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<SEC-DOCUMENT>0000096223-03-000011.txt : 20030328
<SEC-HEADER>0000096223-03-000011.hdr.sgml : 20030328
<ACCEPTANCE-DATETIME>20030328111500
ACCESSION NUMBER:		0000096223-03-000011
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		14
CONFORMED PERIOD OF REPORT:	20021231
FILED AS OF DATE:		20030328

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-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-05721
		FILM NUMBER:		03623224

	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-K
<SEQUENCE>1
<FILENAME>lnc0210k.txt
<DESCRIPTION>LEUCADIA NATIONAL CORPORATION 2002 10K
<TEXT>


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ----------------------
                                    FORM 10-K
                               ------------------

 [x]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934 For the fiscal year ended December 31, 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 Identification No.)
Incorporation or Organization)

                              315 Park Avenue South
                            New York, New York 10010
                                 (212) 460-1900
 -------------------------------------------------------------------------------
   (Address, Including Zip Code, and Telephone Number, Including Area Code, of
                   Registrant's Principal Executive Offices)

           Securities registered pursuant to Section 12(b) of the Act:

                                                       Name of Each Exchange
              Title of Each Class                      on Which Registered
- --------------------------------------------------------------------------------
COMMON SHARES, PAR VALUE $1 PER SHARE               NEW YORK STOCK EXCHANGE
                                                    PACIFIC EXCHANGE, INC.

7-3/4% SENIOR NOTES DUE AUGUST 15, 2013             NEW YORK STOCK EXCHANGE

8-1/4% SENIOR SUBORDINATED NOTES DUE                NEW YORK STOCK EXCHANGE
  JUNE 15, 2005

7-7/8% SENIOR SUBORDINATED NOTES DUE                NEW YORK STOCK EXCHANGE
  OCTOBER 15, 2006

           Securities registered pursuant to Section 12(g) of the Act:
                                      None.
 -------------------------------------------------------------------------------
                                (Title of Class)

 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 [_]

 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
 of Regulation S-K is not contained herein, and will not be contained, to the
 best of registrant's knowledge, in definitive proxy or information statement
 incorporated by reference in Part III of this Form 10-K or any amendment to
 this Form 10-K [x].

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [x] No [_]

Aggregate market value of the voting stock of the registrant held by
non-affiliates of the registrant at June 30, 2002 (computed by reference to the
last reported closing sale price of the Common Shares on the New York Stock
Exchange on such date): $1,114,008,000.

 On March 25, 2003, the registrant had outstanding 59,617,292 Common Shares.

                      DOCUMENTS INCORPORATED BY REFERENCE:

 Certain portions of the registrant's definitive proxy statement pursuant to
 Regulation 14A of the Securities Exchange Act of 1934 in connection with the
 2003 annual meeting of shareholders of the registrant are incorporated by
 reference into Part III of this Report.
 ===============================================================================
                                       1
<PAGE>


                                     PART I





Item 1.    Business.
- ------     --------


                                   THE COMPANY


     The Company is a diversified holding company engaged in a variety of
businesses, including telecommunications, banking and lending, manufacturing,
real estate activities, winery operations, development of a copper mine and
property and casualty reinsurance. The Company concentrates on return on
investment and cash flow to build long-term shareholder value, rather than
emphasizing volume or market share. Additionally, the Company continuously
evaluates the retention and disposition of its existing operations and
investigates possible acquisitions of new businesses in order to maximize
shareholder value. In identifying possible acquisitions, the Company tends to
seek assets and companies that are troubled or out of favor and, as a result,
are selling substantially below the values the Company believes to be present.

     Shareholders' equity has grown from a deficit of $7,700,000 at December 31,
1978 (prior to the acquisition of a controlling interest in the Company by the
Company's Chairman and President), to a positive shareholders' equity of
$1,534,525,000 at December 31, 2002, equal to a book value per common share of
the Company (a "common share") of negative $.11 at December 31, 1978 and $25.74
at December 31, 2002. The December 31, 2002 shareholders' equity and book value
per share amounts have been reduced by the $811,900,000 special cash dividend
paid in 1999.

     In December 2002, the Company completed a private placement of
approximately $150,000,000 of equity securities, based on a common share price
of $35.25, to mutual fund clients of Franklin Mutual Advisers, LLC, including
the funds comprising the Franklin Mutual Series Funds. The private placement
included 2,907,599 common shares and newly authorized Series A Non-Voting
Convertible Preferred Stock, that were converted into 1,347,720 common shares in
March 2003. The securities sold in the private placement represent 7.1% of the
Company's outstanding common shares at March 25, 2003.

     In the fourth quarter of 2002, the Company completed the acquisition of 44%
of the outstanding common stock of WilTel Communications Group, Inc. ("WilTel")
for an aggregate purchase price of $330,000,000, excluding expenses. The WilTel
stock was acquired by the Company under the chapter 11 restructuring plan of
Williams Communications Group, Inc. In October 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. Together, these transactions resulted in the Company
acquiring 47.4% of the outstanding common stock of WilTel for an aggregate
purchase price of $350,400,000, excluding expenses. WilTel is a publicly traded
telecommunications company that owns or leases and operates a nationwide
inter-city fiber-optic network, extended locally and globally, to provide
Internet, data, voice and video services. WilTel's common stock is traded on the
Nasdaq National Market (Symbol: WTEL).

     During 2002, the Internal Revenue Service completed the audit of the
Company's consolidated federal income tax returns for the years 1996 through
1999, without any material tax payment required from the Company. As a result of
this favorable resolution of various federal income tax contingencies, the
income tax provision for 2002 reflects a benefit of approximately $120,000,000.
                                       2
<PAGE>

     The Company's banking and lending operations have historically consisted of
making instalment loans to niche markets primarily funded by customer banking
deposits insured by the Federal Deposit Insurance Corporation (the "FDIC").
However, as a result of increased loss experience and declining profitability in
its automobile lending program, the segment's largest program, the Company
stopped originating new automobile loans in September 2001. In 2003, the Company
ceased originating all other lending programs. The Company is considering its
alternatives for its banking and lending operations, which could include selling
or liquidating some or all of its loan portfolios, and outsourcing certain
functions.

     The Company's manufacturing operations manufacture and market proprietary
lightweight plastic netting used for a variety of purposes including, among
other things, construction, agriculture, packaging, carpet padding, filtration
and consumer products.

     The Company's domestic real estate operations include a mixture of
commercial properties, residential land development projects and other
unimproved land, all in various stages of development and all available for
sale. During 2002, the Company sold its interest in Compagnie Fonciere FIDEI
("Fidei"), its foreign real estate subsidiary, for total proceeds of 70,400,000
Euros ($66,200,000) and recorded an increase to shareholders' equity of
$12,100,000.

     The Company's winery operations consist of Pine Ridge Winery in Napa
Valley, California and Archery Summit in the Willamette Valley of Oregon. These
wineries primarily produce and sell wines in the luxury segment of the premium
table wine market.

     The Company's copper mine development operations consist of its 72.8%
interest in MK Gold Company ("MK Gold"), a publicly traded company listed on the
NASD OTC Bulletin Board (Symbol: MKAU).

     The Company's property and casualty reinsurance business is conducted
through its 25% common stock interest in Olympus Re Holdings, Ltd. ("Olympus"),
a Bermuda reinsurance company primarily engaged in the property excess, marine
and aviation reinsurance business.

     As used herein, the term "Company" refers to Leucadia National Corporation,
a New York corporation organized in 1968, and its subsidiaries, except as the
context otherwise may require.

Investor Information

     The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"). Accordingly, the Company files
periodic reports, proxy statements and other information with the Securities and
Exchange Commission (the "SEC"). Such reports, proxy statements and other
information may be obtained by visiting the Public Reference Room of the SEC at
450 Fifth Street, NW, Washington, D.C. 20549 or by calling the SEC at
1-800-SEC-0330. In addition, the SEC maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding the Company and other issuers that file
electronically. In addition, material filed by the Company can be inspected at
the offices of the New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street,
New York, NY 10005 and the Pacific Exchange, Inc., 115 Sansome Street, San
Francisco, CA 94104, on which the Company's common shares are listed.

     The Company does not maintain a website. The Company will provide without
charge upon request copies of its annual report on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K and amendments to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. Requests
for such copies should be directed to: Leucadia National Corporation, 315 Park
Avenue South, New York, NY 10010 (telephone number (212) 460-1900), Attention:
Corporate Secretary.

                                       3
<PAGE>


Financial Information about Segments

     The Company's reportable segments consist of its operating units, which
offer different products and services and are managed separately. These
reportable segments are: banking and lending, manufacturing and domestic real
estate. Banking and lending operations historically made collateralized personal
automobile instalment loans to individuals who have difficulty obtaining credit,
at interest rates above those charged to individuals with good credit histories.
Such loans were primarily funded by deposits insured by the FDIC. Manufacturing
operations manufacture and market proprietary lightweight plastic netting used
for a variety of purposes. The Company's domestic real estate operations consist
of a variety of commercial properties, residential land development projects and
other unimproved land, all in various stages of development and all available
for sale. Other operations primarily consist of winery operations and
development of a copper mine.

     Associated companies include equity interests in entities that the Company
does not control and that are accounted for on the equity method of accounting.
WilTel, a public telecommunications company that owns or leases and operates a
nationwide fiber optic network over which it provides a variety of
telecommunications services is an associated company, as is Olympus, a
Bermuda-based reinsurance company.

     The information in the following table for Corporate assets primarily
consists of investments and cash and cash equivalents. Corporate revenues listed
below primarily consist of investment income and securities gains and losses on
Corporate assets. Corporate assets, revenues, overhead expenses and interest
expense are not allocated to the operating units. The Company has a
manufacturing facility located in Belgium and an interest, through MK Gold, in a
copper deposit in Spain. The Company does not have any other material foreign
operations or investments.


                                       4
<PAGE>


     Certain information concerning the Company's segments for 2002, 2001 and
2000 is presented in the following table. Associated Companies are only
reflected in the table below under Identifiable assets employed. Prior period
amounts have been reclassified to reflect the Company's Foreign Real Estate
segment as a discontinued operation.

<TABLE>
<CAPTION>

                                                                                        2002            2001              2000
                                                                                        ----            ----              ----
                                                                                                    (In millions)

<S>                                                                                       <C>             <C>               <C>
Revenues:
   Banking and Lending                                                               $     95.9        $  122.4         $   108.8
   Manufacturing                                                                           51.0            57.4              65.1
   Domestic Real Estate                                                                    51.3            65.3              83.1
   Other Operations                                                                        48.3            39.3              44.9
   Corporate  (a) (b)                                                                      (4.7)           89.8             191.5
                                                                                     ----------        --------         ---------
       Total consolidated revenues (c)                                               $    241.8       $   374.2         $   493.4
                                                                                     ==========       =========         =========

Income (loss) from continuing operations before income taxes,
  minority expense of trust preferred securities and equity in income
  (losses) of associated companies:
   Banking and Lending                                                               $      1.9       $    (6.1)        $    11.0
   Manufacturing                                                                            3.1             7.8              11.3
   Domestic Real Estate                                                                    16.7            30.4              58.8
   Other Operations                                                                        11.7             8.2               5.2
   Corporate (a) (b)                                                                      (74.9)           32.8             115.0
                                                                                     ----------       ---------         ---------
       Total consolidated income (loss) from continuing operations
         before income taxes, minority expense of trust preferred
         securities and equity in income (losses) of associated
         companies (c)                                                               $    (41.5)      $    73.1         $   201.3
                                                                                     ==========       =========         =========

Identifiable assets employed:
   Banking and Lending                                                                $   481.5       $   595.7         $   664.2
   Manufacturing                                                                           51.5            59.3              63.4
   Domestic Real Estate                                                                   106.8           176.4             218.1
   Other Operations                                                                       193.7           171.2             177.1
   Investment in Associated Companies:
     WilTel                                                                               340.6             --               --
     Other Associated Companies                                                           397.1           358.8             192.5
   Net Assets of Discontinued Operations                                                   --              44.0             156.9
   Corporate                                                                              970.6         1,063.7             945.6
                                                                                      ---------       ---------         ---------
       Total consolidated assets                                                      $ 2,541.8       $ 2,469.1         $ 2,417.8
                                                                                      =========       =========         =========
</TABLE>

(a)      For 2002, includes a provision of $37,100,000 to write down investments
         in certain available for sale securities and an equity investment in a
         non-public fund. The write down of the available for sale securities
         resulted from a decline in market value determined to be other than
         temporary.

(b)      For 2000, includes, among other items, pre-tax securities gains on sale
         of Fidelity National Financial, Inc. ($90,900,000) and Jordan
         Telecommunication Products, Inc., ($24,800,000), as described in Note
         12 to the Consolidated Financial Statements.

(c)      Prior period amounts have been reclassified to exclude equity in income
         (losses) of associated companies from these captions.

         At December 31, 2002, the Company and its consolidated subsidiaries had
785 full-time employees.

                                       5
<PAGE>

                               TELECOMMUNICATIONS

     In December 2002, the Company completed the acquisition of 44% of the
outstanding common stock of WilTel, for an aggregate purchase price, excluding
expenses, of $330,000,000. The WilTel stock was acquired by the Company under
the chapter 11 restructuring plan of Williams Communications Group, Inc.
("WCG"), the predecessor of WilTel pursuant to a claims purchase agreement with
The Williams Companies, Inc. and an investment agreement with WCG. In October
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. Together, these
transactions resulted in the Company acquiring 47.4% of the outstanding common
stock of WilTel. 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.

     WilTel owns or leases and operates a nationwide inter-city fiber-optic
network, extended locally and globally. WilTel has two reportable operating
segments, Network and Vyvx. Network provides Internet, data, voice, and video
services to companies that use high capacity communications in their businesses.
These companies include regional Bell operating companies, cable television
companies, Internet service providers, application service providers, data
storage service providers, managed network service providers, digital subscriber
line service providers, long distance carriers, local service providers,
utilities, governmental entities, educational institutions, international
carriers, and other companies who desire high-speed communications services.
WilTel also offers rights of use in dark fiber, which is fiber that it installs
but for which it does not provide communications transmission services. Network
has built networks and entered into strategic relationships to provide services
in the United States with connections to Asia, Australia, New Zealand, Canada,
Mexico, and Europe.

     Vyvx transmits media for its customers regardless of format (analog or
digital), method (fiber-optics or satellite), or geographic reach (domestic or
international). In 1990, Vyvx provided the first video transmission over a
terrestrial network and carried the first of fourteen consecutive Super Bowls
for the NFL and its broadcasters. Vyvx provides quality, reliable, network-based
methods for aggregating, managing, and distributing content for content owners
and rights holders. Vyvx also offers a fully integrated hybrid
satellite/terrestrial service to support dedicated and occasional requirements
for the distribution of live content for customers like broadcasters CNN and Fox
in their coverage of breaking news events in remote locations.

     WilTel's global network is used to provide services to the customers of
both Network and Vyvx and includes ownership interests in or rights to use:

     -    nearly 30,000 miles of fiber optic cable, of which 28,554 is currently
          in service;
     -    local fiber optic cable networks within 20 of the largest U.S. cities;
     -    120 network centers located in 107 U.S. cities;
     -    operational border crossings between the U.S. and Mexico in California
          and Texas, and between the U.S. and Canada in Washington, Michigan,
          and New York; and
     -    capacity on five major undersea cable systems connecting the
          continental U.S. with Europe, Asia, Australia, New Zealand, and
          Hawaii.

     The telecommunications industry has experienced a great deal of instability
during the past several years. During the 1990s, forecasts of very high levels
of future demand brought a significant number of new entrants and new capital
investments into the industry. However, many industry participants have gone
through bankruptcy and those forecasts have not materialized. Telecommunications
capacity now far exceeds actual demand, and the resulting marketplace is
characterized by fierce price competition as traditional and next generation
carriers compete to secure market share. Resulting lower prices have eroded
margins and have kept many carriers--including WilTel--from attaining positive
cash flow from operations. Many network providers, and their customers, have and
are undergoing reorganizations through bankruptcy, contemplating bankruptcy, or
experiencing significant operating losses while consuming much of their
remaining liquidity.

                                       6
<PAGE>

     WilTel does not know if and when the current state of aggressive pricing
will end, or whether the current instability in the sector will lead to industry
consolidation. If industry consolidation does occur, it would not necessarily
benefit WilTel or assure that pricing rationality will return to the industry.
However, if consolidation does not occur and new investment capital continues to
flow into telecommunications carriers, pricing pressures could continue and
supply may continue to outpace demand for the foreseeable future. While WilTel
will examine opportunities to acquire other carriers or large blocks of business
if such opportunities are presented to WilTel, even if such transactions could
be consummated at prices deemed to be attractive, no assurance can be given that
WilTel could successfully complete such acquisitions or that WilTel could obtain
the necessary capital or lender approvals to do so.

     WilTel's current focus is to retain its existing business by providing a
high quality of service, to obtain new business if it can be done on a
profitable basis, to reduce its operating expenses to the greatest extent
possible, and to conserve liquidity. At December 31, 2002, WilTel had
$291,300,000 of cash and cash equivalents to meet its cash requirements, and
believes that it has sufficient liquidity to meet its needs through 2004. WilTel
has $375,000,000 of senior debt outstanding under its credit facility, of which
approximately $157,000,000 matures during 2005. Unless WilTel is able to
generate significant cash flows from operations through revenue growth, expense
reductions or some combination of both, it is likely that new capital will have
to be raised to meet its maturing debt obligations in 2005.

     Upon its emergence from bankruptcy proceedings, WilTel adopted fresh start
accounting, resulting in a new reporting entity for accounting purposes as of
October 31, 2002. Accordingly, WilTel's consolidated financial statements for
periods prior to emergence from bankruptcy are not comparable and not combined
with its consolidated financial statements subsequent to emergence. For the two
months ended December 31, 2002, after its emergence from bankruptcy, WilTel
generated revenues of approximately $191,700,000, of which approximately
$168,600,000 were generated from the network segment and approximately
$23,100,000 were generated by Vyvx. For this period, approximately 37% of
WilTel's consolidated revenues were attributed to its single largest customer,
SBC Communications Inc. WilTel's net loss for the two months ended December 31,
2002 was $61,000,000.

     For the period from acquisition through December 31, 2002, the Company
recorded $13,400,000 of pre-tax losses from its investment in WilTel under the
equity method of accounting. As a result of its emergence from bankruptcy
proceedings and its continued restructuring of its operations, WilTel has
reduced its headcount, operating costs and interest expense. However, despite
these cost reductions, the Company believes that WilTel will continue to report
losses from continuing operations for the foreseeable future. Even if WilTel is
able to generate breakeven cash flow from operations, substantial depreciation
charges will still result in losses from continuing operations over the next
several years. The Company will record its 47.4% share of these losses in its
statements of operations, and the recognition of these losses could reduce the
carrying amount of its investment in WilTel to zero. The Company will not record
any further losses in WilTel if and when its investment is reduced to zero,
unless the Company has guaranteed any of WilTel's obligations, or otherwise has
committed or intends to commit to provide further financial support. The Company
has not provided any such guarantees or commitments.

     WilTel is subject to federal, state, local, and foreign laws, regulations,
and orders that affect the rates, terms, and conditions of certain of its
service offerings, its costs, and other aspects of its operations. WilTel's
primary federal regulator is the Federal Communications Commission ("FCC").
Regulation of the telecommunications industry varies from state to state and
from country to country, and it changes regularly (sometimes in unpredictable
ways) in response to regulatory proceedings, judicial rulings, technological
developments, competition, and government policies. WilTel's operations also are
subject to a variety of environmental, building, safety, health, and other
governmental laws and regulations. WilTel cannot predict what impact, if any,
regulatory changes may have on its business or results of operations, nor can it
guarantee that domestic or international regulatory authorities will not raise
material issues regarding its compliance with applicable regulations.

                                       7
<PAGE>

                               BANKING AND LENDING

     The Company's banking and lending operations principally are conducted
through American Investment Bank, N.A. ("AIB"), a national bank subsidiary, and
American Investment Financial ("AIF"), an industrial loan corporation. AIB and
AIF take money market and other non-demand deposits that are eligible for
insurance provided by the FDIC. AIB and AIF had aggregate deposits of
$392,900,000 and $476,500,000 at December 31, 2002 and 2001, respectively. AIB
and AIF currently have three deposit-taking branches in the Salt Lake City area,
which have generated approximately three-quarters of their deposit balances.
Various brokers generated the remainder of the Company's deposits. Deposits have
primarily been used to fund consumer instalment loans.

     The Company's consolidated banking and lending operations had outstanding
loans (net of unearned finance charges) of $373,600,000 and $521,200,000 at
December 31, 2002 and 2001, respectively. At December 31, 2002, 55% were loans
to individuals generally collateralized by automobiles; 38% were loans to
consumers, substantially all of which were collateralized by real or personal
property; 4% were loans to small businesses; and 3% were unsecured loans.

     Historically, collateralized personal automobile instalment loans were
primarily made through automobile dealerships to individuals who have difficulty
obtaining credit, at interest rates above those charged to individuals with good
credit histories. These loans were made to consumers principally to purchase
used, moderately priced automobiles. In September 2001, the Company decided to
stop originating subprime automobile loans as a result of increasing loss
experience and the increasingly difficult competitive environment. The Company
continues to service and closely monitor these loans, and takes prompt
possession of the collateral in the event of a default. During 2001 and 2000,
the Company generated $434,700,000 of these loans, which typically had an
initial loan balance of $12,200, an average contractual maturity of 58 months
and an anticipated average life of 26 months.

     The Company's remaining consumer lending programs have primarily consisted
of marine, recreational vehicle, motorcycle and elective surgery loans. Due to
current economic conditions, portfolio performance and the relatively small size
of these loan portfolios and target markets, in January 2003 the Company stopped
originating all consumer loans. The Company is considering alternatives for its
banking and lending operations, which could include selling or liquidating some
or all of its loan portfolios, and outsourcing certain functions. The Company
anticipates that it will close its remaining satellite branch in 2003, and
reduce its operating and overhead expenses.

     It is the Company's policy to charge to income an allowance for losses
which, based upon management's analysis of numerous factors, including current
economic trends, aging of the loan portfolio, historical loss experience and
collateral value, is deemed adequate to cover probable losses on outstanding
loans. At December 31, 2002, the allowance for loan losses for the Company's
entire loan portfolio was $31,800,000 or 8.5% of the net outstanding loans,
compared to $35,700,000 or 6.8% of net outstanding loans at December 31, 2001.

     The Company's policy is to charge-off an account when the property securing
the delinquent loan is repossessed, which generally occurs when the loan is 60
days delinquent. Otherwise, the Company charges off the account due to the
customer's bankruptcy and in no event later than the month in which it becomes
120 days delinquent. The charge-off represents the difference between the net
realizable value of the property and the amount of the delinquent loan,
including accrued interest.


                                       8
<PAGE>


     Certain information with respect to the Company's banking and lending
segment is as follows for the years ended December 31, 2002, 2001 and 2000
(dollars in thousands):
<TABLE>
<CAPTION>

                                                             2002                2001              2000
                                                             ----                ----              ----
<S>                                                           <C>                 <C>                <C>

Average loans outstanding                                 $440,810            $545,036            $423,030
Interest income earned on loans                           $ 86,018            $111,849            $ 87,865
Average loan yield                                           19.5%               20.5%               20.8%
Average deposits outstanding                              $454,497            $536,020            $422,607
Interest expense on non-demand deposits                   $ 18,035            $ 31,499            $ 26,421
Average rate on non-demand deposits                           3.9%                5.9%                6.3%
Net yield on interest-bearing assets                         11.5%               13.3%               13.1%

</TABLE>

     Investments held by the banking and lending segment are primarily
short-term bonds and notes of the United States Government and its agencies.

     The Company's principal banking and lending operations are subject to
detailed supervision by state authorities, as well as federal regulation
pursuant to the Federal Consumer Credit Protection Act, the Truth in Lending
Act, the Equal Credit Opportunity Act, the Right to Financial Privacy Act, the
Community Reinvestment Act, the Fair Credit Reporting Act and regulations
promulgated by the Federal Trade Commission and the Board of Governors of the
Federal Reserve System. The Company's banking operations are subject to federal
and state regulation and supervision by, among others, the Office of the
Comptroller of the Currency (the "OCC"), the FDIC and the State of Utah. AIB's
primary federal regulator is the OCC, while the primary federal regulator for
AIF is the FDIC.

     As previously stated, AIB stopped originating new sub-prime automobile
loans in September 2001, and both AIB and AIF ceased originating all other
consumer loans in January 2003. The FDIC and OCC have supported these actions
taken with respect to the sub-prime portfolio. However, effective February 2003,
AIB entered into a formal agreement with the OCC, agreeing to develop a written
strategic plan subject to prior OCC approval for the continued operations of
AIB, to continue to maintain certain risk-weighted capital levels, to obtain
prior approval before paying any dividends, to provide certain monthly reports
and to comply with certain other criteria. AIB will also be unable to accept
brokered deposits during the period the agreement remains in effect. In the
event AIB fails to comply with the agreement, the OCC would have the authority
to assert formal charges and seek other statutory remedies and AIB may also be
subject to civil monetary penalties. AIB is complying with the agreement and,
given that it has ceased all lending activities, the agreement is not expected
to have a significant impact on its operations. However, no assurance can be
given that other regulatory actions will not be taken.

     The Competitive Equality Banking Act of 1987 ("CEBA") places certain
restrictions on the operations of AIB and restricts further acquisitions of
banks and savings institutions by the Company. CEBA does not restrict AIF as
currently operated.

                                       9
<PAGE>

                                  MANUFACTURING

     Through its plastics division, the Company manufactures and markets
proprietary lightweight plastic netting used for a variety of purposes
including, among other things, construction, agriculture, packaging, carpet
padding, filtration and consumer products. The products are primarily used to
add strength to other materials or act as barriers, such as warning fences and
crop protection from birds. This division is a market leader in netting products
used in carpet cushion, turf reinforcement, erosion control, nonwoven
reinforcement and crop protection. It markets its products both domestically and
internationally, with approximately 16% of its 2002 revenues generated by
customers in Europe, Latin America, Japan and Australia. Products are sold
primarily through an employee sales force, located in the United States and
Europe. Manufacturing revenues were $50,700,000, $53,700,000 and $65,000,000 for
the years ended December 31, 2002, 2001 and 2000, respectively.

     New product development focuses on niches where the division's proprietary
technology and expertise can lead to sustainable competitive economic
advantages. Historically, this targeted product development generally has been
carried out in partnership with a prospective customer or industry where the
value of the product has been recognized. The plastics division has also begun
focusing on developing products for which it does not yet have a customer. Over
the last several years, the plastics division has spent approximately 2% to 4%
of annual sales on the development and marketing of new products and new
applications of existing products.

     Primarily as a result of a general downturn in the economy, revenues for
the plastics division declined in each of the last two years and the division
currently has excess manufacturing capacity. The plastics division is attempting
to develop new products, applications and markets to replace its lost business
and utilize its excess capacity. In addition, the Company has been focusing on
managing costs and improving service levels by reducing lead times.

     The plastics division is subject to domestic and international competition,
generally on the basis of price, service and quality. Additionally, certain
products are dependent on cyclical industries, including the construction
industry. The Company holds patents on certain improvements to the basic
manufacturing processes and on applications thereof. The Company believes that
the expiration of these patents, individually or in the aggregate, is unlikely
to have a material effect on the plastics division.

                              DOMESTIC REAL ESTATE

     At December 31, 2002, the Company's domestic real estate assets had a book
value of $85,200,000. The real estate operations include a mixture of commercial
properties, residential land development projects and other unimproved land, all
in various stages of development and all available for sale. The Company's
largest domestic real estate investment is a fully-renovated 719-room hotel
located on Waikiki Beach in Hawaii. The Company also owns a shopping center on
Long Island, New York that has 60,000 square feet of retail space. During the
fourth quarter of 2002, the Company sold one of its real estate subsidiaries,
CDS Holding Corporation ("CDS"), to HomeFed Corporation ("HomeFed"),
approximately 9.5% and 8.8% of which is owned by the Company's Chairman and
President, respectively. The purchase price for this transaction was
$25,000,000, consisting of $1,000,000 in cash and 24,742,268 shares of HomeFed's
common stock, which represents approximately 30.3% of the outstanding HomeFed
stock. CDS's principal asset is the master-planned community located in San
Diego County, California known as San Elijo Hills. Since 1998, HomeFed has
served as the development manager for this project, for which it was entitled to
certain fees based upon the project's revenues and a success fee, which
represented a substantial portion of the project's future cash flows. HomeFed is
engaged, directly and through subsidiaries, in the investment in and development
of residential real estate projects in the State of California. HomeFed is a
publicly traded company listed on the NASD OTC Bulletin Board (Symbol: HFDC.OB).

                                OTHER OPERATIONS

     The Company owns two wineries, Pine Ridge Winery in Napa Valley, California
and Archery Summit in the Willamette Valley of Oregon. Pine Ridge, which was
acquired in 1991, has been conducting operations since 1978, while the Company
started Archery Summit in 1993. These wineries primarily produce and sell wines
in the luxury segment of the premium table wine market. During 2002, the
wineries sold approximately 77,700 9-liter equivalent cases of wine generating
wine revenues of $15,700,000. Approximately 8% of the revenues of the wineries
and 24% of case sales were derived from a wine that is not in the luxury segment
and is made from purchased grapes. Since acquisition, the Company's investment
in winery operations has grown, principally to fund the Company's acquisition of
land for vineyard development and to increase production capacity and storage
facilities at both of the wineries. It can take up to five years for a new
vineyard property to reach full production and, depending upon the varietal
produced, up to three years after grape harvest before the wine can be sold. For
the 2002 harvest, approximately 94% of the Company's vineyards were producing
grapes and the balance was under development. At December 31, 2002, the
Company's combined investment in these wineries was $60,900,000.

                                       10
<PAGE>

     The Company's 72.8% interest in MK Gold, a company that is traded on the
NASD OTC Bulletin Board, had a net carrying value of $49,200,000 at December 31,
2002. MK Gold's subsidiary, Cobre Las Cruces, S.A., a Spanish company, holds the
exploration and mineral rights to the Las Cruces copper deposit in the Pyrite
Belt of Spain. An independent feasibility study of this project was completed by
Bechtel International, Inc. in 2001. This study is based on proven and probable
reserves of 15,800,000 metric tonnes grading 5.94% copper overlain by a
gold-bearing gossan (which has not been evaluated) and by 150 meters of
unconsolidated overburden. Independent Mining Consultants, Inc. performed the
reserve calculations used in the feasibility study. Based on the feasibility
study, cash operating costs are estimated to average $.33 per pound of copper
and the estimated capital cost to bring the mine into production is
approximately $290,000,000, excluding interest and other financing costs. These
estimates are subject to a number of risks and uncertainties, including
fluctuations in the value of the euro relative to the U.S. dollar. Since the
feasibility study was completed, the value of the euro has appreciated against
the U.S. dollar, which if sustained, or if it appreciates further, will increase
the actual operating and capital costs.

     Mining will be subject to obtaining required permits, obtaining both debt
and equity financing for the project, engineering and construction. The market
price of copper has been depressed over the past couple of years, reflecting
generally weak global economic conditions. The amount of financing that can be
obtained for the project and its related cost will be significantly affected by
the assessment of potential lenders of the current and expected future market
price of copper. Environmental approval of the project has been obtained from
the Spanish and Andalusian government agencies. Mining and water concession
applications have been submitted to the applicable governmental agencies, but
approval has not yet been received. MK Gold currently anticipates that these
operating permits will be received in the second half of 2003, that final
design, construction and mine development will begin in 2004 and copper
production will begin in 2006. Although MK Gold believes the necessary
permitting and financing will be obtained, no assurances can be given that they
will be successful. Further, there may be other political and economic
circumstances that could prevent or delay development of Las Cruces.

                                OTHER INVESTMENTS

     In December 2002, the Company entered into an agreement to purchase certain
debt and equity securities of WebLink Wireless, Inc. ("WebLink"), for an
aggregate purchase price of $19,000,000. Pursuant to the agreement, the Company
acquired outstanding secured notes of WebLink with a principal amount of
$36,500,000 (representing 91% of the total outstanding debt) and, upon receipt
of approval from the FCC, will acquire approximately 80% of the outstanding
common stock of WebLink. WebLink, a privately held company, is in the wireless
messaging industry, providing wireless data services and traditional paging
services.

     The Company has an investment in Berkadia LLC, an entity jointly owned by
the Company and Berkshire Hathaway Inc. ("Berkshire"). In 2001, Berkadia lent
$5,600,000,000 on a senior secured basis to FINOVA Capital Corporation (the
"Berkadia Loan"), the principal operating subsidiary of The FINOVA Group Inc.
("FINOVA"), to facilitate a chapter 11 restructuring of the outstanding debt of
FINOVA and its principal subsidiaries. Berkadia also received newly issued
shares of common stock of FINOVA representing 50% of the stock of FINOVA
outstanding on a fully diluted basis. In 2001, the Company entered into a
ten-year management agreement with FINOVA, for which it receives an $8,000,000
annual fee that it shares equally with Berkshire. FINOVA is a financial services
holding company that, prior to its filing for bankruptcy, provided a broad range
of financing and capital markets products, primarily to mid-size businesses.
Since its chapter 11 restructuring, FINOVA's business activities have been
limited to the orderly collection and liquidation of its assets and FINOVA has
not engaged in any new lending activities.

                                       11
<PAGE>

     Berkadia financed the Berkadia Loan with bank financing that is guaranteed,
90% by Berkshire and 10% by the Company (with the Company's guarantee being
secondarily guaranteed by Berkshire). As of March 7, 2003, principal payments
have reduced the outstanding amount of Leucadia's guarantee to $152,500,000. All
income related to the Berkadia Loan, after payment of financing costs, is shared
90% to Berkshire and 10% to the Company.

     At December 31, 2002, the book value of the Company's equity investment in
Berkadia was negative $72,100,000. The negative carrying amount principally
results from Berkadia's distribution of loan fees received and the Company's
recognition in 2001 of its share of FINOVA's losses under the equity method of
accounting. This negative carrying amount is being amortized into income over
the term of the Berkadia Loan, and effectively represents an unamortized
discount on the Berkadia Loan. For the year ended December 31, 2002, the Company
recorded $65,600,000 of pre-tax income from this investment, of which
$59,000,000 related to the amortization of the discount on the Berkadia loan.

     At December 31, 2002, the book value of the Company's investment in Olympus
was $155,700,000. For the year ended December 31, 2002, the Company recorded
$24,100,000 of pre-tax income from this investment under the equity method of
accounting. Olympus was formed in 2001 to take advantage of the lack of capacity
and favorable pricing in the reinsurance market. It has entered into a quota
share reinsurance agreement with Folksamerica Reinsurance Company, an affiliate
of White Mountains Insurance Group, Ltd. ("WMIG"), and will also seek to obtain
reinsurance business from other sources as well. When the market opportunity to
underwrite reinsurance business on favorable terms recedes, the by-laws of
Olympus include mechanisms to return its capital to its investors, subject to
Bermuda insurance regulations and other laws restricting the return of capital.

     At December 31, 2002, the book value of the Company's equity investment in
Jefferies Partners Opportunity Fund II, LLC ("JPOF II"), a registered
broker-dealer, was $115,200,000. JPOF II is managed and controlled by Jefferies
& Company, Inc., a full service investment bank to middle market companies. JPOF
II invests in high yield securities, special situation investments and
distressed securities and provides trading services to its customers and
clients. For the year ended December 31, 2002, the Company recorded $15,200,000
of pre-tax income from this investment under the equity method of accounting;
this amount was distributed to the Company in February 2003.

     The Company owns 375,000 common shares that represent approximately 4.5% of
WMIG. WMIG is a publicly traded, Bermuda domiciled financial services holding
company, principally engaged through its subsidiaries and affiliates in property
and casualty insurance and reinsurance. At December 31, 2002, the Company's
investment had a market value of $121,100,000.

     The Company owns approximately 36% of the common stock of Light & Power
Holdings Ltd., the parent company of The Barbados Light and Power Company
Limited, the primary generator and distributor of electricity in Barbados. As of
December 31, 2002, the Company's investment of $12,100,000 was accounted for on
the cost method of accounting, due to currency exchange restrictions and stock
transfer restrictions.

     The Company owns equity interests representing more than 5% of the
outstanding capital stock of each of the following domestic public companies at
March 25, 2003: AmeriKing, Inc. ("AmeriKing") (6.8%), Carmike Cinemas, Inc.
("Carmike") (11.1%), GFSI Holdings, Inc. ("GFSI") (6.9%), HomeFed (30.3%),
Jackson Products, Inc. ("Jackson") (8.8%), Jordan Industries, Inc. ("JII")
(10.1%), and WilTel (47.4%).

     Since 1982, a subsidiary of the Company has had a partnership interest in
The Jordan Company LLC and Jordan/Zalaznick Capital Company, entities that have
specialized in structuring leveraged buyouts in which the owners are given the
opportunity to become equity participants. However, in the fourth quarter of
2002, members of The Jordan Company raised a new $1.5 billion fund through which
they will conduct their investment activities. As a result, the Company's
partnership participation arrangement with The Jordan Company ended. The Company
has committed to invest $10,000,000 in the general partner of the new fund, and
will retain the investments obtained through its prior partnership interest.
These investments include AmeriKing, Carmike, GFSI, Jackson, JII, JZ Equity
Partners PLC (a British company traded on the London Stock Exchange in which the
Company holds a 6.5% equity interest), and a total of 34 other private
companies. These investments are carried in the Company's consolidated financial
statements at $62,000,000, of which $43,700,000 relates to public companies
carried at market value.

                                       12
<PAGE>

     For further information about the Company's business, including the
Company's investments, reference is made to Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of this Report and
Notes to Consolidated Financial Statements.

Item 2.  Properties.
- ------   ----------

     Through its various subsidiaries, the Company owns and utilizes in its
operations offices in Salt Lake City, Utah used for corporate and banking and
lending activities (totaling approximately 80,200 square feet). Subsidiaries of
the Company own facilities primarily used for manufacturing located in Georgia
and Genk, Belgium (totaling approximately 410,300 square feet) and facilities
and land in California and Oregon used for winery operations (totaling
approximately 107,100 square feet and 457 acres, respectively).

     The Company and its subsidiaries lease numerous manufacturing, warehousing,
office and headquarters facilities. The facilities vary in size and have leases
expiring at various times, subject, in certain instances, to renewal options.
See Notes to Consolidated Financial Statements.

Item 3.  Legal Proceedings.
- ------   -----------------

     The Company and its subsidiaries are parties to legal proceedings that are
considered to be either ordinary, routine litigation incidental to their
business or not material to the Company's consolidated financial position. The
Company does not believe that any of the foregoing actions will have a material
adverse effect on its consolidated financial position, consolidated results of
operations or liquidity.

Item 10.  Executive Officers of the Registrant.
- -------   ------------------------------------

     All executive officers of the Company are elected at the organizational
meeting of the Board of Directors of the Company held annually and serve at the
pleasure of the Board of Directors. As of March 25, 2003, the executive officers
of the Company, their ages, the positions held by them and the periods during
which they have served in such positions were as follows:


<TABLE>
<CAPTION>


Name                                Age              Position with Leucadia         Office Held Since
- ----                                ---              ----------------------         -----------------
<S>                                  <C>                     <C>                        <C>
Ian M. Cumming                       62              Chairman of the Board          June 1978
Joseph S. Steinberg                  59              President                      January 1979
Thomas E. Mara                       57              Executive Vice President       May 1980;
                                                        and Treasurer                  January 1993
Joseph A. Orlando                    47              Vice President and             January 1994;
                                                        Chief Financial Officer        April 1996
Barbara L. Lowenthal                 48              Vice President and             April 1996
                                                        Comptroller
Mark Hornstein                       55              Vice President                 July 1983
H.E. Scruggs                         46              Vice President                 August 2002

</TABLE>

     Mr. Cumming has served as a director and Chairman of the Board of the
Company since June 1978 and as Chairman of the Board of FINOVA since August
2001. In addition, he has served as a director of Allcity since February 1988,
MK Gold since June 1995 and WilTel since October 2002. Mr. Cumming has also been
a director of Skywest, Inc., a Utah-based regional air carrier, since June 1986,
a director of HomeFed since May 1999 and a director of Carmike since January
2002.

                                       13
<PAGE>

     Mr. Steinberg has served as a director of the Company since December 1978
and as President of the Company since January 1979. In addition, he has served
as a director of Allcity since February 1988, MK Gold since June 1995, JII since
June 1988, HomeFed since August 1998, FINOVA since August 2001, WMIG since June
2001 and WilTel since October 2002.

     Mr. Mara joined the Company in April 1977 and was elected Vice President of
the Company in May 1977. He has served as Executive Vice President of the
Company since May 1980 and as Treasurer of the Company since January 1993. In
addition, he has served as a director of Allcity since October 1994, MK Gold
since February 2000 and FINOVA since September 2002.

     Mr. Orlando, a certified public accountant, has served as Chief Financial
Officer of the Company since April 1996 and as Vice President of the Company
since January 1994. In addition, he has served as a director of Allcity since
October 1998.

     Ms. Lowenthal, a certified public accountant, has served as Vice President
and Comptroller of the Company since April 1996.

     Mr. Hornstein joined the Company as Vice President in July 1983.

     Mr. Scruggs joined the Company in 1995, served as Vice President from March
2000 through December 2001, and from August 2002 until the present. Mr. Scruggs
has been Chairman of AIB since 1997, Chairman and President of the Empire Group
since October 2000, Chairman of Conwed Plastics since January 2000 and a Senior
Vice President of WilTel since October 2002. In addition, he has served as a
director of MK Gold since March 2001.


                                       14
<PAGE>



                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.
- ------   ---------------------------------------------------------------------

     The common shares of the Company are traded on the New York Stock Exchange
and Pacific Exchange, Inc. under the symbol LUK. The following table sets forth,
for the calendar periods indicated, the high and low sales price per common
share on the consolidated transaction reporting system, as reported by the
Bloomberg Professional Service provided by Bloomberg L.P.
<TABLE>
<CAPTION>

                                                                         Common Share
                                                                         ------------
                                                                  High                   Low
                                                                  ----                   ---
          <S>                                                     <C>                     <C>
         2001
         First Quarter                                          $35.70                 $30.50
         Second Quarter                                          34.90                  30.58
         Third Quarter                                           33.65                  28.25
         Fourth Quarter                                          31.96                  26.31

         2002
         First Quarter                                          $36.04                 $28.00
         Second Quarter                                          38.16                  30.95
         Third Quarter                                           36.37                  27.62
         Fourth Quarter                                          40.27                  32.85

         2003
         First Quarter (through March 25, 2003)                 $38.60                 $32.59

</TABLE>

     As of March 25, 2003, there were approximately 2,976 record holders of the
common shares.

     In 2002 and 2001, the Company paid cash dividends of $.25 per common share.
The payment of dividends in the future is subject to the discretion of the Board
of Directors and will depend upon general business conditions, legal and
contractual restrictions on the payment of dividends and other factors that the
Board of Directors may deem to be relevant.

     In connection with the declaration of dividends or the making of
distributions on, or the purchase, redemption or other acquisition of common
shares, the Company is required to comply with certain restrictions contained in
certain of its debt instruments. The Company's regulated subsidiaries are
restricted in the amount of distributions that can be made to the Company
without regulatory approval. For further information, see Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in this Report.

     The Company and certain of its subsidiaries have or have had tax loss
carryforwards and other tax attributes, the amount and availability of which are
subject to certain qualifications, limitations and uncertainties. In order to
reduce the possibility that certain changes in ownership could impose
limitations on the use of the tax loss carryforwards, the Company's certificate
of incorporation contains provisions which generally restrict the ability of a
person or entity from accumulating five percent or more of the common shares and
the ability of persons or entities now owning five percent or more of the common
shares from acquiring additional common shares. The restrictions will remain in
effect until the earliest of (a) December 31, 2005, (b) the repeal of Section
382 of the Internal Revenue Code (or any comparable successor provision) and (c)
the beginning of a taxable year of the Company to which certain tax benefits may
no longer be carried forward.
                                       15
<PAGE>

     In December 2002, the Company completed a private placement of
approximately $150,000,000 of equity securities, based on a common share price
of $35.25, to mutual fund clients of Franklin Mutual Advisers, LLC, including
the funds comprising the Franklin Mutual Series Funds. The private placement
included 2,907,599 common shares and newly authorized Series A Non-Voting
Convertible Preferred Stock, that were converted into 1,347,720 common shares in
March 2003. The private placement was exempt from registration under Section
4(2) of the Securities Act of 1933 as a transaction not involving a public
offering.

     On May 14, 2002, shareholders approved the Company's reorganization from
New York, its current state of incorporation, to Bermuda. The Company continues
to evaluate the possibility of reorganizing as a Bermuda company and would not
implement the reorganization unless the estimated cost of the reorganization is
acceptable given the anticipated benefits. If the Board of Directors has not
determined to implement the reorganization before the 2005 annual meeting of
shareholders, management will either abandon the reorganization or resubmit it
for shareholder approval at the 2005 annual meeting of shareholders. In
addition, the Board of Directors may determine to abandon the reorganization for
other reasons deemed to be in the Company's best interests and/or the best
interest of its shareholders.

                                       16
<PAGE>




Item 6.  Selected Financial Data.
- ------   -----------------------

     The following selected financial data have been summarized from the
Company's consolidated financial statements and are qualified in their entirety
by reference to, and should be read in conjunction with, such consolidated
financial statements and Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" of this Report. Prior period
amounts have been reclassified to reflect the Company's Foreign Real Estate
segment as a discontinued operation.
<TABLE>
<CAPTION>

                                                                             Year Ended December 31,
                                                                             -----------------------
                                                        2002           2001          2000           1999            1998
                                                        ----           ----          ----           ----            ----
                                                                    (In thousands, except per share amounts)

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

SELECTED INCOME STATEMENT DATA:
Revenues (a)                                          $241,805       $374,161      $493,408         $460,814       $199,070
Expenses                                               283,330        301,079       292,105          226,171        183,968
Income (loss) from continuing operations before
  income taxes, minority expense of trust
  preferred securities and equity in income
  (losses) of associated companies                     (41,525)        73,082       201,303          234,643         15,102
Income from continuing operations before minority
  expense of trust preferred securities and
  equity in income (losses) of associated
  companies (b)                                        103,340         84,423       133,087          195,175         45,814
Minority expense of trust preferred securities,
  net of taxes                                          (5,521)        (5,521)       (5,521)          (5,521)        (8,248)
Equity in income (losses) of associated
  companies, net of taxes                               54,712        (15,974)       19,040           (1,906)        15,138
Income from continuing operations                      152,531         62,928       146,606          187,748         52,704
Income (loss) from discontinued operations,
  including gain (loss) on disposal, net of taxes        9,092        (70,847)      (30,598)          27,294          1,639
Cumulative effect of a change in accounting
 principle                                                 --             411          --              --               --
      Net income (loss)                                161,623         (7,508)      116,008          215,042         54,343

Per share:
  Basic earnings (loss) per common share:
   Income from continuing operations                   $  2.74       $   1.13       $  2.64        $    3.16       $    .83
   Income (loss) from discontinued operations,
    including gain (loss) on disposal                      .16          (1.28)         (.55)             .46            .03
   Cumulative effect of a change in accounting
     principle                                             --             .01          --                --            --
                                                       -------       --------       -------        ---------       --------
      Net income (loss)                                $  2.90       $   (.14)      $  2.09        $    3.62       $    .86
                                                       =======       ========       =======        =========       ========

  Diluted earnings (loss) per common share:
   Income from continuing operations                   $  2.72       $   1.13         $2.64        $    3.16       $    .83
   Income (loss) from discontinued operations,
    including gain (loss) on disposal                      .16          (1.28)         (.55)             .46            .03
   Cumulative effect of a change in accounting
    principle                                              --             .01          --               --             --
                                                       -------       --------       -------        ---------       --------
      Net income (loss)                                $  2.88       $   (.14)      $  2.09        $    3.62       $    .86
                                                       =======       ========       =======        =========       ========

</TABLE>

                                       17
<PAGE>

<TABLE>
<CAPTION>


                                                                              At December 31,
                                                                              ---------------
                                                  2002            2001              2000            1999            1998
                                                  ----            ----              ----            ----            ----
                                                                 (In thousands, except per share amounts)
<S>                                                  <C>            <C>                <C>            <C>             <C>

SELECTED BALANCE SHEET DATA:
  Cash and investments                          $1,043,471     $1,080,271          $  998,892     $  759,089     $1,485,107
  Total assets                                   2,541,778      2,469,087           2,417,783      2,255,239      2,920,916
  Debt, including current maturities               233,073        252,279             190,486        268,736        473,226
  Customer banking deposits                        392,904        476,495             526,172        329,301        189,782
  Shareholders' equity                           1,534,525      1,195,453           1,204,241      1,121,988      1,853,159
  Book value per common share                       $25.74         $21.61              $21.78         $19.75         $29.90
  Cash dividends per common share                   $  .25         $  .25              $  .25         $13.58         $  --

</TABLE>

(a)  Prior period amounts have been changed to reclassify equity in income
     (loss) of associated companies such that it is no longer classified as
     revenues. Includes net securities gains (losses) of $(37,066,000),
     $28,450,000, $124,964,000, $16,268,000 and $(66,159,000) for the years
     ended December 31, 2002, 2001, 2000, 1999 and 1998, respectively.

(b)  During 2002, the Internal Revenue Service completed the audit of the
     Company's consolidated federal income tax returns for the years 1996
     through 1999, without any material tax payment required from the Company.
     As a result of this favorable resolution of various federal income tax
     contingencies, the income tax provision for 2002 reflects a benefit of
     approximately $120,000,000.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        ------------------------------------------------------------------------
        of Operations.
        --------------

     The purpose of this section is to discuss and analyze the Company's
consolidated financial condition, liquidity and capital resources and results of
operations. This analysis should be read in conjunction with the consolidated
financial statements and related notes which appear elsewhere in this Report.

Liquidity and Capital Resources

Parent Company Liquidity

     Leucadia National Corporation (the "Parent") is a holding company whose
assets principally consist of the stock of its direct subsidiaries, cash and
cash equivalents and other investments. The Parent continuously evaluates the
retention and disposition of its existing operations and investigates possible
acquisitions of new businesses in order to maximize shareholder value.
Accordingly, while the Parent does not have any material arrangement, commitment
or understanding with respect thereto (except as disclosed in this Report),
further acquisitions, divestitures, investments and changes in capital structure
are possible. Its principal sources of funds are its available cash resources,
bank borrowings, public and private capital market transactions, repayment of
subsidiary advances, funds distributed from its subsidiaries as tax sharing
payments, management and other fees, and borrowings and dividends from its
regulated and non-regulated subsidiaries. It has no substantial recurring cash
requirements other than payment of interest and principal on its debt, tax
payments and corporate overhead expenses.

     As of December 31, 2002, the Company's readily available cash, cash
equivalents and marketable securities, excluding those amounts held by its
regulated subsidiaries, totaled $680,000,000. This amount is comprised of cash
and short-term bonds and notes of the United States Government and its agencies
of $375,600,000 (55%), the equity investment in WMIG of $121,100,000 (18%)
(which can be sold privately or otherwise in compliance with the securities laws
and is subject to a registration rights agreement), and other publicly traded
debt and equity securities aggregating $183,300,000 (27%). Additional sources of
liquidity as of December 31, 2002 include $170,100,000 of cash and marketable
securities primarily collateralizing letters of credit.
                                       18
<PAGE>

     During 2002, the Internal Revenue Service completed the audit of the
Company's consolidated federal income tax returns for the years 1996 through
1999, without any material tax payment required from the Company. As a result of
this favorable resolution of various federal income tax contingencies, the
income tax provision for 2002 reflects a benefit from the reversal of tax
reserves aggregating approximately $120,000,000.

     In December 2002, the Company completed a private placement of
approximately $150,000,000 of equity securities, based on a common share price
of $35.25, to mutual fund clients of Franklin Mutual Advisers, LLC, including
the funds comprising the Franklin Mutual Series Funds. The Company issued
2,907,599 common shares and newly authorized Series A Non-Voting Convertible
Preferred Stock, that were converted into 1,347,720 common shares in March 2003.
The securities sold in the private placement represent 7.1% of the Company's
outstanding common shares at March 25, 2003.

     In December 2002, the Company completed the acquisition of 44% of the
outstanding common stock of WilTel, for an aggregate purchase price, excluding
expenses, of $330,000,000. The WilTel stock was acquired by the Company under
the chapter 11 restructuring plan of WCG pursuant to a claims purchase agreement
with The Williams Companies, Inc. and an investment agreement with WCG. In
October 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. Together, these
transactions resulted in the Company acquiring 47.4% of the outstanding common
stock of WilTel.

     The Company entered into a stockholders agreement with WilTel pursuant to
which the Company designated four members of WilTel's newly constituted nine
member board of directors. As long as the Company maintains an ownership
interest in WilTel of at least 20%, WilTel agreed to use its best efforts to
cause WilTel's board to nominate four Leucadia nominees in the future. In
addition, the Company agreed to certain restrictions on its ability to increase
its ownership in WilTel above 49% during the first two years after its
acquisition, and certain other restrictions on its ability to increase its
ownership during the first five years after its acquisition. While the
stockholders agreement and WilTel's charter restrict the transferability of
WilTel's securities, the Company does have the ability to sell an amount of
WilTel shares equal to 15% of the total outstanding WilTel shares. The Company
has no current intention to sell its WilTel stock, and although it has a
registration rights agreement with respect to its interest in WilTel, the
Company does not consider this investment to be liquid.

     WilTel's current focus is to retain its existing business by providing a
high quality of service, to obtain new business if it can be done on a
profitable basis, to reduce its operating expenses to the greatest extent
possible, and to conserve liquidity. At December 31, 2002, WilTel had
$291,300,000 of cash and cash equivalents to meet its cash requirements, and
believes that it has sufficient liquidity to meet its needs through 2004. WilTel
has $375,000,000 of senior debt outstanding under its credit facility, of which
approximately $157,000,000 matures during 2005. Unless WilTel is able to
generate significant cash flows from operations through revenue growth, expense
reductions or some combination of both, it is likely that new capital will have
to be raised to meet its maturing debt obligations in 2005.

     In December 2002, the Company entered into an agreement to purchase certain
debt and equity securities of WebLink, for an aggregate purchase price of
$19,000,000. Pursuant to the agreement, the Company acquired outstanding secured
notes of WebLink with a principal amount of $36,500,000 and, upon receipt of
approval from the FCC, will acquire approximately 80% of the outstanding common
stock of WebLink.

