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<SEC-DOCUMENT>0000096223-02-000027.txt : 20021113
<SEC-HEADER>0000096223-02-000027.hdr.sgml : 20021113
<ACCEPTANCE-DATETIME>20021113152629
ACCESSION NUMBER:		0000096223-02-000027
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20020930
FILED AS OF DATE:		20021113

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LEUCADIA NATIONAL CORP
		CENTRAL INDEX KEY:			0000096223
		STANDARD INDUSTRIAL CLASSIFICATION:	FIRE, MARINE & CASUALTY INSURANCE [6331]
		IRS NUMBER:				132615557
		STATE OF INCORPORATION:			NY
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-05721
		FILM NUMBER:		02819797

	BUSINESS ADDRESS:	
		STREET 1:		315 PARK AVE S
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10010
		BUSINESS PHONE:		2124601900

	MAIL ADDRESS:	
		STREET 1:		315 PARK AVENUE SOUTH
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10010

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	TALCOTT NATIONAL CORP
		DATE OF NAME CHANGE:	19800603
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>lnc3q02q.txt
<DESCRIPTION>LEUCADIA NATIONAL CORPORATION 3 QTR. 02
<TEXT>




                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   ----------

                                    FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
                For the quarterly period ended September 30, 2002

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
                        For the transition period from           to

                          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 of                    (I.R.S. Employer
      incorporation or organization)                  Identification Number)

              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)

                             ----------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
                           YES    X       NO
                                ------        -------

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.
                           YES            NO
                               -------        -------

APPLICABLE ONLY TO CORPORATE ISSUERS:  Indicate the number of shares outstanding
of  each  of the  issuer's  classes  of  common  stock,  at  November  6,  2002:
55,357,173.



<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
September 30, 2002 and December 31, 2001
(Dollars in thousands, except par value)


<TABLE>
<CAPTION>

                                                                                   September 30,      December 31,
                                                                                       2002               2001
                                                                                    -----------        ----------
                                                                                    (Unaudited)
<S>                                                                                      <C>                 <C>

Assets
Investments:
   Available for sale (aggregate cost of $452,717 and $579,342)                      $  481,589        $  626,584
   Trading securities (aggregate cost of $47,975 and $68,547)                            40,636            63,850
   Held to maturity (aggregate fair value of $650 and $1,665)                               650             1,666
   Other investments, including accrued interest income                                   4,433            14,949
                                                                                     ----------        ----------
       Total investments                                                                527,308           707,049
Cash and cash equivalents                                                               680,464           373,222
Trade, notes and other receivables, net                                                 446,598           596,229
Prepaids and other assets                                                               215,696           227,709
Property, equipment and leasehold improvements, net                                     171,154           162,158
Investments in associated companies                                                     359,356           358,761
Net assets of discontinued operations                                                     --               43,959
                                                                                     ----------        ----------
           Total                                                                     $2,400,576        $2,469,087
                                                                                     ==========        ==========

Liabilities
Customer banking deposits                                                            $  443,119        $  476,495
Trade payables and expense accruals                                                      73,356            74,988
Other liabilities                                                                       183,854           215,689
Income taxes payable                                                                     81,246           124,692
Deferred tax liability                                                                   29,607            17,051
Debt, including current maturities                                                      246,416           252,279
                                                                                     ----------        ----------
       Total liabilities                                                              1,057,598         1,161,194
                                                                                     ----------        ----------

Commitments and contingencies

Minority interest                                                                        10,768            14,240
                                                                                     ----------        ----------
Company-obligated mandatorily redeemable preferred securities of subsidiary
 trust holding solely subordinated debt securities of the Company                        98,200            98,200
                                                                                     ----------        ----------

Shareholders' Equity
Common shares, par value $1 per share, authorized 150,000,000 shares;
 55,347,343 and 55,318,257 shares issued and outstanding, after
 deducting 63,120,448 and 63,117,584 shares held in treasury                             55,347            55,318
Additional paid-in capital                                                               55,387            54,791
Accumulated other comprehensive income                                                   15,254            14,662
Retained earnings                                                                     1,108,022         1,070,682
                                                                                     ----------        ----------
       Total shareholders' equity                                                     1,234,010         1,195,453
                                                                                     ----------        ----------

           Total                                                                     $2,400,576        $2,469,087
                                                                                     ==========        ==========



</TABLE>


             See notes to interim consolidated financial statements.

                                       2
<PAGE>


LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
For the periods ended September 30, 2002 and 2001
(In thousands, except per share amounts)
(Unaudited)


<TABLE>
<CAPTION>

                                                                                       For the Three              For the Nine
                                                                                        Month Period              Month Period
                                                                                    Ended September 30,        Ended September 30,
                                                                                  ---------------------     ----------------------
                                                                                     2002          2001         2002         2001
                                                                                     ----          ----         ----         ----
<S>                                                                                   <C>           <C>          <C>          <C>

Revenues:
 Manufacturing                                                                    $  13,691    $  15,550    $  39,994    $  41,811
 Finance                                                                             21,269       29,374       68,975       85,984
 Investment and other income                                                         31,225       58,342       97,398      145,928
 Equity in income (losses) of associated companies                                   21,808      (77,000)      77,393      (50,176)
 Net securities gains (losses)                                                      (13,812)      10,477      (26,110)      23,511
                                                                                  ---------    ---------    ---------    ---------
                                                                                     74,181       36,743      257,650      247,058
                                                                                  ---------    ---------    ---------    ---------

Expenses:
 Manufacturing cost of goods sold                                                     9,103       10,330       26,535       28,364
 Interest                                                                             8,299       12,174       25,809       36,821
 Salaries                                                                             9,463       10,305       29,691       34,138
 Selling, general and other expenses                                                 51,481       41,465      127,819      117,836
                                                                                  ---------    ---------    ---------    ---------
                                                                                     78,346       74,274      209,854      217,159
                                                                                  ---------    ---------    ---------    ---------
 Income (loss) from continuing operations before income taxes,
  minority expense of trust preferred securities and
  cumulative effect of a change in accounting principle                              (4,165)     (37,531)      47,796       29,899
Income taxes                                                                         (3,061)     (13,924)      15,407        8,480
                                                                                  ---------    ---------    ---------    ---------
 Income (loss) from continuing operations before minority expense
  of trust preferred securities and cumulative effect of a
  change in accounting principle                                                     (1,104)     (23,607)      32,389       21,419
Minority expense of trust preferred securities, net of taxes                          1,380        1,380        4,141        4,141
                                                                                  ---------    ---------    ---------    ---------
 Income (loss) from continuing operations before cumulative
  effect of a change in accounting principle                                         (2,484)     (24,987)      28,248       17,278
Income (loss) from discontinued operations, net of taxes                              --          (6,973)       4,580      (43,262)
Gain on disposal of discontinued operations, net of taxes                             --           --           4,512         --
                                                                                  ---------    ---------    ---------    ---------

