Central Securities N-30D
<PAGE>
CENTRAL SECURITIES CORPORATION
SEMI-ANNUAL REPORT
JUNE 30, 1997
<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
Total Stock at Net Net from net gains or investment Unrealized
net liquidation asset investment investment capital gains appreciation
Year assets preference value income(A) income surplus (losses) of investments
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1986 $ 116,731,670 $ 10,230,075 $ 13.26 $ 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
1996 356,685,785 9,102,050 25.64 .27 .28 1.37 18,154,136 214,721,981
6 mos.
to
June 30,
1997 407,685,839 9,042,675 29.39 .15 .08 .12 18,658,537 247,809,418
</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, 1997 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 30, 1997, the market quotations were as follows:
<TABLE>
<CAPTION>
<S> <C>
Convertible Preference Stock, $2.00 Series D................. 80 bid, 90 asked
27 9/16 high, 27 3/8 low
Common Stock................................................. and last sale
</TABLE>
[ 2 ]
<PAGE>
TO THE STOCKHOLDERS OF
CENTRAL SECURITIES CORPORATION:
Financial statements for the six months ended June 30, 1997, 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,
1997 1996
<S> <C> <C>
Net assets........................................................... $407,685,839 $356,685,785
Convertible Preference Stock at liquidation preference............... (9,042,675) (9,102,050)
Net assets applicable to Common Stock................................ $398,643,164 $347,583,735
Net asset coverage per share of Convertible Preference Stock......... $ 1,127.12 $ 979.69
Net assets per share of Common Stock................................. 29.39 25.64
Pro forma net assets per share, reflecting conversion of the
Convertible Preference Stock....................................... 27.67 24.21
Shares of Convertible Preference Stock outstanding.............. 361,707 364,082
Shares of Common Stock outstanding.............................. 13,562,710 13,555,021
</TABLE>
Comparative operating results are as follows:
<TABLE>
<CAPTION>
Six months ended June 30,
1997 1996
<S> <C> <C>
Net investment income............................................... $ 2,329,399 $ 2,357,422
Number of times Preferred dividend earned...................... 6.4 6.2
Per share of Common Stock...................................... .15* .15 *
Net realized gain on sale of investments............................ 18,658,537 6,920,621
Increase in net unrealized appreciation of investments.............. 33,087,437 23,066,100
Increase in net assets resulting from operations.................... 54,075,373 32,344,143
</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 27 to holders of Common
Stock. Also, during the first six months of 1997 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 1997 distributions in January 1998.
[ 3 ]
<PAGE>
During the first six months of 1997 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, NY 10152
August 1, 1997
SIGNS OF THE TIMES
" "American manufacturing has never been in more trouble than it is now.'
Thus the glum introduction to an official report on competitiveness released in
1990, the last time America hosted a G7 summit. Its moroseness matched the
nation's mood. Neurosis about the strength of Japan; gloom about the deficit;
woe and decline on every side.
"How times change. The country that presides over this year's rich-world
gathering in Denver is feeling triumphant, even euphoric. "Is this a wonder
economy or what?' asked BUSINESS WEEK. "On top of the world' chirped NEWSWEEK.
Notwithstanding signs of a slowdown in the second quarter of this year, the
economy has been growing faster for longer than most economists thought
sustainable. Unemployment has fallen well below the rate at which wage pressures
have traditionally started to grip. And inflation is nowhere in sight. Producer
prices fell for the fifth consecutive month in May, the longest string of
declines since the 1950's.
"Some back-slapping is in order, for sure. But today's economic success has
also unleashed a Panglossian optimism, and that is more dangerous. A growing
chorus of pundits, investors and economists argue that the good times are
here -- for good. They claim that such factors as globalization and the rise of
information technology have changed the way the economy works, so that old
constraints on growth no longer apply. Instead, America can look forward to a
prolonged period of prosperity, with both inflation and business cycles tamed.
"The stakes in this debate are high. If the new conventional wisdom is
correct, America does indeed face a rosy future. If it is not, unfounded
confidence could endanger the economy's achievements so far." (THE ECONOMIST,
June 21, 1997.)
