##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION



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, 2001 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 1-4720

WESCO FINANCIAL CORPORATION

(Exact name of Registrant as Specified in its
Charter)


|                                                                                                        |  |                                     
|------------------------------------------------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                                                                |  | 95-2109453                          
|(State or Other Jurisdiction of
	incorporation or organization)                                         |  | (I.R.S. Employer Identification No.)
|                                                                                                       
|301 East Colorado Boulevard, Suite 300,
	Pasadena, California
	(Address of Principal Executive Offices) |  | 91101-1901
	(Zip Code)              

(626) 585-6700


(Registrants Telephone Number, Including
Area Code)


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

|                            |  |                                                    
|--------------------------- |  | ---------------------------------------------------
|Title of Each Class         |  | Name of Each Exchange on Which Registered          
|Capital Stock, $1 par value |  | American Stock Exchange
	and Pacific Stock Exchange

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

None




(Title of Class)




---

(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 statements incorporated by
reference in Part III of this Form 10-K or any amendment to
this
Form 10-K.  o

The aggregate market value of voting stock of the
registrant held by non-affiliates of the registrant as of
March 18, 2002 was: $418,137,000.

The number of shares outstanding of the
registrants Capital Stock as of March 18, 2002
was: 7,119,807.

DOCUMENTS INCORPORATED BY REFERENCE

|                                                         |  |                                  
|-------------------------------------------------------- |  | ---------------------------------
|Title of Document                                        |  | Parts of Form 10-K               
|Proxy Statement for 2002
	Annual Meeting of Shareholders |  | Part III. Items 10, 11, 12 and 13

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TABLE OF CONTENTS



|           |                                                                                              |  |  |  |  |  |  | 
|---------- | -------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I    
|           | Item 1. Business                                                                            
|           | Item 2.Properties                                                                           
|           | Item 3.Legal Proceedings                                                                    
|           | Item 4.Submission of Matters to a Vote of Security Holders                                  
|PART II   
|           | Item 5.                                                                                     
|           | Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations
|           | Item 8.Financial Statements                                                                 
|           | Item 10.Directors and Executive Officers of the Registrant                                  
|           | Item 11.Executive Compensation                                                              
|           | Item 12.Security Ownership of Certain Beneficial Owners and Management                      
|           | Item 13.Certain Relationships and Related Transactions                                      
|PART IV   
|           | Item 14.Exhibits, Financial Statement Schedules, and Reports on Form 8-K                    
|           | SIGNATURES                                                                                  
|EXHIBIT 21



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##### Table of Contents






PART I






Item 1.     Business


GENERAL

Wesco Financial Corporation (Wesco)
was incorporated in Delaware on March 19, 1959. Wesco,
through wholly owned subsidiaries, engages in three principal
businesses: (1) the insurance business, through
Wesco-Financial Insurance Company (Wes-FIC), which
was incorporated in 1985 and engages in the property and
casualty insurance business, and The Kansas Bankers Surety
Company (KBS), which was incorporated in 1909, was
purchased by Wes-FIC in mid-1996 and provides specialized
insurance coverages for banks; (2) the furniture rental
business, through CORT Business Services Corporation
(CORT), which traces its operations as a company
with national presence to the combination of five regional
furniture rental companies in 1972 and was purchased by Wesco in
2000; and (3) the steel service center business, through
Precision Steel Warehouse, Inc. (Precision Steel),
which was begun in 1940 and acquired by Wesco in 1979.

Wescos operations also include, through its
wholly owned subsidiary, MS Property Company (MS
Property), management of owned commercial real estate in
downtown Pasadena, California, a portion of which will be
redeveloped. MS Property began its operations in late 1993,
upon transfer to it of real properties previously owned by Wesco
and by a former savings and loan subsidiary of Wesco.

Since 1973, Wesco has been 80.1% owned by Blue
Chip Stamps (Blue Chip), a wholly owned subsidiary
of Berkshire Hathaway Inc. (Berkshire). Thus, Wesco
and its subsidiaries are controlled by Blue Chip and Berkshire.
All of these companies may also be deemed to be controlled by
Warren E. Buffett, who is Berkshires chairman and chief
executive officer and economic owner of approximately 31% of its
stock. Charles T. Munger, the chairman of Wesco, is also vice
chairman of Berkshire, and consults with Mr. Buffett with
respect to Wescos investment decisions and major capital
allocations. Although operating decisions for Wescos
businesses are made by the managers of those business units,
Mr. Buffett is president and a director of Wesco Holdings
Midwest, Inc. (WHMI), a wholly owned subsidiary of
Wesco, and a director of Wes-FIC, Precision Steel, and CORT,
which are wholly owned subsidiaries of WHMI.

Wescos activities fall into three business
segments  insurance, furniture rental and industrial.
The insurance segment consists of the operations of Wes-FIC and
KBS. The furniture rental segment consists of the operations of
CORT. The industrial segment comprises Precision Steels
steel service center and other operations. Wesco is also engaged
in several relatively insignificant activities not identified
with the three business segments; these include
(1) investment activity unrelated to the insurance segment,
(2) MS Propertys real estate activities, and
(3) parent company activities.

INSURANCE SEGMENT

Wes-FIC was incorporated in 1985 to engage in the
property and casualty insurance and reinsurance business. Its
insurance operations are managed by National Indemnity Company
(NICO), which is headquartered in Omaha, Nebraska.
To simplify discussion, the term Berkshire Insurance
Group, as used in this report, refers to NICO and certain
other wholly owned insurance subsidiaries of Berkshire,
individually or collectively, although Berkshire also includes
in its insurance group the insurance subsidiaries 80.1%-owned
through Berkshires ownership of Wesco.

Wes-FICs high net worth (about
$1.8 billion at 2001 yearend) has enabled Berkshire to
offer Wes-FIC the opportunity to participate, from time to time,
in contracts in which Wes-FIC effectively has reinsured certain
property and casualty risks of unaffiliated property and
casualty insurers. These arrangements have included contracts
for super-catastrophe reinsurance, which subject the
reinsurer to especially large amounts of losses from
mega-catastrophes such as hurricanes or earthquakes.
Super-catastrophe policies indemnify the ceding companies for
all or part of covered losses in excess of large, specified
retentions, and have been subject to aggregate limits;
reinsurance of this type is

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referred to as excess-of-loss
reinsurance (as contrasted with quota-share
reinsurance, under which a ceding company is indemnified in
proportion to its own loss).


Wescos and Wes-FICs boards of
directors have authorized automatic acceptance of retrocessions
of super-catastrophe reinsurance offered by the Berkshire
Insurance Group provided the following guidelines and
limitations are complied with: (1) in order not to delay
the acceptance process, the retrocession is to be accepted
without delay in writing in Nebraska by agents of Wes-FIC who
are salaried employees of the Berkshire Insurance Group;
(2) any ceding commission received by the Berkshire
Insurance Group cannot exceed 3% of premiums, probably less than
the Berkshire Insurance Group could get in the marketplace;
(3) Wes-FIC is to assume 20% or less of the total risk;
(4) the Berkshire Insurance Group must retain at least 80%
of the identical risk; and (5) the aggregate premiums from
this type of business in any twelve-month period cannot exceed
10% of Wes-FICs net worth.

Following is a summary of Wes-FICs more
significant reinsurance agreements:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A quota-share arrangement entered into in 1985
	whereby Wes-FIC effectively reinsured  through the
	Berkshire Insurance Group, as
	intermediary-without-profit  2% of the entire book of
	insurance business of a major property and casualty insurer
	written during a four-year coverage period that expired in 1989.
	Wes-FIC remains liable for its share of remaining unpaid losses
	and loss adjustment expenses, an estimate of which is included
	in insurance liabilities on Wescos consolidated balance
	sheet, and will continue to invest the related float
	(funds set aside and invested pending payment of claims) until
	all liabilities are settled, perhaps many years hence.     
|
| |  | During 1992 and 1993, a 50% quota-share agreement
	retroceded from the Berkshire Insurance Group related to certain
	personal lines business written by another large U.S.-based
	property and casualty insurer. No liabilities remain under this
	agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Several contracts for super-catastrophe
	reinsurance retroceded from the Berkshire Insurance Group
	beginning in 1994, including 3% participations in two
	super-catastrophe reinsurance policies covering hurricane risks
	in Florida: (1) a 12-month policy effective June 1,
	1996; and (2) a three-year policy effective January 1,
	1997. No losses were incurred under these contracts.                                                                                                                                                                                                                                                                                                            
|
| |  | Participation to the extent of 10% in a
	catastrophic excess-of-loss contract effective for the 1999
	calendar year covering property risks of a major international
	reinsurer, also retroceded from the Berkshire Insurance Group.
	No liabilities remain under this contract.                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | A three-year arrangement entered into in 2000
	through NICO, as intermediary without profit, for participation
	to the extent of 3.3% in certain property and casualty exposure
	ceded by a large, unaffiliated insurer. The terms of this
	arrangement are identical to those accepted by another member of
	the Berkshire Insurance Group, except as to the amount of the
	participation. Wes-FIC recorded a provision of $10 million
	before income taxes ($6.5 million after taxes) reflecting
	estimated loss and expenses relating to the September 11,
	2001 terrorist activity. (See Item 7, Managements
	Discussion and Analysis of Results of Operations, below, for
	additional information.)
|
| |  | Participation in four risk pools covering hull,
	liability, workers compensation and satellite exposures
	relating to the aviation industry  each to the extent
	of 3% for 2001 and, for 2002, 13% of the hull and liability
	pools, 3% of the workers compensation pool, and likely 13%
	of the satellite pool  all managed by a Berkshire
	Insurance Group member. Another Berkshire Insurance Group member
	provides a portion of the reinsurance protection to these
	aviation risk pools, and therefore to Wes-FIC.                                                                                                                                                                             

Since September 11, 2001, insurance industry
and governmental leaders have been working to identify
alternatives to mitigate the insurance industrys concerns
regarding the ability of the insurance

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industry to cover losses from terrorism
catastrophes. Beyond limited assumptions of certain aviation
exposures, the U.S. government has not yet assumed any of this
risk. Because of the magnitude and uncertainty of the
catastrophic terrorism exposure, many insurers and reinsurers
are responding primarily by restricting coverages where allowed
and secondarily by raising premium rates. Various proposals are
presently under consideration under which the federal government
would assume significant losses arising from future terrorist
attacks, thereby limiting this exposure to insurers and
reinsurers. It is currently unknown if or when any such
proposals will be enacted.


Although Wes-FIC has no active super-catastrophe
reinsurance contracts in force, its management has indicated
that Wes-FIC will likely have opportunities to participate in
such business from time to time in the future. Management
believes that an insurer in the reinsurance business must
maintain large net worth in relation to annual premiums in order
to remain solvent when called upon to pay claims when a loss
occurs. In this regard, Wes-FIC is believed to operate
differently from many other reinsurers in that risks it writes
are entirely retained, while other reinsurers may retrocede
portions of the risks to other reinsurers, thereby assuming
contingent risks that such reinsurers will not be able to
respond if called upon to pay off on risks reinsured. In this
respect Wes-FIC and KBS are competitively well positioned,
inasmuch as their net premiums written for calendar 2001
amounted to only 2.8% of their combined statutory surplus,
compared to an industry average of about 94% based on figures
reported for 2000.

Wes-FIC is also licensed to write
direct insurance business (as distinguished from
reinsurance) in Nebraska, Utah, and Iowa, and may write direct
insurance in the non-admitted excess and surplus lines market in
several other states, but the volume written to date has been
minimal.

In July 1996, Wes-FIC purchased KBS for
approximately $80 million in cash. KBS provides specialized
insurance coverage to more than 20% of the banks in the United
States, mostly small and medium-size banks in the Midwest. It is
licensed to write business in 27 states. KBS is also
subject to regulation by the Department of the Treasury. Its
product line for financial institutions includes policies for
crime insurance, check kiting fraud indemnification, internet
banking catastrophe bonds, directors and officers liability,
bank employment practices, and professional errors and omissions
indemnity, as well as deposit guaranty bonds, which insure
deposits in excess of federal deposit insurance limits. KBS,
which for many years had minimized its risks arising from large
losses through cessions to third party reinsurers, restructured
its reinsurance program effective January 1, 1998 in order
to retain a much higher portion of its premiums and risks of
loss. Wescos management anticipates that KBSs
reinsurance restructuring will improve operating results over
the long term in return for greater short-term volatility.

KBS markets its products in some states through
exclusive, commissioned agents, and direct to insureds in other
states. Inasmuch as the number of small midwestern banks is
declining as the banking industry consolidates, KBS relies for
growth on an extraordinary level of service provided by its
dedicated employees and agents, and on new products such as
deposit guaranty bonds, which were introduced in 1993 and
currently account for approximately one-third of premiums
written.

Standard & Poors Corporation, in
recognition of Wes-FICs strong competitive position as a
member of Berkshires family of wholly and substantially
owned insurance subsidiaries and its unusual capital strength,
has assigned its highest rating, AAA, to Wes-FICs
claims-paying ability. This rating recognizes the commitment of
Wes-FICs management to a disciplined approach to
underwriting and reserving, as well as Wes-FICs extremely
strong capital base.

Wescos and Wes-FICs boards are
hopeful, but have no assurance, that the businesses of Wes-FIC
and KBS will grow. They welcome the opportunity to participate
in additional reinsurance retrocessions and other insurance
arrangements, as well as acquisitions of other insurance
companies.

Insurance companies are subject to regulation by
the departments of insurance of the various states in which they
write policies as well as the states in which they are domiciled
and, if applicable, as is the case with KBS, by the Department
of the Treasury. Regulations relate to, among other things,

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capital requirements, shareholder and
policyholder dividend restrictions, reporting requirements,
annual audits by independent accountants, periodic regulatory
examinations, and limitations on the size and types of
investments that can be made.


Wes-FIC, which is operated by NICO, has no
employees of its own. KBS has 16 employees.

FURNITURE RENTAL SEGMENT

CORT, acquired in February 2000 by a subsidiary
of Wesco, is the largest, and only national, provider of rental
furniture, accessories and related services in the
rent-to-rent (as opposed to rent-to-own)
segment of the furniture industry. It rents high quality
furniture to corporate and individual customers who desire
flexibility in meeting their temporary office, residential or
tradeshow furnishing needs and who typically do not seek to own
such furniture. In addition, CORT sells previously rented
furniture through company-owned clearance centers, thereby
enabling it to regularly renew its inventory and update styles.
CORTs national network includes 119 showrooms,
85 clearance centers and 79 warehouses in 35 states
and the District of Columbia as well as three web sites
(cort1.com, relocationcentral.com and corttradeshow.com).

The rent-to-rent business is differentiated from
the rent-to-own business primarily by the terms of the rental
arrangements and the type of customer served. Rent-to-rent
customers generally desire high quality furniture to meet
temporary needs, have established credit, and pay on a monthly
basis. Typically, these customers do not seek to acquire the
property rented. In the typical rent-to-rent transaction, the
customer agrees to rent furniture for three to six months,
subject to extension by the customer on a month-to-month basis.
By contrast, rent-to-own arrangements are generally made by
customers without established credit whose objective is to
acquire ownership of the property; these arrangements are
typically entered into on a month-to-month basis and require
weekly rental payments.

CORTs customer base includes Fortune 500
companies, small businesses and professionals, and owners and
operators of apartment communities. CORTs management
believes that its size, national presence, consistently high
level of customer service, product quality and breadth of
selection, depth of management and efficient clearance centers
have been key contributors to the companys success. CORT
offers a full range of office, conference room and reception
area furniture, panel systems and accessories. CORT emphasizes
its ability to outfit an entire suite of offices with high
quality furniture in two business days. CORTs objective is
to build on these fundamentals and to further increase revenues
by continuing to pursue its growth strategy. The key components
of this strategy are (1) expanding its corporate customer
base, (2) making selective acquisitions, (3) capturing
an increasing number of internet customers through enhancements
to its on-line catalog and websites, and (4) continuing to
invest in the development of various products and services. CORT
believes that, as a result, over the long term, margins will
expand and operating earnings will increase.

In order to capitalize on the significant profit
potential available from longer average rental periods and the
higher average monthly rent for office products, CORTs
strategy is to place greater emphasis on rentals of office
furniture than residential furniture. In order to promote longer
office lease terms, CORT offers lower rates on leases where
lease terms exceed six months. A significant portion of
CORTs residential furniture rentals are derived from
corporate relocations and temporary assignments, as new and
transferred employees of CORTs corporate customers enter
into leases for residential furniture. Sales personnel maintain
contact with corporate relocation departments and present the
possibility of obtaining fully furnished rental apartments as a
lower-cost alternative to hotel accommodations. Thus, CORT
offers its corporate rental customers a way to reduce the costs
of corporate relocation while developing residential business
with new and transferred employees.

CORTs Relocation Central Corporation
subsidiary (Relocation Central), formed in January
2001, is a web-enabled customer management center which obtains
relocation leads and distributes them to a company-operated
national network of locator agents. Relocation Central operates

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apartment locator businesses in six metropolitan
areas. It intends to open apartment locator businesses in
additional markets, either within CORTs existing showrooms
or in acquired premises.


The customer management center manages apartment
and business furniture leads through its web site,
relocationcentral.com. The website serves as an access site to
users considering moving to major cities. It provides useful
data, such as information about vacant apartments, school
systems, movers, local recreation and weather, as well as tips
on relocating, at no charge.

Relocation Centrals personnel also market
CORTs furniture rental business to real estate investment
trusts and other owners of housing communities and apartment
houses. CORTs management hopes that, through Relocation
Central, CORT will become the principal source of furniture
rentals for large, multi-unit owners whose tenants require
rental furniture. To date, more than 350 apartment communities
refer their tenants to CORT.

CORT also provides short-term rentals for trade
shows and conventions. Its corttradeshow.com website assists in
providing information to and gathering leads from prospects.

Until the economy weakened beginning late in
2000, CORT benefited from increasing demand for furniture rental
services. CORTs management believed that this favorable
trend had been caused by continued growth in management and
professional employment, the increasing importance to American
business of flexibility and outsourcing, and the impact of a
more mobile and transitory population. CORTs management
attributes the decline in business experienced throughout its
industry in 2001 to continued weakness of the economy, notably
in the high-technology sector, exacerbated by the terrorist
activity on September 11.

The rent-to-rent segment of the furniture rental
industry is highly competitive. There are several large regional
as well as a number of smaller regional and local rent-to-rent
furniture companies. In addition, numerous retailers offer
residential and office furniture under rent-to-own arrangements.
Management believes that the principal competitive factors in
the furniture rental industry are product value, furniture
condition, extent of furniture selection, terms of rental
agreement, speed of delivery, exchange privilege, option to
purchase, deposit requirements and customer service.

