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, 2009
Date of reporting period: June 30, 2009
Item 1. Reports to Stockholders.
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CENTRAL SECURITIES CORPORATION
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SEMI-ANNUAL REPORT
JUNE 30, 2009
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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 (loss) of investments
---- ------ ----------- ----- ---------- -------- --------- ------------ --------------
1998 $476,463,575 $8,986,125 $31.43 $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
2008 397,353,061 -- 17.79 .39 .36 2.10 43,582,234 94,752,477
Six mos. to
June 30,
2009** 429,428,422 -- 19.27 .15 .09 .01 (451,241) 126,642,273
----------
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 NYSE-Amex under the symbol CET. On June
30, 2009 the market quotations were: $15.12 low, $15.35 high and $15.28 last
sale.
[ 2 ]
To the Stockholders of
CENTRAL SECURITIES CORPORATION:
Financial statements for the six months ended June 30, 2009 reviewed by
our independent registered public accounting firm and other pertinent
information are submitted herewith.
Comparative net assets are as follows:
June 30,
2009 December 31,
(Unaudited) 2008
----------- ----
Net assets ................................... $429,428,422 $397,353,061
Net assets per share of Common Stock ......... 19.27 17.79
Shares of Common Stock outstanding .... 22,282,413 22,331,813
Comparative operating results are as follows:
Six months ended June 30,
-----------------------------------
2009 2008
(Unaudited) (Unaudited)
----------- -----------
Net investment income .............................................................. $ 3,457,135 $ 4,703,564
Per share of Common Stock ...................................................... .15* .22*
Net realized gain (loss) on sale of investments .................................... (451,241) 24,660,810
Increase (decrease) in net unrealized appreciation of investments .................. 31,889,796 (31,265,811)
Increase (decrease) in net assets resulting from operations ........................ 34,895,690 (1,901,437)
----------
* Per-share data are based on the average number of Common shares
outstanding.
A distribution of $.10 per share of Common Stock was paid on June 19,
2009. Stockholders will be sent a notice concerning the taxability of all 2009
distributions in January 2010.
During the first six months of 2009 the Corporation repurchased 49,400
shares of its Common Stock at an average price per share of $11.99. The
Corporation may from time to time purchase Common Stock in such amounts and at
such prices as the Board of Directors deem advisable in the best interests of
stockholders. Purchases may be made on the NYSE-Amex or in transactions directly
with stockholders.
We are very pleased to report that on June 15, 2009, Mr. David C. Colander
was elected to the Board of Directors. He is a Professor of Economics at
Middlebury College, and is the author of numerous books and articles including a
widely used economics textbook which has been translated into several languages.
Stockholders' inquiries are welcome.
CENTRAL SECURITIES CORPORATION
WILMOT H. KIDD, President
630 Fifth Avenue
New York, NY 10111
July 23, 2009
[ 3 ]
TEN LARGEST INVESTMENTS
June 30, 2009
(Unaudited)
Percent of Year First
Cost Value Net Assets Acquired
---- ----- ---------- --------
(millions)
The Plymouth Rock Company, Inc. ................................ $ 2.2 $140.0 32.6% 1982
Brady Corporation .............................................. 2.5 21.9 5.1 1984
The Bank of New York Mellon Corporation ........................ 12.2 19.8 4.6 1993
Murphy Oil Corporation ......................................... 1.4 18.8 4.4 1974
Agilent Technologies, Inc. ..................................... 21.9 18.7 4.4 2005
Coherent, Inc. ................................................. 22.9 17.2 4.0 2007
Convergys Corporation .......................................... 24.8 15.8 3.7 1998
Intel Corporation .............................................. 0.3 13.2 3.1 1986
Dover Corporation .............................................. 13.0 13.2 3.1 2003
Devon Energy Corporation ....................................... 14.9 10.9 2.5 2007
PRINCIPAL PORTFOLIO CHANGES
April 1 to June 30, 2009
(Unaudited)
(Common Stock unless specified otherwise)
Number of Shares
-----------------------------------------
Held
June 30,
Purchased Sold 2009
--------- ---- ----
Abbott Laboratories................................................. 10,000 110,000
AT&T Inc............................................................ 200,000 200,000
The Bank of New York Mellon Corporation............................. 25,000 675,000
Convergys Corporation............................................... 30,800 1,700,000
Intel Corporation................................................... 9,600 800,000
Medtronic, Inc...................................................... 100,000 100,000
Murphy Oil Corporation.............................................. 4,300 345,700
Nexen Inc........................................................... 60,000 240,000
Roper Industries, Inc............................................... 20,000 230,000
[ 4 ]
DIVERSIFICATION OF INVESTMENTS
June 30, 2009
(Unaudited)
Percent of Net Assets
-----------------------
June 30, December 31,
Issues Cost Value 2009 2008
------ ---- ----- ---- ----
Common Stocks:
Insurance .............................. 2 $ 2,610,297 $140,357,600 32.7% 31.8%
Electronics ............................ 9 90,038,152 82,140,500 19.1 17.5
Manufacturing .......................... 6 43,869,923 59,966,700 14.0 15.2
Energy ................................. 6 50,957,090 46,644,624 10.8 11.8
Information Technology ................. 2 38,221,824 21,802,400 5.1 4.7
Banking and Finance .................... 2 13,065,868 20,070,750 4.7 8.0
Other .................................. 8 29,131,387 23,554,238 5.5 3.6
Short-Term Investments .................... 4 33,972,559 33,972,559 7.9 5.8
FINANCIAL HIGHLIGHTS
Six Mos.
