The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, including gains and losses on forward foreign currency contracts, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities, at the date of valuation, resulting from changes in exchange rates.
Notes to Financial Statements (unaudited) (continued)
Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.
(k) Distributions to Shareholders. Distributions from net investment income for the Fund, if any, are declared and paid on a monthly basis. Distributions of net realized gains, if any, are declared at least annually. Distributions are recorded on the ex-dividend date and are determined in accordance with income tax regulations, which may differ from GAAP.
(l) Federal and Other Taxes. It is the Fund’s policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute substantially all of its income and net realized gains on investments, if any, to shareholders each year. Therefore, no federal income tax provision is required in the Fund’s financial statements. Under the applicable foreign tax laws, a withholding tax may be imposed on interest, dividends and capital gains at various rates.
(m) Reclassification. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on net assets or net asset values per share.
2. Investment Management Agreement and Other Transactions with Affiliates
On December 1, 2005, Citigroup Inc. (“Citigroup”) completed the sale of substantially all of its asset management business, Citigroup Asset Management (“CAM”), to Legg Mason, Inc. (“Legg Mason”). As a result, the Fund’s investment manager, Salomon Brothers Asset Management Inc. (the “Manager” or “SBAM”), previously an indirect wholly-owned subsidiary of Citigroup, has become a wholly-owned subsidiary of Legg Mason. Completion of the sale caused the Fund’s existing investment advisory and administrative contracts to terminate. The Fund’s shareholders approved a new investment management contract between the Fund and the Manager, which became effective on December 1, 2005.
Legg Mason, whose principal executive offices are in Baltimore, Maryland, is a financial services holding company.
Prior to the Legg Mason transaction and under the new investment management agreement the Fund pays the Manager a management fee calculated at an annual rate of 0.85% of the Fund’s average daily net assets plus the proceeds of any outstanding borrowings used for leverage.
During the six months ended April 30, 2006, the Manager reimbursed expenses amounting to $14,331.
Effective December 1, 2005, the administration agreement was terminated.
Certain officers and one Director of the Fund are employees of Legg Mason or its affiliates and do not receive compensation from the Fund.
Salomon Brothers Capital and Income Fund Inc. 2006 Semi-Annual Report 35
Notes to Financial Statements (unaudited) (continued)
3. Investments
During the six months ended April 30, 2006, the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) and U.S. Government & Agency Obligations were as follows:
| | Investments | U.S. Government & Agency Obligations |
|
|
|
|
|
| Purchases | $146,055,348 | | $27,285,403 | |
|
|
|
| Sales | 193,995,117 | | 1,697,276 | |
|
|
|
At April 30, 2006, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were as follows:
|
| Gross unrealized appreciation | $ 91,869,800 | |
| Gross unrealized depreciation | (19,745,524 | ) |
|
|
|
| Net unrealized appreciation | $ 72,124,276 | |
|
|
|
At April 30, 2006, the Fund held loan participations with a total cost of $2,000,000 and a total market value of $2,012,917.
At April 30, 2006, the Fund had outstanding mortgage dollar rolls with a total cost of $9,508,984. The average monthly balance of dollar rolls outstanding during the six months ended April 30, 2006 was $9,508,984.
4. Loan
At April 30, 2006, the Fund had a $220,000,000 loan pursuant to a revolving credit and security agreement with Crown Point Capital Company LLC and Citicorp North America, Inc. (“CNA”). In addition, CNA acts as administrative agent of the credit facility. The loan generally bears interest at a variable rate based on the weighted average interest rates of the underlying commercial paper or LIBOR plus any applicable margin. Securities held by the Fund are subject to a lien, granted to the lenders, to the extent of the borrowings outstanding and any additional expenses. For the six months ended April 30, 2006, the Fund incurred interest expense on this loan in the amount of $5,529,646.
5. Dividends Subsequent to April 30, 2006
On February 22, 2006, the Board of Directors (“Board”) of the Fund declared a dividend distribution in the amount of $0.10 per share payable on May 26, 2006 to shareholders of record on May 23, 2006.
On May 3, 2006, the Fund’s Board declared three distributions, each in the amount of $0.10 per share payable on June 30, 2006, July 28, 2006 and August 25, 2006 to shareholders of record on June 27, 2006, July 25, 2006 and August 22, 2006, respectively.
