UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act File Number 811-179
Name of registrant as specified in charter: Central Securities Corporation
Address of principal executive offices:
630 Fifth Avenue
Suite 820
New York, New York 10111
Name and address of agent for service:
Central Securities Corporation, Wilmot H. Kidd, President
630 Fifth Avenue
Suite 820
New York, New York 10111
Registrant's telephone number, including area code: 212-698-2020
Date of fiscal year end: December 31, 2007
Date of reporting period: December 31, 2007
Item 1. Reports to Stockholders.
================================================================================
CENTRAL SECURITIES CORPORATION
----------
SEVENTY-NINTH ANNUAL REPORT
2007
================================================================================
SIGNS OF THE TIMES
"Think about what is happening in Asia today, centered on China but
followed by India. At a growth rate of per capita living standards of six and a
half percent which is less than the average of the last ten years for China,
living standards don't double in a single human life span, they don't rise five
fold in a human life span, they rise 100 fold within a single human life span.
They rise more than living standards have increased in the United States since
my country gained independence in 1776. This is not an isolated event affecting
a few people, in a niche in the world, this is an event affecting a third or
more of humanity, if one takes into account China and India and looks to the
remainder of Asia.
"Living standards rising as much as a 100 fold in a single human life span
in places where a third of humanity resides, this is an economic event, in the
last millennium that exceeds very substantially the impact of either the
Renaissance or the Industrial revolution. I would dare to suggest to you that
when historians record the history of our time, 300 years from now, the end of
the Cold War, that fifty year struggle will be at most a third story in that
history. All that is happening in the Middle East, with all that the region
needs, will be the second story. What happens in Asia, the changes in the lives
of so many people, so quickly and its ramifications for the global system will
be the most important story when the history of our times is written." (Lawrence
Summers, Charles W. Eliot University Professor, Harvard University, Welcoming
Dinner Address, Beijing Friendship Hotel, January 14, 2007)
----------
"The collapse of communism in Europe was a key event in the creation of a
more growth-oriented global economy. In one fell swoop, 240 million working-age
people in the former USSR and its satellites were catapulted into the global
traded goods system. China had already embarked on steps toward a more
market-oriented economy, but this accelerated in the 1990s. Meanwhile, the
dramatic growth in China encouraged India to start retreating from its
heavy-handed state control of the economy. In total, the global labor force
potentially involved in the market system doubled by the inclusion of all these
`new' entrants. If each country's labor force is weighted by its export-to-GDP
ratio, the IMF calculates that the effective labor supply involved in the global
trading system has doubled in the past 20 years." (Martin H. Barnes, The Bank
Credit Analyst, May 2007)
----------
"As I see it, the role that quants play in the financial world is
analogous to the role that batfish play in keeping coral reefs tidy. Batfish do
not construct the reef, but they are essential to its health. Quants do not
create the structure on which the markets depend, but they maintain the
conditions which make financial markets function."
"By scrutinizing financial data, quants spot arbitrage opportunities and
alert their firms to act before those opportunities disappear."
"Most of the time, they have no idea what, if anything, is produced by the
companies with whose stocks they deal. Their mission is to blindly keep those
stocks moving, not to pass judgment on a stock's value, either to the buyer or
society. Thus, I find it completely appropriate that quants now prefer the
euphemism `financial engineer.' They are certainly not `financial architects.'
Nor are they responsible for the mess in which the financial world finds itself
at the moment. Quants may have greased the rails, but others were supposed to be
manning the brakes." (Daniel Stroock, MIT TechReview, November 2007)
[2]
SIGNS OF THE TIMES
"Last week the Congressional Budget Office joined the IRS in releasing tax
numbers for 2005, and part of the news is that the richest 1% paid about 39% of
all income taxes that year. The richest 5% paid a tad less than 60%, and the
richest 10% paid 70%. These tax shares are all up substantially since 1990, and
even somewhat since 2000. Meanwhile, Americans with an income below the median -
half of all households - paid a mere 3% of all income taxes in 2005. The richest
1.3 million tax-filers - those Americans with adjusted gross incomes of more
than $365,000 in 2005 - paid more than all of the 66 million American tax filers
below the median income. Ten times more. (Wall Street Journal, December 17,
2007)
------------------------------------------------------
The Rich Pay More
Shares of income earned by all taxpayers compared
to share of income taxes paid in the U.S.
Share of total
-------------------
Richest 1% Income Taxes Paid
1990................ 14% 25%
2000................ 21% 37%
2005................ 21% 39%
Richest 5%
1990................ 27% 44%
2000................ 35% 56%
2005................ 36% 60%
Source: Treasury Department, October 2007.
------------------------------------------------------
----------
"In 1986, President Ronald Reagan in tandem with the Democratic House and
Republican Senate reformed and simplified the tax code, reducing the number of
brackets, closing loopholes and lowering individual and corporate rates. The
U.S. moved from a country with above-average corporate tax rates to one with
below-average rates. The Reagan tax reforms set the stage for 20 years of
remarkable economic performance in the U. S. and around the world, what Ronald
Reagan called the `American Miracle.'
"Twenty years later, after much of the world has followed our lead, the
U.S. is once again a high corporate tax country. We now have, on average, the
second-highest statutory corporate tax rate (including state corporate taxes),
39%, compared with an average rate of 31% for our top competitors-the
democratic, market-oriented nations that form the Organisation of Economic
Cooperation and Development (OECD)." (Henry M. Paulson, Jr. Wall Street Journal,
July 19, 2007)
----------
"A record eight million Americans moved from one state to another last
year. Where is everyone going, and why? The answer has little to do with the
climate: California has arguably the nicest climate of any state in the nation -
yet in this decade more Americans have left the Golden State than entered it.
Migration patterns instead reveal which states have the most dynamic and
desirable economies, and which are `has-been' states. The winners in this
contest for the most valuable resource on the globe - human capital - are
generally the states with the lowest tax, spending and regulatory burdens. The
biggest losers are almost all congregated in the Northeast and Midwest. (Arthur
Laffer and Stephen Moore, Wall Street Journal, December 10, 2007)
----------
"Because of lax lending standards in the past few years, many homeowners
never amassed much equity in their homes. Sizable down payments became a rarity,
as many buyers borrowed close to 100% of the purchase price through a blend of
first mortgages and home-equity lines of credit. Others kept refinancing their
mortgages as property prices climbed, taking on bigger loans and draining the
equity value of their homes.