The majority of CORTs furniture sales
revenue is from clearance center sales. The remaining furniture
sales revenue is derived primarily from lease conversions and
sales of new furniture. Sales of rental furniture allow CORT to
control inventory levels and maintain showroom quality of rental
inventory. On average, furniture is typically sold through the
clearance centers three years after its initial purchase by the
company.

With respect to sales of furniture through its
clearance centers, CORT competes with numerous used and new
furniture retailers, some of which are larger than CORT.
Management believes that price and value are its principal
competitive advantages in this activity.

CORT and Relocation Central have approximately
2,750 employees, including 90 union members. Management
considers labor relations to be good.

INDUSTRIAL SEGMENT

Precision Steel, acquired in 1979, and one of its
subsidiaries operate steel service centers in the Chicago and
Charlotte metropolitan areas. The service centers buy stainless
steel, low carbon sheet and strip steel, coated metals, spring
steel, brass, phosphor bronze, aluminum and other metals, cut
these metals to order, and sell them to a wide variety of
customers.

The service center business is highly
competitive. Precision Steels annual sales volume of
approximately 25 thousand tons compares with the steel
service industrys annual volume of approximately
20 million tons. Precision Steel competes not only with
other service centers but also with mills which supply metal to
the service centers. Competition exists in the areas of price,
quality, availability of products and speed of delivery. Because
it is willing to sell in relatively small quantities, Precision
Steel has been able to compete in geographic areas distant from
its service center facilities.

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Competitive pressure is intensified by imports
and by a tendency of domestic manufacturers to use less costly
materials in making parts.


Precision Brand Products, Inc. (Precision
Brand), a wholly owned subsidiary of Precision Steel that
is also located in the Chicago area, manufactures shim stock and
other toolroom specialty items, and distributes a line of hose
and muffler clamps. These products are sold under the Precision
Brand and DuPage names nationwide, generally through industrial
distributors. This business is highly competitive. Precision
Brands share of the toolroom specialty products market is
believed to approximate .5%; statistics are not available with
respect to its share of the market for hose and muffler clamps.

Steel service raw materials are obtained
principally from major domestic steel mills, and their
availability is considered good. Precision Steels service
centers maintain extensive inventories in order to meet customer
demand for prompt deliveries; typically, processed metals are
delivered to the customer within one week. Precision Brand
normally maintains inventories adequate to allow for
off-the-shelf service to customers within 24 hours.

The industrial segment businesses are subject to
economic cycles. These businesses are not dependent on a few
large customers. The backlog of steel service orders decreased
to approximately $4.1 million at December 31, 2001
from $5.8 million at December 31, 2000.

There are 214 full-time employees engaged in the
industrial segment businesses, about 40% of whom are members of
unions. Management considers labor relations to be good.

ACTIVITIES NOT IDENTIFIED WITH A BUSINESS SEGMENT

Certain of Wescos activities are not
identified with any business segment. These extraneous,
relatively insignificant operations include (1) investment
activity unrelated to the insurance segment, (2) management
of owned commercial real property in Pasadena, California, a
portion of which will be redeveloped, and (3) parent
company activities.

The Wesco group, while it seeks suitable
businesses to acquire and explores ways to expand its existing
operations, also invests in marketable equity securities and in
securities with fixed maturities. (See Note 3 to the
accompanying consolidated financial statements for summaries of
investments.)

Six full-time employees are engaged in the
activities of Wesco and MS Property.






Item 2. Properties


MS Property owns a business block in Pasadena,
California situated between the city hall and a large shopping
mall. The mall has recently been redeveloped to include
residential units and a multi-screen movie theatre. The
blocks improvements include a nine-story office building
that was constructed in 1964 and has approximately 125,000
square feet of net rentable area, and a multistory garage with
space for 425 automobiles. Of the 125,000 square feet of space
in the office building, approximately 5,000 square feet are used
by MS Property or leased to Blue Chip or Wesco. The remaining
space is leased to outside parties, including California Federal
Bank, the ground floor tenant, law firms and others, under
agreements expiring at dates extending to 2008. Adjacent to the
building and garage is a vacant parcel; MS Property is in
process of redeveloping it, together with a parcel of land it
owns in the next block which it has been using as a 100-car
parking lot.

MS Property also owns several buildings that are
leased to various small businesses in a small shopping center in
Southern California.

Wes-FICs place of business is the Omaha,
Nebraska headquarters office of NICO.

KBS leases 5,100 square feet of office space in a
multistory office building in Topeka, Kansas under a lease that
expires in 2007.

CORT leases 23,800 square feet of office space in
a multistory office building in Fairfax, Virginia, which it uses
as its headquarters. It has an option to renew the lease for
five years beyond its 2006 expiration.

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CORT carries out its rental, sales and warehouse
operations in metropolitan areas in 35 states and the District
of Columbia through 212 facilities, of which 18 were owned and
the balance leased as of 2001 yearend. The leased
facilities lease terms expire at dates ranging from 2002
to 2015. CORT has generally been able to extend expiration dates
of its leases or obtain suitable alternative facilities on
satisfactory terms. Its management seeks to locate properties in
new markets where rental, clearance and warehouse operations can
be combined in one facility. As CORT expands in a particular
district, it seeks to open free-standing showrooms and clearance
centers that can be serviced from pre-existing warehouses.
CORTs showrooms generally have 4,500 square feet of floor
space. CORT regularly reviews the presentation and appearance of
its furniture showrooms and clearance centers and periodically
improves or refurbishes them to enhance their attractiveness to
customers.

Relocation Central leases 2,800 square feet of
office space in a multistory office building in Santa Clara,
California, which it uses as its headquarters. It has no option
to renew the lease beyond its 2003 expiration.

Relocation Centrals apartment locator
services are situated in 10 leased facilities in six
metropolitan areas in five southern and midwestern states under
leases expiring at dates ranging from 2002 to 2005, as well as
in two of CORTs showrooms.

Precision Steel and its subsidiaries own three
buildings housing their plant and office facilities, with usable
area approximately as follows: 138,000 square feet in Franklin
Park, Illinois; 63,000 square feet in Charlotte, North Carolina;
and 59,000 square feet in Downers Grove, Illinois.




Item 3. Legal Proceedings

Wesco and its subsidiaries are not involved in
any legal proceedings that are expected to result in material
loss.






Item 4. Submission of Matters to a Vote
of Security Holders


None.




PART II




Item 5.

Wescos capital stock is traded on the
American Stock Exchange and the Pacific Stock Exchange.

The following table sets forth quarterly ranges
of composite prices for American Stock Exchange trading of Wesco
shares for 2001 and 2000, based on data reported by the American
Stock Exchange, as well as cash dividends paid by Wesco on each
outstanding share:

|              |  |             |     |           |  |             |     |           |  |     |       |      |  |   |     |  |  |   |     |  |  |   |       | 
|------------- |  | ----------- | --- | --------- |  | ----------- | --- | --------- |  | --- | ----- | ---- |  | - | --- |  |  | - | --- |  |  | - | ----- | 
|              |  |             |     |          
|              |  | 2001        |     | 2000     
|              |  |             |     |          
|              |  |             |     |           |  |             |     |          
|              |  | Sales Price |     |           |  | Sales Price |     |          
|              |  |             |     | Dividends |  |             |     | Dividends
|Quarter Ended |  | High        |     | Low       |  | Paid        |     | High      |  | Low |       | Paid
|              |  |             |     |           |  |             |     |           |  |     |       |     
|March 31      |  | $           | 310 |           |  | $           | 270 |           |  | $   | 0.315 |      |  | $ | 281 |  |  | $ | 200 |  |  | $ | 0.305 | 
|June 30       |  |             | 350 |           |  |             | 291 |           |  |     | 0.315 |      |  |   | 252 |  |  |   | 200 |  |  |   | 0.305 | 
|September 30  |  |             | 349 |           |  |             | 275 |           |  |     | 0.315 |      |  |   | 256 |  |  |   | 209 |  |  |   | 0.305 | 
|December 31   |  |             | 343 |           |  |             | 287 |           |  |     | 0.315 |      |  |   | 294 |  |  |   | 236 |  |  |   | 0.305 | 
|              |  |             |     |           |  |             |     |           |  |     |       |      |  |   |     |  |  |   |     |  |  |   |       | 
|              |  |             |     |           |  |             |     |           |  | $   | 1.260 |      |  |   |     |  |  |   |     |  |  | $ | 1.220 | 
|              |  |             |     |           |  |             |     |           |  |     |       |      |  |   |     |  |  |   |     |  |  |   |       | 

There were approximately 600 shareholders of
record of Wescos capital stock as of the close of business
on March 18, 2002. It is estimated that approximately 5,200
additional Wesco shareholders held shares of Wescos
capital stock in street name at that date.

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Item 6. Selected Financial Data

Set forth below and on the following page are
selected consolidated financial data for Wesco and its
subsidiaries. For additional financial information, attention is
directed to Wescos audited 2001 consolidated financial
statements appearing elsewhere in this report. (Amounts are in
thousands except for amounts per share.)

|                      |                                                         |                                  |                            |                   |         |           |        |           |         |           |        |           |           |           |        |           |           |           |        |           |           |           |        | 
|--------------------- | ------------------------------------------------------- | -------------------------------- | -------------------------- | ----------------- | ------- | --------- | ------ | --------- | ------- | --------- | ------ | --------- | --------- | --------- | ------ | --------- | --------- | --------- | ------ | --------- | --------- | --------- | ------ | 
|                      |                                                         |                                 
|                      |                                                         | December 31,                    
|                      |                                                         |                                 
|                      |                                                         | 2001                             |                            | 2000              |         | 1999      |        | 1998      |         | 1997     
|                      |                                                         |                                  |                            |                   |         |           |        |           |         |          
|Assets:               |                                                         |                                  |                            |                   |         |           |        |           |         |           |        |           |           |           |        |           |           |           |        |          
|                      | Cash and cash equivalents                               |                                  | $                          | 120,784           |         |           | $      | 153,810   |         |           | $      | 66,331    |           |           | $      | 320,034   |           |           | $      | 10,687    |          
|                      | Investments                                            |                                  |                            |                   |         |           |        |           |         |           |        |           |           |           |        |           |           |           |        |           |          
|                      |                                                         | Securities with fixed maturities |                            |                   | 924,160 |           |        |           | 839,683 |           |        |           | 309,976   |           |        |           | 66,619    |           |        |           | 279,697   |          
|                      |                                                         | Marketable equity
	securities    |                            |                   | 667,262 |           |        |           | 833,937 |           |        |           | 2,214,883 |           |        |           | 2,778,595 |           |        |           | 2,224,848 |          
|                      | Accounts receivable                                     |                                  |                            | 43,871            |         |           |        | 38,444    |         |           |        | 8,685     |           |           |        | 7,707     |           |           |        | 7,148     |          
|                      | Rental furniture                                        |                                  |                            | 212,586           |         |           |        | 244,847   |         |           |        |          |           |           |        |          |           |           |        |          |          
|                      | Property and equipment                                  |                                  |                            | 47,916            |         |           |        | 53,833    |         |           |        | 11,414    |           |           |        | 12,193    |           |           |        | 13,229    |          
|                      | Goodwill of acquired businesses                         |                                  |                            | 264,465           |         |           |        | 260,037   |         |           |        | 28,556    |           |           |        | 29,338    |           |           |        | 30,121    |          
|                      | Other assets                                            |                                  |                            | 38,649            |         |           |        | 36,324    |         |           |        | 12,350    |           |           |        | 13,920    |           |           |        | 22,382    |          
|                      |                                                         |                                  |                            |                   |         |           |        |           |         |           |        |           |           |           |        |           |           |           |        |          
|                      |                                                         |                                  | Total assets               |                   | $       | 2,319,693 |        |           | $       | 2,460,915 |        |           | $         | 2,652,195 |        |           | $         | 3,228,406 |        |           | $         | 2,588,112 |       
|                      |                                                         |                                  |                            |                   |         |           |        |           |         |           |        |           |           |           |        |           |           |           |        |          
|Liabilities:          |                                                         |                                  |                            |                   |         |           |        |           |         |           |        |           |           |           |        |           |           |           |        |          
|                      | Insurance losses and loss adjustment expenses           |                                  | $                          | 61,879            |         |           | $      | 39,959    |         |           | $      | 33,642    |           |           | $      | 36,731    |           |           | $      | 41,437    |          
|                      | Deferred furniture rental income and security
	deposits |                                  |                            | 23,796            |         |           |        | 27,669    |         |           |        |          |           |           |        |          |           |           |        |          |          
|                      | Accounts payable and accrued expenses                   |                                  |                            | 36,794            |         |           |        | 33,881    |         |           |        | 3,674     |           |           |        | 4,520     |           |           |        | 4,491     |          
|                      | Notes payable                                           |                                  |                            | 33,649            |         |           |        | 56,035    |         |           |        | 3,635     |           |           |        | 33,635    |           |           |        | 33,635    |          
|                      | Income taxes payable, principally deferred              |                                  |                            | 225,665           |         |           |        | 305,175   |         |           |        | 707,345   |           |           |        | 920,035   |           |           |        | 733,488   |          
|                      | Other liabilities                                       |                                  |                            | 25,513            |         |           |        | 21,162    |         |           |        | 8,527     |           |           |        | 9,729     |           |           |        | 10,769    |          
|                      |                                                         |                                  |                            |                   |         |           |        |           |         |           |        |           |           |           |        |           |           |           |        |          
|                      |                                                         |                                  | Total liabilities          |                   | $       | 407,296   |        |           | $       | 483,881   |        |           | $         | 756,823   |        |           | $         | 1,004,650 |        |           | $         | 823,820   |       
|                      |                                                         |                                  |                            |                   |         |           |        |           |         |           |        |           |           |           |        |           |           |           |        |          
|Shareholders equity: |                                                         |                                  |                            |                   |         |           |        |           |         |           |        |           |           |           |        |           |           |           |        |          
|                      | Capital stock and surplus                               |                                  | $                          | 30,439            |         |           | $      | 30,439    |         |           | $      | 30,439    |           |           | $      | 30,439    |           |           | $      | 30,439    |          
|                      | Unrealized appreciation of investments, net of
	taxes   |                                  |                            | 372,267           |         |           |        | 480,469   |         |           |        | 1,312,590 |           |           |        | 1,686,716 |           |           |        | 1,290,939 |          
|                      | Retained earnings                                       |                                  |                            | 1,509,691         |         |           |        | 1,466,126 |         |           |        | 552,343   |           |           |        | 506,601   |           |           |        | 442,914   |          
|                      |                                                         |                                  |                            |                   |         |           |        |           |         |           |        |           |           |           |        |           |           |           |        |          
|                      |                                                         |                                  | Total shareholders equity |                   | $       | 1,912,397 |        |           | $       | 1,977,034 |        |           | $         | 1,895,372 |        |           | $         | 2,223,756 |        |           | $         | 1,764,292 |       
|                      |                                                         |                                  |                            |                   |         |           |        |           |         |           |        |           |           |           |        |           |           |           |        |          
|                      |                                                         |                                  |                            | Per capital share |         | $         | 268.60 |           |         | $         | 277.68 |           |           | $         | 266.21 |           |           | $         | 312.33 |           |           | $         | 247.80 | 
|                      |                                                         |                                  |                            |                   |         |           |        |           |         |           |        |           |           |           |        |           |           |           |        |          

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|                           |                                                              |                         |         |         |  |      |           |           |  |      |         |        |  |   |         |        |  |   |         |         | 
|-------------------------- | ------------------------------------------------------------ | ----------------------- | ------- | ------- |  | ---- | --------- | --------- |  | ---- | ------- | ------ |  | - | ------- | ------ |  | - | ------- | ------- | 
|                           |                                                              |                        
|                           |                                                              | Year Ended December 31,
|                           |                                                              |                        
|                           |                                                              | 2001                    |         | 2000    |  | 1999 |           | 1998      |  | 1997
|                           |                                                              |                         |         |         |  |      |           |           |  |     
|Revenues:                  |                                                              |                         |         |         |  |      |           |           |  |      |         |        |  |   |         |        |  |   |         |        
|                           | Sales and service revenues                                   |                         | $       | 443,628 |  |      | $         | 426,096   |  |      | $       | 64,571 |  |   | $       | 66,137 |  |   | $       | 67,557  | 
|                           | Insurance premiums earned                                    |                         |         | 43,031  |  |      |           | 23,783    |  |      |         | 17,655 |  |   |         | 15,923 |  |   |         | 11,507  | 
|                           | Dividend and interest income                                 |                         |         | 70,981  |  |      |           | 59,759    |  |      |         | 49,679 |  |   |         | 40,543 |  |   |         | 36,552  | 
|                           | Realized net securities gains                                |                         |         |        |  |      |           | 1,311,270 |  |      |         | 11,186 |  |   |         | 51,706 |  |   |         | 100,914 | 
|                           | Other                                                        |                         |         | 3,439   |  |      |           | 3,056     |  |      |         | 4,600  |  |   |         | 3,921  |  |   |         | 4,498   | 
|                           |                                                              |                         |         |         |  |      |           |           |  |      |         |        |  |   |         |        |  |   |         |        
|                           |                                                              |                         | 561,079 |         |  |      | 1,823,964 |           |  |      | 147,691 |        |  |   | 178,230 |        |  |   | 221,028 |        
|                           |                                                              |                         |         |         |  |      |           |           |  |      |         |        |  |   |         |        |  |   |         |        
|Costs and expenses:        |                                                              |                         |         |         |  |      |           |           |  |      |         |        |  |   |         |        |  |   |         |        
|                           | Cost of products and services sold                           |                         |         | 144,712 |  |      |           | 146,649   |  |      |         | 50,728 |  |   |         | 51,527 |  |   |         | 52,710  | 
|                           | Insurance losses, loss adjustment and
	underwriting expenses |                         |         | 46,682  |  |      |           | 19,392    |  |      |         | 7,366  |  |   |         | 8,174  |  |   |         | 860     | 
|                           | Selling, general and administrative                          |                         |         | 276,712 |  |      |           | 227,954   |  |      |         | 11,468 |  |   |         | 12,425 |  |   |         | 10,588  | 
|                           | Interest expense                                             |                         |         | 4,169   |  |      |           | 5,235     |  |      |         | 2,549  |  |   |         | 3,016  |  |   |         | 3,320   | 
|                           | Goodwill amortization                                        |                         |         | 7,476   |  |      |           | 6,342     |  |      |         | 782    |  |   |         | 782    |  |   |         | 782     | 
|                           |                                                              |                         |         |         |  |      |           |           |  |      |         |        |  |   |         |        |  |   |         |        
|                           |                                                              |                         | 479,751 |         |  |      | 405,572   |           |  |      | 72,893  |        |  |   | 75,924  |        |  |   | 68,260  |        
|                           |                                                              |                         |         |         |  |      |           |           |  |      |         |        |  |   |         |        |  |   |         |        
|Income before income taxes |                                                              |                         | 81,328  |         |  |      | 1,418,392 |           |  |      | 74,798  |        |  |   | 102,306 |        |  |   | 152,768 |        
|Provision for income taxes |                                                              |                         | (28,792 | )       |  |      | (495,922  | )         |  |      | (20,655 | )      |  |   | (30,503 | )      |  |   | (50,959 | )      
|                           |                                                              |                         |         |         |  |      |           |           |  |      |         |        |  |   |         |        |  |   |         |        
|Net income                 |                                                              | $                       | 52,536  |         |  | $    | 922,470   |           |  | $    | 54,143  |        |  | $ | 71,803  |        |  | $ | 101,809 |        
|                           |                                                              |                         |         |         |  |      |           |           |  |      |         |        |  |   |         |        |  |   |         |        
|Amounts per capital share: |                                                              |                         |         |         |  |      |           |           |  |      |         |        |  |   |         |        |  |   |         |        
|                           | Net income                                                   |                         | $       | 7.38    |  |      | $         | 129.56    |  |      | $       | 7.60   |  |   | $       | 10.08  |  |   | $       | 14.30   | 
|                           | Cash dividends                                               |                         |         | 1.26    |  |      |           | 1.22      |  |      |         | 1.18   |  |   |         | 1.14   |  |   |         | 1.10    | 
|                           |                                                              |                         |         |         |  |      |           |           |  |      |         |        |  |   |         |        |  |   |         |        




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

In reviewing this item, attention is directed to
Item 6, Selected Financial Data, and Item 1, Business.

