UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2015~~2016

¨☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-14905

BERKSHIRE HATHAWAY INC.

(Exact name of registrant as specified in its charter)

Delaware

47-0813844

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

3555 Farnam Street, Omaha, Nebraska 68131

(Address of principal executive office)

(Zip Code)

(402) 346-1400

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No ¨☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x☒ No ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨☐ No x☒

Number of shares of common stock outstanding as of October ~~30, 2015:~~27, 2016:


		Class A —			~~811,129~~784,669
		Class B —			~~1,248,359,021~~1,289,055,322

BERKSHIRE HATHAWAY INC.


		Page No.
Part I – Financial Information


Item 1.		Financial Statements
	Consolidated Balance Sheets— September 30, ~~2015~~2016 and December 31, ~~2014~~2015		2
	Consolidated Statements of Earnings— Third Quarter and First Nine Months ~~2015~~2016 and ~~2014~~		3
	~~Consolidated Statements of Comprehensive Income—~~ ~~Third Quarter and First Nine Months~~ 2015 ~~and 2014~~		4
	Consolidated Statements of ~~Changes in Shareholders’ Equity—~~ Comprehensive Income—Third Quarter and First Nine Months ~~2015~~2016 and ~~2014~~		4
	~~Consolidated Statements of Cash Flows—~~ ~~First Nine Months~~ 2015 ~~and 2014~~		5
	Consolidated Statements of Changes in Shareholders’ Equity—First Nine Months 2016 and 2015		5
	Consolidated Statements of Cash Flows—First Nine Months 2016 and 2015		6
	Notes to Consolidated Financial Statements		~~6-24~~7-24
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		~~25-42~~25-43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		4344
Item 4.	Controls and Procedures		4344

Part II – Other Information

Item 1.	Legal Proceedings		4344
Item 1A.	Risk Factors		4344
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities		4344
Item 3.	Defaults Upon Senior Securities		4344
Item 4.	Mine Safety Disclosures		44
Item 5.	Other Information		44
Item 6.	Exhibits		4445

Signature			45

Part I Financial Information

Item 1. Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(dollars in millions)


	September 30, 2015			December 31, 2014			September 30, 2016		December 31, 2015
	(Unaudited)						(Unaudited)
ASSETS
*Insurance and Other:*
Cash and cash equivalents		$	56,166		$	57,974	$	68,269	$	61,181
Investments:
Fixed maturity securities			27,119			27,397		24,613		25,988
Equity securities			106,104			115,529		100,757		110,212
Other			15,011			16,346		15,415		15,998
Investments in The Kraft Heinz Company			23,526			11,660
Investments in The Kraft Heinz Company (Fair Value: September 30, 2016 – $29,130; December 31, 2015 – $32,042)								15,711		23,424
Receivables			24,484			21,852		27,544		23,303
Inventories			11,995			10,236		15,763		11,916
Property, plant and equipment			15,465			14,153		19,326		15,540
Goodwill			37,133			34,959		53,832		37,188
Other intangible assets								35,034		9,148
Deferred charges reinsurance assumed								7,505		7,687
Other			23,906			23,763		8,685		6,697

			340,909			333,869		392,454		348,282

*Railroad, Utilities and Energy:*
Cash and cash equivalents			4,691			3,001		3,893		3,437
Property, plant and equipment			118,577			115,054		123,005		120,279
Goodwill			24,231			24,418		24,186		24,178
Regulatory assets								4,369		4,285
Other			17,445			16,343		14,219		12,833

			164,944			158,816		169,672		165,012

*Finance and Financial Products:*
Cash and cash equivalents			5,403			2,294		12,673		7,112
Investments in equity and fixed maturity securities			3,040			1,299		336		411
Other investments			5,565			5,978		2,078		5,719
Loans and finance receivables			12,686			12,566		13,213		12,772
Property, plant and equipment and assets held for lease			9,291			8,037		9,737		9,347
Goodwill			1,328			1,337		1,374		1,342
Other			2,302			1,990		2,501		2,260

			39,615			33,501		41,912		38,963

		$	545,468		$	526,186	$	604,038	$	552,257

LIABILITIES AND SHAREHOLDERS’ EQUITY
*Insurance and Other:*
Losses and loss adjustment expenses		$	72,279		$	71,477
Unearned premiums			14,254			11,944
Life, annuity and health insurance benefits			14,266			13,261
Accounts payable, accruals and other liabilities			24,573			23,307
Notes payable and other borrowings			14,556			11,894

			139,928			131,883

*Railroad, Utilities and Energy:*
Accounts payable, accruals and other liabilities			15,204			15,595
Notes payable and other borrowings			57,872			55,579

			73,076			71,174

*Finance and Financial Products:*
Accounts payable, accruals and other liabilities			1,964			1,321
Derivative contract liabilities			4,430			4,810
Notes payable and other borrowings			12,483			12,736

			18,877			18,867

Income taxes, principally deferred			62,266			61,235

Total liabilities			294,147			283,159

Shareholders’ equity:
Common stock			8			8
Capital in excess of par value			35,610			35,573
Accumulated other comprehensive income			32,203			42,732
Retained earnings			182,225			163,620
Treasury stock, at cost			(1,763)			(1,763)

Berkshire Hathaway shareholders’ equity			248,283			240,170
Noncontrolling interests			3,038			2,857

Total shareholders’ equity			251,321			243,027

		$	545,468		$	526,186

See accompanying Notes to Consolidated Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(dollars in millions)


	September 30, 2016		December 31, 2015
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
*Insurance and Other:*
Losses and loss adjustment expenses	$	75,469	$	73,144
Unearned premiums		15,223		13,311
Life, annuity and health insurance benefits		15,405		14,497
Other policyholder liabilities		7,259		7,123
Accounts payable, accruals and other liabilities		22,426		17,879
Notes payable and other borrowings		27,514		14,599

		163,296		140,553

*Railroad, Utilities and Energy:*
Accounts payable, accruals and other liabilities		11,590		11,994
Regulatory liabilities		3,094		3,033
Notes payable and other borrowings		58,811		57,739

		73,495		72,766

*Finance and Financial Products:*
Accounts payable, accruals and other liabilities		1,616		1,398
Derivative contract liabilities		3,973		3,836
Notes payable and other borrowings		15,473		11,951

		21,062		17,185

Income taxes, principally deferred		73,570		63,126

Total liabilities		331,423		293,630

Shareholders’ equity:
Common stock		8		8
Capital in excess of par value		35,730		35,620
Accumulated other comprehensive income		29,798		33,982
Retained earnings		205,491		187,703
Treasury stock, at cost		(1,763)		(1,763)

Berkshire Hathaway shareholders’ equity		269,264		255,550
Noncontrolling interests		3,351		3,077

Total shareholders’ equity		272,615		258,627

	$	604,038	$	552,257

See accompanying Notes to Consolidated Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS

(dollars in millions except per share amounts)


	Third Quarter				First Nine Months				Third Quarter				First Nine Months
	2015		2014		2015		2014		2016		2015		2016			2015
	(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Revenues:
*Insurance and Other:*
Insurance premiums earned	$	10,514	$	12,717	$	30,454	$	31,456	$	11,364	$	10,514	$	33,287		$	30,454
Sales and service revenues		27,436		25,078		80,169		72,252		30,536		27,436		89,357			80,169
Interest, dividend and other investment income		1,132		1,171		3,758		3,909		1,276		1,132		4,284			3,758
Investment gains/losses		8,339		(376)		8,571		3,049		735		8,339		3,221			8,571

		47,421		38,590		122,952		110,666		43,911		47,421		130,149			122,952

*Railroad, Utilities and Energy:*
Revenues		10,697		10,697		30,454		30,296		10,330		10,697		28,026			30,454


*Finance and Financial Products:*
Sales and service revenues		1,379		1,322		3,984		3,732		1,588		1,379		4,557			3,984
Interest, dividend and other investment income		329		332		1,077		999		366		329		1,109			1,077
Investment gains/losses		(73)		—		154		72		2,415		(73)		2,422			154
Derivative gains/losses		(764)		258		380		649		458		(764)		(332	)		380

		871		1,912		5,595		5,452		4,827		871		7,756			5,595

		58,989		51,199		159,001		146,414		59,068		58,989		165,931			159,001

Costs and expenses:
*Insurance and Other:*
Insurance losses and loss adjustment expenses		6,831		8,791		19,524		19,923		7,615		6,831		22,325			19,524
Life, annuity and health insurance benefits		1,165		1,355		4,083		3,844		1,339		1,165		3,747			4,083
Insurance underwriting expenses		1,875		1,596		5,505		5,361		2,001		1,875		5,948			5,505
Cost of sales and services		22,297		20,410		65,145		58,610		24,472		22,297		71,617			65,145
Selling, general and administrative expenses		3,721		2,991		10,177		8,845		3,959		3,721		11,747			10,177
Interest expense		88		109		449		323		259		88		674			449

		35,977		35,252		104,883		96,906		39,645		35,977		116,058			104,883

*Railroad, Utilities and Energy:*
Cost of sales and operating expenses		7,018		7,383		20,985		21,957		6,763		7,018		19,421			20,985
Interest expense		672		597		1,957		1,753		681		672		1,962			1,957

		7,690		7,980		22,942		23,710		7,444		7,690		21,383			22,942

*Finance and Financial Products:*
Cost of sales and services		736		713		2,134		2,043		886		736		2,529			2,134
Selling, general and administrative expenses		409		393		1,176		1,144		465		409		1,301			1,176
Interest expense		105		111		301		347		103		105		307			301

		1,250		1,217		3,611		3,534		1,454		1,250		4,137			3,611

		44,917		44,449		131,436		124,150		48,543		44,917		141,578			131,436

Earnings before income taxes		14,072		6,750		27,565		22,264		10,525		14,072		24,353			27,565
Income tax expense		4,545		2,029		8,698		6,312		3,192		4,545		6,281			8,698

Net earnings		9,527		4,721		18,867		15,952		7,333		9,527		18,072			18,867
Less: Earnings attributable to noncontrolling interests		99		104		262		235		135		99		284			262

Net earnings attributable to Berkshire Hathaway shareholders	$	9,428	$	4,617	$	18,605	$	15,717	$	7,198	$	9,428	$	17,788		$	18,605

Average common shares outstanding *		1,643,316		1,642,558		1,643,118		1,643,657
Net earnings per share attributable to Berkshire Hathaway shareholders *	$	5,737	$	2,811	$	11,323	$	9,562

Net earnings per share attributable to Berkshire Hathaway shareholders*									$	4,379	$	5,737	$	10,822		$	11,323
Average equivalent Class A Shares outstanding*										1,643,913		1,643,316		1,643,716			1,643,118

Average shares outstanding ~~include average Class A common shares~~ and ~~average Class B common shares determined~~net earnings per share are shown on an equivalent Class A common stock basis. Equivalent Class B shares outstanding are 1,500 times the equivalent Class A amount. Net ~~earnings per common share attributable to Berkshire Hathaway shown above represents net~~ earnings per equivalent Class ~~A common share. Net earnings per Class~~ B ~~common~~ share ~~is equal to~~outstanding are one-fifteen-hundredth (1/1,500) of ~~such~~the equivalent Class A amount.

See accompanying Notes to Consolidated Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollars in millions)


	Third Quarter						First Nine Months						Third Quarter				First Nine Months
	2015			2014			2015			2014			2016		2015		2016			2015
	(Unaudited)						(Unaudited)						(Unaudited)				(Unaudited)
Net earnings	$	9,527		$	4,721		$	18,867		$	15,952		$	7,333	$	9,527	$	18,072		$	18,867


Other comprehensive income:
Net change in unrealized appreciation of investments		(8,623	)		(601	)		(12,185	)		4,629			1,581		(8,623)		(1,381	)		(12,185)
Applicable income taxes		2,957			174			4,237			(1,662	)		(515)		2,957		478			4,237
Reclassification of investment appreciation in net earnings		(1,586	)		417			(1,781	)		(3,032	)		(3,088)		(1,586)		(4,904	)		(1,781)
Applicable income taxes		555			(146	)		623			1,061			1,080		555		1,716			623
Foreign currency translation		(716	)		(1,226	)		(1,499	)		(846	)		(44)		(716)		(158	)		(1,499)
Applicable income taxes		(11	)		101			(30	)		31			9		(11)		23			(30)
Prior service cost and actuarial gains/losses of defined benefit pension plans		247			39			252			30			(21)		247		34			252
Applicable income taxes		(85	)		(7	)		(87	)		(2	)		13		(85)		(6	)		(87)
Other, net		(4	)		2			(104	)		(27	)		3		(4)		(3	)		(104)

Other comprehensive income, net		(7,266	)		(1,247	)		(10,574	)		182			(982)		(7,266)		(4,201	)		(10,574)

Comprehensive income		2,261			3,474			8,293			16,134			6,351		2,261		13,871			8,293
Comprehensive income attributable to noncontrolling interests		47			92			217			256			132		47		267			217

Comprehensive income attributable to Berkshire Hathaway shareholders	$	2,214		$	3,382		$	8,076		$	15,878		$	6,219	$	2,214	$	13,604		$	8,076

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(dollars in millions)

   Berkshire Hathaway shareholders’ equity
     Common stock
  and capital in
  excess of par
  value     Accumulated
  other
  comprehensive
  income   Retained
earnings    Treasury
stock      Non-
controlling
interests        Total
Balance at December 31, 2013
     $ 35,480   $ 44,025    $ 143,748       $ (1,363 )        $ 2,595      $ 224,485
Net earnings
   —   —   15,717    —        235    15,952
Other comprehensive income, net
   —   161 —      —        21    182
Issuance (acquisition) of common stock
   106 —   —      (400 )      —      (294 )
Transactions with noncontrolling interests
   (18 ) —   —      —        (5 )    (23 )








Balance at September 30, 2014
     $       35,568   $ 44,186    $ 159,465       $ (1,763 )        $ 2,846      $ 240,302








Balance at December 31, 2014
     $ 35,581   $ 42,732    $ 163,620       $ (1,763 )        $ 2,857      $ 243,027
Net earnings
   —   —   18,605    —        262    18,867
Other comprehensive income, net
   —       (10,529 ) —      —        (45 )    (10,574 )
Issuance of common stock
   63 —   —      —        —      63
Transactions with noncontrolling interests
   (26 ) —   —      —        (36 )    (62 )








Balance at September 30, 2015
     $ 35,618   $ 32,203    $ 182,225       $ (1,763 )        $ 3,038      $ 251,321


	Berkshire Hathaway shareholders’ equity										Total
	Common stock and capital in excess of par value		Accumulated other comprehensive income		Retained earnings		Treasury stock		Non- controlling interests		Total
Balance at December 31, 2014	$	35,581	$	42,732	$	163,620	$	(1,763)	$	2,857	$	243,027
Net earnings		—		—		18,605		—		262		18,867
Other comprehensive income, net		—		(10,529)		—		—		(45)		(10,574)
Issuance of common stock		63		—		—		—		—		63
Transactions with noncontrolling interests		(26)		—		—		—		(36)		(62)

Balance at September 30, 2015	$	35,618	$	32,203	$	182,225	$	(1,763)	$	3,038	$	251,321


Balance at December 31, 2015	$	35,628	$	33,982	$	187,703	$	(1,763)	$	3,077	$	258,627
Net earnings		—		—		17,788		—		284		18,072
Other comprehensive income, net		—		(4,184)		—		—		(17)		(4,201)
Issuance of common stock		80		—		—		—		—		80
Transactions with noncontrolling interests		30		—		—		—		7		37

Balance at September 30, 2016	$	35,738	$	29,798	$	205,491	$	(1,763)	$	3,351	$	272,615

See accompanying Notes to Consolidated Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in millions)


	First Nine Months						First Nine Months
	2015			2014			2016			2015
	(Unaudited)						(Unaudited)
Cash flows from operating activities:
Net earnings	$	18,867			$15,952		$	18,072		$	18,867
Adjustments to reconcile net earnings to operating cash flows:
Investment gains/losses		(8,725	)		(3,121	)		(5,643	)		(8,725	)
Depreciation and amortization		5,801			5,436			6,605			5,801
Other		620			(369	)		27			620
Changes in operating assets and liabilities:
Losses and loss adjustment expenses		1,195			6,731			2,615			1,195
Deferred charges reinsurance assumed		369			(3,162	)		182			369
Unearned premiums		2,311			1,982			1,906			2,311
Receivables and originated loans		(3,021	)		(3,061	)		(3,445	)		(3,021	)
Derivative contract assets and liabilities		(296	)		(663	)		137			(296	)
Income taxes		5,954			2,700			3,601			5,954
Other		1,080			1,732			1,114			1,080

Net cash flows from operating activities		24,155			24,157			25,171			24,155


Cash flows from investing activities:
Purchases of fixed maturity securities		(5,365	)		(5,775	)		(6,009	)		(5,365	)
Purchases of equity securities		(8,809	)		(4,389	)		(5,185	)		(8,809	)
Investments in The Kraft Heinz Company and other investments		(5,258	)		—
Purchase of Kraft Heinz Company common stock								—			(5,258	)
Sales of fixed maturity securities		791			916			1,121			791
Redemptions and maturities of fixed maturity securities		4,421			4,722			6,640			4,421
Sales and redemptions of equity securities		5,755			3,803			19,989			5,755
Purchases of loans and finance receivables		(144	)		(162	)		(224	)		(144	)
Collections of loans and finance receivables		345			770			271			345
Acquisitions of businesses, net of cash acquired		(4,802	)		(1,069	)		(30,815	)		(4,802	)
Purchases of property, plant and equipment		(11,803	)		(10,172	)		(9,429	)		(11,803	)
Other		21			390			(611	)		21

Net cash flows from investing activities		(24,848	)		(10,966	)		(24,252	)		(24,848	)


Cash flows from financing activities:
Proceeds from borrowings of insurance and other businesses		3,271			826			9,385			3,271
Proceeds from borrowings of railroad, utilities and energy businesses		4,468			4,272			2,234			4,468
Proceeds from borrowings of finance businesses		998			1,148			4,740			998
Repayments of borrowings of insurance and other businesses		(1,875	)		(809	)		(1,921	)		(1,875	)
Repayments of borrowings of railroad, utilities and energy businesses		(1,050	)		(1,745	)		(1,879	)		(1,050	)
Repayments of borrowings of finance businesses		(1,254	)		(1,488	)		(1,220	)		(1,254	)
Change in short term borrowings, net		(508	)		222
Changes in short term borrowings, net								888			(508	)
Acquisitions of noncontrolling interests		(71	)		(1,288	)		(3	)		(71	)
Other		(181	)		38			(28	)		(181	)

Net cash flows from financing activities		3,798			1,176			12,196			3,798

Effects of foreign currency exchange rate changes		(114	)		(173	)		(10	)		(114	)

Increase in cash and cash equivalents		2,991			14,194			13,105			2,991
Cash and cash equivalents at beginning of year *		63,269			48,186
Cash and cash equivalents at beginning of year								71,730			63,269

Cash and cash equivalents at end of third quarter *	$	66,260			$62,380		$	84,835		$	66,260


*Cash and cash equivalents are comprised of the following:
Beginning of year—
Insurance and Other	$	57,974		$	42,433		$	61,181		$	57,974
Railroad, Utilities and Energy		3,001			3,400			3,437			3,001
Finance and Financial Products		2,294			2,353			7,112			2,294

	$	63,269		$	48,186		$	71,730		$	63,269

End of third quarter—
Insurance and Other	$	56,166			$55,834		$	68,269		$	56,166
Railroad, Utilities and Energy		4,691			3,951			3,893			4,691
Finance and Financial Products		5,403			2,595			12,673			5,403

	$	66,260			$62,380		$	84,835		$	66,260

See accompanying Notes to Consolidated Financial Statements

BERKSHIRE HATHAWAY INC.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, ~~2015~~2016

Note 1. General

The accompanying unaudited Consolidated Financial Statements include the accounts of Berkshire Hathaway Inc. (“Berkshire” or “Company”) consolidated with the accounts of all its subsidiaries and affiliates in which Berkshire holds controlling financial interests as of the financial statement date. In these notes the terms “us,” “we” or “our” refer to Berkshire and its consolidated subsidiaries. Reference is made to Berkshire’s most recently issued Annual Report on Form 10-K (“Annual Report”) which includes information necessary or useful to understanding Berkshire’s businesses and financial statement presentations. Our significant accounting policies and practices were presented as Note 1 to the Consolidated Financial Statements included in the Annual Report.

Financial information in this Quarterly Report reflects any adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary to a fair statement of results for the interim periods in accordance with accounting principles generally accepted in the United States (“GAAP”). For a number of reasons, our results for interim periods are not normally indicative of results to be expected for the year. The timing and magnitude of catastrophe losses incurred by insurance subsidiaries and the estimation error inherent to the process of determining liabilities for unpaid losses of insurance subsidiaries can be more significant to results of interim periods than to results for a full year. Variations in the amount and timing of investment gains/losses can cause significant variations in periodic net earnings. Investment gains/losses are recorded when investments are disposed or are other-than-temporarily impaired. In addition, changes in the fair values of liabilities associated with derivative contracts can cause significant variations in periodic net earnings.

Note 2. New accounting pronouncements

In April 2015, the FASB issued ASU 2015-05 “Intangibles—Goodwill and Other—Internal-Use Software,” which clarifies that software licenses contained in a cloud computing arrangement should be capitalized if the customer has the right to take possession of the software and the ability to run the software outside of the cloud computing arrangement. ASU 2015-05 is effective for annual periods beginning after December 15, 2015 and may be adopted prospectively or retrospectively. Early adoption is permitted. In April 2015, the FASB also issued ASU 2015-03 “Interest—Imputation of Interest,” which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, instead of as an asset. The recognition and measurement guidance for debt issuance costs under current GAAP is not affected by this pronouncement. ASU 2015-03 is effective for reporting periods beginning after December 15, 2015 and should be adopted retrospectively. Early adoption is permitted. We do not expect that the adoption of ASU 2015-05 and ASU 2015-03 will have a material impact on our Consolidated Financial Statements.

In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers.” ASU 2014-09 applies to contracts with customers, excluding, most notably, insurance and leasing contracts. ASU 2014-09 prescribes a framework ~~for~~in accounting for revenues from contracts within its scope, including (a) ~~identification of~~identifying the contract, (b) ~~identification of~~identifying the performance obligations under the contract, (c) ~~determination of~~determining the transaction price, (d) ~~allocation of~~allocating the transaction price to the identified performance obligations and (e) ~~recognition of~~recognizing revenues as the identified performance obligations are satisfied. ASU 2014-09 also prescribes additional ~~disclosures and~~ financial statement ~~presentations. In August 2015, the FASB deferred the effective date of~~presentations and disclosures. We currently expect to adopt ASU 2014-09 ~~to reporting periods beginning after December 15, 2017. Early adoption is permitted for reporting periods beginning after December 15, 2016. ASU 2014-09 may be adopted retrospectively or~~as of January 1, 2018, under athe modified retrospective method where the cumulative effect is recognized at the date of initial application. ~~We are evaluating the effect that the adoption~~Our evaluation of ASU 2014-09 is ongoing and not complete. The FASB has issued and may issue in the future, interpretative guidance, which may cause our evaluation to change. While we anticipate some changes to revenue recognition for certain customer contracts, we do not currently believe ASU 2014-09 will have a material effect on our Consolidated Financial Statements.

In May 2015, the FASB issued ASU 2015-09 “Financial Services—Insurance—Disclosures about Short-Duration Contracts,” which requires additional disclosures in annual and interim reporting periods by insurance entities regarding liabilities for unpaid claims and claim adjustment expenses, and ~~any~~ changes in assumptions or methodologies for ~~calculations of~~calculating such liabilities. ASU 2015-09 is effective for annual periods beginning after December 15, 2015 and interim periods beginning after December 15, 2016. ~~Early adoption is permitted.~~ We ~~are evaluating~~continue to evaluate the effect adopting this standard will have on the disclosures in our Consolidated Financial Statements.

In January 2016, the FASB issued ASU 2016-01 “Financial Instruments—Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 generally requires that equity investments (excluding equity method investments) be measured at fair value with changes in fair value recognized in net income. Under existing GAAP, changes in fair value of available-for-sale equity investments are recorded in other comprehensive income. Given the current magnitude of our equity investments, the adoption of ASU ~~2015-09~~2016-01 will likely have a significant impact on the periodic net earnings reported in our Consolidated Statement of Earnings, although it will likely not significantly impact our comprehensive income or shareholders’ equity. ASU 2016-01 is effective for annual and interim periods beginning after December 15, 2017, with the cumulative effect of the adoption made to the balance sheet as of the date of adoption. Thus, the adoption will result in a reclassification of the related accumulated unrealized appreciation currently included in accumulated other comprehensive income to retained earnings, with no impact on Berkshire shareholders’ equity.

In February 2016, the FASB issued ASU 2016-02 “Leases.” ASU 2016-02 requires a lessee to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the effect this standard will have on our Consolidated Financial Statements.

Notes to Consolidated Financial Statements(Continued)

Note 2. New accounting pronouncements(Continued)

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments—Credit Losses,” which provides for the recognition and measurement at the reporting date of all expected credit losses for financial assets held at amortized cost and available-for-sale debt securities. Currently credit losses are recognized and measured when such losses become probable based on the prevailing facts and circumstances. ASU 2016-13 is effective for reporting periods beginning after December 15, 2019. We are currently evaluating the effect this standard will have on our Consolidated Financial Statements.

Note 3. Significant business acquisitions

Our long-held acquisition strategy is to acquire businesses at sensible prices that have consistent earning power, good returns on equity and able and honest management. On August 8, 2015, Berkshire entered into a definitive agreement with Precision Castparts Corp. (“PCC”) to acquire all outstanding PCC shares of common stock for $235 per share in cash. The acquisition was completed on January 29, 2016. The aggregate consideration paid was approximately $32.7 billion, which included the value of PCC shares we already owned. We funded the acquisition with a combination of existing cash balances and proceeds from a short-term credit facility.

PCC is a worldwide, diversified manufacturer of complex metal components and products. It serves the aerospace, power and general industrial markets. PCC is a market leader in manufacturing complex structural investment castings and forged components for aerospace markets, machined airframe components and highly engineered critical fasteners for aerospace applications, and in manufacturing airfoil castings for the aerospace and industrial gas turbine markets. PCC also is a leading producer of titanium and nickel superalloy melted and mill products for the aerospace, chemical processing, oil and gas and pollution control industries, and manufactures extruded seamless pipe, fittings and forgings for power generation and oil and gas applications.

In November 2014, Berkshire entered into a definitive agreement with The Procter & Gamble Company (“P&G”) to acquire the Duracell business from P&G. The transaction closed on February 29, 2016. Duracell is a leading manufacturer of high-performance alkaline batteries and is an innovator in renewable power and wireless charging technologies. Pursuant to the agreement, we received a recapitalized Duracell Company in exchange for shares of P&G common stock held by Berkshire subsidiaries which had a fair value of approximately $4.2 billion.

Financial results attributable to these business acquisitions are included in our Consolidated Financial Statements beginning on their respective acquisition dates.

In The acquisition date fair values of certain assets and liabilities, particularly property, plant and equipment and intangible assets, and related estimated useful lives are provisional and are subject to revision as the ~~first quarter~~related valuations are completed. We expect such values will be finalized as of 2015, Berkshire acquired controlling interests in the Van Tuyl Group. The Van Tuyl Group (now named Berkshire Hathaway Automotive) included 81 automotive dealerships located in 10 states as well as two related insurance businesses, two auto auctions and a manufacturer of automotive fluid maintenance products. In addition to selling new and pre-owned automobiles, the Berkshire Hathaway Automotive group offers repair and other services and products, including extended warranty services and other automotive protection plans. Consideration paid for the acquisition was $4.1 billion. On December 1, 2014, Berkshire Hathaway Energy Company acquired AltaLink, L.P. (“AltaLink”) for a cash purchase price of C$3.1 billion (approximately $2.7 billion). AltaLink is a regulated electric transmission-only business, headquartered in Calgary, Alberta. The goodwill related to the AltaLink acquisition31, 2016. Goodwill from these acquisitions is not amortizable for income tax ~~purposes, while substantially all of the goodwill related to Berkshire Hathaway Automotive is expected to be amortizable for income tax~~ purposes.

Preliminary fair values of identified assets acquired and liabilities assumed and residual goodwill of PCC and Duracell at their respective acquisition dates are summarized asin the table that follows (in millions).


	Berkshire Hathaway Automotive		AltaLink		PCC		Duracell
Cash and investments		$ 1,274		$ 15
Cash and cash equivalents					$	250	$	1,807
Inventories		1,209		—		3,430		326
Property, plant and equipment		1,034		5,610		2,772		364
Goodwill		1,719		1,731		15,880		614
Other intangible assets						24,197		2,024
Other assets		1,401		287		1,914		256

Assets acquired		$ 6,637		$ 7,643	$	48,443	$	5,391


Accounts payable, accruals and other liabilities		$ 1,396		$ 1,064	$	2,442	$	392
Notes payable and other borrowings		1,129		3,851		5,251		—
Income taxes, principally deferred						8,092		760

Liabilities assumed		$ 2,525		$ 4,915	$	15,785	$	1,152

Net assets		$ 4,112		$ 2,728	$	32,658	$	4,239

Notes to Consolidated Financial Statements(Continued)

Note 3. Significant business acquisitions(Continued)

The following table sets forth certain unaudited pro forma consolidated earnings data for the first nine months of ~~2014~~2015 as if the acquisitions discussed previously were consummated on the same terms at the beginning of the year preceding their respective acquisition dates (in millions, except ~~the~~ per share amount). Pro forma data for the first nine months of ~~2015~~2016 was not materially different from the amounts reflected in the accompanying Consolidated ~~Statement of Earnings.~~Financial Statements.


