##### Table of Contents







Form 10-K




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





|    |                                                                                               
|--- | ----------------------------------------------------------------------------------------------
|[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) 
     OF THE SECURITIES EXCHANGE ACT OF 1934






WESCO FINANCIAL CORPORATION




|                                                                   |  |                                     
|------------------------------------------------------------------ |  | ------------------------------------
|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   |  | 91101-1901                          
|(Address of Principal Executive Offices)                           |  | (Zip Code)                          







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















X


x


X








|                                                            |  |                                      
|----------------------------------------------------------- |  | -------------------------------------
|Title of Document                                           |  | Parts of Form 10-K                   
|Proxy Statement for 2005
    Annual Meeting of Shareholders |  | Part III. Items 10, 11, 12, 13 and 14

9



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|                                                                                                                    |  |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|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.Market for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
|Item 6.Selected Financial Data                                                                                     
|Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations                       
|Item 7A.Quantitative and Qualitative Disclosures About Market Risk                                                 
|Item 8.Financial Statements and Supplementary Data                                                                 
|Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                        
|Item 9A.Controls and Procedures                                                                                    
|Item 9B.Other Information                                                                                          
|PART III                                                                                                           
|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                                                             
|Item 14.Principal Accounting Fees and Services                                                                     
|Item 15.Exhibits and Financial Statement Schedules                                                                 
|SIGNATURES                                                                                                         
|REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                                                            
|CONSOLIDATED BALANCE SHEET                                                                                         
|CONSOLIDATED STATEMENT OF INCOME                                                                                   
|CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY                                                          
|CONSOLIDATED STATEMENT OF CASH FLOWS                                                                               
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                                         
|EXHIBIT 31.A                                                                                                       
|EXHIBIT 31.B                                                                                                       
|EXHIBIT 32.A                                                                                                       
|EXHIBIT 32.B                                                                                                       



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PART I







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

















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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A quota-share agreement entered into in 1985 whereby Wes-FIC
    effectively reinsured  through the Berkshire
    Insurance Group, as intermediary-without-profit  2%
    of essentially all 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Several contracts for super-catastrophe reinsurance retroceded
    by 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 by the Berkshire Insurance Group. No liabilities
    remain under this contract.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | A multi-year, quota-share arrangement, entered into in 2000
    through NICO, as intermediary without profit, for participation
    in a pool of certain property and casualty risks written by a
    large, unaffiliated insurer, under which Wes-FICs
    participation increased from approximately 3.3% of certain risks
    associated with policy years 2000 through 2002 to 6% of certain
    risks thereafter. The terms of this arrangement were identical
    to those accepted by another member of the Berkshire Insurance
    Group, except as to the amount of the participation. This
    arrangement was commuted (terminated) in the fourth quarter
    of 2004, at which time Wes-FIC returned $43.1 million,
    cash, to the ceding company, representing all unearned premiums,
    less unamortized costs and expenses, and the ceding company
    assumed the liabilities for any and all insurance risks
    previously undertaken under the contract. Thus, at
    December 31, 2004, Wes-FIC was no longer liable for any
    claims or losses, or for adjustments to losses previously
    recorded, under the contract.
|
| |  | Participation in four risk pools managed by a Berkshire
    Insurance Group member covering hull, liability, workers
    compensation and satellite exposures relating to the aviation
    industry, as follows: with respect to 2001, to the extent of 3%
    for each pool, with satellite exposures effective June 1;
    for 2002, 13% of the hull and liability pools, increasing to
    15.5% in August, and 3% of the workers compensation pool
    (satellite exposures were not renewed in June); and, for 2003
    and 2004, 10% of the hull and liability pools only. The
    Berkshire Insurance Group member provides a portion of the
    upper-level reinsurance protection to these aviation risk pools,
    and therefore to Wes-FIC, on terms that could cause some
    conflict of interest under certain conditions, e.g., in settling
    a large loss.                                                                                                                                                                                                                                                                      

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

















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








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






PART II







|        |                                                                                                                 
|------- | ----------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Shareholder Matters and Issuer Purchases of Equity Securities





|              |  |             |     |  |           |   |             |      |  |   |           |  |  |     |     |  |      |   |     |  |  |   |       | 
|------------- |  | ----------- | --- |  | --------- | - | ----------- | ---- |  | - | --------- |  |  | --- | --- |  | ---- | - | --- |  |  | - | ----- | 
|              |  | 2004        |     |  | 2003      |  
|              |  |             |     |  |           |  
|              |  | Sales Price |     |  |           |   | Sales Price |      |  |  
|              |  |             |     |  | Dividends |   |             |      |  |   | Dividends | 
|Quarter Ended |  | High        |     |  | Low       |   |             | Paid |  |   | High      |  |  | Low |     |  | Paid |  
|              |  |             |     |  |           |   |             |      |  |   |           |  |  |     |     |  |      |  
|March 31      |  | $           | 410 |  |           | $ | 324         |      |  | $ | 0.345     |  |  | $   | 310 |  |      | $ | 285 |  |  | $ | 0.335 | 
|June 30       |  |             | 433 |  |           |   | 351         |      |  |   | 0.345     |  |  |     | 322 |  |      |   | 285 |  |  |   | 0.335 | 
|September 30  |  |             | 374 |  |           |   | 339         |      |  |   | 0.345     |  |  |     | 357 |  |      |   | 303 |  |  |   | 0.335 | 
|December 31   |  |             | 419 |  |           |   | 338         |      |  |   | 0.345     |  |  |     | 373 |  |      |   | 315 |  |  |   | 0.335 | 
|              |  |             |     |  |           |   |             |      |  |   |           |  |  |     |     |  |      |  
|              |  |             |     |  |           |   |             |      |  | $ | 1.380     |  |  |     |     |  |      |   |     |  |  | $ | 1.340 | 
|              |  |             |     |  |           |   |             |      |  |   |           |  |  |     |     |  |      |  





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Item 6. Selected Financial Data




|                      |                                                        |                                  |                            |                   |         |           |        |           |         |           |        |           |         |           |        |           |         |           |        |           |         |           |        | 
|--------------------- | ------------------------------------------------------ | -------------------------------- | -------------------------- | ----------------- | ------- | --------- | ------ | --------- | ------- | --------- | ------ | --------- | ------- | --------- | ------ | --------- | ------- | --------- | ------ | --------- | ------- | --------- | ------ | 
|                      |                                                        | December 31,                     |                           
|                      |                                                        |                                  |                           
|                      |                                                        | 2004                             |                            |                   | 2003    |           |        | 2002      |         |           | 2001   |           |         | 2000      |       
|                      |                                                        |                                  |                            |                   |         |           |        |           |         |           |        |           |         |           |       
|Assets:               |                                                        |                                  |                            |                   |         |           |        |           |         |           |        |           |         |           |        |           |         |           |        |          
|                      | Cash and cash equivalents                              |                                  | $                          | 1,161,163         |         |           | $      | 1,052,462 |         |           | $      | 349,812   |         |           | $      | 120,784   |         |           | $      | 153,810   |        
|                      | Investments                                           |                                  |                            |                   |         |           |        |           |         |           |        |           |         |           |        |           |         |           |        |           |        
|                      |                                                        | Securities with fixed maturities |                            |                   | 94,299  |           |        |           | 167,390 |           |        |           | 827,537 |           |        |           | 924,160 |           |        |           | 839,683 |          
|                      |                                                        | Marketable equity securities     |                            |                   | 759,658 |           |        |           | 754,634 |           |        |           | 626,768 |           |        |           | 667,262 |           |        |           | 833,937 |          
|                      | Accounts receivable                                    |                                  |                            | 46,007            |         |           |        | 60,168    |         |           |        | 67,425    |         |           |        | 43,871    |         |           |        | 38,444    |        
|                      | Rental furniture                                       |                                  |                            | 171,983           |         |           |        | 163,699   |         |           |        | 187,480   |         |           |        | 212,586   |         |           |        | 244,847   |        
|                      | Goodwill of acquired businesses                        |                                  |                            | 266,607           |         |           |        | 266,607   |         |           |        | 266,203   |         |           |        | 264,465   |         |           |        | 260,037   |        
|                      | Other assets                                           |                                  |                            | 71,818            |         |           |        | 73,435    |         |           |        | 81,750    |         |           |        | 86,565    |         |           |        | 90,157    |        
|                      |                                                        |                                  |                            |                   |         |           |        |           |         |           |        |           |         |           |       
|                      |                                                        |                                  | Total assets               |                   | $       | 2,571,535 |        |           | $       | 2,538,395 |        |           | $       | 2,406,975 |        |           | $       | 2,319,693 |        |           | $       | 2,460,915 |       
|                      |                                                        |                                  |                            |                   |         |           |        |           |         |           |        |           |         |           |       
|Liabilities:          |                                                        |                                  |                            |                   |         |           |        |           |         |           |        |           |         |           |        |           |         |           |        |          
|                      | Insurance losses and loss adjustment expenses          |                                  | $                          | 56,162            |         |           | $      | 102,526   |         |           | $      | 73,065    |         |           | $      | 61,879    |         |           | $      | 39,959    |        
|                      | Unearned insurance premiums                            |                                  |                            | 25,341            |         |           |        | 28,993    |         |           |        | 48,681    |         |           |        | 24,897    |         |           |        | 17,006    |        
|                      | Deferred furniture rental income and security deposits |                                  |                            | 20,358            |         |           |        | 19,835    |         |           |        | 21,562    |         |           |        | 23,796    |         |           |        | 27,669    |        
|                      | Notes payable                                          |                                  |                            | 29,225            |         |           |        | 12,679    |         |           |        | 32,481    |         |           |        | 33,649    |         |           |        | 56,035    |        
|                      | Income taxes payable, principally deferred             |                                  |                            | 272,005           |         |           |        | 247,241   |         |           |        | 227,902   |         |           |        | 225,665   |         |           |        | 305,175   |        
|                      | Other liabilities                                      |                                  |                            | 51,501            |         |           |        | 48,931    |         |           |        | 45,122    |         |           |        | 37,410    |         |           |        | 38,037    |        
|                      |                                                        |                                  |                            |                   |         |           |        |           |         |           |        |           |         |           |       
|                      |                                                        |                                  | Total liabilities          |                   | $       | 454,592   |        |           | $       | 460,205   |        |           | $       | 448,813   |        |           | $       | 407,296   |        |           | $       | 483,881   |       
|                      |                                                        |                                  |                            |                   |         |           |        |           |         |           |        |           |         |           |       
|Shareholders equity: |                                                        |                                  |                            |                   |         |           |        |           |         |           |        |           |         |           |        |           |         |           |        |          
|                      | Capital stock and surplus                              |                                  | $                          | 33,324            |         |           | $      | 33,324    |         |           | $      | 30,439    |         |           | $      | 30,439    |         |           | $      | 30,439    |        
|                      | Unrealized appreciation of investments, net of taxes   |                                  |                            | 427,690           |         |           |        | 426,542   |         |           |        | 374,571   |         |           |        | 372,267   |         |           |        | 480,469   |        
|                      | Retained earnings                                      |                                  |                            | 1,655,929         |         |           |        | 1,618,324 |         |           |        | 1,553,152 |         |           |        | 1,509,691 |         |           |        | 1,466,126 |        
|                      |                                                        |                                  |                            |                   |         |           |        |           |         |           |        |           |         |           |       
|                      |                                                        |                                  | Total shareholders equity |                   | $       | 2,116,943 |        |           | $       | 2,078,190 |        |           | $       | 1,958,162 |        |           | $       | 1,912,397 |        |           | $       | 1,977,034 |       
|                      |                                                        |                                  |                            |                   |         |           |        |           |         |           |        |           |         |           |       
|                      |                                                        |                                  |                            | Per capital share |         | $         | 297.33 |           |         | $         | 291.89 |           |         | $         | 275.03 |           |         | $         | 268.60 |           |         | $         | 277.68 | 
|                      |                                                        |                                  |                            |                   |         |           |        |           |         |           |        |           |         |           |       