                                       19
<PAGE>

     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), and recorded an increase to
shareholders' equity of $12,100,000. Although the Euro denominated sale proceeds
were not converted into US dollars immediately upon receipt, the Company did
enter 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. In connection with the sale, the Company classified
its foreign real estate operations as discontinued operations.

     In November 2002, the Company sold its 40% equity interest in certain
thoroughbred racetrack businesses for net proceeds of approximately $28,000,000,
and recorded a pre-tax gain of $14,300,000. As part of this transaction, the
Company has an approximately 15% profits interest in a joint venture formed with
the buyer of the businesses to pursue the potential development and management
of gaming ventures in Maryland, including slot machines and video lottery
terminals (if authorized by state law). The Company has no funding obligations
for this joint venture. The Company is unable to currently determine the value,
if any, of this profits interest.

     The Parent maintains the principal borrowings for the Company and its
non-banking subsidiaries and has provided working capital to certain of its
subsidiaries. These borrowings have primarily been made from banks through the
Company's credit agreement facility and through public financings. In March
2003, the Company entered into a new $110,000,000 unsecured bank credit facility
that matures in three years and bears interest based on the Eurocurrency Rate or
the prime rate.

     As of March 25, 2003, the Company is authorized to repurchase an additional
4,490,000 common shares. Such purchases may be made from time to time in the
open market, through block trades or otherwise. Depending on market conditions
and other factors, such purchases may be commenced or suspended at any time
without prior notice.

     At December 31, 2002, a maximum of $10,200,000 was available to the Parent
as dividends from its regulated subsidiaries without regulatory approval. There
are no restrictions on distributions from non-regulated subsidiaries. The Parent
also receives tax sharing payments from subsidiaries included in its
consolidated income tax return, including certain regulated subsidiaries.
Payments from regulated subsidiaries for dividends and tax sharing payments
totaled $7,100,000 for the year ended December 31, 2002.

     Based on discussions with commercial and investment bankers, the Company
believes that it has the ability to raise additional funds under acceptable
conditions for use in its existing businesses or for appropriate investment
opportunities. Standard & Poor's and Duff & Phelps Inc. have rated the Company's
senior debt obligations as investment grade since 1993, while Moody's Investors
Services, Inc. rates the Company's senior debt obligations below investment
grade. Ratings issued by bond rating agencies are subject to change at any time.

Consolidated Liquidity

     In 2002, net cash was provided by operating activities, principally as a
result of a reduction to the Company's investment in the trading portfolio. In
2001 and 2000, net cash was used for operations, reflecting lower investment
income on corporate investments as a result of the special dividend payment of
$811,900,000 in 1999, payment of the Parent's interest and overhead expenses and
a reduction of payables related to the trading portfolio.

                                       20
<PAGE>

     The Company's consolidated banking and lending operations had outstanding
loans (net of unearned finance charges) of $373,600,000 and $521,200,000 at
December 31, 2002 and 2001, respectively. At December 31, 2002, 55% were loans
to individuals generally collateralized by automobiles; 38% were loans to
consumers, substantially all of which were collateralized by real or personal
property; 4% were loans to small businesses; and 3% were unsecured loans. The
banking and lending segment is no longer making consumer loans and is in the
process of liquidating its remaining portfolio. These loans were primarily
funded by deposits generated by the Company's deposit-taking facilities and by
brokers. The Company intends to use the cash flows generated from its loan
portfolios to retire these deposits as they mature, which the Company expects
will be substantially complete by the end of 2005. The Company's customer
banking deposits totaled $392,900,000 and $476,500,000 as of December 31, 2002
and 2001, respectively.

     As previously stated, AIB stopped originating new sub-prime automobile
loans in September 2001, and both AIB and AIF ceased originating all other
consumer loans in January 2003. The FDIC and OCC have supported these actions
taken with respect to the sub-prime portfolio. However, effective February 2003,
AIB entered into a formal agreement with the OCC, agreeing to develop a written
strategic plan subject to prior OCC approval for the continued operations of
AIB, to continue to maintain certain risk-weighted capital levels, to obtain
prior approval before paying any dividends, to provide certain monthly reports
and to comply with certain other criteria. AIB will also be unable to accept
brokered deposits during the period the agreement remains in effect. In the
event AIB fails to comply with the agreement, the OCC would have the authority
to assert formal charges and seek other statutory remedies and AIB may also be
subject to civil monetary penalties. AIB is complying with the agreement and,
given that it has ceased all lending activities, the agreement is not expected
to have a significant impact on its operations. However, no assurance can be
given that other regulatory actions will not be taken.

     The Company and certain of its subsidiaries have or have had tax loss
carryforwards and other tax attributes, the amount and availability of which are
subject to certain qualifications, limitations and uncertainties. In order to
reduce the possibility that certain changes in ownership could impose
limitations on the use of the tax loss carryforwards, the Company's certificate
of incorporation contains provisions which generally restrict the ability of a
person or entity from accumulating five percent or more of the common shares and
the ability of persons or entities now owning five percent or more of the common
shares from acquiring additional common shares. The restrictions will remain in
effect until the earliest of (a) December 31, 2005, (b) the repeal of Section
382 of the Internal Revenue Code (or any comparable successor provision) and (c)
the beginning of a taxable year of the Company to which certain tax benefits may
no longer be carried forward.

     As shown below, at December 31, 2002, the Company's contractual cash
obligations totaled $807,472,000. The Company's debt instruments require
maintenance of minimum Tangible Net Worth, limit distributions to shareholders
and limit Indebtedness, as defined in the agreements. In addition, the debt
instruments contain limitations on investments, liens, contingent obligations
and certain other matters. The Company is in compliance with all of these
restrictions, and the Company has the ability to incur additional indebtedness
or make distributions to its shareholders and still remain in compliance with
these restrictions.
<TABLE>
<CAPTION>

                                                                                    Payments Due by Period (in thousands)
                                                             -----------------------------------------------------------------------
                                                                            Less than 1
Contractual Cash Obligations                                 Total             Year       1-3 Years     4-5 Years    After 5 Years
- ----------------------------                                 -----          -----------   ---------     ---------    -------------
<S>                                                           <C>               <C>          <C>            <C>              <C>

Customer Banking Deposits                                   $392,904        $283,613      $ 89,959        $ 19,332        $   --
Long-Term Debt                                               233,073           3,647        27,124          39,815         162,487
Operating Leases, net of Sublease Income                      83,295           4,946         7,770           6,829          63,750
Preferred Securities of Subsidiary Trust                      98,200            --            --              --            98,200
                                                            --------        --------      --------        --------        --------
Total Contractual Cash Obligations                          $807,472        $292,206      $124,853        $ 65,976        $324,437
                                                            ========        ========      ========        ========        ========

</TABLE>


                                       21
<PAGE>




Off-Balance Sheet Arrangements

     At December 31, 2002, the Company's off-balance sheet arrangements consist
of guarantees aggregating $265,500,000. The Company's guarantee of 10% of
Berkadia's financing incurred in connection with the Berkadia Loan represents
$217,500,000 of that total, $65,000,000 of which expired in connection with
payments of principal on the Berkadia Loan in the first quarter of 2003. To the
extent that future principal payments are received under the Berkadia Loan prior
to maturity, such amounts will be used to paydown the Berkadia financing and the
remaining $152,500,000 guarantee will expire proportionally at such times. The
Berkadia Loan matures in August 2006.

     Prior to the sale of CDS, the Company had agreed to provide project
improvement bonds primarily for the benefit of the City of San Marcos for the
San Elijo Hills project, which are required prior to the commencement of any
project development. These bonds provide funds primarily to the City in the
event that CDS is unable or unwilling to complete certain infrastructure
improvements in the San Elijo Hills project. CDS is responsible for paying all
third party fees related to obtaining the bonds. Should the City or others draw
on the bonds for any reason, CDS and one of its subsidiaries would be obligated
to reimburse the Company for the amount drawn. At December 31, 2002, the amount
of outstanding bonds was $30,000,000, of which $25,400,000 expires in less than
one year. The Company's remaining guarantee at December 31, 2002 is an
$18,000,000 indemnification in connection with the financing of a real estate
property.

Results of Operations

Critical Accounting Policies and Estimates

     The Company's discussion and analysis of its financial condition and
results of operations are based upon its consolidated financial statements,
which have been prepared in accordance with generally accepted accounting
principles. The preparation of these financial statements requires the Company
to make estimates and assumptions that affect the reported amounts in the
financial statements and disclosures of contingent assets and liabilities. On an
on-going basis, the Company evaluates all of these estimates and assumptions.
Actual results could differ from those estimates.

     The allowance for loan losses is established through a provision that is
charged to expense. As of December 31, 2002, the Company's allowance for loan
losses was $31,800,000 or 8.5% of the related outstanding loan receivable
balance of $373,600,000. The allowance for loan losses is an amount that the
Company believes will be adequate to absorb probable losses inherent in its
portfolio based on the Company's evaluations of the collectibility of loans and
prior loan loss experience. Factors considered by the Company include actual
experience, current economic trends, aging of the loan portfolio and collateral
value. During periods of economic weakness, delinquencies, defaults,
repossessions and losses generally increase. These periods may also be
accompanied by decreased demand and declining values of automobiles securing
outstanding loans, which weakens collateral coverage and increases the amount of
a loss in the event of default. In addition, incentives offered by the
automobile industry on new cars affect the supply of used cars and the value the
Company may realize upon sale of repossessed automobiles. The allowance is based
on judgments and assumptions and the actual loss experience may be different.

     The Company records a valuation allowance to reduce its deferred taxes to
the amount that is more likely than not to be realized. If the Company were to
determine that it would be able to realize its deferred tax assets in the future
in excess of its net recorded amount, an adjustment would increase income in
such period. Similarly, if the Company were to determine that it would not be
able to realize all or part of its net deferred taxes in the future, an
adjustment would be charged to income in such period. The Company also records
reserves for contingent tax liabilities related to potential exposure.

                                       22
<PAGE>

     The Company accounts for its investment in Berkadia under the equity method
of accounting. Although the Company has no cash investment in Berkadia, the
Company has a contingent liability resulting from its guarantee of 10% of the
third party financing provided to Berkadia. The total amount of the Company's
guarantee is $152,500,000 as of March 7, 2003. Since the Company does not expect
that Berkadia will suffer losses resulting in the Company having to fund its
guarantee obligation, no reserve has been recorded.

     As of December 31, 2002, the carrying amount of the Company's investment in
the mining properties of MK Gold was approximately $59,300,000. The
recoverability of this asset is entirely dependent upon the success of MK Gold's
mining project at the Las Cruces copper deposit in the Pyrite Belt of Spain.
Mining will be subject to obtaining required permits, obtaining both debt and
equity financing for the project, engineering and construction. The market price
of copper has been depressed over the past couple of years, reflecting generally
weak global economic conditions. The amount of financing that can be obtained
for the project and its related cost will be significantly affected by the
assessment of potential lenders of the current and expected future market price
of copper. In addition, the actual price of copper, the operating cost of the
mine and the capital cost to bring the mine into production will affect the
recoverability of this asset. Based on the current status of the project and MK
Gold's estimate of future financing costs and future cash flows, the Company
believes the asset is recoverable.

Banking and Lending

     Finance revenues, which reflect the level and mix of consumer instalment
loans, decreased in 2002 as compared to 2001 due to fewer average loans
outstanding. Average loans outstanding were $440,800,000, $545,000,000 and
$423,000,000 for 2002, 2001 and 2000, respectively. This decline was primarily
due to the Company's decision in September 2001 to stop originating subprime
automobile loans. Although finance revenues decreased in 2002 as compared to
2001, pre-tax results increased primarily due to a $13,700,000 reduction in
interest expense, due to reduced customer banking deposits and lower interest
rates thereon, a net change of $10,000,000 in the accounting for the market
values of interest rate swaps (discussed below), a decline in the provision for
loan losses of $7,100,000, and lower salaries expense and operating costs
resulting from the segment's restructuring efforts. These changes were partially
offset by higher interest paid on interest rate swaps of $4,100,000.

     In 2002, the banking and lending segment's provision for loan losses
decreased as compared to the prior year primarily due to the decline in loans
outstanding, although as a percent of outstanding loans it increased due to
increased loss experience, particularly in the subprime automobile portfolio.
The Company believes this loss experience reflects the difficulties experienced
by subprime borrowers in the current economy. At December 31, 2002, the
allowance for loan losses for the Company's entire loan portfolio was
$31,800,000 or 8.5% of the net outstanding loans, compared to $35,700,000 or
6.8% of net outstanding loans at December 31, 2001.

     The Company's remaining consumer lending programs have primarily consisted
of marine, recreational vehicle, motorcycle and elective surgery loans. Due to
current economic conditions, portfolio performance and the relatively small size
of these loan portfolios and target markets, in January 2003 the Company stopped
originating all consumer loans. The Company is considering its alternatives for
its banking and lending operations, which could include selling or liquidating
some or all of its loan portfolios, and outsourcing certain functions.

                                       23
<PAGE>

     Although finance revenues increased in 2001 as compared to 2000, pre-tax
results declined primarily due to a larger provision for loan losses, changes in
market values of interest rate swaps, higher interest paid on interest rate
swaps, charges recorded in connection with the Company's decision to stop
originating new subprime automobile loans and to consolidate all operations in
Salt Lake City, and higher interest expense due to the increased customer
banking deposits through September of 2001. In 2001, the banking and lending
segment's provision for loan losses increased $13,000,000 as compared to the
prior year. This increase primarily reflected higher net charge-offs, for which
the Company believes a weaker economy and increased bankruptcies were
contributing factors, and an increase in the rates used by the Company to
establish the allowance for loan losses in recognition of its increased loss
experience. Pre-tax results for the banking and lending segment for 2001 also
included $7,100,000 of charges related to consolidating all operations in Salt
Lake City.

     Pre-tax results for the banking and lending segment include income
(expense) of $3,500,000 and ($6,500,000) for the years ended December 31, 2002
and 2001, respectively, resulting from mark-to-market changes on its interest
rate swaps. 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.

Manufacturing

     Manufacturing revenues for the plastics division declined approximately 5%
in 2002 as compared to 2001 primarily due to reductions in the consumer products
market of $3,800,000, partially offset by increases in the construction market
of $1,200,000. 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. Gross profit
was largely unchanged for 2002 as compared to 2001, reflecting cost reduction
initiatives that reduced labor costs, improved material utilization and reduced
non-resin raw material costs.

     For the year ended December 31, 2002, the division recorded an impairment
charge of approximately $1,250,000 to write down the book value of certain
production lines that the division does not expect will be utilized over the
next several years. These lines were initially purchased to provide additional
capacity to produce a specific product for a specific customer; however, the
customer discontinued the product in 2001 and the Company no longer believes
that the cost of these lines are currently recoverable from other business. When
the division's customer discontinued the product and terminated their contract
in 2001, they were required to pay the division a termination payment of
$3,500,000, which was recognized as other income in 2001. The division did not
record an impairment charge in 2001 since its expected production volume for
these lines would have resulted in future cash flows that did not support an
impairment charge at that time.

     Manufacturing revenues, gross profit and pre-tax results for the plastics
division declined in 2001 as compared to 2000. Of the $11,400,000 decline in
manufacturing revenues in 2001, the most significant reduction was in the
consumer products market, which declined by $7,300,000. This decline was
primarily due to a customer for the Asian market no longer using one of the
Company's products and a lower than anticipated demand for consumer dust wipe
products. In addition, increased competition in the agriculture, home furnishing
and packaging markets and customer inventory reductions in the construction and
certain industrial markets also contributed to the reduction in sales in 2001.
Gross profit for 2001 declined primarily due to the decline in sales and higher
fixed costs related to the Belgium manufacturing facility. The decline in
pre-tax income in 2001 was partially offset by the contract termination gain
referred to above.

                                       24
<PAGE>

Domestic Real Estate

     Revenues from domestic real estate declined in 2002 as compared to 2001 as
a result of lower gains from property sales of $16,400,000, and less rent income
of $7,300,000 largely due to the sale of one of the Company's shopping centers
in 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 also reflects greater
operating costs, principally related to the Hawaiian hotel and a $1,300,000
write-down of a mortgage receivable.

     During the fourth quarter of 2002, the Company sold one of its real estate
subsidiaries, CDS, to HomeFed for a purchase price of $25,000,000, consisting of
$1,000,000 in cash and 24,742,268 shares of HomeFed's common stock, which
represents approximately 30.3% of the outstanding HomeFed stock. CDS's principal
asset is the master-planned community located in San Diego County, California
known as San Elijo Hills, for which HomeFed has served as the development
manager since 1998. The deferred gain on this sale of approximately $12,100,000
at December 31, 2002, will be recognized into income as the San Elijo Hills
project is developed and sold. The Company is accounting for its investment in
HomeFed under the equity method of accounting. Income recognized representing
its share of HomeFed's earnings in 2002 was not material. Prior to the sale to
HomeFed, the Company recognized pre-tax gains of $7,800,000 from sales of
residential sites at San Elijo Hills during 2002.

     The reduction in revenues and pre-tax income from domestic real estate in
2001 as compared to the prior year was principally due to the foreclosure gains
recorded in 2000 and lower gains from property sales, net of costs. During 2001,
the Company sold 691 residential sites and a school site resulting in pre-tax
gains of $18,100,000 at San Elijo Hills.

Other

     Investment and other income declined in 2002 as compared to 2001
principally due to reductions in gains from domestic property sales and rent
income as discussed above, a reduction of $20,600,000 in investment income
resulting from a decline in interest rates and a lower amount of invested
assets, a decline of $9,200,000 in revenues from the Company's gas operations
principally due to lower production and prices, and the gain recognized in 2001
of $6,300,000 from the sale of the Company's investment in two inactive
insurance companies. The decreases were partially offset by a $14,300,000 gain
from the sale of certain thoroughbred racetrack businesses and increased
revenues from the Company's Hawaiian hotel of $8,200,000.

     Investment and other income declined in 2001 as compared to 2000 in part
from non-recurring income recognized in 2000 totaling $25,900,000, primarily
consisting of foreclosure gains from certain domestic real estate properties of
$10,700,000, a prepayment penalty related to certain promissory notes of
$7,500,000 and a gain from the sale of a corporate owned aircraft of $7,700,000.
In addition, investment and other income declined in 2001 due to decreased gains
from sales of various domestic real estate properties of $8,500,000 and a
reduction in revenues related to MK Gold of $10,100,000. Such decreases were
partially offset by the 2001 gain from the sale of the Company's investment in
two inactive insurance companies referred to above and increased revenues from
the Company's oil and gas operations of $6,200,000.

     Net securities gains (losses) for 2002 include a provision of $37,100,000
to write down the Company's investments in certain available for sale securities
and its equity investment in a non-public fund. The write down of the available
for sale securities resulted from a decline in market value determined to be
other than temporary. Net securities gains (losses) for 2000 include pre-tax
security gains related to the Company's investments in Fidelity National
Financial, Inc. ($90,900,000) and Jordan Telecommunication Products, Inc.
($24,800,000).

                                       25
<PAGE>

     For 2002, the Company recognized $91,400,000 of pre-tax income from its
equity investments in associated companies as compared to $24,600,000 of pre-tax
losses for 2001. The increase in 2002 was primarily due to income from the
Company's equity investment in Berkadia of $65,600,000 as compared to a loss
from this investment of $70,400,000 in 2001, and $24,100,000 of income from the
Company's equity investment in Olympus, an investment the Company made in
December 2001. These increases were partially offset by a $11,900,000 decline in
income from its investment in JPOF II, from which the Company recorded
$15,200,000 of income in 2002, and a loss of $13,400,000 from the Company's
equity investment in WilTel, representing the Company's share of WilTel's losses
under the equity method of accounting.

     For 2002, the Company's equity in the income of Berkadia consisted of
pre-tax income of $59,000,000 related to the amortization of the discount on the
Berkadia Loan and $6,600,000 from its share of the net interest spread on the
Berkadia Loan. For 2001, the Company's equity in the loss of Berkadia consisted
of a pre-tax loss of $94,400,000 for its share of FINOVA's losses under the
equity method of accounting, $20,100,000 of pre-tax income related to the
amortization of the discount on the Berkadia Loan and $3,900,000 of pre-tax
income from its share of the net interest spread on the Berkadia Loan. As more
fully described in Note 3 to the Company's consolidated financial statements,
Berkadia's initial investment in the FINOVA stock and the Berkadia Loan are
determined based upon the relative fair values of the securities received in
exchange for the funds transferred to FINOVA. The fair value assigned to the
FINOVA stock was based upon the trading price of FINOVA's common stock on the
day the FINOVA stock was received, was far in excess of FINOVA's net worth and
was inconsistent with the Company's view that the FINOVA common stock has a very
limited value. Subsequent to acquisition, and principally as a result of the
terrorist attacks on September 11, 2001, Berkadia recorded its share of FINOVA's
losses in an amount that reduced Berkadia's investment in FINOVA's common stock
to zero in 2001.

     The book value of the Company's equity investment in Berkadia was negative
$72,100,000 and negative $129,000,000 at December 31, 2002 and 2001,
respectively. The negative carrying amount principally results from Berkadia's
distribution of loan fees received and the Company's recognition in 2001 of its
share of FINOVA's losses under the equity method of accounting. This negative
carrying amount is being amortized into income over the term of the Berkadia
Loan, and effectively represents an unamortized discount on the Berkadia Loan.

     Since its acquisition in the fourth quarter of 2002, the Company has
recorded its share of WilTel's losses under the equity method of accounting. As
a result of its emergence from bankruptcy proceedings and its continued
restructuring of its operations, WilTel has reduced its headcount, operating
costs and interest expense. However, despite these cost reductions, the Company
believes that WilTel will continue to report losses from continuing operations
for the foreseeable future. Even if WilTel is able to generate breakeven cash
flow from operations, substantial depreciation charges will still result in
losses from continuing operations over the next several years. The Company will
record its 47.4% share of these losses in its statements of operations, and the
recognition of these losses could reduce the carrying amount of its investment
in WilTel to zero. The Company will not record any further losses in WilTel if
and when its investment is reduced to zero, unless the Company has guaranteed
any of WilTel's obligations, or otherwise has committed or intends to commit to
provide further financial support. The Company has not provided any such
guarantees or commitments.

     For 2001, the Company recognized $24,600,000 of pre-tax losses from its
equity investments in associated companies as compared to $29,300,000 of pre-tax
income for 2000. The loss in 2001 was primarily due to a loss of $70,400,000,
representing the Company's share of the loss recorded by Berkadia, as described
above. The Company's loss related to Berkadia was partially offset by income
from other equity investments, the most significant of which related to JPOF II.
The Company recognized income from its investment in JPOF II of $27,100,000 and
$17,300,000 in 2001 and 2000, respectively.

                                       26
<PAGE>

     The decline in interest expense for 2002 as compared to 2001 primarily
reflects lower interest expense at the banking and lending segment due to
reduced customer banking deposits and lower interest rates thereon.

     Salaries expense in 2001 primarily reflects decreased expenses related to
lower bonus expense.

     Selling, general and other expenses increased in 2001 as compared to the
prior year primarily due to higher provisions for loan losses and charges
recorded in connection with consolidating the banking and lending operations
referred to above, partially offset by lower expenses related to MK Gold.

     Income taxes for 2002 reflect the reversal of tax reserves aggregating
$120,000,000, as a result of the favorable resolution of certain federal income
tax contingencies discussed above. Income taxes for 2001 reflect a benefit of
$36,200,000 for the favorable resolution of federal and state income tax
contingencies, and in 2000, the Company's effective income tax rate did not vary
materially from the expected statutory federal rate.

Property and Casualty Insurance--Discontinued Operation

       In December 2001, upon approval by the Company's Board of Directors to
commence an orderly liquidation of the Empire Group, the Company classified as
discontinued operations the property and casualty insurance operations of the
Empire Group. The Empire Group had historically engaged in commercial and
personal lines of property and casualty insurance, principally in the New York
metropolitan area. The Empire Group only accepts new business that it is
obligated to accept by contract or New York insurance law; it does not engage in
any other business activities except for its claims runoff operations. The
voluntary liquidation is expected to be substantially complete by 2005. In
December 2001, the Company wrote down its investment in the Empire Group to its
estimated net realizable value based on expected operating results and cash
flows during the liquidation period, which indicated that the Company is
unlikely to realize any value once the liquidation is complete. Accordingly, the
Company recorded a $31,100,000 after-tax charge (net of taxes of $16,800,000) as
a loss on disposal of discontinued operations to fully write-off its investment.
While this estimated net realizable value represents management's best estimate,
the amount the Company will ultimately realize could be, but is not expected to
be, greater. The Company has no obligation to contribute additional capital to
the Empire Group.

Recently Issued Accounting Standards

       In July 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS 146"), which is effective
for exit or disposal activities initiated after December 31, 2002. SFAS 146
addresses issues regarding the recognition, measurement and reporting of costs
associated with exit and disposal activities, including restructuring
activities. SFAS 146 requires a liability be recognized at fair value for costs
associated with exit or disposal activities only when the liability is incurred
as opposed to at the time the Company commits to an exit plan as permitted under
Emerging Issues Task Force Issue No. 94-3. In November 2002, the FASB issued
FASB Interpretation No. 45 ("FIN 45"), which requires a guarantor for certain
guarantees to recognize, at the inception of a guarantee, a liability for the
fair value of the obligation undertaken in issuing the guarantee. The initial
recognition and initial measurement provisions of FIN 45 are applied on a
prospective basis to guarantees issued or modified after December 31, 2002. In
addition, FIN 45 modified the disclosure requirements for such guarantees
effective for interim or annual periods ending after December 15, 2002; the
Company has adopted these disclosure requirements. In January 2003, the FASB
issued FASB Interpretation No. 46 ("FIN 46"), which addresses consolidation of
variable interest entities, which are entities in which equity investors do not
have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without


                                       27
<PAGE>

additional subordinated financial support from other parties. FIN 46 is
effective immediately to variable interest entities created after January 31,
2003, and to variable interest entities in which an enterprise obtains an
interest after that date. FIN 46 applies in the first fiscal year or interim
period beginning after June 15, 2003, to variable interest entities in which an
enterprise holds a variable interest that it acquired before February 1, 2003.
FIN 46 may be applied prospectively with a cumulative effect adjustment as of
the date on which it is first applied or by restating previously issued
financial statements with a cumulative effect adjustment as of the beginning of
the first year restated. The Company is reviewing the impact of the
implementation of SFAS 146, the initial recognition and measurement provisions
of FIN 45, and the implementation of FIN 46.

Cautionary Statement for Forward-Looking Information

     Statements included in this Report 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, 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 Report, 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:

     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 and vacation markets in
          Hawaii;
     o    increased competition in the luxury segment of the premium table wine
          market;
     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 and 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;
     o    further adverse regulatory action by the OCC;
     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    deterioration in the business and operations of WilTel and the ability
          of WilTel to generate operating profits and positive cash flows,
          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.

                                       28
<PAGE>

     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 Report or to reflect
the occurrence of unanticipated events.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.
- -------   ----------------------------------------------------------

     The following includes "forward-looking statements" that involve risk and
uncertainties. Actual results could differ materially from those projected in
the forward-looking statements.

     The Company's market risk arises principally from interest rate risk
related to its investment portfolio, its borrowing activities and the banking
and lending activities of certain subsidiaries.

     The Company's investment portfolio is primarily classified as available for
sale, and consequently, is recorded on the balance sheet at fair value with
unrealized gains and losses reflected in shareholders' equity. Included in the
Company's investment portfolio are fixed income securities, which comprised
approximately 69% of the Company's total investment portfolio at December 31,
2002. These fixed income securities are primarily rated "investment grade" or
are U.S. governmental agency issued or guaranteed obligations. The estimated
weighted average remaining life of these fixed income securities was
approximately 4.6 years at December 31, 2002. The Company's fixed income
securities, like all fixed income instruments, are subject to interest rate risk
and will fall in value if market interest rates increase. The Company's
investment portfolio also includes its investment in WMIG, carried at its
aggregate market value of $121,100,000. This investment is approximately 19% of
the Company's total investment portfolio, and its value is subject to change if
the market value of the WMIG stock rises or falls. At December 31, 2001, fixed
income securities comprised approximately 68% of the Company's total investment
portfolio and had an estimated weighted average remaining life of 2.0 years. At
December 31, 2002 and 2001, the Company's portfolio of trading securities was
not material.

     The Company is subject to interest rate risk on its long-term fixed
interest rate debt and the Company-obligated mandatorily redeemable preferred
securities of its subsidiary trust holding solely subordinated debt securities
of the Company. Generally, the fair market value of debt and preferred
securities with a fixed interest rate will increase as interest rates fall, and
the fair market value will decrease as interest rates rise.

     The Company's banking and lending operations are subject to risk resulting
from interest rate fluctuations to the extent that there is a difference between
the amount of the interest-earning assets and the amount of interest-bearing
liabilities that are prepaid/withdrawn, mature or reprice in specified periods.
The principal objectives of the Company's banking and lending asset/liability
management activities are to provide maximum levels of net interest income while
maintaining acceptable levels of interest rate and liquidity risk and to
facilitate funding needs. The Company utilizes an interest rate sensitivity
model as the primary quantitative tool in measuring the amount of interest rate
risk that is present. The model quantifies the effects of various interest rate
scenarios on the projected net interest margin over the ensuing twelve-month
period. Derivative financial instruments, including interest rate swaps, may be
used to modify the Company's indicated net interest sensitivity to levels deemed
to be appropriate based on risk management policies and the Company's current
economic outlook. Counterparties to such agreements are major financial
institutions, which the Company believes are able to fulfill their obligations;
however, if they are not, the Company believes that any losses are unlikely to
be material.

                                       29
<PAGE>

     The following table provides information about the Company's financial
instruments used for purposes other than trading that are primarily sensitive to
changes in interest rates. For investment securities and debt obligations, the
table presents principal cash flows by expected maturity dates. For the variable
rate notes receivable and variable rate borrowings, the weighted average
interest rates are based on implied forward rates in the yield curve at the
reporting date. For loans, securities and liabilities with contractual
maturities, the table presents contractual principal cash flows adjusted for the
Company's historical experience and prepayments of mortgage-backed securities.
For banking and lending's variable rate products, the weighted average variable
rates are based upon the respective pricing index at the reporting date. For
money market deposits that have no contractual maturity, the table presents
principal cash flows based on the Company's historical experience and
management's judgment concerning their most likely withdrawal behaviors. For
interest rate swaps, the table presents notional amounts by contractual maturity
date.

     For additional information, see Notes 5, 9 and 19 to Consolidated Financial
Statements.





                                       30
<PAGE>
<TABLE>
<CAPTION>



                                                                   Expected Maturity Date
                                                                   ----------------------
                                    2003       2004         2005         2006         2007      Thereafter   Total     Fair Value
                                    ----       ----         ----         ----         ----      ----------   -----     ----------
                                                                          (Dollars in thousands)
<S>                                 <C>          <C>          <C>         <C>         <C>         <C>       <C>         <C>
The Company, Excluding
 Banking and Lending:
Rate Sensitive Assets:
Available for Sale Fixed
 Income Securities:
  U.S. Government                 $ 98,763    $16,536      $   --      $ 1,621     $   --      $   --      $116,920     $116,920
    Weighted Average
    Interest Rate                    1.64%      3.95%          --        4.14%         --          --
  Other Fixed Maturities:
   Rated Investment Grade         $ 10,783    $13,785      $ 1,567     $ 1,699     $   --      $   --      $ 27,834     $ 27,834
     Weighted Average
      Interest Rate                  6.43%      7.25%        5.96%       6.75%         --          --
   Rated Less Than
     Investment Grade/Not
      Rated                       $ 15,298    $26,518      $ 9,045    $ 10,394     $ 15,404    $ 52,804    $129,463     $129,463
     Weighted Average
      Interest Rate                  7.43%      6.88%        5.32%       8.03%        9.17%       8.57%

Rate Sensitive Liabilities:
Fixed Interest Rate Borrowings    $  1,515    $ 1,631      $21,265     $23,539     $  2,233    $123,268    $173,451     $179,290
   Weighted Average
     Interest Rate                   7.92%      7.92%        7.92%       7.88%        7.88%       7.86%
Variable Interest Rate
  Borrowings                     $   2,114    $ 2,114      $ 2,114     $ 2,114     $ 11,929    $ 39,219    $ 59,604     $ 59,604
   Weighted Average
     Interest Rate                   2.20%      2.84%        3.50%       3.94%        4.32%       5.33%

Other Rate Sensitive
Financial Instruments:
Company-obligated
  Mandatorily Redeemable
  Preferred Securities of
  Subsidiary Trust Holding
  Solely Subordinated Debt
  Securities of the Company      $    --      $  --        $  --       $   --      $   --      $ 98,200    $ 98,200     $ 98,200
    Weighted Average
      Interest Rate                 8.65%       8.65%        8.65%       8.65%        8.65%       8.65%


</TABLE>




                                       31
<PAGE>
<TABLE>
<CAPTION>


                                                                   Expected Maturity Date
                                                                   ----------------------
                                    2003       2004         2005         2006         2007      Thereafter   Total     Fair Value
                                    ----       ----         ----         ----         ----      ----------   -----     ----------
                                                                          (Dollars in thousands)

<S>                                   <C>         <C>         <C>         <C>        <C>    <C>              <C>          <C>
Rate Sensitive Derivative
Financial Instruments:
Euro currency swap               $  2,085     $ 2,085      $ 2,085     $ 2,085     $  2,085    $  4,693    $ 15,118     $ (1,566)
  Average Pay Rate                  5.89%       5.89%        5.89%       5.89%        5.89%       5.89%
  Average Receive Rate              7.60%       7.60%        7.60%       7.60%        7.60%       7.60%
Pay Fixed/Receive Variable
Interest Rate Swap               $  2,114     $ 2,114      $ 2,114     $ 2,114     $  2,114    $ 39,219    $ 49,789     $ (4,251)
  Average Pay Rate                  5.01%       5.01%        5.01%       5.01%        5.01%       5.01%
  Average Receive Rate              1.70%       2.39%        3.09%       3.55%        3.95%       4.67%

Off-Balance Sheet Items:
 Unused Lines of Credit          $152,500     $  --        $  --       $   --      $  --       $   --      $152,500     $152,500
    Weighted Average
     Interest Rate                  1.45%        --           --           --         --           --

 Banking and Lending:
Rate Sensitive Assets:
  Certificates of Deposit        $    697     $  --        $  --       $   --      $   --      $   --      $    697     $    697
    Weighted Average
     Interest Rate                  2.06%        --           --           --          --          --         2.06%
  Fixed Interest Rate
    Securities                   $  9,725     $ 2,757      $ 1,651     $   414     $      1    $  8,146    $ 22,694     $ 22,694
    Weighted Average
      Interest Rate                 9.06%       9.10%        9.12%       9.12%       10.93%       5.12%       7.62%
  Variable Interest Rate
     Securities                  $ 29,843     $16,895      $12,839     $ 9,819     $  2,993    $ 18,753    $ 91,142     $ 91,140
    Weighted Average
     Interest Rate                  3.22%       1.77%        1.78%       1.78%        1.83%       3.32%       2.57%
  Fixed Interest Rate Loans      $ 72,558     $73,017      $52,444     $21,427     $  4,525    $ 82,039    $306,010     $280,351
    Weighted Average
     Interest Rate                 21.09%      21.00%       21.62%      21.35%       19.28%      18.66%      20.50%
  Variable Interest Rate
     Loans                       $  7,651     $ 2,896      $ 3,342     $ 3,930     $  4,560    $ 45,215    $ 67,594     $ 67,287
    Weighted Average
     Interest Rate                 17.28%      19.00%       18.92%      18.61%       17.85%      15.24%      16.19%

Rate Sensitive Liabilities:
  Money Market Deposits          $ 36,004     $   350      $   350     $  --       $   --      $   --      $ 36,704     $ 36,704
    Weighted Average
     Interest Rate                   .30%        .25%         .25%        --           --          --          .30%
  Time Deposits                  $247,609     $61,004      $28,255     $ 7,574     $ 11,758    $   --      $356,200     $362,863
    Weighted Average
     Interest Rate                  3.30%       3.90%        3.53%       5.33%        4.58%        --         3.50%
  Fixed Interest Rate
   Borrowings                    $     18     $  --        $  --       $  --       $   --      $   --      $     18     $     18
    Weighted Average
     Interest Rate                  7.38%        --           --          --           --          --         7.38%

Rate Sensitive Derivative
Financial Instruments:
Pay Fixed/Receive Variable
  Interest Rate Swap             $160,000     $  --        $  --          --       $   --      $   --      $160,000     $ (3,135)
  Average Pay Rate                  6.22%        --           --          --           --          --         6.22%
  Average Receive Rate              1.76%        --           --          --           --          --         1.76%

Off-Balance Sheet Items:
Commitments to Extend Credit     $  5,503     $  --        $  --       $  --       $   --      $   --      $  5,503     $  5,503
  Weighted Average
   Interest Rate                   17.44%        --           --          --           --          --        17.44%
Unused Lines of Credit           $  3,000     $  --        $  --       $  --       $   --      $ 17,192    $ 20,192     $ 20,192
  Weighted Average
   Interest Rate                    4.75%        --           --          --           --         1.25%       1.77%
</TABLE>


                                       32
<PAGE>

Item 8. Financial Statements and Supplementary Data.
- ------  -------------------------------------------

     Financial Statements and supplementary data required by this Item 8 are set
forth at the pages indicated in Item 15(a) below.

Item 9. Changes in and Disagreements with Accountants on Accounting and
- ------  -----------------------------------------------------------------
        Financial Disclosure.
        --------------------

     Not applicable.

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant.
- -------   --------------------------------------------------

       The information to be included under the caption "Nominees for Election
as Directors" in the Company's definitive proxy statement to be filed with the
Commission pursuant to Regulation 14A of the 1934 Act in connection with the
2003 annual meeting of shareholders of the Company (the "Proxy Statement") is
incorporated herein by reference. In addition, reference is made to Item 10 in
Part I of this Report.

Item 11.  Executive Compensation.
- -------   ----------------------

     The information to be included under the caption "Executive Compensation"
in the Proxy Statement is incorporated herein by reference.




                                       33
<PAGE>


Item 12.  Security Ownership of Certain Beneficial Owners and Management.
- -------   --------------------------------------------------------------

Equity Compensation Plan Information

     The following table summarizes information regarding the Company's equity
compensation plans as of December 31, 2002. All outstanding awards relate to the
Company's common stock.
<TABLE>
<CAPTION>

                                                                                         Number of securities
                                                                                          remaining available
                                                                                          for future issuance
                                  Number of securities            Weighted-average           under equity
                                    to be issued upon            exercise price of        compensation plans
                            exercise of outstanding options,    outstanding options,     (excluding securities
                                   warrants and rights          warrants and rights      reflected in column (a))
Plan Category                           (a)                              (b)                       (c)
- -------------               -------------------------------     --------------------     -----------------------

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

Equity compensation
  plans approved by
  security holders                   1,353,070                     $ 25.29                     578,050

Equity compensation
  plans not approved
  by security holders                   --                            --                         --
                                   -----------                     -------                     -------

Total                                1,353,070                     $ 25.29                     578,050
                                   ===========                     =======                     =======

</TABLE>

     The information to be included under the caption "Present Beneficial
Ownership of Common Shares" in the Proxy Statement is incorporated herein by
reference.

Item 13.  Certain Relationships and Related Transactions.
- -------   ----------------------------------------------

     The information to be included under the caption "Executive Compensation -
Certain Relationships and Related Transactions" in the Proxy Statement is
incorporated herein by reference.

Item 14.  Controls and Procedures.
- -------   -----------------------

     (a) Based on their evaluation as of a date within 90 days of the filing
date of this Annual Report on Form 10-K, the Company's chief executive officer
and chief financial officer have concluded that the Company's disclosure
controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the
Exchange Act) are effective to ensure that information required to be disclosed
by the Company in reports that it files or submits under the Exchange Act are
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.

     (b) There were no significant changes in the Company's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.




                                       34
<PAGE>




                                     PART IV

Item 15.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
- --------  -----------------------------------------------------------------
<TABLE>
<CAPTION>

(a)(1)(2) Financial Statements and Schedules.
<S>                    <C>                                                                           <C>

          Report of Independent Accountants..........................................................F-1
          Financial Statements:
           Consolidated Balance Sheets at December 31, 2002 and 2001.................................F-2
           Consolidated Statements of Operations for the years ended December 31,  2002, 2001 and
             2000....................................................................................F-3
           Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and
             2000....................................................................................F-4
           Consolidated Statements of Changes in Shareholders' Equity for the years ended
             December 31, 2002, 2001 and 2000........................................................F-6
           Notes to Consolidated Financial Statements................................................F-7

           Financial Statement Schedule:

           Schedule II - Valuation and Qualifying Accounts...........................................F-36
</TABLE>

      (3) Executive Compensation Plans and Arrangements.
          ---------------------------------------------

          1999 Stock Option Plan (filed as Annex A to the Company's Proxy
          Statement dated April 9, 1999 (the "1999 Proxy Statement")).

          Amended and Restated Shareholders Agreement dated as of December 16,
          1997 among the Company, Ian M. Cumming and Joseph S. Steinberg (filed
          as Exhibit 10.4 to the Company's Annual Report on Form 10-K for the
          fiscal year ended December 31, 1997 (the "1997 10-K")).

          Leucadia National Corporation Senior Executive Annual Incentive Bonus
          Plan (filed as Annex D to the Company's Proxy Statement dated October
          3, 1997 (the "1997 Proxy Statement")).

          Employment Agreement made as of December 28, 1993 by and between the
          Company and Ian M. Cumming (filed as Exhibit 10.17 to the Company's
          Annual Report on Form 10-K for the fiscal year ended December 31, 1993
          (the "1993 10-K")).

          Amendment, dated as of May 5, 1999, to the Employment Agreement made
          as of December 28, 1993 by and between the Company and Ian M. Cumming
          (filed as Exhibit 10.19 to the Company's Annual Report on Form 10-K
          for the fiscal year ended December 31, 2001 (the "2001 10-K")).

          Employment Agreement made as of December 28, 1993 by and between the
          Company and Joseph S. Steinberg (filed as Exhibit 10.18 to the 1993
          10-K).

          Amendment, dated as of May 5, 1999, to the Employment Agreement made
          as of December 28, 1993 by and between the Company and Joseph S.
          Steinberg (filed as Exhibit 10.21 to the 2001 10-K).

          Deferred Compensation Agreement between the Company and Joseph S.
          Steinberg dated December 8, 1998 (filed as Exhibit 10.6 to the
          Company's Annual Report on Form 10-K for the fiscal year ended
          December 31, 1998 (the "1998 10-K")).

          Deferred Compensation Agreement between the Company and Joseph S.
          Steinberg dated as of December 30, 1999 (filed as Exhibit 10.16 to the
          Company's Annual Report on Form 10-K for the fiscal year ended
          December 31, 1999 (the "1999 10-K")).

          Deferred Compensation Agreement between the Company and Mark Hornstein
          dated as of January 10, 2000 (filed as Exhibit 10.17 to the 1999
          10-K).

          Deferred Compensation Agreement between the Company and Thomas E. Mara
          dated as of January 10, 2000 (filed as Exhibit 10.17 to the 2001
          10-K).

                                       35
<PAGE>

          Deferred Compensation Agreement between the Company and Mark Hornstein
          dated as of December 29, 2000 (filed as Exhibit 10.18 to the 2000
          10-K).

          Leucadia National Corporation Senior Executive Warrant Plan (filed as
          Annex B to the 1999 Proxy Statement).

          Deferred Compensation Agreement between the Company and Thomas E. Mara
          dated as of December 20, 2001 (filed as Exhibit 10.28 the 2001 10-K).

          Deferred Compensation Agreement between the Company and Mark Hornstein
          dated as of December 27, 2001 (filed as Exhibit 10.29 to the 2001
          10-K).

          Deferred Compensation Agreement between the Company and Mark Hornstein
          dated as of December 16, 2002.

(b)  Reports on Form 8-K.

     The Company filed current reports on Form 8-K dated October 15, 2002,
     October 16, 2002 and December 24, 2002 which set forth information under
     Item 5. Other Events and Item 7. Financial Statements and Exhibits.

     The Company filed current reports on Form 8-K dated November 27, 2002 which
     set forth information under Item 2. Acquisition or Disposition of Assets,
     Item 5. Other Events and Item 7. Financial Statements and Exhibits.

(c)  Exhibits.

       3.1    Restated Certificate of Incorporation (filed as Exhibit 5.1 to the
              Company's Current Report on Form 8-K dated July 14, 1993). *

       3.2    Certificate of Amendment of the Certificate of Incorporation dated
              as of December 23, 2002.

       3.3    Amended and Restated By-laws as amended through February 23, 1999
              (filed as Exhibit 3.2 to the 1998 10-K).*

       4.1    The Company undertakes to furnish the Securities and Exchange
              Commission, upon request, a copy of all instruments with respect
              to long-term debt not filed herewith.

       10.1   1999 Stock Option Plan (filed as Annex A to the 1999 Proxy
              Statement).*


- ------------------------------------------
*  Incorporated by reference


                                       36
<PAGE>

       10.2   Articles and Agreement of General Partnership, effective as of
              April 15, 1985, of Jordan/Zalaznick Capital Company (filed as
              Exhibit 10.20 to the Company's Registration Statement No.
              33-00606).*

       10.3   Operating Agreement of The Jordan Company LLC, dated as of July
              23, 1998 (filed as Exhibit 10.3 to the 1998 10-K).*

       10.4   Leucadia National Corporation Senior Executive Warrant Plan (filed
              as Annex B to the 1999 Proxy Statement).*

       10.5   Amended and Restated Shareholders Agreement dated as of December
              16, 1997 among the Company, Ian M. Cumming and Joseph S. Steinberg
              (filed as Exhibit 10.4 to the 1997 10-K).*

       10.6   Deferred Compensation Agreement between the Company and Joseph S.
              Steinberg dated December 8, 1998 (filed as Exhibit 10.6 to the
              1998 10-K).*

       10.7   Form of Amended and Restated Revolving Credit Agreement dated as
              of June 27, 2000 between the Company, Fleet National Bank as
              Administrative Agent, The Chase Manhattan Bank, as Syndication
              Agent, and the Banks signatory thereto, with Fleet Boston
              Robertson Stephens, Inc., as Arranger (filed as Exhibit 10.9 to
              the 2000 10-K).*

       10.8   Form of First Amendment, dated as of August 10, 2001, to Amended
              and Restated Revolving Credit Agreement dated as of June 27, 2000
              between the Company, Fleet National Bank as Administrative Agent,
              The Chase Manhattan Bank, as Syndication Agent, and the Banks
              signatory thereto, with Fleet Boston Robertson Stephens, Inc., as
              Arranger (filed as Exhibit 10.8 to the Company's 2001 10-K).*

       10.9   Purchase Agreement among Conseco, Inc., the Company, Charter
              National Life Insurance Company, Colonial Penn Group, Inc.,
              Colonial Penn Holdings, Inc., Leucadia Financial Corporation,
              Intramerica Life Insurance Company, Colonial Penn Franklin
              Insurance Company and Colonial Penn Insurance Company dated as of
              April 30, 1997 (filed as Exhibit 10.1 to the Company's Quarterly
              Report on Form 10-Q for the quarterly period ended June 30,
              1997).*

       10.10  Purchase Agreement among General Electric Capital Corporation, the
              Company, Charter National Life Insurance Company, Colonial Penn
              Group Inc. and Colonial Penn Holdings, Inc. dated as of June 30,
              1997 (filed as Annex A to the 1997 Proxy Statement).*

       10.11  Purchase Agreement by and among Allstate Life Insurance Company,
              Allstate Life Insurance Company of New York, Charter National Life
              Insurance Company, Intramerica Life Insurance Company and the
              Company, dated February 11, 1998 (filed as Exhibit 10.16 to the
              1997 10-K).*

       10.12  Leucadia National Corporation Senior Executive Annual Incentive
              Bonus Plan (filed as Annex D to the 1997 Proxy Statement).*


- ------------------------------------------
*  Incorporated by reference

                                       37
<PAGE>

       10.13  Stock Purchase Agreement by and between the Company and Allstate
              Life Insurance Company dated as of December 18, 1998 (filed as
              Exhibit 10.14 to the 1998 10-K).*

       10.14  Deferred Compensation Agreement between the Company and Joseph S.
              Steinberg dated as of December 30, 1999 (filed as Exhibit 10.16 to
              the Company's 1999 10-K).*

       10.15  Deferred Compensation Agreement between the Company and Mark
              Hornstein dated as of January 10, 2000 (filed as Exhibit 10.17 to
              the 1999 10-K).*

       10.16  Deferred Compensation Agreement between the Company and Thomas E.
              Mara dated as of January 10, 2000 (filed as Exhibit 10.17 to the
              2000 10-K).*

       10.17  Deferred Compensation Agreement between the Company and Mark
              Hornstein dated as of December 29, 2000 (filed as Exhibit 10.18 to
              the 2000 10-K).*

       10.18  Employment Agreement made as of December 28, 1993 by and between
              the Company and Ian M. Cumming (filed as Exhibit 10.17 to the
              Company's 1993 Form 10-K).*

       10.19  Amendment, dated as of May 5, 1999, to the Employment Agreement
              made as of December 28, 1993 by and between the Company and Ian M.
              Cumming (filed as Exhibit 10.19 to the 2001 10-K).*

       10.20  Employment Agreement made as of December 28, 1993 by and between
              the Company and Joseph S. Steinberg (filed as Exhibit 10.18 to the
              1993 10-K).*

       10.21  Amendment, dated as of May 5, 1999, to the Employment Agreement
              made as of December 28, 1993 by and between the Company and Joseph
              S. Steinberg (filed as Exhibit 10.21 to the 2001 10-K).*

       10.22  Commitment Letter dated February 26, 2001 among the Company,
              Berkshire Hathaway Inc., Berkadia LLC, The FINOVA Group Inc. and
              FINOVA Capital Corporation (filed as Exhibit 10.19 to the 2000
              10-K).*

       10.23  Management Services Agreement dated as of February 26, 2001 among
              The FINOVA Group Inc., the Company and Leucadia International
              Corporation (filed as Exhibit 10.20 to the 2000 10-K).*

       10.24  Leucadia National Corporation Guaranty to Fleet Securities, Inc.,
              as administrative agent, and the lenders from time to time party
              to the Fleet Facility, dated as of August 21, 2001 (filed as
              Exhibit 4 to the Schedule 13D filed with the SEC on August 28,
              2001 in respect of Company Common Stock by Berkshire Hathaway Inc.
              et al. (the "Berkshire Schedule 13D")).*

       10.25  Berkadia Management LLC Operating Agreement, dated August 21,
              2001, by and between BH Finance LLC and WMAC Investment
              Corporation (filed as Exhibit 8 to the Berkshire Schedule 13D).*

       10.26  Voting Agreement, dated August 21, 2001, by and among Berkadia
              LLC, Berkshire Hathaway Inc., the Company and The FINOVA Group
              Inc. (filed as Exhibit 10.J to the Company's Current Report on
              Form 8-K dated August 27, 2001).*

       10.27  First Amended and Restated Berkadia LLC Operating Agreement, dated
              August 21, 2001, by and among BHF Berkadia Member Inc., WMAC
              Investment Corporation and Berkadia Management LLC (filed as
              Exhibit 11 to the Berkshire Schedule 13D).*


- ------------------------------------------
*  Incorporated by reference

                                       38
<PAGE>

       10.28  Deferred Compensation Agreement between the Company and Thomas E.
              Mara dated as of December 20, 2001 (filed as Exhibit 10.28 to the
              2001 10-K).*

       10.29  Deferred Compensation Agreement between the Company and Mark
              Hornstein dated as of December 27, 2001 (filed as Exhibit 10.29 to
              the 2001 10-K).*

       10.30  Settlement Agreement dated as of July 26, 2002, by and among The
              Williams Companies Inc. ("TWC"), Williams Communications Group,
              Inc. ("WCG"), CG Austria, Inc., the official committee of
              unsecured creditors and the Company (filed as Exhibit 99.2 to the
              Current Report on Form 8-K of WCG dated July 31, 2002 (the "WCG
              July 31, 2002 8-K")).*

       10.31  Investment Agreement, dated as of July 26, 2002, by and among the
              Company, WCG and, for purposes of Section 7.4 only, Williams
              Communications, LLC ("WCL") (filed as Exhibit 99.4 to the WCG July
              31, 2002 8-K). *

       10.32  First Amendment, made as of September 30, 2002, to the Investment
              Agreement, dated as of July 26, 2002, by and among the Company,
              WCG and WCL (filed as Exhibit 99.4 to the Current Report on Form
              8-K of WCG dated October 24, 2002 (the "WilTel October 24, 2002
              8-K")). *

       10.33  Second Amendment, made as of October 15, 2002, to the Investment
              Agreement, dated as of July 26, 2002, as amended on September 30,
              2002, by and among the Company, WCG and WCL (filed as Exhibit 99.5
              to the WilTel October 24, 2002 8-K).*

       10.34  Purchase and Sale Agreement, dated as of July 26, 2002, by and
              between TWC and the Company (filed as Exhibit 99.5 to the
              Company's Current Report on Form 8-K dated July 31, 2002).*

       10.35  Amendment, made as of October 15, 2002, to the Purchase and Sale
              Agreement, dated as of July 26, 2002, by and among the Company and
              TWC (filed as Exhibit 99.2 to the WilTel October 24, 2002 8-K). *

       10.36  Escrow Agreement, dated as of October 15, 2002, among the Company,
              TWC, WilTel and The Bank of New York, as Escrow Agent (filed as
              Exhibit 99.3 to the WilTel October 24, 2002 8-K). *

       10.37  Share Purchase Agreement, dated April 17, 2002, between LUK Fidei
              L.L.C and Hampton Trust PLC.

       10.38  Reiterative Share Purchase Agreement, dated June 4, 2002, among
              Savits AB Private, Hampton Trust Holding (Europe) SA, John C.
              Jones and Herald Centruy Consolidated SA.

       10.39  Stock Purchase Agreement, dated as of October 21, 2002, between
              HomeFed Corporation ("HomeFed") and the Company (filed as Exhibit
              10.1 to the Current Report on Form 8-K of HomeFed dated October
              22, 2002). *

       10.40  Second Amended and Restated Berkadia LLC Operating Agreement
              dated December 2, 2002, by and among BH Finance LLC and WMAC
              Investment Corporation.

