10-Q 1 a50050868.htm BERKSHIRE HATHAWAY INC. 10-Q a50050868.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2011
 
OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                      to                     
 
Commission file number 001-14905
 
BERKSHIRE HATHAWAY INC.
(Exact name of registrant as specified in its charter)
 
Delaware
47-0813844
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification Number)
 
3555 Farnam Street, Omaha, Nebraska 68131
(Address of principal executive office)
(Zip Code)
 
(402) 346-1400
(Registrant’s telephone number, including area code)


(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x    No  ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer  x
Accelerated filer  ¨
Non-accelerated filer  ¨
Smaller reporting company  ¨
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes  ¨    No  x
 
Number of shares of common stock outstanding as of October 28, 2011:
 
Class A —            939,280
Class B —  1,067,219,118
 


 
 
 
 
 
BERKSHIRE HATHAWAY INC.
 
 
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34-35
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1

 
 
 
 
BERKSHIRE HATHAWAY INC.
and Subsidiaries
 
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
 
   
September 30,
   
December 31,
 
   
2011
   
2010
 
    (Unaudited)
 
   
ASSETS
           
Insurance and Other:
           
Cash and cash equivalents
  $ 30,587     $ 34,767  
Investments:
               
Fixed maturity securities
    33,031       33,803  
Equity securities
    67,225       59,819  
Other
    16,633       19,333  
Receivables
    19,834       20,917  
Inventories
    9,265       7,101  
Property, plant and equipment
    17,804       15,741  
Goodwill
    32,215       27,891  
Other
    18,062       13,529  
      244,656       232,901  
                 
Railroad, Utilities and Energy:
               
Cash and cash equivalents
    2,965       2,557  
Property, plant and equipment
    80,642       77,385  
Goodwill
    20,064       20,084  
Other
    12,347       13,579  
      116,018       113,605  
                 
Finance and Financial Products:
               
Cash and cash equivalents
    1,224       903  
Investments in fixed maturity securities
    1,017       1,080  
Other investments
    3,886       3,676  
Loans and finance receivables
    14,003       15,226  
Goodwill
    1,031       1,031  
Other
    3,659       3,807  
      24,820       25,723  
    $ 385,494     $ 372,229  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Insurance and Other:
               
Losses and loss adjustment expenses
  $ 63,812     $ 60,075  
Unearned premiums
    9,609       7,997  
Life, annuity and health insurance benefits
    8,896       8,565  
Accounts payable, accruals and other liabilities
    17,916       15,826  
Notes payable and other borrowings
    13,748       12,471  
      113,981       104,934  
                 
Railroad, Utilities and Energy:
               
Accounts payable, accruals and other liabilities
    12,196       12,367  
Notes payable and other borrowings
    32,644       31,626  
      44,840       43,993  
                 
Finance and Financial Products:
               
Accounts payable, accruals and other liabilities
    1,123       1,168  
Derivative contract liabilities
    10,421       8,371  
Notes payable and other borrowings
    14,092       14,477  
      25,636       24,016  
Income taxes, principally deferred
    37,156       36,352  
Total liabilities
    221,613       209,295  
                 
Shareholders’ equity:
               
Common stock
    8       8  
Capital in excess of par value
    37,786       37,533  
Accumulated other comprehensive income
    15,781       20,583  
Retained earnings
    106,400       99,194  
Treasury stock, at cost
    (18 )      
Berkshire Hathaway shareholders’ equity
    159,957       157,318  
Noncontrolling interests
    3,924       5,616  
Total shareholders’ equity
    163,881       162,934  
    $ 385,494     $ 372,229  
 
See accompanying Notes to Consolidated Financial Statements
 
 
2

 
 
BERKSHIRE HATHAWAY INC.
and Subsidiaries
 
CONSOLIDATED STATEMENTS OF EARNINGS
(dollars in millions except per share amounts)
 
   
Third Quarter
   
First Nine Months
 
   
2011
   
2010
   
2011
   
2010
 
   
(Unaudited)
   
(Unaudited)
 
Revenues:
                       
Insurance and Other:
                       
Insurance premiums earned
  $ 7,645     $ 9,054     $ 24,076     $ 23,344  
Sales and service revenues
    18,573       17,408       53,681       50,149  
Interest, dividend and other investment income
    1,051       1,239       3,754       4,048  
Investment gains/losses
    100       473       1,314       2,169  
Other-than-temporary impairment losses on investments
    (8 )     (15 )     (514 )     (15 )
      27,361       28,159       82,311       79,695  
                                 
Railroad, Utilities and Energy:
                               
Operating revenues
    7,781       7,155       22,594       18,889  
Other
    47       60       115       142  
      7,828       7,215       22,709       19,031  
                                 
Finance and Financial Products:
                               
Interest, dividend and other investment income
    384       395       1,141       1,197  
Investment gains/losses
                174       5  
Derivative gains/losses
    (2,443 )     (146 )     (2,356 )     (1,911 )
Other
    609       651       1,754       2,003  
      (1,450 )     900       713       1,294  
      33,739       36,274       105,733       100,020  
                                 
Costs and expenses:
                               
Insurance and Other:
                               
Insurance losses and loss adjustment expenses
    3,827       6,254       16,107       14,357  
Life, annuity and health insurance benefits
    1,041       861       3,032       3,240  
Insurance underwriting expenses
    1,082       1,634       4,527       4,381  
Cost of sales and services
    15,281       14,439       44,095       41,537  
Selling, general and administrative expenses
    2,105       1,896       6,262       5,650  
Interest expense
    79       71       216       206  
      23,415       25,155       74,239       69,371  
                                 
Railroad, Utilities and Energy:
                               
Cost of sales and operating expenses
    5,675       5,251       16,898       14,143  
Interest expense
    428       421       1,280       1,162  
      6,103       5,672       18,178       15,305  
                                 
Finance and Financial Products:
                               
