##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedJune 30, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 0-30050
 PEOPLES FINANCIAL CORPORATION
  Mississippi
    
    64-0709834(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)Lameuse and Howard Avenues, Biloxi, Mississippi
    
    39533(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
 þ o
  o þ o
 o þ
    1




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TABLE OF CONTENTS  PART IItem 2  Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 4: Controls and ProceduresPART II OTHER INFORMATIONItem 1  Legal ProceedingsItem 4  Submission of Matters to a Vote of Security HoldersItem 5  Other InformationItem 6  Exhibits and Reports on Form 8-KSIGNATURESCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 1350Certification of CFO Pursuant to Section 1350    Table of Contents  
 
 (Unaudited)
    
    
    (Audited)
    
    
    (Unaudited)June 30, December 31, and June 30,
    
    2007
    
    
    2006
    
    
    2006AssetsCash and due from banks
    
    $
    82,045,189
    
    
    $
    37,793,493
    
    
    $
    59,876,184Federal funds sold
    
    
    7,525,000
    
    
    
    6,400,000
    
    
    
    1,680,000Held to maturity securities, market value of
$15,659,000 - June 30, 2007;

$85,519,000 - December 31, 2006;
$132,253,000 - June 30, 2006
    
    
    15,692,746
    
    
    
    85,574,260
    
    
    
    132,596,937Available for sale securities, at market value
    
    
    411,750,551
    
    
    
    397,207,489
    
    
    
    249,120,369Federal Home Loan Bank stock, at cost
    
    
    1,158,100
    
    
    
    1,128,500
    
    
    
    1,101,700Loans
    
    
    429,853,383
    
    
    
    401,194,010
    
    
    
    401,010,495Less: Allowance for loan losses
    
    
    10,864,266
    
    
    
    10,841,367
    
    
    
    11,042,833Loans, net
    
    
    418,989,117
    
    
    
    390,352,643
    
    
    
    389,967,662Bank premises and equipment, net of
accumulated depreciation
    
    
    24,242,019
    
    
    
    19,658,585
    
    
    
    18,340,033Accrued interest receivable
    
    
    8,413,007
    
    
    
    8,142,230
    
    
    
    6,062,262Other assets
    
    
    20,804,770
    
    
    
    17,765,868
    
    
    
    19,836,553Total assets
    
    $
    990,620,499
    
    
    $
    964,023,068
    
    
    $
    878,581,700
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##### Table of Contents



(Unaudited)
    
    
    (Audited)
    
    
    (Unaudited)June 30, December 31, and June 30,
    
    2007
    
    
    2006
    
    
    2006Liabilities & Shareholders EquityLiabilities:Deposits:Demand, non-interest bearing
    
    $
    214,329,629
    
    
    $
    148,455,754
    
    
    $
    167,165,370Savings and demand, interest bearing
    
    
    250,239,717
    
    
    
    271,331,272
    
    
    
    296,176,398Time, $100,000 or more
    
    
    144,849,302
    
    
    
    132,846,509
    
    
    
    97,394,708Other time deposits
    
    
    59,289,641
    
    
    
    60,536,259
    
    
    
    62,255,783Total deposits
    
    
    668,708,289
    
    
    
    613,169,794
    
    
    
    622,992,259Federal funds purchased and securities
sold under agreements to repurchase
    
    
    197,142,818
    
    
    
    226,032,370
    
    
    
    148,593,191Borrowings from Federal Home Loan Bank
    
    
    13,982,178
    
    
    
    7,267,349
    
    
    
    7,339,841Other liabilities
    
    
    12,322,587
    
    
    
    19,320,860
    
    
    
    9,436,224Total liabilities
    
    
    892,155,872
    
    
    
    865,790,373
    
    
    
    788,361,515Shareholders Equity:Common Stock, $1 par value, 15,000,000
shares authorized, 5,515,782,
5,548,199 and 5,548,199
shares issued and
outstanding at June 30,
2007, December 31, 2006
and June 30, 2006, respectively
    
    
    5,515,782
    
    
    
    5,548,199
    
    
    
    5,548,199Surplus
    
    
    65,780,254
    
    
    