	First ~~nine months~~ ~~2014~~Nine Months
	2015
Revenues		$	~~153,079~~167,315
Net earnings attributable to Berkshire Hathaway shareholders			~~15,838~~19,086
Net earnings per equivalent Class A common share attributable to Berkshire Hathaway shareholders			~~9,636~~11,615

~~Notes to Consolidated Financial Statements~~~~(Continued)~~

Note 4. Investments in fixed maturity securities

Investments in securities with fixed maturities as of September 30, ~~2015~~2016 and December 31, ~~2014~~2015 are summarized ~~by type~~ below (in millions).


	Amortized Cost			Unrealized Gains			Unrealized Losses				Fair Value			Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
September 30, 2015
September 30, 2016
U.S. Treasury, U.S. government corporations and agencies		$	3,796		$	24		$	(1	)		$	3,819	$	4,549	$	17	$	(1	)	$	4,565
States, municipalities and political subdivisions			1,788			82			(2	)			1,868		1,216		64		(1	)		1,279
Foreign governments			11,415			306			(77	)			11,644		9,454		362		(21	)		9,795
Corporate bonds			7,359			778			(21	)			8,116		6,996		800		(7	)		7,789
Mortgage-backed securities			1,526			191			(4	)			1,713		1,068		156		(5	)		1,219

		$	25,884		$	1,381		$	(105	)		$	27,160	$	23,283	$	1,399	$	(35	)	$	24,647

December 31, 2014
December 31, 2015
U.S. Treasury, U.S. government corporations and agencies		$	2,921		$	14		$	(5	)		$	2,930	$	3,425	$	10	$	(8	)	$	3,427
States, municipalities and political subdivisions			1,820			93			(1	)			1,912		1,695		71		(2	)		1,764
Foreign governments			12,023			373			(126	)			12,270		11,327		226		(85	)		11,468
Corporate bonds			7,704			1,072			(5	)			8,771		7,323		632		(29	)		7,926
Mortgage-backed securities			1,555			202			(4	)			1,753		1,279		168		(5	)		1,442

		$	26,023		$	1,754		$	(141	)		$	27,636	$	25,049	$	1,107	$	(129	)	$	26,027

Investments in fixed maturity securities are reflected in our Consolidated Balance Sheets as follows (in millions).


	September 30, 2015			December 31, 2014			September 30, 2016			December 31, 2015
Insurance and other		$	27,119		$	27,397		$	24,613		$	25,988
Finance and financial products			41			239			34			39

		$	27,160		$	27,636		$	24,647		$	26,027

Investments in foreign government securities include securities issued by national and provincial government entities as well as instruments that are unconditionally guaranteed by such entities. As of September 30, ~~2015,~~2016, approximately ~~94%~~92% of foreign government holdings were rated AA or higher by at least one of the major rating agencies. Approximately ~~75%~~80% of foreign government holdings were issued or guaranteed by the United Kingdom, Germany, Australia ~~Canada~~ or ~~The Netherlands. Unrealized losses on all~~Canada.

Notes to Consolidated Financial Statements(Continued)

Note 4. Investments in fixed maturity ~~investments in a continuous unrealized loss position for more than twelve consecutive months were $10 million as of September 30, 2015 and $15 million as of December 31, 2014.~~securities(Continued)

The amortized cost and estimated fair value of securities with fixed maturities at September 30, ~~2015~~2016 are summarized below by contractual maturity dates. Actual maturities ~~will~~may differ from contractual maturities ~~because issuers of certain of the securities retain~~due to early call or prepayment ~~rights. Amounts are in millions.~~rights held by issuers (in millions).

   Due in one
year or less    Due after one
year through
five years    Due after five
years through
ten years    Due after
ten years    Mortgage-backed
securities    Total
Amortized cost
   $8,103       $11,635       $1,897       $2,723       $1,526       $25,884
Fair value
   8,112       12,134       2,024       3,177       1,713       27,160

~~Notes to Consolidated Financial Statements~~~~(Continued)~~


	Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Mortgage- backed securities		Total
Amortized cost		$8,007		$10,773		$1,076		$2,359		$1,068		$23,283
Fair value		8,068		11,224		1,177		2,959		1,219		24,647

Note 5. Investments in equity securities

Investments in equity securities as of September 30, ~~2015~~2016 and December 31, ~~2014~~2015 are summarized based on the primary industry of the investee in the table below (in millions).


	Cost Basis			Unrealized Gains			Unrealized Losses				Fair Value			Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
September 30, 2015 *
September 30, 2016 *
Banks, insurance and finance		$	21,587		$	27,358		$	(86	)		$	48,859	$	19,852	$	21,695	$	(173	)	$	41,374
Consumer products			6,893			16,620			(5	)			23,508		5,149		16,790		—			21,939
Commercial, industrial and other			34,567			6,243			(2,889	)			37,921		32,517		7,904		(1,199	)		39,222

		$	63,047		$	50,221		$	(2,980	)		$	110,288	$	57,518	$	46,389	$	(1,372	)	$	102,535

Approximately ~~58%~~60% of the aggregate fair value was concentrated in the equity securities of four companies (American Express Company – ~~$11.2~~$9.7 billion; Wells Fargo & Company – ~~$25.2~~$22.1 billion; International Business Machines Corporation (“IBM”) – ~~$11.7~~$12.9 billion; and The Coca-Cola Company – ~~$16.0~~$16.9 billion).


	Cost Basis			Unrealized Gains			Unrealized Losses				Fair Value			Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
December 31, 2014 *
December 31, 2015 *
Banks, insurance and finance		$	22,495		$	33,170		$	—			$	55,665	$	20,026	$	27,965	$	(21)	$	47,970
Consumer products			6,951			18,389			(1	)			25,339		6,867		18,022		(1)		24,888
Commercial, industrial and other			28,924			8,578			(1,036	)			36,466		35,417		6,785		(3,238)		38,964

		$	58,370		$	60,137		$	(1,037	)		$	117,470	$	62,310	$	52,772	$	(3,260)	$	111,822

Approximately 59% of the aggregate fair value was concentrated in the equity securities of four companies (American Express Company – ~~$14.1~~$10.5 billion; Wells Fargo & Company – ~~$26.5~~$27.2 billion; ~~International Business Machines Corporation (“IBM”)~~IBM – ~~$12.3~~$11.2 billion; and The Coca-Cola Company – ~~$16.9~~$17.2 billion).

As of September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, we concluded that ~~there were no~~the unrealized losses ~~that~~shown in the tables above were ~~other than~~ temporary. Our conclusions were based on: (a) our ability and intent to hold the securities to recovery; (b) our assessment that the underlying business and financial condition of ~~each of these~~the issuers was favorable; (c) our opinion that the relative price declines were not significant; and (d) our belief that market prices will increase to and exceed our cost. As of September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, unrealized losses on equity securities in a continuous unrealized loss position for more than twelve ~~consecutive~~ months were ~~$204~~$995 million and ~~$65~~$989 million, respectively.

Unrealized losses at September 30, ~~2015~~2016 included ~~approximately $2.0 billion~~$941 million related to our investment in IBM common stock of which $855 million had been in a continuous unrealized loss position for more than twelve months. Unrealized losses represented ~~15%~~7% of our cost. IBM continues to be profitable and generate significant cash flows. We currently ~~have no intention of disposing~~do not intend to dispose of our ~~investment in~~ IBM common ~~stock. We~~stock and we expect that the fair value of ~~our~~this investment ~~in IBM common stock~~ will recover and ultimately exceed our cost.

Notes to Consolidated Financial Statements(Continued)

Note 5. Investments in equity securities(Continued)

Investments in equity securities are reflected in our Consolidated Balance Sheets as follows (in millions).


	September 30, 2015			December 31, 2014			September 30, 2016		December 31, 2015
Insurance and other		$	106,104		$	115,529	$	100,757	$	110,212
Railroad, utilities and energy *			1,185			881		1,476		1,238
Finance and financial products			2,999			1,060		302		372

		$	110,288		$	117,470	$	102,535	$	111,822

*	Included in other assets.

~~Notes to Consolidated Financial Statements~~~~(Continued)~~

Note 6. Other investments

Other investments include preferred stock of Wm. Wrigley Jr. Company (“Wrigley”), The Dow Chemical Company (“Dow”) and Bank of America Corporation (“BAC”), warrants to purchase common stock of BAC and ~~our investments in~~preferred and common stock of Restaurant Brands International, Inc. (“RBI”). Other investments are classified as available-for-sale and ~~carried at fair value and~~ are shown in our Consolidated Balance Sheets as follows (in millions).


	Cost					Fair Value				Cost				Fair Value
	September 30, 2015		��	December 31, 2014		September 30, 2015		December 31, 2014		September 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015
Insurance and other		$9,970			$9,970		$15,011		$16,346	$	9,970	$	9,970	$	15,415	$	15,998
Finance and financial products		3,052			3,052		5,565		5,978		1,000		3,052		2,078		5,719

		$13,022			$13,022		$20,576		$22,324	$	10,970	$	13,022	$	17,493	$	21,717

~~We own~~During 2008, we purchased $2.1 billion ~~liquidation amount~~ of Wrigley preferred stock that was acquired pursuant to a shareholder agreement in conjunction with ~~the~~ Mars ~~Incorporated (“Mars”)~~Incorporated’s acquisition of Wrigley. ~~The Wrigley preferred stock is entitled to dividends at 5% per annum and is subject~~Pursuant to certain put and call ~~arrangements during 2016 for~~provisions in the shareholder agreement, up to 50% of our original ~~investment. Beginning in 2021, our then outstanding~~ investment ~~will be subject~~was redeemable over a 90-day period that was scheduled to ~~annual put and call arrangements.~~begin on October 6, 2016. On August 8, 2016, we entered into a stock purchase agreement with Mars, under which Mars agreed to acquire all of the Wrigley preferred stock for approximately $4.56 billion, which included a prorated dividend that would have otherwise been payable on October 6, 2016. The ~~redemption amounts under the put and call arrangements will be based upon the earnings of Wrigley.~~transaction was completed on September 27, 2016.

We own 3,000,000 shares of Series A Cumulative Convertible Perpetual Preferred Stock of Dow (“Dow Preferred”) with a liquidation value of $1,000 per share. Each share of the Dow Preferred is convertible into 24.201 shares of Dow common stock (equivalent to a conversion price of $41.32 per share). Dow currently has the option to cause some or all of the Dow Preferred to be converted into Dow common stock at the then applicable conversion rate, if the New York Stock Exchange closing price of its common stock exceeds $53.72 per share for any 20 trading days within a period of 30 consecutive trading days ending on the day before Dow exercises its option. The Dow Preferred is entitled to dividends at a rate of 8.5% per annum.

We own 50,000 shares of 6% Non-Cumulative Perpetual Preferred Stock of BAC (“BAC Preferred”) with a liquidation value of $100,000 per share and warrants to purchase 700,000,000 shares of common stock of BAC (“BAC Warrants”). The BAC Preferred ~~may be redeemed~~is redeemable at the option of BAC beginning on May 7, 2019 at a redemption price of $105,000 per share (or $5.25 billion in aggregate). The BAC Warrants expire in 2021 and are exercisable for an additional aggregate cost of $5 billion ($7.142857/share).

~~On December 12, 2014, we acquired~~We own Class A 9% Cumulative Compounding Perpetual Preferred Shares of RBI (“RBI Preferred”) having a stated value of $3 ~~billion and common stock of RBI for an aggregate cost of $3~~ billion. RBI, domiciled in Canada, is the ultimate parent company of Burger King and Tim Hortons. ~~As of the acquisition date, our combined investment in RBI possessed approximately 14.4% of the voting interests of RBI.~~ The RBI Preferred is entitled to dividends on a cumulative basis of 9% per annum plus an additional amount, ~~that is intended~~if necessary, to produce an after-tax yield to Berkshire as if the dividends were paid by a U.S.-based company. The RBI Preferred is redeemable at the option of RBI beginning on December 12, 2017. If not redeemed prior to December 12, 2024, we can cause RBI to redeem the RBI Preferred. In either case, the redemption price will be 109.9% of the stated value of such shares.

Notes to Consolidated Financial Statements(Continued)

Note 7. Investments in The Kraft Heinz Company ~~(formerly H.J. Heinz Holding Corporation)~~

On June 7, 2013, Berkshire and an affiliate of the global investment firm 3G Capital (such affiliate, “3G”), ~~through a newly formed holding company,~~each made equity investments in H.J. Heinz Holding Corporation (“Heinz Holding”), ~~acquired H.J. Heinz Company (“Heinz”). Berkshire and 3G each made equity investments in Heinz Holding,~~ which, together with debt financing obtained by Heinz Holding, was used to acquire ~~Heinz.~~H. J. Heinz is one of the world’s leading marketers and producers of healthy, convenient and affordable foods specializing in ketchup, sauces, meals, soups, snacks and infant nutrition. Heinz is comprised of a global family of leading branded products, including Heinz^® ~~Ketchup, sauces, soups, beans, pasta, infant foods, Ore-Ida~~^® ~~potato products, Weight Watchers~~^® ~~Smart Ones~~^® ~~entrées and T.G.I. Friday’s~~^® ~~snacks.~~

Company (“Heinz”). Berkshire’s initial investments consisted of 425 million shares of Heinz Holding common stock, warrants, which were exercised in June 2015, to acquire approximately 46 million additional shares of common stock at one cent per share, and cumulative compounding preferred stock (“Preferred Stock”) with a liquidation preference of $8 billion. The aggregate cost of ~~these~~our investments was $12.25 billion. 3G also acquired 425 million shares of Heinz Holding common stock for $4.25 billion. ~~In addition, Heinz Holding reserved 39.6 million shares~~On June 7, 2016, our Preferred Stock investment was redeemed for cash of ~~common stock for issuance~~$8.32 billion. Prior to its ~~management and directors under equity grants, including stock options.~~

~~Notes to Consolidated Financial Statements~~~~(Continued)~~

~~Note 7. Investments in The Kraft Heinz Company (formerly H.J. Heinz Holding Corporation)~~~~(Continued)~~

~~In March 2015, Heinz Holding and Kraft Foods Group, Inc. (“Kraft”) entered into a merger agreement under which Kraft shareholders were~~redemption, the Preferred Stock was entitled to ~~receive one share of newly issued Heinz Holding common stock for each share of Kraft common stock and a special cash dividend of $16.50~~dividends at 9% per ~~share. Kraft is one of North America’s largest consumer packaged food and beverage companies, with annual revenues of more than $18 billion. The company’s iconic brands include~~~~Kraft~~,~~Capri Sun~~,~~Jell-O~~,~~Kool-Aid~~,~~Lunchables~~,~~Maxwell House~~,~~Oscar Mayer~~,~~Philadelphia~~,~~Planters~~~~and~~~~Velveeta.~~annum.

On July 1, 2015, Berkshire acquired 262.9 million shares of newly issued common stock of Heinz Holding for $5.26 billion and 3G acquired 237.1 million shares of newly issued common stock for $4.74 billion. Immediately thereafter, Heinz Holding executed a reverse stock split at a rate of 0.443332 of a share for each share.

On July 2, 2015, Heinz Holding acquired Kraft Foods Group, Inc. (“Kraft”). Upon completion of ~~these transactions, Berkshire owned approximately 325.4 million shares of Heinz Holding common stock, or 52.5% of~~ the ~~then outstanding shares. The merger transaction closed on July 2, 2015, at which time~~acquisition, Heinz Holding was renamed The Kraft Heinz Company (“Kraft Heinz”) ~~and~~. Kraft Heinz is one of the largest manufacturers and marketers of food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee, and other grocery products, in the world. Kraft Heinz’s leading iconic brands includeKraft, Heinz, ABC, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Maxwell House, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta.

In connection with Heinz Holding’s acquisition of Kraft, Kraft shareholders received one share of newly issued ~~approximately 593 million new shares of its~~Heinz Holding common stock ~~to the former~~for each share of Kraft ~~shareholders.~~common stock and a special cash dividend of $16.50 per share. Following the issuance of these additional shares, Berkshire and 3G together owned approximately 51% of the outstanding Kraft Heinz common stock, with Berkshire owning approximately 26.8% and 3G owning 24.2%. ~~Our investments in Kraft Heinz are summarized as follows (in millions).~~

   Carrying Value
   September 30,
2015    December 31,
2014
Common stock
       $ 15,816        $ 3,950
Preferred Stock
   7,710    7,710




       $ 23,526        $ 11,660

We account for our investment in ~~the~~Kraft Heinz common stock ~~of Kraft Heinz~~ on the equity method. We include our proportionate share of net earnings attributable to common stockholders and other comprehensive income in our Consolidated Statements of Earnings and Comprehensive Income. We account for our investment in the Preferred Stock as an equity investment and it is carried at cost in our Consolidated Balance Sheets. Dividends earned on the Preferred Stock and our share of net earnings or loss attributable to common stockholders are included in interest, dividend and other investment income in our Consolidated Statements of Earnings.

~~As previously discussed, the issuance of new common stock by Kraft Heinz for Kraft common stock reduced our ownership of Kraft Heinz from approximately 52.5% to 26.8%.~~ Under the equity method, ~~of accounting,~~ the issuance of shares by an investee is accounted for by the investor as if the investor had sold a proportionate share of its investment. As a result, we recorded a non-cash pre-tax holding gain of approximately $6.8 billion in the third quarter of 2015, representing the excess of the fair value of Kraft Heinz common stock at the date of the merger over our carrying value associated with the reduction in our ~~ownership~~ownership.

A summary of our investments in Kraft ~~Heinz.~~Heinz follows (in millions).

The Preferred Stock possesses no voting rights except as are required by law or for certain matters. The Preferred Stock is entitled to dividends at 9% per annum whether or not declared, is senior in priority to


	Carrying Value
	September 30, 2016		December 31, 2015
Common stock		$15,711		$15,714
Preferred Stock		—		7,710

		$15,711		$23,424

Our equity method earnings on the common stock and is callable after June 7, 2016 at the liquidation value plus an applicable premium and any accrued and unpaid dividends. After June 7, 2021, Berkshire can cause Kraft Heinz to attempt to sell shares of common stock through public offerings or other issuances (“redemption offerings”), the proceeds of which would be required to be used to redeem any outstanding shares of the Preferred Stock. Kraft Heinz has announced its intention to calldividends earned on the Preferred Stock ~~after June 7,~~in the first nine months of 2016 and ~~prior to June 7, 2017, although it has no obligation to do so.~~2015 were $851 million and $329 million, respectively, and are included in interest, dividend and other investment income in our Consolidated Statements of Earnings. Preferred Stock dividends received in the first nine months of 2016 were $180 million. In 2015, Preferred Stock dividends received were $180 million in the third quarter and $540 million in the first nine months.

Summarized consolidated financial information of Kraft Heinz follows (in millions).


	September 27, 2015			December 28, 2014			October 2, 2016		January 3, 2016
Assets		$	121,792		$	36,535		$121,080		$122,973
Liabilities			54,433			20,850		63,212		56,737

   Third quarter    First nine months
   2015 2014    2015    2014
Sales
     $     6,120   $     2,594      $     11,214        $     8,123






Net earnings (loss)
     $ (123 )   $ 172      $ (11)         $ 494
Preferred Stock dividends
   (180 ) (180)    (540)       (540)






Net loss attributable to common shareholders
     $ (303 )   $ (8)      $ (551)         $ (46)






Net earnings attributable to Berkshire Hathaway Shareholders *
     $ 115   $ 198      $ 315        $ 491

*	~~Includes dividends earned on Preferred Stock and Berkshire’s share of net loss attributable to Kraft Heinz common shareholders, net of applicable income taxes.~~


	Third Quarter						First Nine Months
	2016			2015			2016			2015
Sales		$	6,267		$	6,120		$	19,630		$	11,214 ��

Net earnings (loss) attributable to common shareholders		$	842		$	(303)		$	2,508		$	(551)

Notes to Consolidated Financial Statements(Continued)

Note 8. Income taxes

Our consolidated effective income tax rates for the third quarter and first nine months of 2016 were 30.3% and 25.8%, respectively. In 2015, our effective income tax rates were 32.3% for the third quarter and 31.6% for the first nine months. Our effective income tax rate normally reflects benefits from the recurring impact of (a) dividends received deductions applicable to certain investments in equity securities, (b) income production tax credits from wind-powered electricity generation placed in service in the U.S. and (c) lower income tax rates applicable to earnings of certain foreign subsidiaries.

As discussed in Notes 3 and 9 to these Consolidated Financial Statements, on February 29, 2016, we exchanged our long-held investment in P&G common stock for the common stock of Duracell. This exchange produced a pre-tax gain of $1.1 billion for financial reporting purposes. The exchange transaction was structured as a tax-free reorganization under the Internal Revenue Code. As a result, no income taxes are currently payable on the excess of the fair value of the business received over the tax basis of the P&G shares exchanged and we recorded a one-time reduction of certain deferred income tax liabilities (approximately $750 million) that were recorded in 2005 in connection with our exchange of The Gillette Company common stock for P&G common stock upon the merger of those two companies. The P&G/Duracell exchange produced a 4.7 percentage point reduction in our consolidated effective income tax rate for the first nine months of 2016.

Note 9. Investment gains/losses

Investment gains/~~losses, including other-than-temporary impairment (“OTTI”)~~ losses are summarized below (in millions).


	Third Quarter				First Nine Months
	2016		2015		2016		2015
Fixed maturity securities—
Gross gains from sales and redemptions	$	5	$	6	$	44	$	88
Gross losses from sales and redemptions		(24)		(44)		(41)		(128)
Equity securities—
Gross gains from sales and redemptions		3,173		8,407		5,720		8,855
Gross losses from sales and redemptions		(13)		(75)		(76)		(95)
Other-than-temporary impairment losses		—		(26)		(63)		(26)
Other		9		(2)		59		31

	$	3,150	$	8,266	$	5,643	$	8,725

   Third Quarter First Nine Months
   2015    2014 2015    2014
Fixed maturity securities —

Gross gains
     $ 6       $ 4   $ 88    $ 233
Gross losses
   (44)         (25 ) (128)       (73)
Equity securities —

Gross gains
   8,407       354 8,855    3,749
Gross losses
   (75)         (38 ) (95)       (41)
OTTI losses
   (26)         (678 ) (26)       (697)
Other
   (2)         7 31    (50)






     $ 8,266       $   (376 )   $ 8,725      $ 3,121

~~Investment~~Gains from sales and redemptions of equity securities in 2016 included gains of approximately $2.4 billion from the disposition of our investment in Wrigley preferred stock in the third quarter, and in the first nine months also included $610 million from the redemption of our investment in Kraft Heinz Preferred Stock and a non-cash holding gain of approximately $1.1 billion from the exchange of our P&G common stock in connection with the acquisition of Duracell. The non-cash gain from the P&G/Duracell exchange represented the excess of the fair value of net assets of Duracell over the cost basis of the P&G stock exchanged. Gains from sales and redemptions of equity securities in the third quarter and first nine months of 2015 included a non-cash holding gain of approximately $6.8 billion in connection with our investment in Kraft Heinz common ~~stock (see Note 7). Gains from~~stock.

We record investments in equity and fixed maturity securities during the first nine months of 2014 included non-cash holding gains of approximately $2.1 billion from the exchange of Phillips 66 (“PSX”) common stock in connection with the acquisition of Phillips Specialty Products Inc. (subsequently renamed Lubrizol Specialty Products Inc. (“LSPI”)) and the exchange of Graham Holding Company (“GHC”) common stock for WPLG, Inc. (“WPLG”). The PSX/LSPI exchange was completed on February 25, 2014 and the GHC/WPLG exchange was completed on June 30, 2014. These holding gains represented the excess of the respectiveclassified as available-for-sale at fair value ofand record the ~~net assets of LSPI~~difference between fair value and ~~WPLG received over~~cost in other comprehensive income. Other-than-temporary impairment losses recognized in earnings represent reductions in the ~~respective~~ cost basis of the ~~PSX and GHC shares exchanged. In 2014, we recorded an OTTI charge~~investment, but not the fair value. Accordingly, such losses that are included in earnings are generally offset by a credit to other comprehensive income, producing no net effect on shareholders’ equity as of ~~$678 million~~the balance sheet date.

Note 10. Inventories

Inventories are comprised of the following (in millions).


	September 30, 2016			December 31, 2015
Raw materials		$	2,909		$	1,852
Work in process and other			2,461			778
Finished manufactured goods			4,287			3,369
Goods acquired for resale			6,106			5,917

		$	15,763		$	11,916

Inventories at September 30, 2016 included approximately $3.6 billion related to ~~our investment in equity securities of Tesco PLC.~~PCC and Duracell.

Notes to Consolidated Financial Statements(Continued)

Note 9.11. Receivables

Receivables of insurance and other businesses are comprised of the following (in millions).


	September 30, 2015			December 31, 2014				September 30, 2016		December 31, 2015
Insurance premiums receivable		$	9,354		$	7,914		$	10,226	$	8,843
Reinsurance recoverable on unpaid losses			3,373			3,116	��		3,482		3,307
Trade and other receivables			12,085			11,133			14,181		11,521
Allowances for uncollectible accounts			(328)			(311	)		(345)		(368)

		$	24,484		$	21,852		$	27,544	$	23,303

Trade and other receivables at September 30, 2016 included approximately $1.9 billion related to PCC and Duracell.

Loans and finance receivables of finance and financial products businesses are summarized as follows (in millions).

   September 30,
2015    December 31,
2014
Loans and finance receivables before allowances and discounts
     $ 13,123          $ 13,150
Allowances for uncollectible loans
   (195)          (303 )
Unamortized acquisition discounts
   (242)          (281 )




     $ 12,686          $ 12,566

~~Notes to Consolidated Financial Statements~~~~(Continued)~~

~~Note 9. Receivables~~~~(Continued)~~


	September 30, 2016		December 31, 2015
Loans and finance receivables before allowances and discounts	$	13,663	$	13,186
Allowances for uncollectible loans		(183)		(182)
Unamortized acquisition discounts		(267)		(232)

	$	13,213	$	12,772

Loans and finance receivables are predominantly ~~installment loans~~ originated or acquired ~~by our~~ manufactured housing ~~business.~~installment loans. Provisions for loan losses ~~for~~in the first nine months of 2016 and 2015 ~~and 2014~~ were ~~$119~~$124 million and ~~$143~~$119 million, respectively. Loan charge-offs, net of recoveries, ~~for~~in the first nine months of 2016 and 2015 were $123 million and ~~2014 were~~ $136 million, ~~and $157 million,~~ respectively. In 2015, we reclassified $93 million of allowances for uncollectible loans and related installment loan receivables that were in-substance foreclosures or repossessions to other assets. The reclassifications had no impact on earnings or cash flows. At September 30, ~~2015,~~2016, approximately 98% of the loan balances were evaluated collectively for impairment. As a part of the evaluation process, credit quality indicators are reviewed and loans are designated as performing or non-performing. At September 30, ~~2015,~~2016, approximately ~~99%~~98% of the loan balances were determined to be performing and approximately ~~95%~~94% of the loan balances were current as to payment status.

Note ~~10. Inventories~~

~~Inventories are comprised of the following (in millions).~~

     September 30,
2015      December 31,
2014
Raw materials
   $  1,838      $  1,881
Work in process and other
   856      850
Finished manufactured goods
   3,503      3,333
Goods acquired for resale
   5,798      4,172




   $11,995      $10,236

~~Note 11.~~12. Property, plant and equipment ~~and assets held for lease~~

~~Property,~~A summary of property, plant and equipment of our insurance and other businesses ~~is summarized below~~follows (in millions).


	Range of estimated useful life	September 30, 2015			December 31, 2014			Range of estimated useful life		September 30, 2016		December 31, 2015
Land	—		$ 1,614			$ 1,171			—	$	2,128	$	1,689
Buildings and improvements	2 – 40 years		7,250			6,600			5 – 40 years		8,315		7,329
Machinery and equipment	3 – 25 years		16,673			16,413			3 – 25 years		20,103		17,054
Furniture, fixtures and other	2 – 18 years		3,812			3,136			2 – 15 years		4,419		3,545

			29,349			27,320					34,965		29,617
Accumulated depreciation			(13,884	)		(13,167	)				(15,639)		(14,077)

			$ 15,465			$ 14,153				$	19,326	$	15,540

~~Depreciation expense~~Property, plant and equipment at September 30, 2016 included approximately $3.3 billion related to PCC and Duracell.

Notes to Consolidated Financial Statements(Continued)

Note 12. Property, plant and equipment(Continued)

A summary of ~~insurance and other businesses for the first nine months of 2015 and 2014 was $1,240 million and $1,202 million, respectively.~~

~~Property,~~property, plant and equipment of our railroad and our utilities and energy businesses ~~is summarized below~~follows (in millions).

