-------------
SEMI-ANNUAL REPORT
JUNE 30, 1996
<PAGE>
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
<TABLE>
<CAPTION>
Per Share of Common Stock
-----------------------------------------------
Distribu-
tions(B)
declared
Divi- from
Convertible dends(B) long-term Net
Preference declared investment realized Unrealized
Total Stock at Net Net from net gains or investment appreciation
net liquidation asset investment investment capital gains of
Year assets preference value income(A) income surplus (losses) investments
------------ ----------- ------ --------- -------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1985 $111,397,854 $ 5,472,300 $15.38 $ 35,905,193
1986 116,731,670 10,230,075 13.26 $ .18 $.23 $3.47 $15,684,308 32,538,800
1987 110,629,270 10,145,300 11.36 .17 .22 1.55 18,037,871 15,056,016
1988 118,930,727 10,072,150 11.77 .16 .16 .92 2,292,807 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
6 mos.
to June
30, 1996 321,908,144 9,437,375 23.99 .15 .08 .12 6,920,621 185,082,898
</TABLE>
- ------------
A -Excluding gains or losses realized on sale of investments.
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, 1996 which are estimated.
* Includes a non-taxable return of capital of $.56 in 1989, $.47 in 1990 and
$.11 in 1991.
The Preference and Common Stocks are listed on the American Stock Exchange.
On June 28, 1996, the market quotations were as follows:
<TABLE>
<S> <C>
Convertible Preference Stock, $2.00 Series D.......... 71 bid, 78 asked
Common Stock.......................................... 24 1/8 high, 24 low and
last sale
</TABLE>
[ 2 ]
<PAGE>
To the Stockholders of
CENTRAL SECURITIES CORPORATION:
Financial statements for the six months ended June 30, 1996, as reported
upon by our independent auditors, and other pertinent information are submitted
herewith.
Comparative market values of net assets are as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---- ----
<S> <C> <C>
Net assets........................................ $321,908,144 $292,547,559
Convertible Preference Stock at liquidation
preference........................................ (9,437,375) (9,488,350)
------------ ------------
Net assets applicable to Common Stock............. $312,470,769 $283,059,209
------------ ------------
------------ ------------
Net asset coverage per share of Convertible
Preference Stock.................................. $ 852.75 $ 770.81
Net assets per share of Common Stock.............. 23.99 21.74
Pro forma net assets per share, reflecting
conversion of the Convertible Preference
Stock............................................. 22.67 20.60
Shares of Convertible Preference Stock
outstanding....................................... 377,495 379,534
Shares of Common Stock outstanding............ 13,024,744 13,018,389
</TABLE>
Comparative operating results are as follows:
<TABLE>
<CAPTION>
Six months ended June 30,
-----------------------------
<S> <C> <C>
1996 1995
------------ ------------
Net investment income............................. $ 2,357,422 $ 2,358,544
Number of times Preferred dividend earned..... 6.2 6.1
Per share of Common Stock..................... .15* .16*
Net realized gain on sale of investments.......... 6,920,621 13,007,875
Increase in net unrealized appreciation of
investments..................................... 23,066,100 34,293,814
Increase in net assets resulting from
operations...................................... 32,344,143 49,660,233
</TABLE>
- ---------
* 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 28 to holders of Common Stock.
Also, during the first six months of 1996 dividends of $1.00 per share were paid
on the Series D Preference Stock. Stockholders will be sent a notice concerning
the taxability of all 1996 distributions in January 1997.
[ 3 ]
<PAGE>
During the first six months of 1996 the Corporation did not repurchase any
of its Common or Preference Stock. However, it may from time to time purchase
Common or Preference 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, N.Y. 10152
August 2, 1996
-------------------
SIGNS OF THE TIMES
"The Internet is like a 20-foot tidal wave coming, and we are in kayaks.
