- Quarterly Report (10-Q)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________

FORM 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

[ ]

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 (State or other jurisdiction of	13-2615557 (I.R.S. Employer
incorporation or organization)	Identification Number)

315 Park Avenue South, New York, New York (Address of principal executive offices)	10010-3607 (Zip Code)

(212) 460-1900

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

______________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES X NO _____

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES X NO _____

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x		Accelerated filer o
Non-accelerated filer o	(Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ____ NO X

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer’s classes of common stock, at April 26, 2012: 244,582,588.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2012 and December 31, 2011

(Dollars in thousands, except par value)

(Unaudited)

	March 31,		December 31,
	2012		2011
ASSETS
Current assets:
Cash and cash equivalents	$	205,291	$	168,490
Investments		125,480		150,135
Trade, notes and other receivables, net		332,170		369,123
Inventory		355,736		354,578
Current deferred tax asset		44,046		144,281
Prepaids and other current assets		62,707		66,872
Total current assets		1,125,430		1,253,479
Non-current investments ($416,771 and $432,768 collateralizing repurchase
agreements)		1,759,427		2,226,875
Intangible assets, net and goodwill		865,864		876,589
Deferred tax asset, net		1,411,758		1,440,605
Other assets		404,144		420,157
Property, equipment and leasehold improvements, net		1,043,313		1,053,689
Investments in associated companies ($1,566,553 and $1,198,029 measured
using fair value option)		2,376,701		1,991,795

Total	$	8,986,637	$	9,263,189

LIABILITIES
Current liabilities:
Trade payables and expense accruals	$	315,333	$	386,544
Other current liabilities		44,116		42,976
Securities sold under agreements to repurchase		403,461		417,479
Debt due within one year		39,257		30,133
Total current liabilities		802,167		877,132
Other non-current liabilities		96,378		96,316
Long-term debt		1,425,187		1,875,571
Total liabilities		2,323,732		2,849,019

Commitments and contingencies

Redeemable noncontrolling interests in subsidiary		232,709		235,909

EQUITY
Common shares, par value $1 per share, authorized 600,000,000
shares; 244,582,588 shares issued and outstanding,
after deducting 47,006,711 shares held in treasury		244,583		244,583
Additional paid-in capital		1,573,932		1,570,684
Accumulated other comprehensive income		671,579		912,421
Retained earnings		3,937,585		3,446,708
Total Leucadia National Corporation shareholders’ equity		6,427,679		6,174,396
Noncontrolling interest		2,517		3,865
Total equity		6,430,196		6,178,261

Total	$	8,986,637	$	9,263,189

See notes to interim consolidated financial statements.

LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

For the three months ended March 31, 2012 and 2011

(In thousands, except per share amounts)

(Unaudited)

	2012			2011

Revenues and Other Income:
Beef processing services	$	1,790,555		$	–
Manufacturing		61,710			63,765
Oil and gas drilling services		37,322			30,872
Gaming entertainment		32,069			30,776
Investment and other income		77,696			156,318
Net securities gains		424,936			2,303
		2,424,288			284,034
Expenses:
Cost of sales:
Beef processing services		1,772,219			–
Manufacturing		50,943			54,253
Direct operating expenses:
Oil and gas drilling services		29,183			21,271
Gaming entertainment		22,390			21,469
Interest		28,868			28,977
Salaries and incentive compensation		46,490			16,236
Depreciation and amortization		39,496			17,762
Selling, general and other expenses		76,254			44,536
		2,065,843			204,504
Income from continuing operations before income taxes and
income (losses) related to associated companies		358,445			79,530
Income taxes		133,517			39,053
Income from continuing operations before income (losses)
related to associated companies		224,928			40,477
Income (losses) related to associated companies, net of income tax
provision (benefit) of $139,369 and $(16,124)		262,539			(28,048	)
Income from continuing operations		487,467			12,429
Loss from discontinued operations, net of income tax provision
(benefit) of $(129) and $(863)		(232	)		(1,722	)
Gain on disposal of discontinued operations, net of income tax
provision of $0 and $0		–			79
Net income		487,235			10,786
Net (income) attributable to the noncontrolling interest		(202	)		(279	)
Net loss attributable to the redeemable noncontrolling interest		3,844			–
Net income attributable to Leucadia National Corporation
common shareholders	$	490,877		$	10,507

(continued)

See notes to interim consolidated financial statements.

LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations (continued)

For the three months ended March 31, 2012 and 2011

(In thousands, except per share amounts)

(Unaudited)

	2012			2011

Basic earnings (loss) per common share attributable
to Leucadia National Corporation common shareholders:
Income from continuing operations	$	2.01		$	.05
Loss from discontinued operations		–			(.01	)
Gain on disposal of discontinued operations		–			–
Net income	$	2.01		$	.04

Diluted earnings (loss) per common share attributable
to Leucadia National Corporation common shareholders:
Income from continuing operations	$	1.97		$	.05
Loss from discontinued operations		–			(.01	)
Gain on disposal of discontinued operations		–			–
Net income	$	1.97		$	.04

Amounts attributable to Leucadia National Corporation
common shareholders:
Income from continuing operations, net of taxes	$	491,109		$	12,150
Loss from discontinued operations, net of taxes		(232	)		(1,722	)
Gain on disposal of discontinued operations, net of taxes		–			79
Net income	$	490,877		$	10,507

See notes to interim consolidated financial statements.

LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

For the three months ended March 31, 2012 and 2011

(In thousands)

(Unaudited)

	2012			2011

Net income	$	487,235		$	10,786
Other comprehensive income (loss):
Net unrealized holding gains (losses) on investments arising during
the period, net of income tax provision (benefit) of $(9,201) and $(37,592)		(16,571	)		(67,707	)
Less: reclassification adjustment for net (gains) losses included in net income,
net of income tax provision (benefit) of $123,791 and $(773)		(222,964	)		1,391
Net change in unrealized holding gains (losses) on investments,
net of income tax provision (benefit) of $(132,992) and $(36,819)		(239,535	)		(66,316	)

Net unrealized foreign exchange gains (losses) arising during the period,
net of income tax provision (benefit) of $(1,070) and $698		(1,927	)		1,258
Less: reclassification adjustment for foreign exchange gains (losses)
included in net income, net of income tax provision (benefit) of $0 and $0		–			–
Net change in unrealized foreign exchange gains (losses),
net of income tax provision (benefit) of $(1,070) and $698		(1,927	)		1,258

Net unrealized gains (losses) on derivatives arising during the period,
net of income tax provision (benefit) of $(89) and $0		(160	)		–
Less: reclassification adjustment for derivative gains (losses)
included in net income, net of income tax provision (benefit) of $0 and $0		–			–
Net change in unrealized derivative gains (losses), net of income tax
provision (benefit) of $(89) and $0		(160	)		–

Net pension and postretirement gain (loss) arising during the period,
net of income tax provision (benefit) of $0 and $0		–			–
Less: amortization of actuarial net loss included in net periodic
pension cost, net of income tax provision (benefit) of $433 and $(1)		780			–
Net change in pension liability and postretirement benefits,
net of income tax provision (benefit) of $433 and $(1)		780			–

Other comprehensive (loss), net of income taxes		(240,842	)		(65,058	)

Comprehensive income (loss)		246,393			(54,272	)

Comprehensive (income) attributable to the noncontrolling interest		(202	)		(279	)

Comprehensive loss attributable to the redeemable noncontrolling interest		3,844			–

Comprehensive income (loss) attributable to Leucadia National Corporation
common shareholders	$	250,035		$	(54,551	)

See notes to interim consolidated financial statements.

LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the three months ended March 31, 2012 and 2011

(In thousands)

(Unaudited)

	2012			2011

Net cash flows from operating activities:
Net income	$	487,235		$	10,786
Adjustments to reconcile net income to net cash used for operations:
Deferred income tax provision		263,133			18,072
Depreciation and amortization of property, equipment and leasehold improvements		26,247			16,735
Other amortization		23,894			7,052
Share-based compensation		3,892			1,024
Excess tax benefit from exercise of stock options		–			(15	)
Provision for doubtful accounts		2,484			233
Net securities gains		(424,936	)		(2,303	)
(Income) losses related to associated companies		(401,908	)		44,172
Distributions from associated companies		10,660			13,150
Net (gains) related to real estate, property and equipment, and other assets		(4,352	)		(85,699	)
Income related to Fortescue’s Pilbara project, net of proceeds received		62,812			43,587
Gain on disposal of discontinued operations		–			(79	)
Change in estimated litigation reserve		–			(2,241	)
Net change in:
Trade, notes and other receivables		(28,591	)		(13,363	)
Inventory		(1,432	)		(2,514	)
Prepaids and other assets		4,574			522
Trade payables and expense accruals		(71,947	)		(55,936	)
Other liabilities		11,092			(4,382	)
Income taxes payable		(5,128	)		(8,201	)
Other		(416	)		1,625
Net cash used for operating activities		(42,687	)		(17,775	)

