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8-K - FORM 8-K - WESCO FINANCIAL CORP | v58807e8vk.htm |
Exhibit 99.1
EARNINGS RELEASE OF WESCO FINANCIAL CORPORATION FOR THE YEAR ENDED
DECEMBER 31, 2010, FURNISHED TO THE S.E.C. AS AN EXHIBIT TO FORM 8-K
DATED FEBRUARY 28, 2011
DECEMBER 31, 2010, FURNISHED TO THE S.E.C. AS AN EXHIBIT TO FORM 8-K
DATED FEBRUARY 28, 2011
WESCO FINANCIAL CORPORATION
301 East Colorado Boulevard, Suite 300
Pasadena, California 91101-1901
301 East Colorado Boulevard, Suite 300
Pasadena, California 91101-1901
Contact: Jeffrey L. Jacobson
|
626/585-6700 | |
FOR IMMEDIATE RELEASE - PASADENA, CALIFORNIA, February 26, 2011 |
Consolidated net income of Wesco Financial Corporation and its subsidiaries for the
fourth quarter of 2010 amounted to $10,867,000 compared with $11,302,000 for the fourth quarter
of 2009. Consolidated net income for the year ended December 31, 2010 was $72,212,000 compared
with $54,073,000 for calendar 2009. The 2010 figures included after-tax net investment gains of
$1,820,000 and other-than-temporary impairment (OTTI) losses of $13,664,000 realized in the
fourth quarter, explained below, and after-tax net investment gains of $4,252,000 realized in
the calendar year. No investment gains or losses or OTTI losses were realized in 2009.
Following is a breakdown of consolidated net income into useful business components. All
figures are on an after-tax basis and are in thousands except for per-share amounts, which are
based on 7,119,807 shares outstanding.
Quarter Ended December 31, |
Year Ended December 31, |
|||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Wesco-Financial and Kansas Bankers
insurance businesses: |
||||||||||||||||
Underwriting gain |
$ | 9,262 | $ | 6,148 | $ | 10,840 | $ | 7,222 | ||||||||
Investment income |
15,543 | 13,459 | 62,211 | 55,781 | ||||||||||||
CORT furniture rental business |
141 | (1,951 | ) | 11,480 | (1,359 | ) | ||||||||||
Precision Steel businesses |
773 | 211 | 1,079 | (648 | ) | |||||||||||
Other income (loss) |
(3,008 | ) | (6,565 | ) | (3,986 | ) | (6,923 | ) | ||||||||
Realized net investment gains |
1,820 | --- | 4,252 | --- | ||||||||||||
Other-than-temporary impairment losses
on investments* |
(13,664 | ) | --- | (13,664 | ) | --- | ||||||||||
Consolidated net income |
$ | 10,867 | $ | 11,302 | $ | 72,212 | $ | 54,073 | ||||||||
Per share |
$ | 1.53 | $ | 1.58 | $ | 10.14 | $ | 7.59 | ||||||||
*At 2010 yearend, Wesco determined that an other than temporary impairment had occurred
in the fair values of certain purchase lots of an equity investment that had been below cost
for more than two years. Because Wescos consolidated balance sheet reflects investments
carried at fair value, with net unrealized gains, after applicable income tax effect, included
in shareholders equity, the realization of the OTTI loss merely resulted in a reclassification
from net unrealized gains to retained earnings, another component of shareholders equity.
Wescos consolidated net income, excluding realized net investment gains and OTTI
losses, increased by $11.4 million for the fourth quarter of 2010 and by $27.6 million for the
year, from the corresponding
2009 figures. Several factors were involved, including (1) improved profitability of
CORTs furniture rental business due to a reduction in operating expenses, (2) increased
underwriting gain and investment income of Wescos insurance businesses, and (3) improving
economic conditions. The operations of CORT and Precision Steel, although improved, continue to
reflect the effects of weak economic conditions.
On February 7, 2011, Wesco and Berkshire Hathaway (Berkshire) announced that they had
entered into a definitive merger agreement, whereby Berkshire will acquire the remaining 19.9%
of the shares of Wescos common stock that it does not presently
own in exchange for cash or shares of Berkshire Class B common stock, at the election of each Wesco shareholder. The
transaction requires the affirmative vote of holders of a majority of
Wescos outstanding shares in favor of the adoption of the merger agreement, which will be sought at a special
meeting of the shareholders of Wesco, and is subject to customary closing conditions. The
transaction is also subject to a non-waivable condition that a majority of the outstanding
shares not owned by Berkshire (and excluding certain specified shareholders) vote in favor of
the adoption of the merger agreement. Berkshire has agreed to vote the Wesco shares it owns in
favor of the transaction. Closing is expected to occur before the end of the second quarter of
2011. Reference is made to the Form 8-K filed by Wesco with the Securities and Exchange
Commission (the SEC) on February 7, 2011 for the terms of the transaction and additional
information. That report is available at no charge at Wescos website, www.wescofinancial.com,
or the SECs website, www.sec.gov.
Certain statements contained in this press release are forward looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, including the statement as
to the expected closing of the merger with Berkshire. These statements are not guaranties of
future performance and actual results may differ materially from those forecasted.
Wescos Form 10-K for the year ended December 31, 2010 will be filed electronically with
the Securities and Exchange Commission next week, and we invite shareholders, the financial
media and others to access it through the SECs website (www.sec.gov). The Form 10-K will
contain complete, audited financial statements, managements discussion and analysis of
financial condition and results of operations, and other information.
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