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|                                                 |                                                             |                         |         |         |      |   |         |         |       |   |         |         |      |      |         |         |      |   |           |           |        | 
|------------------------------------------------ | ----------------------------------------------------------- | ----------------------- | ------- | ------- | ---- | - | ------- | ------- | ----- | - | ------- | ------- | ---- | ---- | ------- | ------- | ---- | - | --------- | --------- | ------ | 
|                                                 |                                                             | Year Ended December 31, |        
|                                                 |                                                             |                         |        
|                                                 |                                                             | 2004                    |         |         | 2003 |   |         | 2002    |       |   | 2001    |         |      | 2000 |        
|                                                 |                                                             |                         |         |         |      |   |         |         |       |   |         |         |      |      |        
|Revenues:                                        |                                                             |                         |         |         |      |   |         |         |       |   |         |         |      |      |         |         |      |   |           |          
|                                                 | Sales and service revenues                                  |                         | $       | 414,508 |      |   | $       | 406,250 |       |   | $       | 437,099 |      |      | $       | 443,628 |      |   | $         | 426,096   |       
|                                                 | Insurance premiums earned                                   |                         |         | 54,589  |      |   |         | 106,651 |       |   |         | 64,627  |      |      |         | 43,031  |      |   |           | 23,783    |       
|                                                 | Dividend and interest income                                |                         |         | 36,844  |      |   |         | 44,763  |       |   |         | 70,652  |      |      |         | 70,981  |      |   |           | 59,759    |       
|                                                 | Realized net investment gains                               |                         |         |        |      |   |         | 53,466  |       |   |         |        |      |      |         |        |      |   |           | 1,311,270 |       
|                                                 | Other                                                       |                         |         | 3,372   |      |   |         | 3,187   |       |   |         | 3,299   |      |      |         | 3,439   |      |   |           | 3,056     |       
|                                                 |                                                             |                         |         |         |      |   |         |         |       |   |         |         |      |      |        
|                                                 |                                                             |                         | 509,313 |         |      |   | 614,317 |         |       |   | 575,677 |         |      |      | 561,079 |         |      |   | 1,823,964 |          
|                                                 |                                                             |                         |         |         |      |   |         |         |       |   |         |         |      |      |        
|Costs and expenses:                              |                                                             |                         |         |         |      |   |         |         |       |   |         |         |      |      |         |         |      |   |           |          
|                                                 | Cost of products and services sold                          |                         |         | 146,783 |      |   |         | 144,725 |       |   |         | 145,677 |      |      |         | 144,712 |      |   |           | 146,649   |       
|                                                 | Insurance losses, loss adjustment and underwriting expenses |                         |         | 32,062  |      |   |         | 82,497  |       |   |         | 58,736  |      |      |         | 46,682  |      |   |           | 19,392    |       
|                                                 | Selling, general and administrative                         |                         |         | 261,434 |      |   |         | 278,090 |       |   |         | 288,353 |      |      |         | 276,712 |      |   |           | 227,954   |       
|                                                 | Interest expense                                            |                         |         | 799     |      |   |         | 749     |       |   |         | 1,994   |      |      |         | 4,169   |      |   |           | 5,235     |       
|                                                 | Goodwill amortization                                       |                         |         |        |      |   |         |        |       |   |         |        |      |      |         | 7,476   |      |   |           | 6,342     |       
|                                                 |                                                             |                         |         |         |      |   |         |         |       |   |         |         |      |      |        
|                                                 |                                                             |                         | 441,078 |         |      |   | 506,061 |         |       |   | 494,760 |         |      |      | 479,751 |         |      |   | 405,572   |          
|                                                 |                                                             |                         |         |         |      |   |         |         |       |   |         |         |      |      |        
|Income before income taxes and minority interest |                                                             |                         | 68,235  |         |      |   | 108,256 |         |       |   | 80,917  |         |      |      | 81,328  |         |      |   | 1,418,392 |          
|Income taxes                                     |                                                             |                         | 20,808  |         |      |   | 34,852  |         |       |   | 28,199  |         |      |      | 28,792  |         |      |   | 495,922   |          
|Minority interest in net loss of subsidiary      |                                                             |                         |        |         |      |   | (1,307  | )       |       |   |        |         |      |      |        |         |      |   |          |          
|                                                 |                                                             |                         |         |         |      |   |         |         |       |   |         |         |      |      |        
|Net income                                       |                                                             | $                       | 47,427  |         |      | $ | 74,711  |         |       | $ | 52,718  |         |      | $    | 52,536  |         |      | $ | 922,470   |          
|                                                 |                                                             |                         |         |         |      |   |         |         |       |   |         |         |      |      |        
|Amounts per capital share:                       |                                                             |                         |         |         |      |   |         |         |       |   |         |         |      |      |         |         |      |   |           |          
|                                                 |                                                             | Net income              |         | $       | 6.66 |   |         | $       | 10.49 |   |         | $       | 7.40 |      |         | $       | 7.38 |   |           | $         | 129.56 | 
|                                                 |                                                             | Cash dividends          |         |         | 1.38 |   |         |         | 1.34  |   |         |         | 1.30 |      |         |         | 1.26 |   |           |           | 1.22   | 
|                                                 |                                                             |                         |         |         |      |   |         |         |       |   |         |         |      |      |        









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





Financial Condition






Results of Operations




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all
after income tax effect


|                          |                                              |                         |       |        |        |  |        |        |        |  |       |        |        | 
|------------------------- | -------------------------------------------- | ----------------------- | ----- | ------ | ------ |  | ------ | ------ | ------ |  | ----- | ------ | ------ | 
|                          |                                              | Year Ended December 31, |      
|                          |                                              |                         |      
|                          |                                              | 2004                    |       |        | 2003   |  |        | 2002   |       
|                          |                                              |                         |       |        |        |  |        |        |       
|Insurance segment:        |                                              |                         |       |        |        |  |        |        |        |  |       |       
|                          | Underwriting                                 |                         | $     | 14,618 |        |  | $      | 15,711 |        |  | $     | 3,829  |       
|                          | Investment income                            |                         |       | 26,302 |        |  |        | 30,925 |        |  |       | 45,642 |       
|Furniture rental segment  |                                              |                         | 5,022 |        |        |  | (6,257 | )      |        |  | 2,442 |       
|Industrial segment        |                                              |                         | 1,094 |        |        |  | (860   | )      |        |  | 250   |       
|                          | Nonsegment items other than investment gains |                         |       | 391    |        |  |        | 439    |        |  |       | 555    |       
|                         
|Realized investment gains |                                              |                         |      |        |        |  | 34,753 |        |        |  |      |       
|                          |                                              |                         |       |        |        |  |        |        |       
|                          |                                              | Consolidated net income |       | $      | 47,427 |  |        | $      | 74,711 |  |       | $      | 52,718 | 
|                          |                                              |                         |       |        |        |  |        |        |       

after


Insurance Segment




|                             |  |                         |        |  |      |   |         |      |  |   |        | 
|---------------------------- |  | ----------------------- | ------ |  | ---- | - | ------- | ---- |  | - | ------ | 
|                             |  | Year Ended December 31, |       
|                             |  |                         |       
|                             |  | 2004                    |        |  | 2003 |   |         | 2002 | 
|                             |  |                         |        |  |      |   |         |      | 
|Premiums written             |  | $                       | 45,042 |  |      | $ | 86,962  |      |  | $ | 88,411 | 
|                             |  |                         |        |  |      |   |         |      | 
|Premiums earned              |  | $                       | 54,589 |  |      | $ | 106,651 |      |  | $ | 64,627 | 
|                             |  |                         |        |  |      |   |         |      | 
|Underwriting gain            |  | $                       | 22,490 |  |      | $ | 24,171  |      |  | $ | 5,891  | 
|Dividend and interest income |  |                         | 36,035 |  |      |   | 44,118  |      |  |   | 70,007 | 
|                             |  |                         |        |  |      |   |         |      | 
|Income before income taxes   |  |                         | 58,525 |  |      |   | 68,289  |      |  |   | 75,898 | 
|Income taxes                 |  |                         | 17,605 |  |      |   | 21,653  |      |  |   | 26,427 | 
|                             |  |                         |        |  |      |   |         |      | 
|Segment net income           |  | $                       | 40,920 |  |      | $ | 46,636  |      |  | $ | 49,471 | 
|                             |  |                         |        |  |      |   |         |      | 









