SECURITIESTable ANDof EXCHANGE COMMISSION Contents

ItemTable 1.of BusinessContents

Wesco’sTable board of directors has authorized automatic acceptance of retrocessions of super-catastrophe reinsurance offered by the Berkshire Insurance Group provided the following guidelines and limitations are complied with: (1) in order not to delay the acceptance process, the retrocession is to be accepted without delay in writing in Nebraska by agents of Wes-FIC who are salaried employees of the Berkshire Insurance Group; (2) any ceding commission received by the Berkshire Insurance Group cannot exceed 3% of premiums, which is believed to be less than the Berkshire Insurance Group could get in the marketplace; (3) Wes-FIC is to assume 20% or less of the total risk; (4) the Berkshire Insurance Group must retain at least 80% of the identical risk; and (5) the aggregate premiums from this type of business in any twelve-month period cannot exceed 10% of Wes-FIC’s net worth. Occasionally, the Berkshire Insurance Group will also have an upper-level reinsurance interest with interests different from Wes-FIC’s, particularly in the event of one or more large losses. Although Wes-FIC has no active super-catastrophe reinsurance contracts in force, Wes-FIC may have opportunities to participate in such business from time to time in the future. Contents

KBSTable limits its loss exposure per loss event to a maximum of $7.6 million, after taxes, by limiting the maximum amount of risk underwritten to $30 million to any single customer or group of affiliated customers, and through the purchase of reinsurance, from the Berkshire Insurance Group, at market prices. KBS reinsures the entire layer of losses between $3 million and $5 million and 65% of the entire layer above $5 million. Contents

FURNITURETable RENTAL SEGMENT of Contents

isTable believedof to be better positioned to benefit from future economic expansion, particularly if there is corresponding job growth. Contents

generallyTable increasing worldwide demand for certain popular but relatively scarce imported materials have resulted in periods of shortages and large swings in prices, intensifying the competitive pressures on the steel service business, to which has more recently been added a significant downturn in industrial demand resulting from a weak economic environment. Precision Steel’s service centers continue to focus on cost-cutting measures where feasible, while focusing on customer service and the maintenance of extensive inventories in order to meet customer demand for prompt deliveries; typically, processed metals are delivered to the customer within one or two weeks. Precision Brand normally maintains inventories adequate to allow for off-the-shelf service to customers within 24 hours. Contents

AnTable investment inof Wesco is not an investment in Berkshire Hathaway. Contents

AsTable described in Item 1, Business, effective January 1, 2008, Wes-FIC entered into a quota-share retrocession agreement with NICO, a member of the Berkshire Insurance Group, to assume 10% of NICO’s quota share reinsurance of Swiss Re. Under this retrocession agreement, Wes-FIC has assumed 2% part of NICO’s 20% quota share reinsurance of all Swiss Re property-casualty risks incepting over the five-year period which began January 1, 2008, on the same terms as NICO’s agreement with Swiss Re (the “Swiss Re contract”). This arrangement significantly increased Wes-FIC’s premium volume as well as exposure to large losses, such as hurricanes, and foreign exchange risk, and thus, the potential for increased volatility and losses. In addition, as with all reinsurance arrangements, Wes-FIC does not control the underwriting of the primary insurer and relies on the primary insurer’s reputation and judgment in deciding what underlying risks to insure. Contents

ItemTable 1B.of Unresolved Staff CommentsContents

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

ItemTable 6.of Selected Financial DataContents

Wesco’sTable operating businesses are managed on a decentralized basis. There are essentially no centralized or integrated business functions (such as sales, marketing, purchasing, legal or human resources) and there is minimal involvement by Wesco’s management in the day-to-day business activities of the operating businesses. Wesco’s Chairman, President and Chief Executive Officer, Charles T. Munger, is also Vice Chairman of Berkshire Hathaway, and consults with Warren E. Buffett, Chairman and Chief Executive Officer of Berkshire, with respect to Wesco’s investment decisions, major capital allocations, and the selection of the chief executives to head each of Wesco’s operating units, subject to ultimate approval of Wesco’s Board of Directors. Contents

Wesco’sTable reportable business segments are organized in a manner that reflects how Wesco’s top management views those business activities. Wesco’s management views insurance businesses as possessing two distinct operations — underwriting and investing, and believes that “underwriting gain or loss” is an important measure of their financial performance. Underwriting gain or loss represents the simple arithmetic difference between the following line items appearing on the consolidated statement of income: (1) insurance premiums earned, less (2) insurance losses and loss adjustment expenses, and insurance underwriting expenses. Management’s goal is to generate underwriting gains over the long term. Underwriting decisions are the responsibility of the unit managers; investing is the responsibility of Charles T. Munger in consultation with Warren E. Buffett, subject to ultimate approval by Wesco’s Board of Directors. Accordingly, underwriting results are evaluated without allocation of investment income. Contents

22 Table of Contents

TheTable 2009 figures represented increases of 10.9% in written premiums and 51.0% in earned premiums for the year. Premiums assumed in each of the remaining three years under the contract could vary significantly depending on Swiss Re’s response to market conditions and opportunities that may arise, as well as any significant fluctuation in the value of the U.S. Dollar in foreign exchange as compared with the many currencies in which Swiss Re conducts its business. For 2009, written aviation-related reinsurance premiums increased by $1.7 million (5.2%), after having decreased by $2.0 million (5.9%) for 2008, from those of 2007. Earned aviation-related premiums increased by $0.1 million (0.2%) for 2009, and decreased by $0.6 million (1.7%) for 2008, from those of 2007. Aviation insurance is a competitive business. The pool manager exercises underwriting discipline and does not accept business when pricing is deemed inadequate with respect to risks assumed. Contents

ItTable should be noted that the profitability of a reinsurance or insurance arrangement is better assessed after all losses and expenses have been realized, perhaps many years after the coverage period, rather than for any given reporting period. As noted above, because of recent events in the banking industry, including a number of bank failures, management became less confident in the long-term profitability of KBS’s line of bank deposit guarantee bonds and, in the latter part of 2008, KBS initiated steps to exit that line of business as rapidly as feasible. No other trends have been identified which directly relate to losses, other than periodic effects from increasing competition (causing declining premium rates), fluctuations in exchange rates of foreign currencies relative to the U.S. dollar (which will affect the underwriting results under the Swiss Re contract), and the weak economy (which might result in a decrease in the demand for insurance overall or an increase in claims). Losses incurred by Wesco’s insurance segment, by their very nature, occur unexpectedly and fluctuate from period to period in both frequency and magnitude. Wesco’s insurers cede minimal amounts of their direct business, and as a result underwriting results may be volatile. Contents

FurnitureTable Rental Segment of Contents

ServiceTable fees for 2009 decreased $1.3 million (16.2%) from those of 2008, after increasing $1.3 million (18.9%) in 2008 from those of 2007. Despite the significant investment made by CORT in recent years towards the expansion and marketing of its relocation services to corporate relocation departments as well as individual customers, service fee revenues remain disappointing. Management is now focusing its efforts on controlling operating costs associated with rental relocations services. Contents

28 Table of Contents

WescoTable andof its subsidiaries have contractual obligations associated with ongoing business activities, which will result in cash payments in future periods. Certain obligations, such as notes payable, accrued interest, and unpaid insurance losses and loss adjustment expenses, are reflected in the accompanying consolidated financial statements. In addition, Wesco and its subsidiaries have entered into long-term contracts to acquire goods or services in the future, which are not currently reflected in the consolidated financial statements and Contents

TheTable preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported revenues and expenses during the period reported upon. In particular, estimates of written and earned premiums and unpaid losses and loss adjustment expenses for property and casualty insurance are subject to considerable estimation error due both to the necessity of estimating information with respect to certain reinsurance contracts where reports from ceding companies for quarterly reporting periods are not contractually due until after the balance sheet date, as well as the inherent uncertainty in estimating ultimate claim amounts that will be reported and settled over a period of many years. The estimates and assumptions are based on management’s evaluation of the relevant facts and circumstances using information available at the time such estimates and assumptions are made. The amounts of such assets, liabilities, revenues and expenses included in the consolidated financial statements may differ significantly from those that might result from use of estimates and assumptions based on facts and circumstances not yet available. Although Wesco’s management Contents

Level 2Table inputs represent observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active or inactive markets; quoted prices for identical assets or liabilities in markets that are not active; other inputs that may be considered in fair value determinations of the assets or liabilities, such as interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Fair values for Wesco’s investments in fixed maturity securities are based primarily on market prices and market data available for instruments with similar characteristics since active markets are not common for many instruments. Contents

InterestTable income from investments in bonds and mortgage-backed securities is earned under the constant yield method and includes accrual of interest due as well as amortization of acquisition premiums and accruable discounts. In determining the constant yield for mortgage-backed securities, anticipated counterparty prepayments are estimated and evaluated periodically. Dividends from equity securities are earned on the ex-dividend date. Contents

TheTable time period between the claim occurrence date and payment date of the loss is referred to as the “claim tail.” Property claims usually have fairly short claim tails, and, absent litigation, are reported and settled within a few months or years after occurrence. Casualty losses usually have very long claim tails. Casualty claims can be more susceptible to litigation and can be more significantly affected by changing contract interpretations and the legal environment, which contributes to extended claim tails. Claim tails for reinsurers may be further extended due to delayed reporting by ceding insurers or reinsurers due to contractual provisions or reporting practices. Actual ultimate loss settlement amounts are likely to differ from amounts recorded at the balance sheet date. Changes in estimates, referred to as “loss development,” are recorded as a component of losses incurred in the period of change. Wes-FIC and KBS do not use consultants to assist in reserving activities. Contents

TheTable techniquesof and processes employed in estimating loss reserves are differentiated between reinsurance and primary insurance. Contents

TheTable Company determines the fair value of its furniture rental unit using the discounted cash flows approach. Under the discounted cash flows approach, the Company estimates the fair value of the reporting unit based on the present value of its estimated future cash flows. This approach incorporates a number of significant estimates and assumptions that include: a forecast of the reporting unit’s future cash flows, estimated growth rates, future terminal value, and an appropriate discount rate. The Company then prepares a sensitivity analysis as to how changes in key estimates or assumptions might affect the outcome of the goodwill impairment test. In projecting future cash flows, the Company considers the current economic environment as well as historical results of the unit. The Company believes that the discounted cash flows approach is the most meaningful valuation technique for the furniture rental business, as CORT is the only national company that operates in the rent-to-rent furniture industry, thus making market-based and transaction-based valuation techniques less meaningful. Contents

Wesco’sTable consolidated balance sheet at December 31, 2009 contained $2.066 billion of marketable equity securities stated at fair value, reflecting a net increase in fair values by $198 million during the year. The concentration existing in Wesco’s equity securities portfolio exposes it to more significant market price fluctuations than might be the case were Wesco’s investments more diversified. This exposure to fluctuations is further exacerbated by the large amount invested in companies engaged in the banking industry, inasmuch as trading prices of financial institutions’ shares have been more severely impacted than have general trading prices as a result of the recent liquidity crisis and deterioration of assets and earnings reported by the industry beginning in mid 2008. (At December 31, 2009, five investments, whose carrying values aggregated $1.6 billion, comprised 79% of the carrying value of the Company’s equity securities portfolio. These five were common stocks of Wells Fargo & Company, USBancorp, The Procter & Gamble Company, The Coca-Cola Company and Kraft Foods Incorporated, of which the first two are in the banking industry and the latter three have significant global operations and thus are subject to changes in global economic conditions and foreign currency exchange rates.) Contents

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

Wesco’sTable independent registered public accounting firm has audited our internal control over financial reporting as of December 31, 2009. Its report begins on Page 41. Contents

TheTable information set forth in the sections “Election of Directors,” “Executive Officers,” “Corporate Governance” and “Code of Business Conduct and Ethics” appearing in the definitive combined notice of annual meeting and proxy statement of Wesco for its annual meeting of shareholders scheduled to be held May 5, 2010 (the “2010 Proxy Statement”) is incorporated herein by reference. Contents

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

PursuantTable to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Contents

41 Table of Contents

WESCOTable FINANCIAL CORPORATION of Contents

estimatesTable would have a materially adverse effect on shareholders’ equity, they could produce a material effect on results of operations in a reporting period. Contents

DollarTable amountsof in thousands except for amounts per share Contents

InterestTable income from investments in fixed maturity securities is earned under the constant yield method and includes accrual of interest due as well as amortization of acquisition premiums and accruable discounts. In Contents

WescoTable and its subsidiaries join in the filing of consolidated Federal income tax returns of Berkshire Hathaway Inc. The consolidated Federal tax liability is apportioned among group members pursuant to methods that result in each member of the group paying or receiving an amount that approximates the increase or decrease in consolidated taxes attributable to that member. In addition, Wesco and its subsidiaries also file income tax returns in state and local jurisdictions as applicable. Contents

ASCTable 820 establishes a framework for measuring fair value based on observable, independent market inputs and unobservable market assumptions. Following is a description of the three levels of inputs that may be used to measure fair value: Contents

InTable Mayof 2009, the FASB amended ASC 855 Subsequent Events to set forth general accounting and disclosure requirements for events that occur subsequent to the balance sheet date but before the company’s financial statements are issued and is effective for the periods ending after June 15, 2009. Wesco management has evaluated events that have occurred subsequent to December 31, 2009. Contents

ShownTable below are the amortized costs and fair values of securities with fixed maturities at December 31, 2009, by contractual maturity dates. Contents

FollowingTable is a reconciliation of the change in carrying value of rental furniture for 2009 and 2008: Contents

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

FollowingTable is a summary of notes payable, at year end: Contents

FollowingTable is a summary of Wesco’s assets and liabilities measured at fair value, with the use of significant unobservable inputs (Level 3): Contents

57 Table of Contents

Wes-FICTable has also participated through the Berkshire Insurance Group in several contracts for super-catastrophe reinsurance covering hurricane risks in Florida and catastrophic excess-of-loss risks of a major international reinsurer, in prior years. Because Wesco’s board of directors desires that Wesco participate in insurance and reinsurance activities in which the Berkshire Insurance Group also participates, it has approved Wes-FIC’s automatic acceptance of retrocessions of super-catastrophe reinsurance provided that the following guidelines are met: (1) in order not to delay the acceptance process, the retrocession is to be accepted without delay in writing in Nebraska by agents of Wes-FIC who are salaried employees of the Berkshire Insurance Group; (2) any ceding commission received by the Berkshire Insurance Group cannot exceed 3% of premiums; (3) Wes-FIC is to assume 20% or less of the total risk; (4) the Berkshire Insurance Group must retain at least 80% of the identical risk; and (5) the aggregate premiums from this type of business in any twelve-month period cannot exceed 10% of Wes-FIC’s net worth. Contents

DollarTable amountsof in thousands except for amounts per share Contents

~~Washington, D.C.~~SECURITIES ~~20549~~AND EXCHANGE COMMISSION

Washington, D.C. 20549 ~~Form 10-K~~

Form 10-K ~~(Mark One)~~

~~þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15~~(d)Mark ~~OF THE SECURITIES EXCHANGE ACT OF 1934~~One)

~~For~~þ ~~the~~ANNUAL ~~fiscal~~REPORT ~~year~~PURSUANT ~~ended December 31,~~TO ~~2009~~SECTION or 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

oFor ~~TRANSITION~~the ~~REPORT~~fiscal ~~PURSUANT~~year TOended ~~SECTION~~December 31, ~~13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~2010

~~For the Transition period from to~~ or

~~Commission~~o ~~file~~TRANSITION ~~number~~REPORT ~~1-4720~~ PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~WESCO~~For ~~FINANCIAL CORPORATION~~ the Transition period from to

~~(Exact~~Commission ~~name~~file ofnumber ~~Registrant as~~1-4720 ~~Specified in its Charter)~~

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

WESCO FINANCIAL CORPORATION

(~~626~~Exact name of Registrant as Specified in its Charter) ~~585-6700~~

(Registrant’s Telephone Number, Including Area Code)


Delaware (State or Other Jurisdiction of Incorporation or organization)		95-2109453 (I.R.S. Employer Identification No.)

301 East Colorado Boulevard, Suite 300, Pasadena, California		91101-1901 (Zip Code)
(Address of Principal Executive Offices)

~~Securities registered pursuant to section 12~~(b626) ~~of the Act:~~ 585-6700

Title of Each Class		Name of Each Exchange on Which Registered
Capital Stock, $1 par value		NYSE Amex

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to ~~Section~~ section 12(gb) of the Act:

~~None~~ Title of Each Class Capital Stock, $1 par value Name of Each Exchange on Which Registered NYSE Amex

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

None

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of of the Exchange Act). Yes o No þ

The aggregate market value of voting and non-voting stock of the registrant held by non-affiliates of the registrant as of June 30, ~~2009~~2010 was: $~~390~~434,~~654~~333,000.

The number of shares outstanding of the registrant’s Capital Stock as of February 2625, ~~2010~~ 2011 was: 7,119,807.

DOCUMENTS INCORPORATED BY REFERENCE

		Parts of
Title of Document		Parts of Form 10-K
Title of Document		Form 10-K
None		None
Proxy Statement for 2010 Annual Meeting of Shareholders		Part III. Items 10, 11, 12, 13 and 14

9 TABLE OF CONTENTS

PART I


PART I
	Item 1. Business
	Item 1A. Risk Factors
	Item 1B. Unresolved Staff Comments
	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 Stockholder 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, Executive Officers and Corporate Governance
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
	Item 13. Certain Relationships and Related Transactions, and Director Independence
	Item 14. Principal Accountant Fees and Services
	Item 15. Exhibits and Financial Statement Schedules
SIGNATURES
EX-21
EX-31.A
EX-31.B
EX-32.A
EX-32.B

PART I ~~GENERAL~~

~~Wesco Financial Corporation (“Wesco”) was incorporated in Delaware on March~~Item ~~19, 1959~~1. ~~Wesco engages in three~~ Business ~~principal businesses through its direct or indirect wholly owned subsidiaries:~~

• the insurance business, through Wesco-Financial Insurance Company (“Wes-FIC”), which was incorporated in 1985 and engages in the property and casualty insurance business, and The Kansas Bankers Surety Company (“KBS”), which was incorporated in 1909, purchased by Wes-FIC in 1996 and provides specialized insurance coverages for banks; • the furniture rental business, through CORT Business Services Corporation (“CORT”), which traces its national presence to the combination of five regional furniture rental companies in 1972 and was purchased by Wesco in 2000; and • the steel service center business, through Precision Steel Warehouse, Inc. (“Precision Steel”), which was begun in 1940 and acquired by Wesco in 1979.GENERAL

Wesco’s ~~operations~~Financial ~~also~~Corporation ~~include, through another wholly owned subsidiary, MS Property Company~~ (“~~MS Property~~Wesco”)~~, management~~ ofwas ~~owned~~incorporated ~~commercial~~in ~~real~~Delaware ~~estate~~on inMarch 19, ~~downtown~~1959. ~~Pasadena,~~Wesco ~~California.~~engages ~~MS Property began its operations~~ in ~~late~~three ~~1993,~~principal ~~upon transfer~~businesses tothrough itits ofdirect ~~real~~or ~~properties~~indirect ~~previously~~wholly owned ~~by Wesco and~~subsidiaries: ~~by a former savings and loan subsidiary of Wesco.~~

~~Since~~• ~~1973,~~the ~~Wesco~~insurance ~~has~~business, ~~been~~through ~~80.1%~~Wesco-~~owned~~Financial byInsurance ~~Blue~~Company ~~Chip Stamps~~ (“~~Blue Chip~~Wes-FIC”), awhich ~~wholly~~was ~~owned~~incorporated ~~subsidiary~~in of1985 ~~Berkshire Hathaway Inc. (“Berkshire”). Thus, Wesco~~ and ~~its subsidiaries~~engages ~~are~~in ~~controlled~~the byproperty ~~Blue Chip~~ and ~~Berkshire.~~casualty ~~All~~insurance ~~of these companies may also be deemed to be controlled by Warren E. Buffett~~business, ~~who is Berkshire’s Chairman~~ and ~~Chief~~The ~~Executive Officer~~Kansas ~~and~~Bankers ~~economic~~Surety ~~owner~~Company ~~of 24.3% of its stock. Wesco’s Chairman~~(“KBS”), ~~President~~which ~~and~~was ~~Chief~~incorporated ~~Executive~~in ~~Officer~~1909, ~~Charles~~purchased ~~T. Munger,~~by isWes-FIC ~~also~~in ~~Vice~~1996 ~~Chairman of Berkshire,~~ and ~~consults~~provides ~~with Mr. Buffett~~specialized ~~with~~insurance ~~respect~~coverages tofor Wesco’s investment decisions, major capital allocations, and the selection of the chief executives to head each of its operating businesses, subject to ultimate approval of Wesco’s Board of Directors. banks;

~~Wesco’s~~• ~~activities~~the ~~fall~~furniture ~~into~~rental ~~three~~ business ~~segments — insurance~~, ~~furniture~~through ~~rental~~CORT ~~and~~Business ~~industrial. The~~Services ~~insurance~~Corporation ~~segment~~(“CORT”), ~~consists~~which oftraces ~~the~~its ~~operations~~national ofpresence ~~Wes-FIC~~to ~~and KBS. The furniture rental segment consists of~~ the ~~operations~~combination of ~~CORT.~~ ~~The~~five ~~industrial~~regional ~~segment~~furniture ~~comprises~~rental ~~Precision~~companies ~~Steel’s steel~~in ~~service~~1972 ~~center~~ and ~~industrial~~was ~~supply~~purchased ~~operations.~~by Wesco ~~is also engaged~~ in ~~several activities not identified with the three business segments~~2000, ~~including investment activity unrelated to the insurance segment, MS Property’s real estate activities,~~ and ~~parent company activities.~~

~~INSURANCE~~• ~~SEGMENT~~ the steel service center business, through Precision Steel Warehouse, Inc. (“Precision Steel”), which was begun in 1940 and acquired by Wesco in 1979.

~~Wes-FIC~~ Wesco’s ~~was~~operations ~~incorporated~~also ininclude, ~~1985~~through toanother ~~engage~~wholly inowned ~~the~~subsidiary, ~~property~~MS ~~and casualty~~Property ~~insurance and reinsurance business. Its insurance operations are managed by National Indemnity~~ Company (“~~NICO~~MS Property”), ~~which~~management isof ~~headquartered~~owned incommercial ~~Omaha,~~real ~~Nebraska. To~~estate ~~simplify~~in ~~discussion~~downtown Pasadena, ~~the~~California. ~~term “Berkshire Insurance~~MS ~~Group”~~Property ~~refers~~began toits ~~NICO,~~operations ~~General~~in ~~Reinsurance~~late ~~Corporation~~1993, ~~and certain~~upon ~~other~~transfer ~~wholly~~to ~~owned~~it ~~insurance subsidiaries~~ of ~~Berkshire, although~~real ~~Berkshire~~properties ~~also~~previously ~~includes~~owned by inWesco ~~its~~and ~~insurance~~by ~~group~~a ~~the insurance~~former ~~subsidiaries~~savings ~~that~~and ~~are~~loan ~~80.1%-owned~~subsidiary ~~through Berkshire’s ownership~~ of Wesco.

~~Wes-FIC’s~~ Since ~~high~~1977, ~~statutory~~Wesco ~~net~~has ~~worth~~been ~~(about $2~~80.~~6 billion at~~1%-owned ~~December 31,~~by ~~2009) has~~Blue ~~enabled~~Chip ~~Berkshire~~Stamps to(“Blue ~~offer Wes-FIC~~Chip”), ~~the~~a ~~opportunity~~wholly toowned subsidiary ~~participate,~~of ~~from~~Berkshire ~~time~~Hathaway toInc. ~~time~~(“Berkshire”). Thus, ~~in contracts~~Wesco inand ~~which~~its ~~Wes-FIC~~subsidiaries ~~effectively~~are controlled ~~has~~by ~~reinsured~~Blue ~~certain property~~Chip and ~~casualty~~Berkshire. ~~risks~~All of ~~unaffiliated~~these ~~property~~companies ~~and casualty~~may ~~insurers.~~also ~~These~~be ~~arrangements~~deemed ~~have~~to ~~included~~be controlled ~~“excess-of-loss” contracts~~by ~~such~~Warren asE. ~~“super-catastrophe~~Buffett, ~~reinsurance” contracts~~who ~~which~~is ~~subject~~Berkshire’s ~~the~~Chairman ~~reinsurer~~and toChief ~~especially~~Executive ~~large~~Officer and economic owner of ~~amounts~~23.3% of ~~losses~~its ~~from~~stock. ~~mega-catastrophes~~Wesco’s ~~such~~Chairman, asPresident ~~hurricanes~~and ~~or earthquakes.~~Chief ~~Super-catastrophe~~Executive ~~policies~~Officer, ~~which~~Charles ~~indemnify~~T. ~~the~~Munger, is ~~ceding~~also ~~companies~~Vice ~~for~~Chairman ~~all~~of orBerkshire, ~~part~~and ofconsults ~~covered~~with ~~losses~~Mr. Buffett inwith ~~excess~~respect ofto Wesco’s investment ~~large~~decisions, ~~specified~~major ~~retentions~~capital allocations, ~~have~~and ~~been~~the ~~subject~~selection of the chief executives to ~~aggregate limits.~~head ~~Wes-FIC~~each isof ~~also~~its operating abusinesses, ~~party~~subject to ~~large~~ultimate ~~“quota-share”~~approval of Wesco’s Board of Directors.

On February 7, 2011, Wesco and Berkshire announced that they had entered into a definitive merger agreement, whereby Berkshire will acquire the remaining 19.9% of the shares of Wesco’s 10capital stock that it does not presently own in exchange for cash or shares of Berkshire Class B common stock, at the election of each Wesco shareholder. The transaction requires the affirmative vote of holders of a majority of Wesco’s outstanding shares in favor of the adoption of the merger agreement, which will be sought at a special meeting of the shareholders of Wesco, and is subject to customary closing conditions. The transaction is also subject to a non-waivable condition that a majority of the outstanding shares not owned by Berkshire (and excluding certain specified shareholders) vote in favor of the adoption of the merger agreement. Berkshire has agreed to vote the Wesco shares it owns in favor of the transaction. Closing is expected to occur before the end of the second quarter of 2011, though there can be no assurance that any transaction will be completed. A Form 8-K filed by Wesco with the Securities and Exchange Commission (the “SEC”) on February 7, 2011 contains

2 ~~reinsurance arrangements under which it shares in premiums and losses proportionately with the ceding companies as described in more detail below.~~

~~Following~~additional ~~are~~information ~~some~~about the proposed transaction, including a copy of the ~~more~~merger agreement. ~~significant~~That ~~reinsurance arrangements~~report inis ~~which~~available ~~Wes-FIC~~at ~~has~~no ~~participated~~charge inat ~~recent~~Wesco’s ~~years:~~website, www.wescofinancial.com, or the SEC’s website, www.sec.gov.

	•	Participation, since 2001, in several risk pools managed by a subsidiary of General Reinsurance Corporation, covering principally hull, liability and workers’ compensation exposures, relating to the aviation industry. For the past three years, Wes-FIC has participated to the extent of 16.67% in several hull and liability pools and 5% of a workers’ compensation pool. In July 2009, it began to participate to the extent of 25% in an international pool. Another General Reinsurance Corporation subsidiary 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, such as in settling a large loss. Wes-FIC’s exposure to detrimental effects, however, is mitigated because a senior manager of NICO who represents the membership interests of Wes-FIC and unrelated pool members with an additional 75% of the hull and liability pools and 90% of the workers’ compensation pool who have the same exposures to this potential conflict of interest, has access to information regarding significant losses and thus is able to address conflict issues that might arise.
	•	Participation, since the beginning of 2008, in a retrocession agreement with NICO, to assume 10% of NICO’s quota share reinsurance of Swiss Reinsurance Company and its major property-casualty affiliates (“Swiss Re”). Under this agreement, Wes-FIC has assumed 2% part of NICO’s 20% quota share reinsurance of all Swiss Re property-casualty risks incepting over the five-year period ending December 31, 2012 on the same terms as NICO’s agreement with Swiss Re. Wes-FIC’s share of written premiums under the contract was $294.1 million in 2009, giving rise to earned premiums of $276.7 million, the latter representing 85.6% of Wes-FIC’s 2009 earned premiums and 34.0% of Wesco’s consolidated revenues. Annual premiums in each of the three remaining years under the contract could vary significantly depending on market conditions and opportunities. See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, beginning on page 20, for more information about the impact of Wes-FIC’s participation in the Swiss Re contract.

In connection with the proposed transaction, Berkshire will file with the SEC a registration statement that will include a proxy statement of Wesco that also constitutes a prospectus of Berkshire relating to the proposed transaction. Investors are urged to read the registration statement and proxy statement/prospectus and any other relevant documents filed with the SEC when they become available, because they will contain important information about Wesco, Berkshire and the proposed transaction. The registration statement and proxy statement/prospectus and other documents relating to the proposed transaction filed with the SEC (when they are available) can be obtained free of charge from the websites listed above.

~~Wes-FIC~~ Wesco’s isactivities ~~also~~fall ~~licensed~~into tothree ~~write~~business ~~“direct~~segments — insurance,” orfurniture rental and ~~“primary”~~industrial. The insurance ~~business~~segment ~~(as~~consists ~~distinguished~~of ~~from reinsurance)~~the inoperations ~~Nebraska,~~of ~~Utah~~Wes-FIC and ~~Iowa,~~KBS. ~~and~~The ~~may~~furniture rental ~~write~~segment ~~such insurance~~consists inof the ~~non-admitted~~operations ~~excess~~of CORT. The industrial segment comprises Precision Steel’s steel service center and ~~surplus~~industrial ~~lines~~supply ~~market~~operations. Wesco is also engaged in several activities ~~other~~not ~~states,~~identified ~~but~~with the ~~volume~~three ~~written~~business tosegments, ~~date~~including ~~has~~investment ~~been~~activity unrelated ~~minimal~~to the insurance segment, MS Property’s real estate activities, and parent company activities.

InINSURANCE ~~1996, Wes-FIC purchased 100% of KBS, which writes specialized~~SEGMENT primary insurance coverage to mostly small and medium-sized banks in the Midwest. Its product line for financial institutions includes policies for crime insurance, check kiting fraud indemnification, Internet banking catastrophe theft insurance, Internet banking privacy liability insurance, directors and officers liability, bank employment practices, and bank insurance agents professional errors and omissions indemnity.

~~Through~~ Wes-FIC ~~the~~was ~~latter~~incorporated ~~part~~in of1985 ~~2008,~~to ~~KBS~~engage ~~also~~in ~~offered~~the ~~deposit~~property and casualty insurance and ~~guarantee~~reinsurance ~~bonds~~business. ~~which~~Its ~~insured~~insurance ~~bank~~operations ~~deposits~~are inmanaged ~~excess~~by ofNational Indemnity Company (“NICO”), ~~federally~~which ~~insured~~is ~~limits~~headquartered in Omaha, Nebraska. ~~Beginning~~To insimplify ~~2008~~discussion, ~~events~~the term “Berkshire Insurance Group” refers to NICO, General Reinsurance Corporation, and certain other wholly owned insurance subsidiaries of Berkshire, although Berkshire also includes in its insurance group the insurance ~~banking~~subsidiaries ~~industry~~that ~~led~~are to80.1%-owned athrough ~~rapid~~Berkshire’s ~~increase~~ownership inof Wesco.

Wes-FIC’s high statutory net worth (about $2.8 billion at December 31, 2010) has enabled Berkshire to offer Wes-FIC the opportunity to participate, from time to time, in contracts in which 11Wes-FIC effectively has reinsured certain property and casualty risks of unaffiliated property and casualty insurers. These arrangements have included “excess-of-loss” contracts such as “super-catastrophe reinsurance” contracts which subject the reinsurer to especially large amounts of losses from mega-catastrophes such as hurricanes or earthquakes. Super-catastrophe policies, which indemnify the ceding companies for all or part of covered losses in excess of large, specified retentions, have been subject to aggregate limits. Wes-FIC is also a party to large “quota-share” reinsurance arrangements under which it shares in premiums and losses proportionately with the ceding companies as described in more detail below.

~~bank~~ Wesco’s ~~failures.~~board ~~Although~~of ~~few~~directors has authorized automatic acceptance of ~~KBS’s~~retrocessions ~~customer~~of super-catastrophe ~~banks~~reinsurance ~~were~~offered by the Berkshire Insurance Group provided the following ~~believed~~guidelines toand belimitations ~~subject~~are complied with: (1) in order not to ~~significant~~delay ~~risk~~the ofacceptance ~~failure~~process, the ~~management~~retrocession ~~became~~is ~~less~~to ~~confident~~be accepted without delay in ~~the~~writing ~~long-term~~in ~~profitability of~~Nebraska ~~this~~by ~~line~~agents of ~~insurance.~~Wes-FIC ~~Following~~who ~~the~~are salaried ~~failure~~employees of ~~one~~the ofBerkshire ~~its customer~~Insurance ~~banks~~Group; in(2) any ceding commission received by the Berkshire ~~third~~Insurance ~~quarter~~Group cannot exceed 3% of ~~2008~~premiums, ~~resulting~~which inis abelieved ~~loss~~to be less than the Berkshire Insurance Group could get in the marketplace; (3) Wes-FIC is to ~~KBS,~~assume ~~and~~20% ~~thus,~~or ~~Wesco,~~less of $the total risk; (4.7) ~~million,~~the ~~after~~Berkshire ~~taxes,~~Insurance ~~KBS notified~~Group ~~its~~must ~~customers~~retain at least 80% of ~~its~~the ~~decision~~identical torisk; ~~exit~~and (5) the aggregate premiums from this ~~line~~type of ~~insurance~~ asbusiness ~~rapidly~~in asany ~~feasible~~twelve-month period cannot exceed 10% of Wes-FIC’s net worth. ~~Bond~~Occasionally, ~~premiums~~the ~~accounted~~Berkshire ~~for~~Insurance Group will also have an upper-level ~~approximately~~reinsurance ~~half~~interest ofwith ~~KBS~~interests different from Wes-FIC’s, ~~written~~particularly ~~premiums~~in the event of one or ~~$20 million~~more inlarge ~~2008~~losses. Wes-FIC currently has no active super-catastrophe reinsurance contracts in force.

3 The aggregate face amount of deposit guarantee bonds has been reduced, from $9.7 billion outstanding at September 30, 2008, to $33 million, currently. The number of institutions that had outstanding KBS bonds has been reduced from 1,671 at September 30, 2008, to ten. KBS is licensed to write business in 29 states; however, in 4 states its insurance has been limited to deposit guarantee bonds. Thus, it is actively writing insurance in 25 states at the present time. Management is hopeful that KBS’s primary insurance premiums will increase, albeit slowly, in future periods.

In Following ~~2009,~~are ~~premiums~~some of ~~$0.1 million were ceded to~~ the ~~Berkshire~~ ~~Insurance~~more ~~Group,~~significant ~~$0.2 million~~reinsurance ofarrangements ~~reinsured~~in ~~losses were allocated to it and $1.4 million of losses~~ which ~~had~~Wes-FIC has ~~been~~participated ~~allocated to it~~ in ~~2008,~~recent ~~were recovered and repaid to it.~~years: ~~In 2008, premiums of $3.4 million were ceded to the Berkshire Insurance Group, and $11.0 million of reinsured losses were allocated to it.~~

~~KBS~~• ~~markets~~Participation, ~~its~~since ~~products~~2001, in ~~some~~several ~~states~~risk ~~through~~pools ~~exclusive~~managed by a subsidiary of General Reinsurance Corporation, ~~commissioned~~ ~~agents~~covering principally hull, liability and ~~directly~~workers’ tocompensation ~~insureds~~exposures, inrelating ~~other~~to ~~states~~the aviation industry. ~~Inasmuch~~ asFor the ~~number~~past offour ~~small~~years, ~~Midwestern~~Wes-FIC ~~banks~~has isparticipated ~~declining~~to as the ~~banking~~extent ~~industry~~of ~~consolidates~~16.67% in several hull and liability pools and 5% of a workers’ compensation pool. In July 2009, ~~KBS~~it ~~has~~began ~~attributed~~to participate to the ~~ongoing~~ ~~growth~~extent of 25% in ~~its~~an ~~business~~international topool. anAnother ~~extraordinary~~General ~~level~~Reinsurance Corporation subsidiary provides a portion of ~~service~~ ~~provided~~the byupper-level ~~its~~reinsurance ~~employees~~protection ~~and~~to ~~agents~~these aviation risk pools, and therefore to ~~the introduction~~Wes-FIC, on terms that could cause some conflict of ~~new~~interest ~~products~~under certain conditions, such as ~~deposit~~in ~~guarantee~~settling ~~bonds which,~~a ~~until~~large ~~KBS~~loss. ~~decided~~Wes-FIC’s inexposure ~~late~~to ~~2008~~detrimental toeffects, ~~exit~~however, ~~that~~is ~~line~~mitigated because a senior manager of ~~insurance,~~ ~~had~~NICO ~~grown~~who torepresents ~~represent~~the ~~approximately~~membership ~~half~~interests of ~~its business.~~Wes-FIC ~~Internet~~and ~~banking~~unrelated ~~catastrophe~~pool ~~theft~~members ~~insurance~~with ~~and Internet~~an ~~banking~~additional ~~privacy~~75% of the hull and liability ~~insurance,~~pools ~~which~~and ~~were introduced~~90% ~~relatively~~of ~~recently,~~the ~~are~~workers’ ~~steadily~~compensation ~~increasing~~pool ~~in volume,~~who ~~but~~have dothe ~~not~~same ~~yet~~exposures ~~provide~~to athis ~~significant~~potential ~~amount~~conflict of ~~premium volume~~interest, has access to information regarding significant losses and thus is able to address conflict issues that might arise.

A• ~~significant~~Participation, ~~marketing~~since ~~advantage~~the ~~enjoyed~~beginning byof ~~the~~2008, ~~Berkshire Insurance~~in ~~Group~~a retrocession agreement with NICO, ~~including~~to ~~Wesco~~assume 10% of NICO’s ~~insurance~~quota ~~segment,~~share ~~is the~~reinsurance ~~maintenance~~ of ~~exceptional~~Swiss ~~capital~~Reinsurance ~~strength~~Company and its major property-casualty affiliates (“Swiss Re”). ~~The~~Under ~~combined statutory~~this ~~surplus~~agreement, Wes-FIC has assumed 2% part of ~~Wesco~~NICO’s ~~insurance~~20% ~~businesses~~quota ~~totaled approximately~~share ~~$2.6 billion~~reinsurance atof all Swiss Re property-casualty risks incepting over the five-year period ending December 31, ~~2009.~~2012 ~~This capital~~on ~~strength~~the ~~creates~~same ~~opportunities~~terms ~~for~~as NICO’s agreement with Swiss Re. Wes-FIC’s share of written premiums under the contract was $241.1 million in 2010, giving rise to ~~participate~~ earned premiums of $240.5 million, the latter representing 84.5% of Wes-FIC’s 2010 earned premiums and 31.4% of Wesco’s consolidated revenues. Annual premiums in ~~reinsurance~~each of the two remaining years under the contract could vary significantly depending on market conditions and ~~insurance~~opportunities. ~~contracts~~The ~~not necessarily~~contract ~~available~~expires toat ~~many~~the end of ~~its~~2012. ~~competitors~~See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, beginning on page 15, for more information about the impact of Wes-FIC’s participation in the Swiss Re contract.

Management of Wesco believes that an insurer in the reinsurance business must maintain a large net worth in relation to annual premiums in order to remain solvent when called upon to pay claims when a loss occurs. In this respect, Wes-FIC ~~and~~is ~~KBS~~also ~~are competitively~~licensed ~~well positioned, inasmuch as their net premiums written for calendar 2009 amounted~~ to ~~only~~write ~~13% of their combined statutory surplus~~“direct,” ~~compared~~or to“primary” aninsurance ~~industry~~business ~~average~~(as ~~of 94% based~~distinguished onfrom ~~figures~~reinsurance) ~~reported~~in ~~for~~Nebraska, ~~2008~~Utah byand ~~A.M. Best Company~~Iowa, ~~a nationally~~and ~~recognized~~may ~~statistical~~write ~~rating~~such ~~organization for the~~ insurance ~~industry.~~in ~~Standard & Poor’s Corporation recently reduced from AAA to AA+~~ the ~~rating it assigned to Wes~~non-~~FIC’s claims-paying ability. This rating continues to~~admitted ~~recognize~~excess ~~Wes-FIC’s~~and ~~strong~~surplus ~~competitive~~lines ~~position~~market asin aseveral ~~member of~~other ~~the Berkshire Insurance Group and its significant capital strength~~states, asbut ~~well as~~ the ~~commitment~~volume ofwritten ~~Wes-FIC’s management~~ to adate ~~disciplined~~has ~~approach to underwriting and conservative~~been ~~reserving~~minimal.

~~Insurance~~ In ~~companies~~1996, ~~are~~Wes-FIC ~~subject~~purchased to100% ~~regulation by the departments~~ of ~~insurance~~KBS, ofwhich ~~the~~writes ~~various~~specialized ~~states~~primary ininsurance ~~which~~coverage ~~they write policies~~to asmostly ~~well~~small asand ~~the~~medium-sized ~~states~~banks in ~~which~~the ~~they~~Midwest. ~~are~~Its ~~domiciled~~product ~~and,~~line infor ~~the~~financial institutions ~~case~~includes ofpolicies ~~KBS,~~for ~~because~~crime ofinsurance, ~~its~~check ~~business~~kiting offraud ~~insuring banks~~indemnification, byInternet ~~the~~banking ~~Department~~catastrophe oftheft ~~the~~insurance, ~~Treasury.~~Internet ~~Regulations~~banking ~~relate~~privacy ~~to,~~liability ~~among other things~~insurance, ~~capital~~directors ~~requirements, shareholder~~ and ~~policyholder~~officers ~~dividend restrictions~~liability, ~~reporting~~bank ~~requirements,~~employment ~~annual audits by independent accountants~~practices, ~~periodic regulatory examinations~~ and ~~limitations~~ onbank ~~the~~insurance ~~risk~~agents ~~exposures~~professional ~~that~~errors ~~can be retained, as well as the size~~ and ~~types of investments that can be made~~omissions indemnity.

Through the latter part of 2008, KBS also offered deposit guarantee bonds which insured bank ~~Because~~deposits itin isexcess ~~operated~~of byfederally ~~NICO~~insured limits. Beginning in 2008, ~~Wes~~events in the banking industry led to a rapid increase in bank failures. Although few of KBS’s customer banks were believed to be subject to significant risk of failure, management became less confident in the long-~~FIC~~term profitability ~~has~~of nothis ~~employees~~line of insurance. Following the failure of one of its customer banks in the ~~own.~~third quarter of 2008, resulting in a loss to KBS, ~~has~~and 18thus, Wesco, of $4.7 ~~employees~~million, after taxes, (subsequently reduced to $3.7 million, net, as a result of subsequent recoveries from the FDIC), KBS notified its customers of its decision to exit this line of insurance as rapidly as feasible. KBS is

4 12

~~CORT~~currently iswriting ~~the~~premiums ~~nation’s largest provider~~ of ~~rental~~approximately ~~furniture~~$10 million, ~~accessories~~ ~~and~~annually, ~~related~~approximately ~~services~~half ~~in the “rent-to-rent” (as opposed to “rent-to-own”) segment~~ of the ~~furniture industry. CORT rents high-quality~~ ~~furniture~~volume towritten ~~corporate~~before and individual customers who desire flexibility in meeting their temporary office, residential or trade show furnishing needs, and who typically do not seek to own such furniture. In addition, CORT sells previously rented furniture through company-owned clearance centers, thereby enabling it todiscontinued ~~regularly renew~~ its ~~inventory~~line ~~and update styles. CORT’s network~~ of ~~facilities~~deposit ~~(in~~guarantee ~~34 states, the District of Columbia and the United Kingdom (“U~~bonds.~~K.”))~~ ~~comprises 90 showrooms, 83 clearance centers and 92 warehouses, as well as seven websites, including www.cort.com.~~

~~CORT’s rent-to-rent business~~ The isaggregate ~~differentiated~~face ~~from rent-to-own businesses~~amount ~~primarily by the terms~~ of ~~the~~outstanding ~~rental~~deposit ~~arrangements~~guarantee ~~and the~~bonds ~~type~~has ofbeen ~~customer~~reduced, ~~served~~from $9.7 ~~Rent-to-rent customers~~billion ~~generally~~at ~~desire~~September 30, ~~high-quality~~2008, ~~furniture~~ to ~~meet temporary~~$2.9 ~~needs~~million, ~~have~~at ~~established credit~~December 31, ~~and~~2010. ~~pay~~The onnumber aof ~~monthly~~institutions ~~basis.~~with ~~Typically,~~outstanding ~~these~~KBS ~~customers~~bonds dohas ~~not~~been ~~seek~~reduced tofrom ~~acquire~~1,671 ~~the property~~at onSeptember 30, a2008, ~~permanent~~to ~~basis.~~one, Inat ~~a typical~~December ~~rent-to-rent transaction~~31, ~~the~~2010. ~~customer~~At ~~agrees~~the totime ~~rent~~KBS ~~furniture~~discontinued ~~for~~its aline ~~minimum~~ of ~~three~~deposit ~~months~~guarantee bonds, ~~subject~~it towas ~~extension~~licensed byto write ~~the~~business ~~customer~~in on39 ~~a month-to-month basis.~~states, Byincluding ~~contrast, rent-to-own arrangements~~16 ~~are~~in ~~generally~~which ~~made~~it bywrote ~~customers~~only ~~lacking~~deposit ~~established credit~~guarantee ~~whose~~bonds. ~~objective~~KBS is currently ~~the~~licensed ~~eventual~~to ~~ownership~~write ofbusiness ~~the property.~~in ~~These~~25 ~~transactions~~states. ~~are~~Management ~~typically~~is ~~entered~~hopeful ~~into~~that onKBS’s aprimary ~~month-to-month basis~~insurance ~~and~~premiums ~~may~~will ~~require~~increase, ~~weekly~~albeit ~~rental~~slowly, ~~payments~~in future periods.

