UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act File Number 811-179
Name of registrant as specified in charter: Central Securities Corporation
Address of principal executive offices:
630 Fifth Avenue
Suite 820
New York, New York 10111
Name and address of agent for service:
Central Securities Corporation, Wilmot H. Kidd, President
630 Fifth Avenue
Suite 820
New York, New York 10111
Registrant's telephone number, including area code: 212-698-2020
Date of fiscal year end: December 31, 2005
Date of reporting period: December 31, 2005
Item 1. Reports to Stockholders.
================================================================================
CENTRAL SECURITIES CORPORATION
----------
SEVENTY-SEVENTH ANNUAL REPORT
2005
================================================================================
SIGNS OF THE TIMES
"For most of recorded history, China was the world's largest economy.
Until the end of the fifteenth century it was by far the leader in technology
and had the highest per capita GDP on the planet. While Europeans were hacking
at each other with broadswords, the Chinese were scaring their enemies to death
with fireworks. Europe overtook China in per capita GDP by about 1500, but China
remained the world's biggest economy until well into the nineteenth century. As
late as 1820, the Middle Kingdom accounted for nearly a third of global GDP. By
1950, however, that had shrunk to less than 5 percent and China's per capita GDP
was one of the lowest in the world."
"Unless things go badly off track, the story of the next fifty years will
be that of China recovering its historically central position as the Middle
Kingdom, with the world's largest population and economy. In terms of purchasing
power parity, it could have a larger GDP than the United States as soon as 2020.
And in nominal dollar terms, its GDP in 2050 will be $45 trillion versus about
$35 trillion for the United States. China will be the world's largest market for
virtually everything as well as the biggest recipient of investment from, and
the largest investor in, most other countries. It will be a large international
creditor, and the yuan could well be the world's money, or at least one of its
major reserve currencies." (Clyde Prestowitz, Three Billion New Capitalists)
----------
"There have been two great shifts in global power over the past 400 years.
The first was the rise of Europe, which around the 17th century became the
richest, most enterprising and ambitious part of the world. The second was the
rise of the United States, in the late 19th and early 20th centuries, when it
became the single most powerful country in the world, the globe's decisive
player in economics and politics.
"For centuries, the rest of the world was a stage for the ambitions and
interests of the West's great powers. China's rise, along with that of India and
the continuing weight of Japan, represents the third great shift in global power
- the rise of Asia.
"Great powers are not born every day. The list of current ones - the
United States, Britain, France, Germany, Russia - has been mostly the same for
two centuries. The arrival of a new one usually produces tension if not turmoil,
as the newcomer tries to fit into the established order -- or overturns it to
suit its purposes. Think of the rise of Germany and Japan in the early 20th
century or the decline of the Ottoman Empire in that same period, which created
the modern Middle East." (Fareed Zakaria, Newsweek, May 9, 2005)
----------
"The U.S. is at a critical juncture. [It faces] a competitive challenge of
historic dimensions coming from China, India, and many other emerging-market
economies. India, China, Korea, and Southeast Asia will be the most robust part
of the global economy and will become the center of it over the decades ahead.
At some point in that period, China will likely become the world's largest
economy. That is a challenge we can meet, but we are not on track to meet it
today." (Robert Rubin, Business Week, December 19, 2005)
[2]
SIGNS OF THE TIMES
"According to estimates by The Economist, the total value of residential
property in developed economies rose by more than $30 trillion over the past
five years, to over $70 trillion, an increase equivalent to 100% of those
countries' combined GDPs. Not only does this dwarf any previous house-price
boom, it is larger than the global stockmarket bubble in the late 1990s (an
increase over five years of 80% of GDP) or America's stockmarket bubble in the
late 1920s (55% of GDP). In other words, it looks like the biggest bubble in
history.
"The global boom in house prices has been driven by two common factors:
historically low interest rates have encouraged home buyers to borrow money; and
households have lost faith in equities after stockmarkets plunged, making
property look attractive. Will prices now fall, or simply flatten off?" (The
Economist, June 18, 2005)
----------
"There have been more than a dozen 'tax reform' attempts in Washington
over the last 30 years; yet after all of this 'reforming,' the tax code is as
monstrously complex as ever. The tax code is now 3.5 million words long and IRS
regulations are another 8 million words - together that's about 12 times the
length of William Shakespeare's complete works, and 15 times the length of the
King James Bible." (Stephen Moore, The Wall Street Journal, January 27, 2005)
----------
"As most Americans are aware, our auto industry is in a crisis. Workers'
wages are falling, and hundreds of thousands of jobs are being sent offshore.
America's largest parts supplier, Delphi, filed for bankruptcy protection, and
General Motors, Delphi's main customer, may too, if a threatened United Auto
Workers strike occurs next month. Meanwhile, Ford and its main parts supplier,
Visteon, seem to be skidding down the same road.
"How did we get here? There are many causes: poor car designs, high
pension costs, increased foreign competition. But much of it comes down to the
overwhelming health insurance costs borne by the automakers. This is why the
union's president, Ron Gettelfinger, has urged Congress to enact sweeping health
insurance reforms.
"If the government paid everyone's health insurance bills, as those in
Canada and most of Europe do, Detroit's Big Three could save at least $1,300 per
vehicle. Profitability would return. With deeper pockets, the auto makers could
afford to pay their suppliers. Communities would be spared layoffs." (Robert
Fitch, The New York Times, December 28, 2005)
----------
"The technology revolution is at an early stage....More transformational
than technology itself is the shift in behaviour that it enables. We work not
just globally but instantaneously. We are forming communities and relationships
in new ways (12 percent of American newlyweds last year met online). More than
2bn people now use cellphones. We send 9,000 bn e-mails a year. We do a billion
Google searches a day, over half not in the English language. For perhaps the
first time in history, geography is not the primary constraint on the boundaries
of social and economic organisation." (Ian Davis, The Financial Times, January
13, 2006)
[3]
CENTRAL SECURITIES CORPORATION
(Organized on October 1, 1929 as an investment company, registered as
such with the Securities and Exchange Commission under the
provisions of the Investment Company Act of 1940.)
