-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EPZjTILWXDivdMLOi+grKJ1eWufRGuSXNo05/HzgLUKuUUU/sNzK69EjYIKoAUIB XR77S1QJEdFtaB1i+47Nqg== 0000891092-99-000452.txt : 19990805 0000891092-99-000452.hdr.sgml : 19990805 ACCESSION NUMBER: 0000891092-99-000452 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990804 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTRAL SECURITIES CORP CENTRAL INDEX KEY: 0000018748 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 131875970 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-00179 FILM NUMBER: 99677277 BUSINESS ADDRESS: STREET 1: 375 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10152 BUSINESS PHONE: 2126883011 MAIL ADDRESS: STREET 1: 375 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10152 FORMER COMPANY: FORMER CONFORMED NAME: TRANS CENTRAL SECURITIES CORP DATE OF NAME CHANGE: 19700722 FORMER COMPANY: FORMER CONFORMED NAME: BUERGER LADET & RADINSKY INC DATE OF NAME CHANGE: 19671026 N-30D 1 SEMI-ANNUAL REPORT ================================================================================ CENTRAL SECURITIES CORPORATION --------- SEMI-ANNUAL REPORT JUNE 30, 1999 ================================================================================ 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 ----------------------------------------- Distribu- tions(B) declared Divi- from Convertible dends(B) long-term Preference declared investment Total Stock at Net Net from net gains or Net realized Unrealized net liquidation asset investment investment capital investment appreciation Year assets preference value income(A) income surplus gains (losses) of investments ---- ------ ---------- ----- --------- ------ ------- -------------- -------------- 1988 $118,930,727 $10,072,150 $11.77 $ 25,718,033 1989 129,376,703 10,034,925 12.24 $.17 $.35 $. 65* $ 661,161 38,661,339 1990 111,152,013 10,027,050 10.00 .17 .20 .50* (2,643,394) 25,940,819 1991 131,639,511 10,022,100 11.87 .14 .14 .56* 7,321,233 43,465,583 1992 165,599,864 10,019,000 14.33 .12 .20 .66 8,304,369 70,586,429 1993 218,868,360 9,960,900 17.90 .14 .18 1.42 16,407,909 111,304,454 1994 226,639,144 9,687,575 17.60 .23 .22 1.39 16,339,601 109,278,788 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 6 mos. to June 30, 1999** 528,821,518 8,914,900 34.98 .14 .09 .11 13,267,720 342,225,693
- --------- A - Excluding gains or losses realized on sale of investments and the dividend requirement on the Convertible Preference Stock. B - Computed on the basis of the Corporation's status as a "regulated investment company" for Federal income tax purposes, except for the six months ended June 30, 1999 which are estimated. * Includes a non-taxable return of capital of $.56 in 1989, $.47 in 1990 and $.11 in 1991. ** Unaudited. The Preference and Common Stocks are listed on the American Stock Exchange. On June 30, 1999, the market quotations were as follows: Convertible Preference Stock, $2.00 Series D .. 95 5/8 bid, 99 3/8 asked Common Stock .................................. 26 7/8 low, 27 3/8 high and last sale [2] To the Stockholders of CENTRAL SECURITIES CORPORATION: Financial statements for the six months ended June 30, 1999 reviewed by our independent accountants and other pertinent information are submitted herewith. Comparative market values of net assets are as follows:
June 30, 1999 December 31, (Unaudited) 1998 ----------- ---- Net assets ........................................................... $528,821,518 $476,463,575 Convertible Preference Stock at liquidation preference ............... (8,914,900) (8,986,125) ------------ ------------ Net assets applicable to Common Stock ................................ $519,906,618 $467,477,450 ============ ============ Net asset coverage per share of Convertible Preference Stock ......... $ 1,482.97 $ 1,325.55 Net assets per share of Common Stock ................................. 34.98 31.43 Pro forma net assets per share, reflecting conversion of the Convertible Preference Stock ....................................... 32.72 29.44 Shares of Convertible Preference Stock outstanding ............... 356,596 359,445 Shares of Common Stock outstanding ............................... 