~~CORT’s~~ KBS ~~customer~~limits ~~base~~its ~~includes~~loss ~~primarily~~exposure ~~Fortune 500 companies,~~per ~~small~~loss ~~businesses,~~event ~~professionals,~~to ~~and~~a ~~owners and~~maximum ~~operators~~ of ~~apartment communities~~$7. ~~CORT’s management believes its size~~6 million, ~~national~~after ~~presence~~taxes, ~~brand awareness,~~by ~~consistently~~limiting ~~high~~the ~~level~~maximum amount of ~~customer~~risk ~~service,~~underwritten ~~product~~to ~~quality, breadth~~$30 million ofto ~~selection,~~any ~~depth~~single ~~and~~customer ~~experience~~or group of affiliated ~~management~~customers, and ~~efficient~~ ~~clearance~~through ~~centers have been key contributors to~~ the ~~company’s~~ ~~success.~~purchase ~~CORT offers a wide variety~~ of ~~office~~reinsurance ~~and home~~from ~~furnishings,~~the ~~including~~Berkshire ~~commercial~~Insurance ~~panel systems~~Group, ~~televisions,~~at ~~housewares~~prices ~~and~~believed ~~accessories. CORT emphasizes its ability~~ to ~~furnish~~be anmarket ~~apartment,~~prices. ~~home~~KBS orreinsures the entire ~~suite~~layer of ~~offices with~~losses ~~high-quality~~between ~~furniture, housewares and accessories in two~~$3 million ~~business days. CORT’s objective is to build upon these core competencies~~ and ~~competitive~~$5 million ~~advantages to increase revenues~~ and ~~market~~ ~~share.~~65% ~~Key~~of tothe ~~CORT’s~~entire ~~growth~~layer ~~strategies~~above ~~are:~~$5 million.

• In ~~expanding~~2010, ~~its~~premiums ~~commercial~~of ~~customer~~$0.2 million ~~base;~~were •ceded ~~enhancing~~to ~~its~~the ~~ability~~Berkshire toInsurance ~~capture~~Group, anno ~~increasing~~reinsured losses ~~number~~were allocated to it, and $0.8 million of ~~Internet~~losses ~~customers~~which ~~through~~had ~~its~~been ~~on-line~~allocated ~~catalog~~to it in prior years were recovered and ~~other~~repaid ~~web~~to ~~services;~~it. •In ~~making~~2009, ~~selective~~premiums ~~acquisitions;~~of $0.1 million were ceded to the Group, $0.2 million of reinsured losses were allocated to it, and •$1.4 million ~~continuing~~of losses which had been allocated to ~~develop~~it ~~various~~in ~~products~~2008 were recovered and ~~services~~repaid to it.

In KBS ~~order~~markets toits ~~capitalize~~products onin ~~the~~some ~~significant~~states ~~profit~~through ~~potential available~~exclusive, ~~from~~commissioned ~~longer~~agents, ~~average rental periods~~ and ~~the higher~~directly ~~average~~to ~~monthly~~insureds ~~rent~~in ~~typically~~other ~~available~~states. ~~for~~Inasmuch ~~office~~as ~~products, CORT’s~~the ~~strategy~~number isof tosmall ~~place~~Midwestern ~~greater~~banks ~~emphasis~~is ondeclining ~~growth~~as inthe ~~rentals~~banking ofindustry ~~office~~consolidates, ~~furniture~~KBS ~~while~~has ~~maintaining~~attributed ~~its~~the ~~premier position~~growth in ~~residential~~its ~~furniture~~business ~~rental.~~that Inoccurred ~~order~~prior to ~~promote~~ ~~longer~~late ~~office~~2008 ~~lease~~to ~~terms,~~an ~~CORT~~extraordinary ~~offers~~level ~~lower~~of ~~rates~~service onprovided ~~leases when~~by ~~lease~~its ~~terms~~employees ~~exceed~~and ~~six~~agents, ~~months.~~and Ato ~~significant~~the introduction ~~portion~~ of ~~CORT’s~~ ~~residential~~new ~~furniture~~products, ~~rentals~~such isas ~~derived~~deposit ~~from corporate~~guarantee ~~relocations~~bonds ~~and temporary assignments~~which, asuntil ~~new~~KBS ~~and transferred~~decided ~~employees~~in oflate ~~CORT’s corporate customers enter~~2008 ~~into~~to ~~leases~~exit ~~for~~that ~~residential~~line ~~furniture.~~of ~~Thus~~insurance, ~~CORT~~had ~~offers~~grown ~~its corporate rental customers a way~~ to ~~reduce~~represent ~~the~~approximately ~~costs~~half of ~~corporate~~ ~~relocation~~its ~~and~~business. ~~travel~~Internet banking ~~while~~catastrophe ~~developing~~theft ~~residential business~~insurance ~~with~~and ~~new~~Internet ~~and~~banking ~~transferred~~privacy ~~employees.~~liability ~~CORT~~insurance, ~~also~~which ~~provides~~were ~~short-term~~introduced ~~rentals~~several ~~for~~years ~~trade~~ago, ~~shows~~are ~~and~~steadily ~~conventions.~~increasing ~~Its www.corttradeshow.com~~in ~~website~~volume, ~~assists~~but indo ~~providing~~not ~~information to~~yet ~~and~~provide ~~gathering~~a significant ~~leads~~amount ~~from~~of ~~prospects~~premium volume.

In A ~~January~~significant ~~2008,~~marketing ~~CORT~~advantage ~~expanded~~enjoyed ~~its~~by ~~operations~~the toBerkshire ~~the~~Insurance ~~U.K.~~Group, including Wesco’s ~~through~~insurance segment, is the ~~purchase~~maintenance of ~~Roomservice~~exceptional ~~Group,~~capital ~~now~~strength. ~~doing~~The ~~business~~combined asstatutory ~~CORT~~surplus ~~Business~~of ~~Services~~Wesco’s UKinsurance ~~Ltd.,~~businesses atotaled ~~small~~approximately ~~regional~~$2.8 billion ~~provider~~at ofDecember 31, 2010. ~~furniture~~This ~~rental~~capital ~~and~~strength ~~relocation~~creates ~~services.~~opportunities, Inparticularly ~~November~~at ~~2008,~~times ~~CORT~~when the reinsurance and ~~acquired~~insurance acapacity ~~business~~available ~~division~~in ofthe ~~Aaron~~market ~~Rents,~~is ~~Inc.~~constrained, ~~expanding~~for ~~its national~~Wes-FIC ~~presence~~to participate in reinsurance ~~the~~and Uinsurance contracts not necessarily available to many of its competitors.S.

~~The~~ Management ~~furniture~~of ~~rental~~Wesco believes that an insurer in the reinsurance business ismust ~~subject~~maintain a large net worth in relation to ~~economic~~annual ~~cycles~~premiums in order to remain solvent when called upon to pay claims when a loss occurs. In this respect, Wes-FIC and KBS are competitively well positioned, inasmuch as ~~dependent~~their net premiums written for calendar 2010 amounted to only 10% of their combined statutory surplus, compared to an industry average of 80% based on ~~economic~~figures ~~growth~~reported for ~~expansion~~2009 by A.M. ~~Although~~Best Company, a nationally recognized statistical rating organization for the insurance industry. In ~~economic~~2009, ~~contraction~~Standard in& ~~2008~~Poor’s ~~and~~Corporation ~~2009~~reduced ~~has~~from ~~contributed~~AAA to aAA+ the rating it assigned to Wes-FIC’s ~~weakening~~claims-paying ofability. ~~the~~This ~~furniture~~rating ~~rental~~continues ~~business,~~to ~~CORT~~recognize ~~has~~Wes-FIC’s ~~made~~strong competitive position as ~~several~~a ~~selective~~member ~~acquisitions~~of ~~following~~the Berkshire Insurance Group and its ~~purchase~~significant bycapital ~~Wesco~~strength, ~~and~~ itas well

5 13

~~The rent-to-rent segment~~as of the ~~furniture~~commitment ~~rental industry is highly competitive. There are several large regional competitors, as well as a number~~ of ~~smaller regional and local rent~~Wes-~~to-rent competitors.~~FIC’s ~~The~~management availability of low priced, lower-quality furniture from overseas manufacturers is also providing additional competitive pressure. In addition, numerous retailers offer residential and office furniture under rent-to~~-own arrangements.~~ Ita isdisciplined ~~believed~~approach that the principal competitive factors in the furniture rental industry are product value, furniture condition, the extent of furniture selection, terms of the rental agreement, speed of delivery, exchange privileges, options to ~~purchase,~~underwriting ~~deposit requirements~~ and conservative ~~customer service~~reserving.

~~CORT~~ Insurance ~~provides~~companies aare ~~nation-wide~~subject ~~apartment~~to ~~locator~~regulation ~~service~~by ~~through its~~the ~~website~~departments ~~www.apartmentsearch.com~~of ~~and~~insurance ~~customer~~of ~~call~~the ~~centers.~~various ~~The~~states ~~apartment~~in ~~locator~~which ~~service~~they ~~was~~write ~~begun~~policies inas ~~2001~~well as ~~CORT’s Relocation~~the ~~Central~~states ~~Corporation~~in ~~subsidiary.~~which ~~The~~they ~~business,~~are ~~was originally~~domiciled ~~intended mainly to lead to increased furniture rentals~~and, ~~and~~in ~~was marketed primarily to individual renters. In~~the ~~order~~case toof ~~trim operating costs~~KBS, ~~the~~because ~~subsidiary~~of ~~was~~its ~~reorganized and,~~business byof ~~yearend~~insuring ~~2004~~banks, ~~absorbed~~by ~~into CORT. Late in 2006 CORT began~~ the ~~expansion~~Department ~~and marketing~~ of ~~its~~the ~~relocation service,~~Treasury. ~~designed~~Regulations ~~specifically~~relate ~~for renters~~to, toamong ~~Fortune 2000 companies~~other asthings, acapital ~~comprehensive~~requirements, ~~seamless~~shareholder ~~solution~~and topolicyholder ~~their~~dividend ~~employee-relocation~~restrictions, ~~needs.~~reporting ~~However~~requirements, inannual ~~connection~~audits ~~with weak~~by ~~economic~~independent ~~environment~~accountants, ~~CORT~~periodic regulatory ~~has~~examinations ~~more~~and ~~recently~~limitations ~~trimmed back~~ on ~~its~~the ~~efforts~~risk toexposures ~~expand~~that ~~these~~can ~~services.~~be ~~Through~~retained, ~~its~~as ~~network~~well ofas the ~~foreign~~size ~~contacts,~~and ~~CORT~~types ~~also~~of ~~provides~~investments ~~such~~that ~~services internationally~~can be made.

~~The~~ Because ~~majority~~it ~~of CORT’s furniture sales revenue~~ is ~~derived from~~operated ~~its~~by clearance center sales. The remaining furniture sales revenue results principally from lease conversions and sales of new furniture. The sale of previously leased furniture allows CORT to control inventory quantities and to maintain inventory quality at showroom level. On averageNICO, ~~furniture~~Wes-FIC ishas ~~typically sold~~no ~~through~~employees ~~the clearance centers from three to five years after its initial purchase. With respect to sales~~ of ~~furniture through~~ its ~~clearance centers, CORT competes with numerous new and used furniture retailers, some of which are larger than CORT~~own. ~~Wesco~~KBS ~~management~~has ~~believes~~14 ~~that price and value are CORT’s principal competitive advantages~~employees.

~~CORT~~FURNITURE ~~has~~RENTAL ~~approximately 2,211 full-time employees, including~~SEGMENT ~~72 union members. Management considers labor relations to be good.~~

CORT is the nation’s largest provider of rental furniture, accessories and related services in the “rent-to-rent” (as opposed to “rent-to-own”) segment of the furniture industry. CORT rents ~~INDUSTRIAL~~high-quality ~~SEGMENT~~furniture to corporate and individual customers who desire flexibility in meeting their temporary office, residential or trade show furnishing needs, and who typically do not seek to own such furniture. In addition, CORT sells previously rented furniture through company-owned clearance centers, thereby enabling it to regularly renew its inventory and update styles. CORT’s network of facilities (in 34 states, the District of Columbia and the United Kingdom (the “U.K.”)) comprises 85 showrooms, 75 clearance centers and 81 warehouses, as well as thirteen websites, including www.cort.com.

~~Precision~~ CORT’s ~~Steel~~rent-to-rent ~~and~~business ~~one~~is ofdifferentiated ~~its~~from ~~subsidiaries~~rent-to-own ~~operate~~businesses ~~steel service~~primarily ~~centers~~by inthe terms of the ~~Chicago~~rental arrangements and ~~Charlotte~~the ~~metropolitan~~type ~~areas~~of customer served. Rent-to-rent customers generally ~~The~~desire ~~service~~high-quality ~~centers~~furniture ~~buy~~to ~~stainless~~meet ~~steel~~temporary needs, ~~low~~have ~~carbon~~established ~~sheet~~credit, and pay on a ~~strip~~monthly ~~steel~~basis. Typically, ~~coated~~these ~~metals,~~customers ~~spring~~do ~~steel,~~not ~~brass,~~seek ~~phosphor~~to ~~bronze~~acquire the property on a permanent basis. ~~and~~In ~~other~~a ~~metals~~typical rent-to-rent transaction, ~~cut~~the ~~these~~customer ~~metals~~agrees to ~~order,~~rent ~~and~~furniture ~~sell~~for ~~them~~a minimum of three months, subject to extension by the customer on a month-to-month basis. By contrast, rent-to-own ~~wide~~arrangements ~~variety~~are ofgenerally made by customers lacking established credit whose objective is the eventual ownership of the property. These transactions are typically entered into on a month-to-month basis and may require weekly rental payments.

~~The~~ CORT’s ~~steel~~customer ~~service~~base ~~center~~includes ~~business~~primarily isFortune ~~highly~~500 ~~competitive. Precision~~companies, ~~Steel’s~~small ~~annual~~businesses, professionals, ~~sales~~and ~~volume~~owners ofand ~~approximately~~operators ~~12 thousand tons~~ of ~~flat~~apartment ~~rolled~~communities. ~~products~~CORT’s ~~compares~~management ~~with~~believes ~~the domestic~~its ~~steel~~size, ~~service~~national ~~industry’s~~presence, ~~annual~~brand ~~volume~~awareness, ~~for~~consistently ~~all~~high ~~shapes~~level of ~~products~~ ~~(flat~~customer ~~rolled~~service, ~~bar, wire, structural, plate, tubular~~product ~~steel~~quality, ~~etc.)~~breadth of ~~approximately~~selection, ~~30 million~~depth ~~tons.~~and ~~Precision Steel~~experience ~~competes~~of ~~not~~management, ~~only~~and ~~with~~efficient ~~other~~clearance ~~service~~ centers ~~but also with~~ ~~mills~~have ~~that~~been ~~supply~~key ~~metal~~contributors to ~~service~~the ~~centers,~~company’s ~~original~~success. ~~equipment manufacturers~~CORT ~~and~~offers ~~end-users.~~a ~~Sales~~wide ~~competition~~variety ~~exists~~of inoffice ~~the~~and home ~~areas~~furnishings, ofincluding ~~price~~commercial panel systems, ~~quality~~televisions, ~~availability~~housewares and ~~speed of delivery~~accessories. CORT ~~Because~~emphasizes itits isability ~~willing~~ to ~~sell~~furnish inan ~~relatively small quantities~~apartment, ~~Precision~~ ~~Steel~~home ~~has~~or ~~been~~entire ~~able~~suite toof ~~compete~~offices inwith ~~geographic areas~~high-quality ~~distant~~furniture, ~~from~~housewares ~~its~~and ~~service~~accessories ~~center~~in ~~facilities.~~two ~~Competitive~~business ~~pressure has~~days. ~~been~~CORT’s ~~intensified~~objective byis ~~economic~~to ~~cycles~~build ~~and~~upon ~~a shift to~~these ~~production~~core ~~abroad~~competencies and ancompetitive ~~increasing~~advantages ~~tendency~~to ofincrease ~~domestic manufacturers~~revenues toand ~~use~~market ~~less~~share. ~~costly~~Key ~~materials~~to inCORT’s growth ~~making~~strategies ~~parts.~~are:

~~Precision~~• ~~Brand~~expanding ~~Products,~~its ~~Inc.~~corporate ~~(“Precision Brand”), a wholly owned subsidiary of Precision Steel that is also located in the Chicago area, manufactures shim stock~~ and ~~other~~individual ~~toolroom specialty~~customer items, and distributes a line of hose clamps and threaded rod. These products are sold under the Precision Brand and DuPage names nationwide, generally through industrial distributors. This business is highly competitive, and Precision Brand’s sales represent a very small share of the market. base;

~~Steel~~• ~~service~~enhancing ~~raw~~its ~~materials~~ability ~~are~~to ~~obtained~~capture ~~principally~~an ~~from~~increasing ~~major domestic~~number ~~steel~~of ~~mills.~~Internet ~~Periodic~~customers ~~scarcities~~through ofits ~~domestic~~on-line ~~supplies resulting~~catalog ~~from consolidation~~ and ~~downsizing~~other atweb ~~the mill level in recent years, combined with~~ services;

6 14

~~The~~• ~~industrial~~making ~~segment~~selective ~~businesses~~acquisitions; ~~are subject to economic cycles~~ and other factors, but are not dependent on a few large customers. The backlog of steel service orders decreased to $3.7 million at December 31, 2009 from $4.7 million at December 31, 2008.

~~There~~• ~~are~~continuing ~~166 full-time~~to ~~employees~~develop ~~engaged~~various inproducts ~~the~~and ~~industrial segment businesses, one-third of whom are members of unions~~services. ~~Management considers labor relations to be good.~~

In order to capitalize on the significant profit potential available from longer average rental periods and the higher average monthly rent typically available for office products, CORT’s ~~ACTIVITIES~~strategy ~~NOT~~is to place greater emphasis on growth in rentals of office furniture while maintaining ~~IDENTIFIED~~its ~~WITH~~premier position in residential furniture rental. In order to promote longer office lease terms, CORT offers lower rates on leases when lease terms exceed six months. A ~~BUSINESS~~significant ~~SEGMENT~~portion of CORT’s residential furniture rentals is derived from corporate relocations and temporary assignments, as new and transferred employees of CORT’s corporate customers enter into leases for residential furniture. Thus, CORT offers its corporate rental customers a way to reduce the costs of corporate relocation and travel while developing residential business with new and transferred employees. CORT also provides short-term rentals for trade shows and conventions. Its www.corttradeshow.com website assists in providing information to and gathering leads from prospects.

~~Certain~~ In ofJanuary 2008, ~~Wesco’s~~CORT ~~activities~~expanded ~~are~~its ~~not~~operation ~~identified~~to ~~with~~the ~~any~~U.K. through the purchase of Roomservice Group, now doing business ~~segment~~as CORT Business Services UK Ltd., ~~These~~a ~~include~~small ~~investment~~regional ~~activity~~provider ~~unrelated~~of tofurniture ~~the~~rental ~~insurance~~and ~~segment~~relocation services. In November 2008, ~~management~~CORT ~~and~~acquired ~~development~~a business division of ~~owned~~Aaron ~~real~~Rents, ~~property~~Inc., ~~including~~expanding its national presence in the ~~development~~U.S. ofIn a2009 ~~multi-story~~and ~~luxury~~2010, CORT made several small ~~condominium~~acquisitions ~~building~~of ~~currently~~local ~~being~~furniture ~~offered~~rental ~~for~~companies ~~sale,~~to ~~and parent~~expand ~~company~~its ~~activities~~presence in select local markets.

~~Five~~ The ~~full~~rent-~~time~~to-rent ~~employees~~segment of the furniture rental industry is highly competitive. There are several ~~engaged~~large regional competitors, as well as a number of smaller regional and local rent-to-rent competitors. The availability of low-priced furniture, principally from overseas manufactures, sold through online retailers is also providing additional competitive pressure. In addition, numerous retailers offer residential and office furniture under rent-to-own arrangements. It is believed that the principal competitive factors in the ~~activities~~furniture rental industry are product value, furniture condition, the extent of ~~Wesco~~furniture selection, terms of the rental agreement, speed of delivery, exchange privileges, options to purchase, deposit requirements and MScustomer ~~Property~~service.

CORT provides a nation-wide apartment locator service through its website www.apartmentsearch.com and customer call centers. The service is intended to supplement and lead ~~AVAILABLE~~to ~~INFORMATION~~increased furniture rentals, and is marketed to individual renters as well as relocation departments of Fortune 2000 companies. Through its network of foreign contacts, CORT also provides such services internationally.

~~Wesco~~ The majority of CORT’s furniture sales revenue is derived from its clearance center sales. The ~~Forms 10-K, 10-Q~~remaining furniture sales revenue results principally from lease conversions and sales of new ~~8-K,~~furniture. The sale of previously leased furniture allows CORT to control inventory quantities and ~~amendments~~to ~~thereto,~~maintain asinventory ~~well~~quality asat ~~proxy~~showroom ~~materials~~level. On average, ~~may~~furniture beis ~~accessed~~typically sold through ~~soon~~the clearance centers from three to five years after ~~they~~its ~~are~~initial ~~electronically~~purchase. ~~filed~~With ~~with~~respect ~~the~~to ~~Securities~~sales ~~and~~of ~~Exchange~~furniture ~~Commission~~through ~~(“SEC”)~~its clearance centers, ~~through~~CORT ~~Wesco’s~~competes with numerous new and used furniture ~~website~~retailers, ~~www~~some of which are larger than CORT.~~wescofinancial.com,~~ orWesco ~~the~~management ~~SEC~~believes that price and value are CORT’s ~~website, www~~principal competitive advantages.~~sec.gov.~~

~~Item~~ CORT 1Ahas approximately 2,100 full-time employees, including 49 union members. ~~Risk~~Management considers ~~Factors~~labor relations to be good.

7 In addition to the factors affecting specific business operations identified in connection with the description of these operations and their financial results elsewhere in this report, we invite your attention to the considerations and risk factors described below. The risk factors could cause Wesco’s actual results to differ materially from the forward-looking and other statements contained in this report and in the other periodic reports and other filings Wesco makes with the SEC, as well as in news releases, annual reports and other communications that Wesco makes from time to time. It should be noted that there are other risks facing Wesco, and that additional risks and uncertainties not presently known or that are currently deemed immaterial may also impair Wesco’s business operations.

~~From~~INDUSTRIAL ~~time to time there is an erroneous report by an analyst or~~SEGMENT reporter that an investor wishing to purchase Berkshire common stock can instead purchase shares of Wesco. Berkshire is the parent of Wesco. Wesco’s operations differ significantly from those of Berkshire, and its shares may trade at a significantly different price relative to its intrinsic value than do those of Berkshire. In addition to the risk factors affecting Wesco’s operations, Berkshire has risk factors of its own. Investors wishing to have investment exposure to Berkshire cannot accomplish this by purchasing Wesco shares. They should carefully read Berkshire’s published financial statements and filings with the SEC.

Precision Steel and one of its subsidiaries operate steel service centers in the Chicago and Charlotte metropolitan areas. The service centers buy stainless steel, low carbon sheet and strip ~~Wesco’s investments~~steel, ~~are~~coated ~~unusually~~metals, ~~concentrated~~spring steel, brass and ~~fair~~other ~~values~~metals, ~~are~~cut these metals to order, and sell ~~subject~~them to ~~loss~~a inwide ~~value~~variety of customers.

~~Compared~~ The tosteel ~~other~~service ~~companies,~~center ~~Wesco~~business ~~keeps~~is anhighly ~~unusually~~competitive. ~~high~~Its annual sales volume of ~~percentage~~approximately 15.5 thousand tons of ~~its~~flat ~~assets~~rolled products compares with the domestic steel service industry’s annual volume for all shapes of products (~~principally~~flat ~~related~~rolled, tobar, ~~its~~wire, ~~insurance~~structural, plate, ~~businesses~~tubular steel, etc.) inof ~~common~~approximately ~~stocks~~36 million tons. Precision Steel competes not only with large national chains and ~~diversifies~~other ~~its~~service ~~portfolio~~centers, ~~far~~but also with mills that supply metal to service ~~less~~centers, ~~than~~original isequipment ~~conventional~~manufacturers and end-users. ASales ~~significant~~competition ~~decline~~exists in the ~~general~~areas of ~~stock~~price, ~~market~~quality, oravailability and speed of delivery. Because it is willing to sell in ~~the~~relatively small ~~price~~quantities, ofPrecision ~~major~~Steel ~~investments~~has ~~may~~been ~~produce~~able ato compete in geographic areas distant from its ~~large~~service ~~decrease~~center facilities.

Precision Brand Products, Inc. (“Precision Brand”), a wholly owned subsidiary of Precision Steel that is also located in the Chicago area, manufactures shim stock and other toolroom 15specialty items, and distributes a line of hose clamps and threaded rod. These products are sold under the Precision Brand and DuPage names nationwide, generally through industrial distributors. This business is highly competitive, and Precision Brand’s sales represent a very small share of the market.

in Steel ~~Wesco’s~~Service ~~shareholders’~~raw ~~equity~~materials ~~and~~are ~~under~~obtained ~~certain circumstances~~principally ~~may~~from ~~require~~major ~~the~~domestic ~~recognition~~steel ofmills. ~~such~~Periodic scarcities ~~losses~~of indomestic ~~the statement~~supplies ofresulting ~~income.~~from ~~Decreases~~an inongoing ~~values~~tendency ofby ~~equity~~domestic ~~investments~~manufacturers to ~~could~~shift ~~have~~production aabroad, ~~material~~consolidation ~~adverse~~and ~~effect~~downsizing onat ~~Wesco’s~~the ~~book~~mill ~~value~~level, increasing worldwide ~~per~~demand ~~share.~~for ~~During~~certain ~~2008,~~popular ~~several~~but ~~crises~~relatively ~~affecting~~scarce ~~the~~imported ~~financial system~~materials, and ~~capital~~economic ~~markets~~cycles, have resulted in periods of ~~the~~intensified ~~U.S. resulted~~competition inand ~~very~~ large ~~price~~fluctuations ~~declines~~ in ~~the~~prices ~~general~~at ~~stock~~all ~~market~~levels. Sales ~~and~~volume inof the ~~fair~~industrial segment, which has been declining for more than a decade, was ~~values~~significantly ofaffected ~~Wesco’s~~by ~~equity~~the ~~securities~~recent ~~investments~~recession. ~~Although~~ Since late in 2009, as the ~~aggregate~~economy ~~fair~~began ~~value~~to strengthen, ofraw ~~Wesco’s~~material ~~equity~~supplies ~~securities~~have been adequate and prices have been relatively stable, ~~investments~~following ~~increased~~more than one year during ~~2009,~~which ~~the~~prices ~~fair~~declined ~~values~~rapidly ofas ~~several~~a result of the recession. ~~its~~Precision ~~equity~~Steel’s ~~securities~~businesses ~~investments~~are ~~continued~~not todependent ~~decline.~~on ~~There~~a ~~is no~~few ~~guarantee~~large ~~that~~customers. ~~their~~The ~~fair~~backlog ~~values~~of ~~will~~steel service ~~recover~~orders, orhowever, ~~whether significant~~decreased ~~decreases~~to ~~will~~$3.4 million ~~occur~~at inDecember 31, ~~the~~2010 ~~future~~from $3.7 million at December 31, 2009.

Precision Steel’s service centers continue to focus on cost-cutting measures where feasible, ~~Wesco~~while isfocusing on customer service and the maintenance of extensive inventories in order to meet ~~dependent~~customer demand for ~~its~~prompt ~~investment~~deliveries; ~~and~~typically, ~~all~~processed ~~other~~metals ~~capital~~are ~~allocation~~delivered to the customer ~~decisions~~within onone aor ~~few~~two ~~key~~weeks. ~~people~~Precision Brand normally maintains inventories adequate to allow for off-the-shelf service to customers within 24 hours.

~~Investment~~ There ~~decisions and all other capital allocation decisions~~ are ~~made~~172 ~~for~~full-time ~~Wesco’s~~employees ~~businesses~~engaged byin ~~Charles T. Munger, Chairman of~~ the ~~Board~~industrial ofsegment ~~Directors~~businesses, ~~President~~one-third ~~and CEO~~ of ~~Wesco,~~ ~~and~~whom ~~Vice~~are ~~Chairman~~members of ~~the Board of Directors of Berkshire Hathaway, age 86, in consultation with Warren E~~unions. ~~Buffett, Chairman~~Management ofconsiders ~~the~~labor ~~Board~~relations ~~of Directors and CEO of Berkshire Hathaway, age 79. If for any reason the services of those key personnel, particularly Mr. Buffett, were~~ to ~~become unavailable to Wesco, there could~~ be ~~a material adverse effect on Wesco~~good. ~~However, Berkshire’s Board of Directors has~~ ~~agreed on a replacement for Mr. Buffett should a replacement be needed currently. Its Board continually monitors this matter and could alter its current view in the future.~~

~~Wesco’s Wes-FIC~~ACTIVITIES ~~subsidiary~~NOT isIDENTIFIED ~~dependent~~WITH ~~upon~~A ~~the~~BUSINESS ~~Berkshire Insurance~~SEGMENT Group for its management and personnel, and for opportunities to participate with the Berkshire Insurance Group in reinsurance contracts representing essentially the entirety of its reinsurance business, as well as a significant portion of its insurance business to date.

~~Since~~ Certain ~~the incorporation~~ of ~~Wes-FIC in 1985,~~ Wesco’s ~~insurance~~ ~~and~~activities ~~reinsurance~~are ~~business,~~not ~~other~~identified ~~than~~with ~~that~~any ~~conducted~~business ~~by its~~segment. ~~Kansas~~These ~~Bankers~~include investment ~~Surety~~activity ~~subsidiary,~~unrelated ~~has been limited principally~~ to ~~participation with members of~~ the ~~Berkshire Insurance~~insurance ~~Group~~segment, inmanagement ~~contracts~~and ~~for~~development ~~the reinsurance~~ of ~~risks~~owned ofreal ~~unaffiliated~~ property ~~and casualty insurance companies. Wes-FIC’s operations are managed by NICO~~, including a ~~member of the Berkshire Insurance Group; it has no employees of its own. In the event the Berkshire Insurance Group were to cease operating Wes~~multi-~~FIC’s~~story ~~business~~luxury orcondominium tobuilding ~~significantly~~that ~~curtail Wes-FIC’s~~MS ~~participation~~Property ~~with~~is ~~it in reinsurance contracts~~marketing, ~~Wes-FIC~~ ~~would be required to look elsewhere for personnel who would conduct~~ and ~~manage its operations,~~ ~~and/or~~parent ~~seek to~~company ~~continue its insurance business in a different manner, possibly by acquisition~~activities.

~~Wesco’s tolerance~~ Five ~~for~~full-time ~~risk~~employees inare ~~its~~engaged ~~insurance businesses may result~~ in ~~a high~~the ~~degree~~activities of ~~volatility~~Wesco inand ~~periodic~~MS ~~reported earnings~~Property.

8 Wes-FIC participates with members of the Berkshire Insurance Group in certain reinsurance contracts in which significant risk is periodically assumed. The Berkshire Insurance Group has indicated that it believes that it has been and continues to be willing to assume more risk than any other insurer has knowingly assumed.

~~Aside~~ AVAILABLE ~~from risks assumed under the Swiss Re contract,~~INFORMATION Wes-FIC’s reinsurance activities currently in force do not subject it to super-catastrophe risks. However, it has procedures in place for the immediate acceptance of participations in catastrophic excess of loss reinsurance, which could subject it to large amounts of losses from mega-catastrophes such as hurricanes or earthquakes, if offered to it by the Berkshire Insurance Group, so long as the Berkshire Insurance Group participates in such reinsurance activities to a greater degree. The tolerance for

Wesco’s Forms 10-K, 10-Q and 8-K, and amendments thereto, as well as proxy materials, may be accessed soon after they are electronically filed with the SEC, through Wesco’s website, 16www.wescofinancial.com, or the SEC’s website, www.sec.gov.

~~significant~~Item ~~risks may in certain future periods result in significant losses~~1A. ~~This~~Risk ~~policy may result in a high degree of volatility in Wesco’s periodic reported earnings.~~ Factors

In addition to the factors affecting specific business operations identified in connection ~~The~~with ~~degree~~the description of ~~estimation~~ ~~error~~these ~~inherent~~operations and their financial results elsewhere in this report, we invite your attention to the ~~process~~considerations ofand ~~estimating~~risk ~~property~~factors described below. The risk factors could cause Wesco’s actual results to differ materially from the forward-looking and ~~casualty~~other statements ~~insurance~~contained ~~loss~~in ~~reserves~~this ~~may~~report ~~result~~and in athe ~~high~~other ~~degree~~periodic reports and other filings Wesco makes ofwith ~~volatility~~the SEC, as well as in ~~periodic~~news ~~reported~~releases, ~~earnings~~annual reports and other communications that Wesco makes from time to time. It should be noted that there are other risks facing Wesco, and that additional risks and uncertainties not presently known or that are currently deemed immaterial may also impair Wesco’s business operations.

InAn ~~the~~investment ~~insurance business, premiums are charged today for promises to pay covered losses~~ in ~~the~~Wesco ~~future. The principal cost associated with premium revenue~~ is claims. However, it will literally take decades before all losses that have occurred as of the balance sheet date will be reported and settled. Although Wesco believes that loss reserve balances are adequate to cover losses, Wesco will not ~~truly~~an ~~know~~investment ~~whether~~in ~~the~~Berkshire ~~premiums charged for the coverages provided were sufficient until well after the balance sheet date~~Hathaway. ~~Wesco’s objective is to generate~~ underwriting profits over the long term. Estimating insurance claim costs is inherently imprecise. Wesco’s reserve estimates are large ($343.5 million at December 31, 2009), so adjustments to reserve estimates can have a material effect on periodic reported earnings.

From time to time in the past there have been erroneous reports by an analyst or reporter that an investor wishing to purchase Berkshire common stock can instead purchase shares of Wesco. ~~Each~~Berkshire is the parent of Wesco. Wesco’s operations differ significantly from those of Berkshire, and its shares may trade at a significantly different price relative to its intrinsic value than do those of Berkshire. In addition to the risk factors affecting Wesco’s ~~operating~~operations, ~~businesses~~Berkshire ~~faces~~has risk ~~intense~~factors ~~competitive~~of its own. Investors wishing to have investment exposure to Berkshire cannot ~~pressures~~accomplish this by purchasing Wesco shares. They should carefully read Berkshire’s published financial statements and filings with the SEC.

~~Each of~~ Wesco’s ~~operating~~investments ~~businesses~~are ~~faces~~unusually ~~intense competitive~~concentrated ~~pressures within its respective markets. Such competition may come from domestic~~ and ~~international~~fair ~~operators. While~~values ~~Wesco’s businesses~~ are ~~managed~~subject with the objective of achieving sustainable growth over the long term through developing and strengthening competitive advantages, many factors, including market changes and technology, could erode or impede those competitive advantages or prevent their strengthening. Accordingly, future operating results will depend to ~~some~~loss ~~degree on whether the operating units are successful~~ in ~~protecting or enhancing their competitive advantages~~value.

Compared to other companies, Wesco keeps an unusually high percentage of its assets (principally related to its insurance businesses) in common stocks and diversifies its portfolio ~~Unfavorable~~far less than is conventional. A significant decline in the general stock market or in the price of ~~economic~~major ~~conditions~~investments ~~could~~may ~~hurt~~produce a large decrease in Wesco’s ~~operating~~shareholders’ equity and under certain ~~businesses~~circumstances may require the recognition of such losses in the statement of income. Decreases in values of equity investments could have a material adverse effect on Wesco’s book value per share.

Wesco’s ~~operating~~is ~~businesses~~dependent ~~are~~for ~~subject~~its toinvestment ~~normal economic cycles affecting the economy in general~~ and ~~the~~all ~~industries~~other ~~in which~~capital ~~they~~allocation ~~operate.~~decisions Toon ~~the extent that the current weak economic environment continues for~~ a ~~prolonged~~few ~~period of time, one or~~key ~~more of Wesco’s significant operations could be materially harmed~~people.

In Investment ~~addition~~decisions ~~to the~~and ~~foregoing~~all ~~risk~~other ~~factors~~capital ~~inherent~~allocation indecisions are made for Wesco’s businesses ~~operations~~by Charles T. Munger, Chairman of the Board of Directors, President and CEO of Wesco’s, and ~~shareholders~~Vice ~~face~~Chairman aof ~~market~~the ~~liquidity~~Board ~~risk~~of ~~because~~Directors of Berkshire Hathaway, age 87, in consultation with Warren E. Buffett, Chairman of the ~~daily~~Board ~~trading~~of ~~volume~~Directors and CEO of Berkshire Hathaway, age 80. If for any reason the services of those key personnel, particularly Mr. Buffett, were to become unavailable to Wesco, there could be a material adverse effect on Wesco. However, Berkshire’s ~~shares~~Board of Directors has agreed on ~~NYSE~~a ~~Amex~~replacement isfor Mr. Buffett should a replacement be needed currently. ~~relatively~~Its ~~low~~Board continually monitors this matter and could alter its current view in the future.

9 In addition to the risks facing Wesco in its business operations, investors wishing to purchase or sell shares of its capital stock face market price risks because the daily NYSE Amex trading volume of Wesco’s shares is relatively low. An order for the purchase or sale of a large number of Wesco shares could significantly affect the price at which the order is executed.

Wesco’s Wes-FIC subsidiary is dependent upon the Berkshire Insurance Group for its management ~~None~~and personnel, and for opportunities to participate with the Berkshire Insurance Group in reinsurance contracts representing essentially the entirety of its reinsurance business, as well as a significant portion of its insurance business to date.

~~Item~~ Since 2the incorporation of Wes-FIC in 1985, Wesco’s insurance and reinsurance business, other than that conducted by its Kansas Bankers Surety subsidiary, has been limited principally to participation with members of the Berkshire Insurance Group in contracts for the reinsurance of risks of unaffiliated property and casualty insurance companies. ~~Properties~~Wes-FIC’s operations are managed by NICO, a member of the Berkshire Insurance Group; it has no employees of its own. In the event the Berkshire Insurance Group were to cease operating Wes-FIC’s business or to significantly curtail Wes-FIC’s participation with it in reinsurance contracts, Wes-FIC would be required to look elsewhere for personnel who would conduct and manage its operations, and/or seek to continue its insurance business in a different manner. Alternatively, in those circumstances Wes-FIC might need to significantly curtail its insurance business or cease it altogether.

~~CORT~~Wesco’s ~~leases~~tolerance ~~16,212 square~~for ~~feet~~risk ofin ~~office~~its ~~space~~insurance inbusinesses ~~a multistory~~may ~~office~~result ~~building~~ in ~~Fairfax,~~a ~~Virginia,~~high ~~which~~degree ~~it uses~~of asvolatility ~~its~~in ~~headquarters~~periodic ~~under~~reported ~~a lease which will expire in 2012~~earnings.

~~CORT~~ Wes-FIC ~~carries~~participates ~~out~~with ~~its~~members ~~rental,~~of ~~sales~~the ~~and~~Berkshire ~~warehouse~~Insurance ~~operations~~Group in ~~metropolitan~~ ~~areas~~certain ~~in 34 states, the District of Columbia~~reinsurance ~~and~~contracts ~~the~~in ~~U.K. through 157 facilities, of~~ which 17significant ~~were~~risk ~~owned~~is ~~and the~~periodically ~~remaining were leased as of December 31, 2009~~assumed. The ~~leased~~ ~~facilities’~~Berkshire ~~lease~~Insurance ~~terms~~Group ~~expire at dates ranging from 2010 to 2021. CORT~~ has ~~generally been able to extend expiration~~ ~~dates~~indicated ofthat ~~its~~it ~~leases~~believes orthat ~~obtain~~it ~~suitable alternative facilities on satisfactory terms. As leases expire, CORT~~ has been ~~eliminating redundant locations~~ and ~~decreasing~~continues ~~the size of its showrooms, which as of yearend 2009 ranged in size from 1,200~~ to ~~17,368 square~~ ~~feet~~be ofwilling ~~floor space. Where locations are desirable, its management has been attempting~~ to ~~combine~~assume ~~rental, clearance~~more ~~and~~risk ~~warehouse operations rather~~ than ~~retain separate~~ ~~showrooms,~~any ~~because~~other ~~business~~insurer ~~and~~has ~~residential~~knowingly ~~customers have been~~assumed.

As described in Item 1, Business, effective January 1, 2008, Wes-FIC entered into a quota-share retrocession agreement with NICO, a member of the Berkshire Insurance Group, to assume 1710% of NICO’s quota share reinsurance of Swiss Re. Under this retrocession agreement, Wes-FIC has assumed 2% part of NICO’s 20% quota share reinsurance of all Swiss Re property-casualty risks incepting over the five-year period which began January 1, 2008, on the same terms as NICO’s agreement with Swiss Re (the “Swiss Re contract”). This arrangement significantly increased Wes-FIC’s premium volume as well as exposure to large losses, such as hurricanes, floods, earthquakes and acts of terrorism, as well as foreign exchange risk, and thus the potential for increased volatility and losses. In addition, as with all reinsurance arrangements, Wes-FIC does not control the underwriting of the primary insurer and relies on the primary insurer’s reputation and judgment in deciding what underlying risks to insure.

~~increasingly~~ Aside ~~using~~from risks assumed under the ~~Internet~~Swiss Re contract, Wes-FIC’s reinsurance activities currently in force do not subject it to super-catastrophe risks. ~~CORT~~However, ~~regularly~~it ~~reviews~~has ~~the~~procedures in ~~presentation~~place ~~and~~for ~~appearance~~the immediate acceptance of ~~its~~participations ~~furniture~~in ~~showrooms~~catastrophic ~~and~~excess of loss reinsurance, ~~clearance~~which ~~centers~~could ~~and~~subject ~~periodically~~it ~~improves~~to orlarge ~~refurbishes~~amounts ~~them~~of losses from mega-catastrophes such as hurricanes or earthquakes, if offered to ~~enhance~~it ~~their~~by ~~attractiveness~~the Berkshire Insurance Group, so long as the Berkshire Insurance Group participates in such reinsurance activities to ~~customers~~a greater degree. The tolerance for significant risks may in certain future periods result in significant losses. This policy may result in a high degree of volatility in Wesco’s periodic reported earnings.