 Income (loss) before cumulative effect of a change in
  accounting principle                                                               (2,484)     (31,960)      37,340      (25,984)
Cumulative effect of a change in accounting principle                                 --           --            --            411
                                                                                  ---------    ---------    ---------    ---------
    Net income (loss)                                                             $  (2,484)   $ (31,960)   $  37,340    $ (25,573)
                                                                                  =========    =========    =========    =========

Basic earnings (loss) per common share:
 Income (loss) from continuing operations before cumulative effect
  of a change in accounting principle                                             $    (.04)   $    (.45)   $     .51    $     .31
 Income (loss) from discontinued operations                                            --           (.13)         .08         (.78)
 Gain on disposal of discontinued operations                                           --           --            .08         --
 Cumulative effect of a change in accounting principle                                 --           --           --            .01
                                                                                  ---------    ---------    ---------    ---------
    Net income (loss)                                                             $    (.04)   $    (.58)   $     .67    $    (.46)
                                                                                  =========    =========    =========    =========

Diluted earnings (loss) per common share:
 Income (loss) from continuing operations before cumulative effect
  of a change in accounting principle                                             $    (.04)   $   (.45)    $     .51    $     .31
 Income (loss) from discontinued operations                                           --           (.13)          .08         (.78)
 Gain on disposal of discontinued operations                                          --            --            .08         --
 Cumulative effect of a change in accounting principle                                --            --            --           .01
                                                                                  ---------     --------    ---------    ---------
    Net income (loss)                                                             $    (.04)   $   (.58)    $     .67    $    (.46)
                                                                                  =========    =========    =========    =========

</TABLE>


             See notes to interim consolidated financial statements.

                                       3
<PAGE>


LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2002 and 2001
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>

                                                                                                2002            2001
                                                                                                ----            ----

<S>                                                                                              <C>             <C>

Net cash flows from operating activities:
Net income (loss)                                                                           $  37,340       $ (25,573)
Adjustments to reconcile net income (loss) to net cash provided by (used for) operations:
 Cumulative effect of a change in accounting principle                                            --             (411)
 Provision (benefit) for deferred income taxes                                                 21,539         (34,446)
 Depreciation and amortization of property, equipment and leasehold improvements               13,904          11,791
 Other amortization (primarily related to investments)                                         (1,507)        (11,133)
 Provision for doubtful accounts                                                               28,619          27,413
 Net securities (gains) losses                                                                 26,110         (23,511)
 Equity in (income) losses of associated companies                                            (77,393)         50,176
 Gain on disposal of real estate, property and equipment, and other assets                    (19,722)        (47,616)
 Gain on disposal of discontinued operations                                                   (4,512)          --
 Investments classified as trading, net                                                        47,897          (3,424)
 Net change in:
  Trade and other receivables                                                                   9,190            (705)
  Prepaids and other assets                                                                    (2,856)         (7,437)
  Trade payables and expense accruals                                                          (2,518)        (39,873)
  Other liabilities                                                                            (1,099)            472
  Income taxes payable                                                                        (45,977)          7,067
Other                                                                                           3,478           8,363
Net change in net assets of discontinued operations                                            (5,384)         66,461
                                                                                            ---------       ---------
   Net cash provided by (used for) operating activities                                        27,109         (22,386)
                                                                                            ---------       ---------

Net cash flows from investing activities:
Acquisition of real estate, property and equipment, and other assets                          (29,210)        (36,904)
Proceeds from disposals of real estate, property and equipment, and other assets               72,108         113,767
Proceeds from sale of discontinued operations                                                  66,241           --
Advances on loan receivables                                                                  (70,008)       (238,775)
Principal collections on loan receivables                                                     138,853         145,276
Advances on notes receivables                                                                    (715)         (3,230)
Collections on notes receivables                                                                  213          39,387
Investments in associated companies                                                            (9,721)         (6,519)
Distributions from associated companies                                                        38,761         121,143
Purchases of investments (other than short-term)                                             (614,653)       (903,471)
Proceeds from maturities of investments                                                       567,529         427,682
Proceeds from sales of investments                                                            159,596         165,682
                                                                                            ---------       ---------
   Net cash provided by (used for) investing activities                                       318,994        (175,962)
                                                                                            ---------       ---------

Net cash flows from financing activities:
Net change in customer banking deposits                                                       (32,515)         30,435
Issuance of long-term debt, net of issuance costs                                               6,145          66,631
Reduction of long-term debt                                                                   (12,543)         (5,929)
Purchase of common shares for treasury                                                            (98)            (45)
                                                                                            ---------       ---------
   Net cash provided by (used for) financing activities                                       (39,011)         91,092
                                                                                            ---------       ---------
Effect of foreign exchange rate changes on cash                                                   150            (378)
                                                                                            ---------       ---------
   Net increase (decrease) in cash and cash equivalents                                       307,242        (107,634)
Cash and cash equivalents at January 1,                                                       373,222         475,367
                                                                                            ---------       ---------
Cash and cash equivalents at September 30,                                                  $ 680,464       $ 367,733
                                                                                            =========       =========



             See notes to interim consolidated financial statements.

</TABLE>

                                       4
<PAGE>




LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders' Equity
For the nine months ended September 30, 2002 and 2001
(In thousands, except par value)
(Unaudited)

<TABLE>
<CAPTION>


                                                                     Common                 Accumulated
                                                                     Shares    Additional      Other
                                                                     $1 Par     Paid-In     Comprehensive     Retained
                                                                      Value     Capital     Income (Loss)     Earnings      Total
                                                                     -------   ----------  --------------     ---------- -----------

<S>                                                                    <C>       <C>             <C>            <C>         <C>
Balance, January 1, 2001                                             $55,297    $54,340      $  2,585        $1,092,019  $1,204,241
                                                                                                                         ----------
Comprehensive loss:
   Net change in unrealized gain (loss) on investments                                         16,801                        16,801
   Net change in unrealized foreign exchange gain (loss)                                       (4,882)                       (4,882)
   Net change in unrealized gain (loss) on derivative
    instruments (including the cumulative effect of a
    change in accounting principle of $1,371)                                                    (456)                         (456)
   Net loss                                                                                                     (25,573)    (25,573)
                                                                                                                         ----------
     Comprehensive loss                                                                                                     (14,110)
                                                                                                                         ----------
Exercise of options to purchase common shares                             20        429                                         449
Purchase of stock for treasury                                            (2)       (43)                                        (45)
                                                                     -------    -------      --------        ----------  ----------

Balance, September 30, 2001                                          $55,315    $54,726      $ 14,048        $1,066,446  $1,190,535
                                                                     =======    =======      ========        ==========  ==========

Balance, January 1, 2002                                             $55,318    $54,791      $ 14,662        $1,070,682  $1,195,453
                                                                                                                         ----------
Comprehensive income:
   Net change in unrealized gain (loss) on investments                                        (12,520)                      (12,520)
   Net change in unrealized foreign exchange gain (loss)                                       13,854                        13,854
   Net change in unrealized gain (loss) on derivative                                            (742)                         (742)
    instruments
   Net income                                                                                                    37,340      37,340
                                                                                                                         ----------
     Comprehensive income                                                                                                    37,932
                                                                                                                         ----------
Exercise of options to purchase common shares                             32        691                                         723
Purchase of stock for treasury                                            (3)       (95)                                        (98)
                                                                     -------    -------      --------        ----------  ----------

Balance, September 30, 2002                                          $55,347    $55,387      $ 15,254        $1,108,022  $1,234,010
                                                                     =======    =======      ========        ==========  ==========




</TABLE>





             See notes to interim consolidated financial statements.