Interest expense
    162       176       493       530  
Other
    696       737       1,961       2,244  
      858       913       2,454       2,774  
      30,376       31,740       94,871       87,450  
Earnings before income taxes
    3,363       4,534       10,862       12,570  
Income tax expense
    953       1,415       3,307       3,599  
Earnings from equity method investment
                      50  
Net earnings
    2,410       3,119       7,555       9,021  
Less: Earnings attributable to noncontrolling interests
    132       130       349       431  
Net earnings attributable to Berkshire Hathaway
  $ 2,278     $ 2,989     $ 7,206     $ 8,590  
Average common shares outstanding *
    1,651,290       1,647,593       1,649,585       1,631,489  
Net earnings per share attributable to Berkshire Hathaway shareholders *
  $ 1,380     $ 1,814     $ 4,368     $ 5,265  
 

*
Average shares outstanding include average Class A common shares and average Class B common shares determined on an equivalent Class A common stock basis. Net earnings per common share attributable to Berkshire Hathaway shown above represents net earnings per equivalent Class A common share. Net earnings per Class B common share is equal to one-fifteen-hundredth (1/1,500) of such amount.
 
See accompanying Notes to Consolidated Financial Statements
 
 
3

 
 
BERKSHIRE HATHAWAY INC.
and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
 
   
First Nine Months
 
   
2011
   
2010
 
   
(Unaudited)
 
Cash flows from operating activities:
           
Net earnings
  $ 7,555     $ 9,021  
Adjustments to reconcile net earnings to operating cash flows:
               
Investment (gains) losses and other-than-temporary impairment losses
    (974 )     (2,159 )
Depreciation
    3,418       3,109  
Other
    374       203  
Changes in operating assets and liabilities before business acquisitions:
               
Losses and loss adjustment expenses
    3,478       1,974  
Deferred charges reinsurance assumed
    (525 )     150  
Unearned premiums
    1,599       1,168  
Receivables and originated loans
    (1,847 )     (3,295 )
Derivative contract assets and liabilities
    2,222       1,732  
Income taxes
    1,024       757  
Other assets
    (1,427 )     (1,102 )
Other liabilities
    1,085       2,273  
Net cash flows from operating activities
    15,982       13,831  
                 
Cash flows from investing activities:
               
Purchases of fixed maturity securities
    (6,122 )     (7,039 )
Purchases of equity securities
    (11,351 )     (3,893 )
Purchases of other investments
    (5,000 )      
Sales of fixed maturity securities
    1,612       3,646  
Redemptions and maturities of fixed maturity securities
    5,419       4,882  
Sales of equity securities
    885       4,532  
Redemptions of other investments
    9,345        
Purchases of loans and finance receivables
    (1,615 )     (2,063 )
Principal collections on loans and finance receivables
    2,683       2,255  
Acquisitions of businesses, net of cash acquired
    (7,984 )     (15,376 )
Purchases of property, plant and equipment
    (5,673 )     (4,291 )
Other
    15       (803 )
Net cash flows from investing activities
    (17,786 )     (18,150 )
                 
Cash flows from financing activities:
               
Proceeds from borrowings of insurance and other businesses
    2,063       8,164  
Proceeds from borrowings of railroad, utilities and energy businesses
    2,290       1,731  
Proceeds from borrowings of finance businesses
    1,528       1,039  
Repayments of borrowings of insurance and other businesses
    (2,272 )     (380 )
Repayments of borrowings of railroad, utilities and energy businesses
    (1,158 )     (382 )
Repayments of borrowings of finance businesses
    (1,847 )     (1,823 )
Change in short term borrowings, net
    (552 )     (59 )
Acquisitions of noncontrolling interests and other
    (1,810 )     (49 )
Net cash flows from financing activities
    (1,758 )     8,241  
Effects of foreign currency exchange rate changes
    111       (19 )
Increase (decrease) in cash and cash equivalents
    (3,451 )     3,903  
Cash and cash equivalents at beginning of year *
    38,227       30,558  
Cash and cash equivalents at end of first nine months *
  $ 34,776     $ 34,461  
                 
* Cash and cash equivalents are comprised of the following:
               
Beginning of year—
               
Insurance and Other
  $ 34,767     $ 28,223  
Railroad, Utilities and Energy
    2,557       429  
Finance and Financial Products
    903       1,906  
    $ 38,227     $ 30,558  
End of first nine months—
               
Insurance and Other
  $ 30,587     $ 30,772  
Railroad, Utilities and Energy
    2,965       2,646  
Finance and Financial Products
    1,224       1,043  
    $ 34,776     $ 34,461  
 
See accompanying Notes to Consolidated Financial Statements
 
 
4

 
 
BERKSHIRE HATHAWAY INC.
and Subsidiaries
 
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(dollars in millions)
 
         
Berkshire Hathaway shareholders’ equity
       
   
Common stock
and capital in
excess of par
value
   
Accumulated
other
comprehensive
income
   
Retained
earnings
   
Treasury
stock
   
Total
   
Non-
controlling
interests
 
Balance at December 31, 2009
  $ 27,082     $ 17,793     $ 86,227     $     $ 131,102     $ 4,683  
Net earnings
                8,590             8,590       431  
Other comprehensive income, net
          (1,070 )                 (1,070 )     (17 )
Issuance of common stock and other transactions
    11,067                         11,067        
Changes in noncontrolling interests:
                                               
Interests acquired and other transactions
    (18 )                       (18 )     (171 )
                                                 
Balance at September 30, 2010
  $ 38,131     $ 16,723     $ 94,817     $     $ 149,671     $ 4,926  
                                                 
Balance at December 31, 2010
  $ 37,541     $ 20,583     $ 99,194     $     $ 157,318     $ 5,616  
Net earnings
                7,206             7,206       349  
Other comprehensive income, net
          (4,878 )                 (4,878 )     (110 )
Issuance of common stock and other transactions
    392                   (18 )     374        
Changes in noncontrolling interests:
                                               
Interests acquired and other transactions
    (139 )     76                   (63 )     (1,931 )
Balance at September 30, 2011
  $ 37,794     $ 15,781     $ 106,400     $ (18 )   $ 159,957     $ 3,924  
 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(dollars in millions)

