Berkshire Hathaway 2002 Annual Report Download - page 38

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(3) Investments in MidAmerican Energy Holdings Company (Continued)
MidAmericans Articles of Incorporation further provide that the convertible preferred shares: a) are not
mandatorily redeemable by MidAmerican or at the option of the holder; b) participate in dividends and other
distributions to common shareholders as if they were common shares and otherwise possess no dividend rights; c) are
convertible into common shares on a 1 for 1 basis, as adjusted for splits, combinations, reclassifications and other
capital changes by MidAmerican and d) upon liquidation, except for a de minimus first priority distribution of $1 per
share, share ratably with the shareholders of common stock. Further, the aforementioned dividend and distribution
arrangements cannot be modified without the positive consent of the preferred shareholders. Accordingly, the
convertible preferred stock is, in substance, a substantially identical subordinate interest to a share of common stock and
economically equivalent to common stock. Therefore, Berkshire is accounting for its investments in common and
convertible preferred stock of MidAmerican pursuant to the equity method.
Berkshire's aggregate investments in MidAmerican are included in the Consolidated Balance Sheets as
Investments in MidAmerican Energy Holdings Company, and include the common and convertible preferred stock
investments accounted for pursuant to the equity method totaling $1,923 million at December 31, 2002 and $1,371
million at December 31, 2001. The 11% non-transferable trust preferred securities are classified as held-to-maturity and
are carried at cost.
Condensed consolidated balance sheets of MidAmerican are as follows. Amounts are in millions.
December 31, December 31,
2002 2001
Assets:
Properties, plants, contracts and equipment, net ............................................................ $ 9,810 $ 6,537
Goodwill......................................................................................................................... 4,258 3,639
Other assets .................................................................................................................... 3,948 2,450
$18,016 $12,626
Liabilities and shareholders equity:
Term debt .......................................................................................................................$ 9,952 $ 7,163
Redeemable securities held by Berkshire....................................................................... 1,728 455
Redeemable securities held by others............................................................................. 429 554
Other liabilities and minority interests ........................................................................... 3,613 2,746
15,722 10,918
Shareholders equity....................................................................................................... 2,294* 1,708
$18,016 $12,626
* Shareholders’ equity was reduced during 2002 by a net charge to other comprehensive income of $177 million, consisting of a
minimum pension liability charge of $313 million net of a credit of $136 million related primarily to a foreign currency
translation adjustment.
Condensed consolidated statements of earnings of MidAmerican for the years ending December 31, 2002 and 2001
and for the period March 14, 2000 through December 31, 2000 are as follows. Amounts are in millions.
2002 2001 2000
Revenues ........................................................................................................... $4,968 $4,973 $4,013
Costs and expenses:
Cost of sales and operating expenses ................................................................ 3,189 3,522 3,100
Depreciation and amortization .......................................................................... 526 539 383
Interest expense  securities held by Berkshire................................................. 118 50 40
Other interest expense ....................................................................................... 640 443 336
4,473 4,554 3,859
Earnings before taxes ........................................................................................ 495 419 154
Income taxes and minority interests .................................................................. 115 276 73
Net earnings ...................................................................................................... $ 380 $ 143 $ 81