                                       5
<PAGE>


LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements

1.   The unaudited interim consolidated financial statements,  which reflect all
     adjustments  (consisting  only of normal  recurring  items) that management
     believes necessary to present fairly results of interim operations,  should
     be read in conjunction with the Notes to Consolidated  Financial Statements
     (including the Summary of Significant  Accounting Policies) included in the
     Company's  audited  consolidated  financial  statements  for the year ended
     December 31, 2001,  which are included in the Company's Annual Report filed
     on Form 10-K for such year (the "2001  10-K").  Results of  operations  for
     interim  periods  are not  necessarily  indicative  of  annual  results  of
     operations.  The  consolidated  balance  sheet  at  December  31,  2001 was
     extracted from the audited annual financial statements and does not include
     all disclosures  required by generally accepted  accounting  principles for
     annual financial statements.

     Certain  amounts for prior periods have been  reclassified to be consistent
     with the 2002 presentation.

2.   During the second  quarter of 2002, the Company sold its interest in Fidei,
     its foreign real estate  subsidiary,  to an unrelated third party for total
     proceeds of 70,400,000 Euros ($66,200,000),  which resulted in an after tax
     gain on the sale  reflected in results of operations of $4,500,000  for the
     nine  month  period  ended   September   30,  2002,   and  an  increase  to
     shareholders' equity of $12,100,000 as of September 30, 2002. In connection
     with this  transaction,  the Company  classified  its  foreign  real estate
     operations  as  discontinued  operations  and,  accordingly,  prior  period
     financial   statements   have  been   reclassified  to  conform  with  this
     presentation.

     Prior  to the  sale,  the  Company  had  recorded  an  unrealized  loss  in
     accumulated other comprehensive income of $7,600,000,  relating to currency
     translation  adjustments  and a  deferred  gain  resulting  from the  early
     termination of a currency swap  agreement.  Upon the sale,  this unrealized
     loss was recognized in results of  operations,  reducing the after tax gain
     on the sale for the nine month  period  ended  September  30,  2002,  while
     increasing shareholders' equity as of September 30, 2002.

     The Euro  denominated  sale  proceeds  were not  converted  into US dollars
     immediately upon receipt. The Company entered into a participating currency
     derivative,  which expired in September 2002. Upon  expiration,  net of the
     premium paid to purchase the contract,  the Company received $67,900,000 in
     exchange for  70,000,000  Euros and  recognized a foreign  exchange gain of
     $2,000,000,  which is included in investment  and other income for the nine
     month period ended September 30, 2002.

3.   Certain  information  concerning  the  Company's  segments for the nine and
     three month periods  ended  September 30, 2002 and 2001 is presented in the
     following  table.  Prior  period  amounts  have been  reclassified  for the
     domestic real estate  operations,  which were previously  included in Other
     Operations.


<TABLE>
<CAPTION>

                                                                              For the Three Month             For the Nine Month
                                                                           Period Ended September 30,     Period Ended September 30,
                                                                           --------------------------     --------------------------
                                                                              2002         2001            2002           2001
                                                                              ----         ----            ----           ----
                                                                                                (In thousands)
<S>                                                                              <C>           <C>             <C>             <C>
       Revenues:
        Banking and lending                                                 $23,447      $ 29,179       $ 76,847       $ 91,133
        Domestic real estate                                                 17,336        30,196         42,778         56,777
        Manufacturing                                                        13,930        15,603         40,269         41,959
        Other operations                                                      6,785        14,678         25,086         40,238
        Equity in associated companies                                       21,808       (77,000)        77,393        (50,176)
        Corporate (a)                                                        (9,125)       24,087         (4,723)        67,127
                                                                            -------      --------       --------       --------
            Total consolidated revenues                                     $74,181      $ 36,743       $257,650       $247,058
                                                                            =======      ========       ========       ========

                                                                                                                   (continued)

</TABLE>
                                       6
<PAGE>


Notes to Interim Consolidated Financial Statements, continued


<TABLE>
<CAPTION>

                                                                              For the Three Month             For the Nine Month
                                                                          Period Ended September 30,      Period Ended September 30,
                                                                          --------------------------      --------------------------
                                                                             2002            2001            2002           2001
                                                                             ----            ----            ----           ----
                                                                                                (In thousands)

<S>                                                                             <C>          <C>           <C>             <C>

     Income (loss) from continuing operations before income taxes,
      minority expense of trust preferred securities and cumulative
      effect of a change in accounting principle:
       Banking and lending                                                 $ (7,812)     $ (1,756)      $  2,698       $  3,314
       Domestic real estate                                                   7,535        20,417         16,632         32,661
       Manufacturing                                                          1,497         2,321          4,791          3,963
       Other operations                                                      (1,634)        7,592          1,172         16,207
       Equity in associated companies                                        21,808       (77,000)        77,393        (50,176)
       Corporate (a)                                                        (25,559)       10,895        (54,890)        23,930
                                                                           --------      --------       --------       --------
            Total consolidated income (loss) from continuing
             operations before income taxes, minority expense
             of trust preferred securities and cumulative effect
             of a change in accounting principle                           $ (4,165)     $(37,531)      $ 47,796       $ 29,899
                                                                           ========      ========       ========       ========
</TABLE>

(a)  Includes  provisions that reduce net security gains (losses) by $22,500,000
     and  $2,400,000  for the nine and three month periods  ended  September 30,
     2002, respectively, to write down investments in certain available for sale
     securities and an equity investment in a non-public fund.

4.   The Company accounts for its investment in Berkadia under the equity method
     of  accounting.  At  September  30, 2002,  the book value of the  Company's
     equity investment in Berkadia was negative  $84,100,000,  which is included
     in other  liabilities  in the  consolidated  balance  sheet.  As more fully
     described  in the 2001 10-K,  the  negative  carrying  amount  results from
     Berkadia's distribution of loan fees received and the Company's recognition
     in 2001 of its share of The FINOVA Group Inc.'s ("FINOVA")  non-cash losses
     recorded by Berkadia, partially offset by the Company's share of Berkadia's
     income related to Berkadia's loan to FINOVA. The Company has guaranteed 10%
     of  Berkadia's  debt and,  although the Company has no cash  investment  in
     Berkadia, it records its share of any losses recorded by Berkadia up to the
     amount of the guarantee. In 2001, Berkadia suspended its recognition of its
     share  of  FINOVA's  losses,   since  the  carrying  amount  of  Berkadia's
     investment in FINOVA's  common stock was reduced to zero. As of October 31,
     2002, the outstanding amount of the guarantee was $227,500,000.

