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Leucadia Natl has a market cap of $7.04 billion; its shares were traded at around $29.05 with a P/E ratio of 4.5 and P/S ratio of 5.3. The dividend yield of Leucadia Natl stocks is 0.9%.
Highlight of Business Operations:Garcadia is a joint venture between the Company and Garff Enterprises, Inc. (“Garff”) pursuant to which Garcadia has acquired various automobile dealerships. The Garcadia joint venture agreement specifies that the Company and Garff shall have equal board representation and equal votes on all matters affecting Garcadia, and that all cash flows from Garcadia will be allocated 65% to the Company and 35% to Garff, with the exception of one dealership from which the Company receives 83% of all cash flows. Garcadia s strategy is to acquire automobile dealerships in secondary market locations meeting its specified return criteria. At December 31, 2011, Garcadia owned 17 dealerships comprised of domestic and foreign automobile makers. The Company has received cash distributions of fees and earnings aggregating $10,382,000, $8,778,000 and $6,137,000 for the years ended December 31, 2011, 2010 and 2009, respectively. In addition, the Company owns the land for certain dealerships and leases it to the dealerships for rent aggregating $5,654,000, $5,062,000 and $4,971,000 for the years ended December 31, 2011, 2010 and 2009, respectively. At December 31, 2011, the Company s investment in Garcadia (excluding the land) was classified as an investment in associated company with a carrying value of $72,303,000.
Net cash of $9,084,000 and $431,266,000 was provided by operating activities in 2011 and 2010, respectively, The change in operating cash flows reflects interest payments received from FMG ($171,718,000 in 2011 and $154,930,000 in 2010, net of withholding taxes), greater income tax payments, lower interest payments and the proceeds received from the sale of ACF in excess of the cost of the investment in 2010 ($404,700,000). Keen generated funds of $23,446,000 and $7,311,000 during 2011 and 2010, respectively; Premier generated funds of $26,516,000 and $26,524,000 during 2011 and 2010, respectively; and the Company s manufacturing segments generated funds of $12,819,000 and $28,333,000 during 2011 and 2010, respectively. Funds used by Sangart, a development stage company, increased to $39,396,000 during 2011 from $23,757,000 during 2010. During 2011, distributions from associated companies principally include earnings distributed by Berkadia ($23,636,000), Jefferies ($7,789,000) and Garcadia ($5,654,000). In 2010, distributions from associated companies principally include ACF, earnings distributed by Berkadia ($29,000,000) and Jefferies ($14,575,000). Net gains related to real estate, property and equipment, and other assets in 2011 include a gain of $81,848,000 on forgiveness of debt related to the Myrtle Beach project. Funds provided by operating activities include $4,690,000 and $11,640,000 in 2011 and 2010, respectively, from funds distributed by Empire Insurance Company (“Empire”), a discontinued operation.
Net cash of $431,266,000 was provided by operating activities in 2010 as compared to $133,398,000 of cash used for operating activities in 2009. The change in operating cash flows reflects the sale of ACF in 2010, interest paid on the FMG Note in 2010, greater income tax payments, lower interest payments and increased distributions of earnings from associated companies. The telecommunications operations of STi Prepaid, LLC (“STi Prepaid”), which was sold during 2010, generated funds from operating activities of $532,000 in 2010 and $3,355,000 in 2009. The property management and services operations of ResortQuest International, LLC (“ResortQuest”), which was sold in 2010, generated funds from operating activities of $6,268,000 in 2010 and used funds of $888,000 in 2009. Keen, which became a consolidated subsidiary in November 2009, generated funds of $7,311,000 in 2010 and used funds of $5,410,000 in 2009. Premier generated funds of $26,524,000 and $21,866,000 in 2010 and 2009, respectively; and the Company s manufacturing segments generated funds from operating activities of $28,333,000 and $30,342,000 in 2010 and 2009, respectively. Funds used by Sangart, a development stage company, were $23,757,000 in 2010 and $20,334,000 in 2009. In 2010, distributions from associated companies principally include ACF, earnings distributed by Berkadia ($29,000,000) and Jefferies ($14,575,000). In 2009, distributions from associated companies principally include earnings distributed by HFH ShortPLUS Fund L.P. (“Shortplus”) ($14,545,000), Keen ($8,379,000) and Garcadia ($11,108,000). Funds provided by operating activities include $11,640,000 and $11,253,000 in 2010 and 2009, respectively, from funds distributed by Empire.
Other income, which decreased $322,851,000 in 2011 as compared to 2010 and increased $449,997,000 in 2010 as compared to 2009, includes $214,455,000, $149,257,000 and $66,079,000 for 2011, 2010 and 2009, respectively, related to Fortescue s Pilbara iron ore and infrastructure project in Western Australia. The Company is entitled to receive 4% of the revenue, net of government royalties, invoiced from certain areas of Fortescue s project, which commenced production in May 2008. Depreciation and amortization expenses include prepaid mining interest amortization of $11,800,000, $9,943,000 and $7,293,000 for 2011, 2010 and 2009, respectively, which is being amortized over time in proportion to the amount of ore produced. Other income in 2010 includes a gain on the sale of Las Cruces of $383,369,000, as discussed above. Other income for 2010 and 2009 also includes gains for legal settlements of $2,107,000 and $10,453,000, respectively, and for 2009 gains of $6,693,000 on the repurchase of certain of the Company s debt securities.
The change in salaries and incentive compensation for 2011 as compared to 2010 is principally due to lower accrued incentive bonus expense of $37,558,000, of which $23,459,000 related to the Company s Senior Executive Annual Incentive Bonus Plan, partially offset by greater share-based compensation expense. The change in salaries and incentive compensation for 2010 as compared to 2009 reflects greater accrued incentive bonus expense of $22,253,000, of which $5,600,000 related to the Company s Senior Executive Annual Incentive Bonus Plan, and lower share-based compensation expense. Bonus accruals under Senior Executive Annual Incentive Bonus Plan are based on a percentage of pre-tax profits as defined in the plan. Other Corporate incentive bonuses are discretionary and not determined based on any mathematical formula. The Company recorded share-based compensation expense relating to grants made under the Company s senior executive warrant plan and the fixed stock option plan of $23,019,000, $4,067,000 and $10,905,000 in 2011, 2010 and 2009, respectively. Share-based compensation expense increased in 2011 as compared to 2010 principally due to the warrants granted under the Company s senior executive warrant plan in the second quarter of 2011. Share-based compensation expense declined for 2010 as compared to 2009 due to the warrants previously granted under the Company s senior executive warrant plan becoming fully vested.
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