MSThe ~~Property~~degree ~~owns~~of aestimation ~~business~~error ~~block~~inherent in ~~Pasadena,~~the ~~California situated~~process ~~between~~of ~~the~~estimating ~~city~~property ~~hall~~ and ~~a large shopping mall. The~~casualty ~~block’s~~insurance ~~improvements~~loss ~~include~~reserves amay ~~nine-story~~result ~~office building that was constructed~~ in ~~1964 and has approximately 125,000 square feet of rentable area, and~~ a ~~multistory garage~~high ~~with~~degree ~~space for 420 vehicles. Of the 125,000 square feet~~ of ~~space~~volatility in ~~the~~periodic ~~office building, approximately~~reported ~~5,000 square feet are used by MS Property or leased to Blue Chip or Wesco at market rental rates~~earnings. ~~The remaining space is~~ ~~almost fully leased to outside parties, including Citibank (the ground floor tenant), law firms and others, under agreements expiring at dates extending to 2017.~~

~~Wes-FIC’s~~ In ~~place~~the ofinsurance business, ispremiums are charged today for promises to pay covered losses in the ~~Omaha~~future. The principal cost associated with premium revenue is claims. However, ~~Nebraska~~it will ~~headquarters~~literally ~~office~~take decades before all losses that have occurred as of ~~NICO~~the balance sheet date will be reported and settled. Although Wesco believes that loss reserve balances are adequate to cover losses, Wesco will not truly know whether the premiums charged for

10 ~~KBS leases 5,100 square feet of office space in a multistory office building in Topeka, Kansas under a lease that expires in 2012.~~

~~Item~~the 3coverages provided were sufficient until well after the balance sheet date. ~~Legal~~Wesco’s objective ~~Proceedings~~is to generate underwriting profits over the long term. Estimating insurance claim costs is inherently imprecise. Wesco’s reserve estimates are large ($408.4 million at December 31, 2010), so adjustments to reserve estimates can have a material effect on periodic reported earnings.

~~Wesco~~Each ~~and its subsidiaries are not involved in any legal proceedings the ultimate outcomes~~ of ~~which~~Wesco’s ~~are~~operating ~~expected~~businesses tofaces ~~be significant~~intense tocompetitive ~~Wesco~~pressures.

~~Item~~ Each 4of Wesco’s operating businesses faces intense competitive pressures within its respective markets. ~~Submission~~Such competition may come from domestic and international operators. While Wesco’s businesses are managed with the objective of ~~Matters~~achieving sustainable growth over the long term through developing and strengthening competitive advantages, many factors, including market changes and technology, could erode or impede those competitive advantages or prevent their strengthening. Accordingly, future operating results will depend to asome ~~Vote~~degree ofon ~~Security~~whether ~~Holders~~the operating units are successful in protecting or enhancing their competitive advantages.

~~None~~Unfavorable economic conditions could hurt Wesco’s operating businesses.

Wesco’s operating businesses are subject to normal economic cycles affecting the economy in general and the industries in which they operate. To the extent that the current weak economic ~~PART II~~environment continues for a prolonged period of time, one or more of Wesco’s significant operations could be materially harmed.

~~Item~~Berkshire 5and Wesco have entered into a merger agreement. ~~Market~~In ~~for~~the ~~Registrant’s~~event ~~Common~~the ~~Equity~~merger does not close, ~~Related~~there ~~Stockholder~~could ~~Matters~~be ~~and~~an ~~Issuer~~adverse ~~Repurchases~~effect on the trading price of ~~Equity~~Wesco’s ~~Securities~~capital stock.

On February 7, 2011, Wesco and Berkshire announced that they had entered into a definitive merger agreement, whereby Berkshire will acquire the remaining 19.9% of the shares of Wesco’s capital stock isthat ~~listed~~it does not presently own in exchange for cash or shares of Berkshire Class B common stock, at the election of each Wesco shareholder. The trading price of Wesco’s capital stock on the NYSE Amex, ~~owned~~increased ~~and~~upon the public announcement of Berkshire’s original offer to acquire ~~operated~~the byremaining ~~NYSE~~Wesco ~~Euronext~~shares, aand ~~holding~~it ~~company~~increased ~~also~~again ~~owning~~upon public announcement of the ~~New~~execution of the ~~York~~merger ~~Stock~~agreement. ~~Exchange~~In the event a transaction does not occur, there could be an adverse effect on the trading price of Wesco’s capital stock.

~~The~~In ~~following~~addition ~~table~~to ~~sets~~the ~~forth~~foregoing ~~quarterly~~risk ~~ranges~~factors ofinherent ~~composite prices~~in ~~for~~Wesco’s ~~trading~~operations, of Wesco’s ~~shares~~shareholders face ~~for~~a ~~2009~~market ~~and~~liquidity ~~2008,~~risk ~~based~~because ~~on data reported by~~ the ~~American~~daily ~~Stock~~trading ~~Exchange,~~volume onof ~~which~~ Wesco’s ~~capital~~shares ~~stock~~on ~~was~~NYSE ~~listed~~Amex ~~through November 2008, and~~is ~~thereafter,~~relatively ~~by Bloomberg LP, as well as cash dividends paid by~~low. ~~Wesco on each outstanding share:~~

	2009			2008
	Sales Price		Dividends	Sales Price		Dividends
Quarter Ended	High	Low	Paid	High	Low	Paid
March 31	$309	$222	$0.395	$421	$368	$0.385
June 30	320	275	0.395	450	368	0.385
September 30	326	285	0.395	401	352	0.385
December 31	349	315	0.395	372	243	0.385
			$1.58			$1.54

In addition to the risks facing Wesco in its business operations, investors wishing to purchase or sell shares of its capital stock face market price risks because the daily NYSE Amex trading volume of Wesco’s shares is relatively low. An order for the purchase or sale of a large number of Wesco shares could significantly affect the price at which the order is executed.

~~There~~Item ~~were approximately 400 shareholders of record of Wesco’s capital stock as of the close of business on February 26, 2010~~1B. ItUnresolved isStaff ~~estimated that approximately 5,000 additional Wesco shareholders held shares of Wesco’s capital stock in street name at that date.~~ Comments

~~Wesco did not purchase any of its own equity securities during 2009~~ None.

11 18

Set forth below and on the following page are selected consolidated financial data for Wesco and its subsidiaries. For additional financial information, attention is directed to Wesco’s audited 2009 consolidated financial statements appearing in Item 8 ~~of this report~~2. ~~(Amounts are in thousands except for amounts per share.)~~ Properties

	December 31,
	2009			2008			2007		2006		2005
Assets:
Cash and cash equivalents	$	273,671		$	297,643		$	526,722	$	1,257,351	$	1,194,113
Investments —
Securities with fixed maturities		229,872			28,656			38,600		81,861		74,441
Marketable equity securities		2,065,627			1,868,293			1,919,425		1,040,550		884,673
Accounts receivable		37,983			57,489			42,841		37,204		39,203
Receivable from affiliates		173,476			133,396			36,671		23,182		14,784
Rental furniture		177,793			217,597			178,297		182,846		187,572
Goodwill of acquired businesses		277,590			277,742			266,607		266,607		266,607
Other assets		165,414			169,879			103,846		80,704		67,118
Total assets	$	3,401,426		$	3,050,695		$	3,113,009	$	2,970,305	$	2,728,511
Liabilities:
Insurance losses and loss adjustment expenses —
Affiliated business	$	290,375		$	164,424		$	39,687	$	29,761	$	19,697
Unaffiliated business		53,091			50,844			54,158		48,549		42,283
Unearned insurance premiums —
Affiliated business		110,477			94,544			15,041		14,062		12,301
Unaffiliated business		11,516			13,251			15,225		15,298		16,092
Deferred furniture rental income and security deposits		11,846			17,674			19,947		20,440		22,204
Accounts payable and accrued expenses		54,537			61,145			49,476		48,258		52,587
Notes payable		28,200			40,400			37,200		38,200		42,300
Income taxes payable, principally deferred		290,667			230,657			347,416		355,399		290,615
Total liabilities	$	850,709		$	672,939		$	578,150	$	569,967	$	498,079
Shareholders’ equity:
Capital stock and additional paid- in capital	$	33,324		$	33,324		$	33,324	$	33,324	$	33,324
Accumulated other comprehensive income —
Unrealized appreciation of investments, net of taxes		284,051			154,660			381,017		344,978		256,710
Foreign currency translation adjustments, net of taxes		(1,151	)		(1,897	)		—		—		—
Retained earnings		2,234,493			2,191,669			2,120,518		2,022,036		1,940,398
Total shareholders’ equity	$	2,550,717		$	2,377,756		$	2,534,859	$	2,400,338	$	2,230,432
Per capital share	$	358.26		$	333.96		$	356.03	$	337.14	$	313.27

CORT leases 16,212 square feet of office space in a multistory office building in Fairfax, Virginia, which it uses as its headquarters under a lease which will expire in 2012.

CORT carries out its rental, sales and warehouse operations in metropolitan areas in 34 states, the District of Columbia and the U.K. through 148 facilities, of which 15 were owned and 19the remaining were leased as of December 31, 2010. The leased facilities’ lease terms expire at dates ranging from 2011 to 2021. CORT has generally been able to extend expiration dates of its leases or obtain suitable alternative facilities on satisfactory terms. As leases expire, CORT has been eliminating redundant locations and decreasing the size of its showrooms, which as of yearend 2010 ranged in size from 1,200 to 10,388 square feet of floor space. Where locations are desirable, its management has been attempting to combine rental, clearance and warehouse operations rather than retain separate showrooms, because business and residential customers have been increasingly using the Internet. CORT regularly reviews the presentation and appearance of its furniture showrooms and clearance centers and periodically improves or refurbishes them to enhance their attractiveness to customers.

	Year Ended December 31,
	2009		2008		2007		2006		2005
Revenues:
Furniture rentals	$	312,234	$	340,162	$	327,671	$	324,300	$	303,485
Sales and service revenues		106,342		130,753		129,861		139,058		141,749
Insurance premiums earned —
Affiliated business		307,560		218,094		35,530		32,643		32,450
Unaffiliated business		15,661		19,870		18,881		21,506		17,032
Dividend and interest income		67,458		79,079		90,872		84,504		56,792
Realized net investment gains		—		7,006		24,240		—		333,241
Other		4,076		3,990		3,869		3,716		3,541
		813,331		798,954		630,924		605,727		888,290
Costs and expenses:
Cost of products and services sold		130,992		149,319		143,282		154,218		153,402
Insurance losses and loss adjustment expenses —
Affiliated business		198,853		151,308		24,008		21,401		11,990
Unaffiliated business		14,454		20,892		4,269		9,944		9,482
Insurance underwriting expenses —
Affiliated business		92,857		63,156		8,019		7,566		6,611
Unaffiliated business		5,946		7,135		7,284		7,294		6,832
Selling, general and administrative		305,934		300,231		280,728		265,327		262,594
Interest expense		641		1,798		2,408		2,711		1,575
		749,677		693,839		469,998		468,461		452,486
Income before income taxes		63,654		105,115		160,926		137,266		435,804
Income taxes		9,581		22,999		51,765		45,233		141,225
Net income	$	54,073	$	82,116	$	109,161	$	92,033	$	294,579
Amounts per share:
Net income	$	7.59	$	11.53	$	15.33	$	12.93	$	41.37
Cash dividends		1.58		1.54		1.50		1.46		1.42

MS Property owns a business block in Pasadena, California situated between the city hall and a large shopping mall. The block’s improvements include a nine-story office building that was constructed in 1964 and has approximately 125,000 square feet of rentable area, and a multistory garage with space for 420 vehicles. Of the 125,000 square feet of space in the office building, approximately 5,000 square feet are used by MS Property or leased to Blue Chip or Wesco at market rental rates. The remaining space is almost fully leased to outside parties, including Citibank (the ground floor tenant), law firms and others, under agreements expiring at dates extending to 2017.

~~The reinsurance activities of Wesco~~ Wes-FIC’s ~~insurance~~place ~~segment are managed by Berkshire’s NICO subsidiary and represent participations in contracts in which NICO and other members~~ of ~~the~~ ~~Berkshire~~business ~~Insurance Group also participate. Financial information associated with these participations~~ is ~~identified in~~the ~~Wesco’s consolidated financial statements~~Omaha, asNebraska ~~well~~headquarters asoffice ~~in Item 6,~~of ~~Selected Financial Data, as affiliated business~~NICO.

~~Item~~ KBS 7.leases ~~Management’s~~5,100 ~~Discussion~~square ~~and~~feet ~~Analysis~~ of ~~Financial~~office ~~Condition~~space ~~and~~in ~~Results~~an ofoffice ~~Operations~~building in Topeka, Kansas under a lease that expires in 2012.

Precision Steel and its subsidiaries own three buildings housing their plant and office Infacilities, ~~reviewing~~with ~~this~~usable ~~item~~area approximately as follows: 138,000 ~~attention~~square isfeet ~~directed~~in toFranklin ~~Item 6~~Park, ~~Selected~~Illinois; ~~Financial~~63,000 ~~Data~~square feet in Charlotte, North Carolina; and ~~Item 1~~59,000 ~~Business~~square feet in Downers Grove, Illinois.

~~OVERVIEW~~ Item 3. Legal Proceedings

~~The~~ Two ~~principal~~lawsuits ~~goal~~were offiled ~~Wesco’s~~on ~~management~~February 8, is2011 toby ~~maximize gain~~plaintiffs inclaiming ~~Wesco’s~~to ~~intrinsic~~be ~~business~~Wesco ~~value~~shareholders challenging ~~per share over~~ the ~~long~~ ~~term.~~transactions ~~Accounting~~contemplated ~~consequences~~by dothe ~~not~~merger ~~influence~~agreement ~~business decisions,~~between ~~nor~~Berkshire doand ~~fluctuations in annual net income~~Wesco. To ~~accomplish~~Both ~~desired~~of ~~growth,~~the alawsuits ~~high~~name ~~priority~~Wesco, isWesco’s ~~placed~~directors, ~~on investing~~Berkshire inand ~~companies~~Montana ~~having~~Acquisitions, ~~excellent~~LLC ~~economic~~as ~~characteristics,~~defendants. ~~run~~One byof ~~outstanding~~them ~~managers.~~also ~~Management~~names ~~strives to~~Blue ~~maintain~~Chip ~~high~~and ~~liquidity~~Wesco’s toChief ~~ensure~~Financial ~~that~~Officer ~~Wesco~~as ~~and its~~defendants. ~~subsidiaries~~One ~~are~~of ~~able~~the toactions ~~endure~~was ~~unforeseen~~filed ~~circumstances, including~~in ~~recessionary~~Delaware ~~economic~~Chancery ~~cycles~~Court and ~~periods~~the ~~of significant~~other ~~declines~~ in ~~the~~Los ~~trading~~Angeles ~~prices of investments, with~~Superior aCourt. ~~margin~~Both ofpurport ~~safety, and~~ to ~~invest~~be inclass ~~common~~actions ~~stocks~~on behalf of ~~outstanding~~ ~~publicly~~Wesco ~~traded companies at prices deemed~~shareholders.

The Delaware action is styled Joel Krieger v. Wesco Financial Corporation, et al. The Los 20Angeles action is styled James Kinsey v. Wesco Financial Corporation, et al. The lawsuits allege, among other things, that Wesco’s directors have breached their fiduciary duties based on allegations that (i) the consideration being offered is unfair and inadequate, (ii) statements in Wesco’s annual reports comparing its prospects for growth with those of Berkshire have been unduly unfavorable to Wesco, and (iii) the Wesco directors’ approval of the

12 reasonable. In the event that such investments are not available, capital is preserved through investments principally in high-quality cash equivalents, securities of the U.S. Government and its agencies, and high-quality corporate debt instruments.

~~The~~proposed ~~operations~~merger ofwas ~~Wesco’s~~tainted ~~Wes-FIC~~by ~~subsidiary~~conflicts ~~are~~of ~~managed~~interest by between Berkshire’s ~~NICO~~and ~~subsidiary.~~the ~~Wes~~non-~~FIC participates~~Berkshire ~~principally~~shareholders of Wesco in ~~reinsurance~~breach ~~contracts,~~of inthe ~~which~~Board’s ~~NICO~~fiduciary ~~and~~duties. ~~other~~The lawsuits also allege that Berkshire ~~insurance~~and ~~subsidiaries~~its ~~participate,~~affiliates inviolated ~~the~~fiduciary ~~reinsurance of~~duties ~~property~~owed ~~and~~by ~~casualty~~a ~~risks~~majority ofshareholder ~~unaffiliated~~and/or ~~insurance~~aided ~~companies.~~and ~~The~~abetted ~~terms~~the ofalleged ~~Wes-FIC~~breaches by Wesco’s ~~participation~~directors. ~~are essentially~~The ~~identical~~plaintiffs toseek ~~those~~various byremedies, including ~~which~~enjoining the ~~other~~transaction ~~Berkshire insurance~~from ~~subsidiaries~~being ~~participate,~~consummated ~~except~~in asaccordance towith the ~~percentages~~agreed-upon ofterms. ~~participation~~The ~~(see~~defendants ~~Item 1,~~intend ~~Business,~~to ~~for~~defend ~~further~~against these and any additional actions asserting similar ~~information)~~claims that may be brought in the future.

Wesco and its subsidiaries are not otherwise involved in any legal proceedings the ultimate ~~FINANCIAL~~outcomes ~~CONDITION~~of which are expected to be significant to Wesco.

~~Wesco~~Item ~~continues to have a strong consolidated balance sheet, with high liquidity and relatively little debt~~4. ~~Its~~Submission ~~equity investments are in strong, well-known companies, whose aggregate fair values as~~ of ~~yearend~~Matters 2009 reflected net appreciation during the year, although the fair values of several of Wesco’s investees were down for 2009. In particular, as of December 31, 2009, the stock prices of the banking companies in which Wesco has significant investments had not fully recovered from near panic selling in the marketplace in early 2009. Management of Wesco believes that it may be some time, perhaps beyond 2010, before economic conditions begin significantly to ~~improve. Wesco’s practice of concentrating its investments in~~ a ~~few~~Vote ~~issuers, rather than diversifying, follows the investment philosophy~~ of ~~the~~Security ~~chairmen-CEOs of Wesco and its parent, Berkshire, who consult with respect to Wesco’s investments and major capital allocations.~~ Holders

~~Wesco’s shareholders’ equity was $2~~ Reserved.~~55 billion~~ ($358.26 per share) at December 31, 2009, $2.38 billion ($333.96 per share) as of December 31, 2008, and $2.53 billion ($356.03 per share) at December 31, 2007. Wesco carries principally all of its investments on its consolidated balance sheet at fair value, with net unrealized appreciation or depreciation included as a component of shareholders’ equity, net of deferred taxes, without being reflected in earnings. The changes in shareholders’ equity reflect principally the after-tax appreciation or depreciation of the aggregate values of Wesco’s investments, as well as net income retained, after payment of dividends to shareholders.

~~Because~~PART ~~unrealized appreciation or depreciation is recorded~~II based upon market quotations and, in some cases, upon other inputs that are affected by economic and market conditions as of the balance sheet date, gains or losses ultimately realized upon sale of investments could differ substantially from unrealized appreciation or depreciation recorded on the balance sheet. See Item 7A, Quantitative and Qualitative Disclosures About Market Risk, as well as Notes 1, 2 and 8 to Wesco’s accompanying consolidated financial statements, for additional information on Wesco’s investments.

~~Wesco’s liability for unpaid losses and loss adjustment expenses at December~~Item ~~31, 2009 totaled $343.~~5 ~~million versus $215~~.~~3 million~~ Market atfor ~~December 31,~~Registrant’s ~~2008.~~Common ~~The increase~~Equity, ~~related~~Related ~~mainly~~Stockholder toMatters ~~the~~and ~~retrocession~~Issuer ~~agreement~~Purchases ~~with~~of ~~Berkshire’s~~Equity ~~NICO subsidiary, described in Item 1,~~Securities ~~Business, above.~~

Wesco’s ~~consolidated~~capital ~~borrowings~~stock ~~totaled~~is ~~$28.2 million at~~listed ~~December 31,~~on ~~2009~~the ~~versus~~NYSE ~~$40.4 million at December 31~~Amex, ~~2008.~~owned ~~These amounts related primarily to a $100 million revolving credit facility used in CORT’s furniture rental business. In addition to this recorded debt, Wesco~~ and ~~its~~operated ~~subsidiaries~~by ~~had~~NYSE ~~$125.8 million of operating lease and other contractual obligations at December 31~~Euronext, ~~2009,~~ ~~versus $142.2 million one year earlier. (See the~~a ~~section~~holding oncompany ~~off-balance~~also ~~sheet~~owning ~~arrangements and contractual obligations appearing below in this Item 7, as well as Note 7 to~~ the ~~accompanying~~New ~~consolidated~~York ~~financial statements,~~Stock ~~for additional information on debt~~Exchange.)

~~Wes-FIC~~ The ~~has~~following atable ~~rating~~sets forth quarterly ranges of ~~AA+~~composite ~~from~~prices ~~Standard &~~for trading of Wesco ~~Poor’s~~shares ~~Corporation~~for ~~with~~2010 ~~respect~~and to2009, ~~its~~based ~~claims-paying~~on data reported by Bloomberg LP, as well as cash dividends paid by ~~ability.~~Wesco on each outstanding share:


	2010						2009
	Sales Price						Sales Price
					Dividends						Dividends
Quarter Ended	High		Low		Paid		High		Low		Paid
March 31	$	416	$	342	$	0.41	$	309	$	208	$	0.395
June 30		408		319		0.41		323		269		0.395
September 30		387		318		0.41		328		285		0.395
December 31		373		352		0.41		354		313		0.395

					$	1.64					$	1.580

There were approximately 400 shareholders of record of Wesco’s capital stock as of the close of business on February 15, 2011. It is estimated that approximately 10,700 additional Wesco ~~RESULTS~~shareholders OFheld ~~OPERATIONS~~shares of Wesco’s capital stock in street name at that date.

~~The~~ Wesco ~~weakness~~did innot ~~global~~purchase ~~economic~~any ~~activity over the last half~~ of ~~2008~~ ~~continued~~its ~~through~~own ~~2009.~~equity ~~Wesco’s~~securities ~~consolidated~~during ~~operating results in 2009 were significantly impacted by that weakness~~2010.

13 Wesco’s consolidated net income is also impacted from year to year as a result of the realization of gains or losses on investments. The amount, if any, of realized gain or loss in any year has no predictive value, and variations in amount from year to year have no practical analytical value. Realized gains amounted to $7.0 million ($4.6 million, after taxes) for 2008 and $24.2 million ($15.8 million, after income taxes) for 2007. No gains or losses were realized in 2009.

~~Wesco’s consolidated net income, excluding realized investment gains, decreased by $23.5~~Item ~~million for 2009~~6. ~~Several~~ Selected ~~factors~~Financial ~~were involved, including (1) the~~Data detrimental effects of the weak economic environment on CORT’s and Precision Steel’s businesses, (2) a decrease in investment income resulting mainly from declining interest yields on investments, and (3) a writedown in the carrying value of real estate held for sale, partially offset by (4) improved insurance underwriting results.

As Set ~~noted~~forth ~~above,~~below ~~the~~and ~~operations~~on ofthe ~~Wesco’s~~following ~~subsidiaries~~page ~~have been~~are ~~impacted~~selected byconsolidated ~~the~~financial ~~weak~~data ~~economic~~for ~~conditions, which Berkshire~~Wesco and ~~Wesco~~its ~~management~~subsidiaries. ~~believe~~For ~~will~~additional ~~likely~~financial ~~persist~~information, atattention ~~least through~~is ~~2010~~directed ~~before~~to ~~meaningful improvements become evident.~~ Wesco’s ~~subsidiaries will continue their cost reduction~~ ~~actions~~audited in2010 ~~response~~consolidated tofinancial ~~the~~statements ~~current~~appearing ~~economic situation, including ongoing reductions~~ in ~~capital~~Item 8 ~~expenditures~~of ~~and~~this ~~operating expenses~~report. ~~Wesco~~(Amounts ~~has~~are ~~historically attempted to manage its~~in ~~financial~~thousands ~~condition~~except ~~such~~for ~~that~~amounts itper ~~can weather cyclical economic conditions~~share. ~~Management believes that the economic franchises of~~) ~~Wesco’s principal business operations will remain intact and that their operating results will ultimately return to more normal historic levels.~~

The selected financial data in Item 6 are set forth essentially in the income statement format customary to generally accepted accounting principles (“GAAP”). Revenues, including realized net investment gains, are followed by costs and expenses, and a provision for income taxes, to arrive at net income. The following summary sets forth the after-tax contribution to GAAP net income of each business segment — insurance, furniture rental and industrial — as well as activities not considered related to such segments. Realized net investment gains are excluded from segment activities, consistent with the way Wesco’s management views the business operations. (Amounts are in thousands, all after income tax effect.)


	December 31,
	2010			2009			2008			2007		2006
Assets:
Cash and cash equivalents	$	472,569		$	273,671		$	297,643		$	526,722	$	1,257,351
Investments —
Securities with fixed maturities		235,193			229,872			28,656			38,600		81,861
Equity securities		2,272,253			2,065,627			1,868,293			1,919,425		1,040,550
Accounts receivable		37,191			37,983			57,489			42,841		37,204
Receivable from affiliates		170,852			173,476			133,396			36,671		23,182
Rental furniture		177,680			177,793			217,597			178,297		182,846
Goodwill of acquired businesses		277,514			277,590			277,742			266,607		266,607
Other assets		148,692			165,414			169,879			103,846		80,704

Total assets	$	3,791,944		$	3,401,426		$	3,050,695		$	3,113,009	$	2,970,305


Liabilities:
Insurance losses and loss adjustment expenses —
Affiliated business	$	371,805		$	290,375		$	164,424		$	39,687	$	29,761
Unaffiliated business		36,579			53,091			50,844			54,158		48,549
Unearned insurance premiums —
Affiliated business		112,019			110,477			94,544			15,041		14,062
Unaffiliated business		9,545			11,516			13,251			15,225		15,298
Deferred furniture rental income and security deposits		8,269			11,846			17,674			19,947		20,440
Accounts payable and accrued expenses		73,500			54,537			61,145			49,476		48,258
Notes payable		51,200			28,200			40,400			37,200		38,200
Income taxes payable, principally deferred		363,310			290,667			230,657			347,416		355,399

Total liabilities	$	1,026,227		$	850,709		$	672,939		$	578,150	$	569,967


Shareholders’ equity:
Capital stock and additional paid- in capital	$	33,324		$	33,324		$	33,324		$	33,324	$	33,324
Accumulated other comprehensive income —
Unrealized appreciation of investments, net of taxes		438,918			284,051			154,660			381,017		344,978
Foreign currency translation adjustments, net of taxes		(1,553	)		(1,151	)		(1,897	)		—		—
Retained earnings		2,295,028			2,234,493			2,191,669			2,120,518		2,022,036

Total shareholders’ equity	$	2,765,717		$	2,550,717		$	2,377,756		$	2,534,859	$	2,400,338

Per capital share	$	388.45		$	358.26		$	333.96		$	356.03	$	337.14

	Year Ended December 31,
	2009			2008			2007
Insurance segment:
Underwriting	$	7,222		$	(2,942	)	$	7,040
Investment income		55,781			64,274			65,207
Furniture rental segment		(1,359	)		15,744			20,316
Industrial segment		(648	)		842			915
Nonsegment items other than investment gains		(6,923	)		(356	)		(73	)
Realized investment gains		—			4,554			15,756
Consolidated net income	$	54,073		$	82,116		$	109,161

In the following sections the data set forth in the foregoing summary on an after-tax basis are broken down and discussed.


	Year Ended December 31,
	2010			2009		2008		2007		2006
Revenues:
Furniture rentals	$	309,439		$	312,234	$	340,162	$	327,671	$	324,300
Sales and service revenues		106,278			106,342		130,753		129,861		139,058
Insurance premiums earned —
Affiliated business		272,223			307,560		218,094		35,530		32,643
Unaffiliated business		12,294			15,661		19,870		18,881		21,506
Dividend and interest income		75,807			67,458		79,079		90,872		84,504
Realized net investment gains		6,541			—		7,006		24,240		—
Other-than-temporary impairment losses on investments		(21,021	)		—		—		—		—
Other		4,142			4,076		3,990		3,869		3,716

		765,703			813,331		798,954		630,924		605,727

Costs and expenses:
Cost of products and services sold		124,245			130,992		149,319		143,282		154,218
Insurance losses and loss adjustment expenses —
Affiliated business		182,925			198,853		151,308		24,008		21,401
Unaffiliated business		(2,669	)		14,454		20,892		4,269		9,944
Insurance underwriting expenses —
Affiliated business		82,059			92,857		63,156		8,019		7,566
Unaffiliated business		5,525			5,946		7,135		7,284		7,294
Selling, general and administrative		281,929			305,934		300,231		280,728		265,327
Interest expense		504			641		1,798		2,408		2,711

		674,518			749,677		693,839		469,998		468,461

Income before income taxes		91,185			63,654		105,115		160,926		137,266
Income taxes		18,973			9,581		22,999		51,765		45,233

Net income	$	72,212		$	54,073	$	82,116	$	109,161	$	92,033


Amounts per share:
Net income	$	10.14		$	7.59	$	11.53	$	15.33	$	12.93
Cash dividends		1.64			1.58		1.54		1.50		1.46

The reinsurance activities of Wesco’s insurance segment are managed by Berkshire’s NICO subsidiary and represent participations in contracts in which NICO and other members of the Berkshire Insurance Group also participate. Financial information associated with these ~~Segment~~participations is identified in Wesco’s consolidated financial statements, as well as in Item 6, Selected Financial Data, as affiliated business.

~~Wesco engages principally in reinsurance of property and casualty risks through Wes-FIC~~Item 7. ~~It also engages in primary insurance through KBS. Their operations are conducted or supervised by wholly owned subsidiaries of Berkshire, Wesco~~ Management’s ~~ultimate~~Discussion ~~parent~~and ~~company,~~Analysis ~~principally, NICO. In reinsurance activities, defined portions~~ of ~~similar~~Financial ~~or dissimilar~~Condition risks that other insurers or reinsurers have subjected themselves to in their own insuring activities are assumed. In primary insurance activities, defined portions of the risks of loss from persons or organizations that are directly subject to the risks are assumed. For purposes of the following discussion, the results have been disaggregated between reinsurance and ~~primary~~Results ~~insurance activities. Following is a summary~~ of ~~the insurance segment’s underwriting~~Operations ~~activities. (Amounts are in thousands.)~~

	Year Ended December 31,
	2009			2008			2007
Insurance premiums written —
Reinsurance	$	329,227		$	298,622		$	35,346
Primary		9,964			17,850			19,493
Total	$	339,191		$	316,472		$	54,839
Insurance premiums earned —
Reinsurance	$	311,144		$	217,584		$	34,998
Primary		12,077			20,380			19,413
Total		323,221			237,964			54,411
Insurance losses, loss adjustment expenses and underwriting expenses		312,110			242,491			43,580
Underwriting gain (loss), before income taxes —
Reinsurance		15,968			(2,162	)		2,158
Primary		(4,857	)		(2,365	)		8,673
Total		11,111			(4,527	)		10,831
Income taxes		3,889			(1,585	)		3,791
Underwriting gain (loss)	$	7,222		$	(2,942	)	$	7,040

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

OVERVIEW Contractual delays in reporting, and limitations in details reported, by the ceding companies necessitate that estimates be made of reinsurance premiums written and earned, as well as reinsurance losses and expenses. Under the Swiss Re contract, for example, estimates of premiums, claims and expenses are reported 45 days after the end of each quarterly period. Estimates are therefore made each reporting period by management for the activity not yet reported. Such estimates are developed by NICO based on information publicly available and adjusted for the impact of its, as well as Wes-FIC’s management’s, assessments of prevailing market conditions and other factors with respect to the underlying reinsured business. The relative importance of the Swiss Re contract to Wesco’s results of operations causes those results to be particularly sensitive to this estimation process. However, increases or decreases in premiums earned as a result of the estimation process related to the reporting lag have been and will typically be substantially offset by corresponding increases or decreases in claim and expense estimates. Periodic underwriting results can also be affected significantly by changes in estimates for unpaid losses and loss adjustment expenses, including amounts established for occurrences in prior years. See the Critical Accounting Policies section of this discussion for information concerning the loss reserve estimation process.

~~Written~~ The ~~and~~principal ~~earned~~goal ~~reinsurance~~of ~~premiums~~Wesco’s ~~have~~management ~~increased significantly~~is ~~beginning~~to maximize gain in ~~2008~~Wesco’s asintrinsic abusiness value ~~result~~per ofshare over the ~~inception~~long ofterm. Accounting consequences do not influence business decisions, ~~the~~nor ~~Swiss~~do Refluctuations ~~contract~~in annual net income. ~~Written~~Management ~~and~~strives ~~earned~~to ~~premiums~~maintain ~~assumed~~high ~~under~~liquidity to ensure ~~the~~that ~~Swiss~~Wesco Reand ~~contract~~its ~~were~~subsidiaries ~~$294.1 million~~are ~~and $276.7 million,~~able ~~respectively,~~to ~~for~~endure ~~2009~~unforeseen circumstances, ~~and~~including recessionary ~~$265.2 million~~economic cycles and ~~$183.2 million,~~periods ~~for~~of ~~2008.~~significant declines in

15 23

~~Written~~the ~~primary~~trading ~~insurance~~prices ~~premiums~~of ~~decreased~~investments, ~~by $7.9 million~~with ~~(44.2%)~~a ~~for~~margin ~~2009~~of ~~and by $1.6 million (8.4%) for 2008~~safety, ~~from those of each corresponding prior year. Earned primary insurance premiums decreased by $8.3 million (40.7%) for 2009~~ and ~~increased~~to byinvest ~~$1.0 million (5.0%) for 2008, from~~ the ~~corresponding~~investable ~~prior year figures. These~~funds ~~fluctuations~~principally ~~related~~held ~~essentially~~in ~~to KBS~~Wesco’s ~~bank~~insurance ~~deposit guarantee~~segment ~~bonds~~in ~~which~~common ~~insure~~stocks ~~deposits above FDIC limits for specific customers~~ of ~~mainly~~outstanding ~~Midwestern~~publicly ~~banks and which~~traded ~~represented~~companies ~~approximately~~at ~~half~~prices ofdeemed ~~KBS’s premium volume for 2008 and 2007~~reasonable. ~~KBS~~In ~~announced~~the ~~late~~event ~~in 2008~~ that ~~events~~such ininvestments ~~the banking~~are ~~industry,~~not ~~including a number of bank failures~~available, ~~had~~ ~~caused~~capital ~~management~~is topreserved ~~become~~through ~~less~~investments ~~confident~~ in ~~the long~~high-~~term profitability~~quality ofcash ~~this line of insurance. In September 2008~~equivalents, ~~KBS notified~~securities ~~its customers~~ of ~~its decision to exit this line of insurance as rapidly as feasible. As a result,~~ the ~~aggregate face amount of outstanding deposit guarantee bonds was reduced, from $9~~U.~~7 billion at September 30, 2008, when 1,671 separate institutions were insured by KBS, to $33 million, insuring 10 institutions currently~~S. ~~KBS anticipates that~~ ~~outstanding~~Government ~~guarantee~~and ~~bonds~~its ~~will decline to approximately $3 million~~agencies, ~~insuring just one institution by December 31, 2010,~~ and tohigh-quality ~~zero,~~corporate bydebt ~~August 1, 2011~~instruments.

~~KBS~~ Wesco’s ~~limits~~operating ~~its~~businesses ~~risk~~are ~~exposure~~managed ~~through~~on ~~the~~a ~~use~~decentralized ~~of underwriting practices, policy limits and reinsurance~~basis. ~~Its~~There ~~management maintains~~are ~~and~~essentially ~~regularly updates a list ranking the banks it~~no ~~believes~~centralized toor beintegrated ~~the~~business ~~250~~functions ~~weakest~~(such inas ~~the~~sales, ~~nation~~marketing, ~~based~~purchasing, onlegal ~~data~~or human ~~obtained~~resources) ~~from~~and ~~quarterly~~there ~~financial~~is ~~“Call”~~minimal ~~reports~~involvement ~~filed~~ by ~~all~~Wesco’s ~~domestic~~management ~~banks~~in ~~with~~the ~~their~~day-to-day ~~banking regulators. Data by~~business ~~which~~activities ~~banks~~of ~~are~~the ~~rated~~operating ~~includes~~businesses. ~~capital~~Wesco’s ~~to asset ratio~~Chairman, ~~brokered deposits,~~President ~~loan~~and toChief ~~deposit~~Executive ~~ratio~~Officer, ~~loans to insiders, loan~~ ~~delinquencies~~Charles ~~and non-accruing loans~~T. ~~Procedures~~Munger, ~~followed~~is byalso ~~KBS management~~Vice ~~with~~Chairman ~~respect~~of toBerkshire ~~customer~~Hathaway, ~~banks~~and ~~whose~~consults ~~names~~with ~~are~~Warren ~~on the~~E. ~~list~~Buffett, ~~might~~Chairman ~~include~~and ~~the~~Chief ~~issuance~~Executive ofOfficer ~~notices~~ of ~~non-voluntary cancellation.~~Berkshire, ~~None~~with ofrespect ~~the~~to ~~10 banks for which deposit guarantee bonds are outstanding are included on KBS~~Wesco’s ~~list~~investment decisions, ofmajor ~~250 weakest~~capital ~~banks~~allocations, inand the ~~nation.~~selection ~~KBS management believes that none~~ of the ~~institutions~~chief ~~for~~executives ~~which~~to ~~deposit~~head ~~guarantee~~each ~~bonds are outstanding are facing a significant risk~~ of ~~failure. None of~~ ~~the~~Wesco’s ~~banks~~operating ~~whose~~units, ~~deposits~~subject ~~are currently insured by KBS exposes it~~ to anultimate ~~individual~~approval ~~after-tax~~of ~~loss~~Wesco’s inBoard ~~excess~~ of ~~$3 million~~Directors.

~~Management~~ The ~~believes~~operations ~~that~~of ~~“underwriting~~Wesco’s ~~gain~~Wes-FIC orsubsidiary ~~loss” is~~are anmanaged ~~important~~by ~~measure~~Berkshire’s ofNICO ~~financial performance of insurance companies~~subsidiary. Wes-FIC ~~When~~participates ~~stated~~principally asin areinsurance ~~percentage,~~contracts ~~the~~in ~~sum~~which ofNICO ~~insurance losses, loss adjustment expenses~~ and ~~underwriting~~other ~~expenses,~~Berkshire ~~divided~~insurance bysubsidiaries ~~premiums~~participate, ~~gives~~in the ~~combined~~reinsurance ~~ratio. A combined ratio~~ of ~~less~~property ~~than 100% connotes an underwriting profit~~ and acasualty ~~combined ratio~~risks of unaffiliated ~~greater~~insurance ~~than 100% connotes an underwriting loss~~companies. The ~~ratio~~ isterms ~~figured~~of ~~on a pre~~Wes-~~tax basis. Underwriting results of Wesco~~FIC’s ~~insurance~~participation ~~segment~~are ~~have~~essentially ~~generally~~identical ~~been favorable,~~to ~~but~~those ~~have~~by ~~fluctuated~~which ~~from~~the ~~year~~other toBerkshire ~~year~~insurance ~~for~~subsidiaries ~~various reasons~~participate, ~~including~~ ~~competitiveness~~except ofas ~~pricing~~to inthe ~~terms~~ percentages of ~~premiums charged~~participation ~~for~~(see ~~risks~~Item 1, ~~assumed~~Business, ~~and~~for ~~volatility~~further ~~of losses incurred~~information).

~~Reinsurance~~FINANCIAL ~~generated pre-tax underwriting gains (losses) of~~CONDITION $16.0 million for 2009, ($2.2 million) for 2008 and $2.2 million for 2007, representing combined ratios of 94.9%, 101.0% and 93.9%. The 2009 figure included a pre-tax underwriting gain of $12.6 million under the Swiss Re contract, versus a pre-tax loss of $5.4 million incurred under the contract for 2008. During the third quarter of 2008, Hurricanes Gustav and Ike struck the Caribbean and the Gulf coast region of the United States, producing large catastrophe losses for the property-casualty insurance industry. The underwriting figure for 2008 included Wes-FIC’s estimate that its share of Swiss Re’s losses from those events was $13.5 million, before taxes, based entirely on management’s assessment of publicly available information. Pre-tax underwriting results under the contract for 2009 include favorable loss development of $12.0 million in recognition of more favorable underwriting results for 2008 than had been reflected in Wes-FIC’s estimate of Swiss Re’s results under the contract for the year. Wes-FIC, for 2009, reserved for Swiss Re losses and loss expenses at a lower rate than for 2008 in part based on the lack of major catastrophes in 2009 and in part based on the reported performance by Swiss Re; however, the 2009 figures also

Wesco continues to have a strong consolidated balance sheet, with high liquidity and relatively little debt. 24

~~reflect~~ Its ~~the~~equity ~~mildly~~investments ~~detrimental~~are ~~effects~~in ofstrong, ~~the~~well-known ~~declining value of the U~~companies.~~S. Dollar~~ ~~relative~~Wesco’s topractice ~~other~~of ~~currencies~~concentrating its investments in ~~which~~a ~~Swiss Re~~few ~~conducts~~issuers, ~~much~~rather ofthan ~~its~~diversifying, ~~business.~~follows ~~Wesco~~the ~~does~~investment ~~not~~philosophy ~~hedge against~~of ~~such~~the ~~fluctuations~~chairmen-CEOs ~~recognizing~~of ~~that~~Wesco ~~foreign~~and ~~exchange~~its ~~risk~~parent, isBerkshire, ~~an inherent~~who ~~part~~consult ofwith ~~assuming~~respect ~~risks~~to ~~denominated in other currencies,~~Wesco’s ~~which~~investments itand ismajor ~~willing~~capital ~~to retain~~allocations.

~~Underwriting~~ Wesco’s ~~gains~~shareholders’ ~~from~~equity ~~the~~was ~~aviation-related reinsurance contracts were~~ $32.477 ~~million,~~billion ($3388.245 per share) at December ~~million~~31, ~~and~~ 2010, $2.~~2 million,~~55 billion ~~before~~($358.26 ~~taxes,~~per ~~for~~share) at December 31, 2009, ~~2008~~ and ~~2007~~$2. ~~Underwriting~~38 billion ~~results~~($333.96 ~~typically~~per ~~fluctuate~~share) ~~from~~as ~~period~~of December 31, ~~to period~~2008. ~~The~~ ~~severity~~Wesco ~~component~~carries substantially all of ~~aviation-related~~its ~~losses~~investments ~~tends~~on toits beconsolidated balance ~~volatile,~~sheet ~~especially~~at fair value, with ~~respect~~net tounrealized ~~losses~~appreciation ~~incurred~~or ~~during~~depreciation included as a component of ~~single~~shareholders’ ~~reporting~~equity, ~~period~~net of deferred taxes, without being reflected in earnings. ~~Included~~The change in shareholders’ equity reflects principally the ~~pre~~after-tax ~~underwriting~~net appreciation of the aggregate values of ~~gains~~Wesco’s ~~for~~investments, ~~each~~as ~~year~~well ~~were~~as net ~~favorable~~income ~~prior~~retained, ~~period~~after ~~reserve development~~payment of $3dividends to shareholders.~~5 million~~ During in2010, ~~2009~~however, ~~$4.2 million~~as inexplained below, under “Results of Operations,” Wesco recorded an ~~2008~~“other-than-temporary” ~~and~~impairment loss with respect to one investment, in the amount of $321.20 million ($13.7 million, after taxes). The realization of the loss did not affect Wesco’s shareholders’ equity, but merely resulted in ~~2007~~a reclassification of the after-tax amount from net unrealized appreciation to retained earnings, another component of shareholders’ equity.

~~Primary~~ Because ~~insurance~~unrealized ~~activities~~appreciation ~~resulted~~and indepreciation ~~pre-tax~~is ~~underwriting gains~~recorded ~~(losses)~~based ofupon ~~($4.9 million),~~market ~~($2.4 million)~~quotations and, ~~$8.7 million~~in ~~for~~some ~~2009~~cases, ~~2008~~upon ~~and~~other ~~2007.~~inputs ~~These~~that ~~figures represented~~are ~~combined~~affected ~~ratios~~by ofeconomic ~~140.2%, 111.6%~~ and ~~55.1%.~~market ~~Not only~~conditions doas ~~these figures reflect favorable (unfavorable) pre-tax loss development~~ of ~~($3.4 million), ($0.4 million) and~~the ~~$3.6 million~~balance ~~for~~sheet ~~those respective years~~date, ~~but~~gains ~~the~~or ~~2009~~losses ~~and 2008~~ultimately ~~figures~~realized ~~also~~upon ~~reflect~~sale ~~pre-tax losses~~ of ~~$2.6 million ($1.7 million,~~investments ~~after~~could ~~taxes) and $6.9 million~~differ ~~($4.7 million,~~substantially ~~after taxes), respectively,~~ from ~~the FDIC’s~~unrealized ~~seizure~~appreciation ofor ~~several~~depreciation ~~failed~~recorded ~~banks~~on ~~that~~the ~~had~~balance ~~portions of their deposits insured by KBS~~sheet. AsSee ~~the FDIC liquidates the assets~~Item ~~of failed banks~~7A, itQuantitative ~~distributes funds to the bank’s creditors~~ and ~~owners~~Qualitative ofDisclosures ~~deposits~~About inMarket ~~excess of FDIC insurance limits~~Risk, ~~including~~as ~~KBS~~well ~~(by~~as ~~right~~Notes ~~of subrogation). KBS’s pre-tax underwriting loss for 2009 reflects $~~1~~.2 million ($0.8 million~~, ~~after~~2 ~~taxes)~~and ~~recovered~~8 to ~~date from the~~ ~~FDIC.~~Wesco’s ~~Additional~~accompanying ~~recoveries,~~consolidated iffinancial ~~any~~statements, ~~will~~for ~~also~~additional beinformation ~~recorded~~on ~~when~~Wesco’s ~~received~~investments.