     For the nine and three month periods ended September 30, 2002 and 2001, the
     Company's equity in the income (loss) of Berkadia consists of the following
     (in thousands):


<TABLE>
<CAPTION>

                                                                      For the Three Month                For the Nine Month
                                                                   Period Ended September 30,        Period Ended September 30,
                                                                   ---------------------------       --------------------------
                                                                     2002              2001              2002             2001
                                                                     ----              ----              ----             ----
<S>                                                                     <C>               <C>               <C>            <C>

     Net interest spread on the Berkadia loan - 10% of total         $ 1,300          $  1,300          $ 4,900        $  1,300
     Amortization of Berkadia loan discount related to cash
      fees - 50% of total                                              6,000             2,900           18,200           2,900
     Amortization of Berkadia loan discount related to
      FINOVA stock - 50% of total                                      9,300             4,500           28,600           4,500
     Share of FINOVA loss under equity method - 50% of
      total                                                            --              (94,400)            --           (94,400)
                                                                     -------          --------          -------        --------
            Equity in income (loss) of  associated  companies -
             Berkadia                                                $16,600          $(85,700)         $51,700        $(85,700)
                                                                     =======          ========          =======        ========
</TABLE>


                                        7
<PAGE>


Notes to Interim Consolidated Financial Statements, continued

     The  amortization  of the Berkadia loan discount has been  accelerated as a
     result of principal  payments on the  Berkadia  loan that were greater than
     expected  at the  time  the loan was  made.  For the nine and  three  month
     periods ended  September 30, 2002, the effect of this  acceleration  was to
     increase  the  Company's  equity  in income of  Berkadia  by  approximately
     $22,200,000 and $5,300,000,  respectively.  Loan repayments from FINOVA are
     unlikely to continue at the pace experienced to date.

5.   A summary of accumulated other comprehensive income (loss) at September 30,
     2002 and December 31, 2001 is as follows (in thousands):

<TABLE>
<CAPTION>

                                                                           September 30,        December 31,
                                                                              2002                 2001
                                                                           ------------         -----------
<S>                                                                             <C>                   <C>

          Net unrealized gains on investments                                 $ 19,161             $ 31,681
          Net unrealized foreign exchange losses                                (2,758)             (16,612)
          Net unrealized losses on derivative instruments                       (1,149)                (407)
                                                                              --------             --------
                                                                              $ 15,254             $ 14,662
                                                                              ========             ========
</TABLE>

6.   Included  in  investment  and other  income are charges of  $3,000,000  and
     $2,000,000  for the nine and three month periods ended  September 30, 2002,
     respectively,  and  $4,600,000  and $3,900,000 for the nine and three month
     periods ended September 30, 2001,  respectively,  as a result of accounting
     for its derivative  financial  instruments in accordance  with Statement of
     Financial Accounting Standards No. 133 ("SFAS 133").

7.   Per share amounts were  calculated by dividing net income (loss) by the sum
     of the  weighted  average  number of common  shares  outstanding  and,  for
     diluted earnings (loss) per share, the incremental  weighted average number
     of shares  issuable upon exercise of  outstanding  options and warrants for
     the periods they were  outstanding.  The number of shares used to calculate
     basic  earnings  (loss) per share amounts was 55,334,000 and 55,307,000 for
     the nine month periods ended September 30, 2002 and 2001, respectively, and
     55,346,000 and  55,314,000 for the three month periods ended  September 30,
     2002 and 2001, respectively. The number of shares used to calculate diluted
     earnings  (loss) per share amounts was  55,649,000  and  55,307,000 for the
     nine month periods ended  September  30, 2002 and 2001,  respectively,  and
     55,346,000 and  55,314,000 for the three month periods ended  September 30,
     2002 and 2001,  respectively.  Options and  warrants  to purchase  323,000,
     302,000  and  325,000   weighted   average  shares  of  common  stock  were
     outstanding  during the three month  periods  ended  September 30, 2002 and
     2001 and the nine month period ended September 30, 2001, respectively,  but
     were not included in the  computation  of diluted loss per share,  as those
     options and warrants were antidilutive.

8.   Cash paid for interest  and income  taxes (net of refunds) was  $27,500,000
     and  $37,400,000,  respectively,  for the nine month period ended September
     30, 2002 and $39,000,000 and $11,700,000,  respectively, for the nine month
     period ended September 30, 2001.

9.   As  disclosed  in the  2001  10-K,  in  connection  with  its  audit of the
     Company's  consolidated  federal  income  tax  returns  for the years  1996
     through 1999, the Internal  Revenue  Service  ("IRS") had issued Notices of
     Proposed   Adjustments   that,  if   sustained,   would  have  resulted  in
     approximately  $100,000,000 of liability. The Company is fully reserved for
     this  exposure.  In April 2002,  the IRS revised  these Notices of Proposed
     Adjustments.  As a result,  when the  statute  of  limitations  expires  on
     December 31, 2002,  the Company will take all of these reserves into income
     in the Company's year end financial statements.

10.  In July 2002,  the  Company  agreed to sell its equity  interest in certain
     thoroughbred  racetrack  businesses  to a third  party for net  proceeds of
     approximately  $28,000,000  and form a joint venture with the buyer and the
     other sellers to pursue the  potential  development  of gaming  ventures in
     Maryland  (if  authorized  by  state  law).  The  Company  has  no  funding
     obligations  for  this  joint  venture.   The  transaction  is  subject  to
     legislative  review and customary  closing  conditions,  and is expected to
     close in 2002;  however,  there can be no assurance that it will ultimately
     be  consummated  or that, if  consummated,  the joint venture will have any
     significant  value to the Company.  At September  30, 2002,  the  Company's
     equity investment in these businesses was $14,100,000.

                                       8
<PAGE>


Notes to Interim Consolidated Financial Statements, continued

11.  On October 15, 2002, two of the Company's  subsidiaries acquired 44% of the
     outstanding equity of WilTel Communications Group, Inc. ("WilTel"), a newly
     formed  Nevada  corporation  that  emerged on that date from the chapter 11
     bankruptcy proceedings of Williams  Communications Group, Inc. ("Old WCG").
     The aggregate  purchase price of  $330,000,000,  in the form of irrevocable
     letters  of credit,  has been  deposited  into  escrow  pending  receipt of
     requisite  regulatory approval from the Federal  Communications  Commission
     ("FCC").  The  letters  of  credit  are  collateralized  by  United  States
     Government  securities with an aggregate value of $350,000,000,  which were
     included in the consolidated balance sheet as cash equivalents at September
     30, 2002. If the  requisite  FCC approval is not  obtained,  the letters of
     credit will expire on March 14, 2003.

     The WilTel  stock was  acquired by the Company  under Old WCG's  chapter 11
     Restructuring  Plan  pursuant  to a  claims  purchase  agreement  with  The
     Williams  Companies,  Inc. and an  investment  agreement  with Old WCG. The
     Plan,  which became  effective on October 15, 2002, was  consummated  under
     special  temporary  authority  granted  by the  FCC.  The  Company  expects
     requisite  approvals will be received from the FCC prior to the end of this
     year;  at such time the purchase  price will be released  from escrow,  and
     thereupon,  the Company will account for this  investment  under the equity
     method of accounting. The Company has appointed four members (including the
     Company's  Chairman and  President)  to the newly  constituted  nine member
     board of directors of WilTel and has entered into a stockholders  agreement
     with   WilTel   pursuant  to  which  the  Company  has  agreed  to  certain
     restrictions on its ability to acquire or sell WilTel stock.