   Range of
  estimated useful life        September 30,
2015      December 31,
2014
Railroad:

Land
   —    $      6,031    $      5,983
Track structure and other roadway
   7 – 100 years    44,902    42,588
Locomotives, freight cars and other equipment
     6 – 40 years    10,866    9,493
Construction in progress
   —    1,257    1,292
Utilities and energy:

Utility generation, distribution and transmission system
     5 – 80 years    67,044    64,645
Interstate pipeline assets
     3 – 80 years    6,761    6,660
Independent power plants and other assets
     3 – 30 years    5,574    5,035
Construction in progress
   —    4,160    5,194




      146,595    140,890
Accumulated depreciation
      (28,018)       (25,836)




      $  118,577    $  115,054

~~Notes to Consolidated Financial Statements~~~~(Continued)~~

~~Note 11. Property, plant and equipment and assets held for lease~~~~(Continued)~~

~~Railroad property, plant and equipment includes the land, other roadway, track structure and rolling stock (primarily locomotives and freight cars) of BNSF.~~ The utility generation, transmission and distribution ~~and transmission system~~systems and interstate natural gas pipeline assets are ~~the~~owned by regulated ~~assets of~~ public utility and natural gas pipeline subsidiaries. ~~Depreciation expense of the railroad, utilities and energy businesses for the first nine months of 2015 and 2014 was $3,276 million and $2,932 million, respectively.~~


	Range of estimated useful life		September 30, 2016		December 31, 2015
Railroad:
Land		—	$	6,060	$	6,037
Track structure and other roadway		7 – 100 years		47,586		45,967
Locomotives, freight cars and other equipment		6 – 40 years		11,860		11,320
Construction in progress		—		1,064		1,031

				66,570		64,355
Accumulated depreciation				(5,673)		(4,845)

			$	60,897	$	59,510

Utilities and energy:
Utility generation, transmission and distribution systems		5 – 80 years	$	70,316	$	69,248
Interstate natural gas pipeline assets		3 – 80 years		6,866		6,755
Independent power plants and other assets		3 – 30 years		6,056		5,626
Construction in progress		—		3,175		2,627

				86,413		84,256
Accumulated depreciation				(24,305)		(23,487)

			$	62,108	$	60,769

Assets held for lease and property, plant and equipment of our finance and financial products businesses are summarized below (in millions).


	Range of estimated useful life	September 30, 2015			December 31, 2014			Range of estimated useful life		September 30, 2016		December 31, 2015
Assets held for lease	5 – 30 years		$ 11,222			$ 9,810			5 – 35 years	$	11,906	$	11,317
Land	—		221			227			—		223		220
Buildings, machinery and other	3 – 50 years		1,170			1,179			3 – 50 years		1,289		1,207

			12,613			11,216					13,418		12,744
Accumulated depreciation			(3,322	)		(3,179	)				(3,681)		(3,397)

			$ 9,291			$ 8,037				$	9,737	$	9,347

~~Assets held for lease includes railcars, intermodal tank containers, cranes, over-the-road trailers, storage units and furniture. Depreciation~~A summary of depreciation expense ~~of the finance and financial products businesses for the first nine months of 2015 and 2014 was $447 million in each period.~~follows (in millions).


	First Nine Months
	2016		2015
Insurance and other	$	1,595	$	1,240
Railroad, utilities and energy		3,459		3,276
Finance and financial products		466		447

	$	5,520	$	4,963

Notes to Consolidated Financial Statements(Continued)

Note ~~12.~~13. Goodwill and other intangible assets

~~The~~A reconciliation of the change in the carrying value of goodwill ~~for the first nine months of 2015 and the year ended December 31, 2014~~ is ~~summarized~~ as follows (in millions).


	September 30, 2015		December 31, 2014		September 30, 2016		December 31, 2015
Balance at beginning of year		$ 60,714		$57,011	$	62,708	$	60,714
Acquisitions of businesses		2,388		4,006		17,016		2,563
Other, including foreign currency translation		(410)		(303)		(332)		(569)

Balance at end of period		$ 62,692		$60,714	$	79,392	$	62,708

~~Intangible~~Other intangible assets ~~other than goodwill are included in other assets and~~ are summarized as follows (in millions).


	September 30, 2015				December 31, 2014				September 30, 2016						December 31, 2015
	Gross carrying amount		Accumulated amortization		Gross carrying amount		Accumulated amortization		Gross carrying amount			Accumulated amortization			Gross carrying amount			Accumulated amortization
Insurance and other		$14,783		$5,243		$13,714		$4,476		$	41,575		$	6,541		$	14,610		$	5,462
Railroad, utilities and energy		885		225		2,254		1,551			897			279			888			239

		$15,668		$5,468		$15,968		$6,027		$	42,472		$	6,820		$	15,498		$	5,701

Trademarks and trade names		$ 3,054		$ 742		$ 3,117		$ 599		$	6,049		$	821		$	3,041		$	765
Patents and technology		4,225		1,992		5,425		3,133			4,455			2,329			4,252			2,050
Customer relationships		5,510		2,041		5,603		1,768			28,851			2,721			5,474			2,131
Other		2,879		693		1,823		527			3,117			949			2,731			755

		$15,668		$5,468		$15,968		$ 6,027		$	42,472		$	6,820		$	15,498		$	5,701

InOther intangible assets at September 30, 2016 included preliminary fair values of intangible assets of PCC and Duracell of approximately $26.2 billion, which included approximately $17.6 billion in customer relationships and trade names that were preliminarily determined to have indefinite lives. Amortization expense in the first nine months of 2016 and 2015 ~~and 2014, amortization expense~~ was ~~$837~~$1,085 million and ~~$854~~$837 million, respectively. Intangible assets with indefinite lives, excluding intangible assets related to business acquisitions completed in 2016, were approximately $3.0 billion as of September 30, ~~2015~~2016 and December 31, ~~2014 were $3,140 million and $2,586 million, respectively.~~2015.

~~Notes to Consolidated Financial Statements~~~~(Continued)~~

Note ~~13.~~14. Derivative contracts

Derivative contracts have been entered into primarily through our finance and financial products and our utilities and energy businesses. ~~Derivative contract liabilities associated with~~During 2016, derivative contracts of our finance and financial products businesses ~~are concentrated in~~consisted of equity index put option contracts and a credit default ~~contracts.~~contract. A summary of ~~those~~the liabilities and related notional values of these contracts follows (in millions).


	September 30, 2015							December 31, 2014							September 30, 2016					December 31, 2015
	Liabilities			Notional Value				Liabilities			Notional Value				Liabilities		Notional Value			Liabilities		Notional Value
Equity index put options		$	4,188		$	28,239	⁽¹⁾		$	4,560		$	29,469	⁽¹⁾	$	3,973	$	27,982	⁽¹⁾	$	3,552	$	27,722	⁽¹⁾
Credit default(2)			242			7,792	⁽²⁾			250			7,792	⁽²⁾		—		—			284		7,792

		$	4,430						$	4,810					$	3,973				$	3,836

⁽¹⁾

Represents the aggregate undiscounted amounts payable assuming that the value of each index is zero at each contract’s expiration date. Certain of these contracts are denominated in foreign currencies. Notional amounts are based on the foreign currency exchange rates as of each balance sheet date.

⁽²⁾

~~Represents~~In July 2016, our remaining credit default contract was terminated by mutual agreement with the ~~aggregate undiscounted amounts payable~~counterparty. We no longer have any exposure to losses under ~~the contracts assuming all underlying issuers~~credit default ~~and the residual value of the specified obligations is zero.~~contracts.

Notes to Consolidated Financial Statements(Continued)

Note 14. Derivative contracts(Continued)

The derivative contracts of our finance and financial products businesses are recorded at fair value and the changes in the fair values of such contracts are reported in earnings as derivative gains/losses. We entered into these contracts with the expectation that the premiums received would exceed the amounts ultimately paid to counterparties. A summary of the derivative ~~gains/losses~~gains (losses) included in our Consolidated Statements of Earnings ~~for the third quarter and first nine months of 2015 and 2014~~ follows (in millions).


	Third Quarter					First Nine Months				Third Quarter				First Nine Months
	2015			2014		2015		2014		2016		2015		2016			2015
Equity index put options	$	(802	)	$	223	$	371	$	156	$	458	$	(802)	$	(421	)	$	371
Credit default		38			35		9		492		—		38		89			9
Other, principally interest rate and foreign currency		—			—		—		1

	$	(764	)	$	258	$	380	$	649	$	458	$	(764)	$	(332	)	$	380

The equity index put option contracts ~~were written between 2004 and 2008. These contracts~~ are European style options written between 2004 and 2008 on four major equity ~~indexes and~~indexes. These contracts will expire between June 2018 and January 2026. Future payments, if any, under any given contract will be required if the ~~underlying~~prevailing index value is below the contract strike price at the ~~contract~~ expiration date. We received the premiums on these contracts ~~in full~~ at the ~~contract~~ inception dates and therefore we have no counterparty credit risk.

The aggregate intrinsic value ~~(which is the~~(the undiscounted liability assuming the contracts are settled based on the index values and foreign currency exchange rates as of the balance sheet date) of our equity index put option contracts was approximately ~~$1.4~~$1.6 billion at September 30, ~~2015~~2016 and $1.1 billion at December 31, ~~2014.~~2015. However, these contracts may not be unilaterally terminated or fully settled before the expiration dates. Therefore, the ultimate amount of cash basis gains or losses on these contracts will not be determined for several years. The remaining weighted average life of all contracts was approximately ~~5.2~~4.2 years at September 30, ~~2015.~~

Our remaining credit default contract was written in 2008 and relates to approximately 500 zero-coupon municipal debt issues with maturities ranging from 2019 to 2054. The underlying debt issues had a weighted average maturity of approximately 16 years on September 30, 2015. Pursuant to the contract terms, future loss payments are required in the event of non-payment by the issuer and non-performance by the primary financial guarantee insurers under their contracts with the issuers. Payments under our contract, if any, are not required prior to the maturity dates of the underlying obligations. The premium was received at the inception of this contract and therefore we have no counterparty credit risk.2016.

A limited number of our equity index put option contracts contain collateral posting requirements with respect to changes in the fair value or intrinsic value of the contracts and/or a downgrade of Berkshire’s credit ratings. As of September 30, ~~2015 and December 31, 2014,~~2016, we did not have any collateral posting requirements. If Berkshire’s credit ratings (currently AA from Standard & Poor’s and Aa2 from Moody’s) are downgraded below either A- by Standard & Poor’s or A3 by Moody’s, collateral of up to $1.1 billion could be required to be posted.

~~Notes to Consolidated Financial Statements~~~~(Continued)~~

~~Note 13. Derivative contracts~~~~(Continued)~~

Our regulated utility subsidiaries are exposed to variations in the prices of fuel required to generate electricity, wholesale electricity purchased and sold and natural gas supplied for customers. Derivative instruments, including forward purchases and sales, futures, swaps and options, are used to manage a portion of these price risks. Derivative contract assets are included in other assets ~~of railroad, utilities and energy businesses~~ and were ~~$109 million and $108~~$105 million as of September 30, ~~2015~~2016 and $103 million as of December 31, ~~2014, respectively.~~2015. Derivative contract liabilities are included in accounts payable, accruals and other liabilities ~~of railroad, utilities and energy businesses~~ and were ~~$257 million and $230~~$198 million as of September 30, ~~2015~~2016 and $237 million as of December 31, ~~2014, respectively. Unrealized gains and losses on contracts of our regulated utilities~~2015. Net derivative contract assets or liabilities that are probable of recovery ~~or refund~~ through rates of our regulated utilities are ~~recorded as~~offset by regulatory ~~assets~~liabilities or ~~liabilities.~~assets. Unrealized gains or losses on contracts accounted for as cash flow or fair value hedges are recorded in other comprehensive income or in net earnings, as appropriate.

Note ~~14.~~15. Supplemental cash flow information

A summary of supplemental cash flow information ~~for the first nine months of 2015 and 2014~~ is presented in the following table (in millions).


	First Nine Months				First Nine Months
	2015		2014		2016		2015
Cash paid during the period for:
Income taxes		$ 2,575		$ 3,201	$	2,237	$	2,575
Interest:
Insurance and other businesses		312		321		499		312
Railroad, utilities and energy businesses		2,043		1,864		2,130		2,043
Finance and financial products businesses		274		332		263		274
Non-cash investing and financing activities:
Equity securities exchanged in connection with business acquisitions		—		2,478
Liabilities assumed in connection with business acquisitions		2,792		1,459		17,319		2,792
Treasury stock acquired in connection with business acquisition		—		400
Equity securities exchanged in connection with business acquisition						4,239		—

Notes to Consolidated Financial Statements(Continued)

Note ~~15.~~16. Notes payable and other borrowings

Notes payable and other borrowings are summarized below (in millions). The weighted average interest rates and maturity date ranges shown in the following tables are based on borrowings as of September 30, ~~2015.~~2016.


	Weighted Average Interest Rate	September 30, 2015		December 31, 2014		Weighted Average Interest Rate		September 30, 2016		December 31, 2015
Insurance and other:
Issued by Berkshire due 2015-2047	2.2%		$ 9,903		$ 8,354
Berkshire Hathaway Inc. (“Berkshire”) due 2016-2047							2.2%	$	18,108	$	9,799
Short-term subsidiary borrowings	1.8%		1,909		839		2.2%		2,019		1,989
Other subsidiary borrowings due 2015-2044	6.0%		2,744		2,701
Other subsidiary borrowings due 2016-2044							4.0%		7,387		2,811

			$14,556		$ 11,894			$	27,514	$	14,599

On January 8, 2016, Berkshire entered into a $10 billion 364-day revolving credit agreement. In connection with the PCC acquisition, Berkshire borrowed $10 billion under the credit agreement. In March ~~2015,~~2016, Berkshire issued ~~€3.0~~€2.75 billion in senior unsecured notes consisting of €1.0 billion of 0.50% notes due in 2020, €1.0 billion of 1.30% notes due in 2024 and €750 million of ~~0.75%~~2.15% notes due in 2028. Berkshire also issued $5.5 billion in senior unsecured notes consisting of $1.0 billion of 2.20% notes due in 2021, $2.0 billion of 2.75% notes due in 2023 ~~€1.25~~and $2.5 billion of ~~1.125% senior~~3.125% notes due in ~~2027 and €1.0 billion~~2026. The proceeds from these debt issues were used in the repayment of ~~1.625%~~all outstanding borrowings under the aforementioned credit agreement. In June 2016, the revolving credit agreement was terminated. In August 2016, Berkshire issued $750 million in senior unsecured notes consisting of $500 million of 1.15% notes due in ~~2035. In February 2015, $1.7~~2018 and $250 million of floating rate notes due in 2018, to replace $750 million of maturing debt. Other subsidiary borrowings at September 30, 2016 included $4.7 billion ~~of Berkshire senior notes matured.~~attributable to PCC.

   Weighted
Average
Interest Rate September 30,
2015    December 31,
2014
Railroad, utilities and energy:

Issued by Berkshire Hathaway Energy Company (“BHE”) and its subsidiaries:

BHE senior unsecured debt due 2017-2045
   5.1% $  7,860      $    7,860
Subsidiary and other debt due 2015-2064
   4.9% 28,130      28,439
Issued by BNSF due 2015-2097
   4.9% 21,882      19,280




   $57,872      $  55,579

~~Notes to Consolidated Financial Statements~~~~(Continued)~~

~~Note 15. Notes payable and other borrowings~~~~(Continued)~~


	Weighted Average Interest Rate		September 30, 2016		December 31, 2015
Railroad, utilities and energy:
Berkshire Hathaway Energy Company (“BHE”) and its subsidiaries:
BHE senior unsecured debt due 2017-2045		5.1%	$	7,817	$	7,814
Subsidiary and other debt due 2016-2064		4.7%		28,828		28,188
Burlington Northern Santa Fe (“BNSF”) due 2016-2097		4.8%		22,166		21,737

			$	58,811	$	57,739

BHE subsidiary debt represents amounts issued pursuant to separate financing agreements. Substantially all of the assets of certain BHE subsidiaries are, or may be, pledged or encumbered to support or otherwise secure ~~the~~ debt. These borrowing arrangements generally contain various covenants including, but not limited to, leverage ratios, interest coverage ratios and debt service coverage ratios. BNSF’s borrowings are primarily senior unsecured debentures. In ~~the first nine months of 2015,~~May 2016, BNSF issued ~~$2.5 billion~~$750 million of ~~senior unsecured debentures consisting of $850 million of~~3.9% debentures due in 2025 and $1.65 billion of debentures due in 2045. These senior unsecured debentures have interest rates ranging from 3.0% to 4.7%. In the second quarter of 2015, BNSF issued $500 million of amortizing debt with a final maturity date of 2028, which is secured with locomotives.2046. As of September 30, ~~2015,~~2016, BNSF and BHE and their subsidiaries were in compliance with all applicable debt covenants. Berkshire does not guarantee any debt, borrowings or lines of credit of BNSF, BHE or their subsidiaries.

   Weighted
Average
  Interest Rate
September 30,
2015
   December 31,
2014
Finance and financial products:

Issued by Berkshire Hathaway Finance Corporation (“BHFC”) due 2015-2043
   2.7%          $ 11,178      $ 11,178
Issued by other subsidiaries due 2015-2036
   5.3%        1,305    1,558




  $ 12,483      $ 12,736


	Weighted Average Interest Rate	September 30, 2016		December 31, 2015
Finance and financial products:
Berkshire Hathaway Finance Corporation (“BHFC”) due 2017-2043	2.5%	$	14,421	$	10,679
Other subsidiary borrowings due 2016-2036	5.0%		1,052		1,272

		$	15,473	$	11,951 ��

In ~~January 2015,~~March 2016, BHFC issued ~~$1.0~~$3.5 billion of ~~new~~ senior notes consisting of ~~$400~~$750 million of 1.45% notes due in 2018, $1.0 billion of floating rate ~~senior~~ notes ~~that mature~~due in ~~2017~~2018, $1.25 billion of 1.70% notes due in 2019 and ~~$600~~$500 million of floating rate ~~senior~~ notes ~~that mature~~due in ~~2018, which replaced $1.0~~2019. In August 2016, BHFC issued $1.25 billion of senior notes ~~that matured.~~consisting of $1 billion of 1.30% notes due in 2019 and $250 million of floating rate notes due in 2019, primarily to replace $1 billion of maturing debt. The borrowings of BHFC, a wholly owned finance subsidiary of Berkshire, are fully and unconditionally guaranteed by Berkshire.

As of September 30, ~~2015,~~2016, our subsidiaries also had unused lines of credit and commercial paper capacity aggregating approximately ~~$9.2~~$8.2 billion to support short-term borrowing programs and provide additional liquidity. Such unused lines of credit included about ~~$5.4~~$4.0 billion related to BHE and its subsidiaries. In addition to BHFC’s borrowings, Berkshire ~~has guaranteed~~guarantees certain other subsidiary borrowings, ~~aggregating~~which aggregated approximately ~~$3.3~~$3.2 billion at September 30, ~~2015.~~2016. Generally, Berkshire’s guarantee of a subsidiary’s debt obligation is an absolute, unconditional and irrevocable guarantee for the full and prompt payment when due of all present and future payment obligations.

Notes to Consolidated Financial Statements(Continued)

Note ~~16.~~17. Fair value measurements

Our financial assets and liabilities are summarized below as of September 30, ~~2015~~2016 and December 31, ~~2014~~2015 with fair values shown according to the fair value hierarchy (in millions). The carrying values of cash and cash equivalents, ~~accounts receivable~~receivables and accounts payable, accruals and other liabilities are considered to be reasonable estimates of their fair values.


	Carrying Value			Fair Value			Quoted Prices (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Carrying Value		Fair Value		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2015
September 30, 2016
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies																	$ 4,565		$ 4,565		$ 3,318		$ 1,247		$ —
States, municipalities and political subdivisions																	1,279		1,279		—		1,279		—
Foreign governments																	9,795		9,795		7,704		2,091		—
Corporate bonds																	7,789		7,789		—		7,682		107
Mortgage-backed securities																	1,219		1,219		—		1,219		—
Investments in equity securities																	102,535		102,535		102,534		—		1
Investment in Kraft Heinz common stock																	15,711		29,130		29,130		—		—
Other investments																	17,493		17,493		376		—		17,117
Loans and finance receivables																	13,213		13,650		—		14		13,636
Derivative contract assets⁽¹⁾																	105		105		1		5		99
Derivative contract liabilities:
Railroad, utilities and energy⁽¹⁾																	198		198		5		161		32
Finance and financial products:
Equity index put options																	3,973		3,973		—		—		3,973
Notes payable and other borrowings:
Insurance and other																	27,514		29,119		—		29,119		—
Railroad, utilities and energy																	58,811		69,130		—		69,130		—
Finance and financial products																	15,473		16,251		—		15,862		389

December 31, 2015
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies		$	3,819		$	3,819		$	2,542		$	1,277		$	—		$ 3,427		$ 3,427		$ 2,485		$ 942		$ —
States, municipalities and political subdivisions			1,868			1,868			—			1,868			—		1,764		1,764		—		1,764		—
Foreign governments			11,644			11,644			6,982			4,662			—		11,468		11,468		9,188		2,280		—
Corporate bonds			8,116			8,116			—			8,005			111		7,926		7,926		—		7,826		100
Mortgage-backed securities			1,713			1,713			—			1,713			—		1,442		1,442		—		1,442		—
Investments in equity securities			110,288			110,288			110,250			37			1		111,822		111,822		111,786		35		1
Investment in Kraft Heinz common stock			15,816			22,970			22,970			—			—		15,714		23,679		23,679		—		—
Investment in Kraft Heinz Preferred Stock			7,710			8,568			—			—			8,568		7,710		8,363		—		—		8,363
Other investments			20,576			20,576			303			—			20,273		21,717		21,717		315		—		21,402
Loans and finance receivables			12,686			13,067			—			16			13,051		12,772		13,112		—		16		13,096
Derivative contract assets⁽¹⁾			109			109			—			10			99		103		103		—		5		98
Derivative contract liabilities:
Railroad, utilities and energy⁽¹⁾			257			257			12			196			49		237		237		13		177		47
Finance and financial products:
Equity index put options			4,188			4,188			—			—			4,188		3,552		3,552		—		—		3,552
Credit default			242			242			—			—			242		284		284		—		—		284
Notes payable and other borrowings:
Insurance and other			14,556			14,716			—			14,716			—		14,599		14,773		—		14,773		—
Railroad, utilities and energy			57,872			63,044			—			63,044			—		57,739		62,471		—		62,471		—
Finance and financial products			12,483			12,918			—			12,433			485		11,951		12,363		—		11,887		476
December 31, 2014
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies		$	2,930		$	2,930		$	2,264		$	666		$	—
States, municipalities and political subdivisions			1,912			1,912			—			1,912			—
Foreign governments			12,270			12,270			7,981			4,289			—
Corporate bonds			8,771			8,771			—			8,763			8
Mortgage-backed securities			1,753			1,753			—			1,753			—
Investments in equity securities			117,470			117,470			117,424			45			1
Investment in Kraft Heinz Preferred Stock			7,710			8,416			—			—			8,416
Other investments			22,324			22,324			329			—			21,995
Loans and finance receivables			12,566			12,891			—			33			12,858
Derivative contract assets⁽¹⁾			108			108			1			13			94
Derivative contract liabilities:
Railroad, utilities and energy⁽¹⁾			230			230			18			169			43
Finance and financial products:
Equity index put options			4,560			4,560			—			—			4,560
Credit default			250			250			—			—			250
Notes payable and other borrowings:
Insurance and other			11,894			12,484			—			12,484			—
Railroad, utilities and energy			55,579			62,802			—			62,802			—
Finance and financial products			12,736			13,417			—			12,846			571

⁽¹⁾

Assets are included in other assets and liabilities are included in accounts payable, accruals and other liabilities.

Notes to Consolidated Financial Statements(Continued)

Note ~~16.~~17. Fair value measurements(Continued)

The fair values of substantially all of our financial instruments were measured using market or income approaches. Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, the fair values presented are not necessarily indicative of the amounts that could be realized in an actual current market exchange. The use of alternative market assumptions and/or estimation methodologies may have a material effect on the estimated fair value. The hierarchy for measuring fair value consists of Levels 1 through 3, which are described below.

Level 1 – —Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.

Level 2 – —Inputs include directly or indirectly observable inputs (other than Level 1 inputs) such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that may be considered in fair value determinations of the assets or liabilities, such as interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Pricing evaluations generally reflect discounted expected future cash flows, which incorporate yield curves for instruments with similar characteristics, such as credit ratings, estimated durations and yields for other instruments of the issuer or entities in the same industry sector.

Level 3 – —Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities and it may be unable to corroborate the related observable inputs. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in ~~pricing~~valuing assets or liabilities.

Reconciliations of assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for the nine months ending September 30, ~~2015~~2016 and ~~2014~~2015 follow (in millions).


													Investments in fixed maturity securities				Investments in equity securities and other investments				Net derivative contract liabilities
Nine months ending September 30, 2016
Balance at December 31, 2015														$	100			$	21,403			$	(3,785	)
Gains (losses) included in:
Earnings															—				2,409				(221	)
Other comprehensive income															3				(2,233	)			(2	)
Regulatory assets and liabilities															—				—				(12	)
Acquisitions, dispositions and settlements															5				(4,461	)			(81	)
Transfers into/out of Level 3															(1	)			—				195

Balance at September 30, 2016														$	107			$	17,118			$	(3,906	)
	Investments in fixed maturity securities				Investments in equity securities and other investments				Net derivative contract liabilities
Nine months ending September 30, 2015
Balance at December 31, 2014		$	8			$	21,996			$	(4,759	)		$	8			$	21,996			$	(4,759	)
Gains (losses) included in:
Earnings			—				—				467				—				—				467
Other comprehensive income			—				(1,722	)			(5	)			—				(1,722	)			(5	)
Regulatory assets and liabilities			—				—				(21	)			—				—				(21	)
Acquisitions, dispositions and settlements			103				—				(65	)
Acquisition, dispositions and settlements															103				—				(65	)
Transfers into/out of Level 3			—				—				3				—				—				3

Balance at September 30, 2015		$	111			$	20,274			$	(4,380	)		$	111			$	20,274			$	(4,380	)


Nine months ending September 30, 2014
Balance at December 31, 2013		$	372			$	17,958			$	(5,255	)
Gains (losses) included in:
Earnings			—				—				644
Other comprehensive income			13				1,228				4
Regulatory assets and liabilities			—				—				(3	)
Dispositions and settlements			(1	)			—				(1	)
Transfers into/out of Level 3			(375	)			(6	)			(35	)

Balance at September 30, 2014		$	9			$	19,180			$	(4,646	)

Gains and losses included in earnings are included as components of investment gains/losses, derivative gains/losses ~~and~~or other revenues, as appropriate and are primarily related to changes in the fair values of derivative contracts and settlement transactions. ~~Substantially all of the gains~~Gains and losses included in other comprehensive income ~~are included as components of~~primarily represent the net change in unrealized appreciation of ~~investments and~~investments. In the ~~reclassification~~third quarter of 2016, our investment ~~appreciation~~ in ~~earnings, as appropriate in our Consolidated Statements of Comprehensive Income.~~Wrigley preferred stock was redeemed.

Notes to Consolidated Financial Statements(Continued)

Note ~~16.~~17. Fair value measurements(Continued)

Quantitative information as of September 30, ~~2015,~~2016, with respect to assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) follows (in millions).

Fair
value

Principal valuation
techniques

Unobservable Inputs

Weighted
Average

Fair
Value

Principal Valuation

Techniques

Unobservable Inputs

Weighted
Average

Other investments:

Preferred stocks

14,526

Discounted cash flow

Expected duration

7 years

11,615

Discounted cash flow

Expected duration

6 years

Discount for transferability

restrictions and subordination

134 basis points

Discount for transferability
restrictions and subordination

159 basis points

Common stock warrants

5,747

Warrant pricing model

Discount for transferability

and hedging restrictions

5,502

Warrant pricing model

Discount for transferability and
hedging restrictions

Net derivative liabilities:

Equity index put options

4,188

Option pricing model

Volatility

22%

3,973

Option pricing model

Volatility

21%

Credit default

242

Discounted cash flow

Credit spreads

31 basis points

Other investments consist of perpetual preferred stocks and common stock warrants that we acquired in ~~a few relatively large~~ private placement transactions. These investments are subject to contractual restrictions on transferability and may contain provisions that prevent us from economically hedging our investments. In applying discounted estimated cash flow techniques in valuing the perpetual preferred stocks, we made assumptions regarding the expected durations of the investments, as the issuers may have the right to redeem or convert these investments. We also made estimates regarding the impact of subordination, as the preferred stocks have a lower priority in liquidation than debt instruments of the issuers. In valuing the common stock warrants, we used a warrant valuation model. While most of the inputs to the model are observable, we are subject to the aforementioned contractual restrictions and we have applied discounts with respect to such restrictions. Increases or decreases to these inputs would result in decreases or increases to the fair values of the investments.

Our equity index put option ~~and credit default~~ contracts are illiquid and contain contract terms that are not standard in derivatives markets. For example, we are not required to post collateral under most of our contracts and many contracts have relatively long durations. For these and other reasons, we classified these contracts as Level 3. WeThe methods we use to value these contracts are those that we believe ~~that our valuation methods represent the methods that~~ market participants would use in determining exchange prices with respect to our contracts.