"As a result, there is a new class of homeowners in name only. Because
these people never put up much of their own money, they don't act like owners,
committed to their property for the long haul. They behave more like renters,
ducking out of an onerous lease in the midst of a housing slump." (George
Anders, Wall Street Journal, December 19, 2007)
[3]
CENTRAL SECURITIES CORPORATION:
(Organized on October 1, 1929 as an investment company, registered as such
with the Securities and Exchange Commission under the provisions of the
Investment Company Act of 1940.)
TEN YEAR HISTORICAL DATA
Per Share of Common Stock
---------------------------------------------------
Total Convertible Net Net Net realized Unrealized
net Preference asset investment Divi- Distribu- investment appreciation
Year assets Stock(A) value income(B) dends(C) tions(C) gain of investments
---- ------ -------- ----- --------- -------- -------- ------------ --------------
1997 $434,423,053 $9,040,850 $29.97 $273,760,444
1998 476,463,575 8,986,125 31.43 $.29 $.29 $1.65 $22,908,091 301,750,135
1999 590,655,679 -- 35.05 .26 .26 2.34 43,205,449 394,282,360
2000 596,289,086 -- 32.94 .32 .32 4.03 65,921,671 363,263,634
2001 539,839,060 -- 28.54 .18 .22 1.58* 13,662,612 304,887,640
2002 361,942,568 -- 18.72 .14 .14 1.11 22,869,274 119,501,484
2003 478,959,218 -- 24.32 .09 .11 1.29 24,761,313 229,388,141
2004 529,468,675 -- 26.44 .11 .11 1.21 25,103,157 271,710,179
2005 573,979,905 -- 27.65 .28 .28 1.72 31,669,417 302,381,671
2006 617,167,026 -- 30.05 .36 .58 1.64 36,468,013 351,924,627
2007 644,822,724 -- 30.15 .38 .52 1.88 42,124,417 356,551,394
----------
A - At liquidation preference.
B - Excluding gains or losses realized on sale of investments and the dividend
requirement on the Convertible Preference Stock which was redeemed August
1, 1999.
C - Computed on the basis of the Corporation's status as a "regulated
investment company" for Federal income tax purposes. Dividends are from
ordinary income. Distributions are from long-term investment gains.
* Includes a non-taxable return of capital of $.55.
The Common Stock is listed on the American Stock Exchange under the symbol
CET. On December 31, 2007 the market quotations were: $26.06 low, $26.96 high
and $26.84 last sale.
Central's results to December 31, 2007 versus the S&P 500:
Central's Central's Standard &
Average Annual Total Return NAV Return Market Return Poor's 500
--------------------------- ---------- ------------- ----------
One Year........................... 9.4% 9.9% 5.5%
Five Year.......................... 18.8% 19.3% 12.8%
Ten Year........................... 9.6% 7.8% 5.9%
Fifteen Year....................... 14.8% 15.4% 10.5%
Twenty Year........................ 14.7% 16.2% 11.8%
[4]
To the Stockholders of
CENTRAL SECURITIES CORPORATION:
Financial statements for the year 2007, as reported upon by our
independent registered public accounting firm, and other pertinent information
are submitted herewith.
Comparative net assets are as follows:
December 31, December 31,
2007 2006
------------ ------------
Net assets................................................. $644,822,724 $617,167,026
Net assets per share of Common Stock....................... 30.15 30.05
Shares of Common Stock outstanding..................... 21,385,882 20,538,195
Comparative operating results are as follows:
Year 2007 Year 2006
------------ ------------
Net investment income...................................... $ 7,817,245 $ 7,269,692
Per share of Common Stock.............................. .38* .36*
Net realized gain on sale of investments................... 42,124,417 36,468,013
Increase in net unrealized appreciation
of investments........................................... 4,626,767 49,542,956
Increase in net assets resulting from operations........... 54,568,429 93,280,661
----------
* Per-share data are based on the average number of Common shares
outstanding during the year.
The Corporation made two distributions to holders of Common Stock in 2007,
a cash dividend of $.20 per share paid on June 22 and an optional distribution
of $2.20 per share in cash, or one share of Common Stock for each 12 shares
held, paid on December 27. For Federal income tax purposes, of the $2.40 paid in
2007, $.52 represents ordinary income and $1.88 represents long-term capital
gains. Separate tax notices have been mailed to stockholders. With respect to
state and local taxes, the character of distributions may vary. Stockholders
should consult with their tax advisors on this matter.
In the optional distribution paid in December, the holders of 50% of the
outstanding shares of Common Stock elected stock, and they received 847,687
Common shares.
During 2007 the Corporation did not repurchase any shares of its Common
Stock. The Corporation may from time to time purchase Common Stock in such
amounts and at such prices as the Board of Directors may deem advisable in the
best interests of stockholders. Purchases may be made on the American Stock
Exchange or in private transactions directly with stockholders.
[5]
Central's net asset value, adjusted for the reinvestment of distributions,
increased by 9.4% last year. The S&P 500 and Russell 2000, an index composed of
smaller companies, returned 5.5% and a negative 1.6%, respectively.
Interestingly, the Russell had outperformed the S&P for seven of the previous
eight years. Last year, however, market uncertainty had a greater impact on the
prices of smaller companies, which are presumed to be more vulnerable to slowing
economic growth than larger ones. Plymouth Rock, Murphy Oil, Bank of New York
Mellon, Intel, Berry Petroleum and Roper Industries were the major contributors
to Central's gain. Capital One Financial, Convergys and Geomet detracted the
most.
Our trading activity as measured by turnover increased from 18% to 20%.
Over the year eight investments were added and fourteen sold. The largest new
investments were Coherent, Devon Energy, Radisys and A.S.V. The largest
eliminations were Neoware, Chevron, Ceridian, Hewitt Associates and SLM Corp. We
ended the year with thirty-three holdings. The ten largest, shown on page eight,
accounted for 63% of Central's net assets.
Plymouth Rock did not repeat its record earnings performance of 2006 in
2007. Since this letter precedes its annual report, audited results for last
year are not yet available. (The Plymouth Rock annual report will be placed on
the company's website at www.prac.com in early April.) The $54 million earned in
2006, it may be remembered, was boosted by a $10 million reduction of reserves
from prior years and Plymouth Rock Assurance Corp., along with other
Massachusetts insurers, experienced an unexpected rise in its loss ratio in
2007. Management has taken aggressive action to address the issue. The New
Jersey subsidiaries, Palisades and High Point, are both benefiting from recent
acquisitions. These companies, it should be noted, are management companies
which derive their income from servicing fees as opposed to underwriting.