TEN YEAR HISTORICAL DATA
Per Share of Common Stock
--------------------------------------
Total Convertible Net Net Net realized Unrealized
net Preference asset investment Divi- Distribu- investment appreciation
Year assets Stock(A) value income(B) dends(C) tions(C) gain of investments
---- ------------ ----------- ------ ---------- -------- --------- ------------ --------------
1995 $292,547,559 $9,488,350 $21.74 $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
1999 590,655,679 -- 35.05 .26 .26 2.34 43,205,449 394,282,360
2000 596,289,086 -- 32.94 .32 .32 4.03 65,921,671 363,263,634
2001 539,839,060 -- 28.54 .18 .22 1.58* 13,662,612 304,887,640
2002 361,942,568 -- 18.72 .14 .14 1.11 22,869,274 119,501,484
2003 478,959,218 -- 24.32 .09 .11 1.29 24,761,313 229,388,141
2004 529,468,675 -- 26.44 .11 .11 1.21 25,103,157 271,710,179
2005 573,979,905 -- 27.65 .28 .28 1.72 31,669,417 302,381,671
----------
A- At liquidation preference.
B- Excluding gains or losses realized on sale of investments and the dividend
requirement on the Convertible Preference Stock which was redeemed August
1, 1999.
C- Computed on the basis of the Corporation's status as a "regulated
investment company" for Federal income tax purposes. Dividends are from
undistributed net investment income. Distributions are from long-term
investment gains.
* Includes a non-taxable return of capital of $.55.
The Common Stock is listed on the American Stock Exchange under the symbol
CET. On December 30, 2005 (the last trading day of the year) the market
quotations were: $23.73 low, $23.90 high and $23.80 last sale.
Central's results to December 31, 2005 versus the S&P 500:
Central's Central's Standard &
Average Annual Total Return NAV Return Market Return Poor's 500
--------------------------- ---------- ------------- ----------
One Year ............................. 13.8% 14.0% 4.9%
Five Year ............................ 3.8% 4.2% 0.5%
Ten Year ............................. 11.9% 10.0% 9.1%
Fifteen Year ......................... 16.6% 17.5% 11.5%
[4]
To the Stockholders of
CENTRAL SECURITIES CORPORATION:
Financial statements for the year 2005, as reported upon by our
independent registered public accounting firm, and other pertinent information
are submitted herewith.
Comparative net assets are as follows:
December 31, December 31,
2005 2004
---- ----
Net assets ........................................ $573,979,905 $529,468,675
Net assets per share of Common Stock .............. 27.65 26.44
Shares of Common Stock outstanding ............ 20,762,159 20,023,209
Comparative operating results are as follows:
Year 2005 Year 2004
--------- ---------
Net investment income ............................. $ 5,684,776 $ 2,073,746
Per share of Common Stock ..................... .28* .11*
Net realized gain on sale of investments .......... 31,669,417 25,103,157
Increase in net unrealized appreciation
of investments .................................. 30,671,492 42,322,038
Increase in net assets resulting from operations .. 68,025,685 69,498,941
----------
* Per-share data are based on the average number of Common shares
outstanding during the year.
The Corporation made two distributions to holders of Common Stock in 2005,
a cash dividend of $.20 per share paid on June 24 and an optional distribution
of $1.80 per share in cash, or one share of Common Stock for each 12.5 shares
held, paid on December 27. For Federal income tax purposes, of the $2.00 paid in
2005, $.28 represents ordinary income and $1.72 represents long-term capital
gains, and separate notices have been mailed to stockholders. With respect to
state and local taxes, the status of distributions may vary. Stockholders should
consult with their tax advisors on this matter.
In the optional distribution paid in December, the holders of 58% of the
outstanding shares of Common Stock elected stock, and they received 923,250
Common shares.
During 2005 the Corporation repurchased 184,300 shares of its Common Stock
on the American Stock Exchange at an average price per share of $24.09. The
Corporation 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. Purchases may be made on the American Stock Exchange or in
private transactions directly with stockholders.
[5]
Overall equity market returns last year were below the long-term trend of
10-12%. The S&P 500 increased by 4.9% while the Russell 2000, an index of
smaller companies, increased by 4.6%. Central's 13.8% increase was aided
primarily by energy stocks (Unocal, Murphy, Kerr-McGee, and Nexen) and
investments in Plymouth Rock, TriZetto, Agilent, Brady and Roper. Unisys,
PolyOne and Flextronics declined during the year. Our investment activity, as
measured by portfolio turnover, was 16%. We added nine new investments and sold
eight as well as making a number of additions and reductions as reported
quarterly. We ended the year with thirty-nine holdings. The ten largest, shown
on page eight, accounted for 57% of net assets.
Energy stocks performed well last year in part because the price of both
oil and natural gas continued to rise. Probably the most interesting aspect of
the price increase was the fact that it did not have a more noticeable dampening
effect on overall economic activity. Consumers seemed to take the $3.00 per
gallon price of gasoline in stride. We have yet to see, however, what effect
higher winter heating bills may have. The contested takeover of Unocal and the
restructuring of Kerr-McGee were two events that had a positive outcome for
Central. While we do not believe that we can forecast the price of oil or gas,
looking ahead, we do believe it is possible that there will be more industry
consolidation as the cash rich majors look for ways to acquire companies with
drilling opportunities. In the meantime, the exploration companies that Central
owns have been doing an excellent job of developing drilling prospects and
finding oil and gas.
Although audited financial information will not be available until March,
it appears that Plymouth Rock had another good year on top of the spectacular
results of 2004. The coming year will likely be more challenging. The
environment in New Jersey has become more competitive with the entry of new
companies including GEICO and, more recently, Progressive. In Massachusetts the
Governor has proposed regulatory changes intended to bring more national
companies into the state. The ongoing information technology project at Plymouth
Rock is now in its implementation phase. In the long run it will provide the
company with significant capabilities and savings, but at the moment it requires
a great deal of attention. Plymouth Rock's management is focused on all of these
issues and we have confidence in the company's ability to meet these challenges.
We also have confidence in management's ability to grow Plymouth Rock for a
number of years into the future.