It's been coming across the Pacific for thousands of miles and gaining momentum,
and it's going to lift you and drop you. We're just a step away from the point
when every computer is connected to every other computer, at least in the U.S.,
Japan, and Europe. It affects everybody--the computer industry,
telecommunications, the media, chipmakers, and the software world. Some are more
aware of this than others." (Andrew S. Grove, President and Chief Executive
Officer of Intel Corporation, "A Conversation with the Lords of Wintel,"
Fortune, July 8, 1996.)
[ 4 ]
<PAGE>
PRINCIPAL PORTFOLIO CHANGES*
April 1 to June 30, 1996
(Common Stock unless specified otherwise)
<TABLE>
<CAPTION>
Number of Shares
------------------------------------------
Held
Purchased Sold June 30, 1996
--------- -------- -------------
<S> <C> <C> <C>
Allmerica Financial Corporation........... 90,000 90,000
American Management Systems, Inc. ........ 30,000 410,000
Analog Devices, Inc. ..................... 15,000 555,000
Church & Dwight Co., Inc. ................ 6,100 366,100
Cliffs Drilling Company................... 20,000 55,757
Hanna (M.A.) Company...................... 325,000+ 975,000
Hilb, Rogal & Hamilton Company............ 51,600 50,000
Mercantile International Petroleum
Inc. ..................................... 300,000 300,000
Mutual Risk Management Ltd. .............. 33,333+ 133,333
Provident Companies, Inc. ................ 27,300 150,000
The Reynolds and Reynolds Company Class
A......................................... 40,000 360,000
Santa Fe Energy Resources, Inc ........... 20,000 350,000
USG Corporation........................... 100,000 100,000
</TABLE>
- ------------
* Excluding stocks listed under "Miscellaneous" in the Statement of Investments.
+ Stock split.
[ 5 ]
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996
<TABLE>
<S> <C> <C>
ASSETS:
Investments:
General portfolio securities at market
value (cost $98,832,326) (Note 1)........ $245,536,303
Securities of affiliated companies (cost
$4,367,061) (Notes 1, 5 and 6)........... 42,745,982
Short-term debt securities at cost plus
accrued interest......................... 32,409,931 $320,692,216
------------
Cash and receivables:
Cash and dividends receivable.............. 103,930
Receivable for securities sold............. 1,238,305 1,342,235
------------
Office equipment and leasehold improvements,
net.......................................... 19,629
------------
Total Assets........................... 322,054,080
LIABILITIES:
Accrued expenses and reserves.................. 145,936
------------
Total Liabilities...................... 145,936
------------
NET ASSETS......................................... $321,908,144
------------
------------
NET ASSETS are represented by:
$2.00 Series D Convertible Preference Stock
without par value at liquidation preference,
$25.00 per share, authorized 750,000 shares;
issued 377,495 (Note 2)....................... $ 9,437,375
Common Stock at par value, $1.00 per share,
authorized 20,000,000 shares; issued
13,024,744 (Note 2).......................... 13,024,744
Surplus:
Paid-in.................................... $106,504,973
Undistributed net gain on sales of
investments.............................. 6,892,590
Undistributed net investment income........ 965,564 114,363,127
------------
Net unrealized appreciation of investments..... 185,082,898
------------
NET ASSETS......................................... $321,908,144
------------
------------
NET ASSET VALUE PER COMMON SHARE................... $23.99
------
------
</TABLE>
See accompanying notes to financial statements.