16 KBS operates from modest offices, and its ongoing operations require a basic level of services with annual costs that do not lend themselves to downsizing nearly in proportion to the significant reduction in revenues resulting from the discontinuation of the deposit-guarantee bond line of insurance. Underwriting results of future periods will likely continue to reflect the disproportionately higher level of operating expenses to revenues, as in 2009, unless and until KBS is able to replace the premiums from deposit guarantee bonds it no longer writes, with other premium revenues.

~~Since~~ Wesco’s ~~September 11,~~liability ~~2001,~~for ~~the~~unpaid ~~insurance~~losses ~~industry~~and ~~has~~loss ~~been particularly~~adjustment ~~concerned~~expenses ~~about~~at ~~its~~December 31, ~~exposure~~2010 ~~to claims resulting~~totaled ~~from~~$408.4 million ~~acts~~versus ~~of terrorism~~$343.5 million Inat ~~spite of partial relief provided to the insurance industry by the Terrorism Risk Insurance Act~~December 31, ~~enacted~~ in2009. ~~2002~~The ~~and~~increase ~~amended~~related byprincipally ~~the~~to ~~Terrorism Risk Extension Act of 2005, and~~ the ~~Terrorism Risk Insurance Program~~ ~~Reauthorization~~retrocession ~~Act~~agreement ofwith ~~2007, Wes-FIC is exposed to insurance losses from terrorist events. Wes-FIC~~Berkshire’s ~~(and~~NICO ~~thus Wesco’s) exposure to such losses from an insurance standpoint cannot be predicted. Management~~subsidiary, ~~however,~~described does not believe it likely that, on a worst-case basis, Wesco’s shareholders’ equity would be severely impacted by future terrorism-related insurance losses under reinsurance or insurance contracts currently in ~~effect. Losses from terrorism could~~Item 1, ~~however~~Business, ~~significantly impact Wesco’s periodic reported earnings~~above.

~~Other~~ Wesco’s ~~industry~~consolidated ~~concerns~~borrowings intotaled ~~recent~~$51.2 million ~~years~~at ~~have~~December 31, ~~included~~2010 ~~exposures~~versus $28.2 million at December 31, 2009. These amounts related primarily to ~~losses~~a ~~relating~~$100 million revolving credit facility used in CORT’s furniture rental business. In addition to ~~environmental~~this ~~contamination~~recorded debt, Wesco and ~~asbestos~~its subsidiaries had $128.2 million of operating lease and other contractual obligations at December ~~Management~~31, ~~currently~~2010, ~~believes~~versus ~~such~~$125.8 million ~~exposures~~one year earlier. (See the section on off-balance sheet arrangements and contractual obligations appearing below in this Item 7, as well as Note 7 to bethe accompanying ~~minimal~~consolidated financial statements, for additional information on debt.)

Wes-FIC has a rating of AA+ from Standard & Poor’s Corporation with respect to its claims-paying ability. 25

~~Following~~RESULTS isOF ~~a summary of investment income produced by~~OPERATIONS ~~Wesco’s insurance segment (in thousands of dollars)~~

	Year Ended December 31,
	2009		2008		2007
Investment income, before taxes	$	67,049	$	84,920	$	89,716
Income taxes		11,268		20,646		24,509
Investment income, after taxes	$	55,781	$	64,274	$	65,207

Over the last half of 2008 and throughout 2009, operating results of Wesco’s furniture rental and industrial segments were adversely impacted by the world-wide economic recession. While Wesco’s insurance segment has remained strong, late in 2008, KBS discontinued its line of deposit guarantee bonds, the premiums from which had provided half of its insurance premium revenues. In 2010, operating results of Wesco’s furniture rental and industrial segments improved versus 2009, reflecting some improvement in economic conditions; and, Wesco’s insurance segment reported improved income from underwriting activities.

~~Investment~~ Wesco’s ~~income~~consolidated ofnet ~~the~~income ~~insurance~~has ~~segment~~also ~~comprises~~been ~~dividends~~ and ~~interest~~will ~~earned~~continue ~~principally~~to ~~from~~be ~~the~~impacted ~~investment~~from ofyear to ~~shareholder~~year ~~capital~~as ~~(including~~a ~~reinvested~~result ~~earnings)~~of asthe ~~well~~realization ~~as float~~of ~~(principally,~~gains ~~premiums~~or ~~received~~losses ~~before~~on ~~payment~~investments, ~~of related claims~~ and, ~~expenses).~~in ~~Wesco’s~~2010, ~~insurance~~it ~~segment~~was ~~redeployed~~also ~~$1.2 billion~~impacted ofby ~~interest~~an “other-~~yielding~~than-temporary” ~~investments~~impairment ~~into~~(“OTTI”) ~~equity securities~~loss ~~beginning~~on incertain ~~the~~purchase ~~latter~~lots ~~part~~ of ~~2007, and through~~an ~~yearend~~investment ~~2008,~~that ~~including~~had ~~$205 million~~been ~~invested~~below incost ~~shares~~for ~~of 10%~~more ~~cumulative~~than ~~perpetual~~two ~~preferred~~years. ~~stock of~~ The ~~Goldman Sachs Group~~amounts, ~~Inc.~~if any, ~~in the fourth quarter~~ of ~~2008.~~these ~~Not only have~~gains ~~interest~~and ~~rates~~losses ~~continued~~in toany ~~soften~~year ~~since~~have ~~late~~no inpredictive ~~2007~~value, ~~but Wells Fargo & Company~~ and ~~US Bancorp,~~variations in ~~which Wesco’s~~amount ~~insurance~~from ~~segment~~year ~~has~~to ~~significant~~year ~~investments, reduced~~have ~~their quarterly dividend distributions to shareholders~~no ~~during~~practical ~~2009~~analytical value. ~~The~~In ~~insurance~~2010, ~~segment’s~~realized ~~pre-tax~~net ~~dividend income~~investment ~~decreased~~gains bywere $16.05 million ~~for~~($4.2 million, after ~~2009~~taxes), ~~having~~and ~~increased by~~OTTI losses were $3321.0 million ~~in 2008~~($13.7 million, ~~and~~after ~~pre-tax~~taxes). ~~interest~~No ~~income~~investment gains ~~decreased~~or bylosses ~~$16.9 million~~were realized in 2009,. ~~following~~Realized a investment gains of $377.80 million ~~decrease in 2008~~($4.6 million, ~~from~~after taxes) ~~the~~were ~~corresponding prior~~realized ~~year~~in ~~figures~~2008.

Wesco’s ~~continues~~reportable tobusiness ~~seek~~segments toare ~~invest~~organized in a manner that reflects how Wesco’s top management views those business activities. Wesco’s management views insurance businesses as possessing two distinct operations — underwriting and investing, and believes that “underwriting gain or loss” is an important measure of their financial performance. Underwriting gain or loss represents the ~~purchase~~simple arithmetic difference between the following line items appearing on the consolidated statement of ~~businesses~~income: (1) insurance premiums earned, less (2) insurance losses and loss adjustment expenses, and ininsurance underwriting expenses. Management’s goal is to generate underwriting gains over the long- term. ~~equity~~Underwriting ~~holdings~~decisions are the responsibility of the unit managers; investing is the responsibility of Charles T. Munger in consultation with Warren E. Buffett, subject to ultimate approval by Wesco’s Board of Directors. Accordingly, underwriting results are evaluated without allocation of investment income.

Wesco’s ~~insurance~~consolidated ~~subsidiaries~~net income, asexcluding arealized ~~matter~~net ofinvestment ~~practice, maintain~~gains ~~liquidity~~and inOTTI ~~amounts~~losses, increased ~~which~~by ~~exceed~~$27.6 million byfor ~~wide~~2010. ~~margins expected~~Several ~~near-term~~factors ~~requirements~~were ~~for~~involved, ~~payment~~principally (1) improved profitability of ~~claims~~CORT’s ~~and expenses.~~furniture Asrental abusiness ~~result,~~due itto ~~would~~a bereduction ~~unlikely~~in ~~that~~operating ~~any~~expenses, (2) ~~unanticipated~~increased ~~payment~~underwriting ofgain ~~claims~~and orinvestment ~~expenses~~income ~~would~~of ~~require~~Wesco’s ~~the liquidation~~insurance ofbusinesses, ~~investments~~and at(3) improving aeconomic ~~loss~~conditions. ~~Wesco~~The ~~does~~operations ~~not~~of ~~attempt~~CORT ~~to match~~and ~~long-term~~Precision ~~investment~~Steel, ~~maturities~~although improved, continue to ~~estimated~~reflect ~~durations~~the effects of ~~claim~~ ~~liabilities~~weak economic conditions.

17 ~~Reference is made to the table of contractual obligations appearing on page 30.~~

~~Following~~While isthere ahas ~~summary~~been ofsome ~~the~~improvement ~~results~~in ofeconomic ~~operations~~conditions, ofWesco’s ~~CORT,~~management believes that generally weak conditions will likely persist at least through 2011. Wesco’s ~~furniture~~subsidiaries ~~rental~~will continue ~~segment.~~their ~~(Amounts~~cost ~~are~~reduction actions in response to this situation, including ongoing reductions ~~thousands~~in capital expenditures and operating expenses.) Wesco has historically attempted to manage its financial condition such that it can weather cyclical economic conditions, and it intends to continue doing so throughout the current economic cycle.

	Year Ended December 31,
	2009			2008		2007
Revenues:
Furniture rentals	$	312,234		$	340,162	$	327,671
Furniture sales		61,191			61,800		61,704
Service fees		6,771			8,081		6,795
		380,196			410,043		396,170
Cost of rentals, sales and fees		99,042			97,997		91,407
Selling, general and administrative expenses		283,590			287,498		268,469
Interest expense		640			1,798		2,408
		383,272			387,293		362,284
Income (loss) before income taxes		(3,076	)		22,750		33,886
Income taxes		(1,717	)		7,006		13,570
Segment net income (loss)	$	(1,359	)	$	15,744	$	20,316

The selected financial data in Item 6 are set forth essentially in the income statement format customary to accounting principles generally accepted in the United States (“GAAP”). Revenues, including realized net investment gains and OTTI losses, are followed by costs and expenses, and a provision for income taxes, to arrive at net income. The following summary sets forth the after-tax contribution to GAAP net income of each business segment — insurance, furniture rental and industrial — as well as activities not considered related to such segments. Realized net investment gains and OTTI losses are excluded from segment activities, consistent with the way Wesco’s management views the business operations. (Amounts are in thousands, all after income tax effect.)


	Year Ended December 31,
	2010			2009			2008
Insurance segment:
Underwriting		$10,840		$	7,222		$	(2,942	)
Investment income		62,211			55,781			64,274
Furniture rental segment		11,480			(1,359	)		15,744
Industrial segment		1,079			(648	)		842
Nonsegment items other than investment gains		(3,986	)		(6,923	)		(356	)
Realized net investment gains		4,252			—			4,554
Other-than-temporary impairment losses on investments		(13,664	)		—			—

Consolidated net income		$72,212		$	54,073		$	82,116

~~Furniture~~ In ~~rental revenues decreased $27.9 million (8.2%) for 2009, after increasing $12.5 million (3.8%) for 2008 from those of~~ the respective prior years. Excluding rental revenues from trade shows and locations not in operation throughout each year (“core rental revenues”), core rental revenues decreased 17.8% for 2009, following asections ~~decrease of 2.7% for 2008. Excluding~~ the ~~effects~~data ofset ~~acquisitions~~forth in the ~~year~~ ~~over~~foregoing ~~year~~summary ~~comparisons,~~on ~~the~~an ~~number~~after-tax ~~of furniture leases~~basis ~~outstanding~~are atbroken ~~yearend~~down 2009 declined by 24.9%, following a decline by 8.3% in 2008, accelerating a trend that was established late in 2006. CORT’s core rental revenues have decreased, despite some strategic acquisitions and ~~price increases, due primarily to the ongoing weak economic environment~~discussed.

18 Furniture sales revenues for 2009, 2008, and 2007 were relatively unchanged; however furniture sales margins have decreased from 36.8% in 2007, to 34.3% in 2008, and to 33.6% in 2009. The reductions in retail margins reflect management’s efforts to reduce rental furniture inventory levels in the face of lower customer demand.

~~Cost~~Insurance ~~of rentals, sales and fees amounted to 26.1% of revenues~~Segment for 2009, versus 23.9% for 2008 and 23.1% for 2007. The increases in the percentages for the 2009 and 2008 periods were due primarily to higher depreciation expense on rental furniture acquired in the business acquisition in November 2008 and decreasing profit margins on furniture sold.

~~Selling,~~ Wesco ~~general,~~engages ~~administrative~~principally ~~and~~in ~~interest~~reinsurance ~~expenses (“operating~~of ~~expenses”)~~property ~~for~~and ~~the~~casualty ~~segment~~risks ~~were $284.2 million~~through ~~for 2009, down 1~~Wes-FIC.8% ~~from the~~It ~~$289.3 million~~also ~~incurred~~engages ~~for~~in ~~2008,~~primary ~~following~~insurance anthrough ~~increase of 6~~KBS.8% ~~from~~Their ~~the~~operations ~~$270.9 million~~are ~~incurred~~conducted ~~for~~or ~~2007.~~supervised ~~The~~by ~~decrease~~wholly inowned ~~operating~~subsidiaries ~~expenses~~of inBerkshire, ~~2009~~Wesco’s ~~reflected~~ultimate parent company, principally, ~~the~~NICO. In ~~effect~~reinsurance toactivities, ~~date~~defined portions of ~~management’s~~similar ~~ongoing~~or ~~cost-cutting initiative,~~dissimilar ~~offset~~risks ~~somewhat~~that byother ~~incremental~~insurers ~~costs attributable to~~or ~~the~~reinsurers ~~November~~have ~~2008~~subjected ~~business~~themselves ~~acquisition,~~to ~~including employee-related~~in ~~expenses~~their asown ~~well~~insuring asactivities anare ~~increase~~assumed. byIn primary ~~$3.0 million~~insurance ofactivities, ~~amortization~~defined portions of the ~~value~~risks ~~assigned~~of ~~to rental~~loss ~~contracts~~from ~~acquired.~~persons ~~The~~or ~~increase~~organizations inthat ~~operating expenses~~are ~~for~~directly ~~2008~~subject ~~was due principally~~ to the ~~incremental~~risks ~~costs~~are ~~associated with~~assumed. ~~two~~For ~~business~~purposes ~~acquisitions~~of inthe ~~2008~~following asdiscussion, ~~well~~the ~~as business~~results ~~growth~~have ~~initiatives,~~been ~~subsequently~~disaggregated ~~curtailed,~~between ~~relating~~reinsurance toand ~~rental relocation~~primary ~~services~~insurance activities. ~~Given~~Following ~~the~~is ~~uncertainty~~a summary of the ~~timing~~insurance ~~of future~~segment’s ~~economic~~underwriting ~~growth,~~activities. ~~management~~(Amounts isare ~~aggressively~~in ~~seeking to further reduce operating expenses~~thousands.)

Income (loss) before income taxes for the furniture rental segment amounted to ($3.1 million) in 2009, $22.8 million in 2008 and $33.9 million in 2007. The significant decline in pre-tax income for 2009 was due primarily to a dramatic decrease in revenues, principally attributable to the effect of the ongoing weak economic environment, coupled with a level of expenses that could not be sufficiently reduced to match the depressed revenue level. The decline in pre-tax income for 2008 was principally attributable to the significant increase in year-to-year operating expenses. Although uncertain as to the timing of future revenue growth, management believes that the segment will be well-positioned to return to profitability when the business cycle improves.


	Year Ended December 31,
	2010		2009			2008
Insurance premiums written —
Reinsurance	$	275,126	$	329,227		$	298,622
Primary		9,658		9,964			17,850

Total	$	284,784	$	339,191		$	316,472

Insurance premiums earned —
Reinsurance	$	274,567	$	311,144		$	217,584
Primary		9,950		12,077			20,380

Total		284,517		323,221			237,964

Insurance losses, loss adjustment expenses and underwriting expenses		267,840		312,110			242,491

Underwriting gain (loss), before income taxes —
Reinsurance		13,820		15,968			(2,162	)
Primary		2,857		(4,857	)		(2,365	)

Total		16,677		11,111			(4,527	)
Income taxes		5,837		3,889			(1,585	)

Underwriting gain (loss)	$	10,840	$	7,222		$	(2,942	)

Contractual delays in reporting, and limitations in details reported by the ceding companies, necessitate that estimates be made of reinsurance premiums written and earned, as well as 27reinsurance losses and expenses. Under the Swiss Re contract, for example, premiums, claims and expenses are reported by Swiss Re 45 days after the end of each quarterly period. Estimates are therefore made each reporting period by management for the activity not yet reported. Such estimates are developed by NICO based on information publicly available and adjusted for the impact of its, as well as NICO’s and Wes-FIC’s managements’, assessments of prevailing market conditions and other factors with respect to the underlying reinsured business. The relative importance of the Swiss Re contract to Wesco’s results of operations causes those results to be particularly sensitive to this estimation process. However, increases or decreases in premiums earned as a result of the estimation process related to the reporting lag have been and will typically be substantially offset by corresponding increases or decreases in claim and expense estimates. Periodic underwriting results can also be affected significantly by changes in estimates for unpaid losses and loss adjustment expenses, including amounts established for occurrences in prior years. See the Critical Accounting Policies section of this discussion for information concerning the loss reserve estimation process.

Written and earned reinsurance premiums assumed under the Swiss Re contract were $241.1 million and $240.5 million, respectively, for 2010, $294.1 million and $276.7 million, for 2009, ~~Industrial~~and $265.2 million and $183.2 million, for 2008. The 2010 figures represented decreases of 18.0% in ~~Segment~~written and 13.1% in earned premiums for the year; the 2009 figures represented increases of 10.9% in written and 51.0% in earned premiums for the year. Premiums assumed in each of the remaining two years under the contract could vary

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

	Year Ended December 31,
	2009			2008		2007
Revenues, principally sales and services	$	38,380		$	60,872	$	61,361
Cost of sales and services		31,950			51,323		51,875
Selling, general and administrative expenses		7,435			7,948		7,968
		39,385			59,271		59,843
Income (loss) before income taxes		(1,005	)		1,601		1,518
Income taxes		(357	)		759		603
Segment net income (loss)	$	(648	)	$	842	$	915

~~The~~significantly ~~operations~~depending ofon ~~Wesco~~Swiss Re’s ~~industrial~~response ~~segment~~to ~~are~~market ~~subject~~conditions toand opportunities that may ~~economic~~arise, ~~cycles~~as ~~and~~well ~~have~~as ~~suffered~~any asignificant ~~variety~~fluctuation in the value of ~~ongoing~~the U.S. Dollar as compared with the ~~difficulties~~many ~~for~~currencies ain ~~number~~which ofSwiss ~~years,~~Re ~~including~~conducts aits ~~shift~~business. ofFor 2010, written aviation-related ~~production~~reinsurance premiums decreased by ~~many~~$1.1 million ~~customers~~(3.1%) from ~~domestic~~those toof ~~overseas facilities~~2009, ~~resulting~~after inhaving aincreased by ~~general~~$1.7 million ~~decline~~(5.2%) infor ~~the~~2009, ~~number~~from those of 2008. Earned aviation-related premiums for 2010 ~~orders~~decreased ~~placed~~by ~~and~~$0.5 million a(1.3%) ~~trend~~for ~~towards~~2010, ~~smaller-sized~~after ~~orders~~having increased by $0.1 million (0.2%) for 2009, ~~unprecedented~~from ~~ability~~those of ~~the~~2008. ~~major~~Property ~~steel~~casualty ~~producers~~insurance inis ~~recent years~~a tocompetitive ~~raise~~business. ~~prices~~Both Swiss Re and ~~establish~~the aviation ~~minimum~~pool ~~order~~manager ~~quantities following~~have ~~consolidation~~indicated inthat the ~~industry,~~level ~~periods~~ of ~~intensified~~business written in a given period will vary ~~competitive~~due ~~pressures~~to ~~for~~changes ~~product~~in ~~from~~market ~~suppliers,~~conditions and ~~intensifying~~ ~~competitive~~their ~~pressures~~respective ~~among~~managements’ ~~service~~assessments ~~centers~~of ~~for~~the adequacy ~~remaining~~of ~~domestic~~premium ~~business~~rates.

In Written ~~last~~primary ~~year’s Form 10-K it~~insurance ~~was~~premiums ~~reported~~decreased ~~that~~by ~~the~~$0.3 million ~~severity~~(3.1%) offor ~~the~~2010 ~~impact~~and ofby ~~the foregoing~~$7.9 ~~factors~~million on(44.2%) ~~Wesco’s~~for ~~industrial segment was demonstrated by the significant decline in sales volume~~2009, inand ~~terms~~earned ofprimary ~~pounds sold,~~insurance ~~from~~premiums andecreased ~~average~~by ~~of 68~~$2.1 million ~~pounds annually over~~(17.6%) ~~the~~for ~~three-year~~2010 ~~period~~and ofby ~~1998 through 2000, to an average of 39~~$8.3 million ~~pounds~~(40.7%) ~~annually~~ for ~~the three-year period of 2006 through 2008. By the second half of 2008~~2009, itfrom ~~became apparent that~~ the ~~economy~~corresponding ~~had~~prior ~~begun~~year ~~to slip into a recession~~figures. ~~Recessionary~~ ~~conditions significantly intensified throughout~~These ~~2009,~~fluctuations ~~and~~related ~~sales~~essentially ~~volume fell~~ to ~~24.4 million~~KBS’s ~~pounds,~~discontinued ~~34% below~~line ~~the volume~~ of ~~2008~~bank ~~and~~deposit ~~less~~guarantee ~~than half the volume that Precision Steel had sold thirty years earlier~~bonds, ~~when Wesco~~ ~~acquired~~discussed it in ~~1979~~Item 1, Business.

~~The~~ Management ~~industrial~~believes ~~segment~~that ~~has~~“underwriting ~~strived~~gain toor ~~continually~~loss” ~~improve~~is ~~its gross~~an ~~profit~~important ~~margins~~measure ~~(revenues,~~of ~~less~~financial performance ~~cost~~ of ~~products~~insurance ~~and services),~~companies. ~~which~~When ~~were~~stated ~~16.8%,~~as ~~15.7%~~a ~~and~~percentage, ~~15.5%~~the sum of ~~revenues~~insurance ~~for 2009~~losses, ~~2008~~loss adjustment expenses and ~~2007~~underwriting expenses, ~~determined~~divided onby ~~a last-in~~premiums, ~~first-out~~ ~~(“LIFO”)~~gives ~~basis~~the ~~with~~combined ~~respect~~ratio. toA combined ~~cost~~ratio of ~~products~~ ~~sold.~~less Asthan ~~competition~~100% ~~for~~connotes ~~sales~~an ~~has~~underwriting ~~intensified~~profit ~~in recent~~and ~~years,~~a ~~selling~~combined ~~prices~~ratio ~~have~~of ~~been determined more as a~~greater ~~function~~than of100% ~~current~~connotes ~~replacement~~an ~~costs~~underwriting ~~than previously~~loss. ~~Following recessionary-driven~~The ~~decreases~~ratio inis ~~worldwide~~figured ~~demand~~on ~~during~~a ~~the current~~pre-tax ~~year,~~basis. ~~the~~Underwriting results ~~pricing~~ of ~~raw~~Wesco’s ~~materials,~~insurance ~~which~~segment ~~reached historic~~have ~~highs~~generally inbeen ~~2008~~favorable, ~~declined~~but inhave ~~2009~~fluctuated tofrom ~~pricing levels of~~year ~~earlier~~to ~~periods.~~year ~~Thus,~~for invarious ~~2009~~reasons, ~~the~~including ~~combination~~competitiveness of ~~lower~~pricing ~~selling prices and decreased volume resulted~~ in aterms ~~$3.1 million reduction~~ of ~~gross~~premiums ~~profit,~~charged ~~from $9.5 million realized by~~for ~~the~~risks ~~industrial~~assumed, ~~segment both in 2007~~ and ~~2008,~~volatility ~~to $6.4 million~~of inlosses ~~2009~~incurred.

~~The~~ Reinsurance ~~segment’s~~generated ~~business~~pre-tax ~~activities~~underwriting ~~require~~gains ~~a base~~ (losses) of ~~operations~~ ~~supported~~$13.8 million, ~~by significant fixed operating costs~~$16.0 million ~~The deterioration of the industrial segment’s pre-tax~~ and ~~net~~ ~~operating~~($2.2 million), ~~results~~ for ~~2009 resulted principally from the decrease in revenues~~2010, ~~which~~2009 ~~resulted~~and infor ~~the reduction in gross profit~~2008, ~~in terms of dollars available to absorb the operating costs~~respectively, ~~explained~~representing ~~above,~~combined ~~despite~~ratios ~~management’s~~of ~~ongoing~~95.0%, ~~efforts~~94.9% toand ~~trim expenses aggressively~~101.0%. ItThe isforegoing ~~not~~figures ~~yet~~included ~~clear~~pre-tax ~~when the~~underwriting ~~effects~~gains of(losses) under the ~~weak economic environment will abate, but~~ ~~management~~Swiss ~~continues~~Re tocontract ~~strive~~of ~~to reduce costs and expenses where feasible~~$10.7 million, to$12.6 million ~~lessen the downside, while maintaining exceptional customer service~~ and ~~hoping ultimately to return the segment to profitability~~($5.4 million).

During 2010, several events occurred which produced large catastrophe losses for the property casualty industry, notably the Chilean earthquake, European winter storm Xynthia, the loss of the ~~Unrelated~~Deepwater Horizon oil rig in the Gulf of Mexico, the New Zealand earthquake in September, and the Australian flood that began in December. Underwriting results under the Swiss Re contract for 2010 reflect estimated losses of $31.3 million, before taxes, related to those events. Loss estimates ~~Business~~relating ~~Segment~~to ~~Operations~~the New Zealand earthquake were based significantly on, and the Australian flood, were based entirely on, Wes-FIC management’s assessment of publicly available information. Underwriting results under the contract for 2010 also reflect favorable pre-tax reserve development of $4.7 million attributed to accident year 2009 and $2.3 million related to accident year 2008. During the third quarter of 2008, Hurricanes Gustav and Ike struck the Caribbean and the Gulf coast region of the United States, also producing large catastrophe losses. The underwriting figures for 2008 included Wes-FIC’s estimate that its share of Swiss Re’s losses from those events was $13.5 million, before taxes, based entirely on Wes-FIC management’s assessment of publicly available information. Pre-tax underwriting results under the contract for 2009 include favorable loss development of $12.0 million in recognition of more favorable underwriting results for 2008 than had been reflected in Wes-FIC’s estimate of Swiss Re’s results at the end of 2008. Wes-FIC, for 2009, reserved for Swiss Re losses and loss expenses at a lower rate than for 2008 in part based on the lack of major catastrophes in 2009 and in part based on the reported performance by Swiss Re. Underwriting results under the contract also reflect the effects from the fluctuating value of the U.S. Dollar relative to other currencies in which Swiss Re conducts much of its business. To date, these

20 Realized gains and losses on Wesco’s investments have fluctuated in amount from year to year, sometimes impacting net income significantly. Amounts and timing of these realizations have no predictive or practical analytical value. Wesco’s investments are carried at fair value, and unrealized gains and losses are reflected, net

fluctuations ofhave ~~deferred~~not ~~income~~been ~~tax~~significant. ~~effect,~~Wesco indoes ~~the~~not ~~unrealized~~hedge ~~appreciation component~~against ofsuch ~~other comprehensive income~~fluctuations, inrecognizing ~~its~~that ~~shareholders’~~foreign ~~equity.~~exchange ~~When~~risk ~~gains~~is oran ~~losses~~inherent ~~are~~part ~~realized, due to sale~~ of ~~securities~~assuming orrisks ~~other~~denominated ~~triggering events, they are credited or charged to the consolidated statement of income; generally,~~ in ~~Wesco’s~~other ~~case~~currencies, ~~there has been little effect on~~which ~~total~~it ~~shareholders’~~is ~~equity —~~willing ~~essentially only a transfer from net unrealized appreciation~~ to ~~retained earnings~~retain. ~~Wesco’s consolidated earnings contained net realized investment gains, after taxes, of $4.6 million for 2008 and $15.8 million for 2007; no gains or losses were realized in 2009.~~

~~Management’s~~ Underwriting ~~principal~~gains ~~goal~~from isthe toaviation-related ~~maximize~~reinsurance ~~gain~~contracts ~~in Wesco’s~~were ~~intrinsic~~$3.1 million, ~~business~~$3.4 million ~~value~~and ~~per~~$3.2 million, ~~share~~before ~~over~~taxes, ~~the~~for ~~long term.~~2010, ~~Accounting~~2009 ~~consequences~~and do2008. ~~not~~Underwriting ~~influence~~results ~~business~~often ~~decisions.~~fluctuate ~~There~~from isperiod noto ~~particular~~period. ~~strategy~~The asseverity tocomponent ~~the timing~~ of ~~sales~~ ofaviation-related ~~investments.~~losses ~~Investments~~tends ~~may~~to be ~~sold for a variety of~~ ~~reasons~~volatile, ~~including~~especially ~~(1) the~~with ~~belief~~respect ~~that~~to ~~prospects~~losses ~~for~~incurred ~~future appreciation~~during of a ~~particular~~single ~~investment~~reporting ~~are~~period. ~~less~~Included ~~attractive than~~in the ~~prospects for reinvestment of the after~~pre-tax ~~proceeds~~underwriting ~~from its~~gains ~~sale, or (2) the desire to generate funds~~ for ~~an acquisition~~each oryear ~~repayment~~was ofnet ~~debt.~~favorable ~~Investment~~prior ~~gains~~period ~~may~~reserve ~~also derive~~development ~~from non-cash exchanges~~ of ~~securities for other~~ ~~investment~~$3.4 million, ~~securities~~$3.5 million asand a$4.2 million, ~~result~~in of2010, ~~merger~~2009 ~~activity~~and ~~involving the investees~~2008.

~~Other~~ Primary ~~nonsegment~~insurance ~~items~~activities ~~typically~~resulted ~~include~~in ~~mainly~~pre-tax underwriting gains (1losses) ~~rental~~of $2.9 million, ~~income~~($4.9 million) ~~from~~and ~~owned~~($2.4 million), ~~commercial~~for ~~real~~2010, ~~estate~~2009 and (2008. These figures represented combined ratios of 71.2%, 140.2% and 111.6%. The frequency and severity of primary insurance losses tend to be volatile. Not only do the foregoing figures reflect net favorable (unfavorable) ~~dividend~~pre-tax loss development of $5.9 million, ($3.4 million) and ~~interest~~($0.4 million) ~~income~~for ~~from~~the ~~marketable~~respective ~~securities~~years, but the 2009 and ~~cash~~2008 figures also reflect pre-tax losses of $2.6 million ($1.7 million, after taxes) and ~~equivalents~~$6.9 million ~~owned~~($4.7 million, ~~outside~~after taxes), respectively, from the ~~insurance~~FDIC’s ~~subsidiaries,~~seizure ~~reduced~~of byseveral failed ~~real~~banks ~~estate~~that ~~and~~had ~~general~~portions ~~and~~of ~~administrative~~their ~~expenses~~deposits insured by KBS. ~~The~~There ~~2009~~were no such losses in 2010. As the ~~figure~~FDIC ~~also~~liquidates ~~included~~the anassets ~~impairment~~of ~~loss~~failed banks, it distributes funds to the bank’s creditors and owners of deposits in excess of FDIC insurance limits, including KBS (by right of subrogation). KBS’s pre-tax underwriting results for 2010 and 2009 also reflect $90.57 million ( and $61.2 million ($0.4 million and $0.8 million, after taxes), onrespectively, ~~real~~recovered ~~estate~~from ~~held~~the ~~for~~FDIC. ~~sale~~Additional recoveries, if any, will be recorded when received.

KBS operates with few employees and from modest offices, and its ongoing operations require a *basic *level *of *services with annual costs that do not lend themselves to downsizing nearly in proportion to the significant reduction in revenues beginning late in 2008 which resulted from the discontinuation of the deposit-guarantee bond line of insurance. Underwriting results of future periods will likely continue to reflect the disproportionately higher level of operating expenses to revenues, as in 2010 and 2009, unless and until KBS is able to replace the premiums from deposit guarantee bonds it no longer writes, with other premium revenues.

The profitability of a reinsurance or insurance arrangement is better assessed after all ~~Consolidated~~losses ~~revenues,~~and expenses ~~and~~have ~~net~~been ~~income~~realized, ~~reported~~perhaps many years after the coverage period, rather than for any ~~period~~ ~~are~~given ~~not~~reporting ~~necessarily~~period. ~~indicative~~No oftrends ~~future~~have ~~results~~recently inbeen ~~that they~~identified ~~are~~which ~~subject~~directly relate to losses, ~~significant~~other ~~variations~~than inperiodic ~~amount~~effects ~~and~~from ~~timing of~~increasing competition (1causing declining premium rates) ~~participations~~, fluctuations in ~~reinsurance~~exchange ~~contracts~~rates ~~with members~~ of ~~the~~foreign ~~Berkshire~~currencies ~~Insurance~~relative ~~Group,~~to ~~such~~the asU.S. ~~the~~dollar ~~quota-share~~(which will affect ~~arrangement~~the ~~with~~underwriting ~~NICO~~results ~~described~~under inthe ~~Item 1,~~Swiss ~~Business~~Re contract), ~~which significantly~~and ~~increased~~ the ~~business~~generally ofweak ~~the~~economy. Losses incurred by Wesco’s insurance segment ~~beginning~~, inby ~~2008~~their very nature, ~~(2) investment~~occur ~~gains~~unexpectedly and ~~losses,~~fluctuate orfrom ~~(3) unusual~~period ~~nonoperating~~to ~~items.~~period Inin ~~addition,~~both ~~consolidated revenues,~~frequency ~~expenses~~ and ~~net~~magnitude. ~~income~~Wesco’s ~~are~~insurers ~~subject~~cede tominimal ~~external~~amounts of their ~~conditions~~direct business, ~~such~~and as ~~terrorist~~a ~~activity,~~result ~~and~~underwriting ~~changes~~results inmay ~~the economy~~be volatile.

~~Wesco~~ Since isSeptember 11, ~~not~~2001, ~~presently~~the ~~suffering~~insurance ~~from~~industry ~~inflation,~~has ~~but~~been ~~each~~particularly ofconcerned about its ~~business~~exposure ~~operations~~to ~~has~~claims ~~potential~~resulting ~~exposure.~~from ~~Large~~acts ~~unanticipated changes~~of interrorism. ~~the~~In ~~rate~~spite of ~~inflation~~partial ~~could~~relief ~~adversely~~provided ~~impact~~to the insurance ~~business,~~industry ~~because~~by ~~premium~~the ~~rates~~Terrorism ~~are~~Risk ~~established~~Insurance ~~well in~~Act, ~~advance~~enacted ofin ~~expenditures.~~2002 ~~Precision~~and ~~Steel’s~~amended ~~businesses~~by the ~~are~~Terrorism ~~competitive~~Risk ~~and~~Extension ~~operate~~Act onof ~~tight~~2005, ~~gross~~and ~~profit~~the ~~margins, making~~Terrorism ~~their~~Risk ~~earnings~~Insurance ~~susceptible~~Program toReauthorization ~~inflationary and~~Act ~~deflationary~~of ~~cost~~2007, ~~changes;~~Wes-FIC ~~the~~is ~~impact,~~exposed ~~though~~to ~~not~~insurance ~~material~~losses ~~in relation~~from toterrorist ~~Wesco~~events. Wes-FIC’s ~~consolidated~~(and ~~net~~thus ~~income, may be~~Wesco’s) ~~significant~~exposure to ~~that~~such oflosses ~~the~~from ~~industrial~~an ~~segment,~~insurance ~~due~~standpoint ~~particularly to~~cannot ~~the~~be ~~segment’s~~predicted. ~~use~~Management, ofhowever, ~~LIFO~~does not ~~inventory~~believe ~~accounting.~~it Aslikely ~~we continue~~that, toon ~~endure~~a ~~the~~worst-case ~~ongoing~~basis, ~~effects~~Wesco’s ofshareholders’ ~~the~~equity ~~weak~~would ~~economic~~be severely ~~environment,~~impacted ~~management~~by ~~will~~future ~~continue~~terrorism-related toinsurance ~~exercise~~losses ~~judgment~~under ~~in all~~reinsurance ~~aspects~~or ofinsurance ~~Wesco’s~~contracts currently ~~operations,~~in ~~with~~effect. ~~the~~Losses ~~goal~~from ~~of maximizing~~terrorism ~~shareholder~~could, ~~value~~however, ~~over~~significantly ~~the~~impact ~~long~~Wesco’s ~~term~~periodic earnings.

~~OFF-BALANCE~~ Other ~~SHEET~~industry concerns in recent years have included exposures to losses relating to ~~ARRANGEMENTS~~environmental ~~AND~~contamination ~~CONTRACTUAL~~and ~~OBLIGATIONS~~asbestos. Management currently believes Wesco’s exposures to such losses is minimal.

21 Neither Wesco nor any of its subsidiaries has off-balance sheet arrangements other than the unrecorded contractual obligations discussed below. Nor do they have any insurance obligations for which estimated provisions have not been made in the accompanying consolidated financial statements.

Management also believes that recent legislative attempts to address certain issues generally referred to as “climate change” are unlikely to have a material effect on Wesco’s businesses. 29

~~will~~ Following beis ~~reflected~~a ~~in future periods as the goods are delivered or services provided. A~~ summary of ~~contractual~~investment ~~obligations~~income asproduced ~~of December 31,~~by ~~2009~~Wesco’s ~~follows.~~insurance ~~(Amounts~~segment ~~are~~ (in thousands. of dollars).

			Payments Due
	Year Ended December 31,
	Total		2010		2011-2012		2013-2014		Thereafter
	2010		2009		2008
Notes payable, including interest	$	28,295	$	28,095	$	—	$	200	$	—
Investment income, before taxes	$	75,643	$	67,253	$	77,914
Operating lease obligations		108,090		27,755		41,544		22,113		16,678
Income taxes		13,432		11,472		13,640
Payment of insurance losses and loss adjustment expenses*		343,466		102,740		116,620		77,947		46,159
Investment income, after taxes	$	62,211	$	55,781	$	64,274
Purchase obligations, other than for capital expenditures		10,536		5,668		2,786		1,608		474
Purchase obligations for capital expenditures**		1,231		1,231		—		—		—
Other, principally deferred compensation		5,898		196		288		267		5,147
Totals	$	497,516	$	165,685	$	161,238	$	102,135	$	68,458

* Investment ~~Amounts~~income of the insurance segment comprises dividends and ~~timing~~interest earned principally from the investment of ~~payments~~shareholder ~~are~~capital ~~significantly~~(including ~~dependent~~reinvested onearnings) ~~estimates.~~as ~~See~~well ~~Critical~~as ~~Accounting~~float (principally, ~~Policies~~unpaid losses and ~~Practices~~unearned ~~below.~~premiums, **less ~~Principally~~premiums and reinsurance receivables, ~~construction~~and deferred policy acquisition costs). ofFloat, MSwhich ~~Property’s~~amounted ~~luxury~~to ~~condominium~~$76 million ~~development~~at yearend 2007, increased to $164 million at yearend 2008, $264 million at yearend 2009 and $339 million at yearend 2010. The increases are attributable principally to the Swiss Re contract.

~~Credit~~ Wesco’s ~~markets~~insurance ~~have~~segment ~~become~~redeployed ~~restricted~~$205 million asto apurchase ~~consequence~~shares of ~~the~~10% cumulative ~~ongoing~~perpetual ~~worldwide~~preferred ~~credit~~stock ~~crisis.~~of AsThe aGoldman ~~result~~Sachs Group, Inc. in the ~~availability~~fourth quarter of 2008 and $200 million of ~~credit~~5% tosenior ~~corporations~~notes ~~has~~of ~~declined~~Wm. ~~significantly~~Wrigley ~~and~~Jr. Company in the fourth quarter of 2009. Not only did interest rates ~~for~~soften ~~new~~during ~~issues~~2008 ~~have~~and ~~increased~~2009, ~~relative~~and tohold at relatively low levels throughout 2010, but ~~government~~Wells ~~obligations~~Fargo & Company and US Bancorp, ~~even~~in ~~for~~which ~~companies~~Wesco’s ~~with~~insurance ~~strong~~segment ~~credit~~has significant ~~histories~~investments, ~~and~~reduced ~~capital~~their quarterly dividend distributions to ~~withstand~~shareholders ~~these~~beginning ~~conditions.~~in ~~Management~~the second ~~believes~~quarter ~~that~~of ~~Wesco~~2009. ~~currently~~The ~~maintains~~insurance ~~ample~~segment’s ~~liquidity~~pre-tax todividend ~~cover~~income decreased by $1.9 million for ~~its~~2010, ~~contractual~~having ~~obligations~~decreased ~~and~~by ~~provide~~$1.0 million for ~~contingent~~2009, ~~liquidity~~and pre-tax interest income increased by $10.3 in ~~needs~~2010, following a decrease of $9.9 million in 2009, from the corresponding prior year figures.

Wesco’s insurance subsidiaries, as a matter of practice, maintain liquidity in amounts which exceed by wide margins expected near-term requirements for payment of claims and expenses. As a ~~CRITICAL~~result, ~~ACCOUNTING~~it would be unlikely that any unanticipated payment of claims or expenses would require the ~~POLICIES~~liquidation ~~AND~~of ~~PRACTICES~~investments at a loss. Wesco does not attempt to match long-term investment maturities to estimated durations of claim liabilities.

~~Wesco’s~~ Reference ~~consolidated~~is ~~financial~~made ~~statements~~to ~~are prepared in conformity with accounting principles generally accepted in~~ the ~~United~~ ~~States~~table ~~(“GAAP”). In 2009, the Financial Accounting Standards Board established the FASB Accounting Standards Codification (the “Codification” or “ASC”) as the source~~ of ~~GAAP~~contractual ~~through~~obligations ~~the~~appearing integration of then current accounting standards from several sources into a single source. The Codification did not affect the content or application of GAAP that was in effect and had no material impact on ~~our~~page ~~consolidated financial statements~~26. ~~The significant~~ accounting policies and practices followed by Wesco are set forth in Note 1 to the accompanying consolidated financial statements. Following are the accounting policies and practices considered by Wesco’s management to be critical to the determination of consolidated financial position and results of operations.

22 ~~Use of Estimates in Preparation of Financial Statements~~

Furniture Rental Segment 30

~~does~~ Following ~~not~~is ~~believe~~a ~~such~~summary ~~changes~~of inthe ~~estimates~~results ~~would~~of ~~have~~operations ~~a materially~~of ~~adverse~~CORT, ~~effect on shareholders~~Wesco’s ~~equity,~~furniture ~~they~~rental segment. ~~could~~(Amounts ~~produce~~are ~~a material effect on results of operations~~ in ~~a reporting period~~thousands.)