Net cash flows from investing activities:
Acquisition of property, equipment and leasehold improvements		(18,575	)		(4,052	)
Acquisitions of and capital expenditures for real estate investments		(1,248	)		(4,452	)
Proceeds from disposals of real estate, property and equipment, and other assets		1,979			15,811
Net change in restricted cash		4,676			(187	)
Proceeds from (payments related to) disposal of discontinued operations, net of
expenses and cash of operations sold		(384	)		951
Advances on notes and other receivables		(451	)		(2,366	)
Collections on notes, loans and other receivables		6,068			4,957
Investments in associated companies		(498	)		(890	)
Capital distributions and loan repayment from associated companies		8,886			4,858
Purchases of investments (other than short-term)		(558,688	)		(395,591	)
Proceeds from maturities of investments		75,162			145,151
Proceeds from sales of investments		1,022,731			54,223
Other		–			2,066
Net cash provided by (used for) investing activities		539,658			(179,521	)

(continued)

See notes to interim consolidated financial statements.

LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows (continued)

For the three months ended March 31, 2012 and 2011

(In thousands)

(Unaudited)

	2012			2011

Net cash flows from financing activities:
Issuance of debt, net of issuance costs	$	70,433		$	145,066
Reduction of debt		(525,940	)		(73,156	)
Issuance of common shares		–			1,340
Excess tax benefit from exercise of stock options		–			15
Other		(4,663	)		(3,377	)
Net cash provided by (used for) financing activities		(460,170	)		69,888
Net increase (decrease) in cash and cash equivalents		36,801			(127,408	)
Cash and cash equivalents at January 1,		168,490			441,340
Cash and cash equivalents at March 31,	$	205,291		$	313,932

Supplemental disclosures of cash flow information:
Cash paid during the year for :
Interest	$	56,466		$	55,472
Income tax payments, net	$	14,941		$	12,214

See notes to interim consolidated financial statements.

LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the three months ended March 31, 2012 and 2011

(In thousands, except par value)

(Unaudited)

	Leucadia National Corporation Common Shareholders
	Common					Accumulated
	Shares		Additional			Other
	$1 Par		Paid-In			Comprehensive			Retained					Noncontrolling
	Value		Capital			Income			Earnings		Subtotal			Interest			Total

Balance, January 1, 2011	$	243,808	$	1,542,964		$	1,687,363		$	3,482,623	$	6,956,758		$	6,623		$	6,963,381
Net income										10,507		10,507			279			10,786
Other comprehensive loss, net of taxes							(65,058	)				(65,058	)					(65,058	)
Contributions from noncontrolling interests															190			190
Distributions to noncontrolling interests															(3,567	)		(3,567	)
Change in interest in consolidated subsidiary				(1,912	)							(1,912	)		1,912			–
Share-based compensation expense				1,024								1,024						1,024
Exercise of warrants to purchase common
shares		523		(523	)							–						–
Exercise of options to purchase common
shares, including excess tax benefit		48		1,307								1,355						1,355

Balance, March 31, 2011	$	244,379	$	1,542,860		$	1,622,305		$	3,493,130	$	6,902,674		$	5,437		$	6,908,111


Balance, January 1, 2012	$	244,583	$	1,570,684		$	912,421		$	3,446,708	$	6,174,396		$	3,865		$	6,178,261
Net income										490,877		490,877			202			491,079
Other comprehensive loss, net of taxes							(240,842	)				(240,842	)					(240,842	)
Contributions from noncontrolling interests															26			26
Distributions to noncontrolling interests															(1,576	)		(1,576	)
Change in fair value of redeemable
noncontrolling interests				(644	)							(644	)					(644	)
Share-based compensation expense				3,892								3,892						3,892

Balance, March 31, 2012	$	244,583	$	1,573,932		$	671,579		$	3,937,585	$	6,427,679		$	2,517		$	6,430,196

See notes to interim consolidated financial statements.

LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements

1.	Significant Accounting Policies

The unaudited interim consolidated financial statements, which reflect all adjustments (consisting of normal recurring items or items discussed herein) that management believes necessary to fairly state results of interim operations, should be read in conjunction with the Notes to Consolidated Financial Statements (including the Summary of Significant Accounting Policies) included in the Company’s audited consolidated financial statements for the year ended December 31, 2011, which are included in the Company’s Annual Report filed on Form 10-K for such year (the “2011 10-K”). Results of operations for interim periods are not necessarily indicative of annual results of operations. The consolidated balance sheet at December 31, 2011 was extracted from the audited annual financial statements and does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements.

Effective January 1, 2012, the Company adopted new Financial Accounting Standards Board (“FASB”) guidance with respect to the improvement of the comparability of fair value measurements presented and disclosed in financial statements issued in accordance with GAAP and International Financial Reporting Standards. The amendment includes requirements for measuring fair value and for disclosing information about fair value measurements, but does not require additional fair value measurements and is not intended to establish valuation standards or affect valuation practices outside of financial reporting. The guidance did not have a significant impact on the Company’s consolidated financial statements.

Effective January 1, 2012, the Company adopted new FASB guidance on the presentation of comprehensive income. This amendment eliminated the previous option to report other comprehensive income and its components in the statement of changes in equity; instead, it requires the presentation of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This amendment was applied retrospectively. Adoption of this amendment changed the presentation of the Company’s consolidated financial statements but did not have any impact on its consolidated financial position, results of operations or cash flows.

Effective January 1, 2012, the Company adopted new FASB guidance with respect to the simplification of how entities test for goodwill impairment. This amendment permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The guidance did not have a significant impact on the Company’s consolidated financial statements.

Certain amounts for prior periods have been reclassified to be consistent with the 2012 presentation.

2.	Acquisitions

As more fully discussed in the 2011 10-K, the Company acquired a controlling interest in National Beef Packing Company, LLC (“National Beef”) in December 2011. Unaudited pro forma operating results for the Company for the three month period ended March 31, 2011, assuming the acquisition had occurred as of January 1, 2010 are as follows (in thousands, except per share amounts):

Revenues and other income	$	1,936,880
Net income attributable to Leucadia National Corporation
common shareholders	$	36,202
Basic earnings per common share attributable to Leucadia National
Corporation common shareholders	$	.15
Diluted earnings per common share attributable to Leucadia National
Corporation common shareholders	$	.15

Pro forma adjustments principally reflect an increase to depreciation and amortization expenses related to the fair value of property and equipment and amortizable intangible assets. The unaudited pro forma data is not indicative of future results of operations or what would have resulted if the acquisition had actually occurred as of January 1, 2010.

3.	Segment Information

The primary measure of segment operating results and profitability used by the Company is income (loss) from continuing operations before income taxes. Associated companies are not considered to be a reportable segment, but are reflected in the table below under income (loss) from continuing operations before income taxes. Certain information concerning the Company’s segments for the three month periods ended March 31, 2012 and 2011 is presented in the following table (in thousands).

	2012			2011
Revenues and other income:
Beef Processing Services	$	1,791,979		$	–
Manufacturing:
Idaho Timber		41,129			40,240
Conwed Plastics		20,598			23,569
Oil and Gas Drilling Services		39,027			32,084
Gaming Entertainment		32,073			30,782
Domestic Real Estate		3,421			85,383
Medical Product Development		74			91
Other Operations		18,965			16,107
Corporate		477,022			55,778
Total consolidated revenues and other income	$	2,424,288		$	284,034

Income (loss) from continuing operations before
income taxes:
Beef Processing Services	$	(17,597	)	$	–
Manufacturing:
Idaho Timber		2,368			16
Conwed Plastics		2,447			3,290
Oil and Gas Drilling Services		2,053			3,571
Gaming Entertainment		4,263			5,796
Domestic Real Estate		(1,109	)		81,317
Medical Product Development		(10,053	)		(3,994	)
Other Operations		(2,101	)		(6,571	)
Income (losses) related to associated companies		401,908			(44,172	)
Corporate		378,174			(3,895	)
Total consolidated income from continuing
operations before income taxes	$	760,353		$	35,358