    65,780,254
    
    
    
    65,780,254Undivided profits
    
    
    31,792,995
    
    
    
    29,253,825
    
    
    
    22,851,882Accumulated other comprehensive income, net
of tax
    
    
    (4,624,404
    )
    
    
    (2,349,583
    )
    
    
    (3,960,150
    )Total shareholders equity
    
    
    98,464,627
    
    
    
    98,232,695
    
    
    
    90,220,185Total liabilities and shareholders equity
    
    $
    990,620,499
    
    
    $
    964,023,068
    
    
    $
    878,581,700
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##### Table of Contents



For the Quarters Ended June 30,
    
    
    For the Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Interest income:Interest and fees on loans
    
    $
    8,422,725
    
    
    $
    6,871,406
    
    
    $
    16,212,614
    
    
    $
    13,054,483Interest and dividends on investments:U. S. Treasury
    
    
    1,152,278
    
    
    
    1,495,269
    
    
    
    2,467,589
    
    
    
    3,323,351U. S. Government agencies and corporations
    
    
    4,144,884
    
    
    
    2,774,493
    
    
    
    8,416,417
    
    
    
    4,533,026States and political subdivisions
    
    
    233,953
    
    
    
    208,790
    
    
    
    457,115
    
    
    
    417,391Other investments
    
    
    296,220
    
    
    
    39,845
    
    
    
    439,768
    
    
    
    125,819Interest on federal funds sold
    
    
    30,602
    
    
    
    98,866
    
    
    
    81,711
    
    
    
    539,356Total interest income
    
    
    14,280,662
    
    
    
    11,488,669
    
    
    
    28,075,214
    
    
    
    21,993,426Interest expense:Deposits
    
    
    3,704,829
    
    
    
    2,619,658
    
    
    
    7,231,163
    
    
    
    4,837,928Borrowings from Federal Home Loan Bank
    
    
    165,304
    
    
    
    126,525
    
    
    
    279,847
    
    
    
    242,391Federal funds purchased and securities sold
under agreements to repurchase
    
    
    2,845,117
    
    
    
    1,237,760
    
    
    
    5,570,169
    
    
    
    1,901,005Total interest expense
    
    
    6,715,250
    
    
    
    3,983,943
    
    
    
    13,081,179
    
    
    
    6,981,324Net interest income
    
    
    7,565,412
    
    
    
    7,504,726
    
    
    
    14,994,035
    
    
    
    15,012,102Provision for allowance for losses on loans
    
    
    51,000
    
    
    
    42,000
    
    
    
    100,000
    
    
    
    77,000Net interest income after provision for
allowance for
losses on loans
    
    $
    7,514,412
    
    
    $
    7,462,726
    
    
    $
    14,894,035
    
    
    $
    14,935,102
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For the Quarters Ended June 30,
    
    
    For the Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Other operating income:Trust department income and fees
    
    $
    449,625
    
    
    $
    374,221
    
    
    $
    898,245
    
    
    $
    730,238Service charges on deposit accounts
    
    
    1,631,897
    
    
    
    1,244,781
    
    
    
    3,303,758
    
    
    
    2,305,268Other service charges, commissions and fees
    
    
    60,423
    
    
    
    76,367
    
    
    
    117,953
    
    
    
    150,874Loss on sale of securities
    
    
    (603,022
    )
    
    
    
    
    
    
    (619,015
    )Other income
    
    
    422,781
    
    
    
    452,582
    
    
    
    910,734
    
    
    
    632,111Total other operating income
    
    
    1,961,704
    
    
    
    2,147,951
    
    
    
    4,611,675
    
    
    
    3,818,491Other operating expense:Salaries and employee benefits
    
    
    3,478,055
    
    
    
    3,105,195
    
    
    
    6,865,231
    
    
    
    6,138,214Net occupancy
    
    
    541,789
    
    
    
    762,230
    
    
    
    919,494
    
    
    
    1,105,232Equipment rentals, depreciation and maintenance
    
    
    834,905
    
    
    
    689,064
    
    
    
    1,618,575
    
    
    
    1,350,269Other expense
    
    
    1,425,117
    
    
    
