<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 2, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
BERKSHIRE HATHAWAY INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------
DELAWARE 04-2254452
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR IDENTIFICATION NUMBER)
ORGANIZATION)
1440 KIEWIT PLAZA, OMAHA, NEBRASKA 68131
(402) 346-1400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------
MARC D. HAMBURG
BERKSHIRE HATHAWAY INC.
1440 KIEWIT PLAZA, OMAHA, NEBRASKA 68131
(402) 346-1400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
--------------
COPIES TO:
R. GREGORY MORGAN JOHN W. WHITE
MUNGER, TOLLES & OLSON CRAVATH, SWAINE & MOORE
355 SOUTH GRAND AVENUE 825 EIGHTH AVENUE
LOS ANGELES, CALIFORNIA 90071 NEW YORK, NEW YORK 10019
(213) 683-9100 -------------- (212) 474-1000
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] _____
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] ______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
--------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT (2) OFFERING PRICE FEE
<S> <C> <C> <C> <C>
Class B Common Stock,
$.1667 par value
per share 115,000 shares(1) $1,131 $130,065,000 $44,950(3)
</TABLE>
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(1) In addition to the 115,000 shares of Class B Common Stock being registered
hereby, this registration also includes a currently indeterminable amount
of Class B Common Stock that may be offered and sold from time to time by
Salomon Brothers Inc in the course of its business as a broker-dealer at
negotiated prices relating to prevailing market prices at the time of
sale.
(2) Estimated pursuant to Rule 457(c) solely for purpose of calculating the
registration fee.
(3) Includes the minimum registration fee payable pursuant to Section 6(b) of
the Securities Act of 1933 of $100 in connection with the Class B Common
Stock that may be offered and sold from time to time by Salomon Brothers
Inc in the course of its business as a broker-dealer as described in Note
1 above.
--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAW OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
APRIL 2, 1996
PROSPECTUS
100,000 SHARES
BERKSHIRE HATHAWAY INC.
CLASS B COMMON STOCK
($.1667 PAR VALUE)
Berkshire Hathaway Inc. ("Berkshire" or the "Company") is offering shares of
its Class B Common Stock, $.1667 par value per share (the "Class B Common
Stock"). The Company will assess investor demand for shares of Class B Common
Stock in this offering and intends to increase the size of the offering as
necessary to satisfy demand.
The initial public offering price per share of Class B Common Stock is expected
to be approximately one-thirtieth (1/30th) of the closing sale price per share
of Berkshire's common stock, $5.00 par value per share (to be redesignated by
the Amendment, and referred to herein, as the "Class A Common Stock"), on the
New York Stock Exchange on the date of pricing. The closing sale price for the
Class A Common Stock was $33,850 per share on the New York Stock Exchange on
April 1, 1996, the last trading day before 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 next 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.
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<TABLE>
<CAPTION>
PROCEEDS
PRICE TO UNDERWRITING TO
PUBLIC DISCOUNT COMPANY(1)
<S> <C> <C> <C>
Per Class B Share.............................. $ $ $
Total(2)....................................... $ $ $
</TABLE>
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(1) Before deducting expenses payable by the Company, estimated to be $ .
(2) Berkshire has granted to the Underwriter an option, exercisable within 30
days after the date of this Prospectus, to purchase up to 15,000 additional
shares of Class B Common Stock, 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 $ ,
$ , and $ , 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 offices of Salomon Brothers Inc, or through
the facilities of The Depository Trust Company, on or about May , 1996.
-----------------------
SALOMON BROTHERS INC
-----------------------------------------------------------------------
The date of this Prospectus is May , 1996.
<PAGE>
(continued from page 1)
This offering is subject to the approval and effectiveness of an amendment
(the "Amendment") to Berkshire's Restated Certificate of Incorporation
creating the Class B Common Stock, to be considered by Berkshire's
shareholders at its annual meeting on May 6, 1996.
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.
Berkshire has applied to list the Class B Common Stock on the New York Stock
Exchange.
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.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SHARES OF
CLASS B COMMON STOCK OFFERED HEREBY 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 THE OFFERING IN QUESTION, 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 on the New York Stock Exchange.
Application has been made to list the Class B Common Stock 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.
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 . Telephone
requests for such copies should be directed to ( ) .
2
<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.................. 100,000 shares of Class B Common Stock
(115,000 shares if the Underwriter
exercises its over-allotment option in
full). However, the Company will assess
investor demand and intends to increase
the number of shares offered hereby as
necessary to satisfy demand.
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.
The use of proceeds will not change even
if the offering increases materially in
size. 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 Commencing on the fifth trading day after
Stock............................. 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 , 1996, there were
shares of Class A Common Stock
outstanding. After giving effect to the
offering, there will be shares of
Class B Common Stock outstanding (
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, subject to
approval and effectiveness of the Amendment, 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 Candy 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
expected to be 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. The use of proceeds
will not change even if the offering increases materially in size. See "Use of
Proceeds."
Furthermore, Mr. Buffett and Mr. Munger believe that Berkshire's Class A
Common Stock, whose closing sale price was $33,850 per share on the New York
Stock Exchange on April 1, 1996, the last trading day before this Prospectus'
date, 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. As part of the Amendment, 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 to be sold by the Company in this offering, plus any shares sold
if the Underwriter exercises its over-allotment option, will represent 100% of
the number of shares for which the Company, through Salomon Brothers Inc and
certain dealers, will have 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 will have been
satisfied in full, and
6
<PAGE>
subsequent resales of Class B Common Stock offered hereby or issued upon
conversions of shares of Class A Common Stock may 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. 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 pre-tax profits 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.
7
<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 a reduced
level of business will be accepted in 1996 and possibly in subsequent years as
well.
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) (RATIO OF 1 TO 2)
<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>
- --------
* Consists of common stock and convertible preferred stock.
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 $ ($ 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. The use of proceeds will
not change even if the offering increases materially in size. 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........ 1,187,102 1,177,750 1,156,243 1,146,492 1,146,441
</TABLE>
12
<PAGE>
<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.
13
<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> <S> <C>
ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY
Cash and cash equivalents...... $ 758.3 Property and casualty
Investments: insurance policyholder
Securities with fixed liabilities.............. $ 7,655.5
maturities................... 5,104.0 Income taxes, principally
Marketable equity securities.. 20,812.9 deferred................. 4,873.6
Receivables.................... 1,213.9 Borrowings under
Goodwill....................... 2,293.7 investment agreements and
--------- other debt............... 1,475.5
Other assets................... 2,432.9 Other liabilities......... 1,607.8
--------- ---------
$32,615.7 15,612.4
========= ---------
Minority shareholders'
interest................... 264.5
---------
Total shareholders'
equity.................... 16,738.8
---------
$32,615.7
=========
</TABLE>
- --------
* As if the GEICO merger had occurred on December 31, 1995, 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.
14
<PAGE>
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 as of beginning of 1995, and reflecting
certain pro forma adjustments which are described in Berkshire's Current
Report on Form 8-K filed on March 27, 1996, incorporated in this Prospectus
by reference.
15
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Upon approval and effectiveness of the Amendment, the authorized capital
stock of the Company will consist of 1,500,000 shares of Class A Common Stock,
par value $5 per share, 50,000,000 shares of Class B Common Stock, par value
$.1667 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 proposed to be 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 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. 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 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 will be 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.
16
<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 $ 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.
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.
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.
