UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
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, 2008
Date of reporting period: June 30, 2008
Item 1. Reports to Stockholders.
================================================================================
--------------------------------------------------------------------------------
CENTRAL SECURITIES CORPORATION
----------
SEMI-ANNUAL REPORT
JUNE 30, 2008
--------------------------------------------------------------------------------
================================================================================
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
Six mos. to
June 30,
2008** 638,415,329 -- 29.86 .22 .15 .05 24,660,810 325,285,583
----------
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 on 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
undistributed net investment income. Distributions are from long-term
investment gains.
* Includes a non-taxable return of capital of $.55.
** Unaudited.
The Common Stock is listed on the American Stock Exchange under the symbol
CET. On June 30, 2008 the market quotations were: $25.48 low, $25.90 high and
$25.80 last sale.
[ 2 ]
To the Stockholders of
CENTRAL SECURITIES CORPORATION:
Financial statements for the six months ended June 30, 2008 reviewed by
our independent registered public accounting firm and other pertinent
information are submitted herewith.
Comparative net assets are as follows:
June 30,
2008 December 31,
(Unaudited) 2007
----------- ------------
Net assets.......................................................... $638,415,329 $644,822,724
Net assets per share of Common Stock................................ 29.86 30.15
Shares of Common Stock outstanding.............................. 21,376,782 21,385,882
Comparative operating results are as follows:
Six months ended June 30,
----------------------------
2008 2007
(Unaudited) (Unaudited)
----------- -----------
Net investment income............................................... $ 4,703,564 $ 6,714,501
Per share of Common Stock....................................... .22* .33*
Net realized gain on sale of investments............................ 24,660,810 18,046,062
Increase (decrease) in net unrealized appreciation of investments... (31,265,811) 40,457,409
Increase (decrease) in net assets resulting from operations......... (1,901,437) 65,217,972
----------
* Per-share data are based on the average number of Common shares
outstanding.
A distribution of $.20 per share of Common Stock was paid on June 20,
2008. Stockholders will be sent a notice concerning the taxability of all 2008
distributions in January 2009.
During the first six months of 2008 the Corporation repurchased 9,100
shares of its Common Stock at an average price per share of $25.34. 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
transactions directly with stockholders.
Stockholders' inquiries are welcome.
CENTRAL SECURITIES CORPORATION
WILMOT H. KIDD, President
630 Fifth Avenue
New York, NY 10111
July 22, 2008
[ 3 ]
TEN LARGEST INVESTMENTS
June 30, 2008
(Unaudited)
Percent of Year First
Cost Value Net Assets Acquired
---- ----- ---------- --------
(millions)
The Plymouth Rock Company, Inc.................... $ 2.2 $140.0 21.9% 1982
Murphy Oil Corporation............................ 1.7 39.2 6.1 1974
Agilent Technologies, Inc......................... 22.5 33.5 5.2 2005
The Bank of New York Mellon Corporation........... 15.5 31.2 4.9 1993
Brady Corporation................................. 2.5 30.2 4.7 1984
Convergys Corporation............................. 25.3 25.7 4.0 1998
Coherent, Inc..................................... 23.6 25.4 4.0 2007
Devon Energy Corporation.......................... 14.9 24.0 3.8 2007
Roper Industries, Inc............................. 7.2 23.1 3.6 2003
Dover Corporation................................. 13.0 19.3 3.0 2003
PRINCIPAL PORTFOLIO CHANGES
April 1 to June 30, 2008
(Unaudited)
(Common Stock unless specified otherwise)
Number of Shares
----------------------------------------
Held
June 30,
Purchased Sold 2008
--------- ---- ----
American International Group, Inc................. 100,000 200,000
Arbinet-thexchange, Inc........................... 95,000 1,100,000
Berry Petroleum Company........................... 75,000 300,000
Cameco Corporation................................ 10,000 10,000
Carlisle Companies Incorporated................... 50,000 200,000
General Electric Company.......................... 100,000 100,000
Murphy Oil Corporation............................ 10,000 400,000
NewStar Financial, Inc............................ 150,000 150,000
Nexen Inc......................................... 20,000 300,000
Precision Castparts Corp.......................... 22,100 91,100
Rohm and Haas Company............................. 10,000 140,000
The TriZetto Group, Inc........................... 730,000 240,000
Vical Incorporated................................ 90,000 260,000
Xerox Corporation................................. 200,000 900,000
[ 4 ]
DIVERSIFICATION OF INVESTMENTS
June 30, 2008
(Unaudited)
Percent of Net Assets
---------------------
June 30, December 31,
Issues Cost Value 2008 2007
------ ---- ----- ---- ----
Common Stocks:
Insurance............................ 4 $12,153,846 $146,611,500 23.0% 23.3%
Energy............................... 7 51,779,271 129,169,700 20.2 16.6
Electronics.......................... 8 84,453,155 119,703,496 18.8 20.3
Manufacturing........................ 6 43,321,843 89,888,775 14.1 14.2
Banking and Finance.................. 3 21,416,971 45,037,620 7.0 8.7
Information Technology Services...... 3 39,301,882 43,504,888 6.7 7.1
Other................................ 7 21,317,961 25,564,533 4.0 4.6
Short-Term Investments.................. 3 39,327,668 39,327,668 6.2 5.2
FINANCIAL HIGHLIGHTS
Six Mos.
