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, 2005
Date of reporting period: June 30, 2005
Item 1. Reports to Stockholders.
================================================================================
CENTRAL SECURITIES CORPORATION
----------
SEMI-ANNUAL REPORT
JUNE 30, 2005
================================================================================
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
---- ------ -------- ----- --------- -------- -------- ------------ --------------
1994 $226,639,144 $9,687,575 $17.60 $109,278,788
1995 292,547,559 9,488,350 21.74 $ .31 $.33 $1.60 $ 20,112,563 162,016,798
1996 356,685,785 9,102,050 25.64 .27 .28 1.37 18,154,136 214,721,981
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
Six mos.
to
June 30,
2005** 567,123,767 -- 28.40 .22 .03 .17 33,035,041 277,250,073
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. On June 30,
2005 the market quotations were as follows:
Common Stock............................. $24.15 low, $24.33 high
and $24.19 last sale
[2]
To the Stockholders of
CENTRAL SECURITIES CORPORATION:
Financial statements for the six months ended June 30, 2005 reviewed by
our independent accountants and other pertinent information are submitted
herewith.
Comparative net assets are as follows:
June 30,
2005 December 31,
(Unaudited) 2004
----------- ----
Net assets.......................................................... $567,123,767 $529,468,675
Net assets per share of Common Stock................................ 28.40 26.44
Shares of Common Stock outstanding.............................. 19,966,909 20,023,209
Comparative operating results are as follows:
Six months ended June 30,
-----------------------------
2005 2004
(Unaudited) (Unaudited)
----------- ----------
Net investment income............................................... $ 4,385,014 $ 1,648,747
Per share of Common Stock....................................... .22* .08*
Net realized gain on sale of investments............................ 33,035,041 23,778,997
Increase in net unrealized appreciation of investments.............. 5,539,894 27,197,470
Increase in net assets resulting from operations.................... 42,959,949 52,625,214
----------
* 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 24, 2005.
Stockholders will be sent a notice concerning the taxability of all 2005
distributions in January 2006.
During the first six months of 2005 the Corporation repurchased 56,300
shares of its Common Stock at an average price per share of $23.28. 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.
We are pleased to report that on June 22, 2005, Mr. Simms C. Browning was
elected to the Board of Directors. He retired from Neuberger Berman, LLC after a
long career in institutional sales and money management including a number of
years as research director.
Stockholders' inquiries are welcome.
CENTRAL SECURITIES CORPORATION
WILMOT H. KIDD, President
630 Fifth Avenue
New York, NY 10111
July 27, 2005
[3]
TEN LARGEST INVESTMENTS
June 30, 2005
(Unaudited)
% of Year First
Cost Value Net Assets Acquired
----- ----- --------- --------
(millions)
The Plymouth Rock Company, Inc................. $ 2.2 $108.5 19.1% 1982
Murphy Oil Corporation......................... 3.7 31.3 5.5 1974
Brady Corporation.............................. 1.9 27.0 4.8 1984
Unocal Corporation............................. 14.7 26.0 4.6 2004
Intel Corporation.............................. 0.4 25.5 4.5 1986
Capital One Financial Corporation.............. 1.5 24.8 4.4 1994
Convergys Corporation.......................... 28.6 24.6 4.3 1998
TransMontaigne Inc............................. 14.4 20.2 3.6 2005
The TriZetto Group, Inc........................ 6.9 17.4 3.1 2002
Analog Devices, Inc............................ 0.5 16.0 2.8 1987
DIVERSIFICATION OF INVESTMENTS
June 30, 2005
(Unaudited)
Percent of
Net Assets
-----------------------
June 30, December 31,
Issues Value Cost 2005 2004
----- ----- ---- ---- ----
Common Stocks:
Insurance............................ 2 $109,042,500 $ 2,610,297 19.2% 20.3%
Energy............................... 6 98,697,975 47,071,096 17.4 13.1
Electronics.......................... 7 82,314,900 34,296,240 14.5 12.2
Information Technology Services...... 5 65,421,158 62,868,404 11.5 15.7
