BERKSHIRE HATHAWAY INC - 10-Q Quarterly Report

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BERKSHIRE HATHAWAY INC.
and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(dollars in millions except per share amounts)

BERKSHIRE HATHAWAY INC.
and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
(dollars in millions except per share amounts)

BERKSHIRE HATHAWAY INC.
and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)

BERKSHIRE HATHAWAY INC.
and Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003

The accompanying unaudited Consolidated Financial Statements include the accounts of Berkshire Hathaway Inc. (“Berkshire” or “Company”) consolidated with the accounts of all its subsidiaries and affiliates, including special purpose entities, that Berkshire controls as of the financial statement date. Reference is made to Berkshire’s most recently issued Annual Report that included information necessary or useful to understanding Berkshire’s businesses and financial statement presentations. In particular, Berkshire’s significant accounting policies and practices were presented as Note 1 to the Consolidated Financial Statements included in that Report. Certain amounts in 2002 have been reclassified to conform with current year presentation.

Financial information in this Report reflects any adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary to a fair statement of results for the interim periods in accordance with generally accepted accounting principles (“GAAP”).

For a number of reasons, Berkshire’s results for interim periods are not normally indicative of results to be expected for the year. The timing and magnitude of catastrophe losses incurred by insurance subsidiaries and the estimation error inherent to the process of determining liabilities for unpaid losses of insurance subsidiaries can be relatively more significant to results of interim periods than to results for a full year. Realized investment gains/losses are recorded when investments are sold, other-than-temporarily impaired or in certain instances, as required by GAAP, when investments are marked-to-market. Variations in the amounts and timing of realized investment gains/losses can cause significant variations in periodic net earnings.

Berkshire’s long-held acquisition strategy is to purchase businesses with consistent earning power, good returns on equity, able and honest management and at sensible prices. Businesses with these characteristics typically have market values that exceed net asset value, thus producing goodwill for accounting purposes.

During 2002, Berkshire completed five business acquisitions for cash consideration of approximately $2.3 billion. Information concerning these acquisitions follows.

On February 8, 2002, Berkshire acquired all of the outstanding shares of Albecca. Albecca designs, manufactures and distributes a complete line of high-quality custom picture framing products primarily under the Larson-Juhl name.

On April 30, 2002, Berkshire acquired the basic apparel business of Fruit of the Loom, LTD. FOL is a leading vertically integrated basic apparel company manufacturing and marketing underwear, activewear, casualwear and childrenswear. FOL operates on a worldwide basis and sells its products principally in North America under the Fruit of the Loom and BVD brand names.

On September 4, 2002, Berkshire acquired all of the outstanding common stock of Garan. Garan is a leading manufacturer of children’s, women’s, and men’s apparel bearing the private labels of its customers as well as several of its own trademarks, including GARANIMALS.

On October 31, 2002, Berkshire acquired all of the outstanding shares of CTB, a manufacturer of equipment and systems for the poultry, hog, egg production and grain industries.

On October 31, 2002, Berkshire acquired The Pampered Chef, LTD. The Pampered Chef is the largest branded kitchenware company and the largest direct seller of housewares in the United States.

The results of operations for each of these entities are included in Berkshire’s consolidated results of operations from the effective date of each acquisition. The following table sets forth certain unaudited consolidated earnings data for the first quarter of 2002, as if each of the acquisitions discussed above were consummated on the same terms at the beginning of 2002. Dollars are in millions except per share amount.

On April 1, 2003, Clayton Homes, Inc. (“Clayton”) and Berkshire entered into a definitive Merger Agreement. Under the terms of the Merger Agreement, Clayton’s stockholders will receive cash of $12.50 per share in the merger, or approximately $1.7 billion in the aggregate.

The merger is subject to the approval of Clayton stockholders as well as other closing conditions as described in the Merger Agreement. Clayton is a vertically integrated manufactured housing company with 20 manufacturing plants, 297 company owned stores, 610 independent retailers, 85 manufactured housing communities, and financial services operations that provide mortgage services for 165,000 customers and insurance protection for 100,000 families.

On May 1, 2003, Berkshire entered into an agreement to acquire for cash McLane Company, Inc. (“McLane”), a subsidiary of Wal-Mart Stores, Inc. McLane is one of the nation’s largest wholesale distributors of groceries and nonfood items to convenience stores, wholesale clubs, mass merchandisers, quick service restaurants, theaters and others. The acquisition is subject to regulatory approval which is expected prior to June 30, 2003.

On March 14, 2000, Berkshire acquired 900,942 shares of common stock and 34,563,395 shares of convertible preferred stock of MidAmerican Energy Holdings Company (“MidAmerican”) for $35.05 per share, or approximately $1.24 billion in the aggregate. During March 2002, Berkshire acquired 6,700,000 additional shares of the convertible preferred stock for $402 million. Such investments currently give Berkshire about a 9.7% voting interest and an 83.4% economic interest in the equity of MidAmerican (80.2% on a diluted basis). Berkshire and certain of its subsidiaries also acquired approximately $1,728 million of 11% non-transferable trust preferred securities, of which $455 million were acquired in 2000, $323 million were acquired in March 2002, and $950 million were acquired in August 2002. Mr. Walter Scott, Jr., a member of Berkshire’s Board of Directors, controls approximately 86% of the voting interest in MidAmerican.

MidAmerican is a U.S. based global energy company whose principal businesses are regulated electric and natural gas utilities, regulated interstate natural gas transmission and electric power generation. Through its subsidiaries it owns and operates a combined electric and natural gas utility company in the United States, two natural gas pipeline companies in the United States, two electricity distribution companies in the United Kingdom and a diversified portfolio of domestic and international electric power projects. It also owns the second largest residential real estate brokerage firm in the United States.

While the convertible preferred stock does not vote generally with the common stock in the election of directors, the convertible preferred stock gives Berkshire the right to elect 20% of MidAmerican’s Board of Directors. The convertible preferred stock is convertible into common stock only upon the occurrence of specified events, including modification or elimination of the Public Utility Holding Company Act of 1935 so that holding company registration would not be triggered by conversion. Additionally, the prior approval of the holders of convertible preferred stock is required for certain fundamental transactions by MidAmerican. Such transactions include, among others: a) significant asset sales or dispositions; b) merger transactions; c) significant business acquisitions or capital expenditures; d) issuances or repurchases of equity securities and e) the removal or appointment of the Chief Executive Officer. Through the investments in common and convertible preferred stock of MidAmerican, Berkshire has the ability to exercise significant influence on the operations of MidAmerican.

