<PAGE>
FILED PURSUANT TO RULE 424(b)(4)
REGISTRATION NO. 333-02141
PROSPECTUS
450,000 SHARES
BERKSHIRE HATHAWAY INC.
CLASS B COMMON STOCK
($.1667 PAR VALUE)
All of the shares of Class B Common Stock, $.1667 par value per share (the
"Class B Common Stock") being offered hereby will be sold by Berkshire Hathaway
Inc. ("Berkshire" or the "Company"). The Class B Common Stock has been approved
for listing on the New York Stock Exchange under the symbol "BRK.B", subject to
notice of issuance.
The closing sale price of Berkshire's Class A Common Stock, $5.00 par value per
share (the "Class A Common Stock"), listed on the New York Stock Exchange under
the symbol "BRK.A", was $33,400 per share on the date of this Prospectus.
WARREN BUFFETT, AS BERKSHIRE'S CHAIRMAN, AND CHARLES MUNGER, AS BERKSHIRE'S
VICE CHAIRMAN, WANT YOU TO KNOW THE FOLLOWING (AND URGE YOU TO IGNORE ANYONE
TELLING YOU THAT THESE STATEMENTS ARE "BOILERPLATE" OR UNIMPORTANT):
1. Mr. Buffett and Mr. Munger believe that Berkshire's Class A Common Stock is
not undervalued at the market price stated above. Neither Mr. Buffett nor
Mr. Munger would currently buy Berkshire shares at that price, nor would
they recommend that their families or friends do so.
2. Berkshire's historical rate of growth in per-share book value is NOT
indicative of possible future growth. Because of the large size of
Berkshire's capital base (approximately $17 billion at December 31, 1995),
Berkshire's book value per share cannot increase in the future at a rate
even close to its past rate.
3. In recent years the market price of Berkshire shares has increased at a rate
exceeding the growth in per-share intrinsic value. Market overperformance of
that kind cannot persist indefinitely. Inevitably, there will also occur
periods of underperformance, perhaps substantial in degree.
4. Berkshire has attempted to assess the current demand for Class B shares and
has tailored the size of this offering to fully satisfy that demand.
Therefore, buyers hoping to capture quick profits are almost certain to be
disappointed. Shares should be purchased only by investors who expect to
remain holders for many years.
FOR CERTAIN OTHER RISK FACTORS AND INVESTMENT CONSIDERATIONS, SEE "CERTAIN RISK
FACTORS AND INVESTMENT CONSIDERATIONS" ON PAGE 6.
(Continued on inside cover page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
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<S> <C> <C> <C>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT COMPANY(1)
Per Class B Share........................... $1,110.00 $16.65 $1,093.35
Total(2).................................... $499,500,000 $7,492,500 $492,007,500
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Before deducting expenses payable by the Company, estimated to be $604,000.
(2) Berkshire has granted to the Underwriter an option, exercisable within 30
days after the date of this Prospectus, to purchase up to an aggregate of
67,500 additional shares of Class B Common Stock at the Price to Public,
less the Underwriting Discount, solely to cover over-allotments, if any. If
the Underwriter exercises such option in full, the total Price to Public,
Underwriting Discount, and Proceeds to Company will be $574,425,000,
$8,616,375, and $565,808,625, respectively. See "Plan of Distribution."
The shares of Class B Common Stock are offered subject to receipt and
acceptance by the Underwriter, to prior sale and to the Underwriter's right to
reject any order in whole or in part and to withdraw, cancel or modify the
offer without notice. It is expected that delivery of the shares of Class B
Common Stock will be made at the office of Salomon Brothers Inc, Seven World
Trade Center, New York, New York, or through the facilities of The Depository
Trust Company, on or about May 14, 1996.
- -----------------------
SALOMON BROTHERS INC
-----------------------------------------------------------------------------
The date of this Prospectus is May 8, 1996.
<PAGE>
(continued from cover page)
Berkshire has not paid a cash dividend on its common stock since 1967, and has
no present intention to pay a dividend on Class B Common Stock or Class A
Common Stock in the future.
Salomon Brothers Inc does not currently intend to purchase or sell shares of
the Class B Common Stock following the initial offering of the shares of Class
B Common Stock offered hereby, but may do so if its intention changes. Salomon
Brothers Inc, acting as principal or agent, may use this Prospectus in
connection with offers and sales of shares of Class B Common Stock offered
hereby and any other shares of Class B Common Stock outstanding from time to
time in the course of its business as a broker-dealer. Such sales, if any,
will be made at prevailing market prices at the time of sale.
(end of cover page)
----------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SHARES OF CLASS B
COMMON STOCK AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA HAS NEITHER
APPROVED NOR DISAPPROVED OF THIS OFFERING, NOR HAS THE COMMISSIONER ACTED UPON
THE ACCURACY OR ADEQUACY OF THE PROSPECTUS.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). All such reports, proxy
statements and other information filed with the Commission concerning the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices at Seven World Trade
Center, 13th Floor, New York, New York 10048, and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
upon written request addressed to the Commission, Public Reference Section,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Company's Class A Common Stock is listed, and its Class B Common Stock is
approved for listing subject to notice of issuance, on the New York Stock
Exchange. Reports, proxy statements, information statements and other
information concerning the Company can be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (herein together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933 (the "Securities
Act"). This Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement, which may be obtained
from the Commission at its principal office in Washington, D.C. upon payment
of charges prescribed by the Commission.
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<PAGE>
SUMMARY OF THE OFFERING
The following summary is qualified in its entirety by reference to the more
detailed information appearing elsewhere in this Prospectus.
Class B Common Stock.............. Class B Common Stock, $.1667 par value per
share.
Size of Offering.................. 450,000 shares of Class B Common Stock
(517,500 shares if the Underwriter
exercises its over-allotment option in
full).
Use of Proceeds................... The Company is making this offering in
response to the formation of unit
investment trusts unaffiliated with
Berkshire that would invest only in
Berkshire's Class A Common Stock or only
in Class A Common Stock and the stock of
other public companies in which Berkshire
has or has had a publicly disclosed
investment. See "The Offering". The
Company expects that, in time, it will use
the net proceeds for acquisitions of
businesses, for augmenting the capital of
its insurance subsidiaries, or for other
general corporate purposes. However, the
Company has no immediate or specific plans
for the use of proceeds from the offering.
See "Use of Proceeds".
Voting Rights..................... Holders of Class B Common Stock will be
entitled to one-two-hundredth (1/200th) of
a vote for each share held of record on
all matters submitted to a vote of
shareholders.
Dividend Rights................... Holders of Class B Common Stock will be
entitled to receive dividends and
distributions (including liquidating
distributions) equal to one-thirtieth
(1/30th) of the amount per share declared
by the Company's Board of Directors for
each share of Class A Common Stock.
Convertibility of Class A Common
Stock............................. Commencing on May 15, 1996, the fifth
trading day after the initial sale of
Class B Common Stock to the public, each
share of Class A Common Stock may be
converted into thirty (30) shares of Class
B Common Stock at the holder's option at
any time. Shares of Class B Common Stock
are not convertible into shares of Class A
Common Stock or any other security.