Complicating the future in Massachusetts, the state insurance department
is in the process of implementing regulatory changes designed to conform
Massachusetts regulation with that of other states in order to bring more
insurance providers into the state, much as occurred in New Jersey a few years
ago. It is unclear how the market will develop, but we hope the experience
Plymouth Rock gained in NJ will help as it contends with the changes.
It has been 25 years since Central made its initial investment in Plymouth
Rock. Since then the company has grown to the point where last year it had
approximately $1 billion in written and managed premiums. Central has received
dividends over the last 10 years of more than $15 million. Based on the current
valuation our investment has increased at an annual rate of 20% for the 25 year
period. Looking forward, when I reflect on Central's investment in Plymouth
Rock, the team Jim Stone has assembled and the leadership he is able to provide,
I think the company should continue to be able to provide attractive long-term
shareholder returns. Much of the company's growth has come from acquisitions,
and opportunities may arise in the coming years if companies not committed to
the increasingly complex auto business decide to exit.
Plymouth Rock is not publicly traded and its value is determined by
Central's Board of Directors based on an independent appraisal obtained by
Plymouth Rock. We evaluate the appraisal, considering, among other things,
management, corporate governance, valuations of comparable publicly traded
companies, the company and industry outlooks, marketability and recent private
transactions. We currently apply a liquidity discount of 32.5%, resulting in a
value of $2120 per share.
[6]
In last year's annual report we noted that the market seemed to have an
abundance of confidence. That changed abruptly this past summer when it became
apparent that many so called "structured" securities backed by mortgages and
other loans had lost much of their value. Confidence evaporated quickly as a
number of large American and European financial institutions announced write
offs which strained their capital bases. To remedy the situation they have been
trooping "hat in hand" to the Middle East and East Asia to raise capital from
wealthy sovereign investment funds. Fortunately, capital has been available, but
it has been costly for shareholders. In a larger sense, as pointed out by the
historian Niall Ferguson, economic power is shifting. In the past such shifts
have had political implications as well as financial ones. Against this backdrop
the stock market was mixed last year. For example, bank stocks declined by more
than 28%. In contrast, energy stocks increased by 31% as investors focused on
demand from China and hedged against the weak dollar. Looking forward, the
Federal Reserve is faced with the problem of stabilizing the banking system and
mitigating an economic slowdown while avoiding inflation in the process. Success
in this endeavor will require deft management on the part of the regulators.
It is our belief that there is no one "correct" way to invest and Central
uses a number of investment strategies. Our investing activities, however,
continue to be based on a few basic principles: we pay attention to price in
relation to assets, earnings, and intrinsic or franchise value. We take a
long-term view, looking out three to five years. Many investors are forced to
have a shorter time horizon, and we believe the ability to take a long-term view
has been an advantage for Central shareholders. We try to avoid over
diversification. Our long-standing practice has been to keep about one half of
our assets invested in a small number of companies. We often invest in less
liquid securities or go contrary to general opinion on the theory that such
situations are not as efficiently priced. Finally, integrity is important. We
want to own companies whose managements are working in the shareholder's
interest.
It is our goal to provide shareholders with results that will be judged
superior in the long run. We continue to believe that under reasonably favorable
economic conditions our investment approach will provide satisfactory results.
Shareholder inquiries are welcome.
CENTRAL SECURITIES CORPORATION
Wilmot H. Kidd, President
630 Fifth Avenue
New York, NY 10111
January 22, 2008
[7]
TEN LARGEST INVESTMENTS
December 31, 2007
(unaudited)
% of Net Year First
Cost Value Assets Acquired
---- ----- ------ --------
(millions)
The Plymouth Rock Company, Inc...................... $ 2.2 $148.4 23.0% 1982
Murphy Oil Corporation.............................. 2.6 44.5 6.9 1974
The Bank of New York Mellon Corporation............. 15.5 40.3 6.2 1993
Agilent Technologies, Inc........................... 22.5 34.6 5.4 2005
Brady Corporation................................... 2.5 30.7 4.8 1984
Convergys Corporation............................... 25.1 28.2 4.4 1998
Intel Corporation................................... 0.4 24.0 3.7 1986
Roper Industries, Inc............................... 7.2 21.9 3.4 2003
Dover Corporation................................... 13.0 18.4 2.9 2003
Devon Energy Corporation............................ 14.9 17.8 2.8 2007
PRINCIPAL PORTFOLIO CHANGES
October 1 to December 31, 2007
(Common Stock unless specified otherwise)
(unaudited)
Number of Shares
-----------------------------------------------
Held
Purchased Sold December 31, 2007
--------- ---- -----------------
A.S.V., Inc......................................... 120,000 800,000
Carlisle Companies Inc.............................. 10,000 150,000
Coherent, Inc....................................... 600,000 700,000
Covidien Ltd........................................ 100,000 --
Flextronics Ltd..................................... 630,000(a) 630,000
GeoMet, Inc......................................... 850,000 1,850,000
IMS Health, Inc..................................... 80,000 --
McMoRan Exploration Corporation..................... 45,000 600,000
Meritage Homes Corporation.......................... 90,000 --
Murphy Oil Corporation.............................. 25,000 525,000
Roper Industries, Inc............................... 60,000 350,000
Tyco Electronics Ltd................................ 90,000 --
Verigy Ltd.......................................... 60,000 --
Vical Inc........................................... 35,100 170,000
Walgreen Co......................................... 200,000 200,000
----------
(a) 550,600 shares received in exchange for 1,800,000 shares of Solectron
Corporation.