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Furniture Rental Segment




|                                                        |                        |                         |         |         |      |   |         |         |  |   |         |         | 
|------------------------------------------------------- | ---------------------- | ----------------------- | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                        |                        | Year Ended December 31, |        
|                                                        |                        |                         |        
|                                                        |                        | 2004                    |         |         | 2003 |   |         | 2002    | 
|                                                        |                        |                         |         |         |      |   |         |         | 
|Revenues:                                               |                        |                         |         |         |      |   |         |         |  |   |         |        
|                                                        | Furniture rentals      |                         | $       | 275,378 |      |   | $       | 275,949 |  |   | $       | 309,341 | 
|                                                        | Furniture sales        |                         |         | 67,772  |      |   |         | 68,253  |  |   |         | 72,816  | 
|                                                        | Apartment locator fees |                         |         | 10,844  |      |   |         | 15,910  |  |   |         | 6,426   | 
|                                                        |                        |                         |         |         |      |   |         |         | 
|                                                        |                        |                         | 353,994 |         |      |   | 360,112 |         |  |   | 388,583 |        
|                                                        |                        |                         |         |         |      |   |         |         | 
|Cost of rentals, sales and fees                         |                        |                         | 96,266  |         |      |   | 105,998 |         |  |   | 116,354 |        
|Selling, general and administrative expenses            |                        |                         | 249,319 |         |      |   | 265,799 |         |  |   | 266,796 |        
|Interest expense                                        |                        |                         | 799     |         |      |   | 749     |         |  |   | 1,790   |        
|                                                        |                        |                         |         |         |      |   |         |         | 
|                                                        |                        |                         | 346,384 |         |      |   | 372,546 |         |  |   | 384,940 |        
|                                                        |                        |                         |         |         |      |   |         |         | 
|Income (loss) before income taxes and minority interest |                        |                         | 7,610   |         |      |   | (12,434 | )       |  |   | 3,643   |        
|Income taxes                                            |                        |                         | 2,588   |         |      |   | (4,870  | )       |  |   | 1,201   |        
|Minority interest in net loss of subsidiary             |                        |                         |        |         |      |   | (1,307  | )       |  |   |        |        
|                                                        |                        |                         |         |         |      |   |         |         | 
|Segment net income (loss)                               |                        | $                       | 5,022   |         |      | $ | (6,257  | )       |  | $ | 2,442   |        
|                                                        |                        |                         |         |         |      |   |         |         | 









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Industrial Segment




|                                         |  |                         |        |  |      |   |        |      |  |   |        | 
|---------------------------------------- |  | ----------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                                         |  | Year Ended December 31, |       
|                                         |  |                         |       
|                                         |  | 2004                    |        |  | 2003 |   |        | 2002 | 
|                                         |  |                         |        |  |      |   |        |      | 
|Revenues, principally sales and services |  | $                       | 60,514 |  |      | $ | 46,138 |      |  | $ | 48,567 | 
|                                         |  |                         |        |  |      |   |        |      | 
|Income (loss) before income taxes        |  | $                       | 1,758  |  |      | $ | (1,531 | )    |  | $ | 663    | 
|Income taxes                             |  |                         | 664    |  |      |   | (671   | )    |  |   | 413    | 
|                                         |  |                         |        |  |      |   |        |      | 
|Segment net income (loss)                |  | $                       | 1,094  |  |      | $ | (860   | )    |  | $ | 250    | 
|                                         |  |                         |        |  |      |   |        |      | 





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Unrelated to Business Segment Operations




|                                                    |                                                     |                                             |   |        |      |   |        |        |     |   |   |        |     | 
|--------------------------------------------------- | --------------------------------------------------- | ------------------------------------------- | - | ------ | ---- | - | ------ | ------ | --- | - | - | ------ | --- | 
|                                                    |                                                     | Year Ended December 31,                     |  
|                                                    |                                                     |                                             |  
|                                                    |                                                     | 2004                                        |   |        | 2003 |   |        | 2002   |    
|                                                    |                                                     |                                             |   |        |      |   |        |        |    
|Realized investment gains, before income tax effect |                                                     | $                                           |  |        |      | $ | 53,466 |        |     | $ |  |       
|Income taxes                                        |                                                     |                                             |  |        |      |   | 18,713 |        |     |   |  |       
|                                                    |                                                     |                                             |   |        |      |   |        |        |    
|                                                    | Realized investment gains                           |                                             | $ |       |      |   | $      | 34,753 |     |   | $ |       |    
|                                                    |                                                     |                                             |   |        |      |   |        |        |    
|Other nonsegment items                             |                                                     |                                             |   |        |      |   |        |        |     |   |   |       
|                                                    | Rental income from commercial real estate           |                                             | $ | 3,372  |      |   | $      | 3,187  |     |   | $ | 3,248  |    
|                                                    | Dividend and interest income                        |                                             |   | 786    |      |   |        | 617    |     |   |   | 616    |    
|                                                    | Real estate and general and administrative expenses |                                             |   | (3,815 | )    |   |        | (3,367 | )   |   |   | (3,186 | )  
|                                                    | Other items, net                                    |                                             |   | (1     | )    |   |        | 29     |     |   |   | 35     |    
|                                                    |                                                     |                                             |   |        |      |   |        |        |    
|                                                    | Income before income taxes                          |                                             |   | 342    |      |   |        | 466    |     |   |   | 713    |    
|                                                    | Income taxes                                        |                                             |   | (49    | )    |   |        | 27     |     |   |   | 158    |    
|                                                    |                                                     |                                             |   |        |      |   |        |        |    
|                                                    |                                                     | Net income from other nonsegment activities |   | $      | 391  |   |        | $      | 439 |   |   | $      | 555 | 
|                                                    |                                                     |                                             |   |        |      |   |        |        |    



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|                                                          |  |       |         |              |      |   |        |           |  |   |           |  |  |              |        |  |  |   |        | 
|--------------------------------------------------------- |  | ----- | ------- | ------------ | ---- | - | ------ | --------- |  | - | --------- |  |  | ------------ | ------ |  |  | - | ------ | 
|                                                          |  |       |         | Payments Due |     
|                                                          |  |       |         |              |     
|                                                          |  | Total |         |              | 2005 |   |        | 2006-2007 |  |   | 2008-2009 |  |  | Subsequently |       
|                                                          |  |       |         |              |      |   |        |           |  |   |           |  |  |              |       
|Notes payable, including interest                         |  | $     | 29,348  |              |      | $ | 29,148 |           |  | $ |          |  |  | $            |       |  |  | $ | 200    | 
|Operating lease obligations                               |  |       | 110,830 |              |      |   | 27,136 |           |  |   | 40,399    |  |  |              | 23,948 |  |  |   | 19,347 | 
|Purchase obligations, other than for capital expenditures |  |       | 15,223  |              |      |   | 13,450 |           |  |   | 1,773     |  |  |              |       |  |  |   |       | 
|Other, principally deferred compensation                  |  |       | 4,137   |              |      |   | 142    |           |  |   | 152       |  |  |              |       |  |  |   | 3,843  | 
|                                                          |  |       |         |              |      |   |        |           |  |   |           |  |  |              |       
|Totals                                                    |  | $     | 159,538 |              |      | $ | 69,876 |           |  | $ | 42,324    |  |  | $            | 23,948 |  |  | $ | 23,390 | 
|                                                          |  |       |         |              |      |   |        |           |  |   |           |  |  |              |       









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Item 7A. Quantitative and Qualitative Disclosures About
Market Risk








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|                                               |              |                   |   |           |                   |  |   |           |  |  |          |           |  |  |   |           | 
|---------------------------------------------- | ------------ | ----------------- | - | --------- | ----------------- |  | - | --------- |  |  | -------- | --------- |  |  | - | --------- | 
|                                               |              | December 31, 2004 |   |           | December 31, 2003 | 
|                                               |              |                   |   |           |                   | 
|                                               |              | Increase          |   |           | Decrease          |  |   | Increase  |  |  | Decrease |          
|                                               |              |                   |   |           |                   |  |   |           |  |  |          |          
|Market value of marketable equity securities  |              |                   |   |           |                   |  |   |           |  |  |          |           |  |  |   |          
|                                               | As recorded  |                   | $ | 759,658   |                   |  | $ | 759,658   |  |  | $        | 754,634   |  |  | $ | 754,634   | 
|                                               | Hypothetical |                   |   | 987,556   |                   |  |   | 531,760   |  |  |          | 981,024   |  |  |   | 528,244   | 
|Shareholders equity                          |              |                   |   |           |                   |  |   |           |  |  |          |           |  |  |   |          
|                                               | As recorded  |                   |   | 2,116,943 |                   |  |   | 2,116,943 |  |  |          | 2,078,190 |  |  |   | 2,078,190 | 
|                                               | Hypothetical |                   |   | 2,265,076 |                   |  |   | 1,968,810 |  |  |          | 2,225,344 |  |  |   | 1,931,036 | 
|                                               |              |                   |   |           |                   |  |   |           |  |  |          |          











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expects, anticipates, intends, plans,
believes, estimates, may, could,







