United States
Securities and Exchange Commission
Washington, DC 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-00179
Central Securities Corporation
(Exact name of registrant as specified in charter)
630 Fifth Avenue, Suite 820
New York, N.Y. 10111
(Address of principal executive offices)
Registrant's telephone number including area code: 212-698-2020
Date of fiscal year end: December 31
Date of reporting period: September 30, 2008
Item 1. Schedule of Investments.
CENTRAL SECURITIES CORPORATION
Statement of Investments
September 30, 2008
(Unaudited)
PORTFOLIO SECURITIES 89.9%
STOCKS (COMMON UNLESS SPECIFIED OTHERWISE)
Prin. Amt.
or Shares Value
---------- ------------
Banking and Finance 7.1%
825,475 The Bank of New York Mellon Corporation............. $ 26,893,976
250,000 Capital One Financial Corporation................... 12,750,000
150,000 Newstar Financial, Inc.............................. 1,213,500
------------
40,857,476
------------
Business Services 0.3%
75,000 Heritage-Crystal Clean Inc. (a)..................... 1,023,750
70,000 RSC Holdings, Inc. (a).............................. 795,200
------------
1,818,950
------------
Communications 0.5%
1,100,000 Arbinet-thexchange, Inc. (a)........................ 3,003,000
------------
Electronics 19.9%
942,400 Agilent Technologies, Inc. (a)...................... 27,951,584
390,000 Analog Devices, Inc................................. 10,276,500
850,000 Coherent, Inc. (a).................................. 30,217,500
630,000 Flextronics International Inc. (a).................. 4,460,400
809,600 Intel Corporation................................... 15,163,808
310,000 Maxim Integrated Products, Inc...................... 5,611,000
350,000 Motorola, Inc....................................... 2,499,000
1,000,000 Radisys Corporation (a)............................. 8,600,000
3,230,000 Sonus Networks, Inc. (a)............................ 9,302,400
------------
114,082,192
------------
Energy 15.1%
300,000 Berry Petroleum Company Class A..................... 11,619,000
10,000 Cameco Corporation.................................. 223,100
200,000 Devon Energy Corporation............................ 18,240,000
1,900,000 GeoMet, Inc. (a).................................... 10,336,000
670,000 McMoRan Exploration Co. (a)......................... 15,838,800
363,300 Murphy Oil Corporation.............................. 23,302,062
300,000 Nexen Inc.......................................... 6,969,000
------------
86,527,962
------------
Health Care 1.1%
100,000 Abbott Laboratories................................. 5,758,000
260,000 Vical Inc. (a)...................................... 561,600
------------
6,319,600
------------
Information Technology Services 6.3%
1,730,800 Convergys Corporation............................... 25,581,224
930,000 Xerox Corporation................................... 10,722,900
------------
36,304,124
------------
Prin. Amt.
or Shares Value
---------- ------------
Insurance 24.4%
10,000 Erie Indemnity Co. Class A.......................... $ 422,700
70,000 The Plymouth Rock Company, Inc.
Class A (b)(c)(d)............................... 140,000,000
------------
140,422,700
------------
Manufacturing 14.0%
870,000 Brady Corporation Class A........................... 30,693,600
200,000 Carlisle Companies Inc.............................. 5,994,000
400,000 Dover Corporation................................... 16,220,000
100,000 General Electric Co................................. 2,550,000
100,000 Precision Castparts Corporation..................... 7,878,000
300,000 Roper Industries, Inc............................... 17,088,000
------------
80,423,600
------------
Retailing 1.2%
28,751 AeroGroup International, Inc. (a)(c)(d)............. 385,838
200,000 Walgreen Co......................................... 6,192,000
------------
6,577,838
------------
Total Portfolio Securities
(cost $270,965,985)......................... 516,337,442
SHORT-TERM INVESTMENTS 10.2%
Commercial Paper 3.8%
8,046,000 Chevron Corporation 2.61% due 12/4/08................ 8,008,809
13,788,000 General Electric Capital Corp. 2.07% - 2.16%
due 10/1/08 - 12/4/08.............................. 13,784,106
------------
21,792,915
------------
U.S. Government Agency Obligations 2.0%
11,656,000 Federal Home Loan Bank 11.98% due 10/17/08........... 11,645,846
------------
U.S. Treasury Bills 3.3%
25,465,000 U.S. Treasury Bills 0.25% - 1.76%
due 12/18/08 - 2/26/09............................. 25,347,637
------------
Total Short-Term Investments
(cost $58,786,398)............................. 58,786,398
------------
Total Investments (cost $329,752,383) (100.1%)... 575,123,840
Cash, receivables and other assets
less liabilities (0.1%)........................ (522,345)
------------
Net Assets (100%)................................ $574,601,495
============
(a) Non-dividend paying.
