(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, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) 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 ~~July 28, 2016:~~April 27, 2017:


	Second Quarter				First Six Months					First Quarter
	2016		2015		2016			2015		2017		2016
	(Unaudited)				(Unaudited)					(Unaudited)
Revenues:
*Insurance and Other:*
Insurance premiums earned	$	10,799	$	10,400	$	21,923		$	19,940	$	21,753	$	11,124
Sales and service revenues		30,542		27,792		58,821			52,733		30,229		28,279
Interest, dividend and other investment income		1,617		1,323		3,008			2,626		1,162		1,151
Investment gains/losses		640		136		2,486			232		312		1,846

		43,598		39,651		86,238			75,531		53,456		42,400

*Railroad, Utilities and Energy:*
Revenues		8,851		9,866		17,696			19,757		9,404		8,845

*Finance and Financial Products:*
Sales and service revenues		1,577		1,383		2,969			2,605		1,514		1,392
Interest, dividend and other investment income		411		416		743			748		350		332
Investment gains/losses		3		226		7			227		3		4
Derivative gains/losses		20		(174)		(790	)		1,144		460		(810	)

		2,011		1,851		2,929			4,724		2,327		918

		54,460		51,368		106,863			100,012
Total revenues											65,187		52,163

Costs and expenses:
*Insurance and Other:*
Insurance losses and loss adjustment expenses		7,178		6,692		14,710			12,693		18,566		7,532
Life, annuity and health insurance benefits		1,241		1,738		2,408			2,918		1,227		1,167
Insurance underwriting expenses		1,870		2,018		3,947			3,630		2,339		2,077
Cost of sales and services		24,349		22,589		47,145			42,848		24,360		22,796
Selling, general and administrative expenses		4,066		3,378		7,788			6,456		4,116		3,722
Interest expense		28		217		415			361		270		387

		38,732		36,632		76,413			68,906		50,878		37,681

*Railroad, Utilities and Energy:*
Cost of sales and operating expenses		6,339		6,999		12,658			13,967		6,754		6,319
Interest expense		596		653		1,281			1,285		693		685

		6,935		7,652		13,939			15,252		7,447		7,004

*Finance and Financial Products:*
Cost of sales and services		875		739		1,643			1,398		867		768
Selling, general and administrative expenses		443		402		836			767		442		393
Interest expense		103		97		204			196		104		101

		1,421		1,238		2,683			2,361		1,413		1,262

Total costs and expenses											59,738		45,947
		47,088		45,522		93,035			86,519
Earnings before income taxes and equity in earnings of Kraft Heinz Company											5,449		6,216
Equity in earnings of Kraft Heinz Company											239		240

Earnings before income taxes		7,372		5,846		13,828			13,493		5,688		6,456
Income tax expense		2,290		1,739		3,089			4,153		1,549		799

Net earnings		5,082		4,107		10,739			9,340		4,139		5,657
Less: Earnings attributable to noncontrolling interests		81		94		149			163		79		68

Net earnings attributable to Berkshire Hathaway shareholders	$	5,001	$	4,013	$	10,590		$	9,177	$	4,060	$	5,589

Net earnings per share attributable to Berkshire Hathaway shareholders *	$	3,042	$	2,442	$	6,443		$	5,585
Net earnings per equivalent Class A share outstanding *										$	2,469	$	3,401
Average equivalent Class A Shares outstanding *		1,643,745		1,643,084		1,643,616			1,643,018		1,644,425		1,643,487


	Second Quarter				First Six Months						First Quarter
	2016		2015		2016			2015			2017			2016
	(Unaudited)				(Unaudited)						(Unaudited)
Net earnings	$	5,082	$	4,107	$	10,739		$	9,340		$	4,139		$	5,657


Other comprehensive income:
Net change in unrealized appreciation of investments		(271)		234		(2,962	)		(3,562	)		8,377			(2,691	)
Applicable income taxes		94		(151)		993			1,280			(2,872	)		899
Reclassification of investment appreciation in net earnings		(9)		(104)		(1,816	)		(195	)		(305	)		(1,807	)
Applicable income taxes		4		36		636			68			107			632
Foreign currency translation		(607)		577		(114	)		(783	)		558			493
Applicable income taxes		44		4		14			(19	)		(69	)		(30	)
Prior service cost and actuarial gains/losses of defined benefit pension plans		51		(44)		55			5			(10	)		4
Applicable income taxes		(19)		13		(19	)		(2	)		7			—
Other, net		16		25		(6	)		(100	)		3			(22	)