Depreciation and amortization expenses:
Beef Processing Services	$	20,308		$	–
Manufacturing:
Idaho Timber		1,328			1,321
Conwed Plastics		1,335			1,796
Oil and Gas Drilling Services		5,203			5,293
Gaming Entertainment		4,245			4,244
Domestic Real Estate		875			903
Medical Product Development		210			209
Other Operations		2,792			1,928
Corporate		5,982			4,851
Total consolidated depreciation and amortization expense	$	42,278		$	20,545

Revenues and other income for each segment include amounts for services rendered and products sold, as well as segment reported amounts classified as investment and other income and net securities gains (losses) in the Company’s consolidated statements of operations. In 2012, corporate securities gains include a gain of $417,887,000 resulting from the sale of a portion of the Company’s investment in the common shares of Fortescue Metals Group Ltd (“Fortescue”). In 2011, other income for the domestic real estate segment includes a gain on forgiveness of debt of $81,848,000.

Other operations includes pre-tax losses of $5,871,000 and $7,781,000 for the three month periods ended March 31, 2012 and 2011, respectively, for the investigation and evaluation of various energy related projects. There were no significant operating revenues associated with these activities; however, other income for the 2011 period includes $1,990,000 with respect to government grants to reimburse the Company for certain of its prior expenditures, which were fully expensed as incurred.

Depreciation and amortization expenses for the manufacturing and other operations segments include amounts classified as cost of sales.

For 2012, interest expense was primarily comprised of beef processing services ($3,016,000) and corporate ($25,829,000). For 2011, interest expense was primarily comprised of corporate; interest expense for other segments was not significant.

4.	Investments in Associated Companies

A summary of investments in associated companies at March 31, 2012 and December 31, 2011 is as follows:

	March 31,		December 31,
	2012		2011
	(In thousands)
Investments in associated companies accounted for
under the equity method of accounting:
Jefferies High Yield Holdings, LLC (“JHYH”)	$	332,956	$	323,262
Berkadia Commercial Mortgage LLC (“Berkadia”)		206,144		193,496
Garcadia		75,318		72,303
Linkem S.p.A. (“Linkem”)		79,188		86,332
HomeFed Corporation (“HomeFed”)		47,378		47,493
Brooklyn Renaissance Plaza		32,372		31,931
Other		36,792		38,949
Total accounted for under the equity method of accounting		810,148		793,766

Investments in associated companies carried at fair value:
Jefferies Group, Inc. (“Jefferies”)		1,092,834		797,583
Mueller Industries, Inc. (“Mueller”)		473,719		400,446
Total accounted for at fair value		1,566,553		1,198,029

Total investments in associated companies	$	2,376,701	$	1,991,795

Income (losses) related to associated companies includes the following for the three month periods ended March 31, 2012 and 2011:

	2012			2011
	(In thousands)

Jefferies	$	299,601		$	(79,702	)
Mueller		74,315			–
JHYH		9,694			14,928
Berkadia		11,820			14,659
Garcadia		8,094			4,295
Linkem		(4,190	)		–
HomeFed		(115	)		(18	)
Brooklyn Renaissance Plaza		441			643
Other		2,248			1,023
Income (losses) related to associated companies
before income taxes		401,908			(44,172	)
Income tax provision (benefit)		139,369			(16,124	)
Income (losses) related to associated companies,
net of taxes	$	262,539		$	(28,048	)

Investments accounted for under the equity method of accounting are initially recorded at their original cost and subsequently increased for the Company's share of the investees’ earnings, decreased for the Company's share of the investees’ losses, reduced for dividends received and impairment charges recorded, if any, and increased for any additional investment of capital.