[8]
DIVERSIFICATION OF INVESTMENTS
December 31, 2007
(unaudited)
Percent of
Net Assets
December 31
--------------
Issues Cost Value 2007 2006
------ ---- ----- ---- ----
Common Stocks:
Insurance........................... 3 $ 3,633,747 $149,947,000 23.3% 21.8%
Electronics......................... 8 79,307,574 130,984,576 20.3 16.8
Energy.............................. 6 54,002,897 106,792,150 16.6 12.5
Manufacturing....................... 6 45,437,863 91,649,304 14.2 14.0
Banking and Finance................. 2 20,552,122 56,318,561 8.7 9.3
Information Technology.............. 2 31,307,626 45,438,368 7.1 12.6
Other............................... 6 20,227,100 29,890,364 4.6 9.4
Short-Term Investments................. 3 33,713,125 33,713,125 5.2 3.5
FINANCIAL HIGHLIGHTS
2007 2006 2005 2004 2003
---- ---- ---- ---- ----
Per Share Operating Performance:
Net asset value, beginning of year ...................... $ 30.05 $ 27.65 $ 26.44 $ 24.32 $ 18.72
Net investment income* .................................. .38 .36 .28 .11 .09
Net realized and unrealized gain on securities* ......... 2.12 4.26 2.93 3.33 6.91
-------- -------- -------- -------- --------
Total from investment operations .................. 2.50 4.62 3.21 3.44 7.00
Less:
Dividends from net investment income .................... .37 .36 .28 .11 .11
Distributions from capital gains ........................ 2.03 1.86 1.72 1.21 1.29
-------- -------- -------- -------- --------
Total distributions ............................... 2.40 2.22 2.00 1.32 1.40
-------- -------- -------- -------- --------
Net asset value, end of year ............................ $ 30.15 $ 30.05 $ 27.65 $ 26.44 $ 24.32
======== ======== ======== ======== ========
Per share market value, end of year ..................... $ 26.84 $ 26.65 $ 23.80 $ 22.85 $ 20.89
Total return based on market(%) ......................... 9.86 21.31 14.04 16.16 36.22
Total return based on NAV(%) ............................ 9.35 18.55 13.75 15.40 39.32
Ratios/Supplemental Data:
Net assets, end of year(000) ............................ $644,823 $617,167 $573,980 $529,469 $478,959
Ratio of expenses to average net assets(%).. ............ .59 .53 .54 .55 .56
Ratio of net investment income to average
net assets(%) ......................................... 1.21 1.23 1.02 .41 .42
Portfolio turnover rate(%) .............................. 19.58 17.55 15.83 16.72 12.90
----------
* Based on the average number of shares outstanding during the year.
See accompanying notes to financial statements.
[9]
STATEMENT OF INVESTMENTS
December 31, 2007
PORTFOLIO SECURITIES 94.8%
STOCKS (COMMON UNLESS SPECIFIED OTHERWISE)
Prin. Amt.
or Shares Value
--------- -----
Banking and Finance 8.7%
825,475 The Bank of New York Mellon Corporation........ $ 40,250,161
340,000 Capital One Financial Corporation.............. 16,068,400
------------
56,318,561
------------
Chemicals 1.2%
150,000 Rohm and Haas Company.......................... 7,960,500
------------
Communications 0.9%
1,005,000 Arbinet-thexchange, Inc. (a)................... 6,080,250
------------
Electronics 20.3%
942,400 Agilent Technologies, Inc. (a)................. 34,623,776
430,000 Analog Devices, Inc............................ 13,631,000
700,000 Coherent, Inc. (a)............................. 17,549,000
630,000 Flextronics International Ltd. (a)............. 7,597,800
900,000 Intel Corporation.............................. 23,994,000
350,000 Motorola, Inc.................................. 5,614,000
1,000,000 Radisys Corporation (a)........................ 13,400,000
2,500,000 Sonus Networks, Inc. (a)....................... 14,575,000
------------
130,984,576
------------
Energy 16.6%
375,000 Berry Petroleum Company Class A................ 16,668,750
200,000 Devon Energy Corporation....................... 17,782,000
1,850,000 GeoMet, Inc. (a)............................... 9,620,000
600,000 McMoRan Exploration Co. (a).................... 7,854,000
525,000 Murphy Oil Corporation......................... 44,541,000
320,000 Nexen Inc...................................... 10,326,400
------------
106,792,150
------------
Health Care 1.2%
120,000 Abbott Laboratories............................ 6,738,000
170,000 Vical Inc. (a)................................. 722,500
------------
7,460,500
------------
Information Technology Services 7.1%
1,715,800 Convergys Corporation (a)...................... 28,242,068
990,000 The TriZetto Group, Inc. (a)................... 17,196,300
------------
45,438,368
------------
[10]
Prin. Amt.
or Shares Value
--------- -----
Insurance 23.3%
10,000 Erie Indemnity Co. Class A..................... $ 518,900
70,000 The Plymouth Rock Company, Inc.
Class A (b)(c)............................... 148,400,000
2,000 White Mountains Insurance Group, Ltd........... 1,028,100
------------
149,947,000
------------
Manufacturing 14.2%
800,000 A.S.V., Inc. (a)............................... 11,080,000
875,600 Brady Corporation Class A...................... 30,724,804
150,000 Carlisle Companies Inc......................... 5,554,500
400,000 Dover Corporation.............................. 18,436,000
350,000 Roper Industries, Inc.......................... 21,889,000
100,000 Tyco International Ltd......................... 3,965,000
------------
91,649,304
------------
Retailing 1.3%
28,751 Aerogroup International, Inc. (a)(c)........... 773,114
200,000 Walgreen Co.................................... 7,616,000
------------
8,389,114
------------
Total Portfolio Securities
(cost $254,468,929)(d)....................... 611,020,323
SHORT-TERM INVESTMENTS 5.2%
Commercial Paper 1.4%
3,374,000 American Express 4.31%, due 1/9/08............. 3,370,783
5,533,000 General Electric Capital Corporation 4.17%,
due 1/16/08.................................. 5,523,433
------------
8,894,216
------------
U.S. Treasury Bills 3.8%
25,040,000 U.S. Treasury Bills 2.65% - 3.04%
due 1/3/08 - 5/18/08......................... 24,818,909
------------
Total Short-Term Investments
(cost $33,713,125)(d)...................... 33,713,125
------------
Total Investments (100.0%)................... 644,733,448
Cash, receivables and other assets
less liabilities (0.0%)...................... 89,276
------------
Net Assets (100%)............................... $644,822,724
============
----------
(a) Non-dividend paying.
(b) Affiliate as defined in the Investment Company Act of 1940.
(c) Valued at estimated fair value.
(d) Aggregate cost for Federal tax purposes is substantially the same.
See accompanying notes to financial statements.