Investments


	Year Ended December 31,
	2010		2009			2008
Revenues:
Furniture rentals	$	309,439	$	312,234		$	340,162
Furniture sales		51,075		61,191			61,800
Service fees		6,937		6,771			8,081

		367,451		380,196			410,043

Cost of rentals, sales and fees		85,837		99,042			97,997
Selling, general and administrative expenses		262,627		283,590			287,498
Interest expense		504		640			1,798

		348,968		383,272			387,293

Income (loss) before income taxes		18,483		(3,076	)		22,750
Income taxes		7,003		(1,717	)		7,006

Segment net income (loss)	$	11,480	$	(1,359	)	$	15,744

~~The~~ Furniture ~~appropriate~~rental ~~classifications~~revenues ofdecreased ~~investments~~$2.8 million in(0.9%) ~~securities~~for 2010, after decreasing $27.9 ~~with~~million ~~fixed~~(8.2%) ~~maturities~~for ~~and~~2009 ~~marketable~~from ~~equity~~those ~~securities~~of ~~are~~the respective prior years. Management believes that “core ~~established~~rental atrevenues,” ~~the~~a ~~time~~measurement ofthat ~~purchase~~excludes revenues from trade shows and ~~reevaluated~~locations asnot ofin operation throughout each period, is an important statistic in analyzing comparable revenue levels ~~balance~~from ~~sheet~~different ~~date~~periods. ~~There~~Core ~~are~~rental ~~three~~revenues ~~permissible~~decreased ~~classifications:~~6.1% for 2010 after decreasing 17.8% for ~~held-to-maturity, trading,~~2009; ~~and~~however, ~~when~~core ~~neither~~rental ofrevenues ~~those~~increased ~~classifications~~by ~~is applicable, available-for-sale~~9. ~~Trading~~2% ~~investments~~for ~~are~~the ~~carried~~fourth atquarter ~~fair~~of ~~value~~2010 ~~and~~compared ~~include~~with ~~securities~~the ~~acquired~~corresponding ~~with~~2009 figure. Management also views the ~~intent~~number toof ~~sell~~furniture inleases ~~the~~outstanding ~~near~~as an ~~term~~important indicator for future revenues. ~~Held —~~ ~~to-maturity~~The ~~investments~~number ~~are~~of ~~carried~~furniture leases outstanding at yearend ~~amortized~~2010 ~~cost~~increased 7.2%, ~~reflecting~~following ~~the~~a ~~ability~~decline ~~and~~of ~~intent~~24.9% toin ~~hold~~2009. ~~the~~Customer demand for rental furniture ~~securities~~decreased tosignificantly ~~maturity.~~during ~~All~~the ~~other~~recent ~~investments~~economic ~~are~~recession; ~~classified~~however, ~~as available-for-sale and~~management ~~carried~~is athopeful ~~fair~~that the ~~value,~~improvements ~~with~~in ~~unrealized~~quarterly ~~gains~~core rental revenues and ~~losses,~~in ~~net~~furniture leases outstanding indicate ofthat ~~applicable~~customer ~~deferred~~demand ~~income~~has ~~taxes,~~begun ~~reported~~to asrecover afrom ~~separate component~~the ofdepressed ~~shareholders’~~levels ~~equity~~reached in 2009.

~~Realized~~ Furniture ~~investment~~sales ~~gains~~revenues ~~and~~decreased losses, determined on a specific-identification basis, are included in the consolidated statement of income, as are provisions for other-than-temporary declines in market or fair value of equity investments, when applicable$10. ~~With respect to an investment in a fixed-maturity security, an other-than-temporary impairment would be recognized if the Company (a)~~1 ~~intends to~~million ~~sell or expects to be required to sell the security before amortized cost is recovered or~~ (b16.5%) ~~does~~ ~~not~~for ~~expect~~2010 ~~to ultimately~~from ~~recover~~those ~~the~~of ~~amortized~~2009, ~~cost basis even if it does not~~after ~~intend~~having tobeen ~~sell~~relatively ~~the~~unchanged ~~security. Losses under (a) would be recognized~~ in ~~earnings.~~2009 ~~Under~~from ~~(b) any~~those ~~credit loss component would be recognized in earnings and any difference between fair value and the amortized cost basis, net~~ of the ~~credit~~prior ~~loss, would~~year. beThe ~~reflected~~decrease in ~~other comprehensive income. Factors~~furniture ~~considered~~sales infor ~~judging whether an impairment is other than temporary include:~~ the ~~financial~~current ~~condition,~~year ~~business~~was ~~prospects and~~attributable ~~creditworthiness~~principally ofto the ~~issuer,~~closing ~~the length~~ of ~~time~~eight ~~that~~furniture ~~fair~~clearance ~~value~~centers ~~has~~during ~~been less than cost,~~ the ~~relative~~year ~~amount of the decline,~~ and ~~Wesco’s~~a ~~ability~~lower ~~and~~level ~~intent~~of toinventory ~~hold~~available ~~the investment~~for ~~until the fair value recovers~~sale.

~~See~~ Service ~~Notes 2~~fees ~~and~~revenues 8for to2010, ~~Wesco’s~~2009 ~~consolidated~~and ~~financial statements~~2008 ~~for~~have ~~additional~~not ~~information~~been ~~as to Wesco’s investments~~significant.

Cost of rentals, sales and fees amounted to 23.4% of revenues for 2010, 26.1% for 2009 and 23.9% for 2008. The decrease in the cost percentage for 2010 was due principally to a decrease in ~~Fair~~the depreciation expense component, attributable mainly to lower average furniture inventory levels ~~Value~~in the current year, as well as an increase in profit margin on furniture sold. The increase in the percentage for 2009, from the corresponding 2008 figure, was due principally to higher depreciation expense on rental furniture acquired in the acquisition of the Aaron Rents business division in November 2008 and to lower profit margins on furniture sold.

~~Fair~~ Selling, ~~value~~general, isadministrative ~~defined~~and asinterest ~~the~~expenses ~~exchange price that would be received for an asset or paid to transfer a liability~~ (an“operating ~~exit price~~expenses”) infor the ~~principal~~segment were or$263.1 million ~~most advantageous market~~ for ~~the asset~~2010, ordown ~~liability~~7.4% infrom ~~an orderly transaction between market participants on~~ the ~~measurement date~~$284.2 million ~~The~~incurred ~~standard establishes a framework~~ for ~~measuring fair value based on observable~~2009, ~~independent~~ ~~market~~following ~~inputs and unobservable market assumptions.~~a ~~Following~~decrease ~~is a description~~ of ~~the~~1.8% ~~three~~from ~~levels of inputs that~~the ~~may be used to measure fair value:~~

23 Level 1 inputs represent unadjusted quoted prices in active markets for identical assets or liabilities. Substantially all of Wesco’s equity investments are traded on an exchange in active markets and fair value is based on the closing prices as of the balance sheet date.

~~Level~~ $289.3 million ~~inputs~~incurred ~~are~~for ~~unobservable~~2008. ~~inputs~~The ~~used~~decreases in ~~the measurement~~operating ofexpenses ~~assets.~~principally ~~Measurement~~reflect lower ofoccupancy ~~the~~and ~~fair values of the non~~employee-~~exchange~~related ~~traded~~expenses ~~investments~~as ~~are based on~~ a ~~standard~~result ~~warrant valuation~~of ~~model~~management’s orcost-cutting ~~discounted cash flow model, as applicable,~~initiatives. ~~which~~Management ~~are~~intends ~~techniques believed~~ to becontinue ~~widely~~its ~~used~~focus byon ~~other market participants. Significant assumptions inherent in~~ the ~~warrant valuation~~containment ~~model include an estimated stock price volatility factor, dividend and interest rate assumptions, and the estimated term~~ of ~~the~~operating ~~warrants~~expenses.

Income (loss) before income taxes for the furniture rental segment amounted to $18.5 million for 2010, ($3.1 million) for 2009, and $22.8 million for 2008. The improvement in profitability in 312010 was due principally to the reduction in fixed operating expenses, explained above. The significant decline in pre-tax income for 2009 was due primarily to a dramatic decrease in revenues, principally attributable to the effect of the weak economic environment, coupled with a level of expenses that could not be sufficiently reduced to match the depressed revenue level.

~~Significant~~Industrial ~~assumptions used in a discounted cash flow model~~Segment ~~include the discount rate and estimated duration of the instrument.~~

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

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


	Year Ended December 31,
	2010		2009			2008
Revenues, principally sales and services	$	48,266	$	38,380		$	60,872

Cost of sales and services		38,408		31,950			51,323
Selling, general and administrative expenses		8,225		7,435			7,948

		46,633		39,385			59,271

Income (loss) before income taxes		1,633		(1,005	)		1,601
Income taxes		554		(357	)		759

Segment net income (loss)	$	1,079	$	(648	)	$	842

The operations of Wesco’s industrial segment are subject to economic cycles and have suffered a variety of ongoing difficulties for a number of years, including a shift of production from ~~Revenue~~domestic to overseas facilities, (resulting in a general decline in the number of orders placed and ~~Recognition~~a trend towards smaller-sized orders), the unprecedented ability of the major steel producers in recent years to raise prices and establish minimum order quantities following consolidation in the industry, periods of intensified competitive pressures for product from suppliers, and intensifying competitive pressures among service centers for the remaining domestic business.

~~Insurance~~ In ~~premiums~~last ~~are~~year’s ~~stated~~Form ~~net~~10-K ofit ~~amounts~~was ~~ceded~~reported tothat ~~reinsurers and~~the ~~are~~severity ~~recognized~~of asthe ~~earned~~impact ~~revenues~~of inthe ~~proportion~~foregoing factors toon ~~the insurance~~Wesco’s ~~protection~~industrial ~~provided,~~segment ~~which~~was indemonstrated ~~most~~by ~~cases~~the issignificant ~~pro~~decline ~~rata over~~in ~~the~~sales ~~term~~volume, in terms of ~~each~~pounds ~~contract.~~sold, ~~Premiums~~from ~~are~~an ~~estimated~~average ~~with respect~~of to68 million ~~certain~~pounds ~~reinsurance~~annually ~~contracts~~over ~~written~~the ~~during~~three-year ~~the~~ period of ~~where~~1998 ~~reports~~through ~~from~~2000, ~~ceding~~to ~~companies~~an ~~for~~average ~~the~~of ~~period~~39 million ~~are not~~pounds ~~contractually~~annually ~~due~~for ~~until~~the ~~well~~three-year ~~after~~period ~~the~~of ~~balance~~2006 through ~~sheet date~~2008. ~~Unearned~~ ~~insurance~~The ~~premiums~~recent ~~are~~recessionary ~~deferred~~conditions inhave ~~the~~further ~~liability section~~caused of the ~~consolidated~~average ~~balance~~volume ~~sheet.~~of ~~Certain~~steel products ~~costs~~sold ~~of acquiring~~by ~~insurance~~the ~~premiums —~~steel ~~commissions,~~service ~~premium taxes,~~segment ~~and~~during ~~other —~~the ~~are~~most ~~deferred~~recent ~~and~~three-year ~~charged~~period to(2008-2010) ~~income~~to asdecrease ~~the~~to ~~premiums~~30.7 million ~~are earned~~pounds.

~~Furniture~~ Sales ~~rentals~~and ~~are~~service ~~recognized~~revenues asof ~~revenue~~the ~~proportionately~~industrial ~~over~~segment for 2009 fell by $22.5 million (36.9%) ~~the~~from ~~rental~~those ~~contract~~of ~~period;~~2008, ~~rentals~~and ~~received~~volume, in ~~advance~~terms ~~are~~of pounds sold, fell by 34%, to 24.4 million pounds, less ~~deferred~~than inhalf the ~~liability~~volume ~~section~~that ofPrecision ~~the~~Steel ~~consolidated~~had ~~balance~~sold thirty years earlier, when Wesco acquired it in ~~sheet~~1979. ~~Related~~Segment ~~costs~~sales ~~comprise~~and ~~the~~service ~~main~~revenues ~~element~~for of2010 ~~cost~~improved by $9.9 million (25.8%) over those of ~~products~~2009, and ~~services~~volume ~~sold~~improved onby 25.8%, to 30.7 million pounds, 14.7% below the ~~consolidated~~volume ~~income~~as ~~statement~~recently as ~~and~~for ~~include~~2008. ~~depreciation~~Management ~~expense,~~attributes ~~repairs~~these ~~and~~fluctuations ~~maintenance~~principally ~~and~~to recent recessionary conditions ~~inventory~~from ~~losses~~which the industrial segment has not yet fully recovered.

24 Revenues from product sales are recognized upon passage of title to the customer, which coincides with customer pickup, product shipment, delivery or acceptance, depending on the sales arrangement. Revenues from services performed are recognized at the completion of the elements specified in the contract, which typically coincides with their being billed.

The industrial segment has continually strived to improve its gross profit margins (revenues, less cost of products and services), which were 20.4%, 16.8% and 15.7% of revenues for 2010, 2009 ~~Losses~~and 2008, determined on a last-in, first-out (“LIFO”) basis with respect to cost of products sold. Following recessionary-driven decreases in worldwide demand during 2009, the pricing of raw materials, which reached historic highs in 2008, declined to pricing levels of earlier periods, where they remained relatively steady throughout 2010. In 2009, the combination of decreased volume and ~~Loss~~lower selling prices resulted in a $3.1 million reduction of gross profit, from $9.5 million ~~Adjustment~~realized ~~Expenses~~by the industrial segment in 2008, to $6.4 million in 2009. Gross profit increased by $3.4 million for 2010. The improvement was attributable principally to the increase in sales volume resulting from improving economic conditions.

~~Liabilities~~ The ~~for~~industrial ~~unpaid~~segment’s ~~insurance~~business ~~losses~~activities ~~and~~require ~~loss~~a ~~adjustment expenses~~base ~~represent estimates~~ of ~~the~~operations ~~ultimate~~supported ~~amounts payable~~by ~~under~~significant ~~property~~fixed ~~and~~operating ~~casualty~~costs. ~~reinsurance~~In ~~and~~2009, ~~insurance~~there ~~contracts related~~were tofewer ~~losses~~gross ~~occurring~~profit ondollars oravailable ~~before the balance sheet date.~~to ~~Liabilities~~absorb ~~for~~those ~~insurance~~costs, ~~losses~~while, ~~are~~in ~~comprised~~2010, ofgross ~~estimates~~profit ~~for reported~~dollars ~~claims~~exceeded ~~(“case~~those ~~reserves”);~~costs. ~~and reserve~~Management ~~development~~continues onto ~~reported~~strive ~~claims~~to asreduce ~~well~~costs asand ~~estimates~~expenses ~~for~~where ~~claims that~~feasible, ~~have~~while ~~not~~maintaining ~~yet been reported (some of which may not be~~exceptional ~~reported~~customer ~~for~~service. ~~many~~The ~~years),~~segment’s ~~which~~operating ~~together~~results ~~are~~ also ~~referred~~reflected ~~to as “incurred~~litigation-~~but-not-reported”~~related ~~reserves~~expenses ~~(“IBNR”~~of ~~reserves)~~$0.6 million ~~The~~($0.4 million, ~~liability~~after ~~for~~taxes) ~~unpaid losses includes significant estimates~~ for ~~these~~2010 ~~claims~~ and ~~includes~~$0.3 million ~~estimates~~($0.2 million, ~~reported~~after bytaxes) for ~~ceding~~2008, ~~insurers.~~incurred ~~Loss~~in ~~reserve~~connection ~~estimates~~with ~~reflect~~the ~~past~~environmental ~~loss experience,~~matter ~~adjusted~~discussed asin ~~appropriate~~Note ~~when~~11 ~~losses~~to ~~are~~the ~~reasonably~~accompanying ~~expected~~consolidated tofinancial ~~deviate from experience~~statements.

~~Considerable~~Unrelated ~~judgment is required~~ to ~~evaluate~~Business ~~claims~~Segment ~~and~~Operations estimate claims liabilities in connection with reinsurance contracts. As further data become available, the liabilities are reevaluated and adjusted as appropriate. Additionally, claims, at each balance sheet date, are in various stages of the settlement process. Each claim is settled individually based upon its merits, and some take years to settle, especially if legal action is involved. Actual ultimate claims amounts are likely to differ from amounts recorded at the balance sheet date.

~~Depending~~ Realized gains and losses on, ~~the~~and ~~type~~other-than-temporary impairments (“OTTI”) of, ~~loss~~Wesco’s investments ~~being~~have ~~estimated~~fluctuated in amount from year to year, ~~the~~sometimes impacting net income significantly. Amounts and timing of these realizations have no predictive or practical analytical value. Wesco’s investments are carried at fair value, and unrealized gains and losses are ~~amount~~reflected, net of ~~loss~~deferred ~~payments~~income ~~are~~tax ~~subject~~effect, toin athe ~~great~~unrealized ~~degree~~appreciation component of other ~~variability~~comprehensive ~~and~~income, in its shareholders’ equity. When gains or losses are ~~contingent~~realized, ~~among~~due to sale of securities or other ~~factors,~~triggering ~~upon~~events such as the determination that an OTTI is to be ~~timing~~recognized, ofthey are credited or charged to the ~~claim~~consolidated ~~reporting~~statement byof ~~cedants~~income; ~~and~~generally, ~~insureds~~in Wesco’s case, there has been little effect on total shareholders’ equity — essentially only a transfer from net unrealized appreciation or depreciation to retained earnings. Wesco’s consolidated earnings contained after-tax realized net investment gains of $4.2 million and ~~the~~OTTI ~~determination~~losses of $13.7 million for 2010, and ~~payment~~realized investment gains of ~~the~~$4.6 million ~~ultimate~~for ~~loss~~2008; ~~amounts~~no ~~through~~gains ~~the~~or ~~loss~~losses were realized in 2009.

Management’s principal goal is to maximize gain in Wesco’s intrinsic business value per share over the long term. Accounting consequences do not influence business decisions. There is no 32particular strategy as to the timing of sales of investments. Investments may be sold for a variety of reasons, including (1) the belief that prospects for future appreciation of a particular investment are less attractive than the prospects for reinvestment of the after-tax proceeds from its sale, or (2) the desire to generate funds for an acquisition or repayment of debt. Investment gains may also derive from non-cash exchanges of securities for other investment securities as a result of merger activity involving the investees.

Other nonsegment items typically include mainly (1) rental income from owned commercial real ~~adjustment~~estate ~~process.~~and ~~Judgments~~(2) dividend and ~~assumptions~~interest ~~are~~income ~~necessary~~from inequity securities and cash equivalents owned ~~projecting~~outside the ~~ultimate~~insurance ~~amounts~~subsidiaries, ~~payable~~reduced inby ~~the~~real ~~future~~estate ~~with~~and general and administrative expenses. ~~respect~~The 2010 figure also included expenses related to ~~loss~~Berkshire’s ~~events~~offer to acquire the shares of Wesco that ~~have~~it ~~occurred~~does not already own (discussed above), of $4.2 million ($2.7 million, after taxes), and the 2009 figures included impairment losses of $9.5 million ($6.2 million, after taxes), on real estate held for sale.

25 Provisions for losses and loss adjustment expenses are reported in the consolidated statement of income after deducting estimates of amounts that will be recoverable under reinsurance contracts. Reinsurance contracts do not relieve the ceding companies of their obligations to indemnify policyholders with respect to the underlying insurance contracts. Ceded reinsurance losses recoverable (“ceded reserves”) are reflected in the accompanying consolidated balance sheet as a component of accounts receivable.

~~Following~~* ~~are~~* ~~summaries~~* ~~of Wesco’s consolidated liabilities~~* for unpaid insurance losses and loss adjustment expenses and related reinsurance recoverables reflected in the Consolidated Balance Sheet. Wesco does not discount the amounts for time value, regardless of the length of the estimated claim tail. Amounts are in thousands.

	December 31,			December 31,
	2009			2008
Case reserves	$	121,389		$	61,757
IBNR reserves		222,077			153,511
Gross liability before ceded reinsurance		343,466			215,268
Ceded reserves		(19,288	)*		(17,914	)*
Net reserves	$	324,178		$	197,354

Consolidated revenues, expenses and net income reported for any period are not necessarily indicative of future results in that they are subject to significant variations in amount and timing of (1) participations in reinsurance contracts with members of the Berkshire Insurance Group, such as the quota-share arrangement with NICO described in Item 1, Business, which significantly increased the business of the insurance segment beginning in 2008, (2) investment gains and losses, (3) the possibility of OTTI losses, and (4) unusual nonoperating items. In addition, consolidated revenues, expenses and net income are subject to external conditions, such as terrorist activity, and changes in the economy.

* Wesco ~~Represents~~is ~~principally~~not presently suffering from inflation, ~~Wes-FIC~~but each of its business operations has potential exposure. Large unanticipated changes in the rate of inflation could adversely impact the insurance business, because premium rates are established well in advance of expenditures. Precision Steel’s ~~proportionate~~businesses ~~share~~are competitive and operate on tight gross profit margins, making their earnings susceptible to inflationary and deflationary cost changes; the impact, though not material in relation to Wesco’s consolidated net income, may be significant to that of ~~reinsurance~~the industrial ~~purchased~~segment, bydue particularly to the ~~aviation~~segment’s ~~pools~~use of LIFO inventory accounting.

~~Following~~OFF-BALANCE isSHEET aARRANGEMENTS ~~breakdown~~AND ofCONTRACTUAL ~~Wesco’s consolidated~~OBLIGATIONS liabilities for unpaid insurance losses and loss adjustment expenses and related reinsurance recoverables reflected in the Consolidated Balance Sheet at yearends 2009 and 2008. Amounts are in thousands.

	Gross Unpaid Losses				Net Unpaid Losses*
	Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,
	2009		2008		2009		2008
Swiss Re contract	$	246,596	$	127,215	$	246,596	$	127,215
Other reinsurance, principally aviation-related		80,170		73,356		61,152		55,442
KBS primary		16,700		14,697		16,430		14,697
Total	$	343,466	$	215,268	$	324,178	$	197,354

Neither Wesco nor any of its subsidiaries has off-balance sheet arrangements other than the unrecorded contractual obligations discussed below. Nor do they have any insurance obligations for which estimated provisions have not been made in the accompanying consolidated financial statements.

* Wesco ~~Net~~and ofits ~~reinsurance~~subsidiaries ~~recoverable~~have contractual obligations associated with ongoing business activities, which will result in cash payments in future periods. Certain obligations, such as notes payable, accrued interest, and ~~before~~unpaid ~~foreign~~insurance ~~currency~~losses ~~translation~~and ~~effects~~loss adjustment expenses, are reflected in the accompanying consolidated financial statements. In addition, Wesco and its subsidiaries have entered into long-term contracts to acquire goods or services in the future, which are not currently reflected in the consolidated financial statements and will be reflected in future periods as the goods are delivered or services provided. A summary of contractual obligations as of December 31, 2010 follows. (Amounts are in thousands.)

Included in other reinsurance losses in the foregoing table are $6.8 million at yearend 2009 and $5.1 million at yearend 2008, representing non-aviation reinsurance reserve amounts at those dates, consisting mainly of IBNR reserves relating to a quota-share contract that has been in runoff for more than 10 years, under which Wes-FIC continues to make loss payments. Such amounts reflected loss estimates reported by the ceding companies and additional IBNR reserves estimates by Wes-FIC management, which were mainly a function of reported losses from ceding companies, anticipated loss ratios for the contract period, and management’s


			Payments Due
	Total		2011		2012-2013		2014-2015		Thereafter
Notes payable, including interest	$	51,305	$	51,105	$	200	$	—	$	—
Operating lease obligations		107,934		26,659		39,291		23,308		18,676
Payment of insurance losses and loss adjustment expenses*		408,384		104,905		148,095		98,774		56,610
Purchase obligations, other than for capital expenditures		9,064		8,483		406		145		30
Purchase obligations for capital expenditures		4,379		1,324		1,638		1,417		—
Other, principally deferred compensation		6,782		169		339		314		5,960

Totals	$	587,848	$	192,645	$	189,969	$	123,958	$	81,276

33 * Amounts and timing of payments are significantly dependent on estimates. See Critical Accounting Policies and Practices below.

26 ~~judgment as to the loss reserving adequacy of the ceding companies. There is no reinsurance recoverable with respect to these reserves.~~

~~Reinsurance —~~ Credit ~~Historically, Wes-FIC’s~~markets ~~property~~have ~~and~~become ~~casualty~~restricted ~~loss~~as ~~reserves~~a ~~derive~~consequence ~~from individual~~of ~~risk,~~the ~~multi-line~~ongoing ~~and~~worldwide ~~catastrophe~~credit ~~reinsurance policies~~crisis. As ~~In 2008, Wes-FIC entered into~~ a ~~retrocession agreement with National Indemnity Company~~result, ~~(“NICO”),~~the aavailability ~~wholly owned insurance subsidiary~~ of ~~its~~credit ~~parent company, Berkshire Inc.,~~ to ~~assume~~corporations ~~10%~~has ofdeclined ~~NICO’s~~significantly ~~quota~~and ~~share reinsurance of~~interest ~~Swiss~~rates ~~Reinsurance~~for ~~Company~~new ~~and~~issues ~~its~~have ~~property-casualty~~increased ~~affiliates (“Swiss~~relative ~~Re”).~~to ~~Under~~government ~~this retrocession agreement~~obligations, ~~Wes-FIC~~ ~~assumed~~even 2%for ~~part~~companies ~~of NICO’s 20% quota share~~with ~~reinsurance~~strong ofcredit ~~all~~histories ~~Swiss~~and Recapital ~~property-casualty~~to ~~risks~~withstand ~~incepting over~~these aconditions. ~~five-year~~Management ~~period~~believes ~~beginning~~that ~~in 2008, on the same terms as~~Wesco ~~NICO’s~~currently ~~agreement~~maintains ~~with~~ample ~~Swiss~~liquidity ~~Re.~~to ~~Other~~cover ~~Wes-FIC~~its ~~reinsurance activities~~contractual inobligations ~~recent~~and ~~years~~provide ~~have~~for ~~consisted almost exclusively of~~contingent ~~participations~~liquidity ~~in aviation-related pools that are underwritten and managed by a wholly owned indirect subsidiary of Berkshire~~needs.

~~Losses~~CRITICAL ~~from~~ACCOUNTING ~~aviation~~POLICIES ~~coverages~~AND ~~generally have reasonably short~~PRACTICES tails with respect to the property components. The claim tail for the liability coverage can be somewhat longer, especially when litigation results. The case reserving process for aviation risks is believed to involve less uncertainty than for many other types of insurance, because loss events tend to become known and reported relatively soon after the events occur. The material judgments underlying the loss reserving by the aviation pools’ manager assume that future loss patterns (incurred and paid) will be similar to those of the past. The aviation pools’ manager establishes case and IBNR reserves and manages the claims settlement process, including payment of the related claims. Wes-FIC is allocated its share of these amounts, monthly. The pools’ manager has considerable experience with aviation insurance and claims. Wes-FIC management reviews reported claim amounts for reasonableness and has historically accepted the amounts without further adjustment, except for adjustments made for minor reporting delays.

~~Wes-FIC~~ Wesco’s ~~management~~consolidated isfinancial ~~represented~~statements atare ~~regular~~prepared ~~meetings~~in ~~and~~conformity with GAAP. The ~~presentations~~significant ~~held~~accounting bypolicies ~~the~~and ~~aviation~~practices ~~pools’~~followed ~~manager,~~by ~~and~~ Wesco ~~believes~~are ~~that~~set ~~Wes-FIC~~forth isin ~~able~~Note 1 to ~~closely~~the accompanying ~~monitor~~consolidated financial statements. Following are the accounting policies and practices ~~assess~~considered ~~the~~by ~~pools~~Wesco’ ~~manager’~~s ~~judgments~~management ~~concerning~~to be critical to the determination of consolidated financial ~~reserves~~position and results of operations.

~~Wes-FIC’s~~Use ~~estimates~~ of ~~losses~~Estimates and loss adjustment expenses under the Swiss Re contract are derived from Swiss Re’s quarterly reports to NICO on a quarterly-lag basis, plus NICO’s and Wes-FIC’s managements’ estimates of underwriting results for the current quarter, which reflect their assessments of publicly available information and prevailing market conditions. As Swiss Re’s business underlying the contract is predominately reinsurance, Swiss Re’s quarterly reports are affected by the estimation processes of its management, which are believed to be similar to those underlying Wes-FIC’s other reinsurance contracts. In addition, inasmuch as more than half of the business assumed under the Swiss Re contract is denominated with NICO in ~~currencies~~ ~~other~~Preparation ~~than United States dollars, significant portions~~ of ~~assumed~~Financial ~~losses are also subject to foreign exchange~~Statements risks relative to United States dollars. Thus, the foreign exchange risk adds greater uncertainty to the underwriting results estimated by management than the uncertainty relating to the other property-casualty insurance and reinsurance contracts in which Wes-FIC participates. Wesco and Wes-FIC managements understand and accept the greater uncertainty under the Swiss Re contract as a business risk compensated by management’s judgment of the expected profitability of the assumed business.

~~Primary~~ The ~~insurance —~~preparation ~~Loss~~of ~~reserves~~financial ~~from Wesco’s~~statements ~~primary~~in ~~insurance~~conformity ~~activities~~with ~~derive~~GAAP ~~from~~requires ~~individual~~management to make ~~risk~~estimates ~~policies~~and ~~written~~assumptions bythat ~~KBS,~~affect ~~which~~the ~~primarily~~reported ~~provides~~amounts ~~specialty coverages~~of ~~for~~assets ~~financial~~and ~~institutions.~~liabilities ~~Reserve~~at ~~amounts~~the ~~are comprised~~date of the ~~case~~financial ~~estimates~~statements and ~~estimates~~the ofreported ~~IBNR~~revenues ~~reserves, which~~and ~~approximated~~expenses ~~$7 million~~during atthe ~~each~~period ~~yearend~~reported ofupon. ~~2009 and~~In ~~2008.~~particular, ~~Because~~estimates of ~~the~~written ~~relatively~~and ~~low~~earned ~~number~~premiums ~~(or~~and ~~frequency)~~unpaid of losses and ~~potential~~loss adjustment expenses for ~~higher~~property ~~severity~~and ~~(or~~casualty ~~amount~~insurance ~~per~~are ~~claim)~~subject to considerable estimation error, due both to the ~~KBS~~necessity ~~management~~of isestimating ~~familiar~~information with ~~and~~respect ~~closely~~to ~~monitors~~certain ~~each~~reinsurance ~~claim.~~contracts where reports ~~Losses~~from ~~generally~~ceding companies for the quarterly reporting periods are ~~expected~~not tocontractually ~~have~~due auntil ~~relatively~~after ~~short~~the ~~reporting~~balance ~~and~~sheet ~~claim~~date, ~~tail~~as ~~due~~well toas the ~~nature~~inherent uncertainty in estimating ultimate claim amounts that will be reported and settled over a period of ~~the~~many ~~claims~~years. ~~KBS~~The estimates and assumptions are based ~~provides~~on ~~crime~~management’s ~~insurance,~~evaluation ~~check~~of ~~kiting~~the ~~fraud~~relevant ~~indemnification, Internet~~facts ~~banking~~and ~~catastrophe~~circumstances ~~theft~~using ~~insurance,~~information ~~Internet~~available ~~banking~~at ~~privacy~~the ~~liability~~time ~~insurance,~~such ~~directors~~estimates and ~~officers~~assumptions ~~liability, bank~~are ~~employment~~made. ~~practices~~The amounts of such assets, liabilities, revenues and ~~bank~~expenses ~~insurance~~included ~~agents~~in the consolidated financial statements may differ significantly from those ~~professional~~that ~~errors~~might result from use of estimates and ~~omissions~~assumptions ~~indemnity~~based on facts and circumstances not yet available. ~~Until~~Although ~~the~~Wesco’s ~~latter~~management does not believe such changes in estimates would have a ~~part~~materially adverse effect on shareholders’ equity, they could produce a material effect on results of operations in a particular period.

Fair Value Measurements 34

of Fair ~~2008,~~value ~~KBS~~is ~~also~~defined ~~offered~~under ~~deposit~~GAAP ~~guarantee~~as ~~bonds which insured bank deposits in excess of federally insured limits (“bonds”). Beginning in 2008, events in~~ the ~~banking industry~~exchange ~~led~~price tothat awould ~~rapid~~be ~~increase~~received infor ~~bank~~an ~~failures.~~asset ~~Although few~~or ofpaid ~~KBS’s customer banks were believed~~ to betransfer ~~subject to significant risk of failure, following the failure of one of its customer banks, resulting in~~ a ~~loss~~liability to(an ~~KBS,~~exit ~~and~~price) ~~thus, to Wesco, of $4.5 million, after taxes, management became less confident~~ in the ~~long-term~~principal ~~profitability~~or ofmost ~~this~~advantageous ~~line~~market ~~of insurance~~for ~~than previously, and KBS notified its customers of its~~the ~~decision~~asset toor ~~exit~~liability ~~this~~in ~~line~~an oforderly ~~insurance~~transaction asbetween ~~rapidly~~market asparticipants ~~feasible. Bond~~on ~~premiums~~the ~~had~~measurement ~~accounted for approximately half of KBS’s annual premiums of $20 million~~date. ~~The aggregate face amount~~ ofMarket ~~deposit~~participants ~~guarantee~~are ~~bonds~~assumed ~~has~~to ~~been~~be ~~reduced~~independent, ~~from $9.7 billion~~knowledgeable, ~~outstanding~~able atand ~~September 30,~~willing ~~2008,~~ to ~~$33 million,~~ ~~currently.~~transact ~~The number of institutions that had~~an ~~outstanding~~exchange ~~KBS~~and ~~bonds~~not ~~has~~under ~~been~~duress. ~~reduced~~Considerable ~~from~~judgment ~~1,671~~may ~~at September 30,~~be ~~2008,~~required toin ~~10.~~interpreting ~~Deposit~~market ~~guarantee bonds will~~data ~~decline~~used to ~~approximately~~develop ~~$3 million~~the ~~deposited~~estimates inof ~~one institution~~fair ~~by December 31, 2010, and to zero, by August 1, 2011~~value.

As The aframework ~~result~~established offor ~~KBS~~measuring ~~management’s~~fair ~~intimate~~value ~~knowledge~~is asbased ~~to its~~on ~~claims~~observable, ~~reserves~~independent ~~are developed primarily from case~~market ~~estimates,~~inputs ~~reducing~~and ~~the~~unobservable ~~need~~market ~~for~~assumptions. ~~extended~~Following ~~actuarial~~is ~~studies~~a ~~and broad~~description ~~estimates~~ of ~~IBNR of~~ the ~~nature~~three ~~typically~~levels ~~performed by large primary insurers whose business volume requires such procedures for the development~~ of ~~their loss data. A range of~~ ~~reserve~~inputs ~~amounts~~that asmay abe ~~result~~used ofto ~~changes~~measure infair ~~underlying assumptions~~value: ~~is not prepared.~~

Level 1 inputs represent unadjusted quoted prices in active markets for identical assets or ~~Goodwill~~liabilities. Most of Wesco’s equity investments are traded on an exchange in active markets and ~~Acquired~~fair ~~Businesses~~value is based on the closing prices as of the balance sheet date.

27 Goodwill of acquired businesses represents the excess of the cost of acquired entities over the fair values assigned to assets acquired and liabilities assumed. All goodwill acquired is assigned to the reporting unit that the related assets are employed in and the liabilities relate to, as it is believed that those reporting units benefit from the acquisition. The Company accounts for goodwill in accordance with GAAP, which requires a test for impairment annually or if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The impairment test is performed in two phases. The first step compares the carrying value of the reporting unit, including goodwill, to its estimated fair value. If the carrying value is greater than the estimated fair value of the unit, a second step is required, comparing the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. An impairment loss, charged to earnings, is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value.

Level 2 inputs represent observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active or inactive markets; quoted prices for identical ~~Realized~~assets or liabilities in markets that are not active; other inputs that may be considered in fair ~~Investment~~value ~~Gains~~determinations of the assets or liabilities, such as interest rates and ~~Losses~~yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Fair values for Wesco’s investments in fixed maturity securities are based primarily on market prices and market data available for instruments with similar characteristics, since active markets are not common for many instruments.

~~Realized~~ Level ~~investment~~3 ~~gains~~inputs ~~and~~are ~~losses,~~unobservable ~~determined~~inputs onused ~~a specific-identification~~in ~~basis,~~the ~~are~~measurement ~~included~~of inassets. ~~the~~Measurement ~~consolidated~~of the ~~statement~~fair values of ~~income,~~the asnon-exchange traded investments are ~~provisions~~based ~~for other-than-temporary declines~~on ina ~~market~~standard warrant valuation model or ~~estimated~~discounted ~~fair~~cash ~~value~~flow model, ~~when~~as applicable~~. Factors~~, ~~considered~~which inare ~~judging~~techniques ~~whether~~believed anto ~~impairment~~be ~~is other~~widely ~~than~~used ~~temporary~~by ~~include:~~other ~~the~~market ~~financial~~participants. ~~condition,~~Significant ~~business prospects~~assumptions ~~and~~inherent ~~creditworthiness~~in of the ~~issuer,~~warrant ~~the~~valuation model ~~length~~include ofan ~~time that~~estimated ~~fair~~stock ~~value~~price ~~has~~volatility ~~been~~factor, ~~less~~dividend ~~than~~and ~~cost~~interest rate assumptions, and the ~~relative~~estimated ~~amount~~term of the ~~decline,~~warrants. ~~and~~Significant ~~Wesco’s~~assumptions ~~ability~~used ~~and~~in ~~intent~~a todiscounted ~~hold~~cash ~~the~~flow ~~investment~~model ~~until~~include the ~~fair~~discount ~~value~~rate ~~recovers~~and estimated duration of the instrument.

Investments 35

~~Item~~ The 7Aappropriate classifications of investments in securities with fixed maturities and equity securities are established at the time of purchase and reevaluated as of each balance sheet date. There ~~Quantitative~~are three permissible classifications: held-to-maturity, trading, and, ~~Qualitative~~when ~~Disclosures~~neither ~~About~~of ~~Market~~those classifications ~~Risk~~is applicable, available-for-sale. Trading investments are carried at fair value and include securities acquired with the intent to sell in the near term. Held-to-maturity investments are carried at amortized cost, reflecting the ability and intent to hold the securities to maturity. All other investments are classified as available-for-sale and carried at fair value, with unrealized gains and losses, net of applicable deferred income taxes, reported as a separate component of shareholders’ equity.

Realized investment gains and losses, determined on a specific-identification basis, are ~~Wesco’s~~included in the consolidated ~~balance~~statement ~~sheet~~of ~~contains~~income, ~~substantial~~as are provisions for other-than-temporary ~~liquidity~~declines asin ~~well~~market asor ~~substantial~~fair ~~amounts~~value of equity investments, ~~whose~~when applicable. With respect to an ~~estimated~~investment ~~fair~~in ~~values~~a ~~are~~fixed-maturity ~~subject~~security, an other-than-temporary impairment would be recognized if the Company (a) intends to ~~market~~sell ~~risks.~~or ~~Values~~expects ofto be required to sell the security before amortized ~~investment~~cost ~~securities~~is ~~are~~recovered ~~subject~~or (b) does not expect to ~~market~~ultimately ~~fluctuations~~recover the amortized cost basis even if it does not intend to sell the security. ~~Apart~~Losses under (a) would be recognized in earnings. Under (b) ~~from~~any ~~investments~~credit loss component would be recognized in earnings, ~~the~~and ~~consolidated~~any ~~balance~~difference ~~sheet~~between atfair value ~~December 31~~and the amortized cost basis, ~~2009~~net ~~did~~of ~~not~~the ~~contain~~credit ~~significant~~loss, ~~assets~~would orbe reflected in other comprehensive ~~liabilities~~income. ~~with~~Factors ~~values~~considered ~~subject~~in tojudging ~~these~~whether oran impairment is other ~~potential~~than temporary include: the ~~market~~financial ~~exposures~~condition, ~~such~~business asprospects ~~changes~~and increditworthiness ~~commodity~~of ~~prices~~the orissuer, ~~foreign~~the length of time that ~~exchange~~fair ~~rates.~~value has been less than cost, the relative amount of the decline, and Wesco’s ~~does~~ability ~~not~~and intent ~~utilize~~to ~~derivatives~~hold the investment until the fair value recovers. See Notes 2 and 8 to ~~manage~~Wesco’s ~~market~~consolidated ~~risks~~financial statements for additional information as to Wesco’s investments.

~~EQUITY~~Rental ~~PRICE RISK~~furniture

~~Strategically,~~ Rental ~~Wesco~~furniture ~~strives~~consists toprincipally ~~invest~~of inresidential ~~businesses~~and ~~that possess~~office ~~excellent~~furniture ~~economics,~~which ~~with~~is ~~able~~available for ~~and~~rental ~~honest management~~or, ~~at sensible~~if ~~prices.~~no ~~Wesco’s~~longer ~~management~~up ~~prefers~~ to ~~invest~~rental ~~a meaningful amount in each investee~~standards, ~~resulting~~for ~~in concentration~~sale. ~~Most~~ ~~equity~~Rental ~~investments~~furniture ~~are~~is ~~expected~~carried toat ~~be held for long periods~~cost, ofless ~~time;~~accumulated ~~thus,~~depreciation ~~Wesco’s~~calculated ~~management~~primarily ison ~~not~~a ~~ordinarily troubled by short~~declining-~~term~~balance ~~price~~basis ~~volatility~~over ~~with~~3 ~~respect~~ to ~~its~~5 years ~~investments~~using ~~provided~~estimated ~~that~~salvage ~~the~~values ~~underlying business, economic and management characteristics~~ of ~~the~~25 ~~investees remain favorable. Wesco strives~~ to ~~maintain~~40 percent ~~above-average levels~~ of ~~shareholders’~~ ~~equity~~original ~~and liquidity to provide a margin of safety against short-term equity price volatility~~cost.

28 The carrying values of investments subject to equity price risks are based on quoted market prices. During 2008, several crises affecting the financial system and capital markets of the U.S. resulted in very large price declines in the general stock market and in Wesco’s equity securities. Certain of Wesco’s equity investments declined further in 2009. Fluctuation in the market price of a security may also result from actual or perceived changes in the underlying economic characteristics of the investee and the relative prices of alternative investments. Furthermore, amounts realized upon the sale of a particular security may be adversely affected if a relatively large quantity of the security is being sold.

~~The~~Revenue ~~following table summarizes Wesco’s equity price risks~~recognition as of December 31, 2009 and 2008. It shows the effects of a hypothetical 50% overall increase or decrease in market prices of marketable equity securities owned by the Wesco group on total recorded market value and, after tax effect, on Wesco’s shareholders’ equity at each of those dates. (Amounts are in thousands.)

	December 31, 2009				December 31, 2008
	Increase		Decrease		Increase		Decrease
Market value of marketable equity securities —
As recorded	$	2,065,627	$	2,065,627	$	1,868,293	$	1,868,293
Hypothetical		3,098,440		1,032,813		2,802,440		934,147
Shareholders’ equity —
As recorded		2,550,717		2,550,717		2,377,756		2,377,756
Hypothetical		3,222,045		1,879,388		2,984,951		1,770,561

Insurance premiums are stated net of amounts ceded to reinsurers and are recognized as earned revenues in proportion to the insurance protection provided, which in most cases is pro rata over the term of each contract. Premiums are estimated with respect to certain reinsurance contracts written during the period where reports from ceding companies for the period are not contractually due until well after the balance sheet date. Unearned insurance premiums are deferred and reflected in the liability section of the consolidated balance sheet. Certain costs of acquiring insurance premiums — commissions, premium taxes, and other — are deferred and charged to income as the premiums are earned.

Furniture rentals are recognized as revenue proportionately over the rental contract period; rentals received in advance are deferred in the liability section of the consolidated balance 36sheet. Costs related to furniture rentals comprise the main element of cost of products and services sold on the consolidated income statement and include depreciation expense, repairs and maintenance, and inventory losses.

~~The~~ Revenues ~~50%~~from ~~hypothetical~~product ~~changes~~sales inare ~~market~~recognized ~~values~~upon ~~assumed~~passage ~~in preparing~~of title to the ~~tables~~customer, dowhich coincides ~~not~~with ~~reflect~~customer ~~what~~pickup, ~~could~~product beshipment, ~~considered best-~~delivery or ~~worst-case~~acceptance, ~~scenarios.~~depending ~~Actual~~on ~~results~~the ~~could~~sales arrangement. beRevenues ~~much worse~~from orservices ~~better~~performed ~~due~~are ~~both~~recognized toat the ~~nature~~completion of ~~equity~~the ~~markets~~elements specified ~~and~~in the ~~aforementioned~~ ~~concentration~~contract, ~~existing~~which intypically ~~Wesco’s~~coincides ~~equity investment~~with ~~portfolio~~their being billed.

Interest income from investments in fixed maturity securities is earned under the constant yield method and includes accrual of interest due as well as amortization of acquisition premiums ~~INTEREST~~and ~~RATE~~accruable ~~RISK~~discounts. In determining the constant yield for mortgage-backed securities, anticipated counterparty prepayments are estimated and evaluated periodically. Dividends from equity securities are earned on the ex-dividend date.