MidAmerican’s Articles of Incorporation further provide that the convertible preferred shares: a) are not mandatorily redeemable by MidAmerican or at the option of the holder; b) participate in dividends and other distributions to common shareholders as if they were common shares and otherwise possess no dividend rights; c) are convertible into common shares on a 1 for 1 basis, as adjusted for splits, combinations, reclassifications and other capital changes by MidAmerican and d) upon liquidation, except for a de minimus first priority distribution of $1 per share, share ratably with the shareholders of common stock. Further, the aforementioned dividend and distribution arrangements cannot be modified without the positive consent of the preferred shareholders. Accordingly, the convertible preferred stock is, in substance, a substantially identical subordinate interest to a share of common stock and economically equivalent to common stock. Therefore, Berkshire is accounting for its investments in common and convertible preferred stock of MidAmerican pursuant to the equity method.

Berkshire’s aggregate investments in MidAmerican are included in the Consolidated Balance Sheets as Investments in MidAmerican Energy Holdings Company, and include the common and convertible preferred stock investments accounted for pursuant to the equity method totaling $2,013 million at March 31, 2003 and $1,923 million at December 31, 2002. The 11% non-transferable trust preferred securities are classified as held-to-maturity, and are carried at cost.

Condensed consolidated balance sheets of MidAmerican are as follows. Amounts are in millions.

Condensed consolidated statements of earnings of MidAmerican for the first quarter of 2003 and 2002 are as follows. Amounts are in millions.

Data with respect to investments in securities with fixed maturities, which are classified as available-for-sale, are shown in the tabulation below (in millions).

Data with respect to investments in equity securities are shown in the tabulation below (in millions).

Effective January 1, 2002, Berkshire adopted Statement of Financial Accounting Standards (“SFAS”) No. 142 “Goodwill and Other Intangible Assets.” SFAS No. 142 changed the accounting for goodwill from a model that required amortization of goodwill, supplemented by impairment tests, to an accounting model that is based solely upon impairment tests. Thus, Berkshire’s Consolidated Statements of Earnings for the first quarter of 2003 and 2002 include no periodic amortization of goodwill.

A reconciliation of the change in the carrying value of goodwill during the first quarter of 2003 is as follows (in millions):

The tax effects of significant items comprising Berkshire’s net deferred tax liabilities as of March 31, 2003 and December 31, 2002 are as follows (in millions).

Notes payable and other borrowings of Berkshire and its subsidiaries as of March 31, 2003 and December 31, 2002 are summarized below. Amounts are in millions.

The following table summarizes Berkshire’s common stock activity during the first quarter of 2003.

Each share of Class A common stock is convertible, at the option of the holder, into thirty shares of Class B common stock. Class B common stock is not convertible into Class A common stock. Class B common stock has economic rights equal to one-thirtieth (1/30) of the economic rights of Class A common stock. Accordingly, on an equivalent Class A common stock basis, there are 1,534,934 shares outstanding at March 31, 2003 and 1,534,657 shares outstanding at December 31, 2002. Each Class A common share is entitled to one vote per share. Each Class B common share possesses the voting rights of one-two-hundredth (1/200) of the voting rights of a Class A share. Class A and Class B common shares vote together as a single class.

Berkshire’s comprehensive income for the first quarter of 2003 and 2002 is shown in the table below (in millions).

A disaggregation of Berkshire’s consolidated data for the first quarter of each of the two most recent years is as follows. Amounts are in millions.

Note 12. Accounting pronouncements to become effective subsequent to March 31, 2003

In January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities,” which addresses the consolidation of certain entities (“variable interest entity”) when control exists through other than voting interests. FIN 46 requires that a variable interest entity be consolidated by the holder of the majority of the risks and rewards associated with the activities of the variable interest entity. FIN 46 is effective immediately for variable interest entities created after January 31, 2003. For variable interest entities created prior to February 1, 2003, FIN 46 is effective for the first interim period beginning after June 15, 2003, and may be applied retroactively or prospectively. Berkshire has not completed its assessment of FIN 46. However, based on a preliminary review, Berkshire believes that its investment in Value Capital L.P., currently accounted for under the equity method, will be subject to consolidation pursuant to FIN 46 beginning in the third quarter of 2003. This change will have no effect on reported net earnings.

A wholly owned Berkshire subsidiary is a limited partner in Value Capital. The partnership’s objective is to achieve income and capital growth from investments and arbitrage in fixed income investments. Since inception Berkshire has contributed $430 million to the partnership and other partners, including the general partner, have contributed $20 million. Profits and losses of the partnership are allocated to the partners based upon each partner’s investment. At March 31, 2003, the carrying value of $636 million (including Berkshire’s share of accumulated earnings of $206 million) is included as a component of other assets of finance and financial products businesses. Berkshire possesses no management authority over the activities conducted by Value Capital and it does not otherwise provide any financial support of the obligations of this partnership or of the other partners. As a limited partner, Berkshire’s exposure to loss is limited to the carrying value of its investment.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Net earnings for the first quarter of 2003 and 2002 are disaggregated in the table that follows. Amounts are after deducting minority interest and income taxes. Dollar amounts are in millions.

A summary follows of underwriting results from Berkshire’s insurance businesses for the first quarter of 2003 and 2002. Dollar amounts are in millions.

Berkshire engages in both primary insurance and reinsurance of property and casualty risks. Through General Re, Berkshire also reinsures life and health risks. In primary insurance activities, Berkshire subsidiaries assume defined portions of the risks of loss from persons or organizations that are directly subject to the risks. In reinsurance activities, Berkshire subsidiaries assume defined portions of similar or dissimilar risks that other insurers or reinsurers have subjected themselves to in their own insuring activities. Berkshire’s principal insurance businesses are: (1) GEICO, (2) General Re, (3) Berkshire Hathaway Reinsurance Group (“BHRG”) and (4) Berkshire Hathaway Primary Group. Berkshire’s management views insurance businesses as possessing two distinctive operations—underwriting and investment. Accordingly, Berkshire evaluates the performance of underwriting operations without allocation of investment income.