18
<PAGE>
NO DEALER, SALESPERSON OR ANY PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION, OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR INCORPO-
RATED 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
Incorporation of Certain Documents by Reference............................ 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 ................................................. 14
Description of Capital Stock .............................................. 16
Plan of Distribution ...................................................... 17
Legal Matters ............................................................. 18
Experts ................................................................... 18
</TABLE>
100,000 SHARES
BERKSHIRE HATHAWAY INC.
CLASS B COMMON STOCK
($.1667 PAR VALUE)
-----------------------------
SALOMON BROTHERS INC
-----------------------------------
PROSPECTUS
DATED , 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses of this offering are estimated as follows:(1)
<TABLE>
<S> <C>
SEC registration fee............................................ $44,950
NASD fee........................................................ $13,507
Blue sky fees and expenses...................................... (2)
NYSE listing fees............................................... $ 6,775
Printing and engraving expenses................................. (2)
Legal fees and expenses......................................... (2)
Accounting fees and expenses.................................... (2)
Miscellaneous................................................... (2)
-------
Total......................................................... $ (2)
=======
</TABLE>
- --------
(1) All amounts other than the SEC registration fee, NASD fee, and NYSE
listing fees are estimated.
(2) To be supplied by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware empowers the Company
to indemnify, subject to the standards therein prescribed, any person in
connection with any action, suit or proceeding brought or threatened by reason
of the fact that such person is or was a director, officer, employee or agent
of the Company or is or was serving as such with respect to another
corporation or other entity at the request of the Company. Section 10 of the
Company's By-Laws provides that the Company shall, to the fullest extent
permitted by Section 145 of the General Corporation Law of Delaware, indemnify
directors and officers of the Company from and against any and all of the
expenses, liabilities or other matters referred to in or covered by said
Section. Additionally, as permitted by said Section and the Company's By-Laws,
the Company has entered into Indemnification Agreements with each of its
Directors and Officers. The description of these Indemnification Agreements
under the caption "Summary of the Indemnification Agreements" on page 9 of the
Company's definitive proxy statement for its May 19, 1987 Annual Meeting of
Stockholders, Commission File No. 0-7413, is incorporated herein by reference.
As permitted by Section 102 of the General Corporation Law of Delaware, the
Company's Restated Certificate of Incorporation includes as Article Tenth
thereof a provision eliminating, to the extent permitted by Delaware law, the
personal liability of each director of the Company to the Company or any of
its shareholders for monetary damages resulting from breaches of such
director's fiduciary duty of care.
II-1
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
-------------- -----------------------
<C> <S>
1. Form of Underwriting Agreement*
4.1 Article FOURTH of the registrant's Restated Certificate of
Incorporation, as proposed to be amended (incorporated by
reference to Exhibit A to the registrant's Definitive Proxy
Statement dated March 18, 1996 for registrant's Annual Meeting
of Shareholders to be held May 6, 1996).
4.2 Form of Class B Common Stock certificate
5 Opinion of Munger, Tolles & Olson
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Munger, Tolles & Olson (contained in Exhibit 5)
24 Power of attorney (see page II-3)
99.1 Voting Agreement dated March 15, 1996 among the registrant,
Warren E. Buffett, Susan T. Buffett, and the Howard Buffett
Family Trust
99.2 Form of Selected Dealer Agreement and accompanying materials
</TABLE>
- --------
*To be filed by amendment.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(2) For the purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(3) For the purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF OMAHA, STATE OF NEBRASKA, ON APRIL 1, 1996.
BERKSHIRE HATHAWAY INC.
By /s/ MARC D. HAMBURG
_____________________________________
Marc D. Hamburg
Vice President and Chief Financial
Officer
POWER OF ATTORNEY
Each of the undersigned hereby constitutes and appoints Warren E. Buffett,
Charles T. Munger and Marc D. Hamburg, or any one of them, each with full
power of substitution and resubstitution, such person's true and lawful
attorney-in-fact and agent, in such person's name and on such person's behalf,
in any and all capacities, to sign any and all amendments to this Registration
Statement, including any post-effective amendments, and any subsequently filed
registration statement, including any amendments thereto, for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ WARREN E. BUFFETT Chairman of the Board and April 1, 1996
____________________________________ Director (principal
Warren E. Buffett executive officer)
/s/ MARC D. HAMBURG Vice President and Chief April 1, 1996
____________________________________ Financial Officer (principal
Marc D. Hamburg financial officer)
/s/ DANIEL J. JAKSICH Controller (principal April 1, 1996
____________________________________ accounting officer)
Daniel J. Jaksich
/s/ CHARLES T. MUNGER Vice-Chairman of the Board April 1, 1996
____________________________________ and Director
Charles T. Munger
/s/ SUSAN T. BUFFETT Director April 1, 1996
____________________________________
Susan T. Buffett
/s/ MALCOLM G. CHACE, III Director April 1, 1996
____________________________________
Malcolm G. Chace, III
/s/ WALTER SCOTT, JR. Director April 1, 1996
____________________________________
Walter Scott, Jr.
/s/ HOWARD G. BUFFETT Director April 1, 1996
____________________________________
Howard G. Buffett
</TABLE>
II-3
<PAGE>
EXHIBIT 4.2
CERTIFICATE OF STOCK
NUMBER SHARES
FBU
- --------------------------------------------------------------------------------
CLASS B
COMMON STOCK
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
BERKSHIRE HATHAWAY INC.
Par Value
$.1667 each
THIS CERTIFICATE IS TRANSFERABLE IN BOSTON, MASSACHUSETTS OR NEW YORK, NEW YORK
This Certifies that CUSIP 084670 10 8
See Reverse for Certain Definitions
is the owner of
FULLY-PAID AND NON-ASSESSABLE SHARES OF THE CLASS B COMMON STOCK OF
Berkshire Hathaway Inc. transferable upon the books of the corporation in person
or by attorney upon surrender of this certificate duly endorsed or assigned.
This certificate and the shares represented hereby are subject to the laws of
the State of Delaware and to the certificate of incorporation and amendments
thereof and by-laws of the corporation. This certificate is not valid until
countersigned by the transfer agent and registered by the registrar.
In Witness Whereof, Berkshire Hathaway Inc. has caused its corporation
seal to be hereunto affixed and this certificate to be signed by its duly
authorized officers.
Dated:
Vice President Chairman of the Board
Countersigned and Registered:
THE FIRST NATIONAL BANK OF BOSTON,
BY TRANSFER AGENT
AND REGISTRAR,
AUTHORIZED SIGNATURE
<PAGE>
Berkshire Hathaway Inc. will furnish without charge to each stockholder who so
requests a full statement of the powers, designation, preferences, and relative,
participating, optional or other special rights of each class of stock or series
thereof which the corporation is authorized to issue and the qualifications,
limitations or restrictions of such preference and/or rights insofar as the same
may have been fixed and a statement of the authority of the Board of Directors
to fix such designations and other terms not fixed by the Restated Certificate
of Incorporation without respect to other classes of stock or series thereof.
Any such request may be made to the Secretary of the Corporation.
The following abbreviations when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - under Uniform Gifts to Minors
Act ____________ _______ Custodian _______
(State) (Cust) (Minor)
Additional abbreviations may also be used though not in the above list.
For value received, ______ hereby sell, assign and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
_______________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE.
_______________________________________
_______________________________________
________________________________ Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________
_______________________________________
Attorney to transfer the said stock on the books of the within named Company
with full power of substitution in the premises.
Dated, _____________________
----------------
Notice: The signature to this assignment must correspond with the name as
written upon the face of the certificate in every particular, without alteration
or enlargement, or any change whatever.
