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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission File Number 1-5721
LEUCADIA NATIONAL CORPORATION
(Exact name of registrant as specified in its Charter)
New York 13-2615557
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
315 Park Avenue South, New York, New York 10010-3607
(Address of principal executive offices) (Zip Code)
(212) 460-1900
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
______________________
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
YES X NO
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, at August 5, 2003: 59,636,692.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, 2003 and December 31, 2002
(Dollars in thousands, except par value)
June 30, December 31,
2003 2002
---------- -----------
(Unaudited)
Assets
Investments:
Available for sale (aggregate cost of $541,915 and $484,571) $ 698,634 $ 569,861
Trading securities (aggregate cost of $66,125 and $49,888) 71,973 48,036
Held to maturity (aggregate fair value of $454 and $766) 454 768
Other investments, including accrued interest income 8,815 6,206
---------- ----------
Total investments 779,876 624,871
Cash and cash equivalents 497,314 418,600
Trade, notes and other receivables, net 406,241 407,422
Prepaids and other assets 222,635 187,046
Property, equipment and leasehold improvements, net 167,307 166,207
Investments in associated companies:
WilTel Communications Group, Inc. 284,121 340,551
Other associated companies 359,920 397,081
---------- ----------
Total $2,717,414 $2,541,778
========== ==========
Liabilities
Customer banking deposits $ 253,098 $ 392,904
Trade payables and expense accruals 91,220 77,394
Other liabilities 124,193 140,586
Income taxes payable 62,975 38,231
Deferred tax liability 42,917 16,556
Debt, including current maturities 448,382 233,073
---------- ----------
Total liabilities 1,022,785 898,744
---------- ----------
Commitments and contingencies
Minority interest 10,650 10,309
---------- ----------
Company-obligated mandatorily redeemable preferred securities of
subsidiary trust holding solely subordinated debt securities of the Company 98,200 98,200
---------- ----------
Shareholders' Equity
Series A Non-Voting Convertible Preferred Stock -- 47,507
Common shares, par value $1 per share, authorized 150,000,000 shares;
59,636,692 and 58,268,572 shares issued and outstanding, after deducting
58,867,179 and 60,213,299 shares held in treasury 59,637 58,269
Additional paid-in capital 200,860 154,260
Accumulated other comprehensive income 105,187 56,025
Retained earnings 1,220,095 1,218,464
---------- ----------
Total shareholders' equity 1,585,779 1,534,525
---------- ----------
Total $2,717,414 $2,541,778
========== ==========
See notes to interim consolidated financial statements.
2
LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
For the periods ended June 30, 2003 and 2002
(In thousands, except per share amounts)
(Unaudited)
For the Three Month For the Six Month
Period Ended June 30, Period Ended June 30,
---------------------- -----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Revenues:
Manufacturing $ 14,078 $ 13,915 $ 26,225 $ 26,303
Wireless messaging revenues 20,092 -- 20,092 --
Finance 14,734 23,002 31,878 47,706
Investment and other income 40,645 36,692 65,948 66,173
Net securities gains (losses) (2,091) (3,292) 214 (12,298)
--------- --------- --------- ---------
87,458 70,317 144,357 127,884
--------- --------- --------- ---------
Expenses:
Manufacturing cost of goods sold 10,201 9,140 19,150 17,432
Wireless messaging network operating expenses 9,964 -- 9,964 --
Interest 7,473 8,922 14,272 17,510
Salaries 10,406 9,660 19,478 20,228
Selling, general and other expenses 34,474 35,439 70,754 76,338
--------- --------- --------- ---------
72,518 63,161 133,618 131,508
--------- --------- --------- ---------
Income (loss) from continuing operations before income taxes,
minority expense of trust preferred securities and equity
in income (losses) of associated companies 14,940 7,156 10,739 (3,624)
Income taxes 2,493 2,632 1,007 (987)
--------- --------- --------- ---------
Income (loss) from continuing operations before minority
expense of trust preferred securities and equity in
income (losses) of associated companies 12,447 4,524 9,732 (2,637)
Minority expense of trust preferred securities, net of taxes (1,380) (1,380) (2,761) (2,761)
Equity in income (losses) of associated companies, net of taxes 2,542 16,285 (7,148) 36,130
--------- --------- --------- ---------
Income (loss) from continuing operations 13,609 19,429 (177) 30,732
Income from discontinued operations, net of taxes
of $1,859 and $2,571, respectively for 2002 1,808 3,140 1,808 4,580
Gain on disposal of discontinued operations, net of taxes of $2,430 -- 4,512 -- 4,512
--------- --------- --------- ---------
Net income $ 15,417 $ 27,081 $ 1,631 $ 39,824
========= ========= ========= =========
Basic earnings (loss) per common share:
Income (loss) from continuing operations $ .23 $ .35 $ -- $ .56
Income from discontinued operations .03 .06 .03 .08
Gain on disposal of discontinued operations -- .08 -- .08
--------- --------- --------- ---------
Net income $ .26 $ .49 $ .03 $ .72
========= ========= ========= =========
Diluted earnings (loss) per common share:
Income (loss) from continuing operations $ .23 $ .35 $ -- $ .56
Income from discontinued operations .03 .06 .03 .08
Gain on disposal of discontinued operations -- .08 -- .08
--------- --------- --------- ---------
Net income $ .26 $ .49 $ .03 $ .72
========= ========= ========= =========
See notes to interim consolidated financial statements.
