LUK Posts Upbeat FY11 Results

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Leucadia National Corporation (LUK) reported its financial results for the fourth quarter and fiscal year 2011 on February 27. Results were weak in the year 2011 compared with the previous year as the company reported earnings from continuing operations of 7 cents per share as compared with $7.66 per share in 2010. Results, however, surpassed the Zacks Consensus Estimate of a loss of 64 cents.

Earnings for the year 2011 excluded a one cent income from discontinued operations and a 2 cent gain from disposal of discontinuing operations.

Revenue

In the fiscal year 2011, revenue jumped 19.0% year over year to $1,570.8 million compared with $1,320.0 million in the previous year.

In the reported year, revenue from the Manufacturing segment was approximately $245.0 million, down 5.8% year over year and accounted for 15.6% of total revenue. Oil and Gas Drilling segment accounted for about 8.7% of revenue and was $136.1 million.

Revenue generated from the Gaming Entertainment Operations was roughly 7.5% of total revenue, and increased 3.0% to $117.2 million, while revenue of $96.5 million from the Domestic Real Estate segment accounted for 6.1% of total revenue.

Revenue from the Medical Product Development segment was $378 thousand. Proceeds from Other operations were $69.0 million, up from $67.1 million in the previous year and accounted for about 4.4% of total revenue, while the Corporate segment revenue of $906.48 million accounted for about 57.7% of revenue.

Expenses/Margins

Expenses in the year plummeted 6.4% to $889.8 million in the quarter, down from $951.0 million in the previous year. In relation to revenue, expenses dipped to 56.7% from 72.1% in the previous year. Operating margin jumped to 43.4% from roughly 28% in 2010.

Balance Sheet

Exiting the fourth quarter, Leucadia’s cash and cash equivalents plummeted 45.0% sequentially to $168.5 million while its long-term debt jumped 27.5% to $1,875.6 million from $1,471.3 million in the previous quarter.

Cash Flow

Cash flow from operating activities was a net inflow of $9.1 million compared with a net inflow of $431.3 million in the previous year. Spending on property, equipment and leasehold improvements came to $38.6 million versus $44.3 million in 2010.

Leucadia is engaged in manufacturing, telecommunications, oil and gas drilling services, property management and services, gaming entertainment, real estate activities, medical product development operations and various other investment-related activities in the United States. The company faces competition from other companies like Apollo Investment Corporation (AINV) and The Blackstone Group (BX).

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