Common Stock Outstanding.......... As of May 8, 1996, there were 1,193,512
shares of Class A Common Stock
outstanding. After giving effect to the
offering, before any conversion of shares
of Class A Common Stock there will be
450,000 shares of Class B Common Stock
outstanding (517,500 shares if the
Underwriter exercises its over-allotment
option in full).
3
<PAGE>
THE OFFERING
Berkshire is offering shares of its Class B Common Stock in response to
promotions involving Berkshire stock by persons unrelated to Berkshire. In
these promotions, the sponsors planned to sell interests in unit investment
trusts that would hold only Berkshire stock, or only Berkshire stock and the
stocks of other public companies in which Berkshire has or has had a publicly
disclosed investment. These trusts planned to market themselves as "miniature"
Berkshires and as a means of indirect investment in Berkshire for as little as
$1,000, when Berkshire's common stock is selling for about thirty times that
amount.
Berkshire's Board of Directors and management believe that these unit
investment trusts, and other similar investment vehicles that would surely be
proposed if the trusts were successfully marketed, are contrary to the long-
term interests of Berkshire and its shareholders. The trusts would be promoted
by sales people motivated by substantial incentive commissions, who management
believes would inevitably seek to sell the trusts by making misleading
references to Berkshire's past performance. Investors in such trusts would
bear the disadvantages of management fees, of taxes and other costs, and of
sales commissions far higher than those borne by buyers of Berkshire stock on
the New York Stock Exchange. Furthermore, many investors in such trusts,
having been brought in by highly aggressive marketing, would be relatively
unsophisticated and would have bought with totally unrealistic hopes that
future growth in Berkshire's stock price would resemble its past growth.
Moreover, if sales of the trusts were as successful as seemed likely, these
new entities would have needed to acquire a large amount of Berkshire stock,
thereby greatly increasing the demand for that stock, even as the supply
remained constant. This new market demand seemed likely to create, at least
temporarily, an unrealistic increase in Berkshire's stock price, unrelated to
any change in the stock's intrinsic value, given that most Berkshire shares
are held by longtime shareholders who have very low income-tax bases for their
holdings and are reluctant to sell their shares regardless of the price
offered for them. Over the years, annual trading in Berkshire stock has in
fact been exceptionally low as a percentage of shares outstanding.
Under these conditions, it seemed likely to Berkshire that the new
promotions would have had financial consequences much like those of a 1920s-
style "bull pool" in which the price of a popular stock was pushed to
artificial heights through activity that combined orchestrated bursts of
buying with a restricted supply. But the consequences to Berkshire stock might
quite possibly be more extreme, given that, first, income taxes were low in
the 1920s and did not tend to inhibit sales by existing shareholders and,
second, the "bull pools" of that day were typically not driven by the tail
wind of high sales commissions. Thus Berkshire believed that the new trusts
destined Berkshire, against its will and without its assistance, to be
associated with stock promotions that were almost sure in due course to create
many disappointed investors who had not fully understood the risks they were
taking.
To be sure, there are rational arguments that a corporation should not mind
a temporary and unrealistic "spike" in its stock price that occurs because of
the promotional activity of others and without fault or participation of the
corporation. After all, an unrealistically high stock price gives current
shareholders advantages of two types: (1) they can, at least for a brief
period, sell their shares at the unrealistically high price, or (2) assuming
they choose not to sell and that the corporation issues stock at the
unrealistically high price, they will benefit from an increase in the
intrinsic value of the shares they have continued to hold.
Current shareholders, however, can attain neither of these advantages
without disadvantaging some other party. For present and future shareholders
as a group, there can be no "free lunch" from a temporary spike in the price-
value ratio of their stock.
Moreover, in Berkshire's view, any advantages possibly accruing to its
present shareholders from an unrealistically high stock price would not
outweigh the long-term disadvantages that continuing
4
<PAGE>
shareholders would probably sustain as a result of Berkshire being unwillingly
associated with the new aggressively-promoted unit trusts. Just as Berkshire
believes that its See's Candies subsidiary would be harmed if unauthentic,
poor-quality candy bearing the See's label were continuously and aggressively
sold by others, Berkshire believes that its business reputation would be
harmed by the new unit trusts, were these to come successfully into existence.
Berkshire's reputation has been an important factor in both the Company's
business and investment purchases, and also in the success of its insurance
operations. Though the point is impossible to quantify, Berkshire believes
that its reputation has added significantly to the Company's intrinsic value
over the years. Berkshire further believes that its reputation, if it remains
unimpaired, will produce substantial gains in the future as well.
Given these conclusions, Berkshire first tried, by means of vigorous
objections, to dissuade the promoters of the unit trusts from proceeding with
their plans. Proving unsuccessful in that attempt, Berkshire was forced to
fall back to the next-best alternative: a public offering of a newly
authorized Class B Common Stock, with the offering to incorporate both
unusually low sales commissions and a prospectus that appropriately emphasizes
and illuminates the negatives for investors considering purchase of the
shares. In creating the Class B shares, which will have economic rights
equivalent to those of one-thirtieth (1/30th) of a common share of the type
Berkshire has long had outstanding, Berkshire intends to provide a direct,
low-cost means of investment in Berkshire so superior to the investments
offered by the unit trust promoters that their products will be rendered
unmarketable.
A simple split of its shares was also considered by Berkshire. One advantage
of that action was clear: It would have ended any marketing of unit trusts.
However, a split would likely have encouraged unsophisticated, price-
insensitive buyers to purchase shares and, absent a major new supply of
shares, might well have created price irrationalities of the type apt to be
produced by the unit trusts.
Holding all the foregoing beliefs, Berkshire, while it would now still
prefer, if it could, to turn back the clock to a time when it did not have to
contend with the unit trusts, has decided to sell not only a minimum of about
$100 million worth of Class B Common Stock as it initially announced, but also
to sell enough additional Class B shares to meet whatever demand remains after
prospective investors have absorbed the precautionary statements in this
Prospectus. Berkshire considers this course of action to be its least-of-evils
choice.
The creation and sale of Berkshire's new Class B shares, with Class A shares
(the former common stock) thereafter being convertible into Class B shares at
a thirty-for-one conversion ratio, will (1) create minor advantages of
convenience with respect to gift taxes for all holders of Berkshire's Class A
shares, and (2) be likely to increase over time the voting power of Warren E.
Buffett and Susan T. Buffett and other very long-term shareholders. But these
points are incidental. The prompting reason for the creation and sale of the
new Class B shares was the threat to Berkshire's reputation posed by the new,
promotional unit trusts that sought to make themselves vehicles through which
investors could acquire indirect interests in Berkshire stock.
Unlike the indirect investments offered by the trusts, shares of Class B
Common Stock entitle holders to the attributes of Berkshire shares, such as
the power to vote on matters put to Berkshire shareholders, the right to
receive Berkshire's annual report and other communications to shareholders,
and the right to attend meetings of Berkshire's shareholders. See "Description
of Capital Stock" for further information on the relative powers, rights, and
qualifications of Class A Common Stock, Class B Common Stock, and Berkshire's
authorized but presently unissued preferred stock.