GEICO Corporation through its affiliates (“GEICO”) provides private passenger auto insurance to customers in 48 states and the District of Columbia. GEICO policies are marketed mainly through direct response methods, in which insureds apply directly to the company for insurance coverage over the telephone, through the mail or via the Internet. This is a significant element in GEICO’s strategy to be a low cost insurer and, yet, provide high value to policyholders.

GEICO’s pre-tax underwriting results for the first quarter of 2003 and 2002 are summarized in the table below. Dollar amounts are in millions.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Premiums earned in the first quarter of 2003 were $1,820 million, an increase of 16.5% from $1,562 million in 2002. The growth in premiums earned in 2003 for voluntary auto was 15.5%, reflecting a 10.2% increase in policies-in-force during the past year and modest rate increases. During the first quarter of 2003, voluntary policies-in-force increased 3.1% (or about 13% on an annualized basis).

Policies-in-force over the twelve months ending March 31, 2003 increased 7.8% in the preferred risk auto market and 19.6% in the standard and nonstandard auto lines. During the first quarter of 2003, voluntary auto new business sales increased 27.1% compared to 2002. The sales closure ratio and the policy retention rate improved in 2003 compared to the first quarter of 2002 and continued to benefit from premium rate increases taken by competitors.

Losses and loss adjustment expenses incurred in the first quarter of 2003 were $1,370 million, an increase of 16.5% over the first quarter of 2002. The ratio of losses incurred to premiums earned was 75.3% for the first quarter of 2003 and 2002. Claim frequencies for physical damage coverages increased in 2003 over 2002 due to increased numbers of winter storms. Claim frequencies for bodily injury coverages declined slightly in 2003. Average claim severity for physical damage coverages increased in 2003 at a low rate while severity trends for bodily injury and medical coverages appear to be increasing at a higher rate.

GEICO is a defendant in several class action lawsuits related to the use of collision repair parts not produced by the original auto manufacturers, the calculation of “total loss” value and whether to pay diminished value as part of the settlement of certain claims. Management intends to vigorously defend the corporation’s position on these claim settlement procedures. Several lawsuits have been dismissed to date. However, the remaining lawsuits are in various stages of development and the ultimate outcome cannot be reasonably determined at this time.

Underwriting expenses for the first quarter of 2003 were $345 million, an increase of $68 million (24.5%) from the first quarter of 2002. A significant portion of the increase in underwriting expense in 2003 was due to increased staffing and salaries, higher associate profit sharing accruals and increased advertising expense.

GEICO’s underwriting results continue to reflect good claim experience. Management expects policies-in-force to continue to grow moderately over the remainder of 2003.

General Re conducts a reinsurance business, which provides reinsurance coverage in the United States and worldwide. General Re’s principal reinsurance operations are comprised of: (1) North American property/casualty, (2) international property/casualty, which consists of reinsurance business written principally through Germany-based Cologne Re, (3) London market business written principally through the Faraday operations, and (4) global life/health. At March 31, 2003, General Re had an 89% economic ownership interest in Cologne Re.

General Re’s pre-tax underwriting results for the first quarter of 2003 and 2002 are summarized in the table below. Amounts are in millions.

General Re’s consolidated underwriting results for the first quarter of 2003 produced an underwriting gain of $32 million, compared with an $88 million underwriting loss in the first quarter of 2002. The improvement in 2003 was primarily due to improved current accident year results, which benefited from price increases, better coverage terms and the absence of large property losses.

During the last two years, General Re took significant underwriting actions to better align premium rates with coverage terms. Improved current accident year results reflect these efforts. Management continues to believe that additional premium rate increases and more favorable coverage terms are needed in certain international lines and territories to achieve targeted long-term underwriting profitability. Information with respect to each of General Re’s underwriting units is presented below.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

General Re’s North American property/casualty operations underwrite predominantly excess reinsurance across multiple lines of business. Excess reinsurance provides indemnification of losses above a stated retention on either an individual claim basis or in the aggregate across all claims in a portfolio. Reinsurance contracts are written on both a treaty (group of risks) and facultative (individual risk) basis.

Premiums earned in the first quarter of 2003 were $889 million, a decrease of $86 million (8.8%) compared with the same period in 2002. The decline in premiums earned resulted from a net reduction from cancellations/non-renewals over new contracts (approximately $276 million), partially offset by rate increases across all lines of business (roughly estimated at $190 million).

North American property/casualty operations produced an underwriting gain of $11 million in the first quarter of 2003, compared with an underwriting loss of $32 million in the first quarter of 2002. The comparative improvement in first quarter underwriting results reflects improved results for the current accident year. The favorable effects of rate increases and improved contract terms and conditions over the past two years contributed to the net gain in the current accident year. In addition, underwriting results for the first quarter of 2003 included no major catastrophe and other large individual property losses ($20 million or greater), continuing a trend that began in 2002. As a result, the 2003 accident year property results were better than long-term expectations. The timing and magnitude of catastrophe and large individual property losses may produce considerable volatility in periodic underwriting results over the foreseeable future.

In the first quarter of 2003 and 2002, underwriting results included losses from prior years’ loss events totaling $18 million and $36 million, respectively. In each period, these losses were primarily attributed to discount accretion on workers’ compensation reserves and deferred charge amortization on retroactive contracts. For statutory insurance and GAAP reporting purposes, workers’ compensation loss reserves are discounted at 1.0% per annum for claims occurring after December 31, 2002 and at 4.5% for claims occurring before January 1, 2003. The lower discount rate for 2003 claims was approved by General Re’s state insurance regulators and reflects the lower interest rate environment that now exists in the United States. This change reduced the benefit of discounting 2003 loss occurrences by approximately $28 million from the benefit that would have been received using the prior discount rate.

The process of establishing reserves and related ceded reinsurance recoverables by General Re, like most other reinsurers, requires numerous estimates and judgments by management. Loss reserve estimates are based primarily on amounts of claims reported by ceding companies (such amounts generally exclude incurred-but-not-reported (“IBNR”) claims), analysis of historical claim reporting patterns of ceding companies, and estimates of expected overall loss amounts for all accident periods. Expected overall losses are partly based upon assumptions with respect to both General Re’s and ceding companies’ premium rate adequacy. Premium rate adequacy assumptions are an indicator of the profitability of the subject business being reinsured and are important in establishing reserves for claims that will be reported and settled over long periods into the future. Claim frequency or count analyses are generally not practicable because such data is either not provided by ceding companies or otherwise not timely or reliable. Loss reserves, which are established based on estimates by line of business and type of coverage, are regularly re-evaluated.