3
LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the six months ended June 30, 2003 and 2002
(In thousands)
(Unaudited)
2003 2002
--------- ---------
Net cash flows from operating activities:
Net income $ 1,631 $ 39,824
Adjustments to reconcile net income to net cash provided by (used for) operations:
Provision (benefit) for deferred income taxes (2,248) 4,299
Depreciation and amortization of property, equipment and leasehold improvements 10,277 9,350
Other amortization 82 (474)
Provision for doubtful accounts 5,500 11,440
Net securities (gains) losses (214) 12,298
Equity in (income) losses of associated companies 7,148 (36,130)
Distributions from associated companies 22,129 36,470
Gain on disposal of real estate, property and equipment, and other assets (13,950) (11,859)
Gain on disposal of discontinued operations -- (4,512)
Investments classified as trading, net (9,446) 56,177
Net change in:
Trade and other receivables (6,072) 3,676
Prepaids and other assets (11,677) 546
Trade payables and expense accruals (13,468) (2,065)
Other liabilities (1,996) (106)
Income taxes payable 1,734 (44,246)
Other (376) 1,489
Net change in net assets of discontinued operations -- (5,384)
--------- ---------
Net cash provided by (used for) operating activities (10,946) 70,793
--------- ---------
Net cash flows from investing activities:
Acquisition of real estate, property and equipment, and other assets (15,271) (19,789)
Proceeds from disposals of real estate, property and equipment, and other assets 13,829 44,875
Proceeds from sale of discontinued operations -- 66,241
Cash acquired upon acquisition of WebLink 21,459 --
Advances on loan receivables (2,966) (48,381)
Principal collections on loan receivables 73,674 93,734
Advances on notes receivables (400) (650)
Collections on notes receivables 13,214 74
Investments in associated companies (11,390) (1,506)
Purchases of investments (other than short-term) (520,385) (478,784)
Proceeds from maturities of investments 140,405 324,449
Proceeds from sales of investments 307,446 69,333
--------- ---------
Net cash provided by investing activities 19,615 49,596
--------- ---------
Net cash flows from financing activities:
Net change in customer banking deposits (138,697) (7,794)
Issuance of long-term debt, net of issuance costs 211,049 6,145
Reduction of long-term debt (2,548) (8,163)
Purchase of common shares for treasury (61) (98)
--------- ---------
Net cash provided by (used for) financing activities 69,743 (9,910)
--------- ---------
Effect of foreign exchange rate changes on cash 302 152
--------- ---------
Net increase in cash and cash equivalents 78,714 110,631
Cash and cash equivalents at January 1, 418,600 373,222
--------- ---------
Cash and cash equivalents at June 30, $ 497,314 $ 483,853
========= =========
4
See notes to interim consolidated financial statements.
LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders' Equity
For the six months ended June 30, 2003 and 2002
(In thousands, except par value)
(Unaudited)
Series A
Non-Voting Common Accumulated
Convertible Shares Additional Other
Preferred $1 Par Paid-In Comprehensive Retained
Stock Value Capital Income (Loss) Earnings Total
---------- -------- ---------- ------------- -------- --------
Balance, January 1, 2002 $ -- $ 55,318 $ 54,791 $ 14,662 $1,070,682 $1,195,453
----------
Comprehensive income:
Net change in unrealized gain (loss) on
investments 4,315 4,315
Net change in unrealized foreign exchange
gain (loss) 14,209 14,209
Net change in unrealized gain (loss) on
derivative instruments (961) (961)
Net income 39,824 39,824
----------
Comprehensive income 57,387
----------
Exercise of options to purchase common shares 29 615 644
Purchase of stock for treasury (3) (95) (98)
-------- -------- -------- -------- ---------- ----------
Balance, June 30, 2002 $ -- $ 55,344 $ 55,311 $ 32,225 $1,110,506 $1,253,386
======== ======== ======== ======== ========== ==========
Balance, January 1, 2003 $ 47,507 $ 58,269 $154,260 $ 56,025 $1,218,464 $1,534,525
----------
Comprehensive income:
Net change in unrealized gain (loss) on
investments 45,435 45,435
Net change in unrealized foreign exchange
gain (loss) 4,468 4,468
Net change in unrealized gain (loss) on
derivative instruments (741) (741)
Net income 1,631 1,631
----------
Comprehensive income 50,793
----------
Conversion of convertible preferred shares into
common shares (47,507) 1,348 46,159 --
Exercise of options to purchase common shares 22 500 522
Purchase of stock for treasury (2) (59) (61)
-------- -------- -------- -------- ---------- ----------
Balance, June 30, 2003 $ -- $ 59,637 $200,860 $105,187 $1,220,095 $1,585,779
======== ======== ======== ======== ========== ==========
See notes to interim consolidated financial statements.
5
LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements
1. The unaudited interim consolidated financial statements, which reflect all
adjustments (consisting only of normal recurring items) that management
believes necessary to present fairly results of interim operations, should
be read in conjunction with the Notes to Consolidated Financial Statements
(including the Summary of Significant Accounting Policies) included in the
Company's audited consolidated financial statements for the year ended
December 31, 2002, which are included in the Company's Annual Report filed
on Form 10-K for such year (the "2002 10-K"). Results of operations for
interim periods are not necessarily indicative of annual results of
operations. The consolidated balance sheet at December 31, 2002 was
extracted from the audited annual financial statements and does not include
all disclosures required by generally accepted accounting principles for
annual financial statements.
Certain amounts for prior periods have been reclassified to be consistent
with the 2003 presentation.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), establishes a fair value method for
accounting for stock-based compensation plans, either through recognition
in the statements of operations or disclosure. As permitted, the Company
applies APB Opinion No. 25 and related Interpretations in accounting for
its plans. Accordingly, no compensation cost has been recognized in the
statements of operations for its stock-based compensation plans. Had
compensation cost for the Company's stock option plans been recorded in the
statements of operations consistent with the provisions of SFAS 123, the
Company's net income would not have been materially different from that
reported.
2. Certain information concerning the Company's segments for the six and three
month periods ended June 30, 2003 and 2002 is presented in the following
table. Prior period amounts have been reclassified to exclude equity in
income (losses) of associated companies from these captions.
