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FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

For the quarterly period ended September 30, 2003

OR

   For the transition period from _______ to _______

   Commission file number 001-14905

BERKSHIRE HATHAWAY INC.

1440 Kiewit Plaza, Omaha, Nebraska 68131

(402) 346-1400

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. YES x NO o

     Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES x NO o

     Number of shares of common stock outstanding as of October 31, 2003:

Class A — 1,287,624
Class B — 7,449,482

Table of Contents

BERKSHIRE HATHAWAY INC.

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Part I Financial Information
Item 1. Financial Statements

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

See accompanying Notes to Interim Consolidated Financial Statements

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

See accompanying Notes to Interim Consolidated Financial Statements

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

See accompanying Notes to Interim Consolidated Financial Statements

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BERKSHIRE HATHAWAY INC.
and Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003

Note 1. General

     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.

     In January 2003, the FASB issued FASB Interpretation (“FIN”) No. 46, “Consolidation of Variable Interest Entities.” FIN 46 requires consolidation of a variable interest entity by the holder of the majority of the risks and rewards associated with the activities of the variable interest entity. With respect to variable interest entities created prior to February 1, 2003, FIN 46 was originally scheduled to be effective in the first interim period beginning after June 15, 2003. However, on October 9, 2003, the FASB deferred the effective date of application to entities created before February 1, 2003 until the end of the first period ending after December 15, 2003 in order to allow companies more time to completely analyze those entities. Accordingly, Berkshire will adopt FIN 46 with respect to variable interest entities created prior to February 1, 2003 as of December 31, 2003.

     Berkshire is in the process of reviewing its interests in all variable interest entities created prior to February 1, 2003 to determine those entities that will require consolidation. Currently, Berkshire has identified one variable interest entity (Value Capital L.P. or “Value Capital”) that will likely be consolidated upon adoption of FIN 46. A wholly-owned Berkshire subsidiary is a limited partner in Value Capital L.P., whose objective is to achieve income and capital growth from investments and arbitrage in fixed maturity investments. Under the terms of the partnership agreement, the general partner possesses sole authority to conduct business activities and manage the partnership. Berkshire does not otherwise provide any implicit or explicit 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 its share of the partnership’s equity.

     Since inception in 1998, Berkshire has contributed $430 million to the partnership, while the general and other limited partners have contributed $30 million. Berkshire currently accounts for its investment in Value Capital pursuant to the equity method. As of September 30, 2003 the carrying value of the investment in Value Capital was $639 million, which includes Berkshire’s share of accumulated earnings of $209 million. The investment is included as a component of other assets of finance and financial products businesses. Berkshire reflects its proportionate share of pre-tax earnings attributed to Value Capital as a component of other income of finance and financial products.

     Berkshire has preliminarily concluded that Value Capital must be consolidated under FIN 46 because Berkshire currently is the primary beneficiary of a majority of the expected residual gains and losses of the partnership. Although consolidation of Value Capital would have no effect on reported net earnings, consolidated assets and liabilities would each increase approximately $23 billion based upon the assets and liabilities of Value Capital as of September 30, 2003.

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Notes to Interim Consolidated Financial Statements (Continued)

Note 2. Significant business acquisitions

     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 values, thus producing goodwill for accounting purposes.

     On May 23, 2003, Berkshire acquired McLane Company, Inc. (“McLane”), from Wal-Mart Stores, Inc. for cash consideration of approximately $1.5 billion. 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.

     On August 7, 2003, Berkshire acquired all the outstanding common stock of Clayton Homes, Inc. (“Clayton”) for cash consideration of approximately $1.7 billion in the aggregate. Clayton is a vertically integrated manufactured housing company with 20 manufacturing plants, 304 company owned stores, 547 independent retailers, 86 manufactured housing communities, and financial services operations that provide mortgage services for 170,000 customers and insurance protection for 100,000 families.

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

     Albecca Inc. (“Albecca”)

     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.

     Fruit of the Loom (“FOL”)

     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.

     Garan, Incorporated (“Garan”)

     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.

     CTB International (“CTB”)

     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.

     The Pampered Chef, LTD (“The Pampered Chef”)

     On October 31, 2002, Berkshire acquired The Pampered Chef, which 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 statements of earnings from the effective date of each acquisition. The following table sets forth certain unaudited consolidated earnings data for the first nine months of 2003 and 2002, as if each of the acquisitions discussed above were consummated on the same terms at the beginning of each year. Dollars are in millions except per share amounts.

Note 3. Investments in MidAmerican Energy Holdings Company

     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). Since March 2000, Berkshire and certain of its subsidiaries also acquired approximately $1,728 million of 11% non-transferable trust preferred securities, of which $150 million were redeemed in August 2003. Mr. Walter Scott, Jr., a member of Berkshire’s Board of Directors, controls approximately 86% of the voting interest in MidAmerican.

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Notes to Interim Consolidated Financial Statements (Continued)

Note 3. Investments in MidAmerican Energy Holdings Company (Continued)

     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 accounts for its investments in MidAmerican pursuant to the equity method.

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

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Notes to Interim Consolidated Financial Statements (Continued)

Note 3. Investments in MidAmerican Energy Holdings Company (Continued)

     Condensed consolidated statements of earnings of MidAmerican for the third quarter and first nine months of 2003 and 2002 are as follows (in millions).

Note 4. Investments in securities with fixed maturities

     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).

Note 5. Investments in equity securities

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

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Notes to Interim Consolidated Financial Statements (Continued)

Note 6. Receivables

     Receivables of insurance and other businesses are comprised of the following (in millions).

Note 7. Goodwill of acquired businesses

     Effective January 1, 2002, Berkshire adopted Statement of Financial Accounting Standards (“SFAS”) No. 142 “Goodwill and Other Intangible Assets.” SFAS 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 nine months of 2003 and 2002 include no periodic amortization of goodwill. A reconciliation of the change in the carrying value of goodwill during the first nine months of 2003 is as follows (in millions).

Note 8. Deferred income tax liabilities

     The tax effects of significant items comprising Berkshire’s net deferred tax liabilities are as follows (in millions).

Note 9. Notes payable and other borrowings

     Notes payable and other borrowings of Berkshire and its subsidiaries are summarized below (in millions).