SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 21, 1998
Berkshire Hathaway Inc.
(formerly known as NBH, Inc.)
(Exact Name of Registrant as Specified in Charter)
Delaware 47-0813844
(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification No.)
Incorporation)
1440 Kiewit Plaza, Omaha, Nebraska 68131
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (402) 346-1400
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
The financial statements of Old Berkshire and General Re required by
this Item 7(a) are incorporated herein by reference to the financial statements
of Old Berkshire and General Re set forth in their respective Annual Reports on
Form 10-K for the year ended December 31, 1997 and their respective Quarterly
Reports on Form 10-Q for the quarter ended September 30, 1998, which financial
statements are included herewith as Exhibits.
(b) Pro Forma Financial Information.
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements are
based on the historical consolidated financial statements of Old Berkshire and
General Re, combined and adjusted to give effect to the Mergers. Certain
reclassifications have been made to the historical financial statements to
conform with this pro forma presentation. These statements should be read in
conjunction with the historical financial statements and notes thereto.
The unaudited pro forma combined condensed statements of earnings for the
year ended December 31, 1997 and for the nine months ended September 30, 1998
present the results for Old Berkshire and General Re as if the Mergers occurred
at the beginning of each period presented. The accompanying unaudited pro forma
combined condensed balance sheet as of September 30, 1998 gives effect to the
Mergers as of that date.
The pro forma adjustments are based upon preliminary estimates, information
currently available and certain assumptions that management believes are
reasonable under the circumstances. New Berkshire's actual consolidated
financial statements will reflect the effects of the Mergers on and after the
effective time rather than the dates indicated above. The unaudited pro forma
combined condensed financial statements neither purport to represent what the
combined results of operations or financial condition actually would have been
had the Mergers and related transactions in fact occurred on the assumed dates,
nor to project the combined results of operations and financial position for any
future period.
The General Re merger will be accounted for by the purchase method and,
therefore, assets and liabilities of General Re will be recorded at their fair
values. The excess of the purchase cost over the fair value of net assets
acquired at the effective time of the General Re merger will be recorded as
goodwill. Allocations included in the pro forma statements are based on analysis
which is not yet completed. Accordingly, the final value of the purchase price
and its allocation may differ, perhaps significantly, from the amounts included
in these pro forma statements.
The Mergers became effective on December 21, 1998. At the effective time of
the Mergers, each issued and outstanding share of General Re Common Stock was
converted into the right to receive, at the General Re holder's election, either
0.0035 Class A shares or 0.105 Class B shares of New Berkshire Common Stock.
Elections must be made by March 1, 1999. Holders that have not made an election
by March 1, 1999 will receive shares of New Berkshire Class B Common Stock for
their shares of General Re Common Stock. The pro forma combined condensed
financial statements assume that all General Re shares were converted into Class
A shares at the fixed exchange ratio of 0.0035. The total value of the
consideration for pro forma purposes was determined using the average closing
price of Old Berkshire Class A Common Stock on the NYSE for the ten day trading
period ended June 26, 1998. The total consideration for the transaction,
including the estimated value of New Berkshire stock options issued in exchange
for General Re employee stock options outstanding, was $22.0 billion.
