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, 2007
Date of reporting period: June 30, 2007
Item 1. Reports to Stockholders.
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CENTRAL SECURITIES CORPORATION
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SEMI-ANNUAL REPORT
JUNE 30, 2007
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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
---- ------ -------- ----- --------- -------- -------- ---- --------------
1996 $356,685,785 $9,102,050 $25.64 $214,721,981
1997 434,423,053 9,040,850 29.97 $.24 $.34 $2.08 $30,133,125 273,760,444
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
Six mos. to
June 30, 2007** 678,277,359 -- 33.03 .33 .17 .03 18,046,062 392,382,036
----------
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 29, 2007 (the last trading day of the six-month period) the market
quotations were: $29.00 low, $29.24 high and $29.05 last sale.
[ 2 ]
To the Stockholders of
CENTRAL SECURITIES CORPORATION:
Financial statements for the six months ended June 30, 2007 reviewed by
our independent registered public accounting firm and other pertinent
information are submitted herewith.
Comparative net assets are as follows:
June 30,
2007 December 31,
(Unaudited) 2006
------------ ------------
Net assets.......................................................... $678,277,359 $617,167,026
Net assets per share of Common Stock................................ 33.03 30.05
Shares of Common Stock outstanding.............................. 20,538,195 20,538,195
Comparative operating results are as follows:
Six months ended June 30,
----------------------------
2007 2006
(Unaudited) (Unaudited)
------------ ------------
Net investment income............................................... $ 6,714,501 $ 5,975,548
Per share of Common Stock....................................... .33* .29*
Net realized gain on sale of investments............................ 18,046,062 17,949,636
Increase in net unrealized appreciation of investments.............. 40,457,409 19,834,895
Increase in net assets resulting from operations.................... 65,217,972 43,760,079
----------
* Per-share data are based on the average number of Common shares
outstanding.
A dividend of $.20 per share of Common Stock was paid on June 22, 2007.
Stockholders will be sent a notice concerning the taxability of all 2007
distributions in January 2008.
During the first six months of 2007 the Corporation did not repurchase any
of its Common Stock. However, 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 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 25, 2007
[ 3 ]
TEN LARGEST INVESTMENTS
June 30, 2007
(Unaudited)
Percent of Year First
Cost Value Net Assets Acquired
---- ----- ---------- --------
(millions)
The Plymouth Rock Company, Inc.................... $ 2.2 $148.4 21.9% 1982
The Bank of New York Company, Inc................. 15.5 36.3 5.3 1993
Agilent Technologies, Inc......................... 22.5 36.2 5.3 2005
Murphy Oil Corporation............................ 3.7 35.7 5.3 1974
Brady Corporation................................. 3.5 33.8 5.0 1984
Capital One Financial Corporation................. 5.1 26.7 3.9 1994
Convergys Corporation............................. 13.9 24.2 3.6 1998
Roper Industries, Inc............................. 9.0 23.4 3.5 2003
Intel Corporation................................. 0.4 23.3 3.4 1986
Sonus Networks, Inc............................... 9.7 21.3 3.1 2005
PRINCIPAL PORTFOLIO CHANGES
April 1 to June 30, 2007
(Unaudited)
(Common Stock unless specified otherwise)
Number of Shares
----------------------------------------
Held
June 30,
Purchased Sold 2007
--------- ---- ----
Arch Coal, Inc.................................... 100,000 --
A.S.V., Inc....................................... 94,000 294,000
Capital One Financial Corporation................. 30,000 340,000
Cincinnati Bell Inc............................... 400,000 --
Convergys Corporation............................. 400,000 1,000,000
Cypress Semiconductor Corporation................. 255,000 --
GeoMet, Inc....................................... 79,000 780,000
Meritage Homes Corporation........................ 80,000 80,000
Neoware, Inc...................................... 100,000 1,400,000
Nexen Inc......................................... 160,000(a) 320,000
PolyOne Corporation............................... 75,000 --
Radisys Corporation............................... 610,000 610,000
SLM Corporation................................... 100,000 200,000 --
The TriZetto Group, Inc........................... 15,000 990,000
Verigy Ltd........................................ 35,381 80,001
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(a) Stock split.