6. Capital Shares
On May 14, 2004, the Fund‘s Board authorized the Fund to repurchase from time to time in the open market up to 1,000,000 shares of the Fund’s common stock. The Board directed the management of the Fund to repurchase shares of the Fund’s common stock at
36 Salomon Brothers Capital and Income Fund Inc. 2006 Semi-Annual Report
Notes to Financial Statements (unaudited) (continued)
such times and in such amounts as management believes will enhance shareholder value, subject to review by the Fund’s Board. The Fund authorized a second 1,000,000 share repurchase plan in February 2006. Since the inception of the repurchase plan, the Fund repurchased 1,493,900 shares with a total cost of $26,352,814 at the weighted average discount of 34.92% per share.
7. Regulatory Matters
On May 31, 2005, the U.S. Securities and Exchange Commission (“SEC”) issued an order in connection with the settlement of an administrative proceeding against SBFM and CGM relating to the appointment of an affiliated transfer agent for the Smith Barney family of mutual funds (the “Affected Funds”).
The SEC order finds that SBFM and CGM willfully violated Section 206(1) of the Investment Advisers Act of 1940 (“Advisers Act”). Specifically, the order finds that SBFM and CGM knowingly or recklessly failed to disclose to the boards of the Affected Funds in 1999 when proposing a new transfer agent arrangement with an affiliated transfer agent that: First Data Investors Services Group (“First Data”), the Affected Funds’ then-existing transfer agent, had offered to continue as transfer agent and do the same work for substantially less money than before; and that Citigroup Asset Management (“CAM”), the Citigroup business unit that, at the time, included the fund’s investment manager and other investment advisory companies, had entered into a side letter with First Data under which CAM agreed to recommend the appointment of First Data as sub-transfer agent to the affiliated transfer agent in exchange for, among other things, a guarantee by First Data of specified amounts of asset management and investment banking fees to CAM and CGM. The order also finds that SBFM and CGM willfully violated Section 206(2) of the Advisers Act by virtue of the omissions discussed above and other misrepresentations and omissions in the materials provided to the Affected Funds’ boards, including the failure to make clear that the affiliated transfer agent would earn a high profit for performing limited functions while First Data continued to perform almost all of the transfer agent functions, and the suggestion that the proposed arrangement was in the Affected Funds’ best interests and that no viable alternatives existed. SBFM and CGM do not admit or deny any wrongdoing or liability. The settlement does not establish wrongdoing or liability for purposes of any other proceeding.
The SEC censured SBFM and CGM and ordered them to cease and desist from violations of Sections 206(1) and 206(2) of the Advisers Act. The order requires Citigroup to pay $208.1 million, including $109 million in disgorgement of profits, $19.1 million in interest, and a civil money penalty of $80 million. Approximately $24.4 million has already been paid to the Affected Funds, primarily through fee waivers. The remaining $183.7 million, including the penalty, has been paid to the U.S. Treasury and will be distributed pursuant to a plan submitted for the approval of the SEC. At this time, there is no certainty as to how the above-described proceeds of the settlement will be distributed, to whom such distributions will be made, the methodology by which such distributions will be allocated, and when such distributions will be made.
The order also required that transfer agency fees received from the Affected Funds since December 1, 2004 less certain expenses be placed in escrow and provided that a portion of
Salomon Brothers Capital and Income Fund Inc. 2006 Semi-Annual Report 37
Notes to Financial Statements (unaudited) (continued)
such fees might be subsequently distributed in accordance with the terms of the order. On April 3, 2006, an aggregate amount of approximately $9 million was distributed to the Affected Funds.
The order required SBFM to recommend a new transfer agent contract to the Affected Fund boards within 180 days of the entry of the order; if a Citigroup affiliate submitted a proposal to serve as transfer agent or sub-transfer agent, SBFM and CGM would have been required, at their expense, to engage an independent monitor to oversee a competitive bidding process. On November 21, 2005, and within the specified timeframe, the Fund’s Board selected a new transfer agent for the Fund. No Citigroup affiliate submitted a proposal to serve as transfer agent. Under the order, SBFM also must comply with an amended version of a vendor policy that Citigroup instituted in August 2004.
Although there can be no assurance, SBFM does not believe that this matter will have a material adverse effect on the Affected Funds.
This Fund is not one of the Affected Funds and therefore did not implement the transfer agent arrangement described above and therefore has not received and will not receive any portion of the distributions.
