##### Table of Contents



U.S. Securities and Exchange Commission
 Washington, D.C. 20549
 Form 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 Commission file number 000-24498
 DIAMOND HILL INVESTMENT GROUP, INC.
  Ohio
    
    65-0190407(State of incorporation)
    
    (I.R.S. Employer Identification No.)
 
  
  þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



PAGEPart I: FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements
    
 
 3Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    

 15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    

 22Item 4. Controls and Procedures
    

 22Part II: OTHER INFORMATIONItem 1. Legal Proceedings
    

 22Item 1A. Risk Factors
    

 22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    

 22Item 3. Defaults Upon Senior Securities
    

 23Item 4. Submission of Matters to a Vote of Security Holders
    

 23Item 5. Other Information
    

 23Item 6. Exhibits
    

 24Signatures
    

 25EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



PART I FINANCIAL INFORMATION
 
 ITEM 1: Financial Statements
 Diamond Hill Investment Group, Inc.
Consolidated Balance Sheets
 6/30/2008
    
    
    12/31/2007(Unaudited)ASSETSCash and cash equivalents
    
    $
    14,994,330
    
    
    $
    11,783,278Investment portfolio
    
    
    35,600,076
    
    
    
    34,036,163Accounts receivable
    
    
    6,900,855
    
    
    
    5,694,274Prepaid expenses
    
    
    1,618,156
    
    
    
    1,115,728Fixed assets, net of depreciation
    
    
    858,206
    
    
    
    654,500Current and deferred taxes
    
    
    1,023,047
    
    
    
    Total assets
    
    $
    60,994,670
    
    
    $
    53,283,943LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesAccounts payable and accrued expenses
    
    $
    1,289,677
    
    
    $
    979,467Accrued incentive compensation
    
    
    7,040,000
    
    
    
    12,450,000Current and deferred taxes
    
    
    
    
    
    
    546,944Total liabilities
    
    
    8,329,677
    
    
    
    13,976,411Commitments and contingencies
    
    
    
    
    
    
    Shareholders EquityCommon stock, no par value
7,000,000 shares authorized;
2,405,613 issued and outstanding at June 30, 2008;
2,243,653 issued and outstanding at December 31, 2007
    
    
    39,774,299
    
    
    
    27,719,024Preferred stock, undesignated, 1,000,000 shares
authorized and unissued
    
    
    
    
    
    
    Deferred compensation
    
    
    (6,518,891
    )
    
    
    (4,056,015
    )Retained earnings
    
    
    19,409,585
    
    
    
    15,644,523Total shareholders equity
    
    
    52,664,993
    
    
    
    39,307,532Total liabilities and shareholders equity
    
    $
    60,994,670
    
    
    $
    53,283,943
  3




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##### Table of Contents



Diamond Hill Investment Group, Inc.
Consolidated Statements of Income (unaudited)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007REVENUES:Investment advisory
    
    $
    10,657,240
    
    
    $
    8,882,560
    
    
    $
    19,889,234
    
    
    $
    16,763,965Performance incentive
    
    
    97,980
    
    
    
    
    
    
    
    378,881
    
    
    
    4,297Mutual fund administration, net
    
    
    1,640,493
    
    
    
    1,486,279
    
    
    
    3,030,821
    
    
    
    2,955,320Total revenue
    
    
    12,395,713
    
    
    
    10,368,839
    
    
    
    23,298,936
    
    
    
    19,723,582OPERATING EXPENSES:Compensation and related costs
    
    
    6,614,608
    
    
    
    5,221,522
    
    
    
    12,456,362
    
    
    
    9,888,985General and administrative
    
    
    600,590
    
    
    
    585,734
    
    
    
    1,157,738
    
    
    
    1,152,146Sales and marketing
    
    
    152,240
    
    
    
    140,316
    
    
    
    266,270
    
    
    
    241,810Third party distribution
    
    
    395,721
    
    
    
    343,926
    
    
    
    791,826
    
    
    
    723,261Mutual fund administration
    
    
    576,926
    
    
    
    655,582
    
    
    
    1,045,541
    
    
    
    1,208,556Total operating expenses
    
    
    8,340,085
    
    
    
    6,947,080
    
    
    
    15,717,737
    
    
    
    13,214,758NET OPERATING INCOME
    
    
    4,055,628
    
    
    
    3,421,759
    
    
    
    7,581,199
    
    
    
    6,508,824Investment return
    
    
    (1,331,449
    )
    
    
    229,586
    
    
    
