Leucadia National Corp. (LUK, Financial) filed Quarterly Report for the period ended 2010-09-30.
Leucadia National Corp. has a market cap of $6.53 billion; its shares were traded at around $27.01 with a P/E ratio of 34.2 and P/S ratio of 5.9. LUK is in the portfolios of Mohnish Pabrai of Pabrai Mohnish, Bruce Berkowitz of Fairholme Capital Management, Murray Stahl of Horizon Asset Management, Fairholme Fund, Todd Combs of Castle Point Capital Management, LLC, David Winters of Wintergreen Advisors, Third Avenue Management, Tweedy Browne of Tweedy Browne CO LLC, Tom Gayner of Markel Gayner Asset Management Corp, Columbia Wanger of Columbia Wanger Asset Management, Tom Russo of Gardner Russo & Gardner, Diamond Hill Capital of Diamond Hill Capital Management Inc, John Keeley of Keeley Fund Management, Donald Yacktman of Yacktman Asset Management Co., Chuck Royce of Royce& Associates, George Soros of Soros Fund Management LLC, Jim Simons of Renaissance Technologies LLC, Mario Gabelli of GAMCO Investors, Jean-Marie Eveillard of First Eagle Investment Management, LLC, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Steven Cohen of SAC Capital Advisors.
In addition to cash and cash equivalents, the Company also considers investments classified as current assets and investments classified as non-current assets on the face of its consolidated balance sheet as being generally available to meet its liquidity needs. Securities classified as current and non-current investments are not as liquid as cash and cash equivalents, but they are generally easily convertible into cash within a relatively short period of time. As of September 30, 2010, the sum of these amounts aggregated $3,019,200,000. However, since $664,600,000 of this amount is pledged as collateral pursuant to various agreements, represents investments in non-public securities or is held by subsidiaries that are party to agreements that restrict the Company s ability to use the funds for other purposes, the Company does not consider those amounts to be available to meet the Parent s liquidity needs. The $2,354,600,000 that is available is comprised of cash and short-term bonds and notes of the U.S. Government and its agencies, U.S. Government-Sponsored Enterprises and other publicly traded debt and equity securities (including the Fortescue common shares of $1,249,500,000 and the Inmet common shares of $311,900,000). This amount does not include the cash received from the sale of ACF common shares on October 1, 2010. The Parent s available liquidity, and the investment income realized from the Parent s cash, cash equivalents and marketable securities is used to meet the Parent company s short-term recurring cash requirements, which are principally the payment of interest on its debt, corporate overhead expenses and maturing repurchase agreements.
Net cash of $45,900,000 was provided by operating activities in the nine month 2010 period as compared to $121,500,000 of cash used for operating activities in the nine month 2009 period. The change in operating cash flows reflects proceeds received from FMG ($154,900,000, net of withholding taxes), greater income tax payments, lower interest payments and increased distributions of earnings from associated companies. STi Prepaid's telecommunications operations generated funds from operating activities of $500,000 during the 2010 period and $900,000 during the 2009 period. ResortQuest generated funds from operating activities of $6,300,000 during the 2010 period and used funds of $600,000 during the 2009 period. Keen, which became a consolidated subsidiary in November 2009, generated funds of $1,900,000 during the nine month period ended September 30, 2010; Premier generated funds of $18,100,000 and $15,800,000 during the 2010 and 2009 periods, respectively; and the Company s manufacturing segments generated funds from operating activities of $21,100,000 and $22,100,000 during the 2010 and 2009 periods, respectively. Funds used by Sangart, a development stage company, increased to $16,000,000 during 2010 from $14,000,000 during the 2009 period. In 2010, distributions from associated companies principally include earnings distributed by Berkadia ($21,000,000) and Jefferies ($10,900,000). In 2009, distributions from associated companies principally include earnings distributed by HFH ShortPLUS Fund L.P. (“Shortplus”) ($14,500,000), Keen ($7,800,000) and Garcadia ($9,000,000).
Net cash of $44,900,000 was used for investing activities in the nine month 2010 period as compared to $132,500,000 of cash provided by investing activities in the nine month 2009 period. Investments in associated companies include CLC ($2,700,000) and ACF ($7,200,000) in 2010 and CLC ($42,000,000), ACF ($8,200,000) and Berkadia ($5,000,000) in 2009. Capital distributions from associated companies include Berkadia ($2,100,000), JHYH ($17,100,000), Wintergreen Partners Fund, L.P. (“Wintergreen”) ($4,400,000), and Garcadia ($6,700,000) in 2010 and Keen ($28,300,000), Wintergreen ($39,000,000), Shortplus ($24,800,000) and Starboard Value Opportunity Partners, LP ($11,500,000) in 2009.