As noted above, Berkshire has structured this offering to encourage
investors to make their own investment decisions, encumbered by as little
pressure as possible from securities sales people pushing to earn high
commissions. For investors who seek to buy Class B Common Stock, shares are
available from a large group of securities dealers. However, the sales
commission to dealers has been set at the lowest commercially reasonable
level, so that dealers have less incentive to solicit customers who have not
on their own decided to buy shares of Class B Common Stock.
5
<PAGE>
As is implicit in all of the above, Berkshire is not making the offering
while having in mind any immediate and specific use for the proceeds. To the
contrary, Berkshire does not have at present any identified use for additional
equity capital, though it expects that, in time, the net proceeds will be used
for acquisitions of businesses, for augmenting the capital of insurance
subsidiaries, or for other general corporate purposes. See "Use of Proceeds."
Furthermore, Mr. Buffett and Mr. Munger believe that Berkshire's Class A
Common Stock, whose closing sale price was $33,400 per share on the New York
Stock Exchange on the date of this Prospectus, is not undervalued. Neither Mr.
Buffett nor Mr. Munger would currently buy Berkshire shares at that price, nor
would they recommend purchase by their families or friends. For investors
determined to buy, however, Mr. Buffett and Mr. Munger believe that the shares
of Class B Common Stock offered hereby are a superior investment to interests
in the unit investment trusts.
CERTAIN RISK FACTORS AND INVESTMENT CONSIDERATIONS
Past Growth Rate in Berkshire Stock is Not an Indication of Future
Results. In the years since Berkshire's present management acquired control of
the Company, its book value per share has grown at a highly satisfactory rate.
But because Berkshire's shareholders' equity has grown to approximately $17
billion as of December 31, 1995, nothing like the growth rate of the past can
be achieved in the future--and it would be clearly erroneous to think
otherwise. Also, Berkshire's stock price has grown in recent years at a faster
rate than Mr. Buffett and Mr. Munger judge the Company's intrinsic value to
have grown. Market overperformance of that kind is likely to foster
underperformance in the future.
Increase in Book Value to Existing Berkshire Shareholders. Berkshire's book
value per share as of December 31, 1995 was $14,426. On the last trading day
in 1995, the closing sale price for Berkshire shares on the New York Stock
Exchange was $32,100. Berkshire's book value per share continues to be far
less than the market price of its shares as of the date of this Prospectus.
Because the market price exceeds the book value per share, the sale of Class B
Common Stock at the fractional equivalent of the market price for Class A
Common Stock will result in an immediate increase in the book value per share
of the shares held by existing Berkshire shareholders. The more shares of
Class B Common Stock sold, the greater will be the increase in book value per
share accruing to holders of Class A Common Stock.
Convertibility of Class A Common Stock. Each share of Class A Common Stock
will become convertible into thirty (30) shares of Class B Common Stock at the
option of the holder on or after the fifth trading day after the initial
public sale of the Class B Common Stock. Accordingly, additional shares of
Class B Common Stock will become available to the market if and when holders
of Class A Common Stock convert such shares. Though a Class B share may sell
below one-thirtieth (1/30th) of the market price for Class A Common Stock, it
is unlikely that a Class B share will sell more than fractionally above one-
thirtieth (1/30th) of the market price for Class A Common Stock because higher
prices than that would cause arbitrage activity to ensue.
Risk of Downward Pressure on Class B Common Stock Market Price. Unlike the
usual practice in public offerings of selling fewer shares than potential
investors have expressed an interest in purchasing, the shares of Class B
Common Stock being sold by the Company in this offering, plus any shares sold
if the Underwriter exercises its over-allotment option, represent 100% of the
number of shares for which the Company, through Salomon Brothers Inc and
certain dealers, has received firm indications of interest from potential
investors. As a result, an active trading market in the shares of Class B
Common Stock may not develop immediately after the offering since all firm
indications known to the Company and Salomon Brothers Inc have been satisfied
in full, and subsequent resales of Class B Common Stock offered hereby or
issued upon conversions of shares of Class A Common Stock may
6
<PAGE>
result in downward pressure on the price for shares of Class B Common Stock.
If an active trading market does develop, there can be no assurance that such
market will be sustained. Salomon Brothers Inc currently does not intend to
purchase or sell shares of the Class B Common Stock following the initial
offering of the shares of Class B Common Stock.
Dependence on Key Management. Investment decisions and all other capital
allocation decisions are made for Berkshire's businesses by Mr. Buffett, its
Chairman, age 65, in consultation with Mr. Munger, its Vice Chairman, age 72.
In addition, Ajit Jain, age 44, plays a central role in much of Berkshire's
insurance business, including its "super-cat" specialty, in consultation with
Mr. Buffett. If for any reason the services of any of these individuals, and
particularly Mr. Buffett, were to become unavailable to Berkshire, there could
be a material adverse effect both on Berkshire and on the market price of the
Class B Common Stock.
Super-Cat Insurance. Berkshire believes that in recent years it has been the
largest writer in the world of "super-cat" insurance, whereby reinsurers (such
as Berkshire) assume a risk of large losses from mega-catastrophes such as
hurricanes or earthquakes. This business has produced underwriting gains of
approximately $152 million, $240 million, and $110 million in 1995, 1994, and
1993, respectively, but is virtually certain to produce huge losses in some
years in the future. Berkshire's present underwriting standards (which are
subject to change) seek to limit Berkshire's exposure to a loss from a single
event to $1 billion.
Absence of Shareholder-Designated Contributions Program. For some years
Berkshire has let its shareholders of record designate charitable
contributions to be made by the Company. In 1995 this designation amounted to
$12 per share. It is anticipated that this program will continue in the future
for shareholders of record of Class A Common Stock. However, shares of Class B
Common Stock will not participate in the program.
Concentration of Investments. Compared to other insurers, Berkshire's
insurance subsidiaries keep an unusually high percentage of their assets in
common stocks and diversify their portfolios far less than is conventional. A
significant decline in the general stock market would produce a large decrease
in Berkshire's book value, one far greater than likely to be experienced by
most other property-casualty insurance companies. Such a decrease could have a
material adverse effect on the share price for the Class B Common Stock.
BERKSHIRE HATHAWAY INC.
Berkshire is a holding company owning subsidiaries engaged in a number of
diverse business activities. The most important of these is the property and
casualty insurance business, which Berkshire conducts through subsidiaries
referred to collectively as the Berkshire Hathaway Insurance Group. See "--
Berkshire Hathaway Insurance Group." The investment portfolios of the
insurance subsidiaries include meaningful equity ownership percentages of
other publicly traded companies. See "--Common Stock Investments." In
addition, Berkshire publishes the Buffalo News, a daily and Sunday newspaper
in upstate New York, and its non-insurance subsidiaries engage in a variety of
manufacturing, publication, retail, and finance businesses. See "--Non-
Insurance Businesses of Berkshire."