For the first three months of 2003, amounts of reported claims from cedants were slightly below expected losses. Due to the long-tailed nature of casualty claims, a very high degree of estimation is involved in establishing loss reserves, particularly for current accident year occurrences. Thus, the ultimate level of underwriting gain or loss with respect to recent accident years, including 2003, will not be fully known for many years. North American property/casualty loss reserves were $16.1 billion ($14.9 billion net of reinsurance) at March 31, 2003 and $16.2 billion ($14.9 billion net of reinsurance) at December 31, 2002. About 50% of the reserves represent estimates of IBNR losses.

The estimate for environmental and asbestos losses is composed of four parts: known claims, development on known claims, IBNR and direct excess coverage litigation expenses. At March 31, 2003, environmental and asbestos loss reserves for North America were $1,130 million ($986 million net of reinsurance). At December 31, 2002, environmental and asbestos loss reserves for North America were $1,161 million ($1,008 million net of reinsurance). The changing legal environment concerning asbestos claims together with the widespread use of asbestos related products in the U.S. over the past century has made quantification of potential exposures very difficult. Future changes in the legal environment may precipitate significant changes in reserves.

Although loss reserve levels are believed to be adequate, there can be no guarantees. A relatively small change in the estimate of net reserves can produce large changes in annual underwriting results. For instance, a one-percentage point change in net reserves at March 31, 2003 would produce a pre-tax underwriting gain or loss of $149 million, or roughly 4% of annualized first quarter 2003 premiums earned. Changes in reserve estimates are reported as a component of losses incurred in the period of the change. In addition, the timing and magnitude of catastrophes and large individual property losses are expected to continue to contribute to volatile periodic underwriting results in the future.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

The international property/casualty operations write quota-share and excess reinsurance on risks around the world. International property/casualty business is written on a direct reinsurance basis primarily through Cologne Re. The largest international markets are in Western Europe.

First quarter 2003 premiums earned increased $23 million (6.0%) over the first quarter 2002, which reflects an increase in the values of most major foreign currencies relative to the U.S. dollar. First quarter premiums earned in local currencies decreased 10.4% in 2003 from 2002. The decrease in premiums earned was primarily due to the non-renewal of unprofitable business in continental Europe, the United Kingdom and Australia.

The international property/casualty operations produced an underwriting gain of $4 million in the first three months of 2003, compared with an underwriting loss of $42 million in the same period of 2002. Rate increases and the lack of large property losses during the first quarter of 2003 contributed to the gain in 2003. First quarter 2002 results included one large property loss in the United Kingdom ($29 million) and $14 million in losses related to the international credit/bond business, which was discontinued at the end of 2001.

London-market business is primarily written through Faraday Holdings Limited (“Faraday”). Faraday owns the managing agent of Syndicate 435 at Lloyd’s of London and provides capacity and participates in the results of Syndicate 435. Through Faraday, General Re’s participation in Syndicate 435 was 96.7% in 2002 and increased to 100% in 2003.

London-market premiums earned for the first three months of 2003 increased $125 million (75.3%) over the same period in 2002. In local currencies, premiums earned increased 54.4% in 2003 over 2002. The increase in premiums earned is principally due to new business written (aviation lines) in the fourth quarter of 2002, rate increases net of cancelled business, as well as increased participation in Faraday Syndicate 435.

London-market operations produced an underwriting gain in the first quarter of 2003 of $14 million, compared with an underwriting loss of $3 million in the comparable 2002 period. Underwriting results in 2003 benefited from rate increases and lower than expected property losses.

At March 31, 2003, the international property/casualty and London-market operations had gross loss reserves of $7.4 billion, ($6.7 billion net of reinsurance), compared to gross reserves of $7.1 billion at December 31, 2002 ($6.4 billion net of reinsurance). The increase in reserves during the first quarter of 2003 was primarily due to changes in foreign currency rates. Loss reserves for these operations are established based on methodologies similar to those used in the North American property/casualty operations; however, ceded activity reports for continental Europe and certain other international markets are generally provided less frequently by cedants, or are due later than those provided by North American clients.

General Re’s global life/health affiliates reinsure such risks worldwide. Premiums earned in the first three months of 2003 for the global life/health operations increased $17 million (3.8%) from the same period in 2002. Adjusting for the effects of foreign exchange rates, premiums earned in local currencies decreased 4.2% in 2003 reflecting decreases in both U.S. and international markets.

Global life/health generated an underwriting gain of $3 million during the first three months of 2003, compared with an underwriting loss of $11 million in the first three months of 2002. The improvement in results in the first quarter of 2003 was primarily due to international markets, which produced an underwriting gain of $11 million. Offsetting this gain was a loss of $8 million in the U.S. health markets, of which $6 million was due to seasonal losses in the Medicare supplement business. The $11 million global life/health underwriting loss in the first three months of 2002 was also primarily due to seasonal losses in the Medicare supplement business in the U.S. life/health operation.

The Berkshire Hathaway Reinsurance Group (“BHRG”) underwrites excess-of-loss reinsurance and quota-share coverages for insurers and reinsurers around the world. BHRG is believed to be one of the leaders in providing catastrophe excess-of-loss reinsurance. Since July 2001, BHRG has also written a number of policies for large or otherwise unusual discrete commercial property risks on a direct and facultative reinsurance basis. This business is referred to as individual risk.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

BHRG’s pre-tax underwriting results are summarized in the table below. Amounts are in millions.

Premiums earned from catastrophe and individual risk contracts in the first quarter of 2003 were $299 million, an increase of $77 million (34.7%) over 2002. Most of the increase related to individual risk policies written in 2002 in response to an increase in opportunities to write this business at rates considered adequate by BHRG management. During the first quarter of 2003, increased price competition for the individual risk business resulted in a 30% decline in first quarter written premiums as compared to 2002. Nevertheless, premiums earned over the remainder of 2003 from catastrophe and individual risk policies will be considerable.

The underwriting gains from catastrophe and individual risk business in 2003 and 2002 reflect low levels of catastrophe losses and other large individual property losses. However, a truly significant loss event occurring on one of several particularly large policies would have far surpassed these underwriting gains. The timing and magnitude of losses may produce extraordinary volatility in periodic underwriting results of BHRG’s catastrophe and individual risk business. Such volatility is accepted, however, provided that the long-term prospect of achieving an underwriting profit is reasonable. Periodic underwriting results over the remainder of 2003 for catastrophe and individual risk business will continue to be subject to extreme volatility.

