BERKSHIRE HATHAWAY INC.
CONSOLIDATED FINANCIAL STATEMENTS
BERKSHIRE HATHAWAY INC. and Subsidiaries CONSOLIDATED BALANCE SHEETS (dollars in millions except per share amounts)
December 31, ---------------------- 1996 1995* ASSETS ---------- ---------- Cash and cash equivalents..............................$ 1,339.8 $ 2,703.8 Investments: Securities with fixed maturities..................... 6,446.9 1,423.2 Equity securities.................................... 27,750.6 21,017.6 Receivables............................................ 1,523.2 718.9 Inventories............................................ 619.6 601.1 Assets of finance businesses........................... 968.9 756.7 Property, plant and equipment.......................... 1,034.2 333.3 Goodwill of acquired businesses........................ 3,110.3 672.0 Other assets........................................... 616.0 484.8 ---------- ---------- $43,409.5 $28,711.4 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Losses and loss adjustment expenses....................$ 6,274.4 $ 3,698.6 Unearned premiums...................................... 1,183.5 374.1 Accounts payable, accruals and other liabilities....... 2,556.8 1,039.1 Income taxes, principally deferred..................... 6,837.6 4,849.5 Borrowings under investment agreements and other debt.. 1,944.4 1,061.7 Liabilities of finance businesses...................... 851.4 685.2 ---------- ---------- 19,648.1 11,708.2 ---------- ---------- Minority shareholders' interests....................... 335.1 264.5 ---------- ---------- Shareholders' equity: Common Stock: ** Class A Common Stock, $5 par value, 1,376,188 and 1,381,308 shares issued; 1,206,120 and 1,193,512 shares outstanding................... 6.9 6.9 Class B Common Stock, $0.1667 par value, 783,755 shares issued and outstanding in 1996.......... 0.1 -- Capital in excess of par value....................... 2,274.1 1,001.7 Unrealized appreciation of investments, net.......... 12,143.9 9,220.7 Retained earnings.................................... 9,032.7 6,544.1 ---------- ---------- 23,457.7 16,773.4 Less: Cost of 170,068 and 187,796 Class A common shares in treasury............................... 31.4 34.7 ---------- ---------- Total shareholders' equity................. 23,426.3 16,738.7 ---------- ---------- $43,409.5 $28,711.4 ========== ========== * Restated - See Notes to Consolidated Financial Statements. ** 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 1,232,245 shares outstanding at December 31, 1996 versus 1,193,512 outstanding at December 31, 1995.See accompanying Notes to Consolidated Financial Statements
BERKSHIRE HATHAWAY INC. and Subsidiaries CONSOLIDATED STATEMENTS OF EARNINGS (dollars in millions except per share amounts)
Year Ended December 31, 1996 1995 * 1994 * -------- -------- -------- Revenues: Insurance premiums earned.........................$4,117.8 $ 957.5 $ 923.2 Sales and service revenues........................ 3,061.2 2,755.9 2,351.9 Interest, dividend and other investment income.... 811.9 629.2 519.0 Income from finance businesses.................... 25.3 26.6 24.9 Realized investment gain.......................... 2,484.1 194.1 91.3 -------- -------- -------- 10,500.3 4,563.3 3,910.3 -------- -------- -------- Cost and expenses: Insurance losses and loss adjustment expenses..... 3,089.5 612.0 565.3 Insurance underwriting expenses................... 797.6 325.0 228.0 Cost of products and services sold................ 1,884.0 1,706.7 1,450.0 Selling, general and administrative expenses...... 861.9 759.6 599.6 Goodwill amortization............................. 61.7 16.3 13.8 Interest expense.................................. 99.7 59.3 60.1 Other-than-temporary decline in value of investment in USAir Group, Inc. Preferred Stock.. -- -- 268.5 -------- -------- -------- 6,794.4 3,478.9 3,185.3 -------- -------- -------- Earnings before income taxes and minority interest. 3,705.9 1,084.4 725.0 Income taxes...................................... 1,196.8 276.2 163.3 Minority interest................................. 20.5 13.3 8.7 -------- -------- -------- Net earnings.......................................$2,488.6 $ 794.9 $ 553.0 ======== ======== ======== Average shares outstanding **....................1,205,257 1,187,102 1,177,750 Net earnings per share ** ........................ $2,065 $670 $470 ====== ==== ==== * Restated - See Notes to Consolidated Financial Statements. ** Average shares outstanding for 1996 include average Class A Common shares and average Class B Common shares determined on an equivalent Class A Common Stock basis. Net earnings per share shown above represents net earnings per Class A Common share. Net earnings per Class B Common share is equal to one-thirtieth (1/30) of such amount or $69 per share for 1996.See accompanying Notes to Consolidated Financial Statements
BERKSHIRE HATHAWAY INC. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in millions)
Year Ended December 31, 1996 1995 1994 --------- --------- --------- Cash flows from operating activities: Net income.............................................. $ 2,488.6 $ 794.9 $ 553.0 Adjustments to reconcile net income to cash flows from operating activities: Realized investment gain.............................. (2,484.1) (194.1) (91.3) Other-than-temporary decline in value of investment in USAir Group, Inc. Preferred Stock............. -- -- 268.5 Depreciation and amortization......................... 151.6 75.7 62.5 Changes in assets and liabilities before effects from business acquisitions: Losses and loss adjustment expenses................. 352.1 268.6 274.1 Deferred charges re reinsurance assumed............. 51.8 51.0 25.3 Unearned premiums................................... (8.8) 66.9 (8.5) Receivables......................................... (127.1) (35.4) (49.8) Accounts payable, accruals and other liabilities.... 558.3 228.2 210.5 Income taxes........................................ 221.9 (29.9) (252.4) Other................................................. 55.7 (98.0) (62.8) Net cash flows from operating activities.......... 1,260.0 1,127.9 929.1 ---------- --------- --------- Cash flows from investing activities: Purchases of securities with fixed maturities........... (2,464.7) (273.9) (2,485.8) Purchases of equity securities.......................... (1,423.4) (1,459.9) (3,050.0) Proceeds from sales of securities with fixed maturities. 277.5 669.7 1,772.1 Proceeds from redemptions and maturities of securities with fixed maturities................................. 791.9 954.6 85.9 Proceeds from sales of equity securities................ 1,531.0 1,352.7 1,466.8 Loans and investments originated in finance businesses.. (577.1) (381.2) (246.8) Principal collection on loans and investments originated in finance businesses...................... 351.5 363.0 332.4 Acquisitions of businesses, net of cash acquired........ (1,975.3) -- -- Other................................................... (19.2) (11.4) (23.2) Net cash flows from investing activities.......... (3,507.8) 1,213.6 (2,148.6) ---------- --------- --------- Cash flows from financing activities: Proceeds from borrowings of finance businesses.......... 