     On October  28,  2002,  in a private  transaction,  the  Company  purchased
     1,700,000  shares of WilTel  common  stock,  on a when  issued  basis,  for
     $20,400,000.  This  purchase,  which  represented  3.4% of the  outstanding
     equity of WilTel,  increased the Company's  total common stock  interest in
     WilTel to 47.4%.

12.  On July 11, 2002,  options to purchase an  aggregate  of 308,500  shares of
     Common  Stock were  granted to  employees  under the  Company's  1999 Stock
     Option  Plan at an  exercise  price of $30.74 per share,  the then  current
     market price per share.

13.  In October 2002, the Company sold one of its real estate subsidiaries,  CDS
     Holding  Corporation  ("CDS"),  to HomeFed  Corporation  ("HomeFed")  for a
     purchase  price  of  $25,000,000,  consisting  of  $1,000,000  in cash  and
     24,742,268 newly issued shares of HomeFed's common stock,  which represents
     approximately  30.3% of the newly  outstanding  HomeFed stock.  The gain on
     this sale of approximately $10,400,000 will be deferred and recognized into
     income as CDS' principal  asset, the real estate project known as San Elijo
     Hills that is owned through a majority-owned  subsidiary,  is developed and
     sold.  The Company will  account for its  investment  in HomeFed  under the
     equity method of accounting.


                                       9
<PAGE>



Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Interim Operations.

The following should be read in conjunction with the Management's Discussion and
Analysis of Financial  Condition and Results of Operations  included in the 2001
10-K.

                         Liquidity and Capital Resources

For the nine month period  ended  September  30, 2002,  net cash was provided by
operations.  For the nine month period ended  September  30, 2001,  net cash was
used  for  operations,   reflecting   lower   investment   income  on  corporate
investments,  payment of  interest  and  overhead  and a  reduction  of payables
related to the trading portfolio.

As of September 30, 2002, the Company's readily available cash, cash equivalents
and  marketable  securities,  excluding  those  amounts  held  by its  regulated
subsidiaries, totaled $872,800,000, before reduction for the WilTel transactions
that  occurred in October 2002 as discussed  below.  This amount is comprised of
cash and  short-term  bonds and notes of the United  States  Government  and its
agencies  of  $623,100,000  (71%),  the  equity  investment  in White  Mountains
Insurance  Group,  Ltd. of  $110,400,000  (13%) (which can be sold  privately or
otherwise  in  compliance  with  the  securities  laws  and  are  subject  to  a
registration  rights  agreement)  and  other  publicly  traded  debt and  equity
securities aggregating $139,300,000 (16%). Additional sources of liquidity as of
September  30,  2002  include  $164,600,000  of cash and  marketable  securities
collateralizing letters of credit.

As a result of  principal  payments,  as of  October  31,  2002,  the  Company's
guarantee of Berkadia's financing has been reduced to $227,500,000.

During the second quarter of 2002,  the Company sold its interest in Fidei,  its
foreign real estate  subsidiary,  to an unrelated third party for total proceeds
of  70,400,000  Euros  ($66,200,000).  Such amount is included in the  Company's
readily available cash and cash equivalents referred to above.

In July  2002,  the  Company  agreed  to sell its  equity  interest  in  certain
thoroughbred  racetrack  businesses  to  a  third  party  for  net  proceeds  of
approximately  $28,000,000  and to form a joint  venture  with the buyer and the
other sellers to pursue the potential development of gaming ventures in Maryland
(if  authorized by state law). The Company has no funding  obligations  for this
joint venture.  The  transaction is subject to legislative  review and customary
closing conditions,  and is expected to close in 2002; however,  there can be no
assurance that it will  ultimately be consummated or that, if  consummated,  the
joint venture will have any significant  value to the Company.  At September 30,
2002, the Company's equity investment in these businesses was $14,100,000.

On October 15,  2002,  two of the  Company's  subsidiaries  acquired  44% of the
outstanding  equity of WilTel  Communications  Group, Inc.  ("WilTel"),  a newly
formed  Nevada  corporation  that  emerged  on that  date  from the  chapter  11
bankruptcy  proceedings of Williams  Communications Group, Inc. ("Old WCG"). The
aggregate purchase price of $330,000,000,  in the form of irrevocable letters of
credit,  has been deposited into escrow pending receipt of requisite  regulatory
approval  from the Federal  Communications  Commission  ("FCC").  The letters of
credit  are  collateralized  by  United  States  Government  securities  with an
aggregate  value of  $350,000,000  and,  if the  requisite  FCC  approval is not
obtained, will expire on March 14, 2003.

The  WilTel  stock was  acquired  by the  Company  under Old  WCG's  chapter  11
Restructuring  Plan pursuant to a claims  purchase  agreement  with The Williams
Companies, Inc. and an investment agreement with Old WCG. The Plan, which became
effective on October 15, 2002, was consummated under special temporary authority
granted by the FCC. The Company  expects  requisite  approvals  will be received
from the FCC prior to the end of this year; at such time the purchase price will
be released  from  escrow,  and  thereupon,  the Company  will  account for this
investment under the equity method of accounting. The Company has appointed four
members   (including  the  Company's   Chairman  and  President)  to  the  newly
constituted  nine member  board of  directors  of WilTel and has entered  into a
stockholders  agreement with WilTel  pursuant to which the Company has agreed to
certain restrictions on its ability to acquire or sell WilTel stock.

                                       10
<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Interim Operations, continued.


On October 28, 2002, in a private  transaction,  the Company purchased 1,700,000
shares of WilTel common stock,  on a when issued basis,  for  $20,400,000.  This
purchase,  which represented 3.4% of the outstanding equity of WilTel, increased
the Company's total common stock interest in WilTel to 47.4%.

In October  2002,  the  Company  sold one of its real estate  subsidiaries,  CDS
Holding Corporation  ("CDS"), to HomeFed Corporation  ("HomeFed") for a purchase
price of  $25,000,000,  consisting of $1,000,000  in cash and  24,742,268  newly
issued shares of HomeFed's common stock, which represents approximately 30.3% of
the newly  outstanding  HomeFed  stock.  The gain on this sale of  approximately
$10,400,000 will be deferred and recognized into income as CDS' principal asset,
the real  estate  project  known as San  Elijo  Hills  that is owned  through  a
majority-owned  subsidiary,  is developed and sold. The Company will account for
its investment in HomeFed under the equity method of accounting.