Banking and Finance.................. 3 51,544,100 20,671,157 9.1 11.5
Manufacturing........................ 3 51,059,650 18,390,858 9.0 9.7
Health Care.......................... 5 20,048,000 20,027,285 3.5 3.9
Chemicals............................ 3 19,844,500 16,188,926 3.5 3.5
Other................................ 5 11,385,551 9,983,998 2.1 1.6
Short-Term Investments.................. 8 57,389,473 57,389,473 10.1 8.3
[4]
PRINCIPAL PORTFOLIO CHANGES
April 1 to June 30, 2005
(Unaudited)
(Common Stock unless specified otherwise)
Number of Shares
----------------------------------------
Held
June 30,
Purchased Sold 2005
--------- ---- ----
Agilent Technologies, Inc......................... 50,000 600,000
Aerogroup International, Inc...................... 28,751(a) 28,751
aQuantive, Inc.................................... 10,000 10,000
Arbinet-thexchange, Inc........................... 500,000 500,000
Arch Capital Group Ltd............................ 100,000 --
Brady Corporation................................. 505,000(b) 140,000 870,000
Ceridian Corporation.............................. 21,400 378,600
Convergys Corporation............................. 40,000 1,730,000
Cypress Semiconductor Corporation................. 200,000 200,000
Dover Corporation................................. 70,000 260,000
The Dow Chemical Company.......................... 100,000 100,000
Fifth Third Bancorp............................... 15,000 300,000
Flextronics International Ltd..................... 210,000 1,000,000
Kerr-McGee Corporation............................ 80,649 139,351
Murphy Oil Corporation............................ 300,000(b) 600,000
Nexen Inc......................................... 70,000(b) 140,000
Solectron Corporation............................. 1,000,000 2,000,000
TransMontaigne Inc................................ 925,000 1,925,000
----------
(a) Received from Grumman Hill Investments, L.P.
(b) Stock split.
[5]
STATEMENT OF INVESTMENTS
June 30, 2005
(Unaudited)
PORTFOLIO SECURITIES 89.8%
STOCKS (COMMON UNLESS SPECIFIED OTHERWISE)
Prin. Amt.
or Shares Value
-------- -----
Banking and Finance 9.1%
500,000 The Bank of New York Company, Inc.............. $ 14,390,000
310,000 Capital One Financial Corporation.............. 24,803,100
300,000 Fifth Third Bancorp............................ 12,351,000
-----------
51,544,100
-----------
Business Services 0.6%
10,000 aQuantive, Inc.(a)............................. 177,200
500,000 Arbinet-thexhange, Inc.(a)..................... 3,350,000
-----------
3,527,200
-----------
Chemicals 3.5%
100,000 The Dow Chemical Company....................... 4,453,000
1,275,000 PolyOne Corporation(a)......................... 8,440,500
150,000 Rohm and Haas Company.......................... 6,951,000
-----------
19,844,500
-----------
Communications 0.7%
900,000 Cincinnati Bell Inc.(a)........................ 3,870,000
-----------
Electronics 14.5%
600,000 Agilent Technologies, Inc.(a).................. 13,812,000
430,000 Analog Devices, Inc............................ 16,043,300
200,000 Cypress Semiconductor Corporation(a)........... 2,518,000
1,000,000 Flextronics International Ltd.(a).............. 13,210,000
980,000 Intel Corporation.............................. 25,499,600
200,000 Motorola, Inc.................................. 3,652,000
2,000,000 Solectron Corporation(a)....................... 7,580,000
-----------
82,314,900
-----------
Energy 17.4%
139,351 Kerr-McGee Corporation......................... 10,633,875
320,000 McMoRan Exploration Co.(a)..................... 6,243,200
600,000 Murphy Oil Corporation......................... 31,338,000
140,000 Nexen Inc.(a).................................. 4,250,400
1,925,000 TransMontaigne Inc.(a)......................... 20,212,500
400,000 Unocal Corporation............................. 26,020,000
-----------
98,697,975
-----------
Health Care 3.5%
100,000 Abbott Laboratories............................ 4,901,000
100,000 Merck & Co. Inc................................ 3,080,000
100,000 Pfizer Inc..................................... 2,758,000
450,000 Schering-Plough Corporation.................... 8,577,000
150,000 Vical Inc.(a).................................. 732,000
-----------
20,048,000
-----------
[6]
Prin. Amt.