   
Third Quarter
   
First Nine Months
 
   
2011
   
2010
   
2011
   
2010
 
Comprehensive income attributable to Berkshire Hathaway:
                       
Net earnings
  $ 2,278     $ 2,989     $ 7,206     $ 8,590  
                                 
Other comprehensive income:
                               
Net change in unrealized appreciation of investments
    (7,318 )     5,422       (6,720 )     (480 )
Applicable income taxes
    2,575       (1,901 )     2,398       168  
Reclassification of investment appreciation in earnings
    (57 )     (441 )     (977 )     (1,152 )
Applicable income taxes
    20       154       342       403  
Foreign currency translation
    (610 )     726       34       (175 )
Applicable income taxes
    29       (30 )     (6 )     (6 )
Prior service cost and actuarial gains/losses of defined benefit plans
    34       (22 )     45       41  
Applicable income taxes
    (14 )     1       (18 )     (13 )
Other, net
    16       (35 )     24       144  
Other comprehensive income, net
    (5,325 )     3,874       (4,878 )     (1,070 )
Comprehensive income attributable to Berkshire Hathaway
  $ (3,047 )   $ 6,863     $ 2,328     $ 7,520  
Comprehensive income of noncontrolling interests
  $ 2     $ 170     $ 239     $ 414  
 
See accompanying Notes to Consolidated Financial Statements
 
 
5

 
 
BERKSHIRE HATHAWAY INC.
and Subsidiaries
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
 
Note 1.    General
 
The accompanying unaudited Consolidated Financial Statements include the accounts of Berkshire Hathaway Inc. (“Berkshire” or “Company”) consolidated with the accounts of all its subsidiaries and affiliates in which Berkshire holds controlling financial interests as of the financial statement date. In these notes the terms “us,” “we,” or “our” refer to Berkshire and its consolidated subsidiaries.  Reference is made to Berkshire’s most recently issued Annual Report on Form 10-K (“Annual Report”) that included information necessary or useful to understanding Berkshire’s businesses and financial statement presentations. Our significant accounting policies and practices were presented as Note 1 to the Consolidated Financial Statements included in the Annual Report. Certain immaterial amounts in 2010 have been reclassified to conform to the current year presentation. Financial information in this Report reflects any adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary to a fair statement of results for the interim periods in accordance with accounting principles generally accepted in the United States (“GAAP”).
 
For a number of reasons, our results for interim periods are not normally indicative of results to be expected for the year. The timing and magnitude of catastrophe losses incurred by insurance subsidiaries and the estimation error inherent to the process of determining liabilities for unpaid losses of insurance subsidiaries can be relatively more significant to results of interim periods than to results for a full year. Variations in the amount and timing of investment gains/losses can cause significant variations in periodic net earnings. Investment gains/losses are recorded when investments are disposed or are other-than-temporarily impaired. In addition, changes in the fair value of derivative assets/liabilities associated with derivative contracts that are not accounted for as hedging instruments can cause significant variations in periodic net earnings.
 
Note 2.    New accounting pronouncements
 
In October 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-26, “Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts.” ASU 2010-26 modifies the types of costs incurred by insurance entities that may be deferred in the acquiring or renewing of insurance contracts. ASU 2010-26 requires that only direct incremental costs related to successful efforts are capitalized. Capitalized costs may include certain advertising costs which are allowed to be capitalized if the primary purpose of the advertising is to elicit sales to customers who could be shown to have responded directly to the advertising and the probable future revenues generated from the advertising are in excess of expected future costs to be incurred in realizing those revenues. ASU 2010-26 is effective for Berkshire beginning January 1, 2012 and may be applied on a prospective or retrospective basis.
 
In May 2011, the FASB issued ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.”  ASU 2011-04 attempts to improve the comparability of fair value measurements disclosed in financial statements prepared in accordance with U.S. GAAP and IFRS.  The amendments in ASU 2011-04 clarify the intent of the application of existing fair value measurement and disclosure requirements, as well as change certain measurement requirements and disclosures.  ASU 2011-04 is effective for Berkshire beginning January 1, 2012 and will be applied on a prospective basis.
 
In June 2011, the FASB issued ASU 2011-05, “Presentation of Comprehensive Income.”  ASU 2011-05 changes the way other comprehensive income (“OCI”) is presented within the financial statements.  Financial statements will be required to reflect net income, OCI and total comprehensive income in one continuous statement or in two separate but consecutive statements.  Components of OCI may no longer be presented solely in the statement of changes in shareholders’ equity.  Reclassification between OCI and net earnings will be presented on the face of the financial statements.  ASU 2011-05 is effective for Berkshire beginning January 1, 2012.
 
In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment.” ASU 2011-08 allows an entity to first assess qualitative factors in determining whether it is necessary to perform the two-step quantitative goodwill impairment test. Only if an entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount based on qualitative factors, would it be required to then perform the first step of the two-step quantitative goodwill impairment test. ASU 2011-08 is effective for Berkshire beginning January 1, 2012, with early adoption permitted.
 
In September 2011, the FASB issued ASU 2011-09, “Disclosures about and Employer’s Participation in a Multiemployer Plan.” ASU 2011-09 requires additional disclosures for multiemployer pension plans and multiemployer other postretirement benefit plans. ASU 2011-09 is effective for Berkshire beginning January 1, 2012, with early adoption permitted.
 
We do not believe that the adoption of these new pronouncements will have a material effect on our Consolidated Financial Statements.
 
 
6

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 3.    Significant business acquisitions
 
Our long-held acquisition strategy is to purchase businesses with consistent earning power, good returns on equity and able and honest management at sensible prices.
 