~~Wesco’s~~Losses ~~consolidated balance sheet at December 31, 2009 contained $274 million of cash~~ and ~~cash~~loss ~~equivalents and~~adjustment ~~$230 million of securities with fixed maturities.~~expenses ~~Consequently, market value risks with respect to changing interest rates were not considered significant at December 31, 2009.~~

~~The~~ Liabilities ~~fair~~for ~~values~~unpaid ofinsurance ~~Wesco’s~~losses ~~fixed-maturity~~and ~~investments fluctuate~~loss inadjustment ~~response~~expenses torepresent ~~changes~~estimates inof the ~~market~~ultimate ~~interest~~amounts ~~rates. Increases~~payable ~~and~~under ~~decreases~~property inand ~~prevailing~~casualty ~~interest~~reinsurance ~~rates~~and ~~generally~~insurance contracts ~~translate~~related ~~into~~to ~~decreases~~losses ~~and~~occurring ~~increases~~on inor ~~fair~~before ~~values~~the balance sheet date. ~~Fair~~Liabilities for insurance losses ~~values~~are comprised of ~~Wesco’s~~estimates ~~investments~~for ~~may~~reported ~~also~~claims be(“case ~~affected~~reserves”) byand ~~the~~reserve development on ~~creditworthiness~~reported claims, as well as estimates for claims that have not yet been reported (some of ~~the~~which ~~issuer,~~may not ~~prepayment~~be ~~options~~reported for many years), ~~relative~~which together are also referred to as “incurred-but-not-reported” ~~values~~reserves of(“IBNR” ~~alternative~~reserves). ~~investments,~~The ~~the~~liability ~~liquidity~~for ofunpaid ~~the~~losses includes significant estimates for ~~instrument~~these claims and ~~other~~includes ~~market~~estimates ~~conditions~~reported by ceding insurers. Loss reserve estimates reflect past loss experience, adjusted as appropriate when losses are reasonably expected to deviate from experience.

Considerable judgment is required to evaluate claims and estimate claims liabilities in connection with reinsurance contracts. As further data becomes available, the liabilities are ~~FOREIGN~~reevaluated ~~CURRENCY~~and ~~RISK~~adjusted as appropriate. Additionally, claims, at each balance sheet date, are in various stages of the settlement process. Each claim is settled individually based upon its merits, and some take years to settle, especially if legal action is involved. Actual ultimate claims amounts are likely to differ from amounts recorded at the balance sheet date.

~~Wesco’s~~ Depending ~~participation~~on in the ~~Swiss~~type Reof ~~contract~~loss ~~beginning~~being ~~in 2008~~estimated, ~~has~~the ~~subjected~~timing ~~Wesco~~and toamount ~~foreign~~of ~~currency~~loss ~~risk~~payments ~~inasmuch as~~are ~~more~~subject ~~than~~to ~~half~~a ofgreat ~~the~~degree ~~business~~of ~~assumed~~variability byand ~~NICO~~are ~~under~~contingent ~~the contract~~upon, isamong ~~denominated in currencies~~ other ~~than U.S. dollars. In addition~~factors, ~~CORT’s~~the ~~new U.K.-based~~timing ~~subsidiary~~of ~~also~~the ~~subjects~~claim ~~Wesco~~reporting toby ~~foreign~~cedants ~~currency~~and ~~risk~~insureds, ~~although~~ and the ~~volume~~determination ofand ~~business~~payment ~~conducted~~of in the ~~U.K. has not~~ultimate ~~become~~loss ~~significant.~~amounts ~~Otherwise,~~through ~~Wesco’s~~the ~~foreign~~loss ~~currency~~adjustment ~~risk~~process. isJudgments ~~limited principally~~and toassumptions ~~that~~are ofnecessary ~~its~~in ~~investees.~~projecting Itthe ~~has~~ultimate ~~a significant~~amounts ~~amount~~payable ~~invested~~ in ~~major international companies,~~ ~~such as~~ the ~~Coca-Cola Company,~~ ~~that~~future ~~have~~with ~~significant~~respect ~~foreign~~to ~~business~~loss ~~and~~events ~~foreign currency~~that ~~risks~~have ~~of their own~~occurred.

29 ~~FORWARD-LOOKING STATEMENTS~~

~~Actual~~ The ~~events~~time ~~and~~period ~~results~~between ~~may~~the ~~differ~~claim ~~materially~~occurrence ~~from~~date ~~those expressed~~and orpayment ~~forecasted~~date inof ~~forward-looking~~the ~~statements~~loss ~~due~~is toreferred ato ~~number~~as ofthe ~~factors~~“claim tail.” ~~The~~Property ~~principal~~claims ~~important~~usually ~~risk~~have ~~factors~~fairly ~~that could~~short ~~cause~~claim ~~Wesco’s~~tails, ~~actual performance~~ and, ~~future~~absent ~~events~~litigation, are reported and ~~actions~~settled towithin ~~differ~~a ~~materially~~few ~~from~~months ~~those~~or ~~expressed~~years inafter oroccurrence. Casualty losses usually ~~implied~~have byvery ~~such~~long ~~forward-looking~~claim ~~statements~~tails. ~~include,~~Casualty ~~but~~claims ~~are~~can ~~not limited~~be tomore ~~those~~susceptible ~~risks~~to ~~reported~~litigation inand ~~Item 1A,~~can ~~Risk~~be ~~Factors,~~more ~~but~~significantly ~~also~~affected toby ~~the~~changing ~~occurrence~~contract ofinterpretations ~~one~~and orthe ~~more~~legal ~~catastrophic~~environment, ~~events~~which ~~such~~contributes asto ~~acts~~extended ofclaim ~~terrorism,~~tails. ~~hurricanes,~~Claim ortails ~~other~~for ~~events~~reinsurers ~~that cause~~may ~~losses~~be ~~insured~~further extended due to delayed reporting by ~~Wesco’s~~ceding ~~insurance~~insurers ~~subsidiaries, changes~~or inreinsurers ~~insurance~~due ~~laws~~to contractual provisions or ~~regulations,~~reporting practices. ~~changes~~Actual inultimate ~~income~~loss ~~tax~~settlement amounts are likely to differ from amounts recorded at ~~laws~~the orbalance ~~regulations,~~sheet ~~and~~date. ~~changes~~Changes in ~~general~~estimates, ~~economic~~referred ~~and~~to ~~market factors~~as ~~that~~“loss ~~affect~~development,” ~~the~~are ~~prices~~recorded as a component of ~~investment~~losses ~~securities~~incurred orin the ~~industries~~ inperiod ~~which~~of ~~Wesco~~change. Wes-FIC and ~~its~~KBS ~~affiliates~~ do ~~business~~not use consultants to assist in reserving activities.

Provisions for losses and loss adjustment expenses are reported in the consolidated statement of income after deducting estimates of amounts that will be recoverable under reinsurance 37contracts. Reinsurance contracts do not relieve the ceding companies of their obligations to indemnify policyholders with respect to the underlying insurance contracts. Ceded reinsurance losses recoverable (“ceded reserves”) are reflected in the accompanying consolidated balance sheet as a component of accounts receivable.

~~Item~~ Following 8.are ~~Financial~~summaries ~~Statements~~of Wesco’s consolidated liabilities for unpaid insurance losses and loss ~~Supplementary~~adjustment ~~Data~~expenses and related reinsurance recoverables reflected in the Consolidated Balance Sheet. Wesco does not discount the amounts for time value, regardless of the length of the estimated claim tail. Amounts are in thousands.

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


	December 31,			December 31,
	2010			2009
Case reserves	$	165,125		$	121,389
IBNR reserves		243,259			222,077

Gross liability before ceded reinsurance		408,384			343,466
Ceded reserves		(24,271	)*		(19,288	)*

Net reserves	$	384,113		$	324,178

Financial Statements	Page Number(s)
Report of independent registered public accounting firm		41-42
Consolidated balance sheet — December 31, 2009 and 2008		43
Consolidated statement of income — years ended December 31, 2009, 2008 and 2007		44
Consolidated statement of cash flows — years ended December 31, 2009, 2008 and 2007		45
Consolidated statement of changes in shareholders’ equity and comprehensive income — years ended December 31, 2009, 2008 and 2007		46
Notes to consolidated financial statements		47-60


*		Represents principally, Wes-FIC’s proportionate share of reinsurance purchased by the aviation pools.

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

Financial Statement Schedule	Schedule Number		Page Number(s)
Condensed financial information of Wesco —
December 31, 2009 and 2008, and years ended December 31, 2009, 2008 and 2007		I		61-62

~~Item~~ Following 9.is ~~Changes~~a inbreakdown of Wesco’s consolidated liabilities for unpaid insurance losses and loss ~~Disagreements~~adjustment ~~with~~expenses ~~Accountants~~and onrelated ~~Accounting~~reinsurance recoverables reflected in the Consolidated Balance Sheet at yearends 2010 and ~~Financial~~2009. ~~Disclosure~~Amounts are in thousands.

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


	Gross Unpaid Losses				Net Unpaid Losses*
	Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,
	2010		2009		2010		2009
Swiss Re contract	$	307,117	$	246,596	$	307,117	$	246,596
Other reinsurance, principally aviation-related		84,833		80,170		60,562		61,152
KBS primary		16,434		16,700		16,434		16,430

Total	$	408,384	$	343,466	$	384,113	$	324,178

~~Item~~* ~~9A.~~Net ~~Controls~~of reinsurance recoverable, and ~~Procedures~~before foreign currency translation effects.

An Included ~~evaluation~~in ~~was~~other ~~performed~~reinsurance ~~under~~losses in the ~~supervision~~foregoing ~~and~~table ~~with~~are ~~the participation~~$6.3 million ofat ~~the~~yearend ~~Company’s management, including~~2010 ~~Charles~~and T$6.8 million ~~Munger~~at yearend 2009, ~~its~~representing ~~Chief~~non-aviation ~~Executive~~reinsurance ~~Officer~~reserve ~~and~~amounts ~~Jeffrey~~at L.those ~~Jacobson~~dates, ~~its~~consisting ~~Chief~~mainly ~~Financial Officer,~~ of ~~the~~IBNR ~~effectiveness~~reserves ~~of the~~relating ~~design~~to ~~and~~a ~~operation~~quota-share ofcontract ~~the~~that ~~Company’s~~has ~~disclosure~~been in ~~controls~~runoff ~~and~~for ~~procedures~~more asthan ~~of December~~10 31years, ~~2009.~~under ~~Based~~which ~~on that~~Wes-FIC ~~evaluation,~~continues ~~Messrs. Munger~~to ~~and~~make ~~Jacobson~~loss ~~concluded~~payments. ~~that the~~Such ~~Company’s disclosure controls and procedures are~~amounts ~~effective~~reflected inloss ~~ensuring~~estimates ~~that~~reported ~~information required to be disclosed~~ by the ~~Company~~ceding incompanies ~~reports~~and itadditional ~~files~~IBNR orreserves ~~submits~~estimates ~~under the~~by ~~Securities~~Wes-FIC ~~Exchange Act of 1934~~management, aswhich ~~amended~~were ~~(the~~mainly ~~“Exchange Act”),~~a isfunction ~~recorded,~~of ~~processed,~~reported ~~summarized~~losses ~~and~~from ~~reported~~ceding ascompanies, ~~specified~~anticipated inloss ~~the~~ratios ~~rules~~for ~~and forms of~~ the ~~Securities~~contract ~~Exchange Commission~~period, and ~~are~~management’s ~~effective~~judgment toas ~~ensure that information required~~ to ~~be disclosed by Wesco in~~ the ~~reports~~loss ~~it files or~~reserving ~~submits~~adequacy ~~under~~of the ~~Exchange~~ceding ~~Act,~~companies. asThere ~~amended,~~ is ~~accumulated~~no ~~and communicated~~reinsurance torecoverable ~~Wesco’s~~with ~~management,~~respect ~~including Messrs. Munger and Jacobson, as appropriate,~~ to ~~allow~~these ~~timely decisions regarding required disclosure~~reserves.

~~There~~ The ~~has~~techniques ~~been~~and noprocesses ~~change~~employed in ~~the~~estimating ~~Company’s~~loss ~~internal~~reserves ~~control over~~are ~~financial~~differentiated ~~reporting during the fiscal quarter ended~~between ~~December 31,~~reinsurance ~~2009~~and ~~that~~primary ~~has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting~~insurance.

Reinsurance — Historically, Wes-FIC’s property and casualty loss reserves derive from individual risk, multi-line and catastrophe reinsurance policies. In 2008, Wes-FIC entered into a ~~MANAGEMENT~~retrocession agreement with NICO to assume 10% of NICO’Ss quota share reinsurance of Swiss Re and ~~REPORT~~its ONproperty-casualty ~~INTERNAL~~affiliates. ~~CONTROL~~Other ~~OVER~~Wes-FIC ~~FINANCIAL~~reinsurance ~~REPORTING~~activities in recent years have consisted almost exclusively of participations in aviation-related pools that are underwritten and managed by a wholly owned indirect subsidiary of Berkshire.

~~Wesco’s~~ Losses ~~management~~from isaviation ~~responsible~~coverages ~~for~~generally ~~establishing~~have ~~and maintaining~~reasonably ~~adequate~~short ~~internal~~tails ~~control~~with ~~over~~respect ~~financial~~to ~~reporting~~the asproperty ~~such~~components. ~~term~~The isclaim ~~defined~~tail ~~in Rule 13A-5(f) under~~for the ~~Exchange~~liability ~~Act~~coverage can be somewhat longer, especially when litigation results. The ~~internal~~case ~~control~~reserving ~~system~~process offor ~~Wesco~~aviation ~~and its~~risks ~~subsidiaries~~ is ~~designed~~believed to ~~provide~~involve ~~reasonable assurance~~less ~~regarding~~uncertainty ~~the~~than ~~preparation~~for ~~and~~many ~~fair~~other ~~presentation~~types of ~~Wesco’s~~insurance, because loss events tend to become known and ~~published~~reported ~~consolidated~~relatively ~~financial~~soon ~~statements~~after the events occur. ~~Under~~The material judgments underlying the loss ~~supervision~~reserving by the aviation pools’ manager assume that future loss patterns (incurred and ~~with~~paid) ~~the~~will ~~participation~~be similar to those of ~~our~~the ~~management,~~past. The aviation pools’ manager ~~including~~establishes ~~Charles~~case T.and ~~Munger,~~IBNR ~~our~~reserves ~~principal~~and ~~executive~~manages ~~officer~~the claims settlement process, including payment of ~~and~~the ~~Jeffrey~~related Lclaims. ~~Jacobson,~~Wes-FIC ~~our~~is ~~principal~~allocated ~~financial~~its ~~officer~~share of these amounts, wemonthly. The pools’ manager ~~conducted~~has anconsiderable ~~evaluation~~experience ofwith ~~the~~aviation ~~effectiveness~~insurance ofand ~~the~~claims. Wes-FIC management reviews reported ~~Company’s~~claim ~~internal~~amounts ~~control~~for ~~over~~reasonableness ~~financial~~and ~~reporting~~has ashistorically ofaccepted the amounts without further ~~December 31~~adjustment, ~~2009~~except asfor ~~required~~adjustments ~~by Rule 13a-15(c) under~~made ~~the~~for minor reporting delays.

Wes-FIC’s estimates of losses and loss adjustment expenses under the Swiss Re contract are derived from Swiss Re’s quarterly reports to NICO on a quarterly-lag basis, plus NICO’s and 38Wes-FIC’s managements’ estimates of underwriting results for the current quarter, which reflect their assessments of publicly available information and prevailing market conditions. As Swiss Re’s business underlying the contract is predominately

Exchange Act. In making this assessment, we used the criteria set forth in the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, we concluded that Wesco’s internal control over financial reporting was effective as of December 31~~, 2009.~~

reinsurance, Swiss Re’s quarterly reports are ~~WESCO~~affected ~~FINANCIAL~~by ~~CORPORATION~~the estimation processes of its management, which are believed to be similar to those underlying Wes-FIC’s other reinsurance contracts. In addition, inasmuch as more than half of the business assumed under the Swiss Re contract is denominated with NICO in currencies other than United States dollars, significant portions of assumed losses are also subject to foreign exchange risks relative to United States dollars. Thus, the foreign exchange risk adds greater uncertainty to the underwriting results estimated by management than the uncertainty relating to the other property-casualty insurance and reinsurance contracts in which Wes-FIC participates. Wesco and Wes-FIC managements understand and accept the greater uncertainty under the Swiss Re contract as a business risk that in management’s judgment is likely to be compensated by the expected profitability of the assumed business.

Primary insurance — Loss reserves from Wesco’s primary insurance activities derive from ~~Pasadena~~individual risk policies written by KBS, ~~California~~which primarily provides specialty coverages for financial institutions. Reserve amounts are comprised of case estimates and estimates of IBNR reserves, which were $7.1 million at each yearend of 2010 and 2009. Because of the relatively low number (or frequency) of losses and potential for higher severity (or amount per claim), KBS management is familiar with and closely monitors each claim. Losses generally are expected to have a relatively short reporting and claim tail due to the nature of the claims. KBS provides crime insurance, check kiting fraud indemnification, Internet banking catastrophe theft insurance, Internet banking privacy liability insurance, directors and officers liability, bank employment practices, and bank insurance agents professional errors and omissions indemnity.

As a result of KBS management’s intimate knowledge as to its claims, reserves are developed ~~February 26~~primarily from case estimates, ~~2010~~reducing the need for extended actuarial studies and broad estimates of IBNR of the nature typically performed by large primary insurers whose business volume requires such procedures for the development of their loss data. A range of reserve amounts as a result of changes in underlying assumptions is not prepared.

~~Item~~Goodwill ~~9B.~~of ~~Other~~acquired ~~Information~~businesses

Goodwill of acquired businesses represents the excess of the cost of acquired entities over ~~None~~the fair values assigned to assets acquired and liabilities assumed. All goodwill acquired is assigned to the reporting unit that the related assets are employed in and the liabilities relate to, as it is believed that those reporting units benefit from the acquisition. Wesco accounts for goodwill in accordance with GAAP, which requires a test for impairment annually or if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The impairment test is performed in two phases. The first step compares the carrying value of the reporting unit, including goodwill, to its estimated fair value. If the carrying value is greater than the estimated fair value of the unit, a second step is required, comparing the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. An impairment loss, charged to earnings, is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value.

Wesco determines the fair value of its furniture rental unit using the discounted cash flows approach. Under the discounted cash flows approach, Wesco estimates the fair value of the reporting ~~PART III~~unit based on the present value of its estimated future cash flows. This approach incorporates a number of significant estimates and assumptions that include: a forecast of the reporting unit’s future cash flows, estimated growth rates, future terminal value, and an appropriate discount rate. Wesco then prepares a sensitivity analysis as to how changes in key estimates or assumptions might affect the outcome of the goodwill impairment test. In projecting future

~~Item 10. Directors, Executive Officers and Corporate Governance~~32

~~Item~~cash 11flows, Wesco considers the current economic environment as well as historical results of the unit. ~~Executive~~Wesco believes ~~Compensation~~that the discounted cash flows approach is the most meaningful valuation technique for the furniture rental business, as CORT is the only national company that operates in the rent-to-rent furniture industry, thus making market-based and transaction-based valuation techniques less meaningful.

~~The~~Realized ~~information~~Investment ~~set~~Gains ~~forth~~and inLosses ~~the sections “Compensation of Executive Officers,” “Compensation Discussion~~ and ~~Analysis”~~ ~~and~~Other-Than-Temporary ~~“Director Compensation” in the 2010~~Impairments Proxy Statement is incorporated herein by reference. All such compensation is cash compensation; Wesco neither has, nor is considering having, any stock option plan or other equity compensation arrangement.

~~Item~~ Realized 12investment gains and losses, determined on a specific-identification basis, are included in the consolidated statement of income, as are provisions for other-than-temporary declines in market or estimated fair value, when applicable. ~~Security~~Factors ~~Ownership~~considered in judging whether an impairment is other than temporary include: the financial condition, business prospects and creditworthiness of ~~Certain~~the ~~Beneficial~~issuer, ~~Owners~~the length of time that fair value has been less than cost, the relative amount of the decline, and ~~Management~~Wesco’s ability and ~~Related~~intent ~~Shareholder~~to ~~Matters~~hold the investment until the fair value recovers.

~~The~~Item 7A. ~~information~~Quantitative ~~set forth in the sections “Voting Securities~~ and ~~Principal~~Qualitative ~~Holders~~Disclosures ~~Thereof,”~~About ~~“Security Ownership~~Market ~~of Certain Beneficial Owners and Management” and~~Risk ~~“Section 16(A) Beneficial Ownership Reporting Compliance” in the 2010 Proxy Statement is incorporated herein by reference.~~

~~Item~~ Wesco’s 13consolidated balance sheet contains substantial liquidity as well as substantial amounts of investments whose estimated fair values are subject to market risks. ~~Certain~~Values ~~Relationships~~of investment ~~and~~securities ~~Related~~are ~~Transactions~~subject to market fluctuations. Apart from investments, ~~and~~the ~~Director~~consolidated balance ~~Independence~~sheet at December 31, 2010 did not contain significant assets or liabilities with values subject to these or other potential market exposures such as changes in commodity prices or foreign exchange rates. Wesco does not utilize derivatives to manage market risks.

~~Certain~~EQUITY ~~information~~PRICE ~~set forth in the sections “Election of~~RISK Directors,” “Voting Securities and Principal Holders Thereof,” “Compensation of Executive Officers,” “Director Compensation,” “Corporate Governance” and “Compensation Discussion and Analysis” in the 2010 Proxy Statement is incorporated herein by reference.

~~Item~~ Strategically, 14Wesco strives to invest in businesses that possess excellent economics, with able and honest management, at sensible prices. ~~Principal~~Wesco’s ~~Accountant~~management ~~Fees~~prefers to invest a meaningful amount in each investee, resulting in concentration. Most equity investments are expected to be held for long periods of time; thus, Wesco’s management is not ordinarily troubled by short-term price volatility with respect to its investments provided that the underlying business, economic and ~~Services~~management characteristics of the investees remain favorable. Wesco strives to maintain above-average levels of shareholders’ equity and liquidity to provide a margin of safety against short-term equity price volatility.

The ~~information~~carrying ~~set~~values ~~forth~~of ininvestments subject to equity price risks are based on quoted market prices. During 2008, several crises affecting the ~~section~~financial ~~“Independent~~system and capital markets of the U.S. ~~Registered~~resulted ~~Public~~in ~~Accounting~~very ~~Firm”~~large price declines in the general stock market and in Wesco’s equity securities. Certain of Wesco’s equity investments declined further in 2009 but significantly recovered in value in 2010. Fluctuation ~~Proxy~~in the market price of a security may also result from actual or perceived changes in ~~Statement~~the isunderlying ~~incorporated~~economic ~~herein~~characteristics byof ~~reference~~the investee and the relative prices of alternative investments. Furthermore, amounts realized upon the sale of a particular security may be adversely affected if a relatively large quantity of the security is being sold.

Wesco’s consolidated balance sheet at December 31, 2010 contained $2.27 billion of equity securities stated at fair value, reflecting a net increase in fair values of $207 million during 39the year. The concentration existing in Wesco’s equity securities portfolio exposes it to more significant market price fluctuations than might be the case were Wesco’s investments more diversified. This exposure to fluctuations is further exacerbated by the large amount invested in companies engaged in the banking industry, inasmuch as trading prices of financial

~~Item 15. Exhibits and Financial Statement Schedules~~33

~~3a —~~institutions’ ~~Articles~~shares ofwere ~~incorporation~~more ofseverely ~~Wesco~~impacted ~~(filed~~than general trading prices as ~~exhibit 3a~~ toa ~~Wesco’s~~result of recent economic ~~Form 10-K for~~conditions and their impact on the ~~year~~banking ~~ended~~industry. At December 31, ~~1999) and~~2010, ~~Bylaws~~five ofinvestments, with ~~Wesco~~carrying ~~(filed~~values asaggregating ~~exhibit~~$1.85 3billion, comprised 81.25% toof the carrying value of Wesco’s equity ~~Form 8-K~~securities portfolio. These five were common stocks of Wells Fargo & Company, US Bancorp, The ~~dated~~Procter ~~December 5~~& Gamble Company, ~~2007 —~~The ~~Commission~~Coca-Cola ~~File~~Company and Kraft Foods Incorporated, of which the first Notwo are in the banking industry and the latter three have significant global operations and thus are subject to changes in global economic conditions and foreign currency exchange rates. ~~1-4720)~~

14 The following table summarizes Wesco’s equity price risks as of December —31, ~~Code~~2010 and 2009. It shows the effects of ~~Ethics~~a ~~(may~~hypothetical be50% ~~accessed~~overall ~~through~~increase or decrease in market prices of equity securities owned by the Wesco group on total recorded market value and, after tax effect, on Wesco’s ~~website,~~shareholders’ ~~www~~equity at each of those dates.~~wescofinancial~~ (Amounts are in thousands.~~com.~~)

21 — List of subsidiaries


	December 31, 2010				December 31, 2009
	Increase		Decrease		Increase		Decrease
Market value of equity securities —
As recorded	$	2,272,253	$	2,272,253	$	2,065,627	$	2,065,627
Hypothetical		3,408,380		1,136,127		3,098,440		1,032,813
Shareholders’ equity —
As recorded		2,765,717		2,765,717		2,550,717		2,550,717
Hypothetical		3,504,199		2,027,235		3,222,045		1,879,388

The 50% hypothetical changes in market values assumed in preparing the tables do not reflect ~~31(a) —~~what ~~Certification~~could ~~Pursuant~~be considered best- or worst-case scenarios. Actual results could be much worse or better due both to ~~Section 302~~the nature of equity markets and the ~~Sarbanes-Oxley~~aforementioned ~~Act~~concentration ofexisting ~~2002~~in Wesco’s ~~(chief~~equity ~~executive~~investment ~~officer)~~portfolio.

~~31(b) —~~INTEREST ~~Certification~~RATE ~~Pursuant to Section 302 of~~RISK ~~the Sarbanes-Oxley Act of 2002 (chief financial officer)~~

~~32(a) —~~ Wesco’s ~~Certification~~consolidated ~~Pursuant~~balance tosheet ~~Section~~at December ~~906~~31, 2010 contained $473 million of cash and ~~the~~cash ~~Sarbanes-Oxley~~equivalents ~~Act~~and $235 million of ~~2002~~securities ~~(chief~~with ~~executive~~fixed ~~officer)~~maturities. Consequently, market value risks with respect to changing interest rates were not considered significant at December 31, 2010.

~~32(b) —~~ The ~~Certification~~fair ~~Pursuant~~values of Wesco’s fixed-maturity investments fluctuate in response to ~~Section 906~~changes in market interest rates. Increases and decreases in prevailing interest rates generally translate into decreases and increases in fair values. Fair values of Wesco’s investments may also be affected by the ~~Sarbanes-Oxley~~creditworthiness ~~Act~~of the issuer, prepayment options, relative values of ~~2002~~alternative investments, ~~(chief~~the ~~financial~~liquidity ~~officer)~~of the instrument and other market conditions.

~~Instruments~~FOREIGN ~~defining~~CURRENCY ~~the rights of holders of long-term debt of~~RISK Wesco and its subsidiaries are not being filed since the total amount of securities authorized by all such instruments does not exceed 10% of the total assets of Wesco and its subsidiaries on a consolidated basis as of December 31, 2009. Wesco hereby agrees to furnish to the Commission upon request a copy of any such debt instrument to which it is a party.

~~The~~ Wesco’s ~~index~~participation in the Swiss Re contract beginning in 2008 has subjected Wesco to foreign ~~financial~~currency ~~statements~~risk ~~and~~inasmuch ~~related~~as ~~schedules~~more ~~set~~than half of the business assumed by NICO under the contract ~~forth~~is denominated in ~~Item 8~~currencies other than U.S. dollars. In addition, CORT’s new U.K.-based subsidiary also subjects Wesco to foreign currency risk, although the volume of ~~this~~business ~~report~~conducted in the U.K. is ~~incorporated~~not ~~herein~~significant. byOtherwise, Wesco’s foreign currency risk is limited principally to that of its ~~reference~~investees.

* * * * 40

34 ~~SIGNATURES~~

~~WESCO~~FORWARD-LOOKING ~~FINANCIAL CORPORATION~~STATEMENTS

By:	/s/ Charles T. Munger
	Charles T. Munger Chairman of the Board and President (principal executive officer)	February 26, 2010
By:	/s/ Jeffrey L. Jacobson
	Jeffrey L. Jacobson Vice President and Chief Financial Officer (principal financial and accounting officer)	February 26, 2010

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

Actual events and results may differ materially from those expressed or forecasted in ~~Pursuant~~forward-looking statements due to ~~the~~a ~~requirements~~number of ~~the~~factors. ~~Securities~~The ~~Exchange~~principal ~~Act~~important ofrisk factors that ~~1934,~~could ~~this~~cause ~~report~~Wesco’s ~~has~~actual ~~been~~performance ~~signed~~and ~~below~~future events and actions to differ materially from those expressed in or implied by such forward-looking statements include, but are not limited to those risks reported in Item 1A, Risk Factors, but also to the ~~following~~occurrence ~~persons~~of one or more oncatastrophic ~~behalf~~events such as acts of ~~the~~terrorism, ~~registrant~~hurricanes, or other events that cause losses insured by Wesco’s insurance subsidiaries, changes in insurance laws or regulations, changes in income tax laws or regulations, and changes in general economic and market factors that affect the prices ~~capacities~~of investment securities or the industries in which Wesco and onits affiliates do business. Special consideration should also be given to the pending merger transaction between Berkshire and ~~dates~~Wesco ~~indicated~~described in Item 1, Business. There can be no assurance that the merger will actually be consummated.

/s/ Carolyn H. Carlburg
Carolyn H. Carlburg Director		February 26, 2010
/s/ Robert E. Denham
Robert E. Denham Director		February 26, 2010
/s/ Robert T. Flaherty
Robert T. Flaherty Director		February 26, 2010
/s/ Peter D. Kaufman
Peter D. Kaufman Director		February 26, 2010
/s/ Charles T. Munger
Charles T. Munger Director		February 26, 2010
/s/ Elizabeth Caspers Peters
Elizabeth Caspers Peters Director		February 26, 2010

Item 8. Financial Statements and Supplementary Data

~~REPORT~~ Following ~~OF INDEPENDENT~~is ~~REGISTERED~~an ~~PUBLIC~~index ~~ACCOUNTING~~to ~~FIRM~~financial statements and related schedules of Wesco appearing in this report:

To the Board of Directors and Shareholders of


Financial Statements		Page Number(s)
Report of independent registered public accounting firm		48-49
Consolidated balance sheet — December 31, 2010 and 2009		50
Consolidated statement of income — years ended December 31, 2010, 2009 and 2008		51
Consolidated statement of cash flows — years ended December 31, 2010, 2009 and 2008		52
Consolidated statement of changes in shareholders’ equity and comprehensive income — years ended December 31, 2010, 2009 and 2008		53
Notes to consolidated financial statements		54-69

Listed below are financial statement schedules required by the SEC to be included in this report. The data appearing therein should be read in conjunction with the consolidated financial statements and notes thereto of Wesco ~~Financial~~and ~~Corporation~~report of independent registered public accounting firm referred to above. Schedules not included with these financial statement schedules have been omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

Pasadena, California


Financial Statement Schedule	Schedule Number	Page Number(s)
Condensed financial information of Wesco — December 31, 2010 and 2009, and years ended December 31, 2010, 2009 and 2008	I	70-71

35 We have audited the accompanying consolidated balance sheets of Wesco Financial Corporation and subsidiaries (the “Company”) as of December 31, 2009 and 2008, and the related consolidated statements of income, changes in shareholders’ equity and comprehensive income, and cash flows for each of the three years in the period ended December 31, 2009. Our audits also included the financial statement schedule listed in the Index at Item 8. We also have audited the Company’s internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,

~~included in the accompanying Management’s Report on Internal Control over Financial Reporting~~Item 9. ~~Our~~Changes ~~responsibility~~in ~~is to~~and ~~express~~Disagreements anwith ~~opinion~~Accountants on ~~these~~Accounting ~~financial statements~~ and ~~the financial~~Financial ~~statement schedule and an opinion on the effectiveness~~Disclosure ~~of the Company’s internal control over financial reporting based on our audits.~~

We Not conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examiningapplicable, onas athere ~~test~~were ~~basis,~~no evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control over financial reporting based on the assessed risk. Our audits also included performing such ~~other~~changes ~~procedures~~or ~~as we considered necessary in the circumstances~~disagreements. ~~We believe that our audits provide a~~ ~~reasonable basis for our opinions.~~

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principlesItem 9A. AControls ~~company’s internal control over financial reporting includes those policies~~ and ~~procedures that (1) pertain to the maintenance~~Procedures of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

~~Because~~ An ofevaluation was performed under the ~~inherent~~supervision ~~limitations~~and with the participation of ~~internal~~Wesco’s management, ~~control~~including ~~over~~Charles T. Munger, its Chief Executive Officer and Jeffrey L. Jacobson, its ~~financial~~Chief ~~reporting~~Financial Officer, ~~including~~of the ~~possibility~~effectiveness of ~~collusion~~the ~~or improper~~design ~~management~~and ~~override~~operation of Wesco’s disclosure controls and procedures as of December 31, ~~material~~2010. ~~misstatements~~Based on that evaluation, Messrs. Munger and ~~due~~Jacobson toconcluded ~~error~~that orWesco’s ~~fraud~~disclosure ~~may~~controls ~~not~~and procedures are effective in ensuring that information required to be ~~prevented~~disclosed by Wesco in reports it files or ~~detected~~submits onunder athe Securities ~~timely~~Exchange ~~basis.~~Act ~~Also~~of 1934, ~~projections~~is ofrecorded, ~~any~~processed, ~~evaluation~~summarized ofand reported as specified in the rules and ~~effectiveness~~forms of the ~~internal~~Securities ~~control~~Exchange ~~over~~Commission, ~~financial~~and ~~reporting~~are effective to ensure that information required to ~~future~~be ~~periods~~disclosed ~~are~~by ~~subject~~Wesco toin the ~~risk~~reports ~~that~~it files or submits under the ~~controls~~Securities ~~may~~Exchange Act of ~~become~~1934 ~~inadequate~~is ~~because~~accumulated ofand ~~changes~~communicated into ~~conditions~~Wesco’s management, orincluding ~~that~~Messrs. Munger ~~the~~and Jacobson, ~~degree~~as ofappropriate, ~~compliance~~to ~~with~~allow ~~the~~timely ~~policies~~decisions orregarding ~~procedures~~required ~~may deteriorate~~disclosure.

In There ~~our~~has ~~opinion,~~been ~~the~~no ~~consolidated~~change ~~financial statements referred to above present fairly,~~ in ~~all~~Wesco’s ~~material~~internal ~~respects,~~control ~~the~~over financial ~~position~~ ofreporting ~~Wesco~~during ~~Financial Corporation and its subsidiaries as of December 31, 2009 and 2008, and~~ the ~~results of their~~ ~~operations~~fiscal ~~and~~quarter ~~their cash flows for each of the three years in the period~~ ended December 31, ~~2009,~~2010 inthat ~~conformity~~has ~~with accounting principles generally accepted in the United States of America. Also~~materially affected, inor ~~our~~is ~~opinion,~~reasonably ~~such~~likely ~~financial statement schedule, when considered in relation~~ to ~~the basic consolidated~~ ~~financial~~materially ~~statements taken as a whole~~affect, ~~presents~~Wesco’s ~~fairly, in all material respects, the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective~~ internal control over financial reporting ~~as of December 31, 2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission~~.

~~Omaha,~~ MANAGEMENT’S ~~Nebraska~~REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Wesco’s management is responsible for establishing and maintaining adequate internal control ~~February~~over financial reporting as such term is defined in Rule 2613A-5(f) under the Exchange Act. The internal control system of Wesco and its subsidiaries is designed to provide reasonable assurance regarding the preparation and fair presentation of Wesco’s published consolidated financial statements. Under the supervision and with the participation of our management, including Charles T. Munger, our principal executive officer, and Jeffrey L. Jacobson, our principal financial officer, we conducted an evaluation of the effectiveness of Wesco’s internal control over financial reporting as of December 31, 2010 as required by Rule 13a-15(c) under the Exchange Act. In making this assessment, we used the criteria set forth in the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, we concluded that Wesco’s internal control over financial reporting was effective as of December 31, 2010.

Wesco’s independent registered public accounting firm has audited our internal control over financial reporting as of December 31, 2010. Its report begins on Page 48. 42

WESCO FINANCIAL CORPORATION ~~CONSOLIDATED BALANCE SHEET~~ ~~(Dollar amounts in thousands)~~

	December 31,
	2009		2008
ASSETS
Cash and cash equivalents	$	273,671	$	297,643
Investments —
Securities with fixed maturities		229,872		28,656
Marketable equity securities		2,065,627		1,868,293
Accounts receivable		37,983		57,489
Receivable from affiliates		173,476		133,396
Rental furniture		177,793		217,597
Goodwill of acquired businesses		277,590		277,742
Other assets		165,414		169,879
	$	3,401,426	$	3,050,695
LIABILITIES AND SHAREHOLDERS’ EQUITY
Insurance losses and loss adjustment expenses —
Affiliated business	$	290,375	$	164,424
Unaffiliated business		53,091		50,844
Unearned insurance premiums —		110,477		94,544
Affiliated business
Unaffiliated business		11,516		13,251
Deferred furniture rental income and security deposits		11,846		17,674
Accounts payable and accrued expenses		54,537		61,145
Notes payable		28,200		40,400
Income taxes payable, principally deferred		290,667		230,657
		850,709		672,939
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
Accumulated other comprehensive income		282,900		152,763
Retained earnings		2,234,493		2,191,669
Total shareholders’ equity		2,550,717		2,377,756
	$	3,401,426	$	3,050,695

Pasadena, California
February 25, 2011

~~See~~Item 9B. ~~notes~~Other ~~to consolidated financial statements.~~Information

None. 43

36 ~~WESCO FINANCIAL CORPORATION CONSOLIDATED STATEMENT OF INCOME (Dollar amounts in thousands except for amounts per share)~~

	Year Ended December 31,
	2009		2008		2007
Revenues:
Furniture rentals	$	312,234	$	340,162	$	327,671
Sales and service revenues		106,342		130,753		129,861
Insurance premiums earned —		307,560		218,094		35,530
Affiliated business
Unaffiliated business		15,661		19,870		18,881
Dividend and interest income		67,458		79,079		90,872
Realized investment gains		—		7,006		24,240
Other		4,076		3,990		3,869
		813,331		798,954		630,924
Costs and expenses:
Cost of products and services sold		130,992		149,319		143,282
Insurance losses and loss adjustment expenses —		198,853		151,308		24,008
Affiliated business
Unaffiliated business		14,454		20,892		4,269
Insurance underwriting expenses —
Affiliated business		92,857		63,156		8,019
Unaffiliated business		5,946		7,135		7,284
Selling, general and administrative expenses		305,934		300,231		280,728
Interest expense		641		1,798		2,408
		749,677		693,839		469,998
Income before income taxes		63,654		105,115		160,926
Income taxes		9,581		22,999		51,765
Net income	$	54,073	$	82,116	$	109,161
Amounts per capital share based on 7,119,807 shares outstanding throughout each year:
Net income	$	7.59	$	11.53	$	15.33
Cash dividends		1.58		1.54		1.50

~~See~~PART ~~notes to consolidated financial statements.~~III

Item 10. Directors, Executive Officers and Corporate Governance 44

DIRECTORS ~~WESCO FINANCIAL CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Dollar amounts in thousands)~~

	Year Ended December 31,
	2009			2008			2007
Cash flows from operating activities:
Net income	$	54,073		$	82,116		$	109,161
Adjustments to reconcile net income with net cash flows from operating activities —
Gross profit on sale of rental furniture		(20,755	)		(22,447	)		(22,678	)
Investment gains		—			(7,006	)		(24,240	)
Depreciation and amortization		55,500			49,574			41,515
Change in liabilities for insurance losses and loss adjustment expenses —
Affiliated business		125,951			124,737			9,926
Unaffiliated business		2,247			(3,314	)		5,609
Change in unearned insurance premiums —
Affiliated business		15,933			79,503			979
Unaffiliated business		(1,735	)		(1,974	)		(73	)
Change in receivable from affiliates		(40,080	)		(96,725	)		(13,489	)
Change in income taxes payable		(9,410	)		4,953			(27,075	)
Other, net		12,134			(16,767	)		2,724
Net cash flows from operating activities		193,858			192,650			82,359
Cash flows from investing activities:
Purchases of securities with fixed maturities		(208,269	)		—			(29,106	)
Purchases of equity securities		—			(349,071	)		(826,826	)
Purchases of rental furniture		(45,385	)		(74,572	)		(73,809	)
Proceeds from redemptions and maturities of securities with fixed maturities		8,639			7,402			74,195
Proceeds from sales of rental furniture		61,192			61,800			61,704
Proceeds from sales of equity securities		—			60,203			25,126
Change in condominium construction in process		(5,420	)		(28,510	)		(26,059	)
Acquisitions of businesses, net of cash acquired		(878	)		(81,428	)		—
Other, net		(4,333	)		(8,863	)		(6,534	)
Net cash flows from investing activities		(194,454	)		(413,039	)		(801,309	)
Cash flows from financing activities:
Borrowings (repayments), net, under revolving credit facility		(12,200	)		3,200			(1,000	)
Payment of cash dividends		(11,249	)		(10,965	)		(10,679	)
Net cash flows from financing activities		(23,449	)		(7,765	)		(11,679	)
Effect of foreign currency exchange rate changes		73			(925	)		—
Decrease in cash and cash equivalents		(23,972	)		(229,079	)		(730,629	)
Cash and cash equivalents — beginning of year		297,643			526,722			1,257,351
Cash and cash equivalents — end of year	$	273,671		$	297,643		$	526,722
Supplementary disclosures
Interest paid during year	$	713		$	1,744		$	2,309
Income taxes paid, net, during year		19,133			17,960			79,011

Set forth below for each Wesco Director is his or her principal occupation, business experience during at least the past five years, age, and certain other information.

CHARLES T. MUNGER, age 87, has been a Director since 1973, and Chairman of the Board and Chief ~~See~~Executive ~~notes~~Officer toof ~~consolidated~~Wesco ~~financial~~since ~~statements~~1984. He has also served Wesco as President since May 2005. He has been Chairman of the Board of Blue Chip Stamps (“Blue Chip”) since 1976, and its president since February 2011, having joined its board in 1969; Blue Chip, the parent of Wesco, is engaged in the trading stamp business. Since 1978, Mr. Munger has been Vice Chairman of Berkshire, the parent of Blue Chip; Berkshire is engaged in the property and casualty insurance business and many other diverse businesses. Mr. Munger has been Chairman of the Board of Daily Journal Corporation, a publisher of specialty newspapers primarily in California, since 1977. He also has been a director of Costco Wholesale Corporation, which operates a large chain of membership warehouses, since 1997.

Wesco benefits from Mr. Munger’s leadership for numerous reasons, not the least of which are his experience and ability as a successful investor, close working relationship with Warren E. 45Buffett, familiarity with the reinsurance activities of the Berkshire Insurance Group, in which Wesco’s insurance subsidiary is periodically offered certain opportunities to participate, and his focus on creating long-term growth in shareholder value.

CAROLYN H. CARLBURG, age 64, has been a Director since 1991. Since 2005, she has been Chief ~~WESCO~~Executive ~~FINANCIAL~~Officer of AIDS Research Alliance of America, Inc., a non-profit, national research ~~CORPORATION CONSOLIDATED~~organization ~~STATEMENT~~which OFcollaborates ~~CHANGES~~with scientists, universities and researchers worldwide. She is ~~IN SHAREHOLDERS~~also an ex officio member of that organization’s ~~EQUITY~~board of directors. From 2001 until 2005, Ms. ~~AND~~Carlburg ~~COMPREHENSIVE~~was ~~INCOME~~engaged in the practice of law under her own name and specialized in land use matters and business litigation. From 1997 until July 2001, she was Executive Director of the Center for ~~(Dollar~~Community ~~amounts~~& inFamily Services, Inc. Prior thereto, she practiced law under the name Carolyn H. ~~thousands)~~Carlburg & Associates.

	Year Ended December 31,
	2009			2008			2007
Capital stock:
Balance at beginning and end of year	$	7,120		$	7,120		$	7,120
Additional paid-in capital:
Balance at beginning and end of year	$	26,204		$	26,204		$	26,204
Retained earnings:
Balance at beginning of year	$	2,191,669		$	2,120,518		$	2,022,036
Net income		54,073			82,116			109,161
Cash dividends declared and paid		(11,249	)		(10,965	)		(10,679	)
Balance at end of year	$	2,234,493		$	2,191,669		$	2,120,518
Accumulated other comprehensive income:
Unrealized appreciation (depreciation) of investments, net	$	198,917		$	(348,283	)	$	55,132
Applicable income taxes		(69,526	)		121,926			(19,093	)
Foreign currency translation adjustments		1,434			(2,687	)		—
Applicable income taxes		(688	)		790			—
Other comprehensive income (loss)		130,137			(228,254	)		36,039
Accumulated other comprehensive income at beginning of year		152,763			381,017			344,978
Accumulated other comprehensive income at end of year	$	282,900		$	152,763		$	381,017
Comprehensive income (loss):
Net income	$	54,073		$	82,116		$	109,161
Other comprehensive income (loss)		130,137			(228,254	)		36,039
Total comprehensive income (loss)	$	184,210		$	(146,138	)	$	145,200

Wesco benefits from Ms. Carlburg’s experience as an attorney and her almost two decades of service as a director. In addition, her experience as the leader of two non-profit organizations has contributed to her effectiveness as the leader of Wesco’s Audit Committee as well as the committee of independent Wesco Directors appointed by Wesco’s Board in September 2010 to evaluate the proposal from Berkshire to acquire the remaining 19.9% of the shares of Wesco common stock that it does not presently own, as more fully described in Item 1, Business, above (the “Special Committee”).