or Shares Value
-------- -----
Information Technology Services 11.5%
400,000 Accenture Ltd.(a).............................. $ 9,068,000
378,600 Ceridian Corporation(a)........................ 7,375,128
1,730,000 Convergys Corporation(a)....................... 24,600,600
1,243,000 The TriZetto Group, Inc.(a).................... 17,414,430
1,100,000 Unisys Corporation(a).......................... 6,963,000
------------
65,421,158
------------
Insurance 19.2%
10,000 Erie Indemnity Co. Class A..................... 542,500
70,000 The Plymouth Rock Company, Inc. Class A(b)(c).. 108,500,000
------------
109,042,500
------------
Manufacturing 9.0%
870,000 Brady Corporation Class A...................... 26,970,000
260,000 Dover Corporation.............................. 9,458,800
205,000 Roper Industries, Inc.......................... 14,630,850
------------
51,059,650
------------
Retail Trade 0.1%
28,751 Aerogroup International, Inc. (a)(c)........... 373,763
------------
Transportation 0.7%
531,557 Transport Corporation of America, Inc.
Class B(a)(b)................................. 3,614,588
------------
Miscellaneous 0.0%
Grumman Hill Investments, L.P.(a)(c)........... 0
------------
Total Portfolio Securities
(cost $232,108,261)....................... 509,358,334
------------
SHORT-TERM INVESTMENTS 10.1%
Commercial Paper 4.6%
$17,457,000 American Express Credit Corporation
2.8807% - 3.0828% due 7/6/05 - 8/10/05........ 17,427,991
8,958,000 General Electric Capital Corporation
2.9333% - 3.0123% due 7/27/05 - 8/3/05........ 8,935,460
------------
26,363,451
------------
31,164,000 U.S. Treasury Bills 5.5% 31,164,000 U.S.
Treasury Bills 2.7024% - 3.0046% due 7/21/05
- 9/29/05..................................... 31,026,022
------------
Total Short-Term Investments
(cost $57,389,473)........................ 57,389,473
------------
Total Investments
(cost $289,497,734) (99.9%)............... 566,747,807
Cash, receivables and other assets
less liabilities (0.1%)................... 375,960
------------
Net Assets (100%)........................... $567,123,767
============
----------
(a) Non-dividend paying.
(b) Affiliate as defined in the Investment Company Act of 1940.
(c) Valued at estimated fair value.
See accompanying notes to financial statements and
independent accountants' review report.
[7]
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2005
(Unaudited)
ASSETS:
Investments:
General portfolio securities at market value
(cost $228,652,129) (Note 1).............................. $397,243,746
Securities of affiliated companies (cost $3,456,132)
(Notes 1, 5 and 6)........................................ 112,114,588
Short-term investments (cost $57,389,473)................... 57,389,473 $566,747,807
------------
Cash, receivables and other assets:
Cash........................................................ 872,784
Dividends and interest receivable........................... 204,683
Office equipment and leasehold improvements, net............ 503,186
Other assets................................................ 164,775 1,745,428
------------ ------------
Total Assets............................................ 568,493,235
LIABILITIES:
Payable for securities purchased................................ 1,187,680
Accrued expenses and reserves................................... 181,788
------------
Total Liabilities....................................... 1,369,468
------------
NET ASSETS.......................................................... $567,123,767
============
NET ASSETS are represented by:
Common Stock $1 par value: authorized
30,000,000 shares; issued 20,023,209 (Note 2)................. $20,023,209
Surplus:
Paid-in..................................................... $234,314,820
Undistributed net gain on sales of investments.............. 33,033,265
Undistributed net investment income......................... 3,812,795 271,160,880
------------
Net unrealized appreciation of investments...................... 277,250,073
Treasury stock, at cost (56,300 shares of Common Stock)
(Note 2)...................................................... (1,310,395)
------------
NET ASSETS.......................................................... $567,123,767
============
NET ASSET VALUE PER COMMON SHARE
(19,966,909 shares outstanding)................................... $28.40
======
See accompanying notes to financial statements and
independent accountants' review report.