As we have indicated, Plymouth Rock is not publicly traded and is valued
by Central's Board of Directors, based primarily on an independent appraisal
obtained by Plymouth Rock. In addition, we compare it with other insurance
companies, evaluate management, corporate governance, the company and industry
outlooks, marketability, and other factors, including recent private
transactions, to determine the estimated fair value used in the accompanying
financials.
Last year we commented on the flow of capital into an increasing number of
hedge funds and, recently a report indicated that the private equity industry
(leveraged buy-outs and venture capital) had raised $250 billion in 2005. The
ultimate effect of this flow of capital into hedge funds and private equity is
not clear. In any event, it is indicative of substantial wealth in the form of
liquid assets seeking employment in the equity markets. Over long periods of
time small-cap stocks have produced better investment results than large-cap
stocks. During the past three years good small and mid-cap performance has
probably been aided by the attention of hedge and private equity funds with new
money to put to work. Central has historically focused in this area, and, for
example, benefited last year when Sungard was acquired in a buy-out. Finding new
investments is increasingly challenging.
[6]
Our investment approach continues to be based on the long-term view. We
try to make investments at a reasonable, if not a bargain, price with the idea
of holding for a three to five year period. Many investors are forced to have a
shorter time horizon, and we believe that our ability to take a long-term view
has been an advantage for Central stockholders. For example, we sometimes invest
in situations in which a company is making a significant investment that we
think will benefit the future but is currently penalizing results. It is very
important in our view that management's interests are aligned with those of
shareholders, with integrity being a sine qua non.
Our long-standing practice has been to keep about one half of our assets
in a small number of companies, with the remainder in a more diversified
portfolio. We believe the risk associated with this approach can be reduced
through knowledge of the companies in which we invest. Ideally, we want to hold
growing, profitable companies for extended periods of time. Significant growth
for any particular company will not last indefinitely, and, over time, the
composition of our assets will change as long-term investments are reduced or
sold and the proceeds redeployed.
It is our goal to provide shareholders with investment management that
will be judged as excellent over the long-term. We continue to believe that
under reasonably favorable economic conditions our investment approach will
provide satisfactory results.
Shareholder inquiries are welcome.
CENTRAL SECURITIES CORPORATION
WILMOT H. KIDD, President
630 Fifth Avenue
New York, NY 10111
January 25, 2006
--------------------------------------------------------------------------------
In December 2005, the corporation initiated direct registration, a system
that allows for book-entry ownership and the electronic transfer of the
Corporation's shares. Stockholders may find direct registration a convenient way
of managing their investment. Stockholders wishing certificates may request
them.
A pamphlet which describes the features and benefits of direct
registration, including the ability of shareholders to deposit certificates with
our transfer agent, can be obtained by calling Computershare Trust Company at
1-800-756-8200, calling the Corporation at 1-866-593-2507 or visiting our
website: www.centralsecurities.com under Contact Us.
--------------------------------------------------------------------------------
[7]
TEN LARGEST INVESTMENTS
December 31, 2005
Percent of Year First
Cost Value Net Assets Acquired
---- ----- ---------- --------
(millions)
The Plymouth Rock Company, Inc. ...................... $ 2.2 $108.5 18.9% 1982
Brady Corporation Class A ............................ 3.5 33.6 5.9 1984
Murphy Oil Corporation ............................... 3.7 32.4 5.6 1974
Capital One Financial Corporation .................... 1.4 25.9 4.5 1994
Agilent Technologies, Inc. ........................... 18.1 25.0 4.3 2005
Convergys Corporation ................................ 24.1 24.6 4.3 1998
Intel Corporation .................................... 0.4 24.5 4.3 1986
Kerr-McGee Corporation ............................... 12.1 18.2 3.2 2001
The TriZetto Group, Inc. ............................. 5.4 17.4 3.0 2002
Roper Industries, Inc. ............................... 9.0 16.2 2.8 2003
PRINCIPAL PORTFOLIO CHANGES
October 1 to December 31, 2005
(Common Stock unless specified otherwise)
Number of Shares
-------------------------------------
Held
Purchased Sold December 31, 2005
--------- ---- -----------------
Abbott Laboratories ................... 20,000 120,000
Agilent Technologies, Inc. ............ 150,000 750,000
Brady Corporation Class A ............. 60,000 930,000
Capital One Financial Corporation ..... 10,000 300,000
Cincinnati Bell Inc. .................. 300,000 500,000
Cypress Semiconductor Corporation ..... 55,000 255,000
Dover Corporation ..................... 140,000 400,000
Kerr-McGee Corporation ................ 60,649 200,000
Nexen Inc. ............................ 20,000 160,000
PolyOne Corporation ................... 50,000 1,150,000
Sonus Networks, Inc. .................. 2,000,000 2,000,000
Unisys Corporation .................... 100,000 900,000
Virage Logic Corp ..................... 76,300 96,400
[8]
DIVERSIFICATION OF INVESTMENTS
December 31, 2005
Percent of
Net Assets
December 31
------------
Issues Cost Value 2005 2004
------ ---- ----- ---- ----
Common Stocks:
Insurance ........................... 2 $2,610,297 $109,032,000 19.0% 20.3%
Electronics ......................... 9 42,639,736 99,156,582 17.3 12.2
Energy .............................. 6 52,773,727 90,521,001 15.8 13.1
Information Technology Services ..... 5 54,345,926 68,192,256 11.9 15.7
Manufacturing ....................... 3 25,531,980 66,042,500 11.5 9.7
Banking and Finance ................. 2 4,778,824 41,845,000 7.3 11.5
Health Care ......................... 5 20,693,769 20,215,100 3.5 3.9
Chemicals ........................... 3 14,080,461 19,039,500 3.3 3.6
Other ............................... 5 5,364,215 11,156,668 1.9 1.6
Short-Term Investments ................. 2 48,252,004 48,252,004 8.4 8.3
FINANCIAL HIGHLIGHTS
2005 2004 2003 2002 2001
---- ---- ---- ---- ----
Per Share Operating Performance:
Net asset value, beginning of year ............... $ 26.44 $ 24.32 $ 18.72 $ 28.54 $ 32.94
Net investment income* ........................... .28 .11 .09 .14 .18
Net realized and unrealized gain (loss)
on securities* ................................. 2.93 3.33 6.91 (8.71) (2.78)
-------- -------- -------- -------- --------
Total from investment operations ........... 3.21 3.44 7.00 (8.57) (2.60)
Less:
Dividends from net investment income** ........... .28 .11 .11 .14 .22
Distributions from capital gains** ............... 1.72 1.21 1.29 1.11 1.03
Return of capital** .............................. -- -- -- -- .55
-------- -------- -------- -------- --------
Total distributions ........................ 2.00 1.32 1.40 1.25 1.80
-------- -------- -------- -------- --------
Net asset value, end of year ..................... $ 27.65 $ 26.44 $ 24.32 $ 18.72 $ 28.54
======== ======== ======== ======== ========
Per share market value, end of year .............. $ 23.80 $ 22.85 $ 20.89 $ 16.28 $ 25.31
Total return based on market(%) .................. 14.04 16.16 36.22 (31.23) (2.42)
Total return based on NAV(%) ..................... 13.75 15.40 39.32 (29.43) (6.54)
Ratios/Supplemental Data:
Net assets, end of year(000) ..................... $573,980 $529,469 $478,959 $361,943 $539,839
Ratio of expenses to average net assets(%) ....... .54 .55 .56 .50 .45
Ratio of net investment income to average
net assets(%) .................................. 1.02 .41 .42 .57 .60
Portfolio turnover rate(%) ....................... 15.83 16.72 12.90 19.50 10.32
----------
* Based on the average number of shares outstanding during the year.