On December 1, 2005, Citigroup completed the sale of substantially all of its global asset management business, including SBFM, to Legg Mason Inc.
8. Other Matters
On September 16, 2005, the staff of the SEC informed SBFM and SBAM that the staff is considering recommending that the SEC institute administrative proceedings against SBFM and SBAM for alleged violations of Section 19(a) and 34(b) of the Investment Company Act (and related Rule 19a-1). The notification is a result of an industry wide inspection by the SEC and is based upon alleged deficiencies in disclosures regarding dividends and distributions paid to shareholders of certain funds. Section 19(a) and related Rule 19a-1 of the Investment Company Act generally require funds that are making dividend and distribution payments to provide shareholders with a written statement disclosing the source of the dividends and distributions, and, in particular, the portion of the payments made from each of net investment income, undistributed net profits and/or paid-in capital. In connection with the contemplated proceedings, the staff may seek a cease and desist order and/or monetary damages from SBFM or SBAM.
Although there can be no assurance, SBAM believes that this matter is not likely to have a material adverse effect on the Fund or SBAM’s ability to perform investment management services relating to the Fund.
38 Salomon Brothers Capital and Income Fund Inc. 2006 Semi-Annual Report
Additional Shareholder Information (unaudited)
Results of a Special Meeting of Shareholders
On November 22, 2005, a Special Meeting of Shareholders was held to approve a new management agreement. The following table provides the number of votes cast for, against or withheld, as well as the number of abstentions and broker non-votes as to this matter at the Special Meeting of Shareholders.
| Item Voted On | Votes For | Votes Against | Abstentions |
|
|
|
|
| New Management Agreement | 14,381,744 | 1,904,717 | 749,012 |
|
|
|
|
Results of Annual Meeting of Shareholders
The Annual Meeting of Shareholders of Salomon Brothers Capital and Income Fund Inc. was held on February 27, 2006, for the purpose of considering and voting upon the election of Directors. The following table provides information concerning the matter voted upon on the Meeting:
| Nominees | Votes For | Votes Withheld |
|
|
|
| Carol L. Colman | 28,375,113 | 906,534 |
|
|
|
| Daniel P. Cronin | 28,408,680 | 872,967 |
|
|
|
At April 30, 2006, in addition to Carol L. Colman and Daniel P. Cronin, the other Directors of the Fund were as follows:
Leslie H. Gelb
R. Jay Gerken
William R. Hutchinson
Riordan Roett
Jeswald W. Salacuse
Salomon Brothers Capital and Income Fund Inc. 2006 Semi-Annual Report 39
Dividend Reinvestment Plan (unaudited)
Unless you elect to receive distributions in cash, all distributions, on your Common Shares will be automatically reinvested by American Stock Transfer & Trust Company, as agent for the Common Shareholders (the “Plan Agent”), in additional Common Shares under the Dividend Reinvestment Plan (the “Plan”). You may elect not to participate in the Plan by contacting the Plan Agent. If you do not participate, you will receive all cash distributions paid by check mailed directly to you by American Stock Transfer & Trust Company as dividend paying agent.
If you participate in the Plan, the number of Common Shares you will receive will be determined as follows:
(1) If the market price of the Common Shares on the record date (or, if the record date is not a New York Stock Exchange trading day, the immediately preceding trading day) for determining shareholders eligible to receive the relevant distribution (the “determination date”) is equal to or exceeds the net asset value per share of the Common Shares, the Fund will issue new Common Shares at a price equal to the greater of (a) the net asset value per share at the close of trading on the Exchange on the determination date or (b) 95% of the market price per share of the Common Shares on the determination date.
(2) If the net asset value per share of the Common Shares exceeds the market price of the Common Shares on the determination date, the Plan Agent will receive the distribution in cash and will buy Common Shares in the open market, on the Exchange or elsewhere, for your account as soon as practicable commencing on the trading day following the determination date and terminating no later than the earlier of (a) 30 days after the distribution payment date, or (b) the record date for the next succeeding distribution to be made to the Common Shareholders; except when necessary to comply with applicable provisions of the federal securities laws. If during this period: (i) the market price rises so that it equals or exceeds the net asset value per share of the Common Shares at the close of trading on the Exchange on the determination date before the Plan Agent has completed the open market purchases or (ii) if the Plan Agent is unable to invest the full amount eligible to be reinvested in open market purchases, the Plan Agent will cease purchasing Common Shares in the open market and the Fund shall issue the remaining Common Shares at a price per share equal to the greater of (a) the net asset value per share at the close of trading on the Exchange on the determination date or (b) 95% of the then current market price per share.