[8]
STATEMENT OF OPERATIONS
For the six months ended June 30, 2005
(Unaudited)
INVESTMENT INCOME
Income:
Dividends (net of foreign withholding taxes of $1,707).......... $ 4,840,435
Interest........................................................ 719,960 $ 5,560,395
-----------
Expenses:
Administration and operations................................... 284,250
Investment research............................................. 248,250
Occupancy costs................................................. 228,297
Franchise and miscellaneous taxes............................... 81,750
Listing, software and sundry fees............................... 63,069
Insurance....................................................... 56,221
Directors' fees................................................. 52,750
Stationery, supplies, printing and postage...................... 30,731
Legal, auditing and tax fees.................................... 24,000
Publications.................................................... 22,955
Travel and telephone............................................ 20,340
Transfer agent and registrar fees and expenses.................. 16,541
Custodian fees.................................................. 15,451
Employees' retirement plans..................................... 7,250
Miscellaneous................................................... 23,526 1,175,381
----------- -----------
Net investment income............................................... 4,385,014
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain from security transactions........................ 33,035,041
Net increase in unrealized appreciation of investments.............. 5,539,894
-----------
Net gain on investments......................................... 38,574,935
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................................ $42,959,949
===========
See accompanying notes to financial statements and
independent accountants' review report.
[9]
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended June 30, 2005
and the year ended December 31, 2004
Six months
ended
June 30, Year ended
2005 December 31,
(Unaudited) 2004
--------- ----
FROM OPERATIONS:
Net investment income........................................... $ 4,385,014 $ 2,073,746
Net realized gain on investments................................ 33,035,041 25,103,157
Net increase in unrealized appreciation of investments.......... 5,539,894 42,322,038
------------ ------------
Increase in net assets resulting from operations............ 42,959,949 69,498,941
------------ ------------
DISTRIBUTIONS TO STOCKHOLDERS FROM:
Net investment income........................................... (669,903) (2,177,537)
Net realized gain from investment transactions.................. (3,324,559) (23,622,634)
------------ ------------
Decrease in net assets from distributions................... (3,994,462) (25,800,171)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS: (Note 2)
Distribution to stockholders reinvested in Common Stock......... -- 10,682,306
Cost of shares of Common Stock repurchased...................... (1,310,395) (3,871,619)
------------ ------------
Increase (decrease) in net assets from capital
share transactions........................................ (1,310,395) 6,810,687
------------ ------------
Total increase in net assets............................ 37,655,092 50,509,457
NET ASSETS:
Beginning of period............................................. 529,468,675 478,959,218
------------ ------------
End of period (including undistributed net investment income
of $3,812,795 and $97,684, respectively)...................... $567,123,767 $529,468,675
============ ============
See accompanying notes to financial statements and
independent accountants' review report.
[10]
NOTES TO FINANCIAL STATEMENTS -- (unaudited)
1. Significant Accounting Policies -- 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 accounting
principles generally accepted in the United States of America.
Security Valuation -- Securities are valued at the last sale price or, if
unavailable, at the closing bid price. Corporate discount notes 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 accounting principles generally accepted in the United
States of America 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 on the date the
securities are purchased or sold, and cost of securities sold is
determined by specific identification. Dividend income and
distributions to stockholders are recorded on the ex-dividend date.
2. Common Stock -- The Corporation repurchased 56,300 shares of its Common
Stock in the first six months of 2005 at an average price of $23.28 per share,
representing an average discount from net asset value of 14.34%. 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, used in optional stock
distributions, or retired.