In accordance with GAAP, the Company is allowed to choose, at specified election dates, to measure many financial instruments and certain other items at fair value (the “fair value option”) that would not otherwise be required to be measured at fair value. If the fair value option is elected for a particular financial instrument or other item, the Company is required to report unrealized gains and losses on those items in earnings. The Company’s investments Jefferies and Mueller are the only eligible items for which the fair value option was elected, commencing on the date the investments became subject to the equity method of accounting. The Company believes accounting for these investments at fair value better reflects the economics of these investments, and quoted market prices for these investments provide an objectively determined fair value at each balance sheet date. In addition, electing the fair value option eliminates the uncertainty involved with impairment considerations. The Company’s investment in HomeFed is the only other investment in an associated company that is also a publicly traded company but for which the Company did not elect the fair value option. HomeFed’s common stock is not listed on any stock exchange, and price information for the common stock is not regularly quoted on any automated quotation system. It is traded in the over-the-counter market with high and low bid prices published by the National Association of Securities Dealers OTC Bulletin Board Service; however, trading volume is minimal. For these reasons the Company did not elect the fair value option for HomeFed.

As of March 31, 2012, the Company owns 58,006,024 common shares of Jefferies representing approximately 28.2% of the outstanding common shares of Jefferies. Jefferies, a company listed on the New York Stock Exchange (“NYSE”) (Symbol: JEF), is a full-service global investment bank and institutional securities firm serving companies and their investors.

As of March 31, 2012, the Company owns 10,422,859 common shares of Mueller, representing approximately 27.3% of the outstanding common shares of Mueller, a company listed on the NYSE (Symbol: MLI). Mueller is a leading manufacturer of copper, brass, plastic, and aluminum products.

As more fully discussed in the 2011 10-K, the Company has agreed to reimburse Berkshire Hathaway Inc. for up to one-half of any losses incurred under a $2,500,000,000 surety policy securing outstanding commercial paper issued by an affiliate of Berkadia. As of March 31, 2012, the aggregate amount of commercial paper outstanding was $2,470,000,000.

The following tables provide summarized data with respect to significant investments in associated companies. The information is provided for those investments whose current relative significance to the Company could result in the Company including separate audited financial statements for such investments in its Annual Report on Form 10-K for the year ended December 31, 2012. The information for Jefferies is for the three month periods ended February 29, 2012 and February 28, 2011.

	2012		2011
	(In thousands)

Jefferies:
Total revenues	$	1,006,800	$	966,700
Income from continuing operations before extraordinary items		77,100		87,300
Net income		77,100		87,300

JHYH:
Total revenues	$	56,900	$	73,000
Income from continuing operations before extraordinary items		36,400		47,800
Net income		36,400		47,800

Berkadia:
Total revenues	$	95,800	$	85,600
Income from continuing operations before extraordinary items		25,900		19,200
Net income		25,900		19,200

Under GAAP, JHYH is considered a variable interest entity that is consolidated by Jefferies, since Jefferies is the primary beneficiary. The Company owns less than half of JHYH’s capital, including its indirect interest through its investment in Jefferies and will not absorb a majority of its expected losses or receive a majority of its expected residual returns. The Company has not provided any guarantees, nor is it contingently liable for any of JHYH’s liabilities, all of which are non-recourse to the Company. The Company’s maximum exposure to loss as a result of its investment in JHYH is limited to the book value of its investment plus any additional capital it decides to invest.

5.	Investments

A summary of investments classified as current assets at March 31, 2012 and December 31, 2011 is as follows (in thousands):

	March 31, 2012				December 31, 2011
			Carrying Value				Carrying Value
	Amortized		and Estimated		Amortized		And Estimated
	Cost		Fair Value		Cost		Fair Value

Investments available for sale	$	121,421	$	121,440	$	146,594	$	145,977
Other investments, including accrued interest income		3,977		4,040		4,113		4,158
Total current investments	$	125,398	$	125,480	$	150,707	$	150,135

The amortized cost, gross unrealized gains and losses and estimated fair value of available for sale investments classified as current assets at March 31, 2012 and December 31, 2011 are as follows (in thousands):

			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value

March 31, 2012
Bonds and notes:
U.S. Government and agencies	$	116,928	$	7	$	6	$	116,929
All other corporates		4,160		18		–		4,178
Total fixed maturities		121,088		25		6		121,107

Other investments		333		–		–		333
Total current available for sale investments	$	121,421	$	25	$	6	$	121,440

December 31, 2011
Bonds and notes:
U.S. Government and agencies	$	139,940	$	13	$	1	$	139,952
All other corporates		5,649		70		–		5,719
Total fixed maturities		145,589		83		1		145,671

