10-KPeriod: FY2009

BERKSHIRE HATHAWAY INC Annual Report, Year Ended Dec 31, 2009

Filed March 1, 2010For Securities:BRK-BBRK-A

Summary

Berkshire Hathaway Inc.'s (BRK-B) 2009 10-K filing highlights a year of resilience amidst economic challenges, showcasing the strength and diversification of its core businesses, primarily insurance and utilities. Despite the ongoing recession impacting manufacturing, service, and retailing segments, the company demonstrated robust underwriting results from its insurance operations and stable performance from its regulated energy businesses. Key financial performance indicators showed an increase in net earnings attributable to Berkshire Hathaway, reaching $8.055 billion, a significant rise from $4.994 billion in 2008. This growth was largely driven by a strong recovery in investment and derivative gains/losses, which swung from a substantial loss in 2008 to a gain in 2009. The company maintained a strong balance sheet, with shareholders' equity increasing to $131.1 billion. The filing also detailed significant strategic moves, including the near-completion of the acquisition of Burlington Northern Santa Fe (BNSF), a major railroad company, signaling a continued commitment to long-term value creation through strategic capital allocation. Investors can take comfort in Berkshire's diversified business model, its strong capital position, and its ability to navigate economic downturns. The company's commitment to maintaining exceptional capital strength within its insurance subsidiaries, coupled with disciplined underwriting and significant investment income, positions it favorably for future growth and stability. The report emphasizes a continued focus on prudent financial management and strategic investments.

Financial Statements
Beta
Revenue$112.49B
Operating Expenses$100.94B
Operating Income$11.16B
Net Income$8.05B
Shares Outstanding (Basic)1551.17B

Key Highlights

  • 1Net earnings attributable to Berkshire Hathaway increased to $8.055 billion in 2009, up from $4.994 billion in 2008, driven by improved investment and derivative results.
  • 2The insurance underwriting segment generated a net underwriting gain of $1.013 billion in 2009, demonstrating resilience despite market conditions.
  • 3Utilities and energy businesses (MidAmerican) remained a stable contributor, reporting net earnings of $1.071 billion attributable to Berkshire.
  • 4Manufacturing, service, and retailing segments experienced a decline in earnings due to the economic recession, with pre-tax earnings falling to $2.058 billion from $4.023 billion in 2008.
  • 5Berkshire completed the acquisition of Burlington Northern Santa Fe Corporation (BNSF) in February 2010 for approximately $26.5 billion, adding a significant railroad asset to its portfolio.
  • 6Shareholders' equity grew to $131.1 billion by the end of 2009, reflecting the company's strong financial position.
  • 7The company maintained significant investment and derivative gains/losses, which were positive $486 million in 2009, a marked improvement from a loss of $4.645 billion in 2008.

Frequently Asked Questions

In 2009, Berkshire Hathaway reported a net earnings attributable to Berkshire Hathaway of $8.055 billion, a significant increase from $4.994 billion in 2008. This improvement was driven by a strong recovery in investment and derivative results and steady contributions from its insurance and utilities segments, despite challenges in other sectors due to the economic recession.

The insurance business demonstrated strong underwriting results, with a net underwriting gain of $1.013 billion. The utilities and energy segment remained stable, contributing $1.071 billion in net earnings. However, the manufacturing, service, and retailing segments faced headwinds from the economic recession, resulting in a decline in pre-tax earnings. The company also made a significant strategic move with the acquisition of BNSF, which closed in early 2010.

As of December 31, 2009, Berkshire Hathaway maintained a strong financial position with total assets of $297.1 billion and shareholders' equity increasing to $131.1 billion. The company had substantial investments, including equity securities and fixed maturity securities, totaling approximately $136 billion within its insurance operations.

The company identified several key risks, including potential significant underwriting losses due to its willingness to assume substantial risk, estimation errors in property and casualty loss reserves, concentrated investment portfolios in common stocks, potential losses from derivative contracts, and dependence on key personnel for investment and capital allocation decisions. The report also highlighted the impact of unfavorable economic and political conditions and regulatory changes on its businesses.