Signature(s) Guaranteed:
__________________________
The signature(s) should be guaranteed by an eligible guarantor institution
(Banks, Stockbrokers, Savings and Loan Associations and Credit Unions with
membership in an approved signature guarantee Medallion Program), pursuant to
S.E.C. rule 17Ad-15.
<PAGE>
Appendix to Exhibit 4.2: Graphic Material
----------------
On the upper left portion of the face of the Certificate, there is a depiction
of a barefoot woman dressed in a toga. She is standing with a torch in her left
hand, in front of a large globe and adjacent to a redwell containing stock
certificates.
<PAGE>
EXHIBIT 5
April 1, 1996
Berkshire Hathaway Inc.
1440 Kiewit Plaza
Omaha, Nebraska 68131
Re: Registration Statement on Form S-3
----------------------------------
Gentlemen:
We have examined the Registration Statement on Form S-3 proposed to be
filed by you with the Securities and Exchange Commission on April 2, 1996 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of shares of your
Class B Common Stock, par value $0.1667 per share (the "Shares"), for offer and
sale by you. As your counsel in connection therewith, we have examined the
proceedings taken by you in connection with the sale of the Shares.
Based upon the foregoing, it is our opinion that the Shares will be, when
offered and sold in the manner described in the Registration Statement, validly
issued, fully paid, and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to any subsequently filed registration statement for
the same offering that is to be effective upon filing pursuant to Rule 462(b)
under the Securities Act, and further consent to the reference to this firm
appearing under the heading "Legal Matters" in the prospectus which is contained
in the Registration Statement or any such subsequent registration statement.
Very truly yours,
MUNGER, TOLLES & OLSON
/s/ Munger, Tolles & Olson
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Berkshire Hathaway Inc. on Form S-3, of our reports dated March 8, 1996,
appearing in the Annual Report on Form 10-K of Berkshire Hathaway Inc. for the
year ended December 31, 1995 and to the reference to us under the heading
"Experts" in the Prospectus which is part of this Registration Statement.
Deloitte & Touche LLP
Omaha, Nebraska
April 1, 1996
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Berkshire Hathaway Inc. on Form S-3, of our report dated February 16, 1996,
on our audits of the consolidated financial statements of GEICO Corporation and
subsidiaries as of December 31, 1995 and 1994, and for the years ended December
31, 1995, 1994, and 1993, which report is incorporated by reference into the
Current Report on Form 8-K of Berkshire Hathaway Inc. filed March 27, 1996. We
also consent to the reference to our firm under the caption "Experts" in the
Prospectus.
Coopers & Lybrand L.L.P.
Washington, D.C.
April 1, 1996
<PAGE>
EXHIBIT 99.1
VOTING AGREEMENT
March 15, 1996
Berkshire Hathaway Inc.
1440 Kiewit Plaza
Omaha, Nebraska 66131
This letter memorializes an agreement of the undersigned (collectively the
"Holders") with Berkshire Hathaway Inc. ("Berkshire").
1. The Subject Securities. The securities subject to this agreement (the
----------------------
"Subject Securities") are all securities issued by Berkshire and having voting
power in the election of Berkshire directors ("Voting Securities") as to which
Warren E. Buffett has or shares voting and investment power, now or hereafter.
2. The Gap. In all matters voted upon by holders of Voting Securities
-------
when, if ever, the Holders beneficially own Voting Securities having aggregate
voting power exceeding 49.9% (the "Cap") of the aggregate voting power of all
Voting Securities, the Holders will vote Subject Securities that represent the
Holders' voting power in excess of the Cap in the same proportion as all other
holders of Voting Securities voting on the matter vote their Voting Securities
on the matter. The Holders shall determine which Subject Securities to vote
proportionally.
3. Successors. "Successor" means any person who acquires Subject
----------
Securities, whether by sale, gift, bequest, grant, distribution, assignment, or
otherwise. If, but only if, and only for so long as, a Successor has or shares
voting and investment power with respect to Subject Securities having aggregate
voting power exceeding the Cap, such Successor shall be considered a "Holder"
for purposes of Section 2 of this Agreement and will be bound by Section 2 of
this Agreement.
4. Effectiveness; Automatic Termination. This agreement will become
------------------------------------
effective upon the effectiveness of an amendment to Berkshire's Restated
Certificate of Incorporation first authorizing the issuance by Berkshire of
shares of Class A Common Stock and Class B Common Stock. This agreement will
terminate automatically if (a) the Class A Common Stock ceases to be convertible
into Class B Common Stock at a time when the Subject Securities have aggregate
voting power equal to or less than the Cap; (b) the per-share voting rights of
Class B Common Stock become equal on a one-thirtieth (1/30th) equivalent basis
to the per-share voting rights of Class A Common Stock; (c) the Holders convert
all of their shares of Class A Common Stock into shares of Class B Common Stock;
or (d) shares of Class A Common Stock and Class B Common Stock cease being
listed on the New York Stock Exchange.
5. Miscellaneous. This agreement constitutes the entire agreement among
-------------
the parties with respect to this subject, is not intended to confer any rights
or remedies upon any person other
<PAGE>
than the parties, and shall be governed and construed in accordance with
Delaware law without regard to any applicable conflicts of law.
Very truly yours,
/s/ Warren E. Buffett /s/ Susan T. Buffett
- --------------------------- --------------------------------
Warren E. Buffett Susan T. Buffett
Howard Buffett Family Trust
/s/ Warren E. Buffett
- ---------------------------
Warren E. Buffett
Trustee
Accepted and agreed this 15th day of March, 1996
Berkshire Hathaway Inc.
/s/ Charles T. Munger
- ---------------------------
Charles T. Munger
Vice-Chairman
<PAGE>
EXHIBIT 99.2
[Letterhead of Salomon Brothers Inc]
April , 1996
Berkshire Hathaway Inc.
-----------------------
Offering of Shares of Class B Common Stock
------------------------------------------
To Securities Dealers:
Berkshire Hathaway Inc. ("Berkshire") has filed a Registration
Statement with the Securities and Exchange Commission with respect to the
proposed offering of the above-captioned Shares. It is anticipated that the
Registration Statement will become effective in late May, 1996. Berkshire has
selected us as the sole underwriter for the offering, and we are pleased to
offer you the opportunity to participate in the Selected Dealer group.
We enclose, for information purposes only, one copy of the
Registration Statement, as filed with the Securities and Exchange Commission on
April 2, 1996.
We urge you to read the preliminary prospectus included within the
Registration Statement, particularly the sections entitled "The Offering",
"Certain Risk Factors and Investment Considerations" and "Plan of Distribution".
As described in the preliminary prospectus, you will see that certain aspects of
Berkshire's approach to the offering are somewhat unconventional, including (i)
Berkshire's intention to assess investor demand for the Shares during the
offering and increase the size of the offering as necessary to satisfy demand,
(ii) the large size of the selected dealer group, which is expected to be a
broad group of as many as 500 selected dealers located throughout the United
States and in Europe and (iii) Berkshire's philosophy that the offering should
be structured so that prospective investors feel as little sales pressure as
possible from participating brokers.
We are also enclosing two signed copies of the Selected Dealer
Agreement. If you decide to participate in
<PAGE>
2
the offering, please sign and return one copy by May 1, 1996, to Salomon
--------------
Brothers Equity Capital Markets/Syndicate Department, 7 World Trade Center, New
York, New York 10048, Attention: Berkshire Hathaway Equity Syndicate Team.
It is important that you read the enclosed Selected Dealer Agreement
carefully. This Agreement was specially prepared for this transaction and
includes a number of non-standard provisions. Under the terms of the Agreement,
Salomon Brothers reserves the right to terminate the Agreement at any time prior
to the confirmed allocation of Shares to you.