We value equity index put option contracts based on the Black-Scholes option valuation model. Inputs to this model include the index price, contract duration and dividend and interest ~~rate inputs~~rates (including a Berkshire non-performance input) which are observable. However, we believe that the valuation of long-duration options using any model is inherently subjective and, given the lack of observable transactions and prices, acceptable values may be subject to wide ranges. ~~Expected volatility~~Volatility inputs represent our expectations, which consider the remaining duration of each contract and assume that the contracts will remain outstanding until the expiration dates without offsetting transactions occurring in the interim. Increases or decreases in the volatility inputs will produce increases or decreases in the fair values of the liabilities.

~~Notes to Consolidated Financial Statements~~~~(Continued)~~

Note ~~17.~~18. Common stock

Changes in Berkshire’s issued, treasury and outstanding common stock during the first nine months of ~~2015~~2016 are shown in the table below.

   Class A, $5 Par Value
(1,650,000 shares authorized)    Class B, $0.0033 Par Value
(3,225,000,000 shares authorized)
   Issued    Treasury    Outstanding    Issued    Treasury    Outstanding
Balance at December 31, 2014
   838,019    (11,680)    826,339          1,226,265,250       (1,409,762)       1,224,855,488
Conversions of Class A common stock to Class B common stock and exercises of replacement stock options issued in a business acquisition
   (15,058)       —       (15,058)         23,255,846       —          23,255,846












Balance at September 30, 2015
   822,961    (11,680)    811,281          1,249,521,096       (1,409,762)       1,248,111,334


	Class A, $5 Par Value (1,650,000 shares authorized)							Class B, $0.0033 Par Value (3,225,000,000 shares authorized)
	Issued		Treasury		Outstanding			Issued		Treasury		Outstanding
Balance at December 31, 2015		820,102		(11,680)		808,422			1,253,866,598		(1,409,762)		1,252,456,836
Conversions of Class A common stock to Class B common stock and exercises of replacement stock options issued in a business acquisition		(22,628)		—		(22,628	)		34,899,211		—		34,899,211

Balance at September 30, 2016		797,474		(11,680)		785,794			1,288,765,809		(1,409,762)		1,287,356,047

Notes to Consolidated Financial Statements(Continued)

Note 18. Common stock(Continued)

Each Class A common share is entitled to one vote per share. Class B common stock possesses dividend and distribution rights equal to one-fifteen-hundredth (1/1,500) of such rights of Class A common stock. Each Class B common share possesses voting rights equivalent to one-ten-thousandth (1/10,000) of the voting rights of a Class A share. Unless otherwise required under Delaware General Corporation Law, Class A and Class B common shares vote as a single class. Each share of Class A common stock is convertible, at the option of the holder, into 1,500 shares of Class B common stock. Class B common stock is not convertible into Class A common stock. On an equivalent Class A common stock basis, there were ~~1,643,355~~1,644,031 shares outstanding as of September 30, ~~2015~~2016 and ~~1,642,909~~1,643,393 shares outstanding as of December 31, ~~2014.~~2015. In addition to our common stock, 1,000,000 shares of preferred stock are authorized, but none are ~~issued and outstanding.~~issued.

Berkshire’s Board of Directors (“Berkshire’s Board”) has approved a common stock repurchase program under which Berkshire may repurchase its Class A and Class B shares at prices no higher than a 20% premium over the book value of the shares. Berkshire may repurchase shares in the open market or through privately negotiated transactions. Berkshire’s Board authorization does not specify a maximum number of shares to be repurchased. However, repurchases will not be made if they would reduce Berkshire’s consolidated cash and cash equivalent holdings below $20 billion. The repurchase program does not obligate Berkshire to repurchase any dollar amount or number of Class A or Class B shares and there is no expiration date to the program. ~~There were no share repurchases under the program in the first nine months of 2015.~~

~~Notes to Consolidated Financial Statements~~~~(Continued)~~

Note ~~18.~~19. Accumulated other comprehensive income

A summary of the net changes in after-tax accumulated other comprehensive income attributable to Berkshire Hathaway shareholders and significant amounts reclassified out of accumulated other comprehensive income for the nine months ending September 30, ~~2015~~2016 and ~~2014~~2015 follows (in millions).

   Unrealized
appreciation of
investments, net Foreign
currency
translation Prior service
and actuarial
gains/losses of
defined benefit
pension plans    Other    Accumulated
other
comprehensive
income
Nine months ending September 30, 2015

Balance at December 31, 2014
   $ 45,636 $ (1,957 ) $ (1,039)       $ 92       $ 42,732
Other comprehensive income, net before reclassifications
   (7,958 ) (1,602 ) 162    (113)       (9,511)
Reclassifications from accumulated other comprehensive income
   (1,158 ) 128 1    11       (1,018)






Balance at September 30, 2015
   $    36,520 $ (3,431 ) $ (876)       $ (10)       $ 32,203






Reclassifications from other comprehensive income into net earnings:

Investment gains/losses:

Insurance and other
   $ (1,695 ) $ 197 $ —       $ —       $ (1,498)
Finance and financial products
   (86 ) —   —       —          (86)
Other
   —   —   2    18       20






Reclassifications before income taxes
   (1,781 ) 197 2    18       (1,564)
Applicable income taxes
   (623 ) 69 1    7       (546)






   $ (1,158 ) $ 128 $ 1    $ 11       $ (1,018)


	Unrealized appreciation of investments, net			Foreign currency translation			Prior service and actuarial gains/losses of defined benefit pension plans			Other				Accumulated other comprehensive income				Unrealized appreciation of investments			Foreign currency translation				Prior service and actuarial gains/losses of defined benefit pension plans			Other				Accumulated Other Comprehensive income
Nine months ending September 30, 2014
Balance at December 31, 2013		$	44,042		$	(146)		$	46		$	83			$	44,025
Nine months ending September 30, 2016
Balance at December 31, 2015																			$	38,598		$	(3,856	)		$	(762)		$	2			$	33,982
Other comprehensive income, net before reclassifications			2,942			(852)			(15)			(5	)			2,070				(912)			(101	)			(39)			(26	)			(1,078	)
Reclassifications from accumulated other comprehensive income			(1,971)			47			39			(24	)			(1,909	)			(3,188)			—				59			23				(3,106	)

Balance at September 30, 2014		$	45,013		$	(951)		$	70		$	54			$	44,186
Balance at September 30, 2016																			$	34,498		$	(3,957	)		$	(742)		$	(1	)		$	29,798

Reclassifications from other comprehensive income into net earnings:
Investment gains/losses:
Insurance and other		$	(2,960)		$	—		$	—		$	—			$	(2,960	)
Finance and financial products			(72)			—			—			—				(72	)
Investment gains/losses																			$	(4,904)		$	—			$	—		$	—			$	(4,904	)
Other			—			47			51			(39	)			59				—			—				79			41				120

Reclassifications before income taxes			(3,032)			47			51			(39	)			(2,973	)			(4,904)			—				79			41				(4,784	)
Applicable income taxes			(1,061)			—			12			(15	)			(1,064	)			(1,716)			—				20			18				(1,678	)

		$	(1,971)		$	47		$	39		$	(24	)		$	(1,909	)		$	(3,188)		$	—			$	59		$	23			$	(3,106	)

Notes to Consolidated Financial Statements(Continued)

Note 19. Accumulated other comprehensive income(Continued)


	Unrealized appreciation of investments			Foreign currency translation			Prior service and actuarial gains/losses of defined benefit pension plans			Other				Accumulated other comprehensive income
Nine months ending September 30, 2015
Balance at December 31, 2014		$	45,636		$	(1,957)		$	(1,039)		$	92			$	42,732
Other comprehensive income, net before reclassifications			(7,958)			(1,602)			162			(113	)			(9,511)
Reclassifications from accumulated other comprehensive income			(1,158)			128			1			11				(1,018)

Balance at September 30, 2015		$	36,520		$	(3,431)		$	(876)		$	(10	)		$	32,203

Reclassifications from other comprehensive income into net earnings:
Investment gains/losses		$	(1,781)		$	197		$	—		$	—			$	(1,584)
Other			—			—			2			18				20

Reclassifications before income taxes			(1,781)			197			2			18				(1,564)
Applicable income taxes			(623)			69			1			7				(546)

		$	(1,158)		$	128			1		$	11			$	(1,018)

Note ~~19.~~20. Contingencies and Commitments

We are parties in a variety of legal actions that routinely arise out of the normal course of business, including legal actions seeking to establish liability directly through insurance contracts or indirectly through reinsurance contracts issued by Berkshire subsidiaries. Plaintiffs occasionally seek punitive or exemplary damages. We do not ~~currently~~ believe that such normal and routine litigation will have a material effect on our financial condition or results of operations. Berkshire and certain of its subsidiaries are also involved in other kinds of legal actions, some of which assert or may assert claims or seek to impose fines and penalties. We ~~currently~~ believe that any liability that may arise as a result of other pending legal actions will not have a material effect on our consolidated financial condition or results of operations.

On August 8, 2015, Berkshire entered into a definitive agreement with Precision Castparts Corp. (“PCC”) to acquire for $235 per share of common stock in cash, all outstanding PCC shares of common stock, other than the shares we already own (about 2.7 million shares or 1.96%), for aggregate consideration of approximately $31.7 billion. A special meeting of PCC shareholders for the purpose of voting on whether or not to approve the agreement has been scheduled for November 19, 2015. The transaction requires approval by a majority of PCC’s outstanding shares. In addition to the approval of PCC shareholders, the closing of the acquisition is subject to clearance under the Hart-Scott-Rodino (“HSR”) Act and competition clearance in certain foreign jurisdictions. Clearance under the HSR Act was obtained on October 5, 2015. It is expected that the remaining competition clearances will be obtained and that the acquisition will be completed no later than the end of the first quarter of 2016.

PCC is a worldwide, diversified manufacturer of complex metal components and products. It serves the aerospace, power, and general industrial markets. PCC is a market leader in manufacturing complex structural investment castings and forged components for aerospace markets, machined airframe components, and highly engineered, critical fasteners for aerospace applications, and in manufacturing airfoil castings for the aerospace and industrial gas turbine markets. PCC also is a leading producer of titanium and nickel superalloy melted and mill products for the aerospace, chemical processing, oil and gas, and pollution control industries, and manufactures extruded seamless pipe, fittings, and forgings for power generation and oil and gas applications.

On November 13, 2014, Berkshire entered into a definitive agreement with The Procter & Gamble Company (“P&G”) whereby it will acquire the Duracell business from P&G. Duracell is a leading manufacturer of high-performance alkaline batteries and is an innovator in renewable power and wireless charging technologies. Pursuant to the agreement, in exchange for a recapitalized Duracell Company, which will include approximately $1.7 billion in cash at closing, P&G will receive shares of P&G common stock currently held by Berkshire subsidiaries which had a fair value at September 30, 2015 of approximately $3.8 billion. The transaction is currently expected to close in the first quarter of 2016.

We own a 50% interest in a joint venture, Berkadia Commercial Mortgage LLC (“Berkadia”), with Leucadia National Corporation (“Leucadia”) owning the other 50% interest. Berkadia is a servicer of commercial real estate loans in the U.S., performing primary, master and special servicing functions for U.S. government agency programs, commercial mortgage-backed securities transactions, banks, insurance companies and other financial institutions. A significant source of funding for Berkadia’s operations is through the issuance of commercial paper. Repayment of the commercial paper is supported by a ~~$2.5 billion~~ surety policy issued by a Berkshire insurance subsidiary. Leucadia has agreed to indemnify us for one-half of any losses incurred under the policy. Berkadia’s maximum outstanding balance of commercial paper borrowings is currently limited to $1.5 billion. On September 30, ~~2015,~~2016, the aggregate amount of Berkadia commercial paper outstanding was ~~$2.47~~$1.47 billion.

In the third quarter of 2016, our wholly-owned subsidiary, National Indemnity Company entered into a definitive agreement to acquire Medical Liability Mutual Insurance Company (“MLMIC”), a writer of medical professional liability insurance domiciled in New York. MLMIC’s assets and policyholders’ surplus determined under statutory accounting principles as of June 30, 2016 were approximately $5.5 billion and $1.9 billion, respectively. The acquisition price will be an amount equal to the sum of: (i) the tangible book value of MLMIC at the closing date (determined under U.S. GAAP); plus (ii) $100 million. The acquisition will involve the conversion of MLMIC from a mutual company to a stock company. The closing of the transaction is subject to various regulatory approvals, customary closing conditions and the approval of the MLMIC policyholders eligible to vote on the proposed demutualization and sale. The transaction is currently expected to be completed in late 2017.

Notes to Consolidated Financial Statements(Continued)

Note ~~20.~~21. Business segment data

Our operating businesses include a large and diverse group of insurance, finance, manufacturing, service and retailing businesses. Our manufacturing businesses include PCC and Duracell, which were acquired in the first quarter of 2016. Revenues by segment ~~for the third quarter and first nine months of 2015 and 2014~~ were as follows (in millions).


	Third Quarter						First Nine Months
	2015			2014			2015			2014		Third Quarter				First Nine Months
												2016		2015		2016		2015
Operating Businesses:
Insurance group:
Underwriting:
GEICO	$	5,788		$	5,203		$	16,792		$	15,168	$	6,474	$	5,788	$	18,771	$	16,792
General Re		1,405			1,566			4,397			4,733		1,389		1,405		4,168		4,397
Berkshire Hathaway Reinsurance Group		1,892			4,809			5,317			8,414		1,872		1,892		5,767		5,317
Berkshire Hathaway Primary Group		1,429			1,139			3,948			3,141		1,629		1,429		4,581		3,948
Investment income		1,046			957			3,474			3,409		1,043		1,046		3,428		3,474

Total insurance group		11,560			13,674			33,928			34,865		12,407		11,560		36,715		33,928
BNSF		5,600			5,881			16,571			17,063		5,167		5,600		14,519		16,571
Berkshire Hathaway Energy		5,144			4,853			14,018			13,344		5,198		5,144		13,615		14,018
Manufacturing													12,082		9,181		34,837		27,568
McLane Company		12,264			12,151			36,200			34,327		12,271		12,264		36,121		36,200
Manufacturing		9,181			9,534			27,568			27,788
Service and retailing		6,151			3,493			16,966			10,456		6,331		6,151		18,607		16,966
Finance and financial products		1,725			1,654			5,078			4,731		1,962		1,725		5,677		5,078

		51,625			51,240			150,329			142,574		55,418		51,625		160,091		150,329

Reconciliation of segments to consolidated amount:
Investment and derivative gains/losses		7,502			(118	)		9,105			3,770		3,608		7,502		5,311		9,105
Income from Kraft Heinz													225		98		851		329
Eliminations and other		(138	)		77			(433	)		70		(183)		(236)		(322)		(762)

	$	58,989		$	51,199		$	159,001		$	146,414	$	59,068	$	58,989	$	165,931	$	159,001

Earnings before income taxes by segment ~~for the third quarter and first nine months of 2015 and 2014~~ were as follows (in millions).


	Third Quarter						First Nine Months
	2015			2014			2015			2014			Third Quarter				First Nine Months
													2016		2015		2016		2015
Operating Businesses:
Insurance group:
Underwriting:
GEICO	$	258		$	264		$	471		$	1,010		$	138	$	258	$	552	$	471
General Re		(2	)		126			58			322			100		(2)		144		58
Berkshire Hathaway Reinsurance Group		199			443			247			617			(19)		199		86		247
Berkshire Hathaway Primary Group		188			143			566			379			190		188		485		566
Investment income		1,045			950			3,466			3,394			1,029		1,045		3,406		3,466

Total insurance group		1,688			1,926			4,808			5,722			1,438		1,688		4,673		4,808
BNSF		1,839			1,654			5,047			4,295			1,633		1,839		4,129		5,047
Berkshire Hathaway Energy		1,153			1,051			2,398			2,248			1,246		1,153		2,481		2,398
Manufacturing														1,981		1,259		5,150		3,857
McLane Company		106			120			384			361			106		106		371		384
Manufacturing		1,259			1,337			3,857			3,774
Service and retailing		378			355			1,260			1,095			449		378		1,230		1,260
Finance and financial products		486			453			1,480			1,247			517		486		1,578		1,480

		6,909			6,896			19,234			18,742			7,370		6,909		19,612		19,234

Reconciliation of segments to consolidated amount:
Investment and derivative gains/losses		7,502			(118	)		9,105			3,770			3,608		7,502		5,311		9,105
Income from Kraft Heinz														225		98		851		329
Interest expense, not allocated to segments		(83	)		(79	)		(391	)		(233	)		(201)		(83)		(518)		(391)
Eliminations and other		(256	)		51			(383	)		(15	)		(477)		(354)		(903)		(712)

	$	14,072		$	6,750		$	27,565		$	22,264		$	10,525	$	14,072	$	24,353	$	27,565

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Net earnings attributable to Berkshire Hathaway shareholders are disaggregated in the table that follows. Amounts are ~~after deducting income taxes and exclude earnings attributable to noncontrolling interests. Amounts are~~ in millions.


	Third Quarter						First Nine Months							Third Quarter						First Nine Months
	2015			2014			2015				2014			2016			2015			2016		2015
Insurance – underwriting	$	414		$	629		$	856			$	1,501		$	272		$	414		$	822	$	856
Insurance – investment income		840			811			2,692				2,662			850			840			2,747		2,692
Railroad		1,156			1,035			3,164				2,675			1,020			1,156			2,576		3,164
Utilities and energy		786			697			1,709				1,524			932			786			1,855		1,709
Manufacturing, service and retailing		1,177			1,224			3,609		��		3,421			1,702			1,177			4,461		3,609
Finance and financial products		303			297			962				815			337			303			1,044		962
Investment and derivative gains/losses		4,877			(107	)		5,920				3,129			2,347			4,877			4,593		5,920
Other		(125	)		31			(307	)			(10	)		(262	)		(125	)		(310)		(307)

Net earnings attributable to Berkshire Hathaway shareholders	$	9,428		$	4,617		$	18,605			$	15,717		$	7,198		$	9,428		$	17,788	$	18,605

Through our subsidiaries, we engage in a number of diverse business activities. Our operating businesses are managed on an unusually decentralized basis. There are essentially no centralized or integrated business functions (such as sales, marketing, purchasing, legal or human resources) and there is minimal involvement by our corporate headquarters in the day-to-day business activities of ~~our~~the operating businesses. ~~Berkshire’s~~Our senior corporate management team participates in and is ultimately responsible for significant capital allocation decisions, investment activities and the selection of the ~~chief executive~~Chief Executive to head each of the operating businesses. It also is responsible for establishing and monitoring Berkshire’s corporate governance practices, including, but not limited to, communicating the appropriate “tone at the top” messages to its employees and associates, monitoring governance efforts, including those at the operating businesses, and participating in the resolution of governance-related issues as needed. The business segment data (Note 2021 to the accompanying Consolidated Financial Statements) should be read in conjunction with this discussion.

Our insurance businesses generated after-tax earnings from underwriting of $414 million in the third quarter and $856 million in the first nine months of 2015, representing declines from the corresponding 2014 periods. Underwriting earnings in 2015 of GEICO, BHRG and General Re declined from 2014. Our railroad business generated higher after-tax earnings in 2015 compared to 2014. Results in 2015 were positively impacted by improved service levels and lower fuel costs. Our utilities and energy business produced increased after-tax earnings in the first nine months of 2015. Earnings in 2015 benefitted from the inclusion of AltaLink (acquired in December 2014) and an overall lower effective income tax rate. After-tax earnings from our manufacturing, service and retailing businesses in the first nine months of 2015 increased 5.5% in the aggregate over the first nine months of 2014, although earnings in the third quarter of 2015 declined 4% compared to 2014. In the third quarter of 2015, the positive impacts of business acquisitions and higher earnings in our building products businesses were more than offset by lower earnings from certain of our ~~industrial and end-user businesses and our apparel businesses.~~

~~After-tax investment and derivative gains/losses~~insurance underwriting operations were lower in the third quarter and first nine months of ~~2015 were $4.9 billion and $5.9 billion, respectively,~~2016 as compared to ~~losses of $107 million in the third quarter and gains of $3.1 billion in~~2015. In the first nine months of ~~2014. In~~2016, the Berkshire Hathaway Reinsurance and Primary Groups generated lower net underwriting earnings while GEICO and General Re had earnings increases. Our railroad business generated lower net earnings in the third quarter and first nine months of 2016, primarily due to a 6.6% year-to-date decline in unit volume. Earnings of our utilities and energy businesses increased in the third quarter and first nine months of 2016 which was attributable to increased pre-tax earnings and lower effective income tax rates. The increases in net earnings from our manufacturing, service and retailing businesses reflected the impact of the PCC and Duracell acquisitions, partly offset by lower aggregate earnings from the other businesses within this group.

After-tax investment and derivative gains in the third quarter and first nine months were approximately $2.3 billion and $4.6 billion, respectively, in 2016 compared to $4.9 billion and $5.9 billion, respectively, in 2015. After-tax investment gains in the third quarter of 2016 included approximately $1.6 billion from the sale of our Wrigley preferred stock investment and in the first nine months also included non-cash gains of approximately $1.9 billion related to the exchange of P&G common stock for 100% of the common stock of Duracell. After-tax investment and derivative gains in the third quarter of 2015 ~~after-tax gains~~ included a non-cash holding ~~gain~~gains of approximately $4.4 billion ~~that was realized~~ in connection with our investment in Kraft Heinz common stock. In the first nine months of 2014, we recorded after-tax gains of approximately $2.0 billion related to the exchanges of Phillips 66 and Graham Holdings Company common stock for a specified subsidiary of each of those companies. In 2015, derivative contracts produced after-tax losses of $517 million in the third quarter and after-tax gains of $227 million for the first nine months. In 2014, after-tax gains from our derivative contracts were $168 million in the third quarter and $422 million in the first nine months. We believe that investment and derivative gains/losses are often meaningless in terms of understanding our reported results or evaluating our economic performance. ~~These~~Investment and derivative gains and losses have caused and will likely continue to cause significant volatility in our periodic earnings.

Insurance—Underwriting

We engage in both primary insurance and reinsurance of property/casualty, life and health risks. In primary insurance activities, we assume defined portions of the risks of loss from persons or organizations that are directly subject to the risks. In reinsurance activities, we assume defined portions of similar or dissimilar risks that other insurers or reinsurers have ~~assumed~~subjected themselves to in their own insuring activities. Our insurance and reinsurance businesses are: (1) GEICO, (2) General Re, (3) Berkshire Hathaway Reinsurance Group (“BHRG”) and (4) Berkshire Hathaway Primary Group.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Insurance—Underwriting(Continued)

Our management views insurance businesses as possessing two distinct operations – underwriting and investing. Underwriting decisions are the responsibility of the unit managers; investing decisions, with limited exceptions, are the responsibility of Berkshire’s Chairman and CEO, Warren E. Buffett. Accordingly, we evaluate performance of underwriting operations without any allocation of investment income or investment gains.

The timing and amount of large property catastrophe losses can produce significant volatility in our periodic underwriting results, particularly with respect to ~~BHRG and General Re. We define pre-tax~~our reinsurance businesses. In the first nine months of 2016, we had no significant catastrophe losses. Based on preliminary estimates, we believe that losses arising from Hurricane Matthew in ~~excess of $100 million from a single event or series of related events as significant.~~October 2016 will not be material. In the third quarter of 2015, we recorded estimated losses of $130 million in connection with a property loss event in China. ~~In the first nine months of 2014, there were no significant catastrophe losses.~~ Our periodic underwriting results may be affected significantly by changes in estimates for unpaid losses and loss adjustment expenses, including amounts established for occurrences in prior years. Actual claim settlements and revised loss estimates will develop over time. Unpaid loss estimates recorded as of the balance sheet date will develop upward or downward in future periods, producing a corresponding decrease or increase to pre-tax ~~underwriting~~ earnings.

~~Our periodic underwriting results may also include~~ Variations in foreign currency exchange rates can produce relatively significant foreign currency ~~transaction~~exchange gains and losses ~~arising primarily from the changes~~ in ~~the valuation of~~our periodic earnings with respect to non-U.S. ~~Dollar denominated reinsurance assets and~~dollar liabilities of our U.S.-based insurance ~~subsidiaries as a result of foreign currency exchange rate fluctuations. Currency exchange rates can be volatile and the resulting impact on our underwriting earnings can be relatively significant.~~subsidiaries.

A key marketing strategy of our insurance businesses is the maintenance of extraordinary capital strength. A measure of capital strength is combined shareholders’ equity determined pursuant to U.S. statutory accounting rules (“Statutory Surplus”). Statutory Surplus of our insurance businesses was approximately ~~$129~~$124 billion at December 31, ~~2014.~~2015. This superior capital strength creates opportunities, especially with respect to reinsurance activities, to negotiate and enter into insurance and reinsurance contracts specially designed to meet the unique needs of insurance and reinsurance buyers. Underwriting results ~~from~~of our insurance businesses are summarized below. Amounts are in millions.


	Third Quarter					First Nine Months				Third Quarter				First Nine Months
	2015			2014		2015		2014		2016		2015		2016		2015
Underwriting gain (loss) attributable to:
GEICO	$	258		$	264	$	471	$	1,010	$	138	$	258	$	552	$	471
General Re		(2	)		126		58		322		100		(2)		144		58
Berkshire Hathaway Reinsurance Group		199			443		247		617		(19)		199		86		247
Berkshire Hathaway Primary Group		188			143		566		379		190		188		485		566

Pre-tax underwriting gain		643			976		1,342		2,328		409		643		1,267		1,342
Income taxes and noncontrolling interests		229			347		486		827		137		229		445		486

Net underwriting gain	$	414		$	629	$	856	$	1,501	$	272	$	414	$	822	$	856

GEICO

~~Through~~ GEICO ~~we primarily write~~writes private passenger automobile insurance, offering coverages to insureds in all 50 states and the District of Columbia. GEICO’s policies are marketed mainly by direct response methods in which customers apply for coverage directly to the company via the Internet or over the telephone. This is a significant element in our strategy to be a low-cost auto insurer. In addition, we strive to provide excellent ~~customer~~ service to customers, with the goal of establishing long-term customer relationships. GEICO’s underwriting results are summarized below. Dollars are in millions.


	Third Quarter								First Nine Months								Third Quarter								First Nine Months
	2015				2014				2015				2014				2016				2015				2016				2015
	Amount		%		Amount		%		Amount		%		Amount		%		Amount		%		Amount		%		Amount		%		Amount		%
Premiums written	$	6,141			$	5,511			$	17,618			$	15,846			$	6,977			$	6,141			$	19,771			$	17,618

Premiums earned	$	5,788		100.0	$	5,203		100.0	$	16,792		100.0	$	15,168		100.0	$	6,474		100.0	$	5,788		100.0	$	18,771		100.0	$	16,792		100.0

Losses and loss adjustment expenses		4,658		80.4		4,070		78.2		13,673		81.4		11,652		76.8		5,335		82.4		4,658		80.4		15,331		81.7		13,673		81.4
Underwriting expenses		872		15.1		869		16.7		2,648		15.8		2,506		16.5		1,001		15.5		872		15.1		2,888		15.4		2,648		15.8

Total losses and expenses		5,530		95.5		4,939		94.9		16,321		97.2		14,158		93.3		6,336		97.9		5,530		95.5		18,219		97.1		16,321		97.2

Pre-tax underwriting gain	$	258			$	264			$	471			$	1,010			$	138			$	258			$	552			$	471

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Insurance—Underwriting(Continued)

GEICO (Continued)

Premiums written in the third quarter and first nine months of ~~2015 increased 11.4%~~2016 were $7.0 billion and ~~11.2%~~$19.8 billion, respectively, increases of 13.6% and 12.2%, respectively, over premiums written in the comparable 2014 periods. Premiums earned in the third quarter of 2015 were $5.8 billion, an increase of $585 million (11.2%) over 2014 and in the first nine months were $16.8 billion, an increase of $1,624 million (10.7%) over 2014. The increases in premiums reflected growth in voluntary auto policies-in-force (6.1%) and higher average premiums per policy. Voluntary auto new business sales in the first nine months of 2015 exceeded the first nine months of 2014 by 1.5%. Over the first nine months of 2015, our voluntary auto policies-in-force grew by 662,000 policies.

Incompared to the third quarter and first nine months of ~~2015, our pre-tax underwriting gains were $258~~2015. Premiums earned in 2016 increased $686 million (11.9%) in the third quarter and ~~$471 million, respectively,~~$2.0 billion (11.8%) in the first nine months, as compared to ~~$264 million~~the same periods in 2015. These increases reflected voluntary auto policy-in-force growth of 5.2% and ~~$1,010 million, respectively,~~increased average premiums per auto policy of approximately 6.9% over the past twelve months, which were attributable to rate increases, coverage changes and changes in ~~the comparable 2014 periods. In~~state and risk mix. Throughout 2015, we ~~are experiencing~~experienced increases in claims frequencies and severities ~~in several~~across all of our major coverages. ~~Our~~As a result, we implemented premium rate increases as necessary. Voluntary auto new business sales in 2016 increased 16.5% in the third quarter and 6.8% in the first nine months compared to 2015. The significant growth in voluntary auto new business during the third quarter has continued in October. In 2016, voluntary auto policies-in-force increased by approximately 276,000 in the third quarter and 670,000 in the first nine months.