14,860,933 14,872,742 Comparative operating results are as follows: Six months ended June 30, ----------------------------- 1999 (Unaudited) 1998 ----------- ---- Net investment income ................................................ $ 2,655,468 $ 2,639,165 Number of times Preferred dividend earned ........................ 4.9 7.3 Per share of Common Stock ........................................ .14* .16* Net realized gain on sale of investments ............................. 13,267,720 19,805,284 Increase in net unrealized appreciation of investments ............... 40,475,558 8,405,219 Increase in net assets resulting from operations ..................... 56,398,746 30,849,668
- -------- * Per-share data are based on the average number of Common shares outstanding during the six-month period and are after recognition of the dividend requirement on the Convertible Preference Stock. A dividend of $.20 per share was paid on June 15 to holders of Common Stock. Also, during the first six months of 1999 dividends of $1.50 per share were paid or accrued on the Series D Preference Stock. Stockholders will be sent a notice concerning the taxability of all 1999 distributions in January 2000. [3] On June 16, 1999 the Corporation issued a call for the redemption of the Preference Stock on August 1, 1999 at the redemption price of $27.50 per share. Each share of Preference Stock was convertible into 3.652 shares of Common Stock prior to the close of business on July 30, 1999. The final dividend of $.50 per share on the Preference Stock was paid on July 30, 1999 to stockholders of record at June 15, 1999. Pursuant to its fundamental policy regarding the issuance of senior securities, the Corporation may issue senior securities in the future. During the first six months of 1999 the Corporation repurchased 22,200 shares of its Common Stock on the American Stock Exchange at an average price per share of $23.90. 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. Stockholders' inquiries are welcome. CENTRAL SECURITIES CORPORATION WILMOT H. KIDD, President 375 Park Avenue New York, NY 10152 August 4, 1999 ----------- SIGNS OF THE TIMES "[W]orkers' earnings go a lot further than they used to. Measured in time spent working at the average manufacturing wage, the price of a typical personal computer has fallen 85% since 1984. Cell phones are down to just 2% of their 1984 work-hour cost. Videocassette recorders go for a fourth of what they did in 1984. An eight-ounce serving of Coca-Cola goes for 56% less and a Big Mac for 20% less than in 1970. A basket of food staples, including bread, milk, chicken and oranges, costs 26% less than in 1970. When today's twentysomethings settle down, they'll find they have to work only 15% as hard as their parents to own a color television. Compared with 1970, the prices expressed in hours of work are down 40% for refrigerators, 60% for dishwashers, 64% for dryers and 80% for electric ranges." (W. Michael Cox and Richard Alm, The Wall Street Journal, April 6, 1999.) [4] PRINCIPAL PORTFOLIO CHANGES* April 1 to June 30, 1999 (Unaudited) (Common Stock unless specified otherwise) Number of Shares ------------------------------------ Held June 30, Purchased Sold 1999 --------- ---- ---- Allmerica Financial Corporation ......... 70,000 -- Arrow Electronics, Inc. ................. 300,000 400,000 The Bank of New York Company, Inc. ...... 20,000 900,000 Capital One Financial Corporation ....... 400,000+ 600,000 Church & Dwight Co., Inc. ............... 25,000 300,000 Convergys Corporation ................... 250,000 400,000 Deltic Timber Corporation ............... 50,000 -- Intel Corporation ....................... 410,000+ 820,000 Nextel Communications, Inc. Class A ..... 30,000 210,000 UniFirst Corporation .................... 20,000 170,000 Vesta Insurance Group, Inc. ............. 100,000 100,000 Watkins-Johnson Company ................. 35,000 500,000 - --------- * Excludes stocks listed under "Miscellaneous -- Other investments" in the Statement of Investments. + Stock split. [5] STATEMENT OF ASSETS AND LIABILITIES June 30, 1999 (Unaudited)