The Plan Agent maintains all participants’ accounts in the Plan and gives written confirmation of all transactions in the accounts, including information you may need for tax records. Common Shares in your account will be held by the Plan Agent in non-certified form. Any proxy you receive will include all Common Shares you have received under the Plan.
You may withdraw from the Plan by notifying the Plan Agent in writing at 59 Maiden Lane, New York, New York 10038. Such withdrawal will be effective immediately if notice is received by the Plan Agent not less than ten business days prior to any dividend or distribution record date; otherwise such withdrawal will be effective as soon as practicable after the Plan Agent’s investment of the most recently declared dividend or distribution on the Common Shares. The Plan may be terminated by the fund upon notice in writing mailed to Common Shareholders at least 30 days prior to the record date for the payment of any dividend or distribution by the Fund for which the termination is to be effective. Upon any
40 Salomon Brothers Capital and Income Fund Inc. 2006 Semi-Annual Report
Dividend Reinvestment Plan (unaudited) (continued)
termination, you will be sent a certificate or certificates for the full Common Shares held for you under the Plan and cash for any fractional Common Shares. You may elect to notify the Plan Agent in advance of such termination to have the Plan Agent sell part or all of your shares on your behalf. The Plan Agent is authorized to deduct brokerage charges actually incurred for this transaction from the proceeds.
There is no service charge for reinvestment of your dividends or distributions in Common Shares. However, all participants will pay a pro rata share of brokerage commissions incurred by the Plan Agent when it makes open market purchases. Because all dividends and distributions will be automatically reinvested in additional Common Shares, this allows you to add to your investment through dollar cost averaging, which may lower the average cost of your Common Shares over time.
Automatically reinvesting dividends and distributions does not mean that you do not have to pay income taxes due upon receiving dividends and distributions.
The Fund reserves the right to amend or terminate the Plan if, in the judgment of the Board of Directors, the change is warranted. There is no direct service charge to participants in the Plan; however, the Fund reserves the right to amend the Plan to include a service charge payable by the participants. Additional information about the Plan and your account may be obtained from the Plan Agent at 1-888-888-0151.
Salomon Brothers Capital and Income Fund Inc. 2006 Semi-Annual Report 41
(This page intentionally left blank.)
| | Salomon Brothers
Capital and Income Fund Inc. |
| | | |
| | | |
| | | |
| | DIRECTORS
Carol L. Colman
Daniel P. Cronin
Leslie H. Gelb
R. Jay Gerken, CFA
William R. Hutchinson
Riordan Roett
Jeswald W. Salacuse OFFICERS
R. Jay Gerken, CFA
Chairman, President and
Chief Executive Officer Andrew B. Shoup
Senior Vice President and
Chief Administrative Officer Mark J. McAllister, CFA
Executive Vice President Michael Sedoy, CFA
Executive Vice President Frances M. Guggino
Chief Financial Officer and
Treasurer Ted P. Becker
Chief Compliance Officer Wendy S. Setnicka
Controller Robert I. Frenkel
Secretary and Chief Legal Officer | SALOMON BROTHERS
CAPITAL AND INCOME
FUND INC.
125 Broad Street
10th Floor, MF-2
New York, New York 10004 INVESTMENT MANAGER
AND ADMINISTRATOR
Salomon Brothers Asset
Management Inc.