Item 8. Financial Statements and Supplementary
Data




|                                                                                                                 |  |           |    | 
|---------------------------------------------------------------------------------------------------------------- |  | --------- | -- | 
|                                                                                                                 |  | Page      |   
|Financial Statements                                                                                             |  | Number(s) |   
|                                                                                                                 |  |           |   
|Report of independent registered public
    accounting firm                                                      |  |           | 35 | 
|Consolidated balance sheet 
    December 31, 2004 and 2003                                                      |  |           | 36 | 
|Consolidated statement of
    income  years ended December 31, 2004, 2003 and
    2002                          |  |           | 37 | 
|Consolidated statement of changes in
    shareholders equity  years ended
    December 31, 2004, 2003 and 2002 |  |           | 38 | 
|Consolidated statement of cash
    flows  years ended December 31, 2004, 2003 and
    2002                      |  |           | 39 | 
|Notes to consolidated financial
    statements                                                                   |  |           | 40 | 



|                                                                                                                                |  |          |   |  |           |  |    | 
|------------------------------------------------------------------------------------------------------------------------------- |  | -------- | - |  | --------- |  | -- | 
|                                                                                                                                |  | Schedule |   |  | Page      | 
|Financial Statement Schedule                                                                                                    |  | Number   |   |  | Number(s) | 
|                                                                                                                                |  |          |   |  |           | 
|Condensed financial information of Wesco 
    December 31, 2004 and 2003, and years ended
    December 31, 2004, 2003 and 2002 |  |          | I |  |           |  | 49 | 

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







Item 9A. Controls and Procedures






MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING


Internal
Control  Integrated Framework






| |                            
| | ---------------------------
| | WESCO FINANCIAL CORPORATION





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






Internal Control  Integrated Framework


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Internal
Control  Integrated Framework Internal Control  Integrated
Framework











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|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III







|         |                                                   
|-------- | --------------------------------------------------
|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








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accounting Fees and Services








|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

















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SIGNATURES






|    |  |                                                                                                                     |  |              
|--- |  | ------------------------------------------------------------------------------------------------------------------- |  | -------------
|   
|By: |  | /s/ Charles T. Munger                                                                                               |  |              
|    |  | Charles T. Munger
    Chairman of the Board (principal executive officer)                                           |  | March 9, 2005
|   
|By: |  | /s/ Robert H. Bird                                                                                                  |  |              
|    |  | Robert H. Bird
    President                                                                                        |  | March 9, 2005
|   
|By: |  | /s/ Jeffrey L. Jacobson                                                                                             |  |              
|    |  | Jeffrey L. Jacobson
    Vice President and Chief Financial Officer
    (principal financial and accounting officer) |  | March 9, 2005



|                                      |  |              
|------------------------------------- |  | -------------
|                                     
|/s/ Robert H. Bird                    |  |              
|Robert H. Bird
    Director           |  | March 9, 2005
|                                     
|/s/ Carolyn H.
    Carlburg           |  |              
|Carolyn H. Carlburg
    Director      |  | March 9, 2005
|                                     
|/s/ Robert E. Denham                  |  |              
|Robert E. Denham
    Director         |  | March 9, 2005
|                                     
|/s/ Robert T. Flaherty                |  |              
|Robert T. Flaherty
    Director       |  | March 9, 2005
|                                     
|/s/ Peter D. Kaufman                  |  |              
|Peter D. Kaufman
    Director         |  | March 9, 2005
|                                     
|/s/ Charles T. Munger                 |  |              
|Charles T. Munger
    Director        |  | March 9, 2005
|                                     
|/s/ Elizabeth Caspers
    Peters      |  |              
|Elizabeth Caspers Peters
    Director |  | March 9, 2005

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM












Internal Control 
Integrated Framework









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WESCO FINANCIAL CORPORATION








CONSOLIDATED BALANCE SHEET


(Dollar amounts in thousands)


|                                                       |                                                                                                              |                            |           |           |           |   |           |           |           | 
|------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------ | -------------------------- | --------- | --------- | --------- | - | --------- | --------- | --------- | 
|                                                       |                                                                                                              | December 31,               |          
|                                                       |                                                                                                              |                            |          
|                                                       |                                                                                                              | 2004                       |           |           | 2003      |  
|                                                       |                                                                                                              |                            |           |           |           |  
|ASSETS                                                
|Cash and cash equivalents                              |                                                                                                              | $                          | 1,161,163 |           |           | $ | 1,052,462 |          
|Investments:                                           |                                                                                                              |                            |           |           |           |   |           |          
|                                                       | Securities with fixed maturities                                                                             |                            |           | 94,299    |           |   |           | 167,390   |          
|                                                       | Marketable equity securities                                                                                 |                            |           | 759,658   |           |   |           | 754,634   |          
|Accounts receivable                                    |                                                                                                              |                            | 46,007    |           |           |   | 60,168    |          
|Rental furniture                                       |                                                                                                              |                            | 171,983   |           |           |   | 163,699   |          
|Goodwill of acquired businesses                        |                                                                                                              |                            | 266,607   |           |           |   | 266,607   |          
|Other assets                                           |                                                                                                              |                            | 71,818    |           |           |   | 73,435    |          
|                                                       |                                                                                                              |                            |           |           |           |  
|                                                       |                                                                                                              | $                          | 2,571,535 |           |           | $ | 2,538,395 |          
|                                                       |                                                                                                              |                            |           |           |           |  
|                                                      
|LIABILITIES AND SHAREHOLDERS EQUITY                  
|Insurance losses and loss adjustment expenses          |                                                                                                              | $                          | 56,162    |           |           | $ | 102,526   |          
|Unearned insurance premiums                            |                                                                                                              |                            | 25,341    |           |           |   | 28,993    |          
|Deferred furniture rental income and security deposits |                                                                                                              |                            | 20,358    |           |           |   | 19,835    |          
|Accounts payable and accrued expenses                  |                                                                                                              |                            | 51,501    |           |           |   | 48,931    |          
|Notes payable                                          |                                                                                                              |                            | 29,225    |           |           |   | 12,679    |          
|Income taxes payable, principally deferred             |                                                                                                              |                            | 272,005   |           |           |   | 247,241   |          
|                                                       |                                                                                                              |                            |           |           |           |  
|                                                       |                                                                                                              |                            | 454,592   |           |           |   | 460,205   |          
|                                                       |                                                                                                              |                            |           |           |           |  
|Shareholders equity:                                  |                                                                                                              |                            |           |           |           |   |           |          
|                                                       | Capital stock, $1 par value  authorized,
    7,500,000 shares; issued and outstanding,
    7,119,807 shares |                            |           | 7,120     |           |   |           | 7,120     |          
|                                                       | Additional paid-in capital                                                                                   |                            |           | 26,204    |           |   |           | 26,204    |          
|                                                       | Unrealized appreciation of investments, net of taxes                                                         |                            |           | 427,690   |           |   |           | 426,542   |          
|                                                       | Retained earnings                                                                                            |                            |           | 1,655,929 |           |   |           | 1,618,324 |          
|                                                       |                                                                                                              |                            |           |           |           |  
|                                                       |                                                                                                              | Total shareholders equity |           |           | 2,116,943 |   |           |           | 2,078,190 | 
|                                                       |                                                                                                              |                            |           |           |           |  
|                                                       |                                                                                                              | $                          | 2,571,535 |           |           | $ | 2,538,395 |          
|                                                       |                                                                                                              |                            |           |           |           |  

See 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, |        
|                                                                                          |                                                             |                         |        
|                                                                                          |                                                             | 2004                    |         |         | 2003   |  |         | 2002    |       
|                                                                                          |                                                             |                         |         |         |        |  |         |         |       
|Revenues:                                                                                 |                                                             |                         |         |         |        |  |         |         |        |  |         |        
|                                                                                          | Sales and service revenues                                  |                         | $       | 414,508 |        |  | $       | 406,250 |        |  | $       | 437,099 |       
|                                                                                          | Insurance premiums earned                                   |                         |         | 54,589  |        |  |         | 106,651 |        |  |         | 64,627  |       
|                                                                                          | Dividend and interest income                                |                         |         | 36,844  |        |  |         | 44,763  |        |  |         | 70,652  |       
|                                                                                          | Realized investment gains                                   |                         |         |        |        |  |         | 53,466  |        |  |         |        |       
|                                                                                          | Other                                                       |                         |         | 3,372   |        |  |         | 3,187   |        |  |         | 3,299   |       
|                                                                                          |                                                             |                         |         |         |        |  |         |         |       
|                                                                                          |                                                             |                         | 509,313 |         |        |  | 614,317 |         |        |  | 575,677 |        
|                                                                                          |                                                             |                         |         |         |        |  |         |         |       
|Costs and expenses:                                                                       |                                                             |                         |         |         |        |  |         |         |        |  |         |        
|                                                                                          | Cost of products and services sold                          |                         |         | 146,783 |        |  |         | 144,725 |        |  |         | 145,677 |       
|                                                                                          | Insurance losses, loss adjustment and underwriting expenses |                         |         | 32,062  |        |  |         | 82,497  |        |  |         | 58,736  |       
|                                                                                          | Selling, general and administrative expenses                |                         |         | 261,434 |        |  |         | 278,090 |        |  |         | 288,353 |       
|                                                                                          | Interest expense                                            |                         |         | 799     |        |  |         | 749     |        |  |         | 1,994   |       
|                                                                                          |                                                             |                         |         |         |        |  |         |         |       
|                                                                                          |                                                             |                         | 441,078 |         |        |  | 506,061 |         |        |  | 494,760 |        
|                                                                                          |                                                             |                         |         |         |        |  |         |         |       
|Income before income taxes and minority interest                                          |                                                             |                         | 68,235  |         |        |  | 108,256 |         |        |  | 80,917  |        
|Income taxes                                                                              |                                                             |                         | 20,808  |         |        |  | 34,852  |         |        |  | 28,199  |        
|Minority interest in net loss of subsidiary                                               |                                                             |                         |        |         |        |  | (1,307  | )       |        |  |        |        
|                                                                                          |                                                             |                         |         |         |        |  |         |         |       
|                                                                                          |                                                             | Net income              |         | $       | 47,427 |  |         | $       | 74,711 |  |         | $       | 52,718 | 
|                                                                                          |                                                             |                         |         |         |        |  |         |         |       
|Amounts per capital share based on 7,119,807 shares
    outstanding throughout each year: |                                                             |                         |         |         |        |  |         |         |        |  |         |        
|                                                                                          | Net income                                                  |                         | $       | 6.66    |        |  | $       | 10.49   |        |  | $       | 7.40    |       
|                                                                                          | Cash dividends                                              |                         |         | 1.38    |        |  |         | 1.34    |        |  |         | 1.30    |       
|                                                                                          |                                                             |                         |         |         |        |  |         |         |       