On February 12, 2010, we acquired all of the outstanding common stock of the Burlington Northern Santa Fe Corporation that we did not already own (about 264.5 million shares or 77.5% of the outstanding shares) for aggregate consideration of $26.5 billion that consisted of cash of approximately $15.9 billion with the remainder in Berkshire common stock (80,931 Class A shares and 20,976,621 Class B shares). Approximately 50% of the cash component was funded with existing cash balances with the remainder funded by proceeds from debt issued by Berkshire. The acquisition was completed through the merger of a wholly-owned merger subsidiary (a Delaware limited liability company) and Burlington Northern Santa Fe Corporation. The merger subsidiary was the surviving entity and was renamed Burlington Northern Santa Fe, LLC (“BNSF”). BNSF is based in Fort Worth, Texas, and through its wholly owned subsidiary, BNSF Railway Company, operates one of the largest railroad systems in North America with approximately 32,000 route miles (including 23,000 route miles of track owned by BNSF) of track in 28 states and two Canadian provinces.
 
Prior to February 12, 2010, we owned 76.8 million shares of BNSF (22.5% of the outstanding shares), which were acquired between August 2006 and January 2009. We accounted for those shares pursuant to the equity method and as of February 12, 2010, our investment had a carrying value of approximately $6.6 billion. Upon completion of the acquisition of the remaining BNSF shares, we re-measured our previously owned investment in BNSF at fair value as of the acquisition date. In the first quarter of 2010, we recognized a one-time holding gain of approximately $1 billion representing the difference between the fair value of the BNSF shares that we acquired prior to February 12, 2010 and our carrying value under the equity method. BNSF’s financial statements are included in our Consolidated Financial Statements beginning as of February 13, 2010.
 
On March 13, 2011, Berkshire and The Lubrizol Corporation (“Lubrizol”) entered into a merger agreement, whereby Berkshire would acquire all of the outstanding shares of Lubrizol common stock for cash of $135 per share (approximately $8.7 billion in the aggregate). The merger was completed on September 16, 2011. Lubrizol, based in Cleveland, Ohio, is an innovative specialty chemical company that produces and supplies technologies to customers in the global transportation, industrial and consumer markets. These technologies include lubricant additives for engine oils, other transportation-related fluids and industrial lubricants, as well as additives for gasoline and diesel fuel. In addition, Lubrizol makes ingredients and additives for personal care products and pharmaceuticals; specialty materials, including plastics technology; and performance coatings in the form of specialty resins and additives. Lubrizol’s industry-leading technologies in additives, ingredients and compounds enhance the quality, performance and value of customers’ products, while reducing their environmental impact.
 
A preliminary allocation of the purchase price to Lubrizol’s assets and liabilities is summarized below (in millions):
 
Assets:
       
Liabilities, noncontrolling interests and net assets acquired:
     
Cash and cash equivalents
$ 893    
Accounts payable and other liabilities
  $ 1,684  
Inventory   1,598    
Notes payable and other borrowings
     1,607  
Property, plant and equipment
  2,303    
Income taxes, principally deferred
    1,669  
Intangible assets
  3,710    
Noncontrolling interests
    78  
Goodwill
  4,210    
 
    5,038  
Other
    1,028    
Net assets acquired
    8,704  
    $ 13,742    
 
  $ 13,742  
 
Lubrizol’s financial statements are included in our Consolidated Financial Statements beginning as of September 16, 2011. The following table sets forth certain unaudited pro forma consolidated earnings data for the nine months ended September 30, 2011 and 2010, as if the acquisition was consummated on the same terms at the beginning of 2010. Amounts are in millions, except earnings per share.
 
   
First Nine Months
 
   
2011
   
2010
 
Total revenues
  $ 110,205     $ 104,115  
Net earnings attributable to Berkshire Hathaway shareholders
    7,608       8,818  
Earnings per equivalent Class A common share attributable to Berkshire Hathaway shareholders
    4,612       5,405  
 
In the first quarter of 2011, we acquired 16.5% of the outstanding common stock of Marmon Holdings, Inc. (“Marmon”) for approximately $1.5 billion in cash, thus increasing our ownership to 80.2%.  We have owned a controlling interest in Marmon since 2008. We increased our interests in the underlying assets and liabilities of Marmon; however, under current GAAP, the excess of the purchase price over the carrying value of the noncontrolling interests acquired is not allocable to assets or liabilities. We recorded a charge of approximately $600 million to capital in excess of par value in our consolidated shareholders’ equity as of December 31, 2010 to reflect this difference as such amount was fixed and determinable at that date.
 
In June 2011, we acquired the noncontrolling interests in Wesco Financial Corporation (“Wesco”) for aggregate consideration of $543 million consisting of cash of approximately $298 million and 3.25 million shares of Berkshire Class B common stock. Wesco is now an indirect wholly owned subsidiary of Berkshire.
 
 
7

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 4.    Investments in fixed maturity securities
 
Investments in securities with fixed maturities as of September 30, 2011 and December 31, 2010 are summarized by type below (in millions).
 
   
Amortized
Cost
   
Unrealized
Gains
   
Unrealized
Losses
   
Fair
Value
 
September 30, 2011
                       
U.S. Treasury, U.S. government corporations and agencies
  $ 2,245     $ 47     $     $ 2,292  
States, municipalities and political subdivisions
    2,938       216             3,154  
Foreign governments
    12,972       286       (62 )     13,196  
Corporate bonds
    11,142       1,804       (345 )     12,601  
Mortgage-backed securities
    2,464       357       (16 )     2,805  
    $ 31,761     $ 2,710     $ (423 )   $ 34,048  
                                 
December 31, 2010
                               
U.S. Treasury, U.S. government corporations and agencies
  $ 2,151     $ 48     $ (2 )   $ 2,197  
States, municipalities and political subdivisions
    3,356       225             3,581  
Foreign governments
    11,721       242       (51 )     11,912  
Corporate bonds
    11,773       2,304       (23 )     14,054  
Mortgage-backed securities
    2,838       312       (11 )     3,139  
    $ 31,839     $ 3,131     $ (87 )   $ 34,883  
 
Investments in fixed maturity securities are reflected in the Consolidated Balance Sheets as follows (in millions).
 