399 Park Avenue
New York, New York 10022 CUSTODIAN
State Street Bank
& Trust Company
225 Franklin Street
Boston, Massachusetts 02110 TRANSFER AGENT
American Stock Transfer &
Trust Company
59 Maiden Lane
New York, New York 10038 INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
KPMG LLP
345 Park Avenue
New York, New York 10154 LEGAL COUNSEL
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017 NEW YORK STOCK
EXCHANGE SYMBOL
SCD |
| ITEM 2. | CODE OF ETHICS. |
| |
| Not Applicable. |
| |
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
| |
| Not Applicable. |
| |
| ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
| |
| Not applicable. |
| |
| ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
| |
| Not applicable. |
| |
| ITEM 6. | SCHEDULE OF INVESTMENTS. |
| |
| Included herein under Item 1. |
| |
| ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR |
| CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
| |
| Concerning Citigroup Asset Management (1) (CAM) Proxy Voting |
| Policies and Procedures |
| |
| The following is a brief overview of the Proxy Voting Policies and |
| Procedures (the “Policies”) that CAM has adopted to seek to ensure |
| that CAM votes proxies relating to equity securities in the best |
| interest of clients. |
| |
| CAM votes proxies for each client account with respect to which it |
| has been authorized to vote proxies. In voting proxies, CAM is |
| guided by general fiduciary principles and seeks to act prudently |
| and solely in the best interest of clients. CAM attempts to consider |
| all factors that could affect the value of the investment and will |
| vote proxies in the manner that it believes will be consistent with |
| efforts to maximize shareholder values. CAM may utilize an external |
| service provider to provide it with information and/or a |
| recommendation with regard to proxy votes. However, the CAM adviser |
| (business unit) continues to retain responsibility for the proxy |
| vote. |
| |
| In the case of a proxy issue for which there is a stated position in |
| the Policies, CAM generally votes in accordance with such stated |
| position. In the case of a proxy issue for which there is a list of |
| factors set forth in the Policies that CAM considers in voting on |
| such issue, CAM votes on a case-by-case basis in accordance with the |
| general principles set forth above and considering such enumerated |
| factors. In the case of a proxy issue for which there is no stated |
| position or list of factors that CAM considers in voting on such |
| issue, CAM votes on a case-by-case basis in accordance with the |
| general principles set forth above. Issues for which there is a |
| stated position set forth in the Policies or for which there is a |
| list of factors set forth in the Policies that CAM considers in |
| voting on such issues fall into a variety of categories, including |
| election of directors, ratification of auditors, proxy and tender |
| | offer defenses, capital structure issues, executive and director |
| | compensation, mergers and corporate restructurings, and social and |
| | environmental issues. The stated position on an issue set forth in |
| | the Policies can always be superseded, subject to the duty to act |
| | solely in the best interest of the beneficial owners of accounts, by |
| | the investment management professionals responsible for the account |
| | whose shares are being voted. Issues applicable to a particular |
| | industry may cause CAM to abandon a policy that would have otherwise |
| | applied to issuers generally. As a result of the independent |
| | investment advisory services provided by distinct CAM business |
| | units, there may be occasions when different business units or |
| | different portfolio managers within the same business unit vote |
| | differently on the same issue. A CAM business unit or investment |
| | team (e.g. CAM’s Social Awareness Investment team) may adopt proxy |
| | voting policies that supplement these policies and procedures. In |
| | addition, in the case of Taft-Hartley clients, CAM will comply with |
| | a client direction to vote proxies in accordance with Institutional |
| | Shareholder Services’ (ISS) PVS Voting Guidelines, which ISS |
| | represents to be fully consistent with AFL-CIO guidelines. |
| | |
| | In furtherance of CAM’s goal to vote proxies in the best interest of |
| | clients, CAM follows procedures designed to identify and address |
| | material conflicts that may arise between CAM’s interests and those |
| | of its clients before voting proxies on behalf of such clients. To |
| | seek to identify conflicts of interest, CAM periodically notifies |