** Computed on the basis of the Corporation's status as a "regulated
investment company" for Federal income tax purposes.
See accompanying notes to financial statements.
[9]
STATEMENT OF INVESTMENTS
December 31, 2005
PORTFOLIO SECURITIES 91.5%
STOCKS (COMMON UNLESS SPECIFIED OTHERWISE)
Prin. Amt.
or Shares Value
--------- -----
Banking and Finance 7.3%
500,000 The Bank of New York Company, Inc. .............. $ 15,925,000
300,000 Capital One Financial Corporation ............... 25,920,000
------------
41,845,000
------------
Chemicals 3.3%
100,000 The Dow Chemical Company ........................ 4,382,000
1,150,000 PolyOne Corporation (a) ......................... 7,394,500
150,000 Rohm and Haas Company ........................... 7,263,000
------------
19,039,500
------------
Communications 0.9%
500,000 Arbinet-thexchange Inc. (a) ..................... 3,505,000
500,000 Cincinnati Bell Inc. (a) ........................ 1,755,000
------------
5,260,000
------------
Electronics 17.3%
750,000 Agilent Technologies, Inc. (a) .................. 24,967,500
430,000 Analog Devices, Inc. ............................ 15,424,100
255,000 Cypress Semiconductor Corporation (a) ........... 3,633,750
1,000,000 Flextronics International Ltd. (a) .............. 10,440,000
980,000 Intel Corporation ............................... 24,460,800
200,000 Motorola, Inc. .................................. 4,518,000
2,000,000 Solectron Corporation (a) ....................... 7,320,000
2,000,000 Sonus Networks, Inc. (a). ....................... 7,440,000
96,400 Virage Logic Corporation (a) .................... 952,432
------------
99,156,582
------------
Energy 15.8%
234,328 Chevron Corporation ............................. 13,302,801
200,000 Kerr-McGee Corporation .......................... 18,172,000
320,000 McMoRan Exploration Co. (a) ..................... 6,326,400
600,000 Murphy Oil Corporation .......................... 32,394,000
160,000 Nexen Inc. ...................................... 7,620,800
1,925,000 TransMontaigne Inc. (a) ......................... 12,705,000
------------
90,521,001
------------
Health Care 3.5%
120,000 Abbott Laboratories ............................. 4,731,600
100,000 Merck & Co. Inc. ................................ 3,181,000
100,000 Pfizer Inc. ..................................... 2,332,000
450,000 Schering-Plough Corporation ..................... 9,382,500
140,000 Vical Inc. (a) .................................. 588,000
------------
20,215,100
------------
[10]
Prin. Amt.
or Shares Value
--------- -----
Information Technology Services 11.9%
400,000 Accenture Ltd. (a). ............................. $ 11,548,000
378,600 Ceridian Corporation (a) ........................ 9,408,210
1,550,000 Convergys Corporation (a) ....................... 24,567,500
1,025,400 The TriZetto Group, Inc. (a) .................... 17,421,546
900,000 Unisys Corporation (a) .......................... 5,247,000
------------
68,192,256
------------
Insurance 19.0%
10,000 Erie Indemnity Co. Class A ...................... 532,000
70,000 The Plymouth Rock Company, Inc.
Class A (b)(c)(d) ............................. 108,500,000
------------
109,032,000
------------
Manufacturing 11.5%
930,000 Brady Corporation Class A ....................... 33,647,400
400,000 Dover Corporation ............................... 16,196,000
410,000 Roper Industries, Inc. .......................... 16,199,100
------------
66,042,500
------------
Retail Trade 0.1%
28,751 Aerogroup International, Inc. (a)(c) ............ 644,885
------------
Transportation 0.9%
531,557 Transport Corporation of America, Inc.
Class B (a)(b) ................................ 5,251,783
------------
Miscellaneous 0.0%
Grumman Hill Investments, L.P. (a)(c) ........... 0
------------
Total Portfolio Securities
(cost $222,818,936)(d) ........................ 525,200,607
SHORT-TERM INVESTMENTS 8.4%
Commercial Paper 3.2%
18,692,000 Citigroup Funding 4.1600% - 4.2209%
due 2/8/06 - 2/15/06 .......................... 18,604,645
U.S. Treasury Bills 5.2%
29,902,000 U.S. Treasury Bills 3.6104% - 4.0244%
due 2/16/06 - 4/20/06 ......................... 29,647,359
------------
Total Short-Term Investments
(cost $48,252,004)(d) ..................... 48,252,004
------------
Total Investments (cost
$271,070,940) (d) (99.9%) ................. 573,452,611
Cash, receivables and other assets
less liabilities (0.1%) ................... 527,294
------------
Net Assets (100%) ........................... $573,979,905
============
----------
(a) Non-dividend paying.