You should also review the Preliminary Timetable included herewith.
You should note that, as illustrated in the Preliminary Timetable, Selected
Dealers will be committed to purchase the Shares allocated to them several hours
before the initial public offering price is determined. The initial public
offering price will be based on the closing sale price of Berkshire's Class A
Common Stock on the New York Stock Exchange.
Finally, we have included a Responsibility Checklist as a guide to the
documents you will have to provide us in order to participate in the offering.
Very truly yours,
Salomon Brothers Inc
No offer to buy the Shares can be accepted and no part of the purchase
price can be received until the Registration Statement has become effective, and
any such offer may be withdrawn or revoked, without obligation or commitment of
any kind prior to notice of its acceptance given after the Effective Date. No
obligation or commitment to purchase Shares will arise under the Selected Dealer
Agreement until the Registration Statement has become effective.
<PAGE>
PRELIMINARY TIMETABLE
Berkshire Hathaway Inc.
-----------------------
Offering of Shares of Class B Common Stock
------------------------------------------
The timing described below is preliminary and subject to change from
time to time by Written Communication from Salomon Brothers to prospective
Selected Dealers as provided in the Selected Dealer Agreement.
<TABLE>
<S> <C>
Wednesday, May 1 Signed Selected Dealer Agreements and
completed Selected Dealer Information
forms due by mail from prospective
Selected Dealers.
Friday, May 3 Salomon Brothers notifies each
Selected Dealer of its acceptance
into the Selected Dealer group and
assigns to each Selected Dealer a
unique Personal Identification Code.
Monday, May 6 Berkshire shareholders meeting.
Redesignation of Common Stock as
Class A Common Stock and
authorization of Class B Common Stock
submitted to shareholders for
approval.
Tuesday, May 7 Selected Dealer organizational
meeting/conference call.
Wednesday, May 8 Formal announcement of the offering,
with national advertisement in The
Wall Street Journal and commencement
-------------------
of the Offering and period for
collection of firm indications of
investor interest. Initial
distribution of preliminary
prospectuses to Selected Dealers.
</TABLE>
<PAGE>
2
<TABLE>
<S> <C>
Tuesday, May 21
4:00 p.m. (EST) End of period for collection of
indications of investor interest.
5:00 p.m. (EST) Selected Dealers send to Salomon
Brothers by fax their final Demand
Update Forms and Officer's Allocation
Certificates.
6:30 p.m. (EST) Salomon Brothers notifies each
Selected Dealer by telephone of its
collateral requirements, if any.
Wednesday, May 22
By 8:00 a.m. (EST) Salomon Brothers notifies each
Selected Dealer by Written
Communication of its allocation
(subject to Salomon Brothers'
confirmation) of shares in the
Offering.
8:30 a.m. (EST) Berkshire files with the SEC an
amendment to the Registration
Statement which includes the size of
the Offering.
Berkshire distributes a press release
announcing the size of the Offering.
9:30 a.m. (EST) Registration Statement declared
effective by the SEC.
</TABLE>
<PAGE>
3
<TABLE>
<S> <C>
Between Each Selected Dealer telephones
9:30 a.m. (EST) Salomon Brothers (at 212- - )
and 12:00 noon (EST) with its Personal Identification Code
to receive confirmation from Salomon
Brothers of its allocation, whereupon
the Selected Dealer will become
legally bound to purchase the number
of shares allocated to it. Any
Selected Dealer that fails to
telephone Salomon Brothers during
this time period or that does not
receive confirmation from Salomon
Brothers of its allocation will not
be entitled to purchase shares
pursuant to the Selected Dealer
Agreement.
After 4:30 p.m. (EST) Public Offering Price is established
by Berkshire and Salomon Brothers at
a price (i) not greater than
one-thirtieth (1/30th) of the closing
sale price for shares of Berkshire's
Class A Common Stock on the New York
Stock Exchange on such date and (ii)
not less than one-thirtieth (1/30th)
of such closing sale price, less a
discount of 4%.
After 5:00 p.m. (EST) Salomon Brothers advises Selected
Dealers of the Public Offering Price
and settlement date by Written
Communication.
Wednesday, May 29 Settlement date on a T+4 basis.
</TABLE>
<PAGE>
RESPONSIBILITY CHECKLIST
Berkshire Hathaway Inc.
-----------------------
Offering of Shares of Class B Common Stock
------------------------------------------
The following is a summary of your basic responsibilities if you
decide to participate in the Selected Dealer group. All dates are based on the
preliminary timetable and are subject to change at the sole discretion of
Salomon Brothers.
1. By May 1, return to Salomon Brothers by overnight mail or other
express delivery service the signed Selected Dealer Agreement with the Selected
Dealer Information Form (Annex A to the Selected Dealer Agreement) filled out
completely, including your best initial estimate of the number of preliminary
- ----------
prospectuses you will need for the duration of the order collection period.
2. At least one representative of your firm must attend the Selling
Group organizational meeting in New York City or participate in such meeting by
conference call. The meeting will be held on May 7 at 4:15 p.m. (EST) at
Salomon Brothers' offices at 7 World Trade Center, New York, New York, 45th
Floor Banquet Room. A Selected Dealer representative wishing to participate by
telephone conference can call (800) 857-5096 (if calling from within the United
States) or (402) 592-1811 (if calling from outside the United States), with the
password "Berkshire" and the Personal Identification Code assigned to the
Selected Dealer. Expenses of attending or participating in such meeting will
not be reimbursed.
3. Make 10 copies of the Demand Update form (Annex B to the Selected
Dealer Agreement) and fax one copy each business day, starting May 8 and ending
May 21, to Salomon Brothers at fax number (212) 783-3349. Please fill out each
Demand Update form completely in type. Accurate Demand Update forms are crucial
----------------------------------------
as they provide Berkshire Hathaway and Salomon Brothers with the real-time
- --------------------------------------------------------------------------
information required to size the offering correctly to meet investor demand.
- ----------------------------------------------------------------------------
Failure to deliver Demand Update forms may result in expulsion from the Selected
Dealer group.
4. On May 21, before 5:00 p.m. (EST), accompanying the final Demand
Update form, return to Salomon Brothers by fax the Officer's Allocation
Certificate
<PAGE>
2
(Annex C to the Selected Dealer Agreement) filled out completely and signed by a
senior member of your firm. Salomon Brothers' allocation of Shares to you, if
any, will be based on your Officer's Allocation Certificate.
5. On May 22, between 9:30 A.M. (EST) and 12:00 noon (EST), telephone
Salomon Brothers at (212) - with your Personal Identification Code to
receive confirmation from Salomon Brothers of your allocation of Shares,
whereupon you will be legally bound to purchase the number of Shares allocated
to you. Failure to receive confirmation from Salomon Brothers of your
allocation of Shares will result in your not being entitled to purchase any
Shares pursuant to the Selected Dealer Agreement.
6. On May 30, return to Salomon Brothers by fax the Officer's
Recycling Certificate (Annex D to the Selected Dealer Agreement) filled out
completely and signed by a senior member of your firm.
<TABLE>
Communication Summary:
- ---------------------
<S> <C>
By Mail: Salomon Brothers Equity Capital
Markets/Syndication Department
7 World Trade Center
New York, NY 10048
Attention: Berkshire Hathaway
Equity Syndication Team
By Fax: (212) 783-3349
By Telephone: For general questions call (212)
783-3400.