Net cash of $180,100,000 was provided by financing activities in the nine month period ended September 30, 2010 as compared to $15,800,000 of cash used for financing activities in the nine month period ended September 30, 2009. Issuance of debt for 2010 and 2009 primarily reflects the increase in repurchase agreements of $211,800,000 and $45,100,000, respectively, and for 2009, $2,500,000 for MB1 s debt obligation. Reduction of debt for 2010 includes $17,600,000 for the buyback of $6,200,000 principal amount of the 7% Senior Notes, $5,500,000 principal amount of the 7 3/4% Senior Notes, $3,000,000 principal amount of the 8 1/8% Senior Notes and $2,000,000 principal amount of the 8.65% Junior Subordinated Deferrable Interest Debentures, and $10,200,000 for repayment of debt of a subsidiary. Reduction of debt for 2009 includes $29,600,000 for the buyback of $35,600,000 principal amount of the 7% Senior Notes.
During the second quarter of 2010, MB1 entered into an agreement with its lenders under which, among other things, MB1 agreed not to interfere with or oppose foreclosure proceedings and the lenders agreed to release MB1 and various guarantors of the loan. A receiver has been put in place at the property and the foreclosure proceedings are underway. Upon foreclosure, the Company will record a gain equal to the excess of the loan balance over the then book value of the real estate. At September 30, 2010, the carrying value of MB1 s real estate was $67,100,000; if foreclosure proceedings were completed the gain recognized would have been $33,400,000 at September 30, 2010.
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Leucadia National Corp. has a market cap of $6.53 billion; its shares were traded at around $27.01 with a P/E ratio of 34.2 and P/S ratio of 5.9. LUK is in the portfolios of Mohnish Pabrai of Pabrai Mohnish, Bruce Berkowitz of Fairholme Capital Management, Murray Stahl of Horizon Asset Management, Fairholme Fund, Todd Combs of Castle Point Capital Management, LLC, David Winters of Wintergreen Advisors, Third Avenue Management, Tweedy Browne of Tweedy Browne CO LLC, Tom Gayner of Markel Gayner Asset Management Corp, Columbia Wanger of Columbia Wanger Asset Management, Tom Russo of Gardner Russo & Gardner, Diamond Hill Capital of Diamond Hill Capital Management Inc, John Keeley of Keeley Fund Management, Donald Yacktman of Yacktman Asset Management Co., Chuck Royce of Royce& Associates, George Soros of Soros Fund Management LLC, Jim Simons of Renaissance Technologies LLC, Mario Gabelli of GAMCO Investors, Jean-Marie Eveillard of First Eagle Investment Management, LLC, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
The Company s largest publicly traded available for sale equity securities with changes in market values reflected in other comprehensive income (loss) are Fortescue and Inmet. During the nine month period ended September 30, 2010, the market value of the Company s investment in the common shares of Fortescue increased from $988,400,000 at December 31, 2009 (excluding shares sold in 2010) to $1,249,500,000 at September 30, 2010, and the market value of the Company s investment in Inmet decreased from $339,100,000 at December 31, 2009 to $311,900,000 at September 30, 2010. The change in the market values of the Company s investments in ACF and Jefferies, for which the fair value option was elected, was reflected in operations as a component of income related to associated companies. During the nine month period ended September 30, 2010, the Company recognized unrealized gains (losses) related to its investments in ACF and Jefferies of $182,200,000 and $(50,500,000), respectively. For the nine month 2010 period, the Company also recorded impairment losses for declines in value of securities deemed to be other than temporary in its consolidated statement of operations of $1,700,000, reflected as a component of net securities gains (losses).In addition to cash and cash equivalents, the Company also considers investments classified as current assets and investments classified as non-current assets on the face of its consolidated balance sheet as being generally available to meet its liquidity needs. Securities classified as current and non-current investments are not as liquid as cash and cash equivalents, but they are generally easily convertible into cash within a relatively short period of time. As of September 30, 2010, the sum of these amounts aggregated $3,019,200,000. However, since $664,600,000 of this amount is pledged as collateral pursuant to various agreements, represents investments in non-public securities or is held by subsidiaries that are party to agreements that restrict the Company s ability to use the funds for other purposes, the Company does not consider those amounts to be available to meet the Parent s liquidity needs. The $2,354,600,000 that is available is comprised of cash and short-term bonds and notes of the U.S. Government and its agencies, U.S. Government-Sponsored Enterprises and other publicly traded debt and equity securities (including the Fortescue common shares of $1,249,500,000 and the Inmet common shares of $311,900,000). This amount does not include the cash received from the sale of ACF common shares on October 1, 2010. The Parent s available liquidity, and the investment income realized from the Parent s cash, cash equivalents and marketable securities is used to meet the Parent company s short-term recurring cash requirements, which are principally the payment of interest on its debt, corporate overhead expenses and maturing repurchase agreements.