Ended
June 30, 2008
(Unaudited) 2007 2006 2005 2004 2003
----------- ---- ---- ---- ---- ----
Per Share Operating Performance
Net asset value, beginning of period $30.15 $30.05 $27.65 $26.44 $24.32 $18.72
Net investment income*............. .22 .38 .36 .28 .11 .09
Net realized and unrealized gain (loss)
on securities*................... (.31) 2.12 4.26 2.93 3.33 6.91
----- ---- ---- ---- ---- ----
Total from investment
operations................. (.09) 2.50 4.62 3.21 3.44 7.00
Less:
Dividends from net investment income .15 .37 .36 .28 .11 .11
Distributions from capital gains... .05 2.03 1.86 1.72 1.21 1.29
------ ---- ---- ---- ---- ----
Total distributions.......... .20 2.40 2.22 2.00 1.32 1.40
------ ------ ------ ------ ------ ------
Net asset value, end of period..... $29.86 $30.15 $30.05 $27.65 $26.44 $24.32
====== ====== ====== ====== ====== ======
Per share market value, end of period $25.80 $26.84 $26.65 $23.80 $22.85 $20.89
Total investment return, market(%). (4.78) 9.86 21.31 14.04 16.16 36.22
Total investment return, NAV(%).... (0.32) 9.35 18.55 13.75 15.40 39.32
Ratios/Supplemental Data:
Net assets, end of period(000)..... $638,415 $644,823 $617,167 $573,980 $529,469 $478,959
Ratio of expenses to average net
assets(%)........................ .50+ .59 .53 .54 .55 .56
Ratio of net investment income to
average net assets(%)............ 1.01+ 1.21 1.23 1.02 .41 .42
Portfolio turnover rate(%)......... 7.48 19.58 17.55 15.83 16.72 12.90
----------
* Per-share data are based on the average number of shares outstanding
during the period.
+ Annualized, not necessarily indicative of full year ratio.
See accompanying notes to financial statements.
[ 5 ]
STATEMENT OF INVESTMENTS
June 30, 2008
(Unaudited)
PORTFOLIO SECURITIES 93.8%
STOCKS (COMMON UNLESS SPECIFIED OTHERWISE)
Prin. Amt.
or Shares Value
---------- -----
Banking and Finance 7.0%
825,475 The Bank of New York Mellon Corporation........ $ 31,227,720
340,000 Capital One Financial Corporation.............. 12,923,400
150,000 NewStar Financial, Inc. (a).................... 886,500
------------
45,037,620
------------
Business Services 0.2%
75,000 Heritage-Crystal Clean Inc. (a)................ 990,000
------------
Chemicals 1.0%
140,000 Rohm and Haas Company.......................... 6,501,600
------------
Communications 0.7%
1,100,000 Arbinet-thexchange, Inc. (a)................... 4,268,000
------------
Electronics 18.8%
942,400 Agilent Technologies, Inc. (a)................. 33,492,896
430,000 Analog Devices, Inc............................ 13,661,100
850,000 Coherent, Inc. (a)............................. 25,406,500
630,000 Flextronics International Ltd. (a)............. 5,922,000
900,000 Intel Corporation.............................. 19,332,000
350,000 Motorola, Inc.................................. 2,569,000
1,000,000 Radisys Corporation (a)........................ 9,060,000
3,000,000 Sonus Networks, Inc. (a)....................... 10,260,000
------------
119,703,496
------------
Energy 20.2%
300,000 Berry Petroleum Company, Class A............... 17,664,000
10,000 Cameco Corporation............................. 428,700
200,000 Devon Energy Corporation....................... 24,032,000
1,900,000 GeoMet, Inc. (a)............................... 18,012,000
650,000 McMoRan Exploration Co. (a).................... 17,888,000
400,000 Murphy Oil Corporation......................... 39,220,000
300,000 Nexen Inc...................................... 11,925,000
------------
129,169,700
------------
Health Care 1.0%
110,000 Abbott Laboratories............................ 5,826,700
260,000 Vical Incorporated (a)......................... 876,200
------------
6,702,900
------------
Information Technology Services 6.7%
1,730,800 Convergys Corporation (a)...................... 25,719,688
240,000 The TriZetto Group, Inc. (a)................... 5,131,200
900,000 Xerox Corporation.............................. 12,204,000
------------
43,054,888
------------
[ 6 ]
Prin. Amt.