(b) Affiliate as defined in the Investment Company Act of 1940.
(c) Valued at estimated fair value.
(d) Aggregate cost for Federal tax purposes is substantially the same.
See accompanying notes to financial statements.
[11]
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2005
ASSETS:
Investments:
General portfolio securities at market value
(cost $219,362,804) (Note 1) ............................... $411,448,824
Securities of affiliated companies (cost $3,456,132)
(Notes 1, 5 and 6) ......................................... 113,751,783
Short-term investments (cost $48,252,004) .................... 48,252,004 $573,452,611
------------
Cash, receivables and other assets:
Cash ......................................................... 304,702
Dividends and interest receivable ............................ 95,375
Office equipment and leasehold improvements, net ............. 463,624
Other assets ................................................. 84,875 948,576
------------ ------------
Total Assets ............................................. 574,401,187
LIABILITIES:
Payable for securities purchased ................................. 108,000
Accrued expenses and reserves .................................... 313,282
------------
Total Liabilities ........................................ 421,282
------------
NET ASSETS ........................................................... $573,979,905
============
NET ASSETS are represented by:
Common Stock $1 par value: authorized
30,000,000 shares; issued 20,820,859 (Note 2) .................. $ 20,820,859
Surplus:
Paid-in ........................................................ $251,255,509
Undistributed net gain on sale of investments .................. 793,487
Undistributed net investment income ............................ 136,692 252,185,688
------------
Net unrealized appreciation of investments ....................... 302,381,671
Treasury stock, at cost (58,700 shares of Common Stock)
(Note 2) ....................................................... (1,408,313)
------------
NET ASSETS ........................................................... $573,979,905
============
NET ASSET VALUE PER COMMON SHARE
(20,762,159 shares outstanding) .................................. $27.65
======
See accompanying notes to financial statements.
[12]
STATEMENT OF OPERATIONS
For the year ended December 31, 2005
INVESTMENT INCOME
Income:
Dividends (net of foreign withholding taxes of $3,642) ............ $ 6,644,762
Interest .......................................................... 2,015,881 $ 8,660,643
-----------
Expenses:
Administration and operations ..................................... 812,500
Investment research ............................................... 760,000
Occupancy costs ................................................... 433,217
Franchise and miscellaneous taxes ................................. 147,759
Employees' retirement plans ....................................... 125,500
Directors' fees ................................................... 117,750
Listing, software and sundry fees ................................. 117,484
Insurance ......................................................... 110,606
Stationery, supplies, printing and postage ........................ 93,158
Legal, auditing and tax fees ...................................... 80,032
Travel and telephone .............................................. 44,480
Transfer agent and registrar fees and expenses .................... 34,998
Custodian fees .................................................... 30,643
Publications and miscellaneous .................................... 67,740 2,975,867
----------- -----------
Net investment income ................................................. 5,684,776
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain from investment transactions ........................ 31,669,417
Net increase in unrealized appreciation of investments ................ 30,671,492
-----------
Net gain on investments ........................................... 62,340,909
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS .......................................................... $68,025,685
===========
See accompanying notes to financial statements.
[13]
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 2005 and 2004
2005 2004
---- ----
FROM OPERATIONS:
Net investment income ........................................................ $ 5,684,776 $ 2,073,746
Net realized gain on investments ............................................. 31,669,417 25,103,157
Net increase in unrealized appreciation
of investments ............................................................. 30,671,492 42,322,038
------------ ------------
Increase in net assets resulting from
operations ............................................................... 68,025,685 69,498,941
------------ ------------
DISTRIBUTIONS TO STOCKHOLDERS FROM:
Net investment income ........................................................ (5,649,605) (2,177,537)
Net realized gain from investment transactions ............................... (34,198,713) (23,622,634)
------------ ------------
Decrease in net assets from distributions .................................. (39,848,318) (25,800,171)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS: (Note 2)
Distribution to stockholders reinvested in
Common Stock ............................................................... 20,773,125 10,682,306
Cost of shares of Common Stock repurchased ................................... (4,439,262) (3,871,619)
------------ ------------
Increase in net assets from capital share transactions ..................... 16,333,863 6,810,687
------------ ------------
Total increase in net assets ......................................... 44,511,230 50,509,457
NET ASSETS:
Beginning of year ............................................................ 529,468,675 478,959,218
------------ ------------
End of year (including undistributed net investment
income of $136,692 and $97,684, respectively) .............................. $573,979,905 $529,468,675
============ ============
See accompanying notes to financial statements.
[14]
STATEMENT OF CASH FLOWS
For the year ended December 31, 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets from operations ............................ $ 68,025,685
Adjustments to net increase in net assets from operations:
Purchase of securities .............................................. ($78,203,872)
Proceeds from securities sold ....................................... 99,997,126
Net purchases of short-term investments ............................. (4,259,383)
Net realized gain from investments .................................. (31,669,417)
Increase in unrealized appreciation ................................. (30,671,492)
Depreciation and amortization ....................................... 83,256
Changes in operating assets and liabilities:
Decrease in dividends and interest receivable ..................... 185,092
Increase in office equipment and
leasehold improvements .......................................... (7,991)
Decrease in other assets .......................................... 79,900
Increase in accrued expenses and reserves ......................... 4,167
------------
Total adjustments ................................................... (44,462,614)
------------
Net cash provided by operating activities ................................. 23,563,071
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid ........................................................ (19,075,193)
Treasury shares repurchased ........................................... (4,331,262)
------------
Cash flows used in financing activities ................................... (23,406,455)
------------
Net increase in cash ...................................................... 156,616
Cash at beginning of year ................................................. 148,086
------------
Cash at end of year ....................................................... $ 304,702
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Non-cash financing activities not included herein consist of:
Reinvestment of dividends and distributions to stockholders ............. $ 20,773,125
Payable for treasury shares repurchased ................................. $ 108,000
See accompanying notes to financial statements.
