01—Abstract
Summary
Summary of the 10-K filed February 28, 2011. Cited figures are marked; the original filing is the authoritative source.
Berkshire Hathaway Inc.'s (BRK-B) 2010 10-K filing reveals a year of significant growth and strategic expansion, notably the full acquisition of Burlington Northern Santa Fe (BNSF) in February 2010.
This acquisition substantially increased the company's asset base and diversified its operations into the railroad sector. The company reported robust performance across its diverse subsidiaries, with strong underwriting results from its insurance operations, including GEICO and General Re. Manufacturing, service, and retailing segments also showed improvement, reflecting a gradual stabilization of economic conditions.
Berkshire Hathaway maintained its strategy of decentralized management, allowing subsidiaries to operate with autonomy while benefiting from the conglomerate's strong financial position and capital allocation expertise. The company ended the year with substantial shareholders' equity and significant liquidity, positioning it well for future opportunities.
02—Key points
Key Highlights
- Completed the full acquisition of Burlington Northern Santa Fe (BNSF) for approximately $26.5 billion, significantly expanding its railroad operations.
- Reported net earnings attributable to Berkshire Hathaway of $12.967 billion, a substantial increase from $8.055 billion in 2009, driven by improved underwriting results and investment gains.
- Insurance underwriting businesses showed strong performance, with GEICO's premiums earned increasing by 5.2% and General Re maintaining underwriting profitability.
- Invested heavily in property, plant, and equipment across various segments, with significant capital expenditures in the utilities and energy, and railroad businesses.
- Float for insurance businesses grew to approximately $66 billion, demonstrating the continued strength and cost-effectiveness of its insurance operations.
- Maintained extraordinary capital strength across its insurance subsidiaries, with statutory surplus of approximately $94 billion at year-end 2010.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 28, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $136.19B$112.49B | +21.1% |
| Operating Expenses | $117.13B$100.94B | +16.0% |
| Operating Income | $17.27B$11.16B | +54.8% |
| Net Income | $12.97B$8.05B | +61.0% |
| Shares Outstanding (Basic) | 1.64M1551.17B | −100.0% |
05—Questions
Frequently Asked Questions
What was the most significant strategic move Berkshire Hathaway made in 2010?
The most significant strategic move was the full acquisition of Burlington Northern Santa Fe (BNSF) Corporation for approximately $26.5 billion. This acquisition marked a major diversification into the railroad industry and significantly expanded Berkshire's asset base and operational scope.
How did Berkshire Hathaway's insurance operations perform in 2010?
Berkshire's insurance operations performed strongly. Underwriting profits were robust across the key segments like GEICO, General Re, and the Berkshire Hathaway Reinsurance Group. GEICO saw a 5.2% increase in premiums earned, and the company maintained its strategy of exceptional capital strength, with statutory surplus reaching approximately $94 billion.
What is the outlook for investment income given the company's large cash holdings and investment strategy?
Berkshire's investment income is derived from a mix of fixed maturity and equity securities, managed centrally. While the company held substantial invested assets, it noted that investment income in 2011 might decline compared to 2010 due to the maturity of higher-yielding investments and low interest rates for reinvestment. The company's strategy remains focused on acquiring attractively priced businesses and securities with strong long-term prospects.
06—Continue