or Shares Value
---------- -----
Insurance 23.0%
200,000 American International Group, Inc.............. $5,292,000
10,000 Erie Indemnity Company, Class A................ 461,500
70,000 The Plymouth Rock Company, Inc., Class A (b)(c) 140,000,000
2,000 White Mountains Insurance Group, Ltd........... 858,000
------------
146,611,500
------------
Manufacturing 14.1%
875,600 Brady Corporation, Class A..................... 30,234,468
200,000 Carlisle Companies Incorporated................ 5,800,000
400,000 Dover Corporation.............................. 19,348,000
100,000 General Electric Company....................... 2,669,000
91,100 Precision Castparts Corp....................... 8,779,307
350,000 Roper Industries, Inc.......................... 23,058,000
------------
89,888,775
------------
Retailing 1.1%
28,751 Aerogroup International, Inc. (a)(c)........... 600,033
200,000 Walgreen Co.................................... 6,502,000
------------
7,102,033
------------
Total Portfolio Securities
(cost $273,744,929)(d).................... 599,030,512
SHORT-TERM INVESTMENTS 6.2%
Commercial Paper 3.1%
11,079,000 General Electric Capital Corporation 2.05% - 2.07%
due 7/23/08 - 7/30/08......................... 11,063,586
8,954,000 Toyota Motor Corporation 2.04% - 2.16%
due 7/2/08 - 7/16/08.......................... 8,950,506
------------
20,014,092
------------
U.S. Government Agency Obligations 3.1%
19,403,000 Federal Home Loan Bank 1.98% - 2.12%
due 8/8/08 - 10/17/08......................... 19,313,576
------------
Total Short-Term Investments
(cost $39,327,668)(d)..................... 39,327,668
------------
Total Investments (100.0%).................. 638,358,180
Cash, receivables and other assets
less liabilities (0.0%)................... 57,149
------------
Net Assets (100%)........................... $638,415,329
============
----------
(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.
[ 7 ]
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2008
(Unaudited)
ASSETS:
Investments:
General portfolio securities at market value
(cost $271,544,943)....................................... $459,030,512
Securities of affiliated companies (cost $2,199,986)
(Notes 6 and 7)........................................... 140,000,000
Short-term investments (cost $39,327,668)................... 39,327,668 $638,358,180
------------
Cash, receivables and other assets:
Cash........................................................ 11,615
Dividends and interest receivable........................... 100,883
Office equipment and leasehold improvements, net............ 270,560
Other assets................................................ 102,621 485,679
------------ ------------
Total Assets............................................ 638,843,859
LIABILITIES:
Payable for securities purchased................................ 186,433
Accrued expenses and reserves................................... 242,097
------------
Total Liabilities....................................... 428,530
------------
NET ASSETS.......................................................... $638,415,329
============
NET ASSETS are represented by:
Common Stock $1 par value: authorized
30,000,000 shares; issued 21,385,882 (Note 3)................. $21,385,882
Surplus:
Paid-in..................................................... $265,303,938
Undistributed net gain on sales of investments.............. 22,304,981
Undistributed net investment income......................... 4,365,547 291,974,466
------------
Net unrealized appreciation of investments...................... 325,285,583
Treasury stock, at cost (9,100 shares of Common Stock)
(Note 3)...................................................... (230,602)
------------
NET ASSETS.......................................................... $638,415,329
============
NET ASSET VALUE PER COMMON SHARE
(21,376,782 shares outstanding)................................... $29.86
======
See accompanying notes to financial statements.