Operating decisions for the various insurance and non-insurance businesses
of Berkshire are made by the managers of the business units. Investment
decisions and all other capital allocation decisions are made for Berkshire
and its subsidiaries by Mr. Buffett, Berkshire's Chairman, in consultation
with Mr. Munger, its Vice Chairman.
Berkshire's executive offices are located at 1440 Kiewit Plaza, Omaha,
Nebraska 68131, and its telephone number at that location is (402) 346-1400.
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<PAGE>
Berkshire Hathaway Insurance Group
The Berkshire Hathaway Insurance Group (the "Group") operates a primary or
direct insurance business nationwide and a reinsurance business worldwide. The
largest subsidiary in the Group is National Indemnity Company ("National
Indemnity"), headquartered in Omaha, Nebraska with offices also in Stamford,
Connecticut.
The Group maintains capital strength at high levels, significantly higher
than normal in the industry. Statutory surplus as regards policyholders
increased to approximately $19.5 billion at December 31, 1995. This capital
strength differentiates Group members from their competitors. For example, in
each of the past five years the Group's ratio of net premiums written to year-
end statutory surplus was 10% or less. The industry average net premiums-to-
surplus ratio from 1990 through 1994 ranged from 130% to 157% (based on
statistics published by A.M Best & Company).
Because it maintains large capital in relation to annual premiums written,
Berkshire can pay losses under the most adverse circumstances. This obvious
margin of safety is very attractive to the Group's insureds, and creates
opportunities for the Group to negotiate and enter into contracts of insurance
specially designed to meet unique needs of sophisticated insurance and
reinsurance buyers. Berkshire's capital base also allows the Group to issue
policies with limits larger than other insurance companies are typically
prepared to write. Finally, large capital combined with low overhead allows
the Group to respond to insurance opportunities with exceptional speed and be
selective about the business it writes. The Group can forbear from writing
policies when it perceives rates to be inadequate. Conversely, it can more
fully utilize its capital strength when better-than-industry-average results
may be expected.
Reinsurance. The Reinsurance Division of National Indemnity, located in
Stamford, Connecticut, provides excess of loss and quota share treaty
reinsurance to other property/casualty insurers and reinsurers. Minimal
organizational resources, but huge financial resources, are currently devoted
to this business. Over the past five years, premium volume generated from
reinsurance activities has totalled approximately 75% of aggregate premium
volume produced by the Insurance Group.
During 1990, management of the Group perceived declines in industry capacity
and competition for mega-catastrophe excess-of-loss reinsurance coverages.
Consequently, National Indemnity has written coverages for a number of such
risks. Management believes that in recent years the Group has been the largest
provider in the world of this type of coverage. These coverages may provide
sizeable amounts of indemnification per contract (often in excess of $10
million), and a single event may result in payments under a number of
contracts. This business can produce extreme volatility in reported periodic
results. Accounting consequences, however, do not influence decisions of
Berkshire's management with respect to this or any other business, and this
fact plus the Group's extraordinary financial strength are believed to be the
primary reasons why the Group has become a major provider of these coverages.
Since 1992, there has been a substantial increase in catastrophe reinsurance
capacity for the industry. Most of the additional capacity has arisen from
equity capital raised by newly-formed entities. Berkshire management has
observed that, in some instances, catastrophe reinsurance prices have fallen
below the amounts that it considered adequate. The result was a decrease in
the level of business accepted in 1995. Management anticipates that the level
of business accepted in 1996, and possibly in subsequent years as well, may be
significantly reduced.
In recent years, the Group has entered into several non-traditional
reinsurance arrangements known as finite-risk contracts. These contracts have
become increasingly significant in the Group's business and the
property/casualty insurance marketplace. These reinsurance agreements provide
essentially traditional coverages but also contractually establish minimum and
maximum payouts by the reinsurer. Minimum payout requirements may call for
repayments to the reinsured, on specified
8
<PAGE>
dates, of sums not otherwise paid out by the reinsurer as losses. The amount
of risk transferred, while significant, is limited. Because the period over
which claims are expected to be paid can be lengthy, the time value of money
is an important element in pricing and setting terms for these contracts.
Transaction amounts and limits of indemnifications are likely to be large. In
addition, a single contract may relate to loss occurrences in a number of
lines of business that span a number of years.
Providers of such non-traditional products need significant financial
strength. Increased competition for such business and new accounting standards
for ceding companies have limited the number of opportunities to write such
business, particularly with respect to retroactive reinsurance coverages of
past loss events. However, the occasional acceptance of such business produced
considerable premium volume to the Group in 1994 and 1995.
Primary or Direct Basis Insurance. The Group also writes insurance on a
primary or direct basis (policies issued in the name of and to the insured
party). The Group's primary or direct business was significantly expanded when
GEICO Corporation ("GEICO") became a wholly owned subsidiary of Berkshire on
January 2, 1996.
GEICO, through its own subsidiaries, is a multiple line property casualty
insurer, the principal business of which is writing private passenger
automobile insurance. GEICO markets its policies to individuals in 49 states
and the District of Columbia by direct response methods, which is a major
aspect of GEICO's strategy to be a low-cost provider of such coverages. See
"GEICO Merger and Certain Pro Forma Condensed Financial Data."
Other Group members engaged in primary or direct basis insurance underwrite
multiple lines of principally casualty coverages nationwide for primarily
commercial accounts. These members write business through insurance agents and
brokers. The traditional business of National Indemnity has been largely in
providing liability coverages for commercial truck and bus operators and
related commercial transportation activities that require specialized
underwriting knowledge and techniques. The Commercial Casualty Division and
Professional Liability and Special Risk Division of National Indemnity, also
with offices in Stamford, solicit and underwrite especially large or unusual
risks. Other member companies, referred to as "homestate operations," market
various commercial coverages for standard risks to insureds in an increasing
number of selected states. The Group also insures the credit card debt of
policyholders through Berkshire's 82%-owned Central States Indemnity Co. of
Omaha ("Central States"), which markets to individuals through credit card
issuers nationwide, and provides workers' compensation insurance primarily to
employers in California through Cypress Insurance Company.
All primary or direct insurance operations employ disciplined underwriting
practices that encourage rejection of underpriced risks. Other than at GEICO
and Central States, premium rates for these businesses peaked in 1986 and have
generally decreased thereafter. Because of the lower rates, the Group's other
members have written substantially less of this business since 1986. The
amount of primary or direct insurance premiums written in recent years by
these businesses has stabilized at about 25% of the amount written in 1986.
Underwriting Results and "Float". The increases in reinsurance business in
recent years have produced an exceptional increase in the amount of "float"
generated by the Group. Float is an estimate of the net investable funds
provided by policyholders to the Group and held by it prior to payment of
claims and claims adjustment expenses. Float arises because of the time lapse
between the dates premiums are paid by policyholders and the dates policy
costs, primarily losses and loss adjustment expenses, are paid. Float equals
the sum of unpaid losses, unpaid loss adjustment expenses, unearned premiums,
and other liabilities to policyholders, less the aggregate of premium balances
receivable, amounts recoverable as reinsurance on paid and unpaid losses,
deferred policy acquisition costs, deferred charges applicable to assumed
reinsurance and prepaid income taxes. The Group generates float in exceptional
amounts relative to premium volume. Since 1967, when Berkshire entered the
insurance business, its float has grown at an annual compounded rate of 20.7%.