Retroactive reinsurance policies typically provide very large, but limited, indemnification of unpaid losses and loss adjustment expenses with respect to past loss events, including claims that have not yet been reported to the ceding companies. Certain retroactive policies are expected to include significant amounts of environmental, asbestos and other latent injury claims. It is also expected that claims under these contracts will be paid out in the future over a very long period of time. Loss payments have not commenced on several contracts, which are subject to specified loss retentions by the counterparty to the contracts. There were no retroactive policies written during the first quarter of 2003. Substantially all of the premiums earned during the first quarter of 2002 derived from one policy.

The underwriting losses from retroactive reinsurance are primarily attributed to the amortization of deferred charges established on retroactive reinsurance contracts. The deferred charges, which represent the difference between the policy premium and the estimated ultimate claim reserves, are amortized over the expected claim payment period using the interest method. The amortization charges are recorded as losses incurred and, therefore, produce underwriting losses. The level of amortization in a given period is based upon estimates of the timing and amount of future loss payments. The increase in amortization charges in 2003 over 2002 relates to the significant amount of new business written in recent years. Unamortized deferred charges at March 31, 2003 totaled approximately $3.3 billion. It is currently estimated that additional deferred charge amortization of approximately $310 million will be recognized over the remainder of 2003. BHRG believes that these charges are reasonable relative to the large amounts of float generated from these policies, which totaled about $8.3 billion at March 31, 2003. Income generated from the investment of float is reflected in net investment income.

Premiums earned in the first quarter of 2003 from quota-share reinsurance totaled $616 million and included approximately $150 million from two multi-line quota-share contracts and an increase of about $380 million in premiums earned under participations in several Lloyd’s Syndicates and several property quota-share reinsurance contracts. Net underwriting results from quota-share contracts in 2003 reflect low amounts of property and aviation losses.

Premiums earned by Berkshire’s various other primary insurers totaled $232 million for the first quarter of 2003, an increase of $81 million (53.6%) over the first quarter of 2002. For the first three months, Berkshire’s primary insurers produced underwriting gains of $13 million in 2003 and $7 million in 2002. The increases in premiums earned and underwriting gains were principally attributed to the NICO Primary group and U.S. Liability Insurance Group.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

After-tax net investment income produced by Berkshire’s insurance and reinsurance businesses for the first quarter of 2003 and 2002 is summarized in the table below. Dollar amounts are in millions.

Pre-tax net investment income earned by Berkshire’s insurance businesses for the first quarter of 2003 exceeded the first quarter of 2002 by $135 million (18.9%). The increase in investment income in 2003 reflects an increase in invested assets. Invested assets of the insurance businesses totaled $80.9 billion at March 31, 2003.

Invested assets derive from shareholder capital as well as policyholder float. “Float” is an approximation of the net amount of liabilities due to policyholders that is temporarily available for investment. Float represents the sum of unpaid losses and loss adjustment expenses, unearned premiums and other policyholder liabilities less the aggregate of premiums and reinsurance balances receivable, deferred policy acquisition costs, and deferred charges on retroactive reinsurance contracts. Consolidated float at March 31, 2003 was approximately $42.5 billion, compared to $41.2 billion at December 31, 2002, $37.3 billion at March 31, 2002 and $35.5 billion at December 31, 2001. Berkshire’s management does not anticipate that float will grow significantly over the remainder of 2003.

While float at all of Berkshire’s underwriting units has increased over the past year, the largest increases principally derived from BHRG and General Re. For the first quarter of 2003 and 2002, the annualized cost of float was negative, as Berkshire’s consolidated insurance and reinsurance businesses produced pre-tax underwriting gains in each period. Absent a major catastrophe or a significant increase in reserves established for prior years’ loss events, the cost of float is expected to remain very low, if not negative, over the remainder of 2003.

Results of operations of Berkshire’s diverse non-insurance businesses for the first quarter of 2003 and 2002 are summarized in the following table. Dollar amounts are in millions.

A comparison of revenues and pre-tax earnings for the non-insurance business segments follows. Dollar amounts are in millions.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Operating results of most of Berkshire’s non-insurance group businesses were adversely affected to varying degrees in the first quarter by weak commercial/industrial construction activity, the soft retail environment and declining consumer confidence in the United States, which Berkshire’s management believes was exacerbated by higher energy and materials costs and the war in Iraq.

Berkshire’s apparel business includes Fruit of the Loom and Garan, which were acquired in April 2002 and September 2002, respectively. Revenues and pre-tax earnings from these businesses are included in Berkshire’s apparel results beginning from their respective acquisition dates and in 2003 account for essentially all of the comparative increases in first quarter apparel revenues and pre-tax earnings versus 2002.

The building products group consists of Johns Manville, Benjamin Moore, Acme Brick Company, and MiTek. First quarter 2003 revenues at Johns Manville and Benjamin Moore declined $33 million (approximately 5%) from 2002, whereas revenues of MiTek increased $13 million. Pre-tax earnings of the building products segment in the first quarter of 2003 declined $15 million (13.2%) from 2002, principally due to the effects of comparatively higher raw material, energy and insurance costs. In particular, higher energy costs resulted in higher manufacturing costs of insulation (Johns Manville) products.

Pre-tax earnings of the finance and financial products business in the first quarter 2003 totaled $229 million, an increase of $79 million (52.7%) from the first quarter of 2002. Significant, but comparatively lower earnings were achieved at BH Finance, which includes Berkadia LLC. The decline reflects lower levels of invested assets, as investment maturities and redemptions exceeded new investments. BH Finance primarily invests in fixed income instruments on a substantially leveraged basis under a small number of proprietary strategies. Such strategies are subject to market conditions, which were unusually favorable in 2002. Berkshire currently expects this business will continue to generate significant pre-tax earnings for the remainder of 2003, but at lower levels compared to 2002. Income derived from Berkadia is entirely a function of the balance of its loan to FINOVA ($5.6 billion at August 2001). Since the loan was made, FINOVA has made principal prepayments to reduce the loan balance to $1.525 billion at March 31, 2003. For the first quarter 2003, net interest earned from Berkadia’s loan was $30 million, compared to $37 million in 2002. Net interest earned from this activity will decline in the future.