For the Three Month For the Six Month
Period Ended June 30, Period Ended June 30,
--------------------- ---------------------
2003 2002 2003 2002
---- ---- ---- ----
(In thousands)
Revenues:
Banking and lending $ 16,720 $ 24,723 $ 37,188 $ 53,400
Domestic real estate 16,104 17,063 26,226 25,442
Manufacturing 14,437 13,931 26,603 26,339
Wireless messaging 20,128 -- 20,128 --
Other operations 8,105 10,723 15,175 18,301
Corporate (a) 11,964 3,877 19,037 4,402
--------- --------- --------- ---------
Total consolidated revenues $ 87,458 $ 70,317 $ 144,357 $ 127,884
========= ========= ========= =========
Income (loss) from continuing operations before income taxes,
minority expense of trust preferred securities and equity in income
(losses) of associated companies:
Banking and lending $ 7,080 $ 6,445 $ 11,920 $ 10,510
Domestic real estate 7,158 8,854 8,690 9,097
Manufacturing 1,515 2,064 1,777 3,294
Wireless messaging 3,182 -- 3,182 --
Other operations (51) 2,514 (1,125) 2,806
Corporate (a) (3,944) (12,721) (13,705) (29,331)
--------- --------- --------- ---------
Total consolidated income (loss) from continuing operations
before income taxes, minority expense of trust preferred
securities and equity in income (losses) of associated companies $ 14,940 $ 7,156 $ 10,739 $ (3,624)
========= ========= ========= =========
(a) Includes a provision of $5,100,000 and $2,400,000 for the six and
three month periods ended June 30, 2003, respectively, to write down
the Company's investments in certain available for sale securities and
its investment in a non-public security, and for the six and three
month periods ended June 30, 2002, a provision of $19,700,000 and
$14,700,000, respectively, to write down the Company's investments in
certain available for sale securities and its equity in a non-public
fund.
6
Notes to Interim Consolidated Financial Statements, continued
3. The Company accounts for its investment in Berkadia under the equity method
of accounting. At June 30, 2003, the book value of the Company's equity
investment in Berkadia was negative $48,400,000, which is included in other
liabilities in the consolidated balance sheet. As more fully described in
the 2002 10-K, the negative carrying amount results from Berkadia's
distribution of loan related fees received and the Company's recognition in
2001 of its share of The FINOVA Group Inc.'s ("FINOVA") non-cash losses
recorded by Berkadia, partially offset by the Company's share of Berkadia's
income related to Berkadia's loan to FINOVA. The Company has guaranteed 10%
of Berkadia's debt and, although the Company has no cash investment in
Berkadia, it records its share of any losses recorded by Berkadia up to the
amount of the guarantee. The total amount of the Company's guarantee was
$120,000,000 as of August 5, 2003.
For the six and three month periods ended June 30, 2003 and 2002, the
Company's equity in the income of Berkadia consists of the following (in
thousands):
For the Three Month For the Six Month
Period Ended June 30, Period Ended June 30,
--------------------- ---------------------
2003 2002 2003 2002
----- ----- ---- ----
Net interest spread on the Berkadia loan - 10% of total $ 1,100 $ 1,500 $ 2,400 $ 3,600
Amortization of Berkadia loan discount related to cash fees - 50% of total 1,300 5,100 9,700 12,200
Amortization of Berkadia loan discount related to FINOVA stock - 50% of total 2,100 8,100 15,200 19,300
------- ------- ------- -------
Equity in income of associated companies - Berkadia $ 4,500 $14,700 $27,300 $35,100
======= ======= ======= =======
The pace of actual and anticipated principal payments on the Berkadia Loan
has slowed, resulting in a reduction in the amortization of the discount on
the Berkadia Loan.
4. As more fully discussed in the Company's 2002 10-K, the Company owns 47.4%
of the outstanding common shares of WilTel Communications Group, Inc.
("WilTel"). For the six and three month periods ended June 30, 2003, the
Company recorded $57,100,000 and $22,300,000, respectively, of pre-tax
losses from its investment in WilTel under the equity method of accounting.
The Company has not recorded a related deferred tax benefit, as its ability
to use the capital loss to reduce taxes due on capital gains in the future
is uncertain.
On August 12, 2003, the Company and WilTel announced an agreement in
principle whereby WilTel will become a wholly owned subsidiary of the
Company. The Company and WilTel intend to enter into a merger agreement
that provides for a first-step exchange offer pursuant to which tendering
WilTel stockholders will receive .4242 of a Leucadia common share for each
share of WilTel common stock to be followed by a back-end merger for the
same consideration as offered in the exchange offer. At this exchange
ratio, if all of the publicly held WilTel shares are acquired by the
Company, Leucadia would issue 11,156,460 common shares and the former
public stockholders of WilTel would own approximately 15.8% of Leucadia. In
addition, in the exchange offer and merger WilTel stockholders will receive
contingent sale rights which entitle WilTel stockholders to additional
Leucadia common shares if the Company sells substantially all of WilTel's
assets prior to October 15, 2004 (which we have no plans to do) and the net
proceeds exceed the price paid pursuant to this transaction.
Consummation of this transaction is subject to the negotiation and
execution of a definitive agreement, certain regulatory approvals and a
non-waivable condition that the holders of at least a majority of the
WilTel shares that are not beneficially owned by the Company and its
affiliates have tendered and not withdrawn their shares in the exchange
offer, as well as other customary conditions.
7
Notes to Interim Consolidated Financial Statements, continued
5. The following tables provide summarized data with respect to significant
investments in Associated Companies accounted for under the equity method
of accounting for the periods the investments were owned by the Company.
The information is provided for those investments whose relative
significance to the Company is expected to result in the Company including
separate audited financial statements for such investments in its Annual
Report on Form 10-K for the year ended December 31, 2003 (in thousands).
