10-QPeriod: Q2 FY2009

BERKSHIRE HATHAWAY INC Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 7, 2009For Securities:BRK-BBRK-A

Summary

Berkshire Hathaway Inc. (BRK-B) reported its financial results for the second quarter and first six months of 2009. The company demonstrated resilience despite challenging economic conditions, with consolidated shareholders' equity increasing to $114.5 billion. Revenue from operating businesses showed a decline compared to the prior year, largely impacted by the ongoing recession affecting manufacturing, service, and retailing segments. However, the insurance and utilities segments remained strong. Net earnings attributable to Berkshire Hathaway were $3.295 billion for the second quarter and $1.761 billion for the first six months. The company saw significant gains from derivative contracts, particularly equity index put options, which partially offset losses from credit default contracts and other-than-temporary impairments on investments. Significant new investments were made in the first half of 2009, including substantial preferred stock purchases in The Dow Chemical Company and a convertible instrument from Swiss Re, which are expected to bolster future investment income.

Financial Highlights

17 data points
Beta

Revenue

$29.61B

Net Income

$3.29B

11.1% Net Margin

EPS (Diluted)

$2123.00

Cash & Equivalents

$24.51B

Free Cash Flow

$1.59B

Financial Statements
Beta
Revenue$29.61B
Operating Expenses$24.82B
Net Income$3.29B
EPS (Basic)$2123.00
Shares Outstanding (Basic)1.55M

Key Highlights

  • 1Consolidated shareholders' equity increased by $5.3 billion to $114.5 billion by June 30, 2009.
  • 2Net earnings attributable to Berkshire Hathaway were $3.295 billion for Q2 2009 and $1.761 billion for the first six months of 2009.
  • 3The insurance and utilities segments demonstrated strength, unaffected by the broader economic recession.
  • 4Manufacturing, service, and retailing businesses experienced significant revenue and earnings declines due to the recession.
  • 5Significant new investments were made in Swiss Re and Dow Chemical, expected to enhance future investment income.
  • 6Derivative contracts, particularly equity index put options, generated substantial gains, offsetting losses in other investment categories.
  • 7The company maintained significant liquidity, with $21.4 billion in cash and cash equivalents for insurance and other businesses.

Frequently Asked Questions

The overall economic recession had a mixed impact. While manufacturing, service, and retailing businesses experienced significant revenue and earnings declines due to reduced consumer spending, the insurance and utilities segments remained strong and relatively unaffected. The company actively managed costs across its businesses to mitigate the recession's effects.

Investment and derivative gains/losses were volatile. Significant gains were realized from equity index put option contracts, driven by market index increases. These gains were partially offset by losses from credit default contracts, reflecting corporate defaults and widening credit spreads, and by other-than-temporary impairments on certain equity investments, notably ConocoPhillips. The company also made substantial new investments in Swiss Re and Dow Chemical.

Berkshire Hathaway and its subsidiaries continue to cooperate with ongoing investigations by the SEC, Department of Justice, and other authorities concerning non-traditional insurance products, particularly those involving General Re and transactions with AIG. While some former executives have been convicted, the company is still evaluating possible legal actions against General Re and its subsidiaries. Berkshire cannot predict the outcome or estimate a range of possible loss at this time, nor can it determine if these matters will have a material adverse effect on its business or results.

Berkshire Hathaway maintained a strong financial position, with consolidated shareholders' equity increasing to $114.5 billion. The company held $21.4 billion in cash and cash equivalents for its insurance and other businesses. Significant new investments were made, and capital expenditures for utilities and energy businesses were substantial. Management believes it maintains ample liquidity to cover existing contractual obligations and contingent needs.