Other investments		1,005		–		699		306
Total current available for sale investments	$	146,594	$	83	$	700	$	145,977

A summary of non-current investments at March 31, 2012 and December 31, 2011 is as follows (in thousands):

	March 31, 2012				December 31, 2011
			Carrying Value				Carrying Value
	Amortized		and Estimated		Amortized		And Estimated
	Cost		Fair Value		Cost		Fair Value

Investments available for sale:
Fortescue	$	27,100	$	183,853	$	115,703	$	569,256
Inmet Mining Corporation (“Inmet”)		504,006		623,603		504,006		708,193
Other investments available for sale		725,145		779,063		724,664		776,444
Other investments:
Private equity funds		84,530		84,530		85,528		85,528
FMG Chichester Pty Ltd (“FMG”)
zero coupon note component		42,019		42,019		40,801		40,801
Other non-publicly traded investments		46,421		46,359		46,947		46,653
Total non-current investments	$	1,429,221	$	1,759,427	$	1,517,649	$	2,226,875

At March 31, 2012, the Company owns 30,586,000 common shares of Fortescue, a publicly traded company listed on the Australian Stock Exchange (Symbol: FMG). As more fully discussed in the 2011 10-K, the Company’s investment in Fortescue also includes a $100,000,000 unsecured note of FMG that matures in August 2019 (the “FMG Note”). Interest on the FMG Note is calculated as 4% of the revenue, net of government royalties, invoiced from the iron ore produced from the project’s Cloud Break and Christmas Creek areas, which commenced production in May 2008. Interest is payable semi-annually within thirty days of June 30 th and December 31 st of each year. The Company accounts for the FMG Note as two components: a thirteen year zero-coupon note and a prepaid mining interest. The zero-coupon note component of this investment is accounted for as a loan-like instrument, with income being recognized as the note is accreted up to its face value. The prepaid mining interest, which is being amortized to expense as the revenue is earned (using the units of production method), is classified as other current and non-current assets with an aggregate balance of $149,626,000 and $152,521,000 at March 31, 2012 and December 31, 2011, respectively. Amounts recognized in the consolidated statements of operations related to the FMG Note are as follows (in thousands):

	March 31,		March 31,
	2012		2011

Classified as investment and other income:
Interest income on FMG Note	$	45,069	$	37,413
Interest accreted on zero-coupon note component	$	1,218	$	1,083

Amortization expense on prepaid mining interest	$	2,895	$	2,116

The aggregate book values of the various components of the FMG Note, net of accrued withholding taxes on interest, totaled $231,772,000 and $290,415,000 at March 31, 2012 and December 31, 2011, respectively.

In August 2010, the Company was advised that Fortescue is asserting that FMG is entitled to issue additional notes identical to the FMG Note in an unlimited amount. Fortescue further claims that any interest to be paid on additional notes can dilute, on a pro rata basis, the Company’s entitlement to the above stated interest of 4% of net revenue. The Company does not believe that FMG has the right to issue additional notes which affect the Company’s interest or that the interpretation by Fortescue of the terms of the FMG Note, as currently claimed by Fortescue, reflects the agreement between the parties.

In September 2010, the Company filed a Writ of Summons against Fortescue, FMG and Fortescue’s then Chief Executive Officer in the Supreme Court of Western Australia. The Writ of Summons seeks, among other things, an injunction restraining the issuance of any additional notes identical to the FMG Note and damages. If the litigation is ultimately determined adversely to the Company and additional notes are issued, the Company’s future cash flows from the FMG Note and future results of operations would be significantly and adversely affected to the extent of the dilution resulting from the issuance of such additional notes. In addition, the Company would have to evaluate whether the prepaid mining interest had become impaired. The amount of the impairment, if any, would depend upon the amount of new notes issued and the resulting dilution, plus the Company’s projection of future interest payable on the FMG Note.

At March 31, 2012, the Company owns 11,042,413 common shares of Inmet, representing approximately 15.9% of Inmet’s outstanding shares. Inmet is a Canadian-based global mining company traded on the Toronto Stock Exchange (Symbol: IMN). The Inmet shares have registration rights and may be sold without restriction in accordance with applicable securities laws.

Non-current other non-publicly traded investments are accounted for under the cost method of accounting, reduced for impairment charges when appropriate.

