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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report Pursuant
To Section 13 or 15 (D) of the
Securities Exchange Act of 1934
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Date of Report (Date of Earliest Event Reported): November 27, 2002
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 (I.R.S. Employer Identification Number)
of incorporation)
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)
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Item 2. Acquisition or Disposition of Assets.
As more fully described in Leucadia National Corporation's (the
"Company") Form 8-K dated December 5, 2002, the Company completed the previously
announced acquisition of 44% of the outstanding equity of WilTel Communications
Group, Inc. ("WilTel") for an aggregate purchase price of $333.5 million,
including expenses. The aggregate purchase price, in the form of irrevocable
letters of credit, was released from escrow on November 29, 2002, as a result of
WilTel's receipt of requisite regulatory approval from the Federal
Communications Commission. The WilTel stock was acquired by the Company under
the chapter 11 restructuring plan of Williams Communications Group, Inc.
("WCG"), the predecessor of WilTel. In addition, as more fully described in the
Company's Amendment No. 1 to Schedule 13-D dated October 30, 2002, on October
28, 2002, in a private transaction, the Company purchased for a purchase price
of $20.4 million, 1.7 million shares of WilTel common stock, on a when issued
basis. Together, these transactions (collectively, the "WilTel Transactions"),
resulted in the Company acquiring 47.4% of the outstanding common stock of
WilTel. This Form 8-K/A amends the previously filed Form 8-K by including the
financial statements and exhibits set forth under Item 7.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired:
(1) Audited consolidated financial statements of WCG for the year
ended December 31, 2001 described below, incorporated by
reference to Item 14 of WCG's Annual Report to Stockholders on
Form 10-K for the fiscal year ended December 31, 2001
o Report of Independent Auditors
o Consolidated Balance Sheets as of December 31, 2001
and 2000
o Statements of Consolidated Operations for the years
ended December 31, 2001, 2000 and 1999
o Statements of Consolidated Stockholders' Equity
(Deficit) for the years ended December 31, 2001, 2000
and 1999
o Statements of Consolidated Cash Flows for the years
ended December 31, 2001, 2000 and 1999
o Notes to Consolidated Financial Statements
(2) Unaudited consolidated financial statements of WCG for the
nine months ended September 30, 2002 described below,
incorporated by reference to Item 1 of WCG's Quarterly Report
on Form 10-Q for the quarterly period ended September 30, 2002
o Condensed Consolidated Balance Sheet as of September
30, 2002
o Condensed Statements of Consolidated Operations for
the three and nine months ended September 30, 2002
and 2001
o Condensed Statements of Consolidated Cash Flows for
the nine months ended September 30, 2002 and 2001
(b) Pro forma financial information:
In accordance with the requirements of Form 8-K, the accompanying
unaudited pro forma consolidated statements of operations for the year ended
December 31, 2001 and the nine months ended September 30, 2002 are presented to
reflect the WilTel Transactions as if they had occurred on January 1, 2001.
However, since the Company acquired 47.4% of WilTel's common stock in the fourth
quarter of 2002, it will begin to account for its investment under the equity
method of accounting starting from its acquisition date. In accordance with
generally accepted accounting principles, the Company will not restate its
statements of operations for the pro forma period. The pro forma statements of
operations merely show what the Company's statements of operations would have
reflected if the acquisition had occurred on January 1, 2001, rather than the
actual acquisition date in the fourth quarter of 2002. The pro forma adjustments
reflect a preliminary allocation of the purchase price and necessarily involve
certain significant estimates, and as such, may change. However, the final
allocation of the purchase price is not expected to be materially different than
the amounts estimated to determine the pro forma adjustments.
2
The pro forma adjustments are based on WilTel's historical loss from
continuing operations for the period from January 1, 2001 through September 30,
2002. While these historical results are not necessarily indicative of WilTel's
future results of operations, 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, the Company
believes that WilTel's substantial depreciation charges will still result in
losses from continuing operations for the foreseeable future. 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 and does not
currently intend to provide any such guarantees or commitments.
The accompanying unaudited pro forma consolidated statements of
operations should be read in conjunction with the Company's historical
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2001 and its
Quarterly Report on Form 10-Q for the period ended September 30, 2002 and the
historical consolidated financial statements and notes thereto of WilTel, which
are referenced in Item 7 hereof and are incorporated into this Report. The
unaudited pro forma consolidated financial statements are presented for
informational purposes only and are not necessarily indicative of actual results
had the foregoing transactions occurred as described in the preceding paragraph,
nor do they purport to represent results of future operations.
A separate pro forma balance sheet assuming the WilTel Transactions had
occurred on September 30, 2002 is not included in this Report, since the only
pro forma adjustments to the Company's unaudited consolidated balance sheet
would be a reduction in cash equivalents of $353.9 million and an increase in
investments in associated companies of $353.9 million.