June 30,
2003
-----------
Investment in WilTel:
Total revenues $ 611,500
Loss from continuing operations before extraordinary items $(119,900)
Net loss $(119,900)
The Company's equity in net loss $ (57,100)
June 30, June 30,
2003 2002
----------- ---------
Investment in Berkadia:
Total revenues $ 80,500 $ 138,900
Income from continuing operations before extraordinary items $ 68,100 $ 99,400
Net income $ 68,100 $ 99,400
The Company's equity in net income $ 27,300 $ 35,100
Investment in Olympus Re Holdings, Ltd.:
Total revenues $ 209,900 $ 88,000
Income from continuing operations before extraordinary items $ 90,100 $ 46,200
Net income $ 90,100 $ 46,200
The Company's equity in net income $ 22,500 $ 9,400
In June 2003, the Company sold 567,574 common shares of Olympus Re to
Olympus Re for total proceeds of $79,500,000, which were received in July
2003. The Company recognized a $1,500,000 gain on the sale which is
reflected in other income. The shares were tendered to Olympus Re as part
of a tender offer available to all of its shareholders. After completion of
the tender, the Company's interest in Olympus Re declined from 25% to
16.1%. The Company will continue to account for this investment under the
equity method of accounting based upon the Company's ability to exercise
significant influence.
6. In December 2002, the Company completed a private placement of
approximately $150,000,000 of equity securities, based on a common share
price of $35.25, to mutual fund clients of Franklin Mutual Advisers, LLC,
including the funds comprising the Franklin Mutual Series Funds. The
private placement included 2,907,599 common shares and newly authorized
Series A Non-Voting Convertible Preferred Stock that were mandatorily
convertible into 1,347,720 common shares within 90 days of issuance. Such
shares were converted into common shares in March 2003.
7. In June 2003, the Company sold $200,000,000 principal amount of its newly
authorized 7% Senior Notes due 2013 in a private placement at 99.612% of
the principal amount. On July 15, 2003, the Company filed a registration
statement with the Securities and Exchange Commission pursuant to which
each holder of privately placed senior notes will have the opportunity to
exchange those notes for registered 7% Senior Notes due 2013 having
substantially identical terms. The registration statement has not yet been
declared effective. In August 2003, the Company sold $25,000,000 principal
amount of its newly authorized 7% Senior Notes due 2013 in a private
placement at 99.612% of the principal amount.
8
Notes to Interim Consolidated Financial Statements, continued
8. A summary of accumulated other comprehensive income (loss) at June 30, 2003
and December 31, 2002 is as follows (in thousands):
June 30, December 31,
2003 2002
---- -------
Net unrealized gains on investments $ 103,447 $ 58,012
Net unrealized foreign exchange gains (losses) 4,231 (237)
Net unrealized losses on derivative instruments (2,491) (1,750)
--------- --------
$ 105,187 $ 56,025
========= ========
9. Included in investment and other income is income (charges) of $700,000 and
$(900,000), for the six and three month periods ended June 30, 2003,
respectively, and charges of $1,000,000 and $3,700,000 for the six and
three month periods ended June 30, 2002, respectively, as a result of
accounting for its derivative financial instruments in accordance with
Statement of Financial Accounting Standards No. 133 ("SFAS 133").
10. Per share amounts were calculated by dividing net income (loss) by the sum
of the weighted average number of common shares outstanding and, for
diluted earnings (loss) per share, the incremental weighted average number
of shares issuable upon exercise of outstanding options and warrants for
the periods they were outstanding. The number of shares used to calculate
basic earnings (loss) per share amounts was 59,624,000 and 55,328,000 for
the six month periods ended June 30, 2003 and 2002, respectively, and
59,630,000 and 55,336,000 for the three month periods ended June 30, 2003
and 2002, respectively. The number of shares used to calculate diluted
earnings (loss) per share amounts was 59,624,000 and 55,642,000 for the six
month periods ended June 30, 2003 and 2002, respectively, and 60,069,000
and 55,694,000 for the three month periods ended June 30, 2003 and 2002,
respectively. For the six month period ended June 30, 2003, options and
warrants to purchase approximately 407,000 weighted average shares of
common stock were outstanding but were not included in the computation of
diluted earnings (loss) per share, as those options and warrants were
antidilutive. Due to the nature of their rights and their nominal
liquidation value, the Series A Non-Voting Convertible Preferred Shares are
treated as common shares and are included in the weighted average share
calculations for basic and diluted per share computations for 2003.
11. Cash paid for interest and income taxes (net of refunds) was $14,200,000
and $3,300,000, respectively, for the six month period ended June 30, 2003
and $17,800,000 and $37,300,000, respectively, for the six month period
ended June 30, 2002.
12. In December 2002, the Company entered into an agreement to purchase certain
debt and equity securities of WebLink Wireless, Inc. ("WebLink"), for an
aggregate purchase price of $19,000,000. WebLink, a privately held company,
is in the wireless messaging industry, providing wireless data services and
traditional paging services. Pursuant to the agreement, the Company
acquired outstanding secured notes of WebLink with a principal amount of
$36,500,000 (representing 94% of the total outstanding debt). In April
2003, upon receipt of approval from the FCC, the Company acquired
approximately 80% of the outstanding common stock of WebLink. The Company
has consolidated WebLink's financial condition and results of operations
from the date FCC approval was received.
13. In April 2003, the Company entered into an agreement with a third party
(the "Seller") to acquire certain businesses of Integrated Health Services,
Inc. ("IHS"), a company undergoing reorganization proceedings under chapter
11 of the Bankruptcy Code. The businesses to be acquired are primarily
engaged in the provision of physical, occupational, speech and respiratory
therapy services, and are operated by subsidiaries of Symphony Health
Services, Inc. ("Symphony"). The purchase price is approximately
$50,000,000, including expenses, and is subject to certain working capital
and other adjustments. Closing of the transaction is subject to acquisition
by the Seller of the Symphony businesses from IHS, which is expected to
close during the third quarter of 2003.
9
Notes to Interim Consolidated Financial Statements, continued
14. In connection with the 1997 sale of the property and casualty insurance
business of the Colonial Penn Insurance Company, the Company provided the
purchaser with a bank issued $100,000,000 non-cancelable letter of credit
to collateralize certain indemnification obligations. In May 2003, the
Company was released from its indemnification obligation (without any
payment) and the letter of credit was returned and cancelled. Accordingly,
the bank released cash and marketable securities of $167,100,000, which had
been left on deposit to collateralize the letter of credit.
