01—Abstract
Summary
Summary of the 10-K filed March 3, 2014. Cited figures are marked; the original filing is the authoritative source.
Berkshire Hathaway Inc.'s 2013 10-K report showcases a robust and diversified conglomerate.
The company demonstrated strong performance across its core insurance operations, with significant underwriting gains, bolstered by solid investment income. The railroad segment, BNSF, and the utilities and energy businesses, primarily MidAmerican, both reported substantial earnings and saw revenue growth, contributing significantly to the overall results. Manufacturing, service, and retailing segments collectively showed increased earnings, partly due to strategic acquisitions and operational improvements.
The finance and financial products division also contributed positively, driven by growth in manufactured housing and finance. Berkshire Hathaway continued its focus on capital preservation and opportunistic investments, with substantial cash reserves maintained. The company also highlighted its commitment to share repurchases, although no shares were repurchased in 2013, the program remained in place to be utilized when valuations were deemed attractive.
02—Key points
Key Highlights
- Underwriting gains across insurance operations exceeded $1.9 billion, demonstrating profitability despite some catastrophe losses.
- BNSF railroad operations reported pre-tax earnings of $5.9 billion on revenues of $22 billion, reflecting strong performance in key freight categories.
- Utilities and energy businesses, led by MidAmerican, generated $1.47 billion in net earnings attributable to Berkshire Hathaway, supported by regulated operations and renewable energy investments.
- Manufacturing, service, and retailing segments saw a 14.4% increase in earnings over 2012, partly due to acquisitions like Lubrizol and operational improvements.
- The company maintained a strong financial position with consolidated shareholders' equity reaching $221.9 billion, and significant cash reserves of $42.6 billion in the insurance and other businesses.
- Investment and derivative gains contributed $4.3 billion after-tax to net earnings, though management cautioned against over-reliance on these volatile components for performance evaluation.
- Berkshire Hathaway continued its large-scale acquisition strategy, notably investing $12.25 billion in H.J. Heinz Holding Corporation.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2013filed March 3, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $182.15B$162.46B | +12.1% |
| Operating Expenses | $153.35B$140.23B | +9.4% |
| Interest Expense | $2.80B— | — |
| Net Income | $19.48B$14.82B | +31.4% |
| Shares Outstanding (Basic) | 1.64M1.65M | −0.5% |
05—Questions
Frequently Asked Questions
What were Berkshire Hathaway's primary sources of earnings in 2013?
Berkshire Hathaway's primary sources of earnings in 2013 were its insurance operations (both underwriting and investment income), its railroad business (BNSF), its utilities and energy businesses (primarily MidAmerican), and its diverse manufacturing, service, and retailing segments. The company also benefited from investment and derivative gains.
How did the insurance segment perform in 2013?
The insurance segment demonstrated strong performance, generating a net underwriting gain of $1.995 billion. Investment income from insurance operations contributed $3.708 billion after taxes. GEICO, General Re, Berkshire Hathaway Reinsurance Group, and Berkshire Hathaway Primary Group all reported underwriting gains.
What significant acquisitions or investments did Berkshire Hathaway make in 2013?
In 2013, Berkshire Hathaway made a significant investment of $12.25 billion in H.J. Heinz Holding Corporation, acquiring a 50% stake. Additionally, MidAmerican completed the acquisition of NV Energy for approximately $5.6 billion. The company also acquired noncontrolling interests in Marmon and IMC International Metalworking Companies.
What is Berkshire Hathaway's policy on share repurchases?
Berkshire Hathaway's Board of Directors has authorized a common stock repurchase program under which shares can be repurchased at prices up to a 20% premium over book value, provided that consolidated cash and cash equivalent holdings remain above $20 billion. While the program is ongoing, no shares were repurchased in 2013. Management indicated that repurchases would occur if attractive investment and business opportunities were limited and the market price was discounted relative to intrinsic value.
06—Continue