3
Leucadia National Corporation and Subsidiaries
Unaudited Pro Forma Consolidated Statement of Operations
For the year ended December 31, 2001
(In thousands, except per share amounts)
Pro Forma Pro Forma As
Historical Adjustments Adjusted
---------- ----------- --------
Revenues:
Manufacturing $ 53,667 $ 53,667
Finance 113,422 113,422
Investment and other income 203,161 203,161
Equity in income (losses) of associated companies (24,576) $(196,249) (a) (220,825)
Net securities gains 29,624 -- 29,624
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375,298 (196,249) 179,049
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Expenses:
Manufacturing cost of goods sold 36,803 36,803
Interest 55,200 55,200
Salaries 42,985 42,985
Selling, general and other expenses 186,637 186,637
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321,625 -- 321,625
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Income (loss) from continuing operations before income taxes, minority
expense of trust preferred securities, extraordinary gain (loss) and
cumulative effect of a change in accounting principle 53,673 (196,249) (142,576)
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Income taxes:
Current 53,851 53,851
Deferred (70,499) (70,499)
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(16,648) 0 (b) (16,648)
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Income (loss) from continuing operations before minority expense of trust
preferred securities, extraordinary gain (loss) and cumulative
effect of a change in accounting principle 70,321 (196,249) (125,928)
Minority expense of trust preferred securities, net of taxes 5,521 -- 5,521
--------- --------- ---------
Income (loss) from continuing operations before extraordinary gain
(loss) and cumulative effect of a change in accounting principle $ 64,800 $(196,249) $(131,449)
========= ========= =========
Basic earnings (loss) per common share:
Income (loss) from continuing operations before extraordinary gain (loss)
and cumulative effect of a change in accounting principle $ 1.17 $ (2.38)
Number of shares in calculation 55,309 55,309
Diluted earnings (loss) per common share:
Income (loss) from continuing operations before extraordinary gain (loss)
and cumulative effect of a change in accounting principle $ 1.17 $ (2.38)
Number of shares in calculation 55,604 55,309
4
Leucadia National Corporation and Subsidiaries
Unaudited Pro Forma Consolidated Statement of Operations
For the nine months ended September 30, 2002
(In thousands, except per share amounts)
Pro Forma Pro Forma As
Historical Adjustments Adjusted
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Revenues:
Manufacturing $ 39,994 $ 39,994
Finance 68,975 68,975
Investment and other income 97,398 97,398
Equity in income (losses) of associated companies 77,393 $(157,651) (a) (80,258)
Net securities gains (losses) (26,110) -- (26,110)
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257,650 (157,651) 99,999
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Expenses:
Manufacturing cost of goods sold 26,535 26,535
Interest 25,809 25,809
Salaries 29,691 29,691
Selling, general and other expenses 127,819 127,819
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209,854 -- 209,854
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Income (loss) from continuing operations before income taxes,
minority expense of trust preferred securities and
cumulative effect of a change in accounting principle 47,796 (157,651) (109,855)
Income taxes 15,407 0 (b) 15,407
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Income (loss) from continuing operations before minority
expense of trust preferred securities and cumulative effect
of a change in accounting principle 32,389 (157,651) (125,262)
Minority expense of trust preferred securities, net of taxes 4,141 -- 4,141
--------- --------- ---------
Income (loss) from continuing operations before cumulative
effect of a change in accounting principle $ 28,248 $(157,651) $(129,403)
========= ========= =========
Basic earnings (loss) per common share:
Income (loss) from continuing operations before cumulative effect
of a change in accounting principle $ .51 $ (2.34)
Number of shares in calculation 55,334 55,334
Diluted earnings (loss) per common share:
Income (loss) from continuing operations before cumulative effect
of a change in accounting principle $.51 $ (2.34)
Number of shares in calculation 55,649 55,334
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Notes to Unaudited Pro Forma Consolidated Statements of Operations
The unaudited pro forma consolidated statement of operations for the
year ended December 31, 2001 and the unaudited pro forma consolidated statement
of operations for the nine months ended September 30, 2002 have been prepared
assuming the WilTel Transactions occurred on January 1, 2001 and reflect the
effects of certain adjustments to the historical consolidated financial
statements that result from the WilTel Transactions.
The amount described in note (a) is recorded under the equity method of
accounting and is reflected in the caption "Equity in income (losses) of
associated companies." The Company's recognition of its share of WilTel's losses
is suspended once the Company's equity interest in WilTel is reduced to zero.
(a) Represents the Company's 47.4% share of losses from continuing
operations recorded by WilTel, as adjusted to reflect the
Company's preliminary allocation of the purchase price and
certain transactions consummated pursuant to the chapter 11
restructuring plan of WilTel, both as of January 1, 2001, as
follows:
For the year ended For the nine months ended
December 31, 2001 September 30, 2002
----------------- ------------------
(Dollars in thousands)
Loss from continuing operations, as reported $(4,107,253) $(801,154)
Adjustments:
(i) Reversal of historical interest expense related to all debt
that was converted to equity under the restructuring plan. 436,463 136,481
(ii) Reversal of historical asset impairment charges as such
assets are reflected at fair value at January 1, 2001. 2,971,512 0
(iii) Reversal of historical depreciation and amortization
expense and recognition of depreciation and amortization expense
based on the preliminary allocation of the purchase price
to individual assets and liabilities. 286,604 293,726
(iv) Other. (1,353) 3,872
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Adjusted loss from continuing operations (414,027) (367,075)
The Company's equity interest 47.4% 47.4%
----------- ---------
Sub-total (196,249) (173,994)
Adjustment to limit the Company's share of losses to its aggregate
investment in the common stock of WilTel. 0 16,343
----------- ---------
The Company's 47.4% share of adjusted loss from continuing operations $ (196,249) $(157,651)
=========== =========
(b) No income tax benefit is reflected for the unrealized capital
loss since the ability to utilize the capital loss, when and
if realized, to reduce capital gains is uncertain.
This Report contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements are based upon management's expectations, estimates, projections and
assumptions. Forward-looking statements are inherently subject to risks and
uncertainties, many of which cannot be predicted or quantified. Future events
and actual results could differ materially from those set forth in, contemplated
by or underlying the forward-looking statements. 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 Report or to reflect
unanticipated events.
(c) Exhibits.
23.1 Consent of Ernst & Young LLP
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SIGNATURE
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 hereunto duly authorized.
LEUCADIA NATIONAL CORPORATION
By: /s/ Joseph A. Orlando
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Joseph A. Orlando
Vice President
Date: February 7, 2003
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EXHIBIT INDEX
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Exhibit Number Description
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23.1 Consent of Ernst & Young LLP
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