In an unrelated matter, the Company also settled certain other tax payment
responsibilities during the second quarter of 2003 with the purchaser of
Colonial Penn Insurance Company. Income from discontinued operations for
the 2003 periods consists of a payment from the purchaser to reimburse the
Company for tax payments previously made.
15. In May 2003, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity" ("SFAS 150"), which is effective for financial instruments entered
into and modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. SFAS
150 establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity.
As a result of the implementation of SFAS 150, the Company will classify
its trust issued preferred securities as liabilities in the third quarter
of 2003.
In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
which addresses consolidation of variable interest entities, which are
entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for
the entity to finance its activities without additional subordinated
financial support from other parties. FIN 46 is effective immediately to
variable interest entities created after January 31, 2003, and to variable
interest entities in which an enterprise obtains an interest after that
date. FIN 46 applies in the first fiscal year or interim period beginning
after June 15, 2003, to variable interest entities in which an enterprise
holds a variable interest that it acquired before February 1, 2003. FIN 46
may be applied prospectively with a cumulative effect adjustment as of the
date on which it is first applied or by restating previously issued
financial statements with a cumulative effect adjustment as of the
beginning of the first year restated. The Company is currently reviewing
the impact of the implementation of FIN 46, which may result in the
consolidation of certain entities that are not currently consolidated.
10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Interim Operations.
The following should be read in conjunction with the Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the 2002
10-K.
Liquidity and Capital Resources
For the six month period ended June 30, 2003, net cash was used for operations
principally as a result of an increase in the Company's investment in the
trading portfolio, lower investment income on corporate investments, and payment
of corporate interest and overhead expenses. For the six month period ended June
30, 2002, net cash was provided by operations principally as a result of a
reduction to the Company's investment in the trading portfolio and distributions
from associated companies partially offset by the payment of income taxes.
As of June 30, 2003, the Company's readily available cash, cash equivalents and
marketable securities, excluding those amounts held by its regulated
subsidiaries, totaled $1,115,200,000. This amount is comprised of cash and
short-term bonds and notes of the United States Government and its agencies of
$687,500,000 (62%), the equity investment in White Mountains Insurance Group,
Ltd. of $148,100,000 (13%) (which can be sold privately or otherwise in
compliance with the securities laws and is subject to a registration rights
agreement) and other publicly traded debt and equity securities aggregating
$279,600,000 (25%).
As a result of principal payments by FINOVA to Berkadia, as of August 5, 2003,
the Company's guarantee of Berkadia's financing has been reduced to
$120,000,000.
In December 2002, the Company completed a private placement of approximately
$150,000,000 of equity securities, based on a common share price of $35.25, to
mutual fund clients of Franklin Mutual Advisers, LLC, including the funds
comprising the Franklin Mutual Series Funds. The private placement included
2,907,599 common shares and newly authorized Series A Non-Voting Convertible
Preferred Stock that were mandatorily convertible into 1,347,720 common shares
within 90 days of issuance. Such shares were converted into common shares in
March 2003.
In June 2003, the Company sold $200,000,000 principal amount of its newly
authorized 7% Senior Notes due 2013 in a private placement at 99.612% of the
principal amount. The net cash proceeds from the sale of the notes will be used
for general corporate purposes. On July 15, 2003, the Company filed a
registration statement with the Securities and Exchange Commission pursuant to
which each holder of privately placed senior notes will have the opportunity to
exchange those notes for registered 7% Senior Notes due 2013 having
substantially identical terms. The registration statement has not yet been
declared effective. In August 2003, the Company sold $25,000,000 principal
amount of its newly authorized 7% Senior Notes due 2013 in a private placement
at 99.612% of the principal amount.
The Company's consolidated banking and lending operations had outstanding loans
(net of unearned finance charges) of $284,400,000 and $373,600,000 at June 30,
2003 and December 31, 2002, respectively. At June 30, 2003, 51% were loans to
individuals generally collateralized by automobiles; 42% were loans to
consumers, substantially all of which were collateralized by real or personal
property; 4% were loans to small businesses; and 3% were unsecured loans. The
banking and lending segment is no longer making consumer loans and is in the
process of liquidating its remaining portfolio. These loans were primarily
funded by deposits generated by the Company's deposit-taking facilities and by
brokers. The Company intends to use the cash flows generated from its loan
portfolios to retire these deposits as they mature, which the Company expects
will be substantially complete by the end of 2005. The Company's customer
banking deposits totaled $253,100,000 and $392,900,000 as of June 30, 2003 and
December 31, 2002, respectively.
As disclosed in the 2002 10-K, the Company's national bank subsidiary, American
Investment Bank, ("AIB") stopped originating new subprime automobile loans in
September 2001, and the Company's banking and lending segment ceased originating
all other consumer loans in January 2003. The FDIC and Office of the Comptroller
of the Currency ("OCC") have supported these actions taken with respect to the
sub-prime portfolio. However, effective February 2003, AIB entered into a formal
agreement with the OCC, agreeing to develop a written
11
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Interim Operations, continued.
strategic plan subject to prior OCC approval for the continued operations of
AIB, to continue to maintain certain risk-weighted capital levels, to obtain
prior approval before paying any dividends, to provide certain monthly reports
and to comply with certain other criteria. In May 2003, the OCC approved AIB's
strategic plan. AIB will also be unable to accept brokered deposits during the
period the agreement remains in effect. In the event AIB fails to comply with
the agreement, the OCC would have the authority to assert formal charges and
seek other statutory remedies and AIB may also be subject to civil monetary
penalties. AIB is complying with the agreement and, given that it has ceased all
lending activities, the agreement is not expected to have a significant impact
on its operations. However, no assurance can be given that other regulatory
actions will not be taken.
In April 2003, the Company entered into an agreement with a third party (the
"Seller") to acquire certain businesses of Integrated Health Services, Inc.