| | CAM employees in writing that they are under an obligation (i) to be |
| | aware of the potential for conflicts of interest on the part of CAM |
| | with respect to voting proxies on behalf of client accounts both as |
| | a result of their personal relationships and due to special |
| | circumstances that may arise during the conduct of CAM’s business, |
| | and (ii) to bring conflicts of interest of which they become aware |
| | to the attention of CAM’s compliance personnel. CAM also maintains |
| | and considers a list of significant CAM relationships that could |
| | present a conflict of interest for CAM in voting proxies. CAM is |
| | also sensitive to the fact that a significant, publicized |
| | relationship between an issuer and a non-CAM Legg Mason affiliate |
| | might appear to the public to influence the manner in which CAM |
| | decides to vote a proxy with respect to such issuer. Absent special |
| | circumstances or a significant, publicized non-CAM Legg Mason |
| | affiliate relationship that CAM for prudential reasons treats as a |
| | potential conflict of interest because such relationship might |
| | appear to the public to influence the manner in which CAM decides to |
| | vote a proxy, CAM generally takes the position that relationships |
| | between a non-CAM Legg Mason affiliate and an issuer (e.g. |
| | investment management relationship between an issuer and a non-CAM |
| | Legg Mason affiliate) do not present a conflict of interest for CAM |
| | in voting proxies with respect to such issuer. Such position is |
| | based on the fact that CAM is operated as an independent business |
| | unit from other Legg Mason business units as well as on the |
| | existence of information barriers between CAM and certain other Legg |
| | Mason business units. |
| | |
| | CAM maintains a Proxy Voting Committee to review and address |
| | conflicts of interest brought to its attention by CAM compliance |
| | personnel. A proxy issue that will be voted in accordance with a |
| | stated CAM position on such issue or in accordance with the |
| | recommendation of an independent third party is not brought to the |
| | attention of the Proxy Voting Committee for a conflict of interest |
| | review because CAM’s position is that to the extent a conflict of |
| | interest issue exists, it is resolved by voting in accordance with a |
| | pre-determined policy or in accordance with the recommendation of an |
| | independent third party. With respect to a conflict of interest |
| | brought to its attention, the Proxy Voting Committee first |
| | determines whether such conflict of interest is material. A conflict |
| | of interest is considered material to the extent that it is |
| | determined that such conflict is likely to influence, or appear to |
| | influence, CAM’s decision-making in voting proxies. If it is |
| | determined by the Proxy Voting Committee that a conflict of interest |
| | is not material, CAM may vote proxies notwithstanding the existence |
| | of the conflict. |
| |
| | If it is determined by the Proxy Voting Committee that a conflict of |
| | interest is material, the Proxy Voting Committee is responsible for |
| | determining an appropriate method to resolve such conflict of |
| | interest before the proxy affected by the conflict of interest is |
| | voted. Such determination is based on the particular facts and |
| | circumstances, including the importance of the proxy issue and the |
| | nature of the conflict of interest. |
| |
| | (1) | Citigroup Asset Management comprises CAM North America, LLC, Salomon Brothers |
| | | Asset Management Inc, Smith Barney Fund Management LLC, and other affiliated |
| | | investment advisory firms. On December 1, 2005, Citigroup Inc. (“Citigroup”) sold |
| | | substantially all of its worldwide asset management business, Citigroup Asset |
| | | Management, to Legg Mason, Inc. (“Legg Mason”). As part of this transaction, CAM |
| | | North America, LLC, Salomon Brothers Asset Management Inc and Smith Barney Fund |
| | | Management LLC became wholly-owned subsidiaries of Legg Mason. Under a licensing |
| | | agreement between Citigroup and Legg Mason, the names of CAM North America, LLC, |
| | | Salomon Brothers Asset Management Inc, Smith Barney Fund Management LLC and their |
| | | affiliated advisory entities, as well as all logos, trademarks, and service marks |
| | | related to Citigroup or any of its affiliates (“Citi Marks”) are licensed for use |
| | | by Legg Mason. Citi Marks include, but are not limited to, “Citigroup Asset |
| | | Management,” “Salomon Brothers Asset Management” and “CAM”. All Citi Marks are |