    (1,706,113
    )
    
    
    199,126INCOME BEFORE TAXES
    
    
    2,724,179
    
    
    
    3,651,345
    
    
    
    5,875,086
    
    
    
    6,707,950Income tax provision
    
    
    (944,805
    )
    
    
    (1,237,749
    )
    
    
    (2,110,024
    )
    
    
    (2,299,941
    )NET INCOME
    
    $
    1,779,374
    
    
    $
    2,413,596
    
    
    $
    3,765,062
    
    
    $
    4,408,009Earnings per shareBasic
    
    $
    0.75
    
    
    $
    1.12
    
    
    $
    1.60
    
    
    $
    2.11Diluted
    
    $
    0.73
    
    
    $
    1.05
    
    
    $
    1.55
    
    
    $
    1.97Weighted average shares outstandingBasic
    
    
    2,381,474
    
    
    
    2,155,705
    
    
    
    2,359,649
    
    
    
    2,093,282Diluted
    
    
    2,447,151
    
    
    
    2,302,087
    
    
    
    2,424,601
    
    
    
    2,240,037
  4




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##### Table of Contents



Diamond Hill Investment Group, Inc.
Consolidated Statements of Cash Flow (unaudited)
 Six Months Ended June 30,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net Income
    
    $
    3,765,062
    
    
    $
    4,408,009Adjustments to reconcile net income to net cash provided by
(used in) operating activities:Depreciation on furniture and equipment
    
    
    83,657
    
    
    
    78,761Amortization of deferred compensation
    
    
    1,287,279
    
    
    
    522,472(Increase) decrease in accounts receivable
    
    
    (1,206,581
    )
    
    
    1,223,235Increase in deferred taxes
    
    
    1,939,345
    
    
    
    1,762,158Stock option expense
    
    
    2,233
    
    
    
    5,472Noncash director fee expense
    
    
    167,281
    
    
    
    Unrealized losses on investments
    
    
    2,407,110
    
    
    
    84,217(Decrease) in accrued liabilities
    
    
    (979,432
    )
    
    
    (7,930,122
    )Other changes in assets and liabilities
    
    
    (502,428
    )
    
    
    (316,832
    )Net cash provided by (used in) operating activities
    
    
    6,963,526
    
    
    
    (162,630
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    (287,363
    )
    
    
    (254,589
    )Investment portfolio activity
    
    
    (3,971,023
    )
    
    
    (83,232
    )Net cash used in investing activities
    
    
    (4,258,386
    )
    
    
    (337,821
    )CASH FLOWS FROM FINANCING ACTIVITIES:Payment for repurchase of common shares
    
    
    (116,896
    )
    
    
    Payment of taxes withheld on option/warrant exercises
    
    
    (131,800
    )
    
    
    (8,020,273
    )Proceeds from common stock issuance
    
    
    754,608
    
    
    
    9,580,888Purchase of treasury stock
    
    
    
    
    
    
    (1,344,958
    )Sale of treasury stock
    
    
    
    
    
    
    1,273,280Net cash provided by financing activities
    
    
    505,912
    
    
    
    1,488,937CASH AND CASH EQUIVALENTSNet change during the period
    
    
    3,211,052
    
    
    
    988,486At beginning of period
    
    
    11,783,278
    
    
    
    9,836,989At end of period
    
    $
    14,994,330
    
    
    $
    10,825,475Cash paid during the period for:Interest
    
    
    
    
    
    
    Income taxes
    
    
    1,805,000
    
    
    
    486,207Noncash Transactions during the period for:Common Stock Issued as Incentive Compensation
    
    
    5,754,140
    
    
    
    5,478,718
  5




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##### Table of Contents



Diamond Hill Investment Group, Inc.
Notes to Consolidated Financial Statements (unaudited)
 Organization
     Significant Accounting Policies
  Principles of Consolidation
  Segment Information
  Cash and Cash Equivalents
  6




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##### Table of Contents



Significant Accounting Policies (Continued)
 Accounts Receivable
  Valuation of Investment Portfolio
   Limited Partnership Interests
  Furniture and Equipment
  Revenue Recognition  General
  7




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##### Table of Contents



Significant Accounting Policies (Continued)
 Revenue Recognition  Performance Incentive Revenue
  As Of June 30,2008
    
    
    2007AUM  Contractual Period Ends
Quarterly
    
    $
    243,704,401
    
    
    $
    236,367,860AUM  Contractual Period Ends Annually
    
    
    324,211,714
    
    
    