FINANCIAL CONDITION

Wescos shareholders equity at
December 31, 2001 was $1.9 billion ($268.60 per
share), down from $2.0 billion ($277.68 per share) at
December 31, 2000. The decrease was due to a decline in
appreciation in market value of investments, which under
accounting convention, is credited directly to
shareholders equity, net of taxes, without being reflected
in earnings. Because unrealized appreciation is recorded based
upon current market quotations, gains or losses ultimately
realized upon sale of investments could differ substantially
from recorded unrealized appreciation. Net unrealized
appreciation constituted 19% of shareholders equity at
December 31, 2001, compared to 24% at December 31,
2000. (See the section on market risk analysis appearing below
in this Item 7, as well as Note 3 to the accompanying
consolidated financial statements, for additional information on
investments.)

At December 31, 2001, Wescos
consolidated cash and cash equivalents totaled
$120.8 million, down from $153.8 million at
December 31, 2000. The $33.0 million decrease resulted
from a number of factors as shown in the consolidated statement
of cash flows in Wescos accompanying consolidated
financial statements.

Wescos consolidated borrowings totaled
$33.6 million at December 31, 2001 versus
$56.0 million at December 31, 2000. Most of the
borrowings related to a $150 million revolving line of
credit used by CORT in its furniture rental business; the
balance outstanding decreased during the year due to repayments
by CORT, using internally generated cash.

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Wescos management believes the group has
adequate liquidity and capital resources, including the ability
to borrow, to provide for contingent needs. Borrowings from
banks and others have been available to Wesco and its
subsidiaries under attractive terms for a number of years.
Wes-FIC enjoys Standard & Poor Corporations highest
rating, AAA, with respect to its claims-paying ability.

RESULTS OF OPERATIONS

The consolidated data in the table on the
preceding page are set forth essentially in the income statement
format customary to generally accepted accounting principles
(GAAP). Revenues, including realized net securities
gains, are followed by costs and expenses, including goodwill
amortization, and a provision for income taxes, to arrive at net
income. The following summary sets forth the after-tax
contribution to GAAP net income of each business
segment  insurance, furniture rental and
industrial  as well as activities not considered
related to such segments. Realized net securities gains and
goodwill amortization are excluded from segment activities,
consistent with the way Wescos management views the
business operations. (Amounts are in thousands, all after
income tax effect.)

|                                           |                               |                                         |                         |        |        |        |        |         |        |         |        |       |        |        | 
|------------------------------------------ | ----------------------------- | --------------------------------------- | ----------------------- | ------ | ------ | ------ | ------ | ------- | ------ | ------- | ------ | ----- | ------ | ------ | 
|                                           |                               |                                        
|                                           |                               | Year Ended December 31,                
|                                           |                               |                                        
|                                           |                               | 2001                                    |                         | 2000   |        | 1999  
|                                           |                               |                                         |                         |        |        |       
|Insurance segment                          |                               | $                                       | 45,254                  |        |        | $      | 45,518 |         |        | $       | 44,392 |      
|Furniture rental segment                   |                               |                                         | 13,076                  |        |        |        | 28,988 |         |        |         |       |      
|Industrial segment                         |                               |                                         | 388                     |        |        |        | 1,281  |         |        |         | 2,532  |      
|Unrelated to business segment operations  |                               |                                         |                         |        |        |        |        |         |        |         |        |      
|                                           | Goodwill amortization         |                                         |                         | (6,814 | )      |        |        | (5,867  | )      |         |        | (782  | )     
|                                           | Other nonsegment items        |                                         |                         | 632    |        |        |        | 167     |        |         |        | 730   |       
|                                           |                               |                                         |                         |        |        |        |        |         |        |         |        |      
|                                           |                               | Income before realized securities gains |                         |        | 52,536 |        |        |         | 70,087 |         |        |       | 46,872 |       
|                                           | Realized net securities gains |                                         |                         |       |        |        |        | 852,383 |        |         |        | 7,271 |       
|                                           |                               |                                         |                         |        |        |        |        |         |        |         |        |      
|                                           |                               |                                         | Consolidated net income |        | $      | 52,536 |        |         | $      | 922,470 |        |       | $      | 54,143 | 
|                                           |                               |                                         |                         |        |        |        |        |         |        |         |        |      

In the following sections the data set forth in
the foregoing summary on an after-tax basis are broken
down and discussed. Attention is directed to Note 9 to the
accompanying consolidated financial statements for additional
information.

Insurance Segment

Following is a summary of the results of
operations of the insurance segment (i.e., Wes-FIC and KBS),
which represent essentially the combination of underwriting
results with dividend and interest income. (Amounts are in
thousands.)

|                             |  |                         |         |      |  |      |         |   |  |   |         |  
|---------------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                             |  |                        
|                             |  | Year Ended December 31,
|                             |  |                        
|                             |  | 2001                    |         | 2000 |  | 1999
|                             |  |                         |         |      |  |     
|Premiums written             |  | $                       | 50,922  |      |  | $    | 32,370  |   |  | $ | 18,326  |  
|                             |  |                         |         |      |  |      |         |   |  |   |         |  
|Premiums earned              |  | $                       | 43,031  |      |  | $    | 23,783  |   |  | $ | 17,655  |  
|                             |  |                         |         |      |  |      |         |   |  |   |         |  
|Underwriting gain (loss)     |  | $                       | (3,651  | )    |  | $    | 4,391   |   |  | $ | 10,289  |  
|Dividend and interest income |  |                         | 70,048  |      |  |      | 59,241  |   |  |   | 49,098  |  
|                             |  |                         |         |      |  |      |         |   |  |   |         |  
|Income before income taxes   |  |                         | 66,397  |      |  |      | 63,632  |   |  |   | 59,387  |  
|Income tax provision         |  |                         | (21,143 | )    |  |      | (18,114 | ) |  |   | (14,995 | )
|                             |  |                         |         |      |  |      |         |   |  |   |         |  
|Segment net income           |  | $                       | 45,254  |      |  | $    | 45,518  |   |  | $ | 44,392  |  
|                             |  |                         |         |      |  |      |         |   |  |   |         |  

Premiums written for 2001, 2000 and 1999 were
comprised of $32.8 million, $15.5 million and
$2.5 million attributable to Wes-FIC, and
$18.1 million, $16.9 million and $15.8 million
attributable to KBS. Of the premiums written by Wes-FIC for 2001
and 2000, $27.8 million and $15.2 million were
attributable to its participation in a three-year arrangement
for the reinsurance of 3 1/3% of certain

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property and casualty risk exposure ceded by a
large, unaffiliated insurance group. Wes-FICs written
premiums for 1999 related mainly to its participation in
super-catastrophe reinsurance arrangements, notably a three-year
Florida hurricane risk policy that ended, without loss, at
1999 yearend. The increases in premiums written by KBS for
each of the past two years were principally due to growth in
volume of bank deposit guarantee bonds. This product, which to
date has not resulted in a loss, currently accounts for
approximately 38% of premiums written by KBS.


Earned premiums for 2001, 2000 and 1999 included
$25.3 million, $7.4 million and $2.6 million
attributable to Wes-FIC, and $17.7 million, $16.4 million
and $15.1 million attributable to KBS. Wes-FICs
earned premiums were attributable principally to the reinsurance
arrangements referred to above.

The underwriting gain (loss) for 2001, 2000
and 1999 included $8.7 million, $4.2 million and
$5.9 million attributable to KBS, and ($12.4 million),
$.2 million and $4.4 million attributed to Wes-FIC.
Wes-FICs underwriting loss in 2001 resulted mainly from a
loss provision of $10 million before income taxes
($6.5 million after taxes) recorded as a result of the
terrorist activity of September 11, 2001. The amount is an
estimate and is subject to considerable estimation error. In
addition, management believes that it will take years to resolve
complicated coverage issues related to the aforementioned
terrorism activity, which could have a material effect on the
ultimate loss incurred.

Aggregate underwriting results benefited by
$2.3 million, $4.1 million and $5.8 million in
2001, 2000 and 1999 from downward revisions of estimated
liabilities for losses and loss adjustment expenses. Insurance
losses and loss adjustment expenses, and the related liabilities
reflected on Wescos consolidated balance sheet, because
they are estimates, are subject to estimation error. Revisions
of such estimates in future periods could significantly affect
the results of operations reported for those periods.

Wes-FIC has participated in super-catastrophe
reinsurance from time to time; and, although no such business
was entered into in 2000 or 2001, participations may again
become available in the future. Although no super-catastrophe
reinsurance losses have been incurred to date, Wescos
management believes that catastrophe losses will inevitably
occur from time to time during periods when Wes-FIC participates
actively in such business. While such large losses are not
expected to be significant in relation to Wes-FICs capital
base, management accepts the prospect of increased volatility in
Wes-FICs short-term underwriting results in order to
obtain what is believed will be better long-term results.

One area of particular concern to the insurance
industry is its exposure to claims for environmental
contamination. Wescos management believes such exposure to
be minimal.

Dividend and interest income has been earned by
the insurance group principally (1) on earnings retained
and reinvested by Wes-FIC, (2) on capital contributed by
Wesco, and (3) on float (funds invested pending payment of
claims). Dividend and interest income, before income taxes,
amounted to $70 million, $59.2 million and
$49.1 million for 2001, 2000 and 1999. The increases in the
two most recent years were due principally to the sale of
Wes-FICs investment in Freddie Mac common stock in various
transactions throughout 2000. The proceeds of $1.4 billion
were reinvested mainly in fixed-income securities.

The income tax provision of the insurance segment
has fluctuated as a percentage of its pre-tax income in each of
the periods presented in the foregoing table. These fluctuations
have been caused by fluctuations in the relationship of
substantially tax-exempt components of income to total pre-tax
income.

A significant marketing strategy followed by
Berkshires insurance subsidiaries, including Wescos
insurance segment, is the maintenance of extraordinary capital
strength. The combined statutory surplus of Wescos
insurance businesses totaled approximately $1.8 billion at
December 31, 2001. This capital strength creates
opportunities for the Wesco subsidiaries to participate in
reinsurance and insurance contracts not necessarily available to
many of their competitors. Although Wesco would

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welcome other attractive reinsurance or insurance
arrangements, or acquisitions of insurance businesses, the
timing and extent of any increase in its insurance underwriting
activity cannot presently be predicted.


Furniture Rental Segment

Following is a summary of the operating results
of CORT as included in Wescos consolidated results of
operations since acquisition in late February of 2000. For
comparative purposes, corresponding amounts for all of 2000 and
1999 are also presented; these unaudited figures are set forth
exclusive of items not classified as segment-related by
Wesco  goodwill amortization, securities gains or
losses, and income tax provisions or benefits related thereto.
(Amounts are in thousands.)

|                                             |                   |                         |         |              |  |      |         |         |  |   |         |         |  |   |         |         | 
|-------------------------------------------- | ----------------- | ----------------------- | ------- | ------------ |  | ---- | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|                                             |                   |                         |         | Late        
|                                             |                   | Year Ended December 31, |         | February to 
|                                             |                   |                         |         | December 31,
|                                             |                   | 2001                    |         | 2000         |  | 1999 |         | 2000   
|                                             |                   |                         |         |              |  |      |         |        
|                                             |                   |                         |         |              |  |     
|                                             |                   |                         |         | (unaudited)  |  |     
|Revenues:                                    |                   |                         |         |              |  |      |         |         |  |   |         |         |  |   |         |        
|                                             | Furniture rentals |                         | $       | 329,406      |  |      | $       | 348,429 |  |   | $       | 295,232 |  |   | $       | 305,820 | 
|                                             | Furniture sales   |                         |         | 66,008       |  |      |         | 62,852  |  |   |         | 58,852  |  |   |         | 55,235  | 
|                                             |                   |                         |         |              |  |      |         |         |  |   |         |         |  |   |         |        
|                                             |                   |                         | 395,414 |              |  |      | 411,281 |         |  |   | 354,084 |         |  |   | 361,055 |        
|                                             |                   |                         |         |              |  |      |         |         |  |   |         |         |  |   |         |        
|Cost of rentals and sales                    |                   |                         | 105,718 |              |  |      | 105,544 |         |  |   | 89,916  |         |  |   | 93,165  |        
|Selling, general and administrative expenses |                   |                         | 265,130 |              |  |      | 245,682 |         |  |   | 207,587 |         |  |   | 215,787 |        
|Interest expense                             |                   |                         | 3,889   |              |  |      | 5,732   |         |  |   | 5,769   |         |  |   | 4,955   |        
|                                             |                   |                         |         |              |  |      |         |         |  |   |         |         |  |   |         |        
|                                             |                   |                         | 374,737 |              |  |      | 356,958 |         |  |   | 303,272 |         |  |   | 313,907 |        
|                                             |                   |                         |         |              |  |      |         |         |  |   |         |         |  |   |         |        
|Income before income taxes                   |                   |                         | 20,677  |              |  |      | 54,323  |         |  |   | 50,812  |         |  |   | 47,148  |        
|Income tax provision                         |                   |                         | (7,601  | )            |  |      | (20,952 | )       |  |   | (20,811 | )       |  |   | (18,160 | )      
|                                             |                   |                         |         |              |  |      |         |         |  |   |         |         |  |   |         |        
|Segment net income                           |                   | $                       | 13,076  |              |  | $    | 33,371  |         |  | $ | 30,001  |         |  | $ | 28,988  |        
|                                             |                   |                         |         |              |  |      |         |         |  |   |         |         |  |   |         |        

CORTs revenues for the year 2001 decreased
$15.9 million, or 3.9%, from those reported for 2000. Its
revenues for 2000 increased $57.2 million, or 16.2%, from
those reported in 1999. Excluding rental revenues from locations
acquired in each respective year, trade show operations, a
significant short-term contract in 2000 with the U.S. Bureau of
the Census, and $1.2 million generated by Relocation Central
from the startup of its apartment locator operation, rental
revenues for 2001 declined approximately 6% compared to those in
2000, following an increase of approximately 12% in such
revenues the prior year. The number of leases outstanding and
the average revenue per lease at the end of 2001 were continuing
on a downward trend begun in 2000s fourth quarter. The
decline is attributed mainly to continued weakness of the
economy, notably in the high-technology sector, exacerbated by
the terrorist activity of September 11, 2001. Furniture
sales revenues increased 5% in 2001 and 6.8% in 2000 principally
as a result of CORTs ongoing efforts to maintain the
quality of its rental furniture. CORT established new retail
pricing procedures in the second quarter of 2000 that have
improved sales but reduced the margin slightly.

Cost of furniture rentals and sales amounted to
26.7% of related revenues for the year 2001, versus 25.7% for
2000 and 25.4% for 1999. The increasing cost percentages
reflected (1) an increase in the proportion of distribution
costs relating to the handling of rental furniture to revenues,
and (2) a reduction in the gross margin on furniture sales
as CORT reduced prices in its efforts to dispose of excess idle
inventories.

Selling, general and administrative expenses
increased $19.5 million in 2001. Of that amount,
$7.4 million was incurred by Relocation Central in the
startup of its apartment locator operation. Excluding those
expenses, selling, general and administrative expenses increased
$12.1 million, or 5.0%, for 2001 to 63.9% of rental and
sales revenues, versus 59.7% for the year 2000 and 58.6% for the
year 1999. The increases were due principally to increases in
employee compensation and benefits expenses. Although CORT
reduced the number of its full-time employees by approximately

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15% during 2001, escalating health care costs
more than offset the reduction in wages. Occupancy costs also
increased. CORT has undertaken strict cost-cutting measures,
including a further reduction in the number of full-time
employees as well as the elimination of redundant or marginal
facilities. CORT has noted a trend of diminishing showroom sales
volume combined with increased volume via the internet and fax,
which may lead to improvements in productivity and profitability
in the future.


CORTs income before income taxes decreased
to 5.2% of total revenues for the year 2001 from 13.2% for the
year 2000 and 14.4% for 1999. These decreases were due not only
to unfavorable operating expense comparisons, summarized above,
but, for 2001, to the decline in revenues.