285.1 265.7 208.6 Proceeds from other borrowings.......................... 1,604.3 1,232.7 1,225.3 Repayments of borrowings of finance businesses.......... (427.3) (232.1) (390.5) Repayments of other borrowings.......................... (1,170.0) (1,151.7) (1,387.7) Net proceeds from issuance of Class B Common Stock...... 565.0 -- -- Other................................................... (3.5) (1.5) (0.9) ---------- --------- --------- Net cash flows from financing activities.......... 853.6 113.1 (345.2) ---------- --------- --------- Increase (decrease) in cash and cash equivalents.. (1,394.2) 2,454.6 (1,564.7) Cash and cash equivalents at beginning of year........... 2,744.5 289.9 1,854.6 ---------- --------- --------- Cash and cash equivalents at end of year *............... $1,350.3 $2,744.5 $ 289.9 ========== ========= ========= * Cash and cash equivalents at end of year are comprised of the following: Finance businesses...............................$ 10.5 $ 40.7 $ 16.0 Other............................................ 1,339.8 2,703.8 273.9 ---------- --------- --------- $1,350.3 $ 2,744.5 $ 289.9 ========== ========= =========See accompanying Notes to Consolidated Financial Statements
BERKSHIRE HATHAWAY INC. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1996
(1) Significant accounting policies and practices (a) Nature of operations and basis of consolidation Berkshire Hathaway Inc. ("Berkshire" or "Company") is a holding company owning subsidiaries engaged in a number of diverse business activities. The most important of these is the property and casualty insurance business conducted on both a direct and reinsurance basis. Further information regarding this business and Berkshire's other reportable business segments is contained in Note 15. The accompanying Consolidated Financial Statements include the accounts of Berkshire consolidated with accounts of all its subsidiaries. Intercompany accounts and transactions have been eliminated. The accompanying prior year financial statements have been restated from the amounts previously reported in the Company's Consolidated Financial Statements included in its Annual Report for the year ended December 31, 1995. See 1(b) below for further information. (b) Restatement As more fully discussed in Note 2, on January 2, 1996, GEICO Corporation ("GEICO") became a wholly-owned subsidiary of Berkshire. Prior to January 2, 1996, Berkshire owned approximately 51% of the outstanding common stock of GEICO. Previously the investment in GEICO common stock had been classified as an available-for-sale security and was carried in Berkshire's Consolidated Balance Sheet at fair value. Generally accepted accounting principles require that prior year financial statements be restated when control of a business is obtained on a "step-by-step" basis. Accordingly, the accompanying Consolidated Financial Statements for 1995 and 1994 have been restated to account for Berkshire's previous investment in GEICO common stock under the equity method. Berkshire's proportionate share of GEICO's net income reduced by amortization of related goodwill is included in the Consolidated Statements of Earnings as a component of interest, dividends and other investment income. The principal effect of the restatement was to decrease shareholders' equity as of December 31, 1995, by $478.4 million from the amount reported in Berkshire's Consolidated Financial Statements included in its Annual Report for the year ended December 31, 1995. (c) Use of estimates in preparation of financial statements The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Actual results may differ from the estimates and assumptions used in preparing the consolidated financial statements. (d) Cash equivalents Cash equivalents consist of funds invested in money market accounts and in investments with a maturity of three months or less when purchased. (e) Investments Management determines the appropriate classifications of investments in securities with fixed maturities and equity securities at the time of purchase and reevaluates such designations as of each balance sheet date. Investments in securities with fixed maturities, except for such securities held by finance businesses, are classified as available-for-sale. Securities with fixed maturities held by finance businesses are classified as held-to-maturity. Investments in equity securities are classified as available-for-sale. Securities with fixed maturities are deemed to be held-to-maturity securities when the Company has the ability and positive intent to hold them to maturity. Held-to-maturity securities are carried at amortized cost. Available-for-sale securities are stated at fair value, with unrealized gains and losses, net of tax, reported in a separate component of shareholders' equity. Realized gains and losses, which arise when investments are sold (as determined on a specific identification basis), other-than-temporarily impaired or in certain situations when investments are marked- to-market, are included in the Consolidated Statements of Earnings. (f) Goodwill of acquired businesses Goodwill of acquired businesses represents the difference between purchase cost and the fair value of the net assets of acquired businesses and is being amortized on a straight line basis over forty years. The Company continually reviews the recoverability of the carrying value of goodwill of acquired businesses using the methodology prescribed by Statement of Financial Accounting Standards No. 121 "Accounting for the impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." (g) Insurance premium acquisition costs For financial reporting purposes, certain costs of acquiring insurance premiums are deferred, subjectto ultimate recoverability, and charged to income as the premiums are earned. Generally, the ultimate recoverability of premium acquisition costs is determined without regard to investment income. The unamortized balance of deferred premium acquisition costs is included in other assets. (h) Deferred charges re reinsurance assumed The excess of estimated liabilities for claims and claim costs ultimately payable by the Insurance Groupover consideration received with respect to retroactive property/casualty reinsurance contracts that provide for indemnification of insurance risk, other than structured settlements, is established as a deferred charge at inception of such contracts. The deferred charges are subsequently amortized using the interest method over the expected settlement periods of the claim liabilities. The unamortized balance is included in other assets and was $337.9 million at December 31, 1996 and $389.7 million at December 31, 1995. (j) Losses and loss adjustment expenses Liability for unpaid losses and loss adjustment expenses represents the aggregate of such obligations ofmembers of the Insurance Group with respect to: (i) prospective property/casualty insurance and reinsurance contracts, (ii) retroactive property/casualty reinsurance contracts that provide for indemnification of insurance risk, other than structured settlements, and (iii) reinsurance contracts providing for periodic