    1,077,767
    
    
    
    2,902,837
    
    
    
    2,360,007Total other operating expense
    
    
    6,279,866
    
    
    
    5,634,256
    
    
    
    12,306,137
    
    
    
    10,953,722Income before income taxes
    
    
    3,196,250
    
    
    
    3,976,421
    
    
    
    7,199,573
    
    
    
    7,799,871Income taxes
    
    
    1,210,000
    
    
    
    1,420,000
    
    
    
    2,498,000
    
    
    
    2,710,000Net income
    
    $
    1,986,250
    
    
    $
    2,556,421
    
    
    $
    4,701,573
    
    
    $
    5,089,871Basic and diluted earnings per share
    
    $
    .36
    
    
    $
    .46
    
    
    $
    .85
    
    
    $
    .92
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AccumulatedOtherCompre-# of Common
    
    
    Common
    
    
    
    
    
    
    Undivided
    
    
    hensive
    
    
    Comprehen-Shares
    
    
    Stock
    
    
    Surplus
    
    
    Profits
    
    
    Income
    
    
    sive Income
    
    
    TotalBalance, January 1,
2006
    
    
    5,549,128
    
    
    $
    5,549,128
    
    
    $
    65,780,254
    
    
    $
    18,942,855
    
    
    $
    (2,769,106
    )
    
    
    
    
    
    $
    87,503,131Comprehensive
Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,089,871
    
    
    
    
    
    
    $
    5,089,871
    
    
    
    5,089,871Net unrealized
loss on available
for sale
securities, net of
tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,191,044
    )
    
    
    (1,191,044
    )
    
    
    (1,191,044
    )Total
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,898,827Retirement of
common stock
    
    
    (929
    )
    
    
    (929
    )
    
    
    
    
    
    
    (15,722
    )
    
    
    
    
    
    
    
    
    
    
    (16,651
    )Dividend declared
($ .21 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,165,122
    )
    
    
    
    
    
    
    
    
    
    
    (1,165,122
    )Balance, June 30,
2006
    
    
    5,548,199
    
    
    $
    5,548,199
    
    
    $
    65,780,254
    
    
    $
    22,851,882
    
    
    $
    (3,960,150
    )
    
    
    
    
    
    $
    90,220,185
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AccumulatedOtherCompre-# of Common
    
    
    Common
    
    
    
    
    
    
    Undivided
    
    
    hensive
    
    
    Comprehen-Shares
    
    
    Stock
    
    
    Surplus
    
    
    Profits
    
    
    Income
    
    
    sive Income
    
    
    TotalBalance, January 1,
2007
    
    
    5,548,199
    
    
    $
    5,548,199
    
    
    $
    65,780,254
    
    
    $
    29,253,825
    
    
    $
    (2,349,583
    )
    
    
    
    
    
    $
    98,232,695Comprehensive
Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,701,573
    
    
    
    
    
    
    $
    4,701,573
    
    
    
    4,701,573Net unrealized loss
on available for
sale securities,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,630,891
    )
    
    
    (2,630,891
    )
    
    
    (2,630,891
    )Reclassification adjustment for
available for sale
securities called
or sold in the
current year, net
of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    356,070
    
    
    
    356,070
    
    
    
    356,070Total
comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,426,752Retirement of
common stock
    
    
    (32,417
    )
    
    
    (32,417
    )
    
    
    
    
    
    
    (783,458
    )
    
    
    
    
    
    
    
    
    
    
    (815,875
    )Dividend declared
($ .25 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,378,945
    )
    
    
    
    
    
    
    
    
    
    
    (1,378,945
    )Balance, June 30,
2007
    
    
    5,515,782
    
    
    $
    5,515,782
    
    
    $
    65,780,254
    
    
    $
    31,792,995
    
    
    $
    (4,624,404
    )
    
    
    
    
    
    $
    98,464,627
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For the Six Months Ended June 30,
    
    2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    4,701,573
    
    
    $
    5,089,871Adjustments to reconcile net income to net cash provided
by (used in) operating activities:Depreciation
    
    
    910,000
    
    
    
    758,000Provision for loan losses
    
    
    100,000
    
    
    