[ 4 ]
<PAGE>
PRINCIPAL PORTFOLIO CHANGES*
April 1 to June 30, 1997
(Common Stock unless specified otherwise)
<TABLE>
<CAPTION>
Number of Shares
Held
June 30,
Purchased Sold 1997
<S> <C> <C> <C>
Allmerica Financial Corporation................................ 30,000 120,000
Deltic Timber Corporation...................................... 5,000 80,714
Electronic Data Systems Corporation............................ 200,000 200,000
Household International, Inc................................... 10,000 190,000
IXC Communications Corporation 7-1/4% Junior
Conv. Pfd. Due 2007.......................................... 10,181+ 10,181
Intel Corporation.............................................. 30,000 270,000
Kelly Services Inc. Class A.................................... 30,000 --
MGI Pharma, Inc................................................ 50,000 150,000
Media General, Inc. Class A.................................... 60,000 --
RKS Health Ventures Corporation Ser. C Conv. Pfd............... 9,009 9,009
The Reynolds and Reynolds Company Class A...................... 100,000 600,000
Signet Banking Corporation..................................... 5,000 295,000
Trigon Healthcare Inc.......................................... 7,200 --
</TABLE>
* Excluding stocks listed under "Miscellaneous" in the Statement of Investments.
+ 181 of which were received as a dividend.
[ 5 ]
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments:
General portfolio securities at market value
(cost $120,726,476) (Note 1)............................. $ 333,647,860
Securities of affiliated companies (cost $4,467,061)
(Notes 1, 5 and 6)....................................... 39,355,095
Short-term debt securities at cost plus accrued interest... 35,230,647 $ 408,233,602
Cash and receivables:
Cash....................................................... 430,409
Dividends receivable....................................... 94,100 524,509
Office equipment and leasehold improvements, net................ 19,173
Total Assets.......................................... 408,777,284
LIABILITIES:
Payable for securities purchased................................ 951,375
Accrued expenses and reserves................................... 140,070
Total Liabilities..................................... 1,091,445
NET ASSETS........................................................... $ 407,685,839
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 361,707 (Note 2)....................................... $ 9,042,675
Common Stock at par value, $1.00 per share, authorized
20,000,000 shares; issued 13,562,710 (Note 2)................. 13,562,710
Surplus:
Paid-in.................................................... $ 117,689,798
Undistributed net gain on sales of investments............. 18,412,929
Undistributed net investment income........................ 1,168,309 137,271,036
Net unrealized appreciation of investments...................... 247,809,418
NET ASSETS........................................................... $ 407,685,839
NET ASSET VALUE PER COMMON SHARE..................................... $29.39
</TABLE>
See accompanying notes to financial statements.
[ 6 ]
<PAGE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Income:
Cash dividends.................................................... $ 1,975,707
Interest.......................................................... 1,025,342
Miscellaneous income.............................................. 43,750 $ 3,044,799
Expenses:
Investment research............................................... 107,311
Administration and operations..................................... 148,870
Employees' retirement plans....................................... 3,300
Custodian fees.................................................... 37,222
Franchise and miscellaneous taxes................................. 84,052
Transfer agent and registrar fees and expenses.................... 33,486
Rent and utilities................................................ 75,390
Listing, software and sundry fees................................. 50,295
Legal, auditing and tax fees...................................... 18,848
Stationery, supplies, printing and postage........................ 31,672
Travel and telephone.............................................. 16,102
Directors' fees................................................... 25,000
Insurance......................................................... 48,111
Publications and miscellaneous.................................... 35,741 715,400
Net investment income.................................................. 2,329,399
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain from security transactions........................... 18,658,537
Net increase in unrealized appreciation of investments................. 33,087,437
Net gain on investments........................................... 51,745,974
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $ 54,075,373
</TABLE>
See accompanying notes to financial statements.