payments with respect to settled claims ("structured settlements"). Except for structured settlement liabilities which are stated at discounted present values, the liability for unpaid losses and loss adjustment expenses is at the aggregate of estimated ultimate payment amounts. Ultimate payment amounts with respect to prospective contracts are determined from (i) individual caseestimates, (ii) estimates of incurred but not reported losses, based on past experience, and (iii) reports of losses from ceding insurers. Ultimate payment amounts with respect to retroactive reinsurance contracts that provide forindemnification of insurance risk, other than structured settlements, are established for financial reporting purposes at maximum limits of indemnification under the contracts. (See also 1(h) above related to deferred charges re reinsurance assumed.) Liabilities under structured settlement contracts are established when the contracts are entered into, at the then present value of the actuarially determined ultimate payment amount discounted at the prevailing market interest rate. Annual accretions to the liabilities are charged to losses incurred. This accounting policy also applies to annuity reserves and policyholder liabilities which are included in the liabilities of finance businesses. (k) Insurance premiums Insurance premiums for prospective insurance and non-property catastrophe reinsurance policies are recognized as revenues ratably over their terms with unearned premiums computed on a monthly or daily pro rata basis. Premiums for catastrophe excess of loss reinsurance coverages are deferred until the earlier of a loss occurrence or policy expiration. Consideration received for structured settlements is accounted for as premiums earned at the inception of the contracts. Premiums earned are stated net of amounts ceded to reinsurers. (m) Reinsurance Provisions for losses and loss adjustment expenses are reported in the accompanying consolidated statements of earnings after deducting estimates of amounts that will be recoverable under reinsurance contracts. Such recoverables totalled $47 million, $14 million, and $61 million for 1996, 1995 and 1994, respectively. Reinsurance contracts do not relieve the Insurance Group Members of their obligations to indemnify policyholders with respect to the underlying insurance and reinsurance contracts. Losses and loss adjustment expenses recoverable under reinsurance contracts are included in receivables. (2) Business acquisitions - 1996 During 1996, Berkshire consummated mergers with GEICO Corporation ("GEICO") and FlightSafety International, Inc. ("FlightSafety"). Each of these mergers was accounted for by the purchase method. The excess of the purchase cost of each business over the fair value of net assets acquired as of the respective merger dates is recorded as goodwill of acquired businesses and will subsequently be amortized over forty years. The aggregate amount of goodwill applicable to these acquisitions was approximately $2.5 billion. Additional information concerning each merger is provided below. (a) GEICO On January 2, 1996, GEICO became a wholly-owned subsidiary as a result of the merger of an indirect wholly-owned subsidiary of Berkshire with and into GEICO. GEICO, through its subsidiaries, is a multiple line property and casualty insurer, the principal business of which is underwriting private passenger automobile insurance. The merger was consummated pursuant to an Agreement and Plan of Merger (the "GEICO Agreement") dated August 25, 1995. Pursuant to the GEICO Agreement, each issued and outstanding common share of GEICO, except shares held by Berkshire subsidiaries and GEICO, was converted into the right to receive $70 per share, or an aggregate amount of $2.3 billion. The amount of the merger consideration was based upon 33,284,733 outstanding shares held by the public on the merger date. As of the merger date, subsidiaries of Berkshire owned 34,250,000 common shares of GEICO, which were acquired in years prior to 1981 at an aggregate cost of $45.7 million. Up to the merger date, neither Berkshire nor its subsidiaries had acquired any shares of GEICO common stock since 1980. However, Berkshire's ownership percentage, due to intervening stock repurchases by GEICO, gradually increased from about 33% in 1980 to almost 51% immediately prior to the merger date. (b) FlightSafety On December 23, 1996, FlightSafety became a wholly-owned subsidiary as a result of the merger of FlightSafety with and into a subsidiary of Berkshire. FlightSafety provides high technology training to operators of aircraft and ships throughout the world. The merger was consummated pursuant to an Agreement and Plan of Merger dated October 14, 1996 (the "FlightSafety Agreement") between Berkshire and FlightSafety. Pursuant to the FlightSafety Agreement, aggregate consideration of approximately $1.5 billion was paid to FlightSafety shareholders consisting of $769.0 million in cash, 17,728 shares of Berkshire's Class A common stock and 112,655 shares of Berkshire's Class B common stock. The results of operations for each of these entities are included in Berkshire's consolidated results of operations from the effective dates of each of the mergers (GEICO - January 2, 1996 and FlightSafety - December 23, 1996). The following table sets forth certain consolidated statement of earnings data for the years ended December 31, 1996 and 1995, as if the GEICO and FlightSafety mergers had been consummated on the same terms at the beginning of 1995. Dollar amounts are in millions, except per share amounts. 1996 1995 --------- --------- Insurance premiums earned.......................$ 4,117.8 $ 3,744.5 Sales and service revenues...................... 3,416.5 3,081.6 Total revenues.................................. 10,823.5 7,640.9 Net income...................................... 2,515.0 833.8 Earnings per equivalent Class A common share.... 2,051 690 (3) Business acquisitions - 1995 During 1995, the Company consummated mergers with Helzberg's Diamond Shops, Inc. ("Helzberg's") and R.C. Willey Home Furnishings ("R.C. Willey") by reissuing 15,762 shares of its common stock (subsequently redesignated Class A Common Stock) held in treasury in exchange for 100% of the common stock of each of these companies. Helzberg's consists of a chain of 181 jewelry stores operating in 28 states and R.C. Willey, through its seven locations, is the dominant retailer of home furnishings in Utah. Each of these mergers was accounted for by the purchase method and, accordingly, the operating results of these businesses are included in the Company's consolidated results of operations from the effective dates of the mergers (Helzberg's - April 30, 1995; R.C. Willey - June 29, 1995). Had the results of these businesses been included commencing with operations at the beginning of 1994, the reported results would not have been materially affected. (4) Investments in securities with fixed maturities The amortized cost and estimated fair values as of December 31, 1996 and 1995, of investments in securities with fixed maturities are as follows (in millions): December 31, 1996 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value -------- -------- -------- -------- Bonds: U.S. Treasury securities and obligations of U.S. government corporations and agencies.... $2,618.8 $ 4.0 $ (5.7) $2,617.1 Obligations of states, municipalities and political subdivisions................... 