See 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   |  
|                                                                                |                                   |                      |       | Additional |         |   | Unrealized |                |  |   |          | Compre- | 
|                                                                                |                                   | Capital              |       |            | Paid In |   |            | Appreciation   |  |   | Retained |         |  |       |           | hensive |       
|                                                                                |                                   | Stock                |       |            | Capital |   |            | of Investments |  |   | Earnings |         |  | Total |           |         | Income |  
|                                                                                |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       |           |         |        |  
|Balance, December 31, 2001                                                      |                                   | $                    | 7,120 |            |         | $ | 23,319     |                |  | $ | 372,267  |         |  | $     | 1,509,691 |         |        | $ | 1,912,397 |        |  |  |   |        
|Net income                                                                      |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       | 52,718    |         |        |   | 52,718    |        |  |  |   |        
|Increase in unrealized appreciation                                             |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       |           |         |        |   |           |        |  |  |   |        
|                                                                                | of investments, net of income tax |                      |       |            |         |   |            |                |  |   |          |         |  |       |           |         |        |   |           |        |  |  | $ | 55,022  | 
|                                                                                |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       |           |         |        |  
|                                                                                | effect of $1,342                  |                      |       |            |         |   |            |                |  |   |          | 2,304   |  |       |           |         |        |   |           | 2,304  |  |  |   |         | 
|Cash dividends declared and paid                                                |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       | (9,257    | )       |        |   | (9,257    | )      |  |  |   |        
|                                                                                |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       |           |         |        |  
|Balance, December 31, 2002                                                      |                                   |                      | 7,120 |            |         |   | 23,319     |                |  |   | 374,571  |         |  |       | 1,553,152 |         |        |   | 1,958,162 |        |  |  |   |        
|Net income                                                                      |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       | 74,711    |         |        |   | 74,711    |        |  |  |   |        
|Increase in unrealized appreciation                                             |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       |           |         |        |   |           |        |  |  |   |        
|                                                                                | of investments, net of income tax |                      |       |            |         |   |            |                |  |   |          |         |  |       |           |         |        |   |           |        |  |  | $ | 126,682 | 
|                                                                                |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       |           |         |        |  
|                                                                                | effect of $28,334                 |                      |       |            |         |   |            |                |  |   |          | 51,971  |  |       |           |         |        |   |           | 51,971 |  |  |   |         | 
|Increase in additional paid-in capital due to subsidiary stock
    transactions |                                   |                      |       |            |         |   | 2,885      |                |  |   |          |         |  |       |           |         |        |   | 2,885     |        |  |  |   |        
|Cash dividends declared and paid                                                |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       | (9,539    | )       |        |   | (9,539    | )      |  |  |   |        
|                                                                                |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       |           |         |        |  
|Balance, December 31, 2003                                                      |                                   |                      | 7,120 |            |         |   | 26,204     |                |  |   | 426,542  |         |  |       | 1,618,324 |         |        |   | 2,078,190 |        |  |  |   |        
|Net income                                                                      |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       | 47,427    |         |        |   | 47,427    |        |  |  |   |        
|Increase in unrealized appreciation                                             |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       |           |         |        |   |           |        |  |  |   |        
|                                                                                | of investments, net of income tax |                      |       |            |         |   |            |                |  |   |          |         |  |       |           |         |        |   |           |        |  |  | $ | 48,575  | 
|                                                                                |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       |           |         |        |  
|                                                                                | effect of $714                    |                      |       |            |         |   |            |                |  |   |          | 1,148   |  |       |           |         |        |   |           | 1,148  |  |  |   |         | 
|Cash dividends declared and paid                                                |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       | (9,822    | )       |        |   | (9,822    | )      |  |  |   |        
|                                                                                |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       |           |         |        |  
|Balance, December 31, 2004                                                      |                                   | $                    | 7,120 |            |         | $ | 26,204     |                |  | $ | 427,690  |         |  | $     | 1,655,929 |         |        | $ | 2,116,943 |        |  |  |   |        
|                                                                                |                                   |                      |       |            |         |   |            |                |  |   |          |         |  |       |           |         |        |  

See 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,                                                                  |                                         
|                                              |                                                                                         |                                                                                          |                                         
|                                              |                                                                                         | 2004                                                                                     |                                          |         | 2003    |         |           | 2002    |        
|                                              |                                                                                         |                                                                                          |                                          |         |         |         |           |         |        
|Cash flows from operating activities:         |                                                                                         |                                                                                          |                                          |         |         |         |           |         |         |         |         |         
|                                              | Net income                                                                              |                                                                                          | $                                        | 47,427  |         |         | $         | 74,711  |         |         | $       | 52,718   |       
|                                              | Adjustments to reconcile net income with net cash flows from
    operating activities  |                                                                                          |                                          |         |         |         |           |         |         |         |         |          |       
|                                              |                                                                                         | Realized net securities gains                                                            |                                          |         |        |         |           |         | (53,466 | )       |         |          |       |        
|                                              |                                                                                         | Provision for depreciation and amortization, net                                         |                                          |         | 36,473  |         |           |         | 44,114  |         |         |          | 51,914 |        
|                                              |                                                                                         | Increase (decrease) in liabilities for insurance losses and loss
    adjustment expenses |                                          |         | (46,364 | )       |           |         | 29,461  |         |         |          | 11,186 |        
|                                              |                                                                                         | Increase (decrease) in unearned insurance premiums                                       |                                          |         | (3,652  | )       |           |         | (19,688 | )       |         |          | 23,784 |        
|                                              |                                                                                         | Increase (decrease) in income taxes payable                                              |                                          |         | 24,050  |         |           |         | (8,995  | )       |         |          | 893    |        
|                                              |                                                                                         | Proceeds from sales of rental furniture, less gross profit
    included in net income    |                                          |         | 41,816  |         |           |         | 40,742  |         |         |          | 48,173 |        
|                                              |                                                                                         | Other, net                                                                               |                                          |         | 23,715  |         |           |         | 16,182  |         |         |          | (239   | )      
|                                              |                                                                                         |                                                                                          |                                          |         |         |         |           |         |        
|                                              |                                                                                         |                                                                                          | Net cash flows from operating activities |         |         | 123,465 |           |         |         | 123,061 |         |          |        | 188,429 |  
|                                              |                                                                                         |                                                                                          |                                          |         |         |         |           |         |        
|Cash flows from investing activities:         |                                                                                         |                                                                                          |                                          |         |         |         |           |         |         |         |         |         
|                                              | Maturities and redemptions of securities with fixed maturities                          |                                                                                          |                                          | 72,592  |         |         |           | 314,556 |         |         |         | 427,387  |       
|                                              | Purchases of securities with fixed maturities                                           |                                                                                          |                                          | (2,907  | )       |         |           | (2,562  | )       |         |         | (289,117 | )     
|                                              | Sales of securities with fixed maturities                                               |                                                                                          |                                          |        |         |         |           | 351,180 |         |         |         |         |       
|                                              | Acquisitions of businesses, net of cash and cash equivalents
    acquired               |                                                                                          |                                          | (12,704 | )       |         |           | (9,825  | )       |         |         | (37,082  | )     
|                                              | Purchases of rental furniture                                                           |                                                                                          |                                          | (76,532 | )       |         |           | (50,960 | )       |         |         | (44,550  | )     
|                                              | Other, net                                                                              |                                                                                          |                                          | (1,937  | )       |         |           | (3,267  | )       |         |         | (5,974   | )     
|                                              |                                                                                         |                                                                                          |                                          |         |         |         |           |         |        
|                                              |                                                                                         |                                                                                          | Net cash flows from investing activities |         |         | (21,488 | )         |         |         | 599,122 |         |          |        | 50,664  |  
|                                              |                                                                                         |                                                                                          |                                          |         |         |         |           |         |        
|Cash flows from financing activities:         |                                                                                         |                                                                                          |                                          |         |         |         |           |         |         |         |         |         
|                                              | Borrowings (repayments) under line of credit, net                                       |                                                                                          |                                          | 16,900  |         |         |           | (9,900  | )       |         |         | 1,700    |       
|                                              | Decrease in other notes payable, net                                                    |                                                                                          |                                          | (354    | )       |         |           | (94     | )       |         |         | (2,508   | )     
|                                              | Payment of cash dividends                                                               |                                                                                          |                                          | (9,822  | )       |         |           | (9,539  | )       |         |         | (9,257   | )     
|                                              |                                                                                         |                                                                                          |                                          |         |         |         |           |         |        
|                                              |                                                                                         |                                                                                          | Net cash flows from financing activities |         |         | 6,724   |           |         |         | (19,533 | )       |          |        | (10,065 | )
|                                              |                                                                                         |                                                                                          |                                          |         |         |         |           |         |        
|Increase in cash and cash equivalents         |                                                                                         |                                                                                          | 108,701                                  |         |         |         | 702,650   |         |         |         | 229,028 |         
|Cash and cash equivalents  beginning of year |                                                                                         |                                                                                          | 1,052,462                                |         |         |         | 349,812   |         |         |         | 120,784 |         
|                                              |                                                                                         |                                                                                          |                                          |         |         |         |           |         |        
|Cash and cash equivalents  end of year       |                                                                                         | $                                                                                        | 1,161,163                                |         |         | $       | 1,052,462 |         |         | $       | 349,812 |         
|                                              |                                                                                         |                                                                                          |                                          |         |         |         |           |         |        
|Supplementary disclosures:                    |                                                                                         |                                                                                          |                                          |         |         |         |           |         |         |         |         |         
|                                              | Interest paid during year                                                               |                                                                                          | $                                        | 375     |         |         | $         | 642     |         |         | $       | 1,241    |       
|                                              | Income taxes paid (recovered) during year, net                                          |                                                                                          |                                          | (7,142  | )       |         |           | 43,847  |         |         |         | 27,306   |       
|                                              | Noncash activities  conversion of debt to equity in
    subsidiary                     |                                                                                          |                                          |        |         |         |           | 9,808   |         |         |         |         |       
|                                              | Increase in additional paid-in capital due to subsidiary stock
    transactions         |                                                                                          |                                          |        |         |         |           | 2,885   |         |         |         |         |       
|                                              |                                                                                         |                                                                                          |                                          |         |         |         |           |         |        