[ 7 ]
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended June 30, 1997
and the year ended December 31, 1996
<TABLE>
<CAPTION>
Six months
ended
June 30,
1997 1996
<S> <C> <C>
FROM OPERATIONS:
Net investment income........................................... $ 2,329,399 $ 4,252,357
Net realized gain on investments................................ 18,658,537 18,154,136
Net increase in unrealized appreciation of investments..... 33,087,437 52,705,184
Increase in net assets resulting from operations........... 54,075,373 75,111,677
DIVIDENDS TO STOCKHOLDERS FROM:
Net investment income:
Preference Stock........................................... (362,789) (753,623)
Common Stock............................................... (1,112,454) (3,643,403)
Net realized gain from investment transactions.................. (1,600,076) (17,907,647)
Decrease in net assets from distributions.................. (3,075,319) (22,304,673)
FROM CAPITAL SHARE TRANSACTIONS: (Note 2)
Distribution to stockholders reinvested in Common Stock......... -- 11,331,622
Other capital transactions...................................... -- (400)
Increase in net assets from capital share transactions..... -- 11,331,222
Total increase in net assets.......................... 51,000,054 64,138,226
NET ASSETS:
Beginning of period............................................. 356,685,785 292,547,559
End of period................................................... $407,685,839 $356,685,785
</TABLE>
See accompanying notes to financial statements.
[ 8 ]
<PAGE>
STATEMENT OF INVESTMENTS
June 30, 1997
PORTFOLIO SECURITIES 91.5%
(COMMON STOCKS UNLESS SPECIFIED OTHERWISE)
<TABLE>
<CAPTION>
PRIN. AMT. MARKET
OR SHARES VALUE
<C> <S> <C>
BANKING AND FINANCE 17.5%
600,000 The Bank of New York Company, Inc................. $ 26,100,000
325,000 Capital One Financial Corporation................. 12,268,750
190,000 Household International, Inc...................... 22,313,125
295,000 Signet Banking Corporation........................ 10,620,000
71,301,875
BUILDING PRODUCTS 1.5%
80,714 Deltic Timber Corporation......................... 2,365,929
100,000 USG Corporation(a)................................ 3,650,000
6,015,929
BUSINESS SERVICES 3.0%
600,000 The Reynolds and Reynolds Company
Class A......................................... 9,450,000
150,000 UniFirst Corporation.............................. 3,000,000
12,450,000
CHEMICALS 9.7%
1,000,000 Hanna (M. A.) Company............................. 28,812,500
230,000 Martin Color-Fi, Inc.(a).......................... 1,840,000
100,000 Rohm and Haas Company............................. 9,006,250
39,658,750
COMMUNICATIONS 2.7%
56,905 IXC Communications Corporation(a)................. 1,493,756
10,181 IXC Communications Corporation 7-1/4%
Junior Conv. Pfd. Due 2007(b)................... 1,201,358
93 IXC Communications Corporation 10%
Cum. Pfd.(a)(b)................................. 93,110
440,000 Nextel Communications, Inc. Class A(a)............ 8,332,500
11,120,724
COMPUTER SOFTWARE & SERVICES 5.7%
462,500 American Management Systems, Inc.(a).............. 12,371,875
200,000 Electronic Data Systems Corporation............... 8,200,000
181,129 Peerless Systems Corporation(a)(c)................ 2,490,524
23,062,399
</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.......................... $ 9,793,175
ELECTRONICS 16.9%
740,000 Analog Devices, Inc.(a)........................... 19,656,250
250,000 The DII Group Incorporated........................ 11,000,000
270,000 Intel Corporation................................. 38,289,375
68,945,625
ENERGY 5.0%
300,000 Mercantile International Petroleum Inc.(a)........ 330,000
300,000 Murphy Oil Corporation............................ 14,625,000
110,000 Petroleum Geo-Services ASA ADR(a)................. 5,376,250
Steuart Petroleum Company Warrant to
Purchase Common Stock(a)(b)..................... 0
20,331,250
HEALTH CARE 0.3%
150,000 MGI Pharma, Inc.(a)............................... 525,000
70,000 RKS Health Ventures Corporation(a)(b)(d).......... 350,000
15,950 RKS Health Ventures Corporation Series A
Conv. Pfd.(a)(b)(d)............................. 199,375
9,009 RKS Health Ventures Corporation Series C
Conv. Pfd.(a)(b)(d)............................. 100,000
1,174,375
INDUSTRIAL EQUIPMENT 4.3%
600,000 Brady (W.H.), Inc................................. 17,400,000
INSURANCE 15.2%
120,000 Allmerica Financial Corporation................... 4,785,000
50,000 Gallagher (Arthur J.) & Co........................ 1,887,500
100,000 Integon Corporation............................... 2,500,000
133,333 Mutual Risk Management Ltd........................ 6,116,651
70,000 The Plymouth Rock Company, Inc.