Other comprehensive income, net		(697)		590		(3,219	)		(3,308	)		5,796			(2,522	)

Comprehensive income		4,385		4,697		7,520			6,032			9,935			3,135
Comprehensive income attributable to noncontrolling interests		61		131		135			170			103			74

Comprehensive income attributable to Berkshire Hathaway shareholders	$	4,324	$	4,566	$	7,385		$	5,862		$	9,832		$	3,061


	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		—		—		9,177		—		163		9,340
Other comprehensive income, net		—		(3,315)		—		—		7		(3,308)
Issuance of common stock		30		—		—		—		—		30
Transactions with noncontrolling interests		(19)		—		—		—		132		113

Balance at June 30, 2015	$	35,592	$	39,417	$	172,797	$	(1,763)	$	3,159	$	249,202
													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, 2015	$	35,628	$	33,982	$	187,703	$	(1,763)	$	3,077	$	258,627		$ 35,628			$ 33,982			$187,703		$ (1,763)		$ 3,077			$ 258,627
Net earnings		—		—		10,590		—		149		10,739		—			—			5,589		—		68			5,657
Other comprehensive income, net		—		(3,205)		—		—		(14)		(3,219)		—			(2,528	)		—		—		6			(2,522	)
Issuance of common stock		52		—		—		—		—		52		34			—			—		—		—			34
Transactions with noncontrolling interests		38		—		—		—		21		59		16			—			—		—		25			41

Balance at June 30, 2016	$	35,718	$	30,777	$	198,293	$	(1,763)	$	3,233	$	266,258
Balance at March 31, 2016														$ 35,678			$ 31,454			$193,292		$ (1,763)		$ 3,176			$ 261,837


Balance at December 31, 2016														$ 35,689			$ 37,298			$211,777		$ (1,763)		$ 3,358			$286,359
Net earnings														—			—			4,060		—		79			4,139
Other comprehensive income, net														—			5,772			—		—		24			5,796
Issuance of common stock														34			—			—		—		—			34
Transactions with noncontrolling interests														(16	)		—			—		—		(32	)		(48	)

Balance at March 31, 2017														$ 35,707			$ 43,070			$215,837		$ (1,763)		$ 3,429			$ 296,280


	First Six Months						First Quarter
	2016			2015			2017			2016
	(Unaudited)						(Unaudited)
Cash flows from operating activities:
Net earnings	$	10,739		$	9,340		$	4,139		$	5,657
Adjustments to reconcile net earnings to operating cash flows:
Investment gains/losses		(2,493	)		(459	)		(315	)		(1,850)
Depreciation and amortization		4,359			3,812			2,243			2,125
Other		(72	)		160			120			228
Changes in operating assets and liabilities:
Losses and loss adjustment expenses		1,769			670			16,900			1,454
Deferred charges reinsurance assumed		35			246			(5,783	)		(111)
Unearned premiums		1,444			1,379			1,829			1,476
Receivables and originated loans		(2,716	)		(2,667	)		(1,197	)		(1,987)
Derivative contract assets and liabilities		790			(1,144	)		(460)			810
Income taxes		1,822			2,763			1,451			497
Other		(366	)		(157	)		(622	)		(845)

Net cash flows from operating activities		15,311			13,943			18,305			7,454


Cash flows from investing activities:
Purchases of fixed maturity securities		(3,130	)		(3,001	)
Purchases of U.S. Treasury Bills and fixed maturity securities								(45,342	)		(14,359)
Purchases of equity securities		(4,129	)		(4,714	)		(10,590	)		(3,059)
Sales of fixed maturity securities		926			622
Redemptions and maturities of fixed maturity securities		4,767			2,295
Sales of U.S. Treasury Bills and fixed maturity securities								10,048			1,124
Redemptions and maturities of U.S. Treasury Bills and fixed maturity securities								23,990			3,689
Sales and redemptions of equity securities		12,444			2,160			3,452			2,258
Purchases of loans and finance receivables		(188	)		(57	)		(52	)		(175)
Collections of loans and finance receivables		174			246			97			80
Acquisitions of businesses, net of cash acquired		(30,440	)		(4,500	)		(1,599	)		(30,185)
Purchases of property, plant and equipment		(6,144	)		(6,836	)		(2,355	)		(2,843)
Other		(397	)		41			(115	)		(390)