[ 6 ]
<PAGE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1996
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Income:
Cash dividends.................................... $ 2,064,886
Interest.......................................... 989,621
Miscellaneous income.............................. 5,485 $ 3,059,992
-----------
Expenses:
Investment research............................... 105,241
Administration and operations..................... 148,425
Employees' retirement plans....................... 3,487
Custodian fees.................................... 30,292
Franchise and miscellaneous taxes................. 67,047
Transfer agent's and registrar's fees and
expenses........................................ 42,656
Rent and utilities................................ 73,757
Listing, software and sundry fees................. 38,721
Legal, auditing and tax fees...................... 50,176
Stationery, supplies, printing and postage........ 32,116
Travel and telephone.............................. 13,851
Directors' fees................................... 23,000
Insurance......................................... 49,059
Publications and miscellaneous.................... 24,742 702,570
----------- -----------
Net investment income................................. 2,357,422
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain from security transactions.......... 6,920,621
Net increase in unrealized appreciation of
investments......................................... 23,066,100
-----------
Net gain on investments........................... 29,986,721
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.......................................... $32,344,143
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
[ 7 ]
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended June 30, 1996
and the year ended December 31, 1995
<TABLE>
<CAPTION>
Six months
ended
June 30,
1996 1995
------------ ------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income........................... $ 2,357,422 $ 4,539,869
Net realized gain on investments................ 6,920,621 20,112,563
Net increase in unrealized appreciation of
investments................................... 23,066,100 52,738,010
------------ ------------
Increase in net assets resulting from
operations................................ 32,344,143 77,390,442
------------ ------------
DIVIDENDS TO STOCKHOLDERS FROM:
Net investment income:
Preference Stock............................ (378,861) (771,139)
Common Stock................................ (1,103,681) (3,668,730)
Net realized gain from investment
transactions.................................. (1,500,816) (20,161,206)
------------ ------------
Decrease in net assets from distributions... (2,983,358) (24,601,075)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS: (Note 2)
Distribution to stockholders reinvested in
Common Stock.................................. -- 13,119,148
Other capital transactions...................... (200) (100)
------------ ------------
Increase (decrease) in net assets from
capital share transactions................ (200) 13,119,048
------------ ------------
Total increase in net assets............ 29,360,585 65,908,415
NET ASSETS:
Beginning of period............................. 292,547,559 226,639,144
------------ ------------
End of period................................... $321,908,144 $292,547,559
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
[ 8 ]
<PAGE>
STATEMENT OF INVESTMENTS
June 30, 1996
PORTFOLIO SECURITIES 89.5%
(COMMON STOCKS UNLESS SPECIFIED OTHERWISE)
<TABLE>
<CAPTION>
Prin. Amt. Market
or Shares Value
- ------------ ------------
<C> <S> <C>
BANKING AND FINANCE 14.5%
300,000 The Bank of New York Company, Inc..... $ 15,375,000
325,000 Capital One Financial Corporation..... 9,262,500
200,000 Household International, Inc. ........ 15,200,000
300,000 Signet Banking Corporation............ 6,975,000
------------
46,812,500
------------
BUILDING PRODUCTS 0.8%
100,000 USG Corporation(a).................... 2,787,500
------------
BUSINESS SERVICES 7.4%
50,000 Kelly Services, Inc. Class A.......... 1,462,500
360,000 The Reynolds and Reynolds Company
Class A............................. 19,170,000
150,000 UniFirst Corporation.................. 3,168,750
------------
23,801,250
------------
CHEMICALS 8.6%
975,000 Hanna (M.A.) Company.................. 20,353,125
230,000 Martin Color-Fi, Inc.(a).............. 1,236,250