    77,000Gain on sale of bank premises
    
    
    (192,200
    )Gain on sales of other real estate
    
    
    (10,470
    )
    
    
    (150,000
    )Loss on sales of securities
    
    
    619,015Changes in assets and liabilities:Accrued interest receivable
    
    
    (270,777
    )
    
    
    (1,746,904
    )Other assets
    
    
    (866,793
    )
    
    
    (224,154
    )Other liabilities
    
    
    (7,810,083
    )
    
    
    246,123Net cash provided by (used in) operating activities
    
    
    (2,819,735
    )
    
    
    4,049,936Cash flows from investing activities:Proceeds from maturities and calls of held to maturity
securities
    
    
    75,390,000
    
    
    
    153,170,000Proceeds from maturities, sales and calls of available
for sale securities
    
    
    105,881,327
    
    
    
    8,110,292Purchases of investments in held to maturity securities
    
    
    (5,508,486
    )
    
    
    (151,719,978
    )Purchases of investments in available for sale securities
    
    
    (124,481,485
    )
    
    
    (80,634,652
    )Purchases of investments in Federal Home Loan Bank
    
    
    (29,600
    )
    
    
    (25,100
    )Proceeds from sales of other real estate
    
    
    55,000
    
    
    
    238,000Loans, net increase
    
    
    (28,736,474
    )
    
    
    (51,705,744
    )Proceeds from sale of bank premises
    
    
    250,000Acquisition of premises and equipment
    
    
    (5,551,234
    )
    
    
    (1,210,126
    )Other assets
    
    
    (344,428
    )
    
    
    (295,685
    )Net cash provided by (used in) investing activities
    
    
    16,924,620
    
    
    
    (124,072,993
    )
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For the Six Months Ended June 30,
    
    2007
    
    
    2006Cash flows from financing activities:Demand and savings deposits, net increase (decrease)
    
    $
    44,782,320
    
    
    $
    (14,338,167
    )Time deposits, net increase
    
    
    10,756,175
    
    
    
    45,113,084Borrowings from Federal Home Loan Bank
    
    
    35,850,030
    
    
    
    10,607,443Repayments to Federal Home Loan Bank
    
    
    (29,135,201
    )
    
    
    (10,619,607
    )Retirement of common stock
    
    
    (815,875
    )
    
    
    (16,651
    )Cash dividends
    
    
    (1,276,086
    )
    
    
    (1,109,826
    )Federal funds purchased and securities sold under
agreements to repurchase, net decrease
    
    
    (28,889,552
    )
    
    
    (674,559
    )Net cash provided by financing activities
    
    
    31,271,811
    
    
    
    28,961,717Net increase (decrease in) cash and cash equivalents
    
    
    45,376,696
    
    
    
    (91,061,340
    )Cash and cash equivalents, beginning of period
    
    
    44,193,493
    
    
    
    152,617,524Cash and cash equivalents, end of period
    
    $
    89,570,189
    
    
    $
    61,556,184
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Less Than TwelveMonths
    
    
    Over Twelve Months
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossUnreal-
    
    
    
    
    
    
    Unreal-
    
    
    
    
    
    
    Unreal-Fair Value
    
    
    ized Loss
    
    
    Fair Value
    
    
    ized Loss
    
    
    Fair Value
    
    
    ized LossU. S. Treasury
    
    $
    58,659
    
    
    $
    289
    
    
    $
    28,790
    
    
    $
    192
    
    
    $
    87,449
    
    
    $
    481U. S. Govt. Agencies
    
    
    183,094
    
    
    
    2,182
    
    
    
    88,952
    
    
    
    1,534
    
    
    
    272,046
    
    
    
    3,716States and
political
subdivisions
    
    
    9,888
    
    
    
    272
    
    
    
    8,135
    
    
    
    297
    
    
    
    18,023
    
    
    
    569Mortgage backed
securities
    
    
    20,741
    
    
    
    684
    
    
    
    
    
    
    
    
    
    
    
    20,741
    
    
    
    684FHLMC preferred
stock
    
    
    
    
    
    
    
    
    
    
    2,459
    
    
    