ASSETS: Investments: General portfolio securities at market value (cost $125,449,150) (Note 1) ............................... $429,379,303 Securities of affiliated companies (cost $17,486,581) (Notes 1, 5 and 6) ......................................... 55,782,121 Short-term debt securities at cost plus accrued interest ..... 44,425,034 $529,586,458 ------------ Cash and receivables: Cash ......................................................... 31,145 Receivable for securities sold ............................... 5,365 Dividends receivable ......................................... 114,375 150,885 ----------- Office equipment and leasehold improvements, net ................. 11,245 ----------- Total Assets ............................................. 529,748,588 LIABILITIES: Payable for securities purchased ................................. 622,380 Cash dividends payable ........................................... 179,553 Accrued expenses and reserves .................................... 125,137 ----------- Total Liabilities ........................................ 927,070 ------------ NET ASSETS ........................................................... $528,821,518 ============ NET ASSETS are represented by: $2.00 Series D Convertible Preference Stock without par value at liquidation preference, $25.00 per share, authorized 4,000,000 shares; issued 356,596 (Note 2) ........................................ $ 8,914,900 Common Stock at par value, $1.00 per share, authorized 30,000,000 shares; issued 14,915,133 (Note 2) .................. 14,915,133 Surplus: Paid-in ...................................................... $149,950,756 Undistributed net gain on sales of investments ............... 13,240,183 Undistributed net investment income .......................... 870,334 164,061,273 ------------ Net unrealized appreciation of investments ....................... 342,225,693 Treasury stock, at cost (54,200 shares of Common Stock) (Note 2) ....................................................... (1,295,481) ------------ NET ASSETS ........................................................... $528,821,518 ============ NET ASSET VALUE PER COMMON SHARE ..................................... $34.98 ======
See accompanying notes to financial statements and independent accountants' review report. [6] STATEMENT OF OPERATIONS For the six months ended June 30, 1999 (Unaudited)
INVESTMENT INCOME Income: Dividends ....................................................... $ 2,231,206 Interest ........................................................ 1,247,213 $ 3,478,419 ---------- Expenses: Investment research ............................................. 165,581 Administration and operations ................................... 202,471 Employees' retirement plans ..................................... 6,820 Custodian fees .................................................. 11,050 Franchise and miscellaneous taxes ............................... 73,276 Transfer agent and registrar fees and expenses .................. 22,119 Rent and utilities .............................................. 81,580 Listing, software and sundry fees ............................... 49,683 Legal, auditing and tax fees .................................... 35,601 Stationery, supplies, printing and postage ...................... 29,062 Travel and telephone ............................................ 15,491 Directors' fees ................................................. 39,000 Insurance ....................................................... 45,513 Publications and miscellaneous .................................. 45,704 822,951 ---------- ----------- Net investment income ............................................... 2,655,468 NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain from security transactions ........................ 13,267,720 Net increase in unrealized appreciation of investments .............. 40,475,558 ---------- Net gain on investments ......................................... 53,743,278 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................................................ $56,398,746 ===========
See accompanying notes to financial statements and independent accountants' review report. [7] STATEMENTS OF CHANGES IN NET ASSETS For the six months ended June 30, 1999 and the year ended December 31, 1998