Berkshire and General Re
Unaudited Pro Forma Combined Condensed Statement of Earnings
For the year ended December 31, 1997
(in millions)
Historical
---------- Pro Forma
Berkshire General Re Adjustments Pro Forma
--------- ---------- ----------- ---------
Revenues:
Insurance premiums earned... $4,761 $6,607 $11,368
Sales and service revenues.. 3,578 83 3,661
Interest, dividend and
other investment income.... 953 1,314 $ (104) A 2,163
Income from financial
services................... 32 302 334
Realized investment gain.... 1,106 3 1,109
------ ------ ------ -------
10,430 8,309 (104) 18,635
------ ------ ------ -------
Cost and Expenses:
Insurance losses and loss
adjustment expenses........ 3,420 4,671 8,091
Insurance underwriting
expenses................... 880 1,955 63 B 2,898
Cost of products and
services sold.............. 2,187 2,187
Selling, general and
administrative expenses.... 921 269 1,190
Goodwill amortization....... 83 29 332 C 444
Interest expense............ 112 58 (2) D 168
------ ------ ------ -------
7,603 6,982 393 14,978
------ ------ ------ -------
Earnings before income taxes
and minority interest 2,827 1,327 (497) 3,657
Income taxes................ 898 302 (57) E 1,143
Minority interest........... 28 57 85
------ ------ ------ -------
Net earnings................. $1,901 $ 968 $ (440) $ 2,429
====== ====== ====== =======
Net earnings per common share* $1,542 $ 1,615
Average common shares
outstanding* 1,233,192 270,824 1,504,016
* Average shares outstanding for 1997 include average Class A common shares
and average Class B common shares determined on an equivalent Class A
common stock basis. Net earnings per common share shown above represents
net earnings per equivalent Class A common share. Net earnings per Class B
common share is equal to one-thirtieth (1/30) of such amount or $54 per
share on a pro forma basis.
See the accompanying notes to the unaudited pro forma combined condensed
financial statements.
Berkshire and General Re
Unaudited Pro Forma Combined Condensed Statement of Earnings
For the nine months ended September 30, 1998
(in millions)
Historical
---------- Pro Forma
Berkshire General Re Adjustments Pro Forma
--------- ---------- ----------- ---------
Revenues:
Insurance premiums earned..................... $ 3,983 $4,436 $ 8,419
Sales and service revenues.................... 3,150 67 3,217
Interest, dividend and
other investment income...................... 774 1,057 $ (78) A 1,753
Income from financial services................ 36 266 302
Realized investment gain...................... 2,227 293 2,520
------- ------ ----- -------
10,170 6,119 (78) 16,211
------- ------ ----- -------
Cost and Expenses:
Insurance losses and loss
adjustment expenses.......................... 2,962 3,083 6,045
Insurance underwriting
expenses..................................... 804 1,404 47 B 2,255
Cost of products and services sold............ 2,053 2,053
Selling, general and administrative
expenses..................................... 744 201 945
Goodwill amortization......................... 73 21 250 C 344
Interest expense.............................. 82 114 (2) D 194
------- ------ ----- -------
6,718 4,823 295 11,836
------- ------ ----- -------
Earnings before income taxes and
minority interest............................. 3,452 1,296 (373) 4,375
Income taxes.................................. 1,166 331 (43) E 1,454
Minority interest............................. 23 47 70
------- ------ ----- -------
Net earnings................................... $2,263 $ 918 $(330) $ 2,851
======= ====== ===== =======
Net earnings per common share* $1,822 $1,884
Average common shares outstanding* 1,242,075 270,824 1,512,899
* Average shares outstanding for the nine months ended September 30,1998
include average Class A common shares and average Class B common shares
determined on an equivalent Class A common stock basis. Net earnings per
common share shown above represents net earnings per equivalent Class A
common share. Net earnings per Class B common share is equal to one-
thirtieth (1/30) of such amount or $63 per share on a pro forma basis.
See the accompanying notes to the unaudited pro forma combined condensed
financial statements.