[ 4 ]
DIVERSIFICATION OF INVESTMENTS
June 30, 2007
(Unaudited)
Percent of Net Assets
---------------------
June 30,December 31,
Issues Cost Value 2007 2006
------ ---- ----- ---- ----
Common Stocks:
Insurance............................ 3 $ 3,633,747 $150,152,440 22.1% 21.8%
Electronics.......................... 8 54,636,326 119,647,986 17.6 16.8
Manufacturing........................ 5 40,745,493 96,264,720 14.2 14.0
Energy............................... 6 48,554,175 93,182,591 13.7 12.5
Banking and Finance.................. 2 20,552,122 62,929,600 9.3 9.3
Information Technology............... 2 22,968,258 38,122,400 5.6 6.7
Business Services.................... 3 23,719,309 37,066,000 5.5 10.9
Other................................ 6 14,708,837 24,534,566 3.7 4.5
Short-Term Investments.................. 3 56,497,967 56,497,967 8.3 3.5
FINANCIAL HIGHLIGHTS
Six Mos.
Ended
June 30, 2007
(Unaudited) 2006 2005 2004 2003 2002
----------- ---- ---- ---- ---- ----
Per Share Operating Performance
Net asset value, beginning of period ............... $30.05 $27.65 $26.44 $24.32 $18.72 $28.54
Net investment income* ............................. .33 .36 .28 .11 .09 .14
Net realized and unrealized gain (loss)
on securities* ................................... 2.85 4.26 2.93 3.33 6.91 (8.71)
------ ------ ------ ------ ------ ------
Total from investment
operations ................................. 3.18 4.62 3.21 3.44 7.00 (8.57)
Less:
Dividends from net investment income ............... .17 .36 .28 .11 .11 .14
Distributions from capital gains ................... .03 1.86 1.72 1.21 1.29 1.11
------ ------ ------ ------ ------ ------
Total distributions .......................... .20 2.22 2.00 1.32 1.40 1.25
------ ------ ------ ------ ------ ------
Net asset value, end of period ..................... $33.03 $30.05 $27.65 $26.44 $24.32 $18.72
====== ======= ======= ======= ======= =======
Per share market value, end of period .............. $29.05 $26.65 $23.80 $22.85 $20.89 $16.28
Total investment return, market(%). ................ 9.76 21.31 14.04 16.16 36.22 (31.23)
Total investment return, NAV(%) .................... 10.58 18.55 13.75 15.40 39.32 (29.43)
Ratios/Supplemental Data:
Net assets, end of period(000) ..................... $678,277 $617,167 $573,980 $529,469 $478,959 $361,943
Ratio of expenses to average net
assets(%) ........................................ .48+ .53 .54 .55 .56 .50
Ratio of net investment income to
average net assets(%) ............................ 1.32+ 1.23 1.02 .41 .42 .57
Portfolio turnover rate(%) ......................... 6.33 17.55 15.83 16.72 12.90 19.50
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* 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, 2007
(Unaudited)
PORTFOLIO SECURITIES 91.7%
STOCKS (COMMON UNLESS SPECIFIED OTHERWISE)
Prin. Amt.
or Shares Value
---------- -----
Banking and Finance 9.3%
875,000 The Bank of New York Company, Inc.............. $ 36,260,000
340,000 Capital One Financial Corporation.............. 26,669,600
------------
62,929,600
------------
Business Services 5.5%
1,000,000 Convergys Corporation (a)...................... 24,240,000
200,000 Hewitt Associates, Inc. (a).................... 6,400,000
200,000 IMS Health Inc................................. 6,426,000
------------
37,066,000
------------
Chemicals 1.2%
150,000 Rohm and Haas Company......................... 8,202,000
------------
Communications 0.9%
1,005,000 Arbinet-thexchange, Inc. (a).................. 6,060,150
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Electronics 17.6%
942,400 Agilent Technologies, Inc. (a)................. 36,225,856
430,000 Analog Devices, Inc............................ 16,185,200
980,000 Intel Corporation.............................. 23,265,102
350,000 Motorola, Inc.................................. 6,195,000
610,000 Radisys Corporation (a)........................ 7,564,000
1,800,000 Solectron Corporation (a)...................... 6,624,000
2,500,000 Sonus Networks, Inc. (a)....................... 21,300,000
80,001 Verigy Ltd. (a)................................ 2,288,828
------------
119,647,986
------------
Energy 13.7%
375,000 Berry Petroleum Company Class A................ 14,130,000
234,328 Chevron Corporation............................ 19,739,791
780,000 GeoMet, Inc. (a)............................... 5,974,800
555,000 McMoRan Exploration Co. (a).................... 7,770,000
600,000 Murphy Oil Corporation......................... 35,664,000
320,000 Nexen Inc...................................... 9,904,000
------------
93,182,591
------------
Health Care 1.1%
120,000 Abbott Laboratories............................ 6,426,000
134,900 Vical Inc. (a)................................. 700,131
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7,126,131
------------
Homebuilding 0.3%
80,000 Meritage Homes Corporation (a)................. 2,140,000
------------
[ 6 ]
Prin. Amt.