ROBERT E. DENHAM, age 65, has been a Director since 2000. He is a partner of Munger, Tolles & Olson ~~See~~LLP, ~~notes~~a law firm which renders legal services for Wesco, Berkshire, and certain of their affiliates. In 1998, he rejoined that firm, with which he had been associated for twenty years, after serving Salomon Inc, a former investee of Berkshire, Wesco and several of their subsidiaries, in the following capacities: 1992 to ~~consolidated~~1997, ~~financial~~Chairman ~~statements~~and Chief Executive Officer of Salomon Inc; 1991 and 1992, general counsel of Salomon Inc and its investment banking subsidiary, Salomon Brothers. Mr. Denham has also been a director of Chevron Corporation, an international energy company, since 2004; Fomento Economico Mexicano, S.A. de C.V., a beverage and convenience store company, since 2001; and The New York Times Company, a media company, since 2008. He was also a director of Lucent Technologies, Inc., a telecommunications equipment manufacturer, from 2002 and of its successor by merger, Alcatel-Lucent, from 2006 through 2009.

37 46

Mr. Denham has a significant amount of experience as a director of various public companies, ~~NOTES~~and Wesco benefits from his knowledge of other companies’ practices. Mr. TODenham also contributes ~~CONSOLIDATED~~through ~~FINANCIAL~~his ~~STATEMENTS~~experience as a business lawyer and as a chief executive officer, and through his financial and accounting experience, which includes five years as chairman of the Financial Accounting Foundation.

ROBERT T. FLAHERTY, age 73, has been a Director since 2003. He is engaged in personal investments. ~~(Dollar~~From ~~amounts~~1983 through 1996, he served as President of Flaherty & Crumrine Incorporated, a registered investment and commodities trading advisor. In addition, he served as a director of Flaherty & Crumrine Incorporated until 2002; he retired from that company in ~~thousands~~2003. ~~except~~During ~~for~~his ~~amounts~~affiliation ~~per~~with Flaherty ~~share)~~& Crumrine Incorporated, Mr. Flaherty also served as Chairman, President and Chief Executive Officer of three publicly traded closed-end investment companies managed by that firm.

~~Note~~ Mr. Flaherty’s 1extensive investment management experience is of substantial value to Wesco, which maintains a sizable investment portfolio. ~~Significant~~Mr. Flaherty ~~Accounting~~also ~~Policies~~has an MBA and ~~Practices~~is a Chartered Financial Analyst. His experience and education have contributed to his effectiveness as a member of Wesco’s Audit Committee as well as its Special Committee.

PETER D. KAUFMAN, age 56, has been a Director since 2003. He is Chairman and Chief Executive ~~Nature~~Officer of ~~operations~~ Glenair, ~~basis~~Inc., a privately held manufacturer of ~~consolidation,~~electrical and ~~presentation~~fiber optic components and assemblies for the aerospace industry. He has served in various capacities at that company since 1977. Mr. Kaufman has also been a director of Daily Journal Corporation since 2006.

~~Wesco Financial Corporation (“Wesco”) is an 80~~ Mr.~~1% indirectly~~ Kaufman ~~owned~~has ~~subsidiary~~many years of ~~Berkshire~~practical ~~Hathaway~~experience ~~Inc. (“Berkshire”).~~as ~~Wesco is~~ a ~~holding~~chief ~~company.~~executive ~~Its consolidated~~officer, ~~financial statements include the accounts of Wesco~~ and ~~its subsidiaries, all wholly owned. Its principal~~he ~~subsidiaries~~specializes ~~are~~in ~~Wesco-Financial~~fostering ~~Insurance~~a ~~Company (“Wes-FIC”),~~business ~~The~~culture ~~Kansas~~that ~~Bankers~~motivates ~~Surety Company (“KBS”), CORT Business Services Corporation (“CORT”)~~ and ~~Precision~~retains ~~Steel~~exceptional ~~Warehouse, Inc~~employees. ~~(“Precision~~ ~~Steel”). Further information regarding~~His ~~these~~background ~~businesses is contained~~ in ~~Note 12.~~accounting ~~Intercompany balances~~also ~~and~~makes ~~transactions~~him ~~are~~a ~~eliminated~~valuable inmember ~~the preparation~~ of ~~the~~ ~~consolidated~~Wesco’s ~~financial~~Audit ~~statements~~Committee.

InELIZABETH ~~January~~CASPERS ~~2008~~PETERS, ~~CORT~~age ~~purchased~~84, ~~RoomService~~has ~~Group,~~been a ~~small furniture~~Director ~~rental~~since ~~company~~1959 inexcept ~~the United Kingdom,~~ for ~~$5,500, including $1,913 of goodwill. In November 2008 CORT purchased certain assets of~~ the ~~Corporate~~period ~~Furnishing~~1961 ~~Division of Aaron~~to ~~Rents, Inc~~1967., ~~for~~She ~~$76,430,~~is ~~including~~engaged ~~$9,717 of goodwill. The fair values of the assets acquired and liabilities assumed are included~~ in ~~the~~personal ~~accompanying consolidated financial statements from dates of acquisition~~investments.

~~The~~ Ms. Peters ~~operations~~has ofserved ~~Wes-FIC~~on ~~are managed by Berkshire~~Wesco’s ~~subsidiary~~ ~~National~~board ~~Indemnity~~of ~~Company~~directors ~~(“NICO”). Historically,~~for amore ~~significant~~than ~~part~~40 years. ofHer ~~Wes~~long-~~FIC’s insurance~~time ~~business~~service ~~has~~provides ~~derived~~important ~~from~~knowledge ~~contracts with NICO and other wholly owned insurance subsidiaries~~ of ~~Berkshire, herein referred to as the “Berkshire Insurance Group”. Terms of Wes-FIC~~Wesco’s ~~participation~~operations inand ~~the~~corporate ~~insurance~~history ~~contracts~~and ~~are identical~~contributes to ~~those by which the other Berkshire Insurance Group~~ ~~members~~her ~~participate,~~effectiveness ~~except~~ as toa ~~the~~member ~~relative percentages~~ of ~~their~~ ~~participation~~Wesco’s inSpecial ~~the various contracts~~Committee. ~~Financial data~~ ~~appearing in the accompanying consolidated financial statements relative to business with the Berkshire Insurance Group is designated as affiliated business.~~

~~Wes-FIC~~EXECUTIVE ~~significantly increased its reinsurance activities~~OFFICERS effective at the beginning of 2008, when it entered into a retrocession agreement with NICO, to assume 10% of NICO’s quota share reinsurance of Swiss Reinsurance Company and its major property-casualty affiliates (“Swiss Re”). Under this arrangement, Wes-FIC has assumed 2% part of NICO’s 20% quota share reinsurance of all Swiss Re property-casualty risks incepting over the five-year period ending December 31, 2012 on the same terms as NICO’s agreement with Swiss Re. Wes-FIC recorded written premiums of $294.1 million and $265.2 million in 2009 and 2008, and earned premiums of $276.7 million and $183.2 million in those respective years, under this arrangement.

In addition to Mr. Munger, Wesco has three executive officers, who are listed below. All officers are elected by Wesco’s Board to serve for the twelve-month period following Wesco’s annual ~~Use~~meeting of ~~estimates~~shareholders or until their successors have been elected and qualified. Set forth below infor ~~preparation~~each ofexecutive ~~financial~~officer ~~statements~~other than Mr. Munger is his principal occupation, business experience during at least the past five years, age, and certain other information.

~~The~~JEFFREY preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported revenues and expenses during the period reported uponL. In ~~particular~~JACOBSON, ~~estimates~~age of63, ~~written~~has ~~and~~served ~~earned~~as ~~premiums~~Vice ~~and unpaid~~President ~~losses~~ and ~~loss~~Chief ~~adjustment~~Financial ~~expenses~~Officer ~~for property and casualty insurance are subject to considerable estimation error due both to the necessity~~ of ~~estimating information with respect~~Wesco tosince ~~certain~~1984. ~~reinsurance~~He ~~contracts~~has ~~where~~served ~~reports~~MS ~~from~~Property ~~ceding companies~~Company, ~~for~~a ~~the~~wholly ~~quarterly~~owned ~~reporting~~Wesco ~~periods are not contractually due until after the balance sheet date~~subsidiary, as ~~well~~Vice asPresident ~~the~~and ~~inherent~~Chief ~~uncertainty~~Financial inOfficer ~~estimating~~since ~~ultimate~~1993, ~~claim amounts that will be reported~~ and ~~settled~~as ~~over~~ a ~~period~~director ofsince ~~many years~~2005. ~~The~~ ~~estimates~~He ~~and~~has ~~assumptions~~served ~~are~~in ~~based on management’s~~various ~~evaluation~~financial ~~of the relevant facts~~ and ~~circumstances~~other ~~using information~~offices ~~available at the time such estimates and assumptions are made. The amounts~~ of ~~such~~Blue ~~assets,~~Chip ~~liabilities,~~since ~~revenues~~joining ~~and expenses~~it ~~included~~ in ~~the~~1977 ~~consolidated~~— ~~financial~~currently ~~statements~~he ~~may differ~~is ~~significantly~~Vice ~~from those that might result from use of~~President ~~estimates~~ and ~~assumptions~~Chief ~~based~~Financial onOfficer ~~facts~~— and ~~circumstances~~has ~~not yet~~served ~~available.~~as ~~Although~~a ~~Wesco’s~~Blue ~~management~~Chip ~~does~~director ~~not~~since ~~believe~~1987. ~~such changes in~~

38 47

ROBERT E. SAHM, age 83, has, since 1971, served Wesco as Vice President in charge of building management and, ultimately, all real estate operations; prior thereto, he served as Building ~~Cash~~Manager from 1967. Since 2005, he has served MS Property Company as President and, from 1993 to ~~equivalents~~2005, as Senior Vice President in charge of property management, development and sales. He has served as a director of MS Property since 1993.

CHRISTOPHER M. GRECO, age 33, has served Wesco as Treasurer since 2005. He has also served MS ~~Cash~~Property ~~equivalents~~as ~~consist~~Executive ofVice ~~funds~~President ~~invested~~since in2008 Uand, prior thereto, as Treasurer, since 2005.S. He has also served Blue Chip as Treasurer since 2005 and as a director since February ~~Treasury~~2011. ~~Bills~~Previously, ~~money~~he ~~market~~was ~~accounts~~employed by PriceWaterhouseCoopers, ~~and~~providing ~~other~~audit, ~~investments~~tax-related ~~with~~and abusiness ~~maturity~~consulting ofservices ~~three~~to ~~months~~publicly ortraded ~~less~~and ~~when~~privately ~~purchased~~owned companies, and other clients of that accounting firm.

STANDING BOARD COMMITTEES ~~Investments~~

~~The~~ Wesco ~~appropriate~~has ~~classifications~~a ofstanding ~~investments~~audit committee (“Audit Committee”) established in ~~securities~~ accordance with Section 3(a)(58)(A) ~~fixed~~of ~~maturities~~the ~~and~~Exchange ~~marketable~~Act ~~equity~~that ~~securities~~is ~~are established~~responsible atfor assisting the ~~time~~Board ofin ~~purchase~~fulfilling its ~~and~~responsibilities ~~reevaluated~~ as ofthey ~~each balance~~relate ~~sheet~~to ~~date.~~Wesco’s ~~There~~accounting ~~are~~policies, ~~three~~internal ~~permissible~~controls ~~classifications:~~and financial ~~held-to-maturity, trading,~~reporting ~~and,~~practices. ~~when~~The ~~neither~~members of ~~those~~the ~~classifications~~Audit ~~is applicable~~Committee are Carolyn H. Carlburg (Chair), ~~available-for-sale~~ Robert T. ~~Trading~~Flaherty ~~investments~~and ~~are~~Peter ~~carried~~D. atKaufman. ~~fair~~The ~~value~~Board ~~and~~has ~~include securities~~determined ~~acquired~~that ~~with~~each ~~the~~of ~~intent~~these toDirectors ~~sell~~is independent in ~~the~~accordance ~~near~~with ~~term. Held-to-maturity investments~~NYSE ~~are~~Amex ~~carried~~listing atstandards, ~~amortized~~and ~~cost,~~with ~~reflecting~~Rule 10A-3 ~~the ability~~promulgated ~~and~~under ~~intent~~the toExchange Act. ~~hold~~The ~~the~~Board ~~securities~~has todetermined ~~maturity~~that Messrs. Flaherty ~~All~~and ~~other investments~~Kaufman are ~~classified~~each ~~as available-for-sale and~~“audit ~~carried~~committee atfinancial experts” ~~fair~~as ~~value,~~that ~~with~~term ~~unrealized~~is ~~gains~~used ~~and~~in ~~losses,~~Item 407 ~~net~~ of ~~applicable~~Regulation S-K ~~deferred~~promulgated ~~income~~under ~~taxes,~~the ~~reported~~Exchange asAct. ~~a separate~~The ~~component~~Audit ~~of shareholders~~Committee’s ~~equity~~charter is available at www.wescofinancial.com.

~~Realized~~ The ~~investment~~Audit ~~gains~~Committee ~~and~~is ~~losses, determined on a specific-identification basis, are included in~~ the ~~consolidated statement~~only ofstanding ~~income,~~committee ~~as are provisions for other-than-temporary declines in market or fair value~~ of ~~equity~~the ~~investments, when applicable~~Board. ~~With~~Wesco ~~respect~~does tonot anhave ~~investment in~~ a ~~fixed-maturity~~ ~~security,~~nominating ~~an other-than-temporary impairment~~committee ~~would be recognized if the Company (a) intends to sell~~ or expects to be required to sell the security before amortized cost is recovered or (b) does not expect to ultimately recover the amortized cost basis even if it does not intend to sell the security. Losses under (a~~) would~~ ~~be recognized~~compensation ~~in earnings~~committee. ~~Under (b) any credit loss component~~ would be recognized in earnings and any difference between fair value and the amortized cost basis, net of the credit loss, would be reflected in other comprehensive income. Factors considered in judging whether an impairment is other than temporary include: the financial condition, business prospects and creditworthiness of the issuer, the length of time that fair value has been less than cost, the relative amount of the decline, and Wesco’s ability and intent to hold the investment until the fair value recovers.

SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE ~~Accounts receivable~~

~~Substantially~~ Section 16(a) ~~all~~of ~~accounts~~the ~~receivable~~Securities ~~are~~Exchange ~~due~~Act ~~from~~of ~~customers~~1934 ~~and affiliates~~requires ~~located~~Wesco’s ~~within~~executive ~~the~~officers ~~United States. Accounts receivable~~and ~~are~~Directors, ~~recorded~~and ~~net~~persons ofwho anown ~~allowance~~more ~~for~~than ~~doubtful~~ten ~~accounts,~~percent ~~based on a review~~ of ~~specifically~~Wesco’s ~~identified~~outstanding ~~accounts~~capital instock, ~~addition~~ to anfile ~~overall~~reports ~~collectability~~of ~~analysis.~~ownership ~~Judgments~~and ~~are~~changes ~~made~~in ownership with ~~respect to~~ the ~~collectability~~SEC. Copies of ~~accounts~~all ~~receivable~~such ~~based~~Section ~~on historical~~16(a) ~~experience~~reports ~~and~~must ~~current~~be ~~economic~~furnished ~~trends.~~to ~~Actual losses could differ from those estimates~~Wesco.

Based solely on its review of the copies of such Section 16(a) reports received by it, and representations from certain persons subject to Section 16(a) reporting that no such reports were ~~Rental~~required to be filed, Wesco believes that its executive officers, Directors, and beneficial owners ~~furniture~~of more than ten percent filed all such required reports on a timely basis during 2010.

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

Wesco has adopted a Code of Business Conduct and Ethics (the “Code”) applicable to its ~~Goodwill~~Directors, officers and employees and those of its subsidiaries. A copy of the Code may be accessed ~~acquired~~through ~~businesses~~Wesco’s website, www.wescofinancial.com.

39 Goodwill of acquired businesses represents the excess of the cost of acquired entities over the fair values assigned to assets acquired and liabilities assumed. All goodwill acquired is assigned to the reporting unit that the related assets are employed in and the liabilities relate to, as it is believed that those reporting units benefit from the acquisition. The Company accounts for goodwill in accordance with GAAP, which requires a test for impairment annually or if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The impairment test is performed in two phases. The first step compares the carrying value of the reporting unit, including goodwill, to its estimated fair value. If the

Item 11. Executive Compensation 48

~~carrying~~DIRECTOR ~~value is greater than the estimated fair value of the~~COMPENSATION unit, a second step is required, comparing the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. An impairment loss, charged to earnings, is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value.

~~The~~ Directors ~~Company~~who ~~determines~~are ~~the~~not ~~fair~~officers ~~value~~receive offees ~~its~~totaling ~~furniture~~$9,000 ~~rental unit~~per ~~using the discounted cash flows approach. Under the discounted cash flows approach~~year, ~~the~~plus ~~Company~~$750 ~~estimates~~for ~~the fair~~each ~~value~~special meeting of the ~~reporting~~Board ~~unit~~which ~~based~~they ~~on the present value of its estimated future cash flows~~attend. ~~This~~The ~~approach~~chair ~~incorporates a number~~ of ~~significant estimates and assumptions that include: a forecast of~~ the ~~reporting~~Audit ~~unit’s~~Committee ~~future~~receives ~~cash flows,~~an ~~estimated~~additional ~~growth rates~~$9,000 ~~future~~per ~~terminal value~~year, and ~~an appropriate~~each ~~discount~~other ~~rate.~~member ~~The~~of ~~Company~~the ~~then~~Audit ~~prepares~~Committee ~~a sensitivity~~receives ~~analysis~~$750 asfor toeach Audit ~~how~~Committee ~~changes~~meeting inattended. ~~key~~Mr. Munger ~~estimates~~does ~~or assumptions~~not ~~might~~receive ~~affect~~any ~~the~~compensation ~~outcome~~for ofserving ~~the~~as ~~goodwill impairment~~a ~~test~~Director. In ~~projecting~~addition, ~~future~~as ~~cash~~described ~~flows~~above, ~~the~~a ~~Company~~Special ~~considers~~Committee ~~the current~~of ~~economic~~independent ~~environment~~Directors aswas ~~well as historical results of~~formed ~~the~~to ~~unit.~~evaluate ~~The Company believes that~~ the ~~discounted~~Berkshire ~~cash~~Offer. ~~flows approach~~Based ison the ~~most~~Board’s ~~meaningful~~recommendation, ~~valuation~~retainers ~~technique~~were ~~for~~paid to the ~~furniture~~members ~~rental~~of ~~business, as CORT is~~ the ~~only~~Special ~~national~~Committee ~~company that~~as ~~operates~~follows: in$50,000 ~~the rent-~~to~~-rent furniture~~ ~~industry~~Ms. Carlburg, ~~thus~~Chair, ~~making market-based~~ and ~~transaction-based~~ ~~valuation~~$25,000 ~~techniques~~each ~~less~~to Mr. Flaherty ~~meaningful~~and Ms. Peters.

Wesco’s directors do not participate in any equity plans, deferred compensation arrangements, non-equity incentive plans, pensions or other arrangements. All compensation is paid in cash and is ~~Inventories~~disclosed in the table.

Inventories of $6,221 and $6,425, included in other assets on the accompanying consolidated balance sheet at December 31, 2009 and 2008, are stated at the lower of last-in, first-out (“LIFO”) cost or market; under this method, the most recent costs are reflected in cost of products sold. The aggregate differences in values between LIFO cost and cost determined under the first-in, first-out (“FIFO”) methods were $9,793 and $12,674 as of December 31, 2009 and December 31, 2008, respectively. LIFO inventory accounting adjustments increased income before income taxes by $2,551 ($1,535 after income taxes) for 2009 and decreased income before income taxes by $1,667 and $1,695 ($1,003 and $1,020, after income taxes) for 2008 and 2007.


Name	Cash Fees
Carolyn H. Carlburg	$	69,500	(1,2)
Robert E. Denham		10,500
Robert T. Flaherty		38,500	(2,3)
Peter D. Kaufman		13,500	(3)
Elizabeth Caspers Peters		38,500	(2)

Capitalized construction costs


(1)		Includes $9,000 paid to Ms. Carlburg as chair of the Audit Committee.

(2)		Includes retainers paid to Special Committee members early in 2011.

(3)		Includes fees of $3,000 each, paid to Messrs. Flaherty and Kaufman as members of the Audit Committee, representing $750 for each of four meetings they attended.

~~Capitalized~~COMPENSATION ~~construction~~DISCUSSION ~~costs~~AND ~~of $72,005 and $76,085 are~~ANALYSIS included in other assets on the accompanying consolidated balance sheet at December 31, 2009 and 2008. These costs are associated with the acquisition, development and construction of a real estate project managed by MS Property Company, a Wesco subsidiary.

Wesco is a holding company with no employees of its own. Accordingly, Wesco’s program of executive compensation is believed different from most public corporations’ programs. Messrs. ~~Revenue~~Munger, Jacobson and Greco are not employees of Wesco or a Wesco subsidiary (together, the “Wesco ~~recognition~~Group”); nor are they or have they been remunerated directly by any member of the Wesco Group for their services. All three have been employed by Blue Chip, are its directors, and Mr. Munger is chairman of its board.

~~Insurance~~ The ~~premiums~~Wesco ~~are~~Group ~~stated~~reimburses ~~net~~Blue ofChip ~~amounts~~for ~~ceded to reinsurers and are recognized as earned revenues in proportion to~~ the ~~insurance~~ ~~protection~~services ~~provided, which in most cases is pro rata over the term~~ of ~~each contract~~Messrs. Jacobson ~~Premiums~~and ~~are~~Greco ~~estimated~~based ~~with~~on ~~respect~~Blue toChip’s ~~certain~~cost ~~reinsurance~~of ~~contracts~~their ~~written~~compensation, ~~during~~including ~~the period~~related ~~where~~taxes, ~~reports~~benefits ~~from~~and ~~ceding~~perquisites, ~~companies for the period are not contractually due until well after the balance sheet date. Unearned insurance premiums are deferred~~ and ~~reflected in the~~an ~~liability~~estimate ~~section~~ of the ~~consolidated~~relative ~~balance~~time ~~sheet.~~each ~~Certain costs~~individual ofhas ~~acquiring~~devoted ~~insurance premiums — commissions, premium taxes, and other — are deferred and charged~~ to ~~income~~ as the ~~premiums~~business ~~are~~of ~~earned~~each company.

~~Furniture~~ In ~~rentals~~determining ~~are~~the ~~recognized~~allocation asto ~~revenue~~the ~~proportionately~~Wesco ~~over~~Group, Blue Chip’s actual cost is simply multiplied by the ~~rental~~percentage ~~contract~~of ~~period;~~time ~~rentals~~Messrs. Jacobson ~~received~~and Greco estimate in ~~advance~~good ~~are deferred~~faith inthat ~~the~~they ~~liability~~devote ~~section~~to the business of the ~~consolidated~~Wesco ~~balance sheet~~Group. ~~Costs~~In ~~related~~2010, tothose ~~furniture~~percentages ~~rentals~~were ~~comprise~~approximately ~~the~~91.5% ~~main~~for Mr. Jacobson ~~element~~and of97% ~~cost~~for ofMr. Greco. ~~products~~Nothing ~~and~~else ~~services~~is ~~sold~~considered onby Mr. Munger or by Wesco’s Board in the ~~consolidated~~determination ~~income~~and ~~statement~~approval ~~and~~of ~~include~~the ~~depreciation~~amounts ~~expense~~reimbursed to Blue Chip, ~~repairs~~ ~~and~~except ~~maintenance~~that, in 2010 and ~~inventory~~2009, in ~~losses~~recognition of the extraordinary services provided by Mr. Greco in connection with MS Property’s development of a multi-story luxury condominium

40 Revenues from product sales are recognized upon passage of title to the customer, which coincides with customer pickup, product shipment, delivery or acceptance, depending on the sales arrangement. Revenues from services performed are recognized at the completion of the elements specified in the contract, which typically coincides with their being billed.

~~Dollar~~building, ~~amounts~~Mr. Munger inproposed, ~~thousands~~and the Boards of ~~except~~Wesco and MS Property authorized, that MS Property reimburse Blue Chip for ~~amounts~~special ~~per~~$50,000 ~~share~~bonuses to Mr. Greco.

Mr. Jacobson has primary responsibility for all aspects of accounting, financial reporting, and income tax reporting for Blue Chip, Wesco and MS Property. He also performs the other duties 49typical of chief financial officers on behalf of each of these companies.

Mr. Greco assists Mr. Jacobson with respect to accounting, financial reporting and income tax ~~determining~~reporting, ~~the~~and ~~constant~~has ~~yield~~hands-on responsibility for ~~mortgage~~the Sarbanes-~~backed~~Oxley-required ~~securities,~~documentation and ~~anticipated~~testing ~~counterparty~~of ~~prepayments~~internal ~~are~~control ~~estimated~~over ~~and~~financial ~~evaluated~~reporting at the Wesco parent company level, and, ~~periodically~~ultimately, for the testing of internal control over financial reporting for the Wesco Group. ~~Dividends~~He ~~from~~is also ~~equity~~directly ~~securities~~responsible ~~are~~for ~~earned~~Wesco’s oninternal audit function, from the parent company perspective, exand he has had primary responsibility for the management and marketing of MS Property’s multi-~~dividend~~story luxury ~~date~~condominium development.

Mr. Munger determines the level of compensation of Blue Chip’s executive officers using subjective factors, including individual performance, changes in responsibility and inflation. The ~~Losses~~profitability of Blue Chip is not considered in setting its executives’ compensation. Wesco and ~~loss~~its ~~adjustment~~subsidiaries ~~expenses~~do not reimburse Blue Chip for Mr. Munger’s services. Wesco’s Board, at least annually, reviews and approves the compensation of, or any reimbursement to Blue Chip for, Wesco’s executive officers based on the recommendations of Mr. Munger.

~~Liabilities~~ The ~~for~~sharing ~~unpaid~~of ~~insurance~~executives, ~~losses~~as ~~and~~well ~~loss~~as ~~adjustment expenses~~the ~~represent~~allocation ~~estimates~~ of ~~the~~their ~~ultimate~~compensation ~~amounts~~among ~~payable under~~Blue ~~property~~Chip and the ~~casualty~~Wesco ~~reinsurance~~Group, ~~and~~was ~~insurance~~the ~~contracts related~~product toof ~~losses~~evolution. ~~occurring~~Mr. Jacobson onhad orbeen ~~before~~involved in the ~~balance sheet date.~~financial ~~Liabilities~~reporting for ~~insurance~~Blue ~~losses~~Chip ~~are~~as ~~comprised~~an ofauditor ~~estimates~~with ~~for reported~~Price ~~claims~~Waterhouse ~~(“case~~beginning ~~reserves”)~~in 1969, and ~~reserve~~then as an ~~development~~employee onof ~~reported~~Blue ~~claims~~Chip asbeginning ~~well~~in as1977. ~~estimates~~He ~~for~~has ~~claims~~also been involved in the development of ~~that~~consolidated ~~have~~Wesco ~~not~~financial ~~yet~~information ~~been~~for ~~reported~~inclusion ~~(some~~in ofthe ~~which~~consolidated ~~may~~financial ~~not~~reporting beof ~~reported~~Blue ~~for~~Chip, ~~many~~when ~~years),~~it ~~which~~was ~~together~~a ~~are~~publicly ~~also~~owned ~~referred~~company tountil ~~as “incurred~~mid-~~but-not-reported”~~1983, ~~reserves~~and ~~(“IBNR”~~of ~~reserves)~~ Berkshire, since approximately the mid-1970s. ~~The~~Throughout ~~liability~~the ~~for~~early ~~unpaid~~1980s, ~~losses~~he ~~includes~~had ~~significant~~assumed ~~estimates~~increasing responsibilities for ~~these~~the ~~claims~~financial and ~~includes~~income ~~estimates~~tax ~~reported~~reporting ~~by ceding~~for ~~insurers.~~Wesco ~~Loss~~and ~~reserve~~its ~~estimates~~savings and ~~reflect~~loan ~~past loss experience~~subsidiary, ~~adjusted~~in asaddition ~~appropriate~~to ~~when~~his ~~losses~~similar ~~are~~responsibilities ~~reasonably expected~~for toBlue ~~deviate from experience~~Chip.

~~Considerable~~ In ~~judgment~~1984, isMr. Munger, ~~required~~Chairman toand ~~evaluate~~CEO ~~claims~~ and ~~estimate~~ ~~claims~~president ~~liabilities~~of inBlue ~~connection~~Chip, ~~with~~as ~~reinsurance contracts.~~well Asas ~~further~~a ~~data~~Wesco ~~becomes available~~Director, ~~the liabilities~~ ~~are~~became ~~reevaluated~~Chairman and ~~adjusted~~CEO asof ~~appropriate.~~Wesco ~~Additionally, claims,~~and atof ~~each~~its ~~balance~~savings ~~sheet~~and ~~date~~loan subsidiary, ~~are~~and inMr. Jacobson ~~various~~was appointed ~~stages~~Chief Financial Officer of Wesco and the ~~settlement~~ ~~process.~~savings ~~Each~~and ~~claim~~loan issubsidiary. ~~settled~~He ~~individually~~also ~~based~~retained ~~upon~~his ~~its~~financial ~~merits~~reporting responsibilities for Blue Chip, and ~~some~~Blue ~~take~~Chip ~~years~~began to ~~settle,~~apportion ~~especially~~the ifcost ~~legal~~of ~~action is involved~~Mr. Jacobson’s ~~Actual~~compensation ~~ultimate~~and ~~claims~~benefits ~~amounts are likely~~ to ~~differ~~Wesco ~~from~~and ~~amounts~~its ~~recorded at the balance sheet date~~subsidiary.

~~Depending~~ When onMr. Greco ~~the~~was ~~type of loss being estimated~~hired, ~~the~~because ~~timing~~Wesco ~~and amount~~did ofnot ~~loss payments are subject to a great degree of variability~~ and ~~are~~still ~~contingent~~does ~~upon,~~not ~~among~~have ~~other~~any ~~factors,~~employees ~~the timing~~ of ~~the claim reporting by cedants and insureds~~its own, ~~and~~he ~~the determination~~logically ~~and~~became ~~payment~~an employee of ~~the~~Blue ~~ultimate~~Chip ~~loss~~just ~~amounts~~like ~~through the loss adjustment process~~Mr. ~~Judgments and assumptions are necessary in projecting the ultimate amounts payable in the future with respect to loss events that have occurred~~ Jacobson.

~~The~~ No ~~time~~tax ~~period~~considerations ~~between~~have ~~the~~been ~~claim~~taken ~~occurrence~~into ~~date~~account ~~and~~in ~~payment date of~~ the ~~loss~~structuring isof ~~referred~~Wesco’s toexecutive compensation asor in the ~~“claim~~allocation ~~tail.” Property~~of ~~claims~~such ~~usually~~compensation ~~have~~among ~~fairly~~Blue ~~short~~Chip ~~claim~~and ~~tails,~~the ~~and, absent~~Wesco ~~litigation~~Group, ~~are reported~~ and ~~settled within a few months~~no oroutside ~~years~~compensation ~~after~~consultants ~~occurrence. Casualty losses usually~~ have ~~very long~~been ~~claim tails~~used. ~~Casualty~~Wesco ~~claims~~has ~~can~~no beequity ~~more~~plans, ~~susceptible~~deferred tocompensation ~~litigation and can be more significantly affected by changing contract interpretations and the legal environment~~arrangements, ~~which contributes~~non-equity toincentive ~~extended~~or ~~claim~~pension ~~tails.~~plans ~~Claim tails~~ for ~~reinsurers may~~its beexecutive ~~further extended due to delayed reporting by ceding insurers or reinsurers due to contractual provisions or reporting practices~~officers. ~~Actual~~Neither ~~ultimate loss settlement amounts are~~the ~~likely~~profitability toof ~~differ~~Wesco ~~from~~nor ~~amounts recorded at~~ the ~~balance~~market ~~sheet date.~~price ~~Changes~~of inWesco’s ~~estimates,~~stock ~~referred~~is toconsidered ~~as “loss development,” are recorded as a component of losses incurred~~ in ~~the~~setting ~~period of change~~executive compensation.

~~Provisions~~ Factors ~~for~~considered ~~losses~~by ~~and~~Mr. Munger ~~loss adjustment expenses are reported~~ in setting the ~~consolidated~~level ~~statement~~ of ~~income~~remuneration ~~after deducting estimates~~ of ~~amounts~~Mr. Sahm, ~~that~~who ~~will be recoverable under reinsurance~~is ~~contracts.~~employed ~~Reinsurance~~by ~~contracts~~a domember ~~not~~of ~~relieve~~ the ~~ceding companies~~Wesco ofGroup ~~their~~and ~~obligations~~not toBlue ~~indemnify~~Chip, ~~policyholders~~are ~~with respect~~typically tosubjective ~~the~~and ~~underlying~~include ~~insurance contracts. Ceded reinsurance~~his ~~losses~~performance, ~~recoverable~~changes ~~(“ceded reserves”) are reflected~~ in ~~the~~ ~~accompanying~~responsibilities ~~consolidated~~and ~~balance sheet as a component of accounts receivable~~inflation.

41 ~~Income taxes~~

~~Provisions~~BOARD ~~for~~OF ~~current~~DIRECTORS ~~income~~REPORT ~~tax~~ON ~~liabilities are calculated and~~COMPENSATION accrued on income and expense amounts expected to be included in the income tax returns for the current year. Deferred income taxes are calculated under the liability method. Deferred income tax assets and liabilities are based on differences between the financial statement and tax bases of assets and liabilities at the current enacted tax rates.

The Board reviewed and discussed the Compensation Discussion and Analysis section with Wesco ~~Dollar~~management ~~amounts~~and, inbased ~~thousands~~on such review and discussion, recommended that the Compensation Discussion ~~except~~and ~~for~~Analysis ~~amounts~~be ~~per~~included ~~share~~in this Form 10-K Annual Report.

Submitted by Wesco’s Board of Directors: Charles T. Munger, Carolyn H. Carlburg, Robert E. Denham, Robert T. Flaherty, Peter D. Kaufman and Elizabeth Caspers Peters. 50

~~Changes~~COMPENSATION inOF ~~deferred~~EXECUTIVE ~~income tax assets and liabilities that are~~OFFICERS associated with components of other comprehensive income (principally, unrealized investment gains and losses) are charged or credited directly to other comprehensive income. Otherwise, changes in deferred income tax assets and liabilities are included as a component of income tax expense. Changes in deferred income taxes and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established for deferred tax assets where realization is not likely.

~~Assets~~The ~~and~~following ~~liabilities~~table ~~are~~shows ~~established~~compensation ~~for~~paid ~~uncertain~~by ~~tax positions~~the ~~taken~~Wesco orGroup ~~positions expected~~ to beWesco’s ~~taken~~executive inofficers ~~income tax~~for ~~returns when such positions are judged to not meet~~ the ~~“more-likely-than-not”~~ ~~threshold~~years ~~based~~ended onDecember 31, ~~the technical~~2010, ~~merits~~2009 ~~of the positions. Estimated interest~~ and ~~penalties~~ ~~related to uncertain tax positions are included as a component of income tax expense~~2008.(1)

Foreign currency


			Annual Compensation
							All
Name and Capacity in Which Served	Year		Salary(2)		Bonus(3)		Other(4)		Total
Charles T. Munger — Chairman of the Board,		2010	$	—	$	—	$	—	$	—
President and Chief Executive Officer of Wesco		2009		—		—		—		—
		2008		—		—		—		—
Jeffrey L. Jacobson — Vice President and Chief Financial		2010		294,000		—		—		294,000	_
Officer of Wesco and MS Property Company		2009		276,600		—		—		276,600
		2008		286,000		—		—		286,000
Robert E. Sahm — Vice President of Wesco and		2010		244,800		20,400		12,441		277,641
President of MS Property Company		2009		242,400		20,400		14,865		277,665
		2008		235,200		20,000		20,822		276,022
Christopher M. Greco — Treasurer of Wesco and		2010		266,000		—		—		266,000
Executive Vice President of MS Property Company		2009		256,400		—		—		256,400
		2008		177,600		—		—		177,600

The accounts of the Company’s foreign-based subsidiary are measured using the local currency as the “functional” currency. Thus, revenues and expenses of this business are translated into U.S. dollars at the average exchange rate for the period. Assets and liabilities are translated at the exchange rate as of the end of the reporting period. Gains or losses from translating the financial statements of the foreign-based operations are included in shareholders’ equity as a component of accumulated other comprehensive income.


(1)		Wesco has no equity plans, deferred compensation arrangements, non-equity incentive or pension plans for its executive officers.

(2)		Messrs. Munger, Jacobson and Greco have been employees of, and compensated by, Blue Chip but have spent a portion of their time on the activities of Wesco and its subsidiaries. The figures shown in this column for Messrs. Jacobson and Greco represent amounts paid to Blue Chip by Wesco or its subsidiaries for their services. Blue Chip has not been compensated by Wesco or its subsidiaries for Mr. Munger’s services. Mr. Munger was paid a total of $100,000 annually by Blue Chip for 2010, 2009 and 2008. Mr. Sahm is compensated by MS Property Company.

(3)		Mr. Sahm’s bonus is based on a length-of-service formula applicable to all employees of MS Property Company and is equal to one month’s salary.

(4)		Represents the value of company-owned automobile and club dues paid by MS Property.

~~Accounting pronouncements~~BOARD ~~adopted~~OF inDIRECTORS ~~2009~~INTERLOCKS ~~and~~AND ~~2008~~INSIDER PARTICIPATION

In Charles ~~2009~~T. Munger, ~~the~~Chairman ~~Financial~~of ~~Accounting~~the ~~Standards~~ Board, ~~established the~~President ~~FASB~~and ~~Accounting~~Chief ~~Standards~~Executive ~~Codification~~Officer ~~(the “Codification”~~of orWesco, ~~“ASC”) as the source of~~is ~~GAAP~~also ~~through~~Chairman ~~the integration~~ of ~~then current accounting standards from several sources into a single source. The Codification did not affect~~ the ~~content~~Board orand ~~application~~president of ~~GAAP that~~Blue ~~was~~Chip ~~in effect~~ and ~~had~~Vice noChairman ~~material~~of ~~impact~~the onBoard ~~our consolidated~~of ~~financial statements~~Berkshire. ~~In these notes, specific~~ ~~accounting~~Jeffrey ~~standards are identified by Accounting Standards Codification number or “ASC”~~L.

42 As of January 1, 2008, Wesco adopted ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

~~Level 1~~Jacobson, ~~inputs~~Vice ~~represent~~President ~~unadjusted~~and ~~quoted~~Chief ~~prices~~Financial inOfficer ~~active markets~~of ~~for~~Wesco, ~~identical~~and ~~assets~~Christopher ~~or liabilities~~M. ~~Substantially all~~Greco, Treasurer of Wesco’s, ~~equity~~are ~~investments~~also ~~are~~a ~~traded~~directors onof anBlue ~~exchange~~Chip ~~in active~~and ~~markets~~serve Blue Chip as Vice President and Chief ~~fair~~Financial ~~value~~Officer, isand ~~based~~Treasurer, onrespectively. ~~the~~Mr. Munger ~~closing~~participated ~~prices~~in as discussions of Wesco’s ~~the~~Board ~~balance~~regarding ~~sheet~~executive ~~date~~officer compensation.

~~Level~~Item 212. ~~inputs~~Security ~~represent~~Ownership observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active or inactive markets; quoted prices for identical assets or liabilities in markets that are not active; other inputs that may be considered in fair value determinations of ~~the~~Certain ~~assets~~Beneficial orOwners ~~liabilities, such as interest rates~~ and ~~yield curves,~~Management ~~volatilities, prepayment speeds, loss severities, credit risks~~ and ~~default~~Related ~~rates;~~Shareholder ~~and inputs that are derived principally~~Matters from or corroborated by observable market data by correlation or other means. Fair values for Wesco’s investments in fixed maturity securities are based primarily on market prices and market data available for instruments with similar characteristics since active markets are not common for many instruments.

~~Level 3~~SECURITY ~~inputs~~OWNERSHIP ~~are~~OF ~~unobservable~~CERTAIN ~~inputs~~BENEFICIAL ~~used~~OWNERS inAND ~~the~~MANAGEMENT measurement of assets. Measurement of the fair values of the non-exchange traded investments are based on a standard warrant valuation model or discounted cash flow model, as applicable, which are techniques believed to be widely used by other market participants. Significant assumptions inherent in the warrant valuation model include an estimated stock price volatility factor, dividend and interest rate assumptions, and the estimated term of the warrants.

Wesco’s capital stock is the only class of its outstanding stock, with a total of 7,119,807 ~~Dollar~~shares ~~amounts~~outstanding. Blue Chip, a wholly owned subsidiary of Berkshire, owns 5,703,087 shares (80.1%) of Wesco capital stock. Blue Chip is the only organization or individual known to Wesco’s management to own beneficially 5% or more of its outstanding shares. Warren E. Buffett, Chairman of the Board and Chief Executive Officer of Berkshire, may be deemed to be in ~~thousands~~control of Berkshire, ~~except~~and ~~for~~Mr. Buffett, ~~amounts~~as ~~per~~well ~~share~~as Berkshire, may be deemed to be in control of Blue Chip and Wesco. Charles T. Munger, Chairman of the Board and President of Wesco, is also Vice Chairman of the Board of Berkshire. Mr. Munger consults with Mr. Buffett with respect to Wesco’s investment decisions and major capital allocations. Berkshire has two classes of common stock, designated Class A and Class B. Beneficial ownership as of February 15, 2011 of Wesco capital stock and Berkshire common stock by Blue Chip and by all Wesco Directors and executive officers who own shares is set forth below.


	Wesco Capital Stock						Berkshire Class A Stock					Berkshire Class B Stock
	Amount and Nature						Amount and Nature					Amount and Nature
	of Beneficial			Percent			of Beneficial			Percent		of Beneficial			Percent
Name	Ownership(1)			of Class			Ownership(1)			of Class		Ownership(1)			of Class
Blue Chip Stamps		5,703,087	(2)		80.1	%		—			—		—			—
Carolyn H. Carlburg		—			—			—			—		550			*
Robert E. Denham		1,270	(3)		*			60	(4)		*		9,250	(4)		*
Robert T. Flaherty		—			—			147			*		—			*
Peter D. Kaufman		1,000			*			—			—		2,300	(5)		*
Charles T. Munger		—			—			6,403			*		750			*
Elizabeth Caspers Peters		66,843	(6)		*			—			—		—			—
Christopher M. Greco		—			—			—			—		250	(7)		*
Jeffrey L. Jacobson		—			—			2			*		7,320	(8)		*
Robert E. Sahm		3,150			*			—			—		2,000			*
All directors and executive officers as a group		72,263	(2,3,6,9)		1.0			6,612	(4)		*		22,420	(4,5,7,8)		*

Significant assumptions used in a discounted cash flow model include the discount rate and estimated duration of the instrument.


*		Less than 1%.

(1)		Beneficial owner has sole voting and investment power, except as indicated. With respect to Berkshire shares, each share of Class A stock is convertible into one thousand five hundred shares of Class B stock at the option of the shareholder. As a result, pursuant to Rule 13d-3(d)(1) of the Securities Exchange Act of 1934, a shareholder is deemed to have beneficial ownership of the shares of Class B stock which such shareholder may acquire upon conversion of the Class A stock. In order to avoid overstatement in this table, the amount of Class B stock beneficially owned does not take into account such shares of Class B stock which may be acquired upon conversion of shares of Class A stock held by a shareholder. The percentage of outstanding Class B stock is based on the total number of shares of Class B stock outstanding as of February 15, 2011 and does not take into account shares of Class B stock which may be issued upon conversion of Class A stock.