    616
    
    
    
    2,459
    
    
    
    616Total
    
    $
    272,382
    
    
    $
    3,427
    
    
    $
    128,336
    
    
    $
    2,639
    
    
    $
    400,718
    
    
    $
    6,066
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For the Six
    
    
    For the Year
    
    
    For the SixMonths Ended
    
    
    Ended December
    
    
    Months EndedJune 30, 2007
    
    
    31, 2006
    
    
    June 30, 2006Balance, beginning of
period
    
    $
    10,841,367
    
    
    $
    10,966,022
    
    
    $
    10,966,022Provision for loan losses
    
    
    100,000
    
    
    
    141,000
    
    
    
    77,000Recoveries
    
    
    130,645
    
    
    
    463,345
    
    
    
    227,700Loans charged off
    
    
    (207,746
    )
    
    
    (729,000
    )
    
    
    (227,889
    )Balance, end of period
    
    $
    10,864,266
    
    
    $
    10,841,367
    
    
    $
    11,042,833
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13




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Forward-Looking Information
  Overview
    For the six months ended June 30,
    
    2007
    
    
    2006Net income per share
    
    $
    .85
    
    
    $
    .92Book value per share
    
    $
    17.85
    
    
    $
    16.26Return on average total assets
    
    
    .95
    %
    
    
    1.17
    %Allowance for loan losses as a %
of loans, net of
unearned discount
    
    
    2.53
    %
    
    
    2.75
    %
 14




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Financial Condition
 Held to Maturity Securities
   June 30,
    
    2007
    
    
    2006Amount
    
    
    %
    
    
    Amount
    
    
    %U.S. Treasury
    
    $
    8,994,614
    
    
    
    57
    %
    
    $
    58,607,734
    
    
    
    44
    %U.S. Government agencies
    
    
    2,000,000
    
    
    
    13
    %
    
    
    68,000,000
    
    
    
    51
    %States & political subdivisions
    
    
    4,698,132
    
    
    
    30
    %
    
    
    5,989,203
    
    
    
    5
    %Totals
    
    $
    15,692,746
    
    
    
    100
    %
    
    $
    132,596,937
    
    
    
    100
    %
 Available for Sale Securities
   15




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June 30,
    
    2007
    
    
    2006Amount
    
    
    %
    
    
    Amount
    
    
    %U.S. Treasury
    
    $
    82,463,442
    
    
    
    20
    %
    
    $
    43,175,580
    
    
    
    17
    %U.S. Government agencies
    
    
    285,493,317
    
    
    
    69
    %
    
    
    187,579,562
    
    
    
    75
    %Mortgage-backed securities
    
    
    20,741,398
    
    
    
    5
    %States and political subdivisions
    
    
    18,777,682
    
    
    
    5
    %
    
    
    14,720,813
    
    
    
    6
    %Other securities
    
    
    4,274,712
    
    
    
    1
    %
    
    
    3,644,414
    
    
    
    2
    %Totals
    
    $
    411,750,551
    
    
    
    100
    %
    
    $
    249,120,369
    
    
    
    100
    %
 Loans
  Bank Premises and Equipment
  Accrued Interest Receivable
  Other Assets
  Deposits
  16




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##### Table of Contents



Federal Funds Purchased and Securities Sold Under Agreements to Repurchase
  Other Liabilities
  Shareholders Equity and Capital Adequacy
  RESULTS OF OPERATIONS
 Net Interest Income
   17




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##### Table of Contents



18




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##### Table of Contents



For the Six Months Ended
    
    
    For the Six Months EndedJune 30, 2007
    
    
    June 30, 2006Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage

    
    
    Earned/
    
    
    
    
    
    
    Average
    
    
    Earned/Balance
    
    
    Paid
    
    
    Yield
    
    
    Balance
    
    
    Paid
    
    
    YieldINTEREST INCOME:Loans (2)(3)
    
    $
    415,765
    
    
    $
    16,213
    
    
    
    7.80
    %
    
    $
    356,898
    
    
    $
    13,054
    
    
    
    7.32
    %Federal funds sold
    
    
    2,967
    
    
    
    82
    
    
    