During the first quarter of 2003, General Re Securities (“GRS”) generated a pre-tax loss of $27 million compared to a loss of $89 million in 2002. In the first quarter of 2002, General Re announced that the operations of GRS would be run-off in an orderly manner, which is expected to take several years to complete. Additional losses may be incurred in future periods as transactions to restructure or close out existing trade positions take place.

Flight services revenues for the first quarter of 2003 declined $107 million (16.3%) from the comparable period in 2002. Comparative revenues of NetJets declined about 19.5% due to a 53% decline in aircraft sales partially offset by a 15.7% increase in flight operations revenue. Revenues of FlightSafety declined 5.4% due primarily to lower simulator usage in the regional airline market. For the first quarter of 2003, the flight services businesses produced a pre-tax loss of $8 million. This includes approximately $25 million of charges to write down certain NetJets aircraft to estimated realizable value. The flight services businesses, in particular, have been negatively affected by the slowdown in the U.S. economy, the war in Iraq and the lingering effects of the terrorist attack in 2001. While Berkshire’s management believes that the adverse conditions affecting travel industries are temporary, it is currently uncertain how long these conditions will continue.

For the first quarter of 2003, Shaw’s revenues increased $38 million (3.9%) over 2002. The increase resulted from slightly higher prices for carpet and rugs and higher volume of hard floor surface sales. Pre-tax earnings in the first quarter of 2003 declined ($4 million) reflecting higher raw material costs. Material used in carpet manufacturing mostly derives from petrochemical products. The increase in petroleum prices in 2003 has generated an increase in the cost of raw materials.

Berkshire’s other non-insurance businesses consist of the results of several smaller businesses, as well as income from investments in MidAmerican. Income from MidAmerican consists of Berkshire’s share of MidAmerican’s net income plus income earned from investments in MidAmerican’s 11% trust preferred securities. For the first quarter of 2003 and 2002, income from MidAmerican totaled $156 million and $68 million, respectively. The increase in income from MidAmerican in 2003 was primarily due to Berkshire’s additional investments during 2002. MidAmerican’s operating earnings increased in 2003 as a result of the acquisition of two natural gas pipelines and three real estate brokerage businesses in 2002, and improvements in the earnings of existing energy businesses. See Note 3 to the Interim Consolidated Financial Statements for additional information regarding Berkshire’s investments in MidAmerican. Pre-tax earnings of other businesses in 2003 also include newly-acquired businesses, Albecca Inc. (on February 8, 2002), The Pampered Chef and CTB International (both on October 31, 2002).

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Purchase-accounting adjustments reflect the after-tax effect on net earnings with respect to the amortization of fair value adjustments to certain assets and liabilities recorded at various business acquisition dates. Purchase-accounting adjustments consist primarily of the amortization of the excess of market value over historical cost of fixed maturity investments held by certain businesses at their acquisition dates. Berkshire included such excess in the cost of the investments and subsequently amortizes it over the estimated remaining lives of the investments.

Realized investment gains and losses have been a recurring element in Berkshire’s net earnings for many years. Such amounts — recorded when investments (1) are sold; (2) other-than-temporarily impaired; and (3) marked-to-market with a corresponding gain or loss included in earnings — may fluctuate significantly from period to period, resulting in a meaningful effect on reported net earnings. The Consolidated Statements of Earnings include after-tax realized investment gains of $518 million and $98 million for the first quarter of 2003 and 2002, respectively.

Berkshire’s balance sheet continues to reflect significant liquidity and a strong capital base. Consolidated shareholders’ equity at March 31, 2003 totaled $65.4 billion. Consolidated cash and invested assets, excluding assets of finance and financial products businesses, totaled approximately $82.3 billion at March 31, 2003 and $80.8 billion at December 31, 2002, which includes cash and cash equivalents of $16.1 billion at March 31, 2003 and $10.3 billion at December 31, 2002.

Berkshire’s consolidated borrowings under investment agreements and other debt, excluding borrowings of finance businesses, totaled $4.45 billion at March 31, 2003 and $4.81 billion at December 31, 2002. Of these amounts, approximately $1.77 billion and $2.21 billion are short-term commercial paper and other borrowings by Berkshire’s operating businesses. In August 2003, Berkshire expects to redeem $135 million of pre-acquisition debt of Albecca Inc., which was acquired in February 2002.

Berkshire issued 40,000 SQUARZ securities in May 2002 for net proceeds of approximately $398 million. The SQUARZ securities consist of $400 million par amount of senior notes due in November 2007 together with warrants to purchase Berkshire Class A or Class B common stock, which expire in May 2007. A warrant premium is payable to Berkshire at an annual rate of 3.75% and interest is payable to note holders at a rate of 3.00%. Holders of the notes may surrender the warrants and require Berkshire to repurchase the notes at par annually beginning May 15, 2003.

During the second quarter of 2001, Berkshire filed a shelf registration to issue up to $700 million in new debt securities at a future date. The intended purpose of the future issuance of debt is to fund the repayment of currently outstanding borrowings of certain Berkshire subsidiaries. The timing and amount of the debt to be issued under the shelf registration has not yet been determined.

Assets of the finance and financial products businesses totaled $31.5 billion at March 31, 2003 and $33.6 billion at December 31, 2002. The overall decline reflects a decline in invested assets of BH Finance and $650 million in principal collections by Berkadia with respect to its loan to FINOVA. Certain assets held by BH Finance are sold under agreements to repurchase, which represent collateralized borrowings. The balance of such borrowings at March 31, 2003 was $11.6 billion, a decrease of $2.2 billion since December 31, 2002. This reduction reflects a decline in related assets.

Notes payable and other borrowings of Berkshire’s finance and financial products businesses totaled $3.8 billion at March 31, 2003 and $4.5 billion at December 31, 2002. These balances include Berkadia’s bank borrowing of $1.525 billion at March 31, 2003 and $2.175 billion at December 31, 2002, which declined as a result of FINOVA’s loan prepayments to Berkadia.

Berkshire believes that it currently maintains sufficient liquidity to cover its existing requirements and provide for contingent liquidity needs.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

In applying certain accounting policies, Berkshire’s management is required to make estimates and judgments regarding transactions that have occurred and ultimately will be settled several years in the future. Amounts recognized in the financial statements from such estimates are necessarily based on assumptions about numerous factors involving varying, and possibly significant, degrees of judgment and uncertainty. Accordingly, the amounts currently recorded in the financial statements may prove, with the benefit of hindsight, to be inaccurate. The balance sheet items most significantly affected by these estimates are property and casualty insurance and reinsurance related liabilities, deferred charges on retroactive reinsurance, and goodwill of businesses acquired.