Class A(b)(d)................................... 31,500,000
150,000 Provident Companies, Inc.......................... 8,025,000
170,000 Vesta Insurance Group, Inc........................ 7,352,500
62,166,651
LIMITED PARTNERSHIP 0.7%
Grumman Hill Investments, L.P.(a)(b).............. 2,762,557
METALS AND MINING 2.8%
300,000 Cyprus Amax Minerals Company...................... 7,350,000
300,000 Morrison Knudsen Corporation(a)................... 4,087,500
11,437,500
</TABLE>
[ 10 ]
<PAGE>
<TABLE>
<CAPTION>
PRIN. AMT. MARKET
OR SHARES VALUE
<C> <S> <C>
TRANSPORTATION 1.8%
533,757 Transport Corporation of America, Inc.
Class B(a)(d)................................... $ 7,205,720
MISCELLANEOUS 2.0%
5,000 Southeast Publishing Ventures, Inc.
Series A Pfd.(a)(b)(d).......................... 0
Other investments................................. 8,176,425
8,176,425
Total Portfolio Securities.............. 373,002,955
SHORT-TERM DEBT INVESTMENTS 8.6%
$ 6,844,000 Chevron Corporation 5.50% due 7/14/97............. 6,859,694
15,456,000 Ford Motor Corporation 5.50%-5.54%
due 7/07/97-7/14/97............................. 15,499,572
12,857,000 General Electric Capital Corp.
5.57%-5.58% due 7/21/97-7/28/97................. 12,871,381
Total Short-Term Investments............ 35,230,647
Total Investments....................... 408,233,602
Liabilities, less cash, receivables and
other assets (0.1%)................... (547,763)
Net Assets (100%)....................... $407,685,839
</TABLE>
(a) Non-dividend paying.
(b) Valued at estimated fair value.
(c) As a result of a fractional adjustment, the actual number of
shares of Common Stock of Peerless Systems Corporation
received on conversion of Series B Pfd. Stock was 133,253
shares rather than 133,254 shares as previously reported.
(d) 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
30, 1997 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. 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. 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 3.241 shares of Common Stock and
1,172,292 authorized but unissued Common shares have been reserved for issuance
upon conversion. During the six months ended June 30, 1997, 7,689 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 1997, 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, 1997, excluding short-term investments, were $21,137,007 and $26,617,035,
respectively.
[ 12 ]
<PAGE>
As of June 30, 1997, based on cost for Federal income tax purposes, the
aggregate gross unrealized appreciation and depreciation for all securities were
$249,237,613 and $1,428,195, respectively.
4. OPERATING EXPENSES -- The aggregate remuneration paid during the six
months ended June 30, 1997 to officers and directors amounted to $231,965, of
which $25,000 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, 1997.
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 $127,400 from The Plymouth Rock Company,
Inc. during the six months ended June 30, 1997. Unrealized appreciation related
to affiliates increased by $1,117,832 for the six months ended June 30, 1997.
6. RESTRICTED SECURITIES -- The Corporation from time to time invests in
securities the resale of which is restricted. On June 30, 1997 such investments
had an aggregate value of $36,206,400, which was equal to 8.9% of the
Corporation's net assets. Investments in restricted securities at June 30, 1997,
including acquisition dates and cost, were: Grumman Hill Investments, L.P.,
9/11/85, $535,880; IXC Communications, Inc., 3/15/96, $106 and 4/14/97,
$1,010,453; The Plymouth Rock Company, Inc., 12/15/82, $1,500,000 and 6/1/84,
$699,986; RKS Health Ventures Corporation, 12/15/94, $700,000, 7/13/95, $199,375
and 4/3/97, $100,000; 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 $367,870 for the six
months ended June 30, 1997.