9
<PAGE>
The "cost" of float in any year is the underwriting loss that occurs when
premiums earned by an insurer are less than losses and expenses incurred by
the insurer for the year. In years when an underwriting profit is achieved, as
the Group has in each of the past three years, the "cost" of float is
negative; that is, the Group has had access to money at no cost. The following
table shows the Group's pre-tax underwriting profit or loss (stated on the
basis of generally accepted accounting principles and not including GEICO),
average float, and approximate cost of float (compared to the year-end yield
on long-term U.S. Treasury bonds) for the past five years:
<TABLE>
<CAPTION>
YEAR-END
YIELD ON
(1) LONG-TERM
UNDERWRITING (2) APPROXIMATE GOVERNMENT
GAIN (LOSS) AVERAGE FLOAT COST OF FUNDS BONDS
--------------- --------------- -------------- ----------
(IN $ MILLIONS) (IN $ MILLIONS)
<S> <C> <C> <C> <C>
1991.............. (119.6) 1,895.0 6.31% 7.40%
1992.............. (109.0) 2,290.4 4.76% 7.39%
1993.............. 30.0 2,624.7 less than zero 6.35%
1994.............. 129.0 3,056.6 less than zero 7.88%
1995.............. 19.6 3,607.2 less than zero 5.95%
</TABLE>
Underwriting results from the last three years have benefitted from the
profitability of the super-cat business (see "Certain Risk Factors and
Investment Considerations," page 6).
Common Stock Investments
Berkshire's investment portfolio, held principally through insurance
subsidiaries, includes marketable equity securities valued at approximately
$21.7 billion as of March 31, 1996. Such investments include:
<TABLE>
<CAPTION>
APPROXIMATE
PERCENTAGE
OF CAPITAL
STOCK
-----------
<S> <C>
American Express Company......................................... 10%
The Coca-Cola Company............................................ 8%
The Walt Disney Company.......................................... 3 1/2%
Federal Home Loan Mortgage Company............................... 9%
The Gillette Company............................................. 11%
Salomon Inc...................................................... 18%*
The Washington Post Company...................................... 16%
Wells Fargo & Company............................................ 7%
</TABLE>
- --------
* Includes convertible preferred stock with a carrying value of $588 million
as of March 31, 1996 not included in the $21.7 billion stated above.
Much information about these publicly owned companies is available, including
that released from time to time by the companies themselves.
Mr. Buffett and Mr. Munger select marketable equity securities in much the
same way as they evaluate a business for acquisition in its entirety. They
seek businesses that they can understand, with favorable long-term prospects,
operated by honest and competent people, and available at an attractive price.
When pro-rata portions of outstanding businesses sell in the securities
markets at discounts from the prices they would command in negotiated
transactions involving entire companies, bargains in business ownership that
are not available through corporate acquisition can be obtained indirectly
through minority stock ownership.
Berkshire is willing to take very large positions in selected companies, not
with an intention of taking control, but with the expectation that excellent
business results by corporations will translate over the long term into
correspondingly excellent market value and dividend results for owners,
minority as well as majority. Large positions of the type reflected in the
table above may be less liquid
10
<PAGE>
than smaller positions, in that such large positions often cannot be sold
readily without causing a decline in market value. However, Berkshire is
willing to hold such positions for the very long term.
Non-Insurance Businesses of Berkshire
Berkshire's non-insurance businesses engage in a variety of manufacturing,
publication, retail, and finance activities. Mr. Buffett and Mr. Munger apply
the same economic principles in acquiring whole businesses as in acquiring
marketable equity securities. They seek businesses they understand, with
demonstrated consistent earning power, good returns on equity while employing
little or no debt, and management in place. Applying these criteria, Berkshire
has accumulated over many years a collection of businesses operated by
managers, whom Mr. Buffett and Mr. Munger admire and trust, working with
extraordinary autonomy.
Berkshire's non-insurance businesses accounted for approximately 62% of
Berkshire's consolidated revenues and 26% of consolidated net earnings in 1995
and consisted primarily of the following:
<TABLE>
<CAPTION>
PRODUCT OR SERVICE
------------------
<S> <C>
See's Candies Manufacture and distribution of candy at retail and by
catalog solicitation
World Book Publication and marketing of encyclopedias and other
reference materials, principally by the direct sales method
Kirby, Douglas and Cleveland Wood Manufacture and sale of home cleaning systems, principally to
Divisions of The Scott Fetzer distributors
Company
Nebraska Furniture Mart and R.C. Retailing of home furnishings
Willey Home Furnishings
Buffalo News Publication of a daily and Sunday newspaper
H. H. Brown Shoe Co., Lowell Manufacture, importing and distribution of shoes at wholesale
Shoe, Inc. and Dexter Shoe and retail
Companies
Fechheimer Bros. Co. Manufacture and distribution of uniforms at wholesale and
retail
Borsheim's and Helzberg's Diamond Retailing of fine jewelry
Shops
Scott Fetzer Financial Group and Consumer and commercial financing and annuities
other finance companies
Campbell Hausfeld and other Scott Manufacture and sale of diverse industrial tools and products
Fetzer Manufacturing Group
companies
</TABLE>
USE OF PROCEEDS
The net proceeds to be received by Berkshire from the sale of the shares
offered hereby are estimated to be $491,403,500 ($565,204,625 if the
Underwriter exercises its over-allotment option in full). The Company is
making this offering in response to the formation of unit investment trusts
unaffiliated with Berkshire that would invest only in the Class A Common Stock
or only in the Class A Common Stock and the stock of other public companies in
which Berkshire has or has had a publicly disclosed investment. The Company
expects that, in time, it will use the net proceeds for acquisitions of
businesses, for augmenting the capital of its insurance subsidiaries, or for
other general corporate purposes. However, the Company has no immediate or
specific plans for the use of the net proceeds from the offering. See "The
Offering."