Reference is made to “Critical Accounting Policies” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Berkshire’s Annual Report for the year ending December 31, 2002, for additional information on Berkshire’s critical accounting estimates.

Berkshire’s Consolidated Balance Sheet includes estimated liabilities for unpaid losses from property and casualty insurance and reinsurance contracts of $44.8 billion and reinsurance receivables of $2.6 billion at March 31, 2003. Due to the inherent uncertainties in the process of establishing these amounts, the actual ultimate claim amounts will differ from the currently recorded amounts. A small percentage change in estimates of this magnitude will result in a material effect on reported earnings. For instance, a 5% increase in the March 31, 2003 net estimate would produce a $2.1 billion charge to pre-tax earnings. Future effects from changes in these estimates will be recorded as a component of losses incurred in the period of the change.

Unamortized deferred charges on retroactive reinsurance policies assumed totaled $3.5 billion at March 31, 2003. Significant changes in either the timing or ultimate amount of loss payments may have a significant effect on unamortized deferred charges and the amount of periodic amortization.

Berkshire’s Consolidated Balance Sheet as of March 31, 2003 includes goodwill of acquired businesses of approximately $22.3 billion. These amounts were recorded as a result of Berkshire’s numerous prior business acquisitions accounted for under the purchase method. Prior to 2002, goodwill from each acquisition was generally amortized as a charge to earnings over periods not exceeding 40 years. Under SFAS No. 142, which was adopted by Berkshire as of January 1, 2002, periodic amortization ceased, in favor of an impairment-only accounting model.

Investors are cautioned that certain statements contained in this document as well as some statements in periodic press releases and some oral statements of Berkshire officials during presentations about Berkshire, are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, which include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” or similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future Berkshire actions, which may be provided by management are also forward-looking statements as defined by the Act. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties, and assumptions about Berkshire, economic and market factors and the industries in which Berkshire does business, among other things. These statements are not guaranties of future performance and Berkshire has no specific intention to update these statements.

Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors. The principal important risk factors that could cause Berkshire’s actual performance and future events and actions to differ materially from such forward-looking statements, include, but are not limited to, changes in market prices of Berkshire’s significant equity investees, the occurrence of one or more catastrophic events, such as an earthquake or hurricane that causes losses insured by Berkshire’s insurance subsidiaries, changes in insurance laws or regulations, changes in Federal income tax laws, and changes in general economic and market factors that affect the prices of securities or the industries in which Berkshire and its affiliates do business, especially those affecting the property and casualty insurance industry.

Reference is made to Berkshire’s most recently issued Annual Report and in particular the “Market Risk Disclosures” included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As of March 31, 2003, there have been no material changes in the market risks described in Berkshire’s most recently issued Annual Report.

Within the 90 days prior to the date of filing this Quarterly Report on Form 10-Q, the Corporation carried out an evaluation, under the supervision and with the participation of the Corporation’s management, including the Chairman (Chief Executive Officer) and the Vice President-Treasurer (Chief Financial Officer), of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Chairman (Chief Executive Officer) and the Vice President -Treasurer (Chief Financial Officer) concluded that the Corporation’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Corporation (including its consolidated subsidiaries) required to be included in the Corporation’s periodic SEC filings. Subsequent to the date of that evaluation, there have been no significant changes in the Corporation’s internal controls or in other factors that could significantly affect internal controls, nor were any corrective actions required with regard to significant deficiencies and material weaknesses.

99.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)

99.2 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)

Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

1.		I have reviewed this quarterly report on Form 10-Q of Berkshire Hathaway Inc.;

2.		Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.		Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

	a)		designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	c)		presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	a)		all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

1.		I have reviewed this quarterly report on Form 10-Q of Berkshire Hathaway Inc.;

2.		Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.		Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

	a)		designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	c)		presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

	a)		all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and


(Mark One)
x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended March 31, 2003

		OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Delaware		47-0813844

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification number)


CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF EARNINGS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
Part II Other Information
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
EXHIBIT 99.1
EXHIBIT 99.2


			Page No.
Part I — Financial Information
	Item 1. Financial Statements
		Consolidated Balance Sheets - March 31, 2003 and December 31, 2002		2
		Consolidated Statements of Earnings - First Quarter 2003 and 2002		3
		Condensed Consolidated Statements of Cash Flows - First Quarter 2003 and 2002		4
		Notes to Interim Consolidated Financial Statements		5
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			12
	Item 3. Quantitative and Qualitative Disclosures About Market Risk			21
	Item 4. Controls and Procedures			21
Part II — Other Information
	Item 6. Exhibits and Reports on Form 8-K			21
	Signature			21
	Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002			22


				March 31,		December 31,
				2003		2002

ASSETS				(Unaudited)
*Insurance and Other:*
	Cash and cash equivalents			$	16,130	$	10,294
	Investments:
		Securities with fixed maturities			34,988		38,096
		Equity securities			27,402		28,363
		Other investments			3,766		4,044
	Insurance premiums receivable				6,143		6,228
	Reinsurance recoverables on unpaid losses				2,628		2,623
	Trade and other receivables				4,634		4,324
	Inventories				3,066		3,030
	Property, plant and equipment				5,466		5,407
	Goodwill of acquired businesses				22,302		22,298
	Deferred charges reinsurance assumed				3,467		3,379
	Other assets				4,430		4,229

					134,422		132,315

*Investments in MidAmerican Energy Holdings Company*					3,741		3,651

*Finance and Financial Products:*
	Cash and cash equivalents				3,362		2,454
	Investments in securities with fixed maturities:
		Available-for-sale			13,963		15,666
		Held-to-maturity			727		1,019
		Trading			49		168
	Trading account assets				6,399		6,582
	Loans and other receivables				3,206		3,863
	Other				3,747		3,826

					31,453		33,578

				$	169,616	$	169,544

LIABILITIES AND SHAREHOLDERS’ EQUITY
*Insurance and Other:*
	Losses and loss adjustment expenses			$	44,824	$	43,925
	Unearned premiums				7,651		6,694
	Life and health insurance benefits				2,747		2,642
	Other policyholder liabilities				3,514		4,218
	Accounts payable, accruals and other liabilities				4,705		5,053
	Income taxes				8,621		8,051
	Notes payable and other borrowings				4,448		4,807