[ 8 ]
STATEMENT OF OPERATIONS
For the six months ended June 30, 2008
(Unaudited)
INVESTMENT INCOME
Income:
Dividends (net of foreign withholding taxes of $3,539).......... $ 5,749,204
Interest........................................................ 529,811 $6,279,015
------------
Expenses:
Investment research............................................. 449,375
Administration and operations................................... 399,125
Occupancy costs................................................. 217,945
Franchise and miscellaneous taxes............................... 102,813
Directors' fees................................................. 76,150
Insurance....................................................... 62,273
Stationery, supplies, printing and postage...................... 61,220
Listing, software and sundry fees............................... 52,119
Legal, auditing and tax fees.................................... 39,974
Travel and telephone............................................ 32,864
Transfer agent and registrar fees and expenses.................. 18,703
Custodian fees.................................................. 18,400
Miscellaneous................................................... 44,490 1,575,451
------------ ------------
Net investment income............................................... 4,703,564
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain from investment transactions...................... 24,660,810
Net decrease in unrealized appreciation of investments.............. (31,265,811)
------------
Net loss on investments......................................... (6,605,001)
------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................................ ($1,901,437)
============
See accompanying notes to financial statements.
[ 9 ]
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended June 30, 2008
and the year ended December 31, 2007
Six months
ended
June 30, Year ended
2008 December 31,
(Unaudited) 2007
------------ ------------
FROM OPERATIONS:
Net investment income........................................... $ 4,703,564 $ 7,817,245
Net realized gain on investments................................ 24,660,810 42,124,417
Net increase (decrease) in unrealized
appreciation of investments................................... (31,265,811) 4,626,767
------------ ------------
Increase (decrease) in net assets
resulting from operations................................. (1,901,437) 54,568,429
------------ ------------
DISTRIBUTIONS TO STOCKHOLDERS FROM:
Net investment income........................................... (3,186,068) (7,557,915)
Net realized gain from investment transactions.................. (1,089,288) (41,733,753)
------------ ------------
Decrease in net assets from distributions................... (4,275,356) (49,291,668)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS: (Note 3)
Distribution to stockholders reinvested in Common Stock......... -- 22,378,937
Cost of shares of Common Stock repurchased...................... (230,602) --
------------ ------------
Increase (decrease) in net assets from capital
share transactions........................................ (230,602) 22,378,937
------------ ------------
Total increase (decrease) in net assets................. (6,407,395) 27,655,698
NET ASSETS:
Beginning of period............................................. 644,822,724 617,167,026
------------ ------------
End of period (including undistributed net investment income
of $4,365,547 and $491,609, respectively)..................... $638,415,329 $644,822,724
============ ============
See accompanying notes to financial statements.
[ 10 ]
STATEMENT OF CASH FLOWS
For the six months ended June 30, 2008
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net decrease in net assets from operations...................... ($1,901,437)
Adjustments to net decrease in net assets
from operations:
Purchase of securities........................................ ($44,398,788)
Proceeds from securities sold................................. 49,768,115
Net purchase of short-term investments........................ (5,614,543)
Net realized gain from investments............................ (24,645,326)
Decrease in unrealized appreciation........................... 31,265,811
Depreciation and amortization................................. 40,348
Changes in operating assets and liabilities:
Increase in dividends and interest receivable............... (58,830)
Increase in other assets.................................... (21,814)
Increase in payable for securities purchased................ 186,433
Decrease in accrued expenses and reserves................... (124,986)
------------
Total adjustments............................................. 6,396,420
------------
Net cash provided by operating activities........................... 4,494,983
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid.................................................. (4,275,356)
Treasury shares repurchased..................................... (230,602)
------------
Cash flows used in financing activities............................. (4,505,958)
------------
Net decrease in cash................................................ (10,975)
Cash at beginning of period......................................... 22,590
------------
Cash at end of period............................................... $ 11,615
============
See accompanying notes to financial statements.
[ 11 ]
NOTES TO FINANCIAL STATEMENTS -- (unaudited)
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 -- Marketable securities are valued at the last sale or
official closing price or, if unavailable, at the closing bid price.
Short-term investments are valued at amortized cost, which
approximates market value. Securities for which no ready market
exists, 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 the 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 such 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.
