Berkshire Hathaway 2011 Annual Report Download - page 42

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”), The Dow Chemical Company (“Dow”) and Bank of America
Corporation (“BAC”). A summary of other investments follows (in millions).
Cost
Net
Unrealized
Gains
Fair
Value
Carrying
Value
December 31, 2011
Other fixed maturity and equity securities:
Insurance and other ................................................ $13,051 $1,055 $14,106 $13,111
Finance and financial products ....................................... 3,198 623 3,821 3,810
$16,249 $1,678 $17,927 $16,921
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
In 2008, we acquired 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”) for a combined cost of $5 billion. Under its terms, the GS
Preferred was redeemable at any time by GS at a price of $110,000 per share ($5.5 billion in aggregate). On April 18, 2011, GS
fully redeemed our GS Preferred investment and we received aggregate redemption proceeds of $5.5 billion. The GS Warrants
remain outstanding and expire in 2013. The GS Warrants are exercisable for an 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. Under its
terms, the GE Preferred was redeemable by GE beginning in October 2011 at a price of $110,000 per share ($3.3 billion in
aggregate). On October 17, 2011, GE fully redeemed our GE Preferred investment and we received aggregate redemption
proceeds of $3.3 billion. The GE Warrants remain outstanding and expire in 2013. The GE Warrants are exercisable for an
aggregate cost of $3 billion ($22.25/share).
In 2008, we acquired $4.4 billion par amount of 11.45% Wrigley subordinated notes due in 2018 and $2.1 billion of 5%
Wrigley preferred stock. In 2009, we also acquired $1.0 billion par amount of Wrigley senior notes due in 2013 and 2014. We
currently own $800 million of the Wrigley senior notes and an unconsolidated joint venture in which we have a 50% economic
interest owns $200 million of the Wrigley senior notes. 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.
In 2009, we acquired 3,000,000 shares of Series A Cumulative Convertible Perpetual Preferred Stock of Dow (“Dow
Preferred”) for a cost of $3 billion. Under certain conditions, we can convert each share of the Dow Preferred into 24.201 shares
of Dow common stock (equivalent to a conversion price of $41.32 per share). 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.
On September 1, 2011, we acquired 50,000 shares of 6% Cumulative Perpetual Preferred Stock of BAC (“BAC Preferred”)
and warrants to purchase 700,000,000 shares of common stock of BAC (“BAC Warrants”) for a combined cost of $5 billion.
Under its terms, the BAC Preferred is redeemable at any time by BAC at a price of $105,000 per share ($5.25 billion in
aggregate). The BAC Warrants expire in 2021 and are exercisable for an additional aggregate cost of $5 billion
($7.142857/share).
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