("IHS"), a company undergoing reorganization proceedings under Chapter 11 of the
Bankruptcy Code. The businesses to be acquired are primarily engaged in the
provision of physical, occupational, speech and respiratory therapy services,
and are operated by subsidiaries of Symphony Health Services, Inc. ("Symphony").
The purchase price is approximately $50,000,000, including expenses, and is
subject to certain working capital and other adjustments. Closing of the
transaction is subject to acquisition by the Seller of the Symphony businesses
from IHS, which is expected to close during the third quarter of 2003.
In June 2003, the Company sold 567,574 common shares of Olympus Re to Olympus Re
for total proceeds of $79,500,000, which were received in July 2003. The shares
were tendered to Olympus Re as part of a tender offer available to all of its
shareholders. After completion of the tender, the Company's interest in Olympus
Re declined from 25% to 16.1%.
As more fully discussed in the Company's 2002 10-K, the Company owns 47.4% of
the outstanding common shares of WilTel Communications Group, Inc. ("WilTel").
For the six and three month periods ended June 30, 2003, the Company recorded
$57,100,000 and $22,300,000, respectively, of pre-tax losses from its investment
in WilTel under the equity method of accounting. The Company has not recorded a
related deferred tax benefit, as its ability to use the capital loss to reduce
taxes due on capital gains in the future is uncertain.
On August 12, 2003, the Company and WilTel announced an agreement in principle
whereby WilTel will become a wholly owned subsidiary of the Company. The Company
and WilTel intend to enter into a merger agreement that provides for a
first-step exchange offer pursuant to which tendering WilTel stockholders will
receive .4242 of a Leucadia common share for each share of WilTel common stock
to be followed by a back-end merger for the same consideration as offered in the
exchange offer. At this exchange ratio, if all of the publicly held WilTel
shares are acquired by the Company, Leucadia would issue 11,156,460 common
shares and the former public stockholders of WilTel would own approximately
15.8% of Leucadia. In addition, in the exchange offer and merger WilTel
stockholders will receive contingent sale rights which entitle WilTel
stockholders to additional Leucadia common shares if the Company sells
substantially all of WilTel's assets prior to October 15, 2004 (which we have no
plans to do) and the net proceeds exceed the price paid pursuant to this
transaction.
Consummation of this transaction is subject to the negotiation and execution of
a definitive agreement, certain regulatory approvals and a non-waivable
condition that the holders of at least a majority of the WilTel shares that are
not beneficially owned by the Company and its affiliates have tendered and not
withdrawn their shares in the exchange offer, as well as other customary
conditions.
12
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Interim Operations, continued.
Results of Operations
The 2003 Periods Compared to the 2002 Periods
Finance revenues, which reflect the level and mix of consumer instalment loans,
decreased in the six and three month periods ended June 30, 2003 as compared to
the similar periods in 2002 due to fewer average loans outstanding. Average
loans outstanding were $325,400,000 and $288,600,000 for the six and three month
periods ended June 30, 2003, respectively, as compared to $474,300,000 and
$457,800,000, respectively, during the six and three month periods ended June
30, 2002. This decline was primarily due to the Company's decision in September
2001 to stop originating subprime automobile loans. Although finance revenues
decreased in the 2003 periods as compared to the same periods in 2002, pre-tax
results for the six and three month periods ended June 30, 2003 increased
primarily due to a reduction in interest expense, resulting from reduced
customer banking deposits and lower interest rates thereon, of $4,600,000 and
$2,300,000, respectively, a decline in the provision for loan losses of
$6,200,000 and $3,400,000, respectively, and lower salaries expense and
operating and other costs resulting from the segment's restructuring efforts.
In the six and three month periods ended June 30, 2003, the banking and lending
segment's provision for loan losses decreased as compared to the same periods in
2002 primarily due to the decline in loans outstanding and lower net
charge-offs. At June 30, 2003, the allowance for loan losses for the Company's
entire loan portfolio was $24,800,000 or 8.7% of the net outstanding loans, as
compared to $31,800,000 or 8.5% of the net outstanding loans at December 31,
2002. The Company believes its loss experience reflects the difficulties
experienced by subprime borrowers in the current economy.
The Company's remaining consumer lending programs have primarily consisted of
marine, recreational vehicle, motorcycle and elective surgery loans. Due to
economic conditions, portfolio performance and the relatively small size of
these loan portfolios and target markets, in January 2003 the Company stopped
originating all consumer loans. The Company is considering its alternatives for
its banking and lending operations, which could include selling or liquidating
some or all of its loan portfolios, and outsourcing certain functions.
Pre-tax results for the banking and lending segment include income (charges) of
$2,300,000 and $1,300,000 for the six month periods ended June 30, 2003 and
2002, respectively, and $600,000 and $(500,000) for the three month periods
ended June 30, 2003 and 2002, respectively, resulting from mark-to-market
changes on its interest rate swaps. The Company uses interest rate swaps to
manage the impact of interest rate changes on its customer banking deposits.
Although the Company believes that these derivative financial instruments serve
as economic hedges, they do not meet certain effectiveness criteria under SFAS
133 and, therefore, are not accounted for as hedges.
Revenues from domestic real estate modestly changed in the 2003 periods as
compared to the 2002 periods as increased revenues from the Company's Hawaiian
hotel were tempered by lower gains from property sales and for the six month
2003 period, lower rent income, largely due to the sale of two shopping centers
during 2002. The decline in pre-tax income for the 2003 periods results from the
changes in revenues as well as greater operating and other costs principally
related to the Hawaiian hotel.
Manufacturing revenues were largely unchanged for the six and three month
periods ended June 30, 2003 as compared to the same periods in 2002 as declines
principally in the carpet padding and agricultural markets were largely offset
by increases in the construction and consumer products markets. Gross profit and
pre-tax results for the 2003 periods declined as compared to the 2002 periods
primarily due to higher raw material costs.
In April 2003, upon receipt of approval from the FCC, the Company acquired
approximately 80% of the outstanding common stock of WebLink Wireless, Inc.