(b) Affiliate as defined in the Investment Company Act of 1940.
(c) Valued at estimated fair value.
(d) Restricted security. See footnote 2.
See accompanying notes to statement of investments.
CENTRAL SECURITIES CORPORATION
NOTES TO STATEMENT OF INVESTMENTS
1. Security Valuation - Securities are valued at the last sale price or, if
unavailable, at the closing bid price. Corporate discount notes are valued at
amortized cost, which approximates value. Securities for which no ready market
exists are valued at estimated fair value by the Board of Directors.
As of September 30, 2008, the tax cost of investments was $329,752,383. Net
unrealized appreciation was $245,371,457 consisting of gross unrealized
appreciation and gross unrealized depreciation of $276,722,569 and $31,351,112,
respectively.
2. Fair Value Measurements - Effective January 1, 2008, the Corporation adopted
Financial Accounting Standards Board Statement of Financial Accounting Standard
No. 157, "Fair Value measurements" ("FAS 157"). FAS 157 establishes a disclosure
framework which prioritizes and ranks the level of market price observability
used in determining the fair value of investments as follows:
o Level 1 - Fair value is determined based on market data obtained from
independent sources; for example, quoted prices in active markets for
identical investments. The Corporation's Level 1 investments consist
of equity securities listed on a national securities exchange or
NASDAQ National Market.
o Level 2 - Fair value is determined using other significant observable
assumptions obtained from independent sources; for example, quoted
prices for similar investments or the use of models or other valuation
methodologies. The Corporation's Level 2 instruments consist of
short-term investments, carried at amortized cost.
o Level 3 - Fair value is determined using significant unobservable
inputs including the Corporation's own assumptions based upon the best
information available. Investments categorized as Level 3 include
situations in which there is little, if any, market activity. The
Corporation's Level 3 investments consist of The Plymouth Rock
Company, Inc. and Aerogroup International, Inc.
In certain cases, the inputs used to determine fair value may fall into
different levels of the fair value hierarchy. In such cases, an investment's
level within the hierarchy is based on the least observable input that is
significant to fair value. The inputs used for valuing securities are not
necessarily an indication of the risk associated with investing in those
securities.
The Corporation's investments as of September 30, 2008 are classified as
follows:
Valuation Inputs Investments in Securities
---------------- -------------------------
Level 1 $375,951,604
Level 2 58,786,398
Level 3 140,385,838
------------
$575,123,840
============
The following is a reconciliation of assets in which significant unobservable
inputs (Level 3) were used in determining fair value:
Balance at December 31, 2007 $149,173,114
Change in unrealized appreciation of investments (8,787,276)
------------
Balance at September 30, 2008 $140,385,838
============
No Level 3 investments were purchased, sold or transferred to Level 1 or Level 2
during the nine months ended September 30, 2008.
3. Restricted Securities - The Corporation has from time to time invested in
securities the resale of which is restricted. On September 30, 2008, such
investments had an aggregate value of $140,385,838, which was equal to 24.4% of
the Corporation's net assets. Investments in restricted securities at September
30, 2008 were:
Date
Company Shares Security Purchased Cost
------- ------ -------------------- --------- ----------
AeroGroup
International, Inc. 28,751 Common Stock 6/14/05 $ 17,200
The Plymouth Rock
Company, Inc. 60,000 Class A Common Stock 12/15/82 1,500,000
The Plymouth Rock
Company, Inc. 10,000 Class A Common Stock 6/9/84 699,986
The Corporation does not have the right to demand registration of the restricted
securities.
Item 2. Controls and Procedures.
(a) Disclosure Controls and Procedures. The Principal Executive and Financial
Officers have concluded that the Registrant's Disclosure Controls and Procedures
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) Internal Control Over Financial Reporting. During the last fiscal quarter,
there was no significant change in the Registrant's internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.
Item 3. Exhibits.
(a) Certifications.
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
-------------------
President
Date: October 22, 2008
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 capacities and on the
dates indicated.
By: /s/ Wilmot H. Kidd
----------------------------
President
Date: October 22, 2008
By: /s/ Charles N. Edgerton
----------------------------
Vice President and Treasurer
Date: October 22, 2008