Losses and loss adjustment expenses incurred in 2016 increased $677 million (14.5%) in the third quarter and $1.7 billion (12.1%) in the first nine months, as compared to 2015. In 2016, our loss ratio ~~which is the~~(the ratio of losses and loss adjustment expenses ~~incurred~~ to ~~premiums~~ earned ~~for~~premiums) increased 2.0 percentage points in the third quarter and 0.3 percentage points in the first nine months as compared to 2015, reflecting increased storm losses and claims severity, partly offset by the aforementioned premium rate increases. Claims frequencies (claim counts per exposure unit) in the first nine months of ~~2015 was 80.4%~~2016 for property damage and ~~81.4%, respectively,~~collision coverages were relatively unchanged as ~~compared to 78.2% and 76.8%~~the decreases experienced in the ~~comparable 2014 periods. As a result, we continue~~first quarter were offset by subsequent increases. Claim frequencies for bodily injury coverage for the first nine months of 2016 were relatively unchanged from 2015. Average claims severities were higher in the first nine months of 2016 for physical damage and collision coverages (four to ~~implement premium rate increases where necessary.~~

~~Losses~~six percent range) and ~~loss adjustment expenses incurred~~bodily injury coverage (five to seven percent range). In addition, storm-related losses (primarily from hail and flooding) in the third quarter and first nine months of ~~2015~~2016 were ~~$4.7 billion~~approximately $90 million and ~~$13.7 billion,~~$380 million, respectively, ~~representing increases of $588~~compared to $5 million ~~(14.4%)~~ and ~~$2,021~~$129 million, ~~(17.3%),~~ respectively, ~~over~~in the corresponding ~~2014~~2015 periods. Claims frequencies in the first nine months of 2015 increased over 2014 in all major coverages, including property damage and collision coverages (four to six percent range), bodily injury coverage (five to six percent range) and personal injury protection (PIP) coverage (one to two percent range). Average claims severities were also higher in the first nine months of 2015 for property damage and collision coverages (four to five percent range), bodily injury coverage (six to seven percent range) and PIP coverage (two to four percent range).

Underwriting expenses in the third quarter ~~of 2015 were relatively unchanged from the third quarter of 2014, while expenses in the~~and first nine months of ~~2015 exceeded 2014 by $142~~2016 were $1.0 billion and $2.9 billion, respectively, increases of $129 million ~~(5.7%~~(14.8%)~~. During 2015, underwriting expenses, most notably advertising~~ and ~~employee-related costs, have grown at a slower rate than premiums. As a result, our~~$240 million (9.1%), respectively, over 2015. Our expense ~~ratios~~ratio (underwriting expenses to premiums earned) in ~~2015 declined 1.6~~2016 increased 0.4 percentage points in the third quarter and ~~0.7~~decreased 0.4 percentage points in the first nine months compared to 2015. The largest components of underwriting expenses are employee-related expenses (salaries and benefits) and advertising costs. The increases in underwriting expenses reflected the ~~corresponding 2014 periods.~~increases in policies-in-force.

General Re

~~Through~~ General Re ~~we conduct~~conducts a reinsurance business offering property and casualty ~~and life and health~~ coverages to clients ~~worldwide. We write property and casualty reinsurance in North America on a direct basis~~worldwide through General Reinsurance Corporation, ~~and internationally through~~ Germany-based General Reinsurance AG, Faraday Holdings in London and other wholly-owned affiliates. Property and casualty reinsurance is written primarily on a direct basis, but is also written ~~in broker markets~~ through ~~Faraday in London.~~brokers and intermediaries. Life and health reinsurance is written ~~in North America~~primarily on a direct basis through General Re Life Corporation and ~~internationally through~~ General Reinsurance AG. General Re strives to generate underwriting profits in essentially all of its product lines. Our management does not evaluate underwriting performance based upon market share and our underwriters are instructed to reject inadequately priced risks. General Re’s underwriting results are summarized in the following table. Amounts are in millions.


																									Premiums earned								Pre-tax underwriting gain (loss)
	Premiums written								Premiums earned								Pre-tax underwriting gain (loss)								Third Quarter				First Nine Months				Third Quarter				First Nine Months
	Third Quarter				First Nine Months				Third Quarter				First Nine Months				Third Quarter				First Nine Months				2016		2015		2016		2015		2016		2015		2016		2015
	2015		2014		2015		2014		2015		2014		2015		2014		2015		2014		2015		2014
Property/casualty	$	628	$	756	$	2,307	$	2,796	$	683	$	799	$	2,119	$	2,386	$	(9)	$	94	$	65	$	265	$	643	$	683	$	1,919	$	2,119	$	66	$	(9)	$	119	$	65
Life/health		722		770		2,274		2,342		722		767		2,278		2,347		7		32		(7)		57		746		722		2,249		2,278		34		7		25		(7)

	$	1,350	$	1,526	$	4,581	$	5,138	$	1,405	$	1,566	$	4,397	$	4,733	$	(2)	$	126	$	58	$	322	$	1,389	$	1,405	$	4,168	$	4,397	$	100	$	(2)	$	144	$	58

Property/casualty

In the third quarter ~~and~~of 2016, property/casualty premiums written were relatively unchanged from 2015, reflecting a modest increase in North America, offset by modestly lower volume in international markets. In the first nine months, ~~of 2015,~~ property/casualty premiums written in 2016 declined ~~$128~~$215 million ~~(17%~~(9%) compared to 2015, primarily due to lower volume in international treaty and ~~$489 million (17%), respectively, while~~broker market business, and to a lesser degree, to unfavorable foreign currency exchange rate changes. In 2016, premiums earned decreased ~~$116~~$40 million ~~(15%~~(6%) in the third quarter and ~~$267~~$200 million ~~(11%~~(9%)~~, respectively,~~ in the first nine months as compared to ~~2014. Adjusting for~~the same periods in 2015. The declines in earned premiums reflected lower volume and unfavorable changes in foreign currency exchange rates, premiums written in the third quarter and first nine months of 2015 declined $79 million (10%) and $256 million (9%), respectively, while premiums earned decreased $60 million (8%) and $72 million (3%), respectively, compared to 2014. Our premium volume declined in both the direct and broker markets worldwide.rates. Insurance industry capacity remains high and price competition in most property/casualty reinsurance markets persists. We continue to decline business when we believe prices are inadequate. However, we remain prepared to write substantially more business when more appropriate prices can be ~~attained relative to the risks assumed.~~attained.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Insurance—Underwriting(Continued)

General Re (Continued)

~~Property/casualty (Continued)~~

Our ~~property/casualty~~property business ~~produced~~generated pre-tax underwriting ~~losses~~gains of $9$76 million in the third quarter and ~~gains of $65~~$154 million in the first nine months of ~~2015~~2016 compared to gains of ~~$94~~$15 million and ~~$265~~$114 million, respectively, in the ~~third quarter and first nine months of 2014, respectively. In~~corresponding 2015 periods. There were no significant catastrophe losses during the first nine months of ~~2015, our property business generated pre-tax~~2016, while underwriting gains of $114 million compared to $330 million in the first nine months of 2014. The comparative decrease in underwriting gains from property business was driven by an increase in the current accident year loss ratio, reflecting a relative increase in reported losses. The property results in 2015 included estimated ~~incurred~~ losses of $44 million from an explosion in Tianjin, China during the third quarter. There were no significant catastrophe losses during the first nine months of 2014. Our property business results in both years benefitted from reductions of estimated losses for prior years’ exposures. The timing and magnitude of catastrophe and large individual losses can produce significant volatility in our periodic underwriting results.

In the first nine months of ~~2015 and 2014, our casualty/workers’ compensation business produced~~2016, we recognized pre-tax ~~underwriting losses of $49 million and $65 million, respectively. Underwriting results included~~ gains from reductions of estimated losses on prior years’ business of ~~$133~~approximately $160 million, which were relatively unchanged from 2015.

Our casualty/workers’ compensation business produced pre-tax underwriting losses of $10 million in the third quarter and ~~$177~~$35 million in the first nine months of 2016 and pre-tax losses of $24 million in the third quarter and $49 million in the first nine months of 2015. Underwriting results in 2016 and 2015 ~~and 2014, respectively, which~~ included ~~recurring~~net losses on current year business and charges for recurring discount accretion on workers’ compensation liabilities and deferred charge amortization on retroactive reinsurance ~~contracts.~~contracts, partially offset by gains from reductions of estimated losses on prior years’ business. Casualty losses tend to be ~~long-tail~~long-tailed and it should not be assumed that favorable loss experience in a given period means that the ultimate liability estimates currently established will continue to develop favorably.

Life/health

In the third quarter and first nine months of ~~2015,~~2016, life/health premiums earned ~~decreased $45~~increased $24 million ~~(6%~~(3%) and ~~$69~~decreased $29 million ~~(3%~~(1%), respectively, compared to ~~2014. However, adjusting~~2015. Adjusting for changes in foreign currency exchange rates, premiums earned in ~~2015~~2016 increased ~~$27~~$31 million (4%) in the third quarter and ~~$136~~$32 million ~~(6%~~(1%) in the first nine months, ~~as compared to 2014. In 2015, life business increased~~reflecting growth across a number of non-U.S. markets, particularly in ~~Canada~~Asia and ~~Asia.~~

the United Kingdom. Our life/health business produced ~~aggregate~~ pre-tax underwriting gains of $7$25 million in the ~~third quarter~~first nine months of ~~2015 and~~2016 compared to losses of $7 million in the first nine months ~~compared to gains~~ of ~~$32 million and $57 million in~~2015. In the ~~third quarter and~~ first nine months of ~~2014, respectively. In 2015,~~2016, underwriting results reflected gains from our ~~North American operations experienced greater~~international life business offset by losses from the recurring discount accretion on long-term care liabilities and higher than expected ~~loss activity in the long-term care business and higher frequency and severity of losses in the~~ individual life ~~business. In addition, our~~claim frequency in North America. Our international underwriting results in 2016 were adversely affected ~~in 2015~~ by ~~an increase in~~increased liabilities for ~~life benefits as a result of~~estimated premium deficiencies on certain disability business in the second quarter, partly offset by reductions ~~of discount rates. Underwriting results for~~in both ~~years also reflected charges attributable~~foreign currency exchange losses and the adverse impact from lower interest rates compared to ~~discount accretion on U.S. long-term care liabilities.~~2015.

Berkshire Hathaway Reinsurance Group

~~Through~~ BHRG ~~we underwrite~~underwrites excess-of-loss reinsurance and quota-share coverages on property and casualty risks for insurers and reinsurers worldwide, including property catastrophe insurance and reinsurance. ~~The timing and magnitude of catastrophe losses can produce extraordinary volatility in the periodic underwriting results.~~ BHRG also writes retroactive reinsurance ~~which provides indemnification of losses and loss adjustment expenses with respect to past loss events arising under~~on property/casualty ~~coverages. In addition, BHRG writes~~exposures as well as life reinsurance and periodic payment annuity ~~insurance and reinsurance contracts.~~business. BHRG’s underwriting results are summarized in the table ~~below. Amounts are in millions.~~below (in millions).


	Premiums earned								Pre-tax underwriting gain (loss)
	Third Quarter				First Nine Months				Third Quarter				First Nine Months
	2016		2015		2016		2015		2016		2015		2016			2015
Property/casualty	$	1,164	$	1,341	$	3,358	$	3,168	$	40	$	315	$	415		$	737
Retroactive reinsurance		—		1		582		4		(114)		2		(196	)		(283	)
Life and annuity		708		550		1,827		2,145		55		(118)		(133	)		(207	)

	$	1,872	$	1,892	$	5,767	$	5,317	$	(19)	$	199	$	86		$	247

Property/casualty

Premiums written Premiums earned Pre-tax underwriting gain (loss)

Third Quarter

First Nine Months

Third Quarter

First Nine Months

Third Quarter

First Nine Months

2015

2014

2015

2014

2015

2014

2015

2014

2015

2014

2015

2014

Property/casualty
$ 1,883 $ 961 $ 3,932 $ 3,481 $ 1,341   $ 1,022 $ 3,168      $ 3,109    $ 435    $ 547    $ 829    $ 1,036
Retroactive reinsurance
1 3,046 4 3,272 1   3,046 4      3,272    (118)    (109)    (375)    (270)
Life and annuity
550 741 2,145 2,033 550   741 2,145      2,033    (118)    5    (207)    (149)

$ 2,434 $ 4,748 $   6,081 $ 8,786 $ 1,892   $ 4,809 $ 5,317      $ 8,414    $ 199    $ 443    $ 247    $ 617

Premiums written in the third quarter and first nine months of 2016 decreased $945 million (50.2%) and $322 million (8.2%), respectively, compared to 2015. The decline during the third quarter was primarily due to the impact of the quota-share contract with Insurance Australia Group Ltd. (“IAG”), which became effective on July 1, 2015. Premiums written in the third quarter of 2015 included a quota-share percentage of IAG’s unearned premiums in-force as of the effective date. Premiums earned decreased $177 million (13.2%) in the third quarter and increased $190 million (6.0%) in the first nine months compared to 2015. The increase in the first nine months was primarily attributable to increased premiums earned from the IAG contract, partially offset by lower premiums from property business. Our premium volume is generally constrained for most property/casualty reinsurance coverages, and for property catastrophe reinsurance in particular as rates, in our view, are generally inadequate. However, we have the capacity and desire to write more business when appropriate pricing can be obtained.

Our property/casualty business generated pre-tax underwriting gains of $40 million and $415 million in the third quarter and first nine months of 2016, respectively, compared to $315 million and $737 million, respectively, in 2015. In the third quarter of 2015, the property/casualty business incurred losses of $86 million from an explosion in Tianjin, China. The declines in pre-tax underwriting gains in 2016 were primarily due to comparatively lower gains from reductions of estimated losses on prior years’ events.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Insurance—Underwriting(Continued)

Berkshire Hathaway Reinsurance Group (Continued)

~~Property/casualty~~

Premiums written in the third quarter and first nine months of 2015 increased $922 million (96%) and $451 million (13%), respectively, compared to the same periods in 2014. Premiums earned in the third quarter and first nine months of 2015 increased 31% and 2%, respectively, versus 2014. The premium increases were primarily attributable to a new 10-year, 20% quota-share contract with Insurance Australia Group Ltd. (“IAG”), which became effective on July 1, 2015, partially offset by premium declines in property catastrophe, property quota-share and London facilities business. Our premium volume is generally constrained for most property/casualty coverages, and for property catastrophe coverages in particular, as rates, in our view, are generally inadequate. However, we have the capacity and desire to write substantially more business when appropriate pricing can be obtained.

The property/casualty business generated pre-tax underwriting gains in 2015 of $435 million in the third quarter and $829 million in the first nine months compared to gains of $547 million in the third quarter and $1,036 million in the first nine months of 2014. In the third quarter of 2015, the property/casualty business incurred losses of $86 million from an explosion in Tianjin, China. In the first nine months of 2014, there were no significant catastrophe losses. Underwriting results in 2015 also included foreign currency transaction gains of $165 million in both the third quarter and first nine months of 2015 compared to gains of $227 million in the third quarter and $128 million in the first nine months of 2014. The foreign currency transaction gains relate to periodic revaluation of reinsurance liabilities of certain of our domestic insurance subsidiaries which are denominated in foreign currencies (primarily arising under retroactive reinsurance contracts). Underwriting results in the first nine months of 2015 also reflected lower pre-tax underwriting gains from catastrophe business.

Retroactive reinsurance

Retroactive reinsurance contracts provide indemnification of losses and loss adjustment expenses with respect to past loss events, and related claims are generally expected to be paid over long periods of time. ~~Premiums and limits of indemnification are often very large in amount.~~ At the inception of a contract, deferred charge assets are recorded for the excess, if any, of the estimated ultimate losses payable over the premiums earned. Deferred charges are subsequently amortized over the estimated claims payment period ~~using the interest method, which reflects~~based on estimates of the timing and amount of future loss payments. The original estimates of the timing and amount of loss payments are periodically analyzed against actual experience and revised based on an actuarial evaluation of the expected remaining losses. Amortization charges and deferred charge adjustments resulting from changes to the estimated timing and amount of future loss payments are included in periodic earnings.

~~Premiums~~Pre-tax underwriting results from retroactive reinsurance contracts also include foreign currency transaction gains/losses associated with foreign currency denominated liabilities of U.S.-based subsidiaries. In 2016, foreign currency gains were ~~not significant~~$21 million in the third quarter and $198 million in the first nine months. In 2015, foreign currency gains were $120 million in the third quarter and $92 million in the first nine months. Before foreign currency gains/losses, retroactive reinsurance contracts produced pre-tax losses in the first nine months of $394 million in 2016 and $375 million in 2015, ~~whereas premiums~~primarily from recurring periodic deferred charge amortization. Gross unpaid losses assumed under retroactive reinsurance contracts were approximately $23.7 billion at September 30, 2016 and at December 31, 2015. Unamortized deferred charges related to such reinsurance contracts were approximately $7.4 billion at September 30, 2016 and $7.6 billion at December 31, 2015.

Life and annuity

BHRG’s life and annuity underwriting results are summarized as follows. Amounts are in millions.


	Premiums earned								Pre-tax underwriting gain (loss)
	Third Quarter				First Nine Months				Third Quarter				First Nine Months
	2016		2015		2016		2015		2016		2015		2016		2015
Periodic payment annuity	$	367	$	195	$	771	$	1,062	$	(61)	$	(6)	$	(123)	$	(159)
Life reinsurance		337		350		1,043		1,068		(9)		(13)		5		(81)
Variable annuity guarantee		4		5		13		15		125		(99)		(15)		33

	$	708	$	550	$	1,827	$	2,145	$	55	$	(118)	$	(133)	$	(207)

Premiums earned in 2016 from periodic payment annuity contracts increased $172 million (88.2%) in the third quarter and declined $291 million (27.4%) in the first nine months compared to 2015. Premiums earned in 2016 increased in the third quarter due to increased direct annuity volume, which for the first nine months was more than offset by the impact of a sizable reinsurance contract written in the second quarter of 2015.

Periodic payment annuity contracts generated pre-tax underwriting losses of $61 million in the third quarter and $123 million in the first nine months of 2016 and $6 million in the third quarter and $159 million in the first nine months of 2015. Our periodic payment annuity liabilities under certain contracts of a U.S. subsidiary are denominated in foreign currencies, most significantly the Great Britain Pound (“GBP”). In 2016, the value of the U.S. Dollar strengthened versus the GBP, producing reductions in our liabilities in U.S. Dollars and resulting in pre-tax gains of $216 million in the first nine months of 2016 and $53 million in the first nine months of 2015. Before the impact of foreign currency exchange rate changes, pre-tax underwriting losses from annuity contracts were $111 million and $339 million in the third quarter and first nine months of ~~2014 included $3 billion from a single contract with Liberty Mutual Insurance Company. Pre-tax~~2016, respectively, compared to $66 million and $212 million, respectively, in the corresponding 2015 periods. This business is expected to generate underwriting losses attributable to the recurring accretion of discounted annuity liabilities. The increases in underwriting losses (before foreign currency impacts) reflected increased liabilities from ~~retroactive contracts~~new business written over the past two years and the impact of lower interest rates, which increased expected future loss payments under certain reinsurance contracts. Aggregate annuity liabilities were approximately $9.6 billion at September 30, 2016 and $8.7 billion at December 31, 2015.

In the third quarter and first nine months of 2016, life reinsurance premiums were relatively unchanged compared to 2015. The life reinsurance business produced a pre-tax underwriting loss of $9 million in the third quarter and a pre-tax gain of $5 million in the first nine months of 2016. Underwriting losses of $81 million in the first nine months of 2015 ~~were $375~~included losses of $53 million ~~compared to $270 million~~incurred in 2014. The increase in underwriting losses in 2015 was primarily related to amortization of deferred charges on contracts written in the last half of 2014 and from the impact of gains in the first quarter of 2014 from the commutations of two contracts. There were no significant increases or decreases to estimated ultimate losses related to prior years’ contracts during the first nine months of 2015. Gross unpaid losses from retroactive reinsurance contracts were approximately $23.2 billion at September 30, 2015 and $24.3 billion at December 31, 2014. Unamortized deferred charges related to BHRG’s retroactive reinsurance contracts were approximately $7.3 billion at September 30, 2015 and $7.7 billion at December 31, 2014. As previously indicated, the amortization of deferred charge balances will be charged to earnings in the future.

~~Life and annuity~~

~~Life and annuity premiums written and earned in 2015 declined 26% in the third quarter and increased 6% in the first nine months compared~~connection with ~~the same periods of 2014. The increase in year-to-date premiums in 2015 was primarily attributable to an increase in annuity~~ business ~~which included a reinsurance contract written~~terminated in the second quarter of 2015 that produced an upfront premium of approximately $425 million. Annuity payments under this contract are not expected to begin for several years. Otherwise, premiums from life reinsurance contracts and structured settlement annuities declined as compared to the same period in 2014.quarter.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Insurance—Underwriting(Continued)

Berkshire Hathaway Reinsurance Group (Continued)

~~Life and annuity (Continued)~~

~~In the third quarter and first nine months of 2015, the aggregate life and~~Our variable annuity business ~~produced pre-tax underwriting losses~~primarily consists of ~~$118 million and $207 million, respectively, compared to pre-tax gains~~contracts that provide guarantees on closed blocks of ~~$5 million in the third quarter and pre-tax losses of $149 million in the first nine months of 2014. Structured settlement and periodic payment~~variable annuity reinsurance contracts produced pre-tax underwriting losses of $6 million in the third quarter and $159 million in the first nine months of 2015, compared to losses of $12 million in the third quarter and $177 million in the first nine months of 2014. Underwriting results of structured settlement and annuity contracts included foreign currency transaction gains of $60 million in the third quarter and $53 million in the first nine months of 2015, compared to gains of $74 million in the third quarter and $34 million in the first nine months of 2014, which were primarily related to the revaluation of liabilities denominated in foreign currencies.business written by other insurers. The ~~liabilities recorded for structured settlement and annuity contracts are discounted and the~~ periodic underwriting results include recurring charges for the accretion of the discounted liabilities. Aggregate annuity liabilities were approximately $8.4 billion at September 30, 2015 and $7.1 billion at December 31, 2014.

~~In the third quarter of 2015, our variable annuity guarantee contracts produced pre-tax underwriting losses of $99 million, which partially offset the $132 million of pre-tax~~ gains ~~generated in the first six months of the year. These contracts generated pre-tax gains of $21 million in the third quarter~~ and losses ~~of $14 million~~ in ~~the first nine months of 2014. The losses~~each period reflect changes in ~~the third quarter of 2015 were primarily attributable to the impacts of lower equity~~liabilities for guaranteed benefits which are impacted by changes in securities markets and interest ~~rates which resulted in increases of our estimated liabilities for guaranteed minimum benefits.~~rates. Periodic results from these contracts can be volatile reflecting changes in investment ~~markets,~~market conditions, which impact the underlying insured exposures. ~~Pre-tax~~In the third quarter of 2016, the pre-tax underwriting ~~losses from life reinsurance business~~gains were primarily due to better than expected equity market performance, which was more than offset in the first nine months of 2016 by lower interest rates. In the third quarter of 2015, pre-tax underwriting losses were ~~$80 million,~~primarily due to lower equity markets and interest rates which ~~included losses~~partly offset the underwriting gains in ~~connection with business that was terminated.~~the first six months.

Berkshire Hathaway Primary Group

The Berkshire Hathaway Primary Group (“BH Primary”) consists of ~~a wide variety of~~several independently managed insurance businesses. These businesses include: ~~Medical Protective~~MedPro Group, providers of healthcare malpractice insurance coverages; National Indemnity Company’s primary group (“NICO Primary”), writers of commercial motor vehicle and general liability coverages; U.S. Investment Corporation, whose subsidiaries underwrite specialty insurance coverages; a group of companies referred to as Berkshire Hathaway Homestate Companies (“BHHC”), providers of commercial multi-line ~~insurance, including~~and workers’ ~~compensation;~~compensation insurance; Berkshire Hathaway Specialty Insurance (“BH Specialty”), which concentrates on providing large scale insurance solutions for commercial property and casualty risks; Applied Underwriters, a provider of integrated workers’ compensation solutions; Berkshire Hathaway GUARD Insurance Companies (“GUARD”), providers of workers’ compensation and commercial property and casualty insurance coverage to small and mid-sized businesses; and Central States Indemnity Company, a provider of credit and Medicare Supplement insurance.

Premiums earned in the first nine months of ~~2015 and 2014 aggregated $3.95~~2016 were $4.58 billion, ~~and $3.14 billion, respectively.~~an increase of 16.0% compared to 2015. The increase in premiums was primarily attributable to volume increases from BH Specialty, ~~NICO Primary,~~MedPro Group, BHHC and GUARD. The BH Primary insurers produced aggregate pre-tax underwriting gains of ~~$566~~$485 million in the first nine months of ~~2015~~2016 and ~~$379~~$566 million in ~~2014. Loss~~2015. Combined loss ratios ~~for this group~~ were ~~59%~~61% in the first nine months of ~~2015~~2016 and ~~61%~~59% in ~~2014. Overall,~~2015. The comparative increase in the ~~claim environment~~loss ratio reflected comparative declines in ~~recent years has been favorable. However, these~~favorable loss development of prior years’ loss events, partly offset by lower loss ratios on current year business. Our primary insurers write ~~primarily~~considerable amounts of liability and workers’ compensation ~~coverage, and related claims settlements may occur over lengthy time periods.~~business, which can have extended claim tails. It should not be assumed that the current claim experience ~~loss ratios~~ or ~~favorable~~ underwriting results will continue into the future.

Insurance—Investment Income

A summary of net investment income generated by investments held by our insurance operations follows. Amounts are in millions.


	Third Quarter				First Nine Months				Third Quarter				First Nine Months
	2015		2014		2015		2014		2016		2015		2016		2015
Investment income before taxes and noncontrolling interests	$	1,045	$	950	$	3,466	$	3,394
Interest income									$	224	$	221	$	668	$	675
Dividend income										805		824		2,738		2,791

Net investment income before income taxes and noncontrolling interests										1,029		1,045		3,406		3,466
Income taxes and noncontrolling interests		205		139		774		732		179		205		659		774

Net investment income	$	840	$	811	$	2,692	$	2,662	$	850	$	840	$	2,747	$	2,692

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~~~(Continued)~~

~~Insurance—Investment Income~~~~(Continued)~~

~~Investment income consists of interest and dividends earned on cash and investments of our insurance businesses.~~ Pre-tax investment income in the third quarter and first nine months of ~~2015 increased $95~~2016 declined $16 million ~~(10%~~(2%) and ~~$72~~$60 million (2%), respectively, ~~compared with the same periods~~from 2015, due primarily to lower dividends from foreign issuers as a result of investment dispositions in ~~2014. The increases were primarily attributable to~~2015, partly offset by increased dividends ~~earned~~ from common and preferred stocks, which included dividends earned from our investment in Restaurant Brands International, Inc. 9% Preferred Stock ($3 billion stated value), partially offset by lower interest earned on fixed maturity investments. Our insurance businessesdomestic issuers. We continue to hold significant cash and cash ~~equivalent balances (approximately $42.9 billion as of September 30, 2015)~~equivalents earning very low yields. We believe that maintaining ample liquidity is paramount and we insist on safety over yield with respect to ~~cash and cash equivalents.~~such balances.

Invested assets of our insurance businesses derive from shareholder capital, ~~and~~including reinvested earnings, ~~as well as~~and from net liabilities under insurance contracts or “float.” The major components of float are unpaid losses, life, annuity and health benefit liabilities, unearned premiums and other liabilities to policyholders less premium and reinsurance receivables, deferred charges assumed under retroactive reinsurance contracts and deferred policy acquisition costs. Float approximated ~~$86.2~~$91 billion at September 30, ~~2015~~2016 and ~~$84.0~~$88 billion at December 31, ~~2014.~~2015. The cost of float was negative as our insurance businesses overall generated pre-tax underwriting gains in each period.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Insurance—Investment Income(Continued)

A summary of cash and investments held in our insurance businesses follows. Other investments include our investments in The Dow Chemical Company, Bank of America Corporation and Restaurant Brands International, Inc. See Note 6 to the accompanying Consolidated Financial Statements. Amounts are in millions.


	September 30, 2015		December 31, 2014		September 30, 2016		December 31, 2015
Cash and cash equivalents	$	42,868		$ 42,760	$	50,242	$	43,762
Equity securities		105,559		114,876		100,277		109,607
Fixed maturity securities		24,526		26,010		23,630		23,621
Other investments		15,011		16,346		15,415		15,998

	$	187,964		$199,992	$	189,564	$	192,988

Fixed maturity ~~securities held by our insurance businesses~~investments as of September 30, ~~2015~~2016 were as follows. Amounts are in millions.


	Amortized cost		Unrealized gains/losses		Carrying value		Amortized cost		Unrealized gains/losses		Carrying value
U.S. Treasury, U.S. government corporations and agencies	$	3,714	$	22	$	3,736	$	4,053	$	16	$	4,069
States, municipalities and political subdivisions		1,665		79		1,744		1,180		62		1,242
Foreign governments		9,474		229		9,703		9,319		341		9,660
Corporate bonds, investment grade		5,370		466		5,836		5,491		515		6,006
Corporate bonds, non-investment grade		1,666		296		1,962		1,280		277		1,557
Mortgage-backed securities		1,363		182		1,545		949		147		1,096

	$	23,252	$	1,274	$	24,526	$	22,272	$	1,358	$	23,630

U.S. government obligations are rated AA+ or Aaa by the major rating agencies and approximately ~~86%~~87% of all state, municipal and political subdivisions, foreign government obligations and mortgage-backed securities were rated AA or higher. Non-investment grade securities represent securities that are rated below BBB- or Baa3. Foreign government securities include obligations issued or unconditionally guaranteed by national or provincial government entities.