See 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. Significant Accounting Policies and
Practices


Nature of operations and basis of consolidation






Accounting pronouncements not yet in effect




Use of estimates




Cash equivalents




Investments




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Goodwill of acquired businesses




Insurance business








Furniture rental business








Dollars amounts in thousands except for amounts per share


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Industrial business




Income taxes




Note 2. Investments




|                            |  |                   |        |                |                   |   |        |           |                |   |            |  |  |   |         | 
|--------------------------- |  | ----------------- | ------ | -------------- | ----------------- | - | ------ | --------- | -------------- | - | ---------- |  |  | - | ------- | 
|                            |  | December 31, 2004 |        |                | December 31, 2003 |  
|                            |  |                   |        |                |                   |  
|                            |  |                   |        | Estimated Fair |                   |   |        |           | Estimated Fair |  
|                            |  | Amortized         |        |                | (Carrying)        |   |        | Amortized |                |   | (Carrying) | 
|                            |  | Cost              |        |                | Value             |   |        | Cost      |                |   | Value      | 
|                            |  |                   |        |                |                   |   |        |           |                |   |            | 
|Mortgage-backed securities  |  | $                 | 76,212 |                |                   | $ | 80,531 |           |                | $ | 146,793    |  |  | $ | 154,623 | 
|U.S. government obligations |  |                   | 12,812 |                |                   |   | 13,768 |           |                |   | 12,160     |  |  |   | 12,767  | 
|                            |  |                   |        |                |                   |   |        |           |                |   |            | 
|                            |  | $                 | 89,024 |                |                   | $ | 94,299 |           |                | $ | 158,953    |  |  | $ | 167,390 | 
|                            |  |                   |        |                |                   |   |        |           |                |   |            | 







|                         |  |           |           |                   |      |        |                   |       |  |   |         |            |  |       |         |  |  |   |         | 
|------------------------ |  | --------- | --------- | ----------------- | ---- | ------ | ----------------- | ----- |  | - | ------- | ---------- |  | ----- | ------- |  |  | - | ------- | 
|                         |  |           |           | December 31, 2004 |      |        | December 31, 2003 |      
|                         |  |           |           |                   |      |        |                   |      
|                         |  |           |           |                   |      | Quoted |                   |       |  |   | Quoted  |           
|                         |  |           |           |                   |      | Market |                   |       |  |   | Market  |           
|                         |  | Number of |           |                   |      |        | (Carrying)        |       |  |   |         | (Carrying) | 
|                         |  | Shares    |           |                   | Cost |        |                   | Value |  |   | Cost    |            |  | Value |        
|                         |  |           |           |                   |      |        |                   |       |  |   |         |            |  |       |        
|The Coca-Cola Company    |  |           | 7,205,600 |                   |      | $      | 40,761            |       |  | $ | 300,041 |            |  | $     | 40,761  |  |  | $ | 365,684 | 
|The Gillette Company     |  |           | 6,400,000 |                   |      |        | 40,000            |       |  |   | 286,592 |            |  |       | 40,000  |  |  |   | 235,072 | 
|American Express Company |  |           | 1,943,100 |                   |      |        | 20,687            |       |  |   | 109,533 |            |  |       | 20,687  |  |  |   | 93,716  | 
|Wells Fargo & Company    |  |           | 1,021,600 |                   |      |        | 6,333             |       |  |   | 63,492  |            |  |       | 6,333   |  |  |   | 60,162  | 
|                         |  |           |           |                   |      |        |                   |       |  |   |         |            |  |       |        
|                         |  |           |           |                   |      | $      | 107,781           |       |  | $ | 759,658 |            |  | $     | 107,781 |  |  | $ | 754,634 | 
|                         |  |           |           |                   |      |        |                   |       |  |   |         |            |  |       |        





Dollars amounts in thousands except for amounts per share


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Note 3. Insurance Business




|                                       |                     |                       |         |        |        |   |         |        |        |   |        |        |        | 
|-------------------------------------- | ------------------- | --------------------- | ------- | ------ | ------ | - | ------- | ------ | ------ | - | ------ | ------ | ------ | 
|                                       |                     | 2004                  |         |        | 2003   |   |         | 2002   |       
|                                       |                     |                       |         |        |        |   |         |        |       
|Balance at beginning of year           |                     | $                     | 102,526 |        |        | $ | 73,065  |        |        | $ | 61,879 |       
|Less ceded liabilities                 |                     |                       | (500    | )      |        |   | (50     | )      |        |   |       |       
|                                       |                     |                       |         |        |        |   |         |        |       
|Net balance at beginning of year       |                     |                       | 102,026 |        |        |   | 73,015  |        |        |   | 61,879 |       
|                                       |                     |                       |         |        |        |   |         |        |       
|Incurred losses recorded during year  |                     |                       |         |        |        |   |         |        |        |   |        |       
|                                       | For current year    |                       |         | 25,247 |        |   |         | 57,805 |        |   |        | 39,641 |       
|                                       | For all prior years |                       |         | (5,291 | )      |   |         | 4,497  |        |   |        | (818   | )     
|                                       |                     |                       |         |        |        |   |         |        |       
|                                       |                     | Total incurred losses |         |        | 19,956 |   |         |        | 62,302 |   |        |        | 38,823 | 
|                                       |                     |                       |         |        |        |   |         |        |       
|Payments made during year             |                     |                       |         |        |        |   |         |        |        |   |        |       
|                                       | For current year    |                       |         | 6,236  |        |   |         | 15,584 |        |   |        | 12,607 |       
|                                       | For all prior years |                       |         | 61,464 |        |   |         | 17,707 |        |   |        | 15,080 |       
|                                       |                     |                       |         |        |        |   |         |        |       
|                                       |                     | Total payments        |         |        | 67,700 |   |         |        | 33,291 |   |        |        | 27,687 | 
|                                       |                     |                       |         |        |        |   |         |        |       
|Net liabilities at end of year         |                     |                       | 54,282  |        |        |   | 102,026 |        |        |   | 73,015 |       
|Plus ceded liabilities                 |                     |                       | 1,880   |        |        |   | 500     |        |        |   | 50     |       
|                                       |                     |                       |         |        |        |   |         |        |       
|Gross liabilities at end of year       |                     | $                     | 56,162  |        |        | $ | 102,526 |        |        | $ | 73,065 |       
|                                       |                     |                       |         |        |        |   |         |        |       







Note 4. Furniture Rental Business




|                              |  |              |         |   |      |   |         |  
|----------------------------- |  | ------------ | ------- | - | ---- | - | ------- | -
|                              |  | December 31, |        
|                              |  |              |        
|                              |  | 2004         |         |   | 2003 |  
|                              |  |              |         |   |      |  
|Cost of rental furniture      |  | $            | 260,109 |   |      | $ | 250,658 |  
|Less accumulated depreciation |  |              | (88,126 | ) |      |   | (86,959 | )
|                              |  |              |         |   |      |  
|                              |  | $            | 171,983 |   |      | $ | 163,699 |  
|                              |  |              |         |   |      |  



Dollars amounts in thousands except for amounts per share


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Note 5. Industrial Business






Note 6. Notes Payable and Other Contractual
Obligations




|                         |  |              |        |  |      |   |        | 
|------------------------ |  | ------------ | ------ |  | ---- | - | ------ | 
|                         |  | December 31, |       
|                         |  |              |       
|                         |  | 2004         |        |  | 2003 |  
|                         |  |              |        |  |      |  
|Revolving line of credit |  | $            | 29,000 |  |      | $ | 12,100 | 
|Other                    |  |              | 225    |  |      |   | 579    | 
|                         |  |              |        |  |      |  
|                         |  | $            | 29,225 |  |      | $ | 12,679 | 
|                         |  |              |        |  |      |  