       10.41  Subscription Agreement made and entered into as of December 23,
              2002 by and among the Company and each of the entities named in
              Schedule I thereto.

       10.42  Deferred Compensation Agreement between the Company and Mark
              Hornstein dated as of December 26, 2002.

       21     Subsidiaries of the registrant.




- ------------------------------------------
*  Incorporated by reference

                                       39
<PAGE>

       23.1   Consent of PricewaterhouseCoopers LLP with respect to the
              incorporation by reference into the Company's Registration
              Statement on Form S-8 (File No. 2-84303), Form S-8 and S-3 (File
              No. 33-6054), Form S-8 and S-3 (File No. 33-26434), Form S-8 and
              S-3 (File No. 33-30277), Form S-8 (File No. 33-61682), Form S-8
              (File No. 33-61718), Form S-8 (File No. 333-51494) and Form S-4
              (File No. 333-86018).

       23.2   Independent Auditors' Consent from PricewaterhouseCoopers,
              with respect to the inclusion in this Annual Report on Form 10-K
              the financial statements of Olympus Re Holdings, Ltd. and with
              respect to the incorporation by reference in the Company's
              Registration Statements on Form S-8 (No. 2-84303), Form S-8 and
              S-3 (No. 33-6054), Form S-8 and S-3 (No. 33-26434), Form S-8 and
              S-3 (No. 33-30277), Form S-8 (No. 33-61682), Form S-8 (No.
              33-61718), Form S-8 (No. 333-51494) and Form S-4 (No.333-86018).

       23.3   Consent of independent auditors from Ernst & Young LLP with
              respect to the inclusion in this Annual Report on Form 10-K of the
              financial statements of Berkadia LLC and with respect to the
              incorporation by reference in the Company's Registration
              Statements on Form S-8 (No. 2-84303), Form S-8 and S-3 (No.
              33-6054), Form S-8 and S-3 (No. 33-26434), Form S-8 and S-3 (No.
              33-30277), Form S-8 (No. 33-61682), Form S-8 (No. 33-61718), Form
              S-8 (No. 333-51494) and Form S-4 (No. 333-86018).

       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.

       (d)    Financial statement schedules.
              -----------------------------

              (1)    Berkadia LLC financial statements as of December 31, 2002
                     and 2001 and for the year ended December 31, 2002 and for
                     the period from inception, February 26, 2001, to December
                     31, 2001.

              (2)    Olympus Re Holdings, Ltd. combined financial statements as
                     of December 31, 2002 and 2001 and for the year ended
                     December 31, 2002 and for the period from date of
                     incorporation, December 3, 2001 to December 31, 2001.



                                       40
<PAGE>


                                   SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) 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


March 28, 2003                                By: /s/     Barbara L. Lowenthal
                                                  -----------------------------
                                                  Barbara L. Lowenthal
                                                  Vice President and Comptroller

       Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated, on the date set forth above.

         Signature                                Title
         ---------                                -----


 /s/ Ian M. Cumming                  Chairman of the Board
- -----------------------------        (Principal Executive Officer)
Ian M. Cumming


 /s/ Joseph S. Steinberg             President and Director
- -----------------------------        (Principal Executive Officer)
Joseph S. Steinberg


 /s/ Joseph A. Orlando               Vice President and Chief Financial Officer
- -----------------------------        (Principal Financial Officer)
Joseph A. Orlando


 /s/ Barbara L. Lowenthal            Vice President and Comptroller
- -----------------------------        (Principal Accounting Officer)
Barbara L. Lowenthal


 /s/ Paul M. Dougan                  Director
- -----------------------------
Paul M. Dougan


 /s/ Lawrence D. Glaubinger          Director
- -----------------------------
Lawrence D. Glaubinger


 /s/ James E. Jordan                 Director
- -----------------------------
James E. Jordan


 /s/ Jesse Clyde Nichols, III        Director
 ----------------------------
Jesse Clyde Nichols, III

                                       41
<PAGE>



                                 CERTIFICATIONS


I, Ian M. Cumming, certify that:

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

2. Based on my knowledge, this annual 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 annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 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 annual 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
annual report (the "Evaluation Date"); and

       c) presented in this annual 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
annual report whether 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:  March 28, 2003

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


                                       42
<PAGE>



                                 CERTIFICATIONS



I, Joseph S. Steinberg, certify that:

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

2. Based on my knowledge, this annual 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 annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 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 annual 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
annual report (the "Evaluation Date"); and

       c) presented in this annual 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
annual report whether 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:  March 28, 2003

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

                                       43
<PAGE>



                                 CERTIFICATIONS


I, Joseph A. Orlando, certify that:

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

2. Based on my knowledge, this annual 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 annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 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 annual 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
annual report (the "Evaluation Date"); and

       c) presented in this annual 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
annual report whether 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:  March 28, 2003

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


                                       44
<PAGE>


                                  EXHIBIT INDEX

       3.1    Restated Certificate of Incorporation (filed as Exhibit 5.1 to the
              Company's Current Report on Form 8-K dated July 14, 1993). *

       3.2    Certificate of Amendment of the Certificate of Incorporation dated
              as of December 23, 2002.

       3.3    Amended and Restated By-laws as amended through February 23, 1999
              (filed as Exhibit 3.2 to the 1998 10-K).*

       4.1    The Company undertakes to furnish the Securities and Exchange
              Commission, upon request, a copy of all instruments with respect
              to long-term debt not filed herewith.

       10.1   1999 Stock Option Plan (filed as Annex A to the 1999 Proxy
              Statement).*

       10.2   Articles and Agreement of General Partnership, effective as of
              April 15, 1985, of Jordan/Zalaznick Capital Company (filed as
              Exhibit 10.20 to the Company's Registration Statement No.
              33-00606).*

       10.3   Operating Agreement of The Jordan Company LLC, dated as of July
              23, 1998 (filed as Exhibit 10.3 to the 1998 10-K).*

       10.4   Leucadia National Corporation Senior Executive Warrant Plan (filed
              as Annex B to the 1999 Proxy Statement).*

       10.5   Amended and Restated Shareholders Agreement dated as of December
              16, 1997 among the Company, Ian M. Cumming and Joseph S. Steinberg
              (filed as Exhibit 10.4 to the 1997 10-K).*

       10.6   Deferred Compensation Agreement between the Company and Joseph S.
              Steinberg dated December 8, 1998 (filed as Exhibit 10.6 to the
              1998 10-K).*

       10.7   Form of Amended and Restated Revolving Credit Agreement dated as
              of June 27, 2000 between the Company, Fleet National Bank as
              Administrative Agent, The Chase Manhattan Bank, as Syndication
              Agent, and the Banks signatory thereto, with Fleet Boston
              Robertson Stephens, Inc., as Arranger (filed as Exhibit 10.9 to
              the 2000 10-K).*

       10.8   Form of First Amendment, dated as of August 10, 2001, to Amended
              and Restated Revolving Credit Agreement dated as of June 27, 2000
              between the Company, Fleet National Bank as Administrative Agent,
              The Chase Manhattan Bank, as Syndication Agent, and the Banks
              signatory thereto, with Fleet Boston Robertson Stephens, Inc., as
              Arranger (filed as Exhibit 10.8 to the Company's 2001 10-K).*


- ------------------------------------------
*  Incorporated by reference

                                       45
<PAGE>


       10.9   Purchase Agreement among Conseco, Inc., the Company, Charter
              National Life Insurance Company, Colonial Penn Group, Inc.,
              Colonial Penn Holdings, Inc., Leucadia Financial Corporation,
              Intramerica Life Insurance Company, Colonial Penn Franklin
              Insurance Company and Colonial Penn Insurance Company dated as of
              April 30, 1997 (filed as Exhibit 10.1 to the Company's Quarterly
              Report on Form 10-Q for the quarterly period ended June 30,
              1997).*

       10.10  Purchase Agreement among General Electric Capital Corporation, the
              Company, Charter National Life Insurance Company, Colonial Penn
              Group Inc. and Colonial Penn Holdings, Inc. dated as of June 30,
              1997 (filed as Annex A to the 1997 Proxy Statement).*

       10.11  Purchase Agreement by and among Allstate Life Insurance Company,
              Allstate Life Insurance Company of New York, Charter National Life
              Insurance Company, Intramerica Life Insurance Company and the
              Company, dated February 11, 1998 (filed as Exhibit 10.16 to the
              1997 10-K).*

       10.12  Leucadia National Corporation Senior Executive Annual Incentive
              Bonus Plan (filed as Annex D to the 1997 Proxy Statement).*

       10.13  Stock Purchase Agreement by and between the Company and Allstate
              Life Insurance Company dated as of December 18, 1998 (filed as
              Exhibit 10.14 to the 1998 10-K).*

       10.14  Deferred Compensation Agreement between the Company and Joseph S.
              Steinberg dated as of December 30, 1999 (filed as Exhibit 10.16 to
              the Company's 1999 10-K).*

       10.15  Deferred Compensation Agreement between the Company and Mark
              Hornstein dated as of January 10, 2000 (filed as Exhibit 10.17 to
              the 1999 10-K).*

       10.16  Deferred Compensation Agreement between the Company and Thomas E.
              Mara dated as of January 10, 2000 (filed as Exhibit 10.17 to the
              2000 10-K).*

       10.17  Deferred Compensation Agreement between the Company and Mark
              Hornstein dated as of December 29, 2000 (filed as Exhibit 10.18 to
              the 2000 10-K).*

       10.18  Employment Agreement made as of December 28, 1993 by and between
              the Company and Ian M. Cumming (filed as Exhibit 10.17 to the
              Company's 1993 Form 10-K).*

       10.19  Amendment, dated as of May 5, 1999, to the Employment Agreement
              made as of December 28, 1993 by and between the Company and Ian M.
              Cumming (filed as Exhibit 10.19 to the 2001 10-K).*

       10.20  Employment Agreement made as of December 28, 1993 by and between
              the Company and Joseph S. Steinberg (filed as Exhibit 10.18 to the
              1993 10-K).*

       10.21  Amendment, dated as of May 5, 1999, to the Employment Agreement
              made as of December 28, 1993 by and between the Company and Joseph
              S. Steinberg (filed as Exhibit 10.21 to the 2001 10-K).*



- ------------------------------------------
*  Incorporated by reference

                                       46
<PAGE>

       10.22  Commitment Letter dated February 26, 2001 among the Company,
              Berkshire Hathaway Inc., Berkadia LLC, The FINOVA Group Inc. and
              FINOVA Capital Corporation (filed as Exhibit 10.19 to the 2000
              10-K).*

       10.23  Management Services Agreement dated as of February 26, 2001 among
              The FINOVA Group Inc., the Company and Leucadia International
              Corporation (filed as Exhibit 10.20 to the 2000 10-K).*

       10.24  Leucadia National Corporation Guaranty to Fleet Securities, Inc.,
              as administrative agent, and the lenders from time to time party
              to the Fleet Facility, dated as of August 21, 2001 (filed as
              Exhibit 4 to the Berkshire Schedule 13D).*

       10.25  Berkadia Management LLC Operating Agreement, dated August 21,
              2001, by and between BH Finance LLC and WMAC Investment
              Corporation (filed as Exhibit 8 to the Berkshire Schedule 13D).*

       10.26  Voting Agreement, dated August 21, 2001, by and among Berkadia
              LLC, Berkshire Hathaway Inc., the Company and The FINOVA Group
              Inc. (filed as Exhibit 10.J to the Company's Current Report on
              Form 8-K dated August 27, 2001).*

       10.27  First Amended and Restated Berkadia LLC Operating Agreement, dated
              August 21, 2001, by and among BHF Berkadia Member Inc., WMAC
              Investment Corporation and Berkadia Management LLC (filed as
              Exhibit 11 to the Berkshire Schedule 13D).*

       10.28  Deferred Compensation Agreement between the Company and Thomas E.
              Mara dated as of December 20, 2001 (filed as Exhibit 10.28 to the
              2001 10-K).*

       10.29  Deferred Compensation Agreement between the Company and Mark
              Hornstein dated as of December 27, 2001 (filed as Exhibit 10.29 to
              the 2001 10-K).*

       10.30  Settlement Agreement dated as of July 26, 2002, by and among The
              Williams Companies Inc. ("TWC"), Williams Communications Group,
              Inc. ("WCG"), CG Austria, Inc., the official committee of
              unsecured creditors and the Company (filed as Exhibit 99.2 to the
              WCG July 31, 2002 8-K).*

       10.31  Investment Agreement, dated as of July 26, 2002, by and among the
              Company, WCG and, for purposes of Section 7.4 only, Williams
              Communications, LLC ("WCL") (filed as Exhibit 99.4 to the WCG July
              31, 2002 8-K). *

       10.32  First Amendment, made as of September 30, 2002, to the Investment
              Agreement, dated as of July 26, 2002, by and among the Company,
              WCG and WCL (filed as Exhibit 99.4 to the WilTel October 24, 2002
              8-K). *

       10.33  Second Amendment, made as of October 15, 2002, to the Investment
              Agreement, dated as of July 26, 2002, as amended on September 30,
              2002, by and among the Company, WCG and WCL (filed as Exhibit 99.5
              to the WilTel October 24, 2002 8-K). *



- ------------------------------------------
*  Incorporated by reference


                                       47
<PAGE>



       10.34  Purchase and Sale Agreement, dated as of July 26, 2002, by and
              between TWC and the Company (filed as Exhibit 99.5 to the
              Company's Current Report on Form 8-K dated July 31, 2002).*

       10.35  Amendment, made as of October 15, 2002, to the Purchase and Sale
              Agreement, dated as of July 26, 2002, by and among the Company and
              TWC (filed as Exhibit 99.2 to the WilTel October 24, 2002 8-K). *

       10.36  Escrow Agreement, dated as of October 15, 2002, among the Company,
              TWC, WilTel and The Bank of New York, as Escrow Agent (filed as
              Exhibit 99.3 to the WilTel October 24, 2002 8-K). *

       10.37  Share Purchase Agreement, dated April 17, 2002, between LUK Fidei
              L.L.C and Hampton Trust PLC.

       10.38  Reiterative Share Purchase Agreement, dated June 4, 2002, among
              Savits AB Private, Hampton Trust Holding (Europe) SA, John C.
              Jones and Herald Centruy Consolidated SA.

       10.39  Stock Purchase Agreement, dated as of October 21, 2002, between
              HomeFed Corporation ("HomeFed") and the Company (filed as Exhibit
              10.1 to the Current Report on Form 8-K of HomeFed dated October
              22, 2002). *

       10.40  Second Amended and Restated Berkadia LLC Operating Agreement
              dated December 2, 2002, by and among BH Finance LLC and WMAC
              Investment Corporation.

       10.41  Subscription Agreement made and entered into as of December 23,
              2002 by and among the Company and each of the entities named in
              Schedule I thereto.

       10.42  Deferred Compensation Agreement between the Company and Mark
              Hornstein dated as of December 26, 2002.


       21     Subsidiaries of the registrant.

       23.1   Consent of PricewaterhouseCoopers LLP with respect to the
              incorporation by reference into the Company's Registration
              Statement on Form S-8 (File No. 2-84303), Form S-8 and S-3 (File
              No. 33-6054), Form S-8 and S-3 (File No. 33-26434), Form S-8 and
              S-3 (File No. 33-30277), Form S-8 (File No. 33-61682), Form S-8
              (File No. 33-61718), Form S-8 (File No. 333-51494) and Form S-4
              (File No. 333-86018).

       23.2   Independent Auditors' Consent from PricewaterhouseCoopers,
              with respect to the inclusion in this Annual Report on Form 10-K
              the financial statements of Olympus Re Holdings, Ltd. and with
              respect to the incorporation by reference in the Company's
              Registration Statements on Form S-8 (No. 2-84303), Form S-8 and
              S-3 (No. 33-6054), Form S-8 and S-3 (No. 33-26434), Form S-8 and
              S-3 (No. 33-30277), Form S-8 (No. 33-61682), Form S-8 (No.
              33-61718), Form S-8 (No. 333-51494) and Form S-4 (No.333-86018).

       23.3   Consent of independent auditors from Ernst & Young LLP with
              respect to the inclusion in this Annual Report on Form 10-K of the
              financial statements of Berkadia LLC and with respect to the
              incorporation by reference in the Company's Registration
              Statements on Form S-8 (No. 2-84303), Form S-8 and S-3 (No.
              33-6054), Form S-8 and S-3 (No. 33-26434), Form S-8 and S-3 (No.
              33-30277), Form S-8 (No. 33-61682), Form S-8 (No. 33-61718), Form
              S-8 (No. 333-51494) and Form S-4 (No. 333-86018).



- ------------------------------------------
*  Incorporated by reference

                                       48
<PAGE>


       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.

       (d)    Financial statement schedules.
              -----------------------------

              (1)    Berkadia LLC financial statements as of December 31, 2002
                     and 2001 and for the year ended December 31, 2002 and for
                     the period from inception, February 26, 2001, to December
                     31, 2001.

              (2)    Olympus Re Holdings, Ltd. combined financial statements as
                     of December 31, 2002 and 2001 and for the year ended
                     December 31, 2002 and for the period from date of
                     incorporation, December 3, 2001 to December 31, 2001.






                                       49
<PAGE>



                        Report of Independent Accountants





To the Board of Directors and
Shareholders of Leucadia National Corporation



In our opinion, the consolidated financial statements listed in the index
appearing under Item 15(a)(1)(2) of this Form 10-K, present fairly, in all
material respects, the financial position of Leucadia National Corporation and
Subsidiaries at December 31, 2002 and 2001, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2002, in conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the financial statement
schedule listed in the index appearing under Item 15(a)(1)(2) of this Form 10-K,
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
These financial statements and financial statement schedule are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.





PricewaterhouseCoopers LLP
New York, New York
March 12, 2003









                                      F-1

<PAGE>

LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2002 and 2001
(Dollars in thousands, except par value)


<TABLE>
<CAPTION>

                                                                                            2002                   2001
                                                                                            ----                   ----
<S>                                                                                         <C>                      <C>
ASSETS
- ------
Investments:
   Available for sale (aggregate cost of $484,571 and $579,342)                         $  569,861              $  626,584
   Trading securities (aggregate cost of $49,888 and $68,547)                               48,036                  63,850
   Held to maturity (aggregate fair value of $766 and $1,665)                                  768                   1,666
   Other investments, including accrued interest income                                      6,206                  14,949
                                                                                        ----------              ----------
       Total investments                                                                   624,871                 707,049
Cash and cash equivalents                                                                  418,600                 373,222
Trade, notes and other receivables, net                                                    407,422                 596,229
Prepaids and other assets                                                                  187,046                 227,709
Property, equipment and leasehold improvements, net                                        166,207                 162,158
Investments in associated companies:
   WilTel Communications Group, Inc.                                                       340,551                    --
   Other associated companies                                                              397,081                 358,761
Net assets of discontinued operations                                                        --                     43,959
                                                                                        ----------              ----------
           Total                                                                        $2,541,778              $2,469,087
                                                                                        ==========              ==========

LIABILITIES
- -----------
Customer banking deposits                                                               $  392,904              $  476,495
Trade payables and expense accruals                                                         77,394                  74,988
Other liabilities                                                                          140,586                 215,689
Income taxes payable                                                                        38,231                 124,692
Deferred tax liability                                                                      16,556                  17,051
Debt, including current maturities                                                         233,073                 252,279
                                                                                        ----------              ----------
       Total liabilities                                                                   898,744               1,161,194
                                                                                        ----------              ----------

Commitments and contingencies

Minority interest                                                                           10,309                  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
- --------------------
Series A Non-Voting Convertible Preferred Stock                                             47,507                    --
Common shares, par value $1 per share, authorized 150,000,000 shares;
   58,268,572 and 55,318,257 shares issued and outstanding, after deducting
   60,213,299 and 63,117,584 shares held in treasury                                        58,269                  55,318
Additional paid-in capital                                                                 154,260                  54,791
Accumulated other comprehensive income                                                      56,025                  14,662
Retained earnings                                                                        1,218,464               1,070,682
                                                                                        ----------              ----------
       Total shareholders' equity                                                        1,534,525               1,195,453
                                                                                        ----------              ----------

           Total                                                                        $2,541,778              $2,469,087
                                                                                        ==========              ==========
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      F-2
<PAGE>


LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 2002, 2001 and 2000
(In thousands, except per share amounts)

<TABLE>
<CAPTION>


                                                                                                 2002           2001           2000
                                                                                                 ----           ----           ----
<S>                                                                                             <C>            <C>              <C>
REVENUES:
- ---------
   Manufacturing                                                                            $  50,744      $  53,667      $  65,019
   Finance                                                                                     87,812        113,422         89,007
   Investment and other income                                                                140,315        178,622        214,418
   Net securities gains (losses)                                                              (37,066)        28,450        124,964
                                                                                            ---------      ---------      ---------
                                                                                              241,805        374,161        493,408
                                                                                            ---------      ---------      ---------

EXPENSES:
- ---------
   Manufacturing cost of goods sold                                                            33,963         36,803         40,650
   Interest                                                                                    33,547         47,763         48,109
   Salaries                                                                                    41,814         42,611         48,815
   Selling, general and other expenses                                                        174,006        173,902        154,531
                                                                                            ---------      ---------      ---------
                                                                                              283,330        301,079        292,105
                                                                                            ---------      ---------      ---------
   Income (loss) from continuing operations before income taxes, minority
     expense of trust preferred securities and equity in income (losses) of
     associated companies                                                                     (41,525)        73,082        201,303
                                                                                            ---------      ---------      ---------
Income tax (benefit) provision:
   Current                                                                                   (116,817)        30,362         39,898
   Deferred                                                                                   (28,048)       (41,703)        28,318
                                                                                            ---------      ---------      ---------
                                                                                             (144,865)       (11,341)        68,216
                                                                                            ---------      ---------      ---------
   Income from continuing operations before minority expense of trust preferred
      securities and equity in income (losses) of associated companies                        103,340         84,423        133,087
Minority expense of trust preferred securities, net of taxes                                   (5,521)        (5,521)        (5,521)
Equity in income (losses) of associated companies, net of taxes                                54,712        (15,974)        19,040
                                                                                            ---------      ---------      ---------
   Income from continuing operations                                                          152,531         62,928        146,606
Income (loss) from discontinued operations, net of taxes                                        4,580        (39,742)       (30,598)
Gain (loss) on disposal of discontinued operations, net of taxes                                4,512        (31,105)          --
                                                                                            ---------      ---------      ---------
   Income (loss) before cumulative effect of a change in accounting principle                 161,623         (7,919)       116,008
Cumulative effect of a change in accounting principle                                            --              411           --
                                                                                            ---------      ---------      ---------

           Net income (loss)                                                                $ 161,623      $  (7,508)     $ 116,008
                                                                                            =========      =========      =========

Basic earnings (loss) per common share:
   Income from continuing operations                                                        $    2.74      $    1.13      $    2.64
   Income (loss) from discontinued operations                                                     .08           (.72)          (.55)
   Gain (loss) on disposal of discontinued operations                                             .08           (.56)          --
   Cumulative effect of a change in accounting principle                                          --             .01           --
                                                                                            ---------      ---------      ---------
            Net income (loss)                                                               $    2.90      $    (.14)     $    2.09
                                                                                            =========      =========      =========

Diluted earnings (loss) per common share:
   Income from continuing operations                                                        $    2.72      $    1.13      $    2.64
   Income (loss) from discontinued operations                                                     .08           (.72)          (.55)
   Gain (loss) on disposal of discontinued operations                                             .08           (.56)          --
   Cumulative effect of a change in accounting principle                                          --             .01           --
                                                                                            ---------      ---------      ---------
           Net income (loss)                                                                $    2.88      $    (.14)     $    2.09
                                                                                            =========      =========      =========

</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      F-3
<PAGE>



LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2002, 2001 and 2000
(In thousands)

<TABLE>
<CAPTION>



                                                                                            2002             2001            2000
                                                                                            ----             ----            ----

Net cash flows from operating activities:
- -----------------------------------------

<S>                                                                                           <C>               <C>            <C>
Net income (loss)                                                                       $   161,623      $    (7,508)   $   116,008
Adjustments to reconcile net income (loss) to net cash provided by (used for)
  operations:
  Cumulative effect of a change in accounting principle                                        --               (411)           --
  (Benefit) provision for deferred income taxes                                             (28,048)         (35,291)        28,318
  Depreciation and amortization of property, equipment and leasehold improvements            18,714           17,476         15,903
  Other amortization (primarily related to investments)                                      (2,517)         (14,108)        (2,838)
  Provision for doubtful accounts                                                            36,248           43,263         30,320
  Net securities (gains) losses                                                              37,066          (28,450)      (124,964)
  Equity in (income) losses of associated companies                                         (54,712)          15,974        (19,040)
  (Gain) on disposal of real estate, property and equipment, and other assets               (35,051)         (48,407)       (65,154)
  (Gain) loss on disposal of discontinued operations                                         (4,512)          31,105            --
  Investments classified as trading, net                                                     48,990           (6,675)        (3,978)
  Net change in:
   Trade and other receivables                                                               10,681              574        (10,617)
   Prepaids and other assets                                                                 (1,021)          (3,055)        (3,039)
   Trade payables and expense accruals                                                       11,936          (34,940)       (54,111)
   Other liabilities                                                                         (4,243)          (1,925)        12,824
   Income taxes payable                                                                    (137,327)         (13,180)        (8,908)
  Other                                                                                       2,934            6,941          9,753
  Net change in net assets of discontinued operations                                        (5,384)          63,982         53,039
                                                                                      -------------      -----------     ----------
   Net cash provided by (used for) operating activities                                      55,377          (14,635)       (26,484)
                                                                                      -------------      -----------     ----------

Net cash flows from investing activities:
- -----------------------------------------
Acquisition of real estate, property, equipment and leasehold improvements                  (37,854)         (51,920)       (83,119)
Proceeds from disposals of real estate, property and equipment, and other assets            108,146          187,629        221,909
Proceeds from disposal of discontinued operations, net of expenses                           66,241             --             --
Reduction in cash related to sale of subsidiary, net of cash proceeds from sale             (18,979)            --             --
Advances on loan receivables                                                                (81,650)        (262,388)      (355,604)
Principal collections on loan receivables                                                   174,718          186,626        148,259
Advances on notes receivables                                                                (2,390)          (9,593)       (30,864)
Collections on notes receivables                                                              4,373           39,790        266,954
Investments in associated companies                                                        (375,307)        (186,782)      (108,600)
Distributions from associated companies                                                      43,807          123,871         19,784
Purchases of investments (other than short-term)                                         (1,143,361)      (1,014,015)      (769,194)
Proceeds from maturities of investments                                                     657,487          696,340         68,688
Proceeds from sales of investments                                                          548,249          201,840        898,842
                                                                                      -------------      -----------     ----------

   Net cash (used for) provided by investing activities                                     (56,520)         (88,602)       277,055
                                                                                      -------------      -----------     ----------
                                                                                                                         (continued)


</TABLE>




              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                      F-4
<PAGE>



LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
For the years ended December 31, 2002, 2001 and 2000
(In thousands)

<TABLE>
<CAPTION>

                                                                                            2002             2001            2000
                                                                                            ----             ----            ----

Net cash flows from financing activities:
- -----------------------------------------
<S>                                                                                           <C>              <C>             <C>

Net change in short-term borrowings                                                      $    --          $     --        $ (75,500)
Net change in customer banking deposits                                                     (82,351)         (45,928)       192,512
Issuance of long-term debt, net of issuance costs                                             6,145           71,496        105,850
Reduction of long-term debt                                                                 (13,265)         (10,555)      (113,114)
Issuance of convertible preferred shares                                                     47,507             --             --
Issuance of common shares                                                                   102,535              517           --
Purchase of common shares for treasury                                                         (115)             (45)       (32,094)
Dividends paid                                                                              (13,841)         (13,829)       (13,824)
                                                                                         ----------       ----------      ---------

   Net cash provided by financing activities                                                 46,615            1,656         63,830
                                                                                         ----------       ----------      ---------

Effect of foreign exchange rate changes on cash                                                 (94)            (564)           (51)
                                                                                         ----------       ----------      ---------

   Net increase (decrease) in cash and cash equivalents                                      45,378         (102,145)       314,350
Cash and cash equivalents at January 1,                                                     373,222          475,367        161,017
                                                                                         ----------       ----------      ---------

Cash and cash equivalents at December 31,                                                $  418,600       $  373,222      $ 475,367
                                                                                         ==========       ==========      =========

Supplemental disclosures of cash flow information:
- --------------------------------------------------
Cash paid during the year for:
   Interest                                                                              $   34,681       $   51,232      $  44,213
   Income tax payments, net of refunds                                                   $   17,314       $   11,885      $  24,774







</TABLE>






              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      F-5
<PAGE>



LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the years ended December 31, 2002, 2001 and 2000
(In thousands, except par value and per share amounts)
<TABLE>
<CAPTION>

                                                 Series A
                                                Non-Voting     Common                 Accumulated
                                               Convertible     Shares    Additional      Other
                                                Preferred      $1 Par     Paid-In     Comprehensive     Retained
                                                   Stock       Value      Capital     Income (Loss)     Earnings          Total
                                                ----------    --------   ----------   -------------     --------          -----

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

Balance, January 1, 2000                        $   --        $56,802    $ 84,929        $(9,578)     $   989,835     $1,121,988
                                                                                                                      ----------
Comprehensive income:
   Net change in unrealized gain (loss)
    on investments, net of taxes of $9,078                                                16,386                          16,386
   Net change in unrealized foreign exchange
    gain (loss), net of taxes of $47                                                      (4,223)                         (4,223)
   Net income                                                                                             116,008        116,008
                                                                                                                      ----------
     Comprehensive income                                                                                                128,171
                                                                                                                      ----------
Purchase of stock for treasury                                 (1,505)    (30,589)                                       (32,094)
Dividends ($.25 per common share)                                                                         (13,824)       (13,824)
                                                  -------    --------    --------       --------       ----------     ----------

Balance, December 31, 2000                          --         55,297      54,340          2,585        1,092,019      1,204,241
                                                                                                                      ----------
Comprehensive income:
   Net change in unrealized gain (loss)
     on investments, net of taxes of $9,537                                               17,850                          17,850
   Net change in unrealized foreign exchange
     gain (loss), net of taxes of $882                                                    (5,366)                         (5,366)
   Net change in unrealized gain (loss) on
     derivative  instruments (including the
     cumulative effect of a change in accounting
     principle of  $1,371), net of taxes of $219                                            (407)                           (407)
   Net loss                                                                                                (7,508)        (7,508)
                                                                                                                      ----------
     Comprehensive income                                                                                                  4,569
                                                                                                                      ----------
Exercise of options to purchase common shares                      23         494                                            517
Purchase of stock for treasury                                     (2)        (43)                                           (45)
Dividends ($.25 per common share)                                                                         (13,829)       (13,829)
                                                  -------    --------    --------       --------       ----------     ----------


Balance, December 31, 2001                          --         55,318      54,791         14,662        1,070,682      1,195,453
                                                                                                                      ----------
Comprehensive income:
   Net change in unrealized gain (loss)
     on investments, net of taxes of $14,215                                              26,331                          26,331
   Net change in unrealized foreign exchange
     gain (loss), net of taxes of $1,691                                                  16,375                          16,375
   Net change in unrealized gain (loss) on
     derivative instruments, net of taxes of $724                                         (1,343)                         (1,343)
   Net income                                                                                             161,623        161,623
                                                                                                                      ----------
     Comprehensive income                                                                                                202,986
                                                                                                                      ----------
Issuance of convertible preferred shares           47,507                                                                 47,507
Issuance of common shares                                       2,908      98,585                                        101,493
Exercise of options to purchase common shares                      46         996                                          1,042
Purchase of stock for treasury                                     (3)       (112)                                          (115)
Dividends ($.25 per common share)                                                                         (13,841)       (13,841)
                                                  -------     -------     -------        -------       ----------     ----------

Balance, December 31, 2002                        $47,507     $58,269    $154,260        $56,025       $1,218,464     $1,534,525
                                                  =======     =======    ========        =======       ==========     ==========
</TABLE>



              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      F-6
<PAGE>



LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements

1. Nature of Operations:
   ---------------------

The Company is a diversified holding company engaged in a variety of businesses,
including telecommunications, banking and lending, manufacturing, real estate
activities, winery operations, and property and casualty reinsurance,
principally in markets in the United States, and development of a copper mine in
Spain.

The Company's telecommunications operations are conducted through its 47.4%
interest in WilTel Communications Group, Inc. ("WilTel"), a public company
(traded on the Nasdaq National Market, Symbol: WTEL) that owns or leases and
operates a nationwide inter-city fiber-optic network, extended locally and
globally, to provide Internet, data, voice and video services.

The Company's banking and lending operations principally consist of making
instalment loans to niche markets primarily funded by customer banking deposits
insured by the Federal Deposit Insurance Corporation ("FDIC"). Historically, the
Company's principal lending activities have consisted of providing
collateralized personal automobile loans to individuals with poor credit
histories. As a result of increased loss experience and declining profitability
in its auto lending program, the Company stopped originating new subprime
automobile loans in September 2001. Due to current economic conditions,
portfolio performance and the relatively small size of the Company's other
consumer loan portfolios and target markets, in January 2003 the Company decided
to stop originating all consumer loans. The Company is considering its
alternatives for its banking and lending operations, which could include selling
or liquidating some or all of its loan portfolios, and outsourcing certain
functions.

The Company's manufacturing operations manufacture and market proprietary
lightweight plastic netting used for a variety of purposes including, among
other things, construction, agriculture, packaging, carpet padding, filtration
and consumer products.

The Company's domestic real estate operations include a mixture of commercial
properties, residential land development projects and other unimproved land, all
in various stages of development and all available for sale.

The Company's winery operations consist of two wineries, which produce and sell
wines in the luxury segment of the premium table wine market.

The Company's copper mine development operations consist of its 72.8% interest
in MK Gold Company ("MK Gold"), a company that is traded on the NASD OTC
Bulletin Board.

During the second quarter of 2002, the Company sold its interest in Compagnie
Fonciere FIDEI ("Fidei"), a French real estate company and, accordingly, has
classified its foreign real estate operations as discontinued operations. Prior
period financial statements have been reclassified to conform with this
presentation.

2. Significant Accounting Policies:
   -------------------------------

(a) Critical Accounting Policies and Estimates: The preparation of financial
    ------------------------------------------
statements in conformity with generally accepted accounting principles ("GAAP")
requires the Company to make estimates and assumptions that affect the reported
amounts in the financial statements and disclosures of contingent assets and
liabilities. On an on-going basis, the Company evaluates all of these estimates
and assumptions. Actual results could differ from those estimates.

                                      F-7
<PAGE>


2. Significant Accounting Policies, continued:
   -------------------------------

The allowance for loan losses is established through a provision for loan losses
charged to expense. The allowance for loan losses is an amount that the Company
believes will be adequate to absorb probable losses inherent in its portfolio
based on the Company's evaluations of the collectibility of loans and prior loan
loss experience. Factors considered by the Company include actual experience,
current economic trends, aging of the loan portfolio and collateral value.
During periods of economic weakness, delinquencies, defaults, repossessions and
losses generally increase. These periods may also be accompanied by decreased
demand and declining values of automobiles securing outstanding loans, which
weakens collateral coverage and increases the amount of a loss in the event of
default. In addition, incentives offered by the automobile industry on new cars
affect the supply of used cars and the value the Company may realize upon sale
of repossessed automobiles. The allowance for loan losses is based on numerous
judgments and assumptions and actual loss experience may be different.

The Company records a valuation allowance to reduce its deferred taxes to the
amount that is more likely than not to be realized. If the Company were to
determine that it would be able to realize its deferred tax assets in the future
in excess of its net recorded amount, an adjustment would increase income in
such period. Similarly, if the Company were to determine that it would not be
able to realize all or part of its net deferred taxes in the future, an
adjustment would be charged to income in such period. The Company also records
reserves for contingent tax liabilities related to potential exposure.

The Company accounts for its investment in Berkadia under the equity method of
accounting. Although the Company has no cash investment in Berkadia, the Company
has a contingent liability resulting from its guarantee of 10% of the third
party financing provided to Berkadia. Since the Company does not expect that
Berkadia will suffer losses resulting in the Company having to fund its
guarantee obligation, no reserve has been recorded.

As of December 31, 2002, the carrying amount of the Company's investment in the
mining properties of MK Gold was approximately $59,300,000. The recoverability
of this asset is entirely dependent upon the success of MK Gold's mining project
at the Las Cruces copper deposit in the Pyrite Belt of Spain. Mining will be
subject to obtaining required permits, obtaining both debt and equity financing
for the project, engineering and construction. The market price of copper has
been depressed over the past couple of years, reflecting generally weak global
economic conditions. The amount of financing that can be obtained for the
project and its related cost will be significantly affected by the assessment of
potential lenders of the current and expected future market price of copper. In
addition, the actual price of copper, the operating cost of the mine and the
capital cost to bring the mine into production will affect the recoverability of
this asset. Based on the current status of the project and MK Gold's estimate of
future financing costs and future cash flows, the Company believes the asset is
recoverable.

(b) Consolidation Policy: The consolidated financial statements include the
    --------------------
accounts of the Company and all majority-owned entities except for those in
which control does not rest with the Company due to the significant
participating or controlling rights of other parties. All significant
intercompany transactions and balances are eliminated in consolidation.

Associated companies are investments in equity interests of entities that the
Company does not control and that are accounted for on the equity method of
accounting.

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

(c) Statements of Cash Flows: The Company considers short-term investments,
    ------------------------
which have maturities of less than three months at the time of acquisition, to
be cash equivalents. Cash and cash equivalents include short-term investments of
$267,900,000 and $286,100,000 at December 31, 2002 and 2001, respectively.

                                      F-8
<PAGE>


2. Significant Accounting Policies, continued:
   -------------------------------

(d) Investments: At acquisition, marketable debt and equity securities are
    -----------
designated as either i) held to maturity, which are carried at amortized cost,
ii) trading, which are carried at estimated fair value with unrealized gains and
loses reflected in results of operations, or iii) available for sale, which are
carried at estimated fair value with unrealized gains and losses reflected as a
separate component of shareholders' equity, net of taxes.

Held to maturity investments are made with the intention of holding such
securities to maturity, which the Company has the ability to do. Estimated fair
values are principally based on quoted market prices.

Investments with an impairment in value considered to be other than temporary
are written down to estimated net realizable values. The writedowns are included
in "Net securities gains (losses)" in the Consolidated Statements of Operations.
The cost of securities sold is based on average cost.

(e) Property, Equipment and Leasehold Improvements: Property, equipment and
    ----------------------------------------------
leasehold improvements are stated at cost, net of accumulated depreciation and
amortization ($117,500,000 and $112,600,000 at December 31, 2002 and 2001,
respectively). Depreciation and amortization are provided principally on the
straight-line method over the estimated useful lives of the assets or, if less,
the term of the underlying lease.

(f) Revenue Recognition: Revenue from loans made by the banking and lending
    -------------------
operations is recognized over the term of the loan to provide a constant yield
on the daily principal balance outstanding. Manufacturing revenues are
recognized when title passes, which is generally upon shipment of goods. Revenue
from the sale of real estate is recognized when title passes.

(g) Income Taxes: The Company provides for income taxes using the liability
    ------------
method. The future benefit of certain tax loss carryforwards and future
deductions is recorded as an asset. A valuation allowance is provided if
deferred tax assets are not considered to be more likely than not to be
realized.

(h) Derivative Financial Instruments: On January 1, 2001, the Company adopted
    --------------------------------
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended ("SFAS 133"). Under SFAS 133,
the Company reflects its derivative financial instruments in its balance sheet
at fair value. The Company has utilized derivative financial instruments to
manage the impact of changes in interest rates on its customer banking deposits
and certain debt obligations, hedge net investments in foreign subsidiaries and
manage foreign currency risk on certain available for sale securities. Although
the Company believes that these derivative financial instruments are practical
economic hedges of the Company's risks, except for the hedge of the net
investment in foreign subsidiaries, they do not meet the effectiveness criteria
under SFAS 133, and therefore are not accounted for as hedges.

In accordance with the transition provisions of SFAS 133, the Company recorded
income from a cumulative effect of a change in accounting principle of $411,000,
net of taxes, in results of operations for the year ended December 31, 2001 and
recorded a loss of $1,371,000, net of taxes, as a cumulative effect of a change
in accounting principle in accumulated other comprehensive income. The net
pre-tax charge that the Company expects to reclassify during the next twelve
months to investment and other income from the transition adjustment that was
recorded in accumulated other comprehensive income is not material. Amounts
recorded as charges to investment and other income as a result of accounting for
its derivative financial instruments in accordance with SFAS 133 were $1,700,000
and $2,300,000 for the years ended December 31, 2002 and 2001, respectively. Net
unrealized losses on derivative instruments were $1,800,000 and $400,000 at
December 31, 2002 and 2001, respectively.

                                      F-9
<PAGE>


2. Significant Accounting Policies, continued:
   -------------------------------

(i) Translation of Foreign Currency: Foreign currency denominated investments
    -------------------------------
and financial statements are translated into U.S. dollars at current exchange
rates, except that revenues and expenses are translated at average exchange
rates during each reporting period; resulting translation adjustments are
reported as a component of shareholders' equity. Net foreign exchange gains were
$2,500,000 for 2002, $2,100,000 for 2000 and not material for 2001. Net
unrealized foreign exchange losses were $200,000 and $16,600,000 at December 31,
2002 and 2001, respectively.

(j) Stock-Based Compensation: Statement of Financial Accounting Standards No.
    ------------------------
123, "Accounting for Stock-Based Compensation" ("SFAS 123"), establishes a fair
value method for accounting for stock-based compensation plans, either through
recognition in the statements of operations or disclosure. As permitted, the
Company applies APB Opinion No. 25 and related Interpretations in accounting for
its plans. Accordingly, no compensation cost has been recognized in the
statements of operations for its stock-based compensation plans. Had
compensation cost for the Company's stock option plans been recorded in the
statements of operations consistent with the provisions of SFAS 123, the
Company's net income (loss) would not have been materially different from that
reported in 2002, 2001 and 2000.

(k) Recently Issued Accounting Standards: In July 2002, the Financial Accounting
    ------------------------------------
Standards Board ("FASB") issued Statement of Financial Accounting Standards No.
146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS
146"), which is effective for exit or disposal activities initiated after
December 31, 2002. SFAS 146 addresses issues regarding the recognition,
measurement and reporting of costs associated with exit and disposal activities,
including restructuring activities. SFAS 146 requires a liability be recognized
at fair value for costs associated with exit or disposal activities only when
the liability is incurred as opposed to at the time the Company commits to an
exit plan as permitted under Emerging Issues Task Force Issue No. 94-3. In
November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"), which
requires a guarantor for certain guarantees to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The initial recognition and initial measurement
provisions of FIN 45 are applied on a prospective basis to guarantees issued or
modified after December 31, 2002. In addition, FIN 45 modified the disclosure
requirements for such guarantees effective for interim or annual periods ending
after December 15, 2002; the Company has adopted these disclosure requirements.
In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"), which
addresses consolidation of variable interest entities, which are entities in
which equity investors do not have the characteristics of a controlling
financial interest or do not have sufficient equity at risk for the entity to
finance its activities without additional subordinated financial support from
other parties. FIN 46 is effective immediately to variable interest entities
created after January 31, 2003, and to variable interest entities in which an
enterprise obtains an interest after that date. FIN 46 applies in the first
fiscal year or interim period beginning after June 15, 2003, to variable
interest entities in which an enterprise holds a variable interest that it
acquired before February 1, 2003. FIN 46 may be applied prospectively with a
cumulative effect adjustment as of the date on which it is first applied or by
restating previously issued financial statements with a cumulative effect
adjustment as of the beginning of the first year restated. The Company is
reviewing the impact of the implementation of SFAS 146, the initial recognition
and measurement provisions of FIN 45, and the implementation of FIN 46.

3. Investments in Associated Companies:
   -----------------------------------

The Company has investments in several Associated Companies. The Company records
its portion of the earnings of certain companies based on fiscal periods ended
up to three months prior to the end of the Company's reporting period. The
amounts reflected as equity in income (losses) of associated companies in the
consolidated statements of operations are net of income tax provisions
(benefits) of $36,700,000, $(8,600,000) and $10,300,000 for the years ended
December 31, 2002, 2001 and 2000, respectively.

                                      F-10
<PAGE>


3. Investments in Associated Companies, continued:
   -----------------------------------

The following table provides summarized data with respect to the Associated
Companies accounted for on the equity method of accounting included in results
of operations for the three years ended December 31, 2002, except for Berkadia
and WilTel which are separately summarized below. (Amounts are in thousands.)


<TABLE>
<CAPTION>

                                                                                2002              2001
                                                                                ----              ----
<S>                                                                               <C>              <C>
  Assets                                                                      $1,597,400       $1,317,200
  Liabilities                                                                    584,500          429,400
                                                                              ----------       ----------
     Net assets                                                               $1,012,900       $  887,800
                                                                              ==========       ==========
  The Company's portion of the reported net assets                            $  387,600       $  340,400
                                                                              ==========       ==========
</TABLE>
<TABLE>
<CAPTION>

                                                                                2002              2001            2000
                                                                                ----              ----            ----
<S>                                                                               <C>              <C>             <C>

  Total revenues                                                              $  479,200       $  277,700      $ 233,500
  Income from continuing operations before extraordinary items                $  133,400       $   79,900      $  42,900
  Net income                                                                  $  136,600       $   96,700      $  42,900
  The Company's equity in net income                                          $   39,200       $   45,800      $  29,300


</TABLE>

The Company has not provided any guarantees, nor is it contingently liable for
any of the liabilities reflected in the above table. All such liabilities are
non-recourse to the Company. The Company's exposure to adverse events at the
investee companies is limited to the book value of its aggregate net investment
of $397,100,000.

During 2000, the Company invested $100,000,000 in the equity of a limited
liability company, Jefferies Partners Opportunity Fund II, LLC ("JPOF II"), that
is a registered broker-dealer. JPOF II is managed and controlled by Jefferies &
Company, Inc., a full service investment bank to middle market companies. JPOF
II invests in high yield securities, special situation investments and
distressed securities and provides trading services to its customers and
clients. For the years ended December 31, 2002, 2001 and 2000, the Company
recorded $15,200,000, $27,100,000 and $17,300,000, respectively, of pre-tax
income from this investment under the equity method of accounting. These
earnings were distributed by JPOF II as dividends shortly after the end of each
year.

In December 2001, the Company invested $127,500,000 for an approximate 25%
common stock interest in Olympus Re Holdings, Ltd. ("Olympus"), a newly formed
Bermuda reinsurance company primarily engaged in the property excess, marine and
aviation reinsurance business. For the year ended December 31, 2002, the Company
recorded $24,100,000 of pre-tax income from this investment under the equity
method of accounting.

In December 2001, the Company invested $50,000,000 in a limited partnership that
invests primarily in securities and other obligations of highly leveraged,
distressed and out of favor companies. For the year ended December 31, 2002, the
Company recorded $4,500,000 of pre-tax losses from this investment under the
equity method of accounting.

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 shares of
HomeFed's common stock, which represents approximately 30.3% of HomeFed's
outstanding common stock. At December 31, 2002, the deferred gain on this sale
was $12,100,000 which will be recognized into income as CDS's principal asset,
the real estate project known as San Elijo Hills, is developed and sold. The
Company is accounting for its investment in HomeFed under the equity method of
accounting.

                                      F-11
<PAGE>


3. Investments in Associated Companies, continued:
   -----------------------------------

In November 2002, the Company sold its approximately 40% equity interest in
certain thoroughbred racetrack businesses to a third party for net proceeds of
$28,000,000. The sale resulted in a pre-tax gain of $14,300,000. As part of the
transaction, the Company has an approximately 15% profits interest in a joint
venture formed with the buyer of the businesses to pursue the potential
development and management of gaming ventures in Maryland, including slot
machines and video lottery terminals (if authorized by state law). The Company
has no funding obligations for this joint venture.

In August 2001, Berkadia LLC, an entity jointly owned by the Company and
Berkshire Hathaway Inc. loaned $5,600,000,000 on a senior secured basis to
FINOVA Capital Corporation (the "Berkadia Loan"), the principal operating
subsidiary of The FINOVA Group Inc. ("FINOVA"), to facilitate a chapter 11
restructuring of the outstanding debt of FINOVA and its principal subsidiaries.
Berkadia also received 61,020,581 newly issued shares of common stock of FINOVA
(the "FNV Shares"), representing 50% of the stock of FINOVA outstanding on a
fully diluted basis. The Berkadia Loan is collateralized by substantially all of
the assets of FINOVA and its subsidiaries and is guaranteed by FINOVA and
substantially all of the subsidiaries of FINOVA and FINOVA Capital. Berkadia
financed the Berkadia Loan with bank financing that is guaranteed, 90% by
Berkshire Hathaway and 10% by the Company (with the Company's guarantee being
secondarily guaranteed by Berkshire Hathaway), and that is also secured by
Berkadia's pledge of the $5,600,000,000 five year senior secured promissory note
from FINOVA Capital to Berkadia issued pursuant to the Berkadia Loan. The
financing provided to Berkadia matures on the same date as the Berkadia Loan;
principal payments prior to maturity are required only to the extent principal
payments are received on the Berkadia Loan. As of March 7, 2003, principal
payments have reduced the amount outstanding under the Berkadia Loan and
Berkadia's financing to $1,525,000,000.

During 2001, Berkadia was paid a $60,000,000 commitment fee by FINOVA Capital
upon execution of the commitment, and a $60,000,000 funding fee upon funding of
the Berkadia Loan. The Company's share of these fees, $60,000,000 in the
aggregate, was distributed to the Company shortly after the fees were received.
In addition, FINOVA Capital has reimbursed Berkadia, Berkshire Hathaway and the
Company for all fees and expenses incurred in connection with Berkadia's
financing of its funding obligation under the commitment. In connection with the
funding commitment, in February 2001, FINOVA entered into a ten-year management
agreement with the Company, for which the Company receives an annual fee of
$8,000,000.

Under the agreement governing Berkadia, the Company and Berkshire Hathaway have
agreed to equally share the commitment fee, funding fee and all management fees.
All income related to the Berkadia Loan, after payment of financing costs, will
be shared 90% to Berkshire Hathaway and 10% to the Company. For 2002 and the
2001 period, the Company recorded income of $6,600,000 and $3,900,000,
respectively, representing 10% of the net interest spread on the Berkadia Loan.
All of this income has been distributed to the Company.

In August 2001, Berkadia transferred $5,540,000,000 in cash to FINOVA Capital,
representing the $5,600,000,000 loan reduced by the funding fee of $60,000,000.
As indicated above, in exchange for these funds, Berkadia received a
$5,600,000,000 note from FINOVA Capital and the FNV Shares. Under generally
accepted accounting principles, Berkadia was required to allocate the
$5,540,000,000 cash transferred, reduced by the previously received $60,000,000
commitment fee, between its investment in the Berkadia Loan and the FNV Shares,
based upon the relative fair values of the securities received. Further, the
fair value of the FNV Shares was presumed to be equal to the trading price of
the stock on the day Berkadia received the FNV Shares, with only relatively
minor adjustments allowed for transfer restrictions and the inability of the
traded market price to account for a large block transfer. The requirement to
use the trading price as the basis for the fair value estimate resulted in an
initial book value for the FNV Shares of $188,800,000, which was far in excess
of the $17,600,000 aggregate book net worth of FINOVA on the effective date of
the Plan, and was inconsistent with the Company's view that the FINOVA common
stock has a very limited value. Based on this determination of fair value,
Berkadia recorded an initial investment in the FNV Shares of $188,800,000 and in
the Berkadia Loan of $5,291,200,000.

                                      F-12
<PAGE>

3. Investments in Associated Companies, continued:
   -----------------------------------

The allocation of $188,800,000 to the investment in the common stock of FINOVA,
plus the $120,000,000 of cash fees received, were recorded and reflected as a
discount from the face amount of the Berkadia Loan. The discount is being
amortized to income over the life of the Berkadia Loan under the effective
interest method.

Subsequent to acquisition, Berkadia accounts for its investment in the FINOVA
common stock under the equity method of accounting. Berkadia's recognition of
its share of FINOVA's losses was suspended once the carrying amount of
Berkadia's equity interest in FINOVA was reduced to zero during 2001.
Principally as a result of the terrorist attacks on September 11, 2001, Berkadia
recorded its share of FINOVA's losses in an amount that reduced Berkadia's
investment in FINOVA's common stock to zero. This non-cash loss recorded by
Berkadia is being reversed by Berkadia's accretion of the non-cash portion of
the discount on the Berkadia Loan discussed above.

The Company accounts for its investment in Berkadia under the equity method of
accounting because it does not control Berkadia. Although the Company has no
cash investment in Berkadia, since it has guaranteed 10% of the third party
financing provided to Berkadia, the Company records its share of any losses
recorded by Berkadia, up to the amount of the Company's guarantee. The total
amount of the Company's guarantee is $152,500,000 as of March 7, 2003. For the
year ended December 31, 2002 and for the period from the effective date of the
Plan to December 31, 2001, the Company's equity in the income (loss) of Berkadia
consists of the following (in thousands):
<TABLE>
<CAPTION>

                                                                                              2002             2001
                                                                                              ----             ----
<S>                                                                                           <C>                 <C>

   Net interest spread on the Berkadia Loan - 10% of total                                 $ 6,600           $  3,900
   Amortization of Berkadia Loan discount related to cash fees -
      50% of total                                                                          22,900              7,800
   Amortization of Berkadia Loan discount related to FINOVA stock -
      50% of total                                                                          36,100             12,300
   Share of FINOVA loss under equity method - 50% of total                                     --             (94,400)
                                                                                           -------           --------
      Equity in income (loss) of associated companies - Berkadia                           $65,600           $(70,400)
                                                                                           =======           ========
</TABLE>

The loss recorded by the Company related to its share of Berkadia's equity
method loss in FINOVA in 2001 is a non-cash loss that is being reversed over the
term of the Berkadia Loan as Berkadia accretes the discount on the Berkadia Loan
into income. The net carrying amount of the Company's investment in Berkadia was
negative $72,100,000 and $129,000,000, as of December 31, 2002 and 2001,
respectively, which is included in "Other liabilities" in the consolidated
balance sheets. The negative carrying amounts are due to Berkadia's distribution
of the commitment and funding fees and its recognition of its share of FINOVA's
losses under the equity method of accounting, partially offset by the Company's
share of Berkadia's income related to the Berkadia loan. As a result of the
application of these accounting rules, the negative carrying amount of the
Company's investment in Berkadia effectively represents an unamortized discount
on the Berkadia Loan, which is being amortized to income over the term of the
loan.