To participate in the organizational
meeting by telephone conference, call
(800) 857-5096 (if calling from
within the United States) or (402)
592-1811 (if calling from outside the
United States), with the password
"Berkshire" and your Personal
Identification Code.
To receive confirmation of your
allocation (on May 22), call (212)
- .
</TABLE>
<PAGE>
[Letterhead of]
SALOMON BROTHERS INC
April , 1996
Berkshire Hathaway Inc.
-----------------------
Offering of Shares of Class B Common Stock
------------------------------------------
Selected Dealer Agreement
-------------------------
Ladies and Gentlemen:
Salomon Brothers Inc ("Salomon") is pleased to invite you (the
"Selected Dealer") to participate in the group of selected dealers
(collectively, the "Selected Dealers") organized for the public offering (the
"Offering") of the shares of Class B Common Stock, $.1667 par value per share
(the "Shares"), of Berkshire Hathaway Inc. ("Berkshire"). This will confirm our
mutual agreement as to the terms and conditions applicable to your participation
in the selected dealer group for the Offering.
1. The Offering. The Offering consists of a public offering by
------------
Berkshire of the Shares pursuant to a registration statement on Form S-3 (the
"Registration Statement") filed under the Securities Act of 1933 (the
"Securities Act").
2. Conditions of Offering. The Offering will be subject to delivery
-----------------------
of the Shares by Berkshire to Salomon and their acceptance by Salomon, to the
approval of all legal matters by counsel to Salomon and to the satisfaction of
other conditions to be set forth in the underwriting agreement between Berkshire
and Salomon.
3. Allocation of Shares; Effective Time. (a) The Selected Dealer's
-------------------------------------
delivery pursuant to Section 5(f) hereof of an Officer's Allocation Certificate
in the form attached hereto as Annex C shall constitute the offer of the
<PAGE>
2
Selected Dealer to purchase from Salomon up to the number of Shares specified
therein. Such offer shall be revocable by the Selected Dealer (in whole but not
in part) at any time prior to Salomon's confirmation of the allocation of Shares
for purchase by the Selected Dealer as provided in Section 5(g) hereof.
(b) Salomon shall have the right to accept or reject such offer in
whole or in part. Salomon's confirmation of the allocation of Shares for
purchase by the Selected Dealer as provided in Section 5(g) hereof shall
constitute Salomon's acceptance of such offer to the extent of such allocation
(the time of such confirmation being referred to herein as the "Effective
Time"), whereupon this Agreement shall become and shall thereafter constitute
the legal and binding obligation of the Selected Dealer to purchase, and the
legal and binding obligation of Salomon to sell, the allocated Shares, subject
to the terms and conditions specified herein, at a price equal to the Public
Offering Price less a selling concession (the "Concession") equal to $ per
Share, such purchase and sale to be effective as of the pricing date and to
settle on the date and in the manner provided in Section 4 hereof.
(c) Salomon shall specify the "Public Offering Price" to the Selected
Dealer by Written Communication sent promptly after pricing. The Public
Offering Price (i) shall not be greater than one-thirtieth (1/30th) of the
closing sale price per share on the New York Stock Exchange of shares of
Berkshire's Class A Common Stock, par value $5.00 per share (the "Class A Common
Stock"), on the pricing date and (ii) shall not be less than one-thirtieth
(1/30th) of such closing sale price, less a discount of 4%.
4. Delivery and Payment. Delivery of and payment for the Shares
---------------------
purchased by the Selected Dealer shall be made on such date after the pricing
date as Salomon shall determine, on one day's prior notice to the Selected
Dealer. Payment shall be made in same-day Federal funds, in an amount equal to
the Public Offering Price less the Concession, against delivery of the Shares.
Unless notified otherwise by Salomon, payment for and delivery of Shares
purchased by the Selected Dealer shall be made through the facilities of The
Depository Trust Company, if the Selected Dealer is a participant, or, if the
Selected Dealer is not a participant, settlement shall be made through a
correspondent who is a participant pursuant to instructions set forth in the
Selected Dealer Information Form
<PAGE>
3
(previously provided to Salomon in the form of Annex A hereto).
5. Rules of Engagement. The Selected Dealer acknowledges that the
--------------------
Offering will be conducted pursuant to the following rules of engagement (the
"Rules of Engagement") and hereby agrees to observe and perform its obligations
thereunder:
(a) Limited Selling Efforts. The Selected Dealer shall not discuss
------------------------
any aspect of the Offering with any member of the news media and shall not
advertise or make any press release regarding the Selected Dealer's
participation in the Offering, provided that after formal announcement of
the Offering (May 8) the Selected Dealer may distribute only to its
customers with accounts open as of May 1, 1996, an announcement of its
participation in the Offering which satisfies the requirements of Rule 134
under the Securities Act.
(b) Organizational Meeting. At least one of the Selected Dealer's
-----------------------
representatives must attend the organizational meeting in New York or
participate in the meeting by telephone conference call (Tuesday, May 7 at
4:15 p.m. (EST)).
(c) Offering Materials. The Offering is by authorized prospectus
-------------------
only, and the Selected Dealer shall not deliver to prospective investors,
the news media or the general public any other document which could be
construed as an offering document or which otherwise does not meet the
requirements of Section 10 of the Securities Act (including without
limitation Berkshire's annual report to shareholders or any press report
regarding Berkshire, the Offering or Warren Buffett). The Selected Dealer
is not authorized by Berkshire or by Salomon to give any information or to
make any representation not contained in the prospectus authorized by
Berkshire and Salomon for use by the Selected Dealer in connection with any
offer or sale of the Shares.
(d) Daily Demand Updates. The Selected Dealer shall inform Salomon
---------------------
of aggregate firm indications of interest received by the Selected Dealer
each business day during the bookbuilding period. Demand Update Forms (in
the form of Annex B attached hereto) (the "Demand Update Form") are due by
way of facsimile
<PAGE>
4
transmission in accordance with Section 13 hereof by 5:00 p.m. (EST) on
each business day during the bookbuilding period (Wednesday, May 8 to
Tuesday, May 21).
(e) Bookbuilding Limitations. The Selected Dealer shall not report
-------------------------
to Salomon firm indications of interest which are subject to price
limitations (as to price per share or as to total purchase price).
(f) Allocation Certificate. On the last day of the bookbuilding
-----------------------
period, the Selected Dealer must notify Salomon of all firm indications of
interest received during the bookbuilding period by the Selected Dealer
(and not revoked) by sending an Officer's Allocation Certificate (in the
form of Annex C attached hereto) signed by an authorized officer of the
Selected Dealer and delivered by fax in accordance with Section 13 hereof
by 5:00 p.m. (EST) on the last day of the bookbuilding period (Tuesday May
21), as a pre-condition to Share allocation.
(g) Share Allocation and Confirmation of Share Allocation. Salomon
------------------------------------------------------
will notify the Selected Dealer by Written Communication before 8:00 a.m.
(EST) on the pricing date of its allocation, if any, of Shares for purchase
by the Selected Dealer (subject to confirmation as described below). Such
allocation will not entitle the Selected Dealer to purchase any Shares
hereunder. Between 9:30 a.m. (EST) and 12:00 Noon (EST) on the pricing
date, the Selected Dealer must telephone Salomon at 212- - in order
to receive from Salomon Brothers confirmation of such allocation. If the
Registration Statement has not been declared effective by the Securities
and Exchange Commission at the time the Selected Dealer telephones to
receive confirmation of its allocation, Salomon will specify a later time
by which the Selected Dealer must telephone Salomon in order to receive
such confirmation. In order to receive confirmation of its allocation,
each Selected Dealer will be required to identify its Personal
Identification Code previously assigned to it by Salomon in a Written
Communication.