Net cash flows from investing activities		(26,117	)		(13,744	)		(22,466	)		(43,860)


Cash flows from financing activities:
Proceeds from borrowings of insurance and other businesses		8,600			3,253			1,203			8,539
Proceeds from borrowings of railroad, utilities and energy businesses		2,211			3,238			2,094			—
Proceeds from borrowings of finance businesses		3,494			998			1,298			3,493
Repayments of borrowings of insurance and other businesses		(1,148	)		(1,843	)		(1,130	)		(381)
Repayments of borrowings of railroad, utilities and energy businesses		(1,781	)		(848	)		(446	)		(522)
Repayments of borrowings of finance businesses		(195	)		(1,173	)		(1,068	)		(88)
Changes in short term borrowings, net		618			(246	)		87			547
Acquisitions of noncontrolling interests		(2	)		(70	)
Other		(44	)		(113	)		(23	)		25

Net cash flows from financing activities		11,753			3,196			2,015			11,613

Effects of foreign currency exchange rate changes		2			(77	)		61			7

Increase in cash and cash equivalents		949			3,318
Increase (decrease) in cash and cash equivalents								(2,085	)		(24,786)
Cash and cash equivalents at beginning of year		71,730			63,269			28,048			67,161

Cash and cash equivalents at end of second quarter *	$	72,679		$	66,587

Cash and cash equivalents at end of first quarter *							$	25,963		$	42,375

* Cash and cash equivalents are comprised of the following:
Beginning of year—
Insurance and Other	$	61,181		$	57,974		$	23,581		$	56,612
Railroad, Utilities and Energy		3,437			3,001			3,939			3,437
Finance and Financial Products		7,112			2,294			528			7,112

	$	71,730		$	63,269		$	28,048		$	67,161

End of second quarter—
End of first quarter—
Insurance and Other	$	61,788		$	60,394		$	18,362		$	37,620
Railroad, Utilities and Energy		3,036			3,860			5,584			2,692
Finance and Financial Products		7,855			2,333			2,017			2,063

	$	72,679		$	66,587		$	25,963		$	42,375

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. At December 31, 2016, we began presenting U.S. Treasury Bills with maturity dates greater than three months from their purchase dates separately in our Consolidated Balance Sheets. Accordingly, we revised the first quarter of 2016 Consolidated Statement of Cash Flows to reflect this change.

Financial information in this Quarterly Report reflects ~~any~~all 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.

In May 2014, the ~~FASB~~Financial Accounting Standards Board (“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 in accounting for revenues from contracts within its scope, including (a) identifying the contract, (b) identifying the performance obligations under the contract, (c) determining the transaction price, (d) allocating the transaction price to the identified performance obligations and (e) recognizing revenues as the identified performance obligations are satisfied. ASU 2014-09 also prescribes additional financial statement presentations and disclosures. We currently expect to adopt ASU 2014-09 as of January 1, 2018, under the modified retrospective method where the cumulative effect is recognized at the date of initial application. 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 the adoption of 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 changes in assumptions or methodologies for calculating such liabilities. ASU 2015-09 is effective for annual periods beginning after December 15, 2015 and interim periods beginning after December 15, 2016. We 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~~securities (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,~~securities, the adoption of ASU 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~~affect our comprehensive income or total shareholders’ equity. ASU 2016-01 is effective for ~~annual and interim~~reporting 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.~~earnings.

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~~reporting 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.

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.

In January 2017, the FASB issued ASU 2017-04 “Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates the requirement to determine the implied goodwill in measuring an impairment loss. Upon adoption, a goodwill impairment will be measured as the excess of the reporting unit’s carrying value over fair value, limited to the carrying value of goodwill. ASU 2017-04 is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the effect this standard will have on our Consolidated Financial Statements.