11
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data are derived from
Berkshire's consolidated financial statements included in documents which are
incorporated by reference into this Prospectus, and should be read in
conjunction with such documents. See "Incorporation of Certain Documents by
Reference." These financial data do not consolidate the assets or operations
of GEICO. See "GEICO Merger and Certain Pro Forma Condensed Financial Data."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenues:
Sales and service
revenues.............. $2,755.9 $2,351.9 $1,962.9 $1,774.4 $1,651.1
Insurance premiums
earned................ 957.5 923.2 650.7 664.3 776.4
Interest and dividend
income................ 474.8 426.1 354.1 364.9 347.3
Income from investment
in Salomon Inc........ 78.8 30.1 63.0 63.0 63.0
Income from finance
businesses............ 26.6 24.9 22.2 20.7 19.5
Realized investment
gain.................. 194.1 91.3 546.4 89.9 192.5
-------- -------- -------- -------- --------
Total revenues...... $4,487.7 $3,847.5 $3,599.3 $2,977.2 $3,049.8
======== ======== ======== ======== ========
Earnings:
Before realized
investment gain and
cumulative effect of
accounting change..... $ 600.2 $ 433.7 (1) $ 402.4 (2) $ 347.7 $ 315.7
Realized investment
gain.................. 125.0 61.1 356.7 59.6 124.2
Cumulative effect of
change in accounting
for income taxes...... -- -- (71.0) -- --
-------- -------- -------- -------- --------
Net earnings........ $ 725.2 $ 494.8 $ 688.1 $ 407.3 $ 439.9
======== ======== ======== ======== ========
Sources of net earnings:
Property and casualty
insurance:
Underwriting.......... $ 10.4 $ 79.9 $ 19.2 $ (71.1) $ (77.2)
Investment income..... 416.3 349.2 320.9 305.8 285.1
-------- -------- -------- -------- --------
426.7 429.1 340.1 234.7 207.9
Non-insurance
businesses............ 191.4 202.2 166.5 154.1 131.8
Realized investment
gain(3)............... 125.0 61.1 356.7 59.6 124.2
Interest expense....... (34.9) (37.3) (35.6) (62.9) (57.2)
Other.................. 17.0 12.3 6.7 21.8 33.2
-------- -------- -------- -------- --------
Earnings before non-
recurring charges and
effect of accounting
change................. 725.2 667.4 834.4 407.3 439.9
Non-recurring charges
and effect of
accounting changes.... -- (172.6)(1) (146.3)(4) -- --
-------- -------- -------- -------- --------
Net earnings........ $ 725.2 $ 494.8 $ 688.1 $ 407.3 $ 439.9
======== ======== ======== ======== ========
Net earnings per
share.............. $ 611 $ 420 $ 595 $ 355 $ 384
======== ======== ======== ======== ========
Average shares
outstanding, in
thousands.......... 1,187 1,178 1,156 1,146 1,146
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Year-end data:
Total assets................ $29,928.8 $21,338.2 $19,520.5 $17,132.0 $14,461.9
Borrowings under investment
contracts and other
debt(5).................... 1,061.7 810.7 972.4 1,154.7 1,100.5
Shareholders' equity........ 17,217.1 11,875.0 10,428.5 8,896.4 7,379.9
Common shares outstanding,
in thousands............... 1,194 1,178 1,178 1,149 1,146
Shareholders' equity per
outstanding share.......... $ 14,426 $ 10,083 $ 8,854 $ 7,745 $ 6,437
========= ========= ========= ========= =========
</TABLE>
- -------
(1) Includes a charge of $172.6 representing an other-than-temporary decline
in value of investment in USAir Group, Inc. preferred stock.
(2) Includes a charge of $75.3 representing the effect of the change in
federal income tax rates on deferred taxes applicable to unrealized
appreciation.
(3) The amount of realized gain for any given period has no predictive value,
and variations in amount from period to period have no practical
analytical value, particularly in view of the unrealized price
appreciation now existing in Berkshire's consolidated investment
portfolio.
(4) Includes a charge of $71 related to change in accounting for income taxes
and $75.3 as described in (2) above.
(5) Excludes borrowings of finance businesses.
12
<PAGE>
GEICO MERGER
AND CERTAIN PRO FORMA CONDENSED FINANCIAL DATA
GEICO, through its subsidiaries, is a multiple line property casualty
insurer, the principal business of which is writing private passenger
automobile insurance. GEICO became an indirect wholly owned subsidiary of
Berkshire on January 2, 1996 (the "Merger Date") through the merger of GEICO
with an indirect Berkshire subsidiary. Berkshire subsidiaries had previously
acquired shares of GEICO prior to 1980, and held almost 51% of the outstanding
GEICO shares as of the Merger Date. Berkshire paid an aggregate consideration
of approximately $2.3 billion in cash in the merger.
GEICO's audited consolidated financial statements as of December 31, 1995
and 1994 and for each of the three years in the period ended December 31, 1995
are incorporated into Berkshire's Current Report on Form 8-K filed March 27,
1996, incorporated herein by reference. See "Incorporation of Certain
Documents by Reference."
The following unaudited pro forma combined condensed financial data result
from combining the separate consolidated financial data of GEICO and
Berkshire.
PRO FORMA COMBINED CONDENSED BALANCE SHEET*
AS OF DECEMBER 31, 1995
(DOLLARS IN MILLIONS)
<TABLE>
<S> <C>
ASSETS
Cash and cash equivalents...... $ 758.3
Investments:
Securities with fixed
maturities................... 5,104.0
Marketable equity securities.. 20,812.9
Receivables.................... 1,213.9
Goodwill....................... 2,293.7
Other assets................... 2,432.9
---------
$32,615.7
=========
</TABLE>
<TABLE>
<S> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Property and casualty
insurance policyholder
liabilities.............. $ 7,655.5
Income taxes, principally
deferred................. 4,873.6
Borrowings under
investment agreements and
other debt............... 1,475.5
Other liabilities......... 1,607.8
---------
15,612.4
---------
Minority shareholders' in-
terest................... 264.5
---------
Total shareholders' equi-
ty....................... 16,738.8
---------
$32,615.7
=========
</TABLE>
PRO FORMA COMBINED CONDENSED STATEMENT OF EARNINGS*
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN MILLIONS)
<TABLE>
<S> <C>
Revenues:
Insurance premiums earned............................................ $3,744.5
Sales and service revenues........................................... 2,755.9
Investment income and other.......................................... 631.1
Realized investment gain............................................. 215.7
--------
7,347.2
--------
Cost and expenses:
Insurance losses and underwriting expenses........................... 3,642.5
Cost of products and services sold................................... 1,706.7
Selling, general and administrative.................................. 816.9
Interest expense..................................................... 90.9
--------
6,257.0
--------
Earnings before income taxes and minority interest.................... 1,090.2
Income taxes and minority interest................................... 289.6
--------
Net earnings.......................................................... $ 800.6
========
</TABLE>
- --------
* As if the GEICO merger had occurred on December 31, 1995 (with respect to
the Pro Forma Combined Condensed Balance Sheet) and as if it had occurred as
of the beginning of 1995 (with respect to the Pro Forma Combined Condensed
Statement of Earnings), and reflecting certain pro forma adjustments which
are described in Berkshire's Current Report on Form 8-K filed March 27,
1996, incorporated in this Prospectus by reference.
13
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 1,500,000 shares of
Class A Common Stock, $5 par value per share, 50,000,000 shares of Class B
Common Stock, $.1667 par value per share, and 1,000,000 shares of preferred
stock, no par value per share ("Preferred Stock").
The following summary of certain provisions of the Class A Common Stock,
Class B Common Stock, and Preferred Stock of the Company does not purport to
be complete and is subject to, and qualified in its entirety by, the
provisions of applicable law and the Company's Restated Certificate of
Incorporation, including Article FOURTH thereof as amended (defining the
Company's capital stock) included as an exhibit to the Registration Statement
of which this Prospectus is a part.