Ended
June 30, 2009
(Unaudited) 2008 2007 2006 2005 2004
----------- ---- ---- ---- ---- ----
Per Share Operating Performance
Net asset value, beginning of period ......... $17.79 $30.15 $30.05 $27.65 $26.44 $24.32
Net investment income* ....................... .15 .39 .38 .36 .28 .11
Net realized and unrealized gain (loss)
on securities* ............................ 1.43 (10.29) 2.12 4.26 2.93 3.33
-------- -------- -------- -------- -------- --------
Total from investment operations ....... 1.58 (9.90) 2.50 4.62 3.21 3.44
Less:
Dividends from net investment income ......... .09 .36 .37 .36 .28 .11
Distributions from capital gains ............. .01 2.10 2.03 1.86 1.72 1.21
-------- -------- -------- -------- -------- --------
Total distributions .................... .10 2.46 2.40 2.22 2.00 1.32
-------- -------- -------- -------- -------- --------
Net asset value, end of period ............... $19.27 $17.79 $30.15 $30.05 $27.65 $26.44
======== ======== ======== ======== ======== ========
Per share market value, end of period ........ $15.28 $14.40 $26.84 $26.65 $23.80 $22.85
Total investment return, market(%) ........... 4.55 (39.63) 9.86 21.31 14.04 16.16
Total investment return, NAV(%) .............. 8.88 (32.66) 9.35 18.55 13.75 15.40
Ratios/Supplemental Data:
Net assets, end of period(000) ............... $429,428 $397,353 $644,823 $617,167 $573,980 $529,469
Ratio of expenses to average net
assets(%) ................................. .83+ .66 .59 .53 .54 .55
Ratio of net investment income to
average net assets(%) ..................... 1.02+ 1.43 1.21 1.23 1.02 .41
Portfolio turnover rate(%) ................... 2.53 11.04 19.58 17.55 15.83 16.72
----------
* 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, 2009
(Unaudited)
PORTFOLIO SECURITIES 91.9%
STOCKS (COMMON UNLESS SPECIFIED OTHERWISE)
Prin. Amt.
or Shares Value
--------- -----
Banking and Finance 4.7%
675,000 The Bank of New York Mellon Corporation.............. $ 19,784,250
150,000 Newstar Financial, Inc. (a).......................... 286,500
------------
20,070,750
------------
Business Services 0.3%
100,000 Heritage-Crystal Clean Inc. (a)...................... 1,215,000
------------
Communications 1.5%
1,000,000 Arbinet-thexchange, Inc. (a)......................... 1,740,000
200,000 AT&T Inc............................................. 4,968,000
------------
6,708,000
------------
Electronics 19.1%
920,000 Agilent Technologies, Inc. (a)....................... 18,685,200
370,000 Analog Devices, Inc.................................. 9,168,600
830,000 Coherent, Inc. (a)................................... 17,164,400
630,000 Flextronics International Ltd. (a)................... 2,614,500
800,000 Intel Corporation.................................... 13,240,000
300,000 Maxim Integrated Products, Inc....................... 4,707,000
350,000 Motorola, Inc. (a)................................... 2,320,500
1,000,000 Radisys Corporation (a).............................. 9,040,000
3,230,000 Sonus Networks, Inc. (a)............................. 5,200,300
------------
82,140,500
------------
Energy 10.8%
300,000 Berry Petroleum Company Class A...................... 5,577,000
200,000 Devon Energy Corporation............................. 10,900,000
2,000,000 GeoMet, Inc. (a)(b).................................. 2,200,000
670,000 McMoRan Exploration Co. (a).......................... 3,993,200
345,700 Murphy Oil Corporation............................... 18,778,424
240,000 Nexen Inc............................................ 5,196,000
------------
46,644,624
------------
Health Care 2.2%
110,000 Abbott Laboratories.................................. 5,174,400
100,000 Medtronic, Inc....................................... 3,489,000
260,000 Vical Inc. (a)....................................... 702,000
------------
9,365,400
------------
Information Technology Services 5.1%
1,700,000 Convergys Corporation (a)............................ 15,776,000
930,000 Xerox Corporation.................................... 6,026,400
------------
21,802,400
------------
[ 6 ]
Prin. Amt.