Railroad (“~~BNSF”~~Burlington Northern Santa Fe”)

Burlington Northern Santa Fe, LLC (“BNSF”) operates one of the largest railroad systems in North ~~America with~~America. BNSF operates approximately 32,500 route miles of track in 28 ~~states and~~states. BNSF also operates in three Canadian provinces. BNSF’s major business groups are classified by type of product shipped and include consumer products, ~~coal,~~ industrial products, agricultural products and ~~agricultural products.~~coal. Earnings of BNSF are summarized ~~in the table that follows~~below (in millions).


	Third Quarter				First Nine Months
	2016		2015		2016		2015
Revenues	$	5,167	$	5,600	$	14,519	$	16,571


Operating expenses:
Compensation and benefits		1,193		1,220		3,535		3,826
Fuel		533		670		1,359		2,080
Purchased services		562		633		1,789		1,909
Depreciation and amortization		534		503		1,584		1,488
Equipment rents, materials and other		462		497		1,379		1,538

Total operating expenses		3,284		3,523		9,646		10,841
Interest expense		250		238		744		683

		3,534		3,761		10,390		11,524

Pre-tax earnings		1,633		1,839		4,129		5,047
Income taxes		613		683		1,553		1,883

Net earnings	$	1,020	$	1,156	$	2,576	$	3,164

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Railroad (“~~BNSF”~~Burlington Northern Santa Fe”)(Continued)

   Third Quarter    First Nine Months


2015
   2014    2015    2014
Revenues
   $ 5,600       $ 5,881       $ 16,571       $ 17,063








Operating expenses:

Compensation and benefits
   1,220       1,243       3,826       3,695
Fuel
   670       1,123       2,080       3,438
Purchased services
   633       637       1,909       1,924
Depreciation and amortization
   503       531       1,488       1,569
Equipment rents, materials and other
   497       482       1,538       1,529








Total operating expenses
   3,523       4,016       10,841       12,155
Interest expense
   238       211       683       613








   3,761       4,227       11,524       12,768








Pre-tax earnings
   1,839       1,654       5,047       4,295
Income taxes
   683       619       1,883       1,620








Net earnings
   $   1,156       $   1,035       $ 3,164       $ 2,675

Consolidated revenues ~~during~~in the third quarter and first nine months of ~~2015~~2016 were approximately ~~$5.6~~$5.2 billion and ~~$16.6~~$14.5 billion, respectively, representing decreases of ~~$281~~$433 million ~~(5%~~(7.7%) and ~~$492 million (3%~~$2.1 billion (12.4%), respectively, ~~compared to 2014.~~versus the corresponding periods in 2015. Pre-tax earnings in the third quarter and first nine months of ~~2015 were $1.8 billion~~2016 declined 11.2% and ~~$5.0 billion, increases of $185 million (11%) and $752 million (18%)~~18.2%, respectively, ~~over 2014. Results~~compared to the same periods in 2015. In 2016, our revenues and earnings were negatively impacted by lower volumes versus 2015, particularly in the ~~third quarter~~coal and petroleum products categories.

In the first nine months of 2015 benefitted from improved operating performance. Our operating performance in 2014 was substandard as we experienced significant service related challenges over most of the year. We attribute operational improvements in 2015 to capacity added in 2014 and 2015 through capital investments for line expansion, system improvement projects and additional equipment, as well as from new employee hires, other operational initiatives and more favorable winter weather conditions.

~~The year-to-date decrease in~~2016, revenues reflected ~~a 5% decline~~comparative declines in average revenue per car/unit ~~partially offset by a 1% increase~~(6.5%) and in ~~volumes.~~volumes (6.6%). The decrease in average revenue per car/unit ~~in 2015~~ was ~~due to a 50% decline in fuel surcharges ($1.1 billion) versus 2014,~~ primarily ~~due~~attributable to lower fuel ~~prices, partially offset~~surcharge revenue driven by ~~an increase in average rates. The impact of~~ lower fuel ~~surcharge revenues affected revenues of all product lines.~~

~~In the third quarter~~prices and ~~first nine months of 2015, freight revenues from industrial products decreased 13% and 7%, respectively, from 2014 to $1.4 billion and $4.3 billion, respectively.~~business mix changes. The ~~decreases reflected lower volumes primarily due~~fuel price impact on fuel surcharges generally lags its impact on fuel costs. This timing difference contributed to the ~~impact of lower crude oil prices on petroleum products and frac sand, as well as lower steel product volume and lower average revenue per car/unit.~~

~~Freight revenues from agricultural products increased 4%~~decline in ~~the third quarter of 2015 to approximately $1.0 billion and 6% to approximately $3.1 billion~~earnings in the first ~~nine months~~quarter of ~~2015~~2016 as compared to ~~revenues~~2015 because the price of fuel declined more significantly in early 2015. The effect of the timing difference has moderated since the first quarter and is not expected to be significant in the corresponding 2014 periods. The increases in 2015 were attributable to higher domestic grain shipments, which drove comparative agricultural product volumes up 11% for the third quarter and 7% for the first nine months versus 2014, partially offset by lower average revenue per car/unit.

Freight revenues from coal decreased 6% to $1.2 billion in the third quarter and decreased 3% to $3.6 billion in the first nine months of 2015 from revenues in the corresponding 2014 periods. The decreases were primarily due to lower average rate per car. Coal volumes increased 5% in the third quarter and 4% for the first nine months of 2015 primarily due to higher demand.fourth quarter.

Freight revenues from consumer products in the third quarter of ~~2015~~2016 were $1.7 billion, a decline of 3%3.4% from ~~2014,~~2015, driven by a 3.6% decline in volume. Revenues for the first nine months of 2016 were $4.8 billion, a decline of 2.2% from 2015. Volume for the first nine months of 2016 was relatively flat, as increased automotive volumes, due to the addition of a new customer, and domestic intermodal volumes were offset by lower international intermodal volumes attributable to soft economic activity and excess retail inventories.

In the third quarter and first nine months of 2016, freight revenues from industrial products were $1.2 billion and $3.6 billion, respectively, which decreased 15.2% and 15.8%, respectively, from the comparable 2015 periods. The decreases reflected lower volumes (8.0% in the third quarter and 7.5% in the first nine months), primarily for petroleum products, reflecting pipeline displacement of U.S. crude rail traffic and lower U.S. oil production. This decline was partially offset by increased plastics products volume. For the first nine months of 2016, we also experienced lower demand for taconite and steel products partially offset by increased movements of non-owned rail equipment. With oil production at low levels, along with pipeline displacement of rail, we expect comparative volume declines in petroleum and related products for the remainder of 2016.

Freight revenues in 2016 from agricultural products increased 7.8% in the third quarter to $1.1 billion and decreased 1.8% to $3.1 billion in the first nine months compared to the same periods in 2015. The increase in revenue in the third quarter of 2016 was driven by a volume increase of 13.2% compared to 2015. The decrease in the first nine months of ~~2015 were $4.9 billion, a decline of 6% from 2014. The revenue declines reflected~~2016 was primarily attributable to lower average revenue per ~~car/unit, partially~~car, partly offset by a volume ~~increases~~increase of 5%6.7%. In the third quarter and first nine months of 2016 volumes increased primarily due to higher corn, soybeans and wheat exports.

Freight revenues in 2016 from coal declined 18.5% in the third quarter to $1.0 billion and 33.0% in the first nine months to $2.4 billion compared to the same periods in 2015. Coal volumes declined 13.0% in the third quarter and ~~1% for~~26.5% in the first nine months of ~~2015.~~2016. In recent years, demand for coal by utilities has declined as other fuel sources, particularly natural gas, have increased. Coal volumes in 2015 also benefitted from higher demand in the ~~first quarter of 2015, we experienced a decline in international intermodal volume attributable to diversions of freight from U.S. West Coast ports to other import gateways as a result~~early part of the ~~port productivity slow-down from port labor disruptions. In the second quarter of 2015, we experienced increased volumes,~~year as ~~port productivity improvements allowed the backlog to clear. The comparative increases in volume continued~~utility customers restocked coal inventories. Although natural gas prices have risen in the third quarter, ~~as a result~~we expect declines in coal volumes for the rest of ~~demand.~~2016, driven by coal unit retirements and elevated utility coal inventories.

Operating expenses in the third quarter and first nine months of ~~2015~~2016 were ~~$3.5~~$3.3 billion and ~~$10.8~~$9.6 billion, respectively, orrepresenting decreases of ~~$493~~$239 million ~~(12%~~(6.8%) and ~~$1,314 million (11%~~$1.2 billion (11.0%), respectively, compared to the same periods ~~of 2014. In the third quarter of 2015, the ratio~~in 2015. Our ratios of operating expenses to revenues ~~declined 5.4~~in 2016 increased 0.7 percentage points to ~~62.9%, while~~63.6% in the ~~ratio~~third quarter and 1.0 percentage points to 66.4% for the first nine months ~~declined 5.8 percentage points to 65.4% as compared to 2014.~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~~~(Continued)~~

~~Railroad (“BNSF”)~~~~(Continued)~~

versus the corresponding 2015 periods.

Compensation and benefits expenses decreased ~~$23~~$27 million (2%) for the third quarter of 2015 as compared to 2014, primarily attributable to reduced overtime and lower training costs. For the first nine months of 2015, compensation and benefits increased $131 million (4%) compared to 2014, primarily due to increased employment levels and wage rates. Fuel expenses declined $453 million (40%(2.2%) for the third quarter and ~~$1,358~~$291 million ~~(39%~~(7.6%) for the first nine months of ~~2015~~2016 as compared ~~with the same periods in 2014.~~to 2015. The declines ~~reflected significantly~~were primarily due to lower employment levels, as a result of lower freight volumes, and productivity improvements, partially offset by inflation. Fuel expenses declined $137 million (20.4%) in the third quarter and $721 million (34.7%) in the first nine months of 2016 as compared to 2015 due to lower average fuel prices and ~~improved efficiency, partially offset by higher~~lower volumes. Purchased services declined $71 million (11.2%) in the third quarter and $120 million (6.3%) in the first nine months of 2016 as compared to 2015, due to volume-based and other cost reductions. Depreciation expense increased $31 million (6.2%) in the third quarter and $96 million (6.5%) in the first nine months of 2016 as compared to 2015, due to increased assets in service reflecting our ongoing capital additions and improvement programs. In the third quarter and first nine months of ~~2015, depreciation~~2016, equipment rents, materials and ~~amortization~~other expense declined ~~$28~~$35 million ~~(5%~~(7.0%) and ~~$81~~$159 million ~~(5%~~(10.3%), respectively, compared to the same periods of ~~2014. The~~2015. These declines resulted from lower ~~capitalized software amortization expenses, partially offset by increased depreciation expense attributable to increased levels of railroad assets~~freight volumes and productivity improvements in ~~service.~~both periods, as well as, lower derailment and other casualty related costs in the nine-month period.

Interest expense in the third quarter and first nine months of ~~2015~~2016 was ~~$238~~$250 million and ~~$683~~$744 million, respectively, ~~representing~~ increases of ~~$27~~$12 million ~~(13%~~(5.0%) and ~~$70~~$61 million ~~(11%~~(8.9%), respectively, compared to ~~2014.~~2015. BNSF funds its capital expenditures with cash flow from operations and new debt issuances. The increased interest expense in ~~2015~~2016 resulted from higher average outstanding debt.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Utilities and Energy (“Berkshire Hathaway Energy Company”)

We hold an 89.9% ownership interest in Berkshire Hathaway Energy Company (“BHE”), which operates an international energy business. BHE’s domestic regulated utility interests are comprised of PacifiCorp, MidAmerican Energy Company (“MEC”), and NV Energy. In Great Britain, BHE subsidiaries operate two regulated electricity distribution businesses referred to as Northern Powergrid. BHE also owns two domestic regulated interstate natural gas pipeline companies. ~~BHE acquired~~Other energy businesses include AltaLink, L.P. (“AltaLink”), a regulated electricity transmission-only business in Alberta, Canada ~~on December 1, 2014. AltaLink’s revenues~~ and ~~earnings in 2015 are included in other energy businesses. In addition, BHE also operates~~ a diversified portfolio of independent power ~~projects and~~projects. In addition, BHE also operates the second-largest residential real estate brokerage firm and one of the largest real estate franchise networks in the United States.

The rates our regulated businesses charge customers for energy and services are based, in large part, on the costs of business operations, including a return on capital, and are subject to regulatory approval. To the extent these operations are not allowed to include such costs in the approved rates, operating results will be adversely affected. Revenues and earnings of BHE are summarized below. Amounts are in millions.


		Third Quarter								First Nine Months									Third Quarter								First Nine Months
		Revenues				Earnings				Revenues				Earnings					Revenues				Earnings				Revenues				Earnings
		2015		2014		2015		2014		2015		2014		2015		2014			2016		2015		2016		2015		2016		2015		2016		2015
PacifiCorp		$	1,432	$	1,449	$	354	$	340	$	3,977	$	4,017		$ 799	$	832		$	1,445	$	1,432	$	365	$	354	$	3,952	$	3,977	$	867	$	799
MidAmerican Energy Company			925		879		165		130		2,702		2,912		328		273			806		685		241		163		2,031		2,017		389		310
NV Energy			1,130		1,128		340		337		2,688		2,579		529		501			997		1,130		345		340		2,335		2,688		495		529
Northern Powergrid			264		307		95		121		852		948		352		406			220		264		57		95		749		852		274		352
Natural gas pipelines			198		193		52		44		743		811		277		272			204		198		59		52		709		743		288		277
Other energy businesses			446		253		189		121		1,097		455		323		178			703		686		204		191		1,677		1,782		336		341
Real estate brokerage			749		644		80		61		1,959		1,622		166		101			823		749		89		80		2,162		1,959		187		166

		$	5,144	$	4,853					$	14,018	$	13,344						$	5,198	$	5,144					$	13,615	$	14,018

Earnings before corporate interest and income taxes (“EBIT”)	Earnings before corporate interest and income taxes (“EBIT”)						1,275		1,154						2,774		2,563	Earnings before corporate interest and income taxes (“EBIT”)						1,360		1,275						2,836		2,774
Corporate interest	Corporate interest						122		103						376		315	Corporate interest						114		122						355		376
Income taxes and noncontrolling interests	Income taxes and noncontrolling interests						367		354						689		724	Income taxes and noncontrolling interests						314		367						626		689

Net earnings attributable to Berkshire Hathaway shareholders	Net earnings attributable to Berkshire Hathaway shareholders					$	786	$	697						$1,709	$	1,524	Net earnings attributable to Berkshire Hathaway shareholders					$	932	$	786					$	1,855	$	1,709

PacifiCorp

PacifiCorp operates ana regulated electric utility in portions of several Western states, including Utah, Oregon and Wyoming. PacifiCorp’s revenues in the third quarter and first nine months of ~~2015~~2016 were ~~$1.43~~$1.45 billion and ~~$3.98~~$3.95 billion, respectively, ~~representing 1% decreases~~and were relatively unchanged from 2015. Revenues in 2016 reflected increased retail revenues and lower wholesale revenues. The year-to-date increase in retail revenues was primarily due to higher retail rates as average customer loads were relatively unchanged. The declines in wholesale revenues were attributable to lower volumes and average prices. EBIT in the third quarter and first nine months of 2016 increased $11 million (3.1%) and $68 million (8.5%), respectively, from the same periods of 2015. The increases were primarily due to increased gross margins as energy costs declined due to lower fuel prices and changes in fuel mix.

MidAmerican Energy Company

MEC operates a regulated electric and natural gas utility primarily in Iowa and Illinois. Revenues increased $121 million (17.7%) in the third quarter of 2016 compared to 2015, while revenues in the first nine months were comparatively flat versus 2015. The revenue increase in the third quarter was primarily due to higher retail and wholesale electric revenues ($107 million). The increase in retail electric revenues resulted primarily from a 3.6% increase in customer load and higher electric rates, and the increase in wholesale revenues was due to increased wholesale prices and volumes and transmission revenue. Revenues in the first nine months of ~~2014.~~2016 included increased electric revenues ($100 million), which were largely offset by lower natural gas revenues ($69 million) and other revenues. The decline in natural gas revenues was primarily due to lower average per-unit cost of gas sold ($61 million) which is offset in cost of sales, and a 6.3% decline in retail sales volumes, primarily from warmer winter temperatures in 2016. EBIT increased $78 million (47.9%) in the third quarter and $79 million (25.5%) in the first nine months of 2016 as compared to 2015. The increase in EBIT was primarily due to increased gross margins from electric revenues partially offset by higher depreciation and amortization from additional assets placed in service and higher interest expenses. In addition, EBIT in the first nine months of 2015 ~~wholesale and other revenues declined $76~~included a gain of $13 million principally due to lower renewable energy credit revenue and lower rates and volumes, while retail revenues increased compared to 2014, reflecting higher average rates partially offset by lower volumes.

~~In 2015, PacifiCorp’s EBIT increased $14 million (4%) in the third quarter and decreased $33 million (4%) in the first nine months~~ from the comparable 2014 periods. In 2015, PacifiCorp’s gross margins increased $19 million in the third quarter and $42 million in the first nine months compared to 2014, as energy and natural gas costs declined more than revenues. In the first nine monthssale of 2015, the increases in gross margins were more than offset by increased depreciation and amortization expense ($29 million) due to increased plant-in-service, lower allowances for equity funds used during construction ($14 million) and the impact of the recognition in 2014 of expected insurance recoveries on fire losses.a generating facility lease.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Utilities and Energy (“Berkshire Hathaway Energy Company”)(Continued)

~~MEC~~NV Energy

~~MEC~~NV Energy operates anregulated electric and natural gas ~~utility~~utilities in Nevada. Revenues in the third quarter and first nine months of 2016 were approximately $1.0 billion and $2.3 billion, respectively, decreases of $133 million (11.8%) and $353 million (13.1%), respectively, versus the same periods in 2015. The declines were primarily attributable to lower electric retail rates resulting from lower energy costs. Electric retail customer load in ~~Iowa~~the first nine months of 2016 increased 1.4% compared to 2015. EBIT were relatively unchanged in the third quarter and ~~Illinois.~~fell $34 million (6.4%) in the first nine months of 2016 compared to 2015. In ~~2015, MEC’s revenues~~2016, the negative impact of the revenue declines were substantially offset by the declines in energy costs. However, operating expenses increased ~~$46~~$6 million ~~(5%~~(2%) in the third quarter ~~of 2015~~ and ~~declined $210~~$48 million (7%) ~~for~~in the first nine months compared to 2015. The year-to-date increase resulted primarily from higher depreciation and amortization and property and other taxes. In addition, operating expenses in the ~~comparable 2014 periods.~~first nine months of 2015 included non-recurring benefits from reductions in certain accrued liabilities.

Northern Powergrid

Revenues in the third quarter and first nine months of 2016 declined $44 million (16.7%) to $220 million and $103 million (12.1%) to $749 million, respectively, as compared to 2015. The unfavorable impact from a stronger U.S. Dollar reduced revenues by $40 million in the third quarter and $72 million in the first nine months. In the first nine months of ~~2015, MEC’s regulated natural gas~~2016, revenues also declined, ~~$247 million, primarily~~ due to lower average per-unit cost of gas sold in the first quarter of 2015, which was substantially offset by lower cost of sales. In 2015, regulated electric operating revenues increased $46 million in the third quarter and $57 million for the first nine months, reflecting higher retail rates in Iowa, increases in cost-based adjustment clause recoveries and higher retail customer loads, partially offset by lower average wholesale prices. The increases in Iowa regulated electric rates are attributable to higher retail rates and changes in rate structure approved in August 2014, which results in a greater differential between highertariff rates from ~~June to September and lower rates in the remaining months.~~

~~MEC’s~~a new price control period that became effective April 1, 2015. EBIT in the third quarter and first nine months of ~~2015 increased $35~~2016 declined $38 million ~~(27%~~(40.0%) to $57 million and ~~$55~~$78 million ~~(20%~~(22.2%), to $274 million, respectively, as compared to ~~2014.~~2015. The ~~increases derived~~declines were primarily ~~from~~due to the ~~regulated electric business, which benefitted from the aforementioned changes in Iowa~~impact of lower tariff rates and ~~rate structure and lower fuel and purchased power costs, partially offset by increased~~the stronger U.S. Dollar, as well as increases in depreciation and ~~amortization expense from additional plant-in-service.~~other operating expenses.

~~NV Energy~~Natural gas pipelines

~~NV Energy operates electric and natural gas utilities in Nevada. NV Energy’s revenues and EBIT~~Revenues in the third quarter of ~~2015 were $1.13 billion~~2016 increased 3.0% and ~~$340 million, respectively, and were essentially unchanged from~~for the first nine months declined 4.6% as compared to 2015. The revenue increase in the third quarter ~~of 2014. In~~was primarily attributable to transportation revenues from expansion projects. For the first nine months of ~~2015,~~2016, the decline was due to the impact of lower gas sales from balancing activities and lower transportation revenues from lower volumes and ~~EBIT were $2.69 billion and $529 million, respectively, representing increases of $109 million (4%) and $28 million (6%), respectively, over~~rates, in part due to comparatively milder temperatures in the first nine months of 2014. The increase in year-to-date revenues was due primarily to higher regulated retail electric revenues reflecting increased customers and higher average regulated rates. The increase in year-to-datequarter. EBIT in ~~2015 was attributable to an increase in electric margins, partially offset by~~2016 increased ~~depreciation and amortization. NV Energy’s revenues and EBIT are normally higher in the second and third quarters due to higher electric consumption in certain of its service territories.~~

~~Northern Powergrid~~

~~Northern Powergrid’s revenues declined $43~~$7 million ~~(14%~~(13.5%) in the third quarter and ~~$96~~$11 million ~~(10%~~(4.0%) in the first nine months versus 2015. These increases reflected lower interest expense in 2016, as a result of 2015 versus the corresponding 2014 periods. The declines reflected the adverse impact of the stronger U.S. Dollar of $22 million in the third quarter and $77 million in the first nine months. In addition, distribution revenues declined, reflecting the impact of the new price control period effective April 1, 2015. In 2015, Northern Powergrid’s EBIT declined $26 million (21%) in the third quarter and $54 million (13%) in the first nine months compared to 2014, due primarily to the impact of foreign currency translation, lower ~~distribution revenues and higher distribution-related costs.~~

~~Natural Gas Pipelines~~

Natural gas pipeline revenues in the third quarter of 2015 increased $5 million (3%) from 2014 and in the first nine months of 2015 declined $68 million (8%) versus 2014. The year-to-date revenue decline was primarily due to lower gas sales related to system balancing activities during the first half of the year, partiallyaverage debt balances, partly offset by ~~higher transportation revenues. In 2015, natural gas pipeline EBIT~~ increased $8 million (18%) in the third quarter and $5 million (2%) in the first nine months as compared to 2014. EBIT increased in the first nine months primarily due to the increase in transportation revenues, partially offset by higher depreciation expense.

Other energy businesses

Revenues in the third quarter of 2016 increased $17 million (2.5%) and for the first nine months declined $105 million (5.9%) compared to the corresponding 2015 periods. The increase in third quarter revenues was primarily attributable to increased revenues from ~~other~~AltaLink as a result of increased assets in service. The declines in comparative revenues in the first nine months were principally attributable to lower revenues from AltaLink and from our unregulated retail services business. AltaLink’s year-to-date revenue decline reflected the impact of a regulatory decision in the second quarter that resulted in one-time net reductions in revenue, which more than offset increased revenues from additional assets placed in service. The regulatory decision changed the timing of when construction-in-progress expenditures included in rate base are billable to customers and earned in revenues, but had no impact on net earnings as the one-time revenue reduction was offset by one-time reductions in expenses.

EBIT in the third quarter of 2016 increased $13 million (6.8%) over 2015, while EBIT in the first nine months declined $5 million (1.5%) compared to 2015. The increase in third quarter EBIT was primarily due to increased earnings from our renewable energy and transmission businesses, while the decline in the first nine months reflected lower solar generation primarily from transformer related forced outages.

Real estate brokerage

Revenues in the third quarter and first nine months of ~~2015 included $162~~2016 increased 9.9% to $823 million and ~~$463 million,~~10.4% to $2.16 billion, respectively, as compared to 2015. The increases were primarily attributable to increased closed brokerage transactions (primarily as a result of business acquisitions) and from ~~AltaLink.~~modest increases in average home prices, as well as higher mortgage revenues. EBIT ~~of AltaLink~~ in the third quarter and first nine months of ~~2015 were $43~~2016 increased $9 million (11.3%) and ~~$123~~$21 million ~~respectively. Revenues of other energy businesses, excluding AltaLink, increased $31 million (12%~~(12.7%) ~~in the third quarter and $179 million (39%) in the first nine months of 2015 as~~, respectively, compared to ~~2014. EBIT of businesses other than AltaLink increased $25 million (21%) in~~2015, primarily reflecting the ~~third quarter and $22 million (12%) in the first nine months of 2015 versus the same periods in 2014. The comparative~~ increases in revenues were primarily attributable to increases in solar capacity placed in service. EBIT in 2015 from these other businesses increased over 2014, due primarily to the revenue increases, partially offset by higher depreciation and other operating costs.mortgage revenues.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Utilities and Energy (“Berkshire Hathaway Energy Company”)(Continued)

~~Real estate brokerage~~

Real estate brokerage revenues in the third quarter and first nine months of 2015 increased 16% and 21%, respectively, compared to 2014, reflecting comparative increases in closed transactions and average home prices and the impact of business acquisitions. Real estate brokerage activities generated increased EBIT of $19 million in the third quarter and $65 million for the first nine months of 2015 compared to 2014, reflecting the increases in revenues.

Corporate interest and income taxes

Corporate interest includes interest on unsecured debt issued by BHE and borrowings from certain Berkshire insurance subsidiaries. ~~In 2015,~~The declines in corporate interest ~~expense increased~~in 2016 were primarily due to lower average borrowings ~~in connection with the AltaLink acquisition.~~from Berkshire insurance subsidiaries. BHE’s effective income tax rate for the first nine months was approximately 15.9% in 2016 and 19.8% in ~~2015 and 23.6% in 2014. In each period,~~2015. BHE’s ~~utility subsidiaries recognized~~effective income tax rates regularly reflect significant production tax credits from wind-powered electricity generation placed in service. In addition, pre-tax earnings of Northern Powergrid and AltaLink are taxed at lower statutory rates in the U.K. and Canada, respectively, compared to the statutory tax rate in the U.S.

Manufacturing, Service and Retailing

A summary of revenues and earnings of our manufacturing, service and retailing businesses follows. Amounts are in millions.

Third Quarter First Nine Months
Revenues Earnings Revenues Earnings
2015 2014 2015 2014 2015
2014
2015 2014
McLane Company
  $ 12,264 $ 12,151 $ 106   $ 120 $ 36,200       $ 34,327 $ 384 $ 361
Manufacturing
9,181 9,534 1,259   1,337 27,568          27,788 3,857 3,774
Service and retailing
6,151 3,493 378   355 16,966       10,456 1,260 1,095

  $   27,596 $   25,178 $ 80,734       $ 72,571

Pre-tax earnings
1,743   1,812 5,501 5,230
Income taxes and noncontrolling interests
566   588 1,892 1,809

$ 1,177   $ 1,224 $ 3,609 $ 3,421

~~McLane Company~~

McLane operates a wholesale distribution business that provides grocery and non-food products to retailers, convenience stores and restaurants. Through its subsidiaries, McLane also operates as a wholesale distributor of distilled spirits, wine and beer. McLane’s grocery and foodservice businesses are marked by high sales volume and very low profit margins and have several significant customers, including Wal-Mart, 7-Eleven and Yum! Brands. A curtailment of purchasing by any of its significant customers could have a significant adverse impact on McLane’s periodic revenues and earnings.

Revenues for the third quarter and first nine months of 2015 were $12.3 billion and $36.2 billion, respectively, representing increases of $113 million (1%) and $1.87 billion (5%), respectively, over 2014. The year-to-date revenue increase was primarily in the foodservice and beverage operations. Pre-tax earnings in the third quarter were $106 million, a decrease of $14 million (12%) compared to 2014, while pre-tax earnings in the first nine months of 2015 increased $23 million (6%) to $384 million. In 2015, the ratio of pre-tax earnings to revenues in the third quarter was 0.86% and in the first nine months was 1.06%. Pre-tax earnings in 2015 included a gain of $19 million from the sale of a subsidiary in the second quarter. Otherwise, operating results in 2015 reflected increased earnings in the grocery and beverage divisions, partially offset by lower earnings in the foodservice operations.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~~~(Continued)~~


	Third Quarter								First Nine Months
	Revenues				Earnings*				Revenues				Earnings*
	2016		2015		2016		2015		2016		2015		2016		2015
Manufacturing	$	12,082	$	9,181	$	1,981	$	1,259	$	34,837	$	27,568	$	5,150	$	3,857
Service and retailing		18,602		18,415		555		484		54,728		53,166		1,601		1,644

	$	30,684	$	27,596					$	89,565	$	80,734

Pre-tax earnings						2,536		1,743						6,751		5,501
Income taxes and noncontrolling interests						834		566						2,290		1,892

					$	1,702	$	1,177					$	4,461	$	3,609

~~Manufacturing, Service and Retailing~~
*
Excludes certain acquisition accounting expenses, which were primarily from the amortization of identified intangible assets recorded in connection with our business acquisitions. In the third quarter, the after-tax acquisition accounting expenses excluded from earnings above were $281 million in 2016 and $190 million in 2015. For the first nine months such expenses were $486 million in 2016 and $372 million in 2015. These expenses are included in “other” earnings summarized on page 25.~~(Continued)~~

Manufacturing

~~This~~Our manufacturing group includes a variety of ~~manufacturing businesses. The~~businesses that produce industrial, building and ~~end-user~~consumer products. Industrial products ~~group includes: The~~businesses include specialty chemicals (The Lubrizol ~~Corporation (“Lubrizol”)~~Corporation), ~~a specialty chemical manufacturer; IMC~~metal cutting tools/systems (IMC International Metalworking ~~Companies (“IMC”)~~Companies), ~~an industry leader in the metal cutting tools business with operations worldwide; Forest River, a leading manufacturer of leisure vehicles; CTB, a manufacturer of~~ equipment and systems for the livestock and agricultural ~~industries;~~industries (CTB International), and ~~the diversified manufacturing operations~~a variety of ~~Marmon.~~ industrial products for diverse markets (Marmon and Scott Fetzer). Beginning on January 29, 2016, our industrial products group includes Precision Castparts Corp. (“PCC”), a leading manufacturer of complex metal products for aerospace, power and general industrial markets.