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

On ~~August 8, 2015,~~January 29, 2016, Berkshire ~~entered into a definitive agreement with~~acquired all outstanding common stock of 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.~~cash pursuant to a definitive merger agreement dated August 8, 2015. 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~~On February 29, 2016, we acquired the Duracell business from The Procter & Gamble Company (“P&G”) pursuant to ~~acquire the Duracell business from P&G. The transaction closed on February 29, 2016.~~a definitive agreement entered into in November 2014. 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~~Pro forma consolidated revenues and net earnings data for 2016 was not materially different from the amounts reflected in ~~our~~the accompanying Consolidated Financial Statements beginning on their respective acquisition dates. The fair values of certain assets and liabilities, particularly property, plant and equipment and intangible assets, are provisional and are subject to revision as the related valuations are completed.Statements. Goodwill from these acquisitions is not amortizable for income tax purposes. ~~Preliminary~~The fair values of identified assets acquired and liabilities assumed and residual goodwill of PCC and Duracell at their respective acquisition dates are summarized ~~in the table that~~as follows (in millions).

The following table sets forth certain unaudited pro forma consolidated earnings data for the first six months of 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 per share amount). Pro forma data for the first six months of 2016 was not materially different from the amounts reflected in the accompanying Consolidated Financial Statements.

Investments in securities with fixed maturities as of ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 are summarized by type below (in millions).


	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
June 30, 2016
March 31, 2017
U.S. Treasury, U.S. government corporations and agencies	$	3,511	$	25	$	—		$	3,536	$	4,636	$	14	$	(9	)	$	4,641
States, municipalities and political subdivisions		1,266		66		(1	)		1,331		1,051		55		(1	)		1,105
Foreign governments		9,613		359		(50	)		9,922		8,480		224		(35	)		8,669
Corporate bonds		6,951		753		(10	)		7,694		6,787		687		(7	)		7,467
Mortgage-backed securities		1,133		169		(5	)		1,297		937		121		(7	)		1,051

	$	22,474	$	1,372	$	(66	)	$	23,780	$	21,891	$	1,101	$	(59	)	$	22,933

December 31, 2015
December 31, 2016
U.S. Treasury, U.S. government corporations and agencies	$	3,425	$	10	$	(8	)	$	3,427	$	4,519	$	16	$	(8	)	$	4,527
States, municipalities and political subdivisions		1,695		71		(2	)		1,764		1,159		58		(1	)		1,216
Foreign governments		11,327		226		(85	)		11,468		8,860		207		(66	)		9,001
Corporate bonds		7,323		632		(29	)		7,926		6,899		714		(9	)		7,604
Mortgage-backed securities		1,279		168		(5	)		1,442		997		126		(6	)		1,117

	$	25,049	$	1,107	$	(129	)	$	26,027	$	22,434	$	1,121	$	(90	)	$	23,465

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


	June 30, 2016			December 31, 2015			March 31, 2017		December 31, 2016
Insurance and other		$	23,744		$	25,988	$	22,902	$	23,432
Finance and financial products			36			39		31		33

		$	23,780		$	26,027	$	22,933	$	23,465

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 ~~June 30, 2016,~~March 31, 2017, approximately ~~93%~~92% of foreign government holdings were rated AA or higher by at least one of the major rating agencies. Approximately ~~80%~~81% of foreign government holdings were issued or guaranteed by the United Kingdom, Germany, Australia or Canada.

The amortized cost and estimated fair value of securities with fixed maturities at ~~June 30, 2016~~March 31, 2017 are summarized below by contractual maturity dates. Actual maturities may differ from contractual maturities due to early call or prepayment rights held by issuers. Amounts are 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			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		$	6,344		$	11,403		$	1,209		$	2,385		$	1,133		$	22,474		$8,117		$ 9,898		$ 756		$2,183		$ 937		$21,891
Fair value			6,361			11,866			1,330			2,926			1,297			23,780		8,191		10,204		815		2,672		1,051		22,933

