Berkshire Hathaway 2011 Annual Report Download - page 13

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At MidAmerican, we participate in a similar “social compact.” We are expected to put up ever-increasing
sums to satisfy the future needs of our customers. If we meanwhile operate reliably and efficiently,
we know that we will obtain a fair return on these investments.
MidAmerican, 89.8% owned by Berkshire, supplies 2.5 million customers in the U.S. with electricity,
operating as the largest supplier in Iowa, Utah and Wyoming and as an important provider in six other states as
well. Our pipelines transport 8% of the country’s natural gas. Obviously, many millions of Americans depend on
us every day. They haven’t been disappointed.
When MidAmerican purchased Northern Natural Gas pipeline in 2002, that company’s performance as
a pipeline was rated dead last, 43 out of 43, by the leading authority in the field. In the most recent report,
Northern Natural was ranked second. The top spot was held by our other pipeline, Kern River.
In its electric business, MidAmerican has a comparable record. In the most recent survey of customer
satisfaction, MidAmerican’s U.S. utilities ranked second among 60 utility groups surveyed. The story was far
different not many years back when MidAmerican acquired these properties.
MidAmerican will have 3,316 megawatts of wind generation in operation by the end of 2012, far more
than any other regulated electric utility in the country. The total amount that we have invested or committed to
wind is a staggering $6 billion. We can make this sort of investment because MidAmerican retains all of its
earnings, unlike other utilities that generally pay out most of what they earn. In addition, late last year we took on
two solar projects – one 100%-owned in California and the other 49%-owned in Arizona – that will cost about $3
billion to construct. Many more wind and solar projects will almost certainly follow.
As you can tell by now, I am proud of what has been accomplished for our society by Matt Rose at
BNSF and by Greg Abel at MidAmerican. I am also both proud and grateful for what they have accomplished for
Berkshire shareholders. Below are the relevant figures:
MidAmerican Earnings (in millions)
2011 2010
U.K. utilities ............................................................. $ 469 $ 333
Iowa utility .............................................................. 279 279
Western utilities .......................................................... 771 783
Pipelines ................................................................ 388 378
HomeServices ............................................................ 39 42
Other (net) ............................................................... 36 47
Operating earnings before corporate interest and taxes ............................ 1,982 1,862
Interest, other than to Berkshire .............................................. (323) (323)
Interest on Berkshire junior debt .............................................. (13) (30)
Income tax ............................................................... (315) (271)
Net earnings ............................................................. $1,331 $1,238
Earnings applicable to Berkshire* ............................................ $1,204 $1,131
*Includes interest earned by Berkshire (net of related income taxes) of $8 in 2011 and $19 in 2010.
BNSF
(Historical accounting through 2/12/10; purchase accounting subsequently) (in millions)
2011 2010
Revenues ................................................................ $19,548 $16,850
Operating earnings ........................................................ 5,310 4,495
Interest (Net) ............................................................. 560 507
Pre-Tax earnings .......................................................... 4,741 3,988
Net earnings .............................................................. 2,972 2,459
In the book value recorded on our balance sheet, BNSF and MidAmerican carry substantial goodwill
components totaling $20 billion. In each instance, however, Charlie and I believe current intrinsic value is far
greater than book value.
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