Berkshire Hathaway 2012 Annual Report Download - page 13

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In Matt Rose, at BNSF, and Greg Abel, at MidAmerican, we have two outstanding CEOs. They are
extraordinary managers who have developed businesses that serve both their customers and owners well. Each has
my gratitude and each deserves yours. Here are the key figures for their businesses:
MidAmerican (89.8% owned) Earnings (in millions)
2012 2011
U.K. utilities .................................................... $ 429 $ 469
Iowa utility ..................................................... 236 279
Western utilities ................................................. 737 771
Pipelines ....................................................... 383 388
HomeServices ................................................... 82 39
Other (net) ...................................................... 91 36
Operating earnings before corporate interest and taxes ................... 1,958 1,982
Interest ........................................................ 314 336
Income taxes .................................................... 172 315
Net earnings .................................................... $ 1,472 $ 1,331
Earnings applicable to Berkshire .................................... $ 1,323 $ 1,204
BNSF Earnings (in millions)
2012 2011
Revenues ....................................................... $20,835 $19,548
Operating expenses ............................................... 14,835 14,247
Operating earnings before interest and taxes ........................... 6,000 5,301
Interest (net) .................................................... 623 560
Income taxes .................................................... 2,005 1,769
Net earnings .................................................... $ 3,372 $ 2,972
Sharp-eyed readers will notice an incongruity in the MidAmerican earnings tabulation. What in the world
is HomeServices, a real estate brokerage operation, doing in a section entitled “Regulated, Capital-Intensive
Businesses?”
Well, its ownership came with MidAmerican when we bought control of that company in 2000. At that
time, I focused on MidAmerican’s utility operations and barely noticed HomeServices, which then owned only a
few real estate brokerage companies.
Since then, however, the company has regularly added residential brokers – three in 2012 – and now has
about 16,000 agents in a string of major U.S. cities. (Our real estate brokerage companies are listed on page 107.)
In 2012, our agents participated in $42 billion of home sales, up 33% from 2011.
Additionally, HomeServices last year purchased 67% of the Prudential and Real Living franchise
operations, which together license 544 brokerage companies throughout the country and receive a small royalty on
their sales. We have an arrangement to purchase the balance of those operations within five years. In the coming
years, we will gradually rebrand both our franchisees and the franchise firms we own as Berkshire Hathaway
HomeServices.
Ron Peltier has done an outstanding job in managing HomeServices during a depressed period. Now, as
the housing market continues to strengthen, we expect earnings to rise significantly.
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