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SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

Commission file number 1-4720

WESCO FINANCIAL CORPORATION

301 East Colorado Boulevard, Suite 300, Pasadena, California 91101-1901

     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    þ    No    o

     Indicate by check mark whether registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.    Yes    þ    No    o

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS

     Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes    o    No    o

APPLICABLE ONLY TO CORPORATE ISSUERS

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 7,119,807 as of May 8, 2003

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PART I. FINANCIAL INFORMATION

     Within the 90 days prior to the date of filing this Quarterly Report on Form 10-Q, management of Wesco Financial Corporation (“Wesco”), including Charles T. Munger (Chief Executive Officer) and Jeffrey L. Jacobson (Chief Financial Officer), and management of each of Wesco’s subsidiaries, evaluated the effectiveness of the design and operation of their disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer of Wesco concluded that the disclosure controls and procedures of Wesco and its subsidiaries are effective in timely alerting them to material information required to be included in the reports that Wesco files with the Securities and Exchange Commission. Subsequent to the date of their evaluations, there have been no significant changes in internal controls or in other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

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PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

	(a)		Exhibits:
			99.1 — Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)
			99.2 — Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)
	(b)		Reports on Form 8-K — None.

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WESCO FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF
INCOME AND RETAINED EARNINGS
(Dollar amounts in thousands except for amounts per share)
(Unaudited)

See notes beginning on page 7.

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WESCO FINANCIAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollar amounts in thousands)
(Unaudited)

See notes beginning on page 7.

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WESCO FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollar amounts in thousands)
(Unaudited)

See notes beginning on page 7.

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WESCO FINANCIAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands except for amounts per share)
(Unaudited)

Note 1

     In management’s opinion, the condensed consolidated financial statements of Wesco Financial Corporation (“Wesco”) reflect all adjustments (all of them of a normal recurring nature) necessary to a fair statement of interim results in accordance with accounting principles generally accepted in the United States.

     Reference is made to the notes to Wesco’s consolidated financial statements appearing on pages 42 through 50 of its 2002 Form 10-K Annual Report for other information deemed generally applicable to the condensed consolidated financial statements.

     Wesco’s management does not believe that any accounting pronouncements issued to date by the Financial Accounting Standards Board and required to be adopted after March 31, 2003 will have a material effect on reported shareholders’ equity.

Note 2

     In January 2001, Wesco’s furniture rental subsidiary, CORT Business Services Corporation (“CORT”), formed a marketing subsidiary, Relocation Central Corporation (“Relocation Central”). Relocation Central’s operations, which have not been profitable to date, were partially financed through its issuance in 2001 of convertible notes primarily to unrelated parties. In February 2003, most note holders exercised their options to convert their notes into approximately 20% of Relocation Central’s common stock. This group of minority shareholders has an option to require CORT to purchase the shares in February 2004 for approximately $6,000; this contingent liability has been included in other liabilities on the accompanying condensed consolidated balance sheet. CORT’s benefit resulting from the conversion of Relocation Central’s notes payable into common stock was approximately $1,200, net of the liability to acquire shares, and is reflected as an increase in Wesco’s additional paid-in capital on the same balance sheet.

     Wesco and its subsidiaries join with Berkshire Hathaway Inc. (“Berkshire”) and its other subsidiaries in the filing of consolidated federal income tax returns. Because Relocation Central had operating losses in 2001 and 2002, it received federal tax benefits in cash from Berkshire (approximately $3,000 in each year). However, effective with the conversion of notes into equity in 2003, Relocation Central has become ineligible to continue to be included in the Berkshire consolidated return group. No tax benefit has been anticipated in mitigation of its operating loss for the portion of the first quarter of 2003 following the note conversion because of the uncertainty as to whether Relocation Central will be able to utilize post-conversion tax-loss carryforwards in its stand-alone income tax returns.

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Note 3

     Following is a summary of securities with fixed maturities:

     Following is a summary of marketable equity securities (all common stocks):

     There were no unrealized losses with respect to securities with fixed maturities or marketable equity securities at March 31, 2003 or December 31, 2002.

Note 4

     The following table sets forth Wesco’s consolidated comprehensive income (loss) for the three-month periods ended March 31, 2003 and 2002:

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Note 5

     Following is condensed consolidated financial information for Wesco, broken down by business segment:

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WESCO FINANCIAL CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Reference is made to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing on pages 21 through 29 of the Form 10-K Annual Report filed by Wesco Financial Corporation (“Wesco”) for the year 2002 for information deemed generally appropriate to an understanding of the accompanying condensed consolidated financial statements. The information set forth in the following paragraphs updates such discussion. Further, in reviewing the following paragraphs, attention is directed to the accompanying condensed consolidated financial statements.

FINANCIAL CONDITION

     Wesco’s shareholders’ equity at March 31, 2003 was approximately $1.95 billion ($274 per share), compared to $1.96 billion ($275 per share) at December 31, 2002. The 2003 figure included $355 million of after-tax unrealized appreciation in market value of investments, versus $375 million at December 31, 2002. Because unrealized appreciation is recorded based upon current market quotations, gains or losses ultimately realized upon sale of investments could differ substantially from recorded unrealized appreciation.

     At March 31, 2003, Wesco’s consolidated cash and cash equivalents totaled $485.1 million, up from $349.8 million at December 31, 2002. The $135.3 million increase resulted primarily as a result of maturities and early redemptions of fixed-income securities as well as operating cash flow from Wesco’s insurance businesses.

     Wesco’s consolidated borrowings totaled $21.4 million at March 31, 2003 versus $32.5 million at December 31, 2002. The decreased borrowings resulted principally from the conversion of convertible debt of a subsidiary of CORT to equity by note holders.

     Wesco’s management continues to believe that the Wesco group has adequate liquidity and financial resources to provide for contingent needs.

RESULTS OF OPERATIONS

     The following summary sets forth the contribution to Wesco’s consolidated net income of each business segment — insurance, furniture rental and industrial — as well as activities not considered related to such segments. (Amounts are in thousands, all after income tax effect.)

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Insurance Segment

     The insurance segment comprises Wesco-Financial Insurance Company ( “Wes-FIC” ) and The Kansas Bankers Surety Company (“KBS”). Following is a summary of the results of segment operations, which represent essentially the combination of underwriting results with dividend and interest income. (Amounts are in thousands.)