                              Results of Operations

                  The 2002 Periods Compared to the 2001 Periods

Finance revenues,  which reflect the level and mix of consumer instalment loans,
decreased  in the nine and three  month  periods  ended  September  30,  2002 as
compared to the similar periods in 2001 due to fewer average loans  outstanding.
Average  loans  outstanding  during  the  nine and  three  month  periods  ended
September 30, 2002 were $458,600,000 and $427,600,000, respectively, as compared
to $546,500,000 and $566,000,000,  respectively, during the nine and three month
periods ended  September 30, 2001.  Pre-tax  results for the banking and lending
segment were also  adversely  affected by greater net interest  paid on interest
rate swaps of $3,700,000 and lower investment  income of $2,800,000 for the nine
month 2002 period and by a higher  provision for loan losses of  $6,300,000  for
the three month 2002 period. Such decreases for the nine and three month periods
in 2002 as compared to the prior year were partially offset by changes in market
values of its  interest  rate  swaps  (see  below),  lower  interest  expense of
$10,900,000  and  $3,700,000,  respectively,  due to  reduced  customer  banking
deposits  and lower  interest  rates  thereon,  and lower  salaries  expense  of
$4,600,000 and $1,600,000, respectively, and lower operating costs of $2,900,000
and  $1,500,000,  respectively,  which  related  to the  Company's  decision  in
September 2001 to stop originating subprime automobile loans and subsequently to
consolidate its operations, as more fully described in the 2001 10-K.

Loan losses in the subprime automobile portfolio increased  significantly during
the  third  quarter,  which  the  Company  believes  reflects  the  difficulties
experienced by subprime  borrowers in the current economy.  The losses increased
both in absolute  dollar amount and as a percentage  of the  declining  subprime
automobile  portfolio.  At September 30, 2002, the allowance for loan losses for
this  segment's  entire  loan  portfolio  was  $35,900,000  or  8.7%  of the net
outstanding loans,  compared to $35,700,000 or 6.8% of the net outstanding loans
at December  31,  2001.  The  provisions  for loan losses for this  segment were
$28,400,000  and $27,300,000 for the nine month periods ended September 30, 2002
and 2001,  respectively,  and  $17,200,000  and  $10,900,000 for the three month
periods ended September 30, 2002 and 2001, respectively.

The  Company  is  considering  its  alternatives  for its  banking  and  lending
operation,  which include selling its subprime automobile  portfolio and selling
or liquidating  some or all of its loan portfolios;  however,  the Company is no
longer  contemplating the merger of its banking and lending  subsidiaries as had
previously  been  reported.  The  Company  believes  that it is likely  that its
national bank subsidiary  will be downgraded by its primary  federal  regulator,
the Office of the Comptroller of the Currency (the "OCC"), and would, therefore,
become  subject  to  formal  enforcement  action  as a result  of its loan  loss
experience. The Company does not believe that such actions by the OCC would have
a  significant  impact on its  existing  operations,  as the  Company  is in the
process  of  taking  the  actions  the OCC is  likely to  require.  However,  no
assurance can be given that other  regulatory  actions will not be taken or that
any such  actions  won't  have an  adverse  impact on the  banking  and  lending
segment.

                                       11
<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Interim Operations, continued.

Pre-tax  results  for the banking and lending  segment  reflect  $2,000,000  and
$(7,000,000),   respectively,  of  income  (charges)  primarily  resulting  from
marking-to-market  its  interest  rate  swaps for the nine month  periods  ended
September 30, 2002 and 2001 and $600,000 and $(3,900,000), respectively, for the
three month periods ended September 30, 2002 and 2001. The Company uses interest
rate swaps to manage the impact of interest rate changes on its customer banking
deposits.   Although  the  Company  believes  that  these  derivative  financial
instruments  serve as economic  hedges,  they do not meet certain  effectiveness
criteria under SFAS 133, and therefore are not accounted for as hedges.

Revenues from domestic real estate  declined in the nine and three month periods
ended  September 30, 2002 as compared to the same periods in 2001 as a result of
lower gains from property  sales and less rent income largely due to the sale of
one of the  Company's  shopping  centers in the  fourth  quarter of 2001 and two
shopping centers during 2002,  partially  offset by increased  revenues from the
Company's Hawaiian hotel, which the Company began operating in the third quarter
of 2001.  The decline in pre-tax  income from  domestic  real estate in the 2002
periods  as  compared  to the  similar  periods  in 2001 also  reflects  greater
operating costs, principally related to the Hawaiian hotel and the write-down of
a mortgage  receivable  on a property  on which the Company is in the process of
foreclosing.

Manufacturing  revenues  decreased  in the nine and three  month  periods  ended
September  30,  2002 as  compared  to the same  periods in 2001.  The decline in
manufacturing  revenues for the nine month period ended  September  30, 2002 was
primarily due to reductions in the consumer  products and  agricultural  markets
aggregating  $3,900,000  partially  offset by increases in the  construction and
home  furnishing  markets  totaling  $1,800,000.  The reductions in the consumer
products  market  resulted  from the loss of a customer for the Asian market and
for its consumer dust wipe products, and reduced demand for one of the Company's
healthcare  products.   The  reduction  in  the  agricultural  market  reflected
increased  competition.  While  revenues  declined  in all  markets in the third
quarter of 2002, the most significant  reductions were in the consumer  products
and construction markets aggregating  $1,200,000.  The reduction in the consumer
products  market resulted from the loss of a customer for its consumer dust wipe
products.  The decline in the construction  markets reflected customers' earlier
buying  pattern  compared to the same period in 2001.  Although gross profit was
largely unchanged for the nine month period ended September 30, 2002 as compared
to the same  period  in 2001,  pre-tax  results  for the 2002  period  increased
reflecting cost reduction initiatives that resulted in lower operating expenses.
Gross  profit and  pre-tax  results  declined  for the third  quarter of 2002 as
compared  to the  same  period  in 2001  principally  due to the  reduced  sales
partially offset by lower raw material and labor costs.

Investment  and other income  declined in the nine and three month periods ended
September  30, 2002 as compared to the same periods in 2001  principally  due to
reduced rent income and reduced gains from domestic  property sales as discussed
above,  and a reduction in  investment  income of  $19,000,000  and  $5,100,000,
respectively,  resulting  from a decline in  interest  rates and,  for the three
month 2002  period,  due to a lower amount of invested  assets.  The decrease in
investment  and  other  income  was  also due to a  decline  of  $9,000,000  and
$1,300,000,   respectively,  in  revenues  from  the  Company's  gas  operations
principally  due  to  lower  production  and  prices  and a gain  of  $6,300,000
recognized  in 2001 from the sale of the  Company's  investment  in two inactive
insurance  companies  and, for the three month period ended  September 30, 2002,
decreased  foreign  exchange  gains.  The  decreases  were  partially  offset by
increased revenues from the Company's  Hawaiian hotel,  changes in market values
related to the  Company's  derivative  financial  instruments  and, for the nine
month period ended September 30, 2002, increased foreign exchange gains.