Our ~~manufacturing businesses also include several~~ building products businesses include flooring (Shaw), insulation, roofing and engineered products (Johns Manville), bricks and masonry products (Acme Building ~~Brands, Benjamin Moore, Johns Manville, Shaw~~Brands), paint and ~~MiTek)~~coatings (Benjamin Moore), and residential and commercial construction and engineering products and systems (MiTek). Our consumer products businesses include leisure vehicles (Forest River), six apparel ~~businesses~~and footwear operations (led by Fruit of the Loom, which includes Russell athletic apparel and Vanity Fair Brands women’s intimate apparel), custom picture framing products (Larson Juhl) and jewelry products (Richline). Beginning on February 29, 2016, our consumer products group includes the Duracell Company (“Duracell”), a leading manufacturer of high performance alkaline batteries. A summary of revenues and pre-tax earnings of our manufacturing operations ~~follows (in millions).~~follows. Amounts are in millions.

Third Quarter First Nine Months
Revenues Earnings Revenues Earnings
2015 2014 2015 2014 2015 2014 2015 2014
Industrial and end-user products
$ 5,262    $ 5,586      $ 820 $ 883    $ 16,542      $ 16,855 $ 2,617      $ 2,669
Building products
2,809    2,761      346 297    7,846      7,645 917      736
Apparel
1,110    1,187      93 157    3,180      3,288 323      369

$ 9,181    $ 9,534      $   1,259 $   1,337    $ 27,568      $ 27,788 $ 3,857      $ 3,774

Aggregate revenues of our manufacturers were $9.2 billion and $27.6 billion in the third quarter and first nine months of 2015, respectively, which represented declines of $353 million (4%) from the third quarter and $220 million (1%) from the first nine months of 2014. Pre-tax earnings of these businesses were $1.26 billion in the third quarter of 2015, a decrease of $78 million (6%) compared to 2014, and $3.86 billion in the first nine months of 2015, an increase of $83 million (2%) versus the comparable 2014 period. Operating results in the first nine months 2015 of our industrial and end-user products businesses were mixed. Earnings of our building products businesses were generally higher, while earnings of our apparel businesses were generally lower than earnings in 2014.
Revenues in 2015 of our industrial and end-user products businesses declined $324 million (6%) in the third quarter and $313 million (2%) in the first nine months compared to the corresponding 2014 periods. The declines reflected the foreign currency translation impact of a stronger U.S. Dollar, which resulted in comparative revenue declines of approximately $210 million in the third quarter and $625 million in the first nine months. In addition, commodity cost deflation in petroleum and metals used in certain of our products resulted in lower average selling prices, in particular for Lubrizol, IMC and certain sectors within Marmon. As a result of the decline in oil prices and competitive pressures, we also experienced lower sales volumes to customers in or related to the oil and gas industry. The negative effect of foreign currency and lower selling prices in 2015 was partially offset by the impact of bolt-on acquisitions and underlying year-to-date volume increases in the commercial truck and trailer products and electrical wire and copper tubing businesses (Marmon), the agriculture and livestock equipment business (CTB) and recreational vehicles business (Forest River).
Pre-tax earnings in 2015 from our industrial and end-user products businesses declined $63 million (7%) in the third quarter and $52 million (2%) in the first nine months compared to the corresponding 2014 periods. The average pre-tax margin (pre-tax earnings to revenues) of these businesses was 15.6% in the third quarter of 2015 versus 15.8% in the third quarter of 2014. The average pre-tax margin in the first nine months of 2015 was 15.8%, which was essentially unchanged from 2014. The comparative declines in earnings in 2015 reflected the adverse impact of foreign currency translation as a result of the stronger U.S. Dollar, offset by lower average commodity costs and cost containment actions taken in response to the slowing sales volumes previously referenced.
Third Quarter First Nine Months
Revenues Pre- tax earnings Revenues Pre- tax earnings
2016 2015 2016 2015 2016 2015 2016 2015
Industrial products
$ 6,400      $ 4,208      $ 1,347      $ 753      $ 18,599      $ 12,917      $ 3,534      $ 2,387
Building products
2,841      2,809      362      346      8,149      7,846      909      917
Consumer products
2,841      2,164      272      160      8,089      6,805      707      553

$   12,082      $   9,181      $   1,981      $   1,259      $   34,837      $   27,568      $   5,150      $   3,857

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Manufacturing, Service and Retailing(Continued)

Manufacturing (Continued)

Aggregate revenues in 2016 were approximately $12.1 billion in the third quarter and $34.8 billion in the first nine months, representing increases of approximately $2.9 billion (31.6%) and $7.3 billion (26.4%), respectively, from the corresponding 2015 periods. Pre-tax earnings were approximately $2.0 billion in the third quarter and $5.2 billion in the first nine months of 2016, representing increases of $722 million (57.3%) and $1.3 billion (33.5%), respectively, compared to the same periods in 2015. Excluding PCC and Duracell, aggregate pre-tax earnings increased 2.9% in the third quarter and were relatively unchanged in the first nine months.
Industrial products
Revenues in the third quarter and first nine months of ~~2015 from our building products businesses were~~2016 increased approximately ~~$2.8~~$2.2 billion (52.1%) and ~~$7.8~~$5.7 billion ~~respectively, representing increases of 2% and 3%~~(44.0%), respectively, ~~over 2014. In 2015,~~versus the ~~increases reflected sales volume increases~~same periods in our flooring business (Shaw), insulation/roofing/engineered products businesses (Johns Manville), and certain other residential building products businesses (MiTek), as well as the impact of bolt-on business acquisitions.2015. These ~~revenue~~ increases were due to the inclusion of PCC, partially offset by ~~the adverse impact~~revenue declines of ~~foreign currency translation from a stronger U.S. Dollar ($47~~$210 million (5.0%) in the third quarter and ~~$131~~$832 million (6.4%) in the first nine ~~months).~~ months across our other businesses. In 2016, sales volumes of our other businesses were lower compared to 2015, reflecting sluggish demand for most products, and particularly for products sold to businesses in the oil and gas and heavy equipment industries. In addition, lower costs of oil-based raw materials and metals and increased competitive pressures continued to lower average selling prices.
Pre-tax earnings ~~of the building products businesses~~ in ~~2015~~2016 increased ~~16%~~$594 million (78.9%) in the third quarter and ~~25%~~$1,147 million (48.1%) in the first nine months as compared to ~~2014. In 2015,~~2015. The increases in pre-tax earnings reflected the ~~overall increase~~inclusion of PCC, partially offset by comparative declines in earnings ~~was~~(7.1% for the third quarter and 6.3% for the first nine months) from our other businesses, primarily ~~attributable to~~IMC International, Lubrizol and several of Marmon’s businesses. Generally, these businesses were negatively affected by a combination of weaker customer demand and price and mix changes and increased restructuring costs, partly offset by the ~~increases in revenues~~impacts of cost containment initiatives and lower average ~~raw~~ material prices. We expect the prevailing market conditions to continue during the remainder of 2016 and ~~energy costs, partially offset by the negative impact of foreign currency translation and increased restructuring charges. Most of the comparative increases~~we may take additional cost containment actions in ~~earnings were generated by our flooring business (Shaw) and by our insulation and roofing businesses (Johns Manville).~~response to further slowdowns in customer demand.
~~Apparel revenues~~Building products
Revenues in the third quarter and first nine months of ~~2015 were $1.1 billion and $3.2 billion, respectively, representing decreases of $77~~2016 increased $32 million ~~(6%~~(1.1%) and ~~$108~~$303 million ~~(3%~~(3.9%), respectively, compared to the same periods in ~~2014.~~2015. In the third quarter, ~~of 2015, our apparel operations generally experienced lower sales volume compared to 2014.~~volume-driven revenue increases achieved by MiTek and Johns Manville were partially offset by revenue declines at Benjamin Moore and Shaw. In ~~addition, revenues of these businesses in 2015 were negatively impacted by foreign currency translation in~~ the ~~third quarter ($30 million) and~~ first nine months, ~~($91 million).~~ the revenue increase reflected increased unit sales across most of our product categories, and was partly offset by lower average sales prices and changes in product mix.
Pre-tax earnings ~~of these businesses~~ in ~~2015 decreased $64~~2016 increased $16 million ~~(41%~~(4.6%) in the third quarter and ~~$46~~decreased $8 million ~~(12%~~(0.9%) in the first nine months as compared to ~~2014. The decline~~the corresponding periods in ~~earnings~~2015. In the first nine months, the favorable impact from increased sales volume and lower manufacturing costs attributable to deflation in certain commodity unit costs was ~~primarily due~~essentially offset by increased charges related to ~~a pre-tax loss~~asset impairments, pension settlements and environmental claims.
Consumer products
Revenues in the third quarter and first nine months of 2016 were approximately $2.8 billion and $8.1 billion, respectively, increases of $677 million (31.3%) and approximately $1.3 billion (18.9%), respectively, compared to the corresponding 2015 ~~from~~periods. The increases reflected the inclusion of Duracell and increases in Forest River’s revenues of 19% in the third quarter and 12% in the first nine months, which were primarily attributable to increased unit sales. Apparel revenues in the third quarter increased $18 million (1.6%) and in the first nine months declined $56 million (1.8%) compared to 2015. The year-to-date decline reflected lower footwear sales and the impact of the disposition of a historically unprofitable operation within Fruit of the Loom ~~and lower earnings from our footwear businesses.~~
~~Service and retailing~~
~~Our service and retailing businesses are engaged~~ in various service-related activities, and sell various products through wholesale distribution or retail channels. These businesses include NetJets, a leading provider of fractional ownership programs for general aviation aircraft; FlightSafety, a provider of high technology training to operators of aircraft; TTI, an electronic components distributor; Business Wire, a leading distributor of corporate news, multimedia and regulatory filings; Dairy Queen, which licenses and services a system of over 6,500 stores that offer prepared dairy treats and food; Buffalo News and the BH Media Group (“BH Media”), which includes the Omaha World-Herald, as well as numerous other daily newspapers and other publications; WPLG (acquired June 30, 2014), which operates a television station in Miami, Florida; and Charter Brokerage, a leading third party logistics provider to the petroleum and chemical industries (acquired December 12, 2014).
Our service and retailing businesses also include: four home furnishings retailing businesses (Nebraska Furniture Mart, R.C. Willey, Star Furniture and Jordan’s), three jewelry retailing businesses (Borsheims, Helzberg and Ben Bridge), See’s Candies, which makes and sells confectionary products through its retail stores and quantity order centers; Pampered Chef, a direct seller of high quality kitchen tools and Oriental Trading Company (“OTC”), a direct retailer of party supplies, school supplies and toys and novelties. In the first quarter of 2015, we acquired The Van Tuyl Group (now named Berkshire Hathaway Automotive or “BHA”) which included 81 auto dealerships located in 10 states. BHA sells new and pre-owned automobiles and offers repair and other related services and products, and includes two related insurance businesses, two auto auctions and a manufacturer of automotive fluid maintenance products. On April 30, 2015, we acquired Detlev Louis Motorad (“DLM”), a retailer of motorcycle accessories based in Germany.
Service and retailing revenues in the third quarter and first nine months of 2015 were approximately $6.2 billion and $17.0 billion, respectively, representing increases of approximately $2.7 billion (76%) and $6.5 billion (62%), respectively, as compared to 2014. In 2015, the revenue increases reflected the impact of the BHA and DLM acquisitions, which contributed revenues of approximately $2.5 billion in the third quarter and $6.0 billion in the first nine months. In third quarter and first nine months of 2015, revenues of our home furnishings retailers increased $193 million (33%) and $411 million (24%), respectively. The increases in revenues from home furnishings retailers were driven by Nebraska Furniture Mart, which opened a new store in a suburb of Dallas, Texas in March of 2015, and from revenue increases at R.C. Willey and Jordan’s. In the first nine months of 2015, TTI generated revenue increases of 5% compared to 2014, reflecting the impact of increased sales and bolt-on acquisitions, partially offset by foreign currency translation effects of a stronger U.S. Dollar. In the first nine months of 2015, NetJets produced a revenue increase of 5%, primarily attributable to increased aircraft sales, partially offset by lower flight operations revenues, which were primarily due to lower fuel cost recoveries.2015.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Manufacturing, Service and Retailing(Continued)

~~Service and retailing~~Consumer products (Continued)

~~Service and retailing pre-tax~~Pre-tax earnings in the third quarter and first nine months of ~~2015 were $378~~2016 increased $112 million ~~and $1,260 million, respectively, representing increases of $23 million (6%~~(70.0%) and ~~$165~~$154 million ~~(15%~~(27.8%), respectively, compared to ~~2014.~~the same periods in 2015. The increases in third quarter earnings reflected the impact of the Duracell acquisition as well as increased earnings from Forest River and certain of our apparel businesses. Duracell contributed pre-tax earnings of $39 million in the third quarter of 2016 and $5 million from its acquisition date, reflecting the impact of transition and integration costs. Forest River generated pre-tax earnings increases of 34% in the third quarter and 24% in the first nine months, primarily due to increased unit sales and higher gross margin rates. Earnings of our apparel businesses increased 62% in the third quarter and 29% in the first nine months. The comparative increases were primarily attributable to lower restructuring costs in 2016 and a loss on the disposition of the Fruit of the Loom unprofitable operation in 2015, partly offset by lower earnings in 2016 from our footwear businesses.
Service and retailing
Our service and retailing businesses are comprised of a large group of independently managed businesses engaged in a variety of activities. A summary of revenues and pre-tax earnings of these operations follows. Amounts are in millions.
Third Quarter First Nine Months
Revenues Pre-tax earnings Revenues Pre-tax earnings
2016 2015 2016 2015 2016 2015 2016 2015
Service
  $ 2,619      $ 2,469      $ 305     $ 287      $ 7,557      $ 7,579      $ 826      $ 919
Retailing
3,712    3,682    144   91    11,050    9,387    404    341
McLane Company
12,271    12,264    106   106    36,121    36,200    371    384

  $     18,602      $   18,415      $      555     $      484      $     54,728      $       53,166      $   1,601      $     1,644

Service
Our service businesses offer fractional ownership programs for general aviation aircraft (NetJets) and high technology training to operators of aircraft (FlightSafety). We also distribute electronic components (TTI) and provide electronic distribution services of corporate news, multimedia and regulatory filings (Business Wire). We are a franchisor of quick service restaurants (Dairy Queen), publish newspapers and other publications (Buffalo News and the BH Media Group) and operate a television station in Miami, Florida (WPLG). We also offer third party logistics services that primarily serve the petroleum and chemical industries (Charter Brokerage).
Revenues in the third quarter of 2016 increased $150 million (6.1%) compared to 2015, while revenues for the first nine months of 2016 were relatively unchanged from 2015. NetJets’ comparative revenues increased 3.9% in the third quarter and decreased 6.3% for the first nine months. The increase in NetJets’ third quarter revenues reflected a 2% increase in operating revenues and increased gains from aircraft dispositions, while the decline in revenues for the first nine months was primarily due to lower aircraft sales. TTI’s revenue increases in 2016 were 9.1% in the third quarter and 5.5% for the first nine months and were primarily due to increased sales volume in Europe and through the Internet.
Pre-tax earnings increased $18 million (6.3%) in the third quarter and decreased $93 million (10.1%) in the first nine months of 2016 as compared to corresponding periods in 2015. Pre-tax earnings in the third quarter included increased earnings from NetJets and lower earnings from several of our other service businesses. The year-to-date decline in earnings was primarily due to lower earnings from NetJets, FlightSafety and our newspaper businesses. The decline in NetJets’ earnings for the first nine months was primarily due to increased depreciation expense and lower aircraft sales margins. TTI’s earnings were relatively flat in 2016 as changes in geographic sales mix and price competition produced lower gross margin rates, offsetting the aforementioned revenue increases.
Retailing
Our retailing businesses include four distinct home furnishings retailing businesses (Nebraska Furniture Mart, R.C. Willey, Star Furniture and Jordan’s), which sell furniture, appliances, flooring and electronics. Our retailing businesses also include Berkshire Hathaway Automotive (“BHA”) which was acquired in the first quarter of 2015. BHA currently includes 83 auto dealerships. BHA sells new and pre-owned automobiles and offers repair and other related services and products, and includes two related insurance businesses, two auto auctions and a distributor of automotive fluid maintenance products.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)
Manufacturing, Service and Retailing(Continued)
Retailing (Continued)
Our other retailing businesses include three jewelry retailing businesses (Borsheims, Helzberg and Ben Bridge), See’s Candies (confectionary products), Pampered Chef (high quality kitchen tools), Oriental Trading Company (party supplies, school supplies and toys and novelties) and Detlev Louis Motorrad (“Louis”), a retailer of motorcycle accessories based in Germany which was acquired in the second quarter of 2015.
Revenues of our retailing businesses in the third quarter and first nine months of 2016 increased approximately $30 million (0.8%) and $1.7 billion (17.7%), respectively, as compared to the same periods in 2015. The increase in year-to-date revenues reflected the impact of the BHA and ~~DLM~~Louis acquisitions, which ~~contributed pre-tax earnings~~accounted for approximately $1.5 billion of ~~$30 million~~the comparative increase. Revenues of our home furnishings retailers in the third quarter and ~~$129~~first nine months of 2016 increased $11 million (1.3%) and $180 million (8.5%), respectively, over 2015, primarily due to new stores opened in 2015 by Nebraska Furniture Mart and Jordan’s. Pre-tax earnings in 2016 from the retail group increased $53 million (58.2%) in the third quarter and $63 million (18.5%) in the first nine months. The increases were primarily attributable to BHA, Louis and our home furnishings businesses.
McLane Company
McLane operates a wholesale distribution business that provides grocery and non-food consumer products to retailers and convenience stores (“grocery”) and to restaurants (“foodservice”). McLane also operates businesses that are wholesale distributors of distilled spirits, wine and beer (“beverage”). The grocery and foodservice businesses are marked by high sales volumes and very low profit margins and have several significant customers, including Wal-Mart, 7-Eleven and Yum! Brands. A curtailment of purchasing by any of its significant customers could have an adverse impact on McLane’s periodic revenues and earnings.
Revenues for the third quarter and first nine months of 2016 were $12.3 billion and $36.1 billion, respectively, and were relatively unchanged as compared with the corresponding periods in 2015. Year-to-date revenues in 2016 reflected a comparative decline in grocery sales of 2%, attributable to lower unit volume, partly offset by price and mix changes. Year-to-date foodservice revenues increased 3%, primarily due to an overall increase in unit volume. Earnings in the third quarter and first nine months of 2016 were $106 million and $371 million, respectively, unchanged from the third quarter of 2015 and a decrease of $13 million (3%) compared to the first nine months of 2015. ~~Our home furnishings retailers generated increases~~Pre-tax earnings in ~~pre-tax earnings of 27% in the third quarter and 16% for~~ the first nine months of 2015 ~~primarily due~~included a gain of $19 million from the disposition of a subsidiary. Excluding this gain, the operating margin (ratio of earnings to ~~the impact of the new Nebraska Furniture Mart store and increased earnings from R.C. Willey and Jordan’s. TTI’s earnings~~revenues) in ~~2015 were relatively unchanged from 2014. NetJets’ earnings in 2015 declined 37% in the third quarter and 7% for~~ the first nine months of 2016 was 1.03%, compared to ~~2014. In 2015, NetJets incurred increased non-fuel flight operation costs~~1.01% in 2015. The grocery and ~~increased general~~foodservice business has been and ~~administrative expenses, including fees~~is expected to ~~cancel certain aircraft purchases.~~continue to be highly competitive.
Finance and Financial Products
Our finance and financial products businesses include manufactured housing and finance (Clayton Homes), transportation equipment manufacturing and leasing businesses (UTLX and XTRA, and together, “transportation equipment leasing”), as well as other leasing and financing activities. ~~UTLX manufactures, owns and leases railcars and intermodal tank cars, and also owns and leases cranes, while XTRA owns and leases over-the-road trailers.~~ A summary of revenues and earnings from our finance and financial products businesses follows. Amounts are in millions.

Third Quarter First Nine Months
2015 2014 2015 2014
Manufactured housing and finance
  $ 189      $ 144      $ 515      $ 403
Transportation equipment leasing
235    225    655    605
Other
62    84    310    239

Pre-tax earnings
486    453    1,480    1,247
Income taxes and noncontrolling interests
183    156    518    432

  $     303      $     297      $     962      $     815

Clayton Homes’ pre-tax earnings in the third quarter and first nine months of 2015 increased $45 million (31%) and $112 million (28%), respectively, compared to 2014. Revenues in the third quarter and first nine months of 2015 increased 8% and 7%, respectively, over the comparable 2014 periods, primarily due to an 8% increase in year-to-date home unit sales. Earnings in 2015 benefited from lower interest expense on borrowings, improved manufacturing results and relatively low delinquency rates and lower loss rates on foreclosures. The decline in interest expense was primarily due to lower rates and to a lesser extent lower average balances. As of September 30, 2015, approximately 95% of the aggregate installment loans were current in terms of payment status. Traditional single family housing markets receive significant interest rate subsidies from the U.S. government through government agency insured mortgages. For the most part, these subsidies are not available to factory built homes. Despite this competitive disadvantage, Clayton Homes remains the largest manufactured housing business in the United States and we believe that it will continue to operate profitably.
Transportation equipment leasing revenues in the third quarter of 2015 were relatively unchanged from the corresponding 2014 period, while in the first nine months of 2015, revenues increased 4% compared to 2014. The year-to-date revenues increase reflected increased rail car lease rates, a larger fleet of North American tank cars, higher volumes in our Australian crane business attributable to the ramp up of additional long-term maintenance and logistics contract work, and increased gains on sales of trailers. These increases were partially offset by unfavorable foreign currency exchange effects attributable to a stronger U.S. Dollar and lower volumes in our North American crane services business due to declines in oil drilling activity.
Pre-tax earnings in the third quarter and first nine months of 2015 from our transportation equipment leasing businesses were $235 million and $655 million, respectively, representing increases of $10 million (4%) and $50 million (8%), respectively, over 2014. In 2015, pre-tax earnings as a percentage of revenues, increased to 37% from 36% in the third quarter and to 35% from 34% in the first nine months versus the comparable 2014 periods. In the first nine months of 2015, the increase in earnings was primarily attributable to the positive impact of the revenue growth discussed above, which more than offset the unfavorable foreign currency impact and higher railcar repair costs and warranty costs. A significant portion of the costs of these businesses, such as depreciation, do not vary proportionately to revenue changes and therefore changes in revenues can disproportionately impact earnings. On September 30, 2015, UTLX acquired approximately 25,000 tank cars from General Electric Company’s leasing unit for a total purchase price of approximately $1.0 billion. This transaction and related transactions to be completed in the fourth quarter of 2015 are expected to further enhance the full-service capabilities of UTLX’s repair, maintenance and inspection network and contribute to future revenue and earnings growth.
   Third Quarter First Nine Months
   Revenues Earnings Revenues Earnings
   2016 2015 2016 2015 2016 2015 2016 2015
Manufactured housing and finance
   $ 1,099     $ 926     $ 165     $ 189     $ 3,057     $ 2,637     $ 514     $ 515
Transportation equipment leasing
   655    633    235    235    2,009    1,849    731    655
Other
   208    166    117    62    611    592    333    310


   $   1,962    $   1,725    $     517    $     486    $   5,677    $   5,078    $   1,578    $   1,480


Income taxes and noncontrolling interests
   180    183    534    518


   $ 337    $ 303    $ 1,044    $ 962


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Finance and Financial Products(Continued)

~~Other~~Manufactured housing and finance
Clayton Homes’ revenues in the third quarter and first nine months of 2016 increased $173 million (19%) and $420 million (16%), respectively, compared to 2015. The increases reflected a 27% increase in year-to-date revenues from home sales, due primarily to a 22% increase in units sold and changes in mix. Pre-tax earnings for the third quarter decreased 13% and in the first nine months of 2016 were flat as compared to earnings in the corresponding 2015 periods. Clayton’s earnings in 2016 were negatively impacted by increased losses from insurance claims, increased impairment charges on servicing assets and lower gross sales margins, which partially offset the benefit from the significant increases in unit sales. As of September 30, 2016, approximately 94% of the installment loan portfolio was current in terms of payment status.
Transportation equipment leasing
Transportation equipment leasing revenues in the third quarter and first nine months of 2016 increased $22 million (3.5%) and $160 million (8.7%), respectively, compared to 2015. The increases derived primarily from the acquisition of GE’s railcar services fleet and railcar repair services business in the last half of 2015 and an increase in core fleet size, offset in part by lower utilization rates, lower crane lease demand in North America and reduced volumes in other products and services primarily related to oil and gas markets.
Pre-tax earnings in 2016 were unchanged in the third quarter and increased $76 million (11.6%) in the first nine months compared to 2015. The year-to-date increase was primarily attributable to revenue growth and lower depreciation rates for certain railcars, partially offset by higher railcar repair costs and interest expense on new borrowings from a Berkshire financing subsidiary.
Other
Other finance activities include CORT furniture leasing, our share of the earnings of a commercial mortgage servicing business (“Berkadia”) in which we own a 50% joint venture interest, and interest and dividends from a portfolio of investments. The decline in other earnings in the third quarter was primarily attributable to lower income from investment securities, partially offset by an increase in earnings of CORT. The increase in other earnings forIn the first nine months ~~reflected~~of 2016, other earnings increased $23 million compared to 2015, reflecting increased earnings from investment securities ~~Berkadia~~ and ~~CORT. In addition, other~~CORT, partly offset by lower earnings from Berkadia. Other earnings also includes income from interest rate spreads charged ~~to Clayton Homes~~ on borrowings by a Berkshire financing subsidiary that are used to ~~fund installment~~finance loans ~~made by Clayton Homes~~ and ~~debt guarantee fees charged to NetJets.~~assets held for lease. Corresponding expenses are included in Clayton Homes’ and ~~NetJets’~~UTLX’s results. ~~Guarantee fees and interest~~Interest rate spreads charged to ~~Clayton Homes and NetJets for~~these businesses were $55 million in the first nine months of ~~2015~~2016 and ~~2014 aggregated $48~~$47 million ~~and $53 million, respectively.~~in 2015.
Investment and Derivative Gains/Losses
A summary of investment and derivative gains and losses ~~and other-than-temporary impairment losses on investments~~ follows. Amounts are in millions.