100,000 Rohm and Haas Company................. 6,275,000
------------
27,864,375
------------
COMMUNICATIONS 4.3%
27,461 Frontier Corporation.................. 840,993
100,000 GTE Corporation....................... 4,475,000
93 IXC Communications Corporation
10% Cum. Pfd. (a)(b)................ 96,409
440,000 Nextel Communications, Inc. Class
A(a).................................. 8,387,500
------------
13,799,902
------------
COMPUTER SOFTWARE & SERVICES 3.8%
410,000 American Management Systems,
Inc.(a)............................... 11,992,500
197,302 Peerless Systems Corporation Series B
Conv. Pfd.(a)(b)...................... 293,819
Peerless Systems Corporation Warrants
to Purchase Common Stock(a)(b)...... 12,000
------------
12,298,319
------------
</TABLE>
[ 9 ]
<PAGE>
<TABLE>
<CAPTION>
Prin. Amt. Market
or Shares Value
- ------------ ------------
<C> <S> <C>
CONSUMER PRODUCTS AND SERVICES 2.4%
366,100 Church & Dwight Co., Inc.............. $ 7,642,338
------------
ELECTRONICS 11.2%
555,000 Analog Devices, Inc.(a)............... 14,083,125
300,000 Intel Corporation..................... 22,031,250
------------
36,114,375
------------
ENERGY 6.9%
55,757 Cliffs Drilling Company............... 1,895,738
300,000 Mercantile International Petroleum
Inc. (a).............................. 390,000
185,000 Murphy Oil Corporation................ 8,394,375
100,000 Petroleum Geo-Services ASA ADR (a).... 2,837,500
350,000 Santa Fe Energy Resources, Inc.(a) ... 4,156,250
Steuart Petroleum Company Warrant
to Purchase Common Stock(a)(b)...... 0
100,000 Tidewater Inc. ....................... 4,387,500
------------
22,061,363
------------
HEALTH CARE 0.3%
70,000 RKS Health Ventures Corporation
(a)(b)(c)............................. 784,000
15,950 RKS Health Ventures Corporation Series
A Conv. Pfd. (a)(b)(c)................ 223,300
------------
1,007,300
------------
INDUSTRIAL EQUIPMENT 6.7%
600,000 Brady (W.H.) Co. ..................... 13,350,000
280,000 Measurex Corporation.................. 8,190,000
------------
21,540,000
------------
INSURANCE 16.7%
90,000 Allmerica Financial Corporation....... 2,688,750
50,000 Hilb, Rogal and Hamilton Company...... 693,750
133,333 Mutual Risk Management Ltd. .......... 4,166,656
70,000 The Plymouth Rock Company, Inc.
Class A(b)(c)....................... 35,000,000
150,000 Provident Companies, Inc.............. 5,550,000
168,900 Vesta Insurance Group, Inc............ 5,637,038
------------
53,736,194
------------
LIMITED PARTNERSHIP 0.3%
Grumman Hill Investments,
L.P.(a)(b)............................ 850,687
------------
METALS AND MINING 2.1%
300,000 Cyprus Amax Minerals Company.......... 6,862,500
------------
</TABLE>
[ 10 ]
<PAGE>
<TABLE>
<CAPTION>
Prin. Amt. Market
or Shares Value
- ------------ ------------
<C> <S> <C>
PUBLISHING 1.2%
100,000 Media General, Inc. Class A........... $ 3,725,000
5,000 Southeast Publishing Ventures, Inc.
Series A Pfd.(a)(b)(c).............. 0
------------
3,725,000
------------
TRANSPORTATION 2.1%
533,757 Transport Corporation of America, Inc.
Class B(a)(c)....................... 6,738,682
------------
MISCELLANEOUS 0.2%
Other investments..................... 640,000
------------
Total Portfolio Securities.... 288,282,285
------------
SHORT-TERM DEBT INVESTMENTS 10.1%
$ 9,670,000 Chevron Corporation 5.28% due
7/8/96.............................. 9,715,385
11,231,000 Ford Motor Credit Corp. 5.29%-5.40%
due 7/1/96-7/29/96.................. 11,270,374
11,400,000 General Electric Capital Corp. 5.36%-
5.37% due 7/15/96-7/22/96........... 11,424,172
------------
Total Short-Term
Investments................. 32,409,931
------------
Total Investments............. 320,692,216
------------
Cash, receivables and other
assets, less liabilities--0.4% 1,215,928
------------
Net Assets--100%.............. $321,908,144
------------
------------
</TABLE>
- ------------
(a) Non-dividend paying.
(b) Valued at estimated fair value.
(c) Affiliate as defined in the Investment Company Act of 1940.
See accompanying notes to financial statements.
[ 11 ]
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 28,
1996 or, if unavailable, at the closing bid price. 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 financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of increases and decreases in net assets from operations during
the reporting period. Actual results may differ from estimates.