or Shares Value
---------- -----
Information Technology Services 5.6%
1,400,000 Neoware, Inc. (a)(b)........................... $ 18,956,000
------------
990,000 The TriZetto Group, Inc. (a)................... 19,166,400
------------
38,122,400
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Insurance 22.1%
10,000 Erie Indemnity Co. Class A.................... 540,400
70,000 The Plymouth Rock Company, Inc.
Class A (b)(c)................................ 148,400,000
2,000 White Mountains Insurance Group, Ltd........... 1,212,040
------------
150,152,440
------------
Manufacturing 14.2%
294,000 A.S.V., Inc. (a)............................... 5,080,320
910,000 Brady Corporation Class A...................... 33,797,400
400,000 Dover Corporation.............................. 20,460,000
410,000 Roper Industries, Inc.......................... 23,411,000
400,000 Tyco International Ltd......................... 13,516,000
------------
96,264,720
------------
Retail Trade 0.2%
28,751 Aerogroup International, Inc. (a)(c)........... 1,006,285
------------
Total Portfolio Securities
(cost $229,518,267)(d).................... 621,900,303
------------
SHORT-TERM INVESTMENTS 8.3%
Commercial Paper 4.2%
16,589,000 American Express 5.0986% - 5.1189%
due 7/3/07 - 8/8/07........................... 16,561,732
12,016,000 Citigroup Funding 5.0950% - 5.1421%
due 7/25/07 - 8/8/07.......................... 11,966,955
------------
28,528,687
------------
U.S. Treasury Bills 4.1%
28,427,000 U.S. Treasury Bills 4.7013% - 4.8190%
due 9/27/07 - 12/20/07........................ 27,969,280
------------
Total Short-Term Investments
(cost $56,497,967)(d)..................... 56,497,967
------------
Total Investments (100.0%)
(cost $286,016,234)....................... 678,398,270
Cash, receivables and other assets
less liabilities (0.0%)................... (120,911)
------------
Net Assets (100%)........................... $678,277,359
============
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(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, 2007
(Unaudited)
ASSETS:
Investments:
General portfolio securities at market value
(cost $210,557,118) (Note 1).............................. $454,544,303
Securities of affiliated companies (cost $18,961,149)
(Notes 1, 5 and 6)........................................ 167,356,000
Short-term investments (cost $56,497,967)................... 56,497,967 $678,398,270
------------
Cash, receivables and other assets:
Cash........................................................ 61,591
Dividends and interest receivable........................... 25,219
Receivable for securities sold.............................. 227,536
Office equipment and leasehold improvements, net............ 348,753
Other assets................................................ 89,612 752,711
------------ -------------
Total Assets............................................ 679,150,981
LIABILITIES:
Payable for securities purchased................................ 687,580
Accrued expenses and reserves................................... 186,042
------------
Total Liabilities....................................... 873,622
-------------
NET ASSETS.......................................................... $678,277,359
============
NET ASSETS are represented by:
Common Stock $1 par value: authorized
30,000,000 shares; issued 20,820,859 (Note 2)................. $20,820,859
Surplus:
Paid-in..................................................... $250,426,845
Undistributed net gain on sales of investments.............. 15,601,669
Undistributed net investment income......................... 5,974,976 272,003,490
------------
Net unrealized appreciation of investments...................... 392,382,036
Treasury stock, at cost (282,664 shares of Common Stock)
(Note 2)...................................................... (6,929,026)
-------------
NET ASSETS.......................................................... $678,277,359
============
NET ASSET VALUE PER COMMON SHARE
(20,538,195 shares outstanding)................................... $33.03
======
See accompanying notes to financial statements.