    337,359,956Total AUM Subject to Performance
Incentive
    
    $
    567,916,115
    
    
    $
    573,727,816
 For The Three Months Ending June 30,
    
    For The Six Months Ending June 30,2008
    
    2007
    
    2008
    
    2007Performance Incentive Fees  Method 1
    
    $
    97,980
    
    
    $
    
    
    
    $
    378,881
    
    
    $
    4,297Performance Incentive Fees  Method 2
    
    $
    97,980
    
    
    $
    39,530
    
    
    $
    378,881
    
    
    $
    39,530
  Revenue Recognition  Mutual Fund Administration
  8




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##### Table of Contents



Significant Accounting Policies (Continued)
 Revenue Recognition  Mutual Fund Administration (Continued)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Mutual fund admin revenue, gross
    
    $
    2,468,516
    
    
    $
    2,124,197
    
    
    $
    4,513,064
    
    
    $
    4,160,543Mutual fund admin, fund related expense
    
    
    825,010
    
    
    
    661,738
    
    
    
    1,486,048
    
    
    
    1,238,559Mutual fund admin revenue, net of fund related expenses
    
    
    1,643,506
    
    
    
    1,462,459
    
    
    
    3,027,016
    
    
    
    2,921,984C-Share broker commission advance repayments
    
    
    431,904
    
    
    
    500,946
    
    
    
    830,851
    
    
    
    913,146C-Share broker commission amortization
    
    
    434,917
    
    
    
    477,126
    
    
    
    827,046
    
    
    
    879,810C-Share financing activity, net
    
    
    (3,013
    )
    
    
    23,820
    
    
    
    3,805
    
    
    
    33,336Mutual fund administration revenue, net
    
    $
    1,640,493
    
    
    $
    1,486,279
    
    
    $
    3,030,821
    
    
    $
    2,955,320
 Third Party Distribution Expense
  Income Taxes
   Earnings Per Share
  Reclassifications
  9




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##### Table of Contents



Investment Portfolio
  June 30,
    
    
    December 31,2008
    
    
    2007Diamond Hill Small Cap Fund
    
    $
    1,026,621
    
    
    $
    1,039,517Diamond Hill Small-Mid Cap Fund
    
    
    1,013,339
    
    
    
    1,016,243Diamond Hill Large Cap Fund
    
    
    931,156
    
    
    
    1,017,340Diamond Hill Select Fund
    
    
    921,800
    
    
    
    1,015,803Diamond Hill Long-Short Fund
    
    
    1,004,792
    
    
    
    1,027,615Diamond Hill Financial Long-Short Fund
    
    
    736,381
    
    
    
    1,025,356Diamond Hill Strategic Income Fund
    
    
    6,611,219
    
    
    
    3,765,566Diamond Hill Investment Partners, L.P.
    
    
    9,853,947
    
    
    
    10,070,021Diamond Hill Investment Partners II, L.P.
    
    
    4,962,989
    
    
    
    5,058,702Other marketable equity securities
    
    
    8,537,832
    
    
    
    9,000,000Total Investment Portfolio
    
    $
    35,600,076
    
    
    $
    34,036,163
  June 30,
    
    December 31,2008
    
    2007Total partnership assets
    
    $
    345,112,936
    
    
    $
    360,372,685Total partnership liabilities
    
    
    61,962,970
    
    
    
    80,007,267Net partnership assets
    
    
    283,149,966
    
    
    
    280,365,418Net partnership income (loss)
    
    
    (8,331,300
    )
    
    
    6,581,829DHCMs portion of net assets
    
    
    14,816,936
    
    
    
    15,128,723DHCMs portion of net income (loss)
    
    
    (311,787
    )
    
    
    562,469
  10




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##### Table of Contents



Capital Stock
 Common Shares
  Authorization of Preferred Shares
  Stock-Based Compensation
 Equity Incentive Plans
 2005 Employee and Director Equity Incentive Plan
 1993 Non-qualified and Incentive Stock Option Plan
 Equity Compensation Grants
   401(k) Plan
  11




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##### Table of Contents



Stock-Based Compensation (Continued)
   Options
    
    WarrantsWeighted Average
    
    
    
    
    
    Weighted AverageShares
    
    Exercise Price
    
    Shares
    
    Exercise PriceOustanding December 31, 2006
    
    
    283,102
    
    
    $
    14.60
    
    
    
    249,400
    
    
    $
    12.57Exercisable December 31, 2006
    
    
    243,102
    
    
    $
    16.26
    
    
    