2. Fair Value Measurements -- Effective January 1, 2008, the Corporation
adopted Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 157, "Fair Value Measurements" ("FAS 157"). FAS 157 establishes a
disclosure framework which prioritizes and ranks the level of market price
observability used in determining the fair value of investments as follows:
o Level 1 -- Fair value is determined based on market data obtained
from independent sources; for example, quoted prices in active
markets for identical investments. The Corporation's Level 1
investments consist of equity securities listed on a national
securities exchange or NASDAQ national market.
o Level 2 -- Fair value is determined using other significant
observable assumptions obtained from independent sources; for
example quoted prices for similar investments or the use of models
or other valuation methodologies. The Corporation's Level 2
investments consist of short-term investments, carried at amortized
cost.
o Level 3 -- Fair value is determined using significant unobservable
inputs including the Corporation's own assumptions based upon the
best information available. Investments categorized as Level 3
include situations in which there is little, if any, market
activity. The Corporation's Level 3 investments consist of The
Plymouth Rock Company, Inc. and Aerogroup International, Inc.
In certain cases, the inputs used to determine fair value may fall into
different levels of the fair value hierarchy. In such cases, an investment's
level within the hierarchy is based on the least observable input that is
significant to fair value. The inputs used for valuing securities are not
necessarily an indication of the risk associated with investing in those
securities.
The Corporation's investments as of June 30, 2008 are classified as
follows:
Valuation Inputs Investments in Securities
---------------- -------------------------
Level 1 $458,430,479
Level 2 39,327,668
Level 3 140,600,033
------------
Total $638,358,180
============
[ 12 ]
NOTES TO FINANCIAL STATEMENTS -- continued (unaudited)
The following is a reconciliation of assets in which significant
unobservable inputs (Level 3) were used in determining fair value:
Balance as of December 31, 2007 $149,173,114
Change in unrealized appreciation of investments (8,573,081)
------------
Balance as of June 30, 2008 $140,600,033
============
No Level 3 investments were purchased, sold or transferred to Level 1 or
Level 2 during the six months ended June 30, 2008.
3. Common Stock -- The Corporation repurchased 9,100 shares of its Common
Stock in the first six months of 2008 at an average price of $25.34 per share,
representing an average discount from net asset value of 13.09%. 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.
4. Investment Transactions -- The aggregate cost of securities purchased
and the aggregate proceeds of securities sold during the six months ended June
30, 2008, excluding short-term investments, were $44,398,788 and $49,783,599,
respectively.
As of June 30, 2008, based on cost for Federal income tax purposes, the
aggregate gross unrealized appreciation and depreciation for all securities were
$346,629,267 and $21,343,684, respectively.
5. Operating Expenses -- The aggregate remuneration paid during the six
months ended June 30, 2008 to officers and directors amounted to $856,000, of
which $76,000 was paid as fees to directors who were not officers. Employees
also participate in 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. No contributions were made to the
plan for the six months ended June 30, 2008.
6. Affiliates -- The Plymouth Rock Company, Inc. is an affiliate as
defined in the Investment Company Act of 1940. During the six months ended June
30, 2008, the Corporation received dividends of $3,019,100 from affiliates.
Unrealized appreciation related to affiliates decreased by $8,400,000 for the
six months ended June 30, 2008 to $137,800,014. The President of the Corporation
is a director of Plymouth Rock.
7. Restricted Securities -- The Corporation from time to time invests in
securities the resale of which is restricted. On June 30, 2008 such investments
had an aggregate value of $140,600,033, which was equal to 22.0% of the
Corporation's net assets. Investments in restricted securities at June 30, 2008,
including acquisition dates and cost, were:
Company Shares Security Date Acquired Cost
-------------------------------- ------ -------------- ------------- ----------
Aerogroup International, Inc. 28,751 Common Stock 6/21/05 $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.
8. 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 $2.2 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 for 2008, $329,172 for 2009 and $341,806 annually thereafter.
[ 13 ]
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
CENTRAL SECURITIES CORPORATION
We have reviewed the accompanying statement of assets and liabilities,
including the statement of investments, of Central Securities Corporation as of
June 30, 2008, and the related statements of operations, changes in net assets,
cash flows and financial highlights for the six-month period ended June 30,
2008. These interim financial statements and financial highlights are the
responsibility of the management of Central Securities Corporation.
We conducted our review in accordance with the standards of the Public
Company Accounting Oversight Board (United States). A review of interim
financial information consists principally of applying analytical procedures and
making inquiries of persons responsible for financial and accounting matters. It
is substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States), the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying interim financial statements and financial
highlights referred to above for them to be in conformity with U.S. generally
accepted accounting principles.