Six months ended June 30, 1999 (Unaudited) 1998 --------- ---- FROM OPERATIONS: Net investment income .......................................... $ 2,655,468 $ 4,775,728 Net realized gain on investments ............................... 13,267,720 22,908,091 Net increase in unrealized appreciation of investments ..... 40,475,558 27,989,691 ------------ ----------- Increase in net assets resulting from operations ........... 56,398,746 55,673,510 ------------ ----------- DIVIDENDS TO STOCKHOLDERS FROM: Net investment income: Preference Stock ........................................... (538,855) (721,149) Common Stock ............................................... (1,352,236) (4,049,386) Net realized gain from investment transactions ................. (1,618,120) (23,441,444) ------------ ----------- Decrease in net assets from distributions .................. (3,509,211) (28,211,979) ------------ ----------- FROM CAPITAL SHARE TRANSACTIONS: (Note 2) Distribution to stockholders reinvested in Common Stock ........ -- 15,344,081 Cost of shares of Common Stock repurchased ..................... (530,492) (764,990) Other capital transactions ..................................... (1,100) (100) ------------ ----------- Increase (decrease) in net assets from capital share transactions ....................................... (531,592) 14,578,991 ------------ ----------- Total increase in net assets ........................... 52,357,943 42,040,522 NET ASSETS: Beginning of period ............................................ 476,463,575 434,423,053 ------------ ----------- End of period (including undistributed net investment income of $870,334 and $105,958, respectively) ...................... $528,821,518 $476,463,575 ============ ============
See accompanying notes to financial statements and independent accountants' review report. [8] STATEMENT OF INVESTMENTS June 30, 1999 (Unaudited) PORTFOLIO SECURITIES 91.7% STOCKS (COMMON UNLESS SPECIFIED OTHERWISE) Prin. Amt. Market or Shares Value -------- ----- Banking and Finance 19.1% 900,000 The Bank of New York Company, Inc. .......... $ 33,018,750 600,000 Capital One Financial Corporation ........... 33,412,500 280,000 First Union Corporation ..................... 13,177,500 450,000 Household International, Inc. ............... 21,318,750 ------------ 100,927,500 ------------ Chemicals 5.5% 1,000,000 Hanna (M. A.) Company ....................... 16,437,500 300,000 Rohm and Haas Company ....................... 12,862,500 ------------ 29,300,000 ------------ Commercial Services 0.6% 170,000 UniFirst Corporation ........................ 3,123,750 ------------ Communications Equipment 3.3% 200,000 Cabletron Systems, Inc. ..................... 2,600,000 500,000 Watkins-Johnson Company(b) .................. 14,750,000 ------------ 17,350,000 ------------ Computer Software & Services 9.2% 975,000 American Management Systems, Inc.(a) ........ 31,260,937 400,000 Convergys Corporation ....................... 7,750,000 100,000 Electronic Data Systems Corporation ......... 5,662,500 395,000 Peerless Systems Corporation(a) ............. 4,147,500 ------------ 48,820,937 ------------ Data Processing 2.4% 555,000 The Reynolds and Reynolds Company Class A ... 12,938,438 ------------ Electronics 21.7% 720,000 Analog Devices, Inc.(a) ..................... 36,135,000 400,000 Arrow Electronics, Inc. ..................... 7,600,000 600,000 The DII Group Incorporated .................. 22,387,500 820,000 Intel Corporation ........................... 48,790,000 ------------ 114,912,500 ------------ [9] Prin. Amt. Market or Shares Value -------- ----- Energy 3.7% 70,000 Kerr-McGee Corporation ...................... $ 3,513,125 300,000 Murphy Oil Corporation ...................... 14,643,750 100,000 Petroleum GeoServices ASA Spon-ADR(a) ....... 1,487,500 ----------- 19,644,375 ----------- Engineering and Construction 1.4% 700,000 Morrison Knudsen Corporation(a) ............. 7,218,750 ----------- Health Care 0.5% 150,000 MGI Pharma, Inc.(a) ......................... 1,575,000 100,000 Omnicare, Inc. .............................. 