Berkshire Hathaway 2014 Annual Report Download - page 64

Notes to Consolidated Financial Statements (Continued)
(4) Investments in equity securities (Continued)
Investments in equity securities are reflected in our Consolidated Balance Sheets as follows (in millions).
December 31,
2014 2013
Insurance and other .................................................................... $115,529 $115,464
Railroad, utilities and energy * ........................................................... 881 1,103
Finance and financial products ........................................................... 1,060 938
$117,470 $117,505
* Included in other assets.
(5) Other investments
Other investments include preferred stock of Wm. Wrigley Jr. Company (“Wrigley”), The Dow Chemical Company
(“Dow”) and Bank of America Corporation (“BAC”), as well as warrants to purchase common stock of BAC and our
investments in Restaurant Brands International, Inc. (“RBI”). Other investments are classified as available-for-sale and carried
at fair value and are shown in our Consolidated Balance Sheets as follows (in millions).
Cost Fair Value
December 31, December 31,
2014 2013 2014 2013
Insurance and other ..................................................... $ 9,970 $ 6,970 $16,346 $12,334
Finance and financial products ............................................ 3,052 3,052 5,978 5,617
$13,022 $10,022 $22,324 $17,951
In 2008, we acquired $2.1 billion liquidation amount of Wrigley preferred stock in conjunction with the Mars Incorporated
(“Mars”) acquisition of Wrigley. The Wrigley preferred stock is entitled to dividends at a rate of 5% per annum and is subject to
certain put and call arrangements in 2016 and then annually beginning in 2021. The redemption amount will be based upon the
earnings of Wrigley.
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. Each share of the Dow Preferred is convertible into 24.201 shares of Dow common stock
(equivalent to a conversion price of $41.32 per share). Beginning in April 2014, Dow has the option to cause some or all of the
Dow Preferred to be converted into Dow common stock at the then applicable conversion rate, if the closing price on the New
York Stock Exchange of Dow’s common stock price exceeds $53.72 per share for any 20 trading days within a period of 30
consecutive trading days ending on the day before Dow exercises its option. The Dow Preferred is entitled to dividends at a rate
of 8.5% per annum.
In 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. When issued,
the BAC Preferred was redeemable at any time by BAC at a price of $105,000 per share ($5.25 billion in aggregate) and
dividends were payable on a cumulative basis. At the end of 2013, Berkshire agreed to a proposed amendment to the BAC
Preferred and on May 7, 2014, BAC’s common stock shareholders approved the amendment. Pursuant to the amendment, the
BAC Preferred may not be redeemed at the option of BAC before May 7, 2019 and dividends payable on the BAC Preferred are
no longer cumulative. The BAC Warrants expire in 2021 and are exercisable for an additional aggregate cost of $5 billion
($7.142857/share).
On December 12, 2014, we acquired Class A 9% Cumulative Compounding Perpetual Preferred Shares of RBI having a
stated value of $3 billion (“RBI Preferred”) and common stock of RBI for an aggregate purchase price of $3 billion. RBI,
domiciled in Canada, is a newly formed entity that is the ultimate parent company of Burger King and Tim Hortons. As of the
acquisition date, our combined investment in RBI possessed approximately 14.4% of the voting interests of RBI. The RBI
Preferred is entitled to dividends on a cumulative basis of 9% per annum plus an additional amount that is intended to produce
an after-tax yield to Berkshire as if the dividends were paid by a U.S. based company.
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