                                      F-13
<PAGE>


3. Investments in Associated Companies, continued:
   -----------------------------------

The following table provides certain summarized data with respect to Berkadia at
December 31, 2002 and 2001 and for the year ended December 31, 2002 and for the
period from the effective date of the Plan through December 31, 2001. (Amounts
are in thousands.)
<TABLE>
<CAPTION>

                                                                                          2002                2001
                                                                                          ----                ----
<S>                                                                                        <C>                <C>

   Assets                                                                               $2,030,700         $4,646,700
   Liabilities                                                                           2,177,700          4,908,500
                                                                                        ----------         ----------
      Net assets                                                                        $ (147,000)        $ (261,800)
                                                                                        ==========         ==========
   Total revenues                                                                       $  245,200         $  (52,100)
   Income (loss) from continuing operations before extraordinary items
      and cumulative effect of a change in accounting principle                         $  180,900         $ (110,100)
   Net income (loss)                                                                    $  180,900         $ (110,100)
</TABLE>


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 year ended December 31, 2002, the effect of
this acceleration was to increase the Company's equity in income of Berkadia by
approximately $23,300,000. Loan repayments from FINOVA are unlikely to continue
at the pace experienced to date.

In December 2002, the Company completed the acquisition of 44% of the
outstanding equity of WilTel for an aggregate purchase price of $333,500,000,
including expenses. The WilTel stock was acquired by the Company under the
chapter 11 restructuring plan of Williams Communications Group, Inc. In October
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. Together, these
transactions resulted in the Company acquiring 47.4% of the outstanding common
stock of WilTel. For the period from acquisition through December 31, 2002, the
Company recorded $13,400,000 of pre-tax losses from this investment under the
equity method of accounting. The book value of the Company's investment in
WilTel was $340,600,000 at December 31, 2002. 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. During the
two years subsequent to the effective date of the chapter 11 restructuring plan,
the Company may not sell an amount of WilTel shares greater than 15% of the
total outstanding WilTel common shares.

The following table provides certain summarized data with respect to WilTel at
December 31, 2002 and for the period from acquisition through December 31, 2002.
(Amounts are in thousands.)
<TABLE>
<CAPTION>


             <S>                                                                           <C>
           Assets                                                                        $2,062,300
           Liabilities                                                                    1,372,600
                                                                                         ----------
              Net assets                                                                 $  689,700
                                                                                         ==========
           Total revenues                                                                $  191,700
           Loss from continuing operations before extraordinary items                    $  (61,000)
           Net loss                                                                      $  (61,000)
           The Company's equity in net loss                                              $  (13,400)
</TABLE>

4. Discontinued Operations:
   -----------------------

In December 2001, upon approval by the Company's Board of Directors to commence
an orderly liquidation of the Empire Group, the Company classified as
discontinued operations the property and casualty insurance operations of the
Empire Group. The Empire Group had historically engaged in commercial and
personal lines of property and casualty insurance, principally in the New York
metropolitan area. The Empire Group only accepts new business that it is
obligated to accept by contract or New York insurance law; it does not engage in


                                      F-14
<PAGE>


4. Discontinued Operations, continued:
   -----------------------

any other business activities except for its claims runoff operations. The
voluntary liquidation is expected to be substantially complete by 2005. In
December 2001, the Company wrote down its investment in the Empire Group to its
estimated net realizable value based on expected operating results and cash
flows during the liquidation period, which indicated that the Company is
unlikely to realize any value once the liquidation is complete. Accordingly, the
Company recorded a $31,100,000 after-tax charge (net of taxes of $16,800,000) as
a loss on disposal of discontinued operations to fully write-off its investment.
While this estimated net realizable value represents management's best estimate,
the amount the Company will ultimately realize could be, but is not expected to
be, greater. The Company has no obligation to contribute additional capital to
the Empire Group.

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 (net of income tax expense
of $2,400,000) for the year ended December 31, 2002, and an increase to
shareholders' equity of $12,100,000 as of December 31, 2002. The Euro
denominated sale proceeds were not converted into U.S. 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 year ended December 31, 2002.

At December 31, 2001, the components of net assets of discontinued operations
are as follows (in thousands):

<TABLE>
<CAPTION>



<S>                                                                                          <C>

      Investments                                                                      $  296,215
      Cash and cash equivalents                                                           129,163
      Reinsurance and other receivables, net                                              106,573
      Prepaids and other assets                                                            43,831
      Property, equipment and leasehold improvements, net                                  15,472
                                                                                       ----------
         Total assets                                                                     591,254
                                                                                       ----------

      Trade payables and expense accruals                                                  20,044
      Other liabilities                                                                    24,474
      Policy reserves                                                                     345,989
      Unearned premiums                                                                    16,124
      Debt, including current maturities                                                   90,997
                                                                                       ----------
         Total liabilities                                                                497,628
                                                                                       ----------

      Minority interest                                                                     1,813
                                                                                       ----------
                                                                                           91,813

      Reserve for anticipated loss on liquidation                                         (47,854)
                                                                                       ----------
      Net assets of discontinued operations                                            $   43,959
                                                                                       ==========

</TABLE>

                                      F-15
<PAGE>


4. Discontinued Operations, continued:
   -----------------------

A summary of the results of discontinued operations is as follows for the three
year period ended December 31, 2002 (in thousands):
<TABLE>
<CAPTION>

                                                                                     2002             2001              2000
                                                                                     ----             ----              ----
<S>                                                                                   <C>               <C>               <C>

Revenues:
   Insurance revenues and commissions                                              $   --           $  64,078         $108,494
   Investment and other income                                                       12,904            46,921           87,566
   Net securities gains (losses)                                                       (364)           12,419           (1,739)
                                                                                   --------         ---------         --------
                                                                                     12,540           123,418          194,321
                                                                                   --------         ---------         --------
Expenses:
   Provision for insurance losses and policy benefits                                  --             125,984          150,066
   Amortization of deferred policy acquisition costs                                   --              16,965           26,289
   Interest                                                                           2,163             7,437            9,604
   Salaries                                                                             505             6,744           10,167
   Selling, general and other expenses                                                2,721            24,743           33,954
                                                                                   --------         ---------         --------
                                                                                      5,389           181,873          230,080
                                                                                   --------         ---------         --------

       Income (loss) before income taxes                                              7,151           (58,455)         (35,759)

Income tax provision (benefit)                                                        2,571           (18,713)          (5,161)
                                                                                   --------         ---------         --------

       Income (loss) from discontinued operations, net of taxes                    $  4,580         $ (39,742)        $(30,598)
                                                                                   ========         =========         ========
</TABLE>

5. Investments:
   -----------

The amortized cost, gross unrealized gains and losses and estimated fair value
of investments classified as held to maturity and as available for sale at
December 31, 2002 and 2001 are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                           Gross           Gross       Estimated
                                                                        Amortized        Unrealized      Unrealized     Fair
                                                                          Cost            Gains           Losses        Value
                                                                        ---------       -----------      ----------    --------

Held to maturity:
2002
- ----
<S>                                                                       <C>                <C>            <C>          <C>

Bonds and notes:
  United States Government agencies and authorities                    $    66              $ --           $  2        $   64
  States, municipalities and political subdivisions                          7                --             --             7
Other fixed maturities                                                     695                --             --           695
                                                                       -------              -----          ----        ------
                                                                       $   768              $ --           $  2        $  766
                                                                       =======              =====          ====        ======


2001
- ----
Bonds and notes - States, municipalities and political
  subdivisions                                                         $   501              $ --           $  1        $  500
Other fixed maturities                                                   1,165                --             --         1,165
                                                                       -------              -----          ----        ------


                                                                       $ 1,666              $ --           $  1        $1,665
                                                                       =======              =====          ====        ======



</TABLE>

                                      F-16
<PAGE>


5. Investments, continued:
   -----------

<TABLE>
<CAPTION>

                                                                                           Gross          Gross          Estimated
                                                                       Amortized        Unrealized      Unrealized          Fair
                                                                          Cost            Gains          Losses             Value
                                                                       ---------        ----------       ---------       ----------

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

Available for sale:
2002
- ----
Bonds and notes:
   United States Government agencies and authorities                   $195,285          $    837        $   206          $195,916
   States, municipalities and political subdivisions                      8,530                21            388             8,163
   Foreign governments                                                    4,492               248            --              4,740
   All other corporates                                                 146,175            23,618          7,336           162,457
Other fixed maturities                                                   14,129              --              --             14,129
                                                                       --------          --------        -------          --------
       Total fixed maturities                                           368,611            24,724          7,930           385,405
                                                                       --------          --------        -------          --------

Equity securities:
   Preferred stocks                                                       4,103               304           --               4,407
   Common stocks:
     Banks, trusts and insurance companies                               93,373            60,745         10,192           143,926
     Industrial, miscellaneous and all other                             18,484            18,878          1,239            36,123
                                                                       --------          --------        -------          --------
       Total equity securities                                          115,960            79,927         11,431           184,456
                                                                       --------          --------        -------          --------
                                                                       $484,571          $104,651        $19,361          $569,861
                                                                       ========          ========        =======          ========

2001
- ----
Bonds and notes:
   United States Government agencies and authorities                   $285,272          $  1,210        $    24          $286,458
   States, municipalities and political subdivisions                     11,862                13             48            11,827
   Foreign governments                                                    4,475               238           --               4,713
   Public utilities                                                         660                 2           --                 662
   All other corporates                                                 118,281            13,073         21,266           110,088
Other fixed maturities                                                   25,171             --              --              25,171
                                                                       --------          --------        -------          --------
       Total fixed maturities                                           445,721            14,536         21,338           438,919
                                                                       --------          --------        -------          --------
Equity securities:
   Preferred stocks                                                       4,632               --            --               4,632
   Common stocks:
     Banks, trusts and insurance companies                              102,468            55,500          7,570           150,398
     Industrial, miscellaneous and all other                             26,521            11,249          5,135            32,635
                                                                       --------          --------        -------          --------
       Total equity securities                                          133,621            66,749         12,705           187,665
                                                                       --------          --------        -------          --------

                                                                       $579,342          $ 81,285        $34,043          $626,584
                                                                       ========          ========        =======          ========
</TABLE>


In May 2001, the Company invested $75,000,000 in a new issue of restricted
convertible preference shares of White Mountains Insurance Group, Ltd. ("WMIG").
In August 2001, upon approval by WMIG's shareholders, these securities were
converted into 375,000 common shares which represent approximately 4.5% of WMIG.
WMIG is a publicly traded, Bermuda domiciled financial services holding company,
principally engaged through its subsidiaries and affiliates in property and
casualty insurance and reinsurance. At December 31, 2002 and 2001, the Company's
investment in WMIG, which is reflected in investments available for sale, had a
market value of $121,100,000 and $130,500,000, respectively.

                                      F-17
<PAGE>

5. Investments, continued:
   -----------

At December 31, 2002, investments also included a publicly traded common stock
equity interest of 11.1% in Carmike Cinemas, Inc.

Net unrealized gains on investments were $58,000,000, $31,700,000 and
$13,800,000 at December 31, 2002, 2001 and 2000, respectively. Reclassification
adjustments included in comprehensive income for the three year period ended
December 31, 2002 are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                          2002            2001           2000
                                                                                          ----            ----           ----
<S>                                                                                        <C>            <C>             <C>

Unrealized holding gains arising during the period, net of
   tax provision of $12,558, $12,665 and $8,735                                        $  23,253      $  23,653        $ 15,748
Less:  reclassification adjustment for (gains) losses included in net
   income, net of tax provision (benefit) of $(1,657), $3,128 and $(343)                   3,078         (5,803)            638
                                                                                       ---------      ---------        --------
Net change in unrealized gain on investments, net of tax
   provision of $14,215, $9,537 and $9,078                                             $  26,331      $  17,850        $ 16,386
                                                                                       =========      =========        ========

</TABLE>

The amortized cost and estimated fair value of investments classified as held to
maturity and as available for sale at December 31, 2002, by contractual maturity
are shown below. Expected maturities are likely to differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.


<TABLE>
<CAPTION>

                                                                           Held to Maturity                Available for Sale
                                                                           ----------------                ------------------
                                                                                        Estimated                          Estimated
                                                                     Amortized            Fair           Amortized           Fair
                                                                       Cost               Value            Cost              Value
                                                                     ---------          --------         ---------         ---------
                                                                                             (In thousands)
<S>                                                                       <C>               <C>              <C>              <C>

Due in one year or less                                               $    695          $    695          $134,728          $134,246
Due after one year through five years                                       66                64            91,349           101,537
Due after five years through ten years                                       7                 7            42,876            47,272
Due after ten years                                                       --                --              21,915            24,670
                                                                      --------          --------          --------          --------

                                                                           768               766           290,868           307,725
Mortgage-backed securities                                                --                --              77,743            77,680
                                                                      --------          --------          --------          --------


                                                                      $    768          $    766          $368,611          $385,405
                                                                      ========          ========          ========          ========


</TABLE>

At December 31, 2002 and 2001, securities with book values aggregating
$1,400,000 and $1,500,000, respectively, were on deposit with various regulatory
authorities. Additionally, at December 31, 2002 and 2001, securities with book
values of $165,300,000 and $163,500,000, respectively, collateralized a letter
of credit issued in connection with the sale of the Colonial Penn Insurance
Company and securities with a book value of $4,800,000 at December 31, 2002
collateralized certain swap agreements.

                                      F-18
<PAGE>


5. Investments, continued:
   -----------

Certain information with respect to trading securities at December 31, 2002 and
2001 is as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                    Amortized         Estimated        Carrying
                                                                                      Cost           Fair Value         Value
                                                                                    ---------        ----------       --------

2002
- ----
<S>                                                                                    <C>                <C>          <C>

Fixed maturities - corporate bonds and notes                                        $ 45,225          $ 44,204      $  44,204
Equity securities:
   Preferred stocks                                                                    2,382             2,076          2,076
   Common stocks - industrial, miscellaneous and all other                               259               344            344
Other investments                                                                      2,022             1,412          1,412
                                                                                    --------          --------      ---------

   Total trading securities                                                         $ 49,888          $ 48,036      $  48,036
                                                                                    ========          ========      =========

2001
- ----
Fixed maturities - corporate bonds and notes                                        $ 10,781          $  9,298      $   9,298
Equity securities:
   Preferred stocks                                                                   17,043            14,986         14,986
   Common stocks - industrial, miscellaneous and all other                               832               359            359
Other investments                                                                     39,891            39,207         39,207
                                                                                    --------          --------      ---------

   Total trading securities                                                         $ 68,547          $ 63,850      $  63,850
                                                                                    ========          ========      =========
</TABLE>

6. Trade, Notes and Other Receivables, Net:
   ---------------------------------------

A summary of trade, notes and other receivables, net at December 31, 2002 and
2001 is as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                       2002            2001
                                                                                       ----            ----
<S>                                                                                      <C>            <C>

Instalment loan receivables, net of unearned finance charges of
   $1,614 and $3,748 (a)                                                            $ 373,604       $ 521,242
Receivables related to securities                                                       4,430          30,835
Receivables relating to real estate activities                                         32,720          35,431
Other                                                                                  29,399          45,039
                                                                                    ---------       ---------
                                                                                      440,153         632,547
Allowance for doubtful accounts                                                       (32,731)        (36,318)
                                                                                    ---------       ---------

                                                                                    $ 407,422       $ 596,229
                                                                                    =========       =========
</TABLE>

(a) Contractual maturities of instalment loan receivables at December 31, 2002
were as follows (in thousands): 2003 - $80,200; 2004 - $75,900; 2005 - $55,800;
2006 - $25,400; and 2007 and thereafter - $136,300. Experience shows that a
substantial portion of such notes will be repaid or renewed prior to contractual
maturity. Accordingly, the foregoing is not to be regarded as a forecast of
future cash collections.

7. Prepaids and Other Assets:
   --------------------------

At December 31, 2002 and 2001, prepaids and other assets included real estate
assets, net, of $85,200,000 and $145,800,000, respectively. Prepaids and other
assets at December 31, 2002 and 2001 also included $59,300,000 and $51,100,000,
respectively, of mining properties, net, related to MK Gold.

                                      F-19
<PAGE>

8. Trade Payables, Expense Accruals and Other Liabilities:
   -------------------------------------------------------

A summary of trade payables and expense accruals and other liabilities at
December 31, 2002 and 2001 is as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                       2002             2001
                                                                                       ----             ----
<S>                                                                                     <C>             <C>

Trade Payables and Expense Accruals:
   Payables related to securities                                                   $  26,379       $  20,548
   Trade payables                                                                       9,043          14,697
   Accrued compensation, severance and other employee benefits                         21,684          16,621
   Accrued interest payable                                                             3,652           3,620
   Other                                                                               16,636          19,502
                                                                                    ---------       ---------
                                                                                    $  77,394       $  74,988
                                                                                    =========       =========

Other Liabilities:
   Investment in Berkadia                                                           $  72,106       $ 129,043
   Postretirement and postemployment benefits                                           9,228           9,857
   Liabilities related to real estate activities                                       18,948          36,441
   Other                                                                               40,304          40,348
                                                                                    ---------       ---------
                                                                                    $ 140,586       $ 215,689
                                                                                    =========       =========
</TABLE>

9. Indebtedness:
   ------------

The principal amount, stated interest rate and maturity of debt outstanding at
December 31, 2002 and 2001 are as follows (dollars in thousands):
<TABLE>
<CAPTION>

                                                                                       2002             2001
                                                                                       ----             ----
<S>                                                                                      <C>            <C>

Senior Notes:
   Bank credit facility                                                             $   --          $    --
   7 3/4% Senior Notes due 2013, less debt discount of $531 and $581                   99,469          99,419
   Industrial Revenue Bonds (with variable interest)                                    9,815           9,815
   Aircraft financing                                                                  49,789          51,902
   Other due 2003 through 2016 with a weighted average interest
     rate of 7.97%                                                                     33,265          50,419
                                                                                    ---------       ---------
                                                                                      192,338         211,555
                                                                                    ---------       ---------
Subordinated Notes:
   8 1/4% Senior Subordinated Notes due 2005                                           19,101          19,101
   7 7/8% Senior Subordinated Notes due 2006, less debt discount of
     $42 and $53                                                                       21,634          21,623
                                                                                    ---------       ---------
                                                                                       40,735          40,724
                                                                                    ---------       ---------

                                                                                    $ 233,073       $ 252,279
                                                                                    =========       =========

</TABLE>

At December 31, 2002, the Company had an unsecured bank credit facility of
$152,500,000. In March 2003, the Company entered into a new $110,000,000
unsecured bank credit facility which bears interest based on the Eurocurrency
Rate or the prime rate and matures in 2006. At December 31, 2002, no amounts
were outstanding under this bank credit facility.

                                      F-20
<PAGE>


9. Indebtedness, continued:
   ------------

During 2001, the Company borrowed $53,100,000 secured by its corporate aircraft.
This debt bears interest based on a floating rate, requires monthly payments of
principal and interest and matures in ten years. The interest rate at December
31, 2002 was 2.6%. The Company has entered into an interest rate swap agreement
on this financing, which fixed the interest rate at approximately 5.7%. The
Company would have (paid) received $(4,300,000) and $1,100,000 at December 31,
2002 and 2001, respectively, if the swap were terminated. Changes in interest
rates in the future will change the amounts to be received under the agreement,
as well as interest to be paid under the related variable debt obligation.

The Company has financed the renovation of its Hawaiian hotel and has obtained
loan commitments totaling $25,000,000. At December 31, 2002 and 2001,
$24,900,000 and $18,900,000, respectively, was outstanding under this
non-recourse borrowing. This borrowing bears interest at a rate of 8.05% through
September 1, 2005, at which time the rate is adjusted based on the three year
treasury index to a new fixed rate through maturity. The borrowing matures in
six years and is collateralized by the hotel.

The Company's debt instruments require maintenance of minimum Tangible Net
Worth, limit distributions to shareholders and limit Indebtedness, as defined in
the agreements. In addition, the debt instruments contain limitations on
investments, liens, contingent obligations and certain other matters. As of
December 31, 2002, cash dividends of approximately $534,500,000 would be
eligible to be paid under the most restrictive covenants.

Property, equipment and leasehold improvements of the manufacturing division
with a net book value of $7,100,000 are pledged as collateral for the Industrial
Revenue Bonds; and $99,100,000 of other assets (primarily property) are pledged
for other indebtedness aggregating $83,100,000.

Interest rate agreements are used to manage the potential impact of changes in
interest rates on customer banking deposits. Under interest rate swap
agreements, the Company has agreed with other parties to pay fixed rate interest
amounts and receive variable rate interest amounts calculated by reference to an
agreed notional amount. The variable interest rate portion of the swaps is a
specified LIBOR interest rate. These interest rate swaps expire in 2003 and
require fixed rate payments of 6.2%. The Company would have paid $3,100,000 and
$7,300,000 at December 31, 2002 and 2001, respectively, on retirement of these
agreements. The LIBOR rate at December 31, 2002 was 1.4%. Changes in LIBOR
interest rates in the future will change the amounts to be received under the
agreements, as well as interest to be paid under the related variable debt
obligations.

Counterparties to interest rate and currency swap agreements are major financial
institutions, that management believes are able to fulfill their obligations.
Management believes any losses due to default by the counterparties are likely
to be immaterial.

The aggregate annual mandatory redemptions of debt during the five year period
ending December 31, 2007 are as follows (in thousands): 2003 - $3,600; 2004 -
$3,700; 2005 - $23,400; 2006 - $25,700; and 2007 - $14,200.

At December 31, 2002, customer banking deposits include $138,200,000 aggregate
amount of time deposits in denominations of $100,000 or more.

The weighted average interest rate on short-term borrowings (primarily customer
banking deposits) was 3.5% and 4.8% at December 31, 2002 and 2001, respectively.

                                      F-21
<PAGE>



10. Preferred Securities of Subsidiary Trust:
    ----------------------------------------

In January 1997, the Company sold $150,000,000 aggregate liquidation amount of
8.65% trust issued preferred securities of its wholly-owned subsidiary, Leucadia
Capital Trust I (the "Trust"). These Company-obligated mandatorily redeemable
preferred securities have an effective maturity date of January 15, 2027 and
represent undivided beneficial interests in the Trust's assets, which consist
solely of $154,600,000 principal amount of 8.65% Junior Subordinated Deferrable
Interest Debentures due 2027 of the Company. Considered together, the "back-up
undertakings" of the Company related to the Trust's preferred securities
constitute a full and unconditional guarantee by the Company of the Trust's
obligations under the preferred securities. During 1998, a subsidiary of the
Company repurchased $51,800,000 aggregate liquidation amount of the 8.65% trust
issued preferred securities for $42,200,000, plus accrued interest. The
difference between the purchase price and the book value was credited directly
to shareholders' equity, net of taxes.

11. Common Shares, Stock Options and Preferred Shares:
    -------------------------------------------------

The Board of Directors from time to time has authorized acquisitions of the
Company's Common Shares. In December 1999, the Company's Board of Directors
increased to 6,000,000 the maximum number of shares that the Company is
authorized to purchase. During the three year period ended December 31, 2002,
the Company acquired 1,509,635 Common Shares at an average price of $21.37 per
Common Share. As a result, as of December 31, 2002, the Company is authorized to
repurchase 4,490,365 Common Shares.

In December 2002, the Company completed a private placement of approximately
$150,000,000 of equity securities, based on a common share price of $35.25, to
mutual fund clients of Franklin Mutual Advisers, LLC, including the funds
comprising the Franklin Mutual Series Funds. The Company issued 2,907,599 of the
Company's Common Shares and newly authorized Series A Non-Voting Convertible
Preferred Stock, that were converted into 1,347,720 Common Shares in March 2003.
The securities sold in the private placement represent 7.1% of the Company's
outstanding Common Shares at March 25, 2003.

The Company has a fixed stock option plan which provides for grants of options
or rights to non-employee directors and certain employees up to a maximum grant
of 300,000 shares to any individual in a given taxable year. The maximum number
of Common Shares which may be acquired through the exercise of options or rights
under this plan cannot exceed, in the aggregate, 1,200,000. The plan provides
for the issuance of stock options and stock appreciation rights at not less than
the fair market value of the underlying stock at the date of grant. Options
generally become exercisable in five equal annual instalments starting one year
from date of grant. No stock appreciation rights have been granted.

During the second quarter of 2000, pursuant to shareholder approval, warrants to
purchase 400,000 Common Shares were issued to each of the Company's Chairman and
President. The warrants are exercisable through May 15, 2005 at an exercise
price of $23.95 per Common Share (105% of the closing price of a Common Share on
the date of grant).

                                      F-22
<PAGE>


11. Common Shares, Stock Options and Preferred Shares, continued:
    -------------------------------------------------

A summary of activity with respect to the Company's stock options for the three
years ended December 31, 2002 is as follows:
<TABLE>
<CAPTION>

                                                                    Common            Weighted                         Available
                                                                    Shares             Average         Options         For Future
                                                                    Subject           Exercise       Exercisable         Option
                                                                   to Option           Prices        at Year-End         Grants
                                                                   ---------          ---------      -----------       ----------
<S>                                                                 <C>                   <C>             <C>               <C>

Balance at January 1, 2000                                            --              $    --              --           1,200,000
                                                                                                       =========        =========
   Granted                                                         409,250            $   22.64
   Cancelled                                                       (17,500)           $   22.63
                                                                 ---------

Balance at December 31, 2000                                       391,750            $   22.64           10,000          808,250
                                                                                                       =========        =========
   Granted                                                           4,000            $   33.14
   Exercised                                                       (22,850)           $   22.63
   Cancelled                                                       (46,500)           $   22.63
                                                                 ---------

Balance at December 31, 2001                                       326,400            $   22.77           58,663          850,750
                                                                                                       =========        =========
   Granted                                                         312,500            $   30.80
   Exercised                                                       (46,030)           $   22.63
   Cancelled                                                       (39,800)           $   24.15
                                                                 ---------

Balance at December 31, 2002                                       553,070            $   27.22           81,545          578,050
                                                                 =========                             =========        =========
</TABLE>

The weighted-average fair value of the options granted was $7.91 per share for
2002, $9.46 per share for 2001 and $6.25 per share for 2000 as estimated on the
date of grant using the Black-Scholes option-pricing model with the following
assumptions: (1) expected volatility of 30.3% for 2002, 29.7% for 2001 and 25.4%
for 2000; (2) risk-free interest rates of 3.5% for 2002, 4.9% for 2001 and 6.8%
for 2000; (3) expected lives of 3.7 years for 2002, 4.0 years for 2001 and 3.7
years for 2000; and (4) dividend yields of .8% for 2002 and 2001, and 1.1% for
2000.

The following table summarizes information about fixed stock options outstanding
at December 31, 2002:
<TABLE>
<CAPTION>

                                                       Options Outstanding                          Options Exercisable
                                    ----------------------------------------------------        --------------------------
                                      Common              Weighted             Weighted          Common          Weighted
                                      Shares              Average              Average           Shares          Average
  Range of                           Subject             Remaining             Exercise          Subject         Exercise
Exercise Prices                     to Option         Contractual Life           Price          to Option           Price
- ---------------                     ---------         ----------------       ----------         ---------       ---------
<S>                                       <C>               <C>                   <C>                <C>            <C>
$22.63 - $22.81                        244,070           3.3 years              $22.64             77,545         $22.66
$30.74                                 301,000           5.5 years              $30.74              3,000         $30.74
$33.14                                   4,000           3.4 years              $33.14              1,000         $33.14
$35.23                                   4,000           4.4 years              $35.23              --            $  --

</TABLE>

At December 31, 2002 and 2001, 578,050 and 850,750, respectively, of the
Company's Common Shares were reserved for stock options and 800,000 of the
Company's Common Shares were reserved for warrants.

                                      F-23
<PAGE>


11. Common Shares, Stock Options and Preferred Shares, continued:
    -------------------------------------------------

At December 31, 2002 and 2001, 5,999,990 and 6,000,000, respectively, of
preferred shares (redeemable and non-redeemable), par value $1 per share, were
authorized and not issued.

12. Net Securities Gains (Losses):
    -----------------------------

The following summarizes net securities gains (losses) for each of the three
years in the period ended December 31, 2002 (in thousands):
<TABLE>
<CAPTION>

                                                                                      2002              2001            2000
                                                                                      ----              ----            ----
<S>                                                                                    <C>               <C>            <C>

Net realized gains (losses) on securities                                         $  (1,126)          $ 28,138       $ 134,552
Writedown of investments                                                            (37,053) (a)        (1,907)           --
Net unrealized gains (losses) on trading securities                                   1,113              2,219          (9,588)
                                                                                  ---------           --------        --------

                                                                                  $ (37,066)          $ 28,450        $124,964
                                                                                  =========           ========        ========
</TABLE>

(a) Consists of a provision to write down investments in certain available for
sale securities and an equity investment in a non-public fund.

During 2000, the Company sold its entire equity interest in Fidelity National
Financial, Inc. ("FNF") for proceeds of $179,900,000 and recognized a pre-tax
gain of $90,900,000. Additionally, during 2000, the Company sold its 10% equity
interest in Jordan Telecommunication Products, Inc. ("JTP") for $27,300,000 and
recorded a pre-tax gain of $24,800,000.

Proceeds from sales of investments classified as available for sale were
$649,000,000, $186,000,000 and $883,000,000 during 2002, 2001 and 2000,
respectively. Gross gains of $20,500,000, $15,100,000 and $123,700,000 and gross
losses of $52,600,000, $4,800,000 and $11,300,000 were realized on these sales
during 2002, 2001 and 2000, respectively.

13. Other Results of Operations Information:
    ---------------------------------------

Investment and other income for each of the three years in the period ended
December 31, 2002 consists of the following (in thousands):
<TABLE>
<CAPTION>

                                                                                       2002             2001            2000
                                                                                       ----             ----            ----
<S>                                                                                     <C>              <C>              <C>

Interest on short-term investments                                                  $  7,647          $ 14,187        $ 13,201
Interest on fixed maturities                                                          17,604            28,075          19,184
Interest on notes receivable                                                           5,903             3,005          16,462
Other investment income                                                                8,300            14,817          19,481
Gains on sale and foreclosure of real estate and other assets,
   net of costs                                                                       39,320            48,559          68,401
Rental income                                                                          7,635            14,891          12,685
MK Gold product and service income                                                     4,841             7,299          17,402
Winery revenues                                                                       16,433            13,736          15,337
Prepayment penalty on promissory notes                                                  --                --             7,500
Other                                                                                 32,632            34,053          24,765
                                                                                    --------          --------        --------

                                                                                    $140,315          $178,622        $214,418
                                                                                    ========          ========        ========

</TABLE>

                                      F-24
<PAGE>


13. Other Results of Operations Information, continued:
    ---------------------------------------

Taxes, other than income or payroll, amounted to $3,900,000 for the year ended
December 31, 2002, $5,800,000 for the year ended December 31, 2001 and
$2,600,000 for the year ended December 31, 2000.

Advertising costs amounted to $1,400,000, $2,500,000 and $3,000,000 for the
years ended December 31, 2002, 2001 and 2000, respectively.

14. Income Taxes:
    -------------

The principal components of the deferred tax liability at December 31, 2002 and
2001 are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                       2002             2001
                                                                                       ----             ----
<S>                                                                                    <C>              <C>

Deferred Tax Asset:
   Insurance reserves and unearned premiums                                       $   10,839        $   16,731
   Securities valuation reserves                                                      45,714            48,490
   Investment in WilTel                                                                4,681              --
   Other accrued liabilities                                                          38,962            45,801
                                                                                  ----------        ----------
                                                                                     100,196           111,022
   Valuation allowance                                                               (54,232)          (49,103)
                                                                                  ----------        ----------
                                                                                      45,964            61,919
                                                                                  ----------        ----------
Deferred Tax Liability:
   Unrealized gains on investments                                                   (29,701)          (17,585)
   Depreciation                                                                      (15,864)           (7,209)
   Intangible drilling costs                                                          (5,627)           (5,615)
   Other, net                                                                        (11,328)          (48,561)
                                                                                  ----------        ----------
                                                                                     (62,520)          (78,970)
                                                                                  ----------        ----------

   Net deferred tax liability                                                     $  (16,556)       $  (17,051)
                                                                                  ==========        ==========
</TABLE>

The valuation allowance principally relates to uncertainty as to the realization
of unrealized capital losses.

The provision (benefit) for income taxes for each of the three years in the
period ended December 31, 2002 was as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                     2002             2001          2000
                                                                                     ----             ----          ----
<S>                                                                                    <C>              <C>            <C>

State income taxes (currently payable)                                            $     750         $     500     $   1,113
Federal income taxes:
   Current                                                                         (117,617)           29,812        38,747
   Deferred                                                                         (28,048)          (41,703)       28,318
Foreign income taxes (currently payable)                                                 50                50            38
                                                                                  ---------         ---------     ---------

                                                                                  $(144,865)        $ (11,341)    $  68,216
                                                                                  =========         =========     =========

</TABLE>

                                      F-25
<PAGE>


14. Income Taxes, continued:
    ------------

The table below reconciles the expected statutory federal income tax to the
actual income tax provision (benefit) (in thousands):
<TABLE>
<CAPTION>


                                                                                       2002             2001            2000
                                                                                       ----             ----            ----
<S>                                                                                     <C>               <C>              <C>

Expected federal income tax                                                         $ (14,534)        $ 25,579        $ 70,456
State income taxes, net of federal income tax benefit                                     488              325             723
Resolution of tax contingency                                                        (119,778)            --               --
Recognition of additional tax benefits                                                 (9,360)         (36,234)         (1,597)
Other                                                                                  (1,681)          (1,011)         (1,366)
                                                                                     --------         --------        --------

   Actual income tax provision (benefit)                                            $(144,865)        $(11,341)       $ 68,216
                                                                                    =========         ========        ========
</TABLE>

Reflected above as recognition of additional tax benefits and resolution of tax
contingency are reductions to the Company's income tax provision for the
favorable resolution of certain federal income tax contingencies. The Internal
Revenue Service has completed its audit of the Company's consolidated federal
income tax returns for the years 1996 through 1999, without any material payment
required from the Company. The statue of limitations with respect to the years
1996, 1997 and 1998 expired on December 31, 2002, and the Company made the
adjustments reflected above.

Under certain circumstances, the value of U.S. tax loss carryforwards and other
tax benefits could be substantially reduced if certain changes in ownership were
to occur. In order to reduce this possibility, the Company's certificate of
incorporation includes restrictions which prohibit transfers of the Company's
Common Stock under certain circumstances.

In connection with the sale of certain of the Company's operations in recent
years, the Company has agreed to indemnify the purchasers for certain tax
matters. The Company does not believe that such indemnification obligations will
result in any additional material liability to the Company.

15. Pension Plan and Postretirement Benefits:
    ----------------------------------------

The Company has defined contribution pension plans covering certain employees.
Contributions and costs are a percent of each covered employee's salary. Amounts
charged to expense related to such plans were $1,600,000, $1,800,000 and
$1,600,000 for the years ended December 31, 2002, 2001 and 2000, respectively.

Prior to 1999, the Company also maintained defined benefit pension plans
covering employees of certain units who also met age and service requirements.
Effective December 31, 1998, the Company froze its defined benefit

                                      F-26
<PAGE>


15. Pension Plan and Postretirement Benefits, continued:
    -----------------------------------------


pension plans. A summary of activity with respect to the Company's defined
benefit pension plans for 2002 and 2001 is as follows (in thousands):
<TABLE>
<CAPTION>



                                                                                       2002             2001
                                                                                       ----             ----
<S>                                                                                   <C>                  <C>

Projected Benefit Obligation:
   Projected benefit obligation at January 1,                                       $ 52,705          $ 52,815
   Interest cost (a)                                                                   3,548             3,726
   Actuarial (gain) loss                                                               2,672             1,895
   Benefits paid                                                                      (6,443)           (5,731)
                                                                                    --------          --------
       Projected benefit obligation at December 31,                                 $ 52,482          $ 52,705
                                                                                    ========          ========

Change in Plan Assets:
   Fair value of plan assets at January 1,                                          $ 48,760          $ 49,011
   Actual return on plan assets                                                        2,976             3,614
   Employer contributions                                                                728             1,987
   Benefits paid                                                                      (6,443)           (5,731)
   Administrative expenses                                                              (116)             (121)
                                                                                    --------          --------
       Fair value of plan assets at December 31,                                    $ 45,905          $ 48,760
                                                                                    ========          ========

Funded Status                                                                       $ (6,577)         $ (3,945)
   Unrecognized prior service cost                                                        56                58
   Unrecognized net loss from experience differences and
     assumption changes                                                                9,813             6,824
                                                                                    --------          --------
       Accrued pension asset                                                        $  3,292          $  2,937
                                                                                    ========          ========
</TABLE>

(a) Includes charges to expense of $1,200,000 and $1,300,000 for 2002 and 2001,
respectively, relating to discontinued operations obligations.

Pension expense related to the defined benefit pension plans charged to
operations included the following components (in thousands):
<TABLE>
<CAPTION>

                                                                                       2002             2001           2000
                                                                                       ----             ----           ----
<S>                                                                                    <C>               <C>            <C>

Interest cost                                                                        $ 2,361           $ 2,459       $2,517
Expected return on plan assets                                                        (1,947)           (2,153)      (2,218)
Actuarial loss                                                                            76              --            --
Amortization of prior service cost                                                         3                 3            3
                                                                                     -------           -------       ------
     Net pension expense                                                             $   493           $   309       $  302
                                                                                     =======           =======       ======

</TABLE>

                                      F-27
<PAGE>


15. Pension Plan and Postretirement Benefits, continued:
    ----------------------------------------

The projected benefit obligation at December 31, 2002 and 2001 was determined
using an assumed discount rate of 6.5% and 7.0%, respectively, and the assumed
long-term rate of return on plan assets was 6.5% and 7.5% at December 31, 2002
and 2001, respectively.

Several subsidiaries provide certain health care and other benefits to certain
retired employees under plans which are currently unfunded. The Company pays the
cost of postretirement benefits as they are incurred. Amounts charged to expense
were not material in each of the three years ended December 31, 2002.

A summary of activity with respect to the Company's postretirement plans for
2002 and 2001 is as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                       2002              2001
                                                                                       ----              ----
<S>                                                                                     <C>              <C>

Accumulated postretirement benefit obligation at January 1,                          $ 5,536           $ 5,566
Interest cost                                                                            345               389
Contributions by plan participants                                                       180               175
Actuarial loss                                                                           176               172
Benefits paid                                                                           (796)             (766)
Plan amendments                                                                         (191)              --
                                                                                     -------           -------

   Accumulated postretirement benefit obligation at December 31,                       5,250             5,536
Unrecognized prior service cost                                                          316               197
Unrecognized net actuarial gain                                                        1,923             2,276
                                                                                     -------           -------

   Accrued postretirement benefit obligation                                         $ 7,489           $ 8,009
                                                                                     =======           =======
</TABLE>

The discount rate used in determining the accumulated postretirement benefit
obligation was 6.5% and 7.0% at December 31, 2002 and 2001, respectively. The
assumed health care cost trend rates used in measuring the accumulated
postretirement benefit obligation were between 5.0% and 9.0% for 2002 and 5.0%
and 9.5% for 2001, declining to an ultimate rate of between 5.0% and 6.0% by
2010.

If the health care cost trend rates were increased or decreased by 1%, the
accumulated postretirement obligation as of December 31, 2002 would have
increased or decreased by $400,000 and $300,000, respectively. The effect of
these changes on the aggregate of service and interest cost for 2002 would be
immaterial.

16. Commitments:
    -----------

The Company and its subsidiaries rent office space and office equipment under
non-cancelable operating leases with terms generally varying from one to twenty
years. Rental expense (net of sublease rental income) charged to operations was
$5,200,000 in 2002, $4,700,000 in 2001 and $6,400,000 in 2000. Aggregate minimum
annual rentals (exclusive of real estate taxes, maintenance and certain other
charges) relating to facilities under lease in effect at December 31, 2002 are
as follows (in thousands): 2003 - $6,600; 2004 - $6,000; 2005 - $5,600; 2006 -
$5,400; 2007 - $5,300; and thereafter - $65,200. Future minimum sublease rental
income relating to facilities under lease in effect at December 31, 2002 are as
follows (in thousands): 2003 - $1,600; 2004 - $1,900; 2005 - $1,900; 2006 -
$1,900; 2007 - $1,900; and thereafter - $1,400.

                                      F-28
<PAGE>


16. Commitments, continued:
    -----------

In connection with the sale of certain subsidiaries and certain non-recourse
financings, the Company has made or guaranteed the accuracy of certain
representations. No material loss is expected in connection with such matters.

In connection with the 1997 sale of the property and casualty insurance business
of the Colonial Penn Insurance Company, the Company provided the purchaser with
a $100,000,000 non-cancelable letter of credit to collateralize certain
indemnification obligations. This letter of credit, which expires in 2003, is
collateralized by certain deposits of the Company aggregating $165,300,000,
consisting of investments of $110,100,000 and cash and cash equivalents of
$55,200,000.

Prior to the sale of CDS, the Company had agreed to continue to provide project
improvement bonds, primarily for the benefit of the City of San Marcos for the
San Elijo Hills project, which are required prior to the commencement of any
project development. The bonds provide funds in the event CDS is unable or
unwilling to complete certain infrastructure improvement in the San Elijo Hills
project. Should the City or others draw on the bonds for any reason, CDS and one
of its subsidiaries would be obligated to reimburse the Company for the amount
drawn. At December 31, 2002, $30,000,000 was outstanding under these bonds,
$25,400,000 of which expires in 2003 and the remainder expires in 2004.

At December 31, 2002, the Company also had an $18,000,000 indemnification
guarantee in connection with the financing of a real estate property.

See Note 3 for information concerning the Company's guarantee of Berkadia's
financing.

The banking and lending subsidiaries are limited by regulatory requirements and
agreements in the amount of dividends and other transfers of funds that are
available to the Company. Principally as a result of such restrictions, the net
assets of subsidiaries which are subject to limitations on transfer of funds to
the Company were approximately $77,400,000 at December 31, 2002.

17. Litigation:
    ----------

The Company is subject to various litigation which arises in the course of its
business. Based on discussions with counsel, management is of the opinion that
such litigation is not likely to have any material adverse effect on the
consolidated financial position of the Company, its consolidated results of
operations or liquidity.

18. Earnings (Loss) Per Common Share:
    ---------------------------------

For each of the three years in the period ended December 31, 2002, there were no
differences in the numerators for the basic and diluted per share computations
for income from continuing operations. These numerators were $152,500,000,
$62,900,000 and $146,600,000 for 2002, 2001 and 2000, respectively. The
denominators for basic per share computations were 55,667,000, 55,309,000 and
55,529,000 for 2002, 2001 and 2000, respectively. There were no differences for
the denominators for diluted per share computations except for the dilutive
effect of 349,000, 295,000 and 69,000 options and warrants for 2002, 2001 and
2000, respectively. Due to the nature of their rights and their nominal
liquidation value, the Series A Non-Voting Convertible Preferred shares are
treated as common shares and are included in the denominator for basic and
diluted per share computations for 2002.


                                      F-29
<PAGE>


19. Fair Value of Financial Instruments:
    ------------------------------------

The following table presents fair value information about certain financial
instruments, whether or not recognized on the balance sheet. Fair values are
determined as described below. These techniques are significantly affected by
the assumptions used, including the discount rate and estimates of future cash
flows. The fair value amounts presented do not purport to represent and should
not be considered representative of the underlying "market" or franchise value
of the Company. The methods and assumptions used to estimate the fair values of
each class of the financial instruments described below are as follows:

(a) Investments: The fair values of marketable equity securities, fixed maturity
securities and investments held for trading purposes (which include securities
sold not owned) are substantially based on quoted market prices, as disclosed in
Note 5.

(b) Cash and cash equivalents: For cash equivalents, the carrying amount
approximates fair value.

(c) Notes receivables: The fair values of variable rate notes receivable are
estimated to be the carrying amount.

(d) Loan receivables of banking and lending subsidiaries: The fair value of loan
receivables of the banking and lending subsidiaries is estimated by discounting
the future cash flows using the current rates at which similar loans would be
made to borrowers with similar credit ratings for the same remaining maturities.

(e) Investments in associated companies for which a quoted market price is
available: The fair values are based upon quoted market prices.

(f) Customer banking deposits: The fair value of customer banking deposits is
estimated using rates currently offered for deposits of similar remaining
maturities.

(g) Long-term and other indebtedness: The fair values of non-variable rate debt
are estimated using quoted market prices and estimated rates which would be
available to the Company for debt with similar terms. The fair value of variable
rate debt is estimated to be the carrying amount.

(h) Derivative instruments: The fair values of the interest rate swap and
currency rate swap agreements are based on rates currently available for similar
agreements.

                                      F-30
<PAGE>


19. Fair Value of Financial Instruments, continued:
    -----------------------------------

The carrying amounts and estimated fair values of the Company's financial
instruments at December 31, 2002 and 2001 are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                       2002                 2001
                                                                       ----                 ----
                                                             Carrying      Fair      Carrying     Fair
                                                              Amount       Value      Amount      Value
                                                             --------      -----     --------     ------
<S>                                                             <C>          <C>         <C>         <C>

Financial Assets:
   Investments                                              $ 624,871   $ 624,869   $ 707,049   $ 707,048
   Cash and cash equivalents                                  418,600     418,600     373,222     373,222
   Notes receivable                                            30,240      30,240      41,659      41,659
   Loan receivables of banking and lending
     subsidiaries, net of allowance                           341,756     347,638     485,547     517,128
   Investments in associated companies for
     which a quoted market price is available:
       WilTel                                                 340,551     374,223        --          --
       Other associated companies                              36,527      59,045       2,033      13,893

Financial Liabilities:
   Customer banking deposits                                  392,904     399,567     476,495     486,830
   Debt                                                       233,073     238,912     252,279     258,578
   Securities sold not owned                                   26,379      26,379      19,344      19,344

Company-obligated mandatorily redeemable
   preferred securities of subsidiary trust
   holding solely subordinated debt securities
   of the Company                                              98,200      98,200      98,200      98,200

Derivative Instruments:
   Interest rate swaps                                         (7,386)     (7,386)     (6,292)     (6,292)
   Foreign currency swaps                                      (1,679)     (1,679)        990         990

</TABLE>

20. Segment Information:
    --------------------

The Company's reportable segments consist of its operating units, which offer
different products and services and are managed separately. These reportable
segments are: banking and lending, manufacturing and domestic real estate.
Banking and lending operations historically made collateralized personal
automobile instalment loans to individuals who have difficulty obtaining credit,
at interest rates above those charged to individuals with good credit histories.
Such loans were primarily funded by deposits insured by the FDIC. Manufacturing
operations manufacture and market proprietary lightweight plastic netting used
for a variety of purposes. The Company's domestic real estate operations consist
of a variety of commercial properties, residential land development projects and
other unimproved land, all in various stages of development and all available
for sale. Other operations primarily consist of winery operations and
development of a copper mine.

Associated companies include equity interests in entities that the Company does
not control and that are accounted for on the equity method of accounting.
WilTel, a public telecommunications company that owns or leases and operates a
nationwide fiber optic network over which it provides a variety of
telecommunications services is an associated company, as is Olympus, a
Bermuda-based reinsurance company.


                                      F-31
<PAGE>



20. Segment Information, continued:
    --------------------

The information in the following table for Corporate assets primarily consists
of investments and cash and cash equivalents. Corporate revenues listed below
primarily consist of investment income and securities gains and losses on
Corporate assets. Corporate assets, revenues, overhead expenses and interest
expense are not allocated to the operating units. The Company has a
manufacturing facility located in Belgium and an interest, through MK Gold, in a
copper deposit in Spain. The Company does not have any other material foreign
operations or investments.

Certain information concerning the Company's segments for 2002, 2001 and 2000 is
presented in the following table. Associated Companies are only reflected in the
table below under Identifiable assets employed. Prior period amounts have been
reclassified to reflect the Company's Foreign Real Estate segment as a
discontinued operation.


                                      F-32
<PAGE>



20. Segment Information, continued:
    -------------------
<TABLE>
<CAPTION>

                                                                                        2002            2001              2000
                                                                                        ----            ----              ----
                                                                                                    (In millions)

<S>                                                                                       <C>             <C>               <C>
Revenues:
   Banking and Lending                                                               $     95.9       $   122.4         $   108.8
   Manufacturing                                                                           51.0            57.4              65.1
   Domestic Real Estate                                                                    51.3            65.3              83.1
   Other Operations                                                                        48.3            39.3              44.9
   Corporate  (a) (b)                                                                      (4.7)           89.8             191.5
                                                                                     ----------       ---------         ---------
       Total consolidated revenues (c)                                               $    241.8       $   374.2         $   493.4
                                                                                     ==========       =========         =========

Income (loss) from continuing operations before income taxes,
  minority expense of trust preferred securities and equity in income
  (losses) of associated companies:
   Banking and Lending                                                               $      1.9       $    (6.1)        $    11.0
   Manufacturing                                                                            3.1             7.8              11.3
   Domestic Real Estate                                                                    16.7            30.4              58.8
   Other Operations                                                                        11.7             8.2               5.2
   Corporate (a) (b)                                                                      (74.9)           32.8             115.0
                                                                                     ----------       ---------         ---------
       Total consolidated income (loss) from continuing operations
         before income taxes, minority expense of trust preferred
         securities and equity in income (losses) of associated
         companies (c)                                                               $    (41.5)      $    73.1         $   201.3
                                                                                     ==========       =========         =========

Identifiable assets employed:
   Banking and Lending                                                                $   481.5       $   595.7         $   664.2
   Manufacturing                                                                           51.5            59.3              63.4
   Domestic Real Estate                                                                   106.8           176.4             218.1
   Other Operations                                                                       193.7           171.2             177.1
   Investment in Associated Companies:
     WilTel                                                                               340.6             --               --
     Other Associated Companies                                                           397.1           358.8             192.5
   Net Assets of Discontinued Operations                                                   --              44.0             156.9
   Corporate                                                                              970.6         1,063.7             945.6
                                                                                      ---------       ---------         ---------
       Total consolidated assets                                                      $ 2,541.8       $ 2,469.1         $ 2,417.8
                                                                                      =========       =========         =========
</TABLE>

(a)  For 2002, includes a provision of $37,100,000 to write down investments in
     certain available for sale securities and an equity investment in a
     non-public fund. The write down of the available for sale securities
     resulted from a decline in market value determined to be other than
     temporary.

(b)  For 2000, includes, among other items, pre-tax securities gains on sale of
     FNF ($90,900,000) and JTP ($24,800,000), as described in Note 12.

(c)  Prior period amounts have been reclassified to exclude equity in income
     (losses) of associated companies from these captions.

                                      F-33
<PAGE>



21. Selected Quarterly Financial Data (Unaudited):
    ---------------------------------------------
<TABLE>
<CAPTION>
                                                                          First           Second           Third           Fourth
                                                                         Quarter          Quarter         Quarter          Quarter
                                                                         -------          -------         -------          -------
                                                                                    (In thousands, except per share amounts)
<S>                                                                        <C>                <C>             <C>           <C>
2002:
- -----
Revenues                                                               $    57,567      $    70,317      $  52,373    $   61,548
                                                                       ===========      ===========      =========    ==========
Income (loss) from continuing operations                               $    11,303      $    19,429      $  (2,484)   $  124,283
                                                                       ===========      ===========      =========    ==========
Income from discontinued operations, net of taxes                      $     1,440      $     3,140      $   --       $    --
                                                                       ===========      ===========      =========    ==========
Gain on disposal of discontinued operations, net of taxes              $    --          $     4,512      $   --       $    --
                                                                       ===========      ===========      =========    ==========
     Net income (loss)                                                 $    12,743      $    27,081      $  (2,484)   $  124,283
                                                                       ===========      ===========      =========    ==========

Basic earnings (loss) per common share:
   Income (loss) from continuing operations                            $       .20      $       .35      $    (.04)   $     2.20
   Income from discontinued operations                                         .03              .06            --          --
   Gain on disposal of discontinued operations                              --                  .08             --         --
                                                                       -----------      -----------      ---------    ----------
     Net income (loss)                                                 $       .23      $       .49      $    (.04)   $     2.20
                                                                       ===========      ===========      =========    ==========
   Number of shares used in calculation                                     55,320           55,336         55,346        56,420
                                                                       ===========      ===========      =========    ==========

Diluted earnings (loss) per common share:
   Income (loss) from continuing operations                            $       .20      $       .35      $    (.04)   $     2.19
   Income from discontinued operations                                         .03              .06          --          --
   Gain on disposal of discontinued operations                              --                  .08          --          --
                                                                       -----------      -----------      ---------    ----------
     Net income (loss)                                                 $       .23      $       .49      $    (.04)   $     2.19
                                                                       ===========      ===========      =========    ==========
   Number of shares used in calculation                                     55,558           55,694         55,346        56,871
                                                                       ===========      ===========      =========    ==========

2001:
- -----
Revenues                                                               $    84,178      $    99,313      $ 113,743    $   76,927
                                                                       ===========      ===========      =========    ==========
Income (loss) from continuing operations                               $    11,787      $    30,478      $ (24,987)   $   45,650
                                                                       ===========      ===========      =========    ==========
Income (loss) from discontinued operations, net of taxes               $   (31,685)     $    (4,604)     $  (6,973)   $    3,520
                                                                       ===========      ===========      =========    ==========
Loss on disposal of discontinued operations, net of taxes              $      --        $    --          $    --      $  (31,105)
                                                                       ===========      ===========      =========    ==========
Cumulative effect of a change in accounting principle                  $       411      $    --          $    --      $     --
                                                                       ===========      ===========      =========    ==========
     Net income (loss)                                                 $   (19,487)     $    25,874      $ (31,960)   $   18,065
                                                                       ===========      ===========      =========    ==========

Basic earnings (loss) per common share:
   Income (loss) from continuing operations                            $       .21      $       .55      $    (.45)   $      .83
   Income (loss) from discontinued operations                                 (.57)            (.08)          (.13)          .06
   Loss on disposal of discontinued operations                               --                 --             --           (.56)
   Cumulative effect of a change in accounting principle                       .01              --             --            --
                                                                       -----------      -----------      ---------    ----------
     Net income (loss)                                                 $      (.35)     $       .47      $    (.58)   $      .33
                                                                       ===========      ===========      =========    ==========
   Number of shares used in calculation                                     55,299           55,309         55,314        55,316
                                                                       ===========      ===========      =========    ==========

Diluted earnings (loss) per common share:
   Income (loss) from continuing operations                            $       .21      $       .55      $    (.45)   $      .83
   Income (loss) from discontinued operations                                 (.57)            (.08)          (.13)          .06
   Loss on disposal of discontinued operations                               --                 --             --           (.56)
   Cumulative effect of a change in accounting principle                       .01              --             --            --
                                                                       -----------      -----------      ---------    ----------
     Net income (loss)                                                 $      (.35)     $       .47      $    (.58)   $      .33
                                                                       ===========      ===========      =========    ==========
   Number of shares used in calculation                                     55,299           55,635         55,314        55,521
                                                                       ===========      ===========      =========    ==========
</TABLE>


                                      F-34
<PAGE>


21. Selected Quarterly Financial Data (Unaudited), continued:
    ---------------------------------------------

During 2002, the Internal Revenue Service completed the audit of the Company's
consolidated federal income tax returns for the years 1996 through 1999, without
any material tax payment required from the Company. As a result of this
favorable resolution of various federal income tax contingencies, the income tax
provision for the fourth quarter of 2002 reflects a benefit of approximately
$120,000,000.