[ 8 ]
STATEMENT OF OPERATIONS
For the six months ended June 30, 2007
(Unaudited)
INVESTMENT INCOME
Income:
Dividends (net of foreign withholding taxes of $2,157).......... $ 7,132,399
-----------
Interest........................................................ 1,113,842 $8,246,241
-----------
Expenses:
Investment research............................................. 433,125
Administration and operations................................... 368,375
Occupancy costs................................................. 232,330
Franchise and miscellaneous taxes............................... 102,686
Insurance....................................................... 73,981
Directors' fees................................................. 71,000
Stationery, supplies, printing and postage...................... 60,109
Listing, software and sundry fees............................... 52,166
Travel and telephone............................................ 29,702
Legal, auditing and tax fees.................................... 28,656
Transfer agent and registrar fees and expenses.................. 19,344
Custodian fees.................................................. 16,291
Miscellaneous................................................... 43,975 1,531,740
----------- ----------
Net investment income............................................... 6,714,501
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain from investment transactions...................... 18,046,062
Net increase in unrealized appreciation of investments.............. 40,457,409
-----------
Net gain on investments......................................... 58,503,471
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................................ $65,217,972
===========
See accompanying notes to financial statements.
[ 9 ]
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended June 30, 2007
and the year ended December 31, 2006
Six months
ended
June 30, Year ended
2007 December 31,
(Unaudited) 2006
----------- ------------
FROM OPERATIONS:
Net investment income........................................... $ 6,714,501 $ 7,269,692
Net realized gain on investments................................ 18,046,062 36,468,013
Net increase in unrealized appreciation of investments.......... 40,457,409 49,542,956
------------ ------------
Increase in net assets resulting from operations............ 65,217,972 93,280,661
------------ ------------
DISTRIBUTIONS TO STOCKHOLDERS FROM:
Net investment income........................................... (3,409,015) (7,185,071)
Net realized gain from investment transactions.................. (698,624) (36,564,651)
------------ ------------
Decrease in net assets from distributions................... (4,107,639) (43,749,722)
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS: (Note 2)
Distribution to stockholders reinvested in Common Stock......... -- 21,444,764
Cost of shares of Common Stock repurchased...................... -- (27,788,582)
------------ ------------
Decrease in net assets from capital
share transactions........................................ -- (6,343,818)
------------ ------------
Total increase in net assets............................ 61,110,333 43,187,121
NET ASSETS:
Beginning of period............................................. 617,167,026 573,979,905
------------ ------------
End of period (including undistributed net investment income
of $5,974,976 and $226,873, respectively)..................... $678,277,359 $617,167,026
============ ============
See accompanying notes to financial statements.
[ 10 ]
STATEMENT OF CASH FLOWS
For the six months ended June 30, 2007
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets from operations...................... $ 65,217,972
Adjustments to net increase in net assets
from operations:
Purchase of securities........................................ ($37,217,631)
Proceeds from securities sold................................. 68,596,390
Net purchase of short-term investments........................ (35,024,911)
Net realized gain from investments............................ (18,046,062)
Proceeds from class action settlement......................... 241,669
Increase in unrealized appreciation........................... (40,457,409)
Depreciation and amortization................................. 41,036
Changes in operating assets and liabilities:
Decrease in dividends and interest receivable............... 76,729
Decrease in receivable for securities sold.................. 137,313
Increase in office equipment and
leasehold improvements.................................... (4,127)
Increase in other assets.................................... (9,546)
Increase in payable for securities purchased................ 687,580
Decrease in accrued expenses and reserves................... (150,116)
------------
Total adjustments............................................. (61,129,085)
------------
Net cash provided by operating activities........................... 4,088,887
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid.................................................. (4,107,639)
------------
Cash flows used in financing activities............................. (4,107,639)
------------
Net decrease in cash................................................ (18,752)
Cash at beginning of period......................................... 80,343
------------
Cash at end of period............................................... $ 61,591
============
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. The
policies are in conformity with generally accepted accounting principles.
Security Valuation -- Securities are valued at the last sale or official
closing 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 the financial statements in
accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported. Actual results could 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.
New Accounting Pronouncements -- In September 2006, the Financial
Accounting Standards Board 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. The Corporation is currently assessing the effect of this
pronouncement on our financial statements.
As of June 30, 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 -- The Corporation did not repurchase any shares of its
Common Stock in the first six months of 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.
