================================================================================
CENTRAL SECURITIES CORPORATION
---------
SEMI-ANNUAL REPORT
JUNE 30, 1999
================================================================================
<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
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
---- ------ ---------- ----- --------- ------ ------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
- ---------
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]
<PAGE>
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:
<TABLE>
<CAPTION>
June 30,
1999 December 31,
(Unaudited) 1998
----------- ----
<S> <C> <C>
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
</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 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]
<PAGE>
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]
<PAGE>
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]
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
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
======
</TABLE>
See accompanying notes to financial statements
and independent accountants' review report.
[6]
<PAGE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
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
===========
</TABLE>
See accompanying notes to financial statements
and independent accountants' review report.
[7]
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999
and the year ended December 31, 1998
<TABLE>
<CAPTION>
Six months
ended
June 30,
1999
(Unaudited) 1998
--------- ----
<S> <C> <C>
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
============ ============
</TABLE>
See accompanying notes to financial statements
and independent accountants' review report.
[8]
<PAGE>
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]
<PAGE>
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]
<PAGE>
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]
<PAGE>
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]
<PAGE>
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]
<PAGE>
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
<TABLE>
<CAPTION>
Six Mos.
Ended
6/30/99
(Unaudited) 1998 1997 1996 1995 1994
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
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.
</TABLE>
See accompanying notes to financial statements
and independent accountants' review report.
[14]
<PAGE>
- --------------------------------------------------------------------------------
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
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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.
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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
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