[11]
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2007
ASSETS:
Investments:
General portfolio securities at market
value (cost $252,268,943) (Note 1)........ $462,620,323
Securities of affiliated company
(cost $2,199,986) (Notes 1, 5 and 6)...... 148,400,000
Short-term investments (cost $33,713,125)... 33,713,125 $644,733,448
------------
Cash, receivables and other assets:
Cash........................................ 22,590
Dividends and interest receivable........... 42,053
Office equipment and leasehold
improvements, net......................... 310,908
Other assets................................ 80,808 456,359
------------ ------------
Total Assets............................ 645,189,807
LIABILITIES:
Accrued expenses and reserves.................. 367,083
------------
Total Liabilities....................... 367,083
------------
NET ASSETS......................................... $644,822,724
============
NET ASSETS are represented by:
Common Stock $1 par value: authorized
30,000,000 shares; issued 21,385,882
(Note 2)..................................... $ 21,385,882
Surplus:
Paid-in...................................... $265,306,327
Undistributed net realized gain on sale
of investments............................. 1,087,512
Undistributed net investment income.......... 491,609 266,885,448
------------
Net unrealized appreciation of investments..... 356,551,394
------------
NET ASSETS......................................... $644,822,724
============
NET ASSET VALUE PER COMMON SHARE
(21,385,882 shares outstanding)................ $30.15
======
See accompanying notes to financial statements.
[12]
STATEMENT OF OPERATIONS
For the year ended December 31, 2007
INVESTMENT INCOME
Income:
Dividends (net of foreign
withholding taxes of $4,545).................. $ 9,200,619
Interest......................................... 2,441,736 $11,642,355
-----------
Expenses:
Investment research.............................. 1,293,750
Administration and operations.................... 957,250
Occupancy costs.................................. 461,828
Employees' retirement plans...................... 165,400
Franchise and miscellaneous taxes................ 162,746
Insurance........................................ 150,141
Directors' fees.................................. 135,500
Stationery, supplies, printing and postage....... 106,196
Listing, software and sundry fees................ 103,417
Legal, auditing and tax fees..................... 94,501
Travel and telephone............................. 58,546
Custodian fees................................... 37,945
Transfer agent and registrar fees and expenses... 28,794
Publications and miscellaneous................... 69,096 3,825,110
----------- -----------
Net investment income................................ 7,817,245
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain from investment transactions....... 42,124,417
Net increase in unrealized appreciation
of investments................................... 4,626,767
-----------
Net gain on investments.......................... 46,751,184
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS......................................... $54,568,429
===========
See accompanying notes to financial statements.
[13]
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 2007 and 2006
2007 2006
------------ ------------
FROM OPERATIONS:
Net investment income........................... $ 7,817,245 $ 7,269,692
Net realized gain on investments................ 42,124,417 36,468,013
Net increase in unrealized
appreciation of investments................... 4,626,767 49,542,956
------------ ------------
Increase in net assets resulting from
operations.................................. 54,568,429 93,280,661
------------ ------------
DISTRIBUTIONS TO STOCKHOLDERS FROM:
Net investment income........................... (7,557,915) (7,185,071)
Net realized gain from investment transactions.. (41,733,753) (36,564,651)
------------ ------------
Decrease in net assets from distributions..... (49,291,668) (43,749,722)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS: (Note 2)
Distribution to stockholders reinvested in
Common Stock.................................. 22,378,937 21,444,764
Cost of shares of Common Stock repurchased...... -- (27,788,582)
------------ ------------
Increase (decrease) in net assets from
capital share transactions.................. 22,378,937 (6,343,818)
------------ ------------
Total increase in net assets............ 27,655,698 43,187,121
NET ASSETS:
Beginning of year............................... 617,167,026 573,979,905
------------ ------------
End of year (including undistributed
net investment income of $491,609
and $226,873, respectively)................... $644,822,724 $617,167,026
============ ============
See accompanying notes to financial statements.
[14]
STATEMENT OF CASH FLOWS
For the year ended December 31, 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets from operations..... $ 54,568,429
Adjustments to net increase in net assets
from operations:
Purchase of securities....................... ($117,657,301)
Proceeds from securities sold................ 148,405,422
Net purchase of short-term investments....... (12,240,069)
Net realized gain from investments........... (42,124,417)
Increase in unrealized appreciation.......... (4,626,767)
Depreciation and amortization................ 81,110
Changes in operating assets and liabilities:
Decrease in dividends and interest
receivable............................... 59,895
Decrease in receivable for securities sold. 364,849
Increase in office equipment and
leasehold improvements................... (6,356)
Increase in other assets................... (742)
Increase in accrued expenses and reserves.. 30,925
-------------
Total adjustments............................ (27,713,451)
------------
Net cash provided by operating activities.......... 26,854,978
Cash flows from financing activities:
Dividends and distributions paid............... (26,912,731)
-------------
Cash flows used in financing activities............ (26,912,731)
------------
Net decrease in cash............................... (57,753)
Cash at beginning of year.......................... 80,343
------------
Cash at end of year................................ $ 22,590
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Non-cash financing activities not included herein consist of:
Reinvestment of dividends and distributions to stockholders.... $ 22,378,937
See accompanying notes to financial statements.
[15]
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies--Central Securities Corporation (the
"Corporation") is registered under the Investment Company Act of 1940, as
amended, as a non-diversified, closed-end management investment company. The
following is a summary of the significant accounting policies consistently
followed by the Corporation in the preparation of its financial statements.
These policies are in conformity with generally accepted accounting principles.
Security Valuation--Securities are valued at the last or closing sale
price or, if unavailable, at the closing bid price. Corporate discount
notes and U.S. Treasury Bills are valued at amortized cost, which
approximates market value. Securities for which no ready market exists,
including The Plymouth Rock Company, Inc. Class A Common Stock, are
valued at estimated fair value by the Board of Directors.
Federal Income Taxes--It is the Corporation's policy to meet the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to its
stockholders. Therefore, no Federal income taxes have been accrued.
Use of Estimates--The preparation of financial statements in accordance
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported. Actual
results may differ from those estimates.
Other--Security transactions are accounted for as of the trade date, and
cost of securities sold is determined by specific identification.
Dividend income and distributions to stockholders are recorded on the
ex-dividend date. Interest income is accrued daily. Certain prior year
amounts have been reclassified to conform with current year
presentation.
New Accounting Pronouncements--In September 2006, the FASB issued
Statement 157 ("SFAS 157"), "Fair Value Measurements". This Statement
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles and expands disclosures about
fair value measurements. SFAS 157 will be effective at the beginning of
the Corporation's 2008 fiscal year. Management is currently assessing
the effect of this pronouncement on our financial statements. During the
year ended December 31, 2007, the Corporation adopted Financial
Accounting Standards Board Interpretation 48, "Accounting for
Uncertainty in Income Taxes" ("FIN 48"). Management has determined that
the implementation of FIN 48 had no impact in the financial statements.