Quarterly data for 2001 includes equity losses of $70,400,000 representing the
Company's share of the loss recorded by Berkadia primarily in the third quarter.

In 2002 and 2001, the totals of quarterly per share amounts do not necessarily
equal annual per share amounts.

                                      F-35
<PAGE>



Schedule II - Valuation and Qualifying Accounts
LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
For the years ended December 31, 2002, 2001 and 2000
(In thousands)
<TABLE>
<CAPTION>



                                                                    Additions              Deductions
                                                            ------------------------      ----------

                                                            Charged
                                          Balance at        to Costs                                           Balance
                                          Beginning            and                           Write             at End
  Description                             of Period         Expenses       Recoveries        Offs             of Period
  -----------                             ---------         --------       ----------      ---------         -----------

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

  2002
  ----
  Loan receivables of
   banking and lending
   subsidiaries                          $  35,695         $  36,027        $  9,646      $  49,520          $ 31,848
  Trade, notes and other
   receivables                                 623               221             179            140               883
                                         ---------         ---------        --------      ---------          ---------

  Total allowance for
   doubtful accounts                     $  36,318         $  36,248        $  9,825      $  49,660          $ 32,731
                                         =========         =========        ========      =========          ========

  2001
  ----
  Loan receivables of
   banking and lending
   subsidiaries                          $  27,364         $  43,125        $  8,519      $  43,313          $ 35,695
  Trade, notes and other
   receivables                                 663               138              16            194               623
                                         ---------         ---------        --------      ---------          --------

  Total allowance for
   doubtful accounts                     $  28,027         $  43,263        $  8,535      $  43,507          $ 36,318
                                         =========         =========        ========      =========          ========

  2000
  ----
  Loan receivables of
   banking and lending
   subsidiaries                          $ 16,975           $  30,169        $  5,681      $  25,461          $ 27,364
  Trade, notes and other
   receivables                                565                 151              14             67               663
                                         --------           ---------        --------      ---------          --------

  Total allowance for
   doubtful accounts                     $ 17,540           $  30,320        $  5,695      $  25,528          $ 28,027
                                         ========           =========        ========      =========          ========



</TABLE>




                                      F-36

<PAGE>


FINANCIAL STATEMENTS

Berkadia LLC (a joint venture between Berkshire
Hathaway Inc. and Leucadia National Corporation)


Years ended December 31, 2002 and 2001




<PAGE>


                                  Berkadia LLC

                              Financial Statements


                     Years ended December 31, 2002 and 2001




                                    Contents

Report of Independent Auditors................................................2

Audited Financial Statements

Balance Sheets................................................................3
Statements of Operations and Changes in Members' Deficit......................4
Statement of Cash Flows.......................................................5
Notes to Financial Statements.................................................6





<PAGE>







                         Report of Independent Auditors


The Members of Berkadia LLC

We have audited the accompanying  balance sheets of Berkadia LLC (the "Company")
as of December 31, 2002 and 2001,  and the related  statements of operations and
changes in members'  equity and cash flows for the year ended  December 31, 2002
and for the period from February 26, 2001 to December 31, 2001.  These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Berkadia LLC at December 31,
2002 and 2001 and the results of its  operations and its cash flows for the year
ended  December  31, 2002 and for the period from  February 26, 2001 to December
31, 2001, in conformity with  accounting  principles  generally  accepted in the
United States.






Ernst & Young, LLP



Phoenix, Arizona
February 28, 2003

                                       2
<PAGE>


                                  Berkadia LLC

                                 Balance Sheets

<TABLE>
<CAPTION>


                                                                                                          December 31
                                                                                                  2002                     2001
                                                                                              -----------              -------------
                                                                                                     (In thousands)
<S>                                                                                                 <C>                      <C>
Assets
Cash                                                                                          $      --                 $         1
Loan receivable due from FINOVA, net of discount                                                2,024,503                 4,631,476
Interest and facility fee receivable                                                                6,155                    15,244
                                                                                              -----------               -----------
Total assets                                                                                  $ 2,030,658               $ 4,646,721
                                                                                              ===========               ===========

Liabilities and members' accumulated deficit
Liabilities:
   Long-term debt                                                                             $ 2,175,000               $ 4,900,000
   Interest and facility fee payable                                                                2,693                     8,486
                                                                                              -----------               -----------
Total liabilities                                                                               2,177,693                 4,908,486

Members' accumulated deficit                                                                     (147,035)                 (261,765)
                                                                                              -----------               -----------
Total liabilities and members' accumulated deficit                                            $ 2,030,658               $ 4,646,721
                                                                                              ===========               ===========

</TABLE>


                See accompanying notes to financial statements.

                                       3
<PAGE>


                                  Berkadia LLC

      Statements of Operations and Changes in Members' Accumulated Deficit


<TABLE>
<CAPTION>

                                                                                                                    Ten-month period
                                                                                                Year ended               ended
                                                                                            December 31, 2002      December 31, 2001
                                                                                            -----------------      -----------------
                                                                                                         (In thousands)
<S>                                                                                                 <C>                      <C>

Revenue
Interest income and amortization of loan discount                                               $ 245,167                $ 136,734
                                                                                                ---------                ---------
Total revenue                                                                                     245,167                  136,734

Expenses
Equity loss in FINOVA                                                                                --                    188,800
Interest expense                                                                                   64,287                   57,990
                                                                                                ---------                ---------
Total expenses                                                                                     64,287                  246,790
                                                                                                ---------                ---------
Net income                                                                                        180,880                 (110,056)
Members' accumulated deficit, beginning of period                                                (261,765)                    --
Distributions to members                                                                          (66,150)                (151,709)
                                                                                                ---------                ---------
Members' accumulated deficit, end of period                                                     $(147,035)               $(261,765)
                                                                                                =========                =========

</TABLE>


                See accompanying notes to financial statements.

                                       4
<PAGE>


                                  Berkadia LLC

                             Statement of Cash Flows

<TABLE>
<CAPTION>

                                                                                                                  Ten-month period
                                                                                                 Year ended              ended
                                                                                             December 31, 2002    December 31, 2001
                                                                                             -----------------    -----------------
                                                                                                         (In thousands)

<S>                                                                                                 <C>                 <C>

Net cash flows from operating activities
Net income (loss)                                                                             $   180,880          $  (110,056)
Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
     Equity loss in FINOVA                                                                           --                188,800
     Amortization of loan discount                                                               (118,028)             (40,276)
     Net change in:
       Receivables                                                                                  9,090              (15,244)
       Payables                                                                                    (5,793)               8,486
                                                                                              -----------          ------------
Net cash provided by operating activities                                                          66,149               31,710
                                                                                              -----------          ------------


Net cash flows from investing activities
Loan to FINOVA, net                                                                                  --             (5,480,000)
Loan repayment from FINOVA                                                                      2,725,000              700,000
                                                                                              -----------          -----------
Net cash provided by (used in) investing activities                                             2,725,000           (4,780,000)
                                                                                              -----------          -----------

Net cash flows from financing activities
Issuance of long-term debt                                                                           --              5,600,000
Repayment of long-term debt                                                                    (2,725,000)            (700,000)
Distributions to members                                                                          (66,150)            (151,709)
                                                                                              -----------          -----------
Net cash provided by (used in) financing activities                                            (2,791,150)           4,748,291
                                                                                              -----------          -----------
Net increase (decrease) in cash                                                                        (1)                   1
Cash and cash equivalents at beginning of period                                                        1                 --
                                                                                              -----------          -----------
Cash and cash equivalents at end of period                                                    $      --            $         1
                                                                                              ===========          ===========

Supplemental disclosure of noncash investing activities
Allocation of loan receivable due from FINOVA to equity
 investment in FINOVA shares                                                                  $      --            $   188,800
                                                                                              ===========          ===========
</TABLE>




                See accompanying notes to financial statements.

                                       5
<PAGE>



                                  Berkadia LLC

                        Notes to the Financial Statements

                           December 31, 2002 and 2001




1. Formation and Nature of Operations

Berkadia LLC (the "Company" or "Berkadia")  was formed on February 26, 2001 as a
joint  venture  between  Berkshire  Hathaway  Inc.  ("Berkshire")  and  Leucadia
National  Corporation   ("Leucadia").   Berkshire  and  Leucadia  through  their
respective  wholly owned  affiliates  hold the  interests in the Company and are
referred to as the "Members".

The principal  business purpose of the Company was to lend up to  $6,000,000,000
on a senior secured basis to FINOVA Capital Corporation ("FINOVA Capital"),  the
principal  operating  subsidiary  of  The  FINOVA  Group  Inc.  ("FINOVA"),   to
facilitate a chapter 11  restructuring of the outstanding debt of FINOVA and its
principal  subsidiaries.  On August 10, 2001, the bankruptcy court confirmed the
Chapter 11 reorganization  plan for the FINOVA companies (the "Plan"). On August
21, 2001, the effective date of the Plan, the Company loaned  $5,600,000,000 par
amount  on a senior  secured  basis to FINOVA  Capital  (the  "Berkadia  Loan").
Concurrent with the loan, the Company received 61,020,581 newly issued shares of
common  stock  of  FINOVA  (the  "Shares"),   representing  50  percent  of  the
outstanding stock of FINOVA.

The Berkadia Loan is collateralized by substantially all of the assets of FINOVA
and its  subsidiaries  and  guaranteed  by FINOVA and  substantially  all of the
subsidiaries  of FINOVA.  The Company  borrowed  the entire  amount  required to
finance the Berkadia  Loan from a  consortium  of lenders led by Fleet Bank (the
"Fleet Loan").  The Fleet Loan is guaranteed,  90 percent by Berkshire  Hathaway
and  10  percent  by  Leucadia  (with  Leucadia's  guarantee  being  secondarily
guaranteed by  Berkshire),  and is also secured by the  Company's  pledge of the
Berkadia Loan.

The  Company  was paid a  $60,000,000  commitment  fee by  FINOVA  Capital  upon
execution of the loan  commitment in February 2001,  and a $60,000,000  fee upon
funding of the Berkadia Loan on August 21, 2001.  Under the operating  agreement
governing the Company,  Berkshire and Leucadia  share equally in the  commitment
fee,  funding fee and any  proceeds  realized  from the Shares.  Interest on the
Berkadia  Loan,  after  payment of interest on the Fleet Loan,  is  allocated 90
percent to Berkshire and 10 percent to Leucadia.  To date,  all cash received by
the Company,  after payment of any financing  costs, has been distributed to the
Members. In addition, FINOVA Capital has reimbursed the Company and the Members,
for all fees and expenses  incurred in connection with their  commitments.  Fees
reimbursed to the Company aggregated $11,950,000 during 2001. There were no such
fees in 2002.


                                       6
<PAGE>


                                  Berkadia LLC

                        Notes to the Financial Statements

                           December 31, 2002 and 2001



1. Formation and Nature of Operations (continued)

The Members have not  contributed  any equity  capital to the  Company,  and the
Company does not currently  anticipate  that any capital  contributions  will be
required in the future.  Decisions concerning the management of the business and
affairs of the Company  generally  require the consent of all Members.  However,
Berkshire  makes any and all decisions  with respect to the Berkadia Loan in its
sole and absolute discretion.

Upon FINOVA's  emergence from bankruptcy in 2001, each of Berkshire and Leucadia
designated  two persons to serve on FINOVA's  reconstituted  board of directors.
From and after  the  effective  date of the Plan,  the  Company,  Berkshire  and
Leucadia are not entitled to designate FINOVA board members.

During 2002, several structural changes to the Company were executed, which were
intended to simplify  the  ownership  structure  of the Company and to provide a
debt-free  vehicle for the Berkadia members to use to pursue other  investments.
These changes did not alter the ownership  interests in the Company,  ultimately
held by  Berkshire  and  Leucadia,  and  resulted in no gains or losses or other
changes  to  member's  accumulated  deficit.  Among  the  changes,  the  Company
effectively  distributed  all of its  right,  title and  interest  in and to the
Shares to an entity formed by the Members  (Berkadia  Equity Holdings LLC). As a
result, the Company no longer has a financial interest in the FINOVA Shares.

2. Significant Accounting Policies

(a) Use of Estimates in  Preparing  Financial  Statements:  The  preparation  of
    -----------------------------------------------------
financial statements in conformity with accounting principles generally accepted
in the  United  States  ("GAAP")  requires  management  to  make  estimates  and
assumptions that affect (i) the reported amounts of assets and liabilities, (ii)
the disclosure of contingent assets and liabilities at the date of the financial
statements  and (iii) the reported  amounts of revenues and expenses  during the
reporting period. Actual results could differ from those estimates.

(b) Loan Receivable from FINOVA:   The  Berkadia  Loan  is  carried  net  of
    ---------------------------
unamortized  discount  related to  the commitment fee,  the  funding fee and the
amount of the Berkadia Loan  allocated to  Berkadia's  investment in the Shares.
The discount is accreted  into  investment  income over the life of the Berkadia
Loan through the effective  interest  method.  FINOVA is current with respect to
all amounts due to the Company under the Berkadia Loan. As of December 31, 2002,
there  was no  allowance  for  losses on the  Berkadia  Loan.
                                       7
<PAGE>


                                  Berkadia LLC

                        Notes to the Financial Statements

                           December 31, 2002 and 2001



2.  Significant Accounting Policies (continued)

(c) Investment in FINOVA Shares: Berkadia accounted  for its investment  in  the
    ---------------------------
Shares under the equity method. Under the equity method, Berkadia recognized its
proportionate  share of FINOVA's  net income or loss.  For the period  August 21
through  September  30,  2001,  FINOVA  incurred  significant  operating  losses
primarily as a result of the September 11 terrorist attack.  Berkadia's share of
such losses far exceeded the cost allocated to the Shares,  which was based upon
the relative  fair values of the Shares and the  Berkadia  Loan as of August 21,
2001.  The  application  of the equity  method was  suspended  once the carrying
amount of Shares was reduced to zero. As a result of the  structural  changes to
the  Company  in 2002  discussed  in Note 1,  Berkadia  possessed  no  financial
interests in the Shares as of December 31, 2002.

(d) Income taxes: The Company does not file an income tax return. Each Member is
    ------------
responsible  for the tax  liability,  if any,  deriving from the taxable  income
allocated to such Member.  Accordingly,  no provision  for income taxes has been
reflected in these financial statements.

3. Berkadia Loan

The Berkadia Loan bears interest  payable  monthly,  at the Eurodollar Rate plus
2.25 percent.  All unpaid  principal and accrued  interest is due at maturity on
August 20, 2006.  For the year ended  December 31,  2002,  the  weighted-average
interest rate was 4.14 percent.  For the ten-month period from February 26, 2001
to December 31, 2001, the weighted average  interest rate was 5.06%.  FINOVA and
substantially all of its direct and indirect subsidiaries (except those that are
contractually  prohibited  from acting as a guarantor)  have  guaranteed  FINOVA
Capital's  repayment  of the  Berkadia  Loan.  The  guarantees  are  secured  by
substantially all of the assets of FINOVA and its subsidiaries.

On August 21, 2001,  the Company  transferred  $5,540,000,000  in cash to FINOVA
Capital,  representing  the  $5,600,000,000  loan  reduced by the funding fee of
$60,000,000.  As  indicated  above,  in exchange  for these  funds,  the Company
received a $5,600,000,000  note from FINOVA Capital and the Shares.  The Company
allocated  the   $5,540,000,000   cash  transferred,   reduced  further  by  the
$60,000,000  commitment fee received in February 2001, between its investment in
the Berkadia Loan and the Shares, based upon the respective relative fair values
of the Berkadia Loan and the Shares. As a result, the Berkadia Loan was recorded
at an initial value of $5,291,200,000, which is net of a discount related to the
commitment and funding fees of $120,000,000 and the cost allocated to the Shares
of $188,800,000.
                                       8
<PAGE>

                                  Berkadia LLC

                        Notes to the Financial Statements

                           December 31, 2002 and 2001


3. Berkadia Loan (continued)

The terms of the  Berkadia  Loan  permit  FINOVA to retain a reserve of cash and
cash  equivalents  in an amount not to exceed the sum of (a) 125  percent of the
projected operating expenses for the next fiscal quarter,  (b) unfunded customer
commitments  expected to be funded over the next two fiscal quarters,  (c) taxes
payable  during  the next  fiscal  quarter,  (d)  interest,  loan fees and other
amounts due on the Berkadia Loan during the next fiscal  quarter,  (e) an amount
equal to all payments of principal, interest or fees relating to other permitted
indebtedness  that will,  by their terms,  become due and payable in cash during
the next  fiscal  quarter,  and (f) such  other  reserves  as are  necessary  in
FINOVA's  good faith  judgment and as approved in advance by the Company for the
operations  of FINOVA.  Any amount in excess of the cash  reserve is paid to the
Company to reduce the principal amount of the loan on a quarterly basis.

During 2002, the Company gave its consent to FINOVA to use up to $300 million of
cash to  repurchase  certain  subordinated  notes  rather  than  make  mandatory
prepayments of the Berkadia Loan. In consideration  for its consent,  FINOVA and
the Company  agreed that they would share  equally in the net  interest  savings
resulting from any repurchase.  As a result of repurchases made by FINOVA during
2002,  the Company  recognized  approximately  $1.6  million in interest  income
related to the net interest savings.

For the years ended  December  31, 2002 and 2001,  the Company  received  $2.725
billion and $700 million in loan  repayments  from FINOVA.  During the first two
months of 2003,  the Company has received $450 million in loan  repayments.  The
pace of the repayments depends on numerous factors, such as the rate of FINOVA's
collections  from borrowers and asset sales. As such,  there can be no assurance
that the Berkadia Loan will continue to be repaid at this pace.

The terms of the  Berkadia  Loan  agreement  require  FINOVA to  maintain at all
times, a ratio of Collateral  Value (as defined in the Berkadia Loan  agreement)
to the loan  balance  of not  less  than  1.25 to 1. As of  December  31,  2002,
FINOVA's  collateral value to loan balance ratio was 1.70 to 1, and thereby,  in
compliance with this covenant.


                                       9
<PAGE>

                                  Berkadia LLC

                        Notes to the Financial Statements

                           December 31, 2002 and 2001



4. Fleet Loan

The Fleet Loan bears interest payable monthly,  at a rate generally equal to the
cost of funds  for the  lenders'  conduit  facilities  plus  0.25  percent.  The
lenders'  cost of  funds  rate is  expected  to be  substantially  equal  to the
Eurodollar  Rate that is used to  determine  the  interest  rate on the Berkadia
Loan. For the year ended December 31, 2002, the  weighted-average  interest rate
was 2.11 percent.  For the  ten-month  period from February 26, 2001 to December
31, 2001, the weighted average interest rate was 3.04%. All unpaid principal and
accrued interest is due at maturity on August 20, 2006.

Pursuant to the Fleet Loan  agreement,  any principal  payments  received by the
Company on the  Berkadia  Loan must be used to make  principal  payments  on the
Fleet Loan.  The Fleet Loan agreement  restricts the Company's  ability to incur
additional indebtedness,  liens or to make other investments, which restrictions
are  consistent  with the business  purpose and  operations of the Company.  The
Berkadia Loan is pledged as collateral to secure the Fleet Loan. In addition, if
the asset value of FINOVA (as defined in the Fleet Loan  agreement) is not equal
to at least 1.2 times the Fleet Loan  balance  as of the end of any month,  then
the Company is required to pay  principal on the Fleet Loan in an amount that is
sufficient to comply with this ratio.  As of December 31, 2002,  the asset value
of FINOVA was greater than 1.2 times the Fleet Loan balance.

5. Members' Capital

For the year ended December 31, 2002, the Company distributed  substantially all
of its available cash to its Members, aggregating $66.2 million. Of this amount,
$59.4 million was distributed to Berkshire  Members and $6.8 million to Leucadia
Members.


                                       10
<PAGE>



Olympus Re Holdings, Ltd.
(Incorporated in Bermuda)

Combined Financial Statements

December 31, 2002 and 2001
(expressed in U.S. dollars)
<PAGE>




February 18, 2003





Report of Independent Accountants

To the Shareholders of
Olympus Re Holdings, Ltd.


In our opinion, the accompanying combined balance sheets and the related
combined statements of income and retained earnings, comprehensive income and
cash flows present fairly, in all material respects, the financial position of
Olympus Re Holdings, Ltd. at December 31, 2002 and 2001, and the results of its
operations and its cash flows for the year ended December 31, 2002 and the
period from December 3, 2001, (date of incorporation) to December 31, 2001 in
conformity with accounting principles generally accepted in the United States of
America. These combined financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
combined financial statements in accordance with auditing standards generally
accepted in the United States of America which require that we plan and perform
the audit to obtain reasonable assurance about whether the combined financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the combined
financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall combined financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.



Chartered Accountants

<PAGE>

Olympus Re Holdings, Ltd.
Combined Balance Sheets
As of December 31, 2002 and 2001
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)

<TABLE>
<CAPTION>



                                                                                                 2002                2001
                                                                                                    $                   $
                                                                                           -----------         ------------
<S>                                                                                             <C>                   <C>

ASSETS
Cash and cash equivalents                                                                   64,156,759           509,312,866
Investments (amortized cost - 2002 - $583,018,489; 2001 - $Nil) (note 3)                   599,123,769                 --
Investment income due and accrued                                                            6,684,911                20,049
Common voting shares, subscription receivable (Note 7b)                                         --                   150,000
Premiums receivable                                                                         76,489,609                 --
Deferred acquisition costs                                                                  23,318,087                 --
Other assets                                                                                   158,188                 --
                                                                                           -----------           -----------

                                                                                           769,931,323           509,482,915
                                                                                           ===========           ===========

LIABILITIES
Incorporation cost payable                                                                      --                 7,883,231
Loss and loss adjustment expense reserves (note 4)                                          44,707,594                 --
Unearned premiums                                                                           74,365,214                 --
Accounts payable and accrued expenses                                                          581,289                30,000
Investment trades pending                                                                    2,455,041                 --
Reinsurance balances payable (note 5)                                                       25,170,228                 --
                                                                                           -----------            ----------

                                                                                           147,279,366             7,913,231
                                                                                           -----------            ----------

SHAREHOLDERS' EQUITY
Common voting shares (5,100,000 shares issued and outstanding) (note 7)                         51,000                51,000
Additional paid-in capital (note 7)                                                        509,949,000           509,949,000
Accumulated other comprehensive income                                                      16,105,280                 --
Retained earnings (deficit)                                                                 96,546,677            (8,430,316)
                                                                                           -----------           -----------

                                                                                           622,651,957           501,569,684
                                                                                           -----------           -----------

                                                                                           769,931,323           509,482,915
                                                                                           ===========           ===========
</TABLE>

Approved by the Board of Directors


- ------------------------- Director       --------------------------Director


         The accompanying notes are an integral part of these combined
                              financial statements



<PAGE>

OLYMPUS RE HOLDINGS, LTD.
Combined Statements of Income and Retained Earnings
For the year ended December 31, 2002 and for the period from December 3, 2001,
(date of incorporation) to December 31, 2001
- -------------------------------------------------------------------------------
(expressed in U.S. dollars)

<TABLE>
<CAPTION>


                                                                                                 2002                  2001
                                                                                                    $                     $
                                                                                           -----------            ----------
<S>                                                                                            <C>                   <C>

Revenues
Gross premiums written                                                                     298,522,087                 --
                                                                                           -----------            ----------

Net premiums written                                                                       298,522,087                 --
Change in unearned premiums                                                                (74,365,214)                --
                                                                                           ------------           ----------

Net premiums earned                                                                        224,156,873                 --
                                                                                           -----------            ----------

Net Investment income                                                                       18,002,285               232,594
Net Realized gains (losses) on investments                                                   2,969,859                 --
                                                                                           -----------            ----------

Total Revenues                                                                             245,129,017               232,594
                                                                                           -----------            ----------
Expenses
Losses and loss expenses (note 4)                                                           57,901,965                 --
Commissions                                                                                 78,078,362                 --
Premium taxes and fees                                                                       2,184,366                 --
Other underwriting expenses                                                                    750,726                 --
Incorporation costs                                                                              --                8,632,780
General and administrative expenses                                                          1,236,605                30,130
                                                                                           -----------            ----------

Total Expenses                                                                             140,152,024             8,662,910
                                                                                           -----------            ----------

Net Income (loss)                                                                          104,976,993            (8,430,316)

Retained earnings (deficit) - Beginning of year                                             (8,430,316)                --
                                                                                           -----------            ----------

Retained earnings - End of year                                                             96,546,677            (8,430,316)
                                                                                           ===========            ==========

</TABLE>

              The accompanying notes are an integral part of these
                         combined financial statements.


<PAGE>




Olympus Re Holdings, Ltd.
Combined Statements of Comprehensive Income
For the year ended December 31, 2002 and for the period from December 3, 2001,
(date of incorporation) to December 31, 2001
- ------------------------------------------------------------------------------
(expressed in U.S. dollars)
<TABLE>
<CAPTION>



                                                                                                 2002                   2001
                                                                                                    $                      $
                                                                                           -----------            ----------
<S>                                                                                            <C>                     <C>

Net income (loss) for the year                                                             104,976,993            (8,430,316)

Other comprehensive income
Change in unrealized appreciation on marketable investments                                 16,105,280                 --
                                                                                           -----------            ----------

Comprehensive income (loss) for the year                                                   121,082,273            (8,430,316)
                                                                                           ===========            ==========


</TABLE>










              The accompanying notes are an integral part of these
                         combined financial statements.



<PAGE>




Olympus Re Holdings, Ltd.
Combined Statement of Cash Flows
For the year ended December 31, 2002 and for the period from December 3, 2001,
(date of incorporation) to December 31, 2001
- ------------------------------------------------------------------------------
(expressed in U.S. dollars)
<TABLE>
<CAPTION>


                                                                                                2002                     2001
                                                                                                   $                        $
                                                                                         ------------             -----------
<S>                                                                                           <C>                        <C>

Cash flows from operating activities
Net income for the year                                                                  104,976,993              (8,430,316)
Adjustments to reconcile net income to net cash provided by operating activities
      Gains on sales of investments                                                       (2,969,859)                    --
      Amortization of discount / premium                                                   3,087,459                     --
      Investment income due and accrued                                                   (6,664,862)                (20,049)
      Incorporation cost payable                                                          (7,883,231)              7,883,231
      Premiums receivable                                                                (76,489,609)                    --
      Deferred acquisition costs                                                         (23,318,087)                    --
      Other assets                                                                          (158,188)                    --
      Loss and loss adjustment expense reserves                                           44,707,594                     --
      Unearned premiums                                                                   74,365,214                     --
      Accounts payable and accrued expenses                                                  551,289                  30,000
      Investment trades pending                                                            2,455,041                     --
      Reinsurance balances payable                                                        25,170,228                     --
                                                                                       -------------             ------------
      Cash provided by (used in) operating activities                                    137,829,982                (537,134)
                                                                                       -------------             ------------

Cash flows from investing activities
Purchase of investments                                                               (1,066,976,281)                   --
Proceeds from sales of investments                                                       483,840,192                    --
                                                                                      --------------             ------------
      Cash used in investing activities                                                 (583,136,089)                   --
                                                                                      --------------             ------------

Cash flows from financing activity
Proceeds from issuance of common shares                                                      150,000              509,850,000
                                                                                      --------------             ------------

      Cash provided by financing activity                                                    150,000              509,850,000
                                                                                      --------------             ------------

Increase (decrease) in cash and cash equivalents                                        (445,156,107)            509,312,866

Cash and cash equivalents - Beginning of year                                            509,312,866                   --
                                                                                      --------------             ------------

Cash and cash equivalents - End of year                                                   64,156,759             509,312,866
                                                                                      ==============             ============


</TABLE>


              The accompanying notes are an integral part of these
                         combined financial statements.



<PAGE>


Olympus Re Holdings, Ltd.
Notes to Combined Financial Statements
December 31, 2002 and 2001
- --------------------------------------
(expressed in U.S. dollars)



1.   Nature of the business

     Olympus Re Holdings, Ltd. and its subsidiaries (the "Company") were
     incorporated under the laws of Bermuda on December 3, 2001. The Company's
     principal operating subsidiary is Olympus Reinsurance Company, Ltd.
     ("Olympus Re"). Olympus Re is registered as a Class 4 insurer under The
     Insurance Act 1978, amendments thereto and related regulations ("The Act").
     The Company's bye-laws provide that the Board of Directors of Olympus Re
     shall consist of persons who first have been elected as designated
     directors by a resolution in a general meeting of the shareholders of the
     Company. The Board of Directors of the Company must then vote all shares of
     Olympus Re owned by the Company to elect such designated directors as
     Olympus Re directors. The bye-law provisions with respect to the removal of
     directors of Olympus Re operate similarly.

     The Company, through Olympus Re, writes a diversified range of reinsurance
     business on a global basis with an emphasis on property excess business.
     During the year ended December 31, 2002, this was through a quota share
     reinsurance agreement with a U.S. reinsurance company (see note 6). The
     purpose of this quota share agreement is to produce primarily property
     excess reinsurance. In addition, Olympus Re has a contract with a non-U.S.
     advisor (see note 5) to recommend business and consult on the quota share
     agreement. The non-U.S. advisor is related to the previously mentioned U.S.
     reinsurance company through common ownership.

2.   Significant accounting policies

     Olympus Re's Board of Directors, who are elected as described above, have
     unilateral authority, except for certain actions that require approval by
     the Company as sole shareholder, to manage the affairs of Olympus Re.
     Accordingly, the accompanying financial statements have been prepared on a
     combined basis, rather than on a consolidated basis. The combined financial
     statements include the financial statements of Olympus Re Holdings Ltd. and
     its wholly-owned subsidiary Olympus Re. All significant inter-company
     balances have been eliminated on combination.

     These financial statements have been prepared in accordance with accounting
     principles generally accepted in the United States of America. The
     preparation of financial statements in accordance with generally accepted
     accounting principles requires management to make estimates and assumptions
     that affect reported amounts of assets and liabilities, as well as
     disclosure of contingent assets and liabilities as at the balance sheet
     date. Estimates also affect the reported amounts of income and expenses for
     the reporting period. Actual results could differ from those estimates.

     The following is a summary of the significant accounting policies adopted
     by the Company

     (a)  Premiums and unearned premiums

          The Company records premiums based on cession statements received.
          These cession statements earn premium income evenly over the term of
          the underlying reinsurance contract, in proportion to the risk
          assumed. The portion of the premium related to the unexpired portion
          of the contract at the end of the fiscal year is reflected in unearned
          premiums.
<PAGE>

Olympus Re Holdings, Ltd.
Notes to Combined Financial Statements
December 31, 2002 and 2001
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)

          Certain reinsurance premiums assumed are estimated based on
          information provided by the underlying ceding companies. The
          information used in establishing these estimates is reviewed and
          subsequent adjustments are taken into income in the period in which
          they are determined. These premiums are earned over the terms of the
          related reinsurance contracts.

     (b)  Deferred acquisition costs

          The Company records acquisition costs based on cessions statements
          received, in addition to its own direct acquisition costs.

          Policy acquisition costs are comprised of ceding commissions,
          brokerage, premium taxes and other expenses that relate directly to
          the acquisition of premiums. These costs are deferred and amortized
          over the terms of the related contracts. Deferred policy acquisition
          costs are reviewed to determine if they are recoverable from future
          underwriting profits, including investment income. If such costs are
          estimated to be unrecoverable, they are expensed.

     (c)  Loss and loss adjustment expense reserves

          The Company records loss and loss adjustment expenses based on
          cessions statements received. The reported amounts for incurred but
          not reported losses are also separately reviewed by the Company. Loss
          and loss adjustment expense reserves, including losses incurred but
          not reported and provisions for settlement expenses, includes amounts
          determined from losses reported to the Company, and management
          estimates. Due to limited historical experience, industry data is
          relied upon in the reserving process.

          A significant portion of the Company's business is in the property
          catastrophe market and programs with higher layers of risks. Reserving
          for losses in such programs is inherently complicated in that losses
          in excess of the attachment level of the underlying policies are
          characterized by high severity and low frequency. This limits the
          volume of industry claims experience available from which to reliably
          predict ultimate losses following a loss event.

          The ceding company uses industry data and professional judgment to
          estimate the ultimate loss to the Company from reinsurance contracts
          exposed to a loss event. Delays in reporting losses to the Company
          together with the potential for unforeseen adverse developments, may
          result in losses and loss expenses significantly greater or less than
          the reserve provided at the time of the loss event.

          Loss and loss adjustment reserve estimates are regularly reviewed and
          updated, as new information becomes known to the Company. Any
          resulting adjustments are included in income in the period in which
          they become known.

     (d)  Cash and cash equivalents

          Cash and cash equivalents include debt securities and time deposits
          with a maturity of three months or less from the date of purchase.
<PAGE>


Olympus Re Holdings, Ltd.
Notes to Combined Financial Statements
December 31, 2002 and 2001
- --------------------------------------
(expressed in U.S. dollars)


     (e)  Investments

          The Company's investments are currently in fixed maturities which are
          classified as "available-for-sale" and are carried at fair value,
          based on quoted market prices. Unrealized gains and losses are
          included within accumulated other comprehensive income in
          shareholders' equity.

          Net investment income is stated net of investment management and
          custody fees. Interest income is recognized on the accrual basis and
          includes the amortization of premium or discount on fixed interest
          securities purchased at amounts different from their par value.

          Gains and losses on investments are included in investment income when
          realized. Investments are recorded on a trade date basis and the cost
          of securities sold is determined on the first-in, first-out basis.

          Investments are reviewed periodically to determine if they have
          sustained an impairment of value that is considered to be other than
          temporary. The identification of potentially impaired investments
          involves significant management judgment, which includes the
          determination of their fair value and the assessment of whether any
          decline in value is other than temporary. If investments are
          determined to be impaired, a loss is charged to the income statement
          in that period.

     (f)  Incorporation costs

          Incorporation costs are expensed as incurred.

     (g)  New accounting pronouncements

          In January 2003 the FASB issued FASB Interpretation No. 46,
          Consolidation of variable interest entities - an interpretation of ARB
          No. 51 ("FIN 46"). FIN 46 clarifies the accounting and reporting for
          certain entities in which equity investors do not have the
          characteristics of a controlling financial interest. As disclosed in
          notes 1 and 2 these financial statements are prepared on a combined
          rather than consolidated basis based on the fact that Olympus Re's and
          the Company's Bye-laws provide certain restrictions relating to the
          election of directors of Olympus Re. FIN 46 is effective in the first
          quarter of fiscal 2003. The impact of adopting this interpretation
          will be to present the financial statements as consolidated beginning
          in period ending March 31, 2003. This is not expected to have any
          impact on the Company's net income or net shareholders' equity as
          presented in these financial statements.

3. Investments

<TABLE>
<CAPTION>


                                                     Amortized         Unrealized             Unrealized           2002
                                                        Cost              gain                   loss           Fair value
                                                           $                $                      $                $
                                                    ----------       ------------            -----------       -----------
<S>                                                     <C>                <C>                     <C>             <C>

      U.S. government and agency                   351,457,556         9,286,371                  --           360,743,927
      Corporate                                    143,334,311         6,499,571                  --           149,833,882
      Mortgage-backed securities                    88,226,622           333,785                 14,447         88,545,960
                                                   -----------        ----------                 ------        -----------
                                                   583,018,489        16,119,727                 14,447        599,123,769
                                                   ===========        ==========                 ======        ===========


</TABLE>

<PAGE>
Olympus Re Holdings, Ltd.
Notes to Combined Financial Statements
December 31, 2002 and 2001
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)


     The estimated fair value of investments in fixed interest securities is
     based on quoted market values.

     The Company does not have any investment in a single corporate security
     which exceeds 2.1% of total fixed interest securities.

     The following table sets forth certain information regarding the investment
     ratings of the Company's fixed interest securities portfolio as at December
     31, 2002.


<TABLE>
<CAPTION>

                                                          Amortized cost
      Ratings                                                  $                        %
      -------                                             -------------               -----
            <S>                                                 <C>                    <C>

      U.S. government and agency                            353,912,597                 60
      AAA                                                    65,367,410                 11
      AA                                                     67,472,319                 12
      A                                                      93,134,771                 16
      BBB                                                     3,131,392                  1
                                                          -------------               -----

                                                            583,018,489                100
                                                          =============               =====
</TABLE>

     The amortized cost and estimated fair value amounts for fixed interest
     securities held at December 31, 2002 are shown by contractual maturity.
     Actual maturity may differ from contractual maturity because certain
     borrowers have the right to call or prepay certain obligations with or
     without call or prepayment penalties.
<TABLE>
<CAPTION>



                                                          Amortized cost        Fair Value
                                                                 $                    $
                                                          -------------         -----------

<S>                                                              <C>                 <C>

      Due within one year                                    25,125,281          25,390,750
      Due after one year through five years                 410,631,034         425,245,759
      Due after five years through ten years                 59,035,552          59,941,300
                                                          -------------        ------------

                                                            494,791,867         510,577,809

      Mortgage-backed securities                             88,226,622          88,545,960
                                                          -------------        ------------

                                                            583,018,489        599,123,769
                                                          =============        ============


</TABLE>








<PAGE>
Olympus Re Holdings, Ltd.
Notes to Combined Financial Statements
December 31, 2002 and 2001
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)







The components of net investment income are as follows:
<TABLE>
<CAPTION>

                                                                                                            Period from
                                                                                                          December 3, 2001
                                                                               Year end                (date of incorporation)
                                                                            December 31, 2002            to December 31, 2001
                                                                                  $                                $
                                                                            -----------------           ----------------------

                  <S>                                                             <C>                           <C>
      Interest on fixed maturities                                            20,691,286                        --
      Net amortization of premium/discount on fixed maturities                (3,087,459)                       --
      Interest on cash and cash equivalents                                    1,592,238                      232,594
                                                                              ----------                    ---------
                                                                              19,196,065                      232,594

      Net investment expenses                                                 (1,193,780)                       --
                                                                              ----------                    ---------
                                                                              18,002,285                      232,594
                                                                              ==========                    =========

</TABLE>

     During 2002, proceeds from sales of available-for-sale securities were
     $483,840,192. Gross realized gains were $3,361,350 and gross realized
     losses were $391,491.

     OneBeacon Asset Management receives a management fee at an annual rate of
     0.2% of net invested assets.

     In the normal course of business, the Company provides collateral to the
     reinsured in accordance with the quota share agreement in the form of a
     trust agreement. The Company has cash equivalents of $10,339,521 and
     investments of $65,214,300 in a Trust, as of December 31, 2002, held as
     collateral for the reinsured.

4.   Loss and loss adjustment expense reserve

     Loss and loss adjustment expense reserves are estimates subject to
     variability, and the variability could be material in the near term. The
     variability arises because all events affecting the ultimate settlement of
     claims have not taken place and may not take place for some time.
     Variability can be caused by receipt of additional claim information,
     changes in judicial interpretation of contracts or significant changes in
     the severity or frequency of claims from historical trends. Loss and loss
     adjustment expenses estimates are based on all relevant information
     available to the Company. Methods of estimation are used which the Company
     believes produce reasonable results given current information.


<PAGE>
Olympus Re Holdings, Ltd.
Notes to Combined Financial Statements
December 31, 2002 and 2001
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)


      Reserve activity for loss and loss expenses is summarized below:
<TABLE>
<CAPTION>

                                                                                    $
                                                                                ---------
<S>                                                                                  <C>

      Balance - Beginning of year                                                    --
      Less:  Amounts recoverable from reinsurers                                     --
                                                                                ---------

      Net balance - Beginning of year                                               --
                                                                                ---------

      Net loss and loss expenses incurred for the year related to:
           Current year                                                         57,901,965


      Net paid loss and loss expenses for the year related to:
           Current year                                                         13,194,371


      Net balance - End of year                                                 44,707,594
      Plus:  Amounts recoverable from reinsurers                                     --
                                                                                ----------

      Balance - End of year                                                     44,707,594
                                                                                ==========
</TABLE>

     The year-end balance comprises provisions for reported claims of
     $10,536,402 and provisions for claims incurred but not reported of
     $34,171,192.

5.   Reinsurance balances payable

     Reinsurance balances payable represents profit commissions payable,
     including a 20% profit commission payable to the non-U.S. advisors, White
     Mountains Underwriting Limited, for all business on which they advise.

6.   Major customers

     During the year ended December 31, 2002, the Company derived 99% of its
     premiums written from Folksamerica Reinsurance Company ("Folksamerica") for
     which the Company pays a 12% override commission. Folksamerica is a
     wholly-owned subsidiary of White Mountains Insurance Group Ltd., which is a
     minority shareholder of the Company through a 50% joint venture, and is
     also the parent of the Company's investment advisors and the Company's
     non-U.S. advisors noted in notes 1, 3 and 5. It is not expected that this
     customer concentration with Folksamerica will be as extensive in 2003.
<PAGE>
Olympus Re Holdings, Ltd.
Notes to Combined Financial Statements
December 31, 2002 and 2001
- --------------------------------------------------------------------------------
(expressed in U.S. dollars)

7.   Capital stock

     (a)  Authorized shares

          The Company's authorized share capital is 20,000,000 common shares of
          the par value $0.01 each.

     (b)  Common stock

          At December 31, 2002, the total issued and outstanding shares of the
          Company were 5,100,000 with a par value of $0.01. The holders of the
          ordinary shares are entitled to receive dividends and are allocated
          one vote per share, provided that, if the controlled shares of any
          shareholder (excluding Leucadia National Corporation) constitute 9.5
          percent or more of the outstanding common shares of the Company, only
          a fraction of the vote will be allowed so as not to exceed 9.5
          percent. There are various restrictions on the ability of shareholders
          to dispose of their shares.

          In the period to December 31, 2001, the Company received cash of
          $509,850,000 in respect of subscriptions of common shares. On January
          2, 2002, payment of the remaining outstanding subscriptions totaling
          $150,000 was received from shareholders. Following receipt of the
          outstanding subscriptions payments, all issued and outstanding common
          voting shares were fully paid.

8.   Taxation

     Bermuda
     The Company has received an undertaking from the Bermuda government
     exempting it from all local income, withholding and capital gains taxes
     until March 28, 2016. At the present time no such taxes are levied in
     Bermuda.

     United States
     The Company does not consider itself to be engaged in trade or business in
     the United States and, accordingly, does not expect to be subject to United
     States income tax.

9.   Statutory requirements

     Under The Act, Olympus Re is required to prepare Statutory Financial
     Statements and to file a Statutory Financial Return. The Act also requires
     Olympus Re to meet certain minimum capital and surplus requirements. To
     satisfy these requirements, the Company was required to maintain a minimum
     level of statutory capital and surplus of $149,261,044 and $100,000,000 at
     December 31, 2002 and 2001 respectively. Olympus Re's statutory capital and
     surplus was $593,312,822 and $494,999,111 at December 31, 2002 and 2001
     respectively.

     Statutory capital and surplus as reported under The Act is different from
     shareholders' equity as determined in conformity with accounting principles
     generally accepted in the United States of America ("GAAP") due to certain
     items that are capitalized under GAAP but expensed under The Act.

     Olympus Re is also required to maintain a minimum liquidity ratio, which
     was met for the year ended December 31, 2002.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.(I)
<SEQUENCE>3
<FILENAME>certofinc.txt
<DESCRIPTION>EXHIBIT 3.2 LNC CERT. OF INCORP.
<TEXT>
                                                                   Exhibit 3.2
                                 CERTIFICATE OF
                                AMENDMENT OF THE
                          CERTIFICATE OF INCORPORATION
                                       OF
                          LEUCADIA NATIONAL CORPORATION

                UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW


     Pursuant to the provisions of Section 805 of the Business  Corporation Law,
the undersigned hereby certifies:

     1.   The name of the  Corporation  is Leucadia  National  Corporation  (the
          "Corporation").  The name under  which the  Corporation  was formed is
          Talcott National Corporation.

     2.   The date the Certificate of Incorporation  was filed by the Department
          of State was May 24, 1968.

     3.   The Corporation is authorized to issue a total of 156,000,000  shares,
          consisting of  150,000,000  shares of Common Stock of the par value of
          $1 per share of Common Stock and 6,000,000  shares of Preferred  Stock
          of the par value of $1 per share.  An amendment  of the  Corporation's
          Certificate of Incorporation  effected by the Certificate of Amendment
          to add the terms of the designations,  rights and preference of Series
          A Non-Voting  Convertible  Preferred Stock par value $1 per share (the
          "Convertible Preferred Stock") is hereby made.


     To  effect  the  foregoing,  a  new  Article  FIFTH  of  the  Corporation's
Certificate of  Incorporation,  relating to the Convertible  Preferred Stock, is
hereby added, and all subsequent  Articles of the  Corporation's  Certificate of
Incorporation  are  renumbered  accordingly.  Article  FIFTH  shall  read in its
entirety as follows:


     FIFTH:  The  Corporation's  Board of Directors has  designated 10 shares of
Preferred Stock as Series A Non-Voting Convertible Preferred Stock, which shall
have the following designations, rights and preferences:


     Section 1.  Designation  and  Amount.  The shares of such  series  shall be
                 ------------------------
designated  as the  "Series  A  Non-Voting  Convertible  Preferred  Stock"  (the
"Convertible Preferred Stock") and the number of shares constituting such series
shall be ten (10).


     Section 2.  Dividends  and  Distribution.  (a) The  holders of  Convertible
                 ----------------------------
Preferred Stock, in preference to the holders of common shares,  par value $1.00
per share of the Company  (the "Common  Shares"),  shall be entitled to receive,
subject to Section 510 of the New York Business Corporation Law ("NYBCL"), when,
as and if  declared  by the Board of  Directors  out of surplus  of the  Company
legally  available  for the  payment  of  dividends,  a pro  rata  share  of any
dividends  declared and paid with respect to Common Shares (determined as if the
Convertible  Preferred  Stock had been fully  converted  into  Common  Shares as
provided  herein).  The  Board  of  Directors  may  fix a  record  date  for the
determination  of holders of  Convertible  Preferred  Stock  entitled to receive
payment of a dividend  declared  thereon,  which record date shall coincide with
the record date selected  with respect to the dividends  declared and to be paid
to holders of Common Shares.

        (b) If any dividend  payment on the  Convertible  Preferred Stock is not
paid as required herein, the Company shall be prohibited from declaring,  paying
or setting apart for payment any dividends or making any other  distributions on
any Common Shares,  and from  redeeming,  purchasing or otherwise  acquiring (or
making  any  payment  to or  available  for a sinking  fund for the  redemption,
purchase or other  acquisition of any shares of such stock) (either  directly or
through any Subsidiary) any Common Shares, until all such dividends that are due
are paid in full. Dividends paid on the Convertible Preferred Stock in an amount
less than the total  amount of such  dividends  payable  and due on such  shares
shall be allocated pro rata on a  share-by-share  basis among all such shares at
the time outstanding.

        (c) The holders of Convertible  Preferred Stock shall not be entitled to
receive any dividends or other distributions except as provided herein.

     Section 3. Voting Rights. The holders of shares of Convertible Preferred
                -------------
Stock shall have no voting  rights,  and their consent shall not be required for
the taking of any corporate action, except as is required by the NYBCL.

<PAGE>

     Section 4.  Conversion.  Each share of  Convertible  Preferred  Stock shall
                 ----------
automatically  and immediately be converted into a number of Common Shares equal
to the  Conversion  Number on the  earlier to occur of (i) the date the  Company
determines  (with the  concurrence  of the  Initial  Holders of the  Convertible
Preferred Stock) that the approval  required from the Federal Reserve Board with
respect to the conversion of the Convertible Preferred Stock held by the Initial
Holders into Common Shares has been obtained,  (ii) the sale in accordance  with
the terms hereof to a Person that is not an Affiliate of the Initial  Holders of
the Convertible  Preferred Stock and (iii) 90 days following the issuance of the
Convertible  Preferred Stock to the Initial Holders of the Convertible Preferred
Stock .

     Section  5.  Adjustment  of  Conversion   Number.   (a)  Share   Dividends,
                  -----------------------------------         ------------------
Subdivisions,  Reclassifications,   Combinations.  If  the  Company  declares  a
- ------------------------------------------------
dividend or makes a  distribution  on the  outstanding  Common  Shares in Common
Shares,  or  subdivides or  reclassifies  the  outstanding  Common Shares into a
greater number of Common Shares, or combines the outstanding  Common Shares into
a smaller number of Common Shares, then, in each such event,

            (i) the then applicable  Conversion Number shall be adjusted so that
the registered  holder of each Convertible  Preferred Stock shall be entitled to
receive,  upon the  conversion  thereof,  the number of Common Shares which such
holder would have been  entitled to receive  immediately  after the happening of
any of the events  described  above had such  Convertible  Preferred  Stock been
converted  immediately  prior to the  happening of such event or the record date
therefor, whichever is earlier; and

            (ii) an  adjustment to the  Conversion  Number made pursuant to this
clause  (a)  shall  become  effective  (A) in the case of any such  dividend  or
distribution, immediately after the close of business on the record date for the
determination  of holders of Common Shares  entitled to receive such dividend or
distribution  or (B) in the case of any such  subdivision,  reclassification  or
combination,  at the close of  business  on the day upon  which  such  corporate
action becomes effective.

        (b)  Issuances  upon  Merger,  Amalgamation,  Consolidation  or  Sale of
             -------------------------------------------------------------------
Company. If the Company shall be a party to any transaction (including a merger,
- -------
amalgamation,  consolidation,  sale of all or substantially all of the Company's
assets,  liquidation or  recapitalization of the Common Shares and excluding any
transaction to which Section 5(a) applies) in which the  previously  outstanding
Common Shares shall be changed into or,  pursuant to the operation of law or the
terms of the  transaction  to  which  the  Company  is a  party,  exchanged  for
different  securities  of the Company or common  shares or other  securities  of
another  corporation  or interests in a  noncorporate  entity or other  property
(including  cash)  or  any  combination  of any of  the  foregoing,  then,  as a
condition of the consummation of such transaction, lawful and adequate provision
shall be made so that  each  holder  of  Convertible  Preferred  Stock  shall be
entitled, upon conversion, to an amount per Convertible Preferred Stock equal to
(A) the aggregate  amount of stock,  securities,  cash and/or any other property
(payable in kind),  as applicable,  into which or for which each Common Share is
changed  or  exchanged  multiplied  by  (B)  the  Conversion  Number  in  effect
immediately prior to the consummation of such transaction.

        (c) Adjustment to  Certificate.  Irrespective  of any adjustments in the
            --------------------------
Conversion Number or the kind of shares into which of the Convertible  Preferred
Stock will automatically  convert pursuant hereto,  certificates  theretofore or
thereafter issued may continue to express the same Conversion Number and kind of
shares as are stated on the  certificates  initially  issuable  pursuant  to the
provisions  hereof,  but such  Conversion  Number  and number and kind of shares
shall be understood to be adjusted as provided herein.

        (d) Notices of  Adjustment.  (i) Upon any  adjustment of the  Conversion
            ----------------------
Number  pursuant  to Section 5, the  Company  shall  promptly,  but in any event
within  10 days  thereafter,  cause to be given to each  registered  holder of a
Convertible  Preferred Stock, at its address  appearing on the share register by
registered mail,  postage prepaid,  a certificate signed by an executive officer
setting  forth  the  Conversion  Number  and/or  the  number  of shares of other
securities or assets issuable upon the conversion of each Convertible  Preferred
Stock as so adjusted and  describing in reasonable  detail the facts  accounting
for such adjustment and the method of calculation used. Where appropriate,  such
certificate  may be  given  in  advance  and  included  as a part of the  notice
required to be mailed under the other  provisions of this Section 5. (ii) In the
event the Company  proposes  to take (or  receives  notice of) any action  which
would require an adjustment of the Conversion Number pursuant to Section 5, then
the Company  shall cause to be given to each  registered  holder of  Convertible
                                      2
<PAGE>

Preferred Stock at its address appearing on the share register, at least 10 days
prior to the applicable record date or effective date for such action, a written
notice in  accordance  with Section 5: (A) stating such record date or effective
date, (B) describing  such action in reasonable  detail and (C) stating the date
as of which it is  expected  that  holders of record of Common  Shares  shall be
entitled to receive any  applicable  dividends or  distributions  or to exchange
their shares for securities or other  property,  if any,  deliverable  upon such
action.  The  failure to give the notice  required by this  Section  5(d) or any
defect  therein  shall not affect the legality or validity of any such action or
the vote upon any such action.

     Section 6. Liquidation, Dissolution or Winding Up. (a) If the Company shall
                --------------------------------------
adopt a plan of  liquidation  or of  dissolution,  or commence a voluntary  case
under applicable bankruptcy, insolvency or similar laws, or consent to the entry
of an order for  relief  of any  involuntary  case  under any such law or to the
appointment  of  a  receiver,   liquidator,   assignee,  custodian,  trustee  or
sequestrator (or similar  official) of the Company or of any substantial part of
its property,  or make an assignment for the benefit of its creditors,  or admit
in writing its  inability  to pay its debts  generally as they become due and on
account of such event the Company shall liquidate,  dissolve or wind up, or upon
any other liquidation,  dissolution or winding up of the Company, the holders of
Convertible  Preferred  Stock  shall be  entitled  to  receive a pro rata  share
(determined as if the Convertible  Preferred Stock had been fully converted into
Common Shares as provided  herein) of any  distributions  made to the holders of
Common Shares ("Liquidating Distributions"); provided, however, that each holder
of Convertible  Preferred  Stock shall not receive less than $10.00 per share of
Convertible  Preferred  Stock  owned of record by such holder  together  with an
amount in cash equal to all dividends  accrued and unpaid thereon to the date of
such distribution or payment (the "Liquidation Preference").