    249,400
    
    
    $
    12.57Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired / Forfeited
    
    
    
    
    
    
    
    
    
    
    2,000
    
    
    
    10.63Exercised
    
    
    151,602
    
    
    
    19.16
    
    
    
    222,000
    
    
    
    8.65Oustanding June 30, 2007
    
    
    131,500
    
    
    $
    9.34
    
    
    
    25,400
    
    
    $
    47.00Exercisable June 30, 2007
    
    
    111,150
    
    
    $
    10.20
    
    
    
    25,400
    
    
    $
    47.00Oustanding December 31, 2007
    
    
    92,500
    
    
    $
    10.40
    
    
    
    25,400
    
    
    $
    47.00Exercisable December 31, 2007
    
    
    72,500
    
    
    $
    12.03
    
    
    
    25,400
    
    
    $
    47.00Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired / Forfeited
    
    
    
    
    
    
    
    
    
    
    12,000
    
    
    
    73.75Exercised
    
    
    27,500
    
    
    
    9.15
    
    
    
    3,000
    
    
    
    56.67Oustanding June 30, 2008
    
    
    65,000
    
    
    $
    10.93
    
    
    
    10,400
    
    
    $
    13.35Exercisable June 30, 2008
    
    
    65,000
    
    
    $
    10.93
    
    
    
    10,400
    
    
    $
    13.35
   Options
    
    WarrantsRemaining
    
    
    
    
    
    
    
    
    
    
    
    
    
    RemainingNumber
    
    Life
    
    Number
    
    
    
    
    
    Number
    
    Life
    
    NumberOutstanding
    
    In Years
    
    Exercisable
    
    Exercise Price
    
    Outstanding
    
    In Years
    
    Exercisable
    
    Exercise Price10,000
    
    
    2.11
    
    
    
    10,000
    
    
    $
    7.95
    
    
    
    400
    
    
    
    0.50
    
    
    
    400
    
    
    $
    22.205,500
    
    
    2.47
    
    
    
    5,500
    
    
    
    8.44
    
    
    
    2,000
    
    
    
    0.87
    
    
    
    2,000
    
    
    
    22.5014,500
    
    
    2.47
    
    
    
    14,500
    
    
    
    28.10
    
    
    
    6,000
    
    
    
    1.67
    
    
    
    6,000
    
    
    
    11.255,000
    
    
    2.76
    
    
    
    5,000
    
    
    
    8.45
    
    
    
    2,000
    
    
    
    1.86
    
    
    
    2,000
    
    
    
    8.7530,000
    
    
    4.93
    
    
    
    30,000
    
    
    
    4.5065,000
    
    
    3.58
    
    
    
    65,000
    
    
    
    
    
    
    
    10,400
    
    
    
    1.51
    
    
    
    10,400
  12




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##### Table of Contents



Operating Leases
  2008
    
    2009
    
    2010
    
    2011
    
    2012
    
    2013$
    126,000
    
    
    $
    259,000
    
    
    $
    267,000
    
    
    $
    249,000
    
    
    $
    254,000
    
    
    $
    130,000
  Income Taxes
  Tax Impact of Stock Option and Warrant Exercises
  Earnings Per Share
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Basic and Diluted net income
    
    $
    1,779,374
    
    
    $
    2,413,596
    
    
    $
    3,765,062
    
    
    $
    4,408,009Weighted average number of
outstanding sharesBasic
    
    
    2,381,474
    
    
    
    2,155,705
    
    
    
    2,359,649
    
    
    
    2,093,282Diluted
    
    
    2,447,151
    
    
    
    2,302,087
    
    
    
    2,424,601
    
    
    
    2,240,037Earnings per shareBasic
    
    $
    0.75
    
    
    $
    1.12
    
    
    $
    1.60
    
    
    $
    2.11Diluted
    
    $
    0.73
    
    
    $
    1.05
    
    
    $
    1.55
    
    
    $
    1.97
  13




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##### Table of Contents



Commitments and Contingencies
  14




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##### Table of Contents



ITEM 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-looking Statements
  General
   15




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##### Table of Contents



Assets Under Management
  Assets Under Management by ProductAs of June 30,(in millions)
    
    2008
    
    2007
    
    % ChangeMutual funds
    
    $
    3,899
    
    
    $
    2,976
    
    
    
    31
    %Separate accounts
    
    
    1,146
    
    
    
    1,025
    
    
    