| | | owned by Citigroup, and are licensed for use until no later than one year after |
| | | the date of the licensing agreement. Legg Mason and its subsidiaries, including |
| | | CAM North America, LLC, Salomon Brothers Asset Management Inc, and Smith Barney |
| | | Fund Management LLC are not affiliated with Citigroup. |
| |
| ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
| | |
| ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT |
| | COMPANY AND AFFILIATED PURCHASERS. |
| |
| |
| Period | | (a)Total | | (b) Average | | (c) Total Number | | (d) Maximum |
| | Number of | | Price Paid per | | of Shares (or | | Number (or |
| | Shares (or | | Share (or Unit) | | Units) Purchased | | Approximate |
| | Units) | | | | as Part of a | | Dollar Value) of |
| | Purchased | | | | Publicly | | Shares (or Units) |
| | | | | | Announced Plans | | that May Yet Be |
| | | | | | or Programs | | Purchased Under |
| | | | | | | | the Plans or |
| | | | | | | | Programs |
|
|
|
|
|
|
|
|
|
1st Share Buy Back | | | | | | | | |
Program (Announced | | | | | | | | |
5/17/05 and completed | | | | | | | | |
5/3/06 | | | | | | | | |
|
|
|
|
|
|
|
|
|
| November 1-30, 2005 | | 150,400 | | $17.179 | | 731,800 | | 268,200 |
|
|
|
|
|
|
|
|
|
| December 1-9, 2005 | | 152,200 | | $17.040 | | 884,000 | | 116,000 |
|
|
|
|
|
|
|
|
|
| January 2006 | | None | | None | | 884,000 | | 116,000 |
|
|
|
|
|
|
|
|
|
| February 13-28, 2006 | | 80,000 | | $17.736 | | 964,000 | | 36,000 |
|
|
|
|
|
|
|
|
|
| March 1-3, 2006 | | 36,000 | | $17.885 | | 1,000,000 | | 0 |
|
|
|
|
|
|
|
|
|
Total 1st Program | | 418,600 | | | | | | |
|
|
|
|
|
|
|
|
|
|
2nd Share Buy Back | | | | | | | | |
Program (Announced | | | | | | | | |
2/6/06, Started 3/3/06)‡ | | | | | | | | |
|
|
|
|
|
|
|
|
|
| March 3-23, 2006 | | 259,300 | | $17.806 | | 259,300 | | 740,700 |
|
|
|
|
|
|
|
|
|
| April 3-20, 2006 | | 234,600 | | $17.766 | | 493,900 | | 506,100 |
|
|
|
|
|
|
|
|
|
Total 2nd Program | | 493,900 | | | | | | |
|
|
|
|
|
|
|
|
|
Footnotes:
†On May 17, 2005 the Fund has been authorized to repurchase in the open market up to 1,000,000 shares of the Fund’s common stock. The Fund completed the repurchase of the 1,000,000 authorized shares on March 3, 2006. At the beginning of the period November 1, 2005, the Fund had previously repurchased 581,400 shares in the open market of the 1,000,000 shares that had been authorized.
‡On February 6, 2006 the Fund announced it has been re-authorized to repurchase in the open market up to 1,000,000 shares of the Fund’s common stock.
| |
| ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
| |
| | Not applicable. |
| ITEM 11. | CONTROLS AND PROCEDURES. |
| |
| (a) | The registrant’s principal executive officer and principal |
| | financial officer have concluded that the registrant’s |
| | disclosure controls and procedures (as defined in Rule 30a- |
| | 3(c) under the Investment Company Act of 1940, as amended (the |
| | “1940 Act”)) are effective as of a date within 90 days of the |
| | filing date of this report that includes the disclosure |
| | required by this paragraph, based on their evaluation of the |
| | disclosure controls and procedures required by Rule 30a-3(b) |
| | under the 1940 Act and 15d-15(b) under the Securities Exchange |
| | Act of 1934. |
| |
| (b) | There were no changes in the registrant’s internal control |
| | over financial reporting (as defined in Rule 30a-3(d) under |
| | the 1940 Act) that occurred during the registrant’s last |
| | fiscal half-year (the registrant’s second fiscal half-year in |
| | the case of an annual report) that have materially affected, |
| | or are likely to materially affect the registrant’s internal |
| | control over financial reporting. |
| |
| ITEM 12. | EXHIBITS. |
| |
| (a) | Not applicable. |
| |
| (b) | Attached hereto. |
| |
| |
| Exhibit 99.CERT | Certifications pursuant to section 302 of |
| | | the Sarbanes-Oxley Act of 2002 |
| |
| Exhibit 99.906CERT | Certifications pursuant to Section 906 of |
| | | the Sarbanes-Oxley Act of 2002 |
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, there unto duly authorized.
Salomon Brothers Capital and Income Fund Inc.
| By: | /s/ R. Jay Gerken |
| | R. Jay Gerken |
| | Chief Executive Officer |
| | Salomon Brothers Capital and Income Fund Inc. |
| |
| Date: | July 7, 2006 |
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/ R. Jay Gerken |
| | R. Jay Gerken |
| | Chief Executive Officer |
| | Salomon Brothers Capital and Income Fund Inc. |
| |
| Date: | July 7, 2006 |
| |
| |
| By: | /s/ Frances M. Guggino |
| | Frances M. Guggino |
| | Chief Financial Officer of |
| | Salomon Brothers Capital and Income Fund Inc. |
| |
| |
| Date: | July 7, 2006 |