[15]
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 or closing sale
price or, if unavailable, at the closing bid price. Corporate
discount notes and U.S. Treasury Bills 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.
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 accordance
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported.
Actual results may differ from those estimates.
Other--Security transactions are accounted for as of 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. Common Stock--The Corporation repurchased 184,300 shares of its Common
Stock in 2005 at an average price of $24.09 per share representing an average
discount from net asset value of 14.32%. 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.
The Corporation made two distributions to holders of Common Stock in 2005,
a cash dividend of $.20 per share paid on June 24 and an optional distribution
of $1.80 per share in cash, or one share of Common Stock for each 12.5 shares
held, paid on December 27. In the optional distribution, 125,600 shares of
Common Stock held as treasury shares by the Corporation were distributed, and
797,650 Common shares were issued.
3. Investment Transactions--The aggregate cost of securities purchased and
the aggregate proceeds of securities sold during the year ended December 31,
2005, excluding short-term investments, were $78,203,872 and $99,997,126,
respectively.
[16]
NOTES TO FINANCIAL STATEMENTS -- Continued
As of December 31, 2005, based on cost for Federal income tax purposes,
the aggregate gross unrealized appreciation and depreciation for all securities
were $312,746,271 and $10,364,600, respectively.
4. Operating Expenses--The aggregate remuneration paid during the year
ended December 31, 2005 to officers and directors amounted to $1,542,750, of
which $117,750 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. The amount contributed for the
year ended December 31, 2005 was $114,750.
5. Affiliates--The Plymouth Rock Company, Inc. and Transport Corporation
of America, Inc. are affiliates as defined in the Investment Company Act of
1940. The Corporation received dividends of $3,059,000 from affiliates during
the year ended December 31, 2005. Unrealized appreciation related to affiliates
increased by $16,244,578 for the year 2005 to $110,295,651.
6. Restricted Securities--The Corporation from time to time invests in
securities the resale of which is restricted. On December 31, 2005 such
investments had an aggregate value of $109,144,885, which was equal to 19.0% of
the Corporation's net assets. Investments in restricted securities at December
31, 2005, including acquisition dates and cost, were:
Company Shares Security Date Purchased Cost
------------------------------- ------ ------------------- -------------- ---------
Aerogroup International, Inc. 28,751 Common Stock 6/14/05 $ 17,200
Grumman Hill Investments, L.P. Limited Partnership 9/11/85 0
Interest
The Plymouth Rock Company, Inc. 70,000 Class A Common 12/15/82 1,500,000
Stock 6/9/84 699,986
The Corporation does not have the right to demand registration of the
restricted securities. Unrealized appreciation related to restricted securities
increased by $15,835,875 for the year ended December, 31, 2005 to $106,927,699.
7. Operating Lease Commitment--The Corporation has entered into an
operating lease for office space which expires in 2014 and provides for future
minimum rental payments in the aggregate amount of approximately $2.8 million.
The lease agreement contains escalation clauses relating to operating costs and
real property taxes. Future minimum rental commitments under the lease are
$314,241 per year for 2006 through 2008, $329,172 for 2009 and $341,806 annually
thereafter.
[17]
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
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 (the
"Corporation") as of December 31, 2005, and the related statements of operations
and cash flows for the year then ended, the statements of changes in net assets
for each of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended. 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 the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 2005 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 December 31, 2005, and the results of its
operations and its cash flows for the year then ended, the changes in its net
assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period then ended in
conformity with U.S. generally accepted accounting principles.
The information set forth for each of the years in the ten-year and
two-year periods ended December 31, 2005 appearing in the tables on pages 4 and
5, in our opinion, is fairly stated in all material respects in relation to the
financial statements from which it has been derived.
KPMG LLP
New York, NY
January 27, 2006
--------------------------------------------------------------------------------
Quarterly Portfolio Information
The Corporation files its complete schedule of portfolio holdings with the SEC
for the first quarter and the third quarter of each fiscal year on Form N-Q. The
Corporation's Form N-Q filings are available on the SEC's website at
www.sec.gov. Those forms may be reviewed and copied at the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
[18]
BOARD OF DIRECTORS AND OFFICERS
Principal Occupations (last five years)
Independent Directors Age and Position with the Corporation (if any)
--------------------- --- ------------------------------------------
SIMMS C. BROWNING 65 Retired since 2003; Vice President, Neuberger Berman, LLC
Director since 2005 (asset management) prior thereto
DONALD G. CALDER 68 President, G.L. Ohrstrom & Co. Inc. (private investment firm);
Director since 1982 Director of Brown-Forman Corporation, Carlisle Companies Incorporated and
Roper Industries, Inc. (manufacturing
companies)
JAY R. INGLIS 71 Chairman, Central Securities Corporation; Executive Vice
Director since 1973 President, National Marine Underwriters (insurance
management company)
DUDLEY D. JOHNSON 66 President, Young & Franklin Inc. (private manufacturing
Director since 1984 company)
C. CARTER WALKER, JR. 71 Private investor
Director since 1974
Interested Director
-------------------
WILMOT H. KIDD 64 Investment and research--President,
Director since 1972 Central Securities Corporation
CHARLES N. EDGERTON 61 Vice President and Treasurer,
Central Securities Corporation
MARLENE A. KRUMHOLZ 42 Secretary, Central Securities Corporation
The address of each Director and Officer is c/o Central Securities Corporation,
630 Fifth Avenue, New York, New York 10111.
----------
Proxy Voting Policies and Procedures
The policies and procedures used by the Corporation to determine how to
vote proxies relating to portfolio securities and the Corporation's proxy voting
record for the twelve-month period ended June 30, 2005 are available: (1)
without charge, upon request, by calling us at our toll-free telephone number
(1-866-593-2507), (2) on the Corporation's website at www.centralsecurities.com
and (3) on the Securities and Exchange Commission's website at www.sec.gov.