("WebLink"), a private company engaged in the wireless messaging industry. The
Company has consolidated WebLink's financial condition and results of operations
from the date FCC approval was received.
13
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Interim Operations, continued.
The wireless messaging industry has been in decline for the last several years,
with units in service for traditional paging services experiencing steady
declines and growth in telemetry applications and 2-way messaging not meeting
expectations. WebLink has continued to experience erosion in revenues since the
Company's acquisition; however, cost reduction programs have enabled the company
to maintain profitability. While there appears to be a base level of demand for
products offered by WebLink and its competitors, it does not appear to be
sufficient to support all of the industry's participants, and the Company
believes that an industry consolidation is likely. From the date of acquisition
through June 30, 2003, WebLink's revenues totaled $20,100,000, gross profit was
$10,100,000 or 50.4% and pre-tax income was $3,200,000.
Investment and other income increased in the 2003 periods principally due to
$4,900,000 relating to the favorable resolution of value added tax assessments,
greater income related to accounting for the market values of the Company's
derivative financial instruments and the gain on sale of Olympus Re, as
discussed above. These increases were partially offset by lower revenues from
the Company's winery operations, lower foreign exchange gains and for the six
month 2003 period, by a reduction in investment income.
Equity in income (losses) of associated companies includes the following (in
thousands):
For the Three Month For the Six Month
Period Ended June 30, Period Ended June 30,
--------------------- ---------------------
2003 2002 2003 2002
-------- ------- -------- -------
Berkadia $ 4,500 $ 14,700 $ 27,300 $ 35,100
Olympus Re Holdings, Ltd. 10,200 6,500 22,500 9,400
WilTel (22,300) -- (57,100) --
Jefferies Partners Opportunity Fund II, LLC 3,400 3,800 6,900 8,400
Other 20,200 100 20,500 2,700
-------- -------- -------- --------
Pre-Tax 16,000 25,100 20,100 55,600
Income tax expense 13,500 8,800 27,200 19,500
-------- -------- -------- --------
Equity in income (losses), net of taxes $ 2,500 $ 16,300 $ (7,100) $ 36,100
======== ======== ======== ========
The decrease in income from Berkadia results from a slowing of the pace of
actual and anticipated principal payments on the Berkadia Loan to FINOVA,
causing a reduction in the amortization of the discount on the Berkadia Loan.
The book value of the Company's equity investment in Berkadia was negative
$48,400,000 and negative $72,100,000 at June 30, 2003 and December 31, 2002,
respectively. The negative carrying amount principally results from Berkadia's
distribution of loan related fees received and the Company's recognition in 2001
of its share of FINOVA's losses under the equity method of accounting. This
negative carrying amount is being amortized into income over the term of the
Berkadia Loan, and effectively represents an unamortized discount on the
Berkadia Loan.
The Company's investment in Olympus Re was made in December 2001, when Olympus
Re commenced its operations as a newly formed Bermuda reinsurance company
primarily engaged in the property excess, marine and aviation reinsurance
business. The Company's share of its earnings has increased in 2003, reflecting
the growth in Olympus Re's premium revenues during its second year of operation.
As discussed above, subsequent to a tender offer for its shares in June 2003,
the Company's interest in Olympus Re has declined from 25% to 16.1%.
14
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Interim Operations, continued.
Since its acquisition in the fourth quarter of 2002, the Company has recorded
its share of WilTel's losses under the equity method of accounting. As a result
of its emergence from bankruptcy proceedings and its continued restructuring of
its operations, WilTel has reduced its headcount, operating costs and interest
expense. However, despite these cost reductions, the Company believes that
WilTel will continue to report losses from continuing operations for the
foreseeable future. Even if WilTel is able to generate breakeven cash flow from
operations, substantial depreciation and amortization charges will still result
in losses from continuing operations over the next several years. The Company
will record its 47.4% share of these losses in its statements of operations, and
the recognition of these losses could reduce the carrying amount of its
investment in WilTel to zero. The Company will not record any further losses in
WilTel if and when its investment is reduced to zero, unless the Company has
guaranteed any of WilTel's obligations, or otherwise has committed or intends to
commit to provide further financial support. The Company has not provided any
such guarantees or commitments. The Company has not recorded a deferred tax
benefit for its share of the WilTel loss as its ability to use the capital loss
to reduce the taxes due on capital gains in the future is uncertain.
The remainder of the increase in equity income from associated companies in the
2003 periods includes increased income of $12,200,000 and $13,700,000 for the
six and three month periods, respectively, from the Company's investment in a
limited partnership that invests primarily in securities and other obligations
of highly leveraged, distressed and out of favor companies. In addition, other
equity income in associated companies includes $7,100,000 and $7,800,000 for the
six and three month periods, respectively, from the Company's equity investment
in HomeFed Corporation, as further described in the 2002 10-K.
Net securities gains (losses) for the six and three month periods ended June 30,
2003 include a provision of $5,100,000 and $2,400,000, respectively, to write
down the Company's investments in certain available for sale securities and its
investment in a non-public security, and for the six and three month periods
ended June 30, 2002, a provision of $19,700,000 and $14,700,000, respectively,
to write down the Company's investments in certain available for sale securities
and its equity investment in a non-public fund.
The decline in interest expense in the six and three month periods ended June
30, 2003 as compared to the same periods in 2002 primarily reflects lower
interest expense at the banking and lending segment due to reduced customer
banking deposits and lower interest rates thereon, partially offset by increased
interest expense relating to the 7% Senior Notes that the Company issued in June
2003.
Salaries expense in the 2003 periods includes $3,500,000 related to WebLink,
which became a subsidiary of the Company in April 2003. Salaries expense for the
2003 periods also reflect reductions related to the Company's banking and
lending segment, which has ceased lending activity as discussed above, and
decreased expenses related to certain executive incentive plans.
15
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Interim Operations, continued.