Investments in equity securities as of ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 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
June 30, 2016 *
March 31, 2017 *
Banks, insurance and finance	$	19,852	$	22,247	$	(284	)	$	41,815	$	20,431	$	31,725	$	—		$	52,156
Consumer products		5,259		17,956		(112	)		23,103		19,320		21,020		—			40,340
Commercial, industrial and other		33,822		7,422		(1,928	)		39,316		32,707		9,973		(156	)		42,524

	$	58,933	$	47,625	$	(2,324	)	$	104,234	$	72,458	$	62,718	$	(156	)	$	135,020


	Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value		Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
December 31, 2015 *
December 31, 2016*
Banks, insurance and finance	$	20,026	$	27,965	$	(21)	$	47,970	$	19,852	$	30,572	$	—		$	50,424
Consumer products		6,867		18,022		(1)		24,888		10,657		16,760		(9	)		27,408
Commercial, industrial and other		35,417		6,785		(3,238)		38,964		35,868		9,033		(701	)		44,200

	$	62,310	$	52,772	$	(3,260)	$	111,822	$	66,377	$	56,365	$	(710	)	$	122,032

As of ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, we concluded that the unrealized losses shown in the tables above were 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 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 ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, unrealized losses on equity securities in a continuous unrealized loss position for more than twelve consecutive months were ~~$908~~$39 million and ~~$989~~$551 million, respectively.

Unrealized losses at June 30, 2016 included approximately $1.5 billion related to our investment in IBM common stock (of which $848 million related to IBM shares that had been in a continuous unrealized loss position for more than twelve consecutive months), which represented 11% of our cost. IBM continues to be profitable and generate significant cash flows. We currently do not intend to dispose of our IBM common stock and we expect that the fair value of this investment will recover and ultimately exceed our cost.

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


	June 30, 2016		December 31, 2015		March 31, 2017		December 31, 2016
Insurance and other	$	102,563	$	110,212	$	133,393	$	120,471
Railroad, utilities and energy *		1,347		1,238		1,248		1,186
Finance and financial products		324		372		379		375

	$	104,234	$	111,822	$	135,020	$	122,032

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 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
	June 30, 2016		December 31, 2015		June 30, 2016		December 31, 2015		March 31, 2017		December 31, 2016		March 31, 2017		December 31, 2016
Insurance and other	$	9,970	$	9,970	$	14,487	$	15,998	$	6,720	$	6,720	$	15,293	$	14,364
Finance and financial products		3,052		3,052		6,339		5,719		1,000		1,000		3,119		2,892

	$	13,022	$	13,022	$	20,826	$	21,717	$	7,720	$	7,720	$	18,412	$	17,256

~~We own $2.1 billion liquidation amount of Wrigley preferred stock that was acquired pursuant~~

Notes to a shareholder agreement in conjunction with Mars Incorporated’s acquisition of Wrigley in 2008. The Wrigley preferred stock is entitled to dividends at 5% per annum. Pursuant to certain put and call provisions in the shareholder agreement, up to 50% of our original investment may be redeemed over a 90-day period beginning October 6, 2016. We currently anticipate that such shares will be redeemed. The shareholder agreement also provides that beginning in 2021, our then outstanding investment will be subject to annual put and call arrangements. The consideration due under the put and call arrangements is based upon the earnings of Wrigley.Consolidated Financial Statements(Continued)

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 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 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).

We currently own Class A 9% Cumulative Compounding Perpetual Preferred Shares of RBI (“RBI Preferred”) having a stated value of $3 billion. RBI, domiciled in Canada, ~~is the ultimate parent company of Burger King~~franchises and ~~Tim Hortons.~~operates quick service restaurants. The RBI Preferred is entitled to dividends on a cumulative basis of 9% per annum plus an additional amount, 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.

OnIn June 7, 2013, Berkshire ~~and an affiliate of the global investment firm 3G Capital (such affiliate, “3G”), each made equity investments~~invested $12.25 billion in a newly-formed company, H.J. Heinz Holding Corporation (“Heinz Holding”), which, together with debt financing obtained by Heinz Holding, was used to acquire H. J. Heinz Company (“Heinz”). 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.~~

~~Berkshire’s initial investments consisted~~consisting 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~~$0.01 per share and cumulative compounding preferred stock (“Preferred Stock”) with a liquidation preference of $8 billion. ~~The aggregate cost~~An affiliate of ~~our investments was $12.25 billion.~~the global investment firm 3G Capital (such affiliate, “3G”) also acquired 425 million shares of Heinz Holding common stock for $4.25 billion. At that time, Berkshire and 3G each owned a 50% share of Heinz Holding common stock. Heinz Holding then acquired H.J. Heinz Company.