Industrial Segment

Following is a summary of the results of
operations of the industrial segment, consisting of the
businesses of Precision Steel and its subsidiaries. (Amounts are
in thousands.)

|                                         |  |                         |        |      |  |      |        |   |  |   |        |  
|---------------------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                         |  |                        
|                                         |  | Year Ended December 31,
|                                         |  |                        
|                                         |  | 2001                    |        | 2000 |  | 1999
|                                         |  |                         |        |      |  |     
|Revenues, principally sales and services |  | $                       | 48,440 |      |  | $    | 65,119 |   |  | $ | 64,686 |  
|                                         |  |                         |        |      |  |      |        |   |  |   |        |  
|Income before income taxes               |  | $                       | 862    |      |  | $    | 2,188  |   |  | $ | 4,209  |  
|Income tax provision                     |  |                         | (474   | )    |  |      | (907   | ) |  |   | (1,677 | )
|                                         |  |                         |        |      |  |      |        |   |  |   |        |  
|Segment net income                       |  | $                       | 388    |      |  | $    | 1,281  |   |  | $ | 2,532  |  
|                                         |  |                         |        |      |  |      |        |   |  |   |        |  

Revenues of Precision Steels businesses for
2001 decreased 25.6%; pounds of steel products sold decreased
29.7%. Revenues for 2000 increased .7% despite a 2.8% decrease
in pounds of steel products sold. Revenues for 1999 decreased
2.3% despite a 2.5% increase in pounds of steel products sold.
In 2001, there was (1) a significant reduction in demand
due both to continued weakness in the economy and increased
competitive pressures, already extreme, and (2) a change in
mix of products sold toward lower-priced products. In 2000,
(1) increases in selling prices in response to increases in
costs of its raw materials were almost completely offset by
(2) the effects of a softening demand for Precision
Steels products caused by increasing concerns over general
economic conditions within the manufacturing segment of the
economy.

Income before income taxes and net income of the
industrial segment are dependent not only on revenues, but also
on operating expenses and the cost of products sold. The latter,
as a percentage of revenues, amounted to 80.9%, 82.2% and 78.6%
for 2001, 2000 and 1999. The cost percentage typically
fluctuates slightly from year to year as a result of changes in
product mix and price competition at all levels. Precision
Steels cost of products sold percentage is very sensitive
to current changes in the cost of materials purchased, because
it carries its inventories at the lower of last-in, first-out
(LIFO) cost or market; under this method, the most
recent costs are reflected in cost of goods sold. LIFO inventory
accounting adjustments increased Precision Steels
after-tax earnings by $.4 million and $.3 million for
2001 and 1999, and decreased its earnings by $.4 million
for 2000.

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Unrelated to Business Segment
Operations

Set forth below is a summary of items increasing
(decreasing) Wescos consolidated net income that are
viewed by management as unrelated to the operations of the
insurance, furniture rental and industrial segments. (Amounts
are in thousands.)

|                                                         |                                                              |                                             |        |        |     |      |           |         |     |   |        |        |     | 
|-------------------------------------------------------- | ------------------------------------------------------------ | ------------------------------------------- | ------ | ------ | --- | ---- | --------- | ------- | --- | - | ------ | ------ | --- | 
|                                                         |                                                              |                                            
|                                                         |                                                              | Year Ended December 31,                    
|                                                         |                                                              |                                            
|                                                         |                                                              | 2001                                        |        | 2000   |     | 1999
|                                                         |                                                              |                                             |        |        |     |     
|Goodwill amortization, before income tax effect          |                                                              | $                                           | (7,476 | )      |     | $    | (6,342    | )       |     | $ | (782   | )     
|Income tax benefit                                       |                                                              |                                             | 662    |        |     |      | 475       |         |     |   |       |       
|                                                         |                                                              |                                             |        |        |     |      |           |         |     |   |        |       
|                                                         | Goodwill amortization                                        |                                             | $      | (6,814 | )   |      | $         | (5,867  | )   |   | $      | (782   | )  
|                                                         |                                                              |                                             |        |        |     |      |           |         |     |   |        |       
|                                                        
|Realized net securities gains, before income tax
	effect |                                                              | $                                           |       |        |     | $    | 1,311,270 |         |     | $ | 11,186 |       
|Income tax provision                                     |                                                              |                                             |       |        |     |      | (458,887  | )       |     |   | (3,915 | )     
|                                                         |                                                              |                                             |        |        |     |      |           |         |     |   |        |       
|                                                         | Realized net securities gains                                |                                             | $      |       |     |      | $         | 852,383 |     |   | $      | 7,271  |    
|                                                         |                                                              |                                             |        |        |     |      |           |         |     |   |        |       
|Other nonsegment items                                  |                                                              |                                             |        |        |     |      |           |         |     |   |        |       
|                                                         | Rental income from commercial real estate                    |                                             | $      | 3,214  |     |      | $         | 2,978   |     |   | $      | 2,879  |    
|                                                         | Dividend and interest income                                 |                                             |        | 885    |     |      |           | 518     |     |   |        | 1,145  |    
|                                                         | Net gains on sales of foreclosed real estate                 |                                             |        |       |     |      |           |        |     |   |        | 1,633  |    
|                                                         | Reduction in allowance for losses on foreclosed
	real estate |                                             |        | 149    |     |      |           |        |     |   |        | 1,350  |    
|                                                         | Real estate and general and administrative
	expenses         |                                             |        | (3,303 | )   |      |           | (3,067  | )   |   |        | (3,022 | )  
|                                                         | Interest expense                                             |                                             |        | (79    | )   |      |           | (79     | )   |   |        | (2,939 | )  
|                                                         | Other items, net                                             |                                             |        | 2      |     |      |           | 146     |     |   |        | (247   | )  
|                                                         |                                                              |                                             |        |        |     |      |           |         |     |   |        |       
|                                                         | Income (loss) before income tax benefit                      |                                             |        | 868    |     |      |           | 496     |     |   |        | 799    |    
|                                                         | Income tax provision                                         |                                             |        | (236   | )   |      |           | (329    | )   |   |        | (69    | )  
|                                                         |                                                              |                                             |        |        |     |      |           |         |     |   |        |       
|                                                         |                                                              | Net income from other nonsegment activities |        | $      | 632 |      |           | $       | 167 |   |        | $      | 730 | 
|                                                         |                                                              |                                             |        |        |     |      |           |         |     |   |        |       

Goodwill represents the excess of the cost over
the fair value of identified net assets of acquired businesses.
In the case of the Wesco group, it relates to the acquisitions
of CORT and KBS, as well as smaller entities acquired by CORT
following its purchase by Wesco in February 2000. The increase
in amortization of goodwill for 2001 was due principally to the
inclusion of a full years amortization of CORT goodwill in
2001, versus less than eleven months in 2000. Goodwill has
been amortized mainly on a straight-line basis over
40 years. However, as explained in Notes 1 and 2 to the
accompanying consolidated financial statements, goodwill
accounting will change significantly in 2002.

Realized gains and losses on the Wesco
groups investments have fluctuated in amount from year to
year, sometimes impacting net income significantly, as in 2000.
However, the amounts and timing of these realizations have no
predictive or practical analytical value. Wescos
investments are carried at market value, and unrealized gains or
losses are reflected, net of potential income tax effect, in the
unrealized appreciation component of its shareholders
equity. When gains or losses are realized, due to sale of
securities or other triggering event, they are credited or
charged, net of tax effect, to the consolidated statement of
income; generally, in Wescos case, there has been little
effect on total shareholders equity  merely a
transfer from unrealized appreciation to retained earnings.

Wescos consolidated earnings for 2000
contained net realized securities gains, after income taxes, of
$852.4 million, compared to $7.3 million of after-tax
gains for 1999. No gains or losses were realized in 2001.

Other nonsegment items include mainly
(1) rental income from owned commercial real estate,
(2) dividend and interest income from marketable securities
and cash equivalents owned outside the insurance subsidiaries,
and (3) gains on sales of foreclosed real estate previously
owned by a former savings and loan subsidiary together with
reductions of reserves for possible losses on such sales,

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reduced by (1) real estate and general and
administrative expenses and (2) interest and other
corporate expenses  plus or minus income taxes
related to such items.


Net income or loss from other nonsegment
activities typically fluctuates from period to period but is not
significant in amount. The 2001 and 1999 figures benefited to
the extent of $.1 million and $.8 million, after tax
effect, from reductions in reserves for possible losses on
disposition of foreclosed real estate; there were no adjustments
of these reserves in 2000. MS Property has completed
selling its foreclosed properties.

Nonsegment dividend and interest income has
declined sharply in recent years mainly due to conversions of
preferred stocks into lower-yielding common stocks in 1998 and
1999 and to the contributions of certain of those investments to
the insurance segment.

The net tax provision or benefit from other
nonsegment activities each year appears at first glance to be
anomalous compared to pre-tax income or loss. This is caused
generally by the inclusion in pre-tax income or loss of
declining amounts of dividend income, which is taxed at lower
rates than other revenue and expense items.

*  *  *  *  *

Wescos effective consolidated income tax
rate typically fluctuates from period to period for various
reasons, such as the inclusion in consolidated revenues of
significant, varying amounts of dividend income, which is
substantially exempt from income taxes. The respective income
tax provisions, expressed as percentages of income before income
taxes, amounted to 35.4%, 35.0% and 27.6% in 2001, 2000 and
1999. (See Note 7 to the accompanying consolidated
financial statements for further information on income taxes.)

Managements long-term goal is to maximize
gain in Wescos intrinsic business value per share over the
long term. Accounting consequences do not influence business
decisions. There is no particular strategy as to the timing of
sales of investments or the realization of securities gains.
Securities may be sold for a variety of reasons, including
(1) the belief that prospects for future appreciation of a
particular investment are less attractive than the prospects for
reinvestment of the after-tax proceeds from its sale, or
(2) the desire for funds for an acquisition or repayment of
debt.

Consolidated revenues, expenses and net income
reported for any period are not necessarily indicative of future
revenues, expenses and net income in that they are subject to
significant variations in amount and timing of securities gains
and losses, as well as other unusual nonoperating items such as
the acquisition of CORT. In addition, consolidated revenues,
expenses and net income are subject to external conditions such
as changes in the economy, which have adversely affected CORT
and Precision Steel, and unforeseen events such as the
September 11, 2001 terrorist activity which adversely
affected Wes-FIC.

Shareholders equity is impacted not only to
the extent that unusual items affect earnings, but also to
reflect changes in unrealized appreciation of investments, which
are not reflected in earnings.

Wesco is not now suffering from inflation, but
its business operations have potential exposure, particularly in
the insurance and industrial segments. Large unanticipated
changes in the rate of inflation could adversely impact the
insurance business, because premium rates are established well
in advance of expenditures. Precision Steels businesses
are competitive, operate on tight gross profit margins, and
carry inventories on a LIFO basis; thus their earnings are
susceptible to inflationary cost increases.

MARKET RISK ANALYSIS

Wescos consolidated balance sheet contains
substantial amounts of investments whose estimated fair
(carrying) values are subject to market risks. Values of
marketable equity securities are subject to fluctuations in
their stock market prices, and values of securities with fixed
maturities are subject to changes in interest rate levels.
Otherwise, the consolidated balance sheet at December 31,

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2001 did not contain significant assets or
liabilities with values subject to these or other potential
market exposures such as those relating to changes in commodity
prices and foreign exchange rates. Wesco does not utilize
stand-alone derivatives to manage market risks.


Equity Price Risk

Wescos consolidated balance sheet at
December 31, 2001 contained $667 million of marketable
equity securities stated at market value, down from
$883 million one year earlier. The decline was due to a
decline in market values; no marketable equity securities were
purchased or sold during 2001. The carrying values of
Wescos securities are exposed to market price
fluctuations, which may be accentuated by the concentration
existing in the portfolio. (At December 31, 2001, two
investments comprised 83% of the portfolio.) In addition, the
businesses represented by the equity investments are exposed to
risks related to other markets. The two largest holdings of the
consolidated group at December 31, 2001 ($554 million,
combined) were common stocks of The Coca-Cola Company and The
Gillette Company, both of which have global operations and thus
are subject to changes in foreign currency exchange rates. These
and other market risks to which these investees are subject,
such as commodity price fluctuations, are required, where
material, to be reported upon in their filings with the
Securities and Exchange Commission, which are available to the
public.

Strategically, Wesco strives to invest in
businesses that possess excellent economics, with able and
honest management, at sensible prices. Wescos management
prefers to invest a meaningful amount in each investee,
resulting in concentration. Most equity investments are expected
to be held for long periods of time; thus, Wescos
management is not ordinarily troubled by short-term price
volatility with respect to its investments provided that the
underlying business, economic and management characteristics of
the investees remain favorable. Wesco strives to maintain above
average levels of shareholders equity to provide a margin
of safety against short-term equity price volatility.

The carrying values of investments subject to
equity price risks are based on quoted market prices. Market
prices are subject to fluctuation and, consequently, the amounts
realized upon the subsequent sale of an investment may
significantly differ from the reported market value. Fluctuation
in the market price of a security may result from perceived
changes in the underlying economic characteristics of the
investee, the relative prices of alternative investments, or
general market conditions. Furthermore, amounts realized upon
the sale of a particular security may be adversely affected if a
relatively large quantity of the security is being sold.

The following table summarizes Wescos
equity price risks as of December 31, 2001 and 2000. It
shows the effects of a hypothetical 30% overall increase or
decrease in market prices of marketable equity securities owned
by the Wesco group on total recorded market value and, after tax
effect, on Wescos shareholders equity at each of
those dates. (Amounts are in thousands.)

|                                                |              |                   |   |                   |  |          |   |           |  |  |   |           |  |  |   |           | 
|----------------------------------------------- | ------------ | ----------------- | - | ----------------- |  | -------- | - | --------- |  |  | - | --------- |  |  | - | --------- | 
|                                                |              |                   |   |                  
|                                                |              | December 31, 2001 |   | December 31, 2000
|                                                |              |                   |   |                  
|                                                |              | Increase          |   | Decrease          |  | Increase |   | Decrease 
|                                                |              |                   |   |                   |  |          |   |          
|Market value of marketable equity
	securities  |              |                   |   |                   |  |          |   |           |  |  |   |           |  |  |   |          
|                                                | As recorded  |                   | $ | 667,262           |  |          | $ | 667,262   |  |  | $ | 833,937   |  |  | $ | 833,937   | 
|                                                | Hypothetical |                   |   | 867,441           |  |          |   | 467,083   |  |  |   | 1,084,118 |  |  |   | 583,756   | 
|Shareholders equity                           |              |                   |   |                   |  |          |   |           |  |  |   |           |  |  |   |          
|                                                | As recorded  |                   |   | 1,912,397         |  |          |   | 1,912,397 |  |  |   | 1,977,034 |  |  |   | 1,977,034 | 
|                                                | Hypothetical |                   |   | 2,042,513         |  |          |   | 1,782,781 |  |  |   | 2,139,652 |  |  |   | 1,814,416 | 
|                                                |              |                   |   |                   |  |          |   |           |  |  |   |           |  |  |   |          

The 30% hypothetical changes in market values
assumed in preparing the tables do not reflect what could be
considered best- or worst-case scenarios. Indeed, actual results
could be much worse or better due both to the nature of equity
markets and the aforementioned concentration existing in
Wescos equity investment portfolio.

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Interest Rate Risk

Wescos consolidated balance sheet at
December 31, 2001 contained $924 million of securities
with fixed maturities stated at fair value, up from
$840 million one year earlier. An increase in
mortgage-backed securities ($899 million at
December 31, 2001 versus $647 million one year
earlier) was substantially offset by reductions in other
securities.

As noted in the preceding section on equity price
risk, Wesco prefers to acquire entire businesses or invest in
equity securities. When unable to do so, it may invest in
mortgage-backed securities, government bonds or other
interest-rate-sensitive investments. Wescos strategy is to
acquire securities that are attractively priced in relation to
perceived credit risk. Wesco recognizes and accepts that losses
may occur.

The fair values of Wescos fixed-maturity
investments will fluctuate in response to changes in market
interest rates. Increases and decreases in prevailing interest
rates generally translate into decreases and increases in fair
values. Additionally, fair values of these investments may be
affected by the creditworthiness of the issuer, prepayment
options, relative values of alternative investments, the
liquidity of the instrument and other general market conditions.

The following table shows the estimated effects
as of December 31, 2001 and 2000 of hypothetical overall
increases and decreases in interest rates on the fair value of
Wescos fixed-maturity investments and, after tax effect,
on Wescos shareholders equity at each of those
dates. (Dollar amounts are in thousands.)

|                                       |                             |                   |         |                   |  |               |           |               |  |   |         |         |  |   |           |           | 
|-------------------------------------- | --------------------------- | ----------------- | ------- | ----------------- |  | ------------- | --------- | ------------- |  | - | ------- | ------- |  | - | --------- | --------- | 
|                                       |                             |                   |         |                  
|                                       |                             | December 31, 2001 |         | December 31, 2000
|                                       |                             |                   |         |                  
|                                       |                             | Fair Value of     |         | Shareholders     |  | Fair Value of |           | Shareholders
|                                       |                             | Investments       |         | Equity            |  | Investments   |           | Equity       
|                                       |                             |                   |         |                   |  |               |           |              
|As recorded                            |                             | $                 | 924,160 |                   |  | $             | 1,912,397 |               |  | $ | 839,683 |         |  | $ | 1,977,034 |          
|Hypothetical change in interest rate  |                             |                   |         |                   |  |               |           |               |  |   |         |         |  |   |           |          
|                                       | 1 percentage point decrease |                   |         | 932,101           |  |               |           | 1,917,558     |  |   |         | 845,362 |  |   |           | 1,980,725 | 
|                                       | 1 percentage point increase |                   |         | 897,765           |  |               |           | 1,895,240     |  |   |         | 821,564 |  |   |           | 1,965,257 | 
|                                       | 2 percentage point increase |                   |         | 857,062           |  |               |           | 1,868,783     |  |   |         | 788,864 |  |   |           | 1,944,002 | 
|                                       | 3 percentage point increase |                   |         | 805,013           |  |               |           | 1,834,951     |  |   |         | 756,308 |  |   |           | 1,922,840 | 
|                                       |                             |                   |         |                   |  |               |           |               |  |   |         |         |  |   |           |          

The hypothetical changes in market interest rates
assumed in preparing the table do not reflect what could be
deemed best- or worst-case scenarios. For example, variations in
market interest rates could produce significant changes in the
timing of repayments of mortgage-backed securities due to
prepayment options available to borrowers under the mortgages.
For this and other reasons, actual results might differ from
those reflected in the table.

FORWARD-LOOKING STATEMENTS

Certain written or oral representations of
management stated herein or elsewhere constitute
forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, as contrasted
with statements of historical fact. Forward-looking statements
include statements which are predictive in nature, or which
depend upon or refer to future events or conditions, or which
include words such as expects, anticipates, intends, plans,
believes, estimates, may,or could,or which involve
hypothetical events. Forward-looking statements are based on
information currently available and are subject to various risks
and uncertainties that could cause actual events or results to
differ materially from those characterized as being likely or
possible to occur. Such statements should be considered
judgments only, not guarantees, and Wescos management
assumes no duty, nor has it any specific intention, to update
them.