1,262,500 ----------- 2,837,500 ----------- Household Products 2.5% 300,000 Church & Dwight Co., Inc. ................... 13,050,000 ----------- Insurance 9.7% 240,000 Mutual Risk Management Ltd. ................. 8,010,000 70,000 The Plymouth Rock Company, Inc. Class A(b)(c) ............................. 34,160,000 220,000 Provident Companies, Inc. ................... 8,800,000 100,000 Vesta Insurance Group, Inc. ................. 462,500 ----------- 51,432,500 ----------- Manufacturing 3.7% 600,000 Brady Corporation ........................... 19,500,000 ----------- Telecommunications 4.4% 150,000 Cincinnati Bell Inc. ........................ 3,740,625 175,356 IXC Communications Corporation(a) ........... 6,893,683 10,743 IXC Communications Corporation 71/4% Junior Conv. Pfd. Due 2007(c) ............. 1,865,253 210,000 Nextel Communications, Inc. Class A ......... 10,539,375 ----------- 23,038,936 ----------- Transportation 1.3% 533,757 Transport Corporation of America, Inc. Class B(a)(b) ............................. 6,872,121 ----------- Utilities 2.0% 300,000 MidAmerican Energy Holdings Company ......... 10,387,500 ----------- [10] Prin. Amt. Market or Shares Value -------- ----- Miscellaneous 0.7% Grumman Hill Investments, L.P.(a)(c) ......... $ 1,225,242 5,000 Southeast Publishing Ventures, Inc. Series A Pfd.(a)(b)(c) ..................... 0 Steuart Petroleum Company Warrant to Purchase Common Stock(a)(c) ................ 0 Other investments ............................ 2,581,375 ------------ 3,806,617 ------------ Total Portfolio Securities (cost $142,935,731) ................ 485,161,424 ------------ SHORT-TERM DEBT INVESTMENTS 8.4% $14,165,000 Ford Motor Credit Corporation 4.85% due 7/12/99 .......................... $ 14,264,251 11,393,000 General Electric Capital Corp. 4.81%-- 4.96% due 7/06/99-- 8/16/99 ........ 11,423,669 18,783,000 General Motors Acceptance Corp. 4.85%-- 4.86% due 7/12/99-- 7/26/99 ........ 18,737,114 ------------ Total Short-Term Investments (cost $44,425,034) ................. 44,425,034 ------------ Total Investments (cost $187,360,765) (100.1%) ....... 529,586,458 ------------ Liabilities, less cash, receivables and other assets (0.1%) ................ (764,940) ------------ Net Assets (100%) .................... $528,821,518 ============ - ---------- (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. [11] 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 generally accepted accounting principles. Security Valuation -- Securities are valued at the last sale price on June 30, 1999 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. These estimated values may not reflect amounts that could be realized upon immediate sale, nor amounts that ultimately may be realized. The estimated fair values, also, may differ from the values that would have been used had a liquid market existed, and such differences could be significant. 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. 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. Preference Stock and Common Stock -- On June 16, 1999 the Corporation issued a call for the redemption of the Preference Stock on August 1, 1999 at the redemption price of $27.50 per share. Each share of Preference Stock was convertible into 3.652 shares of Common Stock prior to the close of business on July 30, 1999. The final dividend of $.50 per share on the Preference Stock was paid on July 30, 1999 to stockholders of record at June 15, 1999. During the six months ended June 30, 1999, 10,391 shares of Common Stock were issued upon conversion of shares of Preference Stock. Pursuant to its fundamental policy regarding the issuance of senior securities, the Corporation may issue senior securities in the future when and if, in the judgment of its directors, such action is deemed advisable. The Corporation repurchased 22,200 shares of its Common Stock in the first six months of 1999 at an average price of $23.90 per share representing an average discount from net asset value of 20.6%. 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, 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, 1999, excluding short-term investments, were $23,878,875 and $23,354,441, respectively. See independent accountants' review report. [12] NOTES TO FINANCIAL STATEMENTS -- continued (unaudited) As of June 30, 1999, based on cost for Federal income tax purposes, the aggregate gross unrealized appreciation and depreciation for all securities were $343,971,537 and $1,745,844, respectively. 