     Third Quarter    First Nine Months    Third Quarter First Nine Months
       2015           2014       2015                 2014         2016 2015 2016    2015
Investment gains/losses
     $ 8,292      $ 302    $ 8,751         $ 3,818       $ 3,150 $ 8,266 $ 5,643       $ 8,725
Other-than-temporary impairments
     (26)      (678 )    (26)        (697)
Derivative gains/losses
     (764)      258    380         649       458 (764 )   (332)       380












Gains/losses before income taxes and noncontrolling interests
     7,502      (118 )    9,105         3,770       3,608    7,502 5,311       9,105
Income taxes and noncontrolling interests
     2,625      (11 )    3,185         641       1,261 2,625 718       3,185












Net gains/losses
     $ 4,877      $    (107 )    $ 5,920         $ 3,129       $   2,347 $   4,877 $   4,593       $     5,920












Investment gains/losses
Investment gains/losses arise primarily from the sale, redemption, or exchange of investments or when investments are carried at fair value with the periodic changes in fair values recorded in earnings. The timing of gains or losses can have a material effect on periodic earnings. Investment gains and losses included in earnings usually have minimal impact on the periodic changes in our consolidated shareholders’ equity since most of our investments are recorded at fair value with the unrealized gains and losses included in shareholders’ equity as a component of accumulated other comprehensive income.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)
Investment and Derivative Gains/Losses(Continued)
Investment gains/losses (Continued)
We believe the amount of investment gains/losses included in earnings in any given period typically has little analytical or predictive value. Our decisions to sell securities are not motivated by the impact that the resulting gains or losses will have on our reported earnings. Although ~~our management does~~we do not consider investment gains and losses ~~in a given period~~ as necessarily meaningful or useful in evaluating our periodic ~~earnings,~~results, we are providing information to explain the nature of such gains and losses when reflected in our earnings.
Pre-tax investment gains in the third quarter and first nine months of 2016 were $3.2 billion and $5.6 billion, respectively. Investment gains in the third quarter of 2016 included $2.4 billion from the disposition of our Wrigley preferred stock investment and in the first nine months also included $610 million from the redemption of our Kraft Heinz Preferred Stock investment and $1.1 billion realized in connection with the exchange of shares of P&G common stock for 100% of the common stock of Duracell. Income tax expense allocated to investment gains included a benefit from the reduction of certain deferred income tax liabilities in connection with the exchange of P&G common stock for Duracell. See Notes 8 and 9 to the accompanying Consolidated Financial Statements. In 2015, pre-tax investment gains included non-cash holding gains related to our investment in Kraft Heinz of $6.8 billion in the third quarter, as well as net gains from dispositions of equity and fixed maturity securities of approximately $1.5 billion in the third quarter and $1.9 billion in the first nine months. ~~In connection with its acquisition~~
Investment gains/losses also included pre-tax other-than-temporary impairment (“OTTI”) charges of Kraft Foods, Kraft Heinz issued new shares of its common stock in exchange for the outstanding shares of Kraft Foods common stock, thus reducing Berkshire’s ownership interest in Kraft Heinz by approximately 50%. Under the equity method of accounting, such transactions are treated by the investor as if it sold a portion of its interests. For additional information see Note 7 to our Consolidated Financial Statements.
~~Pre-tax investment gains~~$63 million and $26 million in the first nine months of ~~2014 included $2.1 billion in non-cash gains realized in connection with the exchanges of shares of Phillips 66~~2016 and Graham Holdings Company common stock for 100% of the common stock of a specified subsidiary of each of those companies. The exchange transactions were structured as tax-free reorganizations under the Internal Revenue Code. As a result, no income taxes are payable on the excess of the fair value of the Phillips 66 and Graham Holdings Company shares exchanged and the tax-basis cost of those shares. In addition, investment gains in 2014 included net gains from dispositions of equity and fixed maturity securities of $295 million in the third quarter and approximately $1.8 billion in the first nine months.
~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~~~(Continued)~~
~~Investment and Derivative Gains/Losses~~~~(Continued)~~
~~Other-than-temporary impairment (“OTTI”) charges in the first nine months of~~ 2015, ~~were not significant. OTTI charges in the third quarter of 2014 were $678 million and related to our investments in equity securities of Tesco PLC.~~respectively. Although we have periodically recorded OTTI charges in earnings in the past, ~~years,~~ we continue to hold ~~some~~certain of those securities. If the market values of those ~~investments~~securities increase following the date OTTI charges ~~are~~were recorded in earnings, the increases are not reflected in earnings but are instead included in shareholders’ equity as a component of accumulated other comprehensive income. When recorded, OTTI charges have no impact whatsoever on the asset values otherwise recorded in our Consolidated Balance Sheets or on our consolidated shareholders’ equity. In addition, the recognition of such losses in earnings rather than in accumulated other comprehensive income does not necessarily indicate that sales are planned and ultimately sales may not occur for a number of years. Furthermore, the recognition of an OTTI charge does not necessarily indicate that the loss in value of the security is permanent or that the market price of the security will not subsequently increase to and ultimately exceed our original cost.
As of September 30, ~~2015, consolidated~~2016, gross unrealized losses on our investments in equity and fixed maturity securities determined on an individual purchase lot basis were approximately ~~$3.1 billion.~~$1.4 billion, of which $941 million pertained to our investment in IBM common stock. We concluded that ~~as of that date,~~ such losses were temporary. We consider several factors in determining whether or not impairments are deemed to be other than temporary, including the current and expected long-term business prospects and if applicable, the creditworthiness of the issuer, our ability and intent to hold the investment until the price recovers and the length of time and relative magnitude of the price decline.
Derivative gains/losses
Derivative gains/losses ~~represent~~primarily represented the changes in fair value of our ~~remaining credit default contract and our~~ equity index put option ~~contracts.~~contract liabilities. Periodic changes in the fair values of ~~these contracts are~~liabilities reflected in earnings ~~and~~ can be significant, reflecting the volatility of underlying ~~credit~~equity markets and from changes in the inputs used to measure such liabilities.
In 2016, our equity ~~markets. In 2015, derivative~~index put option contracts produced pre-tax ~~losses~~gains of ~~$764~~$458 million in the third quarter and pre-tax ~~gains~~losses of ~~$380~~$421 million ~~in the first nine months compared to pre-tax gains in 2014 of $258 million in the third quarter and $649 million in~~for the first nine months. In ~~the first nine months of 2015, the~~each period, these gains and losses were primarily ~~related~~due to ~~our equity~~changes in the index ~~put option contracts, while in 2014~~values and interest rates and the ~~gains related to our credit default contract as well as our equity index put option contracts.~~
passage of time. In 2015, our equity index put option contracts produced pre-tax losses of $802 million in the third quarter and pre-tax gains of $371 million in the first nine months. In the third quarter of 2015, the losses were driven by lower index prices and increased expected volatility assumptions, which produced an increase in the fair value of our liabilities. The third quarter losses offset much of the gains realized in the first six months of 2015, which ~~resulted from~~were primarily attributable to higher index prices, a stronger U.S. Dollar and increased interest rates. ~~In 2014,~~As of September 30, 2016, equity index put option ~~contracts produced pre-tax gains of $223 million in the third quarter and $156 million in the first nine months. As of September 30, 2015, the~~ intrinsic ~~value of these contracts was~~values were approximately ~~$1.4~~$1.6 billion and ~~the fair value of~~ our recorded liabilities ~~was~~at fair value were approximately ~~$4.2~~$4.0 billion. Our ultimate payment obligations, if any, under our equity index put option contracts will be determined as of the contract expiration dates ~~which begin~~(beginning in ~~2018,~~2018), and will be based on the intrinsic value as defined under the contracts.
~~Our~~In July 2016, our remaining credit default contract was terminated by mutual agreement with the counterparty and we paid $195 million upon termination. This contract produced pre-tax ~~gains~~earnings of $89 million in the first nine months of 2016. We have no further exposure to losses under credit default contracts.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)
Other
A summary of after-tax other earnings which include corporate income (including income from our investments in Kraft Heinz), expenses and income taxes not allocated to operating businesses is summarized below. Amounts are in millions.
   Third Quarter    First Nine Months
   2016    2015    2016    2015
Kraft Heinz earnings
   $     146       $     115       $     552       $     315
Acquisition accounting expenses
   (317)      (199)      (550)      (400)
Corporate interest expense
   (116)      (41)      (297)      (216)
Other
   25       —      (15)      (6)








Net earnings attributable to Berkshire Hathaway shareholders
   $ (262)      $ (125)      $ (310)      $ (307)








Our earnings in 2016 from our investments in Kraft Heinz included lower dividends on the Preferred Stock, which was redeemed in June 2016, and increased equity method earnings from our common stock investment. Our earnings, after allocated Berkshire corporate income taxes, were $146 million in the third quarter and $552 million in the first nine months of 2016. In 2015, these investments produced earnings of ~~$38~~$115 million ~~and $9 million, respectively. In~~in the third quarter and $315 million for the first nine months.
After-tax corporate interest expense was $116 million in the third quarter and $297 million for the first nine months of ~~2014, this contract generated pre-tax gains of $35~~2016 and $41 million and ~~$492~~$216 million, ~~respectively. These gains represent reductions~~respectively, in the ~~estimated fair value~~comparable 2015 periods. The increases in 2016 reflected the impact of increased average borrowings. The variations in comparative periodic after-tax corporate interest expense also reflected the impact of foreign exchange gains and losses with respect to Euro denominated debt issued by Berkshire in March 2015 (€3.0 billion par) and March 2016 (€2.75 billion par). Corporate interest included after-tax foreign currency exchange losses of $48 million in the third quarter and $107 million in the first nine months of 2016 and $4 million and $106 million, respectively, in the comparable 2015 periods. Relatively minor changes in the U.S. Dollar/Euro exchange rate can produce significant gains or losses given the current level of our ~~recorded liabilities during~~Euro-denominated borrowings.
Also included in other earnings are charges related to the ~~period, reflecting changes in credit spreads, interest rates and remaining durations~~application of the ~~underlying exposures.~~
~~Other~~
~~Corporate income and expenses not allocated to operating businesses includes our investments~~acquisition method in ~~Kraft Heinz which generated after-tax earnings~~connection with Berkshire’s business acquisitions. Such charges were primarily from the amortization of ~~$115~~intangible assets recorded in connection with those business acquisitions. These charges (after-tax) were $317 million and ~~$315~~$550 million in the third quarter and first nine months of ~~2015,~~2016, respectively, compared to ~~$198~~$199 million and ~~$491~~$400 million, respectively, in the ~~corresponding~~comparable periods ~~of 2014. Also included~~ in other earnings are amortization of fair value adjustments made in connection with several prior business acquisitions (primarily related to the amortization of identifiable intangible assets) and corporate interest expense.2015.
Financial Condition
Our balance sheet continues to reflect significant liquidity and a strong capital base. Our consolidated shareholders’ equity at September 30, ~~2015~~2016 was ~~$248.3~~$269.3 billion, an increase of ~~$8.1~~$13.7 billion since December 31, ~~2014.~~2015. Net earnings attributable to Berkshire shareholders in the first nine months of ~~2015~~2016 were ~~$18.6~~$17.8 billion. At September 30, 2016, our insurance and other businesses held cash and cash equivalents of $68.3 billion, and investments (excluding our investment in Kraft Heinz) of $140.8 billion. In June 2016, we received $8.32 billion in connection with the redemption of our Kraft Heinz Preferred Stock investment.
In January 2016, we used cash of approximately $32.1 billion to fund the acquisition of PCC, which ~~was partially offset by approximately $10.5~~we funded through a combination of cash on hand and $10 billion borrowed under a new 364-day revolving credit agreement. In March 2016, we issued €2.75 billion and $5.5 billion of ~~losses~~senior unsecured notes. The proceeds were used in ~~other comprehensive income primarily related~~the repayment of all outstanding borrowings under the aforementioned revolving credit agreement. In June, the revolving credit agreement was terminated. See Note 16 to ~~changes in unrealized investment appreciation and~~ the ~~impact~~accompanying Consolidated Financial Statements. In August 2016, we issued $750 million of ~~foreign currency translation.~~senior unsecured notes to replace $750 million of maturing notes. Over the next twelve months, $1.1 billion of parent company senior notes will mature.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)

Financial Condition(Continued)

At September 30, 2015, insurance and other businesses held cash and cash equivalents of $56.2 billion, and investments (excluding our investments in Kraft Heinz) of $148.2 billion. We used approximately $4.8 billion in cash in the first nine months of 2015 to fund business acquisitions. On July 1, 2015, Berkshire used cash of approximately $5.3 billion to acquire additional shares of Kraft Heinz common stock. Our various insurance and non-insurance businesses continued to generate significant cash flows from operations. In 2015, Berkshire Hathaway parent company issued €3.0 billion in senior unsecured notes consisting of €750 million of 0.75% senior notes due in 2023, €1.25 billion of 1.125% senior notes due in 2027 and €1.0 billion of 1.625% senior notes due in 2035. During 2015, parent company senior notes of $1.7 billion matured and were repaid. Over the next twelve months, $1.05 billion of parent company senior notes will mature, including $300 million in February 2016.
On August 8, 2015, Berkshire entered into a definitive agreement with Precision Castparts Corp. (“PCC”) to acquire for $235 per share of common stock in cash, all outstanding PCC shares of common stock, other than the shares already owned (about 2.7 million shares or 1.96%), for aggregate consideration of approximately $31.7 billion. Berkshire currently expects to fund the acquisition with a combination of cash on hand and newly issued debt.
Berkshire’s Board of Directors has authorized Berkshire to repurchase its Class A and Class B common shares at prices no higher than a 20% premium over the book value of the shares. Berkshire may repurchase shares at management’s discretion. The repurchase program is expected to continue indefinitely, but does not obligate Berkshire to repurchase any dollar amount or number of Class A or Class B common shares. Repurchases will not be made if they would reduce Berkshire’s consolidated cash and cash equivalent holdings below $20 billion. Financial strength and redundant liquidity will always be of paramount importance at Berkshire. There were no share repurchases under the program in the first nine months of 2015.
Our railroad, utilities and energy businesses (conducted by BNSF and BHE) maintain very large investments in capital assets (property, plant and equipment) and will regularly make significant capital expenditures in the normal course of business. In the first nine months of ~~2015,~~2016, aggregate capital expenditures of these businesses were approximately ~~$8.3~~$6.4 billion, including ~~$4.2~~$3.5 billion by BHE and ~~$4.1~~$2.9 billion by BNSF. ~~BNSF and BHE forecast additional aggregate~~Forecasted capital expenditures of ~~approximately $3.3 billion~~the two businesses for the remainder of ~~2015.~~2016 approximate $2.5 billion. Future capital expenditures are expected to be funded from cash flows from operations and debt issuances.
In the first nine months of 2015, BNSF issued $2.5 billion of senior unsecured debentures, consisting of $850 million of debentures due in 2025 and $1.65 billion of debentures due in 2045. In 2015, BNSF also issued $500 million of amortizing debt with a final maturity date of 2028, which is secured with locomotives. BNSF’s outstanding debt was approximately ~~$21.9~~$22.2 billion as of September 30, 2016, an increase of $429 million from December 31, 2015. Outstanding borrowings of BHE and its subsidiaries, excluding its borrowings from Berkshire insurance subsidiaries, were approximately ~~$36.0~~$36.6 billion as of September 30, ~~2015 and were relatively unchanged~~2016, an increase of $643 million from December 31, ~~2014. BNSF and BHE aggregate term debt and capital lease obligations maturing within the next twelve months are not significant.~~2015. Berkshire does not guarantee the repayment of debt issued by BNSF, BHE or any of their subsidiaries and is not committed to provide capital to support ~~BHE~~BNSF or ~~BNSF~~BHE or any of their subsidiaries.
Finance and financial products assets were approximately ~~$39.6~~$41.9 billion as of September 30, ~~2015,~~2016, an increase of approximately ~~$6.1~~$2.9 billion since December 31, ~~2014, reflecting increases in cash and cash equivalents and equity securities. Assets of these businesses~~2015. Finance assets at September 30, 2016 primarily consisted ~~primarily~~ of loans and finance receivables and various types of property held for lease, as well as significant cash and cash equivalents, ~~and sizable portfolios of fixed maturity and equity securities. Assets also consisted of various types of equipment and furniture held for lease,~~ which included ~~tank cars acquired~~the proceeds of approximately $4.6 billion from ~~General Electric Company’s leasing unit on September 30, 2015 for approximately $1.0 billion.~~the sale of our Wrigley preferred stock investment in September.
Finance and financial products liabilities were approximately ~~$18.9~~$21.1 billion as of September 30, ~~2015,~~2016, an increase of approximately ~~$1.0~~$3.9 billion ~~during the third quarter but essentially unchanged~~ compared to December 31, ~~2014.~~2015. The ~~changes in liabilities during 2015 were~~year-to-date increase was primarily attributable to the change in the fair values of derivative contracts. Notes payable and other borrowings were approximately $12.5 billion as of September 30, 2015, a decline of $253 million compared to year-end 2014. As of September 30, 2015, notes payable included $11.2 billion of senior notesnew debt issued by Berkshire Hathaway Finance Corporation (“BHFC”)~~. In January 2015, $1.0~~, including $3.5 billion of ~~BHFC debt matured and at that time BHFC issued $1.0 billion of new floating rate~~ senior notes ~~of which $400 million matures~~issued in ~~2017 and $600 million matures in 2018.~~March. See Note 16 to the accompanying Consolidated Financial Statements. The proceeds ~~from the BHFC senior notes are~~were used to fund loans originated and acquired by Clayton ~~Homes. An additional $1.5~~Homes and to fund a portion of existing assets held for lease by our rail tank car leasing business, UTLX. Over the next twelve months, $2.8 billion of BHFC senior notes ~~mature within the next twelve months including $500 million that mature in December 2015.~~will mature.
Contractual Obligations
We are party to contracts associated with ongoing business and financing activities, which will result in cash payments to counterparties in future periods. Certain obligations are reflected in our Consolidated Balance Sheets, such as notes payable, which require future payments on contractually specified dates and in fixed and determinable amounts. Other obligations pertain to the acquisition of goods or services in the future, such as minimum rentals under operating leases and certain purchase obligations, and are not currently reflected in the financial statements. Such obligations will be reflected in future periods as the goods are delivered or services provided.
~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~~~(Continued)~~
~~Contractual Obligations~~~~(Continued)~~
InDuring the first nine months of ~~2015,~~2016, we issued new term debt and assumed debt through the ~~Berkshire parent company and various subsidiaries.~~PCC business acquisition. Future payments of principal and interest related to such borrowings are summarized as follows (in millions): ~~2015-$30;~~ 2016 - $225; 2017 - $424; 2018 - $3,905; 2019 - $3,362; and ~~2017-$857; 2018 and 2019-$1,041;~~2020 and after 2019-$11,245. As indicated in Note 19 to the accompanying Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition, Berkshire has agreed to acquire all of the outstanding shares of PCC that it does not already own for aggregate cash consideration of approximately $31.7 billion, subject to PCC shareholder and various regulatory approvals.- $15,756. Except as otherwise ~~noted herein,~~disclosed in this Quarterly Report, our contractual obligations as of September 30, ~~2015~~2016 were, in the aggregate, not materially different from those disclosed in the “Contractual Obligations” section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Berkshire’s Annual Report on Form 10-K for the year ended December 31, ~~2014.~~2015.
Critical Accounting Policies
Certain accounting policies require us to make estimates and judgments that affect the amounts reflected in the Consolidated Financial Statements. Such estimates and judgments necessarily involve varying, and possibly significant, degrees of uncertainty. Accordingly, certain amounts currently recorded in the financial statements will likely be adjusted in the future based on new available information and changes in other facts and circumstances. Reference is made to “Critical Accounting Policies” discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Berkshire’s Annual Report on Form 10-K for the year ended December 31, ~~2014.~~2015.
Our Consolidated Balance Sheet as of September 30, ~~2015~~2016 includes estimated liabilities for unpaid losses from property and casualty insurance and reinsurance contracts of ~~$72.3~~approximately $75.5 billion. Due to the inherent uncertainties in the process of establishing ~~loss reserve amounts,~~these liabilities, the actual ultimate claim ~~amounts~~liabilities will likely differ from the currently recorded amounts. A ~~very~~ small percentage change in estimates of this magnitude ~~will result in~~could have a material effect on our periodic earnings. The effects from changes in these estimates are recorded as a component of insurance losses and loss adjustment expenses in the period of the change.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations(Continued)
Critical Accounting Policies(Continued)
Our Consolidated Balance Sheet as of September 30, 2016 includes goodwill of acquired businesses of ~~$62.7~~approximately $79 billion. We evaluate goodwill for impairment at least annually and we conducted our most recent annual review during the fourth quarter of ~~2014.~~2015. Although we believe that the goodwill reflected in the Consolidated Balance Sheet ~~as of September 30, 2015~~ is not impaired, goodwill may subsequently become impaired as a result of changes in facts and circumstances ~~affecting~~that adversely affect the ~~valuation~~valuations of the reporting ~~unit.~~units. A goodwill impairment charge could have a material effect on periodic earnings.
Our Consolidated Balance Sheets include significant derivative contract liabilities with respect to our long-duration equity index put option contracts. The fair values recorded for these liabilities are based on valuation models that utilize various inputs and assumptions that we believe are used by market participants. We further believe that fair values based on such models are inherently subjective and the values in an actual transaction may differ significantly from the model values. Changes in the assumptions utilized within the valuation models may have a significant effect on recorded fair values and periodic earnings.
Information concerning new accounting pronouncements is included in Note 2 to the accompanying Consolidated Financial Statements.
Forward-Looking Statements
Investors are cautioned that certain statements contained in this document as well as some statements in periodic press releases and some oral statements of Berkshire officials during presentations about Berkshire or its subsidiaries are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, which include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates” or similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects and possible future Berkshire actions, which may be provided by management, are also forward-looking statements as defined by the Act. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and assumptions about Berkshire and its subsidiaries, economic and market factors and the industries in which we do business, among other things. These statements are not guarantees of future performance and we have no specific intention to update these statements.
Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors. The principal ~~important~~ risk factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements include, but are not limited to, changes in market prices of our investments in fixed maturity and equity securities, losses realized from derivative contracts, the occurrence of one or more catastrophic events, such as an earthquake, hurricane or act of terrorism that causes losses insured by our insurance subsidiaries and/or losses to our business operations, changes in laws or regulations affecting our insurance, railroad, utilities and energy and finance subsidiaries, changes in federal income tax laws, and changes in general economic and market factors that affect the prices of securities or the industries in which we do business.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Reference is made to Berkshire’s most recently issued Annual Report and in particular the “Market Risk Disclosures” included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As of September 30, ~~2015,~~2016, there were no material changes in the market risks described in Berkshire’s Annual Report on Form 10-K for the year ended December 31, ~~2014.~~2015.
Item 4. Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, the ~~Corporation~~Company carried out an evaluation, under the supervision and with the participation of the ~~Corporation’s~~Company’s management, including the Chairman (Chief Executive Officer) and the Senior Vice President (Chief Financial Officer), of the effectiveness of the design and operation of the ~~Corporation’s~~Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chairman (Chief Executive Officer) and the Senior Vice President (Chief Financial Officer) concluded that the ~~Corporation’s~~Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the ~~Corporation~~Company (including its consolidated subsidiaries) required to be included in the ~~Corporation’s~~Company’s periodic SEC filings. During the quarter, there have been no significant changes in the ~~Corporation’s~~Company’s internal control over financial reporting or in other factors that could significantly affect internal control over financial reporting.
Part II Other Information
Item 1. Legal Proceedings
We are ~~party~~parties in a variety of legal actions ~~arising~~that routinely arise out of the normal course of ~~business. In particular, such~~business, including legal actions ~~affect our insurance and reinsurance businesses. Such litigation generally seeks~~seeking to establish liability directly through insurance contracts or indirectly through reinsurance contracts issued by Berkshire subsidiaries. Plaintiffs occasionally seek punitive or exemplary damages. We do not believe that such normal and routine litigation will have a material effect on our financial condition or results of operations. Berkshire and certain of its subsidiaries are also involved in other kinds of legal actions, some of which assert or may assert claims or seek to impose fines and penalties. We believe that any liability that may arise as a result of other pending legal actions will not have a material effect on our consolidated financial condition or results of operations.
Item 1A. Risk Factors
Our significant business risks are described in Item 1A to Form 10-K for the year ended December 31, ~~2014~~2015 to which reference is made herein.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities
~~In September 2011,~~ Berkshire’s Board of Directors (“Berkshire’s Board”) has approved a common stock repurchase program under which Berkshire may repurchase its Class A and Class B shares at prices no higher than a ~~10%~~20% premium over the book value of the shares. ~~In December 2012, Berkshire’s Board amended the repurchase program by raising the price limit to no higher than a 20% premium over book value.~~ Berkshire may repurchase shares in the open market or through privately negotiated transactions. Berkshire’s Board authorization does not specify a maximum number of shares to be repurchased. However, repurchases will not be made if they would reduce Berkshire’s consolidated cash ~~equivalent holdings~~and cash equivalents below $20 billion. The repurchase program is expected to continue indefinitely and the amount of repurchases will depend entirely upon the level of cash available, the attractiveness of investment and business opportunities either at hand or on the horizon, and the degree of discount of the market price relative to management’s estimate of intrinsic value. The repurchase program does not obligate Berkshire to repurchase any dollar amount or number of Class A or Class B shares and there is no expiration date to the program. There were no share repurchases under the program in the first nine months of ~~2015.~~2016.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Information regarding the Company’s mine safety violations and other legal matters disclosed in accordance with Section 1503(a) of the Dodd-Frank Reform Act is included in Exhibit 95 to this Form 10-Q.
On November 4, 2015, Bridger Coal Company, a coal mining joint venture that is two-thirds owned and operated by a subsidiary of PacifiCorp, received an imminent danger order under section 107(a) of the Federal Mine Safety and Health Act of 1977 at its underground mine located near Rock Springs, Wyoming. On that same date, Bridger Coal Company completed actions to abate the concerns, and the Federal Mine Safety and Health Administration terminated the section 107(a) order.
Item 5. Other Information
None
Item 6. Exhibits
~~a. Exhibits~~

a. Exhibits
3(ii)
By-Laws
Incorporated by reference to Exhibit 3(ii) to Form 8-K filed on May 4, 2016.
12
Calculation of Ratio of Consolidated Earnings to Consolidated Fixed Charges
31.1
Rule 13a-14(a)/15d-14(a) Certifications
31.2
~~31.2~~
Rule 13a-14(a)/15d-14(a) Certifications
32.1
Section 1350 Certifications
32.2
Section 1350 Certifications
95
Mine Safety Disclosures
101
~~101~~
The following financial information from Berkshire Hathaway Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2015,~~2016, formatted in XBRL (Extensible Business Reporting Language) includes: (i) the Consolidated Balance Sheets as of September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, (ii) the Consolidated Statements of Earnings for each of the three-month and nine-month periods ended September 30, ~~2015~~2016 and ~~2014,~~2015, (iii) the Consolidated Statements of Comprehensive Income for each of the three-month and nine-month periods ended September 30, ~~2015~~2016 and ~~2014,~~2015, (iv) the Consolidated Statements of Changes in Shareholders’ Equity for each of the nine-month periods ended September 30, ~~2015~~2016 and ~~2014,~~2015, (v) the Consolidated Statements of Cash Flows for each of the nine-month periods ended September 30, ~~2015~~2016 and ~~2014,~~2015, and (vi) the Notes to Consolidated Financial Statements, tagged in summary and detail.
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

BERKSHIRE HATHAWAY INC.
(Registrant)
Date: November ~~6, 2015~~
4, 2016

/S/ MARC D. HAMBURG

(Signature)
Marc D. Hamburg,

Senior Vice President and
Principal Financial Officer

45


	Berkshire Hathaway shareholders’ equity
	Common stock and capital in excess of par value				Accumulated other comprehensive income				Retained earnings			Treasury stock				Non- controlling interests				Total
Balance at December 31, 2013		$	35,480			$	44,025			$	143,748		$	(1,363	)		$	2,595			$	224,485
Net earnings			—				—				15,717			—				235				15,952
Other comprehensive income, net			—				161				—			—				21				182
Issuance (acquisition) of common stock			106				—				—			(400	)			—				(294	)
Transactions with noncontrolling interests			(18	)			—				—			—				(5	)			(23	)

Balance at September 30, 2014		$	35,568			$	44,186			$	159,465		$	(1,763	)		$	2,846			$	240,302


Balance at December 31, 2014		$	35,581			$	42,732			$	163,620		$	(1,763	)		$	2,857			$	243,027
Net earnings			—				—				18,605			—				262				18,867
Other comprehensive income, net			—				(10,529	)			—			—				(45	)			(10,574	)
Issuance of common stock			63				—				—			—				—				63
Transactions with noncontrolling interests			(26	)			—				—			—				(36	)			(62	)

Balance at September 30, 2015		$	35,618			$	32,203			$	182,225		$	(1,763	)		$	3,038			$	251,321


	Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Mortgage-backed securities		Total
Amortized cost		$8,103		$11,635		$1,897		$2,723		$1,526		$25,884
Fair value		8,112		12,134		2,024		3,177		1,713		27,160


	Class A, $5 Par Value (1,650,000 shares authorized)						Class B, $0.0033 Par Value (3,225,000,000 shares authorized)
	Issued		Treasury		Outstanding		Issued		Treasury		Outstanding
Balance at December 31, 2014		838,019		(11,680)		826,339		1,226,265,250		(1,409,762)		1,224,855,488
Conversions of Class A common stock to Class B common stock and exercises of replacement stock options issued in a business acquisition		(15,058)		—		(15,058)		23,255,846		—		23,255,846

Balance at September 30, 2015		822,961		(11,680)		811,281		1,249,521,096		(1,409,762)		1,248,111,334


	Premiums written								Premiums earned								Pre-tax underwriting gain (loss)
	Third Quarter				First Nine Months				Third Quarter				First Nine Months				Third Quarter				First Nine Months
	2015		2014		2015		2014		2015		2014		2015		2014		2015		2014		2015		2014
Property/casualty	$	1,883	$	961	$	3,932	$	3,481	$	1,341	$	1,022	$	3,168	$	3,109	$	435	$	547	$	829	$	1,036
Retroactive reinsurance		1		3,046		4		3,272		1		3,046		4		3,272		(118)		(109)		(375)		(270)
Life and annuity		550		741		2,145		2,033		550		741		2,145		2,033		(118)		5		(207)		(149)

	$	2,434	$	4,748	$	6,081	$	8,786	$	1,892	$	4,809	$	5,317	$	8,414	$	199	$	443	$	247	$	617


		a. Exhibits

3(ii)		By-Laws Incorporated by reference to Exhibit 3(ii) to Form 8-K filed on May 4, 2016.

12		Calculation of Ratio of Consolidated Earnings to Consolidated Fixed Charges


		BERKSHIRE HATHAWAY INC.
		(Registrant)

Date: November ~~6, 2015~~	4, 2016	/S/ MARC D. HAMBURG
		(Signature)
		Marc D. Hamburg,
		Senior Vice President and
	Principal Financial Officer

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company