   
September 30,
   
December 31,
 
   
2011
   
2010
 
Insurance and other
  $ 33,031     $ 33,803  
Finance and financial products
    1,017       1,080  
    $ 34,048     $ 34,883  
 
As of September 30, 2011, fixed maturity investments that were in a continuous unrealized loss position for more than 12 months had unrealized losses of $16 million.  As of December 31, 2010, fixed maturity investments that were in a continuous unrealized loss position for more than 12 months had unrealized losses of $24 million.
 
The amortized cost and estimated fair value of securities with fixed maturities at September 30, 2011 are summarized below by contractual maturity dates. Actual maturities will differ from contractual maturities because issuers of certain of the securities retain early call or prepayment rights. Amounts are in millions.
 
   
Due in one
year or less
   
Due after one
year through
five years
   
Due after five
years through
ten years
   
Due after
ten years
   
Mortgage-backed
securities
   
Total
 
Amortized cost
  $ 8,466     $ 13,848     $ 4,503     $ 2,480     $ 2,464     $ 31,761  
Fair value
    8,591       14,672       4,946       3,034       2,805       34,048  
 
Note 5.    Investments in equity securities
 
Investments in equity securities as of September 30, 2011 and December 31, 2010 are summarized based on the primary industry of the investee in the table below (in millions).
 
   
Cost Basis
   
Unrealized
Gains
   
Unrealized
Losses
   
Fair
Value
 
September 30, 2011
                       
Banks, insurance and finance
  $ 15,985     $ 8,370     $ (2,308 )   $ 22,047  
Consumer products
    12,564       12,986       (18 )     25,532  
Commercial, industrial and other
    17,411       3,290       (218 )     20,483  
    $ 45,960     $ 24,646     $ (2,544 )   $ 68,062  
                                 
December 31, 2010
                               
Banks, insurance and finance
  $ 15,519     $ 9,549     $ (454 )   $ 24,614  
Consumer products
    13,551       12,410       (212 )     25,749  
Commercial, industrial and other
    6,474       4,682       (6 )     11,150  
    $ 35,544     $ 26,641     $ (672 )   $ 61,513  
 
 
8

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 5.    Investments in equity securities (Continued)
 
Investments in equity securities are reflected in the Consolidated Balance Sheets as follows (in millions).
 
   
September 30,
   
December 31,
 
   
2011
   
2010
 
Insurance and other
  $ 67,225     $ 59,819  
Railroad, utilities and energy *
    381       1,182  
Finance and financial products *
    456       512  
    $ 68,062     $ 61,513  
 

*
Included in Other assets.
 
As of September 30, 2011, there were no equity security investments that were in a continuous unrealized loss position for more than twelve months where other-than-temporary impairment (“OTTI”) losses were not recorded.  As of December 31, 2010 such unrealized losses were $531 million.
 
In the first quarter of 2011, we recorded OTTI losses of $506 million related to certain of our investments in equity securities. The OTTI losses recorded in earnings were offset by a reduction in unrealized losses recorded in other comprehensive income resulting in no impact on our consolidated shareholders’ equity. The OTTI losses included $337 million with respect to 103.6 million shares of our investment in Wells Fargo & Company common stock. These shares had an aggregate original cost of $3,621 million. We also held an additional 255.4 million shares of Wells Fargo which were acquired at an aggregate cost of $4,394 million. These shares had an unrealized gain of $3,704 million as of March 31, 2011. Due to the length of time that certain of our Wells Fargo shares were in a continuous unrealized loss position and because we account for gains and losses on a specific identification basis, accounting regulations required us to record the unrealized losses in earnings. However, the unrealized gains were not reflected in earnings but were instead recorded directly in shareholders’ equity as a component of accumulated other comprehensive income.
 
Note 6.    Other investments
 
Other investments include fixed maturity and equity securities of The Goldman Sachs Group, Inc. (“GS”), General Electric Company (“GE”), Wm. Wrigley Jr. Company (“Wrigley”), The Dow Chemical Company (“Dow”) and Bank of America Corporation (“BAC”). A summary of other investments follows (in millions).
 
   
Cost
   
Net Unrealized
Gains
   
Fair
Value
   
Carrying
Value
 
September 30, 2011
                       
Other fixed maturity and equity securities:
                       
Insurance and other
  $ 15,817     $ 1,841     $ 17,658     $ 16,633  
Finance and financial products
    3,198       699       3,897       3,886  
    $ 19,015     $ 2,540     $ 21,555     $ 20,519  
                                 
December 31, 2010
                               
Other fixed maturity and equity securities:
                               
Insurance and other
  $ 15,700     $ 4,758     $ 20,458     $ 19,333  
Finance and financial products
    2,742       947       3,689       3,676  
    $ 18,442     $ 5,705     $ 24,147     $ 23,009  
 
In 2008, we acquired 50,000 shares of 10% Cumulative Perpetual Preferred Stock of GS (“GS Preferred”) and warrants to purchase 43,478,260 shares of common stock of GS (“GS Warrants”) for a combined cost of $5 billion. Under its terms, the GS Preferred was redeemable at any time by GS at a price of $110,000 per share ($5.5 billion in aggregate). On April 18, 2011, GS fully redeemed our GS Preferred investment and we received aggregate redemption proceeds of $5.5 billion. The GS Warrants remain outstanding and expire in 2013. The GS Warrants are exercisable for an aggregate cost of $5 billion ($115/share).
 
In 2008, we also acquired 30,000 shares of 10% Cumulative Perpetual Preferred Stock of GE (“GE Preferred”) and warrants to purchase 134,831,460 shares of common stock of GE (“GE Warrants”) for a combined cost of $3 billion. Under its terms, the GE Preferred was redeemable by GE beginning in October 2011 at a price of $110,000 per share ($3.3 billion in aggregate). On October 17, 2011, GE fully redeemed our GE Preferred investment and we received aggregate redemption proceeds of $3.3 billion.  The GE Warrants remain outstanding and expire in 2013. The GE Warrants are exercisable for an aggregate cost of $3 billion ($22.25/share).
 