4. Operating Expenses -- The aggregate remuneration paid during the six months ended June 30, 1999 to officers and directors amounted to $342,054, of which $39,000 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. No contributions were made to the plan for the six months ended June 30, 1999. 5. Affiliates -- The Plymouth Rock Company, Inc., Southeast Publishing Ventures, Inc., Transport Corporation of America, Inc. and Watkins-Johnson Company are affiliates as defined in the Investment Company Act of 1940. The Corporation received dividends of $281,000 from affiliates during the six months ended June 30, 1999. Unrealized appreciation related to affiliates increased by $3,956,774 for the six months ended June 30, 1999 to $38,295,540. 6. Restricted Securities -- The Corporation from time to time invests in securities the resale of which is restricted. On June 30, 1999 such investments had an aggregate value of $37,250,495, which was equal to 7.0% of the Corporation's net assets. Investments in restricted securities at June 30, 1999, including acquisition dates and cost, were: Grumman Hill Investments, L.P., 9/11/85, $85,243; IXC Communications, Inc., 4/14/97, $1,112,879; The Plymouth Rock Company, Inc., 12/15/82, $1,500,000 and 6/1/84, $699,986; Southeast Publishing Ventures, Inc., 4/5/89, $5,200; and Steuart Petroleum Company, 6/8/93, $52,500. In general, the Corporation does not have the right to demand registration of the restricted securities. Unrealized appreciation related to restricted securities decreased by $422,073 for the six months ended June 30, 1999 to $33,794,687. 7. Year 2000 Readiness Disclosure -- The Corporation could be adversely affected if computer systems used by the Corporation, the Corporation's principal service providers, or other entities that interact electronically with the Corporation or its service providers fail to properly process date-related data up to and following January 1, 2000. The Corporation has taken steps which it believes are reasonably designed to address the Year 2000 problem with respect to the computer systems it uses, to obtain assurances that its principal service providers, including the Corporation's Custodian and its Registrar and Transfer Agent, are preparing to be Year 2000 compliant, and to develop contingencies to address unexpected problems. However, at this time there can be no assurance that the steps being taken by the Corporation will be sufficient to avoid any adverse impact on the Corporation. For example, the Corporation's Custodian and its Registrar and Transfer Agent could be materially affected adversely if all of their vendors are not completely Year 2000 compliant, which could negatively affect the Corporation. In addition, the Corporation could be adversely affected if the issuers of securities in which the Corporation is invested are negatively affected by the Year 2000 problem. For this reason the Corporation has taken steps reasonably designed to obtain assurances from such issuers that they are preparing to be Year 2000 compliant. See independent accountants' review report. [13] NOTES TO FINANCIAL STATEMENTS -- continued (unaudited) The Corporation did not incur any material costs in addressing the Year 2000 problem in the first six months of 1999, and it does not reasonably believe that it will incur any material costs in the last six months of 1999. ------------ FINANCIAL HIGHLIGHTS
