BERKSHIRE HATHAWAY INC.

COMBINED FINANCIAL STATEMENTS

BUSINESS GROUPS

 

Berkshire's consolidated data is rearranged in the presentations on the following six pages into four categories, corresponding to the way Mr. Buffett and Mr. Munger think about Berkshire's businesses. The presentations may be helpful to readers in making estimates of Berkshire's intrinsic value.

The presentations in this section do not conform in all respects to generally accepted accounting principles. Principal departures from GAAP relate to accounting treatment for assets acquired in business acquisitions, although students and practitioners of accounting will recognize others.

 

Opinions of Berkshire's independent auditors were not solicited for this data. The four-category presentations in no way fell within their purview.

 


 

BERKSHIRE HATHAWAY INC.

INSURANCE GROUP

 

      Berkshire's insurance businesses are comprised of three operating groups of subsidiaries. The largest group (in terms of premium volume) is GEICO Corporation ("GEICO") whose business was merged with another Berkshire subsidiary at the beginning of 1996. Prior to that date, Berkshire subsidiaries owned approximately 51% of the then outstanding capital stock of GEICO. GEICO, through its subsidiaries, is a multiple line property and casualty insurer the principal business of which is writing private passenger automobile insurance. Currently the seventh largest auto insurer in the U.S., GEICO's voluntary auto policy count grew 16% during the twelve months ended December 31, 1997. At the same time, outstanding underwriting results continued to be generated.

      The Berkshire Hathaway Reinsurance Division provides treaty and limited facultative reinsurance to other property/casualty insurers and reinsurers. Berkshire is one of the world's leading providers of catastrophe excess of loss reinsurance. Berkshire's unparalled capital strength has enabled it to offer dollar coverages of a magnitude far in excess of its competitors.

      Berkshire's third group of businesses underwrite miscellaneous forms of direct insurance. National Indemnity Company and other affiliated entities underwrite multiple lines of traditional insurance for primarily commercial accounts. The "Homestate Group" companies underwrite various commercial coverages for risks in an increasing number of selected states. Cypress Insurance Company provides workers' compensation insurance to employers in California and other states. Central States Indemnity Company issues credit insurance distributed through credit card issuers nationwide and Kansas Bankers Surety Company is an insurer for primarily small and medium sized banks located in the midwest.

      The Berkshire Hathaway Insurance Group maintains capital strength at unparalleled high levels. Statutory surplus as regards policyholders of the Insurance Group increased to about $37 billion at December 31, 1997. The obvious margins of safety thus provided to insureds of the Group are particularly persuasive in marketing of individually negotiated insurance and reinsurance contracts.

      Combined financial statements of the Insurance Group -- unaudited and not fully adjusted to conform to Generally Accepted Accounting Principles -- are presented on the following page.

 


BERKSHIRE HATHAWAY INC.

INSURANCE GROUP


                           Balance Sheets
                        (dollars in millions)
                                                        December 31, 
                                                   ----------------------
                                                      1997        1996   
                                                   ----------  ----------
Assets
  Investments:
    Fixed maturities at market ................... $10,028.2   $ 5,462.4 
    Equity securities at market:
      American Express Company ...................   4,315.2     2,731.8 
      The Coca-Cola Company ......................  13,305.5    10,499.7 
      The Walt Disney Company ....................   2,082.8     1,680.2 
      Freddie Mac ................................   2,683.1     1,772.8 
      The Gillette Company .......................   4,821.0     3,732.0 
      Wells Fargo & Company ......................   2,207.9     1,916.8 
      Other ......................................   6,525.6     5,218.3 
                                                   ----------  ----------
                                                    45,969.3    33,014.0 
  Cash and cash equivalents ......................     515.6       513.7 
  Deferred costs .................................     607.7       437.5 
  Other ..........................................   1,287.0     1,022.0 
                                                   ----------  ----------
                                                   $48,379.6   $34,987.2 
                                                   ==========  ==========
Liabilities
  Losses and loss adjustment expenses ............ $ 6,850.5   $ 6,274.4 
  Unearned premiums ..............................   1,273.7     1,183.5 
  Funds held under reinsurance assumed ...........     396.9       449.6 
  Policyholder liabilities and other accruals ....   1,256.4       802.0 
  Income taxes, principally deferred .............  10,372.0     6,611.8 
                                                   ----------  ----------
                                                    20,149.5    15,321.3 
                                                   ----------  ----------
Equity
  Minority shareholders' .........................     359.4       258.1 
  Berkshire shareholders' ........................  27,870.7    19,407.8 
                                                   ----------  ----------
                                                    28,230.1    19,665.9 
                                                   ----------  ----------
                                                   $48,379.6   $34,987.2 
                                                   ==========  ==========