We have previously audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the statement of changes in
net assets for the year ended December 31, 2007 and financial highlights for
each of the five years in the period ended December 31, 2007, and in our report
dated January 25, 2008 we expressed an unqualified opinion on such statement of
changes in net assets and financial highlights.
KPMG LLP
New York, NY
July 22, 2008
--------------------------------------------------------------------------------
[ 14 ]
OTHER STOCKHOLDER INFORMATION
Direct Registration
The Corporation utilizes direct registration, a system that allows for
book-entry ownership and the electronic transfer of the Corporation's shares.
Stockholders may find direct registration a convenient way of managing their
investment. Stockholders wishing certificates may request them.
A pamphlet which describes the features and benefits of direct
registration, including the ability of shareholders to deposit certificates with
our transfer agent, can be obtained by calling Computershare Trust Company at
1-800-756-8200, calling the Corporation at 1-866-593-2507 or visiting our
website: www.centralsecurities.com under Contact Us.
Annual Meeting of Stockholders
The annual meeting of stockholders of the Corporation was held on March
12, 2008. At the meeting all of the directors of the Corporation were reelected
by the following vote of the holders of the Common Stock: Simms C. Browning,
19,503,295 shares in favor, 537,684 withheld; Donald G. Calder, 19,462,341
shares in favor, 578,638 shares withheld; Jay R. Inglis, 19,503,033 shares in
favor, 535,946 shares withheld; Dudley D. Johnson, 19,514,882 shares in favor,
526,097 shares withheld; Wilmot H. Kidd, 19,511,993 shares in favor, 528,986
shares withheld; and C. Carter Walker, Jr., 19,509,804 shares in favor, 531,175
shares withheld.
In addition, the selection of KPMG LLP as independent auditors of the
Corporation for the year 2008 was ratified by the following vote of the holders
of the Common Stock: 19,492,179 shares in favor, 491,479 shares against, 57,321
shares abstaining.
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, 2008 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.
Quarterly Portfolio Information
The Corporation files its complete schedule of portfolio holdings with the
sec for the first 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.
[ 15 ]
BOARD OF DIRECTORS
Dudley D. Johnson, Chairman
Simms C. Browning
Donald G. Calder
Jay R. Inglis
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
[ 16 ]
Item 2. Code of Ethics. The information required by this Item is only required
in an annual report on this Form N-CSR.
Item 3. Audit Committee Financial Experts. The information required by this Item
is only required in an annual report on this Form N-CSR.
Item 4. Principal Accountant Fees and Services. The information required by this
Item is only required in an annual report on this Form N-CSR.
Item 5. Audit Committee of Listed Registrants. The information required by this
Item is only required in an annual report on this Form N-CSR.
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. The information required by this Item is only required in an annual
report on this Form N-CSR.
Item 8. Portfolio Managers of Closed-End Management Investment Companies. The
information required by this Item is only required in an annual report on this
Form N-CSR.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
------------------------------------------------------------------------------------------------------------------------------------
(d) Maximum Number (or
(c) Total Number of Approximate Dollar
(a) Total Shares (or Units) Value) of Shares (or
Period Number of (b) Average Purchased as Part of Units) that May Yet Be
Shares (or Price Paid per Publicly Announced Purchased Under the
Units) Purchased Share (or Unit) Plans or Programs Plans or Programs
------------------------------------------------------------------------------------------------------------------------------------
Month #1 (January 1 0 NA NA NA
through January 31)
------------------------------------------------------------------------------------------------------------------------------------
Month #2 (February 1 0 NA NA NA
through February 28)
------------------------------------------------------------------------------------------------------------------------------------
Month #3 (March 1 through 0 NA NA NA
March 31)
------------------------------------------------------------------------------------------------------------------------------------
Month #4 (April 1 through 9,100 $25.34 NA NA
April 30)
------------------------------------------------------------------------------------------------------------------------------------
Month #5 (May 1 through 0 NA NA NA
May 31)
------------------------------------------------------------------------------------------------------------------------------------
Month #6 (June 1 through 0 NA NA NA
June 30)
------------------------------------------------------------------------------------------------------------------------------------
Total 9,100 $25.34 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. The
information required by this Item is only required in an annual report on this
Form N-CSR.
(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
July 25, 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
July 25, 2008
-------------
Date
By: /s/ Charles N. Edgerton
-----------------------
Charles N. Edgerton
Treasurer
July 25, 2008
-------------
Date