[19]
BOARD OF DIRECTORS
Jay R. Inglis, Chairman
Simms C. Browning
Donald G. Calder
Dudley D. Johnson
Wilmot H. Kidd
C. Carter Walker, Jr.
OFFICERS
Wilmot H. Kidd, President
Charles N. Edgerton, Vice President and Treasurer
Marlene A. Krumholz, Secretary
OFFICE
630 Fifth Avenue
New York, NY 10111
212-698-2020
866-593-2507 (toll-free)
www.centralsecurities.com
CUSTODIAN
UMB Bank, N.A.
Kansas City, MO
TRANSFER AGENT AND REGISTRAR
Computershare Trust Company, N.A.
P.O. Box 43069, Providence, RI 02940-3069
800-756-8200
www.computershare.com
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP
New York, NY
[20]
Item 2. Code of Ethics. The Registrant has adopted a code of ethics that applies
to its principal executive officer and principal financial officer. This code of
ethics is filed as an attachment on this form.
Item 3. Audit Committee Financial Experts. The Board of Directors of the
Corporation has determined that none of the members of its Audit Committee (the
"Committee") meet the definition of "Audit Committee Financial Expert" as the
term has been defined by the Securities and Exchange Commission ("SEC"). The
Board of Directors considered the possibility of adding a member that would
qualify as an Audit Committee Financial Expert, but has determined that the
Committee has sufficient expertise to perform its duties. In addition, the
Committee's charter authorizes the Committee to engage a financial expert should
it determine that such assistance is required.
Item 4. Principal Accountant Fees and Services.
2005 2004
---- ----
Audit fees........................... $35,500(1) $34,000(1)
Audit-related fees................... 0 0
Tax fees............................. 14,750(2) 14,250(2)
All other fees....................... 0 0
------- -------
Total fees........................... $50,250 $48,250
======= =======
(1) Includes fees for review of the semi-annual report to stockholders
and audit of the annual report to stockholders.
(2) Includes fees for services performed with respect to tax compliance
and tax planning.
Pursuant to its charter, the Audit Committee is responsible for recommending the
selection, approving compensation and overseeing the independence,
qualifications and performance of the independent accountants. The Audit
Committee's policy is to pre-approve all audit and permissible non-audit
services provided by the independent accountants. In assessing requests for
services by the independent accountants, the Audit Committee considers whether
such services are consistent with the auditor's independence; whether the
independent accountants are likely to provide the most effective and efficient
service based upon their familiarity with the Corporation; and whether the
service could enhance the Corporation's ability to manage or control risk or
improve audit quality. The Audit Committee may delegate pre-approval authority
to one or more of its members. Any pre-approvals by a member under this
delegation are to be reported to the Audit Committee at its next scheduled
meeting.
All of the audit and tax services provided by KPMG LLP in fiscal year 2005
(described in the footnotes to the table above) and related fees were approved
in advance by the Audit Committee.
Item 5. Audit Committee of Listed Registrants. The registrant has a
separately-designated standing audit committee. Its members are: Simms C.
Browning, Donald G. Calder, Jay R. Inglis, Dudley D. Johnson and C. Carter
Walker, Jr.
Item 6. Schedule of Investments. Schedule is included as a part of the report to
shareholders filed under Item 1 of this Form.
Item 7. Disclose Proxy Voting Policies and Procedures for Closed-End Management
Companies.
CENTRAL SECURITIES CORPORATION
PROXY VOTING GUIDELINES
Central Securities Corporation is involved in many matters of corporate
governance through the proxy voting process. We exercise our voting
responsibilities with the primary goal of maximizing the long-term value of our
investments. Our consideration of proxy issues is focused on the investment
implications of each proposal.
Our management evaluates and votes each proxy ballot that we receive. We do not
use a proxy voting service. Our Board of Directors has approved guidelines in
evaluating how to vote a particular proxy ballot. We recognize that a company's
management is entrusted with the day-to-day operations of the company, as well
as longer term strategic planning, subject to the oversight of the company's
board of directors. Our guidelines are based on the belief that a company's
shareholders have a responsibility to evaluate company performance and to
exercise the rights and duties pertaining to ownership.
When determining whether to invest in a particular company, one of the key
factors we consider is the ability and integrity of its management. As a result,
we believe that recommendations of management on any issue, particularly routine
issues, should be given substantial weight in determining how proxies should be
voted. Thus, on most issues, our votes are cast in accordance with the company's
recommendations. When we believe management's recommendation is not in the best
interests of our stockholders, we will vote against management's recommendation.
Due to the nature of our business and our size, it is unlikely that conflicts of
interest will arise in our voting of proxies of public companies. We do not
engage in investment banking nor do we have private advisory clients or any
other businesses. In the unlikely event that we determine that a conflict does
arise on a proxy voting issue, we will defer that proxy vote to our independent
directors.
We have listed the following, specific examples of voting decisions for the
types of proposals that are frequently presented. We generally vote according to
these guidelines.
We may, on occasion, vote otherwise when we believe it to be in the best
interest of our stockholders:
Election of Directors - We believe that good governance starts with an
independent board, unfettered by significant ties to management, in which all
members are elected annually. In addition, key board committees should be
entirely independent.
o We support the election of directors that result in a board made up
of a majority of independent directors who do not appear to have
been remiss in the performance of their oversight responsibilities.
o We will withhold votes for non-independent directors who serve on
the audit, compensation or nominating committees of the board.
o We consider withholding votes for directors who missed more than
one-fourth of the scheduled board meetings without good reason in
the previous year.
o We generally oppose the establishment of classified boards of
directors and will support proposals that directors stand for
election annually.
o We generally oppose limits to the tenure of directors or
requirements that candidates for directorships own large amounts of
stock before being eligible for election.
Compensation - We believe that appropriately designed equity-based compensation
plans can be an effective way to align the interests of long-term shareholders
and the interests of management, employees, and directors. We are opposed to
plans that substantially dilute our ownership interest in the company, provide
participants with excessive awards, or have inherently objectionable structural
features without offsetting advantages to the company's stockholders. We
evaluate proposals related to compensation on a case-by case basis.
o We generally support stock option plans that are incentive based and
not excessive.
o We generally oppose the ability to re-price options without
compensating factors when the underlying stock has fallen in value.
o We support measures intended to increase the long-term stock
ownership by executives including requiring stock acquired through
option exercise to be held for a substantial period of time.
o We generally support stock purchase plans to increase company stock
ownership by employees, provided that shares purchased under the
plan are acquired for not less than 85% of their market value.
o We generally oppose change-in-control provisions in non-salary
compensation plans, employment contracts, and severance agreements
which benefit management and would be costly to shareholders if
triggered.
