Berkshire Hathaway 2012 Annual Report Download - page 41

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Notes to Consolidated Financial Statements (Continued)
(2) Significant business acquisitions (Continued)
consideration of $26.5 billion that consisted of cash of approximately $15.9 billion with the remainder in Berkshire common
stock (80,931 Class A shares and 20,976,621 Class B shares). BNSF is based in Fort Worth, Texas, and through its wholly-
owned subsidiary, BNSF Railway Company, currently operates one of the largest railroad systems in North America with
approximately 32,500 route miles of track (including 23,000 route miles of track owned by BNSF) in 28 states and two
Canadian provinces.
We accounted for the BNSF acquisition pursuant to the acquisition method and our valuation of the identified assets and
liabilities and the resulting excess amount recorded as goodwill as of the acquisition date was completed as of December 31,
2010. BNSF’s financial results are consolidated in our financial statements beginning on February 12, 2010. Prior to
February 12, 2010, we owned 76.8 million shares of BNSF (22.5% of the outstanding shares), which we acquired between
August 2006 and January 2009. We accounted for those shares pursuant to the equity method and as of February 12, 2010, our
investment had a carrying value of approximately $6.6 billion. Upon completion of the acquisition of the remaining BNSF
shares, we re-measured our previously owned investment in BNSF at fair value. Accordingly, in 2010, we recognized a one-
time holding gain of $979 million representing the difference between the fair value of the BNSF shares that we acquired prior
to February 12, 2010 and our carrying value under the equity method.
We have owned a controlling interest in Marmon Holdings, Inc. (“Marmon”) since 2008. In the fourth quarter of 2012,
pursuant to the terms of the 2008 Marmon acquisition agreement, we acquired an additional 10% of the outstanding shares of
Marmon held by noncontrolling interests for aggregate consideration of approximately $1.4 billion. Approximately $800 million
of the consideration was paid in the fourth quarter of 2012, and the remainder is payable in March 2013. In the fourth quarter of
2010, we acquired 16.6% of Marmon’s outstanding common stock for approximately $1.5 billion. As a result of these
acquisitions, our ownership interest in Marmon has increased to approximately 90%. These purchases were accounted for as
acquisitions of noncontrolling interests. The differences between the consideration paid or payable and the carrying amounts of
the noncontrolling interests acquired were recorded as reductions in Berkshire’s shareholders equity of approximately
$700 million in 2012 and $614 million in 2010. We are contractually required to acquire substantially all of the remaining
noncontrolling interests of Marmon no later than March 31, 2014, for an amount that will be based on Marmon’s future
operating results.
(3) Investments in fixed maturity securities
Investments in securities with fixed maturities as of December 31, 2012 and 2011 are summarized by type below
(in millions).
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
December 31, 2012
U.S. Treasury, U.S. government corporations and agencies ................... $ 2,742 $ 33 $ — $ 2,775
States, municipalities and political subdivisions ............................ 2,735 178 — 2,913
Foreign governments ................................................. 11,098 302 (45) 11,355
Corporate bonds ..................................................... 10,410 2,254 (3) 12,661
Mortgage-backed securities ............................................ 2,276 318 (7) 2,587
$29,261 $3,085 $ (55) $32,291
December 31, 2011
U.S. Treasury, U.S. government corporations and agencies ................... $ 2,894 $ 41 $ — $ 2,935
States, municipalities and political subdivisions ............................ 2,862 208 — 3,070
Foreign governments ................................................. 10,608 283 (48) 10,843
Corporate bonds ..................................................... 11,120 1,483 (155) 12,448
Mortgage-backed securities ............................................ 2,564 343 (15) 2,892
$30,048 $2,358 $(218) $32,188
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