    5.53
    %
    
    
    21,898
    
    
    
    539
    
    
    
    4.92
    %Held to maturity:Taxable
    
    
    39,698
    
    
    
    1,001
    
    
    
    5.04
    %
    
    
    172,470
    
    
    
    3,856
    
    
    
    4.47
    %Non-taxable (1)
    
    
    4,933
    
    
    
    155
    
    
    
    6.28
    %
    
    
    6,114
    
    
    
    218
    
    
    
    7.13
    %Available for sale:Taxable
    
    
    405,738
    
    
    
    10,216
    
    
    
    5.04
    %
    
    
    195,958
    
    
    
    3,999
    
    
    
    4.08
    %Non-taxable (1)
    
    
    18,240
    
    
    
    537
    
    
    
    5.89
    %
    
    
    14,158
    
    
    
    414
    
    
    
    5.85
    %Other
    
    
    5,417
    
    
    
    106
    
    
    
    3.91
    %
    
    
    4,516
    
    
    
    126
    
    
    
    5.58
    %Total
    
    $
    892,758
    
    
    $
    28,310
    
    
    
    6.34
    %
    
    $
    772,012
    
    
    $
    22,206
    
    
    
    5.75
    %INTEREST EXPENSE:Savings and
demand,
interest
bearing
    
    $
    281,986
    
    
    $
    2,784
    
    
    
    1.97
    %
    
    $
    311,466
    
    
    $
    2,641
    
    
    
    1.70
    %Time deposits
    
    
    201,840
    
    
    
    4,447
    
    
    
    4.41
    %
    
    
    130,248
    
    
    
    2,197
    
    
    
    3.37
    %Federal funds
purchased and
securities sold
under agreements to
repurchase
    
    
    235,897
    
    
    
    5,570
    
    
    
    4.72
    %
    
    
    139,925
    
    
    
    1,901
    
    
    
    2.72
    %Borrowings from FHLB
    
    
    9,291
    
    
    
    280
    
    
    
    6.03
    %
    
    
    8,188
    
    
    
    242
    
    
    
    5.91
    %Total
    
    $
    729,014
    
    
    $
    13,081
    
    
    
    3.59
    %
    
    $
    589,827
    
    
    $
    6,981
    
    
    
    2.37
    %Net tax-equivalent
yield on earning
assets
    
    
    
    
    
    
    
    
    
    
    3.41
    %
    
    
    
    
    
    
    
    
    
    
    3.94
    %
 
 (1)
    
    All interest earned is reported on a taxable equivalent basis using a tax rate of 34% in 2007
and 2006.(2)
    
    Loan fees of $307and $308 for 2007 and 2006, respectively, are included in these figures.(3)
    
    Includes nonaccrual loans. 19




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##### Table of Contents



Provision for Loan Losses
       20




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##### Table of Contents



Trust Department Income and Fees
  Service Charges on Deposit Accounts
  Loss on Sale of Securities
  Other Income
  Salaries and Employee Benefits
  Net Occupancy
  Equipment Rentals, Depreciation and Maintenance
  21




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##### Table of Contents



Other Expense
  LIQUIDITY
  
 Item 4: Controls and Procedures
   
 
 
   22




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##### Table of Contents



23




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##### Table of Contents



Exhibit 31.1:
    
    Certification of Chief Executive Officer Pursuant to
Section 302 of the Sarbanes  Oxley Act of 2002Exhibit 31.2:
    
    Certification of Chief Financial Officer Pursuant
to Section 302 of the Sarbanes  Oxley Act of 2002Exhibit 32.1:
    
    Certification of Chief Executive Officer Pursuant
to 18 U.S.C. ss. 1350Exhibit 32.2:
    
    Certification of Chief Financial Officer Pursuant
to 18 U.S.C. ss. 1350
   24




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##### Table of Contents



Date:
    
    August 9, 2007By:
    
    /s/ Chevis C. SwetmanChevis C. SwetmanChairman, President and Chief Executive OfficerDate:
    
    August 9, 2007By:
    
    /s/ Lauri A. WoodLauri A. WoodChief Financial Officer and Controller(principal financial and accounting officer)
 25