                       Statements of Earnings
                        (dollars in millions)

                                            1997       1996       1995    
                                         ---------  ---------  ---------
Premiums written ....................... $ 4,852.3  $ 4,105.2  $ 1,024.2 
                                         =========  =========  =========
Premiums earned ........................ $ 4,761.1  $ 4,117.8  $   957.5 
                                         ---------  ---------  ---------
Losses and loss expenses ...............   3,420.1    3,089.5      612.0 
Underwriting expenses ..................     879.6      806.2      325.0 
                                         ---------  ---------  ---------
  Total losses and expenses ............   4,299.7    3,895.7      937.0 
                                         ---------  ---------  ---------
  Underwriting gain -- pre-tax .........     461.4      222.1       20.5 
Net investment income* .................     882.3      726.2      501.6 
Realized investment gain ...............   1,059.1    2,289.8      181.1 
                                         ---------  ---------  ---------
Earnings before income taxes ...........   2,402.8    3,238.1      703.2 
Income tax expense .....................     704.5    1,006.6      149.0 
                                         ---------  ---------  ---------
                                           1,698.3    2,231.5      554.2 
Minority interest ......................      15.0        7.6        7.5 
                                         ---------  ---------  ---------
Net earnings ........................... $ 1,683.3  $ 2,223.9  $   546.7 
                                         =========  =========  =========
* Net investment income is summarized below:
     Dividends .........................   $ 457.5    $ 418.4    $ 385.0 
     Interest ..........................     430.7      321.9       99.6 
     Equity in unremitted net earnings
       of Salomon Inc ..................      --         --         18.3 
     Investment expenses ...............      (5.9)     (14.1)      (1.3)
                                           -------    -------    ------- 
                                           $ 882.3    $ 726.2    $ 501.6 
                                           =======    =======    =======

These statements do not conform to GAAP in all respects
These statements are unaudited


BERKSHIRE HATHAWAY INC.

MANUFACTURING, PUBLISHING AND RETAILING BUSINESSES


	Combined financial statements of Berkshire's Manufacturing, Publishing 
and Retailing businesses - unaudited and not fully adjusted to conform to 
Generally Accepted Accounting Principles - are presented on the following 
page. The operations whose data have been combined in these presentations 
include the following:


   Operation                    Product/Service/Activity

   Adalet - PLM                 Electrical enclosure systems and 
                                 cable accessories

   Blue Chip Stamps             Marketing motivational services

   Borsheim's                   Retailing fine jewelry

   Buffalo News                 Daily and Sunday newspaper

   Campbell Hausfeld            Air compressors, air tools, painting 
                                 systems, pressure washers, welders and 
                                 generators

   Carefree                     Comfort and convenience products for the 
                                 recreational vehicle industry

   Cleveland Wood Products      Vacuum cleaner brushes and bags

   Dexter Shoe Companies        Dress, casual and athletic shoes

   Douglas Products             Specialty and cordless vacuum cleaners

   Fechheimer Bros. Co.         Uniforms and accessories

   FlightSafety                 High technology training to operators of 
                                 aircraft and ships

   France                       Ignition and sign transformers and
                                 components

   H. H. Brown Shoe Co.         Work shoes, boots and casual footwear

   Halex                        Zinc die cast conduit fittings and other 
                                 electrical construction materials

   Helzberg's Diamond Shops     Retailing fine jewelry

   Kingston                     Appliance controls

   Kirby                        Home cleaning systems

   Lowell Shoe, Inc.            Women's and nurses' shoes

   Meriam                       Pressure and flow measurement devices

   Nebraska Furniture Mart      Retailing home furnishings

   Northland                    Fractional horsepower electric motors

   Powerwinch                   Marine and general purpose winches, 
                                 windlasses, and hoists

   Precision Steel Products     Steel service center

   Quikut                       Cutlery for the home and sporting goods 
                                 markets

   ScottCare                    Cardiopulmonary rehabilitation and 
                                 monitoring equipment

   Scot Labs                    Cleaning and maintenance chemicals

   See's Candies                Boxed chocolates and other confectionery 
                                 products

   Stahl                        Truck equipment including service bodies, 
                                 flatbed bodies, cranes, tool boxes and
                                 dump bodies

   Star Furniture Company       Retailing home furnishings

   Wayne Combustion Systems     Oil and gas burners for residential and 
                                 commercial furnaces and water heaters

   Wayne Pumps                  Sump, utility and sewage pumps

   Western Enterprises          Medical and industrial compressed gas 
                                 fittings and regulators

   Western Plastics             Molded plastic components

   R.C. Willey Home Furnishings Retailing home furnishings

   World Book                   Printed and multimedia encyclopedias and 
                                 other reference materials


BERKSHIRE HATHAWAY INC.