The holders of outstanding shares of Class A Common Stock are entitled to
one vote, and the holders of outstanding shares of Class B Common Stock are
entitled to one-two-hundredth (1/200th) of a vote, for each share held of
record on all matters submitted to a vote of shareholders. Unless otherwise
required by the Delaware General Corporation Law, the Class A Common Stock and
Class B Common Stock will vote as a single class with respect to all matters
submitted to a vote of shareholders of the Company.
Mr. Buffett owns 39.8% of Berkshire's Class A Common Stock, and he shares
voting and investment power over another 3.1% of such stock, which is owned by
his wife Susan T. Buffett, and 0.4% of such stock, which is owned by a trust
of which he is trustee but in which he has no economic interest. Mr. and Mrs.
Buffett have entered into a voting agreement with Berkshire providing that,
should the voting power of shares held by Mr. and Mrs. Buffett and the trust
exceed 49.9% of the total voting power of Berkshire voting securities, they
will vote their shares in excess of that percentage proportionally with the
votes of the other Berkshire shareholders.
Commencing on May 15, 1996, the fifth business day after the initial sale of
Class B Common Stock to the public, each share of Class A Common Stock may be
converted into thirty (30) shares of Class B Common Stock at the holder's
option at any time. Shares of Class B Common Stock are not convertible into
Class A Common Stock or any other security.
Holders of Class A Common Stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors out of funds legally
available therefor. Holders of Class B Common Stock are entitled to dividends
equal to one-thirtieth (1/30th) of the amount per share declared by the Board
of Directors for each share of Class A Common Stock. Dividends with respect to
the Class B Common Stock will be paid in the same form and at the same time as
dividends with respect to Class A Common Stock, except that, in the event of a
stock split or stock dividend, holders of Class A Common Stock will receive
shares of Class A Common Stock and holders of Class B Common Stock will
receive shares of Class B Common Stock, unless otherwise specifically
designated by resolution of the Board of Directors. The Company has not
declared a cash dividend since 1967 and has no present intention to pay a
dividend on Class B Common Stock or on Class A Common Stock (which would
necessitate a one-thirtieth (1/30th) equivalent dividend on Class B Common
Stock) in the future.
In the event of the liquidation, dissolution or winding-up of the Company,
holders of Class A Common Stock and Class B Common Stock are entitled to share
ratably in all assets remaining after the payment of liabilities, with holders
of Class B Common Stock entitled to receive per share one-thirtieth (1/30th)
of any amount per share received by holders of Class A Common Stock. Neither
holders of Class A Common Stock nor Class B Common Stock shall have preemptive
rights to subscribe for additional shares of either class. All outstanding
shares of Class A Common Stock are, and all shares of Class B Common Stock to
be outstanding upon completion of this offering will be, fully paid and
nonassessable.
14
<PAGE>
The Company may issue the Preferred Stock in one or more series. The Board
of Directors is authorized to determine, with respect to each series of
Preferred Stock which may be issued, the powers, designations, preferences,
and rights of the shares of such series and the qualifications, limitations,
or restrictions thereof, including any dividend rate, redemption rights,
liquidation preferences, sinking fund terms, conversion rights, voting rights
and any other preferences or special rights and qualifications. The effect of
any issuance of the Preferred Stock upon the rights of holders of the Class A
Common Stock and Class B Common Stock depends upon the respective powers,
designations, preferences, rights, qualifications, limitations and
restrictions of the shares of one or more series of Preferred Stock as
determined by the Board of Directors. Such effects might include dilution of
the voting power of the Class A Common Stock and Class B Common Stock, the
subordination of the rights of holders of Class A Common Stock and Class B
Common Stock to share in the Company's assets upon liquidation, and reduction
of the amount otherwise available for payment of dividends on Class A Common
Stock and Class B Common Stock.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to Salomon Brothers Inc (the "Underwriter"),
and the Underwriter has agreed to purchase, the shares of Class B Common Stock
offered hereby. In the Underwriting Agreement, the Underwriter has agreed,
subject to the terms and conditions set forth therein, to purchase all the
shares offered hereby if any shares are purchased. The Underwriter proposes
initially to offer the shares to the public at the public offering price set
forth on the cover page of this Prospectus.
Subject to the terms and conditions set forth in separate selected dealer
agreements, the Underwriter has agreed to sell to certain dealers (the
"Dealers"), and each of the Dealers has individually agreed to purchase, the
shares of Class B Common Stock allocated by the Underwriter for purchase by
such Dealer, in each case at the public offering price set forth on the cover
page of this Prospectus less a selling concession of $10.00 per share of Class
B Common Stock sold to such Dealer.
After the offering pursuant to this Prospectus commences, the public
offering price and such concession may be changed.
The Underwriting Agreement provides that the Company will indemnify the
Underwriter against certain civil liabilities, including liabilities under the
Securities Act, or contribute to payments which the Underwriter may be
required to make in respect of such liabilities.
The Underwriter does not currently intend to purchase or sell shares of the
Class B Common Stock following the initial offering of the shares of Class B
Common Stock, but may do so if its intention changes. The Underwriter, acting
as principal or agent, may use this Prospectus in connection with offers and
sales of the Class B Common Stock offered hereby and any other shares of Class
B Common Stock outstanding from time to time in the course of its business as
a broker-dealer. Such sales, if any, will be made at prevailing market prices
at the time of sale.
The Underwriter is a wholly-owned subsidiary of Salomon Inc. The Company
owns common and convertible preferred stock representing approximately 18% of
the voting power of Salomon Inc. Mr. Buffett, Mr. Munger, and Louis A.
Simpson, President and Chief Executive Officer--Capital Operations of GEICO,
are directors of Salomon Inc. Because of such ownership and other
relationships between the Company and the Underwriter, the Company may be
deemed to be an affiliate of the Underwriter. Accordingly, the offering is
being made pursuant to the provisions of Schedule E of the By-Laws of the
National Association of Securities Dealers, Inc.
15
<PAGE>
The following Dealers participated in the offering:
A.G. Edwards & Sons, Inc.
Advest, Inc.
Alex. Brown & Sons Incorporated
Allen & Company of Florida, Inc.
Allen C. Ewing & Co.
Ameritas Investment Corp.
AmeriTrade, Inc.
Apex Securities, Inc.
Arthurs, Lestrange & Company Incorporated
Baird, Patrick & Co., Inc.
Bear, Stearns & Co. Inc.
Branch, Cabell and Company
Broker Dealer Financial Services Corp.
Brookstreet Securities Corporation
Burnham Securities Inc.
Carolan & Co., Inc.
Cazenove & Co.
Charles Schwab & Co., Inc.
City Securities Corporation
Coburn & Meredith, Inc.
Coleman and Company Securities, Inc.
Corporate Securities Group, Inc.
Cowen & Company
Craigie Incorporated
Crowell, Weedon & Co.
CS First Boston
D.A. Davidson & Co.
D.E. Frey & Company, Inc.
Dain Bosworth Incorporated
Dakin Securities Corporation
Davenport & Co. of Virginia, Inc.
David A. Noyes & Company
Dean Witter Reynolds Inc.