2,502.0 32.4 (1.8) 2,532.6 Corporate bonds................................ 22.0 -- -- 22.0 Redeemable preferred stocks...................... 584.3 275.9 (4.3) 855.9 Mortgage-backed securities....................... 415.2 6.1 (2.0) 419.3 -------- -------- -------- -------- $6,142.3 $ 318.4 $ (13.8) $6,446.9 ======== ======== ======== ======== December 31, 1995 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value -------- -------- -------- -------- Bonds: U.S. Treasury securities and obligations of U.S. government corporations and agencies....$ 80.9 $ 2.2 $ -- $ 83.1 Obligations of states, municipalities and political subdivisions................... 346.4 17.2 (0.5) 363.1 Redeemable preferred stocks...................... 682.5 153.4 (2.9) 833.0 Mortgage-backed securities....................... 138.3 5.9 (0.2) 144.0 -------- -------- -------- -------- $ 1,248.1 $ 178.7 $ (3.6) $1,423.2 ======== ======== ======== ======== Amounts above exclude securities with fixed maturities held by finance businesses. See note 7. Redeemable preferred stocks include 358,000 shares of USAir Group, Inc. Series A Cumulative Convertible Preferred Stock ("USAir Preferred Shares"). The USAir Preferred Shares were acquired in 1989 for $358 million. If not called or converted prior to August 7, 1999, the USAir Preferred Shares are mandatorily redeemable by USAir Group, Inc. ("USAir") at $1,000 per share ($358 million in the aggregate), plus accrued dividends. During the five years ended December 31, 1994, USAir reported aggregate losses of approximately $2.4 billion. In 1994, USAir announced it was suspending the payment of dividends. Consequently, prior to the end of 1994, Berkshire management concluded that an other-than-temporary decline in the value of USAir Preferred shares had arisen. The 1994 Consolidated Statement of Earnings includes a pre-tax charge of $268.5 million to reflect the decline. While USAir returned to profitability during 1995, it continued the suspension of dividends until the second half of 1996 when dividend payments of $47 million were received. Such amount is included in the 1996 Consolidated Statement of Earnings under the caption "Interest, dividend and other investment income." An additional dividend payment of $30 million was received in January, 1997 and dividends of approximately $17 million remain in arrears. Berkshire management has estimated the fair value of USAir Preferred shares to be $322.2 million at December 31, 1996. The increase of $232.7 million in the estimated fair value over the amount recorded at December 31, 1994, is included as a component of the increases during 1995 and 1996 in unrealized appreciation of investments. Shown below are the amortized cost and estimated fair values of the above securities at December 31, 1996, by contractual maturity dates. Actual maturities will differ from contractual maturities because issuers of certain of the securities retain early call or prepayment rights. Amounts are in millions. Estimated Amortized Fair Cost Value -------- --------- Due in one year or less................... $2,073.2 $2,085.0 Due after one year through five years..... 2,481.9 2,750.5 Due after five years through ten years.... 1,022.8 1,039.8 Due after ten years....................... 149.2 152.3 -------- --------- 5,727.1 6,027.6 Mortgage-backed securities................ 415.2 419.3 -------- --------- $6,142.3 $ 6,446.9 ======== ========= (5) Investments in equity securities Aggregate data with respect to the consolidated investment in equity securities are shown below (in millions): December 31, 1996 Unrealized Carrying Cost Gains Value *** -------- --------- --------- Common stock of: American Express Company (a).............$1,392.7 $ 1,401.6 $ 2,794.3 The Coca-Cola Company.................... 1,298.9 9,226.1 10,525.0 The Walt Disney Company.................. 1,533.2 183.6 1,716.8 Federal Home Loan Mortgage Corporation... 449.7 1,323.1 1,772.8 The Gillette Company..................... 600.0 3,132.0 3,732.0 McDonald's Corporation................... 1,265.3 103.1 1,368.4 Wells Fargo & Company.................... 553.9 1,413.0 1,966.9 All other equity securities................ 2,058.3 1,816.1* 3,874.4 -------- --------- --------- $9,152.0 $18,598.6 $27,750.6 ======== ========= ========= December 31, 1995 Unrealized Carrying Cost Gains Value *** -------- --------- --------- Common stock of: American Express Company (a).............$1,392.7 $ 653.6 $ 2,046.3 Capital Cities/ABC, Inc. (b)............. 345.0 2,122.5 2,467.5 The Coca-Cola Company.................... 1,298.9 6,126.1 7,425.0 Federal Home Loan Mortgage Corporation... 260.1 783.9 1,044.0 GEICO Corporation (c).................... 1,175.8 -- 1,175.8 The Gillette Company..................... 600.0 1,902.0 2,502.0 Wells Fargo & Company.................... 423.7 1,043.2 1,466.9 All other equity securities................ 1,680.0 1,210.1** 2,890.1 -------- --------- --------- $7,176.2 $13,841.4 $21,017.6 ======== ========= ========= * Represents gross unrealized gains $1,838.5 less gross unrealized losses $22.4. ** Represents gross unrealized gains $1,302.1 less gross unrealized losses $92.0. *** Represents market value for all investments in equity securities except for GEICO Corporation. See footnote (c) which follows. (a) American Express Company Common shares of American Express Company ("AXP") owned by Berkshire and its subsidiaries possessed approximately 10.5% of the voting rights of all AXP shares outstanding at December 31, 1996. The shares are held subject to various agreements with certain insurance and banking regulators which, among other things, prohibit Berkshire from (i) seeking representation on the Board of Directors of AXP (Berkshire may agree, if it so desires, at the request of management or the Board of Directors of AXP to have no more than one representative stand for election to the Board of Directors of AXP) and (ii) acquiring or retaining shares that would cause its ownership of AXP voting securities to equal or exceed 17% of the amount outstanding (should Berkshire have a representative on the board of directors, such amount is limited to 15%). In connection therewith, Berkshire has entered into an agreement with AXP which became effective when Berkshire's ownership interest in AXP voting securities reached 10% and will remain effective so long as Berkshire owns 5% or more of AXP's voting securities. The agreement obligates Berkshire, so long as Harvey Golub is chief executive officer of AXP, to vote its shares in accordance with the recommendations of AXP's Board of Directors. Additionally, subject to certain exceptions, Berkshire has agreed not to sell AXP common shares to any person who owns 5% or more of AXP voting securities or seeks to control AXP, without the consent of AXP. (b) Capital Cities/ABC, Inc. On January 4, 1996, shareholders of Capital Cities/ABC, Inc. ("Capital Cities") and The Walt Disney Company ("Disney") approved an agreement and plan of merger by and between Disney and Capital Cities. In March 1996, Berkshire received approximately 21 million shares of Disney common stock and $1.2 billion in cash in exchange for the common shares of Capital Cities. (c) GEICO Corporation The cost and carrying value of the investment in GEICO common stock as of December 31, 1995 represents Berkshire's cost plus its share of GEICO's undistributed accumulated earnings and unrealized appreciation on investments. See Notes 1(b) and 2 for additional information. (6) Realized investment gains (losses) Realized gains (losses) from sales and redemptions of investments are summarized below (in millions): 1996 1995 1994 Equity securities - --------- -------- -------- Gross realized gains............. $2,379.1 * $ 109.9 $ 185.7 Gross realized losses............ (36.4) (14.2) (96.9) Securities with fixed maturities and other investments - Gross realized gains............. 144.6 100.8 6.8 Gross realized losses............ (3.2) (2.4) (4.3) -------- -------- -------- $2,484.1 $ 194.1 $ 91.3 ======== ======== ======== * In March 1996 Disney completed its acquisition of Capital Cities. Subsidiaries of Berkshire received aggregate consideration of $2.5 billion, which included cash of $1.2 billion and common shares of Disney with a value of $1.3 billion. Gross realized gains from sales of equity securities includes a gain of $2.2 billion relating to Disney's acquisition of Capital Cities. (7) Finance businesses Berkshire's finance businesses are comprised of commercial and consumer finance companies and an annuity business. Assets and liabilities of Berkshire's finance businesses are summarized below (in millions): Dec. 31, Dec. 31, 1996 1995 -------- -------- Assets Cash and cash equivalents.......................$ 10.5 $ 40.7 Installment loans and other receivables......... 215.9 185.9 Fixed maturity investments (a).................. 742.4 529.4 Other........................................... 0.1 0.7 -------- -------- $ 968.9 $ 756.7 ======== ======== Liabilities Borrowings under investment agreements (b)......$ 281.8 $ 403.6 6.75% Notes, due 2001........................... 99.5 -- 8.125% Notes, payable in 1996................... -- 120.0 Annuity reserves and policyholder liabilities... 434.8 116.7 Other........................................... 35.3 44.9 -------- -------- $ 851.4 $ 685.2 ======== ======== (a) At December 31, 1996 and 1995, mortgage-backed securities of $601.6 and $336.0 respectively were included in this caption. Estimated fair values and gross unrealized gains and losses as of December 31, 1996 and 1995, are as follows (in millions): Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value --------- ---------- ---------- --------- 1996 $742.4 $ 25.2 $ (4.8) $762.8 1995 529.4 29.0 (1.0) 557.4 (b) Borrowings under investment agreements are made pursuant to contracts with terms generally ranging from six months to thirty years and at fixed interest rates ranging from 4% to 7%. Payments of amounts outstanding at December 31, 1996, are expected to be required no earlier than as follows (in millions): 1997 1998 1999 2000 2001 After 2001 ------ ------ ------ ------ ------ ---------- $211.9 $2.0 $3.3 -- -- $ 64.6 Income from finance businesses for each of the past three years is summarized below (in millions): 1996 1995 1994 ------- ------- ------- Revenues Interest on loans.....................$ 38.8 $ 38.4 $ 37.4 Interest and dividend income.......... 54.4 39.2 34.8 Annuity premiums earned............... 259.5 75.2 36.0 ------- ------- ------- 352.7 152.8 108.2 ------- ------- ------- Cost and expenses Interest expense...................... 30.3 28.9 31.7 Annuity benefits and expenses......... 276.7 80.8 37.6 General and administrative expenses... 20.4 16.5 14.0 ------- ------- ------- 327.4 126.2 83.3 ------- ------- ------- $ 25.3 $ 26.6 $ 24.9 ======= ======= ======= (8) Unpaid losses and loss adjustment expenses Supplemental data with respect to unpaid losses and loss adjustment expenses of property/casualty insurance subsidiaries (in millions): 1996 1995 1994 -------- -------- -------- Unpaid losses and loss adjustment expenses: Balance at beginning of year..................$5,923.9* $3,430.0 $3,155.9 Less ceded liabilities and deferred charges... 645.0* 573.9 597.9 -------- -------- -------- Net balance................................... 5,278.9* 2,856.1 2,558.0 -------- -------- -------- Incurred losses recorded: Current accident year......................... 3,179.7 556.5 505.1 All prior accident years...................... (90.2) 55.5 60.2 -------- -------- -------- Total incurred losses......................... 3,089.5 612.0 565.3 -------- -------- -------- Payments with respect to: Current accident year......................... 1,484.9 43.6 50.9 All prior accident years...................... 1,194.9 246.2 216.3 -------- -------- -------- Total payments................................ 2,679.8 289.8 267.2 -------- -------- -------- Unpaid losses and loss adjustment expenses: Net balance at end of year.................... 5,688.6 3,178.3 2,856.1 Plus ceded liabilities and deferred charges... 585.8 520.3 573.9 -------- -------- -------- Balance at end of year **......................$6,274.4 $3,698.6 $3,430.0 ======== ======== ======== * Includes GEICO balances as of the acquisition date. ** Unpaid losses and loss adjustment expenses include liabilities established with respect to retroactive reinsurance contracts that provide for indemnification of insurance risk. These liabilities aggregated $1,263.6, $1,283.5, and $1,296.0 at December 31, 1996, 1995 and 1994 respectively. Related deferred charges were established with respect to these contracts and are reported as other assets. Also included in unpaid losses and loss adjustment expenses are discounted structured settlement reinsurance liabilities, which totalled $217.2, $221.7, and $231.3 at December 31, 1996, 1995 and 1994 respectively. Incurred losses "all prior accident years" reflects the amount of estimation error charged or credited to earnings in each year. In addition, this amount includes amortization of deferred charges re reinsurance assumed and accretion of discounted structured settlement liabilities. The use of estimates is inherent in the process of establishing unpaid losses and loss expenses. Additional information will be revealed over time and those estimates and assumptions will be revised resulting in gains or losses in the period made. (9) Borrowings under investment agreements and other debt Liabilities reflected for this balance sheet caption are as follows (in millions): Dec. 31, Dec. 31, 1996 1995 -------- -------- Borrowings under investment agreements..... $ 865.3 $ 878.9 1% Senior Exchangeable Notes Due 2001...... 