        (b) Neither the  consolidation,  merger,  amalgamation or other business
combination  of the  Company  with or into any other  Person or Persons  nor the
sale, lease,  exchange or conveyance of all or any part of the property,  assets
or  business  of the  Company  to a Person  or  Persons  shall be deemed to be a
liquidation,  dissolution  or winding up of the  Company  for  purposes  of this
Section 6.

     Section 7. Rank. The  Convertible  Preferred Stock shall rank, with respect
                ----
to preferences and relative, participating, optional and other special rights of
the shares of such series and the  qualifications,  limitations and restrictions
thereof, including, without limitation, with respect to the payment of dividends
and  redemption  payments and the  distribution  of assets,  prior to all Common
Shares of the Company only to the extent  provided  herein and  otherwise  shall
rank pari passu with the Common Shares. As provide in Section 6, with respect to
any event that would require payment of the Liquidation  Preference  pursuant to
Section 6(a),  the  Convertible  Preferred  Stock shall rank prior to all Common
Shares with respect to  distributions  up to an amount equal to such Liquidation
Preference,  and with  respect to all other  distributions,  pari passu with all
Common Shares of the Company.

     Section 8.  Transfer.  Except to the extent  required  by  applicable  law,
                 --------
Convertible  Preferred  Stock may not be  transferred,  other  than (i) with the
prior written  consent of the Company,  which consent shall not be  unreasonably
withheld or (ii) by any Initial Holder to one of its Affiliates. The Convertible
Preferred Stock has not been registered  under the Securities Act and may not be
offered or sold in the United States or to any citizen or resident of the United
States in the absence of a valid registration under the Securities Act except in
reliance on an exemption from the  registration  requirements  of the Securities
Act.

     Section 9. Definitions. For the purposes of this Exhibit:
                -----------

        "Affiliate" of any specified  Person means any other Person  directly or
        -----------
indirectly  controlling  or  controlled  by or under  direct or indirect  common
control with such specified Person.  For purposes of this definition,  "control"
means the  possession,  direct or indirect,  of the power to direct or cause the
direction  of the  management  and  policies  of a person,  whether  through the
ownership of voting securities, by contract, or otherwise.

        "Board of Directors" means the Board of Directors of the Company.
        --------------------



                                       3

<PAGE>

        "Company" means Leucadia National Corporation.
        ---------

        "Conversion  Number" means  initially  134,772 and  thereafter  shall be
        --------------------
subject  to  adjustment  from time to time  pursuant  to the terms of  Section 5
hereof.

        "Initial  Holders" means each purchaser of Convertible  Preferred  Stock
        ------------------
pursuant to the  Subscription  Agreement,  dated as of December 23, 2002,  among
such purchasers and the Company.

        "Person"   means  any  person  or  entity  of  any  nature   whatsoever,
        --------
specifically  including  an  individual,   a  firm,  a  company,  a  Company,  a
partnership, a trust or other entity.

        "Securities  Act" shall mean the United States  Securities  Act of 1933,
        -----------------
and the rules and regulations promulgated thereunder.

        "Subsidiary"  of any Person means any Company or other entity of which a
        ------------
majority of the voting power of the voting equity  securities or equity interest
is owned, directly or indirectly, by such Person.

     4.   The  foregoing   amendment  of  the   Corporation's   Certificate   of
          Incorporation  was  adopted  by an  affirmative  vote of the  Board of
          Directors  of the  Corporation  at a special  meeting  of the Board on
          December 20, 2002.



                                       4
<PAGE>



     IN  WITNESS  WHEREOF,  the  Corporation  has  caused  this  Certificate  of
Amendment  of  the  Certificate  of  Incorporation  to  be  executed  by a  duly
authorized officer as of the 23rd day of December, 2002.





                                               LEUCADIA NATIONAL CORPORATION





                                                By:    /s/ Joseph A. Orlando
                                                       -------------------------

                                                Name:  Joseph A. Orlando
                                                Title: Vice President and
                                                       Chief Financial Officer








                                       5

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>4
<FILENAME>exhb21.txt
<DESCRIPTION>LEUCADIA NATIONAL CORPORATION EXHIBIT 21
<TEXT>

                                                                Exhibit 21


LEUCADIA NATIONAL CORPORATION
Subsidiaries as of December 31, 2002
                                                        State/Country of
Name                                                     Incorporation
- ----                                                     -------------

Baldwin Enterprises, Inc.                                 Colorado
NSAC, Inc.                                                Colorado
RRP, Inc.                                                 Colorado
330 Mad. Parent Corp.                                     Delaware
Aques Investments Corporation II                          Delaware
Aques Investments Corporation III                         Delaware
AIC Financial Corporation                                 Delaware
American Investment Company                               Delaware
Baldwin-CIS L.L.C.                                        Delaware
BELLPET, Inc.                                             Delaware
Conwed Corporation                                        Delaware
Hawaii Ventures, LLC                                      Delaware
HWB 2507 Kalakaua, LLC                                    Delaware
Leucadia Aviation, Inc.                                   Delaware
Leucadia Cellars, Ltd.                                    Delaware
Leucadia Property Holdings, Ltd.                          Delaware
LNC Investments, LLC                                      Delaware
LUK-Acquisition I, LLC                                    Delaware
LUK-Acquisition II, LLC                                   Delaware
LUK-Asia LLC                                              Delaware
LUK-HY Fund, LLC                                          Delaware
LUK-Israel LLC                                            Delaware
LUK-Shop, LLC                                             Delaware
LUK-TTP, LLC                                              Delaware
LUK-Visible, LLC                                          Delaware
Lympus, LLC                                               Delaware
MK Gold Company                                           Delaware
Nead Corporation                                          Delaware
Neward Corporation                                        Delaware
Rastin Investing Corp.                                    Delaware
Stillwater Holdings, LLC                                  Delaware
Terra Thermal Power, LLC                                  Delaware
Rosemary Beach Cottage Rental Company                     Florida
Rosemary Beach Land Company                               Florida
Rosemary Beach Realty, Inc.                               Florida
College Life Development Corporation                      Indiana
Professional Data Management, Inc.                        Indiana
TTP Corporation                                           Nevada
Allcity Insurance Company                                 New York
Empire Insurance Company                                  New York
Leucadia, Inc.                                            New York
Leucadia Investors, Inc.                                  New York
LUK-REN, Inc.                                             New York
HWB Ventures, Inc.                                        New York
Phlcorp, Inc.                                             Pennsylvania
Pine Ridge Winery, LLC                                    Texas
American Investment Bank, N.A.                            United States
American Investment Financial                             Utah
Leucadia Financial Corporation                            Utah
Leucadia Properties, Inc.                                 Utah
Silver Mountain Industries, Inc.                          Utah
Telluride Properties Acquisition, Inc.                    Utah
Terracor II                                               Utah
WMAC Investment Corporation                               Wisconsin
Canadian International Power Company Limited              Wyoming
LUK-Japan Ltd.                                            British Virgin Islands
MV Gold de Brazil Ltd.                                    Brazil
MK Gold de Mexico, S.  de R.L. de.  C.V. (Mexico)         Mexico
Cobre Las Cruces, S.A.                                    Spain




Subsidiaries not included on this list, considered in the aggregate as a single
subsidiary, would not constitute a significant subsidiary as of December 31,
2002.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>5
<FILENAME>pwcconsent.txt
<DESCRIPTION>EXHIBIT 23.1 PRICEWATERHOUSECOOPERS CONSENT
<TEXT>
                                                              Exhibit 23.1








                       CONSENT OF INDEPENDENT ACCOUNTANTS



We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No.2-84303), Form S-8 and S-3 (No.33-6054), Form S-8 and
S-3 (No.33-26434), Form S-8 and S-3 (No.33-30277), Form S-8 (No.33-61682), Form
S-8 (No.33-61718), Form S-8 (No.333-51494) and Form S-4 (No.333-86018), of
Leucadia National Corporation of our report dated March 12, 2003 relating the
financial statements and financial statement schedule, which appears in this
Annual Report on Form 10-K.






PricewaterhouseCoopers LLP

New York, New York
March 12, 2003


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>6
<FILENAME>olympuscon.txt
<DESCRIPTION>EXHIBIT 23.2 OLYMPUS RE CONSENT
<TEXT>
                                                        Exhibit 23.2









Consent of Independent Auditors





We consent to the inclusion of our report, dated February 18, 2003 with respect
to the financial statements of Olympus Re Holdings Ltd. for the year ended
December 31, 2002 and the period from December 3, 2001 (date of incorporation)
to December 31, 2001, included as Item 15(d) in this Form 10-K and with respect
to the incorporation by reference in the Registration Statements on Form S-8
(No. 2-84303), Form S-8 and S-3 (No. 33-6054), Form S-8 and S-3 (No. 33-26434),
Form S-8 and S-3 (No. 33-30277), Form S-8 (No. 33-61682), Form S-8 (No.
33-61718), Form S-8 (No. 333-51494), and Form S-4 (No. 333-86018).








/s/ PricewaterhouseCoopers
- --------------------------
PricewaterhouseCoopers
March 25, 2002


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>7
<FILENAME>eyconsent.txt
<DESCRIPTION>EXHIBIT 23.3 ERNST & YOUNG CONSENT
<TEXT>



                                                              Exhibit 23.3




                         Consent of Independent Auditors


We consent to the inclusion of our report, dated February 28, 2003, with respect
to the  financial  statements  of Berkadia  LLC for the year ended  December 31,
2002,  included  as Item  15(d)  in this  Form  10-K  and  with  respect  to the
incorporation  by  reference  in the  Registration  Statements  on Form S-8 (No.
2-84303), Form S-8 and S-3 (No. 33-6054), Form S-8 and S-3 (No. 33-26434),  Form
S-8 and  Form  S-3  (No.  33-30277),  Form  S-8  (No.  33-61682),  Form S-8 (No.
33-61718), Form S-8 (No. 333-51494), and Form S-4 (No. 333-86018).


/s/ Ernst & Young LLP


Phoenix, Arizona
March 25, 2003


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>8
<FILENAME>jd3-25_share.txt
<DESCRIPTION>EXHIBIT 10.37 LUK FIDEI SHARE PURCHASE AGREEMENT
<TEXT>
                                                                 Exhibit 10.37


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

                            SHARE PURCHASE AGREEMENT
- --------------------------------------------------------------------------------


BETWEEN:


- - LUK FIDEI L.L.C., having its registered office 1209, Orange Street New Castle
Country, Delaware, (USA), represented for the purposes of this Agreement by Mr.
Luis Medeiros, acting in his capacity as Vice-President, or its successor in
interest which holds the Shares (as defined below) as of the Date of Completion.


                  Hereinafter jointly and severally referred to as the "SELLER",
                                                               OF THE FIRST PART

AND


- - HAMPTON TRUST PLC, having its registered office 121, Mount Street, Mayfair,
London WIK 3NW, represented by Mr. Graeme Jackson, Chairman of the Board of
Directors, which shall substitute HAMPTON TRUST HOLDING (EUROPE) SA, a joint
stock company governed by the Laws of Luxembourg, with a share capital of EUR
100,000 having its registered office at 81, rue Jean-Baptiste Gillardin,
Petange, 4735 Luxembourg, registered with the Trade and Company registry of
Luxembourg under number B86120, represented for the purposes of this Agreement
by Mr. John C. Jones, acting in his capacity as Administrateur Delegue.

                  Hereinafter jointly and severally referred to as the "BUYER",
                                                             OF THE SECOND PART



The SELLER and the BUYER shall be individually referred to as a "Party",
 and collectively as the "Parties"


<PAGE>
RECITALS

Whereas SELLER is the sole shareholder of COMPAGNIE FONCIERE FIDEI (hereafter
"FIDEI"), a French joint stock company ("societe anonyme") with a share capital
of EUR 2,017,870.07, having its registered office located at 17 rue de
Miromesnil - 75008 Paris, registered with the Trade and Company Registry of
Paris under number 692 044 308;

Whereas SELLER shall act solely in its own name and not on behalf of any other
person;

Whereas FIDEI owns, directly or indirectly a majority of the issued and
outstanding shares of each of the Subsidiaries listed on EXHIBIT 1 and, SELLER
shall undertake to cause FIDEI to wholly own, directly or indirectly, such
Subsidiaries as of the Date of Completion, provided, however, that FIDEI does
not own a majority of the issued and outstanding shares of DL Finance & Partners
and as of the Date of Completion, FIDEI SCA will either (i) wholly own, directly
or indirectly or (ii) not own any shares of DL Finance & Partners;

Whereas FIDEI is in the process of converting from a "societe anonyme" into a
"societe en commandite par actions" (hereafter the "Conversion") and after
giving effect to the Conversion, FIDEI shall be referred to as FIDEI SCA.

Whereas it is a condition to this Agreement that the Conversion be consummated
prior to the Date of Completion and the failure of the Conversion to occur on or
prior to June 1, 2002 shall result in the automatic termination of this
Agreement without liability of either Party under this Agreement.

Whereas, it is a condition to this Agreement that the limited partners of FIDEI
SCA receive at least Euro 52,000,000 pursuant to a share buy back proposed by
the Managing Director ("gerant") of FIDEI SCA after the Date of Signature but
prior to the Date of Completion.

Whereas SELLER agrees to sell to BUYER and BUYER agrees to purchase from SELLER,
according to the terms and conditions set forth below, all of the issued and
outstanding shares of FIDEI SCA and the Rights as General Partner as of the Date
of Completion.

NOW, THEREFORE, THE PARTIES HERETO HAVE AGREED AS FOLLOWS:

ARTICLE  1.          DEFINITIONS

1.1 The terms set out hereunder shall have the following meaning for the purpose
of the Agreement:

- - "Agreement": shall mean this agreement, including the Exhibits hereto,
executed by SELLER and BUYER ;

- - "Available Funds": shall mean cash and/or the value of marketable securities
as indicated in the Financial Statements, adjusted to reflect the cash and/or
value of marketable securities of FIDEI SCA on the Date of Completion;

- - "Bonds": shall mean all the issued and outstanding bonds of FIDEI; the
categories of issued and outstanding bonds of FIDEI are listed on EXHIBIT 2;

- - "Business Day": shall mean a day (other than Saturday or Sunday and bank
holidays) on which banks are normally open in Paris for normal business;



                                       2
<PAGE>
- -"Conversion": shall mean the conversion of FIDEI from a societe anonyme into a
"societe en commandite par actions".

- -"Date of Completion": shall mean the date that is (i) twenty-five days after
the deposit of the extract of the minutes of the shareholders meeting of FIDEI
SCA deciding of the share buy-back with the Paris Trade Register and (ii) after
the cancellation by the manager of FIDEI SCA to the redeemed shares, and shall
occur no later than June 30, 2002, with a best efforts to May 31, 2002, unless
otherwise agreed to by the Parties;

- - "Date of Signature": shall mean the date on which this Agreement is executed
by the Parties;

- - "FIDEI": shall mean COMPAGNIE FONCIERE FIDEI, as defined in the Recitals; and
"FIDEI SCA" shall mean FIDEI after its conversion into a "societe en commandite
par actions" as set forth in Section 6.1;

- - "Financial Statements": shall mean the profit and loss accounts as well as the
balance sheet of FIDEI and the Subsidiaries, prepared in accordance with
generally accepted French accounting principles, applied on a consistent basis
and established on a consolidated basis for the financial year ending on 31
December 2001. These statements are attached in EXHIBIT 3.

- -"Pro forma Balance Sheet": is the draft document being in Exhibit 7, a
definitive document being provided five (5) Business Days before Date of
Completion. Temporary Proforma Balance Sheet means the Proforma Balance Sheet
attached hereto at the Date of Signature. Final Proforma Balance Sheet means the
one issued Five (5) Business Days before the Date of Completion.

- -"Rights as General Partner" : shall mean the rights owned by the sole General
Partner of FIDEI SCA and mentioned in the draft articles of association of FIDEI
SCA (EXHIBIT 5);

- -"Shares": shall mean shares of FIDEI or FIDEI SCA, with a nominal value of EUR
0.76];

- - "Subsidiaries" shall mean the entities that are majority owned by FIDEI and
listed on EXHIBIT 1, which entities SELLER shall undertake to be wholly owned,
either directly or indirectly, by FIDEI SCA on the Date of Completion, provided,
however, that FIDEI does not own a majority of the issued and outstanding shares
of DL Finance & Partners and as of the Date of Completion, FIDEI SCA will either
(i) wholly own, directly or indirectly or (ii) not own any shares of DL Finance
& Partners;

- -"Transfer Order": shall mean the legal form ("Ordre de mouvement") according to
which SELLER will transfer the Shares of FIDEI SCA to BUYER.

1.2 Plural forms shall include singular forms and vice versa.

ARTICLE 2. SALE AND PURCHASE OF THE SHARES OF FIDEI SCA AND RIGHTS AS GENERAL
- --------- -------------------------------------------------------------------
PARTNER
- -------

2.1 SELLER undertakes in its own name and not on behalf of any other person to
sell on the Date of Completion to BUYER and BUYER undertakes to purchase on the
Date of Completion from SELLER, all of the issued and outstanding shares of
FIDEI SCA.

2.2 SELLER undertakes in its own name and not on behalf of any other party to
sell on the Date of Completion and BUYER undertakes to purchase on the Date of
Completion from SELLER all of its Rights as General Partner.




                                       3
<PAGE>
2.3 SELLER shall undertake to causes FIDEI SCA to directly or indirectly to
wholly own each of the Subsidiaries, on the Date of Completion, provided,
however, that as of the Date of Completion, FIDEI SCA will either (i) wholly
own, directly or indirectly or (ii) not own any shares of DL Finance & Partners.

ARTICLE 3. AGGREGATE PURCHASE PRICE OF THE SHARES OF FIDEI SCA AND RIGHTS AS
- ---------- ------------------------------------------------------------------
GENERAL PARTNER
- ---------------

3.1 On the Date of Completion, BUYER shall pay to SELLER, TWENTY THREE EUROS and
SEVENTY CENTIMES (EUR 23.70) per share for each share of FIDEI SCA issued and
outstanding, in accordance with Article 5 hereof.

The number of shares of FIDEI SCA to be purchased by BUYER on the Date of
Completion shall be EIGHT HUNDRED and TEN THOUSAND THREE HUNDRED and TWENTY FOUR
(810,324) and the aggregate purchase price for the shares of FIDEI SCA paid to
SELLER shall be NINETEEN MILION TWO HUNDRED SEVEN THOUSAND EUROS (EUR 19.207.00)
(hereafter the "Purchase Price").

3.2 On the Date of Completion, BUYER shall pay to SELLER an additional TWO
THOUSAND TWO HUNDRED and EIGHTY SIX EUROS (EUR 2,286), for SELLER's Rights as
General Partner (together with Purchase Price, the "Aggregate Purchase Price").

3.3 The Aggregate Purchase Price shall be adjusted in compliance with article
7.5.

ARTICLE 4. CLOSING OF THE SALE OF SHARES AND RIGHTS AS GENERAL PARTNER
- ---------  -----------------------------------------------------------

4.1 Subject to the satisfaction of the conditions contained herein, the closing
of the sale of Shares shall occur on the Date of Completion pursuant to the
execution of a Transfer Order by SELLER and BUYER.

The Parties undertake to have the transfer of the Shares registered in the books
and records of FIDEI SCA on the Date of Completion but in any event no later
than five (5) Business Days after the Date of Completion.

The above mentioned registration in the books and records of FIDEI SCA shall
only occur upon the receipt by SELLER of the Aggregate Share Purchase Price in
accordance with Article 5 below.

The Shares shall be transferred with full rights ("jouissance") as of the date
of their transfer.

Registration duties due to any person incurred by the transfer of Shares shall
be the sole responsibility of, and shall be borne by, BUYER.

4.2 Upon SELLER's receipt of the additional price of TWO THOUSAND TWO HUNDRED
and EIGHTY SIX EUROS (EUR 2,286) SELLER's Rights as General Partner shall be
transferred pursuant to a transfer agreement between the Parties. An
extraordinary shareholders' meeting shall be called and held by the BUYER to
modify the articles of association of FIDEI SCA in this respect.

Registration duties due to any person incurred by the transfer of Rights as
General Partner shall be the sole responsibility of, and shall be borne by,
BUYER.




                                       4
<PAGE>
ARTICLE  5.   PAYMENT OF THE PURCHASE PRICE
- -----------   -----------------------------

BUYER shall pay the Purchase Price as set forth in Articles 3 and 4 above on the
Date of Completion by wire transfer in immediately available funds to an account
designated by SELLER at least three days prior to the expected Date of
Completion. The BUYER shall justify the wire transfer on the Date of Completion.

ARTICLE 6. CONDITIONS TO CLOSING
- ---------- ----------------------

6.1 In the event that the Conversion has not been consummated on or prior to
June 1, 2002 for any reason beyond the reasonable control of the SELLER, this
Agreement shall be considered as cancelled without liability of either Party
under this Agreement. However the Parties undertake to negociate in goodfaith an
equitable alternative transaction

6.2 In the event that creditors of FIDEI SCA request the repayment of an
aggregate amount of FIFTY MILLION EUROS (EUR 50,000,000) or more during the
twenty (20) day period after the notice of redemption be filled to the Paris
Trade Register, this Agreement shall be considered as cancelled without
liability of either Party under this Agreement. However the Parties undertake to
negociate in goodfaith an equitable alternative transaction

6.3 In the event that FIDEI SCA does not have Available Funds equal to or
greater than TWENTY FIVE MILLION (EUR 25,000,000) on the Date of Completion,
BUYER shall be entitled to cancel this Agreement without liability to either
Party under this Agreement by notifying SELLER in writing pursuant to the notice
provisions contained in Section 10.8 below on or before the Date of Completion.

6.4 At the Date of Completion, SELLER shall deliver to BUYER:

          o         the written resignation of the Managing Director ("gerant")
                    and all the members of the Supervisory Board of FIDEI SCA,
                    provided, however, that such resignations shall be accepted
                    and ratified at the next shareholders' meetings of FIDEI SCA
                    and the Subsidiaries as set forth in Section 6.6 below;


          o         the written resignation of all the members of each Board of
                    Directors and each Chairman or President of each of the
                    Subsidiaries, a list of such directors, Chairmen and
                    Presidents is set forth on EXHIBIT 4 hereto, provided,
                    however, that such resignations shall be accepted and
                    ratified at the next shareholders' meetings of FIDEI SCA and
                    the Subsidiaries as set forth in Section 6.6 below.

6.5 The replacement of the Managing Director and the members of the Supervisory
Board of FIDEI SCA and the members of the Board of Directors and each Chairman
or President of each of the Subsidiaries shall take place at the next
shareholders' meetings of FIDEI SCA and the Subsidiaries, which meetings shall
be convened no later than five (5) Business Days after the Date of Completion.

ARTICLE  7.          REAL ESTATE PROPERTIES
- -----------          ----------------------

7.1 EXHIBIT 9 hereto lists all real property owned by FIDEI that are under a
commitment to sell ("promesse de vente" or "compromis de vente") as of the Date
of Signature, by FIDEI or the Subsidiaries, on the one hand, and third parties
on the other hand.

7.2 In the event that any property listed on EXHIBIT 9, other than Sevran lot n
3 which BUYER has agreed to purchase from FIDEI, is not sold in accordance with
the contract of sale, BUYER shall have the option to sell such property to



                                       5
<PAGE>
SELLER (hereafter the "Put Right") by giving SELLER written notice no later than
90 days after the Date of Completion of its intent to sell such property to
SELLER. Upon giving such notice to SELLER, BUYER shall be obligated to sell to
SELLER and SELLER shall be obligated to purchase from BUYER any such property at
a price equal to the purchase price as set forth on EXHIBIT 9. The closing of
the sale of real property pursuant to a Put Right shall take place within 60
days after receipt by SELLER of the notice described above and SELLER shall pay
the purchase price by wire transfer in immediately available funds to an account
designated by BUYER at least three days prior to the expected closing date.

7.3 Prior to and after the Date of Completion, BUYER hereby agrees not to
intervene or interfere in the process of sale of the properties listed on
EXHIBIT 9 by FIDEI (or FIDEI SCA or the Subsidiaries, as the case may be) to any
third party, provided that the purchase price is at least equal to the purchase
price listed on EXHIBIT 9. After the Date of Completion, BUYER will use its good
faith efforts to fulfill the obligations of FIDEI SCA under such sale
agreements.

Any breach of BUYER's commitment shall result in the termination of the Put
Right with respect to the real property concerned.

7.4 SELLER hereby agrees that a representative of SELLER selected by Seller
shall assist in the sale of the properties listed on EXHIBIT 9 pursuant to the
contracts of sale. BUYER shall give SELLER written notice at least five (5)
Business Days prior to any meeting with a third party relating to the sale of
the properties listed on EXHIBIT 9 and shall permit SELLER's representative to
participate fully in any such meetings.

Any breach of BUYER's commitment shall result in the termination of the Put
Right with respect to the real property concerned.

7.5 EXHIBITS 8A through 8C list real estate property currently under lease
contracts ("credit bail") by FIDEI or the Subsidiaries. EXHIBITS 8D 8E and 8F
list real estate property currently owned by FIDEI or the Subsidiaries. The
Parties hereby agree that FIDEI (or FIDEI SCA) shall retain the properties set
forth on EXHIBITS 8A through 8F at the value set forth on such EXHIBITS.

The Parties hereby agree that the assets listed on EXHIBITS 8D shall be subject
to a revised valuation based on the revised rental situation (indicating for
each real estate, the identity of lessees and projected yearly rentals) of real
estate owned by FIDEI, FIDEI SCA or the Subsidiaries, as the case may be, five
Business Days prior to the expected Date of Completion (hereafter the "Valuation
Date"). Such revised valuation shall only occur if the rental situation is
modified between the Date of Signature and the Valuation Date and shall be based
upon the present value of the increase in rental income attributable to the
properties. The Parties hereby agree that the revised valuation shall not take
into account any new lease contracts that are for a term of less than two (2)
years ("Baux precaires"). In the event that the revised valuation results in an
increase to the valuation of the assets listed on EXHIBIT 8D, the Aggregate
Share Purchase Price shall be increased by such adjustment. In no event shall
the revised valuation result in a decrease in the Aggregate Share Purchase
Price. SELLER shall provide BUYER with an adjusted valuation of the Valuation
Date. In the event that BUYER objects to the revaluation, the consummation of
the transactions shall take place on the Date of Completion and BUYER shall pay
the Purchase Price, as adjusted pursuant to this Section 7.5; provided, however,
that BUYER and SELLER shall negotiate in good faith to agree on the revised
valuation. If not, article 10.2 will apply.




                                       6
<PAGE>
ARTICLE  8.          REPRESENTATIONS OF SELLER

8.1        SELLER hereby represents that as of the Date of Signature:

          o         FIDEI is a French "societe anonyme" (to be converted into an
                    "societe en commandite par actions"), with a share capital
                    of EUR 2,017,870.07 divided into 2,647,272 shares with a par
                    value of EURO 0.76, all of the same class and fully paid up
                    when issued, whose registered office is located at 17, rue
                    de Miromesnil - 75008 Paris, registered with the Trade and
                    Companies Register of Paris under number 692 044 308, as
                    certified by the "Extrait K-bis" attached hereto as EXHIBIT
                    6.

          o         the information given in the said "Extrait K bis" is true
                    and accurate in all material respects, and FIDEI was
                    incorporated in accordance with the French Companies Act and
                    all relevant regulations in effect under the form of a
                    "societe anonyme" by way of a private agreement that was
                    registered with the Trade and Companies Register of Paris on
                    29 October 1969.

          o         SELLER owns the issued and outstanding Shares of FIDEI free
                    and clear of any and all liens, encumbrances, pre-emptive
                    rights, seizures, or any other restrictions on transfer and
                    has the full power and authority to transfer the issued and
                    outstanding Shares of FIDEI.

          o         other than as set forth on EXHIBIT 1, FIDEI and the
                    Subsidiaries are not shareholders or partners in any other
                    companies and are not representatives of other companies or
                    members of a "groupement d'interet economique".

          o         the issued and outstanding categories of Bonds are listed on
                    EXHIBIT 2.

          o         to the knowledge of SELLER, other than the Bonds the
                    tangible and intangible property, personal and real property
                    of FIDEI is not encumbered by any collateral, mortgage or
                    security interest.

          o         to the knowledge of SELLER, FIDEI has not granted any
                    pledge, guarantee or personal guarantee of the performance
                    of any obligations entered into by FIDEI or any third party.

          o         to the knowledge of SELLER, other than the Conversion, the
                    implementation of a Share buy back, FIDEI has not entered
                    into any [material] financial transactions that are not
                    reflected on the Financial Statements.

          o         to the knowledge of SELLER, FIDEI is not a party to any loan
                    that is not reflected in the Financial Statements.

          o         to the knowledge of SELLER, FIDEI is insured in such amounts
                    and against such risks and losses as are customary for
                    companies conducting the business as conducted by FIDEI. To
                    the knowledge of SELLER, none of the insurance policies
                    taken out by FIDEI are cancelable as a result of the
                    Conversion or the transfer of the issued and outstanding
                    Shares of FIDEI SCA to BUYER. To the knowledge of SELLER,
                    the insurance policies of FIDEI are valid and in full force
                    and effect.

          o         to the knowledge of SELLER, other than as set forth on
                    EXHIBIT 10, there is no action, suit, proceeding or
                    investigation pending against FIDEI or the Subsidiaries.



                                       7
<PAGE>
          o         The Financial Statements have been prepared in accordance
                    with generally accepted French accounting principles,
                    applied on a consistent basis during the periods involved.
                    To the knowledge of SELLER, the Financial Statements of
                    FIDEI fairly present in all material respects the
                    consolidated financial position of FIDEI as at 31 December
                    2001.

8.2        Tax Issues:
- ---        -----------

SELLER represents to BUYER that the following amount of ordinary tax losses,
deferred tax losses (evergreen losses) and long term capital losses are as set
in the FY 2001 tax returns of the FIDEI Tax group and Fideicom:

i) FIDEI Tax group

- -          Tax group ordinary losses: EUR 18,152,170

           Such ordinary losses are allocated as follows:

           created in FY                  Amount
                1999                     EUR 18,152,170
                2000                     EUR 0
                2001                     EUR 0

- -          Tax group deferred losses: EUR 28,845,553

- -          Tax group long term tax losses: EUR 20,641,424

           Such long term tax losses are allocated as follows:

           created in FY                  Amount
                1995                      EUR 19,444,393
                1996                      EUR 1,197,031

ii) Fideicom tax losses:

- -          Ordinary tax losses :                    EUR 0
- -          Long term losses:                        EUR 0
- -          Deferred tax losses :                    EUR 30,712,158

The above amounts were determinated as follows:

o         the amounts stated in the 2001 FIDEI consolidated tax return and the
          2001 Fideicom tax return, as applicable,

o         less the use of 1997 and 1999 FIDEI group ordinary tax losses
          resulting from the de-booking of the long term capital gain reserve of
          FIDEI as an ordinary reserve during FY 2002.

In the event that the French tax administration disallows any of the amounts
listed above as inaccurate, improper or incorrect under the tax laws of France
existing as of the Date of signature, SELLER shall indemnify and hold BUYER
harmless against any loss, liability, obligation or damage, and all assessments,
judgments and penalties incident to any such loss, liability, obligation or
damage (hereafter "Losses") incurred by BUYER; provided, however, that SELLER
shall have no obligation to indemnify BUYER unless and until such Losses exceed



                                       8
<PAGE>
EURO 200,000 and provided, further, however, that SELLER shall not be liable to
BUYER for Losses in excess of EURO 979,102.

In the absence of an agreement between BUYER and SELLER, all sums due by SELLER
to BUYER by virtue of this indemnity shall be paid within thirty (30) Business
Days from such sums being adjudged finally due, as a result of a final and
non-appealable legal judgment handed down by any competent taxing authority.

In respect of the calculation of the indemnity which may be due by SELLER to
BUYER, it is agreed that:

          o         any tax reassessment involving a simple decrease of the
                    above mentioned tax losses of the FIDEI consolidated tax
                    group or of Fideicom shall be taken into account only if it
                    triggers an effective reduction on availability of the tax
                    losses for such consolidated tax group and for Fideicom;

          o         for the purpose of calculating the amount of any indemnity
                    payment to be made by SELLER to BUYER, such indemnity
                    payment shall be reduced by any benefit obtained or likely
                    to be obtained by the FIDEI consolidated tax group, by
                    Fideicom or by BUYER for any reason, including, without
                    limitation, by reason of an increase in liabilities or
                    decrease in assets giving rise to such indemnity payment,
                    such as (i) a tax decrease, saving or refund, (ii) the
                    creation or increase in deficits on the Date of Completion
                    (of any kind) or (iii) the receipt of proceeds from an
                    insurance policy or (iv) any adjustments made to tax returns
                    of prior years that result in any of the above.

It is agreed that the amount of indemnity to be paid under this specific tax
indemnity by SELLER to BUYER shall be determined by applying to the amount of
tax losses listed above that are effectively challenged by the French tax
authorities, the following rates:

       -   Ordinary tax losses:

           created in FY                 Rate
           1999                          6%
           2000                          7%
           2001                          8%

       -   Deferred tax losses: 10%

       -   Long term tax losses: 7.5%

All claims under this indemnity must be made in writing with acknowledgement of
receipt addressed by BUYER to SELLER by the end of the relevant applicable
statute of limitation period for tax matters plus thirty (30) days.

This specific indemnity shall expire on 31 January 2005.

BUYER shall ensure that (i) SELLER will receive copies of complete documents
relating to any claims within eight (8) Business Days, (ii) neither BUYER, FIDEI
SCA nor the Subsidiaries shall accept liability for or compromise any claims
that give rise or could give rise to any claim for indemnification hereunder
without the prior consent of SELLER, (iii) BUYER, FIDEI SCA and the Subsidiaries
shall give SELLER and its advisors access to all documents and information
likely to be useful in the defense of any claim and (iv) BUYER, FIDEI SCA and
the Subsidiaries shall allow SELLER to select its own counsel who will act under
the instructions of SELLER to defend the interests of FIDEI, FIDEI SCA and the
Subsidiaries in respect of the tax claims. If BUYER, FIDEI SCA or the
Subsidiaries decide, contrary to the demand of SELLER, not to defend any claim,



                                       9
<PAGE>
BUYER, FIDEI SCA and the Subsidiaries shall have no right to seek
indemnification from SELLER under this indemnity.

SELLER shall have the right but not the obligation (by providing BUYER notice
pursuant to Section 10.8 below) to represent the interests of FIDEI SCA and the
Subsidiaries in any tax audit or administrative or court proceeding relating to
the taxable periods of FIDEI SCA and the Subsidiaries which end on or before the
Date of Completion. BUYER agrees that it will cooperate fully with the SELLER
and its counsel in the defense against or compromise of any claim in any said
proceeding. SELLER shall bear the legal fees of its advisors or counsels.

BUYER shall cause FIDEI SCA and the Subsidiaries to give, free access to SELLER
and its advisors to all premises, documents and accounts of FIDEI SCA and the
Subsidiaries and will keep SELLER informed of the progression of all elements
reflected or which should be reflected in the accounts of FIDEI SCA and the
Subsidiaries. It is understood that this free access is limited to the scope and
the needs of Article 8.

BUYER undertakes to ensure that FIDEI SCA and the Subsidiaries shall keep and
maintain all books and records as may be needed to defend any claim from the tax
authorities and SELLER shall be relieved of its obligation to indemnify BUYER
for any Losses that SELLER could not adequately contest because of BUYER's
failure to ensure such books and records are maintained.

ARTICLE  9.          REPRESENTATION OF BUYER
- -----------          -----------------------

BUYER represents that it (i) has received all the information it considers
necessary or appropriate for deciding whether to purchase the Shares and Rights
as General Partner, (ii) has had an opportunity to ask questions and receive
answers from FIDEI and the Subsidiaries regarding the business conducted by
FIDEI and the Subsidiaries and the business, properties and financial condition
of FIDEI and the Subsidiaries, (iii) has had the opportunity to visit and survey
the properties of FIDEI and the Subsidiaries, (iv) has had the opportunity to
properly examine and evaluate all documentation relevant to the properties and
(v) has had an opportunity to conduct a thorough and serious technical and
operational investigation into the various assets and liabilities of FIDEI and
the Subsidiaries for the purpose of the Agreement. BUYER has satisfied itself in
respect of all investigations and documentation received or requested from
SELLER.

ARTICLE  10.         MISCELLANEOUS
- ------------         -------------

10.1       LANGUAGE - GOVERNING LAW

 This Agreement is drawn up in English and shall be governed by and construed in
 accordance with the laws of France. Should a French version be prepared, the
 prevailing version shall be the English version.


10.2.      DISPUTE RESOLUTION

The Parties agree to submit any dispute or disagreement arising from this
Agreement to an arbitral tribunal composed of three (3) arbitrators. The seat of
the arbitral tribunal shall be Paris.

Each Party shall appoint one arbitrator within 15 days from the notice sent by
the most diligent party appointing its arbitrator, by letter with acknowledgment
of receipt. If either Party fails to appoint its arbitrator, this Party shall be
notified to do so within 15 days by letter with acknowledgment of receipt.




                                       10
<PAGE>
If such Party does not appoint its arbitrator within this schedule, such
appointment shall be requested to the President of the Tribunal de Commerce de
Paris, "statuant en la forme des referes", at the request of the most diligent
Party.

The two arbitrators shall appoint the third arbitrator within the month
following the appointment of the second arbitrator. If the two arbitrators fail
to do so, the appointment of the third arbitrator shall be requested to the
resident of the Tribunal de Commerce de Paris, "statuant en la forme des
referes", at the request of the most diligent Party.

The decisions of such arbitrators shall be final and not open to appeal.

The Parties shall be responsible for their own costs and expenses (including
legal fees) in connection with any arbitration; provided, however, that each
Party will be responsible for 50% of the fees and expenses of the arbitrators.

10.2       CONFIDENTIALITY

Prior to the Date of Completion, BUYER hereby agrees not to disclose any
confidential information currently in its possession or which may come into its
possession concerning FIDEI, FIDEI SCA and the Subsidiaries and not to use such
information for the benefit of any third party. After the Date of Completion,
SELLER hereby agrees not to disclose any confidential information currently in
its possession or which may come into its possession concerning FIDEI, FIDEI SCA
and the Subsidiaries and not to use such information for the benefit of any
third party

Neither BUYER, SELLER nor any of their representatives shall issue any press
release or public announcement concerning this Agreement or the transactions
contemplated hereby without obtaining the prior written approval of the other
party hereto, unless, disclosure is otherwise required by applicable law or by
the applicable rules of any stock exchange on which BUYER or SELLER or their
respective affiliates lists securities, provided, however, that, to the extent
required by applicable law or the rules of any stock exchange, the party
intending to make such release shall use its commercially reasonable efforts
consistent with such applicable law or rule to consult with the other party with
respect to the text thereof.

10.3       FEES AND EXPENSES

Each of the Parties shall bear its own costs and expenses (including legal fees
and expenses) incurred by either Party in connection with the preparation and
negotiation of this Agreement and the consummation of the transactions
contemplated hereby.

10.4       ENTIRE AGREEMENT; SEVERABILITY; AMENDMENTS
This Agreement constitutes the entire agreement among the Parties and supersedes
any prior and contemporaneous understandings, agreements, or representations by
or among the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.

Any term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions of this Agreement or the validity or
enforceability of the offending term or provision in any other situation or in
any other jurisdiction. However, the Parties hereto shall attempt, through
negotiations in good faith, to replace any provision of this Agreement so held
to be invalid or unenforceable by a provision of comparable effect. The failure
of the Parties to reach an agreement on a replacement provision shall neither
affect the validity of the remaining provisions of this Agreement nor the
validity of the valid or enforceable part of any provision held partly invalid,
which provision shall take effect to the maximum extent permitted by law.



                                       11
<PAGE>
No amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by each Party.

10.5       BINDING EFFECT; ASSIGNMENT

This Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. Nothing in this Agreement
shall create or be deemed to create any third party beneficiary rights in any
person or entity not a party to this Agreement. Other than the Conversion and
the implementation of a Share buy back, no assignment of this Agreement or of
any rights or obligations hereunder may be made by either the SELLER or the
BUYER (by operation of law or otherwise) without the prior written consent of
the other parties hereto and any attempted assignment without the required
consents shall be void[; provided, however, that the SELLER may assign this
Agreement and any or all rights or obligations hereunder to any affiliate of
SELLER. Upon any such permitted assignment, the references in this Agreement to
the SELLER shall apply to any such assignee unless the context otherwise
requires].

10.6       WAIVERS

The failure of any Party hereto to exercise any right, power or remedy provided
under this Agreement or otherwise available in respect hereof at law or in
equity, or to insist upon compliance by any other Party hereto with its
obligations hereunder, and any custom or practice of the parties at variance
with the terms hereof, shall not constitute a waiver by such Party of its right
to exercise any such or other right, power or remedy or to demand such
compliance.

10.7       NOTIFICATIONS

All notices and other communications required or permitted hereunder shall be in
writing and, unless otherwise provided in this Agreement, will be deemed to have
been duly given when delivered in person or when dispatched by electronic
facsimile transfer (confirmed in writing by mail simultaneously dispatched) or
two Business Days after having been dispatched by a nationally recognized
overnight courier service to the appropriate party at the address specified
below

|X|        To BUYER at:

HAMPTON TRUST HOLDINGS (EUROPE) SA
81, rue Jean-Baptiste Gillardin
Petange
4735 Luxembourg
Attn.: Mr. John C. Jones, Administrateur Delegue
Facsimile:

With a copy to:

TESTU PACLOT MOITRY Me Jean-Hubert Moitry 4, rue de Galliera 75 116 Paris
Facsimile:

To SELLER at :LUK FIDEI LLC
1315 Park Avenue South
New York, New York, 10010
Attention: Luis Medeiros
Facsimile:  (212) 598-3245



                                       12
<PAGE>
With a copy to:

JF Delepoulle
Colisee Mur
17, rue de Miromesnil
F - 75008 Paris
Facsimile:

and

Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention:  Andrea A. Bernstein
Facsimile:  (212) 310-8007

10.8       LIST OF EXHIBITS

Exhibit 1 :          List of Subsidiaries

Exhibit 2 :          List of the categories of Bonds issued by FIDEI

Exhibit 3 :          Financial Statements

Exhibit 4 :          List of representatives and managers of FIDEI and
                     its Subsidiaries

Exhibit 5 :          Draft of the articles of association of FIDEI SCA

Exhibit 6 :          Articles of association and Extrait K bis of FIDEI and its
                     Subsidiaries

Exhibit 7:           Temporary Pro forma Balance Sheet at the Date of Signature

Exhibit 8A
through 8F:          Value of the real estate and financial lease contracts
                     owned by FIDEI and the Subsidiaries at the Date of
                     Completion

Exhibit 9:           List of real estate properties under commitment to sell

Exhibit 10:          Action, suit,proceeding or investigation pending against
                     FIDEI or the Subsidiaries

On the 17th April 2002,
In Paris,

Made in two (2) original copies




/s/ Luis Medeiros                               /s/ Graeme Jackson
- --------------------------------                --------------------------------
SELLER                                          BUYER
LUK FIDEI L.L.C                                 and HAMPTON TRUST HOLDING
                                                (EUROPE) SA HAMPTON TRUST PLC
                                                by:  John C. Jones
                                                title: Administrateur Delegue

by: Luis Medeiros                               by: Graeme Jackson
Title:  Vice President                          Title: Chairman of the Board






                                       13

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>9
<FILENAME>jd3-25_reiterative.txt
<DESCRIPTION>EXHIBIT 10.38 REITERATIVE SHARE PUR AGREE
<TEXT>
                                                                Exhibit 10.38



- --------------------------------------------------------------------------------
                      REITERATIVE SHARE PURCHASE AGREEMENT
- --------------------------------------------------------------------------------



BETWEEN:



- - SAVITS AB PRIVATE (formerly Startskottet 21918 AB), a company governed under
the Laws of Sweden, having its registered office, c/o Hellstrom & Partners
Advokatbyra HB - Box 7305 - 103 90 STOCKHOLM -SWEDEN, registered under number
556622 - 7574, represented for the purposes of this Reiterative Share Purchase
Agreement by Luis Medeiros duly empowered pursuant to a Power of Attorney
attached on EXHIBIT 10 hereto.

                                       Hereinafter referred to as the "SELLER",

                                                              OF THE FIRST PART

AND


- - HAMPTON TRUST HOLDING (EUROPE) SA, a joint stock company governed by the Laws
of Luxembourg, with a share capital of EUR 100,000 having its registered office
at 81, rue Jean-Baptiste Gillardin, Petange, 4735 Luxembourg, registered with
the Trade and Company registry of Luxembourg under number B86120, represented
for the purposes of this Agreement by Mr John C. Jones, acting in his capacity
as Administrateur Delegue, and represented by Mr. Graeme Jackson acting in his
capacity as "Administrateur"

- - MR JOHN C. JONES, having his domicile at Courtenay Lodge, Courtenay Terrace,
Hove, BN3 2WF, United Kingdom

- - HERALD CENTURY CONSOLIDATED SA, a joint stock company governed by the Laws of
Luxembourg, with a share capital of EUR 100,000 having its registered office at
69, route d'Esch, 2953 Luxembourg, registered with the Trade and Company
registry of Luxembourg under number B 62-171, represented for the purposes of
this Reiterative share Purchase Agreement by Mr John C. Jones, acting in his
capacity as "Administateur Delegue"

                   Hereinafter jointly and severally referred to as the "BUYER",

                                                             OF THE SECOND PART




<PAGE>
The SELLER and the BUYER shall be individually referred to as a "Party", and
collectively as the "Parties"

RECITALS

Whereas LUK FIDEI LLC was merged on April 24, 2002 into Baldwin Inc having its
registered office 1209, Orange Street New Castle Country Delaware (USA). Whereas
the "shareholders unconditional contribution" of FIDEI SCA to SAVITS AB by
Baldwin Inc has been implemented on May 2, 2002;

Whereas SELLER holds 99.99 % of COMPAGNIE FONCIERE FIDEI (hereafter "FIDEI
SCA"), a French partnership with limited shares ("societe en commandite par
actions") with a share capital of EUR 550,329, having its registered office
located at 17 rue de Miromesnil - 75008 Paris, registered with the Trade and
Company Registry of Paris under number 692 044 308 ;

Whereas FIDEI is owned by three (3) other minor shareholders which are Lortay
LLC, Rishly LLC and Homry LLC, three (3) companies organized under the Laws of
Delaware (USA) and which respectively own one (1) share of FIDEI SCA;

Whereas SELLER shall act in its own name and on behalf of the three (3) above
mentioned minor shareholders ;

Whereas FIDEI owns today directly 100 % of the issued and outstanding shares of
each of the Subsidiaries; an updated list of Subsidiaries is attached on EXHIBIT
1 hereto;

Whereas FIDEI, formerly a "societe anonyme", has been converted into a "societe
en commandite par actions" by its extraordinary shareholders meeting dated April
29, 2002. A copy of the updated "Extrait K bis" is attached on EXHIBIT 2 hereto;

Whereas by virtue of this reiterative share purchase agreement (Hereinafter
"Reiterative Share Purchase Agreement" or "Reiterative SPA"), the Parties
reiterate today the share purchase agreement (Hereafter "SPA") executed on April
17th, 2002, article 3 of which, on Aggregate Purchase price and Right as general
partner, was modified in accordance with the articles 3.3, 7.5 and 10.5 al. 3 of
the SPA by an amendment (Hereafter "Amendment") executed by both Parties on May
6, 2002 ;

Whereas the extraordinary shareholders meeting held on May 6, 2002 decided a
share buy back operation which minutes have been filed with the Paris Trade and
Companies Register on May 7, 2002 and whereas the managing director of FIDEI SCA
noted on minutes dated June 3, 2002, that the creditors opposition time period
was elapsed and, consequently, (i) the share buy back was completed, (ii) the
redeemed shares were cancelled and (iii) the share capital reduced. A copy of
the non-opposition certificate issued by the Clerk of the Commercial Court of
Paris is attached on EXHIBIT 3. The legal formalities regarding this operation
are currently being processed by FIDEI SCA ;



                                       2
<PAGE>
Whereas the two following conditions, contained in Article 6 of the SPA, are
today realised, namely :

o         the Conversion of FIDEI SCA has been implemented on April 29th, 2002 ;

o         The wire transfer by FIDEI SCA to SAVITS AB of an amount of EUR
          51,982,803 following to the share buy back operation has been
          implemented on June 3, 2002.

Whereas SELLER agrees to sell to BUYER and BUYER agrees to purchase from SELLER,
according to the terms and conditions set forth below all of the issued and
outstanding shares of FIDEI SCA.

Whereas the Right as General Partner shall be purchased today in a separate
agreement.

NOW, THEREFORE, THE PARTIES HERETO HAVE AGREED AS FOLLOWS:

ARTICLE 1. DEFINITIONS

1.1. The terms set out hereunder shall have the following meaning for the
purpose of the Reiterative SPA:

- - "Amendment":  shall mean the amendment of the SPA executed on May 6, 2002.

- -"Final Pro forma Balance Sheet": is the pro forma balance sheet attached on
EXHIBIT 4 hereto;

- - "Reiterative SPA": shall mean this agreement, including its Exhibits executed
by SELLER and BUYER.

- - "Minor shareholders of FIDEI SCA": shall mean Lortay LLC, Homry LLC and Rishly
LLC, companies organized and existing under the Laws of Delaware (USA), each of
them owning one (1) share of FIDEI ;

- -"SPA":  shall mean the share purchase agreement executed on April 17, 2002.

- -"Shares": shall mean the 721.983 shares of FIDEI SCA after the share buy back
operation.

- -"Transfer Order": shall mean the legal form ("Ordre de mouvement") according to
which SELLER shall transfer the Shares of FIDEI SCA to BUYER, a copy of which
are attached hereto on EXHIBIT 5 hereto.

1.2. The other terms with a first capital letter are defined in the SPA.

1.3. Plural forms shall include singular forms and vice versa.



                                       3
<PAGE>
ARTICLE 2. SALE AND PURCHASE OF THE SHARES OF FIDEI SCA
- ---------- ---------------------------------------------

SELLER shall sell today in its own name and on behalf of the Minor Shareholders
of FIDEI SCA to BUYER and BUYER shall purchase today from SELLER, all of the
issued and outstanding shares of FIDEI SCA.

The Parties undertake to have the transfers of the Shares registered in the
books and records of FIDEI SCA today.

The Shares shall be transferred with full rights ("jouissance") as of today.

ARTICLE 3. PURCHASE PRICE OF THE SHARES OF FIDEI SCA
- ---------- ------------------------------------------

BUYER shall pay to SELLER and the Minority Shareholders of FIDEI SCA on the
basis of the Final Pro Forma Balance Sheet attached on EXHIBIT 4 - the amount of
TWENTY FIVE EUROS and FORTY EIGHT CENTIMES (EUR 25.48) per share for each share
of FIDEI SCA issued and outstanding.

The number of shares of FIDEI SCA to be purchased by BUYER today shall be SEVEN
HUNDRED TWENTY ONE THOUSAND NINE HUNDRED and EIGHTY THREE (721 983) and the
purchase price for the shares of FIDEI SCA paid to SELLER and the Minor
Shareholders shall be EIGHTEEN MILLION THREE HUNDRED NINETY SEVEN THOUSAND AND
EIGHT HUNDRED AND EIGHTY THREE EUROS SIXTY SEVEN CENTIMES (18,397,883.67)
(hereafter the "Purchase Price").

o         Savits AB : 721.980 shares: 18,397,807.23 Euros: to be sold to Hampton
          Trust Holdings (Europe) SA

o         Lortay LLC: 1 share: 25.48 Euros: to be sold to Hampton Trust Holdings
          (Europe SA)

o         Rishly LLC: 1 share: 25.48 Euros: to be sold to Herald Century
          Consolidated SA

o         Homry LLC:1 share: 25.28 Euros: to be sold to Mr John C. JONES

Registration duties due to any person incurred by the transfer of Shares shall
be the sold responsibility of, and shall be borne by, BUYER.

ARTICLE 4. PAYMENT OF THE PURCHASE PRICE
- ---------- ------------------------------

BUYER shall pay the Purchase Price as set forth in Article 3 today by
certificate check to the SELLER and the three (3) Minority Shareholders. Copies
of the checks are attached on Exhibit 6 hereto.



                                       4
<PAGE>
ARTICLE 5. CONDITIONS TO CLOSING
- ---------- ----------------------

SELLER shall deliver to BUYER today :

o         the written resignation of the Managing Director ("gerant"), the
          President and the Secretary of the Supervisory Board of FIDEI SCA at
          the effective date of today; a copy of these letters is attached on
          EXHIBIT 7 hereto ;

o         the written resignation of all the Presidents of each of the
          Subsidiaries listed on EXHIBIT 1 hereto ; a copy of these letters of
          resignation shall be attached on EXHIBIT 7 hereto ;

o         all the corporate documents listed on EXHIBIT 9 hereto.

The Parties mutually agree that the replacement of the Managing Director of
FIDEI SCA and the dismissal of the members of the Supervisory Board shall take
place at the extraordinary shareholders' meeting of FIDEI SCA to be held today.

ARTICLE 6. REAL ESTATE PROPERTIES
- ---------- -----------------------

EXHIBIT 8 hereto is an updated list of all real property owned by FIDEI SCA
which are still under a commitment to sell ("promesse de vente" or "compromis de
vente") as of today, by FIDEI or the Subsidiaries, on the one hand, and third
parties on the other hand.

It is agreed by the Parties that the provisions 7.2, 7.3 and 7.4 of the SPA
shall continue to apply and produce their effects.

ARTICLE 7. REPRESENTATIONS OF SELLER AND BUYER
- ---------- ------------------------------------

The Parties agree to refer to the articles 8 and 9 of the SPA as regards the
representations and warranties made by them.

ARTICLE 8. MISCELLANEOUS
- ---------- --------------

This Reiterative Agreement is drawn up in English and shall be governed by and
construed in accordance with the laws of France. Should a French version be
prepared, the prevailing version shall be the English version.

This Reiterative Agreement is confidential under the same conditions as defined
in article 10.3 of the SPA.