The increase in equity in income of  associated  companies in the nine and three
month periods  ended  September 30, 2002 as compared to the same periods in 2001
was  primarily due to income from the  Company's  equity  investment in Berkadia
LLC.  As  more  fully  described  in Note 4 of  Notes  to  Interim  Consolidated
Financial  Statements,  the  Company  recognized  $51,700,000  and  $16,600,000,
respectively, of income from Berkadia for the nine and three month periods ended
September 30, 2002, of which $46,800,000 and $15,300,000,
                                       12
<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Interim Operations, continued.

respectively, related to the amortization of discount from the Berkadia loan. In
2001,  the Company  recognized  its share of Berkadia's  losses of  $85,700,000,
which primarily  resulted from  Berkadia's  accounting for its share of FINOVA's
losses under the equity  method of  accounting.  Equity in income of  associated
companies  for the nine and three month  periods  ended  September 30, 2002 also
included $14,000,000 and $4,600,000,  respectively, of income from the Company's
equity  investment in Olympus Re Holdings,  Ltd., an investment the Company made
in December  2001.  Such  increases  were  partially  offset by  $6,600,000  and
$8,700,000 of losses for the nine and three month  periods  ended  September 30,
2002, respectively,  from the Company's investment in December 2001 in a limited
partnership  that  invests  in  securities  and  other   obligations  of  highly
leveraged,  distressed  and out of favor  companies.  In addition,  for the nine
month period ended September 30, 2002, the Company  recognized  $11,800,000 less
income from its equity investment in Jefferies Partners Opportunity Fund II, LLC
and  $5,500,000  less  income  from  its  equity   investments  in  real  estate
businesses;  such  changes  were not  significant  for the three month period in
2002.

Net  securities  gains  (losses)  for the nine and  three  month  periods  ended
September  30,  2002  include  a  provision  of  $22,500,000   and   $2,400,000,
respectively,  to write down the Company's  investments in certain available for
sale securities and its equity investment in a non-public fund.

The  decline in  interest  expense  in the nine and three  month  periods  ended
September 30, 2002 as compared to the same periods in 2001 was  principally  due
to lower  interest  expense at the banking  and  lending  segment due to reduced
customer banking deposits and lower interest rates thereon.

The  increase in selling,  general and other  expenses for the nine month period
ended  September  30,  2002 as  compared  to the same  period in 2001  primarily
resulted from greater net interest paid on the  Company's  derivative  financial
instruments of $5,800,000,  increased  operating costs of $5,500,000  related to
the Hawaiian hotel and losses on the sale or write-down of miscellaneous  assets
aggregating  $4,000,000,  partially  offset by lower expenses related to MK Gold
Company of $4,500,000.  The increase in selling,  general and other expenses for
the three month period ended  September  30, 2002 as compared to the same period
in 2001 primarily resulted from higher provisions for loan losses at the banking
and  lending  segment  of  $6,200,000,  losses  on the  sale  or  write-down  of
miscellaneous assets aggregating $2,800,000 and greater net interest paid on the
Company's derivative financial instruments of $1,500,000.

              Cautionary Statement for Forward-Looking Information

Statements  included in this  Management's  Discussion and Analysis of Financial
Condition  and  Results  of  Interim  Operations  may  contain   forward-looking
statements. Such forward-looking statements are made pursuant to the safe-harbor
provisions  of the  Private  Securities  Litigation  Reform  Act of  1995.  Such
statements may relate, but are not limited,  to projections of revenues,  income
or loss, capital  expenditures,  fluctuations in insurance  reserves,  plans for
growth and future operations, competition and regulation, as well as assumptions
relating to the foregoing.

Forward-looking  statements are inherently  subject to risks and  uncertainties,
many of which cannot be predicted or quantified.  When used in this Management's
Discussion   and  Analysis  of  Financial   Condition  and  Results  of  Interim
Operations,  the  words  "estimates",  "expects",   "anticipates",   "believes",
"plans",  "intends"  and  variations of such words and similar  expressions  are
intended  to  identify   forward-looking   statements  that  involve  risks  and
uncertainties.  Future events and actual  results could differ  materially  from
those  set  forth  in,   contemplated  by  or  underlying  the   forward-looking
statements.

The factors  that could cause  actual  results to differ  materially  from those
suggested  by any  such  statements  include,  but are  not  limited  to,  those
discussed  or  identified  from time to time in the  Company's  public  filings,
including:

                                       13
<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Interim Operations, continued.

o    general economic and market conditions or prevailing interest rate levels,

o    changes in foreign and domestic laws, regulations and taxes,

o    changes in competition and pricing environments,

o    regional or general changes in asset valuation,

o    the occurrence of significant natural disasters,  the inability to reinsure
     certain  risks  economically,  increased  competition  in  the  reinsurance
     markets, the adequacy of loss and loss adjustment expense reserves,

o    weather  related  conditions  that may affect the  Company's  operations or
     investments,

o    changes in U.S. real estate markets,  including the  residential  market in
     Southern California and the commercial market in Hawaii,

o    increased competition in the super premium wine industry,

o    adverse  economic,  political or  environmental  developments in Spain that
     could delay or preclude  the  issuance of permits  necessary  to obtain the
     Company's  copper  mining  rights  or could  result in  increased  costs of
     bringing  the  project to  completion,  increased  costs in  financing  the
     development of the project, decreases in world wide copper prices,

o    increased competition in the international and domestic plastics market and
     increased raw material costs,

o    increased  default  rates  and  decreased  value of assets  pledged  to the
     Company, the Company's ability to generate new loan products,

o    downgrade  of the  Company's  banking  subsidiary  by the OCC and  becoming
     subject to formal enforcement action,

o    any  deterioration in the business and operations of FINOVA, in the ability
     of FINOVA Capital to repay the Berkadia loan, further  deterioration in the
     value of the assets pledged by FINOVA and FINOVA Capital in connection with
     the Berkadia loan,

o    assuming the release of the Wiltel  escrow,  deterioration  in the business
     and  operations  of WilTel and the ability of WilTel to generate  operating
     profits, WilTel's ability to retain key customers and suppliers, regulatory
     changes in the  telecommunications  markets and increased  competition from
     reorganized telecommunication companies, and

o    changes in the composition of the Company's assets and liabilities  through
     acquisitions or divestitures.

Undue reliance should not be placed on these forward-looking  statements,  which
are applicable only as of the date hereof.  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  Management's  Discussion  and
Analysis of Financial  Condition and Results of Interim Operations or to reflect
the occurrence of unanticipated events.

                                       14
<PAGE>


Item 4.  Controls and Procedures.

(a)  The Company maintains  disclosure controls and procedures that are designed
     to ensure  that  information  required  to be  disclosed  in the  Company's
     filings under the Securities  Exchange Act of 1934 is recorded,  processed,
     summarized and reported within the periods specified in the rules and forms
     of the Securities and Exchange Commission.  Such information is accumulated
     and communicated to the Company's management, including its Chairman of the
     Board and Chief Executive  Officer,  President and Chief Financial Officer,
     as appropriate,  to allow timely decisions  regarding required  disclosure.
     The  Company's  management,  including  the Chairman of the Board and Chief
     Executive Officer,  President and Chief Financial Officer,  recognizes that
     any set of  controls  and  procedures,  no  matter  how well  designed  and
     operated,  can provide only  reasonable  assurance of achieving the desired
     control objectives.