Dollars amounts in thousands except for amounts per share


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Note 7. Income Taxes




|                                        |                              |              |         |         |      |   |         |         | 
|--------------------------------------- | ---------------------------- | ------------ | ------- | ------- | ---- | - | ------- | ------- | 
|                                        |                              | December 31, |        
|                                        |                              |              |        
|                                        |                              | 2004         |         |         | 2003 |  
|                                        |                              |              |         |         |      |  
|Deferred tax liabilities, relating to  |                              |              |         |         |      |   |         |        
|                                        | Appreciation of investments  |              | $       | 229,462 |      |   | $       | 228,748 | 
|                                        | Other items                  |              |         | 56,677  |      |   |         | 52,824  | 
|                                        |                              |              |         |         |      |  
|                                        |                              |              | 286,139 |         |      |   | 281,572 |        
|Deferred tax assets                     |                              |              | (27,041 | )       |      |   | (27,790 | )      
|                                        |                              |              |         |         |      |  
|                                        | Net deferred tax liabilities |              |         | 259,098 |      |   |         | 253,782 | 
|Taxes currently payable (recoverable)   |                              |              | 12,907  |         |      |   | (6,541  | )      
|                                        |                              |              |         |         |      |  
|Income taxes payable                    |                              | $            | 272,005 |         |      | $ | 247,241 |        
|                                        |                              |              |         |         |      |  



|         |                            |      |        |        |      |   |        |        |  |   |        |        | 
|-------- | -------------------------- | ---- | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|         |                            | 2004 |        |        | 2003 |   |        | 2002   | 
|         |                            |      |        |        |      |   |        |        | 
|Federal  |                            | $    | 19,894 |        |      | $ | 37,362 |        |  | $ | 29,046 |       
|State    |                            |      | 914    |        |      |   | (2,510 | )      |  |   | (847   | )     
|         |                            |      |        |        |      |   |        |        | 
|         | Provision for income taxes |      | $      | 20,808 |      |   | $      | 34,852 |  |   | $      | 28,199 | 
|         |                            |      |        |        |      |   |        |        | 
|Current  |                            | $    | 16,984 |        |      | $ | 39,965 |        |  | $ | 24,750 |       
|Deferred |                            |      | 3,824  |        |      |   | (5,113 | )      |  |   | 3,449  |       
|         |                            |      |        |        |      |   |        |        | 
|         | Provision for income taxes |      | $      | 20,808 |      |   | $      | 34,852 |  |   | $      | 28,199 | 
|         |                            |      |        |        |      |   |        |        | 



|                                     |                                              |      |      |      |      |  |      |      |   |  |      |      |  
|------------------------------------ | -------------------------------------------- | ---- | ---- | ---- | ---- |  | ---- | ---- | - |  | ---- | ---- | -
|                                     |                                              | 2004 |      |      | 2003 |  |      | 2002 |  
|                                     |                                              |      |      |      |      |  |      |      |  
|Statutory federal income tax rate    |                                              |      | 35.0 | %    |      |  | 35.0 | %    |   |  | 35.0 | %   
|Increase (decrease) resulting from  |                                              |      |      |      |      |  |      |      |   |  |      |     
|                                     | Dividends received deduction                 |      |      | (3.3 | )    |  |      | (2.9 | ) |  |      | (3.1 | )
|                                     | State income taxes, less federal tax benefit |      |      | (0.9 | )    |  |      | (1.7 | ) |  |      | (1.0 | )
|                                     | Other differences, net                       |      |      | (0.3 | )    |  |      | 1.8  |   |  |      | 3.9  |  
|                                     |                                              |      |      |      |      |  |      |      |  
|Effective income tax provision rate  |                                              |      | 30.5 | %    |      |  | 32.2 | %    |   |  | 34.8 | %   
|                                     |                                              |      |      |      |      |  |      |      |  





Dollars amounts in thousands except for amounts per share


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Note 8. Quarterly Financial Information




|                            |                                      |               |         |      |          |   |         |               |  |   |              |      |  |                |         |      |  |   |         |        | 
|--------------------------- | ------------------------------------ | ------------- | ------- | ---- | -------- | - | ------- | ------------- |  | - | ------------ | ---- |  | -------------- | ------- | ---- |  | - | ------- | ------ | 
|                            |                                      | Quarter Ended |         |      |         
|                            |                                      |               |         |      |         
|                            |                                      | March 31,     |         |      | June 30, |   |         | September 30, |  |   | December 31, |      |  | Total For Year |        
|                            |                                      |               |         |      |          |   |         |               |  |   |              |      |  |                |        
|2004                        |                                      |               |         |      |          |   |         |               |  |   |              |      |  |                |         |      |  |   |         |       
|Revenues                    |                                      | $             | 128,243 |      |          | $ | 128,311 |               |  | $ | 126,490      |      |  | $              | 126,269 |      |  | $ | 509,313 |       
|                            |                                      |               |         |      |          |   |         |               |  |   |              |      |  |                |        
|Net income                  |                                      | $             | 12,198  |      |          | $ | 10,561  |               |  | $ | 9,044        |      |  | $              | 15,624  |      |  | $ | 47,427  |       
|                            | Per capital share                    |               |         | 1.71 |          |   |         | 1.49          |  |   |              | 1.27 |  |                |         | 2.19 |  |   |         | 6.66   | 
|                            |                                      |               |         |      |          |   |         |               |  |   |              |      |  |                |        
|2003                        |                                      |               |         |      |          |   |         |               |  |   |              |      |  |                |         |      |  |   |         |       
|Revenues                    |                                      | $             | 155,839 |      |          | $ | 192,125 |               |  | $ | 145,111      |      |  | $              | 121,292 |      |  | $ | 614,367 |       
|                            |                                      |               |         |      |          |   |         |               |  |   |              |      |  |                |        
|Net income                  |                                      | $             | 12,504  |      |          | $ | 45,981  |               |  | $ | 7,137        |      |  | $              | 9,089   |      |  | $ | 74,711  |       
|                            | Per capital share                    |               |         | 1.76 |          |   |         | 6.45          |  |   |              | 1.00 |  |                |         | 1.28 |  |   |         | 10.49  | 
|                            |                                      |               |         |      |          |   |         |               |  |   |              |      |  |                |        
|Realized investment gains  |                                      |               |         |      |          |   |         |               |  |   |              |      |  |                |         |      |  |   |         |       
|                            | 2004                                 |               |         |      |          |   |         |               |  |   |              |      |  |                |         |      |  |   |         |        | 
|                            | None                                 |               |         |      |          |   |         |               |  |   |              |      |  |                |         |      |  |   |         |        | 
|                            | 2003                                 |               |         |      |          |   |         |               |  |   |              |      |  |                |         |      |  |   |         |        | 
|                            | Before taxes (included in revenues)  |               | $       | 811  |          |   | $       | 52,208        |  |   | $            | 447  |  |                | $       |     |  |   | $       | 53,466 | 
|                            | After taxes (included in net income) |               |         | 527  |          |   |         | 33,935        |  |   |              | 291  |  |                |         |     |  |   |         | 34,753 | 
|                            |                                      |               |         |      |          |   |         |               |  |   |              |      |  |                |        

Note 9. Business Segment Data








Dollars amounts in thousands except for amounts per share


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Dollars amounts in thousands except for amounts per share


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|                                                       |                                                                                       |      |           |           |      |   |           |           |   |   |           |           | 
|------------------------------------------------------ | ------------------------------------------------------------------------------------- | ---- | --------- | --------- | ---- | - | --------- | --------- | - | - | --------- | --------- | 
|                                                       |                                                                                       | 2004 |           |           | 2003 |   |           | 2002      |  
|                                                       |                                                                                       |      |           |           |      |   |           |           |  
|Insurance segment:                                     |                                                                                       |      |           |           |      |   |           |           |   |   |           |          
|                                                       | Premiums earned                                                                       |      | $         | 54,589    |      |   | $         | 106,651   |   |   | $         | 64,627    | 
|                                                       | Dividend and interest income                                                          |      |           | 36,058    |      |   |           | 44,118    |   |   |           | 70,007    | 
|                                                       | Income taxes                                                                          |      |           | 17,605    |      |   |           | 21,653    |   |   |           | 26,427    | 
|                                                       | Net income                                                                            |      |           | 40,920    |      |   |           | 46,636    |   |   |           | 49,471    | 
|                                                       | Depreciation and amortization other than of discounts and
    premiums of investments |      |           | 53        |      |   |           | 27        |   |   |           | 26        | 
|                                                       | Capital expenditures                                                                  |      |           | 76        |      |   |           | 4         |   |   |           | 3         | 
|                                                       | Assets at yearend                                                                     |      |           | 2,004,417 |      |   |           | 1,985,846 |   |   |           | 1,818,788 | 
|                                                       |                                                                                       |      |           |           |      |   |           |           |  
|Furniture rental segment:                              |                                                                                       |      |           |           |      |   |           |           |   |   |           |          
|                                                       | Revenues                                                                              |      | $         | 353,994   |      |   | $         | 360,112   |   |   | $         | 388,583   | 
|                                                       | Income taxes                                                                          |      |           | 2,588     |      |   |           | (4,870    | ) |   |           | 1,201     | 
|                                                       | Net income (loss)                                                                     |      |           | 5,022     |      |   |           | (6,257    | ) |   |           | 2,442     | 
|                                                       | Depreciation and amortization other than of discounts and
    premiums of investments |      |           | 35,643    |      |   |           | 41,472    |   |   |           | 47,998    | 
|                                                       | Advertising expense                                                                   |      |           | 18,245    |      |   |           | 19,712    |   |   |           | 12,970    | 
|                                                       | Interest expense                                                                      |      |           | 799       |      |   |           | 749       |   |   |           | 1,793     | 
|                                                       | Capital expenditures                                                                  |      |           | 4,091     |      |   |           | 3,209     |   |   |           | 3,497     | 
|                                                       | Assets at yearend                                                                     |      |           | 245,777   |      |   |           | 235,455   |   |   |           | 277,308   | 
|                                                       |                                                                                       |      |           |           |      |   |           |           |  
|Industrial segment:                                    |                                                                                       |      |           |           |      |   |           |           |   |   |           |          
|                                                       | Sales, service and other revenues                                                     |      | $         | 60,514    |      |   | $         | 46,138    |   |   | $         | 48,567    | 
|                                                       | Income taxes                                                                          |      |           | 664       |      |   |           | (671      | ) |   |           | 413       | 
|                                                       | Net income (loss)                                                                     |      |           | 1,094     |      |   |           | (860      | ) |   |           | 250       | 
|                                                       | Depreciation and amortization                                                         |      |           | 426       |      |   |           | 505       |   |   |           | 592       | 
|                                                       | Advertising expense                                                                   |      |           | 188       |      |   |           | 198       |   |   |           | 209       | 
|                                                       | Interest expense                                                                      |      |           |          |      |   |           |          |   |   |           | 201       | 
|                                                       | Capital expenditures                                                                  |      |           | 314       |      |   |           | 106       |   |   |           | 137       | 
|                                                       | Assets at yearend                                                                     |      |           | 16,949    |      |   |           | 16,826    |   |   |           | 17,905    | 
|                                                       |                                                                                       |      |           |           |      |   |           |           |  
|Goodwill of acquired businesses (included in assets)   |                                                                                       |      | 266,607   |           |      |   | 266,607   |           |   |   | 266,203   |          
|                                                       |                                                                                       |      |           |           |      |   |           |           |  
|Realized investment gains:                             |                                                                                       |      |           |           |      |   |           |           |   |   |           |          
|                                                       | Before taxes (included in revenues)                                                   |      | $         |          |      |   | $         | 53,466    |   |   | $         |          | 
|                                                       | After taxes (included in net income)                                                  |      |           |          |      |   |           | 34,753    |   |   |           |          | 
|                                                       |                                                                                       |      |           |           |      |   |           |           |  
|Other items unrelated to business segments:            |                                                                                       |      |           |           |      |   |           |           |   |   |           |          
|                                                       | Dividend and interest income                                                          |      | $         | 786       |      |   | $         | 617       |   |   | $         | 616       | 
|                                                       | Other revenues                                                                        |      |           | 3,372     |      |   |           | 3,215     |   |   |           | 3,277     | 
|                                                       | Income taxes                                                                          |      |           | (49       | )    |   |           | 27        |   |   |           | 158       | 
|                                                       | Net income                                                                            |      |           | 391       |      |   |           | 439       |   |   |           | 555       | 
|                                                       | Depreciation and amortization                                                         |      |           | 350       |      |   |           | 354       |   |   |           | 360       | 
|                                                       | Capital expenditures                                                                  |      |           | 288       |      |   |           | 366       |   |   |           | 302       | 
|                                                       | Assets at yearend                                                                     |      |           | 37,785    |      |   |           | 33,661    |   |   |           | 26,771    | 
|                                                       |                                                                                       |      |           |           |      |   |           |           |  
|Consolidated revenues (total of those set forth above) |                                                                                       | $    | 509,313   |           |      | $ | 614,317   |           |   | $ | 575,677   |          
|                                                       |                                                                                       |      |           |           |      |   |           |           |  
|Consolidated assets (total of those set forth above)   |                                                                                       | $    | 2,571,535 |           |      | $ | 2,538,395 |           |   | $ | 2,406,975 |          
|                                                       |                                                                                       |      |           |           |      |   |           |           |  