Other--Security transactions are accounted for on the date the securities
are purchased or sold. Dividend income and distributions to stockholders
are recorded on the ex-dividend date.
2. Preference Stock and Common Stock--The Convertible Preference Stock is
redeemable at the Corporation's option at $27.50 per share. Dividends are
cumulative. Each share is convertible into 3.12 shares of Common Stock and
1,177,784 authorized but unissued Common shares have been reserved for issuance
upon conversion. During the six months ended June 30, 1996, 6,355 shares of
Common Stock were issued upon conversion of shares of Preference Stock.
The Corporation did not repurchase any of its Common or Preference Stock in
the first six months of 1996, but it may from time to time purchase Common or
Preference 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,
1996, excluding short-term investments, were $16,407,096 and $9,565,123,
respectively.
As of June 30, 1996, based on cost for Federal income tax purposes, the
aggregate gross unrealized appreciation and depreciation for all securities were
$187,017,518 and $1,934,620, respectively.
[ 12 ]
<PAGE>
NOTES TO FINANCIAL STATEMENTS--Continued
4. Operating Expenses--The aggregate remuneration paid during the six
months ended June 30, 1996 to officers and directors amounted to $225,267, of
which $23,000 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, 1996.
5. Affiliates--The Plymouth Rock Company, Inc., RKS Health Ventures
Corporation, Southeast Publishing Ventures, Inc. and Transport Corporation of
America, Inc. are affiliates as defined in the Investment Company Act of 1940.
The Corporation received a dividend of $371,700 from The Plymouth Rock Company,
Inc. during the six months ended June 30, 1996. Unrealized appreciation related
to affiliates increased by $708,401 for the six months ended June 30, 1996.
6. Restricted Securities--The Corporation from time to time invests in
securities the resale of which is restricted. On June 30, 1996 such investments
had an aggregate value of $37,260,215, which was equal to 11.6% of the
Corporation's net assets. Investments in restricted securities at June 30, 1996,
including acquisition dates and cost, were: Grumman Hill Investments, L.P.,
9/11/85, $537,052; IXC Communications, Inc., 3/15/96, $106; Peerless Systems
Corporation, 12/21/92, $305,819; The Plymouth Rock Company, Inc., 12/15/82,
$1,500,000, 6/1/84, $699,986; RKS Health Ventures Corporation, 12/15/94,
$700,000, 7/13/95, $199,375; 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 increased
by $162,959 for the six months ended June 30, 1996.
ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of stockholders of the Corporation was held on March 20,
1996. At the meeting all of the directors of the Corporation were reelected by
the holders of $2.00 Series D Convertible Preference Stock and Common Stock
voting separately, as follows: Donald G. Calder, 358,229 shares of $2.00 Series
D Convertible Preference Stock in favor, 182 shares withheld; Jay R. Inglis,
358,229 shares of $2.00 Series D Convertible Preference Stock in favor, 182
shares withheld; Dudley D. Johnson, 12,290,882 shares of Common Stock in favor,
36,609 shares withheld; Wilmot H. Kidd, 12,290,882 shares of Common Stock in
favor, 36,609 shares withheld; and C. Carter Walker, Jr., 12,290,882 shares of
Common Stock in favor, 36,609 shares withheld.
In addition, the selection of KPMG Peat Marwick LLP as independent auditors
of the Corporation for the year 1996 was ratified by the following vote of the
holders of $2.00 Series D Convertible Preference Stock and Common Stock voting
together as one class: 12,637,486 shares in favor, 22,720 shares against, 25,696
shares abstaining.
[ 13 ]
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six
Mos.