     Within 90 days prior to the filing  date of this  quarterly  report on Form
     10-Q, the Company has carried out an evaluation,  under the supervision and
     with the participation of the Company's management, including the Company's
     Chairman  of the Board and Chief  Executive  Officer,  President  and Chief
     Financial Officer,  of the effectiveness of the design and operation of the
     Company's disclosure controls and procedures. Based on such evaluation, the
     Company's Chairman of the Board and Chief Executive Officer,  President and
     Chief Financial  Officer concluded that the Company's  disclosure  controls
     and procedures are effective.

(b)  There have been no significant  changes in the Company's  internal controls
     or in other factors that could  significantly  affect the internal controls
     subsequent  to  the  date  of  their  evaluation  in  connection  with  the
     preparation of this quarterly report on Form 10-Q.


                                       15
<PAGE>




                           PART II - OTHER INFORMATION



Item 6.    Exhibits and Reports on Form 8-K.

a) Exhibits.

Item 601(a) of
Regulation S-K
Exhibit No.                Description

99.1      Certification  of  Chairman of the Board and Chief  Executive  Officer
          pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2      Certification   of   President   pursuant   to  Section   906  of  the
          Sarbanes-Oxley Act of 2002.

99.3      Certification  of Chief Financial  Officer  pursuant to Section 906 of
          the Sarbanes-Oxley Act of 2002.


b) Reports on Form 8-K.

   The Company filed a current  report on Form 8-K dated July 31, 2002,  which
   sets forth  information  under Item 5. Other  Events and Item 7.  Financial
   Statements and Exhibits.







                                       16
<PAGE>


                                   SIGNATURES



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 thereunto duly authorized.




                                                  LEUCADIA NATIONAL CORPORATION
                                                         (Registrant)




Date:  November 13, 2002                          By: /s/ Barbara L. Lowenthal
                                                      ------------------------
                                                  Barbara L. Lowenthal
                                                  Vice President and Comptroller
                                                  (Chief Accounting Officer)



                                 CERTIFICATIONS


I, Ian M. Cumming, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Leucadia  National
Corporation;

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

     4. The  registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a- 14 and 15d- 14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

     c)  presented  in  this  quarterly   report  our   conclusions   about  the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

     5. The registrant's other certifying  officers and I have disclosed,  based
on our most  recent  evaluation,  to the  registrant's  auditors  and the  audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent function):

     a) all  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

     6. The registrant's other certifying  officers and I have indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date:  November 13, 2002

                                                  By:/s/ Ian M. Cumming
                                                     --------------------------
                                                     Ian M. Cumming
                                                     Chairman of the Board and
                                                     Chief Executive Officer
                                       17
<PAGE>

                                 CERTIFICATIONS

I, Joseph S. Steinberg, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Leucadia  National
Corporation;

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

     4. The  registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a- 14 and 15d- 14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

     c)  presented  in  this  quarterly   report  our   conclusions   about  the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

     5. The registrant's other certifying  officers and I have disclosed,  based
on our most  recent  evaluation,  to the  registrant's  auditors  and the  audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent function):

     a) all  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

     6. The registrant's other certifying  officers and I have indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.



Date:  November 13, 2002

                                                  By:  /s/ Joseph S. Steinberg
                                                       -----------------------
                                                       Joseph S. Steinberg
                                                       President
                                       18
<PAGE>

                                 CERTIFICATIONS


I, Joseph A. Orlando, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Leucadia  National
Corporation;

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

     4. The  registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a- 14 and 15d- 14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

     c)  presented  in  this  quarterly   report  our   conclusions   about  the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

     5. The registrant's other certifying  officers and I have disclosed,  based
on our most  recent  evaluation,  to the  registrant's  auditors  and the  audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent function):

     a) all  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

     6. The registrant's other certifying  officers and I have indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.



Date:  November 13, 2002

                                                  By:   /s/ Joseph A. Orlando
                                                        ---------------------
                                                        Joseph A. Orlando
                                                        Chief Financial Officer




                                       19
<PAGE>






                                  EXHIBIT INDEX


Exhibit No.                Description

99.1      Certification  of  Chairman of the Board and Chief  Executive  Officer
          pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2      Certification   of   President   pursuant   to  Section   906  of  the
          Sarbanes-Oxley Act of 2002.

99.3      Certification  of Chief Financial  Officer  pursuant to Section 906 of
          the Sarbanes-Oxley Act of 2002.






                                       20


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>imccert3qo2.txt
<DESCRIPTION>99.1
<TEXT>
                                                                Exhibit 99.1



                                  CERTIFICATION
                       PURSUANT TO 18 U.S.C. SECTION 1350,
           AS ADOPTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     I, Ian M. Cumming,  as Chairman of the Board and Chief Executive Officer of
Leucadia National Corporation (the "Company") certify, pursuant to 18 U.S.C. ss.
1350, as adopted by Section 906 of the  Sarbanes-Oxley  Act of 2002,  that to my
knowledge:

     (1) the  accompanying  Form 10-Q report for the period ending September 30,
2002 as filed with the U.S.  Securities and Exchange  Commission  (the "Report")
fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and

     (2)  the  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.


Dated:  November 13, 2002



                                                     By:  /s/ Ian M. Cumming
                                                     --------------------------
                                                     Ian M. Cumming
                                                     Chairman of the Board and
                                                     Chief Executive Officer


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>4
<FILENAME>jsscert3q02.txt
<DESCRIPTION>99.2
<TEXT>
                                                              Exhibit 99.2




                                  CERTIFICATION
                       PURSUANT TO 18 U.S.C. SECTION 1350,
           AS ADOPTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     I, Joseph S. Steinberg,  as President of Leucadia National Corporation (the
"Company") certify, pursuant to 18 U.S.C. ss. 1350, as adopted by Section 906 of
the Sarbanes-Oxley Act of 2002, that to my knowledge:

     (1) the  accompanying  Form 10-Q report for the period ending September 30,
2002 as filed with the U.S.  Securities and Exchange  Commission  (the "Report")
fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and

     (2)  the  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.


Dated:  November 13, 2002



                                                   By:  /s/ Joseph S. Steinberg
                                                   ----------------------------
                                                   Joseph S. Steinberg
                                                   President



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>5
<FILENAME>jaocert3q02.txt
<DESCRIPTION>99.3
<TEXT>
                                                                Exhibit 99.3




                                  CERTIFICATION
                       PURSUANT TO 18 U.S.C. SECTION 1350,
           AS ADOPTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     I, Joseph A.  Orlando,  as Chief  Financial  Officer of  Leucadia  National
Corporation (the "Company") certify,  pursuant to 18 U.S.C. ss. 1350, as adopted
by Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

     (1) the  accompanying  Form 10-Q report for the period ending September 30,
2002 as filed with the U.S.  Securities and Exchange  Commission  (the "Report")
fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and

     (2)  the  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.




Dated:  November 13, 2002


                                                     By:  /s/ Joseph A. Orlando
                                                     --------------------------
                                                     Joseph A. Orlando
                                                     Chief Financial Officer



</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