(h) Order Collection. The Selected Dealer shall not report of its
-----------------
own account a firm indication of interest to purchase 20,000 Shares or more
received from any single customer or a firm indication of
<PAGE>
5
interest to purchase Shares received from an "institutional investor"
(defined below), but shall notify Salomon of any such interest pursuant to
the Demand Update Form. Any such firm indication of interest may be
accepted by Salomon at its sole discretion. Salomon agrees to credit, in
accordance with the customer's designation, an amount up to the Concession
on such Shares to the Selected Dealer, if such Shares are sold by Salomon
to such customer. Customers may not designate the Concession to any person
other than a member of the Selected Dealer group or Salomon. For purposes
of this Agreement, the term "institutional investor" shall mean any of the
entities specified in the definition of "qualified institutional buyer" set
forth in Rule 144A under the Securities Act, but without any limitation
based on the amount of securities owned by such entities.
(i) Recycling Certificate. On the fifth business day after the
----------------------
pricing date, the Selected Dealer shall deliver to Salomon a completed
Officer's Recycling Certificate (in the form of Annex D attached hereto).
(j) Rule 10b-6. The Selected Dealer acknowledges that once it
-----------
decides to participate in the Offering it will be subject to Rule 10b-6
("Rule 10b-6") under the Securities Exchange Act of 1934 (the "Exchange
Act") and hereby agrees that it shall comply with the provisions of Rule
10b-6. Until the Selected Dealer has completed its participation in the
distribution of the Shares, the Selected Dealer shall not (i) publish or
distribute research reports regarding Berkshire, except as permitted by
Rule 139 under the Securities Act and Rule 10b-6 or (ii) bid for or
purchase shares of the Class A Common Stock or the Class B Common Stock,
except bids or purchases made prior to the two full trading days preceding
the Effective Time (i.e., based on the current schedule, bids and purchases
----
will be prohibited after the close of trading on the New York Stock
Exchange on Monday, May 20, and will continue to be prohibited until you
have completed the distribution of Shares allocated to you).
(k) Prospectus Delivery. Salomon shall provide the Selected Dealer
--------------------
with such number of copies of each preliminary prospectus and of the final
prospectus for the Offering as the Selected Dealer may reasonably request
for the purposes contemplated by the Securities
<PAGE>
6
Act and the Exchange Act and the applicable rules and regulations of the
Securities and Exchange Commission thereunder. The Selected Dealer shall
make a record of its distribution of each preliminary prospectus and, when
furnished with copies of any revised preliminary prospectus, the Selected
Dealer will, upon Salomon's request, promptly forward copies thereof to
each person to whom the Selected Dealer has theretofore distributed a
preliminary prospectus.
(l) Public Offering Price; Concession. Until expiration or
----------------------------------
termination of the "Distribution Period" pursuant to Section 10 hereof (as
such term is defined in said Section 10), the Selected Dealer agrees to
offer Shares to the public only at the Public Offering Price. After the
commencement of the Offering, Salomon may change the Public Offering Price
and the Concession by Written Communication to the Selected Dealer (in
accordance with Section 13 hereof), provided that such change shall not
affect the Selected Dealer's obligation, if any, to purchase Shares from
Salomon at the initial Public Offering Price less the initial Concession
pursuant to Section 3 hereof.
(m) Stabilization and Overallotment. Salomon may, with respect to
--------------------------------
the Offering, overallot in arranging sales to Selected Dealers, purchase
and sell Shares for long or short account and stabilize or maintain the
market price of the Shares.
(n) Repayment of Concession. If, prior to the later of (a) the
------------------------
expiration or termination of the Distribution Period, or (b) the covering
by Salomon of any short position created by Salomon in connection with the
Offering for its account, Salomon purchases or contracts to purchase for
its account in the open market or otherwise any Shares purchased by the
Selected Dealer under this Agreement, the Selected Dealer agrees to pay
Salomon on demand an amount equal to the Concession with respect to such
Shares plus transfer taxes and broker's commissions or dealer's mark-up, if
any, paid in connection with such purchase or contract to purchase.
(o) Blue Sky. Upon application to Salomon, Salomon shall inform the
---------
Selected Dealer as to any advice Salomon has received from counsel
concerning the jurisdictions in which Shares have been qualified for
<PAGE>
7
sale or are exempt under the securities or blue sky laws of such
jurisdictions, but Salomon does not assume any obligation or responsibility
as to the Selected Dealer's right to sell Shares in any such jurisdiction.
(p) Offering Outside the United States. The Shares have not been
-----------------------------------
qualified for offer or sale in any jurisdiction outside the United States.
Any Selected Dealer offering or selling the Shares outside the United
States will offer and sell the Shares strictly in compliance with all
applicable laws, rules and regulations of such jurisdiction. Any Selected
Dealer offering or selling the Shares in the United Kingdom shall comply
with the following statement, and shall include a copy of the following
statement with each prospectus that it delivers in the United Kingdom:
"Each of the Company and the Selected Dealer (i) has not offered or
sold, and will not offer or sell, in the United Kingdom, by means of
any document, any shares of Class B Common Stock other than to persons
whose ordinary business it is to buy or sell shares or debentures,
whether as principal or agent (except under circumstances which do not
constitute an offer to the public within the meaning of the Companies
Act 1985); (ii) has complied and will comply with all applicable
provisions of the Financial Services Act 1986 (the '1986 Act') with
respect to anything done by it in relation to the shares of Class B
Common Stock in, from or otherwise involving the United Kingdom; and
(iii) has only issued or passed on, and will only issue or pass on to
any person in the United Kingdom, any investment advertisement (within
the meaning of the 1986 Act) relating to the shares of Class B Common
Stock if that person falls within Article 9(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemption) Order 1988."
(q) Compliance with Law. The Selected Dealer agrees that in selling
--------------------
Shares pursuant to the Offering (which agreement shall also be for the
benefit of
<PAGE>
8
Berkshire) the Selected Dealer will comply with all applicable laws, rules
and regulations, including the applicable provisions of the Securities Act
and the Exchange Act, the applicable rules and regulations of the
Securities and Exchange Commission thereunder, the applicable rules and
regulations of the National Association of Securities Dealers, Inc. (the
"NASD") and the applicable rules and regulations of any securities exchange
having jurisdiction over the Offering.
6. Collateral. (a) Salomon reserves the right to require that the
-----------
Selected Dealer post cash collateral to secure (i) the Selected Dealer's
obligations hereunder to purchase Shares and (ii) the performance by the
Selected Dealer of the Selected Dealer's other obligations hereunder. If the
Selected Dealer delivers such collateral, this Agreement will constitute a
security agreement by the Selected Dealer as debtor in favor of Salomon as the
secured party, and Salomon shall have all the rights and remedies with respect
to such collateral as is available to a secured party under the New York Uniform
Commercial Code. Any cash collateral required hereunder shall be delivered to
Salomon for deposit in an interest-bearing deposit account (the "Cash Account")
specified by Salomon. The Cash Account shall be under the sole dominion and
control of Salomon, and Salomon shall have the sole right to make withdrawals
from the Cash Account and to exercise all rights with respect to the Cash
Account. Interest accruing on cash collateral on deposit from time to time in
the Cash Account shall constitute additional collateral hereunder. Upon
Salomon's receipt of payment for the Shares to be purchased by the Selected
Dealer, as provided in Section 4 hereof, the amount of any such cash collateral
(and all interest actually earned thereon) shall be distributed to the Selected
Dealer.