or Shares Value
--------- -----
Insurance 32.7%
10,000 Erie Indemnity Co. Class A........................... $ 357,600
70,000 The Plymouth Rock Company, Inc.
Class A (b)(d)..................................... 140,000,000
------------
140,357,600
------------
Manufacturing 14.0%
870,000 Brady Corporation Class A............................ 21,854,400
200,000 Carlisle Companies Inc............................... 4,808,000
400,000 Dover Corporation.................................... 13,236,000
200,000 General Electric Company............................. 2,344,000
100,000 Precision Castparts Corp............................. 7,303,000
230,000 Roper Industries, Inc................................ 10,421,300
------------
59,966,700
------------
Retailing 1.5%
28,751 Aerogroup International, Inc. (a)(d)................. 385,838
200,000 Walgreen Co.......................................... 5,880,000
------------
6,265,838
------------
Total Portfolio Securities
(cost $267,894,539)(e)........................... $394,536,812
------------
SHORT-TERM INVESTMENTS 7.9%
Money Market Fund 0.3%
1,463,673 Fidelity Institutional Money Market
Government Portfolio............................... 1,463,673
U.S. Treasury Bills 7.6%
32,521,000 U.S. Treasury Bills 0.08% - 0.26%
due 7/23/09 - 10/22/09 (c)......................... 32,508,886
------------
Total Short-Term Investments
(cost $33,972,559)(e)......................... 33,972,559
------------
Total Investments (99.8%)....................... 428,509,371
Cash, receivables and other assets
less liabilities (0.2%)....................... 919,051
------------
Net Assets (100%)............................... $429,428,422
============
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(a) Non-dividend paying.
(b) Affiliate as defined in the Investment Company Act of 1940.
(c) Value based on Level 2 inputs - see Note 2.
(d) Valued at estimated fair value based on Level 3 inputs - see Note 2.
(e) Aggregate cost for Federal tax purposes is substantially the same.
See accompanying notes to financial statements.
[ 7 ]
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2009
(Unaudited)
ASSETS:
Investments:
General portfolio securities at market value
(cost $252,035,621)........................................................ $252,336,812
Securities of affiliated companies (cost $15,858,918)
(Notes 6 and 7)............................................................ 142,200,000
Short-term investments (cost $33,972,559).................................... 33,972,559 $428,509,371
------------
Cash, receivables and other assets:
Cash......................................................................... 170,397
Dividends and interest receivable............................................ 49,111
Receivable for securities sold............................................... 611,140
Office equipment and leasehold improvements, net............................. 202,926
Other assets................................................................. 97,005 1,130,579
------------ ------------
Total Assets............................................................. 429,639,950
LIABILITIES:
Accrued expenses and reserves.................................................... 211,528
------------
Total Liabilities........................................................ 211,528
------------
NET ASSETS........................................................................... $429,428,422
============
NET ASSETS are represented by:
Common Stock $1 par value: authorized
30,000,000 shares; issued 22,336,013 (Note 3).................................. $22,336,013
Surplus:
Paid-in...................................................................... $279,078,341
Accumulated net loss on sales of investments................................. (451,241)
Undistributed net investment income.......................................... 2,474,140 281,101,240
------------
Net unrealized appreciation of investments....................................... 126,642,273
Treasury stock, at cost (53,600 shares of Common Stock)
(Note 3)....................................................................... (651,104)
------------
NET ASSETS........................................................................... $429,428,422
============
NET ASSET VALUE PER COMMON SHARE
(22,282,413 shares outstanding).................................................... $19.27
======
See accompanying notes to financial statements.