Six Mos. Ended 6/30/99 (Unaudited) 1998 1997 1996 1995 1994 ---------- ---- ---- ---- ---- ---- Per Share Operating Performance Net asset value, beginning of period ... $ 31.43 $ 29.97 $ 25.64 $ 21.74 $ 17.60 $ 17.90 Net investment income .................. .18 .34 .29 .33 .37 .30 Net realized and unrealized gain on securities ........................ 3.61 3.11 6.51 5.28 5.76 1.08 -------- -------- -------- -------- -------- -------- Total from investment operations ..................... 3.79 3.45 6.80 5.61 6.13 1.38 Less: Dividends from net investment income* To Preference Stockholders ......... .04 .05 .05 .06 .06 .07 To Common Stockholders ............. .09 .29 .34 .28 .33 .22 Distributions from capital gains* To Common Stockholders ............. .11 1.65 2.08 1.37 1.60 1.39 -------- -------- -------- -------- -------- -------- Total distributions .............. .24 1.99 2.47 1.71 1.99 1.68 -------- -------- -------- -------- -------- -------- Net asset value, end of period ......... $ 34.98 $ 31.43 $ 29.97 $ 25.64 $ 21.74 $ 17.60 ======== ======== ======== ======== ======== ======== Per share market value, end of period ........................ $ 27.38 $ 24.38 $ 29.69 $ 24.13 $ 20.88 $ 15.75 Total investment return, market(%) ............................ 12.29+ (11.57) 35.60 22.35 45.65 12.30 Total investment return, NAV(%) ........ 11.84+ 13.75 26.08 25.97 34.59 8.62 Ratios/Supplemental Data: Net assets, end of period(000) ......... $528,822 $476,464 $434,423 $356,686 $292,548 $226,639 Ratio of expenses to average net assets for Common(%) ................. .34++ .51 .54 .57 .64 .68 Ratio of net investment income to average net assets for ............... Common(%) 1.10++ 1.09 .99 1.36 1.75 1.58 Portfolio turnover rate(%) ............. 5.29+ 6.21 10.92 9.89 8.27 11.73 - ------------ *Computed on the basis of the Corporation's status as a "regulated investment company" for Federal income tax purposes, except for the six months ended 6/30/99 which are estimated. + Not annualized. ++ Annualized.
See accompanying notes to financial statements and independent accountants' review report. [14] - -------------------------------------------------------------------------------- INDEPENDENT ACCOUNTANTS' REVIEW REPORT 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, 1999, and the related statements of operations, changes in net assets and financial highlights for the six-month period ended June 30, 1999. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, 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 in order for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the statement of changes in net assets for the year ended December 31, 1998, and financial highlights for each of the five years in the period ended December 31, 1998, and in our report dated January 22, 1999 we expressed an unqualified opinion on such statement of changes in net assets and financial highlights. KPMG LLP New York, NY July 27, 1999 - -------------------------------------------------------------------------------- ANNUAL MEETING OF STOCKHOLDERS -- (unaudited) The annual meeting of stockholders of the Corporation was held on March 10, 1999. At the meeting all of the directors of the Corporation were reelected by the holders of the Preference Stock and Common Stock voting separately, as follows: Donald G. Calder and Jay R. Inglis, 344,183 shares of Preference Stock in favor, 175 shares withheld each; Dudley D. Johnson, 13,569,192 shares of Common Stock in favor, 58,660 shares withheld; Wilmot H. Kidd, 13,568,962 shares of Common Stock in favor, 58,890 shares withheld; and C. Carter Walker, Jr., 13,568,661 shares of Common Stock in favor, 59,191 shares withheld. In addition, the selection of KPMG LLP as independent auditors of the Corporation for the year 1999 was ratified by the following vote of the holders of the Preference Stock and Common Stock voting together as one class: 13,864,245 shares in favor, 69,839 shares against, 38,126 shares abstaining. [15] BOARD OF DIRECTORS DONALD G. CALDER DUDLEY D. JOHNSON President President G. L. Ohrstrom & Co., Inc. Young & Franklin Inc. New York, NY Liverpool, NY JAY R. INGLIS WILMOT H. KIDD Executive Vice President President Holt Corporation New York, NY C. CARTER WALKER, JR. Washington, CT OFFICERS WILMOT H. KIDD, President CHARLES N. EDGERTON, Vice President and Treasurer KAREN E. RILEY, Secretary OFFICE 375 Park Avenue, New York, NY 10152 212-688-3011 www.centralsecurities.com CUSTODIAN UMB Bank, N. A. P.O. Box 419226, Kansas City, MO 64141-6226 TRANSFER AGENT AND REGISTRAR EquiServe, First Chicago Trust Division P.O. Box 2500, Jersey City, NJ 07303-2500 INDEPENDENT AUDITORS KPMG LLP 345 Park Avenue, New York, NY 10154 [16] -----END PRIVACY-ENHANCED MESSAGE-----