Each of the Parties shall bear its own costs and expenses (including legal fees
and expenses) incurred by either Party in connection with the preparation and
negotiation of the Reiterative Agreement and the consummation of the
transactions contemplated hereby.



                                       5
<PAGE>
This Reiterative Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and permitted assigns in the same
condition than in the article 10.6 of the SPA.

The failure of any Party hereto to exercise any right, power or remedy provided
under this Agreement or otherwise available in respect hereof at law or in
equity, or to insist upon compliance by any other Party hereto with its
obligations hereunder, and any custom or practice of the Parties at variance
with the terms hereof, shall not constitute a waiver by such Party of its right
to exercise any such or other right, power or remedy or to demand such
compliance.

All notices and other communications required or permitted hereunder shall be in
writing and, unless otherwise provided in this Agreement, will be deemed to have
been duly given when delivered in person or when dispatched by electronic
facsimile transfer (confirmed in writing by mail simultaneously dispatched) or
two Business Days after having been dispatched by a nationally recognized
overnight courier service to the appropriate party at the address specified
below

|X|        To BUYER at:
HAMPTON TRUST HOLDINGS (EUROPE) SA
81, rue Jean-Baptiste Gillardin
Petange
4735 Luxembourg
Attn.: Mr. John C. Jones, Administrateur Delegue
Facsimile:

With a copy to:

TESTU PACLOT MOITRY
Me Jean-Hubert Moitry
4, rue de Galliera
75 116 Paris
Facsimile:

|X|        To SELLER at :

SAVITS AB PRIVATE
Box 7305
10390 STOCKHOLM - SWEDEN
Attn : Philip Cannella



                                       6
<PAGE>
With a copy to:
JF Delepoulle
Colisee Mur
17, rue de Miromesnil
F - 75008 Paris

and

Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention:  Andrea A. Bernstein
Facsimile:  (212) 310-8007

All other provisions contained in the article 10 of the SPA shall be applicable
to this Reiterative Agreement.

10.9       LIST OF EXHIBITS

Exhibit 1 :           Updated list of Subsidiaries and their Presidents

Exhibit 2 :           "Extrait K bis" upon Conversion of FIDEI SCA

Exhibit 3 :           Creditors non opposition certificate from the Clerk of the

                      commercial court.

Exhibit 4 :           Final Pro forma Balance Sheet

Exhibit 5 :           FIDEI SCA Share transfer orders

Exhibit 6 :           Copies of the checks

Exhibit 7 :           Copy of the resignation letters concerning FIDEI SCA and

                      its Subsidiaries

Exhibit 8 :           Updated list of real estate properties under commitment to
                      sell

Exhibit 9 :           List of corporate documents to be delivered by FIDEI to
                      HAMPTON

Exhibit 10 :          Power of Attorney






                                       7
<PAGE>
On June the 4th 2002,
In Paris,

Made in two (4) original copies                GRAEME JACKSON



/s/ Luis Medeiros                              /s/ Graeme Jackson
- ---------------------------------              ---------------------------------
SELLER                                         BUYER
SAVITS AB                                      HAMPTON TRUST
                                               HOLDING (EUROPE) SA



By : Luis Medeiros                             by : John C. Jones
                                               ---------------------------------
                                               Title: Administrateur Delegue
                                               Represented by:  Graeme Jackson
                                               Title:  Administrateur




                                                /s/ John C. Jones
                                                --------------------------------
                                                BUYER
                                                HERALD CENTURY
                                                CONSOLIDATED SA
                                                Represented by:  John C. Jones
                                                Title:  Administrateur Delegue



                                                /s/ John C. Jones
                                                --------------------------------
                                                BUYER
                                                JOHN C. JONES





                                       8







</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>10
<FILENAME>jd3-26_berkadia.txt
<DESCRIPTION>EXHIBIT 10.40 BERKADIA AMEND/RESTATED OP AGREE
<TEXT>
                                                            Exhibit 10.40


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


                                  BERKADIA LLC,

                      A DELAWARE LIMITED LIABILITY COMPANY



                 SECOND AMENDED AND RESTATED OPERATING AGREEMENT

                                December 2, 2002


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



<PAGE>
                 SECOND AMENDED AND RESTATED OPERATING AGREEMENT

                                       OF

                                  BERKADIA LLC

      This SECOND AMENDED AND RESTATED OPERATING AGREEMENT, amending and
restating in its entirety that certain First Amended and Restated Operating
Agreement of Berkadia LLC, as amended by that certain First Amendment to the
First Amended and Restated Operating Agreement of Berkadia LLC, is entered into
by and between BH Finance LLC, a Nebraska limited liability company ("BH
Finance"), and WMAC Investment Corporation, a Wisconsin corporation ("WMAC"), as
the sole Members of the Company. This Agreement shall be effective as of
December 2, 2002.

SECTION 1
                                   THE COMPANY

1.1        Formation.

      The Company has been formed as a limited liability company under and
pursuant to the provisions of the Act and upon the terms and conditions set
forth in this Agreement. The rights and liabilities of the Members shall be as
provided under the Act, the Certificate (as defined herein) and this Agreement.

1.2        Name.

      The name of the Company shall be "Berkadia LLC" and all business of the
Company shall be conducted in such name or such other name as is agreed by the
Members.

1.3        Purpose; Powers.

      The Company has previously (i) obtained approximately $6 billion principal
amount of debt financing for the purpose of funding the Company's activities
(the "Outside Financing"); (ii) negotiated, executed and delivered such loan or
credit agreements, notes, security agreements, pledge agreements, certificates,
and other agreements, documents and/or instruments as were necessary or
desirable in connection with the Outside Financing (the "Outside Financing
Documents"); (iii) negotiated, executed, delivered and accepted the credit
agreement relating to a loan to FCC on a senior secured basis (the "Senior
Loan") contemplated by the plan of reorganization of FNV and its subsidiaries as
confirmed by the bankruptcy court in August 2001; (iv) negotiated, executed,
delivered and accepted notes, security agreements, pledge agreements,
guarantees, certificates and other agreements, documents and/or instruments as
were necessary or desirable in connection with the Senior Loan (including the
credit agreement, the "Senior Loan Documents"); and (v) utilized the proceeds of
the Outside Financing to fund the Senior Loan.

           The purposes of the Company are:


<PAGE>
           (a) to amend, modify, restate, waive, or enforce any terms and
conditions of the Outside Financing Documents; and to repay, prepay, refinance,
extend, renew, redeem, substitute and/or replace the Outside Financing from time
to time;

           (b) to hold collateral, assets, securities, instruments, contracts,
rights and other property of FCC, FNV, Affiliates of FCC or FNV or other persons
or entities (the "Collateral") as security for, or in full or partial
fulfillment of, the obligations of any party to the Senior Loan Documents; to
amend, modify, restate, waive or enforce any terms and conditions of the Senior
Loan Documents; to acquire title to or possession of, hold, transfer, sell or
dispose of Collateral and other property pursuant to the terms of the Senior
Loan Documents;

           (c) to make such additional investments and engage in such additional
investment activities as the Members may approve; and

           (d) to engage in any and all activities related or incidental to the
foregoing purposes.

      (The activities described in clauses (a) through (d) above shall be
referred to as the "Business.")

      The Company shall have the power to do any and all acts necessary,
appropriate, proper, advisable, incidental or convenient to or in furtherance of
such purposes.

1.4        Principal Place of Business.

      The principal place of business of the Company shall be at such location
within or without the State of Delaware as the Members may agree.

1.5        Term.

      The term of the Company commenced on February 26, 2001 (the "Formation
Date"), the date the certificate of formation of the Company (as such
certificate may be amended, modified, supplemented or restated from time to
time, the "Certificate") was filed in the office of the Secretary of State of
the State of Delaware in accordance with the Act, and shall continue until the
winding up and liquidation of the Company pursuant to Section 10 hereof.

1.6        Filings; Agent for Service of Process.

           (a) The Certificate has been filed in the office of the Secretary of
State of the State of Delaware in accordance with the Act. The Members shall
take any and all other actions reasonably necessary to perfect and maintain the
status of the Company as a limited liability company under the laws of the State
of Delaware, including the preparation and filing of such amendments to the
Certificate and such other assumed name certificates, documents, instruments and
publications as may be required by law.

           (b) The Members shall execute and cause to be filed original or
amended certificates and shall take any and all other actions as may be



                                       2
<PAGE>
reasonably necessary to perfect and maintain the status of the Company as a
limited liability company or similar type of entity under the laws of any other
jurisdictions in which the Company engages in business.

           (c) As of the date hereof, the name and address of the Company's
designated agent and registered office for service of process on the Company in
the State of Delaware is Corporation Service Company, 2711 Centerville Road,
Suite 400, Wilmington, Delaware 19808.

1.7        Definitions.

           (a) Capitalized words and phrases used in this Agreement have the
following meanings:

      "Act" means the Delaware Limited Liability Company Act, 6 Del.
C.ss.18-101, et seq., as amended from time to time (or any corresponding
provisions of succeeding law).

      "Additional Capital Contributions" means, with respect to each Member, the
Capital Contributions, if any, made by such Member pursuant to Section 2.4
hereof.

      "Adjusted Capital Account Deficit" means, with respect to any Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the
relevant Allocation Year, after giving effect to the following adjustments:

               (i) Credit to such Capital Account any amounts which such Member
is deemed to be obligated to restore pursuant to Section 1.704-1(b)(2)(ii)(c) or
the penultimate sentences in Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Regulations; and

               (ii) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.

The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.

      "Affiliate" means, with respect to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person.

      "Affiliated Member" has the meaning set forth in Section 9.2 of this
Agreement.

      "Agreement" means this Second Amended and Restated Operating Agreement of
Berkadia LLC, including any appendix attached hereto, as amended from time to
time. Words such as "herein," "hereinafter," "hereof," "hereto" and "hereunder"
refer to this Agreement as a whole, unless the context otherwise requires.

      "Allocation Year" means (i) the period that commenced on the Formation
Date and ends on December 31, 2001, (ii) any subsequent twelve (12) month period
commencing on January 1 and ending on December 31 or (iii) any portion of the
period described in clauses (i) or (ii) for which the Company is required to



                                       3
<PAGE>
allocate Profits, Losses and other items of Company income, gain, loss or
deduction pursuant to Section 3 hereof and Appendix B hereto.

      "Available Cash" means the amount of cash that the Members deem available
for distribution, taking into account all debts, liabilities, and obligations of
the Company then due or soon to come due, including, without limitation,
payments of principal and interest on, and fees and expenses with respect to,
the Outside Financing, and working capital and other amounts and reserves that
the Members deem necessary or advisable in connection with the operation of the
Company's Business and the payment of principal and interest on, and fees and
expenses with respect to, the Outside Financing; provided, however, that
Available Cash shall be determined without regard to any Net Interest Savings
and any management or similar fees described in Section 11.1.

      "Berkshire" means Berkshire Hathaway Inc., a Delaware corporation.

      "BH Finance" has the meaning set forth in the initial paragraph of this
Agreement.

      "Capital Account" means, with respect to any Member, the Capital Account
maintained for such Member in accordance with the following provisions:

               (i) To each Member's Capital Account there shall be credited (A)
such Member's Capital Contributions actually (or deemed) made, (B) such Member's
distributive share of Profits and any items in the nature of income or gain
which are specially allocated pursuant to Section 3 hereof or Paragraph 1, 2 or
3 of Appendix B hereto, and (C) the amount of any Company liabilities assumed by
such Member or which are secured by any property distributed to such Member;

               (ii) To each Member's Capital Account there shall be debited (A)
the amount of money and the Gross Asset Value of any property distributed (or
deemed distributed) to such Member pursuant to Section 2.3(d), 4, 5.4 or 10
hereof, (B) such Member's distributive share of Losses and any items in the
nature of expenses or losses which are specially allocated pursuant to Section 3
hereof or Paragraph 1, 2 or 3 of Appendix B hereto, and (C) the amount of any
liabilities of such Member assumed by the Company or which are secured by any
property contributed by such Member to the Company; and

               (iii) In the event an Interest is Transferred in accordance with
the terms of this Agreement, the transferee shall succeed to the Capital Account
of the transferor to the extent it relates to the Interest.

      The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Regulations.

      "Capital Contributions" means, with respect to any Member, the amount of
money and the initial Gross Asset Value of any property (other than money)
contributed or required to be contributed to the Company by such Member pursuant
to Section 2, Section 10.2 or Section 12.2 hereof, including Required Capital
Contributions and Additional Capital Contributions.



                                       4
<PAGE>
      "Certificate" has the meaning set forth in Section 1.5 of this Agreement.

      "Certificate of Cancellation" means a certificate filed in accordance with
Section 18-203 of the Act.

      "Code" means the United States Internal Revenue Code of 1986, as amended
from time to time.

      "Company" means the limited liability company formed pursuant to the
Certificate and continued pursuant to this Agreement.

      "Company Minimum Gain" has the same meaning as the term "partnership
minimum gain" in Section 1.704-2(b)(2) and 1.704-2(d) of the Regulations.

      "Covered Losses" means all losses, liabilities, expenses or damages
(including reasonable attorneys' fees and expenses) paid to any Third Party
Claimant for claims or legal actions arising out of the Senior Loan or the
Management Agreement or the performance of responsibilities, or taking of
actions or decisions pursuant to either, but shall not include claims or actions
to collect or enforce the Outside Financing or any other contractual obligation
of the Company.

      "Debt Percentage" means, with respect to any Member, such Member's Debt
Percentage as set forth in Appendix A hereto.

      "Depreciation" means, for each Allocation Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such Allocation Year, except that if the Gross Asset
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such Allocation Year, Depreciation shall be an
amount which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such Allocation Year bears to such beginning adjusted tax basis; provided,
however, that if the adjusted basis for federal income tax purposes of an asset
at the beginning of such Allocation Year is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the Members.

      "FCC" means Finova Capital Corporation.

      "Fiscal Year" means (i) the period that commenced on the Formation Date
and ends on December 31, 2001, (ii) any subsequent twelve-month period
commencing on January 1 and ending on December 31 and (iii) the period
commencing on the immediately preceding January 1 and ending on the date on
which all property is distributed to the Members pursuant to Section 10 hereof.

      "FNV" means The Finova Group Inc.

      "Formation Date" has the meaning set forth in Section 1.5 of this
Agreement.



                                       5
<PAGE>
           "Gross Asset Value" means with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:

               (i) The initial Gross Asset Value of any asset contributed by a
Member to the Company shall be the gross fair market value of such asset at the
time of contribution, as determined by the Members;

               (ii) The Gross Asset Values of all Company assets shall be
adjusted to equal their respective gross fair market values (taking Code Section
7701(g) into account), as determined by the Members as of the following times:
(A) the acquisition of an additional interest in the Company by any new or
existing Member in exchange for more than a de minimis Capital Contribution; (B)
the distribution by the Company to a Member of more than a de minimis amount of
Company property as consideration for an interest in the Company; and (C) the
liquidation of the Company within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g); provided that an adjustment at the times described in
clauses (A) and (B) of this paragraph shall be made only if the Members
determine that such adjustment is necessary to reflect the relative economic
interests of the Members in the Company;

               (iii) The Gross Asset Value of any item of Company assets
distributed to any Member shall be adjusted to equal the gross fair market value
(taking Code Section 7701(g) into account) of such asset on the date of
distribution as determined by the Members; and

               (iv) The Gross Asset Values of Company assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and subparagraph (vi) of
the definition of "Profits" and "Losses" or Paragraph 1(g) of Appendix B hereto;
provided, however, that Gross Asset Values shall not be adjusted pursuant to
this subparagraph (iv) to the extent that an adjustment pursuant to subparagraph
(ii) is required in connection with a transaction that would otherwise result in
an adjustment pursuant to this subparagraph (iv).

If the Gross Asset Value of an asset has been determined or adjusted pursuant to
subparagraph (ii) or (iv), such Gross Asset Value shall thereafter be adjusted
by the Depreciation taken into account with respect to such asset, for purposes
of computing Profits and Losses.

      "Gross Profit" shall mean the sum of (a) the amounts distributed to a
Member pursuant to Section 4.1 or Section 10.2 of this Agreement, (b) in the
case of WMAC, the fees paid to WMAC or any of its Affiliates pursuant to the
Management Agreement (net of amounts, if any, paid over to BH Finance or its
Affiliates pursuant to Section 11.1 hereof), and (c) in the case of BH Finance,
the amounts, if any, paid over to BH Finance or its Affiliates pursuant to
Section 11.1 hereof, in each case, from the Formation Date to the date of the
Covered Loss.



                                       6
<PAGE>
      "Interest" means an ownership interest in the Company, including any and
all benefits to which the holder of such Interest may be entitled as provided in
this Agreement, together with all obligations of such Person to comply with the
terms and provisions of this Agreement.

      "Leucadia" means Leucadia National Corporation, a New York corporation.

      "Losses" has the meaning set forth in the definition of "Profits" and
"Losses."

      "Management Agreement" means that certain Second Amended and Restated
Management Services Agreement by and among Leucadia, Leucadia International
Corporation and FNV, dated as of June 10, 2001 (and prior to June 10, 2001, the
predecessor Management Services Agreement dated February 26, 2001, and the First
Amended and Restated Management Services Agreement dated April 3, 2001), or any
similar agreement.

      "Member" means any Person (i) who is referred to as such on Appendix A
hereto, or who has become a substituted Member pursuant to the terms of this
Agreement and (ii) who has not ceased to be a Member.

      "Member Nonrecourse Debt" has the same meaning as the term "partner
nonrecourse debt" in Section 1.704-2(b)(4) of the Regulations.

      "Member Nonrecourse Debt Minimum Gain" means an amount, with respect to
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Section 1.704-2(i)(3) of the Regulations.

      "Member Nonrecourse Deductions" has the same meaning as the term "partner
nonrecourse deductions" in Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the
Regulations.

      "Net Interest Savings" means the amounts, if any, received by the Company
from FNV pursuant to that certain letter agreement dated August 14, 2002
(relating to the proposed repurchase by FNV of certain of its 7.5% Senior
Secured Notes Maturing 2009 with Contingent Interest due 2016), as well as any
amounts derived by the Company therefrom.

      "Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.

      "Nonrecourse Liability" has the meaning set forth in Section 1.704-2(b)(3)
of the Regulations.

      "Outside Financing" has the meaning set forth in Section 1.3 of this
Agreement.

      "Outside Financing Documents" has the meaning set forth in Section 1.3 of
this Agreement.

      "Person" means any individual, partnership (whether general or limited),
limited liability company, corporation, trust, estate, association, nominee or
other entity.



                                       7
<PAGE>
      "Profits" and "Losses" mean, for each Allocation Year, an amount equal to
the Company's taxable income or loss for such Allocation Year, determined in
accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss, or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments (without duplication):

               (i) Any income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses pursuant
to this definition of "Profits" and "Losses" shall be added to such taxable
income or loss;

               (ii) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Profits or Losses pursuant to this definition of "Profits" and
"Losses" shall be subtracted from such taxable income or loss;

               (iii) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraphs (ii) or (iii) of the definition of Gross
Asset Value, the amount of such adjustment shall be treated as an item of gain
(if the adjustment increases the Gross Asset Value of the asset) or an item of
loss (if the adjustment decreases the Gross Asset Value of the asset) from the
disposition of such asset and shall be taken into account for purposes of
computing Profits or Losses;

               (iv) Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;

               (v) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Allocation Year,
computed in accordance with the definition of Depreciation;

               (vi) To the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Code Section 734(b) is required, pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as a result of a distribution other than in
liquidation of a Member's Interest, the amount of such adjustment shall be
treated as an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases such basis) from the disposition of such
asset and shall be taken into account for purposes of computing Profits or
Losses; and

               (vii) Notwithstanding any other provision of this definition, any
items which are specially allocated pursuant to Section 3.1(a) hereof or
Paragraph 1, 2 or 3 of Appendix B hereto shall not be taken into account in
computing Profits or Losses.

The amounts of the items of Company income, gain, loss or deduction available to
be specially allocated pursuant to Section 3.1(a) hereof and Paragraphs 1, 2 or



                                       8
<PAGE>
3 of Appendix B hereto shall be determined by applying rules analogous to those
set forth in subparagraphs (i) through (vi) above.

      "Proportionate Share" for any Member shall mean the product of (x) the
quotient obtained by dividing (I) the Gross Profit of such Member by (II) the
aggregate Gross Profit of all Members multiplied by (y) the amount of the
Covered Loss.

      "Regulations" means the Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as such regulations are amended from
time to time.

      "Required Capital Contributions" means, with respect to each Member, the
Capital Contributions, if any, made or required to be made by such Member
pursuant to Section 2.3 or 12.2 hereof.

      "Senior Loan" has the meaning set forth in Section 1.3 of this Agreement.

      "Senior Loan Documents" has the meaning set forth in Section 1.3 of this
Agreement.

      "Senior Loan Shortfall Amount" means the lesser of (i) the unamortized
original issue discount, if any, with respect to the Senior Loan as determined
for federal income tax purposes or (ii) the excess, if any, of the outstanding
balance of the Senior Loan over the proceeds received by the Company upon a
disposition of the Senior Loan in liquidation.

      "Shortfall Percentage" means, with respect to any Member, such Member's
Shortfall Percentage as set forth in Appendix A hereto.

      "Third Party Claimant" means a Person other than the Company, a Member,
FCC, FNV, any lender or other party to any of the Outside Financing Documents,
or any Affiliate of any of the foregoing; provided, however, that a Third Party
Claimant shall include the shareholders or debtholders of FNV (other than a
Member or an Affiliate of a Member) whether making a claim directly or in a
derivative form of action.

      "Transfer" means, as a noun, any voluntary or involuntary transfer, sale,
pledge or hypothecation or other disposition and, as a verb, voluntarily or
involuntarily to transfer, sell, pledge or hypothecate or otherwise dispose of.

      "WMAC" has the meaning set forth in the initial paragraph of this
Agreement.

                                   SECTION 2
                        FINANCING; CAPITAL CONTRIBUTIONS

2.1        Initial Capital Contributions.

      The Members have not made, and shall not be required to make, any initial
Capital Contributions to the Company.




                                       9
<PAGE>
2.2        Outside Financing; Guarantees.

      The terms of the Outside Financing include (i) a primary guarantee by
Berkshire of 90 percent of the Company's obligations under such Outside
Financing, and (ii) a primary guarantee by Leucadia of the remaining 10 percent
of the Company's obligations under such Outside Financing, as well as a
secondary guaranty by Berkshire of such remaining 10 percent of the Company's
obligations under such Outside Financing. All other matters relating to the
Outside Financing, including, without limitation, the timing, terms and
conditions thereof, as well as all matters related to the administration of the
Outside Financing, shall be determined by BH Finance after consultation with
WMAC.

2.3        Required Capital Contributions.

           (a) If any payment, including any amount of principal, interest or
similar item, or any amount attributable to indemnification obligations of the
Company under the Outside Financing Documents, is due to be paid to the lenders
who have provided the Outside Financing and the Company does not have sufficient
funds to make such payment (apart from any Net Interest Savings), then on or
before the date such funds are required to be paid, the Members shall fund to
the Company, pro rata in accordance with their Debt Percentages, an amount of
Capital Contributions that is sufficient to pay the amounts required to be paid
(without drawing upon such Net Interest Savings, which shall not be applied by
the Company to satisfy such Company payment and shall retain their status as
such for all purposes of this Agreement, including for purposes of applying
Section 4.1 hereof). Consistent with the preceding sentence, and pursuant to
Section 18-303(b) of the Act, BH Finance hereby agrees to be liable for 90
percent of the Company's obligations under the Outside Financing and WMAC hereby
agrees to be liable for 10 percent of the Company's obligations under the
Outside Financing.

           (b) If the Company incurs costs or expenses, other than those set
forth in Section 2.3(a) above, and does not have sufficient funds to pay such
expenses (apart from any Net Interest Savings), upon demand by the Company or by
either Member, the Members shall promptly make Capital Contributions sufficient
to pay such costs and expenses (without drawing upon such Net Interest Savings,
which shall not be applied by the Company to satisfy such Company payment and
shall retain their status as such for all purposes of this Agreement, including
for purposes of applying Section 4.1 hereof) in accordance with their Debt
Percentages; provided, however, that Section 12.2 shall control Capital
Contributions required to fund costs and expenses that constitute Covered
Losses.

           (c) Berkshire agrees to contribute (or cause to be contributed) to BH
Finance, and Leucadia agrees to contribute (or cause to be contributed) to WMAC,
an amount sufficient in each case for such Member to fund its Required Capital
Contributions as and when required under this Section 2.3.

           (d) If BH Finance or WMAC (the "defaulting Member") fails to fund its
Required Capital Contributions as and when required, whether pursuant to this
Section 2.3, Section 12.2, or otherwise, the non-defaulting Member shall have a
direct claim against the defaulting Member for breach of contract hereunder, and



                                       10
<PAGE>
the non-defaulting Member and the Company (at the sole direction of the
non-defaulting Member) shall have all remedies available to either of them in
law or equity with respect to such failure by the defaulting Member. Without
limiting the foregoing, (i) interest shall accrue on a defaulting Member's
unfunded Capital Contributions from the date required to be made at a per annum
rate equal to the "prime rate" (as specified in the Wall Street Journal or
similar national publication) plus two percentage points ("prime plus two"),
compounded annually, (ii) the non-defaulting Member shall be entitled to
contribute to the Company the amount of such unfunded Capital Contributions, and
(iii) to the extent the non-defaulting Member has funded in place of the
defaulting Member, amounts otherwise distributable to the defaulting Member
under this Agreement, whether pursuant to Section 4.1, upon liquidation of the
Company pursuant to Section 10.2, or otherwise, shall be distributed by the
Company to the non-defaulting Member, but deemed for all purposes of this
Agreement as distributed to the defaulting Member and immediately recontributed
to the Company as Required Capital Contributions, until such time as the
non-defaulting Member has received from the Company on account of such
distributions a return of the amount, if any, funded in place of the defaulting
Member, plus interest thereon from the date funded at prime plus two, compounded
annually. To the extent the non-defaulting Member has not funded in place of the
defaulting Member, amounts otherwise distributable to the defaulting Member
shall be retained by the Company, but deemed for all purposes of this Agreement
as distributed to the defaulting Member and immediately recontributed to the
Company as Required Capital Contributions, until such time as the Company has
retained an amount of such distributions equal to the amount not funded by the
defaulting Member (or by the non-defaulting Member pursuant to the immediately
preceding sentence), plus interest thereon from the date required to be made at
prime plus two, compounded annually. A defaulting Member shall remain in default
hereunder until it has contributed, or is deemed to have contributed, to the
Company, all amounts required to be contributed under this Section 2.3(d),
including interest. Beginning on the date that is 10 days after the receipt of
written notice from the Company or the non-defaulting Member that the recipient
Member is in default hereunder, the defaulting Member shall not have any voting,
consent or appointment rights as a Member, or any other rights to direct the
Company in any manner, during the continuation of such default.

2.4        Additional Capital Contributions.

      The Members may make additional Capital Contributions (in addition to
those required by Section 2.3 hereof) with the written consent of both Members,
in which event the Company shall adjust the Members' interests hereunder in the
manner unanimously agreed by the Members.

                                   SECTION 3
                                   ALLOCATIONS

3.1        Profits and Losses.

           (a) After giving effect to the special allocations set forth in
Paragraphs 1, 2 and 3 of Appendix B hereto, (i) income constituting original
issue discount with respect to the Senior Loan for any Allocation Year, as well
as all original issue discount-related adjustments, shall be allocated 50
percent to each Member and (ii) items of Company income and gain for such



                                       11
<PAGE>
Allocation Year attributable to any Net Interest Savings shall be allocated 70
percent to BH Finance and 30 percent to WMAC.

           (b) After giving effect to the special allocations set forth in
Paragraphs 1, 2 and 3 of Appendix B hereto, and the additional special
allocations set forth in Section 3.1(a) above, the Company shall allocate
Profits, Losses and any items of Company income, gain, loss or deduction for any
Allocation Year to the Members as follows:

               (i) Losses and any items of Company expense or deduction for such
Allocation Year shall be allocated (x) first, to those Members with positive
Capital Account balances in proportion to such positive Capital Account
balances, until the Capital Accounts of such Members have been reduced to zero,
(y) second, to the Members in accordance with their Shortfall Percentages, until
an amount equal to the Senior Loan Shortfall Amount has been allocated pursuant
to this clause (y), and (z) thereafter, to the Members in accordance with their
Debt Percentages.

               (ii) Profits and any items of Company income or gain for such
Allocation Year shall be allocated (x) first, to reverse any Losses (or items
thereof) allocated to the Members pursuant to Section 3.1(b)(i) in the reverse
of the order in which they were previously allocated, and (y) thereafter, to the
Members pro rata in accordance with their Debt Percentages.

3.2        Additional Allocations.

     Additional provisions respecting allocations are set forth in Appendix B
hereto and are incorporated by reference herein.

                                   SECTION 4
                                  DISTRIBUTIONS
4.1        Distributions.

           Subject to Section 2.3(d) hereof:

           (a) Net Interest Savings, if any, shall be distributed to the Members
at such times as the Members shall determine, 70 percent to BH Finance and 30
percent to WMAC; and

           (b) Available Cash, if any, shall be distributed to the Members at
such times as the Members shall determine in proportion to their Debt
Percentages.

4.2        Return of Distributions.

      Except as required by law, no Member shall be required to restore to the
Company any funds properly distributed to it pursuant to this Section 4 or
Section 10 hereof; provided, however, that nothing herein shall affect the
obligation to make any Required Capital Contributions.




                                       12
<PAGE>
                                   SECTION 5
                                   MANAGEMENT

5.1        Management by Members.

           (a) All powers to control and manage the Business and affairs of the
Company shall be exclusively vested in the Members and the Members may exercise
all powers of the Company and do all such lawful acts as are not by statute, the
Certificate or this Agreement prohibited, and in so doing shall have the right
and authority to take all actions which the Members deem necessary, useful or
appropriate for the management and conduct of the Business.

           (b) Except as otherwise provided in this Agreement, including,
without limitation, Section 2.3(d) (relating to a defaulting Member's loss of
voting, consent and other rights) and Section 5.5 (relating to BH Finance's
control of matters relating to the Senior Loan), or as required by the Act, all
matters requiring approval of the Members or relating to the management of the
Business and affairs of the Company shall require the consent of both Members
and the Company shall act only by the affirmative vote of both Members.

           (c) The Members shall have the power to delegate authority to such
officers, employees, agents and representatives of the Company as it may from
time to time deem appropriate. Any delegation of authority to take any action
must be approved in the same manner as would be required to approve such action
directly.

5.2        Meetings of the Members; Approval; Expedited Decision.

           (a) The Members shall meet at such times as they may agree.

           (b) For all matters under this Agreement or under the Act for which
the consent, approval or affirmative vote of a Member is required, such Member's
consent, approval or affirmative vote may be given (i) at a physical meeting of
the Members or (ii) at a meeting held by means through which all persons
participating in the meeting can hear and respond to each other, provided that a
summary of such other meeting is promptly delivered to the Members in writing,
followed, in the case of a facsimile transmission, by hard copy sent by
recognized overnight delivery service or U.S. mail, postage and charges prepaid,
addressed as described in Section 12.1 hereof, or to such other address as a
Member may from time to time specify by notice to the other Member.

           (c) Notwithstanding anything to the contrary in this Section 5.2, the
Members may take any action without a meeting that may be taken by the Members
under this Agreement if such action is approved by the written consent of both
Members.

           (d) In addition to the methods set forth above, a Member may solicit
the expedited decision of the other Member with respect to any matter under this
Agreement by having its Designated Representative contact, by telephone,
facsimile or other agreed means, the other Member's Designated Representative.
"Designated Representative" shall mean, in the case of a Member, its authorized
representative as identified by such Member in a written notice to the other



                                       13
<PAGE>
Member. Upon receipt of a request for an expedited decision by a Member's
Designated Representative, the recipient Member's Designated Representative
shall use reasonable efforts to deliver a written decision, consent, approval,
disapproval or other relevant response to the request within 48 hours following
receipt from the requesting Member (or otherwise) of all available information
reasonably required to reach such a decision. The failure of a Member's
Designated Representative to timely respond in writing to such a request shall
be treated as such Member's disapproval or decision not to consent with respect
to the matter involved. Any expedited decision reached in accordance with this
paragraph shall be valid only if the relevant communication is delivered in
writing, followed, in the case of a facsimile transmission, by hard copy sent by
recognized overnight delivery service or U.S. mail, postage and charges prepaid,
addressed as described in Section 12.1 hereof, or to such other address as a
Member may from time to time specify by notice to the other Member.

5.3        Duties and Obligations of the Members.

           (a) The Members shall cause the Company to conduct its Business and
operations separate and apart from that of any Member or its Affiliates,
including, without limitation, (i) segregating Company assets and not allowing
funds or other assets of the Company to be commingled with the funds or other
assets of, held by, or registered in the name of, any Member or its Affiliates,
(ii) maintaining books and financial records of the Company separate from the
books and financial records of any Member or its Affiliates, and observing all
Company procedures and formalities, including, without limitation, maintaining
minutes of Company meetings and acting on behalf of the Company only pursuant to
due authorization of the Members, (iii) causing the Company to pay its
liabilities from assets of the Company, and (iv) causing the Company to conduct
its dealings with third parties in its own name and as a separate and
independent entity.

           (b) The Members shall take all actions which may be necessary or
appropriate (i) for the continuation of the Company's valid existence as a
limited liability company under the laws of the State of Delaware and of each
other jurisdiction in which such existence is necessary to protect the limited
liability of the Members or to enable the Company to conduct the business in
which it is engaged and (ii) for the accomplishment of the Company's purposes,
in accordance with the provisions of this Agreement and applicable laws and
regulations.

           (c) A Member shall not have any duties, fiduciary or otherwise, to
the Company or the other Member, other than the contractual obligations of such
Member set forth herein.

5.4        Reimbursements.

           (a) Except as otherwise specified in this Agreement, and subject to
reimbursement by FNV or FCC pursuant to the Senior Loan and the Senior Loan
Documents, each Member shall pay its own costs and expenses incurred and paid by
such Member in the conduct of the Company's Business. Without limiting the
generality of the foregoing, the Company shall not be responsible for the costs
and expenses resulting from the performance by Leucadia or any Affiliate thereof
of its obligations under the Management Agreement.



                                       14
<PAGE>
           (b) Notwithstanding the foregoing, the Members intend that all costs
and expenses incurred in the operation of the Company's Business (other than
Covered Losses) shall be borne by the Company; provided, however, that direct
costs and expenses of a Member, such as salaries or benefits of its employees or
travel expenses, shall not be treated as expenses of, or paid by, the Company,
and such Member shall not be entitled to any reimbursement hereunder with
respect thereto.

           (c) To the extent that any costs or expenses of the Members or the
Company are reimbursed to the Company by FCC or FNV pursuant to the terms of the
Senior Loan Documents or otherwise, such amounts shall promptly be distributed
to the Members who (or whose predecessors) bore such costs or expenses (if costs
or expenses paid by a Member or its predecessors are being reimbursed), or to
the Members pro rata in accordance with the percentage of such cost or expense
paid by the Members in accordance with Section 2.3(b) (if costs or expenses paid
by the Company are being reimbursed).

5.5        BH Finance Control of Senior Loan.

      Notwithstanding any other provision of this Agreement, and without
limiting the generality of Section 5.1, decisions by the Company relating to any
act taken or not taken by the Company with respect to the Senior Loan,
including, without limitation, any decisions relating to the documentation or
administration of such Senior Loan or arising out of any default, decisions
relating to enforcement or to the waiver of any covenants or requirements with
respect to the Senior Loan, and the control of any contest related thereto,
shall be made by BH Finance on behalf of the Company in its sole and absolute
discretion, after consultation with WMAC. The Company shall promptly reimburse
BH Finance for its reasonable costs and expenses, including attorneys fees,
incurred in connection with any investigation or dispute arising out of any such
occurrence. Without limiting the foregoing, so long as the Senior Loan is
outstanding, decisions of the Company in connection with requests by FNV or its
subsidiaries to repurchase any 7.5% Senior Secured Notes Maturing 2009 with
Contingent Interest due 2016 of FNV shall be made by BH Finance on behalf of the
Company after consultation with WMAC.

5.6        Withdrawal.

      Except as otherwise provided in Sections 4, 5.4(c) and 10 hereof, no
Member shall demand or receive a return on or of its Capital Contributions or
withdraw or resign from the Company without the consent of the other Member.
Under circumstances requiring a return of any Capital Contributions, no Member
has the right to receive property other than cash except as may be specifically
provided herein.

5.7        Member Compensation.

      No Member shall receive any interest, salary or drawing with respect to
its Capital Contributions or its Capital Account or for services rendered on
behalf of the Company, or otherwise, in its capacity as a Member, except as
otherwise provided in this Agreement.



                                       15
<PAGE>
5.8        Member Liability.

      Subject to Section 2.3(a), no Member shall be liable to any third party
under a judgment, decree or order of a court, or in any other manner for the
debts or any other obligations or liabilities of the Company. Except as required
by applicable law or this Agreement, a Member shall be liable only to make its
Capital Contributions and shall not be required to restore a deficit balance in
its Capital Account or to lend any funds to the Company or, apart from its
Capital Contributions, to make any additional contributions, assessments or
payments to the Company.

                                   SECTION 6
                         REPRESENTATIONS AND WARRANTIES

6.1        In General.

      As of the date hereof, each Member hereby makes each of the
representations and warranties applicable to such Member as set forth in Section
6.2 hereof, and such warranties and representations shall survive the execution
of this Agreement.

6.2        Representations and Warranties.

      Each Member hereby represents and warrants that:

           (a) Due Incorporation or Formation; Authorization of Agreement. Such
Member is a corporation or limited liability company duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation or formation and has the company power and authority to own its
property and carry on its business as owned and carried on at the date hereof
and as contemplated hereby. Such Member is duly licensed or qualified to do
business and in good standing in each of the jurisdictions in which the failure
to be so licensed or qualified would have a material adverse effect on its
financial condition or its ability to perform its obligations hereunder. Such
Member has the company power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and the execution, delivery, and
performance of this Agreement has been duly authorized by all necessary company
action. This Agreement constitutes the legal, valid, and binding obligation of
such Member.

           (b) No Conflict with Restrictions; No Default. Neither the execution,
delivery, and performance of this Agreement, nor the consummation by such Member
of the transactions contemplated hereby (i) will conflict with, violate, or
result in a breach of any of the terms, conditions, or provisions of any law,
regulation, order, writ, injunction, decree, determination, or award of any
court, any governmental department, board, agency, or instrumentality, domestic
or foreign, or any arbitrator, applicable to such Member, (ii) will conflict
with, violate, result in a breach of, or constitute a default under any of the
terms, conditions, or provisions of the articles of incorporation or bylaws of
such Member, or of any material agreement or instrument to which such Member is
a party or by which such Member is or may be bound or to which any of its
material properties or assets is subject, (iii) will conflict with, violate,
result in a breach of, constitute a default under (whether with notice or lapse
of time or both), accelerate or permit the acceleration of the performance
required by, give to others any material interests or rights, or require any



                                       16
<PAGE>
consent, authorization, or approval under any indenture, mortgage, lease
agreement, or instrument to which such Member is a party or by which such Member
is or may be bound, or (iv) will result in the creation or imposition of any
lien upon any of the material properties or assets of such Member.

           (c) Governmental Authorizations. Any registration, declaration, or
filing with, or consent, approval, license, permit, or other authorization or
order by, any governmental or regulatory authority, domestic or foreign, that is
required in connection with the valid execution, delivery, acceptance and
performance by such Member under this Agreement, or the consummation by such
Member of any transaction contemplated hereby has been completed, made, or
obtained on or before the date hereof.

           (d) Litigation. There are no actions, suits, proceedings, or
investigations pending or, to the knowledge of such Member threatened against or
affecting such Member or any of its wholly-owned Affiliates or any of their
properties, assets, or businesses in any court or before or by any governmental
department, board, agency, or instrumentality, domestic or foreign, or any
arbitrator which could, if adversely determined (or, in the case of an
investigation could lead to any action, suit, or proceeding, which if adversely
determined could) reasonably be expected to materially impair such Member's
ability to perform its obligations under this Agreement, and such Member has not
received any currently effective notice of any default, and such Member is not
in default, under any applicable order, writ, injunction, decree, permit,
determination, or award of any court, any governmental department, board,
agency, or instrumentality, domestic or foreign, or any arbitrator which could
reasonably be expected to materially impair such Member's ability to perform its
obligations under this Agreement.

                                   SECTION 7
                          ACCOUNTING, BOOKS AND RECORDS

7.1        Accounting, Books and Records.

      The Company shall keep on site at its principal place of business such
books and records relating to the Company and its affairs as it reasonably deems
appropriate, and any Member or its designated representative shall have the
right to have reasonable access to and inspect and copy the contents of such
books or records, subject to compliance by such Member with the safety, security
and confidentiality procedures and guidelines of the Company, as such procedures
and guidelines may be established from time to time.

7.2        Reports.

      The Company shall cause to be delivered to each Member such periodic
reports and financial statements as may be reasonably requested by a Member from
time to time.

7.3        Tax Matters.

      Subject to the agreement of both Members, the Tax Matters Member (as
defined below) shall make on behalf of the Company any and all elections for
federal, state, local, and foreign tax purposes that it determines appropriate,
and shall represent the Company and the Members before taxing authorities or
courts of competent jurisdiction in tax matters affecting the Company or the
Members in their capacities as Members, and file any tax returns and execute any



                                       17
<PAGE>
agreements or other documents relating to or affecting such tax matters,
including agreements or other documents that bind the Members with respect to
such tax matters or otherwise affect the rights of the Company and the Members.
BH Finance is specifically authorized to act as the "Tax Matters Member" under
the Code and in any similar capacity under state or local law.

                                   SECTION 8
                                   AMENDMENTS

8.1        Amendments.

      This Agreement may be amended or modified only by a written instrument
signed by each Member.

SECTION 9
                                    TRANSFERS

9.1        Restrictions on Transfers.

      Except as otherwise permitted by this Agreement, no Member shall Transfer
all or any portion of its Interest.

9.2        Permitted Transfers.

      Subject to the conditions and restrictions set forth in Section 9.3
hereof, a Member may at any time Transfer all, but not less than all, of its
Interest to (a) any other Member or wholly-owned Affiliate of another Member,
(b) any wholly-owned Affiliate of the transferor (or of Berkshire or Leucadia),
or (c) any other Person, subject to receipt, in the case of clause (c), of the
prior written consent of the other Member in its absolute discretion if the
Senior Loan has not then been paid in full (any such Transfer pursuant to
clauses (a), (b) or (c) being referred to in this Agreement as a "Permitted
Transfer"). Notwithstanding the foregoing, a Member may transfer less than all
of its Interests to one or more wholly-owned Affiliates (or wholly-owned
Affiliates of Berkshire, in the case of BH Finance, or of Leucadia, in the case
of WMAC) (each, an "Affiliated Member"); provided, however, that for purposes
hereof, all of a Member's Affiliated Members shall be deemed to constitute one
and the same Member and any action or consent required hereunder with respect to
BH Finance's or WMAC's Affiliated Members shall be given solely through the
action or consent of BH Finance or WMAC, as agent for all BH Finance or WMAC
Affiliated Members, as applicable. Any distribution or allocation to be made
hereunder shall be made as if neither BH Finance nor WMAC had any Affiliated
Members, shall be made as BH Finance or WMAC directs to one Member as agent for
all BH Finance or WMAC Affiliated Members, as applicable, and thereafter BH
Finance or WMAC, as applicable, shall be responsible for apportioning such
distribution among their respective Affiliated Members, if any, according to
their respective Interests. A Transfer to an Affiliated Member shall not relieve
the transferor of its obligations hereunder.




                                       18
<PAGE>
9.3        Conditions to Permitted Transfers.

      A Transfer shall not be treated as a Permitted Transfer under Section 9.2
hereof unless and until the following conditions are satisfied:

           (a) The transferor and transferee shall execute and deliver to the
Company such documents and instruments of conveyance as may be necessary or
appropriate in the opinion of counsel to the Company to effect such Transfer.
The Company shall be reimbursed by the transferor and/or transferee for all
costs and expenses that it reasonably incurs in connection with such Transfer.

           (b) The transferor and transferee shall furnish the Company with the
transferee's taxpayer identification number, sufficient information to determine
the transferee's initial tax basis in the Interest transferred, and any other
information reasonably necessary to permit the Company to file all required
federal and state tax returns and other legally required information statements
or returns. Without limiting the generality of the foregoing, the Company shall
not be required to make any distribution otherwise provided for in this
Agreement with respect to any transferred Interest until it has received such
information.

           (c) The transferee of Interests (other than, with respect to clauses
(i) and (ii) below, a transferee that was a Member prior to the Transfer) shall,
by written instrument in form and substance reasonably satisfactory to the
nontransferring Member (and, in the case of clause (iii) below, the transferor
Member), (i) make representations and warranties to the nontransferring Member
equivalent to those set forth in Section 6, (ii) accept and adopt the terms and
provisions of this Agreement, including, without limitation, this Section 9 and
Section 11, and (iii) assume the obligations of the transferor Member under this
Agreement with respect to the transferred Interest.

           (d) The transferor shall not be relieved of its obligations
hereunder.

9.4        Prohibited Transfers.

           (a) Any purported Transfer of an Interest that is neither a Permitted
Transfer nor a Transfer of less than all of a Member's Interests to one or more
Affiliated Members in compliance with Section 9.2, shall be null and void and of
no force or effect whatever; provided, however, that if the Company is required
by law to recognize a Transfer that is not a Permitted Transfer, the Interest
Transferred shall be strictly limited to the transferor's rights to allocations
and distributions as provided by this Agreement with respect to the transferred
Interest, which allocations and distributions may be applied (without limiting
any other legal or equitable rights of the Company) to satisfy any debts,
obligations, or liabilities for damages that the transferor or transferee of
such Interest may have to the Company, and such transferee shall not become a
Member of the Company.

           (b) In the case of a Transfer or attempted Transfer of an Interest
that is neither a Permitted Transfer nor a Transfer of less than all of a
Member's Interests to one or more Affiliated Members in compliance with Section
9.2, the parties engaging or attempting to engage in such Transfer shall be



                                       19
<PAGE>
liable to indemnify and hold harmless the Company and the other Members from all
cost, liability, and damage that any of such indemnified Members may incur
(including, without limitation, incremental tax liabilities, lawyers' fees and
expenses) as a result of such Transfer or attempted Transfer and efforts to
enforce the indemnity granted hereby.

9.5        Rights of Unadmitted Assignees.

      A Person who acquires an Interest but who is not admitted as a substituted
Member pursuant to Section 9.6 hereof shall be entitled only to allocations and
distributions with respect to such Interest in accordance with this Agreement,
and shall have no right to any information or accounting of the affairs of the
Company, shall not be entitled to inspect the books or records of the Company,
and shall not have any of the rights of a Member under the Act or this
Agreement.

9.6        Admission of Substituted Members.

      Subject to the other provisions of this Section 9, a transferee of an
Interest in a Permitted Transfer shall be admitted to the Company as a
substituted Member.

9.7        Distributions and Allocations in Respect of Transferred Interest.

      If any Interests are Transferred during any Allocation Year in compliance
with the provisions of this Section 9, Profits, Losses, each item thereof, and
all other items attributable to the Transferred Interest for such Allocation
Year shall be divided and allocated between the transferor and the transferee by
taking into account their varying Percentage Interests during the Fiscal Year in
accordance with Code Section 706(d), using any conventions permitted by law and
selected by the Members. All distributions on or before the date of such
Transfer shall be made to the transferor, and all distributions thereafter shall
be made to the transferee.

                                   SECTION 10
                           DISSOLUTION AND WINDING UP

10.1       Dissolution Events.

      Except as otherwise unanimously agreed to by the Members, the Company
shall dissolve and shall commence winding up and liquidating upon the first to
occur of any of the following (each a "Dissolution Event"):

           (a) The unanimous vote of the Members to dissolve, wind up, and
liquidate the Company;

           (b) A judicial determination that an event has occurred that makes it
unlawful, impossible or impractical to carry on the Business;

           (c) The dissolution or liquidation of a Member or the taking of any
action by its directors or a majority of its stockholders looking to the
dissolution or liquidation of such Member, unless substantially all assets of
such Member are transferred or are to be transferred to a wholly-owned Affiliate
of such Member (or of Berkshire or Leucadia);



                                       20
<PAGE>
           (d) The bankruptcy or insolvency of a Member or the occurrence of any
other event which would permit a trustee or receiver to acquire control of the
affairs or assets of a Member; or

           (e) The payment in full of each of the Senior Loan and the Outside
Financing, unless waived by both Members.

The Members hereby agree that, notwithstanding any provision of the Act, the
Company shall not dissolve prior to the occurrence of a Dissolution Event.

10.2       Winding Up.

      Upon the occurrence of a Dissolution Event, the Company shall continue
solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Members,
and no Member shall take any action that is inconsistent with, or not necessary
to or appropriate for, the winding up of the Company's Business and affairs;
provided, that all covenants contained in this Agreement and obligations
provided for in this Agreement shall continue to be fully binding upon the
Members until such time as the Company's property has been distributed pursuant
to this Section 10.2 and the Certificate has been canceled pursuant to the Act.
The Liquidator shall be responsible for overseeing the winding up and
dissolution of the Company, which winding up and dissolution shall be completed
within one (1) year of the occurrence of the Dissolution Event. The Liquidator
shall take full account of the Company's liabilities and property and shall
cause the property or the proceeds from the sale thereof, to the extent
sufficient therefor, to be applied and distributed, to the maximum extent
permitted by law, in the following order:

           (a) First, to creditors (including Members who are creditors, to the
extent otherwise permitted by law) in satisfaction of all of the Company's debts
and other liabilities (whether by payment or the making of reasonable provision
for payment thereof); and

           (b) The balance, if any, to the Members in accordance with Section
4.1 hereof, by the end of the taxable year of the Company during which the
liquidation of the Company occurs (or, if later, by 90 days after the date of
liquidation).

      Except as provided in the next sentence, if any Member has a deficit
balance in its Capital Account (after giving effect to all contributions,
distributions and allocations for all periods), such Member shall have no
obligation to make any contribution to the capital of the Company with respect
to such deficit, and such deficit shall not be considered a debt owed to the
Company or to any other Person for any purpose whatsoever. Notwithstanding the
foregoing, in connection with the liquidation of the Company, and prior to the
application and distribution of Company assets pursuant to clauses (a) and (b)
above, each Member shall contribute to the Company an amount equal to any
portion of its Required Capital Contributions that has not previously been
contributed (or deemed contributed), including interest thereon to the extent
required by Section 2.3(d); provided, however, that notwithstanding anything to
the contrary set forth in Section 2.3(a) hereof, but subject to Section 2.3(d),
the amount, if any, required to be contributed by the Members pursuant to
Section 2.3(a) at the time of any such liquidation of the Company shall be



                                       21
<PAGE>
contributed as follows: (i) first, pro rata in accordance with the Members'
respective Shortfall Percentages, until the Members have contributed an amount
pursuant to this clause (i) equal to the Senior Loan Shortfall Amount, if any,
at the time of such liquidation; (ii) second, 100 percent by BH Finance, until
all contributions made under Section 2.3(a) (including contributions paid or
deemed paid under Section 2.3(d), other than any interest component thereof) or
clause (i) or (ii) hereof during the life of the Company have been made 90
percent by BH Finance and 10 percent by WMAC; and (iii) thereafter, pro rata in
accordance with the Members' respective Debt Percentages.

      No Member shall receive additional compensation for any services performed
pursuant to this Section 10.

10.3       Rights of Members.

      Except as otherwise provided in this Agreement, each Member shall look
solely to the Company's property for the return of its Capital Contribution and
has no right or power to demand or receive property other than cash from the
Company, and if the assets of the Company remaining after payment or discharge
of the debts or liabilities of the Company are insufficient to return such
Capital Contribution, a Member shall have no recourse against the Company or the
other Member.

10.4       Termination.

      Upon completion of the distribution of the Company's property as provided
in this Section 10, the Company shall be terminated, and the Liquidator shall
cause the filing of the Certificate of Cancellation pursuant to Section 18-203
of the Act and shall take all such other actions as may be necessary to
terminate the Company.

10.5       Allocations During Period of Liquidation.

      During the period commencing on the first day of the Fiscal Year during
which a Dissolution Event occurs and ending on the date on which all of the
assets of the Company have been distributed to the Members pursuant to Section
10.2 hereof (the "Liquidation Period"), the Members shall continue to share
Profits, Losses, and other items of Company income, gain, loss or deduction in
the manner provided in Section 3 hereof and Appendix B hereto.

10.6       The Liquidator.

           (a) The "Liquidator" shall mean a Person appointed by the Members to
oversee the liquidation of the Company. The Liquidator may be an officer, a
Member or any other Person.

           (b) The Company is authorized to pay a reasonable fee to the
Liquidator for its services performed pursuant to this Section 10 and to
reimburse the Liquidator for its reasonable costs and expenses incurred in
performing those services.

           (c) The Company shall indemnify, save harmless, and pay all judgments
and claims against such Liquidator or any officers, directors, agents or
employees of the Liquidator relating to any liability or damage incurred by



                                       22
<PAGE>
reason of any act performed or omitted to be performed by the Liquidator, or any
officers, directors, agents or employees of the Liquidator in connection with
the liquidation of the Company, including reasonable attorneys' fees incurred by
the Liquidator, officer, director, agent or employee in connection with the
defense of any action based on any such act or omission, which attorneys' fees
may be paid as incurred, except to the extent such liability or damage is caused
by the fraud, gross negligence, intentional misconduct of, or a knowing
violation of the laws by the Liquidator which was material to the cause of
action.

10.7       Form of Liquidating Distributions.

      For purposes of making distributions required by Section 10.2 hereof, the
Liquidator may determine whether to distribute all or any portion of the
property in-kind or to sell all or any portion of the property and distribute
the proceeds therefrom; provided, however, that no Member shall be required to
accept property in-kind in lieu of cash if cash is being delivered to another
Member.