[ 8 ]
STATEMENT OF OPERATIONS
For the six months ended June 30, 2009
(Unaudited)
INVESTMENT INCOME
Income:
Dividends (net of foreign withholding taxes of $3,519).................................. $ 5,019,495
Interest................................................................................ 52,734 $ 5,072,229
-----------
Expenses:
Investment research..................................................................... 449,375
Administration and operations........................................................... 399,125
Occupancy costs......................................................................... 225,689
Franchise and miscellaneous taxes....................................................... 102,637
Insurance............................................................................... 82,265
Directors' fees......................................................................... 80,750
Stationery, supplies, printing and postage.............................................. 67,270
Listing, software and sundry fees....................................................... 57,625
Legal, auditing and tax fees............................................................ 38,862
Travel and telephone.................................................................... 26,225
Transfer agent and registrar fees and expenses.......................................... 22,640
Custodian fees.......................................................................... 10,496
Miscellaneous........................................................................... 52,135 1,615,094
----------- -----------
Net investment income....................................................................... 3,457,135
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized loss from investment transactions.............................................. (451,241)
Net increase in unrealized appreciation of investments...................................... 31,889,796
-----------
Net gain on investments................................................................. 31,438,555
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................................................................ $34,895,690
===========
See accompanying notes to financial statements.
[ 9 ]
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended June 30, 2009
and the year ended December 31, 2008
Six months
ended Year ended
June 30, 2009 December 31,
(Unaudited) 2008
----------- ----
FROM OPERATIONS:
Net investment income ......................................................... $ 3,457,135 $ 8,254,733
Net realized gain (loss) on investments ....................................... (451,241) 43,582,234
Net increase (decrease) in unrealized
appreciation of investments ................................................ 31,889,796 (261,798,917)
------------- -------------
Increase (decrease) in net assets
resulting from operations ............................................ 34,895,690 (209,961,950)
------------- -------------
DISTRIBUTIONS TO STOCKHOLDERS FROM:
Net investment income ......................................................... (1,944,635) (7,791,012)
Net realized gain from investment transactions ................................ (283,606) (44,387,916)
------------- -------------
Decrease in net assets from distributions ............................... (2,228,241) (52,178,928)
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS: (Note 3)
Distribution to stockholders reinvested in Common Stock ....................... -- 20,932,558
Cost of shares of Common Stock repurchased .................................... (592,088) (6,261,343)
------------- -------------
Increase (decrease) in net assets from capital
share transactions ................................................... (592,088) 14,671,215
------------- -------------
Total increase (decrease) in net assets ........................... 32,075,361 (247,469,663)
NET ASSETS:
Beginning of period ........................................................... 397,353,061 644,822,724
------------- -------------
End of period (including undistributed net investment income
of $2,474,140 and $961,640, respectively) .................................. $ 429,428,422 $ 397,353,061
============= =============
See accompanying notes to financial statements.
[ 10 ]
STATEMENT OF CASH FLOWS
For the six months ended June 30, 2009
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets from operations.............................................. $34,895,690
Adjustments to net increase in net assets from operations:
Purchase of securities................................................................ ($ 8,894,331)
Proceeds from securities sold......................................................... 13,817,451
Net purchase of short-term investments................................................ (10,785,959)
Net realized loss from investments.................................................... 451,241
Increase in unrealized appreciation................................................... (31,889,796)
Depreciation and amortization......................................................... 41,419
Changes in operating assets and liabilities:
Decrease in dividends and interest receivable....................................... 85,798
Increase in office equipment and
leasehold improvements.......................................................... (1,497)
Increase in other assets............................................................ (15,037)
Increase in receivable for securities sold.......................................... (611,140)
Decrease in accrued expenses and reserves........................................... (95,149)
------------
Total adjustments..................................................................... (37,897,000)
-----------
Net cash used by operating activities....................................................... (3,001,310)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid.......................................................................... (5,354,696)
Treasury shares repurchased............................................................. (592,088)
------------
Cash flows used in financing activities..................................................... (5,946,784)
-----------
Net decrease in cash........................................................................ (8,948,094)
Cash at beginning of period................................................................. 9,118,491
-----------
Cash at end of period....................................................................... $ 170,397
===========
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.
Subsequent events have been evaluated through July 23, 2009, the date the
financial statements were available to be issued.
Security Valuation -- Marketable securities are valued at the last or
closing sale price or, if unavailable, at the closing bid price.
Investments in money market funds are valued at net asset value per
share. Other 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 -- The Corporation's investments are
categorized below in three broad hierarchical levels based on market price
observability as follows:
o Level 1 -- Quoted prices in active markets for identical
investments. The Corporation's Level 1 investments consist of
securities listed on a national securities exchange or NASDAQ
national market and money market funds;
o Level 2 -- Other significant observable data 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 -- Significant unobservable inputs including the
Corporation's own assumptions based upon the best information
available. Investments categorized as Level 3 include securities 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.
The methodology used for valuing securities is not necessarily an
indication of the risk associated with investing in those securities.
