Consolidated net income of Wesco Financial Corporation
(AMEX:WSC) and its subsidiaries for the fourth quarter of 2005
amounted to $239,106,000, compared with $15,624,000 for the fourth
quarter of 2004. Consolidated net income for the year ended December
31, 2005, was $294,579,000, compared with $47,427,000 for 2004. The
figures for calendar year 2005 included realized after-tax investment
gains of $216,606,000, including net gains of $216,103,000 realized in
the fourth quarter. No investment gains or losses were realized in
2004.
The 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. -0- Quarter Ended Year Ended December 31, December 31, 2005 2004 2005 2004 Wesco-Financial and Kansas Bankers insurance businesses: Underwriting $ 2,073 $ 6,784 $ 11,798 $14,618 Investment income 11,333 7,717 39,068 26,302 CORT furniture rental business 4,359 1,186 20,676 5,022 Precision Steel businesses 375 (151) 1,198 1,094 Other 4,863 88 5,233 391 Realized investment gains 216,103 --- 216,606 --- Consolidated net income $239,106 $15,624 $294,579 $47,427 Per share $ 33.58 $ 2.19 $ 41.37 $ 6.66
Wesco's consolidated net income for 2005 contained $216,606,000 of net, after-tax investment gains attributable principally to the tax-free exchange of Wesco's common shares of The Gillette Company for common shares of The Procter and Gamble Company in connection with the merger of those companies. Although no cash was received, the transaction had a material impact on Wesco's earnings for the 2005 periods. The investment gains did not have a significant impact on Wesco's shareholders' equity because Wesco's investments are carried at fair value, and as such, unrealized gains had already been reflected in the unrealized appreciation component of shareholders' equity.
Excluding realized investment gains, consolidated earnings increased for the 2005 periods. The principal factors were improvement of the furniture rental business, increased investment income earned by the insurance businesses principally as a result of higher interest rates on short-term investments, and the reduction of income tax reserves, partially offset by decreased underwriting income of the insurance businesses, in the fourth quarter of 2005.
Wesco's Form 10-K for the year ended December 31, 2005, is expected soon to be filed electronically with the Securities and Exchange Commission, and we invite shareholders, the financial media, and others to access it through the SEC's website (www.sec.gov). The Form 10-K will contain complete, audited financial statements, management's discussion and analysis of financial condition and results of operations, and other information. Subsequently, the Form 10-K, as well as the 2005 letter to shareholders from Wesco's chairman, Charles T. Munger, will be posted to Wesco's website (www.wescofinancial.com) and mailed to shareholders.
The 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. -0- Quarter Ended Year Ended December 31, December 31, 2005 2004 2005 2004 Wesco-Financial and Kansas Bankers insurance businesses: Underwriting $ 2,073 $ 6,784 $ 11,798 $14,618 Investment income 11,333 7,717 39,068 26,302 CORT furniture rental business 4,359 1,186 20,676 5,022 Precision Steel businesses 375 (151) 1,198 1,094 Other 4,863 88 5,233 391 Realized investment gains 216,103 --- 216,606 --- Consolidated net income $239,106 $15,624 $294,579 $47,427 Per share $ 33.58 $ 2.19 $ 41.37 $ 6.66
Wesco's consolidated net income for 2005 contained $216,606,000 of net, after-tax investment gains attributable principally to the tax-free exchange of Wesco's common shares of The Gillette Company for common shares of The Procter and Gamble Company in connection with the merger of those companies. Although no cash was received, the transaction had a material impact on Wesco's earnings for the 2005 periods. The investment gains did not have a significant impact on Wesco's shareholders' equity because Wesco's investments are carried at fair value, and as such, unrealized gains had already been reflected in the unrealized appreciation component of shareholders' equity.
Excluding realized investment gains, consolidated earnings increased for the 2005 periods. The principal factors were improvement of the furniture rental business, increased investment income earned by the insurance businesses principally as a result of higher interest rates on short-term investments, and the reduction of income tax reserves, partially offset by decreased underwriting income of the insurance businesses, in the fourth quarter of 2005.
Wesco's Form 10-K for the year ended December 31, 2005, is expected soon to be filed electronically with the Securities and Exchange Commission, and we invite shareholders, the financial media, and others to access it through the SEC's website (www.sec.gov). The Form 10-K will contain complete, audited financial statements, management's discussion and analysis of financial condition and results of operations, and other information. Subsequently, the Form 10-K, as well as the 2005 letter to shareholders from Wesco's chairman, Charles T. Munger, will be posted to Wesco's website (www.wescofinancial.com) and mailed to shareholders.