Berkshire Hathaway 2008 Annual Report Download - page 59

Notes to Consolidated Financial Statements (Continued)
(20) Contingencies and Commitments (Continued)
Court, Southern District of New York. The complaint, brought by several alleged shareholders of AIG, seeks damages,
injunctive and declaratory relief against various officers and directors of AIG as well as a variety of individuals and entities with
whom AIG did business, relating to a wide variety of allegedly wrongful practices by AIG. The allegations relating to General
Reinsurance focus on the AIG Transaction, and the complaint purports to assert causes of action in connection with that
transaction for aiding and abetting other defendants’ breaches of fiduciary duty and for unjust enrichment. The complaint does
not specify the amount of damages or the nature of any other relief sought. Subsequently, this derivative litigation was stayed by
stipulation between the plaintiffs and AIG. That stay remains in place.
In August 2005, General Reinsurance received a Summons and First Amended Consolidated Shareholders’ Derivative
Complaint in In re American International Group, Inc. Consolidated Derivative Litigation, Case No. 769-N, Delaware Chancery
Court. In June 2007, AIG filed an Amended Complaint in the Delaware Derivative Litigation asserting claims against two of its
former officers, but not against General Reinsurance. On September 28, 2007, AIG and the shareholder plaintiffs filed a Second
Combined Amended Complaint, in which AIG asserted claims against certain of its former officers and the shareholder
plaintiffs asserted claims against a number of other defendants, including General Reinsurance and General Re. The claims
asserted in the Delaware complaint are substantially similar to those asserted in the New York derivative complaint, except that
the Delaware complaint makes clear that the plaintiffs are asserting claims against both General Reinsurance and General Re.
General Reinsurance and General Re filed a motion to dismiss on November 30, 2007. Various parties moved to stay discovery
and/or all proceedings in the Delaware derivative litigation. At a hearing held on February 12, 2008, the Court ruled that
discovery would be stayed pending the resolution of the claims asserted against AIG in the AIG Securities Litigation. The
briefing on the motions filed by General Reinsurance and General Re was completed by September 8, 2008. The court heard
argument on certain other defendants’ motions to dismiss on November 7, 2008 and issued a decision on February 10, 2009
granting some defendants’ motions and denying others. The court has not yet heard oral argument on the motions filed by
General Reinsurance and General Re and has not ruled on those motions.
FAI/HIH Matter
In December 2003, the Liquidators of both FAI Insurance Limited (“FAI”) and HIH Insurance Limited (“HIH”) advised
GRA and Cologne Re that they intended to assert claims arising from insurance transactions GRA entered into with FAI in May
and June 1998. In August 2004, the Liquidators filed claims in the Supreme Court of New South Wales in order to avoid the
expiration of a statute of limitations for certain plaintiffs. The focus of the Liquidators’ allegations against GRA and Cologne Re
are the 1998 transactions GRA entered into with FAI (which was acquired by HIH in 1999). The Liquidators contend, among
other things, that GRA and Cologne Re engaged in deceptive conduct that assisted FAI in improperly accounting for such
transactions as reinsurance, and that such deception led to HIH’s acquisition of FAI and caused various losses to FAI and HIH.
The Liquidator of HIH served its Complaint on GRA and Cologne Re in June 2006 and discovery has been ongoing. The FAI
Liquidator dismissed his complaint against GRA and Cologne Re. GRA and Cologne Re recently entered into a settlement in
principle with the HIH Liquidator. The parties are still formulating a settlement deed, which will be subject to court approval.
Berkshire has established reserves for certain of the legal proceedings discussed above where it has concluded that the
likelihood of an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. For other legal
proceedings discussed above, either Berkshire has determined that an unfavorable outcome is reasonably possible but it is
unable to estimate a range of possible losses or it is unable to predict the outcome of the matter. Management believes that any
liability to the Company that may arise as a result of current pending civil litigation, including the matters discussed above, will
not have a material effect on Berkshire’s financial condition or results of operations.
c) Commitments
Berkshire subsidiaries lease certain manufacturing, warehouse, retail and office facilities as well as certain equipment. Rent
expense for all leases was $725 million in 2008, $648 million in 2007 and $578 million in 2006. Minimum rental payments for
operating leases having initial or remaining non-cancelable terms in excess of one year are as follows. Amounts are in millions.
2009 2010 2011 2012 2013
After
2013 Total
$583 $483 $406 $340 $247 $1,056 $3,115
Several of Berkshire’s subsidiaries have made long-term commitments to purchase goods and services used in their
businesses. The most significant of these relate to NetJets’ commitments to purchase up to 556 aircraft through 2018 and
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