Berkshire Hathaway 2000 Annual Report Download - page 16

15
Sources of Reported Earnings
The table that follows shows the main sources of Berkshire's reported earnings. In this presentation,
purchase-accounting adjustments are not assigned to the specific businesses to which they apply, but are instead
aggregated and shown separately. This procedure lets you view the earnings of our businesses as they would have
been reported had we not purchased them. For the reasons discussed on page 65, this form of presentation seems to
us to be more useful to investors and managers than one utilizing generally accepted accounting principles (GAAP),
which require purchase-premiums to be charged off business-by-business. The total net earnings we show in the
table are, of course, identical to the GAAP total in our audited financial statements.
(in millions) Berkshire's Share
of Net Earnings
(after taxes and
Pre-Tax Earnings minority interests)
2000 1999 2000 1999
Operating Earnings:
Insurance Group:
Underwriting – Reinsurance................................. $(1,399) $(1,440) $(899) $(927)
Underwriting – GEICO........................................ (224) 24 (146) 16
Underwriting – Other Primary ............................. 38 22 24 14
Net Investment Income ........................................ 2,747 2,482 1,929 1,764
Finance and Financial Products Business................ 556 125 360 86
Flight Services........................................................ 213 225 126 132
MidAmerican Energy (76% owned)........................ 197 -- 109 --
Retail Operations.................................................... 175 130 104 77
Scott Fetzer (excluding finance operation) .............. 122 147 80 92
Other Businesses .................................................... 225 210 134 131
Purchase-Accounting Adjustments.......................... (881) (739) (843) (648)
Corporate Interest Expense ..................................... (92) (109) (61) (70)
Shareholder-Designated Contributions.................... (17) (17) (11) (11)
Other ...................................................................... 39 25 30 15
Operating Earnings ................................................... 1,699 1,085 936 671
Capital Gains from Investments................................. 3,955 1,365 2,392 886
Total Earnings – All Entities..................................... $5,654 $2,450 $3,328 $1,557
Most of our manufacturing, retailing and service businesses did at least reasonably well last year.
The exception was shoes, particularly at Dexter. In our shoe businesses generally, our attempt to keep the
bulk of our production in domestic factories has cost us dearly. We face another very tough year in 2001 also, as
we make significant changes in how we do business.
I clearly made a mistake in paying what I did for Dexter in 1993. Furthermore, I compounded that
mistake in a huge way by using Berkshire shares in payment. Last year, to recognize my error, we charged off all
the remaining accounting goodwill that was attributable to the Dexter transaction. We may regain some economic
goodwill at Dexter in the future, but we clearly have none at present.
The managers of our shoe businesses are first-class from both a business and human perspective. They
are working very hard at a tough  and often terribly painful  job, even though their personal financial
circumstances don’t require them to do so. They have my admiration and thanks.