3. Investment Transactions -- The aggregate cost of securities purchased
and the aggregate proceeds of securities sold during the six months ended June
30, 2007, excluding short-term investments, were $37,217,631 and $68,596,390,
respectively.
As of June 30, 2007, based on cost for Federal income tax purposes, the
aggregate gross unrealized appreciation and depreciation for all securities were
$396,764,568 and $4,382,532, respectively.
[ 12 ]
NOTES TO FINANCIAL STATEMENTS -- continued (unaudited)
4. Operating Expenses -- The aggregate remuneration paid during the six
months ended June 30, 2007 to officers and directors amounted to $808,500, of
which $71,000 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. No contributions
were made to the plan for the six months ended June 30, 2007.
5. Affiliates -- The Plymouth Rock Company, Inc. and Neoware Inc. are
affiliates as defined in the Investment Company Act of 1940. During the six
months ended June 30, 2007, the Corporation received dividends of $5,039,300
from affiliates and incurred a realized loss of $786,644 from the sale of shares
of an affiliate. Unrealized appreciation related to affiliates increased by
$16,469,306 for the six months ended June 30, 2007 to $148,394,851.
6. Restricted Securities -- The Corporation from time to time invests in
securities the resale of which is restricted. On June 30, 2007 such investments
had an aggregate value of $149,406,285, which was equal to 22.0% of the
Corporation's net assets. Investments in restricted securities at June 30, 2007,
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. Unrealized appreciation related to restricted securities
increased by $15,112,490 for the six months ended June 30, 2007 to $147,189,453.
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 $2.5 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.
[ 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, 2007, and the related statements of operations,
changes in net assets, cash flows and financial highlights for the
six-month period ended June 30, 2007. These financial statements are the
responsibility of the management of Central Securities Corporation.
We have conducted our review in accordance with standards
established by 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 financial statements referred to above for them
to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with standards established
by the Public Company Accounting Oversight Board (United States), the
statement of changes in net assets for the year ended December 31, 2006
and financial highlights for each of the five years in the period ended
December 31, 2006, and in our report dated January 24, 2007 we expressed
an unqualified opinion on those financial statements.
KPMG LLP
New York, NY
July 25, 2007
--------------------------------------------------------------------------------
[ 14 ]
Direct Registration
The Corproation 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 14, 2007. 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, 19,430,480 shares in favor, 67,869 withheld; Donald G.
Calder, 19,401,717 shares in favor, 96,632 shares withheld; Jay R. Inglis,
19,394,489 shares in favor, 103,860 shares withheld; Dudley D. Johnson,
19,409,204 shares in favor, 89,145 shares withheld; Wilmot H. Kidd,
19,077,411 shares in favor, 420,938 shares withheld; and C. Carter Walker,
Jr., 19,406,264 shares in favor, 92,085 shares withheld.
In addition, the selection of KPMG LLP as independent auditors of
the Corporation for the year 2007 was ratified by the following vote of
the holders of the Common Stock: 19,373,522 shares in favor, 61,726 shares
against, 63,101 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, 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.
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
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 Comapany, 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. 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 June 30, 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 Approximate Dollar
(c) Total Number of Value) of Shares
Shares (or Units) (or Units) that
(a) Total Number of (b) Average Price Purchased as Part May Yet Be
Shares (or Units) Paid per Share of Publicly Announced Purchased Under the
Period Purchased (or Unit) Plans or Programs Plans or Programs
-----------------------------------------------------------------------------------------------------------------------------------
Month #1 (January 1 through 0 NA NA NA
January 31)
-----------------------------------------------------------------------------------------------------------------------------------
Month #2 (February 1 through 0 NA NA NA
February 28)
-----------------------------------------------------------------------------------------------------------------------------------
Month #3 (March 1 through 0 NA NA NA
March 31)
-----------------------------------------------------------------------------------------------------------------------------------
Month #4 (April 1 through 0 NA NA NA
April 30)
-----------------------------------------------------------------------------------------------------------------------------------
Month #5 (May 1 through May 31) 0 NA NA NA
-----------------------------------------------------------------------------------------------------------------------------------
Month #6 (June 1 through June 30) 0 NA NA NA
-----------------------------------------------------------------------------------------------------------------------------------
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 6, 2007.
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
August 8, 2007
--------------
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
August 8, 2007
--------------
Date
By: /s/ Charles N. Edgerton
-----------------------
Charles N. Edgerton
Treasurer
August 8, 2007
--------------
Date