Berkshire Hathaway 2010 Annual Report Download - page 46

Notes to Consolidated Financial Statements (Continued)
(5) Other investments
Other investments include fixed maturity and equity securities of The Goldman Sachs Group, Inc. (“GS”), General Electric
Company (“GE”), Wm. Wrigley Jr. Company (“Wrigley”), Swiss Reinsurance Company Ltd. (“Swiss Re”) and The Dow
Chemical Company (“Dow”). As of December 31, 2009, we also owned 22.5% of BNSF’s outstanding common stock, which
we accounted for pursuant to the equity method and included in other investments of insurance and other businesses in our
Consolidated Balance Sheet. Upon acquiring all remaining outstanding shares of BNSF on February 12, 2010, we discontinued
using the equity method and began consolidating the accounts of BNSF. See Note 2. A summary of other investments follows
(in millions).
Cost
Unrealized
Gains
Fair
Value
Carrying
Value
December 31, 2010
Other fixed maturity and equity securities:
Insurance and other ................................................ $15,700 $4,758 $20,458 $19,333
Finance and financial products ....................................... 2,742 947 3,689 3,676
$18,442 $5,705 $24,147 $23,009
December 31, 2009
Other fixed maturity and equity securities:
Insurance and other ................................................ $18,347 $5,451 $23,798 $22,854
Finance and financial products ....................................... 2,742 428 3,170 3,160
Equity method-BNSF .................................................. 5,851 1,721 7,572 6,586
$26,940 $7,600 $34,540 $32,600
We own 50,000 shares of 10% Cumulative Perpetual Preferred Stock of GS (“GS Preferred”) and warrants to purchase
43,478,260 shares of common stock of GS (“GS Warrants”) which we acquired in 2008 for a combined cost of $5 billion. The
GS Preferred may be redeemed at any time by GS at a price of $110,000 per share ($5.5 billion in aggregate). The GS Warrants
expire in 2013 and can be exercised for an additional aggregate cost of $5 billion ($115/share). In 2008, we also acquired 30,000
shares of 10% Cumulative Perpetual Preferred Stock of GE (“GE Preferred”) and warrants to purchase 134,831,460 shares of
common stock of GE (“GE Warrants”) for a combined cost of $3 billion. The GE Preferred may be redeemed by GE beginning
in October 2011 at a price of $110,000 per share ($3.3 billion in aggregate). The GE Warrants expire in 2013 and can be
exercised for an additional aggregate cost of $3 billion ($22.25/share).
We own $4.4 billion par amount of 11.45% Wrigley subordinated notes due in 2018 and $2.1 billion of 5% Wrigley
preferred stock, which we acquired in 2008. In December 2009, we also acquired $1.0 billion par amount of Wrigley senior
notes due in 2013 and 2014. The Wrigley subordinated and senior notes are classified as held-to-maturity and we carry these
investments at cost, adjusted for foreign currency exchange rate changes that apply to certain of the senior notes. We carry the
Wrigley preferred stock at fair value classified as available-for-sale.
We own 3,000,000 shares of Series A Cumulative Convertible Perpetual Preferred Stock of Dow (“Dow Preferred”), which
we acquired in 2009 for a cost of $3 billion. Under certain conditions, each share of the Dow Preferred is convertible into
24.201 shares of Dow common stock. Beginning in April 2014, if Dow’s common stock price exceeds $53.72 per share for any
20 trading days in a consecutive 30-day window, Dow, at its option, at any time, in whole or in part, may convert the Dow
Preferred into Dow common stock at the then applicable conversion rate. The Dow Preferred is entitled to dividends at a rate of
8.5% per annum.
In 2009, we also acquired a 12% convertible perpetual capital instrument issued by Swiss Re at a cost of $2.7 billion. The
instrument had a face amount of 3 billion Swiss Francs (“CHF”). The terms of the instrument allowed Swiss Re to redeem at its
option the instrument under certain conditions. On November 3, 2010, we entered into an agreement with Swiss Re regarding
the redemption of the instrument in exchange for aggregate consideration of approximately CHF 3.9 billion of which CHF
180 million was received on November 25, 2010 with the remainder to be paid to us in 2011. As of December 31, 2010, the
amount due (and subsequently received on January 10, 2011) was classified in our Consolidated Balance Sheet as a component
of receivables of insurance and other businesses.
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