Dollars 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,      |          
|                                      |                                                                                                                             |                   |          
|                                      |                                                                                                                             | 2004              |           |           | 2003    |  
|                                      |                                                                                                                             |                   |           |           |         |  
|Assets:                               |                                                                                                                             |                   |           |           |         |   |           |          
|                                      | Cash and cash equivalents                                                                                                   |                   | $         | 25        |         |   | $         | 27        |        
|                                      | Investment in subsidiaries, at cost plus equity in
    subsidiaries undistributed earnings and unrealized
    appreciation |                   |           | 2,246,775 |         |   |           | 2,196,376 |        
|                                      |                                                                                                                             |                   |           |           |         |  
|                                      |                                                                                                                             | $                 | 2,246,800 |           |         | $ | 2,196,403 |          
|                                      |                                                                                                                             |                   |           |           |         |  
|                                     
|Liabilities and shareholders equity: |                                                                                                                             |                   |           |           |         |   |           |          
|                                      | Advances from subsidiaries                                                                                                  |                   | $         | 127,223   |         |   | $         | 115,420   |        
|                                      | Income taxes payable, principally deferred                                                                                  |                   |           | 42        |         |   |           | 268       |        
|                                      | Other liabilities                                                                                                           |                   |           | 2,592     |         |   |           | 2,525     |        
|                                      |                                                                                                                             |                   |           |           |         |  
|                                      |                                                                                                                             | Total liabilities |           |           | 129,857 |   |           |           | 118,213 | 
|                                      | Shareholders equity (see consolidated balance sheet and
    statement of changes in shareholders equity)                  |                   |           | 2,116,943 |         |   |           | 2,078,190 |        
|                                      |                                                                                                                             |                   |           |           |         |  
|                                      |                                                                                                                             | $                 | 2,246,800 |           |         | $ | 2,196,403 |          
|                                      |                                                                                                                             |                   |           |           |         |  

STATEMENT OF INCOME


(Dollar amounts in thousands)


|                                                 |                                    |                         |        |       |        |   |        |       |        |   |        |       |        | 
|------------------------------------------------ | ---------------------------------- | ----------------------- | ------ | ----- | ------ | - | ------ | ----- | ------ | - | ------ | ----- | ------ | 
|                                                 |                                    | Year Ended December 31, |       
|                                                 |                                    |                         |       
|                                                 |                                    | 2004                    |        |       | 2003   |   |        | 2002  |       
|                                                 |                                    |                         |        |       |        |   |        |       |       
|Revenues                                         |                                    | $                       |       |       |        | $ |       |       |        | $ |       |      
|                                                 |                                    |                         |        |       |        |   |        |       |       
|Expenses:                                        |                                    |                         |        |       |        |   |        |       |        |   |        |      
|                                                 | Interest, principally intercompany |                         |        | 1,953 |        |   |        | 1,487 |        |   |        | 1,512 |       
|                                                 | General and administrative         |                         |        | 862   |        |   |        | 706   |        |   |        | 531   |       
|                                                 |                                    |                         |        |       |        |   |        |       |       
|                                                 |                                    |                         | 2,815  |       |        |   | 2,193  |       |        |   | 2,043  |      
|                                                 |                                    |                         |        |       |        |   |        |       |       
|Loss before items shown below                    |                                    |                         | (2,815 | )     |        |   | (2,193 | )     |        |   | (2,043 | )    
|Income taxes                                     |                                    |                         | (985   | )     |        |   | (767   | )     |        |   | (714   | )    
|Equity in undistributed earnings of subsidiaries |                                    |                         | 49,257 |       |        |   | 76,137 |       |        |   | 54,047 |      
|                                                 |                                    |                         |        |       |        |   |        |       |       
|                                                 |                                    | Net income              |        | $     | 47,427 |   |        | $     | 74,711 |   |        | $     | 52,718 | 
|                                                 |                                    |                         |        |       |        |   |        |       |       

See notes to consolidated financial statements.


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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,                               |                                         
|                                                 |                                                                                     |                                                       |                                         
|                                                 |                                                                                     | 2004                                                  |                                          |        | 2003    |        |    | 2002   |        
|                                                 |                                                                                     |                                                       |                                          |        |         |        |    |        |        
|Cash flows from operating activities:            |                                                                                     |                                                       |                                          |        |         |        |    |        |         |        |    |       
|                                                 | Net income                                                                          |                                                       | $                                        | 47,427 |         |        | $  | 74,711 |         |        | $  | 52,718 |        
|                                                 | Adjustments to reconcile net income with cash flows from
    operating activities  |                                                       |                                          |        |         |        |    |        |         |        |    |        |        
|                                                 |                                                                                     | Increase (decrease) in income taxes payable currently |                                          |        | (226    | )      |    |        | 342     |        |    |        | (693    | )     
|                                                 |                                                                                     | Equity in undistributed earnings of subsidiaries      |                                          |        | (49,257 | )      |    |        | (76,137 | )      |    |        | (54,047 | )     
|                                                 |                                                                                     | Other, net                                            |                                          |        | 73      |        |    |        | 2       |        |    |        | 1       |       
|                                                 |                                                                                     |                                                       |                                          |        |         |        |    |        |        
|                                                 |                                                                                     |                                                       | Net cash flows from operating activities |        |         | (1,983 | )  |        |         | (1,082 | )  |        |         | (2,021 | )
|                                                 |                                                                                     |                                                       |                                          |        |         |        |    |        |        
|Cash flows from financing activities:            |                                                                                     |                                                       |                                          |        |         |        |    |        |         |        |    |       
|                                                 | Advances from subsidiaries, net                                                     |                                                       |                                          | 11,803 |         |        |    | 10,628 |         |        |    | 12,305 |        
|                                                 | Repayment of notes payable                                                          |                                                       |                                          |       |         |        |    |       |         |        |    | (1,035 | )      
|                                                 | Payment of cash dividends                                                           |                                                       |                                          | (9,822 | )       |        |    | (9,539 | )       |        |    | (9,257 | )      
|                                                 |                                                                                     |                                                       |                                          |        |         |        |    |        |        
|                                                 |                                                                                     |                                                       | Net cash flows from financing activities |        |         | 1,981  |    |        |         | 1,089  |    |        |         | 2,013  |  
|                                                 |                                                                                     |                                                       |                                          |        |         |        |    |        |        
|Increase (decrease) in cash and cash equivalents |                                                                                     |                                                       | (2                                       | )      |         |        | 7  |        |         |        | (8 | )     
|Cash and cash equivalents  beginning of year    |                                                                                     |                                                       | 27                                       |        |         |        | 20 |        |         |        | 28 |       
|                                                 |                                                                                     |                                                       |                                          |        |         |        |    |        |        
|Cash and cash equivalents  end of year          |                                                                                     | $                                                     | 25                                       |        |         | $      | 27 |        |         | $      | 20 |       
|                                                 |                                                                                     |                                                       |                                          |        |         |        |    |        |        

See notes to consolidated financial statements.


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