Actual events and results may differ materially
from those expressed or forecasted in forward-looking statements
due to a number of factors. The principal important risk factors
that could cause Wescos actual performance and future
events and actions to differ materially from those expressed in

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or implied by such forward-looking statements
include, but are not limited to, changes in market prices of
Wescos significant equity investees, the occurrence of one
or more catastrophic events such as hurricanes or other events
that cause losses insured by Wescos insurance
subsidiaries, changes in insurance laws or regulations, changes
in income tax laws or regulations, and changes in general
economic and market factors that affect the prices of securities
or the industries in which Wesco and its affiliates do business,
especially those affecting the property and casualty insurance
industry.





Item 8. Financial
Statements

Following is an index to financial statements and
related schedules of Wesco appearing in this report:

|                                                                                                           |  |           |         | 
|---------------------------------------------------------------------------------------------------------- |  | --------- | ------- | 
|                                                                                                           |  | Page     
|Financial Statements                                                                                       |  | Number(s)
|                                                                                                           |  |          
|Independent auditors report                                                                               |  |           | 31      | 
|Consolidated balance sheet 
	December 31, 2001 and 2000                                                   |  |           | 32      | 
|Consolidated statement of income 
	years ended December 31, 2001, 2000 and 1999                           |  |           | 33      | 
|Consolidated statement of changes in
	shareholders equity  years ended
	December 31, 2001, 2000 and 1999 |  |           | 34      | 
|Consolidated statement of cash flows 
	years ended December 31, 2001, 2000 and 1999                       |  |           | 35      | 
|Notes to consolidated financial statements                                                                 |  |           | 36  44 | 

Listed below are financial statement schedules
required by the Securities and Exchange Commission to be
included in this report. The data appearing therein should be
read in conjunction with the consolidated financial statements
and notes of Wesco and the independent auditors report
referred to above. Schedules not included with these financial
statement schedules have been omitted because they are not
applicable or the required information is shown in the
consolidated financial statements or notes thereto.

|                                                                                                                          |  |          |   |           |  |  |         | 
|------------------------------------------------------------------------------------------------------------------------- |  | -------- | - | --------- |  |  | ------- | 
|                                                                                                                          |  | Schedule |   | Page     
|Financial Statement Schedule                                                                                              |  | Number   |   | Number(s)
|                                                                                                                          |  |          |   |          
|Condensed financial information of
	Wesco  December 31, 2001 and 2000, and years
	ended December 31, 2001, 2000 and 1999 |  |          | I |           |  |  | 45  46 | 

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

Not applicable, as there were no such changes or
disagreements.

PART III




Item 10. Directors and Executive
Officers of the Registrant

The information set forth in the sections
entitled Election of Directors and Executive
Officers appearing in the definitive combined notice of
annual meeting and proxy statement of Wesco for its annual
meeting of shareholders scheduled to be held May 8, 2002
(the 2002 Proxy Statement) is incorporated herein by
reference.




Item 11. Executive
Compensation

The information set forth in the section
Compensation of Directors and Executive Officers in
the 2002 Proxy Statement is incorporated herein by reference.
All such compensation is cash compensation; Wesco neither has,
nor is considering having, any stock option plan or other equity
compensation arrangement.

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Item 12. Security Ownership of
Certain Beneficial Owners and Management

The information set forth in the sections
Voting Securities and Holders Thereof and
Requirements for Reporting Securities Ownership in
the 2002 Proxy Statement is incorporated herein by reference.




Item 13. Certain Relationships and
Related Transactions

Certain information set forth in the sections
Election of Directors, Voting Securities and
Holders Thereof, Compensation of Directors and
Executive Officers and Board of Director Interlocks
and Insider Participation in the 2002 Proxy Statement is
incorporated herein by reference.




PART IV




Item 14. Exhibits, Financial
Statement Schedules, and Reports on Form 8-K

The following exhibits (listed by numbers
corresponding to Table 1 of Item 601 of
Regulation S-K) are filed as part of this Annual Report on
Form 10-K or are incorporated herein by reference:

3a.     Articles of
incorporation and by-laws of Wesco

21.     List of
subsidiaries.


Instruments defining the rights of holders of
long-term debt of Wesco and its subsidiaries are not being filed
since the total amount of securities authorized by all such
instruments does not exceed 10% of the total assets of Wesco and
its subsidiaries on a consolidated basis as of December 31,
2001. Wesco hereby agrees to furnish to the Commission upon
request a copy of any such debt instrument to which it is a
party.

The index to financial statements and related
schedules set forth in Item 8 of this report is incorporated
herein by reference.

No reports on Form 8-K were filed during the
quarter ended December 31, 2001.

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SIGNATURES

Pursuant to the requirements of Section 13
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.

WESCO FINANCIAL CORPORATION

|    |  |                                                                                                               |  |               
|--- |  | ------------------------------------------------------------------------------------------------------------- |  | --------------
|   
|By: |  | Charles T. Munger
	Chairman of the Board (principal executive officer)                                        |  | March 20, 2002
|   
|By: |  | Robert H. Bird
	President (principal operating officer)                                                       |  | March 20, 2002
|   
|By: |  | Jeffrey L. Jacobson
	Vice President and Chief Financial Officer
	(principal financial and accounting officer) |  | March 20, 2002

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 and on the dates indicated.

|                              |  |               
|----------------------------- |  | --------------
|                             
|Robert H. Bird
	Director      |  | March 20, 2002
|                             
|Carolyn H. Carlburg
	Director |  | March 20, 2002
|                             
|Robert E. Denham
	Director    |  | March 20, 2002
|                             
|James N. Gamble
	Director     |  | March 20, 2002
|                             
|Charles T. Munger
	Director   |  | March 20, 2002
|                             
|David K. Robinson
	Director   |  | March 20, 2002

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INDEPENDENT AUDITORS REPORT

To the Board of Directors and Shareholders of

Wesco Financial Corporation


We have audited the accompanying consolidated
balance sheets of Wesco Financial Corporation and subsidiaries
as of December 31, 2001 and 2000, and the related
consolidated statements of income, changes in shareholders
equity, and cash flows for each of the three years in the period
ended December 31, 2001. Our audits also included the
financial statement schedule listed in the index at Item 8.
These financial statements and the financial statement schedule
are the responsibility of the Corporation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 in accordance with
auditing standards generally accepted in the United States of
America. 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, such consolidated financial
statements present fairly, in all material respects, the
financial position of Wesco Financial Corporation and
subsidiaries as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001, in
conformity with accounting principles generally accepted in the
United States of America. Also, in our opinion, the financial
statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.

-s- Deloitte & Touche LLP

Omaha, Nebraska

March 5, 2002


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WESCO FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEET


(Dollar amounts in thousands)

|                                                        |                                                                                                        |                            |           |           |           |   |           |           |           | 
|------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | -------------------------- | --------- | --------- | --------- | - | --------- | --------- | --------- | 
|                                                        |                                                                                                        |                           
|                                                        |                                                                                                        | December 31,              
|                                                        |                                                                                                        |                           
|                                                        |                                                                                                        | 2001                       |           | 2000     
|                                                        |                                                                                                        |                            |           |          
|ASSETS                                                 
|Cash and cash equivalents                               |                                                                                                        | $                          | 120,784   |           |           | $ | 153,810   |          
|Investments:                                            |                                                                                                        |                            |           |           |           |   |           |          
|                                                        | Securities with fixed maturities                                                                       |                            |           | 924,160   |           |   |           | 839,683   |          
|                                                        | Marketable equity securities                                                                           |                            |           | 667,262   |           |   |           | 833,937   |          
|Accounts receivable                                     |                                                                                                        |                            | 43,871    |           |           |   | 38,444    |          
|Rental furniture                                        |                                                                                                        |                            | 212,586   |           |           |   | 244,847   |          
|Property and equipment                                  |                                                                                                        |                            | 47,916    |           |           |   | 53,833    |          
|Goodwill of acquired businesses                         |                                                                                                        |                            | 264,465   |           |           |   | 260,037   |          
|Other assets                                            |                                                                                                        |                            | 38,649    |           |           |   | 36,324    |          
|                                                        |                                                                                                        |                            |           |           |           |   |           |          
|                                                        |                                                                                                        | $                          | 2,319,693 |           |           | $ | 2,460,915 |          
|                                                        |                                                                                                        |                            |           |           |           |   |           |          
|                                                       
|LIABILITIES AND SHAREHOLDERS
	EQUITY                  
|Insurance losses and loss adjustment expenses           |                                                                                                        | $                          | 61,879    |           |           | $ | 39,959    |          
|Deferred furniture rental income and security
	deposits |                                                                                                        |                            | 23,796    |           |           |   | 27,669    |          
|Accounts payable and accrued expenses                   |                                                                                                        |                            | 36,794    |           |           |   | 33,881    |          
|Notes payable                                           |                                                                                                        |                            | 33,649    |           |           |   | 56,035    |          
|Income taxes payable, principally deferred              |                                                                                                        |                            | 225,665   |           |           |   | 305,175   |          
|Other liabilities                                       |                                                                                                        |                            | 25,513    |           |           |   | 21,162    |          
|                                                        |                                                                                                        |                            |           |           |           |   |           |          
|                                                        |                                                                                                        |                            | 407,296   |           |           |   | 483,881   |          
|                                                        |                                                                                                        |                            |           |           |           |   |           |          
|Shareholders equity:                                   |                                                                                                        |                            |           |           |           |   |           |          
|                                                        | Capital stock, $1 par value 
	authorized, 7,500,000 shares; issued and outstanding, 7,119,807
	shares |                            |           | 7,120     |           |   |           | 7,120     |          
|                                                        | Capital in excess of par value                                                                         |                            |           | 23,319    |           |   |           | 23,319    |          
|                                                        | Unrealized appreciation of investments, net of
	taxes                                                  |                            |           | 372,267   |           |   |           | 480,469   |          
|                                                        | Retained earnings                                                                                      |                            |           | 1,509,691 |           |   |           | 1,466,126 |          
|                                                        |                                                                                                        |                            |           |           |           |   |           |          
|                                                        |                                                                                                        | Total shareholders equity |           |           | 1,912,397 |   |           |           | 1,977,034 | 
|                                                        |                                                                                                        |                            |           |           |           |   |           |          
|                                                        |                                                                                                        | $                          | 2,319,693 |           |           | $ | 2,460,915 |          
|                                                        |                                                                                                        |                            |           |           |           |   |           |          

See accompanying notes to consolidated
financial statements.

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WESCO FINANCIAL CORPORATION

CONSOLIDATED STATEMENT OF INCOME


(Dollar amounts in thousands except for
amounts per share)

|                                                                                       |                                                              |                         |         |         |        |      |           |           |         |  |         |        |        | 
|-------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ----------------------- | ------- | ------- | ------ | ---- | --------- | --------- | ------- |  | ------- | ------ | ------ | 
|                                                                                       |                                                              |                        
|                                                                                       |                                                              | Year Ended December 31,
|                                                                                       |                                                              |                        
|                                                                                       |                                                              | 2001                    |         | 2000    |        | 1999
|                                                                                       |                                                              |                         |         |         |        |     
|Revenues:                                                                              |                                                              |                         |         |         |        |      |           |           |         |  |         |       
|                                                                                       | Sales and service revenues                                   |                         | $       | 443,628 |        |      | $         | 426,096   |         |  | $       | 64,571 |       
|                                                                                       | Insurance premiums earned                                    |                         |         | 43,031  |        |      |           | 23,783    |         |  |         | 17,655 |       
|                                                                                       | Dividend and interest income                                 |                         |         | 70,981  |        |      |           | 59,759    |         |  |         | 49,679 |       
|                                                                                       | Realized net securities gains                                |                         |         |        |        |      |           | 1,311,270 |         |  |         | 11,186 |       
|                                                                                       | Other                                                        |                         |         | 3,439   |        |      |           | 3,056     |         |  |         | 4,600  |       
|                                                                                       |                                                              |                         |         |         |        |      |           |           |         |  |         |       
|                                                                                       |                                                              |                         | 561,079 |         |        |      | 1,823,964 |           |         |  | 147,691 |       
|                                                                                       |                                                              |                         |         |         |        |      |           |           |         |  |         |       
|Costs and expenses:                                                                    |                                                              |                         |         |         |        |      |           |           |         |  |         |       
|                                                                                       | Cost of products and services sold                           |                         |         | 144,712 |        |      |           | 146,649   |         |  |         | 50,728 |       
|                                                                                       | Insurance losses, loss adjustment and
	underwriting expenses |                         |         | 46,682  |        |      |           | 19,392    |         |  |         | 7,366  |       
|                                                                                       | Selling, general and administrative expenses                 |                         |         | 276,712 |        |      |           | 227,954   |         |  |         | 11,468 |       
|                                                                                       | Interest expense                                             |                         |         | 4,169   |        |      |           | 5,235     |         |  |         | 2,549  |       
|                                                                                       | Goodwill amortization                                        |                         |         | 7,476   |        |      |           | 6,342     |         |  |         | 782    |       
|                                                                                       |                                                              |                         |         |         |        |      |           |           |         |  |         |       
|                                                                                       |                                                              |                         | 479,751 |         |        |      | 405,572   |           |         |  | 72,893  |       
|                                                                                       |                                                              |                         |         |         |        |      |           |           |         |  |         |       
|Income before income taxes                                                             |                                                              |                         | 81,328  |         |        |      | 1,418,392 |           |         |  | 74,798  |       
|Provision for income taxes                                                             |                                                              |                         | (28,792 | )       |        |      | (495,922  | )         |         |  | (20,655 | )     
|                                                                                       |                                                              |                         |         |         |        |      |           |           |         |  |         |       
|                                                                                       |                                                              | Net income              |         | $       | 52,536 |      |           | $         | 922,470 |  |         | $      | 54,143 | 
|                                                                                       |                                                              |                         |         |         |        |      |           |           |         |  |         |       
|Amounts per capital share based on 7,119,807
	shares outstanding throughout each year: |                                                              |                         |         |         |        |      |           |           |         |  |         |       
|                                                                                       | Net income                                                   |                         | $       | 7.38    |        |      | $         | 129.56    |         |  | $       | 7.60   |       
|                                                                                       | Cash dividends                                               |                         |         | 1.26    |        |      |           | 1.22      |         |  |         | 1.18   |       
|                                                                                       |                                                              |                         |         |         |        |      |           |           |         |  |         |       

See accompanying notes to consolidated
financial statements.

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WESCO FINANCIAL CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN


SHAREHOLDERS EQUITY


(Dollar amounts in thousands)

|                                                                                          |                                   |                      |       |            |  |                |        |          |  |         |           |          |   |   |           |   |  |   |           |          |   |   |          |   | 
|----------------------------------------------------------------------------------------- | --------------------------------- | -------------------- | ----- | ---------- |  | -------------- | ------ | -------- |  | ------- | --------- | -------- | - | - | --------- | - |  | - | --------- | -------- | - | - | -------- | - | 
|                                                                                          |                                   |                      |       |           
|                                                                                          |                                   | Shareholders Equity |       | Total     
|                                                                                          |                                   |                      |       | Compre-   
|                                                                                          |                                   |                      |       | Capital in |  | Unrealized     |        |          |  | hensive
|                                                                                          |                                   | Capital              |       | Excess of  |  | Appreciation   |        | Retained |  |         |           | Income  
|                                                                                          |                                   | Stock                |       | Par Value  |  | of Investments |        | Earnings |  | Total   |           | (Loss)  
|                                                                                          |                                   |                      |       |            |  |                |        |          |  |         |           |         
|Balance, December 31, 1998                                                                |                                   | $                    | 7,120 |            |  | $              | 23,319 |          |  | $       | 1,686,716 |          |   | $ | 506,601   |   |  | $ | 2,223,756 |          |   |   |          |  
|Net income                                                                                |                                   |                      |       |            |  |                |        |          |  |         |           |          |   |   | 54,143    |   |  |   | 54,143    |          |   |   |          |  
|Decrease in unrealized appreciation of
	investments, net of income tax effect of $197,478 |                                   |                      |       |            |  |                |        |          |  |         | (366,855  | )        |   |   |           |   |  |   | (366,855  | )        |   | $ | (319,983 | )
|                                                                                          |                                   |                      |       |            |  |                |        |          |  |         |           |          |   |   |           |   |  |   |           |          |   |   |          |  
|                                                                                         
|Reversal of unrealized appreciation upon
	inclusion of realized net gains in net income   |                                   |                      |       |            |  |                |        |          |  |         | (7,271    | )        |   |   |           |   |  |   | (7,271    | )        |   |   |          |  
|Cash dividends declared and paid                                                          |                                   |                      |       |            |  |                |        |          |  |         |           |          |   |   | (8,401    | ) |  |   | (8,401    | )        |   |   |          |  
|                                                                                          |                                   |                      |       |            |  |                |        |          |  |         |           |          |   |   |           |   |  |   |           |          |   |   |          |  
|Balance, December 31, 1999                                                                |                                   |                      | 7,120 |            |  |                | 23,319 |          |  |         | 1,312,590 |          |   |   | 552,343   |   |  |   | 1,895,372 |          |   |   |          |  
|Net income                                                                                |                                   |                      |       |            |  |                |        |          |  |         |           |          |   |   | 922,470   |   |  |   | 922,470   |          |   |   |          |  
|Increase in unrealized appreciation of
	investments, net of income tax effect of $11,248  |                                   |                      |       |            |  |                |        |          |  |         | 20,262    |          |   |   |           |   |  |   | 20,262    |          |   | $ | 90,349   |  
|                                                                                          |                                   |                      |       |            |  |                |        |          |  |         |           |          |   |   |           |   |  |   |           |          |   |   |          |  
|                                                                                         
|Reversal of unrealized appreciation upon
	inclusion of realized net gains in net income   |                                   |                      |       |            |  |                |        |          |  |         | (852,383  | )        |   |   |           |   |  |   | (852,383  | )        |   |   |          |  
|Cash dividends declared and paid                                                          |                                   |                      |       |            |  |                |        |          |  |         |           |          |   |   | (8,687    | ) |  |   | (8,687    | )        |   |   |          |  
|                                                                                          |                                   |                      |       |            |  |                |        |          |  |         |           |          |   |   |           |   |  |   |           |          |   |   |          |  
|Balance, December 31, 2000                                                                |                                   |                      | 7,120 |            |  |                | 23,319 |          |  |         | 480,469   |          |   |   | 1,466,126 |   |  |   | 1,977,034 |          |   |   |          |  
|Net income                                                                                |                                   |                      |       |            |  |                |        |          |  |         |           |          |   |   | 52,536    |   |  |   | 52,536    |          |   |   |          |  
|Decrease in unrealized appreciation                                                       |                                   |                      |       |            |  |                |        |          |  |         |           |          |   |   |           |   |  |   |           |          |   | $ | (55,666  | )
|                                                                                          | of investments, net of income tax |                      |       |            |  |                |        |          |  |         |           |          |   |   |           |   |  |   |           |          |   |   |          |   | 
|                                                                                          | effect of $58,634                 |                      |       |            |  |                |        |          |  |         |           | (108,202 | ) |   |           |   |  |   |           | (108,202 | ) |   |          |   | 
|Cash dividends declared and paid                                                          |                                   |                      |       |            |  |                |        |          |  |         |           |          |   |   | (8,971    | ) |  |   | (8,971    | )        |   |   |          |  
|                                                                                          |                                   |                      |       |            |  |                |        |          |  |         |           |          |   |   |           |   |  |   |           |          |   |   |          |  
|Balance, December 31, 2001                                                                |                                   | $                    | 7,120 |            |  | $              | 23,319 |          |  | $       | 372,267   |          |   | $ | 1,509,691 |   |  | $ | 1,912,397 |          |   |   |          |  
|                                                                                          |                                   |                      |       |            |  |                |        |          |  |         |           |          |   |   |           |   |  |   |           |          |   |   |          |  

See accompanying notes to consolidated
financial statements.