Berkshire and General Re
Unaudited Pro Forma Combined Condensed Balance Sheet
September 30, 1998
(in millions)
Historical
---------- Pro Forma
Berkshire General Re Adjustments Pro Forma
--------- ---------- ----------- ---------
ASSETS
Cash and cash equivalents............................... $ 6,892 $ 296 $ 7,188
Investments:
Securities with fixed maturities.................... 5,069 18,284 23,353
Equity securities and other investments............. 31,193 6,422 37,615
Receivables............................................. 1,900 5,325 7,225
Assets of financial services............................ 1,397 13,377 14,774
Goodwill of acquired businesses......................... 4,071 961 $13,442 F 18,474
Other assets............................................ 3,588 1,339 4,927
------- ------- ------- --------
$54,110 $46,004 $13,442 $113,556
======= ======= ======= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Losses and loss adjustment expenses..................... $ 7,513 $16,631 $ 24,144
Unearned premiums....................................... 1,583 1,947 3,530
Accounts payable, accruals and other liabilities........ 2,226 3,513 29 G 5,574
(194) H
Income taxes, principally deferred...................... 8,345 1,306 -- I 9,651
Borrowings under investment agreements and other debt... 1,792 294 52 J 2,138
Liabilities of financial services....................... 1,222 12,800 14,022
------- ------- ------- --------
22,681 36,491 (113) 59,059
Minority shareholders' interests........................ 472 1,063 1,535
Total shareholders' equity.............................. 30,957 8,450 13,555 K 52,962
------- ------- ------- --------
$54,110 $46,004 $13,442 $113,556
======= ======= ======= ========
See the accompanying notes to the unaudited pro forma combined condensed
financial statements.
Notes to the Unaudited Pro Forma Combined Condensed Financial Statements
The pro forma adjustments to the combined condensed statements of earnings
are described below.
(A) Reduction of interest income due to amortization of purchase accounting
adjustments related to the cost of General Re's investments in securities
with fixed maturities.
(B) Estimation of (1) the increase in compensation expense related to the
anticipated replacement of General Re's employee stock option plan with a
new incentive compensation plan that will not require the issuance of stock
options or securities of New Berkshire and (2) the increase in compensation
expense related to the use of non-dividend paying New Berkshire stock with
respect to the General Re Employee Savings and Stock Ownership Plan
("ESSOP").
(C) Amortization of the excess of purchase price over the fair value of net
assets acquired, net of the elimination of goodwill amortization included in
General Re's historical statement of earnings. The excess of purchase price
over fair value of net assets recorded with respect to the Mergers will be
amortized ratably over 40 years.
(D) Amortization of purchase accounting adjustments related to General Re's
outstanding debt.
(E) Income tax effects on pro forma adjustments.
The purchase accounting and pro forma adjustments related to the combined
condensed balance sheet are described below. Dollar amounts are in millions.
(F) Excess of purchase price (including acquisition costs) over the fair value
of net assets acquired ($14,403), less the elimination of goodwill included
in General Re's historical balance sheet ($961).
(G) Accrual of merger costs which were unpaid at September 30, 1998.
(H) Conversion of General Re's redeemable cumulative convertible preferred stock
into New Berkshire common stock ($144) and adjustment of related ESSOP loan
balance to fair value ($50).
(I) Income tax liabilities applicable to pro forma adjustments to ESSOP loan
balance adjustment ($18) less deferred tax asset attributed to fair value
adjustments to General Re's outstanding debt ($18).
(J) Adjustment of General Re's outstanding debt to fair value.
(K) Issuance of 270,824 Class A equivalent New Berkshire shares in exchange for
General Re Shares ($21,135), plus the estimated value of Berkshire stock
options issued in exchange for General Re stock options outstanding, ($870)
less elimination of General Re's historical shareholders' equity accounts
($8,450).
(c) The following exhibits are filed herewith or incorporated by reference
herein:
Exhibit Number Description
2.1 Joint Proxy Statement/Prospectus, dated August 12,
1998 of Berkshire Hathaway Inc. and General Re
Corporation (Incorporated by reference (File Nos.