The Corporation's investments as of June 30, 2009 are classified as
follows:
Valuation Inputs Investments in Securities
---------------- -------------------------
Level 1 $255,614,647
Level 2 32,508,886
Level 3 140,385,838
------------
Total $428,509,371
============
[ 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, 2008 $126,385,838
Net increase in unrealized appreciation of investments 14,000,000
------------
Balance as of June 30, 2009 $140,385,838
============
No Level 3 investments were purchased, sold or transferred to Level 1 or
Level 2 during the six months ended June 30, 2009. The Corporation's Level 3
investments are valued by the Board of Directors. This valuation is primarily
based on a comparable company valuation analysis and review of independent
appraisals. In addition, consideration is given to corporate governance, private
transactions, company and industry outlooks and general market conditions.
3. Common Stock -- The Corporation repurchased 49,400 shares of its Common
Stock in the first six months of 2009 at an average price of $11.99 per share,
representing an average discount from net asset value of 23.6%. It may from time
to time purchase Common Stock in such amounts and at such prices as the Board of
Directors 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 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, 2009, excluding short-term investments, were $8,894,331 and $13,817,451,
respectively.
As of June 30, 2009, based on cost for Federal income tax purposes, the
aggregate gross unrealized appreciation and depreciation for all securities were
$213,647,047 and $87,004,774, respectively.
5. Operating Expenses -- The aggregate remuneration paid during the six
months ended June 30, 2009 to officers and directors amounted to $829,500, of
which $80,750 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, 2009.
6. Affiliates -- The Plymouth Rock Company, Inc. and GeoMet, Inc., are
affiliates as defined in the Investment Company Act of 1940. During the six
months ended June 30, 2009, the Corporation received dividends of $2,970,800
from affiliates. Unrealized appreciation related to affiliates increased by
$12,760,000 for the six months ended June 30, 2009 to $126,341,082. 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, 2009 such investments
had an aggregate value of $140,385,838, which was equal to 32.7% of the
Corporation's net assets. Investments in restricted securities at June 30, 2009,
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 $1.9 million.
The lease agreement contains escalation clauses relating to operating costs and
real property taxes. Future minimum rental commitments under the lease are
$170,903 remaining 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, 2009, and the related statements of operations, changes in net assets,
cash flows and financial highlights for the six-month period ended June 30,
2009. These interim financial statements and financial highlights are the
responsibility of Central Securities Corporation's management.
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 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, 2008 and financial highlights for
each of the years in the five-year period ended December 31, 2008, and in our
report dated February 2, 2009 we expressed an unqualified opinion on such
statement of changes in net assets and financial highlights.
KPMG LLP
New York, NY
July 23, 2009
--------------------------------------------------------------------------------
[ 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
11, 2009. 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,
20,312,173 shares in favor, 606,414 withheld; Donald G. Calder, 20,313,992
shares in favor, 604,595 shares withheld; Jay R. Inglis, 20,301,700 shares in
favor, 616,887 shares withheld; Dudley D. Johnson, 20,314,331 shares in favor,
604,256 shares withheld; Wilmot H. Kidd, 20,311,008 shares in favor, 607,579
shares withheld; and C. Carter Walker, Jr., 20,310,217 shares in favor, 608,370
shares withheld.
In addition, the selection of KPMG LLP as independent auditors of the
Corporation for the year 2009 was ratified by the following vote of the holders
of the Common Stock: 20,356,349 shares in favor, 487,583 shares against, 74,655
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, 2009 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
Simms C. Browning, Chairman
Donald G. Calder
David C. Colander
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
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 Shares (or Approximate Dollar Value) of
Period (a) Total Number of (b) Average Price Units) Purchased as Part of Shares (or Units) that May Yet
Shares (or Units) Paid per Share (or Publicly Announced Plans or Be Purchased Under the Plans
Purchased Unit) Programs 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 28,600 $10.913 NA NA
through March 31)
----------------------------------------------------------------------------------------------------------------------------------
Month #4 (April 1 20,800 $13.461 NA NA
through April 30)
----------------------------------------------------------------------------------------------------------------------------------
Month #5 (May 1 0 NA NA NA
through May 31)
----------------------------------------------------------------------------------------------------------------------------------
Month #6 (June 1 0 NA NA NA
through June 30)
----------------------------------------------------------------------------------------------------------------------------------
Total 49,400 $11.986 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, 2009.
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 30, 2009
-------------
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 30, 2009
-------------
Date
By: /s/ Charles N. Edgerton
-------------------------------
Charles N. Edgerton
Treasurer
July 30, 2009
-------------
Date