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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 2, 1996
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Berkshire Hathaway Inc.
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 1-10125 04 2254452
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
<TABLE>
<S> <C>
1440 Kiewit Plaza, Omaha, NE 68131
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(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (402) 346-1400
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(Former name or former address, if changed since last report.)
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ITEM 5.
On January 2, 1996, the Registrant consummated its merger with GEICO
Corporation. That significant acquisition was reported on Form 8-K to the
Securities and Exchange Commission on January 16, 1996. A description of the
acquisition is incorporated by reference. See Exhibit 2. This filing
provides supplemental disclosures with respect to Financial Statements of GEICO
Corporation and pro forma financial statements.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The financial statements of GEICO Corporation required to be filed
herewith are incorporated by reference. See Exhibit 99.1.
(b) Pro Forma Financial Information
The required pro forma financial information is included below as
Exhibit 99.2.
(c) Exhibits
2 Agreement and Plan of Merger dated as of August 25, 1995,
between the Registrant and GEICO Corporation.
Incorporated by reference to Exhibit 1 to the
Registrant's Form 8-K dated August 25, 1995.
23 Consent of Coopers & Lybrand L.L.P.
99.1 Consolidated Balance Sheets of GEICO Corporation as of
December 31, 1995 and 1994, and the related Consolidated
Statements of Income, Shareholders' Equity and Cash Flows for
each of the three years in the period ended December 31, 1995,
together with the Notes to Consolidated Financial Statements
and the related Report of Independent Accountants.
Incorporated by reference to Item 8 of GEICO
Corporation's 1995 Form 10-K (Commission File Number
1-8012) dated March 25, 1996.
99.2 Unaudited Pro Forma Combined Condensed Balance Sheet as of
December 31, 1995 and Unaudited Pro Forma Combined Condensed
Statements of Earnings for the year ended December 31, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BERKSHIRE HATHAWAY INC.
Date: March 26, 1996 /s/Marc D. Hamburg
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Marc D. Hamburg
Vice President & Chief Financial
Officer
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EXHIBIT 23
CONSENT OF COOPERS & LYBRAND L.L.P.
We consent to the incorporation by reference in the registration statements of
Berkshire Hathaway Inc. on Form S-3 (File No. 33-50989), Form S-3 (File No.
33-58983) and Form S-3 (File No. 33-60855) of our report dated February 16,
1996, on the consolidated financial statements of GEICO Corporation and
subsidiaries ("GEICO") as of December 31, 1995 and 1994, and for the years
ended December 31, 1995, 1994, and 1993, which report is included in Item 8 of
GEICO's 1995 Form 10-K (File No. 1-8012) which is incorporated by reference in
Berkshire Hathaway Inc.'s Form 8-K dated March 26, 1996.
Coopers & Lybrand L.L.P.
Washington, D.C.
March 26, 1996
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EXHIBIT 99.2
UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial
statements are based upon the consolidated financial statements of Berkshire
Hathaway Inc. ("Registrant") and GEICO Corporation ("GEICO"), combined and
adjusted to give effect to the merger on January 2, 1996 ("Merger Date"), of an
indirect wholly-owned subsidiary of Registrant with and into GEICO. The merger
was consummated pursuant to an Agreement and Plan of Merger dated August 25,
1995 (the "Agreement"). Pursuant to the Agreement each issued and outstanding
common share of GEICO, except shares held by Registrant's subsidiaries and
GEICO, was converted into the right to receive $70.00 per share or an aggregate
amount of $2.33 billion ("Merger Consideration"). The amount of the Merger
Consideration was determined based upon the 33,284,733 common shares held by
the public on the Merger Date. As of the Merger Date, subsidiaries of
Registrant owned 34,250,000 common shares of GEICO, acquired in 1980 and
earlier years for an aggregate cost of $45.7 million.
The following unaudited pro forma combined condensed balance sheet at
December 31, 1995 gives effect to the merger as if it had occurred on such date.
The following unaudited pro forma combined condensed statement of earnings for
the year ended December 31, 1995 gives effect to the merger as if it had
occurred as of the beginning of that year. The unaudited pro forma balance
sheet and statement of earnings are not necessarily indicative of the financial
position or results of operations of Registrant had the acquisition been
consummated on the dates indicated.
