Berkshire Hathaway 2006 Annual Report Download - page 46

45
(16) Fair values of financial instruments (Continued)
services and appraisals reflected the estimated present values utilizing current risk adjusted market rates of similar instruments. The
carrying values of cash and cash equivalents, accounts receivable and payable, other accruals, securities sold under agreements to
repurchase and other liabilities are deemed to be reasonable estimates of their fair values.
Considerable judgment is necessarily required in interpreting market data used to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily indicative of the amounts that could be realized 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.
(17) Common stock
Changes in issued and outstanding Berkshire common stock during the three years ended December 31, 2006 are shown in the
table below.
Class A Common, $5 Par Value Class B Common, $0.1667 Par Value
(1,650,000 shares authorized) (55,000,000 shares authorized)
Shares Issued and Shares Issued and
Outstanding Outstanding
Balance December 31, 2003.............................................. 1,282,979 7,609,543
Conversions of Class A common stock
to Class B common stock and other............................... (14,196) 489,632
Balance December 31, 2004.............................................. 1,268,783 8,099,175
Conversions of Class A common stock
to Class B common stock and other............................... (7,863) 294,908
Balance December 31, 2005.............................................. 1,260,920 8,394,083
Conversions of Class A common stock
to Class B common stock and other............................... (143,352) 4,358,348
Balance December 31, 2006.............................................. 1,117,568 12,752,431
Each share of Class B common stock has dividend and distribution rights equal to one-thirtieth (1/30) of such rights of a Class
A share. Accordingly, on an equivalent Class A common stock basis there are 1,542,649 shares outstanding as of December 31, 2006
and 1,540,723 shares as of December 31, 2005.
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 July 6, 2006, Berkshire’ s Chairman and CEO, Warren E.
Buffett converted 124,998 shares of Class A common stock into 3,749,940 shares of Class B common stock. Each share of Class B
common stock possesses voting rights equivalent to one-two-hundredth (1/200) of the voting rights of a share of Class A common
stock. Class A and Class B common shares vote together as a single class.
(18) Pension plans
Several Berkshire subsidiaries individually sponsor defined benefit pension plans covering certain employees. Benefits under
the plans are generally based on years of service and compensation, although benefits under certain plans are based on years of
service and fixed benefit rates. The companies generally contribute to the plans amounts required to meet regulatory requirements
plus additional amounts determined by management based on actuarial valuations. The measurement date for the pension plans is
predominantly December 31.
In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other
Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106 and 132(R)” (“SFAS No. 158”). SFAS No. 158 requires
an employer to recognize in its statement of financial position the over-funded or under-funded status of a defined benefit
postretirement plan. SFAS No. 158 also requires entities to recognize as a component of other comprehensive income, net of tax, the
actuarial gains and losses and the prior service costs and credits that arise during the period, but are not recognized as components of
net periodic benefit cost of the period pursuant to SFAS No. 87, “Employers’ Accounting for Pensions” and SFAS No. 106,
“Employers’ Accounting for Postretirement Benefits Other Than Pensions.” Berkshire adopted the recognition and related disclosure
provisions of SFAS No. 158 as of December 31, 2006. The incremental impact to the accompanying Consolidated Balance Sheet of
such adoption is as follows (in millions).
Before After
SFAS No. 158 Adjustments SFAS No. 158
Other assets (1) ................................................................................................... $ 17,086 $ (322) $ 16,764
Total assets........................................................................................................ 248,759 (322) 248,437
Accounts payable, accruals and other liabilities (2) ............................................ 20,465 135 20,600
Income taxes, principally deferred .................................................................... 18,614 (154) 18,460
Total liabilities................................................................................................... 137,775 (19) 137,756
Accumulated other comprehensive income ....................................................... 23,280 (303) 22,977
Total shareholders’ equity ................................................................................. 108,722 (303) 108,419
Total liabilities and shareholders’ equity........................................................... 248,759 (322) 248,437
(1) Consists of $126 million related to Insurance and Other and ($448) million related to Utilities and Energy businesses.
(2) Consists of $30 million related to Insurance and Other and $105 million related to Utilities and Energy businesses.