BALTIMORE, MARYLAND – September 8, 2011 – The Board of Directors of The Adams Express Company (NYSE:ADX) announced today that, effective immediately, the Company is committing to distribute annually to its stockholders an amount equal to 6% of the average month-end market price on the NYSE of the Company’s Common Stock for the trailing 12 months, calculated as of October 31. For comparison, the Company paid total distributions at an annual distribution rate of 5.2% in 2009 and at an annual distribution rate of 5.1% in 2010.
"This commitment to our stockholders reflects our long history of annually providing attractive distributions of dividend income and capital gains and adds predictability to the amount that our stockholders will be receiving," said Douglas Ober, Chairman and CEO. "We will continue to manage the portfolio for solid long-term returns while providing a commitment to a cash payout regardless of market conditions. This should be appealing to investors in today’s volatile market and low interest rate environment."
The Company will be making its distributions pursuant to this commitment using the same pay-out schedule that it has used for many years. Accordingly, the Company will pay interim quarterly distributions of earned investment income on March 1, June 1, and September 1 (currently the Company is paying interim quarterly distributions of $0.05 each). Then, for its annual year-end distribution, the Board of Directors will review the amount of income, capital gain, or capital available and the average month-end market price on the NYSE of the Company’s Common Stock for the trailing 12 months (as of October 31), and will declare a year-end distribution that brings the amount of distributions paid out for the full year equal to 6% of the average market price. In circumstances in which the net investment income and realized capital gains exceed 6%, distributions paid to stockholders may be greater than 6%.
Portions of the distributions may be treated as long-term capital gain and qualified dividend income for individuals, each subject to the maximum federal income tax rate, which is currently 15% in taxable accounts for individuals. If, in a given year, the Company does not generate sufficient earnings from net investment income and net realized capital gains to meet the 6% distribution amount commitment, then the amount distributed in excess of the Company’s net investment income and net realized capital gains would be deemed a return of capital. Since this would be considered a return of a portion of a stockholder’s original investment, it is generally not taxable under federal tax regulations and is treated as a reduction in the stockholder’s cost basis. In certain circumstances, however, some or all of the return of capital distributed by the Company may be taxable. Stockholders should, in any event, consult their tax advisers as to the tax treatment for these distributions.
The Board of Directors will continue to monitor the Company’s distribution commitment, taking into consideration the Company’s net asset value and the financial market environment. The Company’s distribution commitment is subject to modification by the Board of Directors at any time. The distribution rate should not be considered the dividend yield or total return on an investment in the Company.
Adams Express is a Baltimore-based closed-end investment company.
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For further information, please contact:
Lawrence L. Hooper, Jr., Vice President, General Counsel & Secretary
at (410) 752-5900 or (800) 638-2479