ANNUAL MEETING OF STOCKHOLDERS
(unaudited)
The annual meeting of stockholders of the Corporation was held on March 12,
1997. 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, 353,690 shares of Preference Stock
in favor, 281 shares withheld each; Dudley D. Johnson, 12,304,367 shares of
Common Stock in favor, 41,380 shares withheld; Wilmot H. Kidd, 12,304,314 shares
of Common Stock in favor, 41,433 shares withheld; and C. Carter Walker, Jr.,
12,304,118 shares of Common Stock in favor, 41,629 shares withheld.
In addition, the selection of KPMG Peat Marwick LLP as independent auditors
of the Corporation for the year 1997 was ratified by the following vote of the
holders of the Preference Stock and Common Stock voting together as one class:
12,652,527 shares in favor, 15,978 shares against, 32,004 shares abstaining.
[ 13 ]
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Mos.
Ended
6/30/97 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...... $ 25.64 $ 21.74 $ 17.60 $ 17.90 $ 14.33 $ 11.87
Net investment income..................... .17 .33 .37 .30 .21 .20
Net realized and unrealized gain on
securities.............................. 3.81 5.28 5.76 1.08 5.03 3.20
Total from investment operations... 3.98 5.61 6.13 1.38 5.24 3.40
Less:
Dividends from net investment income*
To Preference Stockholders........... .03 .06 .06 .07 .07 .08
To Common Stockholders............... .08 .28 .33 .22 .18 .20
Distributions from capital gains*
To Common Stockholders............... .12 1.37 1.60 1.39 1.42 .66
Total distributions................ .23 1.71 1.99 1.68 1.67 .94
Net asset value, end of period............ $ 29.39 $ 25.64 $ 21.74 $ 17.60 $ 17.90 $ 14.33
Per share market value, end of
period.................................. 27.38 24.13 20.88 15.75 15.50 11.63
TOTAL INVESTMENT RETURN,
MARKET(%)............................... 16.11+ 22.35 45.65 12.30 47.68 36.71
TOTAL INVESTMENT RETURN,
NAV(%).................................. 15.12+ 25.97 34.59 8.62 36.66 29.53
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period(000)............ 407,686 356,686 292,548 226,639 218,868 165,600
Ratio of expenses to average net
assets(%)............................... .38| .55 .62 .65 .77 .88
Ratio of net investment income to average
net assets(%)........................... 1.23| 1.32 1.69 1.51 1.17 1.42
Portfolio turnover rate(%)................ 6.16+ 9.89 8.27 11.73 15.14 18.56
Average commission rate paid
((cents) per share)..................... 7.00 6.76 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
6/30/97 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, 1997, 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, 1997 and the year ended December 31, 1996, and the
financial highlights for the six months ended June 30, 1997 and for each
of the years in the five-year period ended December 31, 1996. 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, 1997 by correspondence
with the custodian and broker. 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, 1997, the
results of its operations for the six months then ended, the changes in
its net assets for the six months ended June 30, 1997 and the year ended
December 31, 1996, and the financial highlights for the six months ended
June 30, 1997 and for each of the years in the five-year period ended
December 31, 1996, in conformity with generally accepted accounting
principles.
Also, in our opinion, the information set forth as of June 30, 1997
and December 31, 1996 and for the six months ended June 30, 1997 and 1996
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, NY
July 23, 1997
[ 15 ]
<PAGE>
BOARD OF DIRECTORS
<TABLE>
<S> <C>
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
</TABLE>
C. CARTER WALKER, JR.
Washington, CT
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, NY 10152
212-688-3011
CUSTODIAN
The Chase Manhattan Bank, N.A.
770 Broadway, New York, NY 10003
TRANSFER AGENT AND REGISTRAR
First Chicago Trust Company of New York
P.O. Box 2500, Jersey City, NJ 07303-2500
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
345 Park Avenue, New York, NY 10154
[ 16 ]