Dickinson & Co.
Doley Securities, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Dresdner Bank-Kleinwort Benson
Edgar M. Norris & Co., Inc.
Edward Jones
Emmett A. Larkin Company, Inc.
Equitable Securities Corporation
Ernst & Co.
Everen Securities, Inc.
Fahnestock & Co. Inc.
Fechtor, Detwiler & Co., Inc.
Ferris, Baker Watts Incorporated
Fidelity Brokerage Services, Inc.
Financial West Group
First Albany Corporation
First Analysis Securities Corporation
First Equity Corporation of Florida
First Hanover Securities, Inc.
First Honolulu Securities, Inc.
First of Michigan Corporation
Folger Nolan Fleming Douglas Incorporated
Frederick & Company, Inc.
Gabelli & Company, Inc.
Gaines, Berland Inc.
George K. Baum & Company
Gibraltar Securities Company
Gilford Securities Incorporated
Goldman, Sachs & Co.
Gruntal & Co., Incorporated
Guzman & Company
H.C. Wainwright & Co., Inc.
Hagerty, Stewart & Associates, Inc.
Halpert and Company, Inc.
Hampshire Securities Corporation
HD Brous & Co., Inc.
Herzog Heine Geduld, Inc.
Howe Barnes Investments, Inc.
Interstate/Johnson Lane Corporation
J.P. Morgan & Co.
J.J.B. Hilliard, W.L. Lyons, Inc.
Janney Montgomery Scott Inc.
Jefferies & Company, Inc.
John G. Kinnard and Company Incorporated
Johnston, Lemon & Co. Incorporated
JW Charles Securities, Inc.
Kennedy, Cabot & Co.
16
<PAGE>
Kirkpatrick, Pettis, Smith, Polian Inc.
Lazard Freres & Co. LLC
Legg Mason Wood Walker Incorporated
Lehman Brothers
M.J. Whitman, Inc.
McDonald & Company Securities, Inc.
Merrill Lynch & Co.
Mesirow Financial, Inc.
Moran & Associates, Inc. Securities Brokerage
Morgan Keegan & Company, Inc.
Morgan Stanley & Co. Incorporated
Muriel Siebert & Co., Inc.
NatCity Investments, Inc.
Neidiger/Tucker/Bruner, Inc.
Nutmeg Securities, Ltd.
Oppenheimer & Co., Inc.
Pacific Crest Securities, Inc.
PaineWebber Incorporated
Parker/Hunter Incorporated
Paulson Investment Company, Inc.
Pennsylvania Merchant Group Ltd
Piper Jaffray Inc.
Prime Charter Ltd.
Principal Financial Securities, Inc.
Prudential Securities Inc.
Ragen MacKenzie Incorporated
Rauscher Pierce Refsnes, Inc.
Raymond James & Associates, Inc.
Redwood Securities Group, Inc.
Robert W. Baird & Co. Incorporated
Rodman & Renshaw, Inc.
Roney & Co.
Rothschild Inc.
Samuel A. Ramirez & Co., Inc.
Scott & Stringfellow, Inc.
Shelby Cullom Davis & Co.
Sisung Securities Corp
Smith Barney Inc.
Smith Hayes Financial Services Corporation
Smith, Moore & Co.
Southwest Securities, Inc.
Spelman & Co., Inc.
Stephens Inc.
Sterne, Agee & Leach, Inc.
Stifel, Nicolaus & Company Incorporated
Sutro & Co. Incorporated
The Buckingham Research Group Incorporated
The Chapman Company
The Chicago Corporation
The Ohio Company
The Robinson-Humphrey Company, Inc.
The Seidler Companies Incorporated
The Williams Capital Group, L.P.
Tucker Anthony Incorporated
Utendahl Capital Partners, L.P.
Van Kasper & Company
Warner Group, Inc.
Wasserstein Perella Securities, Inc.
Wayne Hummer Investments LLC
Wedbush Morgan Securities
Wheat First Butcher Singer
Wiley Bros., Inc.
William Blair & Company
Williams MacKay Jordan & Co., Inc.
Young, Stovall & Company
17
<PAGE>
LEGAL MATTERS
Certain legal matters relating to the shares offered hereby will be passed
upon for the Company by Munger, Tolles & Olson, Los Angeles, California, and
for the Underwriter by Cravath, Swaine & Moore, New York, New York. Cravath,
Swaine & Moore has previously represented, and may continue to represent,
GEICO Corporation in connection with its significant legal matters.
EXPERTS
The financial statements and related financial statement schedules
incorporated in this Prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports which
are incorporated herein by reference, and have been so incorporated in
reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.
The consolidated financial statements of GEICO Corporation and subsidiaries
incorporated by reference in the Company's Current Report on Form 8-K dated
March 27, 1996, which is incorporated in this Prospectus by reference, have
been audited by Coopers & Lybrand L.L.P., independent auditors, as stated in
their report which is incorporated herein by reference, and has been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
Sections 13 and 14 of the Exchange Act (File No. 1-10125) are incorporated
herein by reference: (i) the Company's Annual Report on Form 10-K for the year
ended December 31, 1995; (ii) the Company's Current Report on Form 8-K filed
on January 16, 1996; (iii) the Company's Current Report on Form 8-K filed on
February 15, 1996; (iv) the Company's Current Report on Form 8-K filed on
March 27, 1996; and (v) the description of the Company's Class B Common Stock
included in the Registration Statement on Form 8-A filed on April 2, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus, and prior
to the termination of this offering, shall be deemed to be incorporated by
reference in this Prospectus and to be part of this Prospectus from the date
of filing of such documents.
Any statement contained in this Prospectus or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus or in any subsequently filed document which also
is or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
Each person, including any beneficial owner, to whom a copy of this
Prospectus is delivered may obtain, without charge, upon written or oral
request, a copy of any or all of the documents incorporated herein by
reference, except the exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Written requests
for such copies should be directed to Lancaster Financial Fulfillment Center,
1842 Colonial Village Lane, Lancaster, Pennsylvania 17601. Telephone requests
for such copies should be directed to (212) 341-7474.
18
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION, OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR INCOR-
PORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UN-
DER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CON-
TAINED OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information ..................................................... 2
Summary of the Offering ................................................... 3
The Offering .............................................................. 4
Certain Risk Factors and Investment Considerations......................... 6
Berkshire Hathaway Inc. .................................................. 7
Use of Proceeds ........................................................... 11
Selected Consolidated Financial Data ...................................... 12
GEICO Merger and Certain Pro Forma
Condensed Financial Data ................................................. 13
Description of Capital Stock .............................................. 14
Plan of Distribution ...................................................... 15
Legal Matters ............................................................. 18
Experts ................................................................... 18
Incorporation of Certain Documents by Reference............................ 18
</TABLE>
450,000 SHARES
BERKSHIRE HATHAWAY INC.
CLASS B COMMON STOCK
($.1667 PAR VALUE)
-------------------------
SALOMON BROTHERS INC
-----------------------------------
PROSPECTUS
DATED MAY 8, 1996