3. Investment Transactions -- The aggregate cost of securities purchased
and the aggregate proceeds of securities sold during the six months ended June
30, 2005 (excluding short-term investments), were $49,000,916 and $62,870,467,
respectively.
As of June 30, 2005, based on cost for Federal income tax purposes, the
aggregate gross unrealized appreciation and depreciation for all securities were
$299,712,369 and $22,462,296, respectively.
4. Operating Expenses -- The aggregate remuneration paid during the six
months ended June 30, 2005 to officers and directors amounted to $600,250, of
which $52,750 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. No contributions were made to the
plan for the six months ended June 30, 2005.
[11]
NOTES TO FINANCIAL STATEMENTS -- continued (unaudited)
5. Affiliates -- The Plymouth Rock Company, Inc. and Transport Corporation
of America, Inc. are affiliates as defined in the Investment Company Act of
1940. The Corporation received dividends of $3,059,000 from affiliates during
the six months ended June 30, 2005. Unrealized appreciation related to
affiliates increased by $14,607,383 for the six months ended June 30, 2005 to
$108,658,456.
6. Restricted Securities -- The Corporation from time to time invests in
securities the resale of which is restricted. On June 30, 2005 such investments
had an aggregate value of $108,873,763, which was equal to 19.2% of the
Corporation's net assets. Investments in restricted securities at June 30, 2005,
including acquisition dates and cost, were:
Company Shares Security Date Purchased Cost
---------------------------------- ---------- ------------------- ------------- ----------
Aerogroup International, Inc. 28,751 Common Stock 6/21/05 $ 17,200
(received from Grumman Hill
Investments as a final
investment distribution)
Grumman Hill Investments, L.P. Limited Partnership 9/11/85 0
Interest
The Plymouth Rock 70,000 Class A Common 12/15/82 1,500,000
Company, Inc. 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 $15,564,753 for the six months ended June 30, 2005 to $106,656,577.
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 $3.0 million.
The lease agreement contains escalation clauses relating to operating costs and
real property taxes. Future minimum rental commitments under the lease for the
next five years are $157,121 for 2005, $314,241 for 2006 through 2008 and
$329,172 for 2009.
[12]
FINANCIAL HIGHLIGHTS
Six Mos.
Ended
June 30, 2005
(Unaudited) 2004 2003 2002 2001 2000
---------- ---- ---- ---- ---- -----
Per Share Operating Performance
Net asset value, beginning of period $ 26.44 $ 24.32 $ 18.72 $ 28.54 $ 32.94 $ 35.05
Net investment income*............. .22 .11 .09 .14 .18 .32
Net realized and unrealized gain
(loss) on securities............. 1.94 3.33 6.91 (8.71) (2.78) 1.92
-------- -------- -------- -------- -------- --------
Total from investment
operations................. 2.16 3.44 7.00 (8.57) (2.60) 2.24
Less:
Dividends from net investment
income**......................... 03 .11 .11 .14 .22 .32
Distributions from capital gains**. .17 1.21 1.29 1.11 1.03 4.03
Return of capital**................ -- -- -- -- .55 --
-------- -------- -------- -------- -------- --------
Total distributions.......... .20 1.32 1.40 1.25 1.80 4.35
-------- -------- -------- -------- -------- --------
Net asset value, end of period..... $ 28.40 $ 26.44 $ 24.32 $ 18.72 $ 28.54 $ 32.94
======== ======== ======== ======== ======== ========
Per share market value,
end of period.................... $ 24.19 $ 22.85 $ 20.89 $ 16.28 $ 25.31 $ 28.25
Total investment return,
market(%)........................ 7.32 16.16 36.22 (31.23) (2.42) 17.75
Total investment return, NAV(%).... 8.18 15.40 39.32 (29.43) (6.54) 7.02
Ratios/Supplemental Data:
Net assets, end of period(000)..... $567,124 $529,469 $478,959 $361,943 $539,839 $596,289
Ratio of expenses to average net
assets(%)........................ .43+ .55 .56 .50 .45 .38
Ratio of net investment income to
average net assets(%)............ 1.05+ .41 .42 .57 .60 .83
Portfolio turnover rate(%)......... 20.21+ 16.72 12.90 19.50 10.32 13.54
----------
* Per-share data are based on the average number of shares outstanding during
the period.