    12
    %Private investment funds
    
    
    441
    
    
    
    478
    
    
    
    -8
    %Total
    
    $
    5,486
    
    
    $
    4,479
    
    
    
    22
    %
 Assets Under Management by ObjectiveAs of June 30,(in millions)
    
    2008
    
    2007
    
    % ChangeSmall and Small-Mid Cap
    
    $
    548
    
    
    $
    734
    
    
    
    -25
    %Large Cap and Select
    
    
    1,221
    
    
    
    1,062
    
    
    
    15
    %Long-Short
    
    
    3,466
    
    
    
    2,380
    
    
    
    46
    %Strategic and fixed income
    
    
    251
    
    
    
    303
    
    
    
    -17
    %Total
    
    $
    5,486
    
    
    $
    4,479
    
    
    
    22
    %
 Growth in Assets Under ManagementFor the Six Months Ended June 30,(in millions)
    
    2008
    
    2007AUM at beginning of the period
    
    $
    4,403
    
    
    $
    3,708Net cash inflows (outflows)mutual funds
    
    
    1,223
    
    
    
    446separate accounts
    
    
    222
    
    
    
    65private investment funds
    
    
    (44
    )
    
    
    1711,401
    
    
    
    682Net market appreciation (depreciation) and income
    
    
    (318
    )
    
    
    89Increase during the period
    
    
    1,083
    
    
    
    771AUM at end of the period
    
    $
    5,486
    
    
    $
    4,479
 Consolidated Results of Operations
 Three Months Ended June 30,
    
    Six Months Ended June 30,2008
    
    2007
    
    % Change
    
    2008
    
    2007
    
    % ChangeNet income (in thousands)
    
    $
    1,779
    
    
    $
    2,414
    
    
    
    -26
    %
    
    $
    3,765
    
    
    $
    4,408
    
    
    
    -15
    %Net income per shareBasic
    
    $
    0.75
    
    
    $
    1.12
    
    
    
    -33
    %
    
    $
    1.60
    
    
    $
    2.11
    
    
    
    -24
    %Diluted
    
    $
    0.73
    
    
    $
    1.05
    
    
    
    -30
    %
    
    $
    1.55
    
    
    $
    1.97
    
    
    
    -21
    %Weighted average shares
outstanding (in thousands)Basic
    
    
    2,381
    
    
    
    2,156
    
    
    
    
    
    
    
    2,360
    
    
    
    2,093Diluted
    
    
    2,447
    
    
    
    2,302
    
    
    
    
    
    
    
    2,425
    
    
    
    2,240
 16




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##### Table of Contents



Three Months Ended June 30, 2008 compared with Three Months Ended June 30, 2007
 Revenue
 Three Months EndedJune 30,(in Thousands)
    
    2008
    
    2007
    
    % ChangeInvestment advisory
    
    $
    10,657
    
    
    $
    8,883
    
    
    
    20
    %Performance incentive
    
    
    98
    
    
    
    
    
    
    
    n.m.Mutual fund administration, net
    
    
    1,641
    
    
    
    1,486
    
    
    
    10
    %Total
    
    $
    12,396
    
    
    $
    10,369
    
    
    
    20
    %
  Investment Advisory Fees.
 Performance Incentive Fees.
 Mutual Fund Administration Fees.
 17




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##### Table of Contents



Expenses
 Three Months EndedJune 30,(in Thousands)
    
    2008
    
    2007
    
    % ChangeCompensation and related costs
    
    $
    6,615
    
    
    $
    5,222
    
    
    
    27
    %General and administrative
    
    
    600
    
    
    
    586
    
    
    
    2
    %Sales and marketing
    
    
    152
    
    
    
    140
    
    
    
    9
    %Third party distribution
    
    
    396
    
    
    
    344
    
    
    
    15
    %Mutual fund administration
    
    
    577
    
    
    
    655
    
    
    
    -12
    %Total
    
    $
    8,340
    
    
    $
    6,947
    
    
    
    20
    %
 Compensation and Related Costs.
 General and Administrative.
 Sales and Marketing.
 Third Party Distribution.
 Mutual Fund Administration.
 Six Months Ended June 30, 2008 compared with Six Months Ended June 30, 2007
 Revenue
 Six Months EndedJune 30,(in Thousands)
    
    2008
    
    2007
    
    % ChangeInvestment advisory
    
    $
    19,889
    
    
    $
    16,764
    
    
    
    19
    %Performance incentive
    
    
    379
    
    
    