2. Common Stock and Dividend Distributions--The Corporation did not
repurchase any shares of its Common Stock in 2007. It may from time to time
purchase Common Stock in such amounts and at such prices as the Board of
Directors may deem advisable in the best interests of the stockholders.
Purchases will only be made at less than net asset value per share, thereby
increasing the net asset value of shares held by the remaining stockholders.
Shares so acquired may be held as treasury stock and available for optional
stock distributions, or may be retired.
The Corporation made two distributions to holders of Common Stock in 2007,
a cash dividend of $.20 per share paid on June 22 and an optional distribution
of $2.20 per share in cash, or one share of Common Stock for each 12 shares
held, paid on December 27. In the optional distribution, 282,664 shares of
Common Stock held as treasury shares by the Corporation were distributed, and
565,023 common shares were issued.
[16]
NOTES TO FINANCIAL STATEMENTS -- Continued
The tax character of dividends and distributions paid during the year was
ordinary income, $10,597,383 and long-term capital gain, $38,694,285; for 2006
they were $11,563,375 and $32,186,347, respectively. As of December 31, 2007,
for tax purposes, undistributed ordinary income was $563,215 and undistributed
long-term realized capital gain was $1,089,288. Dividends and distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. Financial statements are adjusted for
permanent book-tax differences; however, such adjustments were not material for
the year ended December 31, 2007.
3. Investment Transactions--The aggregate cost of securities purchased and
the aggregate proceeds of securities sold during the year ended December 31,
2007, excluding short-term investments, were $117,657,301 and $148,405,422
respectively.
As of December 31, 2007, based on cost for Federal income tax purposes,
the aggregate gross unrealized appreciation and depreciation for all securities
were $367,281,929 and $10,730,535, respectively.
4. Operating Expenses--The aggregate remuneration paid during the year
ended December 31, 2007 to officers and directors amounted to $2,230,500, of
which $135,500 was paid as fees to directors who were not officers. Benefits to
employees are provided through a profit sharing retirement plan. Contributions
to the plan are made at the discretion of the Board of Directors, and each
participant's benefits vest after three years of employment. The amount
contributed for the year ended December 31, 2007 was $158,400.
5. Affiliates--During the year ended December 31, 2007, The Plymouth Rock
Company, Inc. and Neoware Inc. were affiliates as defined in the Investment
Company Act of 1940. The Corporation received dividends of $5,039,300 from
Plymouth Rock and earned a net realized gain of $5,202,192 from the sale of all
of its shares of Neoware during the year ended December 31, 2007. Unrealized
appreciation related to affiliates increased by $14,274,469 for the year 2007 to
$146,200,014. The President of the Corporation is a director of Plymouth Rock.
6. Restricted Securities--The Corporation from time to time invests in
securities the resale of which is restricted. On December 31, 2007 such
investments had an aggregate value of $149,173,114, which was equal to 23.1% of
the Corporation's net assets. Investments in restricted securities at December
31, 2007, including acquisition dates and cost, were:
Company Shares Security Date Acquired Cost
------------------------------- ------ ------------- ------------- ---------
Aerogroup International, Inc. 28,751 Common Stock 6/14/05 $ 17,200
The Plymouth Rock Company, Inc. 60,000 Class A Stock 12/15/82 1,500,000
The Plymouth Rock Company, Inc. 10,000 Class A Stock 6/9/84 699,986
The Corporation does not have the right to demand registration of the
restricted securities.
7. Operating Lease Commitment--The Corporation has entered into an
operating lease for office space which expires in 2014 and provides for future
minimum rental payments in the aggregate amount of approximately $2.4 million.
The lease agreement contains escalation clauses relating to operating costs and
real property taxes. Future minimum rental commitments under the lease are
$314,241 per year through 2008, $329,172 for 2009 and $341,806 annually
thereafter.
[17]
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
CENTRAL SECURITIES CORPORATION
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Central Securities Corporation (the
"Corporation") as of December 31, 2007, and the related statements of operations
and cash flows for the year then ended, the statements of changes in net assets
for each of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended. These
financial statements and financial highlights are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 2007 by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Central Securities Corporation as of December 31, 2007 and the results of its
operations and its cash flows for the year then ended, the changes in its net
assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period then ended in
conformity with U.S. generally accepted accounting principles.
KPMG LLP
New York, NY
January 25, 2008
--------------------------------------------------------------------------------
Quarterly Portfolio Information
The Corporation files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Corporation's Form N-Q filings are available on the SEC's website at
www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
[18]
BOARD OF DIRECTORS AND OFFICERS
Principal Occupations (last five years)
Independent Directors Age and Position with the Corporation (if any)
--------------------- --- ------------------------------------------
SIMMS C. BROWNING 67 Retired since 2003; Vice President,
Director since 2005 Neuberger Berman, LLC (asset management)
prior thereto
DONALD G. CALDER 70 President, G.L. Ohrstrom & Co. Inc.
Director since 1982 (private investment firm); Director of
Brown-Forman Corporation, Carlisle Companies
Incorporated and Roper Industries, Inc.
(manufacturing companies), Chairman of
Central Securities Corporation
JAY R. INGLIS 73 Vice President and General Counsel,
Director since 1973 International Claims Management, Inc. since
2006; Executive Vice President, National
Marine Underwriters (insurance management
company) prior thereto
DUDLEY D. JOHNSON 68 Chairman, Young & Franklin Inc. (private
Director since 1984 manufacturing company)
C. CARTER WALKER, JR. 73 Private investor
Director since 1974
Interested Director
-------------------
WILMOT H. KIDD 66 Investment and research--President,
Director since 1972 Central Securities Corporation
----------
CHARLES N. EDGERTON 63 Vice President and Treasurer,
Central Securities Corporation
WILLIAM E. SHEELINE 52 Vice President, Central Securities
Corporation since 2007; President, Houqua
Capital LLC from 2004-2006; Research
Analyst, Train Babcock Advisors LLC from
2003-2004; Vice Chairman, Knowlton Brothers
prior thereto
MARLENE A. KRUMHOLZ 44 Secretary, Central Securities Corporation
The address of each Director and Officer is c/o Central Securities Corporation,
630 Fifth Avenue, New York, New York 10111.
----------
Proxy Voting Policies and Procedures
The policies and procedures used by the Corporation to determine how to
vote proxies relating to portfolio securities and the Corporation's proxy voting
record for the twelve-month period ended June 30, 2007 are available: (1)
without charge, upon request, by calling us at our toll-free telephone number
(1-866-593-2507), (2) on the Corporation's website at www.centralsecurities.com
and (3) on the Securities and Exchange Commission's website at www.sec.gov.