43 ~~The adoption of ASC 820 did not have a material impact on the accompanying consolidated financial statements.~~

Accounting pronouncements not yet in effect


(2)		Voting and investment power may be deemed to be controlled by Berkshire and Warren E. Buffett by virtue of the relationships described above. Blue Chip’s principal executive offices are located at 301 East Colorado Boulevard, Suite 300, Pasadena, California 91101-1901. Berkshire’s principal executive offices are located at 3555 Farnam Street, Omaha, Nebraska 68131, which is also Mr. Buffett’s principal address.

(3)		Includes 270 shares held by Mr. Denham’s spouse, as to which Mr. Denham disclaims beneficial ownership.

(4)		Includes 20 Class A shares and 1,750 Class B shares as to which Mr. Denham has shared beneficial ownership by virtue of a power of attorney, allowing Mr. Denham investment power but with respect to which he has no voting power. Also includes 5,250 Class B shares as to which Mr. Denham has voting and investment power but with respect to which he has no economic interest.

(5)		Represents shares held by Mr. Kaufman’s spouse, as to which Mr. Kaufman disclaims beneficial ownership.

(6)		Includes 16,843 shares held by a trust of which Mrs. Peters is co-trustee with her children and income beneficiary.

(7)		Includes 50 shares held by Mr. Greco’s spouse, as to which Mr. Greco disclaims beneficial ownership.

(8)		Includes 1,050 shares held jointly by Mr. Jacobson and his spouse as to which Mr. Jacobson has shared voting and investment power and 300 shares as to which he has shared voting and investment power but with respect to which he has no economic interest.

(9)		Does not include the 5,703,087 shares (80.1%) held by Blue Chip, of which Charles T. Munger, Jeffrey L. Jacobson and Christopher M. Greco are directors and executive officers.

~~Wesco’s~~Item 13. ~~management~~Certain ~~does~~Relationships ~~not~~and ~~believe~~Related ~~than~~Transactions, ~~any authoritative accounting pronouncements issued to date~~ and ~~required~~Director ~~to be~~Independence ~~adopted after yearend 2009 are likely to have a material effect on shareholders’ equity.~~

~~Note~~RELATED 2.PERSON ~~Investments~~TRANSACTIONS

~~Following~~ Wesco-Financial isInsurance Company (“Wes-FIC”), a ~~summary~~wholly owned subsidiary of ~~investments~~Wesco, is headquartered in ~~securities~~Omaha, Nebraska, where its business is administered by employees of wholly owned insurance subsidiaries of Berkshire. From time to time, Berkshire has offered to Wes-FIC, and Wes-FIC (with ~~fixed~~Wesco’s concurrence) has accepted, retrocessions of portions of reinsurance contracts ~~maturities:~~under arrangements described above on page 4. Wesco’s and Wes-FIC’s boards believe all such retrocessions have been entered into at terms more favorable than Wes-FIC could have obtained elsewhere. In 2010, written premiums of $271,717,000 were retroceded to Wes-FIC by insurance subsidiaries of Berkshire. Kansas Bankers Surety Company (“KBS”), wholly owned by Wes-FIC, is supervised by Berkshire subsidiaries. For several years, two Berkshire subsidiaries have provided reinsurance for KBS at rates believed to be market prices. In 2010, premiums of $211,000 were ceded to Berkshire subsidiaries, no reinsured losses were allocated to them, and $821,000 of losses which had been reinsured by them in prior years were recovered and repaid to them.

	December 31, 2009				December 31, 2008
			Fair				Fair
	Amortized Cost		Value		Amortized Cost		Value
Mortgage-backed securities	$	18,865	$	20,702	$	21,894	$	22,886
Corporate bonds		200,000		200,000		—		—
Other, principally U.S. government obligations		8,265		9,170		5,606		5,770
	$	227,130	$	229,872	$	27,500	$	28,656

Robert T. Flaherty, a Wesco Director, owns a significant portion of the stock of Flaherty & Crumrine Incorporated, which leases office space in the commercial office building owned by Wesco’s MS Property Company subsidiary. Terms of the lease are believed by Wesco’s management to be within the general market range for such third-party leases. Wesco’s subsidiary received $121,000 under the lease during 2010.

At Pursuant ~~yearend~~to ~~2009~~a ~~and~~written ~~2008~~policy, ~~the~~Wesco’s ~~fair~~Audit ~~values~~Committee ofmust ~~securities~~ratify ~~with~~or reject any transaction or ~~fixed~~proposed ~~maturities~~transaction ~~contained~~in ~~unrealized~~which ~~gains~~Wesco ofis a participant if the amount involved exceeds $2120,~~742~~000 and a $1“related person” is also a participant,~~156.~~ ~~There~~as ~~were~~that noterm ~~unrealized~~is ~~losses~~defined atby ~~December 31, 2009~~the orfederal ~~2008~~securities laws. The transactions with Berkshire and its

44 On December 17, 2009 Wesco acquired $200 million par amount of 5.0% senior notes due 2014 of Wm. Wrigley Jr. Company (“Wrigley”). Wesco has classified the Wrigley Notes as held-to-maturity, and accordingly, they are carried at cost.

			Fair
	Amortized Cost		Value
Due in 2010 — 2013	$	8,265	$	9,170
Due in 2014		200,000		200,000
Mortgage-backed securities		18,865		20,702
	$	227,130	$	229,872

subsidiaries described above were ratified by Wesco’s Audit Committee. The lease with Flaherty & Crumrine Incorporated was also ratified by Wesco’s Audit Committee (with Mr. Flaherty abstaining from the vote).

~~Dollar~~DIRECTOR ~~amounts in thousands~~INDEPENDENCE ~~except for amounts per share~~

Because 80.1% of Wesco’s capital stock is owned by Blue Chip, the Board has determined that Wesco is a “controlled company” within the meaning of Section 801 of the listing standards of the 52NYSE Amex, on which Wesco’s shares are traded. Controlled companies are exempted from a number of the NYSE Amex listing standards, including the requirement to have a majority of independent directors and the requirement to have director nominees selected by a nominating committee comprised entirely of independent directors or by a majority of the independent directors. Controlled companies are also exempt from the requirement to have the compensation of the issuer’s officers determined by a compensation committee comprised solely of independent directors or by a majority of the independent directors.

Nonetheless, the Board has affirmatively determined that Carolyn H. Carlburg, Robert T. ~~Following~~Flaherty, isPeter aD. ~~summary~~Kaufman ofand ~~investments~~Elizabeth inCaspers ~~marketable~~Peters ~~equity~~are “independent” as defined in Section ~~securities~~803A ~~(all~~of ~~common~~the ~~stocks):~~NYSE Amex listing standards.

	December 31, 2009				December 31, 2008
			Fair (Carrying)				Fair (Carrying)
	Cost		Value		Cost		Value
The Procter & Gamble Company	$	372,480	$	378,331	$	372,480	$	385,757
The Coca-Cola Company		40,761		410,719		40,761		326,198
Wells Fargo & Company		382,779		341,240		382,779		372,722
Kraft Foods Incorporated		325,816		271,800		325,816		268,500
US Bancorp		266,940		225,100		266,940		250,100
Other		243,661		438,437		243,661		265,016
	$	1,632,437	$	2,065,627	$	1,632,437	$	1,868,293

Item 14. Principal Accountant Fees and Services

AtINDEPENDENT ~~yearends~~REGISTERED ~~2009~~PUBLIC ~~and~~ACCOUNTING ~~2008, the estimated fair values of~~FIRM marketable equity securities contained unrealized gains of $590,395 and $399,910 and unrealized losses of $157,205 and $164,054, respectively. As of December 31, 2009, two marketable equity securities had been in an unrealized loss positions for more than twelve months and unrealized losses on each security approximated 16% of its respective cost. In management’s judgment the financial condition and near term prospects of these issuers are favorable and Wesco possesses the intent and ability to retain these investments for a period of time sufficient to allow for the prices to recover.

~~Other~~ Wesco’s ~~equity~~consolidated ~~securities~~financial ~~includes~~statements anare ~~investment~~required ofto ~~$205,000,~~be ~~at cost,~~included in ~~shares~~the ofconsolidated financial ~~newly~~statements ~~issued~~of 10its 80.1% ~~cumulative~~parent, ~~perpetual preferred~~Berkshire. ~~stock~~Accordingly, to facilitate the efficient examination of ~~The~~the ~~Goldman~~statements ~~Sachs~~of ~~Group~~both companies, ~~Inc. (“GS”)~~Wesco’s ~~and~~Audit ~~warrants~~Committee, toeffective ~~purchase~~with ~~1.78 million~~the year ~~shares~~2004, ofdelegated GSto ~~common~~Berkshire’s ~~stock,~~audit atcommittee ~~any~~authority ~~time~~to ~~until~~select ~~they~~a ~~expire~~public onaccounting firm to ~~October 1,~~audit ~~2013,~~Wesco’s atconsolidated afinancial ~~price~~statements, ofsubject ~~$115~~to ~~per~~ratification ~~share~~by Wesco’s Audit Committee. GSDeloitte ~~has~~& ~~the right~~Touche toLLP ~~call~~(“Deloitte”) ~~the~~was ~~preferred~~selected ~~shares~~by Berkshire’s audit committee for ~~redemption~~2010 and atthe ~~any~~appointment ~~time~~was ~~at a~~ratified ~~premium~~by ofWesco’s ~~10%~~Audit Committee.

Audit Fees. In 2010, Berkshire allocated to Wesco $447,930, representing Wesco’s ~~realized~~share ~~investment~~of billings ~~gains~~by Deloitte for ~~2008~~the ~~and~~audits ~~2007~~of ~~were $7,006~~the 2010 consolidated financial statements of Berkshire and all ~~$24,240,~~of ~~before~~its ~~taxes~~subsidiaries, ~~respectively~~including Wesco and its subsidiaries. ~~There~~Such ~~were~~services noincluded testing ~~realized~~required ~~investment~~by ~~gains~~the ~~for~~Sarbanes-Oxley ~~2009~~Act orof ~~realized~~2002, ~~losses~~as inwell ~~any~~as reviews of the financial statements included in Wesco’s Quarterly Reports to the ~~past~~SEC ~~three~~on ~~years~~Form 10-Q for 2010. In 2009, Berkshire allocated to Wesco $508,760 for Deloitte’s audit services.

~~Although~~ Audit-Related ~~the~~Fees. ~~investments~~There ofwere ~~Wesco~~no ~~and~~other ~~its~~audit-related ~~subsidiaries~~fees ~~are subject~~billed toby ~~market~~Deloitte ~~risks,~~or ~~derivatives~~allocated ~~are~~by Berkshire ~~not~~in ~~utilized~~2010 toor ~~manage risks~~2009.

~~Note~~ Tax 3Fees. ~~Accounts~~There ~~Receivable~~were no fees billed by Deloitte or allocated by Berkshire in either 2010 or 2009 for tax compliance, tax advice or tax planning for Wesco or its subsidiaries.

~~Accounts~~ All ~~receivable~~Other ~~from~~Fees. ~~unaffiliated~~There ~~companies~~were ~~are~~no ~~comprised~~fees ofbilled by Deloitte or allocated by Berkshire in either ~~the~~2010 ~~following:~~or 2009 other than those set forth above.

	December 31,			December 31,
	2009			2008
Trade accounts receivable	$	40,592		$	59,875
Allowance for uncollectible accounts		(2,609	)		(2,386	)
	$	37,983		$	57,489

Audit Fees Pre-approval Policy. Beginning in 2004, Wesco’s Audit Committee delegated to Berkshire’s audit committee authority to pre-approve other audit and non-audit services for Wesco that are to be performed by the independent registered public accounting firm that audits Berkshire and its subsidiaries, including Wesco and its subsidiaries. Berkshire’s pre-approval policy requires that Berkshire’s audit committee pre-approve all

~~Note 4. Rental Furniture~~45

	December 31,			December 31,
	2009			2008
Cost of rental furniture	$	294,266		$	323,117
Less accumulated depreciation		(116,473	)		(105,520	)
	$	177,793		$	217,597

services the independent registered public accounting firm provides, including audit services, audit-related services, tax and other services. Some services have a general pre-approval. The term of any general pre-approval is 12 months from the date of pre-approval, unless the Berkshire audit committee considers a different period and states otherwise. Berkshire’s audit committee will annually review and pre-approve the services that may be provided by the independent registered public accounting firm without obtaining specific pre-approval. It will revise the list of general pre-approved services from time to time, based on subsequent determinations. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval by Berkshire’s audit committee. Wesco has been informed that all services performed by Deloitte in 2010 on behalf of Wesco and its subsidiaries were pre-approved in accordance with the pre-approval policy adopted by Berkshire’s audit committee, and Wesco’s Audit Committee has ratified all such pre-approvals.

~~Dollar~~Item 15. ~~amounts~~Exhibits inand ~~thousands except~~Financial ~~for~~Statement ~~amounts per share~~Schedules

The following exhibits (listed by numbers corresponding to Table 1 of Item 601 of Regulation S-K) are filed as part of this Annual Report on Form 10-K or are incorporated herein by reference: 53

~~Note~~ 2 5– Agreement and Plan of Merger by and among Berkshire Hathaway Inc., ~~Goodwill~~Montana Acquisitions, LLC and Wesco Financial Corporation, dated February 4, 2011 (filed as exhibit 2.1 to Wesco’s Form 8-K dated February 7, 2011 – Commission File No. 1-4720)

3a — Articles of Incorporation of Wesco (filed as exhibit 3a to Wesco’s Form 10-K for the ~~Following~~year isended aDecember 31, ~~breakdown~~1999) and Bylaws of ~~goodwill:~~Wesco (filed as exhibit 3.2 to Wesco’s Form 8-K dated December 5, 2007 — Commission File No. 1-4720)

	December 31,			December 31,
	2009			2008
Balance at beginning of year	$	277,742		$	266,607
Foreign currency translation		(152	)		(495	)
Acquisitions of businesses and other		—			11,630
	$	277,590		$	277,742

21 — List of subsidiaries

~~The~~ 31(a) ~~decrease~~— inCertification ~~goodwill~~Pursuant ~~for 2009 relates~~ to ~~the~~Section 302 ~~fluctuation~~ of ~~the~~ ~~foreign currency exchange rate of~~ the ~~functional~~Sarbanes-Oxley ~~currency for~~Act ~~Roomservice Group, CORT’s foreign based subsidiary. The increase in goodwill for 2008 relates primarily to CORT’s acquisitions~~ of ~~Roomservice~~2002 ~~Group and certain assets of Aaron~~(chief ~~Rents,~~executive ~~Inc.~~officer)

~~The~~ 31(b) ~~Company~~— ~~performed~~Certification ~~its~~Pursuant ~~annual~~to ~~goodwill~~Section 302 ~~impairment~~of ~~test for 2009 and 2008 in~~ the ~~fourth~~Sarbanes-Oxley ~~quarters~~Act of ~~each~~2002 ~~respective year,~~(chief ~~and~~financial ~~concluded that there was no impairment for any of its~~officer) ~~reporting units at that time because the fair values exceeded the book carrying values.~~

~~The length and magnitude of the economic recession which became evident in 2008 and continued into 2009 has had~~ 32(a) ~~negative impact~~— onCertification ~~the~~Pursuant ~~Company’s reporting units~~ to ~~date,~~Section 906 ~~but the extent~~ of ~~that impact over~~ the long term cannot be reasonably predicted. There can be no assurance that the Company’s estimates and assumptions regarding future operating results made for purposes of the goodwill impairment testing will be accurate predictions of the future. If the weak economic environment has an adverse impact on the longSarbanes-~~term~~Oxley ~~economic value~~Act of ~~the~~2002 ~~reporting units, the Company may be required to~~(chief ~~record~~executive ~~goodwill impairment losses in future periods. Currently,~~officer) ~~it is not possible to determine if any such future impairment losses would result or if such losses would be material.~~

~~Dollar~~ 32(b) ~~amounts~~— inCertification ~~thousands except~~Pursuant ~~for~~to ~~amounts~~Section 906 ~~per~~of ~~share~~the Sarbanes-Oxley Act of 2002 (chief financial officer)

Instruments defining the rights of holders of long-term debt of Wesco and its subsidiaries are not being filed since the total amount of securities authorized by all such instruments does not 54exceed 10% of the total assets of Wesco and its subsidiaries on a consolidated basis as of December 31, 2010. Wesco hereby agrees to furnish to the Commission upon request a copy of any such debt instrument to which it is a party.

~~Note~~ The 6.index ~~Insurance~~to ~~Losses~~financial statements and ~~Loss~~related ~~Adjustment~~schedules ~~Expenses~~set ~~Payable~~forth in Item 8 of this report is incorporated herein by reference.

46 The balances of unpaid losses and loss adjustment expenses are based upon estimates of the ultimate claim costs associated with property and casualty claim occurrences as of the balance sheet dates including estimates for IBNR claims. Considerable judgment is required to evaluate claims and establish estimated claim liabilities.

	2009			2008			2007
Gross liabilities at beginning of year	$	215,268		$	93,845		$	78,310
Less ceded liabilities*		(17,914	)		(23,502	)		(11,628	)
Net balance at beginning of year		197,354			70,343			66,682
Incurred losses recorded during year —
For current year		225,451			175,962			35,392
For all prior years		(12,144	)		(3,762	)		(7,115	)
Total incurred losses		213,307			172,200			28,277
Payments made during year —
For current year		34,618			19,433			9,255
For all prior years		51,865			25,756			15,362
Total payments		86,483			45,189			24,617
Net liabilities at end of year		324,178			197,354			70,343
Plus ceded liabilities*		19,288			17,914			23,502
Gross liabilities at end of year	$	343,466		$	215,268		$	93,845

SIGNATURES

* Pursuant ~~Principally~~to ~~represents~~the ~~Wes-FIC’s~~requirements ~~proportionate~~of ~~share~~Section 13 of ~~reinsurance~~the ~~purchased~~Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the ~~aviation~~undersigned, ~~pools~~thereunto duly authorized.

Incurred losses “for all prior years,” commonly known as “reserve development,” represents the net amount of estimation error charged (credited) to earnings with respect to the liabilities established as of the beginning of the year. Reference is made to Note 12, Business Segment Data, for a summary of the principal insurance activities in which Wesco’s insurance segment has engaged in the past three years. During 2009, $12,144 of net favorable reserve development was recorded, which principally included $12,043 attributed to the Swiss Re contract for the year 2008 and $3,502 attributable to aviation-related reinsurance, primarily for the years 2005 to 2007, partially offset by $4,579 of unfavorable reserve development attributable to primary insurance, including, most notably, increases in loss estimates relating for the years 2007 and 2008, less loss recoveries of $1,002 attributable mainly to a deposit guarantee loss recorded in 2008. During 2008, $3,762 of net favorable reserve development was recorded, which included $4,158 attributable to aviation-related reinsurance, primarily for years 2002-2007, partially offset by $396 of unfavorable reserve development attributable to primary insurance. During 2007, $7,115 of net favorable reserve development was recorded, which included $3,600 attributable to primary insurance and reflected, most notably, the reversal, following a favorable court decision, of a loss of $1,900 recorded in 2005. The 2007 favorable reserve development also included $3,200 attributable to aviation-related reinsurance.


WESCO FINANCIAL CORPORATION

By:	/s/ Charles T. Munger
	Charles T. Munger	February 25, 2011
	Chairman of the Board and President (principal executive officer)

By:	/s/ Jeffrey L. Jacobson
	Jeffrey L. Jacobson	February 25, 2011
	Vice President and Chief Financial Officer
	(principal financial and accounting officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been ~~Dollar~~signed ~~amounts~~below by the following persons on behalf of the registrant and in ~~thousands except~~the ~~for~~capacities ~~amounts~~and ~~per~~on ~~share~~the dates indicated.


/s/ Carolyn H. Carlburg
Carolyn H. Carlburg		February 25, 2011
Director

/s/ Robert E. Denham
Robert E. Denham		February 25, 2011
Director

/s/ Robert T. Flaherty
Robert T. Flaherty		February 25, 2011
Director

/s/ Peter D. Kaufman
Peter D. Kaufman		February 25, 2011
Director

/s/ Charles T. Munger
Charles T. Munger		February 25, 2011
Director

/s/ Elizabeth Caspers Peters
Elizabeth Caspers Peters		February 25, 2011
Director

~~Note 7. Notes Payable and Other Contractual Obligations~~47

	December 31,
	2009		2008
Revolving credit facility	$	28,000	$	40,200
Other		200		200
	$	28,200	$	40,400

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

~~The~~To ~~credit facility, used in~~ the ~~furniture~~Board ~~rental~~of ~~business, totals~~Directors ~~$100,000~~ and isShareholders ~~unsecured. The weighted average annual interest rate on amounts outstanding under the revolving credit facility at yearend 2009 was 0.51% in addition to an annual commitment fee~~ of ~~.075% of the total credit facility. The~~ ~~underlying~~Wesco ~~agreement~~Financial ~~does not contain any materially restrictive~~Corporation ~~covenants~~Pasadena, ~~and is guaranteed by Berkshire. The credit facility~~California ~~expires in June 2011. In addition to the $28,200 of loans~~ ~~outstanding at December 31, 2009, the business was contingently liable with respect to letters of credit totaling $7,085.~~

~~Fair~~ We ~~values~~have audited the accompanying consolidated balance sheets of Wesco Financial Corporation and subsidiaries (the ~~notes~~“Company”) ~~payable~~as atof ~~yearend~~December 31, 2010 and 2009, and ~~2008~~the related consolidated ~~approximated~~statements ~~carrying~~of ~~values~~income, changes in shareholders’ equity and comprehensive income, and cash flows for each of ~~$28~~the three years in the period ended December 31,~~200~~ 2010. Our audits also included the financial statement schedule listed in the Index at Item 8. We also have audited the Company’s internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for these financial statements and financial ~~$40~~statement schedule,~~400~~ for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and the financial statement schedule and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting InOversight ~~addition~~Board (United States). Those standards require that we plan and perform the audit to obtain ~~recorded~~reasonable ~~liabilities,~~assurance ~~Wesco~~about atwhether ~~yearend~~the ~~2009~~financial ~~had~~statements are free of material ~~operating~~misstatement ~~lease~~and ~~obligations~~whether ~~aggregating~~effective ~~$108,090~~internal ~~(payable~~control over financial reporting was maintained in all ~~2010,~~material ~~$27,755;~~respects. inOur ~~2011,~~audits ~~$23,472;~~of inthe ~~2012,~~financial ~~$18~~statements included examining,~~072;~~ inon ~~2013~~a test basis, ~~$12,709;~~evidence supporting the amounts and disclosures in ~~2014,~~the $9financial statements,~~404;~~ assessing the accounting principles used and ~~thereafter,~~significant ~~$16~~estimates made by management,~~678)~~ and ~~other contractual~~evaluating ~~obligations~~the ~~aggregating~~overall financial ~~$17,665~~statement presentation. ~~Rent~~Our ~~expense~~audit of internal control over financial reporting included ~~amounted~~obtaining toan ~~$34~~understanding of internal control over financial reporting,~~391,~~ ~~$32~~assessing the risk that a material weakness exists,~~013~~ and ~~$29,075~~testing ~~for~~and ~~2009,~~evaluating ~~2008~~the design and ~~2007~~operating effectiveness of internal control over financial reporting based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

~~Note~~ A 8company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. ~~Fair~~A ~~Value~~company’s ~~Measurements~~internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

~~Following~~ Because isof athe ~~summary~~inherent limitations of ~~Wesco’s~~internal ~~yearend~~control ~~2009~~over ~~and~~financial ~~2008~~reporting, including ~~financial~~the ~~assets~~possibility ~~and~~of ~~liabilities~~collusion ~~measured~~or atimproper ~~fair~~management ~~value~~override of controls, material misstatements due to error or fraud may not be prevented or detected on a ~~recurring~~ timely basis. byAlso, ~~the~~projections ~~type~~of any evaluation of ~~inputs~~the ~~applicable~~effectiveness toof ~~fair~~the ~~value~~internal ~~measurement:~~

	Total Fair		Fair Value Measurements Using
	Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2009
Investments in fixed maturity securities	$	29,872	$	—	$	29,872	$	—
Investments in equity securities		2,065,627		1,726,878		—		338,749
December 31, 2008
Investments in fixed maturity securities	$	28,656	$	—	$	28,656	$	—
Investments in equity securities		1,868,293		1,658,783		—		209,510

	Investments in
	Equity Securities
Balance at December 31, 2008	$	209,510
Unrealized gains included in other comprehensive income		129,239
Purchases		—
Balance at December 31, 2009	$	338,749

control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~Dollar~~ In ~~amounts~~our opinion, the consolidated financial statements referred to above present fairly, in ~~thousands~~all ~~except~~material respects, the financial position of Wesco Financial Corporation and its subsidiaries as of December 31, 2010 and 2009, and the results of their operations and their cash flows for ~~amounts~~each ~~per~~of the ~~share~~three years in the period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/ DELOITTE & TOUCH LLP 56

~~Note~~Omaha, 9.Nebraska February 25, ~~Income Taxes~~2011

49 ~~Following is a breakdown of income taxes payable at 2009 and 2008 yearends:~~

	December 31,
	2009			2008
Deferred tax liabilities, relating to —
Appreciation of investments	$	153,511		$	83,985
Cost basis differences in investments		116,368			116,368
Other items		63,794			60,277
		333,673			260,630
Deferred tax assets		(43,066	)		(31,061	)
Net deferred tax liabilities		290,607			229,569
Taxes currently payable		60			1,088
Income taxes payable	$	290,667		$	230,657

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

	2009			2008			2007
Federal	$	12,786		$	24,958		$	50,165
State		(2,517	)		(957	)		1,600
Foreign		(688	)		(1,002	)		—
Provision for income taxes	$	9,581		$	22,999		$	51,765
Current	$	17,349		$	15,987		$	50,272
Deferred		(7,768	)		7,012			1,493
Provision for income taxes	$	9,581		$	22,999		$	51,765

CONSOLIDATED BALANCE SHEET

~~Following~~(Dollar isamounts ~~a reconciliation of the statutory federal income tax rate with the effective income tax rate resulting~~ in ~~the provision~~thousands except for ~~income~~amounts ~~taxes~~per ~~appearing on the consolidated~~share) ~~statement of income:~~

	2009			2008			2007
	December 31,
Statutory Federal income tax rate		35.0	%		35.0	%		35.0	%
	2010			2009
Increase (decrease) resulting from —
ASSETS
Dividends received deduction		(25.1	)		(14.6	)		(4.2	)
Cash and cash equivalents	$	472,569		$	273,671
State income taxes, less Federal tax benefit		(2.7	)		(0.3	)		(0.1	)
Investments —
Other differences, net		7.9			1.8			1.5
Securities with fixed maturities		235,193			229,872
Effective income tax provision rate		15.1	%		21.9	%		32.2	%
Equity securities		2,272,253			2,065,627
Accounts receivable		37,191			37,983
Receivable from affiliates		170,852			173,476
Rental furniture		177,680			177,793
Goodwill of acquired businesses		277,514			277,590
Other assets		148,692			165,414
	$	3,791,944		$	3,401,426
LIABILITIES AND SHAREHOLDERS’ EQUITY
Insurance losses and loss adjustment expenses —
Affiliated business	$	371,805		$	290,375
Unaffiliated business		36,579			53,091
Unearned insurance premiums —
Affiliated business		112,019			110,477
Unaffiliated business		9,545			11,516
Deferred furniture rental income and security deposits		8,269			11,846
Accounts payable and accrued expenses		73,500			54,537
Notes payable		51,200			28,200
Income taxes payable, principally deferred		363,310			290,667
Total liabilities		1,026,227			850,709
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
Accumulated other comprehensive income		437,365			282,900
Retained earnings		2,295,028			2,234,493
Total shareholders’ equity		2,765,717			2,550,717
	$	3,791,944			3,401,426

~~Consolidated~~See ~~U.S. federal~~notes ~~income~~to ~~tax return liabilities have been substantially settled with the Internal Revenue Service (the “IRS”) through 1998. The IRS has completed its examination of the~~ consolidated U.S. federal income tax returns for the years 1999 through 2006. The years 1999 through 2001 are being reviewed by the Joint Committee on Taxation. The years 2002 through 2006 are currently being reviewed in the IRS appeals process. The IRS has recently started its examination of the 2007 and 2008 tax years. Wesco management believes that the ultimate outcome of the Federal income tax audits will not materially affect Wesco’s consolidated financial statements.

50 ~~Dollar amounts in thousands except for amounts per share~~

~~Note~~WESCO ~~10.~~FINANCIAL ~~Environmental Matters and Litigation~~CORPORATION

~~Federal~~CONSOLIDATED ~~and~~STATEMENT ~~state~~OF ~~environmental agencies have made claims~~INCOME relating to alleged contamination of soil and groundwater with trichloroethylene and perchloroethylene against Precision Brand Products (“PBP”), whose results, like those of its parent, Precision Steel, are included in Wesco’s industrial segment, and various other businesses situated in an industrial park in Downers Grove, Illinois. PBP, along with the other businesses, have been negotiating remedial actions with various governmental entities.

~~PBP,~~(Dollar ~~Precision~~amounts ~~Steel, and other parties were also named~~ in ~~several~~ ~~civil~~thousands ~~lawsuits~~except ~~relating to the foregoing matter. The civil lawsuits were settled with the plaintiffs in 2007~~ for amounts ~~that~~per ~~were not material to Wesco.~~share)

Included in other liabilities on the accompanying consolidated balance sheet is $300 as of December 31, 2009, representing management’s estimate of the remaining costs that are likely to be incurred in connection with the litigation. Although the ultimate cost is not yet certain, it is not expected that the ultimate impact of additional future costs, if any, will be significant to Wesco.


	Year Ended December 31,
	2010			2009		2008
Revenues:
Furniture rentals	$	309,439		$	312,234	$	340,162
Sales and service revenues		106,278			106,342		130,753
Insurance premiums earned —
Affiliated business		272,223			307,560		218,094
Unaffiliated business		12,294			15,661		19,870
Dividend and interest income		75,807			67,458		79,079
Realized, net investment gains		6,541			—		7,006
Other-than-temporary impairment losses on investments		(21,021	)		—		—
Other		4,142			4,076		3,990

		765,703			813,331		798,954


Costs and expenses:
Cost of products and services sold		124,245			130,992		149,319
Insurance losses and loss adjustment expenses —
Affiliated business		182,925			198,853		151,308
Unaffiliated business		(2,669	)		14,454		20,892
Insurance underwriting expenses —
Affiliated business		82,059			92,857		63,156
Unaffiliated business		5,525			5,946		7,135
Selling, general and administrative expenses		281,929			305,934		300,231
Interest expense		504			641		1,798

		674,518			749,677		693,839

Income before income taxes		91,185			63,654		105,115
Income taxes		18,973			9,581		22,999

Net income	$	72,212		$	54,073	$	82,116


Amounts per capital share based on 7,119,807 shares outstanding throughout each year:
Net income	$	10.14		$	7.59	$	11.53
Cash dividends		1.64			1.58		1.54

~~Note~~See ~~11.~~notes ~~Quarterly~~to ~~Financial~~consolidated ~~Information~~financial statements.

51 ~~Unaudited quarterly consolidated financial information for 2009 and 2008 follows:~~

	Quarter Ended
	March 31,		June 30,		September 30,		December 31,		Total For Year
2009
Revenues	$	210,802	$	202,515	$	203,884	$	196,130	$	813,331
Net income	$	19,959	$	12,930	$	9,882	$	11,302	$	54,073
Per capital share		2.80		1.82		1.39		1.58		7.59
2008
Revenues	$	160,196	$	211,342	$	207,001	$	220,415	$	798,954
Net income	$	20,717	$	21,573	$	16,164	$	23,662	$	82,116
Per capital share		2.91		3.03		2.27		3.32		11.53
Realized investment gains —
2009
Before taxes (included in revenues)	$	—	$	—	$	—	$	—	$	—
After taxes (included in net income)		—		—		—		—		—
2008
Before taxes (included in revenues)	$	—	$	—	$	—	$	7,006	$	7,006
After taxes (included in net income)		—		—		—		4,554		4,554

~~Note~~WESCO ~~12.~~FINANCIAL ~~Business Segment Data~~CORPORATION

~~Wesco’s~~CONSOLIDATED ~~reportable~~STATEMENT ~~business~~OF ~~segments~~CASH ~~are organized in a~~FLOWS manner that reflects how management views those business activities. The financial information that follows shows data of reportable segments reconciled to amounts reflected in the Consolidated Financial Statements.

~~The~~(Dollar ~~insurance~~amounts ~~segment includes the accounts of Wes-FIC and its subsidiary, KBS. Wes-FIC is engaged~~ in ~~the property and casualty~~thousands) insurance and reinsurance business. For the past three years its reinsurance business has consisted principally of participation with the Berkshire Insurance Group in several reinsurance contracts, as

Dollar amounts in thousands except for amounts per share


	Year Ended December 31,
	2010			2009			2008
Cash flows from operating activities:
Net income	$	72,212		$	54,073		$	82,116
Adjustments to reconcile net income with net cash flows from operating activities —
Gross profit on sale of rental furniture		(17,964	)		(20,755	)		(22,447	)
Realized investment gains, net		(6,541	)		—			(7,006	)
Other-than-temporary impairment losses		21,021			—			—
Depreciation and amortization		46,595			55,500			49,574
Change in liabilities for insurance losses and loss adjustment expenses —
Affiliated business		81,430			125,951			124,737
Unaffiliated business		(16,512	)		2,247			(3,314	)
Change in unearned insurance premiums —
Affiliated business		1,542			15,933			79,503
Unaffiliated business		(1,971	)		(1,735	)		(1,974	)
Change in receivable from affiliates		7,177			(40,080	)		(96,725	)
Change in income taxes payable		(11,080	)		(9,410	)		4,953
Other, net		9,392			12,134			(16,767	)

Net cash flows from operating activities		185,301			193,858			192,650

Cash flows from investing activities:
Purchases of securities with fixed maturities		(13,123	)		(208,269	)		—
Purchases of equity securities		—			—			(349,071	)
Purchases of rental furniture		(69,525	)		(45,385	)		(74,572	)
Proceeds from redemptions and maturities of securities with fixed maturities		14,782			8,639			7,402
Proceeds from sales of rental furniture		51,075			61,192			61,800
Proceeds from sales of equity securities		11,394			—			60,203
Change in condominium construction in process		18,734			(5,420	)		(28,510	)
Acquisitions of businesses, net of cash acquired		(4,631	)		(878	)		(81,428	)
Other, net		(6,384	)		(4,333	)		(8,863	)

Net cash flows from investing activities		2,322			(194,454	)		(413,039	)

Cash flows from financing activities:
Borrowings under revolving credit facility		124,100			45,100			87,200
Repayments under revolving credit facility		(101,100	)		(57,300	)		(84,000	)
Payment of cash dividends		(11,677	)		(11,249	)		(10,965	)

Net cash flows from financing activities		11,323			(23,449	)		(7,765	)

Effect of foreign currency exchange rate changes		(48	)		73			(925	)

Change in cash and cash equivalents		198,898			(23,972	)		(229,079	)
Cash and cash equivalents — beginning of year		273,671			297,643			526,722

Cash and cash equivalents — end of year	$	472,569		$	273,671		$	297,643

Supplementary disclosures
Interest paid during year	$	318		$	713		$	1,744
Income taxes paid, net, during year		30,017			19,133			17,960

See notes to consolidated financial statements. 58

52 follows: (1) since 2008, in a retrocession agreement in which it is now reinsuring a portion of Swiss Re’s property-casualty risks incepting over a five-year period effective in 2008, described more fully in Note 1, and (2) since 2001, in several pools of aviation-related risks.

~~KBS~~WESCO ~~provides~~FINANCIAL ~~specialized insurance coverage mainly to small- and~~CORPORATION medium-sized banks in the Midwestern United States. In addition to generating insurance premiums, Wesco’s insurance segment derives dividend and interest income from the investment of float (premiums received before payment of related claims and expenses) as well as earnings retained and reinvested.

~~Payments~~CONSOLIDATED ofSTATEMENT ~~dividends~~OF byCHANGES ~~insurance subsidiaries are restricted~~IN ~~by insurance statutes and regulations. Without prior regulatory approval, Wesco~~SHAREHOLDERS’s ~~insurance~~EQUITYAND ~~subsidiaries~~COMPREHENSIVE ~~may pay up to~~INCOME ~~approximately $268,295 as ordinary dividends as of yearend 2009.~~

~~Combined shareholders’ equity of Wes-FIC and KBS determined pursuant to statutory accounting rules~~ (~~“statutory surplus”)~~Dollar ~~was~~amounts approximately $2,568,000 at December 31, 2009 and $2,359,000 at December 31, 2008. Statutory surplus differs from the corresponding amount determined on the basis of GAAP. The major differences between statutory basis accounting and GAAP are that deferred policy acquisition costs, unrealized gains and losses on investments in ~~securities with fixed~~thousands) maturities and related deferred income taxes are recognized under GAAP but not for statutory reporting purposes. In addition, statutory accounting for goodwill of acquired businesses requires amortization of goodwill over 10 years, whereas under GAAP, goodwill is subject to periodic tests for impairment.

The furniture rental segment includes the operating accounts of CORT. CORT is a nation-wide provider of rental furniture, accessories and related services in the “rent-to-rent” segment of the furniture industry. It rents high-quality furniture to corporate and individual customers who desire flexibility in meeting their temporary office, residential or trade show furnishing needs and who typically do not seek to own such furniture. In addition, CORT sells previously rented furniture through company-owned clearance centers.


	Year Ended December 31,
	2010			2009			2008
Capital stock:
Balance at beginning and end of year	$	7,120		$	7,120		$	7,120

Additional paid-in capital:
Balance at beginning and end of year	$	26,204		$	26,204		$	26,204

Retained earnings:
Balance at beginning of year	$	2,234,493		$	2,191,669		$	2,120,518
Net income		72,212			54,073			82,116
Cash dividends declared and paid		(11,677	)		(11,249	)		(10,965	)

Balance at end of year	$	2,295,028		$	2,234,493		$	2,191,669

Accumulated other comprehensive income:
Unrealized appreciation (depreciation) of investments, net	$	224,034		$	198,917		$	(341,277	)
Applicable income taxes		(78,579	)		(69,526	)		119,474
Reclassification of investment appreciation (depreciation) in net earnings, including other-than-temporary impairment		14,480			—			(7,006	)
Applicable income taxes		(5,068	)		—			2,452
Foreign currency translation adjustments		(618	)		1,434			(2,687	)
Applicable income taxes		216			(688	)		790

Other comprehensive income (loss)		154,465			130,137			(228,254	)
Accumulated other comprehensive income at beginning of year		282,900			152,763			381,017

Accumulated other comprehensive income at end of year	$	437,365		$	282,900		$	152,763

Comprehensive income (loss):
Net income	$	72,212		$	54,073		$	82,116
Other comprehensive income (loss)		154,465			130,137			(228,254	)

Total comprehensive income (loss)	$	226,677		$	184,210		$	(146,138	)

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

53 Wesco’s consolidated realized net investment gains and goodwill of acquired businesses, are shown separately as nonsegment items, consistent with the way Wesco’s management evaluates the performance of its operating segments. Other items considered unrelated to Wesco’s three business segments include principally (1) investments other than those held by Wes-FIC and KBS, together with related dividend and interest income,

Large accelerated filer o

Accelerated filer þ

Non-accelerated filer o

Smaller reporting company o

(Do not check if a smaller reporting company)

WESCO FINANCIAL CORPORATION 59

~~(2) commercial~~NOTES ~~real~~TO ~~estate,~~CONSOLIDATED ~~together~~FINANCIAL ~~with related revenues~~STATEMENTS ~~and expenses, (3) residential real estate development, and (4) the assets, revenues and expenses of the parent company.~~

	2009			2008			2007
Insurance segment:
Premiums earned	$	323,221		$	237,964		$	54,411
Dividend and interest income		67,253			77,914			89,716
Income taxes		15,156			12,055			28,300
Net income		63,003			61,332			72,247
Depreciation and amortization other than of discounts and premiums of investments		26			36			45
Advertising expense		111			138			181
Capital expenditures		7			4			32
Assets at yearend		2,755,509			2,336,463			2,497,794
Furniture rental segment:
Revenues	$	380,196		$	410,043		$	396,170
Income taxes		(1,717	)		7,006			13,570
Net income (loss)		(1,359	)		15,744			20,316
Depreciation and amortization other than of discounts and premiums of investments		53,783			43,195			39,891
Advertising expense		12,837			16,762			18,002
Interest expense		640			1,798			2,408
Capital expenditures		2,972			7,197			3,971
Assets at yearend		252,180			310,412			245,817
Industrial segment:
Sales, service and other revenues	$	38,380		$	60,872		$	61,361
Income taxes		(357	)		759			603
Net income (loss)		(648	)		842			915
Depreciation and amortization		402			409			433
Advertising expense		211			202			258
Capital expenditures		230			456			357
Assets at yearend		19,502			16,734			19,263
Goodwill of acquired businesses (included in assets)	$	277,590		$	277,742		$	266,607
Realized investment gains:
Before taxes (included in revenues)	$	—		$	7,006		$	24,240
After taxes (included in net income)		—			4,554			15,756
Other items unrelated to business segments:
Dividend and interest income	$	205		$	1,165		$	1,156
Other revenues		4,076			3,990			3,870
Income taxes		(3,501	)		726			808
Net income (loss)		(6,923	)		(356	)		(73	)
Depreciation and amortization		387			351			388
Capital expenditures		755			95			419
Assets at yearend		96,645			109,344			83,528
Consolidated revenues (total of those set forth above)	$	813,331		$	798,954		$	630,924
Consolidated assets (total of those set forth above)	$	3,401,426		$	3,050,695		$	3,113,009

(Dollar amounts in thousands except for amounts per share)

~~Dollar~~Note ~~amounts~~1. Significant inAccounting ~~thousands except~~Policies ~~for~~and ~~amounts per share~~Practices

Nature of operations, basis of consolidation, and presentation 60

Wesco Financial Corporation (“Wesco”) is an 80.1% indirectly owned subsidiary of Berkshire Hathaway Inc. (“Berkshire”). Wesco is a holding company. Its consolidated financial statements ~~WESCO~~include ~~FINANCIAL~~the accounts of Wesco and its subsidiaries, all wholly owned. Its principal subsidiaries ~~CORPORATION~~are Wesco-Financial Insurance Company (“Wes-FIC”), The Kansas Bankers Surety Company (“KBS”), CORT Business Services Corporation (“CORT”) and Precision Steel Warehouse, Inc. (“Precision Steel”). Further information regarding these businesses is contained in Note 13. Intercompany balances and transactions are eliminated in the preparation of the consolidated financial statements.

In 2008, 2009 and 2010, CORT made a few minor acquisitions in select markets in an effort to increase market share. The fair values of the assets acquired and liabilities assumed are included ~~SCHEDULE I — CONDENSED~~in ~~FINANCIAL~~the accompanying consolidated financial statements from dates of acquisition.

The operations of Wes-FIC are managed by Berkshire’s subsidiary, National Indemnity Company (“NICO”). Historically, a significant part of Wes-FIC’s insurance business has derived from ~~INFORMATION~~contracts OFwith NICO and other wholly owned insurance subsidiaries of Berkshire, herein referred to ~~REGISTRANT~~as the “Berkshire Insurance Group”. Terms of Wes-FIC’s participation in the insurance contracts are identical to those by which the other Berkshire Insurance Group members participate, except as to the relative percentages of their participation in the various contracts. Financial data appearing in the accompanying consolidated financial statements relative to business with the Berkshire Insurance Group is designated as affiliated business.

Wes-FIC significantly increased its reinsurance activities effective at the beginning of 2008, when it entered into a retrocession agreement with NICO, to assume 10% of NICO’s quota share ~~BALANCE~~reinsurance of Swiss Reinsurance Company and its major property-casualty affiliates (“Swiss Re”). ~~SHEET~~Under this arrangement, Wes-FIC has assumed 2% part of NICO’s 20% quota share reinsurance of all Swiss Re property-casualty risks incepting over the five-year period ending December 31, 2012 on the same terms as NICO’s agreement with Swiss Re. Wes-FIC recorded written premiums of $241.1 million, $294.1 million and $265.2 million in 2010, 2009 and 2008, and earned premiums of $ 240.5 million, $276.7 million and $183.2 million in those respective years, under this arrangement.

~~(Dollar amounts~~Use of estimates in ~~thousands)~~preparation of financial statements

	December 31,
	2009		2008
Assets:
Cash and cash equivalents	$	18	$	33
Investment in subsidiaries, at cost plus equity in subsidiaries’ undistributed earnings and unrealized appreciation		2,749,442		2,563,311
	$	2,749,460	$	2,563,344
Liabilities and shareholders’ equity:

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