Berkshire Hathaway 1998 Annual Report Download - page 32

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31
(4) Investments in equity securities and other investments
Data with respect to the consolidated investment in equity securities and other investments are shown below.
Amounts are in millions.
December 31, 1998 Unrealized Fair
Cost Gains(Losses) Value
Common stock of:
American Express Company * .................................... $ 1,470 $ 3,710 $ 5,180
The Coca-Cola Company ........................................ 1,299 12,101 13,400
The Gillette Company .......................................... 600 3,990 4,590
Other equity securities ........................................... 5,889 9,062 14,951
Other investments .............................................. 1,736 (96) 1,640
$10,994 $28,767 $39,761
December 31, 1997 Unrealized Fair
Cost Gains Value
Common stock of:
American Express Company * .................................... $1,393 $ 3,021 $ 4,414
The Coca-Cola Company ........................................ 1,299 12,039 13,338
The Gillette Company .......................................... 600 4,221 4,821
Other equity securities ........................................... 5,725 7,950 13,675
$9,017 $27,231 $36,248
* Common shares of American Express Company ("AXP") owned by Berkshire and its subsidiaries possessed
approximately 11% of the voting rights of all AXP shares outstanding at December 31, 1998. 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.
(5) Realized investment gains (losses)
Realized gains (losses) from sales and redemptions of investments are summarized below (in millions):
1998 1997 1996
Equity securities and other investments —
Gross realized gains ...................................... $2,087 $ 739 * $2,379 **
Gross realized losses ...................................... (272) (23) (36)
Securities with fixed maturities —
Gross realized gains ...................................... 602 396 144
Gross realized losses ...................................... (2) (6) (3)
$2,415 $1,106 $2,484
* In November 1997, the merger of Salomon Inc ("Salomon") with and into a subsidiary of Travelers Group Inc.
("Travelers") was completed. Berkshire subsidiaries received common and preferred stock of Travelers in exchange for
common and preferred shares of Salomon then owned. The value of the Travelers shares received was approximately $1.8
billion. Realized investment gains for 1997 include $678 million with respect to the transaction. The gain is net of a charge
of $298 million for the contingent value associated with Berkshire's Exchange Notes. See Note 9 for additional information
regarding the Exchange Notes.
** In March 1996, The Walt Disney Company ("Disney") completed its acquisition of Capital Cities/ABC, Inc.
("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
include a gain of $2.2 billion relating to Disney's acquisition of Capital Cities.