Net cash of $45,900,000 was provided by operating activities in the nine month 2010 period as compared to $121,500,000 of cash used for operating activities in the nine month 2009 period. The change in operating cash flows reflects proceeds received from FMG ($154,900,000, net of withholding taxes), greater income tax payments, lower interest payments and increased distributions of earnings from associated companies. STi Prepaid's telecommunications operations generated funds from operating activities of $500,000 during the 2010 period and $900,000 during the 2009 period. ResortQuest generated funds from operating activities of $6,300,000 during the 2010 period and used funds of $600,000 during the 2009 period. Keen, which became a consolidated subsidiary in November 2009, generated funds of $1,900,000 during the nine month period ended September 30, 2010; Premier generated funds of $18,100,000 and $15,800,000 during the 2010 and 2009 periods, respectively; and the Company s manufacturing segments generated funds from operating activities of $21,100,000 and $22,100,000 during the 2010 and 2009 periods, respectively. Funds used by Sangart, a development stage company, increased to $16,000,000 during 2010 from $14,000,000 during the 2009 period. In 2010, distributions from associated companies principally include earnings distributed by Berkadia ($21,000,000) and Jefferies ($10,900,000). In 2009, distributions from associated companies principally include earnings distributed by HFH ShortPLUS Fund L.P. (“Shortplus”) ($14,500,000), Keen ($7,800,000) and Garcadia ($9,000,000).
Net cash of $44,900,000 was used for investing activities in the nine month 2010 period as compared to $132,500,000 of cash provided by investing activities in the nine month 2009 period. Investments in associated companies include CLC ($2,700,000) and ACF ($7,200,000) in 2010 and CLC ($42,000,000), ACF ($8,200,000) and Berkadia ($5,000,000) in 2009. Capital distributions from associated companies include Berkadia ($2,100,000), JHYH ($17,100,000), Wintergreen Partners Fund, L.P. (“Wintergreen”) ($4,400,000), and Garcadia ($6,700,000) in 2010 and Keen ($28,300,000), Wintergreen ($39,000,000), Shortplus ($24,800,000) and Starboard Value Opportunity Partners, LP ($11,500,000) in 2009.
Net cash of $180,100,000 was provided by financing activities in the nine month period ended September 30, 2010 as compared to $15,800,000 of cash used for financing activities in the nine month period ended September 30, 2009. Issuance of debt for 2010 and 2009 primarily reflects the increase in repurchase agreements of $211,800,000 and $45,100,000, respectively, and for 2009, $2,500,000 for MB1 s debt obligation. Reduction of debt for 2010 includes $17,600,000 for the buyback of $6,200,000 principal amount of the 7% Senior Notes, $5,500,000 principal amount of the 7 3/4% Senior Notes, $3,000,000 principal amount of the 8 1/8% Senior Notes and $2,000,000 principal amount of the 8.65% Junior Subordinated Deferrable Interest Debentures, and $10,200,000 for repayment of debt of a subsidiary. Reduction of debt for 2009 includes $29,600,000 for the buyback of $35,600,000 principal amount of the 7% Senior Notes.
During the second quarter of 2010, MB1 entered into an agreement with its lenders under which, among other things, MB1 agreed not to interfere with or oppose foreclosure proceedings and the lenders agreed to release MB1 and various guarantors of the loan. A receiver has been put in place at the property and the foreclosure proceedings are underway. Upon foreclosure, the Company will record a gain equal to the excess of the loan balance over the then book value of the real estate. At September 30, 2010, the carrying value of MB1 s real estate was $67,100,000; if foreclosure proceedings were completed the gain recognized would have been $33,400,000 at September 30, 2010.
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