454.6 -- Other debt................................. 624.5 182.8 -------- -------- $1,944.4 $1,061.7 ======== ======== Borrowings under investment agreements are made pursuant to contracts with terms generally ranging from three months to forty years and calling for interest payable, normally semiannually, at fixed rates ranging from 3% to 9% per annum. The borrowings are senior unsecured debt obligations of the Company. On December 2, 1996, Berkshire received net proceeds of $447.1 million from the issuance of $500 million principal amount of 1% Senior Exchangeable Notes, due December 2, 2001 (the "Exchange Notes"). Under certain conditions, on the last trading day of January, April, July and October from January 1997 through July 2001, each $1,000 principal amount Exchange Note, is convertible at the option of the holder into 17.65 shares of Salomon Inc common stock ("Salomon Stock"). Upon such conversion, Berkshire, at its option, may elect to redeem the Exchange Notes for an equivalent cash value of the Salomon Stock. Beginning on December 2, 1999, under certain conditions, the Exchange Notes are convertible into 17.65 shares of Salomon Stock at the option of the Company. Upon conversion, Berkshire may elect to redeem the Exchange Notes for an equivalent cash value of the Salomon Stock. In all other circumstances, Berkshire will pay the principal amount at maturity. At December 31, 1996, Berkshire subsidiaries owned common and preferred stock of Salomon possessing about 18% of the total voting power of that company. No materially restrictive covenants are included in any of the various debt agreements. Payments of amounts outstanding at December 31, 1996, are expected to be required no earlier than as follows (in millions): 1997 1998 1999 2000 2001 After 2001 ------ ------ ------ ------ ------ ---------- $130.8 $125.1 $ 54.3 $ 15.8 $474.0 $1,144.4 (10) Income taxes The liability for income taxes as reflected in the accompanying Consolidated Balance Sheets represent estimates of liabilities as follows (in millions): Dec. 31, Dec. 31, 1996 1995 -------- -------- Payable currently.......$ (41.1) $ 86.8 Deferred................ 6,878.7 4,762.7 -------- -------- $6,837.6 $4,849.5 ======== ======== The Consolidated Statements of Earnings reflect charges for income taxes as shown below (in millions): 1996 1995 1994 -------- -------- -------- Federal...........$1,169.9 $ 252.3 $ 138.1 State............. 26.1 22.6 22.1 Foreign........... 0.8 1.3 3.1 -------- -------- -------- $1,196.8 $ 276.2 $ 163.3 ======== ======== ======== Current...........$ 818.9 $ 331.0 $ 188.5 Deferred.......... 377.9 (54.8) (25.2) -------- -------- -------- $1,196.8 $ 276.2 $ 163.3 ======== ======== ======== The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at December 31, 1996 and 1995, are shown below (in millions): 1996 1995 -------- -------- Deferred tax liabilities: Relating to unrealized appreciation of investments...$6,620.6 $4,908.5 Other................................................ 860.9 157.0 -------- -------- 7,481.5 5,065.5 Deferred tax assets.................................... (602.8) (302.8) -------- -------- Net deferred tax liability.............................$6,878.7 $4,762.7 ======== ======== Charges for income taxes are reconciled to hypothetical amounts computed at the federal statutory rate in the table shown below (in millions): 1996 1995 1994 -------- -------- -------- Net earnings before income taxes......................$3,705.9 $1,084.4 $ 725.0 ======== ======== ======== Hypothetical amounts applicable to above computed at the federal statutory rate..............$1,297.1 $ 379.5 $ 253.8 Decreases, resulting from: Tax-exempt interest income.......................... (41.7) (10.6) (14.6) Dividends received deduction........................ (90.3) (86.3) (81.2) Goodwill amortization................................. 21.6 5.7 4.8 State income taxes, less federal income tax benefit... 17.0 14.7 14.4 Other differences, net................................ (6.9) (26.8) (13.9) -------- -------- -------- Total income taxes....................................$1,196.8 $ 276.2 $ 163.3 ======== ======== ======== (11) Shareholders' equity accounts Changes in capital accounts of the Company during the two years ended December 31, 1996, are shown in the table below. Dollar amounts are in millions, except per share amounts. Capital in Class A Common Class B Common in Excess of Class A Common $5 Par Value $0.1667 Par Value Par Value in Treasury ------------------ ----------------- ------------ ---------------- Shares Dollars Shares Dollars Dollars Shares Dollars --------- ------- -------- ------- ------------ ------- ------- Balance December 31, 1994 * .........1,381,308 $6.9 -- -- $ 656.1 203,558 $37.6 Common stock issued in connection with acquisitions of businesses.... 345.6 (15,762) (2.9) --------- ------- -------- ------- ------------ ------- ------- Balance December 31, 1995............1,381,308 6.9 -- -- 1,001.7 187,796 34.7 Common stock issued in connection with acquisitions of businesses.... 112,655 -- 707.5 (17,728) (3.3) Common stock issued for cash......... 517,500 $0.1 564.9 Conversions of Class A Common Stock to Class B Common Stock............(5,120) -- 153,600 -- --------- ------- -------- ------- ------------ ------- ------- Balance December 31, 1996............1,376,188 $6.9 783,755 $0.1 $2,274.1 170,068 $31.4 ========= ======= ======== ======= ============ ======= ======= * There were no changes in the Company's capital accounts during 1994. On May 6, 1996, Berkshire shareholders approved a recapitalization plan which created a new class of common stock, designated as Class B Common Stock. In connection therewith, Berkshire's then existing common stock was redesignated as Class A Common Stock. 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. On May 8, 1996, Berkshire completed an initial public offering of 517,500 shares of Class B Common Stock. Berkshire received net proceeds from the offering of $565.0 million. Since the Class B Common shares are equivalent to one-thirtieth (1/30) of the economic rights of Class A Common shares, the issuance of the Class B Common Stock was equivalent to the issuance of 17,250 Class A Common shares or approximately 1.4% of Class A Common shares outstanding at the time of the issuance of Class B Common shares. Changes in unrealized appreciation of investments, net during the three years ended December 31, 1996 were as follows, in millions: Year ending December 31, -------------------------------- 1996 1995 1994 --------- --------- --------- Balance at beginning of year...............................$ 9,220.7 $ 5,276.9 $ 4,318.6 Increase in unrealized appreciation included in carrying value of investments..................................... 4,604.0 6,177.1 1,486.5 Increase in deemed applicable deferred income taxes........ (1,629.1) (2,176.2) (518.3) Increase in minority interest in unrealized appreciation... (51.7) (57.1) (9.9) --------- --------- --------- Balance at end of year.....................................$12,143.9 $ 9,220.7 $ 5,276.9 ========= ========= ========= Changes in retained earnings during the three years ended December 31, 1996 were as follows, in millions: Year ending December 31, 1996 1995 1994 -------- -------- -------- Balance at beginning of year....$6,544.1 $5,749.2 $5,196.2 Net earnings.................... 2,488.6 794.9 553.0 -------- -------- -------- Balance at end of year..........