** Computed on the basis of the Corporation's status as a "regulated investment
company" for Federal income tax purposes.
+ Annualized, not necessarily indicative of full year ratio.
See accompanying notes to financial statements and
independent accountants' review report.
[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, 2005, and the related statements of operations, changes in net assets
and financial highlights for the six-month period ended June 30, 2005. 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, 2004, and financial
highlights for each of the five years in the period ended December 31, 2004, and
in our report dated January 26, 2005 we expressed an unqualified opinion on
those financial statements.
KPMG LLP
New York, NY
July 27, 2005
--------------------------------------------------------------------------------
[14]
Annual Meeting of Stockholders
The annual meeting of stockholders of the Corporation was held on March 9,
2005. At the meeting all of the directors of the Corporation were reelected by
the following vote of the holders of the Common Stock: Donald G. Calder,
17,794,414 shares in favor, 347,753 shares withheld; Jay R. Inglis, 17,781,974
shares in favor, 360,193 shares withheld; Dudley D. Johnson, 17,793,374 shares
in favor, 348,793 shares withheld; Wilmot H. Kidd, 17,641,668 shares in favor,
500,799 shares withheld; and C. Carter Walker, Jr., 17,792,168 shares in favor,
349,999 shares withheld.
In addition, the selection of KPMG LLP as independent auditors of the
Corporation for the year 2005 was ratified by the following vote of the holders
of the Common Stock: 18,056,248 shares in favor, 41,959 shares against, 43,960
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, 2005 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
Jay R. Inglis, Chairman
Simms C. Browning
Donald G. Calder
Dudley D. Johnson
Wilmot H. Kidd
C. Carter Walker, Jr.
OFFICERS
Wilmot H. Kidd, President
Charles N. Edgerton, Vice President and Treasurer
Marlene A. Krumholz, Secretary
OFFICE
630 Fifth Avenue
New York, NY 10111
212-698-2020
866-593-2507 (toll free)
www.centralsecurities.com
CUSTODIAN
UMB Bank, N. A.
Kansas City, MO
TRANSFER AGENT AND REGISTRAR
Computershare Investor Services (formerly EquiServe Trust Company)
P.O. Box 43069, Providence, RI 02940-3069
781-575-2724
www.equiserve.com
INDEPENDENT AUDITORS
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. Not
applicable. Item is applicable for annual reports for fiscal years ending on or
after December 31, 2005, and every semi-annual report filed after the first such
annual report.
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
Number of (b) Average Purchased as Part of Units) that May Yet Be
Shares (or Price Paid per Publicly Announced Purchased Under the
Period 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
through February 28) 0 NA NA NA
--------------------------- ----------------- ---------------- ------------------------- ------------------------
Month #3 (March 1 through
March 31) 7,300 $23.37 NA NA
--------------------------- ----------------- ---------------- ------------------------- ------------------------
Month #4 (April 1 through
April 30) 35,200 $23.12 NA NA
--------------------------- ----------------- ---------------- ------------------------- ------------------------
Month #5 (May 1 through
May 31) 8,400 $23.35 NA NA
--------------------------- ----------------- ---------------- ------------------------- ------------------------
Month #6 (June 1 through
June 30) 5,400 $24.03 NA NA
--------------------------- ----------------- ---------------- ------------------------- ------------------------
Total 56,300 $23.28 NA NA
--------------------------- ----------------- ---------------- ------------------------- ------------------------
All shares purchased were made in open market transactions as authorized by the
Board of Directors.
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 2, 2005.
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, 2005
--------------
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, 2005
--------------
Date
By: /s/ Charles N. Edgerton
-----------------------
Charles N. Edgerton
Treasurer
August 8, 2005
--------------
Date