The amortized cost, gross unrealized gains and losses and estimated fair value of non-current investments classified as available for sale at March 31, 2012 and December 31, 2011 are as follows (in thousands):

			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value

March 31, 2012
Bonds and notes:
U.S. Government and agencies	$	10,004	$	–	$	18	$	9,986
U.S. Government-Sponsored Enterprises		585,312		14,912		48		600,176
All other corporates		81,332		637		1,041		80,928
Total fixed maturities		676,648		15,549		1,107		691,090

Equity securities:
Common stocks:
Banks, trusts and insurance companies		22,084		25,939		–		48,023
Industrial, miscellaneous and all other		557,519		289,969		82		847,406
Total equity securities		579,603		315,908		82		895,429

	$	1,256,251	$	331,457	$	1,189	$	1,586,519

December 31, 2011
Bonds and notes:
U.S. Government-Sponsored Enterprises	$	609,617	$	12,683	$	109	$	622,191
All other corporates		66,960		636		1,054		66,542
Total fixed maturities		676,577		13,319		1,163		688,733

Equity securities:
Common stocks:
Banks, trusts and insurance companies		22,084		28,887		–		50,971
Industrial, miscellaneous and all other		644,717		669,270		299		1,313,688
Total equity securities		666,801		698,157		299		1,364,659

Other investments		995		–		494		501
	$	1,344,373	$	711,476	$	1,956	$	2,053,893

The amortized cost and estimated fair value of non-current investments classified as available for sale at March 31, 2012, 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.

	Amortized		Estimated
	Cost		Fair Value
	(In thousands)

Due after one year through five years	$	30,380	$	30,611
Due after five years through ten years		–		–
Due after ten years		–		–
		30,380		30,611
Mortgage-backed and asset-backed securities		646,268		660,479
	$	676,648	$	691,090

At March 31, 2012, the unrealized losses on investments which have been in a continuous unrealized loss position for less than 12 months and for 12 months or longer were not significant.

Inventory

A summary of inventory at March 31, 2012 and December 31, 2011 is as follows (in thousands):

	March 31,		December 31,
	2012		2011

Finished goods	$	240,298	$	233,542
Work in process		54,549		49,514
Raw materials, supplies and other		60,889		71,522
	$	355,736	$	354,578

7.	Intangible Assets, Net and Goodwill

A summary of intangible assets, net and goodwill at March 31, 2012 and December 31, 2011 is as follows (in thousands):

	March 31,		December 31,
	2012		2011

Intangibles:
Customer and other relationships, net of accumulated amortization of
$49,060 and $41,958	$	420,979	$	426,603
Trademarks and tradename, net of accumulated amortization of $5,080
and $1,527		274,485		278,024
Cattle supply contracts, net of accumulated amortization of $2,393 and $0		141,207		143,500
Licenses, net of accumulated amortization of $3,064 and $2,917		8,934		9,081
Other, net of accumulated amortization of $5,127 and $5,095		1,230		1,262
Goodwill		19,029		18,119
	$	865,864	$	876,589

Amortization expense on intangible assets was $13,227,000 and $1,890,000 for the three month periods ended March 31, 2012 and 2011, respectively. The estimated aggregate future amortization expense for the intangible assets for each of the next five years is as follows (in thousands): 2012 (for the remaining nine months) - $39,256; 2013 - $52,305; 2014 - $52,265; 2015 - $49,472; and 2016 - $47,650.

At March 31, 2012 and December 31, 2011, goodwill in the above table related to Conwed Plastics ($8,151,000), the winery operations ($1,053,000) and National Beef ($9,825,000 and $8,915,000, respectively).

8.	Accumulated Other Comprehensive Income

Activity in accumulated other comprehensive income is reflected in the consolidated statements of comprehensive income (loss) and consolidated statements of changes in equity but not in the consolidated statements of operations. A summary of accumulated other comprehensive income, net of taxes at March 31, 2012 and December 31, 2011 is as follows (in thousands):

	March 31,			December 31,
	2012			2011

Net unrealized gains on investments	$	758,616		$	998,151
Net unrealized foreign exchange losses		(5,095	)		(3,168	)
Net unrealized losses on derivative instruments		(160	)		–
Net minimum pension liability