 
9

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 6.    Other investments (Continued)
 
In 2008, we acquired $4.4 billion par amount of 11.45% Wrigley subordinated notes due in 2018 and $2.1 billion of 5% Wrigley preferred stock. In 2009, we also acquired $1.0 billion par amount of Wrigley senior notes due in 2013 and 2014. We currently own $800 million of the Wrigley senior notes and a joint venture in which we have a 50% economic interest owns $200 million of the Wrigley senior notes. The Wrigley subordinated and senior notes are classified as held-to-maturity and we carry these investments at cost, adjusted for foreign currency exchange rate changes that apply to certain of the senior notes. We carry the Wrigley preferred stock at fair value classified as available-for-sale.
 
In 2009, we acquired 3,000,000 shares of Series A Cumulative Convertible Perpetual Preferred Stock of Dow (“Dow Preferred”) for a cost of $3 billion. Under certain conditions, we can convert each share of the Dow Preferred into 24.201 shares (equivalent to a conversion price of $41.32 per share) of Dow common stock. Beginning in April 2014, if Dow’s common stock price exceeds $53.72 per share for any 20 trading days in a consecutive 30-day window, Dow, at its option, at any time, in whole or in part, may convert the Dow Preferred into Dow common stock at the then applicable conversion rate. The Dow Preferred is entitled to dividends at a rate of 8.5% per annum.
 
On September 1, 2011, we acquired 50,000 shares of 6% Cumulative Perpetual Preferred Stock of BAC (“BAC Preferred”) and warrants to purchase 700,000,000 shares of common stock of BAC (“BAC Warrants”) for a combined cost of $5 billion. Under its terms, the BAC Preferred is redeemable at any time by BAC at a price of $105,000 per share ($5.25 billion in aggregate). The BAC Warrants expire in 2021 and are exercisable for an additional aggregate cost of $5 billion ($7.142857/share).
 
Note 7.    Investment gains/losses
 
Investment gains/losses are summarized below (in millions).
 
   
Third Quarter
   
First Nine Months
 
   
2011
   
2010
   
2011
   
2010
 
Fixed maturity securities —
                       
Gross gains from sales and other disposals
  $ 31     $ 19     $ 207     $ 587  
Gross losses from sales and other disposals
    (1 )     (9 )     (5 )     (12 )
Equity securities and other investments —
                               
Gross gains from sales and other disposals
    40       522       1,308       857  
Gross losses from sales and other disposals
    (5 )     (76 )     (19 )     (265 )
Other
    35       17       (3 )     1,007  
    $ 100     $ 473     $ 1,488     $ 2,174  
 
Investment gains from equity securities and other investments in the first nine months of 2011 included $1.25 billion with respect to the redemption of our GS Preferred investment. For the first nine months of 2010, other gains included a one-time holding gain of $979 million related to our BNSF acquisition in February.
 
Net investment gains/losses are reflected in the Consolidated Statements of Earnings as follows.
 
Insurance and other
  $ 100     $ 473     $ 1,314     $ 2,169  
Finance and financial products
                174       5  
    $ 100     $ 473     $ 1,488     $ 2,174  
 
Note 8.    Receivables
 
Receivables of insurance and other businesses are comprised of the following (in millions).
 
   
September 30,
   
December 31,
 
   
2011
   
2010
 
Insurance premiums receivable
  $ 7,158     $ 6,342  
Reinsurance recoverable on unpaid losses
    2,917       2,735  
Trade and other receivables
    10,136       12,223  
Allowances for uncollectible accounts
    (377 )     (383 )
    $ 19,834     $ 20,917  
 
As of December 31, 2010, trade and other receivables included approximately $3.9 billion related to the redemption of an investment. The redemption proceeds were received on January 10, 2011.
 
 
10

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 8.    Receivables (Continued)
 
Loans and finance receivables of finance and financial products businesses are comprised of the following (in millions).
 
   
September 30,
   
December 31,
 
   
2011
   
2010
 
Consumer installment loans and finance receivables
  $ 13,564     $ 14,042  
Commercial loans and finance receivables
    828       1,557  
Allowances for uncollectible loans
    (389 )     (373 )
    $ 14,003     $ 15,226  
 
Allowances for uncollectible loans primarily relate to consumer installment loans. Provisions for consumer loan losses were $255 million in the first nine months of 2011 and $266 million for the first nine months of 2010. Loan charge-offs, net of recoveries, were $239 million in the first nine months of 2011 and $265 million for the first nine months of 2010. Consumer loan amounts are net of unamortized acquisition discounts of $545 million at September 30, 2011 and $580 million at December 31, 2010. At September 30, 2011, approximately 96% of consumer installment loan balances were evaluated collectively for impairment whereas about 84% of commercial loan balances were evaluated individually for impairment.  As a part of the evaluation process, credit quality indicators are reviewed and loans are designated as performing or non-performing. At September 30, 2011, approximately 98% of consumer installment and commercial loan balances were determined to be performing and approximately 93% of those balances were current as to payment status.
 
Note 9.    Inventories
 
Inventories are comprised of the following (in millions).
 
   
September 30,
   
December 31,
 
   
2011
   
2010
 
Raw materials
  $ 1,609     $ 1,066  
Work in process and other
    974       509  
Finished manufactured goods
    3,316       2,180  
Goods acquired for resale
    3,366       3,346  
    $ 9,265     $ 7,101  
 
Note 10.    Goodwill and other intangible assets
 
A reconciliation of the change in the carrying value of goodwill is as follows (in millions).
 
   
September 30,
   
December 31,
 
   
2011
   
2010
 
Balance at beginning of year
  $ 49,006     $ 33,972  
Acquisition of businesses
    4,325       15,069  
Other
    (21 )     (35 )
Balance at end of period
  $ 53,310     $ 49,006  
 
Intangible assets other than goodwill are included in other assets in the Consolidated Balance Sheets and are summarized by type as follows (in millions).
 