(b) If Salomon requires cash collateral to be posted, such collateral
will not exceed 30% of the amount by which the dollar amount of the Selected
Dealer's allocation of Shares exceeds the Selected Dealer's net capital (as set
forth in the Selected Dealer's March 31, 1996, Focus Report). The amount of
collateral so required by Salomon is referred to herein as the "Collateral
Requirement".
(c) In lieu of collateral, the Selected Dealer may provide Salomon
(by fax to Salomon at (212) 783-3349) with (i) a letter from a guaranteeing
agent acceptable to Salomon for the full amount of the Selected Dealer's
<PAGE>
9
Collateral Requirement and in a form acceptable to Salomon or (ii) a letter of
credit from a bank acceptable to Salomon for the full amount of the Selected
Dealer's Collateral Requirement and in a form acceptable to Salomon.
7. Representations, Warranties and Agreements. As of the date hereof
-------------------------------------------
and as of the Effective Time, the Selected Dealer hereby represents, warrants
and agrees to and with Salomon as follows:
(a) Prospectus. The Selected Dealer is familiar with Rule 15c2-8
----------
under the Exchange Act relating to the distribution of preliminary and final
prospectuses and agrees that it will comply therewith. In purchasing the
Shares, the Selected Dealer will rely upon no statement whatsoever, written or
oral, other than the statements in the final prospectus delivered to the
Selected Dealer by Salomon.
(b) NASD. The Selected Dealer is actually engaged in the investment
-----
banking or securities business and is either a member in good standing of the
NASD or, if the Selected Dealer is not such a member, the Selected Dealer is a
foreign bank, dealer or institution not eligible for membership in the NASD
which agrees to make no sales within the United States, its territories or its
possessions or to persons who are citizens thereof or residents therein, and in
making other sales agrees to comply with the NASD's interpretation with respect
to free riding and withholding. The Selected Dealer further represents that the
Selected Dealer has provided to Salomon all documents and other information
required to be filed with respect to the Selected Dealer, any related person or
any person associated with the Selected Dealer or any such related person
pursuant to the supplementary requirements of the NASD's interpretation with
respect to review of corporate financing as such requirements relate to the
Offering.
The Selected Dealer agrees that (i) the Selected Dealer will comply
with the provisions of section 24 of Article III of the NASD's Rules of Fair
Practice and (ii) if the Selected Dealer is a non-NASD member broker or dealer
in a foreign country, the Selected Dealer will also comply (A) as though the
Selected Dealer were an NASD member, with the provisions of sections 8 and 36
thereof and (B) with section 25 thereof as that section applies to a non-NASD
member broker or dealer in a foreign country.
<PAGE>
10
The Selected Dealer acknowledges that the Offering is being conducted
pursuant to the provisions of Schedule E to the By-Laws of the NASD and, if the
Selected Dealer is a member of the NASD, the Selected Dealer agrees to comply
with the provisions of Section 12 of said Schedule E, which prohibits purchase
of the Shares in any discretionary account without the prior specific written
approval of the customer.
(c) Certificates. Each of the Officer's Allocation Certificate and
-------------
the Officer's Recycling Certificate delivered by the Selected Dealer pursuant to
this Agreement will be true, correct and complete in all material respects as of
the date made.
(d) Compliance with Rules of Engagement. The Selected Dealer has
------------------------------------
complied and will comply in all material respects with its obligations under
this Agreement, including the Rules of Engagement.
8. Relationship among Salomon and Selected Dealers. Salomon may buy
------------------------------------------------
Shares from or sell Shares to any Selected Dealer, and (with Salomon's consent)
the Selected Dealers may purchase Shares from and sell Shares to each other at
the Public Offering Price less all or any part of the Concession. The Selected
Dealer is not authorized to act as agent for Salomon or Berkshire in offering
Shares to the public or otherwise. Salomon shall not be under any obligation to
the Selected Dealer except for obligations assumed hereby or in any Written
Communication from Salomon in connection with the Offering. Nothing contained
herein or in any Written Communication from Salomon shall constitute the
Selected Dealers an association or partners with Salomon or with one another.
If the Selected Dealers, among themselves or with Salomon, should be deemed to
constitute a partnership for Federal income tax purposes, then the Selected
Dealer hereby elects to be excluded from the application of Subchapter K,
Chapter 1, Subtitle A of the Internal Revenue Code of 1986 and agrees not to
take any position inconsistent with that election. The Selected Dealer
authorizes Salomon, in its discretion, to execute and file on the Selected
Dealer's behalf such evidence of that election as may be required by the
Internal Revenue Service. In connection with the Offering the Selected Dealer
shall be liable for the Selected Dealer's proportionate amount of any tax,
claim, demand or liability that may be asserted against the Selected Dealer
alone or against one or more Selected Dealers participating in the Offering, or
against Salomon, based upon the claim that the Selected Dealers, or any of them,
constitute an association, an unincorporated business
<PAGE>
11
or other entity, including, in each case, the Selected Dealer's proportionate
amount of any expense incurred in defending against any such tax, claim, demand
or liability.
9. Expenses. The Selected Dealer will not be entitled to
---------
reimbursement for Offering-related expenses of any kind.
10. Termination; Supplements and Amendments. This Agreement shall
----------------------------------------
continue in full force and effect from the date of your acceptance hereof until
the 30th day after the commencement of the public offering of the Shares (such
30 day period, the "Distribution Period"). In Salomon's discretion the
Distribution Period may be extended by Salomon for a further period not
exceeding 30 days and at Salomon's discretion, whether or not extended, may be
terminated at any earlier time. Each of Salomon and the Selected Dealer may
terminate this Agreement upon written notice of such termination delivered to
the other pursuant to Section 13 hereof; provided, however, that such
-------- -------
termination shall not be effective if such notice is delivered after the
Effective Time. The Selected Dealer's representations and warranties hereunder
shall survive termination of this Agreement. This Agreement may be supplemented
or amended by Salomon by Written Communication at any time prior to the
Effective Time. Each reference to "this Agreement" herein shall, as
appropriate, be to this Agreement as so supplemented or amended.
11. Successors and Assigns. This Agreement shall be binding on, and
-----------------------
inure to the benefit of, the parties hereto, and the respective successors and
assigns of each of them.
12. Governing Law. This Agreement and the terms and conditions set
--------------
forth herein with respect to the Offering shall be governed by, and construed in
accordance with, the laws of the State of New York.
13. Written Communications. Salomon will advise the Selected Dealer
-----------------------
by fax, telegram, telex or other form of written communication ("Written
Communication", which term may include a prospectus) of any change in the method
and supplementary terms and conditions (including, without limitation, the
pricing) of the Offering. To the extent such supplementary terms and conditions
are inconsistent with any provision herein, such terms and conditions shall
supersede any such provision.
Unless otherwise indicated herein or in any such Written
Communication, communications by the Selected Dealer
<PAGE>
12
with respect to the Offering should be sent to Salomon Brothers Equity Capital
Markets/Syndicate Department, 7 World Trade Center, New York, New York 10048,
Attention Berkshire Hathaway Equity Syndicate Team. Telecopy Number: (212) 783-
3349. The Selected Dealer may also call (212) 783-3400 from 9:00 a.m. to 5:00
p.m. (EST) with any questions regarding the Offering. This is a special voice
mail box that has been set up to accommodate the Offering.
14. Acceptance; Effectiveness. The Selected Dealer's acceptance of
--------------------------
this Agreement must consist of the Selected Dealer's delivery to Salomon of an
original Agreement manually executed by the Selected Dealer's duly authorized
officer, accompanied by the Selected Dealer's completed Selected Dealer
Information in the form attached hereto as Annex A. Salomon reserves the right
to reject any acceptance of this Agreement in whole or in part. This Agreement
shall not constitute a binding agreement until the Effective Time.