1-10125 and 1-8026))
23.1 Consent of Deloitte & Touche LLP (Incorporated by
reference to Exhibit 23.1 to the Current Report on
Form 8-K of Berkshire Hathaway Inc. dated December
21, 1998)
23.2 Consent of PricewaterhouseCoopers LLP (Incorporated
by reference to Exhibit 23.2 to the Current Report
on Form 8-K of Berkshire Hathaway Inc. dated
December 21, 1998)
99.1 Consolidated Financial Statements of Berkshire
Hathaway Inc. and Notes thereto (Incorporated by
reference to the Annual Report on Form 10-K of
Berkshire Hathaway Inc. for the year ended
December 31, 1997 (File No. 1-10125))
99.2 Interim Consolidated Financial Statements of
Berkshire Hathaway Inc. and Notes thereto
(Incorporated by reference to the Quarterly Report
on Form 10-Q of Berkshire Hathaway Inc. for the
quarter ended September 30, 1998 (File No. 1-
10125))
99.3 Consolidated Financial Statements of General Re
Corporation and Notes thereto (Incorporated by
reference to the Annual Report on Form 10-K of
General Re Corporation for the year ended December
31, 1997 (File No. 1-8026))
99.4 Consolidated Interim Financial Statements of
General Re Corporation and Notes thereto
(Incorporated by reference to the Quarterly Report
on Form 10-Q of General Re Corporation for the
quarter ended September 30, 1998 (File No. 1-8026))
99.5 Joint Press Release of Berkshire Hathaway Inc. and
General Re Corporation issued December 21, 1998
(Incorporated by reference to Exhibit 99.5 to the
Current Report on Form 8-K of Berkshire Hathaway
Inc. dated December 21, 1998)
99.6 Press Release of Berkshire Hathaway Inc. issued
December 23, 1998 (Incorporated by reference to
Exhibit 99.6 to the Current Report on Form 8-K of
Berkshire Hathaway Inc. dated December 21, 1998)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BERKSHIRE HATHAWAY INC.
By: /s/ Marc D. Hamburg
----------------------------
Name: Marc D. Hamburg
Title: Vice President and
Chief Financial Officer
Dated: January 22, 1999
EXHIBIT INDEX
Exhibit Number Description
2.1 Joint Proxy Statement/Prospectus, dated August 12,
1998 of Berkshire Hathaway Inc. and General Re
Corporation (Incorporated by reference (File Nos.
1-10125 and 1-8026))
23.1 Consent of Deloitte & Touche LLP (Incorporated by
reference to Exhibit 23.1 to the Current Report on
Form 8-K of Berkshire Hathaway Inc. dated December
21, 1998)
23.2 Consent of PricewaterhouseCoopers LLP (Incorporated
by reference to Exhibit 23.2 to the Current Report
on Form 8-K of Berkshire Hathaway Inc. dated
December 21, 1998)
99.1 Consolidated Financial Statements of Berkshire
Hathaway Inc. and Notes thereto (Incorporated by
reference to the Annual Report on Form 10-K of
Berkshire Hathaway Inc. for the year ended
December 31, 1997 (File No. 1-10125))
99.2 Interim Consolidated Financial Statements of
Berkshire Hathaway Inc. and Notes thereto
(Incorporated by reference to the Quarterly Report
on Form 10-Q of Berkshire Hathaway Inc. for the
quarter ended September 30, 1998 (File No. 1-
10125))
99.3 Consolidated Financial Statements of General Re
Corporation and Notes thereto (Incorporated by
reference to the Annual Report on Form 10-K of
General Re Corporation for the year ended December
31, 1997 (File No. 1-8026))
99.4 Consolidated Interim Financial Statements of
General Re Corporation and Notes thereto
(Incorporated by reference to the Quarterly Report
on Form 10-Q of General Re Corporation for the
quarter ended September 30, 1998 (File No. 1-8026))
99.5 Joint Press Release of Berkshire Hathaway Inc. and
General Re Corporation issued December 21, 1998
(Incorporated by reference to Exhibit 99.5 to the
Current Report on Form 8-K of Berkshire Hathaway
Inc. dated December 21, 1998)
99.6 Press Release of Berkshire Hathaway Inc. issued
December 23, 1998 (Incorporated by reference to
Exhibit 99.6 to the Current Report on Form 8-K of
Berkshire Hathaway Inc. dated December 21, 1998)