The merger will be accounted for by the purchase method and,
therefore, assets and liabilities of GEICO will be recorded in Registrant's
consolidated financial statements at their fair values. The excess of the
purchase cost over the fair value of net assets acquired at the Merger Date
will be recorded as goodwill. Registrant has not completed its study of fair
values of assets and liabilities of GEICO, so the final allocations may be
different than as shown in the pro forma financial statements.
The accompanying unaudited pro forma combined condensed financial
statements include adjustments which result in consolidation of previously
owned investments in GEICO on a "step-by-step" basis, in accordance with the
provisions of Accounting Research Bulletin 51 "Consolidated Financial
Statements," ("ARB 51"). Accordingly, as of the Merger Date, Registrant will
change its method of accounting with respect to its previously owned investment
of 34,250,000 shares of GEICO common stock. Prior to the Merger Date the
investment was classified as an available-for-sale security and carried at fair
value in accordance with the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("FAS 115"). As disclosed in the following pro forma combined
condensed balance sheet, the change in accounting results in a decrease in
shareholders' equity of $478 million.
On October 16, 1995, the Financial Accounting Standards Board issued a
proposed statement of financial accounting standards entitled "Consolidated
Financial Statements: Policy and Procedures" ("Exposure Draft") which would
change certain financial statement consolidation procedures. The Exposure
Draft, if adopted by the FASB, would supersede ARB 51 and, among its provisions,
require recognition in earnings of unrealized gains of such earlier GEICO
investments. The Registrant believes that adoption of the provisions of the
Exposure Draft would increase pro forma consolidated shareholders' equity and
goodwill related to this transaction by at least $478 million from amounts
recorded under the provisions of ARB 51.
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EXHIBIT 99.2
BERKSHIRE HATHAWAY INC.
FORM 8-K
Pro Forma Combined Condensed Balance Sheet
Historical and Pro forma
(Unaudited)
As of December 31, 1995
<TABLE>
<CAPTION>
(Dollars in millions)
Historical
------------------------- Pro forma
Berkshire GEICO Adjustments Pro forma
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents . . . . . . . . . . $ 2,703.8 $ 391.6 $(2,337.1)(a) $ 758.3
Investments:
Securities with fixed maturities . . . . . 1,423.2 3,680.8 5,104.0
Marketable equity securities . . . . . . . 22,235.0 971.1 (2,393.2)(b) 20,812.9
Receivables . . . . . . . . . . . . . . . . . 718.9 495.0 1,213.9
Goodwill . . . . . . . . . . . . . . . . . . 672.0 1,621.7 (d) 2,293.7
Other assets . . . . . . . . . . . . . . . . 2,175.9 257.0 2,432.9
--------- --------- --------- ---------
$29,928.8 $ 5,795.5 $(3,108.6) $32,615.7
========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Property and casualty insurance
policyholder liabilities . . . . . . . . $ 4,629.7 $ 3,025.8 $ 7,655.5
Income taxes, principally deferred . . . . . 5,588.5 49.4 $ (764.3)(h) 4,873.6
Borrowings under investment
agreements and other debt . . . . . . . 1,061.7 434.4 43.3 (c) 1,475.5
(63.9)(e)
Other liabilities . . . . . . . . . . . . . . 1,167.3 417.5 8.7 (c) 1,607.8
14.3 (e)
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12,447.2 3,927.1 (761.9) 15,612.4
--------- --------- --------- ---------
Minority shareholders' interests . . . . . . 264.5 264.5
---------- ---------- --------- ---------
Total shareholders' equity . . . . . . . . . 17,217.1 1,868.4 (1,868.4)(f) 16,738.8
(478.3)(g)
----------- --------- --------- ---------
$29,928.8 $ 5,795.5 $(3,108.6) $32,615.7
========= ========= ========= =========
</TABLE>
See accompanying notes to unaudited pro forma combined condensed financial
statements.
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EXHIBIT 99.2
BERKSHIRE HATHAWAY INC.