    4
    
    
    
    n.m.Mutual fund administration, net
    
    
    3,031
    
    
    
    2,956
    
    
    
    3
    %Total
    
    $
    23,299
    
    
    $
    19,724
    
    
    
    18
    %
  18




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##### Table of Contents



Investment Advisory Fees.
 Performance Incentive Fees.
 Mutual Fund Administration Fees.
 19




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##### Table of Contents



Expenses
 Six Months EndedJune 30,(in Thousands)
    
    2008
    
    2007
    % ChangeCompensation and related costs
    
    $
    12,456
    
    
    $
    9,889
    
    
    
    26
    %General and administrative
    
    
    1,158
    
    
    
    1,152
    
    
    
    1
    %Sales and marketing
    
    
    266
    
    
    
    242
    
    
    
    10
    %Third party distribution
    
    
    792
    
    
    
    723
    
    
    
    10
    %Mutual fund administration
    
    
    1,046
    
    
    
    1,209
    
    
    
    -13
    %Total
    
    $
    15,718
    
    
    $
    13,215
    
    
    
    19
    %
 Compensation and Related Costs.
 General and Administrative.
 Sales and Marketing.
 Third Party Distribution.
 Mutual Fund Administration.
 Liquidity and Capital Resources
    20




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##### Table of Contents



Off-Balance Sheet Arrangements
  Critical Accounting Policies and Estimates
  21




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##### Table of Contents



ITEM 3: Quantitative and Qualitative Disclosures About Market Risk
  
 ITEM 4: Controls and Procedures
  
 PART II: OTHER INFORMATION
 
 ITEM 1: Legal Proceedings 
 
 ITEM 1A: Risk Factors
  
 ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds
  Total Number
    
    Maximum Numberof Shares Purchased
    
    of Shares That Mayas part of a Publicly
    
    Yet Be PurchasedTotal Number
    
    Average Price
    
    Announced Plans
    
    Under the Plans orPeriod
    
    of Shares Purchased
    
    Paid Per Share
    
    or Programs
    
    Programs (1)April 1, 2008 through
April 30, 2008
    
    
    
    
    
    
    
    
    
    
    6,528
    
    
    
    343,472May 1, 2008 through
May 31, 2008
    
    
    
    
    
    
    
    
    
    
    6,528
    
    
    
    343,472June 1, 2008 through
June 30, 2008
    
    
    
    
    
    
    
    
    
    
    6,528
    
    
    
    343,472
 
 (1)
    
    - The Companys current share repurchase program was announced on August 9, 2007. The board of
directors authorized management to repurchase up to 350,000 shares of its common stock in the open
market and in private transactions in accordance with applicable securities laws. The Companys
stock repurchase program is not subject to an expiration date. 22




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##### Table of Contents



ITEM 3: Defaults Upon Senior Securities
 
 ITEM 4: Submission of Matters to a Vote of Security Holders
   Name
    
    Votes For
    
    Votes WithheldLawrence E. Baumgartner
    
    
    1,986,574
    
    
    
    3,569R. H. Dillon
    
    
    1,974,586
    
    
    
    15,557David P. Lauer
    
    
    1,986,690
    
    
    
    3,453Dr. James G. Mathias
    
    
    1,986,690
    
    
    
    3,453David R. Meuse
    
    
    1,987,024
    
    
    
    3,119Diane D. Reynolds
    
    
    1,986,880
    
    
    
    3,263Donald B. Shackelford
    
    
    1,983,062
    
    
    
    7,081
 
 ITEM 5: Other Information
 23




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##### Table of Contents



ITEM 6:      Exhibits
 3.1
    
    Amended and Restated Articles of Incorporation of the Company. (Incorporated by
reference from Form 8-K Current Report for the event on May 2, 2002 filed with the SEC
on May 7, 2002; File No. 000-24498.)3.2
    
    Code of Regulations of the Company. (Incorporated by reference from Form 8-K Current
Report for the event on May 2, 2002 filed with the SEC on May 7, 2002; File No.
000-24498.)31.1
    
    Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).31.2
    
    Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).32.1
    
    Section 1350 Certifications.
 24




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##### Table of Contents



SIGNATURES
   Date
    
    Title
    
    SignatureAugust 8, 2008
    
    President, Chief Executive Officer,
    
    /s/ R. H. Dillonand a Director
    
    R. H. DillonAugust 8, 2008
    
    Chief Financial Officer, Treasurer,
    
    /s/ James F. Lairdand Secretary
    
    James F. Laird
 25