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WESCO FINANCIAL CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS


(Dollar amounts in thousands)

|                                                  |                                                                                  |                                                                                       |                                          |          |         |          |         |            |            |          |          |          |         |          |  
|------------------------------------------------- | -------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ---------------------------------------- | -------- | ------- | -------- | ------- | ---------- | ---------- | -------- | -------- | -------- | ------- | -------- | -
|                                                  |                                                                                  |                                                                                      
|                                                  |                                                                                  | Year Ended December 31,                                                              
|                                                  |                                                                                  |                                                                                      
|                                                  |                                                                                  | 2001                                                                                  |                                          | 2000     |         | 1999    
|                                                  |                                                                                  |                                                                                       |                                          |          |         |         
|Cash flows from operating activities:             |                                                                                  |                                                                                       |                                          |          |         |          |         |            |            |          |          |         
|                                                  | Net income                                                                       |                                                                                       | $                                        | 52,536   |         |          | $       | 922,470    |            |          | $        | 54,143   |        
|                                                  | Adjustments to reconcile net income with cash
	flows from operating activities  |                                                                                       |                                          |          |         |          |         |            |            |          |          |          |        
|                                                  |                                                                                  | Realized securities gains, net, before taxes                                          |                                          |          |        |          |         |            | (1,311,270 | )        |          |          | (11,186 | )       
|                                                  |                                                                                  | Provision for depreciation and amortization, net                                      |                                          |          | 65,564  |          |         |            | 47,203     |          |          |          | 1,995   |         
|                                                  |                                                                                  | Increase (decrease) in liabilities for
	insurance losses and loss adjustment expenses |                                          |          | 21,920  |          |         |            | 6,317      |          |          |          | (3,809  | )       
|                                                  |                                                                                  | Increase (decrease) in income taxes payable                                           |                                          |          | (20,876 | )        |         |            | 20,398     |          |          |          | (11,297 | )       
|                                                  |                                                                                  | Proceeds from sales of rental furniture, less
	gross profit included in net income    |                                          |          | 44,225  |          |         |            | 34,252     |          |          |          |        |         
|                                                  |                                                                                  | Other, net                                                                            |                                          |          | 1,174   |          |         |            | 9,124      |          |          |          | (6,422  | )       
|                                                  |                                                                                  |                                                                                       |                                          |          |         |          |         |            |            |          |          |         
|                                                  |                                                                                  |                                                                                       | Net cash flows from operating activities |          |         | 164,543  |         |            |            | (271,506 | )        |          |         | 23,424   |  
|                                                  |                                                                                  |                                                                                       |                                          |          |         |          |         |            |            |          |          |         
|Cash flows from investing activities:             |                                                                                  |                                                                                       |                                          |          |         |          |         |            |            |          |          |         
|                                                  | Purchases of securities with fixed maturities                                    |                                                                                       |                                          | (719,769 | )       |          |         | (1,204,104 | )          |          |          | (413,659 | )      
|                                                  | Maturities and redemptions of securities with
	fixed maturities                  |                                                                                       |                                          | 631,639  |         |          |         | 20,385     |            |          |          | 21,772   |        
|                                                  | Sales of marketable equity securities                                            |                                                                                       |                                          |         |         |          |         | 1,396,997  |            |          |          | 58,900   |        
|                                                  | Sales of securities with fixed maturities                                        |                                                                                       |                                          |         |         |          |         | 674,660    |            |          |          | 90,788   |        
|                                                  | Acquisition of businesses, net of cash and cash
	equivalents acquired            |                                                                                       |                                          | (20,009  | )       |          |         | (394,523   | )          |          |          |         |        
|                                                  | Purchases of rental furniture                                                    |                                                                                       |                                          | (56,065  | )       |          |         | (103,693   | )          |          |          |         |        
|                                                  | Other, net                                                                       |                                                                                       |                                          | (2,008   | )       |          |         | (7,450     | )          |          |          | 3,473    |        
|                                                  |                                                                                  |                                                                                       |                                          |          |         |          |         |            |            |          |          |         
|                                                  |                                                                                  |                                                                                       | Net cash flows from investing activities |          |         | (166,212 | )       |            |            | 382,272  |          |          |         | (238,726 | )
|                                                  |                                                                                  |                                                                                       |                                          |          |         |          |         |            |            |          |          |         
|Cash flows from financing activities:             |                                                                                  |                                                                                       |                                          |          |         |          |         |            |            |          |          |         
|                                                  | Increase (decrease) in notes payable                                             |                                                                                       |                                          | 9,714    |         |          |         |           |            |          |          | (30,000  | )      
|                                                  | Repayments of line of credit borrowings, net                                     |                                                                                       |                                          | (32,100  | )       |          |         | (14,600    | )          |          |          |         |        
|                                                  | Payment of cash dividends                                                        |                                                                                       |                                          | (8,971   | )       |          |         | (8,687     | )          |          |          | (8,401   | )      
|                                                  |                                                                                  |                                                                                       |                                          |          |         |          |         |            |            |          |          |         
|                                                  |                                                                                  |                                                                                       | Net cash flows from financing activities |          |         | (31,357  | )       |            |            | (23,287  | )        |          |         | (38,401  | )
|                                                  |                                                                                  |                                                                                       |                                          |          |         |          |         |            |            |          |          |         
|Increase (decrease) in cash and cash
	equivalents |                                                                                  |                                                                                       | (33,026                                  | )        |         |          | 87,479  |            |            |          | (253,703 | )       
|Cash and cash equivalents  beginning
	of year    |                                                                                  |                                                                                       | 153,810                                  |          |         |          | 66,331  |            |            |          | 320,034  |         
|                                                  |                                                                                  |                                                                                       |                                          |          |         |          |         |            |            |          |          |         
|Cash and cash equivalents  end of year           |                                                                                  | $                                                                                     | 120,784                                  |          |         | $        | 153,810 |            |            | $        | 66,331   |         
|                                                  |                                                                                  |                                                                                       |                                          |          |         |          |         |            |            |          |          |         
|Supplementary disclosures:                        |                                                                                  |                                                                                       |                                          |          |         |          |         |            |            |          |          |         
|                                                  | Interest paid during year                                                        |                                                                                       | $                                        | 4,356    |         |          | $       | 4,818      |            |          | $        | 2,953    |        
|                                                  | Income taxes paid, net, during year                                              |                                                                                       |                                          | 49,668   |         |          |         | 491,288    |            |          |          | 31,952   |        
|                                                  |                                                                                  |                                                                                       |                                          |          |         |          |         |            |            |          |          |         

See accompanying notes to consolidated
financial statements.

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WESCO FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


Dollar amounts in thousands except for amounts
per share

Note 1. Presentation

Wesco Financial Corporation (Wesco)
is 80.1%-owned by Blue Chip Stamps (Blue Chip),
which in turn is wholly owned by Berkshire Hathaway Inc.
(Berkshire).

Wescos consolidated financial statements
include the accounts of Wesco and its subsidiaries, which, with
one minor exception, are all either directly or indirectly
wholly owned. The principal subsidiaries are Wesco-Financial
Insurance Company (Wes-FIC), The Kansas Bankers
Surety Company (KBS), CORT Business Services
Corporation (CORT) and Precision Steel Warehouse,
Inc. (Precision Steel). Intercompany balances and
transactions have been eliminated in the preparation of the
consolidated 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 the reported amounts of
assets, liabilities, revenues and expenses. The estimates and
assumptions are based on managements evaluation of the
relevant facts and circumstances using information available at
the time such estimates and assumptions are made. For example,
the process of establishing loss reserves for property and
casualty insurance is subject to considerable estimation error
due to the inherent uncertainty in projecting the claim amounts
that will be reported and ultimately paid over many years.
Although the amounts of such assets, liabilities, revenues and
expenses included in the consolidated financial statements may
differ significantly from those that might result from use of
estimates and assumptions based on facts and circumstances not
yet available, Wescos management does not believe such
differences would have a material adverse effect on reported
shareholders equity.

Wescos management does not believe that any
accounting pronouncements required to be adopted after yearend
2001 will have a material effect on reported shareholders
equity. However, Statement of Financial Accounting Standards
(SFAS) No. 142 is likely to materially affect
consolidated earnings beginning in 2002. See Note 2 for
further explanation.

Note 2. Acquisitions and
Goodwill

In late February 2000, a wholly owned subsidiary
of Wesco acquired all of the outstanding common stock of CORT
for approximately $386 million cash pursuant to a tender
offer and merger. The acquisition has been accounted for as a
purchase, with CORTs accounts included in the consolidated
financial statements as of the date of acquisition. CORT is the
largest, and only national, provider of rental furniture,
accessories and related services in the rent-to-rent
segment of the furniture industry. It rents high quality
furniture to corporate and individual customers who desire
flexibility in meeting their temporary office, residential or
tradeshow furnishing needs and who typically do not seek to own
such furniture. In addition, CORT sells previously rented
furniture through company-owned clearance centers.

The following unaudited table presents pro forma
consolidated operating data for Wesco and its subsidiaries for
the years ended December 31, 2000 and 1999 as if CORT had
been acquired on January 1, 1999. It reflects
(1) elimination of estimated income that would have been
earned if investments liquidated in 2000 to fund most of the
purchase had been liquidated on January 1, 1999,
(2) inclusion of interest expense as if line-of-credit
borrowings arranged in 2000 to fund a portion of the purchase
had been made on January 1, 1999, and (3) amortization
of the excess of purchase

36



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##### Table of Contents



price over fair value of identified net assets
acquired (goodwill) over 40 years beginning January 1,
1999.


|                           |                         |                         |           |        |  |   |         |      | 
|-------------------------- | ----------------------- | ----------------------- | --------- | ------ |  | - | ------- | ---- | 
|                           |                         |                        
|                           |                         | Year Ended December 31,
|                           |                         |                        
|                           |                         | 2000                    |           | 1999  
|                           |                         |                         |           |       
|Sales and service revenues |                         | $                       | 476,322   |        |  | $ | 418,655 |     
|Total revenues             |                         |                         | 1,871,690 |        |  |   | 479,790 |     
|Net income                 |                         |                         | 923,367   |        |  |   | 63,159  |     
|                           | Per Wesco capital share |                         |           | 129.69 |  |   |         | 8.87 | 
|                           |                         |                         |           |        |  |   |         |     

During 2000 and 2001, CORT purchased various
small companies engaged in the furniture rental business. These
acquisitions have been accounted for as purchases, and the
results of their operations have been included in CORTs
since the dates of acquisition. Pro forma disclosures have not
been provided inasmuch as the acquisitions, taken as a whole in
each year, were immaterial.

At December 31, 2001, the unamortized
balance of goodwill carried as an asset on Wescos
consolidated balance sheet was $264,465, of which $237,474
related to CORT and the balance to KBS, acquired in 1996.
Amortization has been provided on a straight-line basis,
principally over 40 years.

In June 2001, the Financial Accounting Standards
Board issued SFAS No. 142, Goodwill and Other
Intangible Assets, changing from an accounting model that
required amortization of goodwill, supplemented by impairment
tests, to an accounting model based solely on impairment tests.
SFAS No. 142 also provided guidance on accounting for
identifiable intangible assets that may or may not require
amortization. The provisions of SFAS No. 142 will be
effective for Wesco at the beginning of 2002. Wescos
management believes that implementation will probably have a
material effect on Wescos consolidated earnings beginning
in 2002 and on the comparability of such earnings with those of
prior periods. The consolidated statement of income for the
years ended December 31, 2001, 2000 and 1999 includes
goodwill amortization of $6,814, $5,867 and $782, after income
taxes, respectively.

Note 3. Investments

Cash equivalents consist of funds invested in
money-market accounts and in other investments maturing in less
than three months from date acquired.

Management determines the appropriate
classifications of investments in securities with fixed
maturities and marketable equity securities at the time of
purchase and reevaluates such designations as of each balance
sheet date. There are three permissible classifications:
held-to-maturity, trading, and, when neither of those
classifications is applicable, available-for-sale. Wesco
classifies all of its equity and fixed-maturity investments as
available-for-sale; they are carried at fair value, with
unrealized gains and losses, net of deemed applicable income
taxes, reported as a separate component of shareholders
equity.

The unrealized appreciation component declined in
proportion to total shareholders equity from 24% at 2000
yearend to 19% at 2001 yearend. Because unrealized appreciation
is based upon current, typically fluctuating market quotations,
the gains or losses ultimately realized upon sale of investments
could differ substantially from recorded unrealized
appreciation. The amounts and timing of realizations of
securities gains and losses have no predictive or practical
analytical value.

Realized gains and losses on sales of
investments, determined on a specific-identification basis, are
included in the consolidated statement of income, as are
provisions for other-than-temporary declines in market or
estimated fair value. Once the carrying value of an investment
has been written



Dollar amounts in thousands except for amounts
per share


37



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##### Table of Contents



down to reflect an other-than-temporary decline,
any subsequent increase in market or fair value is credited, net
of taxes, directly to shareholders equity.


Following is a summary of securities with fixed
maturities:

|                                                 |  |                   |         |                   |  |           |         |                |  |   |         |  |  |   |         | 
|------------------------------------------------ |  | ----------------- | ------- | ----------------- |  | --------- | ------- | -------------- |  | - | ------- |  |  | - | ------- | 
|                                                 |  |                   |         |                  
|                                                 |  | December 31, 2001 |         | December 31, 2000
|                                                 |  |                   |         |                  
|                                                 |  |                   |         | Estimated Fair    |  |           |         | Estimated Fair
|                                                 |  | Amortized         |         | (Carrying)        |  | Amortized |         | (Carrying)    
|                                                 |  | Cost              |         | Value             |  | Cost      |         | Value         
|                                                 |  |                   |         |                   |  |           |         |               
|Obligations of U. S. government and its agencies |  | $                 | 23,419  |                   |  | $         | 22,394  |                |  | $ | 188,194 |  |  | $ | 188,189 | 
|Other                                            |  |                   | 2,700   |                   |  |           | 2,700   |                |  |   | 4,301   |  |  |   | 4,284   | 
|                                                 |  |                   |         |                   |  |           |         |                |  |   |         |  |  |   |         | 
|                                                 |  |                   | 26,119  |                   |  |           | 25,094  |                |  |   | 192,495 |  |  |   | 192,473 | 
|Mortgage-backed securities                       |  |                   | 886,186 |                   |  |           | 899,066 |                |  |   | 635,173 |  |  |   | 647,210 | 
|                                                 |  |                   |         |                   |  |           |         |                |  |   |         |  |  |   |         | 
|                                                 |  | $                 | 912,305 |                   |  | $         | 924,160 |                |  | $ | 827,668 |  |  | $ | 839,683 | 
|                                                 |  |                   |         |                   |  |           |         |                |  |   |         |  |  |   |         | 

At 2001 yearend, the estimated fair values
of securities with fixed maturities contained $13,918 of
unrealized gains and $2,063 of unrealized losses, compared with
$12,069 of unrealized gains and $54 of unrealized losses at 2000
yearend.

Fixed-maturity investments other than
mortgage-backed securities at 2001 yearend are expected to
mature as follows:

|                                   |  |           |        |          |  |   |        | 
|---------------------------------- |  | --------- | ------ | -------- |  | - | ------ | 
|                                   |  | Amortized |        | Carrying
|                                   |  | Cost      |        | Value   
|                                   |  |           |        |         
|In one year or less                |  | $         | 7,235  |          |  | $ | 7,282  | 
|After one year through five years  |  |           | 204    |          |  |   | 209    | 
|After five years through ten years |  |           | 9,339  |          |  |   | 9,281  | 
|After ten years                    |  |           | 9,341  |          |  |   | 8,322  | 
|                                   |  |           |        |          |  |   |        | 
|                                   |  | $         | 26,119 |          |  | $ | 25,094 | 
|                                   |  |           |        |          |  |   |        | 

Following is a summary of marketable equity
securities (all common stocks):

|                      |  |           |           |                   |  |                   |         |      |  |            |         |  |  |   |         |  |  |   |         | 
|--------------------- |  | --------- | --------- | ----------------- |  | ----------------- | ------- | ---- |  | ---------- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                      |  |           |           |                   |  |                  
|                      |  |           |           | December 31, 2001 |  | December 31, 2000
|                      |  |           |           |                   |  |                  
|                      |  |           |           |                   |  | Quoted            |         |      |  | Quoted    
|                      |  |           |           |                   |  | Market            |         |      |  | Market    
|                      |  | Number of |           |                   |  | (Carrying)        |         |      |  | (Carrying)
|                      |  | Shares    |           | Cost              |  | Value             |         | Cost |  | Value     
|                      |  |           |           |                   |  |                   |         |      |  |           
|The Coca-Cola Company |  |           | 7,205,600 |                   |  | $                 | 40,761  |      |  | $          | 339,744 |  |  | $ | 40,761  |  |  | $ | 439,095 | 
|The Gillette Company  |  |           | 6,400,000 |                   |  |                   | 40,000  |      |  |            | 213,760 |  |  |   | 40,000  |  |  |   | 231,200 | 
|Other                 |  |           |           |                   |  |                   | 27,020  |      |  |            | 113,758 |  |  |   | 27,020  |  |  |   | 163,642 | 
|                      |  |           |           |                   |  |                   |         |      |  |            |         |  |  |   |         |  |  |   |         | 
|                      |  |           |           |                   |  | $                 | 107,781 |      |  | $          | 667,262 |  |  | $ | 107,781 |  |  | $ | 833,937 | 
|                      |  |           |           |                   |  |                   |         |      |  |            |         |  |  |   |         |  |  |   |         | 

There were no unrealized losses with respect to
marketable equity securities at December 31, 2001 or
December 31, 2000.



