Berkshire Hathaway 2010 Annual Report Download - page 53

Notes to Consolidated Financial Statements (Continued)
(13) Unpaid losses and loss adjustment expenses (Continued)
retroactive reinsurance contracts. Liabilities arising from retroactive contracts with exposure to claims of this nature are
generally subject to aggregate policy limits. Thus, our exposure to environmental and latent injury claims under these contracts
is, likewise, limited. We monitor evolving case law and its effect on environmental and latent injury claims. Changing
government regulations, newly identified toxins, newly reported claims, new theories of liability, new contract interpretations
and other factors could result in significant increases in these liabilities. Such development could be material to our results of
operations. It is not possible to reliably estimate the amount of additional net loss or the range of net loss that is reasonably
possible.
(14) Notes payable and other borrowings
Notes payable and other borrowings are summarized below (in millions). The average interest rates shown in the following
tables are the weighted average interest rates on outstanding debt as of December 31, 2010.
Average
Interest Rate 2010 2009
Insurance and other:
Issued by Berkshire parent company due 2011-2047 .............................. 1.5% $ 8,360 $ 340
Short-term subsidiary borrowings ............................................. 0.3% 1,682 1,607
Other subsidiary borrowings due 2011-2036 .................................... 5.2% 2,429 2,614
$12,471 $4,561
In connection with the BNSF acquisition, Berkshire issued $8.0 billion aggregate par amount of senior unsecured notes
consisting of $2.0 billion par amount of floating rate notes due in 2011; $1.1 billion par amount of floating rate notes due in
2012; $600 million par amount of 1.4% notes due in 2012; $1.2 billion par amount of floating rate notes due in 2013;
$1.4 billion par amount of 2.125% notes due in 2013; and $1.7 billion par amount of 3.2% notes due in 2015. The floating rate
notes due in 2011 were repaid on February 10, 2011.
Average
Interest Rate 2010 2009
Railroad, utilities and energy:
Issued by MidAmerican Energy Holdings Company (“MidAmerican”) and its
subsidiaries:
MidAmerican senior unsecured debt due 2012-2037 ......................... 6.1% $ 5,371 $ 5,371
Subsidiary and other debt due 2011-2039 .................................. 5.8% 14,275 14,208
Issued by BNSF due 2011-2097 ............................................. 6.1% 11,980 —
$31,626 $19,579
Berkshire does not guarantee any debt or other borrowings of BNSF, MidAmerican or their subsidiaries. Subsidiary debt
represents amounts issued by subsidiaries of MidAmerican pursuant to separate financing agreements. All or substantially all of
the assets of certain MidAmerican subsidiaries are or may be pledged or encumbered to support or otherwise secure the debt.
These borrowing arrangements generally contain various covenants including, but not limited to, leverage ratios, interest
coverage ratios and debt service coverage ratios. As of December 31, 2010, BNSF and MidAmerican and its subsidiaries were
in compliance with all applicable covenants.
As of the February 12, 2010 acquisition date, BNSF’s outstanding debt was approximately $11.1 billion. During 2010,
BNSF issued $750 million of 5.75% debentures due in 2040, $250 million of 3.60% debentures due in 2020 and $500 million of
5.05% debentures due in 2041. BNSF’s borrowings are primarily unsecured.
Average
Interest Rate 2010 2009
Finance and financial products:
Issued by Berkshire Hathaway Finance Corporation (“BHFC”) .................... 4.2% $11,535 $12,051
Issued by other subsidiaries due 2011-2036 .................................... 5.1% 2,942 1,718
$14,477 $13,769
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