MANUFACTURING, PUBLISHING AND RETAILING BUSINESSES


                           Balance Sheets
                        (dollars in millions)

                                                        December 31,
                                                   --------------------
                                                     1997        1996
                                                   --------    --------
Assets
  Cash and cash equivalents ...................... $  103.4    $   61.1
  Accounts receivable ............................    624.4       563.1
  Inventories ....................................    598.6       578.7
  Properties and equipment .......................    892.4       863.2
  Other ..........................................    156.3        97.9
                                                   --------    --------
                                                   $2,375.1    $2,164.0
                                                   ========    ========

Liabilities
  Accounts payable, accruals and other ........... $  531.7    $  523.3
  Income taxes ...................................    157.3       126.9
  Term debt and other borrowings .................    216.6       193.3
                                                   --------    --------
                                                      905.6       843.5
                                                   --------    --------

Equity
  Minority shareholders' .........................     52.1        51.6
  Berkshire shareholders' ........................  1,417.4     1,268.9
                                                   --------    --------
                                                    1,469.5     1,320.5
                                                   --------    --------
                                                   $2,375.1    $2,164.0
                                                   ========    ========


                       Statements of Earnings
                        (dollars in millions)

                                                1997      1996      1995   
                                              --------  --------  --------
Revenues:
  Sales and service revenues ................ $3,577.5  $3,061.9  $2,755.9
  Interest income ...........................     44.9      38.8      25.1
                                              --------  --------  --------
                                               3,622.4   3,100.7   2,781.0
                                              --------  --------  --------

Cost and expenses:
  Cost of products and services sold ........  2,179.3   1,875.7   1,698.4
  Selling, general and administrative expenses   899.2     832.1     741.4
  Interest on debt ..........................     19.5      15.3       9.1
                                              --------  --------  --------
                                               3,098.0   2,723.1   2,448.9
                                              --------  --------  --------
  Earnings from operations before income taxes   524.4     377.6     332.1
  Income tax expense ........................    199.9     138.3     126.4
                                              --------  --------  --------
                                                 324.5     239.3     205.7
  Minority interest .........................      5.6       5.1       4.5
                                              --------  --------  --------
  Net earnings .............................. $  318.9  $  234.2  $  201.2
                                              ========  ========  ========


     This presentation reflects the results of operations of Helzberg's 
Diamond Shops, R.C. Willey Home Furnishings, FlightSafety International 
and Star Furniture Company from their respective dates of acquisition 
(Helzberg's -- April 30, 1995; Willey -- June 29, 1995; FlightSafety -- 
December 23, 1996; Star Furniture -- July 1, 1997). Accordingly, while the 
1996 balance sheet includes the assets and liabilities of FlightSafety as 
of December 31, 1996, the statement of earnings for 1996 includes 
FlightSafety's operating results for only the last eight days of the 
year.

     Purchase accounting adjustments, including goodwill, arising from 
Berkshire's business acquisitions are not reflected in these statements, 
but instead are reflected in the statements of non-operating activities 
at page 61.

These statements do not conform to GAAP in all respects
These statements are unaudited


BERKSHIRE HATHAWAY INC.

FINANCE BUSINESSES

	
     Scott Fetzer Financial Group, Inc., Berkshire Hathaway Credit 
Corporation and Berkshire Hathaway Life Insurance Co. of Nebraska make up 
Berkshire's finance businesses.


                           Balance Sheets
                        (dollars in millions)

                                                       December 31,
                                                  ----------------------
                                                     1997        1996
                                                  ----------  ----------
Assets
  Cash and cash equivalents ..................... $    56.1   $    10.5
  Fixed maturity investments ....................     970.9       742.4
  Installment and other receivables .............     226.2       228.4
  Deferred tax assets ...........................      17.8        22.5
                                                  ----------  ----------  
                                                  $ 1,271.0   $ 1,003.8

Liabilities
  Borrowings under investment agreements 
    and other debt .............................. $   325.5   $   381.3
  Annuity reserves and policyholder liabilities       697.4       434.8
  Accounts payable, accruals and other ..........     126.4       123.8
                                                  ----------  ----------
                                                    1,149.3       939.9
                                                  ----------  ----------