Dollar amounts in thousands except for amounts
per share


38



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##### Table of Contents



Realized investment gains (losses), before income
taxes, from sales and redemptions of investments are summarized
below for each of the past three years:

|                                   |                       |      |   |      |  |      |           |           |   |   |        |        |  
|---------------------------------- | --------------------- | ---- | - | ---- |  | ---- | --------- | --------- | - | - | ------ | ------ | -
|                                   |                       | 2001 |   | 2000 |  | 1999
|                                   |                       |      |   |      |  |     
|Securities with fixed maturities  |                       |      |   |      |  |      |           |           |   |   |        |       
|                                   | Gross realized gains  |      | $ |     |  |      | $         | 3,012     |   |   | $      | 7,504  |  
|                                   | Gross realized losses |      |   |     |  |      |           | (8,644    | ) |   |        | (2,714 | )
|Marketable equity securities      |                       |      |   |      |  |      |           |           |   |   |        |       
|                                   | Gross realized gains  |      |   |     |  |      |           | 1,318,060 |   |   |        | 6,396  |  
|                                   | Gross realized losses |      |   |     |  |      |           | (1,158    | ) |   |        |       |  
|                                   |                       |      |   |      |  |      |           |           |   |   |        |       
|                                   |                       | $    |  |      |  | $    | 1,311,270 |           |   | $ | 11,186 |       
|                                   |                       |      |   |      |  |      |           |           |   |   |        |       

Note 4. Insurance Business
Accounting

Insurance premiums are generally recognized as
earned revenues pro rata over the term of each contract.
Unearned insurance premiums of $24,897 and $17,006 at
December 31, 2001 and 2000 are included in other
liabilities on the consolidated balance sheet.

Liabilities for unpaid losses and loss adjustment
expenses represent estimated claim and claim settlement costs.
The liabilities are based upon estimates of ultimate claim costs
associated with claim occurrences as of the balance sheet date,
and are determined from (1) individual case amounts,
(2) incurred but not reported losses, based on past
experience, and (3) reports from ceding insurers. As
further data become available, the liabilities are reevaluated
and adjusted as appropriate.

In the third quarter of 2001, Wes-FIC recorded a
provision of $10,000 ($6,500 after income tax effect),
reflecting estimated insurance loss and expenses relating to the
September 11, 2001 terrorist activity. The amount is
subject to considerable estimation error. Wes-FICs
management believes it will take years to resolve complicated
coverage issues, which could produce a material change in the
ultimate loss amount.

Provisions for losses and loss adjustment
expenses are reported in the consolidated statement of income
after deducting estimates of amounts that will be recoverable
under reinsurance contracts. Reinsurance contracts do not
relieve the ceding companies of their obligations to indemnify
policyholders with respect to the underlying insurance contracts.



Dollar amounts in thousands except for amounts
per share


39



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##### Table of Contents



Following is a summary of liabilities for unpaid
losses and loss adjustment expenses for each of the past three
years:

|                                       |                     |                       |        |        |        |      |        |        |        |   |        |        |       | 
|-------------------------------------- | ------------------- | --------------------- | ------ | ------ | ------ | ---- | ------ | ------ | ------ | - | ------ | ------ | ----- | 
|                                       |                     | 2001                  |        | 2000   |        | 1999
|                                       |                     |                       |        |        |        |     
|Balance at beginning of year           |                     | $                     | 39,959 |        |        | $    | 33,642 |        |        | $ | 36,731 |       
|Less ceded liabilities                 |                     |                       | (50    | )      |        |      |       |        |        |   |       |       
|                                       |                     |                       |        |        |        |      |        |        |        |   |        |       
|Net balance at beginning of year       |                     |                       | 39,909 |        |        |      | 33,642 |        |        |   | 36,731 |       
|                                       |                     |                       |        |        |        |      |        |        |        |   |        |       
|Incurred losses recorded during year  |                     |                       |        |        |        |      |        |        |        |   |        |       
|                                       | For current year    |                       |        | 35,913 |        |      |        | 16,195 |        |   |        | 8,556  |      
|                                       | For all prior years |                       |        | (2,336 | )      |      |        | (4,099 | )      |   |        | (5,819 | )    
|                                       |                     |                       |        |        |        |      |        |        |        |   |        |       
|                                       |                     | Total incurred losses |        |        | 33,577 |      |        |        | 12,096 |   |        |        | 2,737 | 
|                                       |                     |                       |        |        |        |      |        |        |        |   |        |       
|Payments made during year             |                     |                       |        |        |        |      |        |        |        |   |        |       
|                                       | For current year    |                       |        | 3,597  |        |      |        | 2,521  |        |   |        | 2,175  |      
|                                       | For all prior years |                       |        | 8,010  |        |      |        | 3,308  |        |   |        | 3,651  |      
|                                       |                     |                       |        |        |        |      |        |        |        |   |        |       
|                                       |                     | Total payments        |        |        | 11,607 |      |        |        | 5,829  |   |        |        | 5,826 | 
|                                       |                     |                       |        |        |        |      |        |        |        |   |        |       
|Net liabilities at end of year         |                     |                       | 61,879 |        |        |      | 39,909 |        |        |   | 33,642 |       
|Plus ceded liabilities                 |                     |                       |       |        |        |      | 50     |        |        |   |       |       
|                                       |                     |                       |        |        |        |      |        |        |        |   |        |       
|Gross liabilities at end of year       |                     | $                     | 61,879 |        |        | $    | 39,959 |        |        | $ | 33,642 |       
|                                       |                     |                       |        |        |        |      |        |        |        |   |        |       

Payment of dividends by insurance subsidiaries is
restricted by insurance statutes and regulations. In 2002,
without prior regulatory approval, Wesco can receive dividends
from its insurance subsidiaries up to approximately $180,240.

Combined shareholders equity of
Wescos insurance subsidiaries determined pursuant to
statutory accounting rules exceeded corresponding GAAP equity of
$1,826,000 by approximately $23,000 at December 31, 2001,
compared to $220,000 at December 31, 2000. The principal
reason for the decrease was that, unlike GAAP, statutory rules
did not require recognition of deferred income taxes on
unrealized appreciation of equity securities until
January 1, 2001. The main remaining differences between
statutory and GAAP insurance accounting involve deferred taxes
on fixed-income investments and goodwill amortization.

One area of particular concern to the insurance
industry is its exposure to claims for environmental
contamination. Wes-FICs exposure to such claims is
believed to be minimal.

Note 5. Furniture Rental Business
Accounting

Effective with the acquisition of CORT in
February 2000 (see Note 2), Wescos principal source
of sales and service revenues is from rental and sale of
furniture. Rentals are recognized as revenue in the month due;
rentals received in advance are deferred in the liability
section of the consolidated balance sheet. Related costs
comprise the main element of cost of products and services sold
on the consolidated income statement and include depreciation
expense, repairs and maintenance, inventory losses and cost of
furniture sold.

Rental furniture consists principally of
residential and office furniture which is available for rental
or, if no longer up to rental standards, for sale. It is carried
on the consolidated balance sheet at cost, less accumulated
depreciation calculated primarily on a declining-balance basis
over 3 to 5 years using estimated salvage values of 25
to 40 percent of original cost.



Dollar amounts in thousands except for amounts
per share


40



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##### Table of Contents



Following is a breakdown of rental furniture:

|                              |  |              |         |      |  |   |         |  
|----------------------------- |  | ------------ | ------- | ---- |  | - | ------- | -
|                              |  |             
|                              |  | December 31,
|                              |  |             
|                              |  | 2001         |         | 2000
|                              |  |              |         |     
|Cost of rental furniture      |  | $            | 262,388 |      |  | $ | 258,677 |  
|Less accumulated depreciation |  |              | (49,802 | )    |  |   | (13,830 | )
|                              |  |              |         |      |  |   |         |  
|                              |  | $            | 212,586 |      |  | $ | 244,847 |  
|                              |  |              |         |      |  |   |         |  

Note 6. Notes Payable

Following is a summary of notes payable, at
yearend:

|                         |  |              |        |      |  |   |        | 
|------------------------ |  | ------------ | ------ | ---- |  | - | ------ | 
|                         |  |             
|                         |  | December 31,
|                         |  |             
|                         |  | 2001         |        | 2000
|                         |  |              |        |     
|Revolving line of credit |  | $            | 20,300 |      |  | $ | 52,400 | 
|Other                    |  |              | 13,349 |      |  |   | 3,635  | 
|                         |  |              |        |      |  |   |        | 
|                         |  | $            | 33,649 |      |  | $ | 56,035 | 
|                         |  |              |        |      |  |   |        | 

The line of credit, used in the furniture rental
business, totals $150,000 and is unsecured. The weighted average
rate of interest on amounts outstanding at December 31,
2001 was 3.3%.

The $13,349 of other notes payable at
December 31, 2001 mature as follows: 2002, $1,035; 2006,
$9,714; thereafter, $2,600. The main component of this group is
convertible notes of a subsidiary of CORT, which bear interest
at 8% payable quarterly in cash or issuance of additional notes.

Estimated fair market values of notes payable at
December 31, 2001 and December 31, 2000 totaled
approximately $33,756 and $56,132. These figures were calculated
using discounted cash flow computations based upon estimates as
to interest rates prevailing on those dates for comparable
borrowings.

No materially restrictive covenants are included
in any of the various debt agreements.

Note 7. Income Taxes

Following is a breakdown of income taxes payable
at 2001 and 2000 yearends:

|                                        |                              |              |         |         |  |   |         |         | 
|--------------------------------------- | ---------------------------- | ------------ | ------- | ------- |  | - | ------- | ------- | 
|                                        |                              |             
|                                        |                              | December 31,
|                                        |                              |             
|                                        |                              | 2001         |         | 2000   
|                                        |                              |              |         |        
|Deferred tax liabilities, relating to  |                              |              |         |         |  |   |         |        
|                                        | Appreciation of investments  |              | $       | 199,070 |  |   | $       | 257,789 | 
|                                        | Other items                  |              |         | 71,880  |  |   |         | 40,617  | 
|                                        |                              |              |         |         |  |   |         |        
|                                        |                              |              | 270,950 |         |  |   | 298,406 |        
|Deferred tax assets                     |                              |              | (44,740 | )       |  |   | (19,027 | )      
|                                        |                              |              |         |         |  |   |         |        
|                                        | Net deferred tax liabilities |              |         | 226,210 |  |   |         | 279,379 | 
|Taxes currently payable (recoverable)   |                              |              | (545    | )       |  |   | 25,796  |        
|                                        |                              |              |         |         |  |   |         |        
|Income taxes payable                    |                              | $            | 225,665 |         |  | $ | 305,175 |        
|                                        |                              |              |         |         |  |   |         |        

Income taxes are accounted for using the asset
and liability method. Under this method, temporary differences
between financial statement and tax return bases of assets and
liabilities at each balance sheet date are multiplied by the tax
rates in effect at that date, with the results reported on the
balance sheet as net deferred tax liabilities or assets. The
effect of a change in tax rate on such deferred items is
required, under GAAP, to be reflected when enacted in the
consolidated statement of income even though the original charge
or credit for income taxes has been charged or credited to



Dollar amounts in thousands except for amounts
per share


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shareholders equity, as in the case of
unrealized appreciation of investments. As the temporary
differences reverse in future periods, the taxes become
currently payable or recoverable.


The consolidated statement of income contains a
provision (benefit) for income taxes, as follows:

|                             |                            |      |        |        |  |      |         |         |  |   |        |        | 
|---------------------------- | -------------------------- | ---- | ------ | ------ |  | ---- | ------- | ------- |  | - | ------ | ------ | 
|                             |                            | 2001 |        | 2000   |  | 1999
|                             |                            |      |        |        |  |     
|Federal                      |                            | $    | 29,225 |        |  | $    | 493,859 |         |  | $ | 20,316 |       
|State                        |                            |      | (433   | )      |  |      | 2,063   |         |  |   | 339    |       
|                             |                            |      |        |        |  |      |         |         |  |   |        |       
|                             | Provision for income taxes |      | $      | 28,792 |  |      | $       | 495,922 |  |   | $      | 20,655 | 
|                             |                            |      |        |        |  |      |         |         |  |   |        |       
|Current                      |                            | $    | 28,461 |        |  | $    | 495,145 |         |  | $ | 23,818 |       
|Deferred provision (benefit) |                            |      | 331    |        |  |      | 777     |         |  |   | (3,163 | )     
|                             |                            |      |        |        |  |      |         |         |  |   |        |       
|                             | Provision for income taxes |      | $      | 28,792 |  |      | $       | 495,922 |  |   | $      | 20,655 | 
|                             |                            |      |        |        |  |      |         |         |  |   |        |       

Following is a reconciliation of the statutory
federal income tax rate with the effective income tax rate
resulting in the provision for income taxes appearing on the
consolidated statement of income:

|                                     |                                              |      |      |      |   |      |      |      |   |  |      |      |  
|------------------------------------ | -------------------------------------------- | ---- | ---- | ---- | - | ---- | ---- | ---- | - |  | ---- | ---- | -
|                                     |                                              | 2001 |      | 2000 |   | 1999
|                                     |                                              |      |      |      |   |     
|Statutory federal income tax rate    |                                              |      | 35.0 | %    |   |      | 35.0 | %    |   |  | 35.0 | %   
|Increase (decrease) resulting from  |                                              |      |      |      |   |      |      |      |   |  |      |     
|                                     | Dividends received deduction                 |      |      | (9.5 | ) |      |      | (0.3 | ) |  |      | (8.1 | )
|                                     | Goodwill amortization                        |      |      | 7.2  |   |      |      | 0.4  |   |  |      | 1.0  |  
|                                     | State income taxes, less federal tax benefit |      |      | (0.3 | ) |      |      | 0.1  |   |  |      | 0.3  |  
|                                     | Other differences, net                       |      |      | 3.0  |   |      |      | (0.2 | ) |  |      | (0.6 | )
|                                     |                                              |      |      |      |   |      |      |      |   |  |      |     
|Effective income tax provision rate  |                                              |      | 35.4 | %    |   |      | 35.0 | %    |   |  | 27.6 | %   
|                                     |                                              |      |      |      |   |      |      |      |   |  |      |     

Wesco and its subsidiaries join with other
Berkshire entities in the filing of consolidated federal income
tax returns for the Berkshire group. The consolidated federal
tax liability is apportioned among group members pursuant to
methods that result in each member of the group paying or
receiving an amount that approximates the increase or decrease
in consolidated taxes attributable to that member. Returns have
been examined by and settled with the Internal Revenue Service
through 1988.



Dollar amounts in thousands except for amounts
per share


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Note 8. Quarterly Financial
Information

Unaudited quarterly consolidated financial
information for 2001 and 2000 follows:

|               |                         |               |         |               |  |          |         |           |  |   |         |      |  |   |         |      | 
|-------------- | ----------------------- | ------------- | ------- | ------------- |  | -------- | ------- | --------- |  | - | ------- | ---- |  | - | ------- | ---- | 
|               |                         |              
|               |                         | Quarter Ended
|               |                         |              
|               |                         | December 31,  |         | September 30, |  | June 30, |         | March 31,
|               |                         | 2001          |         | 2001          |  | 2001     |         | 2001     
|               |                         |               |         |               |  |          |         |          
|Total revenues |                         | $             | 130,259 |               |  | $        | 136,909 |           |  | $ | 144,060 |      |  | $ | 149,851 |     
|               |                         |               |         |               |  |          |         |           |  |   |         |      |  |   |         |     
|Net income     |                         | $             | 6,422   |               |  | $        | 11,191  |           |  | $ | 15,106  |      |  | $ | 19,817  |     
|               | Per Wesco capital share |               |         | .91           |  |          |         | 1.57      |  |   |         | 2.12 |  |   |         | 2.78 | 
|               |                         |               |         |               |  |          |         |           |  |   |         |      |  |   |         |     

|                                                          |                         |              |         |               |  |          |         |           |  |   |         |       |  |   |         |       | 
|--------------------------------------------------------- | ----------------------- | ------------ | ------- | ------------- |  | -------- | ------- | --------- |  | - | ------- | ----- |  | - | ------- | ----- | 
|                                                          |                         | December 31, |         | September 30, |  | June 30, |         | March 31,
|                                                          |                         | 2000         |         | 2000          |  | 2000     |         | 2000     
|                                                          |                         |              |         |               |  |          |         |          
|Operating revenues                                        |                         | $            | 144,631 |               |  | $        | 146,840 |           |  | $ | 139,880 |       |  | $ | 81,343  |      
|Realized net securities gains                             |                         |              | 44,136  |               |  |          | 653,407 |           |  |   | 430,322 |       |  |   | 183,405 |      
|                                                          |                         |              |         |               |  |          |         |           |  |   |         |       |  |   |         |      
|Total revenues                                            |                         | $            | 188,767 |               |  | $        | 800,247 |           |  | $ | 570,202 |       |  | $ | 264,748 |      
|                                                          |                         |              |         |               |  |          |         |           |  |   |         |       |  |   |         |      
|Net income excluding securities gains                     |                         | $            | 19,803  |               |  | $        | 18,413  |           |  | $ | 18,371  |       |  | $ | 13,500  |      
|                                                          | Per Wesco capital share |              |         | 2.78          |  |          |         | 2.58      |  |   |         | 2.58  |  |   |         | 1.90  | 
|Realized net securities gains, less related
	income taxes |                         |              | 28,688  |               |  |          | 424,773 |           |  |   | 279,710 |       |  |   | 119,212 |      
|                                                          | Per Wesco capital share |              |         | 4.03          |  |          |         | 59.66     |  |   |         | 39.29 |  |   |         | 16.74 | 
|                                                          |                         |              |         |               |  |          |         |           |  |   |         |       |  |   |         |      
|Net income                                                |                         | $            | 48,491  |               |  | $        | 443,186 |           |  | $ | 298,081 |       |  | $ | 132,712 |      
|                                                          | Per Wesco capital share |              |         | 6.81          |  |          |         | 62.24     |  |   |         | 41.87 |  |   |         | 18.64 | 
|                                                          |                         |              |         |               |  |          |         |           |  |   |         |       |  |   |         |      

No securities gains or losses were realized in
2001.