[19]
BOARD OF DIRECTORS
Donald G. Calder, Chairman
Simms C. Browning
Jay R. Inglis
Dudley D. Johnson
Wilmot H. Kidd
C. Carter Walker, Jr.
OFFICERS
Wilmot H. Kidd, President
Charles N. Edgerton, Vice President and Treasurer
William E. Sheeline, Vice President
Marlene A. Krumholz, Secretary
OFFICE
630 Fifth Avenue
New York, NY 10111
212-698-2020
866-593-2507 (toll-free)
www.centralsecurities.com
TRANSFER AGENT AND REGISTRAR
Computershare Trust Company, N.A.
P.O. Box 43069, Providence, RI 02940-3069
800-756-8200
www.computershare.com
CUSTODIAN
UMB Bank, N.A.
Kansas City, MO
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP
New York, NY
[20]
Item 2. Code of Ethics. The Registrant has adopted a code of ethics that applies
to its principal executive officer and principal financial officer. This code of
ethics is filed as an attachment on this form.
Item 3. Audit Committee Financial Experts. The Board of Directors of the
Corporation has determined that none of the members of its Audit Committee (the
"Committee") meet the definition of "Audit Committee Financial Expert" as the
term has been defined by the Securities and Exchange Commission ("SEC"). The
Board of Directors considered the possibility of adding a member that would
qualify as an Audit Committee Financial Expert, but has determined that the
Committee has sufficient expertise to perform its duties. In addition, the
Committee's charter authorizes the Committee to engage a financial expert should
it determine that such assistance is required.
Item 4. Principal Accountant Fees and Services.
2007 2006
--------- ---------
Audit fees ........................... $51,500(1) $45,500(1)
Audit-related fees ................... 0 0
Tax fees ............................. 16,100(2) 15,400(2)
All other fees ....................... 0 0
------- -------
Total fees ........................... $67,600 $60,900
======= =======
(1) Includes fees for review of the semi-annual report to stockholders
and audit of the annual report to stockholders.
(2) Includes fees for services performed with respect to tax
compliance and tax planning.
Pursuant to its charter, the Audit Committee is responsible for recommending the
selection, approving compensation and overseeing the independence,
qualifications and performance of the independent accountants. The Audit
Committee's policy is to pre-approve all audit and permissible non-audit
services provided by the independent accountants. In assessing requests for
services by the independent accountants, the Audit Committee considers whether
such services are consistent with the auditor's independence; whether the
independent accountants are likely to provide the most effective and efficient
service based upon their familiarity with the Corporation; and whether the
service could enhance the Corporation's ability to manage or control risk or
improve audit quality. The Audit Committee may delegate pre-approval authority
to one or more of its members. Any pre-approvals by a member under this
delegation are to be reported to the Audit Committee at its next scheduled
meeting.
All of the audit and tax services provided by KPMG LLP in fiscal year 2007
(described in the footnotes to the table above) and related fees were approved
in advance by the Audit Committee.
Item 5. Audit Committee of Listed Registrants. The registrant has a
separately-designated standing audit committee. Its members are: Simms C.
Browning, Donald G. Calder, Jay R. Inglis, Dudley D. Johnson and C. Carter
Walker, Jr.
Item 6. Schedule of Investments. Schedule is included as a part of the report to
shareholders filed under Item 1 of this Form.
Item 7. Disclose Proxy Voting Policies and Procedures for Closed-End Management
Companies.
CENTRAL SECURITIES CORPORATION
PROXY VOTING GUIDELINES
Central Securities Corporation is involved in many matters of corporate
governance through the proxy voting process. We exercise our voting
responsibilities with the primary goal of maximizing the long-term value of our
investments. Our consideration of proxy issues is focused on the investment
implications of each proposal.
Our management evaluates and votes each proxy ballot that we receive. We do not
use a proxy voting service. Our Board of Directors has approved guidelines in
evaluating how to vote a particular proxy ballot. We recognize that a company's
management is entrusted with the day-to-day operations of the company, as well
as longer term strategic planning, subject to the oversight of the company's
board of directors. Our guidelines are based on the belief that a company's
shareholders have a responsibility to evaluate company performance and to
exercise the rights and duties pertaining to ownership.
When determining whether to invest in a particular company, one of the key
factors we consider is the ability and integrity of its management. As a result,
we believe that recommendations of management on any issue, particularly routine
issues, should be given substantial weight in determining how proxies should be
voted. Thus, on most issues, our votes are cast in accordance with the company's
recommendations. When we believe management's recommendation is not in the best
interests of our stockholders, we will vote against management's recommendation.
Due to the nature of our business and our size, it is unlikely that conflicts of
interest will arise in our voting of proxies of public companies. We do not
engage in investment banking nor do we have private advisory clients or any
other businesses. In the unlikely event that we determine that a conflict does
arise on a proxy voting issue, we will defer that proxy vote to our independent
directors.
We have listed the following, specific examples of voting decisions for the
types of proposals that are frequently presented. We generally vote according to
these guidelines.
We may, on occasion, vote otherwise when we believe it to be in the best
interest of our stockholders:
Election of Directors - We believe that good governance starts with an
independent board, unfettered by significant ties to management, in which all
members are elected annually. In addition, key board committees should be
entirely independent.
o We support the election of directors that result in a board made up
of a majority of independent directors who do not appear to have
been remiss in the performance of their oversight responsibilities.
o We will withhold votes for non-independent directors who serve on
the audit, compensation or nominating committees of the board.
o We consider withholding votes for directors who missed more than
one-fourth of the scheduled board meetings without good reason in
the previous year.
o We generally oppose the establishment of classified boards of
directors and will support proposals that directors stand for
election annually.
o We generally oppose limits to the tenure of directors or
requirements that candidates for directorships own large amounts of
stock before being eligible for election.
Compensation - We believe that appropriately designed equity-based compensation
plans can be an effective way to align the interests of long-term shareholders
and the interests of management, employees, and directors. We are opposed to
plans that substantially dilute our ownership interest in the company, provide
participants with excessive awards, or have inherently objectionable structural
features without offsetting advantages to the company's stockholders.