Selling, general and other expenses in the 2003 periods include amounts related
to WebLink since its acquisition of $3,400,000. Selling, general and other
expenses also reflect decreases in the 2003 periods primarily due to lower
provisions for loan losses and operating and other costs relating to the banking
and lending operations.
Income taxes for the 2003 periods differ from the expected statutory federal
rate principally due to the exclusion of the income related to the favorable
resolution of value added tax assessments discussed above.
Cautionary Statement for Forward-Looking Information
Statements included in this Management's Discussion and Analysis of Financial
Condition and Results of Interim Operations may contain forward-looking
statements. Such forward-looking statements are made pursuant to the safe-harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
statements may relate, but are not limited, to projections of revenues, income
or loss, capital expenditures, fluctuations in insurance reserves, plans for
growth and future operations, competition and regulation, as well as assumptions
relating to the foregoing. Forward-looking statements are inherently subject to
risks and uncertainties, many of which cannot be predicted or quantified. When
used in this Management's Discussion and Analysis of Financial Condition and
Results of Interim Operations, the words "estimates", "expects", "anticipates",
"believes", "plans", "intends" and variations of such words and similar
expressions are intended to identify forward-looking statements that involve
risks and uncertainties. Future events and actual results could differ
materially from those set forth in, contemplated by or underlying the
forward-looking statements. The factors that could cause actual results to
differ materially from those suggested by any such statements include, but are
not limited to, those discussed or identified from time to time in the Company's
public filings, including:
o general economic and market conditions, prevailing interest rate
levels or foreign currency fluctuations;
o reliance on key management personnel;
o changes in foreign and domestic laws, regulations and taxes;
o changes in competition and pricing environments;
o regional or general changes in asset valuation;
o the occurrence of significant natural disasters, the inability to
reinsure certain risks economically, increased competition in the
reinsurance markets, the adequacy of loss and loss adjustment expense
reserves;
o weather related conditions that may affect the Company's operations or
investments;
o changes in U.S. real estate markets, including the commercial and
vacation markets in Hawaii;
o increased competition in the luxury segment of the premium table wine
market;
o adverse economic, political or environmental developments in Spain
that could delay or preclude the issuance of permits necessary to
obtain the Company's copper mining rights or could result in increased
costs of bringing the project to completion, increased costs in
financing the development of the project and decreases in world wide
copper prices;
o increased competition in the international and domestic plastics
market and increased raw material costs;
o increased default rates and decreased value of assets pledged to the
Company;
o further regulatory action by the OCC;
o any deterioration in the business and operations of FINOVA, in the
ability of FINOVA Capital to repay the Berkadia Loan, further
deterioration in the value of the assets pledged by FINOVA and FINOVA
Capital in connection with the Berkadia Loan;
o deterioration in the business and operations of WilTel and the ability
of WilTel to generate operating profits and positive cash flows,
WilTel's ability to retain key customers and suppliers, regulatory
changes in the telecommunications markets and increased competition
from reorganized telecommunication companies; and
o changes in the composition of the Company's assets and liabilities
through acquisitions or divestitures.
16
Undue reliance should not be placed on these forward-looking statements, which
are applicable only as of the date hereof. The Company undertakes no obligation
to revise or update these forward-looking statements to reflect events or
circumstances that arise after the date of this Management's Discussion and
Analysis of Financial Condition and Results of Interim Operations or to reflect
the occurrence of unanticipated events.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Information required under this Item is contained in Item 7A of the Company's
Annual Report on Form 10-K for the year ended December 31, 2002, and is
incorporated by reference herein.
Item 4. Controls and Procedures.
(a) The Company's management evaluated, with the participation of the Company's
principal executive and principal financial officers, the effectiveness of
the Company's disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), as of June 30, 2003. Based on their
evaluation, the Company's principal executive and principal financial
officers concluded that the Company's disclosure controls and procedures
were effective as of June 30, 2003.
(b) There has been no change in the Company's internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act) that occurred during the Company's fiscal quarter ended June 30, 2003,
that has materially affected, or is reasonably likely to materially affect,
the Company's internal control over financial reporting.
17
PART II - OTHER INFORMATION
Item 5. Submission of Matters to a Vote of Security Holders.
The following matters were submitted to a vote of shareholders at the
Company's 2003 Annual Meeting of Shareholders held on May 13, 2003.
a) Election of directors.
Number of Shares
----------------
For Withheld
--- --------
Ian M. Cumming 54,910,988 307,615
Paul M. Dougan 54,900,826 317,777
Lawrence D. Glaubinger 54,912,630 305,973
James E. Jordan 54,913,262 305,341
Jesse Clyde Nichols, III 54,910,802 307,801
Joseph S. Steinberg 54,910,714 307,889
b) Ratification of PricewaterhouseCoopers LLP, as independent
auditors for the year ended December 31, 2003.
For 53,854,179
Against 1,319,368
Abstentions 45,056
Broker non votes --
c) Approval of the Senior Executive Annual Incentive Bonus Plan.
For 53,565,026
Against 1,357,754
Abstentions 295,823
Broker non votes --
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits.
31.1 Certification of Chairman of the Board and Chief Executive
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.2 Certification of President pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.3 Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chairman of the Board and Chief Executive
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
32.2 Certification of President pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.3 Certification of Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
b) Reports on Form 8-K.
The Company filed current reports on Form 8-K dated May 12, 2003,
May 15, 2003, June 3, 2003, June 4, 2003, and June 11, 2003 which
set forth information under Item 5. Other Events and Item 7.
Financial Statements and Exhibits.
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LEUCADIA NATIONAL CORPORATION
(Registrant)
Date: August 13, 2003 By: /s/ Barbara L. Lowenthal
----------------------------
Barbara L. Lowenthal
Vice President and Comptroller
(Chief Accounting Officer)
19
Exhibit Index
31.1 Certification of Chairman of the Board and Chief Executive
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.2 Certification of President pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.3 Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chairman of the Board and Chief Executive
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
32.2 Certification of President pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.3 Certification of Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
20