   
September 30, 2011
   
December 31, 2010
 
   
Gross carrying
amount
   
Accumulated
amortization
   
Gross carrying
amount
   
Accumulated
amortization
 
Insurance and other
  $ 10,699     $ 2,126     $ 6,944     $ 1,816  
Railroad, utilities and energy
    2,089       549       2,082       306  
    $ 12,788     $ 2,675     $ 9,026     $ 2,122  
                                 
Trademarks and trade names
  $ 2,566     $ 205     $ 2,027     $ 166  
Patents and technology
    4,971       1,323       2,922       1,013  
Customer relationships
    3,831       753       2,676       612  
Other
    1,420       394       1,401       331  
    $ 12,788     $ 2,675     $ 9,026     $ 2,122  
 
 
11

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 10.    Goodwill and other intangible assets (Continued)
 
Amortization expense was $565 million for the first nine months of 2011 and $521 million for the first nine months of 2010. Intangible assets with indefinite lives as of September 30, 2011 and December 31, 2010 were $2,040 million and $1,635 million, respectively.
 
Note 11.    Property, plant and equipment
 
Property, plant and equipment of our insurance and other businesses is comprised of the following (in millions).
 
   
Ranges of
estimated useful life
   
September 30,
2011
   
December 31,
2010
 
Land
      $ 872     $ 744  
Buildings and improvements
 
3 – 40 years
      5,263       4,661  
Machinery and equipment
 
3 – 25 years
      13,110       11,573  
Furniture, fixtures and other
 
3 – 20 years
      2,412       1,932  
Assets held for lease
 
12 –30 years
      5,886       5,832  
              27,543       24,742  
Accumulated depreciation
            (9,739 )     (9,001 )
            $ 17,804     $ 15,741  
 
Depreciation expense of insurance and other businesses for the first nine months of 2011 and 2010 was $1,191 million and $1,145 million, respectively.
 
Property, plant and equipment of our railroad and our utilities and energy businesses is comprised of the following (in millions).
 
   
Ranges of
estimated useful life
   
September 30,
2011
   
December 31,
2010
 
Railroad:
                 
Land
      $ 5,925     $ 5,901  
Track structure and other roadway
 
5 – 100 years
      36,301       35,463  
Locomotives, freight cars and other equipment
 
5 – 37 years
      5,134       4,329  
Construction in progress
        856       453  
Utilities and energy:
                       
Utility generation, distribution and transmission system
 
5 – 85 years
      38,907       37,643  
Interstate pipeline assets
 
3 – 67 years
      5,962       5,906  
Independent power plants and other assets
 
3 – 30 years
      1,102       1,097  
Construction in progress
        2,145       1,456  
              96,332       92,248  
Accumulated depreciation
            (15,690 )     (14,863 )
            $ 80,642     $ 77,385  
 
Depreciation expense of the railroad and the utilities and energy businesses for the first nine months of 2011 was $2,093 million.  Depreciation expense for the first nine months of 2010 was $1,810 million, which includes depreciation expense of BNSF from February 13, 2010 through September 30, 2010.
 
 
12

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 12.    Derivative contracts
 
Derivative contracts are used primarily by our finance and financial products, railroad and utilities and energy businesses. As of September 30, 2011 and December 31, 2010, substantially all of the derivative contracts of our finance and financial products businesses were not designated as hedges for financial reporting purposes. These contracts were initially entered into with the expectation that the premiums received would exceed the amounts ultimately paid to counterparties. Changes in the fair values of such contracts are reported in earnings as derivative gains/losses. A summary of derivative contracts of our finance and financial products businesses follows (in millions).
 
   
September 30, 2011
   
December 31, 2010
 
   
Assets (3)
   
Liabilities
   
Notional
Value
   
Assets (3)
   
Liabilities
   
Notional
Value
 
Equity index put options
  $     $ 8,849     $ 34,378 (1)   $     $ 6,712     $ 33,891 (1)
Credit default contracts:
                                               
High yield indexes
          247       4,841 (2)           159       4,893 (2)
States/municipalities
          1,091       16,042 (2)           1,164       16,042 (2)
Individual corporate
    52       38       3,565 (2)     84             3,565 (2)
Other
    240       237               341       375          
Counterparty netting
    (93 )     (41 )             (82 )     (39 )        
    $ 199     $ 10,421             $ 343     $ 8,371          
 
(1)
Represents the aggregate undiscounted amount payable at the contract expiration dates assuming that the value of each index is zero at the contract expiration date.
 
(2)
Represents the maximum undiscounted future value of losses payable under the contracts. The number of losses required to exhaust contract limits under substantially all of the contracts is dependent on the loss recovery rate related to the specific obligor at the time of a default.
 
(3)
Included in Other assets of finance and financial products businesses.
 
A summary of derivative gains/losses of our finance and financial products businesses included in the Consolidated Statements of Earnings is as follows (in millions).
 
   
Third Quarter
   
First Nine Months
 
   
2011
   
2010
   
2011
   
2010
 
Equity index put options
  $ (2,089 )   $ (700 )   $ (2,137 )   $ (2,319 )
Credit default contracts
    (247 )     519       (35 )     407  
Other
    (107 )     35       (184 )     1  
    $ (2,443 )   $ (146 )   $ (2,356 )   $ (1,911 )
 
The equity index put option contracts are European style options written on four major equity indexes. Future payments, if any, under these contracts will be required if the underlying index value is below the strike price at the contract expiration dates which occur between June 2018 and January 2026. We received the premiums on these contracts in full at the contract inception dates and therefore we have no counterparty credit risk. We entered into no new contracts in 2010 or 2011.
 
At September 30, 2011, the aggregate intrinsic value (the undiscounted liability assuming the contracts are settled on their future expiration dates based on the September 30, 2011 index values and foreign currency exchange rates) was approximately $6.7 billion. However, these contracts may not be unilaterally terminated or fully settled before the expiration dates and therefore the ultimate amount of cash basis gains or losses on these contracts may not be determined for many years. The remaining weighted average life of all contracts was approximately 9.25 years at September 30, 2011.
 
Our credit default contracts pertain to various indexes of non-investment grade (or “high yield”) corporate issuers, as well as investment grade state/municipal and individual corporate debt issuers. These contracts cover the loss in value of specified debt obligations of the issuers arising from default events, which are usually from their failure to make payments or bankruptcy. Loss amounts are subject to aggregate contract limits. We entered into no new contracts in 2010 or 2011.
 