					76,510		75,390

*Finance and Financial Products:*
	Securities sold under agreements to repurchase				11,568		13,789
	Trading account liabilities				7,791		7,274
	Notes payable and other borrowings				3,757		4,481
	Other				3,206		3,182

					26,322		28,726

Total liabilities					102,832		104,116

Minority shareholders’ interests					1,426		1,391

Shareholders’ equity:
	Common stock — Class A, $5 par value and Class B, $0.1667 par value				8		8
	Capital in excess of par value				26,044		26,028
	Accumulated other comprehensive income				13,846		14,271
	Retained earnings				25,460		23,730

			Total shareholders’ equity		65,358		64,037

				$	169,616	$	169,544

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		First Quarter

		2003		2002

		(Unaudited)
Revenues:
*Insurance and Other:*
	Insurance premiums earned	$	5,176	$	4,438
	Sales and service revenues		4,106		3,734
	Interest, dividend and other investment income		866		703
	Realized investment gains		811		162

			10,959		9,037

*Finance and Financial Products:*
	Interest income		343		423
	Other		121		61

			464		484

			11,423		9,521

Cost and expenses:
*Insurance and Other:*
	Insurance losses and loss adjustment expenses		3,733		3,474
	Insurance underwriting expenses		1,153		944
	Cost of sales and services		2,912		2,643
	Selling, general and administrative expenses		893		758
	Interest expense		40		46

			8,731		7,865

*Finance and Financial Products:*
	Interest expense		92		148
	Other		131		172

			223		320

			8,954		8,185

Earnings before income taxes and equity in earnings of MidAmerican Energy Holdings Company			2,469		1,336
Equity in net earnings of MidAmerican Energy Holdings Company			109		54

Earnings before income taxes and minority interest			2,578		1,390
	Income taxes		833		460
	Minority interest		15		14

Net earnings		$	1,730	$	916

	Average common shares outstanding *		1,534,802		1,530,961
Net earnings per common share *		$	1,127	$	598


	2002

Total revenues	$	10,078
Net earnings		961
Earnings per equivalent Class A common share		627


Balance December 31, 2002	$	22,298
Acquisitions of businesses		4

Balance March 31, 2003	$	22,302


	Class A common stock			Class B common stock
	(1,650,000 shares authorized)			(55,000,000 shares authorized)
	Issued and Outstanding			Issued and Outstanding

Balance at December 31, 2002		1,311,186			6,704,117
Conversions of Class A common stock to Class B common stock and other		(3,140	)		102,536

Balance at March 31, 2003		1,308,046			6,806,653


			First Quarter

Revenues			2003			2002
Operating Businesses:
Insurance group:
	Premiums earned:
		GEICO	$	1,820		$	1,562
		General Re		2,049			1,970
		Berkshire Hathaway Reinsurance Group		1,075			755
		Berkshire Hathaway Primary Group		232			151
	Investment income			855			721

Total insurance group				6,031			5,159
Apparel				471			172
Building products				830			850
Finance and financial products				464			484
Flight services				548			655
Retail				465			468
Scott Fetzer				220			219
Shaw Industries				1,019			981
Other businesses				604			406

				10,652			9,394
Reconciliation of segments to consolidated amount:
	Realized investment gains			811			162
	Other revenues			5			6
	Eliminations			(14	)		(15	)
	Purchase-accounting adjustments			(31	)		(26	)

			$	11,423		$	9,521


			First Quarter

Earnings (loss) before taxes			2003			2002
Operating Businesses:
Insurance group:
	Underwriting gain:
		GEICO	$	105		$	109
		General Re		32			(88	)
		Berkshire Hathaway Reinsurance Group		140			(8	)
		Berkshire Hathaway Primary Group		13			7
	Net investment income			851			716

Total insurance group				1,141			736
Apparel				65			9
Building products				99			114
Finance and financial products				229			150
Flight services				(8	)		30
Retail				19			30
Scott Fetzer				27			28
Shaw Industries				69			73
Other businesses				207			118

				1,848			1,288
Reconciliation of segments to consolidated amount:
	Realized investment gains			799			151
	Interest expense *			(23	)		(23	)
	Corporate and other			2			4
	Purchase-accounting adjustments			(48	)		(30	)

			$	2,578		$	1,390


	Premiums earned				Pre-tax underwriting gain (loss)
	First Quarter				First Quarter

	2003		2002		2003		2002

North American property/casualty	$	889	$	975	$	11	$	(32	)
International property/casualty		407		384		4		(42	)
Faraday (London market)		291		166		14		(3	)
Global life/health		462		445		3		(11	)

	$	2,049	$	1,970	$	32	$	(88	)


	Premiums earned First Quarter				Pre-tax underwriting gain (loss) First Quarter

	2003		2002		2003			2002

Catastrophe and individual risk	$	299	$	222	$	273		$	157
Retroactive reinsurance		—		399		(147	)		(120	)
Quota-share		616		86		(3	)		(27	)
Other		160		48		17			(18	)

	$	1,075	$	755	$	140		$	(8	)


	Revenues				Pre-tax Earnings
	First Quarter				First Quarter

	2003		2002		2003			2002

Apparel	$	471	$	172	$	65		$	9
Building products		830		850		99			114
Finance and financial products		464		484		229			150
Flight services		548		655		(8	)		30
Retail		465		468		19			30
Scott Fetzer		220		219		27			28
Shaw Industries		1,019		981		69			73
Other businesses		604		406		207			118

	$	4,621	$	4,235	$	707		$	552


		BERKSHIRE HATHAWAY INC. (Registrant)

Date	May 9, 2003	/s/ Marc D. Hamburg

		(Signature) Marc D. Hamburg, Vice President and Principal Financial Officer


	First Quarter

	2003				2002

	Amount		%		Amount		%

Revenues	$	4,621		100.0	$	4,235		100.0
Cost and expenses		3,914		84.7		3,683		87.0

Earnings before income taxes/minority interest		707		15.3		552		13.0
Applicable income taxes/minority interest		230		5.0		205		4.8

Net earnings	$	477		10.3	$	347		8.2


Date: May 9, 2003

		/s/ Warren E. Buffett

		Chairman – Principal Executive Officer


Date: May 9, 2003

		/s/ Marc D. Hamburg

		Vice President – Principal Financial Officer