$9,032.7 $6,544.1 $5,749.2 ======== ======== ======== (12) Dividend restrictions - Insurance subsidiaries Payments of dividends by Insurance Group members are restricted by insurance statutes and regulations. Without prior regulatory approval in 1997, Berkshire can receive up to approximately $2.5 billion as dividends from insurance subsidiaries. Combined shareholders' equity of insurance subsidiaries determined pursuant to statutory accounting rules (Statutory Surplus as Regards Policyholders) was approximately $26.1 billion at December 31, 1996. This amount exceeded by approximately $5.2 billion the corresponding amount determined on the basis of generally accepted accounting principles; the difference principally represents deferred income tax assets and liabilities and deferred charges re reinsurance assumed recognized for financial reporting purposes but not for statutory reporting purposes. (13) Fair values of financial instruments Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments" ("SFAS 107"), requires certain fair value disclosures. Fair value disclosures are required for most investment securities as well as other contractual assets and liabilities. Certain financial instruments, including insurance contracts, were excluded from SFAS 107 disclosure requirements due to perceived difficulties in measuring fair value. Accordingly, an estimation of fair value was not made with respect to unpaid losses and loss adjustment expenses. In determining fair value, the Company used quoted market prices when available. For instruments where quoted market prices were not available, the Company used independent pricing services or appraisals by the Company's management. Those services and appraisals reflected the estimated present values utilizing current risk adjusted market rates of similar instruments. Considerable judgement is necessarily required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value. The carrying values of cash and cash equivalents, receivables and accounts payable, accruals and other liabilities are deemed to be reasonable estimates of their fair values. The estimated fair values of the Company's other financial instruments as of December 31, 1996 and 1995, are as follows (in millions): Carrying Value Estimated Fair Value -------------------- -------------------- 1996 1995 1996 1995 --------- --------- --------- --------- Investments in securities with fixed maturities.................$ 6,446.9 $ 1,423.2 $ 6,446.9 $ 1,423.2 Investments in equity securities.... 27,750.6 21,017.6 27,750.6 22,235.0 Assets of finance businesses........ 968.9 756.7 997.8 792.3 Borrowings under investment agreements and other debt........ 1,944.4 1,061.7 1,937.9 1,095.0 Liabilities of finance businesses... 851.4 685.2 852.0 704.4 (14) Quarterly data A summary of revenues and earnings by quarter for each of the last two years is presented in the following table. This information is unaudited. Dollars are in millions, except per share amounts. 1st 2nd 3rd 4th 1996 Quarter Quarter Quarter Quarter --------- --------- --------- --------- Revenues.......................................$ 4,139.7 $ 1,914.8 $ 2,015.3 $ 2,430.5 Earnings: Excluding realized investment gain...........$ 160.2 $ 193.7 $ 201.4 $ 328.1 Realized investment gain (loss).............. 1,508.5* (2.5) 62.6 36.6 --------- --------- --------- --------- Net earnings.................................$ 1,668.7 $ 191.2 $ 264.0 $ 364.7 ========= ========= ========= ========= Earnings per equivalent Class A common share: Excluding realized investment gain...........$ 134.23 $ 160.91 $ 166.34 $ 270.52 Realized investment gain (loss).............. 1,263.92* (2.08) 51.70 30.17 --------- --------- --------- --------- Net earnings.................................$1,398.15 $ 158.83 $ 218.04 $ 300.69 ========= ========= ========= ========= * Includes $1.4 billion ($1,143.68/share), net of taxes, related to gain arising from The Walt Disney Company's acquisition of Capital Cities/ABC, Inc. See Notes 5 and 6. 1st 2nd 3rd 4th 1995 Quarter Quarter Quarter Quarter --------- --------- --------- --------- Revenues.......................................$ 944.0 $ 1,018.4 $ 1,107.2 $ 1,493.7 Earnings: Excluding realized investment gain...........$ 143.9 $ 140.3 $ 151.3 $ 234.4 Realized investment gain (loss).............. (4.7) 51.7 43.2 34.8 --------- --------- --------- --------- Net earnings.................................$ 139.2 $ 192.0 $ 194.5 $ 269.2 ========= ========= ========= ========= Earnings per equivalent Class A common share: Excluding realized investment gain...........$ 122.22 $ 118.54 $ 126.78 $ 196.56 Realized investment gain (loss).............. (4.03) 43.71 36.18 29.16 --------- --------- --------- --------- Net earnings.................................$ 118.19 $ 162.25 $ 162.96 $ 225.72 ========= ========= ========= ========= (15) Business Segment Data Berkshire identified seven business segments for purposes of 1996 reporting pursuant to Statement of Financial Accounting Standards No. 14. These include the property and casualty insurance business (The Insurance Segment) conducted on both a direct and reinsurance basis through a number of subsidiaries. Included in this segment is GEICO Corporation, the seventh largest auto insurer in the United States and National Indemnity Company, one of the world's leading providers of catastrophe excess of loss reinsurance. Berkshire's six separately conducted non-insurance business segments are as follows: Business identity and headquarters Segment Activity See's Candies Candy Manufacture and distribution at retail South San Francisco, CA and by catalog solicitation World Book Encyclopedias and Publication and marketing, Chicago, IL other reference materials principally by the direct sales method Kirby, Douglas and Cleveland Wood Divisions of The Scott Fetzer Company Home cleaning systems Manufacture and sale principally to distributors Cleveland, OH Nebraska Furniture Mart and Home furnishings Retailing R.C. Willey Home Furnishings Omaha, NE and Salt Lake City, UT Buffalo News Newspaper Publication of a daily and Sunday newspaper Buffalo, NY H. H. Brown Shoe Co., Lowell Shoe, Inc. and Dexter Shoe Companies Shoes Manufacture, importing and distribution at wholesale Greenwich, CT, Hudson, and retail NH and Dexter, ME The business segments identified above were responsible in 1996 for 86% of Berkshire's consolidated revenues. Other businesses activities that contributed for 1996, in the aggregate, 11% of Berkshire's consolidated revenues, were as follows: Business identity Product/Service/Activity Adalet - PLM Explosion proof electrical enclosures, cable couplers and terminations BHR Real estate management Berkshire Hathaway Credit Corporation Commercial financing Berkshire Hathaway Life Insurance Co. Annuities Blue Chip Stamps Marketing motivational services Borsheim's Retailing fine jewelry Campbell Hausfeld Air compressors, air tools, painting systems, pressure washers, welders and generators Carefree Comfort and convenience products for the recreational vehicle industry Fechheimer Bros. Co. Uniforms and accessories FlightSafety International High technology training to operators of aircraft and ships France