Equity
  Berkshire shareholders' .......................     121.7        63.9
                                                  ----------  ----------
                                                  $ 1,271.0   $ 1,003.8


                       Statements of Earnings
                        (dollars in millions)

                                                  1997    1996    1995   
                                                 ------  ------  ------
Revenues:
  Interest and fees on loans 
    and financed receivables ................... $ 37.5  $ 38.8  $ 37.9
  Interest and dividends on investment securities  74.5    54.9    43.7
  Annuity premiums earned ......................  248.0   259.5    75.2
                                                 ------  ------  ------
                                                  360.0   353.2   156.8
                                                 ------  ------  ------

Expenses:
  Interest expense .............................   24.3    32.6    38.7
  Annuity benefits and underwriting expenses ...  286.6   276.7    80.8
  General and administrative ...................   21.0    20.8    16.5
                                                 ------  ------  ------
                                                  331.9   330.1   136.0
                                                 ------  ------  ------
  Earnings from operations before income taxes     28.1    23.1    20.8
  Income tax expense ...........................   10.1     8.2     8.2
                                                 ------  ------  ------
  Net earnings ................................. $ 18.0  $ 14.9  $ 12.6
                                                 ======  ======  ======

These statements do not conform to GAAP in all respects
These statements are unaudited


BERKSHIRE HATHAWAY INC.

NON-OPERATING ACTIVITIES

	
     These statements reflect the consolidated financial statement values 
for assets, liabilities, shareholders' equity, revenues and expenses that 
were not assigned to any Berkshire operating group in the unaudited, and 
not fully GAAP - adjusted group financial statements heretofore presented 
(pages 55 to 60).

                      Statements of Net Assets
                        (dollars in millions)

                                                        December 31,
                                                   ----------------------
                                                      1997        1996
                                                   ----------  ----------
Assets
  Cash and cash equivalents ...................... $   383.4   $   765.0 
  Investments:
    Fixed maturities:
      Bonds ......................................     205.6       942.5 
      Preferred stocks ...........................      64.0        42.0 
    Equity securities ............................     306.6       199.0 
  Unamortized goodwill and  
    other purchase accounting adjustments * ......   3,098.6     3,149.8 
  Deferred tax assets ............................     135.6        31.3 
  Other ..........................................     104.5       258.8 
                                                   ----------  ----------
                                                   $ 4,298.3   $ 5,388.4 
                                                   ==========  ==========

Liabilities
  Accounts payable, accruals and other ........... $    39.4   $   816.4 
  Income taxes ...................................     152.3       142.7 
  Borrowings under investment agreements
    and other debt ...............................   2,016.2     1,718.2 
                                                   ----------  ----------
                                                     2,207.9     2,677.3 
                                                   ----------  ----------

Equity
  Minority shareholders' .........................      45.0        25.4 
  Berkshire shareholders' ........................   2,045.4     2,685.7 
                                                   ----------  ----------
                                                     2,090.4     2,711.1 
                                                   ----------  ----------
                                                   $ 4,298.3   $ 5,388.4 
                                                   ==========  ==========



                       Statements of Earnings
                        (dollars in millions)

                                               1997      1996      1995
                                             --------  --------  --------
Revenues:
  Interest and dividend income ............. $  41.0   $  54.6   $  37.5 
  Realized investment gain .................    52.8     194.7      13.0 
                                             --------  --------  --------
                                                93.8     249.3      50.5 
                                             --------  --------  --------

Expenses:
  Corporate administration .................     6.6       5.1       5.3 
  Shareholder-designated contributions .....    15.4      13.3      11.6 
  Amortization of goodwill 
    and purchase accounting adjustments * ..   104.9      75.7      27.0 
  Interest on debt .........................   101.1      90.9      55.3 
  Other (income) ...........................    (6.5)     (2.8)     (1.4)
                                             --------  --------  --------
                                               221.5     182.2      97.8 
                                             --------  --------  --------
  Income (loss) before income taxes ........  (127.7)     67.1     (47.3)
  Income tax expense (benefit) .............   (16.8)     43.7     (13.3)
                                             --------  --------  --------
                                              (110.9)     23.4     (34.0)
  Minority interest ........................     7.7       7.8       1.3 
                                             --------  --------  --------
  Net earnings (loss) ...................... $(118.6)  $  15.6   $ (35.3)
                                             ========  ========  ========

* Purchase accounting adjustments and goodwill arose in accounting for 
business acquisitions.

These statements do not conform to GAAP in all respects
These statements are unaudited

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