Very truly yours,
SALOMON BROTHERS INC,
by
_________________________
ACCEPTED AND AGREED:
April ___, 1996
_________________________________
(Name of Dealer)
by: _____________________________
Name:
Title:
<PAGE>
Annex A
SELECTED DEALER INFORMATION
(Please Type All Responses)
Official Firm Name ____________________________________________________________
Firm Tax ID Number ____________________________________________________________
Primary Contact Name ___________________________________________________________
Primary Contact Mailing
Address (No Post Office Boxes) ________________________________________________
Primary Contact Phone Number __________________________________________________
Primary Contact Fax Number _____________________________________________________
Credit Contact Name ____________________________________________________________
Credit Contact Phone Number ___________________________________________________
Credit Contact Fax Number _____________________________________________________
Self-Clearing Firms:
- --------------------
DTC Participation Number ____________________________________________________
Standing DTC Delivery Instructions __________________________________________
Non-Self Clearing Firms:
- ------------------------
Clearing Agent Name _________________________________________________________
Clearing Agent Contact Name _________________________________________________
Clearing Agent Contact Phone Number _________________________________________
Clearing Agent DTC Participation Number _____________________________________
Clearing Agent Standing DTC
Delivery Instructions _____________________________________________________
Firm's Account Number at Clearing Agent _____________________________________
NASD Executing Broker Symbol __________________________________________________
Operations Contact Name _______________________________________________________
Operations Contact Phone Number _______________________________________________
Total Ownership Equity (as of 12/31/95
and 3/31/96 Focus Reports) ____________________________________________________
Net Capital (as of 12/31/95 and
3/31/96 Focus Reports) ________________________________________________________
<PAGE>
2
Total Assets (as of 12/31/95 and
3/31/96 Focus Reports) ________________________________________________________
Name of Selected Dealer as it Should Appear in
any Publicity Related to the Offering ________________________________________
Selected Dealer Telephone Number for Reference
of Potential Investors _______________________________________________________
Initial Preliminary Prospectuses Requested _____________________________________
Address for Delivery of Prospectuses
(One Address Only) __________________________________________________________
__________________________________________________________
__________________________________________________________
<PAGE>
Annex B
DEMAND UPDATE FORM
Berkshire Hathaway Inc.
-----------------------
Offering of Shares of Class B Common Stock
------------------------------------------
(Please Type)
Demand Update as of:____________ , 1996
Reporting Selected Dealer (Full Firm Name): ____________________________________
Sender's Full Name: ___________________________________________________________
Sender's Telephone Number: ____________________________________________________
For Firm Indications of Interest From Non-Institutional Investors less than
- ---------------------------------------------------------------------------
20,000 Shares:/1/
- --------------
Previous Day's Total Demand (in Shares): ____________________________________
Today's Additional Demand (in Shares): ______________________________________
Today's Total Demand (in Shares): ___________________________________________
Total Number of Tickets: ____________________________________________________
Comments/Issues: _______________________________________________________________
Number of Additional Preliminary
Prospectuses Needed (if any): __________________________________________________
Number of Volumes of Documents
Incorporated by Reference
Needed (if any): ______________________________________________________________
The return of this form constitutes the Selected Dealer's representation and
warranty that all indications of customer interest have been taken according to
the Rules of Engagement set forth in the Selected Dealer Agreement.
Please fax this Demand Update Form to Salomon Brothers Inc at fax number (212)
783-3349.
- -------------------
/1/ For all firm indications of interest of 20,000 Shares or more or from
institutional investors, provide the full account name and interest size on a
separate page. See Section 5(h) of the Selected Dealer Agreement for the
definition of "institutional investor".
<PAGE>
Annex C
OFFICER'S ALLOCATION CERTIFICATE
Berkshire Hathaway
------------------
Offering of Shares of Class B Common Stock
------------------------------------------
(Please Type)
I, _________________ /2/ being the _________________ /3/ of
__________________________ /4/ (the "Selected Dealer") hereby certify as
follows:
1. The Selected Dealer's aggregate demand with respect to the offering by
Berkshire Hathaway Inc. of its Class B Common Stock, par value $0.1667 per share
(the "Shares"), is ___________ Shares.
2. Schedule 1 attached hereto identifies each customer's account number
and the number of Shares comprising the demand specified in paragraph 1 above.
Such demand constitutes firm indications of interest by such customers.
3. The Selected Dealer hereby offers to purchase up to the number of
Shares specified in paragraph 1 above pursuant to the Selected Dealer Agreement
dated as of April , 1996 (the "Selected Dealer Agreement"), between Salomon
Brothers Inc ("Salomon") and the Selected Dealer. Salomon shall have the right
to accept or reject such offer in whole or in part. Such offer shall be
revocable by the Selected Dealer (in whole but not in part) at any time prior to
Salomon's confirmation of the allocation of Shares for purchase by the Selected
Dealer as provided in Section 5(g) of the Selected Dealer Agreement, which
confirmation will not be made until after the Registration Statement relating to
the Shares has become effective. Upon Salomon's confirmation of the allocation
as provided in said Section 5(g), the Selected Dealer Agreement will constitute
the legal and binding obligation of the Selected Dealer to purchase the
allocated Shares from Salomon on the terms and subject to the conditions set
forth in the Selected Dealer Agreement.
4. The Selected Dealer has complied in all material respects with the
Rules of Engagement.
- -------------
/2/ Insert full name of officer signing this Certificate.
/3/ Insert title of officer signing this Certificate.
/4/ Insert full legal name of the Selected Dealer.
<PAGE>
2
I further acknowledge that a copy of this certificate may be sent to the
following individuals:
Warren Buffett Robert Denham
Berkshire Hathaway Inc. Salomon Inc
Chairman/ Chairman/
Chief Executive Officer Chief Executive Officer
GIVEN under my hand this ____ day of ___________, 1996
Signed: _______________________________________________
<PAGE>
Annex D
OFFICER'S RECYCLING CERTIFICATE
Berkshire Hathaway Inc.
-----------------------
Offering of Shares of Class B Common Stock
------------------------------------------
(Please Type)
I, /1/ being the /2/ of
/3/ (the "Selected Dealer") hereby certify that, in connection with the recently
completed offering (the "Offering") by Berkshire Hathaway Inc. of its Class B
Common Stock, par value $0.1667 per share (the "Shares"), in which the Selected
Dealer received Shares as its confirmed allocation, to the best of my
knowledge after reasonable inquiry (which did not include contacting the
accounts listed on Schedule 1 hereto, but which did include reviewing the
Selected Dealer's internal account records, as of the ___ day of ____________,
1996 (the "Certificate Date")/4/ the information contained on Schedule 1
regarding the number of Shares initially sold by the Selected Dealer to its
customers and the number of Shares held by such customers as of the Certificate
Date is true and correct in all material respects.
I further acknowledge that a copy of this Certificate may be sent to the
following individuals:
Warren Buffett Robert Denham
Berkshire Hathaway Inc. Salomon Inc
Chairman/ Chairman/
Chief Executive Officer Chief Executive Officer
Given under my hand this ____ day of ______________, 1996
Signed: ______________
- --------------------
/1/Insert name of officer signing the Certificate.
/2/Insert title of officer signing this Certificate.
/3/Insert full legal name of the Selected Dealer.
/4/Insert date which is the fifth business day following the pricing date.