Appliance controls; ignition and sign transformers Halex Zinc die cast conduit fittings and other electrical construction materials Helzberg's Diamond Shops Retailing fine jewelry Meriam Pressure and flow measurement devices Northland Fractional horsepower electric motors Powerwinch Marine and general purpose winches, windlasses, and hoists Precision Steel Products Steel service center Quikut Cutlery for home and sporting goods markets ScottCare Cardiopulmonary rehabilitation and monitoring equipment Scott Fetzer Financial Group Commercial and consumer finance companies Scot Labs Cleaning and maintenance chemicals Stahl Custom service bodies, flatbed bodies, cranes and tool boxes for trucks Wayne Furnace burners; sump, utility and sewage pumps Wesco Financial Real estate management Western Enterprises Medical and industrial compressed gas fittings and regulators Western Plastics Molded plastic components A disaggregation of Berkshire's consolidated data for each of the three most recent years is presented in the tables which follow on this and the following page. Amounts are in millions. Revenues Operating profit before taxes ------------------------------- ------------------------------- 1996 1995 1994 1996 1995 1994 --------- --------- --------- --------- --------- --------- Identified Segments: Insurance.......................$ 7,133.1 $ 1,715.7 $ 1,499.8 $ 3,189.6 $ 776.5 $ 702.0 Non-insurance businesses........ 1,922.9 1,775.1 1,620.7 267.2 233.2 261.9 --------- --------- --------- --------- --------- --------- 9,056.0 3,490.8 3,120.5 3,456.8 1,009.7 963.9 Other than identified segments.... 1,444.3 1,072.5 789.8 342.1 130.7 (178.8)** Interest expense *................ (93.0) (56.0) (60.1) --------- --------- --------- --------- --------- --------- Aggregate consolidated total...$10,500.3 $ 4,563.3 $ 3,910.3 $ 3,705.9 $ 1,084.4 $ 725.0 ========= ========= ========= ========= ========= ========= * Amounts of interest expense represent those for borrowings under investment agreements and other debt exclusive of that of finance businesses and interest allocated to certain identified segments. ** Includes pre-tax charge of $268.5 million representing an other- than-temporary decline in value of investment in USAir Group, Inc. Preferred Stock. Insurance Segment Revenues Operating profit before taxes ------------------------------- ------------------------------- 1996 1995 1994 1996 1995 1994 --------- --------- --------- --------- --------- --------- Premiums earned: * Direct..........................$ 3,432.9 $ 287.3 $ 281.1 Reinsurance assumed............. 764.0 718.4 688.5 Reinsurance ceded............... (79.1) (48.2) (46.4) --------- --------- --------- --------- --------- --------- 4,117.8 957.5 923.2 Underwriting...................... $ 230.7 $ 19.6 $ 129.0 Goodwill amortization............. (42.6) -- -- Investment income................. 725.9 577.1 484.6 712.1 575.8 481.0 Realized investment gain.......... 2,289.4 181.1 92.0 2,289.4 181.1 92.0 --------- --------- --------- --------- --------- --------- $ 7,133.1 $ 1,715.7 $ 1,499.8 $ 3,189.6 $ 776.5 $ 702.0 ========= ========= ========= ========= ========= ========= * Premiums written were as follows: 1996 1995 1994 Direct..................$3,465.4 $ 294.8 $ 271.2 Reinsurance assumed..... 722.7 777.9 689.9 Reinsurance ceded....... (82.9) (48.5) (45.6) -------- -------- -------- $4,105.2 $1,024.2 $ 915.5 ======== ======== ======== Non-Insurance Business Segments Revenues Operating profit before taxes ------------------------------- ------------------------------- 1996 1995 1994 1996 1995 1994 --------- --------- --------- --------- --------- --------- Candy...............................$ 248.9 $ 233.6 $ 216.1 $ 50.9 $ 49.3 $ 46.6 Encyclopedias, other reference material.......... 119.0 157.9 191.3 10.3 7.4 24.4 Home cleaning systems............... 253.7 235.6 207.6 62.5 52.6 43.9 Home furnishings.................... 586.6 428.1 245.4 41.0 28.1 16.9 Newspaper........................... 154.2 154.8 150.9 49.8 46.3 53.7 Shoes............................... 560.5 565.1 609.4 52.7 49.5 76.4 --------- --------- --------- --------- --------- --------- $ 1,922.9 $ 1,775.1 $ 1,620.7 $ 267.2 $ 233.2 $ 261.9 ========= ========= ========= ========= ========= ========= Other Than Identified Segments Revenues Operating profit before taxes ------------------------------- ------------------------------- 1996 1995 1994 1996 1995 1994 --------- --------- --------- --------- --------- --------- Other businesses.....................$ 1,195.6 $ 1,021.7 $ 758.5 $ 108.5 $ 93.8 $ 72.7 Not identified with specific businesses: Interest and dividend income....... 54.0 37.8 32.0 54.0 37.8 32.0 Realized investment gain (loss).... 194.7 13.0 (0.7) 194.7 13.0 (0.7) All other except interest expense.. (15.1) (13.9) (282.8)* --------- --------- --------- --------- --------- --------- $ 1,444.3 $ 1,072.5 $ 789.8 $ 342.1 $ 130.7 $ (178.8) ========= ========= ========= ========= ========= ========= * Includes pre-tax charge of $268.5 million representing an other- than-temporary decline in value of investment in USAir Group, Inc. Preferred Stock. Deprec. & amort. Capital expenditures * of tangible assets 1996 1995 1994 1996 1995 1994 ------ ------ ------ ------ ------ ------ Insurance.....................$ 12.2 $ 1.2 $ 0.9 $ 26.3 $ 0.9 $ 0.9 Candy......................... 5.3 5.1 4.1 4.5 4.1 4.1 Encyclopedias, and other reference material.... -- -- 0.1 0.4 1.0 1.4 Home cleaning systems......... 2.0 0.3 1.0 2.7 3.0 4.2 Home furnishings.............. 21.6 9.2 22.6 10.0 9.7 6.2 Newspaper..................... 1.0 1.8 5.2 2.8 4.9 2.2 Shoes......................... 12.8 13.7 17.9 13.4 12.0 10.2 Other......................... 26.9 22.9 15.3 27.6 24.7 20.4 ------ ------ ------ ------ ------ ------ $ 81.8 $ 54.2 $ 67.1 $ 87.7 $ 60.3 $ 49.6 ====== ====== ====== ====== ====== ====== * Excludes expenditures which were part of business acquisitions. Identifiable assets at year-end 1996 1995 1994 Insurance.................................$36,597.8 $25,280.0 $17,765.6 Candy..................................... 74.1 74.5 69.4 Encyclopedias, other reference material... 69.8 71.8 75.9 Home cleaning systems..................... 44.3 42.9 42.1 Home furnishings.......................... 445.8 427.7 128.4 Newspaper................................. 42.0 45.0 48.4 Shoes..................................... 624.4 656.7 672.7 Other..................................... 5,511.3 2,112.8 1,807.1 $43,409.5 $28,711.4 $20,609.6 ========= ========= ========= (16) Supplemental cash flow information A summary of supplemental cash flow information is presented in the following table (in millions): 1996 1995 1994 Cash paid during the year for: Income taxes................................$ 965.9 $ 294.6 $ 411.1 Interest.................................... 129.4 83.9 90.6 Non-cash investing and financing activities: Liabilities assumed in connection with acquisitions of businesses........... 4,172.1 248.0 -- Common shares issued in connection with acquisitions of businesses........... 710.8 348.5 -- Fair value of investments acquired as part of exchanges and conversions...... 1,618.6 -- --