Note 9. Business Segment Data

Consolidated financial information for each of
the past three years is presented in the table on the next page.
It is broken down as to Wescos three business segments,
including the furniture rental segment, which was created in
February 2000 upon the acquisition of CORT (see Note 2).

The insurance segment includes the accounts of
Wes-FIC and its subsidiary, KBS. Wes-FIC is engaged in the
property and casualty insurance and reinsurance business. Its
business has included retrocessions from wholly owned insurance
subsidiaries of Berkshire and reinsurance with unaffiliated
insurance companies. KBS provides specialized insurance coverage
to more than 20% of the banks in the United States, mostly small
and medium-sized banks in the Midwest. In addition to generating
insurance premiums, Wescos insurance segment has derived
dividend and interest income from the investment of float
(premiums received before payment of related claims and
expenses) as well as shareholders equity.

The industrial segment includes the operating
accounts of Precision Steel and its subsidiaries. The Precision
Steel group operates two service centers, which buy steel and
other metals in the form of sheets or strips, cut these to order
and sell them directly to a wide variety of industrial customers
throughout the United States. The Precision Steel group also
manufactures shim stock and other toolroom specialty items and
sells them, along with hose and muffler clamps, nationwide,
generally through distributors.

Wescos consolidated realized net securities
gains  most of which have resulted from sales of
investments held by its insurance subsidiaries  and
goodwill of acquired businesses and related amortization, are
shown separately as nonsegment items, consistent with the way
Wescos management evaluates the performance of its
operating segments. Other items considered unrelated to
Wescos three business segments include principally
(1) investments other than those held by Wes-FIC and KBS,
together with related dividend and interest income,
(2) commercial real estate,



Dollar amounts in thousands except for amounts
per share


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together with related revenues and expenses,
(3) the assets, revenues and expenses of the parent
company, and (4) related income taxes.


|                                            |                                                                                    |                             |   |           |           |      |   |           |           |  |   |           |           | 
|------------------------------------------- | ---------------------------------------------------------------------------------- | --------------------------- | - | --------- | --------- | ---- | - | --------- | --------- |  | - | --------- | --------- | 
|                                            |                                                                                    | 2001                        |   | 2000      |           | 1999
|                                            |                                                                                    |                             |   |           |           |     
|Insurance segment:                          |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          
|                                            | Premiums earned                                                                    |                             | $ | 43,031    |           |      | $ | 23,783    |           |  | $ | 17,655    |          
|                                            | Dividend and interest income                                                       |                             |   | 70,048    |           |      |   | 59,241    |           |  |   | 49,098    |          
|                                            | Provision for income taxes                                                         |                             |   | (21,143   | )         |      |   | (18,114   | )         |  |   | (14,995   | )        
|                                            | Net income                                                                         |                             |   | 45,254    |           |      |   | 45,518    |           |  |   | 44,392    |          
|                                            | Depreciation and amortization other than of
	discounts and premiums of investments |                             |   | 39        |           |      |   | 44        |           |  |   | 44        |          
|                                            | Capital expenditures                                                               |                             |   | 23        |           |      |   | 39        |           |  |   | 79        |          
|                                            | Assets at yearend                                                                  |                             |   | 1,724,612 |           |      |   | 1,820,244 |           |  |   | 2,611,194 |          
|                                            |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          
|Furniture rental segment:                   |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          
|                                            | Revenues                                                                           |                             | $ | 395,414   |           |      | $ | 361,055   |           |  | $ |          |          
|                                            | Provision for income taxes                                                         |                             |   | (7,601    | )         |      |   | (18,160   | )         |  |   |          |          
|                                            | Net income                                                                         |                             |   | 13,076    |           |      |   | 28,988    |           |  |   |          |          
|                                            | Depreciation and amortization other than of
	discounts and premiums of investments |                             |   | 53,429    |           |      |   | 48,657    |           |  |   |          |          
|                                            | Capital expenditures                                                               |                             |   | 1,605     |           |      |   | 6,967     |           |  |   |          |          
|                                            | Assets at yearend                                                                  |                             |   | 286,269   |           |      |   | 325,048   |           |  |   |          |          
|                                            |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          
|Industrial segment:                         |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          
|                                            | Sales, service and other revenues                                                  |                             | $ | 48,440    |           |      | $ | 65,119    |           |  | $ | 64,686    |          
|                                            | Provision for income taxes                                                         |                             |   | (474      | )         |      |   | (907      | )         |  |   | (1,677    | )        
|                                            | Net income                                                                         |                             |   | 388       |           |      |   | 1,281     |           |  |   | 2,532     |          
|                                            | Depreciation and amortization                                                      |                             |   | 747       |           |      |   | 780       |           |  |   | 797       |          
|                                            | Capital expenditures                                                               |                             |   | 245       |           |      |   | 303       |           |  |   | 214       |          
|                                            | Assets at yearend                                                                  |                             |   | 19,044    |           |      |   | 22,537    |           |  |   | 23,252    |          
|                                            |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          
|Goodwill of acquired businesses:            |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          
|                                            | Amortization, net of income taxes                                                  |                             | $ | (6,814    | )         |      | $ | (5,867    | )         |  | $ | (782      | )        
|                                            | Assets at yearend                                                                  |                             |   | 264,465   |           |      |   | 260,037   |           |  |   | 28,556    |          
|                                            |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          
|Realized net securities gains:              |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          
|                                            | Before taxes (included in revenues)                                                |                             | $ |          |           |      | $ | 1,311,270 |           |  | $ | 11,186    |          
|                                            | After taxes (included in net income)                                               |                             |   |          |           |      |   | 852,383   |           |  |   | 7,271     |          
|                                            |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          
|Other items unrelated to business segments: |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          
|                                            | Dividend and interest income                                                       |                             | $ | 885       |           |      | $ | 518       |           |  | $ | 1,145     |          
|                                            | Other revenues                                                                     |                             |   | 3,261     |           |      |   | 2,978     |           |  |   | 4,512     |          
|                                            | Provision for income taxes                                                         |                             |   | (236      | )         |      |   | (329      | )         |  |   | (69       | )        
|                                            | Net income                                                                         |                             |   | 632       |           |      |   | 167       |           |  |   | 730       |          
|                                            | Depreciation and amortization                                                      |                             |   | 360       |           |      |   | 367       |           |  |   | 372       |          
|                                            | Capital expenditures                                                               |                             |   | 135       |           |      |   | 197       |           |  |   | 112       |          
|                                            | Assets at yearend                                                                  |                             |   | 25,303    |           |      |   | 33,049    |           |  |   | 26,013    |          
|                                            |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          
|Reconciliations:                            |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          
|                                            | Total revenues set forth above                                                     |                             | $ | 561,079   |           |      | $ | 1,823,964 |           |  | $ | 148,282   |          
|                                            | Less intersegment interest                                                         |                             |   |          |           |      |   |          |           |  |   | (591      | )        
|                                            |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          
|                                            |                                                                                    | Total consolidated revenues |   | $         | 561,079   |      |   | $         | 1,823,964 |  |   | $         | 147,691   | 
|                                            |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          
|                                            | Total assets set forth above                                                       |                             | $ | 2,319,693 |           |      | $ | 2,460,915 |           |  | $ | 2,689,015 |          
|                                            | Less intersegment advances                                                         |                             |   |          |           |      |   |          |           |  |   | (36,820   | )        
|                                            |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          
|                                            |                                                                                    | Total consolidated assets   |   | $         | 2,319,693 |      |   | $         | 2,460,915 |  |   | $         | 2,652,195 | 
|                                            |                                                                                    |                             |   |           |           |      |   |           |           |  |   |          



Dollar amounts in thousands except for amounts
per share


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WESCO FINANCIAL CORPORATION

SCHEDULE I  CONDENSED
FINANCIAL


INFORMATION OF REGISTRANT


BALANCE SHEET

(Dollar amounts in thousands)


|                                      |                                                                                                                       |                   |           |           |        |   |           |           |        | 
|------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | ----------------- | --------- | --------- | ------ | - | --------- | --------- | ------ | 
|                                      |                                                                                                                       |                  
|                                      |                                                                                                                       | December 31,     
|                                      |                                                                                                                       |                  
|                                      |                                                                                                                       | 2001              |           | 2000     
|                                      |                                                                                                                       |                   |           |          
|Assets:                               |                                                                                                                       |                   |           |           |        |   |           |          
|                                      | Cash and cash equivalents                                                                                             |                   | $         | 28        |        |   | $         | 26        |       
|                                      | Investment in subsidiaries, at cost plus equity
	in subsidiaries undistributed earnings and unrealized
	appreciation |                   |           | 2,009,026 |        |   |           | 2,063,073 |       
|                                      | Other assets                                                                                                          |                   |           | 10        |        |   |           | 23        |       
|                                      |                                                                                                                       |                   |           |           |        |   |           |          
|                                      |                                                                                                                       | $                 | 2,009,064 |           |        | $ | 2,063,122 |          
|                                      |                                                                                                                       |                   |           |           |        |   |           |          
|Liabilities and shareholders equity: |                                                                                                                       |                   |           |           |        |   |           |          
|                                      | Advances from subsidiaries                                                                                            |                   | $         | 92,487    |        |   | $         | 83,140    |       
|                                      | Notes payable                                                                                                         |                   |           | 1,035     |        |   |           | 1,035     |       
|                                      | Income taxes payable, principally deferred                                                                            |                   |           | 3,119     |        |   |           | 1,888     |       
|                                      | Other liabilities                                                                                                     |                   |           | 26        |        |   |           | 25        |       
|                                      |                                                                                                                       |                   |           |           |        |   |           |          
|                                      |                                                                                                                       | Total liabilities |           |           | 96,667 |   |           |           | 86,088 | 
|                                      | Shareholders equity (see consolidated
	balance sheet and statement of changes in shareholders
	equity)              |                   |           | 1,912,397 |        |   |           | 1,977,034 |       
|                                      |                                                                                                                       |                   |           |           |        |   |           |          
|                                      |                                                                                                                       | $                 | 2,009,064 |           |        | $ | 2,063,122 |          
|                                      |                                                                                                                       |                   |           |           |        |   |           |          

STATEMENT OF INCOME

(Dollar amounts in thousands)


|                                                 |                                                                       |                         |        |       |        |      |         |       |         |  |        |       |        | 
|------------------------------------------------ | --------------------------------------------------------------------- | ----------------------- | ------ | ----- | ------ | ---- | ------- | ----- | ------- |  | ------ | ----- | ------ | 
|                                                 |                                                                       |                        
|                                                 |                                                                       | Year Ended December 31,
|                                                 |                                                                       |                        
|                                                 |                                                                       | 2001                    |        | 2000  |        | 1999
|                                                 |                                                                       |                         |        |       |        |     
|Revenues:                                        |                                                                       |                         |        |       |        |      |         |       |         |  |        |      
|                                                 | Dividend and interest income                                          |                         | $      | 1     |        |      | $       | 1     |         |  | $      | 675   |       
|                                                 | Other                                                                 |                         |        |      |        |      |         |      |         |  |        | 46    |       
|                                                 |                                                                       |                         |        |       |        |      |         |       |         |  |        |      
|                                                 |                                                                       |                         | 1      |       |        |      | 1       |       |         |  | 721    |      
|                                                 |                                                                       |                         |        |       |        |      |         |       |         |  |        |      
|Expenses:                                        |                                                                       |                         |        |       |        |      |         |       |         |  |        |      
|                                                 | Interest, including intercompany interest of
	$1,899, $2,789 and $591 |                         |        | 1,978 |        |      |         | 2,868 |         |  |        | 2,939 |       
|                                                 | General and administrative                                            |                         |        | 512   |        |      |         | 483   |         |  |        | 437   |       
|                                                 |                                                                       |                         |        |       |        |      |         |       |         |  |        |      
|                                                 |                                                                       |                         | 2,490  |       |        |      | 3,351   |       |         |  | 3,376  |      
|                                                 |                                                                       |                         |        |       |        |      |         |       |         |  |        |      
|Loss before items shown below                    |                                                                       |                         | (2,489 | )     |        |      | (3,350  | )     |         |  | (2,655 | )    
|Income tax benefit                               |                                                                       |                         | 870    |       |        |      | 1,119   |       |         |  | 1,247  |      
|Equity in undistributed earnings of subsidiaries |                                                                       |                         | 54,155 |       |        |      | 924,701 |       |         |  | 55,551 |      
|                                                 |                                                                       |                         |        |       |        |      |         |       |         |  |        |      
|                                                 |                                                                       | Net income              |        | $     | 52,536 |      |         | $     | 922,470 |  |        | $     | 54,143 | 
|                                                 |                                                                       |                         |        |       |        |      |         |       |         |  |        |      

See notes to accompanying consolidated
financial statement

45



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WESCO FINANCIAL CORPORATION

SCHEDULE I  CONDENSED
FINANCIAL


INFORMATION OF REGISTRANT
(CONTINUED)


STATEMENT OF CASH FLOWS

(Dollar amounts in thousands)


|                                               |                                                                                  |                                                        |                                          |        |         |      |    |         |          |        |    |         |         |        |  
|---------------------------------------------- | -------------------------------------------------------------------------------- | ------------------------------------------------------ | ---------------------------------------- | ------ | ------- | ---- | -- | ------- | -------- | ------ | -- | ------- | ------- | ------ | -
|                                               |                                                                                  |                                                       
|                                               |                                                                                  | Year Ended December 31,                               
|                                               |                                                                                  |                                                       
|                                               |                                                                                  | 2001                                                   |                                          | 2000   |         | 1999
|                                               |                                                                                  |                                                        |                                          |        |         |     
|Cash flows from operating activities:          |                                                                                  |                                                        |                                          |        |         |      |    |         |          |        |    |        
|                                               | Net income                                                                       |                                                        | $                                        | 52,536 |         |      | $  | 922,470 |          |        | $  | 54,143  |        
|                                               | Adjustments to reconcile net income with cash
	flows from operating activities  |                                                        |                                          |        |         |      |    |         |          |        |    |         |        
|                                               |                                                                                  | Increase (decrease) in income taxes payable
	currently |                                          |        | 1,231   |      |    |         | (411     | )      |    |         | (347    | )     
|                                               |                                                                                  | Equity in undistributed earnings of subsidiaries       |                                          |        | (54,155 | )    |    |         | (924,701 | )      |    |         | (55,551 | )     
|                                               |                                                                                  | Other, net                                             |                                          |        | 14      |      |    |         |         |        |    |         | (302    | )     
|                                               |                                                                                  |                                                        |                                          |        |         |      |    |         |          |        |    |        
|                                               |                                                                                  |                                                        | Net cash flows from operating activities |        |         | (374 | )  |         |          | (2,642 | )  |         |         | (2,057 | )
|                                               |                                                                                  |                                                        |                                          |        |         |      |    |         |          |        |    |        
|Cash flows from investing activities:          |                                                                                  |                                                        |                                          |        |         |      |    |         |          |        |    |        
|                                               | Principal collections on loans, and other items                                  |                                                        |                                          |       |         |      |    | 377     |          |        |    | 475     |        
|                                               |                                                                                  |                                                        |                                          |        |         |      |    |         |          |        |    |        
|                                               |                                                                                  |                                                        | Net cash flows from investing activities |        |         |     |    |         |          | 377    |    |         |         | 475    |  
|                                               |                                                                                  |                                                        |                                          |        |         |      |    |         |          |        |    |        
|Cash flows from financing activities:          |                                                                                  |                                                        |                                          |        |         |      |    |         |          |        |    |        
|                                               | Advances from subsidiaries, net                                                  |                                                        |                                          | 9,347  |         |      |    | 10,955  |          |        |    | 39,983  |        
|                                               | Repayment of Notes due November 1, 1999.                                         |                                                        |                                          |       |         |      |    |        |          |        |    | (30,000 | )      
|                                               | Payment of cash dividends                                                        |                                                        |                                          | (8,971 | )       |      |    | (8,687  | )        |        |    | (8,401  | )      
|                                               |                                                                                  |                                                        |                                          |        |         |      |    |         |          |        |    |        
|                                               |                                                                                  |                                                        | Net cash flows from financing activities |        |         | 376  |    |         |          | 2,268  |    |         |         | 1,582  |  
|                                               |                                                                                  |                                                        |                                          |        |         |      |    |         |          |        |    |        
|Increase in cash and cash equivalents          |                                                                                  |                                                        | 2                                        |        |         |      | 3  |         |          |        |   |        
|Cash and cash equivalents  beginning
	of year |                                                                                  |                                                        | 26                                       |        |         |      | 23 |         |          |        | 23 |        
|                                               |                                                                                  |                                                        |                                          |        |         |      |    |         |          |        |    |        
|Cash and cash equivalents  end of year        |                                                                                  | $                                                      | 28                                       |        |         | $    | 26 |         |          | $      | 23 |        
|                                               |                                                                                  |                                                        |                                          |        |         |      |    |         |          |        |    |        
|Supplementary disclosures:                     |                                                                                  |                                                        |                                          |        |         |      |    |         |          |        |    |        
|                                               | Noncash investing activities 
	Investments contributed to subsidiary            |                                                        | $                                        |       |         |      | $  |        |          |        | $  | 28,895  |        
|                                               |                                                                                  |                                                        |                                          |        |         |      |    |         |          |        |    |        

See notes to accompanying consolidated
financial statements

46



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##### Table of Contents



WESCO FINANCIAL CORPORATION
COMMISSION FILE NUMBER 1-4720
EXHIBITS TO FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2001

|    |  |                                                                      |  |       |   |              |  |  |   |              |  | 
|--- |  | -------------------------------------------------------------------- |  | ----- | - | ------------ |  |  | - | ------------ |  | 
|    |  |                                                                      |  |       |   |              |  |  |   | INCORPORATED
|    |  | DESCRIPTION                                                          |  | FILED |   | BY REFERENCE
|    |  |                                                                      |  |       |   |             
|3a. |  | Articles of Incorporation and By-Laws of Wesco Financial Corporation |  |       |   |              |  |  | X |             
|21. |  | List of Subsidiaries                                                 |  |       | X |              |  |  |   |