 
13

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 12.    Derivative contracts (Continued)
 
The high yield index contracts are comprised of specified North American corporate issuers (usually 100 in number at inception) whose obligations are rated below investment grade. High yield contracts remaining in-force at September 30, 2011 expire in 2012 and 2013. State and municipality contracts are comprised of over 500 state and municipality issuers and had a weighted average contract life at September 30, 2011 of approximately 9.5 years. Potential obligations related to approximately 50% of the notional value of the state and municipality contracts cannot be settled before the maturity dates of the underlying obligations, which range from 2019 to 2054.
 
Premiums on the high yield index and state/municipality contracts were received in full at the inception dates of the contracts and, as a result, we have no counterparty credit risk. Our payment obligations under certain of these contracts are on a first loss basis. Losses under other contracts are subject to aggregate deductibles that must be satisfied before we have any payment obligations.
 
Individual corporate credit default contracts primarily relate to issuers of investment grade obligations. In most instances, premiums are due from counterparties on a quarterly basis over the terms of the contracts. As of September 30, 2011, all of the remaining contracts in-force will expire in 2013.
 
With limited exceptions, our equity index put option and credit default contracts contain no collateral posting requirements with respect to changes in either the fair value or intrinsic value of the contracts and/or a downgrade of Berkshire’s credit ratings. As of September 30, 2011, our collateral posting requirement under contracts with collateral provisions was $443 million compared to $31 million at December 31, 2010. If Berkshire’s credit ratings (currently AA+ from Standard & Poor’s and Aa2 from Moody’s) are downgraded below either A- by Standard & Poor’s or A3 by Moody’s, additional collateral of up to $1.1 billion could be required to be posted.
 
Our regulated utility subsidiaries and our railroad are exposed to variations in the market prices in the purchases and sales of natural gas and electricity and in the purchases of fuel. Derivative instruments, including forward purchases and sales, futures, swaps and options, are used to manage these price risks. Unrealized gains and losses under the contracts of our regulated utilities that are probable of recovery through rates are recorded as a regulatory net asset or liability. Unrealized gains or losses on contracts accounted for as cash flow or fair value hedges are recorded in accumulated other comprehensive income or in net earnings, as appropriate. Derivative contract assets included in other assets of railroad, utilities and energy businesses were $79 million and $231 million as of September 30, 2011 and December 31, 2010, respectively. Derivative contract liabilities included in accounts payable, accruals and other liabilities of railroad, utilities and energy businesses were $492 million as of September 30, 2011 and $621 million as of December 31, 2010.
 
Note 13.    Supplemental cash flow information
 
A summary of supplemental cash flow information for the first nine months of 2011 and 2010 is presented in the following table (in millions).
 
   
First Nine Months
 
   
2011
   
2010
 
Cash paid during the period for:
           
Income taxes
  $ 1,352     $ 3,030  
Interest:
               
Insurance and other businesses
    173       146  
Railroad, utilities and energy businesses
    1,390       1,255  
Finance and financial products businesses
    475       543  
                 
Non-cash investing and financing activities:
               
Liabilities assumed in connection with acquisitions
    4,991       31,160  
Common stock issued in connection with acquisition of BNSF
          10,577  
Common stock issued in connection with acquisition of noncontrolling interests in Wesco Financial Corporation
    245          
 
 
14

 
 
Notes To Consolidated Financial Statements (Continued)
 
Note 14.    Notes payable and other borrowings
 
Notes payable and other borrowings are summarized below (in millions). The average interest rates shown in the following tables are the weighted average interest rates on outstanding debt as of September 30, 2011. Maturity date ranges are based on borrowings as of September 30, 2011.
 
   
Average
Interest Rate
 
September 30,
2011
   
December 31,
2010
 
Insurance and other:
                 
Issued by Berkshire parent company due 2012-2047
    1.9 %   $ 8,287     $ 8,360  
Short-term subsidiary borrowings
    0.2 %     1,525       1,682  
Other subsidiary borrowings due 2011-2036
    5.9 %     3,936       2,429  
            $ 13,748     $ 12,471  
 
In connection with the BNSF acquisition, the Berkshire parent company issued $8.0 billion aggregate par amount of senior unsecured notes, including $2.0 billion par amount of floating rate notes that matured in February 2011. In August 2011, the Berkshire parent company issued $2.0 billion of debentures consisting of $750 million of 2.2% senior notes due in 2016, $500 million of 3.75% senior notes due in 2021 and $750 million of floating rate senior notes due in 2014. Other subsidiary borrowings as of September 30, 2011 included $1,607 million in pre-acquisition debt issued by Lubrizol.
 
   
Average
Interest Rate
 
September 30,
2011
   
December 31,
2010
 
Railroad, utilities and energy:
                 
Issued by MidAmerican Energy Holdings Company (“MidAmerican”) and its subsidiaries:
                 
MidAmerican senior unsecured debt due 2012-2037
    6.1 %   $ 5,363     $ 5,371  
Subsidiary and other debt due 2011-2039
    5.6 %     14,509       14,275  
Issued by BNSF due 2011-2097
    5.9 %     12,772       11,980  
            $ 32,644     $ 31,626  
 
MidAmerican subsidiary debt represents amounts issued pursuant to separate financing agreements. All or substantially all of the assets of certain MidAmerican subsidiaries are or may be pledged or encumbered to support or otherwise secure the debt. These borrowing arrangements generally contain various covenants including, but not limited to, leverage ratios, interest coverage ratios and debt service coverage ratios. BNSF’s borrowings are primarily unsecured. As of September 30, 2011, BNSF and MidAmerican and its subsidiaries were in compliance with all applicable covenants. Berkshire does not guarantee any debt or other borrowings of BNSF, MidAmerican or their subsidiaries. In August 2011, BNSF issued $750 million in debentures comprised of $450 million of 3.45% debentures due in September 2021 and $300 million of 4.95% debentures due in September 2041.

   
Averag