10-QPeriod: Q1 FY2010

BERKSHIRE HATHAWAY INC Quarterly Report for Q1 Ended Mar 31, 2010

Filed May 7, 2010For Securities:BRK-BBRK-A

Summary

Berkshire Hathaway Inc.'s first quarter 2010 results show a significant turnaround from the prior year, driven largely by the full consolidation of Burlington Northern Santa Fe (BNSF) and a substantial increase in investment gains. Net earnings attributable to Berkshire Hathaway shareholders swung to $3.63 billion from a loss of $1.53 billion in the same period of 2009. This improvement was boosted by a $1.3 billion investment gain, which included a one-time $979 million gain from the BNSF acquisition. The acquisition of the remaining stake in BNSF in February 2010 significantly expanded the 'Railroad, Utilities and Energy' segment, leading to a substantial increase in its assets and liabilities. While insurance underwriting remained strong with a net underwriting gain of $226 million, investment income saw a slight decrease. The company's financial position remains robust, with consolidated shareholders' equity growing to $147.2 billion.

Financial Highlights

26 data points
Beta

Revenue

$32.04B

Net Income

$3.63B

11.3% Net Margin

EPS (Diluted)

$2272.00

Total Assets

$356.32B

Cash & Equivalents

$25.67B

Free Cash Flow

$2.14B

Financial Statements
Beta
Revenue$32.04B
Operating Expenses$26.94B
Operating Income$3.46B
Net Income$3.63B
EPS (Basic)$2272.00
Shares Outstanding (Basic)1.60M

Key Highlights

  • 1Turnaround to profitability: Net earnings attributable to Berkshire Hathaway shareholders were $3.63 billion in Q1 2010, a significant improvement from a net loss of $1.53 billion in Q1 2009.
  • 2BNSF Acquisition Impact: The full consolidation of Burlington Northern Santa Fe (BNSF) after its acquisition in February 2010 significantly boosted the 'Railroad, Utilities and Energy' segment, with substantial increases in property, plant, and equipment, and goodwill.
  • 3Strong Investment Gains: Investment gains totaled $1.3 billion in Q1 2010, a significant recovery from a loss of $370 million in Q1 2009, boosted by a $979 million one-time gain related to the BNSF acquisition.
  • 4Robust Insurance Underwriting: The insurance businesses collectively reported a net underwriting gain of $226 million, demonstrating continued strength in this core segment, with GEICO showing healthy premium growth.
  • 5Increased Debt Levels: Total borrowings increased significantly, largely due to debt issued to finance the BNSF acquisition, reaching $204.4 billion in total liabilities.
  • 6Growth in Shareholders' Equity: Consolidated shareholders' equity increased by $16.1 billion to $147.2 billion, reflecting strong earnings and the issuance of Berkshire stock for the BNSF acquisition.

Frequently Asked Questions

The primary driver was the full consolidation of Burlington Northern Santa Fe (BNSF) following its acquisition in February 2010. This significantly boosted revenues and earnings, along with a substantial one-time gain recognized on the acquisition itself and a strong recovery in investment gains compared to the prior year's losses.

The BNSF acquisition led to a substantial increase in assets, particularly 'Property, plant and equipment' and 'Goodwill' within the 'Railroad, Utilities and Energy' segment. Consequently, liabilities also increased significantly due to BNSF's existing debt and new debt issued by Berkshire to finance the acquisition.

The insurance businesses demonstrated resilience, with a net underwriting gain of $226 million. GEICO, in particular, saw a 5.9% increase in premiums earned, driven by policy growth and improved loss ratios. Investment income for insurance operations, however, saw a slight decrease compared to the prior year.

The report highlights a significant increase in investment gains, including a one-time gain from the BNSF acquisition. The equity securities portfolio saw an increase in fair value, with substantial unrealized gains in holdings like Coca-Cola and American Express. Fixed maturity securities remained relatively stable, though a portion was in an unrealized loss position for over 12 months.