FORM 8-K
Pro Forma Combined Condensed Statement of Earnings
Historical and Pro forma
(Unaudited)
For the year ended December 31, 1995
<TABLE>
<CAPTION>
(Dollars in millions, except per share amounts)
Historical
------------------------- Pro forma
Berkshire GEICO Adjustments Pro forma
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Sales and service revenues . . . . . . . . $ 2,755.9 $2,755.9
Insurance premiums earned . . . . . . . . . 957.5 $ 2,787.0 3,744.5
Interest and dividend income . . . . . . . 474.8 240.7 $ (139.8)(i) 525.7
(37.0)(j)
(13.0)(k)
Income from investment in Salomon Inc . . . 78.8 78.8
Income from finance businesses . . . . . . 26.6 26.6
Realized investment gain . . . . . . . . . 194.1 21.6 215.7
--------- -------- -------- --------
4,487.7 3,049.3 (189.8) 7,347.2
--------- -------- -------- --------
COST AND EXPENSES:
Cost of products and services sold . . . . 1,706.7 1,706.7
Insurance losses and loss adjustment
expenses . . . . . . . . . . . . . . . . 612.0 2,254.2 2,866.2
Insurance underwriting expenses . . . . . . 325.0 452.4 (1.1)(k) 776.3
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . 775.9 41.0 (m) 816.9
Interest expense . . . . . . . . . . . . . 59.3 34.4 (2.8)(k) 90.9
--------- --------- --------- --------
3,478.9 2,741.0 37.1 6,257.0
--------- --------- --------- --------
EARNINGS BEFORE INCOME TAXES AND MINORITY
INTEREST . . . . . . . . . . . . . . . . 1,008.8 308.3 (226.9) 1,090.2
Income taxes . . . . . . . . . . . . . . . 270.3 60.7 (54.7)(n) 276.3
Minority interest . . . . . . . . . . . . . 13.3 13.3
--------- -------- ------- --------
NET EARNINGS . . . . . . . . . . . . . . . . $ 725.2 $ 247.6 $(172.2) $ 800.6
========= ======== ======= ========
Average shares outstanding . . . . . . . . 1,187,102 1,187,102
NET EARNINGS PER SHARE . . . . . . . . . . . $611 $674
==== ====
</TABLE>
See accompanying notes to unaudited pro forma condensed financial statements.
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EXHIBIT 99.2
BERKSHIRE HATHAWAY INC.
FORM 8-K
Notes To Unaudited Pro Forma
Combined Condensed Financial Statements
(Dollars in millions)
Pro forma adjustments giving effect to the merger in the unaudited pro
forma combined condensed balance sheet reflect the following:
(a) Reflects liquidation of certain cash and cash equivalent balances to
fund the payment of the Merger Consideration and certain merger
related costs.
(b) Elimination of the Registrant's investment in common stock of GEICO
which was previously carried at fair value in accordance with FAS 115.
(c) Estimated fair value adjustment related to term debt and certain other
liabilities of GEICO.
(d) Excess of Merger Consideration and the cost of previously owned common
stock accounted for on a step-by-step basis over the fair value of
GEICO's net assets.
(e) Elimination of certain GEICO borrowings resulting from the termination
of GEICO's Employee Stock Ownership Plan and recognition of
liabilities for certain merger related costs.
(f) Elimination of GEICO's shareholders' equity.
(g) Reduction of shareholders' equity for the net unrealized gain related
to the investment in GEICO common stock previously carried at fair
value in accordance with FAS 115 partially offset by an increase in
shareholders' equity for the Registrant's share of undistributed
earnings and net unrealized investment gain of GEICO pursuant to the
step-by-step acquisition accounting method.
(h) Adjustment of income tax liability related to adjustments (b), (c),
(e) and (g) above.
Pro forma adjustments giving effect to the merger in the unaudited pro
forma combined condensed statements of income reflect the following:
(i) Reduction in interest income to recognize estimated cost of funds used
for the Merger Consideration.
(j) Reduction in dividend income to reflect elimination of dividends
earned from previously owned investments in GEICO common stock.
(k) Reduction in interest income, interest expense and underwriting
expense due to purchase accounting adjustments related to GEICO's
investments in securities with fixed maturities, term debt and certain
other liabilities, respectively.
(m) Amortization of goodwill arising from the merger computed on a
straight line basis over 40 years.
(n) Income tax effects of pro forma adjustments.
6