Ended
6/30/96 1995 1994 1993 1992 1991
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $ 21.74 $ 17.60 $ 17.90 $ 14.33 $ 11.87 $ 10.00
Net investment income............ .18 .37 .30 .21 .20 .22
Net realized and unrealized gain
on securities.................. 2.30 5.76 1.08 5.03 3.20 2.42
------- ------- ------- ------- ------- -------
Total from investment
operations............... 2.48 6.13 1.38 5.24 3.40 2.64
Less:
Dividends from net investment
income*
To Preference Stockholders... .03 .06 .07 .07 .08 .08
To Common Stockholders....... .08 .33 .22 .18 .20 .14
Distributions from capital gains*
To Common Stockholders....... .12 1.60 1.39 1.42 .66 .44
Returns of capital*
To Common Stockholders....... -- -- -- -- -- .11
------- ------- ------- ------- ------- -------
Total distributions........ .23 1.99 1.68 1.67 .94 .77
------- ------- ------- ------- ------- -------
Net asset value, end of period... $ 23.99 $ 21.74 $ 17.60 $ 17.90 $ 14.33 $ 11.87
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
Per share market value, end of
period......................... 24.00 20.88 15.75 15.50 11.63 9.25
TOTAL INVESTMENT RETURN(%)....... 14.56+ 45.65 12.30 47.68 36.71 29.00
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period(000)... 321,908 292,548 226,639 218,868 165,600 131,640
Ratio of expenses to average net
assets(%)...................... .45++ .62 .65 .77 .88 .96
Ratio of net investment income to
average net assets(%).......... 1.52++ 1.69 1.51 1.17 1.42 1.78
Portfolio turnover rate(%)....... 3.52+ 8.27 11.73 15.14 18.56 16.69
Average commission rate paid
(cent per share)............... 6.98 6.89 7.11
</TABLE>
- ---------
* 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
6/30/96 which are estimated.
+ Not annualized.
++ Annualized.
[ 14 ]
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
CENTRAL SECURITIES CORPORATION
We have audited the accompanying statement of assets and liabilities,
including the statement of investments of Central Securities Corporation as of
June 30, 1996, and the related statement of operations for the six months then
ended, the statements of changes in net assets for the six months ended June 30,
1996 and the year ended December 31, 1995, and the financial highlights for the
six months ended June 30, 1996 and for each of the years in the five-year period
ended December 31, 1995. These financial statements and financial highlights are
the responsibility of the Corporation's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Central Securities Corporation as of June 30, 1996, the results of its
operations for the six months then ended, the changes in its net assets for the
six months ended June 30, 1996 and the year ended December 31, 1995, and the
financial highlights for the six months ended June 30, 1996 and for each of the
years in the five-year period ended December 31, 1995, in conformity with
generally accepted accounting principles.
Also, in our opinion, the information set forth as of June 30, 1996 and
December 31, 1995 and for the six months ended June 30, 1996 and 1995 in the
table appearing on page 3 is fairly stated in all material respects in relation
to the financial statements from which it has been derived.
KPMG PEAT MARWICK LLP
New York, N. Y.
July 24, 1996
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<PAGE>
BOARD OF DIRECTORS
DONALD G. CALDER DUDLEY D. JOHNSON
Partner President
G. L. Ohrstrom & Co. Young & Franklin Inc.
New York, N. Y. Liverpool, N. Y.
JAY R. INGLIS WILMOT H. KIDD
Executive Vice President President
Holt Corporation
New York, N. Y.
C. CARTER WALKER, JR.
Private Investor
GARDINER S. ROBINSON
Director Emeritus
OFFICERS
WILMOT H. KIDD, President
CHARLES N. EDGERTON, Vice President and Treasurer
KAREN E. RILEY, Secretary
OFFICE
375 Park Avenue, New York, N. Y. 10152
212-688-3011
CUSTODIAN
The Chase Manhattan Bank, N.A.
770 Broadway, New York, N. Y. 10003
TRANSFER AGENT AND REGISTRAR
First Chicago Trust Company of New York
P.O. Box 2500, Jersey City, N.J. 07303-2500
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
345 Park Avenue, New York, N. Y. 10154
[ 16 ]