                                   SECTION 11
                    AGREEMENTS RELATING TO DEALINGS WITH FNV

11.1       Treatment of Management Fees.

      The Members hereby acknowledge and agree that all management and other
services to be provided by Leucadia or its Affiliates pursuant to the terms of
the Management Agreement are activities conducted on behalf of the Company, and
that any management or similar fees received by Leucadia, Leucadia International
or any of their Affiliates under the Management Agreement are received as a
Member and that such fees are income of the Company to be shared evenly between
the Members. Consequently, WMAC and Leucadia shall promptly pay over (or cause
to be paid over) to BH Finance 50 percent of any such fee paid directly to
Leucadia, Leucadia International or any of their Affiliates. Any such payment to
BH Finance shall not be treated as a contribution to the Company. In the event
that any such fee is paid by FNV or an Affiliate directly to the Company, such
fee shall be distributed 50 percent to each Member. Leucadia and the Members
hereby agree that this Section 11.1 shall survive any dissolution and winding up
of the Company pursuant to Section 10.

11.2       Cooperation; Provision of Information.

      The Members, Berkshire and Leucadia shall keep one another fully and
promptly informed of developments in FNV's or its Affiliates' business or
relationships with or affecting its creditors, including any notices from its
lenders, suppliers or advisors or any notices from any third party related to
its creditors, in each case whether such information is obtained from FNV or its
Affiliates pursuant to the terms of the Management Agreement or otherwise. The
Company shall take the following actions only if first approved by each Member:
(i) file any pleading with, or take any legal and/or factual position or action
in the Bankruptcy Court; (ii) approve the terms or form of any pleading,
including any plan of reorganization, disclosure statement or related proposed
bankruptcy court order; or (iii) subject to Section 5.5, waive a term or
condition of any agreement, plan of reorganization or bankruptcy court order.



                                       23
<PAGE>
11.3       Designation of Observers Pursuant to Management Agreement.

      BH Finance shall be entitled to designate at least one (1) of the three
(3) persons that Leucadia is entitled to designate to the Board of Directors of
FNV pursuant to the terms of the Management Agreement, and Leucadia shall cause
such BH Finance designee to be so designated.

11.4       Exercise of Management Agreement Approval Rights.

      Leucadia shall not, nor shall it permit any of its Affiliates to, provide
its consent or approval with respect to any act or omission by FNV or its
Affiliates for which Leucadia's (or any Affiliate's) consent or approval is
required under the terms of the Management Agreement or otherwise, without the
written consent of BH Finance, which decision regarding consent shall be made
promptly (in light of its circumstances) after receipt of notice seeking such
consent. Without limiting the generality of the foregoing, without the written
consent of BH Finance, Leucadia shall not, nor shall it permit any of its
Affiliates to, agree to any amendment or cancellation of, or waiver of any of
its rights or FNV's obligations under, the Management Agreement.

11.5       Purchase of Additional FNV Securities or Interests or Participations
           in Bank Loans.

      If, during the term of this Agreement, a Member, or any Affiliate thereof,
desires to acquire additional securities (whether debt or equity) of, or
interests or participations in bank loans of, FNV or its Affiliates, then such
Member or Affiliate may not proceed with such transaction unless such Member
affords the other Member a reasonable opportunity to acquire one-half of such
securities or interests or participations in bank loans on the same terms and
conditions.

                                   SECTION 12
                                  MISCELLANEOUS

12.1       Notices.

      Any notice, payment, demand, or communication required or permitted to be
given by any provision of this Agreement shall be in writing and shall be deemed
to have been delivered, given, and received for all purposes (i) if delivered
personally to the Person or to an officer of the Person to whom the same is
directed, or (ii) when the same is actually received, if sent either by
recognized overnight delivery service or registered or certified mail, postage
and charges prepaid, or by facsimile, if such facsimile is followed by a hard
copy of the facsimile communication sent promptly thereafter by recognized
overnight delivery service or registered or certified mail, postage and charges
prepaid, addressed as follows, or to such other address as such Person may from
time to time specify by notice to the Members and the Company:

           (a) If to the Company, to the address determined pursuant to Section
1.4 hereof; and

           (b) If to a Member, to the address set forth on Appendix A hereto.



                                       24
<PAGE>
12.2       Covered Losses.

           (a) The Company shall indemnify and hold harmless any Member from any
Covered Loss in excess of such Member's Proportionate Share of such Covered
Loss.

           (b) If a Covered Loss is incurred by the Company, or if the Company
indemnifies a Member from a Covered Loss pursuant to Section 12.2(a), each of
the Members shall contribute to the Company as Required Capital Contributions,
upon demand of the Company or any Member, the amount by which such Member's
Proportionate Share exceeds the amount of such Covered Loss paid by such Member
to date either directly or by Required Capital Contributions made to date
pursuant to this Section 12.2(b). Berkshire agrees to contribute (or cause to be
contributed) to BH Finance, and Leucadia agrees to contribute (or cause to be
contributed) to WMAC, an amount sufficient in each case for such Member to fund
its Required Capital Contributions as and when required under this Section
12.2(b).

           (c) In the event a Member or the Company becomes aware of a potential
claim, event or state of affairs that could result in a Covered Loss, such
Member or the Company shall promptly notify all of the Members thereof, and
shall provide all Members with copies of all letters, pleadings or other
documents in its possession which could or are alleged to form the material
basis of any such claim or action; provided, that the failure to provide such
notice in a timely fashion shall not affect the parties' respective obligations
hereunder except and only to the extent that any delay in providing such notice
results in actual prejudice to another party. In any case, the Members shall
cooperate with respect to the defense of any such claim or action to the extent
that the Members are not adverse parties or have adverse interests therein. The
Members shall jointly control the defense of any such claim or action.

12.3       Defaults by Berkshire or Leucadia.

      If Berkshire or Leucadia fails to fulfill its obligations under Section
2.3(c) or 12.2(b) hereof, then the Member that is not related to such Person
shall have a direct claim against such Person for breach of contract hereunder,
and the unrelated Member and the Company (at the sole direction of the unrelated
Member) shall have all remedies available to either of them in law or equity
with respect to such failure by such Person.

12.4       Binding Effect.

      Except as otherwise provided in this Agreement, every covenant, term, and
provision of this Agreement shall be binding upon and inure to the benefit of
the Members and their respective successors, transferees, and assigns.

12.5       Headings.

      Section and other headings contained in this Agreement are for reference
purposes only and are not intended to describe, interpret, define, or limit the
scope, extent, or intent of this Agreement or any provision hereof.



                                       25
<PAGE>
12.6       Severability.

      Except as otherwise provided in the succeeding sentence, every provision
of this Agreement is intended to be severable, and, if any term or provision of
this Agreement is illegal or invalid for any reason whatsoever, such illegality
or invalidity shall not affect the validity or legality of the remainder of this
Agreement. The immediately preceding sentence shall be of no force or effect if
the consequence of enforcing the remainder of this Agreement without such
illegal or invalid term or provision would be to cause any Member to lose the
material benefit of its economic bargain.

12.7       Governing Law.

      The laws of the State of Delaware shall govern the validity of this
Agreement, the construction of its terms, and the interpretation of the rights
and duties arising hereunder.

12.8       WAIVER OF JURY TRIAL.

      EACH OF THE MEMBERS, BERKSHIRE AND LEUCADIA IRREVOCABLY WAIVES TO THE
EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

12.9       Arbitration.

      All claims, disputes and other matters in question arising out of, or
relating to this Agreement or the performance thereof, including, without
limitation, questions as to whether a matter is governed by this arbitration
clause, shall be subject to arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA Rules") then
pertaining, insofar as the AAA Rules are not inconsistent with the provisions
expressly set forth in this Agreement, unless the parties mutually agree
otherwise, and pursuant to the following procedures: (i) the arbitration shall
take place in Chicago, Illinois, (ii) a single neutral arbitrator having at
least ten (10) years experience in complex commercial arbitration involving
financial and partnership or limited liability company issues shall be appointed
in the manner specified in the AAA Rules; provided, that if the amount at issue
is greater than Twenty-Five Million Dollars ($25,000,000), then a panel of three
(3) such neutral arbitrators shall be appointed in the manner specified in the
AAA Rules; (iii) each party will, upon the written request of the other party,
provide the other with copies of documents relevant to the issues raised by any
claim or counterclaim; (iv) each party shall have the right to take the
deposition of one individual and any expert witness(es) designated by the other
party; (v) other discovery may be ordered by the arbitrator(s) to the extent the
arbitrator(s) deem additional discovery appropriate, and any dispute regarding
discovery, including disputes as to the need therefor or the relevance or the
scope thereof, shall be determined by the arbitrator(s), which determination
shall be conclusive; (vi) the arbitrator(s) shall have sixty (60) days following
their appointment in which to resolve the question at issue, unless the parties
agree in writing to extend such period; (vii) the award rendered by the
arbitrator(s) may grant any remedy or relief that the arbitrator(s) deem just
and equitable within the scope of this Agreement, including, without limitation,



                                       26
<PAGE>
damages, specific performance or injunctive relief, but may not include punitive
damages or any remedy or relief that a court having jurisdiction thereof would
not have the power to grant; (viii) judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof; (ix) all
reasonable out-of-pocket costs and reasonable legal fees incurred by the
prevailing party shall be paid by the nonprevailing party, except in the event
that a non-arbitrated settlement is reached, in which case each party shall pay
its own respective costs and fees incurred thereby; (x) subject to clause (ix),
each party shall pay one-half of the costs and fees charged by the arbitrator(s)
with regard to the submitted dispute; and (xi) the parties shall be entitled to
seek preliminary injunctive relief or other extraordinary remedies in any court
having jurisdiction thereof, to preserve the status quo pending the outcome of
arbitration.

12.10      Counterpart Execution.

      This Agreement may be executed in any number of counterparts with the same
effect as if all of the Members had signed the same document. All counterparts
shall be construed together and shall constitute one agreement.

12.11      Specific Performance.

      Each Member (as well as, in the case of BH Finance, Berkshire, and in the
case of WMAC, Leucadia) agrees with the other Member that such other Member
would be irreparably damaged if any of the provisions of this Agreement are not
performed in accordance with their specific terms and that monetary damages
would not provide an adequate remedy in such event. Accordingly, it is agreed
that, in addition to any other remedy to which the non-breaching Member may be
entitled, at law or in equity, the non-breaching Member shall be entitled to
injunctive relief to prevent breaches of the provisions of this Agreement and
specifically to enforce the terms and provisions hereof in any action instituted
in any court of the United States or any state thereof having subject matter
jurisdiction thereof.

12.12      Further Assurances.

      Each Member covenants and agrees on behalf of itself, its successors and
its assigns, without further consideration, to prepare, execute, acknowledge,
file and deliver such other instruments, documents and statements, and to take
such other action as may be required by law or reasonably necessary to
effectively carry out the purposes of this Agreement.

12.13      Entire Agreement.

      This Agreement constitutes the entire agreement between the parties hereto
pertaining to the subject matter hereof and fully supersedes any and all prior
or contemporaneous agreements or understandings between the parties hereto
pertaining to the subject matter hereof.




                                       27
<PAGE>
           IN WITNESS WHEREOF, the parties have executed and entered into this
Second Amended and Restated Operating Agreement of the Company on November 27,
2002, effective as of the day first above set forth.

                                      BH FINANCE LLC


                                      By: /s/ Mark D. Hamburg
                                          --------------------------------------
                                      Name:  Mark D. Hamburg
                                      Title:

                                      WMAC INVESTMENT CORPORATION


                                      By: /s/ Joseph A. Orlando
                                          --------------------------------------
                                      Name:  Joseph A. Orlando
                                      Title:


           ACKNOWLEDGED AND AGREED, provided that, except as and to the extent
specifically set forth in this Agreement, the signatories below are not
undertaking to cause or procure the performance of obligations undertaken herein
by the Members.

                                      BERKSHIRE HATHAWAY INC.


                                      By: /s/ Mark D. Hamburg
                                          --------------------------------------
                                      Name: Mark D. Hamburg
                                      Title:

                                      LEUCADIA NATIONAL CORPORATION


                                      By: /s/ Joseph A. Orlando
                                          --------------------------------------
                                      Name:
                                      Title:



<PAGE>
                                  Appendix A-4

                                   APPENDIX A

                         Attached to and Made a Part of
             the Second Amended and Restated Operating Agreement of
                                  Berkadia LLC

                                     Members
                                     -------


Name and Address                   Debt Percentage        Shortfall Percentage
- ----------------                   ---------------        --------------------

BH Finance LLC                         90%                    50%
1440 Kiewit Plaza
Omaha, Nebraska 68131
Attn: Marc Hamburg
Facsimile: (402) 346-3375

WMAC Investment Corporation            10%                    50%
315 Park Avenue South
New York, New York 10010
Attn: Joseph Steinberg
Facsimile: (212) 598-4869





<PAGE>
                                  Appendix B-4

                                   APPENDIX B

                         Attached to and Made a Part of
             the Second Amended and Restated Operating Agreement of
                                  Berkadia LLC

                             Additional Allocations
                             ----------------------

1. Special Allocations.

      The following special allocations shall be made in the following order:

           (a) Minimum Gain Chargeback. Except as otherwise provided in Section
1.704-2(f) of the Regulations, notwithstanding any other provision of Section 3
of the Agreement and this Appendix B, if there is a net decrease in Company
Minimum Gain during any Allocation Year, each Member shall be specially
allocated items of Company income and gain for such Allocation Year (and, if
necessary, subsequent Allocation Years) in an amount equal to such Member's
share of the net decrease in Company Minimum Gain, determined in accordance with
Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated
to each Member pursuant thereto. The items to be so allocated shall be
determined in accordance with sections 1.704-2(f)(6) and 1.704-2(j)(2) of the
Regulations. This Paragraph 1(a) is intended to comply with the minimum gain
chargeback requirement in Section 1.704-2(f) of the Regulations and shall be
interpreted consistently therewith.

           (b) Member Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i) (4) of the Regulations, notwithstanding any other provision
of Section 3 of the Agreement and this Appendix B, if there is a net decrease in
Member Nonrecourse Debt Minimum Gain attributable to Member Nonrecourse Debt
during any Allocation Year, each Member who has a share of the Member
Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt,
determined in accordance with Section 1.704-2(i)(5) of the Regulations, shall be
specially allocated items of Company income and gain for such Allocation Year
(and, if necessary, subsequent Allocation Years) in an amount equal to such
Member's share of the net decrease in Member Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts required
to be allocated to each Member pursuant thereto. The items to be so allocated
shall be determined in accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2)
of the Regulations. This Paragraph 1(b) is intended to comply with the minimum
gain chargeback requirement in Section 1.704-2(i)(4) of the Regulations and
shall be interpreted consistently therewith.

           (c) Qualified Income Offset. In the event any Member unexpectedly
receives any adjustments, allocations, or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) of
the Regulations, items of Company income and gain shall be specially allocated
to such Member in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the Adjusted Capital Account Deficit of the Member
as quickly as possible; provided that an allocation pursuant to this Paragraph




                                  Appendix B-1
<PAGE>
1(c) shall be made only if and to the extent that the Member would have an
Adjusted Capital Account Deficit after all other allocations provided for in
Section 3 of the Agreement and this Appendix B have been tentatively made as if
this Paragraph 1(c) were not part of this Appendix B.

           (d) Gross Income Allocation. In the event any Member has a deficit
Capital Account at the end of any Allocation Year which is in excess of the sum
of the amount such Member is obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such
Member shall be specially allocated items of Company income and gain in the
amount of such excess as quickly as possible; provided that an allocation
pursuant to this Paragraph 1(d) shall be made only if and to the extent that
such Member would have a deficit Capital Account in excess of such sum after all
other allocations provided for in Section 3 of the Agreement and this Appendix B
have been made as if Paragraph 1(c) hereof and this Paragraph 1(d) were not part
of this Appendix B.

           (e) Nonrecourse Deductions. Nonrecourse Deductions for any Allocation
Year shall be specially allocated to the Members in proportion to their
respective Debt Percentages.

           (f) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions
for any Allocation Year shall be specially allocated to the Member who bears the
economic risk of loss with respect to the Member Nonrecourse Debt to which such
Member Nonrecourse Deductions are attributable in accordance with Regulations
Section 1.704-2(i)(1).

           (g) Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Company asset, pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as the result of a distribution to a Member in
complete liquidation of such Member's interest in the Company, the amount of
such adjustment to Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis) and such gain or loss shall be specially allocated to the
Members in accordance with their interests in the Company in the event
Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom
such distribution was made in the event Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.

2. Curative Allocations.

      The allocations set forth in Paragraphs 1(a) through (g) and Paragraph 3
hereof (the "Regulatory Allocations") are intended to comply with certain
requirements of the Regulations. It is the intent of the Members that, to the
extent possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of Company
income, gain, loss or deduction pursuant to this Paragraph 2. Therefore,
notwithstanding any other provision of Section 3 of the Agreement and this
Appendix B (other than the Regulatory Allocations), the Company shall make such
offsetting special allocations of Company income, gain, loss or deduction in
whatever manner it determines appropriate so that, after such offsetting
allocations are made, each Member's Capital Account balance is, to the extent
possible, equal to the Capital Account balance such Member would have had if the
Regulatory Allocations were not part of the Agreement and all Company items were
allocated pursuant to Section 3 of the Agreement.




                                  Appendix B-2
<PAGE>
3. Loss Limitation.

      Losses allocated pursuant to Section 3 of the Agreement shall not exceed
the maximum amount of Losses that can be allocated without causing any Member to
have an Adjusted Capital Account Deficit at the end of any Allocation Year. In
the event some but not all of the Members would have Adjusted Capital Account
Deficits as a consequence of an allocation of Losses pursuant to Section 3 of
the Agreement, the limitation set forth in this Paragraph 3 shall be applied on
a Member by Member basis and Losses not allocable to any Member as a result of
such limitation shall be allocated to the other Members in accordance with the
positive balances in such Member's Capital Accounts so as to allocate the
maximum permissible Losses to each Member under Section 1.704-1(b)(2)(ii)(d) of
the Regulations.

4. Other Allocation Rules.

           (a) For purposes of determining the Profits, Losses, or any other
items allocable to any period, Profits, Losses, and any such other items shall
be determined on a daily, monthly, or other basis, as determined by the Members
using any permissible method under Code Section 706 and the Regulations
thereunder.

           (b) The Members are aware of the income tax consequences of the
allocations made by Section 3 of the Agreement and this Appendix B and hereby
agree to be bound by such provisions in reporting their shares of Company income
and loss for income tax purposes.

           (c) Solely for purposes of determining a Member's proportionate share
of the "excess nonrecourse liabilities" of the Company within the meaning of
Regulations Section 1.752-3(a) (3), the Members' interests in Company profits
are in proportion to their Debt Percentages.

           (d) To the extent permitted by Section 1.704-2(h)(3) of the
Regulations, the Company shall endeavor to treat any distributions as having
been made from the proceeds of a Nonrecourse Liability or a Member Nonrecourse
Debt only to the extent that such distributions would cause or increase an
Adjusted Capital Account Deficit for any Member.

5. Tax Allocations; Code Section 704(c).

           (a) In accordance with Code Section 704(c) and the Regulations
thereunder, income, gain, loss, and deduction with respect to any property
contributed to the capital of the Company shall, solely for tax purposes, be
allocated among the Members so as to take account of any variation between the
adjusted basis of such property to the Company for federal income tax purposes
and its initial Gross Asset Value (computed in accordance with the definition of
Gross Asset Value).

           (b) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraph (ii) of the definition of Gross Asset Value,
subsequent allocations of income, gain, loss, and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the same
manner as under Code Section 704(c) and the Regulations thereunder.



                                  Appendix B-3
<PAGE>
           (c) Any elections or other decisions relating to such allocations
shall be made by the Members in any manner that reasonably reflects the purpose
and intention of this Agreement. Allocations pursuant to this Paragraph 5 are
solely for purposes of federal, state, and local taxes and shall not affect, or
in any way be taken into account in computing, any Member's Capital Account or
share of Profits, Losses, other items, or distributions pursuant to any
provision of this Agreement.

           (d) The Members shall, for federal income tax purposes, share any
original issue discount recognized by the Company in accordance with their
Shortfall Percentages.

           (e) Subject to the foregoing, for federal income tax purposes each
item of income, gain, loss or deduction that corresponds to an item of income,
gain, loss or expense taken into account in calculating Profits or Losses or
specially allocated under Section 3.1(a) of the Agreement or Section 1, 2 or 3
of this Appendix B (a "Book Item") shall be allocated between the Members in the
same proportion as the corresponding Book Item is allocated between the Members.






                                  Appendix b-4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>11
<FILENAME>subscripdoc.txt
<DESCRIPTION>EXHIBIT 10.41 SUBSCRIPTION AGREEMENT
<TEXT>
                                                                Exhibit 10.41



             ______________________________________________________

                             SUBSCRIPTION AGREEMENT

                                  by and among

                          LEUCADIA NATIONAL CORPORATION

                                       AND

                 EACH OF THE ENTITIES NAMED IN SCHEDULE I HERETO

             ______________________________________________________

                          Dated as of December 23, 2002
             ______________________________________________________















<PAGE>





                                TABLE OF CONTENTS

                                                                 Page



    1. Definitions....................................................1

    2. Purchase and Sale..............................................1

    3. Purchase Price.................................................1

    4. The Closing....................................................2

    5. Representations and Warranties of the Company.......... .......2

    6. Representations and Warranties of each Purchaser...............2

    7. Conditions.....................................................4

    8. Restrictions on Transfer.......................................4

    9. Agreement......................................................4

    10. Miscellaneous.................................................5

SCHEDULE I............................................................9

EXHIBIT A............................................................10





<PAGE>

                             SUBSCRIPTION AGREEMENT


     THIS  SUBSCRIPTION  AGREEMENT (the "Agreement") is made and entered into as
of December  23, 2002 by and among  Leucadia  National  Corporation,  a New York
corporation  (the "Company") and each of the entities named in Schedule I hereto
(each a "Purchaser" and, together, the "Purchasers").

                              W I T N E S S E T H:

     WHEREAS, the Company desires to sell to each Purchaser,  and each Purchaser
desires to purchase from the Company, upon the terms and conditions  hereinafter
provided, the number of common shares, par value $1.00 per share, of the Company
(the "Common Shares") and the number of shares of Series A Convertible Preferred
Stock (the "Series A Preferred Stock") set forth opposite its name in Schedule I
hereto  (such  Common  Shares and Series A Preferred  Stock  being  collectively
referred to as the "Securities"); and

     WHEREAS  pursuant to this Agreement and subject to and conditioned upon the
terms and provisions  hereof, the parties desire to set forth certain rights and
obligations  of the Purchasers  with respect to the  Securities  acquired by the
Purchasers  pursuant hereto,  and the Company and each of the Purchasers wish to
make various additional agreements, all as expressly set forth below.

     NOW,  THEREFORE,  in  consideration  of the  premises  and  the  respective
agreements hereinafter set forth, the parties hereto agree as follows:

     1.  Definitions.  As used in this  Agreement,  the following terms have the
         -----------
following meanings:

     "Closing" shall have the meaning given to such term in Section 4.

     "Closing Date" shall have the meaning given to such term in Section 4.

     "Excluded Liens" means Liens imposed by or arising from this Agreement.

     "Liens" means liens, security interests,  claims,  pledges and encumbrances
of any kind.

     "Material  Adverse  Effect"  with  respect to any  person  means a material
adverse effect on (a) the business, financial condition or results of operations
of such  person and its  subsidiaries,  taken as a whole,  or (b) the ability of
such person to perform its obligations under this Agreement.

     "Registration  Rights  Agreement"  means a  registration  rights  agreement
between the Company and the  Purchasers  dated as of the Closing Date and in the
form of Exhibit A attached hereto.

     "Securities Act" means the Securities Act of 1933, as amended.

     2.  Purchase and Sale.  On the Closing Date, and upon the terms and subject
         -----------------
to the conditions herein set forth, the Company agrees to issue and sell to each
Purchaser,  free and clear of all Liens other than any Excluded Liens,  and each
Purchaser  hereby agrees to purchase and accept from the Company,  a face amount
of Securities  equal to the amount set forth opposite each  Purchaser's  name in
Schedule I hereto (with respect to each Purchaser,  its "Allocated Securities").
Subject to the terms and  conditions of this  Agreement and in reliance upon the
representations,  warranties  and agreements of each  Purchaser  hereunder,  the
Company shall deliver to each Purchaser on the Closing Date (against  payment of
the Purchase  Price  provided for in Section 3)  certificates  representing  the
Allocated  Securities  registered in the name of each  Purchaser or a designated
affiliate thereof.

     3.  Purchase  Price.  On the Closing Date, each Purchaser  shall pay to the
        ----------------
Company  $35.25  per  Common  Share  and  $4,750,713.00  per  share of  Series A
Preferred  Stock,  aggregating to the amount set forth opposite such Purchaser's
name in Schedule I hereto (with respect to such Purchaser, the "Purchase Price")
for the purchase of its Allocated  Securities.  The Purchase Price shall be paid
in immediately  available funds by wire transfer to a bank account designated by
the Company.

                                       1
<PAGE>


     4.  The Closing.
         -----------

        (a) Upon the terms and subject to the conditions  herein set forth,  the
purchase and sale provided for herein (the "Closing") will take place (a) at the
offices of Weil,  Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY 10153, at
10:00 a.m.,  New York City time, on December 24, 2002 or (b) at such other time,
date and place as shall be fixed by agreement among the parties hereto. The date
and time of Closing are herein referred to as the "Closing Date".

        (b) The Closing shall be conditioned  upon the Company  having  received
the consent of WilTel  Communications  Group, Inc. to the sale of the Securities
pursuant to this  Agreement.  Until such consent is received,  the Company shall
have no obligation to close.

     5.  Representations  and Warranties of the Company.  The Company represents
         ----------------------------------------------
and warrants to each Purchaser as follows:

     5.1 Authority  of Seller.  The Company has been duly formed and is validly
         --------------------
existing  under  the  laws of the  State of New  York.  The  issuance,  sale and
delivery  by the  Company  of the  Securities  has been duly  authorized  by the
Company.  Upon  issuance  and  delivery  as  contemplated  by  Section 2 of this
Agreement  and upon  payment  therefor  as  contemplated  by  Section  3 of this
Agreement, the Securities will have been duly authorized,  validly issued, fully
paid and  nonassessable.  This Agreement has been duly and validly  executed and
delivered by the Company and is the legal,  valid and binding  obligation of the
Company  enforceable  against the Company in all material respects in accordance
with its terms. No action,  consent or approval by, or filing with, any Federal,
state, municipal,  foreign or other court or governmental or administrative body
or agency,  or any other  regulatory or  self-regulatory  body (a  "Governmental
Authority"), by reason of authority over the affairs of the Company, is required
to be made by the Company in  connection  with the execution and delivery by the
Company of this Agreement or the consummation by the Company of the transactions
contemplated hereby, other than (a) those which may be required solely by reason
of any Purchaser's (as opposed to any other third party's)  participation in the
transaction  contemplated  hereby and (b) such  other  consents,  approvals  and
filings, the failure of which to obtain would not have a Material Adverse Effect
on the Company.

     5.2 No  Conflicts;  No  Violations.  None  of the  execution,  delivery  or
         ------------------------------
performance of this Agreement by the Company will (a) result in any violation of
or be  in  conflict  with  or  constitute  a  default  under  any  term  of  the
constitutive  documents of the Company, (b) result in any material breach of any
terms or provisions  of, or constitute a material  default  under,  any material
contract,  agreement or  instrument  to which the Company is a party or by which
the Company or its property is bound or (c) violate any judgment, order, decree,
statute,  law,  rule or regulation  applicable to the Company  except for in the
case of the foregoing  clauses (b) and (c), any violation,  conflict,  breach or
default which would not have a Material Adverse Effect on the Company.

     5.3 Brokers.  No broker,  investment  banker,  financial  advisor or other
         -------
person is entitled  to any  broker's,  finder's,  financial  advisor's  or other
similar fee or commission in connection  with the  transactions  contemplated by
this  Agreement  based upon  arrangements  made by or on behalf of the  Company,
other than Jefferies & Company, Inc.

     6.  Representations  and  Warranties  of each  Purchaser.  Each  Purchaser,
         ----------------------------------------------------
severally and not jointly, represents and warrants to the Company as follows:

     6.1 Authority of  Purchaser.  Such  Purchaser  has been duly formed and is
         -----------------------
validly  existing  under  the laws of the  state or  other  jurisdiction  of its
incorporation or formation.  Such Purchaser has full right,  power and authority
to consummate the transactions contemplated herein. This Agreement has been duly
and validly executed and delivered by such Purchaser and is the legal, valid and
binding obligation of such Purchaser  enforceable  against such Purchaser in all
material  respects in accordance with its terms. No action,  consent or approval
by, or filing with, any Governmental  Authority, by reason of authority over the
affairs of such Purchaser,  is required to be made or obtained by such Purchaser
in  connection  with  the  execution  and  delivery  by such  Purchaser  of this
Agreement or the consummation by such Purchaser of the transactions contemplated
hereby other than such consents,  approvals and filings, the failure of which to
obtain would not have a Material Adverse Effect on such Purchaser.

                                       2
<PAGE>

     6.2 No  Conflicts;  No  Violations.  None  of the  execution,  delivery  or
         ------------------------------
performance of this Agreement or the receipt of the Securities by such Purchaser
will (a) result in any  violation  of or be in  conflict  with or  constitute  a
default under any term of constitutive  documents of such Purchaser,  (b) result
in any material  breach of any terms or provisions  of, or constitute a material
default  under,  any material  contract,  agreement or  instrument to which such
Purchaser is a party or by which such  Purchaser or its property is bound or (c)
violate any judgment, order, decree, statute, law, rule or regulation applicable
to such Purchaser,  except for in the case of the foregoing clauses (b) and (c),
any  violation,  conflict,  breach or  default  which  would not have a Material
Adverse Effect on such Purchaser.

     6.3 Investment  Intention;  No Resales.  Such  Purchaser is acquiring  the
         ----------------------------------
Securities  hereunder for investment,  solely for its own account and not with a
view to, or for  resale in  connection  with,  the  distribution  thereof.  Such
Purchaser will not resell, transfer,  assign or distribute the Securities except
in compliance with this Agreement,  the  Registration  Rights  Agreement and the
registration  requirements of the Securities Act and applicable state securities
laws or pursuant to an available exemption therefrom.

     6.4 Accredited Investor; Ability to Bear Risk; Evaluation of Risks.
         --------------------------------------------------------------

        (a) Such Purchaser is an "Accredited Investor" as defined in Rule 501(a)
promulgated under Regulation D of the Securities Act.

        (b)  Such  Purchaser  is in a  financial  position  to bear  the risk of
holding  the  Securities  and is  able  to  withstand  a  complete  loss  of its
investment in the Securities.

        (c) The  knowledge  and  experience  of such  Purchaser in financial and
business  matters is such that it,  together  with its  advisors,  is capable of
reading and  interpreting  financial  statements  and  evaluating the merits and
risks of the  investment  in the  Securities  and has the net worth to undertake
such risks.

        (d) Such  Purchaser  acknowledges  that no  representations,  express or
implied,  are  being  made with  respect  to the  Company,  the  Securities,  or
otherwise, other than those expressly set forth herein.

     6.5 Securities Unregistered. Such Purchaser has been advised by the Company
         -----------------------
that (a) the offer and sale of the Securities have not been registered under the
Securities Act and (b) the offering and sale of the Securities is intended to be
exempt from  registration  under the  Securities Act pursuant to Section 4(2) of
the  Securities  Act and (c) there is no  established  market  for the  Series A
Preferred Stock and it is not  anticipated  that there will be any public market
for the Series A Preferred Stock in the foreseeable future.

     6.6 Brokers.  No broker,  investment  banker,  financial  advisor or other
         -------
person is entitled  to any  broker's,  finder's,  financial  advisor's  or other
similar fee or commission in connection  with the  transactions  contemplated by
this Agreement based upon arrangements made by or on behalf of such Purchaser.

     6.7 Investment  Decision.  Each  Purchaser  is making  its own  investment
         --------------------
decision and each investment decision is not based on the investment decision of
any other Purchaser.


                                       3

<PAGE>

     7.  Conditions.
         ----------

     7.1 Conditions to Obligations of the  Purchasers.  The  obligations of each
         --------------------------------------------
Purchaser to perform  under this  Agreement are subject to the  satisfaction  or
waiver by such Purchaser of each of the following  conditions:  (a) the delivery
to the Purchaser by the Company of its Allocated  Securities and a duly executed
Registration  Rights  Agreement  and (b) the absence on the Closing  Date of any
injunction or other order, or statute,  rule or regulation,  of any Governmental
Authority  prohibiting  the  consummation  of  the  sale  and  purchase  of  the
Securities hereunder.

     7.2 Conditions  to  Obligations  of the Company.  The  obligations  of the
         -------------------------------------------
Company to perform  under this  Agreement  are  subject to the  satisfaction  or
waiver by the Company of each of the following  conditions:  (a) each  Purchaser
shall have delivered to the Company the Purchase  Price  specified on Schedule I
in accordance  with the  provisions of Section 3, (b) the execution and delivery
to the Company by each Purchaser of the  Registration  Rights  Agreement and (c)
the absence on the Closing Date of any  injunction  or other order,  or statute,
rule or regulation,  of any Governmental Authority preventing or the prohibiting
the consummation of the sale and purchase of the Securities hereunder.

     8.  Restrictions on Transfer.
         ------------------------

     8.1 General Restriction. The Securities are "restricted securities" within
         -------------------
the  meaning  of Rule  144(a)(3)  under  the  Securities  Act  (the  "Restricted
Securities"),  and will be transferable  only upon the satisfaction of the terms
and  conditions  set forth in (x) this  Section 8, (y) the  Registration  Rights
Agreement and (z) the  Company's  restated  certificate  of  incorporation  (the
"Charter").  Any transfer or  purported  transfer in violation of this Section 8
will be void.

     8.2 Notice of  Transfer.  Subject to the terms of the  Registration  Rights
         -------------------
Agreement and the Charter,  prior to any transfer of any Restricted  Securities,
the  holder  thereof  will give  written  notice to the  Company  describing  in
reasonable detail the manner and terms of the proposed transfer and the identity
of the proposed transferee, accompanied by the written agreement of the proposed
transferee to be bound by all of the provisions  hereof applicable to holders of
such Restricted Securities hereunder or thereunder.

     8.3 Restrictive  Legends.  For so long as the Securities  remain subject to
         --------------------
the  restrictions  on  transfer  set forth in this  Section 8, the  certificates
representing such securities will bear restrictive  legends in addition to those
required by the Charter in substantially the following form:

               "THE    SECURITIES    REPRESENTED   BY   THIS
               CERTIFICATE  HAVE NOT BEEN  REGISTERED  UNDER
               THE  SECURITIES  ACT OF 1933, AS AMENDED (THE
               "SECURITIES  ACT"),  OR ANY STATE  SECURITIES
               LAW  AND   MAY  NOT  BE  SOLD  OR   OTHERWISE
               TRANSFERRED   EXCEPT   PURSUANT   TO  (A)  AN
               EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE
               SECURITIES ACT OR (B) AN APPLICABLE EXEMPTION
               FROM  THE  REGISTRATION  REQUIREMENTS  OF THE
               SECURITIES ACT."

     8.4 Termination of Restrictions. The restrictions imposed by this Section 8
         ---------------------------
upon the  transferability  of  Restricted  Securities  will  terminate as to any
particular  Restricted Securities when such Restricted Securities have been sold
pursuant to an effective  registration  statement  under the Securities  Act, or
pursuant to Rule 144 under the  Securities  Act or any other  exemption from the
registration requirements of the Securities Act pursuant to which the transferee
receives  securities that are not "restricted  securities" within the meaning of
that  term as  defined  in Rule  144(a)(3).  Whenever  any of such  restrictions
terminates as to any Restricted Securities,  the holder thereof will be entitled
to  receive  from  the  Company,  at the  Company's  expense,  new  certificates
representing  such  Securities,  without  the  restrictive  legend  set forth in
Section 8.3,  but  containing  any other legend  required by the Charter at that
time.  Notwithstanding  the foregoing,  the restrictions on transferability  set
forth in the Charter  shall remain  unaffected  by any sale  referred to in this
Section.

     9. Agreement.
        ---------

                                       4
<PAGE>

     9.1 Registration  Rights Agreement.  The Company and each of the Purchasers
         ------------------------------
hereby agree to duly  execute and deliver on the Closing  Date the  Registration
Rights Agreement.

     9.2 Best Efforts;  Further Actions.  Each of the Company and the Purchasers
         ------------------------------
will use its best  efforts  to take or cause to be taken all action and to do or
cause to be done all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the  transactions  contemplated
by this Agreement. If, at any time after the Closing Date, any further action is
necessary or  desirable  to carry out the purposes of this  Agreement or to vest
each  Purchaser  with  full  title  to  the  Securities,  the  proper  officers,
directors,  partners or duly  authorized  representatives  of each party to this
Agreement shall take all such necessary action.

     9.3 Consents.  Each of the Company and the  Purchasers  will cooperate with
         --------
each other,  and use its best  efforts,  in filing any  necessary  applications,
reports or other documents with, giving any notices to, and seeking any consents
from, all regulatory  bodies and all  governmental  agencies and authorities and
all third parties (including,  without limitation,  any other  equityholders) as
may be  necessary  or  desirable  in  connection  with the  consummation  of the
transactions contemplated by this Agreement.

     9.4 Public  Announcements.  Each of the Company, the Purchasers,  and their
         ---------------------
respective affiliates,  will consult with each other before issuing, and provide
each other the  opportunity  to review and comment  upon,  any press  release or
other public  statement  with respect to the sale and purchase of the Securities
and the  transactions  contemplated  by this  Agreement  and shall not issue any
press  release,  disclose  the name of any  Purchaser  or make  any such  public
statement  without the  advance  approval of the other  parties  following  such
consultation (such approval not to be unreasonably withheld or delayed),  except
as may be required by applicable  law, court process or by the  requirements  of
any securities exchange.

     10. Miscellaneous.
         -------------

     10.1 Amendment  and  Waiver.   This  Agreement  may  not  be  amended  or
          ----------------------
supplemented  except by an  instrument in writing duly executed by an authorized
officer  of the  Company  and an  authorized  officer  of  Purchasers  holding a
majority of the Securities being issued pursuant to this Agreement.  Any term or
provision  of this  Agreement  may be  waived,  but only in writing by the party
which is entitled to the benefit  thereof.  The waiver by any party  hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any preceding or  succeeding  breach and no failure by either party to
exercise  any  right or  privilege  hereunder  shall be  deemed a waiver of such
party's  rights  or  privileges  hereunder  or shall be  deemed a waiver of such
party's rights to exercise the same at any subsequent time or times hereunder.

     10.2  Counterparts.   This  Agreement  may  be  executed  in  one  or  more
           ------------
counterparts,  each of which when so executed  and  delivered  will be deemed an
original, and all of which together shall constitute one and the same agreement.
It shall not be  necessary  for each party to sign each  counterpart  so long as
every party has signed at least one counterpart.


                                       5

<PAGE>

     10.3 Facsimile Signatures.  This Agreement may be executed and delivered by
          --------------------
facsimile and upon such delivery the facsimile  signature will be deemed to have
the same effect as if the  original  signature  had been  delivered to the other
party.

     10.4 Notices.  All notices and other  communications  hereunder shall be in
          -------
writing and shall be deemed to have been given if delivered  personally  or sent
by registered or certified mail (return receipt requested),  postage prepaid, or
by facsimile  transmission  to the parties to this  Agreement  at the  following
addresses  or at such other  address for a party as shall be  specified  by like
notice:

               If to the Company, at:

               Leucadia National Corporation
               315 Park Avenue South
               New York, NY 10010
               Fax: (212) 598-3242
               Attention: Joseph A. Orlando

               with a copy to:

               Weil, Gotshal & Manges LLP
               767 Fifth Avenue
               New York, NY 10153
               Fax: (212) 310-8000
               Attention:  Andrea A. Bernstein, Esq.


               If to the Purchasers, at:

               Franklin Mutual Advisers, LLC
               51 John F. Kennedy Parkway
               Short Hills, NJ  07078
               Fax:  (973) 912-0646
               Attention:  Bradley Takahashi

All such notices and communications shall be deemed to have been received on the
date of delivery,  on the date that the facsimile  transmission  is confirmed as
having been received or on the third  business day in New York after the mailing
thereof, as the case may be.

     10.5 Assignment.  Neither this Agreement nor any right, remedy,  obligation
          ----------
or liability  arising  hereunder or by reason  hereof shall be assignable by any
party to this Agreement  without the prior written consent of the other parties,
and any attempt to assign any right,  remedy,  obligation  or liability  arising
hereunder without such consent shall be void.

     10.6 Entire  Agreement.  This Agreement  constitutes  the entire  agreement
          -----------------
between the parties with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, written and oral.

     10.7 Binding Effect;  Parties in Interest.  This Agreement shall be binding
          ------------------------------------
upon and  inure to the  benefit  of the  parties  to this  Agreement  and  their
respective  successors  and permitted  assigns,  and nothing in this  Agreement,
express or implied,  is intended  to or shall  confer upon any other  person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.

                                       6

<PAGE>


     10.8 Expenses, Indemnification.
          --------------------------

        (a)  Whether  or  not  the  purchase  and  sale  of  the  Securities  is
consummated,  each party hereto shall pay its own fees and expenses  incident to
preparing   for,   entering  into  and  carrying  out  this  Agreement  and  the
consummation of the transactions contemplated hereby.

        (b) A party in breach of this Agreement shall, on demand,  indemnify and
hold  harmless the other  parties for and against all  reasonable  out-of-pocket
expenses,  including legal fees, incurred by such other parties by reason of the
enforcement  and protection of its rights under this  Agreement.  The payment of
such  expenses is in addition to any other  relief to which such other party may
be entitled.

     10.9 Applicable Law and  Jurisdiction;  Service of Process;  Waiver of Jury
          ----------------------------------------------------------------------
Trial.
- -----
        (a) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without reference to any applicable principles
of conflict of laws to the extent  that the  application  of the laws of another
jurisdiction  would be required  thereby.  Any and all suits,  legal  actions or
proceedings  against any party  hereto  arising out of this  Agreement  shall be
brought in the United States  Federal court sitting in the Southern  District of
New York, or, if such court shall not have jurisdiction, in the Supreme Court of
the State of New York  sitting in the County of New York,  and each party hereby
submits to and accepts the exclusive jurisdiction of such courts for the purpose
of such suits, legal action or proceedings. Each party hereto hereby irrevocably
waives any objection  which it may now or hereafter  have to the laying of venue
of any such  suit,  legal  action or  proceeding  in any such  court and  hereby
further  waives any claim that any suit,  legal action or proceeding  brought in
any such court has been brought in an  inconvenient  forum.  The parties  hereto
agree  that  service of process in  connection  with any suit,  legal  action or
proceeding brought hereunder or in connection  herewith may be made by any means
of service of process permitted by law.

        (b) Each party  waives,  to the fullest  extent  permitted by applicable
law,  any  right  it may have to a trial by jury in  respect  of any  litigation
arising out of or relating to this  Agreement.  Each party (x) certifies that no
representative,  agent or attorney of another party has presented,  expressly or
otherwise, that such other party would not, in the event of litigation,  seek to
enforce the foregoing  waiver and (y)  acknowledges  that it has been induced to
enter into this  Agreement  by,  among  other  things,  the mutual  waivers  and
certifications set forth in this Section 10.9.

     10.10 Section  Headings.  The section and other headings  contained in this
           -----------------
Agreement  are for  reference  purposes only and shall not affect the meaning or
interpretation of this Agreement.

     10.11 Termination.  This  Agreement may be terminated at any time prior to
           -----------
the Closing by the mutual consent of each of the Purchasers and the Company.

     10.12 Specific  Enforcement.  Each of the parties hereto  acknowledges  and
           ---------------------
agrees  that in the event of any  breach of this  Agreement,  the  non-breaching
party  would be  irreparably  harmed  and  could not be made  whole by  monetary
damages. It is accordingly agreed that the parties hereto will waive the defense
in any action for  specific  performance  that a remedy at law would be adequate
and that the parties  hereto,  in addition to any other remedy to which they may
be  entitled  at law  or in  equity,  shall  be  entitled  to an  injunction  or
injunctions  to prevent  breaches of the  provisions  of this  Agreement  and to
enforce  specifically  the terms and provisions  hereof without the necessity of
proving actual damage or securing or posting any bond or providing prior notice.

     10.13 Further Assurances.  Subject to the specific terms of this Agreement,
           ------------------
each of the parties  hereto shall make,  execute,  acknowledge  and deliver such
other  instruments  and documents,  and take all such other  actions,  as may be
reasonably required in order to effectuate the purposes of this Agreement and to
consummate the transactions contemplated hereby.



                 [REMAINDER OF PAGE IS INTENTIONALLY LEFT BLANK]




                                       7

<PAGE>
     IN WITNESS WHEREOF, each party hereto has executed this Agreement as of the
day and year first above written.

                                     LEUCADIA NATIONAL CORPORATION

                                     By:      __________________________
                                              Name:
                                              Title:


                                     MUTUAL BEACON FUND

                                     By:      __________________________
                                              Name:
                                              Title:


                                     MUTUAL DISCOVERY FUND

                                     By:      __________________________
                                              Name:
                                              Title:


                                     MUTUAL FINANCIAL SERVICES FUND

                                     By:      __________________________
                                              Name:
                                              Title:


                                     MUTUAL QUALIFIED FUND

                                     By:      __________________________
                                              Name:
                                              Title:


                                     MUTUAL SHARES FUND

                                     By:      __________________________
                                              Name:
                                              Title:


                                     MUTUAL BEACON FUND (Ontario, Canada)

                                     By:      __________________________
                                              Name:
                                              Title:


                                     MUTUAL DISCOVERY SECURITIES FUND

                                     By:      __________________________
                                              Name:
                                              Title:


                                     MUTUAL SHARES SECURITIES FUND

                                     By:      __________________________
                                              Name:
                                              Title:


                                     FRANKLIN MUTUAL BEACON FUND

                                     By:      __________________________
                                              Name:
                                              Title:


                                     MASTERS' SELECT VALUE FUND

                                     By:      __________________________
                                              Name:
                                              Title:

                                       8
<PAGE>
<TABLE>
<CAPTION>

                                                                 SCHEDULE I

         Names                        Type of Securities               Number of Shares               Purchase Price
         -----                        ------------------               ----------------               --------------

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

Mutual Beacon Fund                          Common                          595,496                  $20,991,234.00
                                      Series A Preferred                          2                   $9,501,426.00

Mutual Discovery Fund                       Common                          415,236                  $14,637,069.00
                                      Series A Preferred                          2                   $9,501,426.00

Mutual Financial Services Fund              Common                           87,450                   $3,082,612.50

Mutual Qualified Fund                       Common                          422,096                  $14,878,884.00
                                      Series A Preferred                          2                   $9,501,426.00

Mutual Shares Fund                          Common                        1,012,141                  $35,677,970.25
                                      Series A Preferred                          4                  $19,002,852.00

Mutual Beacon Fund (Ontario)                Common                           22,060                     $777,615.00

Mutual Discovery Securities Fund            Common                           34,780                   $1,225,995.00

Mutual Shares Securities Fund               Common                          184,830                   $6,515,257.50

Franklin Mutual Beacon Fund                 Common                           84,290                   $2,971,222.50

Masters' Select Value Fund                  Common                           49,220                   $1,735,005.00
                                                                                                      -------------

         Total                                                                                      $149,999,994.75
                                                                                                    ===============


</TABLE>

                                       9
<PAGE>





                                    EXHIBIT A

                         [REGISTRATION RIGHTS AGREEMENT]



















                                       10

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>12
<FILENAME>hornsteindefcomp.txt
<DESCRIPTION>EXHIBIT 10.42 MARK HORNSTEIN DEFERRED COMP AGREE.
<TEXT>


                                                                Exhibit 10.42



                         DEFERRED COMPENSATION AGREEMENT
                         -------------------------------


               THIS DEFERRED COMPENSATION AGREEMENT, (the "Agreement") is made
and entered into on December 16, 2002 by and between LEUCADIA NATIONAL
CORPORATION, a New York corporation (the "Company"), and Mark Hornstein, (the
"Executive"), collectively the parties ("Parties").

                                   WITNESSETH:
                                   -----------

               WHEREAS, Executive is employed by the Company as Vice President;
and

               WHEREAS, in connection with the provision of services to the
Company in his capacity as Vice President the Executive desires to defer the
receipt of certain compensation from the Company to which in the future he may
become entitled, and the Company agrees to do so, in accordance with the terms
and provisions herein contained;

               NOW, THEREFORE, in consideration of the premises and the mutual
convenants and agreements herein contained, the Parties hereby agree as follows:

               1. Deferral of Payments.
                  --------------------

               The Company shall defer the payment of 50% of bonus compensation,
other than Holiday Bonus, that may be awarded to the Executive by the Company
from and after the date of this Agreement through the end of calendar year 2003.
The Executive acknowledges that the Company is under no obligation to award any
bonus to the Executive and that the award of any bonus, as well as the amount of
any bonus that may be awarded, remains fully discretionary with the Company.

               Each deferred payment shall accrue interest (on the basis of a
360-day year), compounded annually, from the first day of the month immediately
following the date on which payment otherwise would have been made if no
deferral had existed (the "First New Month Date") until the date of actual
payment, at a rate of interest equal to the yield on Treasury bills maturing in
one year in effect at each First New Month Date, and the rate of interest shall
be reset on the first day of each subsequent quarter. For purposes hereof, the
quarters shall begin January 1, April 1, July 1, and October 1.

               All amounts deferred pursuant to this Agreement, including
interest, shall be paid to the Executive in January 2008. Notwithstanding the
preceding sentence, to the extent that the aggregate deferred payments hereunder
(including interest) exceed the maximum annual amount deductible as compensation
by the Company under applicable U.S. federal tax laws, the Company may make such
payments in two or more installments in different taxable years to permit the
Company to obtain the maximum annual deduction available. In addition, to the
extent that the Company determines the aggregate deferred payments hereunder
(including interest) will not be fully deductible when paid as compensation by
the Company under applicable U.S. federal tax laws, the Company may prepay such
amounts to obtain the maximum tax deduction possible.

               The rights of the Executive to the payment of the amounts
pursuant to this Agreement shall be no greater than the rights of an unsecured
general creditor of the Company and may not be assigned, pledged or otherwise
transferred by him during his lifetime to any person, whether by operation of
law or otherwise, and shall not be subject to execution, attachment or similar
proceeding. By written notice delivered to the Company, the Executive may
designate (or change a prior designation of) one or more beneficiaries (or his
estate) to receive payment hereunder in the event of his death.

               2. Withholding.
                  -----------

               The Executive acknowledges and agrees that the Company shall be
entitled to withhold from his compensation all federal, state, local or other
taxes which the Company determines are required to be withheld on amounts
payable to the Executive pursuant to this Agreement or otherwise. The Executive
further agrees to indemnify the Company and hold it harmless from and against
any and all taxes (and penalties thereon) and interest with respect thereto
arising out of the Executive's failure to pay fully his tax liability on such
deferred payment pursuant to any present or future law, regulation or ordinance
of the United States of America or any state, city or municipality therein.



<PAGE>

               3. Governing Law.
                  -------------

               This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.

               4. Entire Agreement.
                  ----------------

               This Agreement constitutes the entire agreement between the
Parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, understandings and arrangements, both oral and written,
between the Parties hereto with respect to such subject matter. This Agreement
may not be modified in any manner, except by a written instrument signed by both
the Company and the Executive.

               5. Notices.
                  -------

               Any notice required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
by hand or facsimile transmission or when deposited in the United States mail by
registered or certified mail, return receipt requested, postage prepaid, as
follows:

If to the Company:                    Leucadia National Corporation
                                      315 Park Avenue South
                                      New York, NY 10010
                                      Attn: Chief Financial Officer

with a copy to:                       Weil, Gotshal & Manges LLP
                                      767 Fifth Avenue
                                      New York, New York 10153
                                      Attention:  Andrea Bernstein

If to Executive:                      Mark Hornstein
                                      25 Sutton Place South
                                      New York, New York 10022



               or to such other addresses as either the Company or the Executive
may from time to time specify to the other.

               6. Notice of Termination; Applicability of Agreement.
                  -------------------------------------------------

               Amounts deferred pursuant to this Agreement shall be paid to the
Executive only as provided herein. At any time, by notice in writing from the
Executive to the Company, the Executive may terminate this Agreement whereupon
any compensation earned by the Executive subsequent to such notification shall
not be subject to the provisions hereof. Amounts earned prior to any such
notification shall remain subject to the terms hereof even after such
termination.

               7. Benefit; Binding Effect.
                  -----------------------

               This Agreement shall be for the benefit of and binding upon the
Parties hereto and their respective heirs, personal representatives, legal
representatives, successors and, where applicable, assigns.

               IN WITNESS WHEREOF, the Parties hereto have executed and
delivered this Agreement as of the day and year first above written.

                                      LEUCADIA NATIONAL CORPORATION



                                      By:
                                           -------------------------------
                                           JOSEPH A. ORLANDO


                                           --------------------------------
                                           MARK HORNSTEIN




                                       2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>13
<FILENAME>imccert.txt
<DESCRIPTION>EXHIBIT 99.1 IAN M. CUMMING CERTIFICATION
<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-K report for the year ended
December 31, 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:  March 28, 2003
                                           By: /s/ Ian M. Cumming
                                               ------------------------------
                                               Ian M. Cumming
                                               Chairman of the Board and
                                               Chief Executive Officer






A signed original of this written statement required by Section 906 has been
provided to Leucadia National Corporation and will be retained by Leucadia
National Corporation and furnished to the Securities and Exchange Commission or
its staff upon request.




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>14
<FILENAME>jsscert.txt
<DESCRIPTION>EXHIBIT 99.2  JOSEPH S. STEINBERG CERTIFICATION
<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-K report for the year ending December 31, 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:  March 28, 2003
                                           By:  /s/  Joseph S. Steinberg
                                                ------------------------
                                                Joseph S. Steinberg
                                                President






A signed original of this written statement required by Section 906 has been
provided to Leucadia National Corporation and will be retained by Leucadia
National Corporation and furnished to the Securities and Exchange Commission or
its staff upon request.




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>15
<FILENAME>jaocert.txt
<DESCRIPTION>EXHIBIT 99.3  JOSEPH A. ORLANDO CERTIFICATION
<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-K report for the year ending December 31, 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:  March 28, 2003
                                           By: /s/  Joseph A. Orlando
                                                -------------------------
                                                Joseph A. Orlando
                                                Chief Financial Officer





A signed original of this written statement required by Section 906 has been
provided to Leucadia National Corporation and will be retained by Leucadia
National Corporation and furnished to the Securities and Exchange Commission or
its staff upon request.




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