10-QPeriod: Q1 FY2014

BERKSHIRE HATHAWAY INC Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 2, 2014For Securities:BRK-BBRK-A

Summary

Berkshire Hathaway Inc.'s first quarter 2014 report shows a net earnings attributable to Berkshire Hathaway shareholders of $4.705 billion, a slight decrease from $4.892 billion in the same period of 2013. While overall revenues saw an increase to $45.45 billion from $43.87 billion, the decrease in net earnings was influenced by a significant drop in derivative gains, which were $236 million in Q1 2014 compared to $1.206 billion in Q1 2013. The company's insurance underwriting segment remained robust, with a net underwriting gain of $461 million. Significant investments in acquisitions, including NV Energy and IMI plc, are reflected in the balance sheet and will contribute to future results. Berkshire Hathaway maintained a strong financial position with consolidated shareholders' equity growing to $227.6 billion.

Financial Highlights

28 data points
Beta

Revenue

$45.45B

Net Income

$4.71B

10.4% Net Margin

Total Assets

$494.94B

Cash & Equivalents

$48.95B

Free Cash Flow

$2.13B

Financial Statements
Beta
Revenue$45.45B
Operating Expenses$38.85B
Net Income$4.71B
Shares Outstanding (Basic)1.64M

Key Highlights

  • 1Net earnings attributable to Berkshire Hathaway shareholders were $4.705 billion for Q1 2014, down from $4.892 billion in Q1 2013.
  • 2Total revenues increased to $45.45 billion in Q1 2014, up from $43.87 billion in Q1 2013.
  • 3Insurance underwriting generated a net gain of $461 million in Q1 2014.
  • 4Derivative gains significantly decreased to $236 million in Q1 2014 from $1.206 billion in Q1 2013, impacting overall net earnings.
  • 5The company completed significant acquisitions in late 2013 and early 2014, including NV Energy and parts of IMI plc.
  • 6Consolidated shareholders' equity increased to $227.6 billion as of March 31, 2014, from $224.5 billion at December 31, 2013.
  • 7Berkshire Hathaway maintained substantial cash and investments, totaling $48.9 billion in cash and cash equivalents and $189.9 billion in cash and investments within its insurance businesses as of March 31, 2014.

Frequently Asked Questions

The primary driver for the decrease in net earnings was a significant reduction in derivative gains. While investment gains increased, the substantial drop in gains from derivative contracts, particularly equity index put options, from $1.206 billion in Q1 2013 to $236 million in Q1 2014, had a material impact on the overall net earnings despite an increase in revenues and solid performance from insurance underwriting.

Berkshire Hathaway made several significant acquisitions, including NV Energy in December 2013 and operations from IMI plc in January 2014. These acquisitions are reflected in the balance sheet with increases in property, plant, and equipment, goodwill, and associated debt. While these acquisitions increase the company's asset base and leverage, they are expected to contribute to future revenue and earnings growth.

The insurance segment remains a core strength. The underwriting operations reported a net gain of $461 million in Q1 2014. While large catastrophe losses can cause volatility, no significant events occurred in the quarter. Investment income from the insurance businesses decreased slightly due to lower yields on fixed-maturity securities and cash, but the overall insurance operations continue to be a stable contributor to earnings and provide significant 'float' for investment.

No, Berkshire Hathaway did not repurchase any of its Class A or Class B common shares during the first three months of 2014. The company's policy allows for repurchases when the stock price is at a significant discount to its estimated intrinsic value and when consolidated cash holdings remain above $20 billion. Repurchases are made at management's discretion.