We evaluate proposals related to compensation on a case-by case basis.
o We generally support stock option plans that are incentive based and
not excessive.
o We generally oppose the ability to re-price options without
compensating factors when the underlying stock has fallen in value.
o We support measures intended to increase the long-term stock
ownership by executives including requiring stock acquired through
option exercise to be held for a substantial period of time.
o We generally support stock purchase plans to increase company stock
ownership by employees, provided that shares purchased under the
plan are acquired for not less than 85% of their market value.
o We generally oppose change-in-control provisions in non-salary
compensation plans, employment contracts, and severance agreements
which benefit management and would be costly to shareholders if
triggered.
Corporate Structure and Shareholder Rights - We generally oppose anti-takeover
measures and other proposals designed to limit the ability of shareholders to
act on possible transactions. We support proposals when management can
demonstrate that there are sound financial or business reasons.
o We generally support proposals to remove super-majority voting
requirements and oppose amendments to bylaws which would require a
super-majority of shareholder votes to pass or repeal certain
provisions.
o We will evaluate proposals regarding shareholders rights plans
("poison pills") on a case-by-case basis considering issues such as
the term of the arrangement and the level of review by independent
directors.
o We will review proposals for changes in corporate structure such as
changes in the state of incorporation or mergers individually. We
generally oppose proposals where management does not offer an
appropriate rationale.
o We generally support share repurchase programs.
o We generally support the general updating of or corrective
amendments to corporate charters and by-laws.
o We generally oppose the elimination of the rights of shareholders to
call special meetings.
Approval of Independent Auditors - We believe that the relationship between the
company and its auditors should be limited primarily to the audit engagement and
closely related activities that do not, in the aggregate, raise the appearance
of impaired independence.
o We generally support management's proposals regarding the approval
of independent auditors.
o We evaluate on a case-by-case basis instances in which the audit
firm appears to have a substantial non-audit relationship with the
company or companies affiliated with it.
Social and Corporate Responsibility Issues - We believe that ordinary business
matters are primarily the responsibility of management and should be approved
solely by the corporation's board of directors. Proposals in this category,
initiated primarily by shareholders, typically request that the company disclose
or amend certain business practices. We generally vote with management on these
types of proposals, although we may make exceptions in certain instances where
we believe a proposal has substantial economic implications.
o We generally oppose shareholder proposals which apply restrictions
related to social, political, or special interest issues which
affect the ability of the company to do business or be competitive
and which have significant financial impact.
o We generally oppose proposals which require that the company provide
costly, duplicative, or redundant reports, or reports of a
non-business nature.
Item 8. Portfolio Managers of Closed-End Management Investment Companies. Mr.
Wilmot H. Kidd is the President and portfolio manager of the Corporation and has
served in that capacity since 1973. He manages no other accounts and
accordingly, the Registrant is not aware of any material conflicts with his
management of the
Corporation's investments. Mr. Kidd's compensation consists primarily of a fixed
base salary and a bonus. His compensation is reviewed and approved by the Board
of Directors annually. His compensation may be adjusted from year to year based
on the Board of Directors perception of overall performance and his management
responsibilities. As of December 31, 2007, Mr. Kidd's investment in Central
Securities common stock exceeded $1 million.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
--------------------------- ----------------- ---------------- ------------------------- ------------------------
(d) Maximum Number (or
(a) Total (c) Total Number of Approximate Dollar
Number of (b) Average Shares (or Units) Value) of Shares (or
Shares (or Price Paid Purchased as Part of Units) that May Yet Be
Units) per Share Publicly Announced Purchased Under the
Period Purchased (or Unit) Plans or Programs Plans or Programs
--------------------------- ----------------- ---------------- ------------------------- ------------------------
Month #1 (July 1 through 0 NA NA NA
July 31)
--------------------------- ----------------- ---------------- ------------------------- ------------------------
Month #2 (August 1 0 NA NA NA
through August 31)
--------------------------- ----------------- ---------------- ------------------------- ------------------------
Month #3 (September 1 0 NA NA NA
through September 30)
--------------------------- ----------------- ---------------- ------------------------- ------------------------
Month #4 (October 1 0 NA NA NA
through October 31)
--------------------------- ----------------- ---------------- ------------------------- ------------------------
Month #5 (November 1 0 NA NA NA
through November 30)
--------------------------- ----------------- ---------------- ------------------------- ------------------------
Month #6 (December 1 0 NA NA NA
through December 31)
--------------------------- ----------------- ---------------- ------------------------- ------------------------
Total 0 NA NA NA
--------------------------- ----------------- ---------------- ------------------------- ------------------------
Item 10. Submission of Matters to a Vote of Security Holders. There have been no
changes to the procedures by which shareholders may recommend nominees to the
registrant's board of directors since such procedures were last described in the
Corporation's proxy statement dated February 5, 2008.
Item 11. Controls and Procedures.
(a) The Principal Executive Officer and Principal Financial Officer of Central
Securities Corporation (the "Corporation") have concluded that the Corporation's
Disclosure Controls and Procedures (as defined in Rule 30a-2(c) under the
Investment Company Act of 1940) are effective based on their evaluation of the
Disclosure Controls and Procedures as of a date within 90 days of the filing
date of this report.
(b) There have been no changes in the Corporation's internal control over
financial reporting (as defined in Rule 30a-3(d)) under the Investment Company
Act of 1940 that occurred during the second fiscal quarter of the period covered
by this report that has materially affected, or is reasonably likely to
materially affect, the Corporation's internal control over financial reporting.
Item 12. Exhibits. (a) Any code of ethics, or amendment thereto, that is the
subject of the disclosure required by Item 2, to the extent that the registrant
intends to satisfy the Item 2 requirements through filing of an exhibit.
Attached hereto.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act.
Attached hereto.
(c) Any written solicitation to purchase securities under Rule 23c-1 under the
Act sent or given during the period covered by the report by or on behalf of the
registrant to 10 or more persons. Not Applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Central Securities Corporation
By: /s/ Wilmot H. Kidd
--------------------
Wilmot H. Kidd
President
February 5, 2008
--------------------
Date
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capabilities and on the
dates indicated.
By: /s/ Wilmot H. Kidd
--------------------
Wilmot H. Kidd
President
February 5, 2008
----------------
Date
By: /s/ Charles N. Edgerton
------------------------
Charles N. Edgerton
Treasurer
February 5, 2008
----------------
Date