Corporate Structure and Shareholder Rights - We generally oppose anti-takeover
measures and other proposals designed to limit the ability of shareholders to
act on possible transactions. We support proposals when management can
demonstrate that there are sound financial or business reasons.
o We generally support proposals to remove super-majority voting
requirements and oppose amendments to bylaws which would require a
super-majority of shareholder votes to pass or repeal certain
provisions.
o We will evaluate proposals regarding shareholders rights plans
("poison pills") on a case-by-case basis considering issues such as
the term of the arrangement and the level of review by independent
directors.
o We will review proposals for changes in corporate structure such as
changes in the state of incorporation or mergers individually. We
generally oppose proposals where management does not offer an
appropriate rationale.
o We generally support share repurchase programs.
o We generally support the general updating of or corrective
amendments to corporate charters and by-laws.
o We generally oppose the elimination of the rights of shareholders to
call special meetings.
Approval of Independent Auditors - We believe that the relationship between the
company and its auditors should be limited primarily to the audit engagement and
closely related activities that do not, in the aggregate, raise the appearance
of impaired independence.
o We generally support management's proposals regarding the approval
of independent auditors.
o We evaluate on a case-by-case basis instances in which the audit
firm appears to have a substantial non-audit relationship with the
company or companies affiliated with it.
Social and Corporate Responsibility Issues - We believe that ordinary business
matters are primarily the responsibility of management and should be approved
solely by the corporation's board of directors. Proposals in this category,
initiated primarily by shareholders, typically request that the company disclose
or amend certain business practices. We generally vote with management on these
types of proposals, although we may make exceptions in certain instances where
we believe a proposal has substantial economic implications.
o We generally oppose shareholder proposals which apply restrictions
related to social, political, or special interest issues which
affect the ability of the company to do business or be competitive
and which have significant financial impact.
o We generally oppose proposals which require that the company provide
costly, duplicative, or redundant reports, or reports of a
non-business nature.
Item 8. Portfolio Managers of Closed-End Management Investment Companies. Mr.
Wilmot H. Kidd is the President and portfolio manager of the Corporation and has
served in that capacity since 1973. He manages no other accounts and
accordingly, the Registrant is not aware of any material conflicts with his
management of the
Corporation's investments. Mr. Kidd's compensation consists primarily of a fixed
base salary and a bonus. His compensation is reviewed and approved by the Board
of Directors annually. His compensation may be adjusted from year to year based
on the Board of Directors perception of overall performance and his management
responsibilities. As of December 31, 2005, Mr. Kidd's investment in Central
Securities common stock exceeded $1 million.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
----------------------------------------------------------------------------------------------------------------------------------
(d) Maximum Number (or
(c) Total Number of Shares Approximate Dollar Value)
(a) Total Number (b) Average Price (or Units) Purchased as Part of Shares (or Units) that
of Shares (or Paid per Share of Publicly Announced Plans May Yet Be Purchased Under
Period Units) Purchased (or Unit) or Programs the Plans or Programs
----------------------------------------------------------------------------------------------------------------------------------
Month #1 (July 1
through July 31) 12,200 $25.18 NA NA
----------------------------------------------------------------------------------------------------------------------------------
Month #2 (August 1
through August 31) 17,300 $25.61 NA NA
----------------------------------------------------------------------------------------------------------------------------------
Month #3 (September 1
through September 30) 13,200 $25.40 NA NA
----------------------------------------------------------------------------------------------------------------------------------
Month #4 (October 1
through October 31) 5,400 $24.28 NA NA
----------------------------------------------------------------------------------------------------------------------------------
Month #5 (November 1
through November 30) 16,500 $23.65 NA NA
----------------------------------------------------------------------------------------------------------------------------------
Month #6 (December 1
through December 31) 63,400 $24.01 NA NA
----------------------------------------------------------------------------------------------------------------------------------
Total 128,000 $24.44 NA NA
----------------------------------------------------------------------------------------------------------------------------------
All shares purchased were made in open market transactions as authorized by the
Board of Directors.
Item 10. Submission of Matters to a Vote of Security Holders. There have been no
changes to the procedures by which shareholders may recommend nominees to the
registrant's board of directors since such procedures were last described in the
Corporation's proxy statement dated February 3, 2006.
Item 11. Controls and Procedures.
(a) The Principal Executive Officer and Principal Financial Officer of Central
Securities Corporation (the "Corporation") have concluded that the Corporation's
Disclosure Controls and Procedures (as defined in Rule 30a-2(c) under the
Investment Company Act of 1940) are effective based on their evaluation of the
Disclosure Controls and Procedures as of a date within 90 days of the filing
date of this report.
(b) There have been no changes in the Corporation's internal control over
financial reporting (as defined in Rule 30a-3(d)) under the Investment Company
Act of 1940 that occurred during the second fiscal quarter of the period covered
by this report that has materially affected, or is reasonably likely to
materially affect, the Corporation's internal control over financial reporting.
Item 12. Exhibits. (a) Any code of ethics, or amendment thereto, that is the
subject of the disclosure required by Item 2, to the extent that the registrant
intends to satisfy the Item 2 requirements through filing of an exhibit.
Attached hereto.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act.
Attached hereto.
(c) Any written solicitation to purchase securities under Rule 23c-1 under the
Act sent or given during the period covered by the report by or on behalf of the
registrant to 10 or more persons. Not Applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Central Securities Corporation
By: /s/ Wilmot H. Kidd
--------------------------
Wilmot H. Kidd
President
February 3, 2006
Date
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capabilities and on the
dates indicated.
By: /s/ Wilmot H. Kidd
--------------------------
Wilmot H. Kidd
President
February 3, 2006
Date
By: /s/ Charles N. Edgerton
--------------------------
Charles N. Edgerton
Treasurer
February 3, 2006
Date