In March 2015, Heinz Holding entered into an agreement to acquire all of the outstanding common stock of Kraft Foods Group, Inc. (“Kraft”). In June 2015, Berkshire exercised the aforementioned common stock warrants. On July 1, 2015, Berkshire and 3G also acquired new shares of Heinz Holding common stock for $5.26 billion and $4.74 billion, respectively. After these transactions, Berkshire owned approximately 52.5% of the outstanding shares of Heinz Holding. On July 2, 2015, Heinz Holding completed its acquisition of Kraft, at which time Heinz Holding was renamed The Kraft Heinz Company (“Kraft Heinz”). In connection with its acquisition of Kraft, Kraft Heinz issued one new share of Kraft Heinz common stock for each share of Kraft common stock, which reduced Berkshire’s and 3G’s ownership of outstanding shares of Kraft Heinz common stock to 26.8% and 24.2%, respectively.

Berkshire currently owns 26.7% of the outstanding shares of Kraft Heinz common stock. We account for our investment in Kraft Heinz common stock pursuant to the equity method. The carrying value of this investment was approximately $15.4 billion at March 31, 2017 and $15.3 billion at December 31, 2016. Our earnings determined under the equity method for the first quarter were $239 million in 2017 and $240 million in 2016. We received dividends on the common stock of $195 million in the first quarter of 2017 and $187 million in the first quarter of 2016, which were recorded as reductions of our investment. On June 7, 2016, Kraft Heinz redeemed our Preferred Stock investment for cash of $8.32 billion. ~~The Preferred Stock was entitled to dividends at 9% per annum.~~

Kraft Heinz is one of the world’s 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. Summarized consolidated financial information of Kraft Heinz follows (in millions).

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”). Kraft shareholders received one share of newly issued Heinz Holding common stock for each share of Kraft common stock (or 593 million shares) and a special cash dividend of $16.50 per share. Upon completion of the acquisition, Heinz Holding was renamed The Kraft Heinz Company (“Kraft Heinz”). 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%. 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.~~

We account for our investment in Kraft Heinz common stock on the equity method. Our equity method earnings on the common stock and dividends earned on the Preferred Stock in the first six months were $626 million in 2016 and $231 million in 2015 and are included in interest, dividend and other investment income in our Consolidated Statements of Earnings. Preferred Stock dividends received in the second quarter and first six months of 2016 were $180 million. In 2015, Preferred Stock dividends received were $180 million in the second quarter and $360 million in the first six months.

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

Our consolidated effective income tax rates for the ~~second~~first quarter of 2017 and ~~first six months of~~ 2016 were ~~31.1%~~27.2% and ~~22.3%~~12.4%, respectively. ~~In 2015, our effective income tax rates were 29.7% for the second quarter and 30.8% for the first six months.~~ Our effective income tax rate normally reflects benefits from the recurring impact ofof: (a) dividends received deductions applicable to certain investments in equity securities, (b) income production tax credits ~~from~~related to 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~~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~~were 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 ~~an 8.3~~a 17.7 percentage point reduction in our consolidated effective income tax rate for the first ~~six months~~quarter of 2016.

Investment gains/losses included in earnings are summarized below (in millions).

Gains from sales and redemptions of equity securities in the second quarter of 2016 included $610 million from the redemption of our investment in Kraft Heinz Preferred Stock. Gains in the first six months of 2016 also included a pre-tax 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.

We record investments in equity and fixed maturity securities classified as available-for-sale at fair value and record the difference between fair value and cost in other comprehensive income. ~~Other-than-temporary impairment~~Investment gains and losses are recognized ~~in earnings represent reductions~~when we sell or otherwise dispose such securities. Gains from sales and redemptions of equity securities in the ~~cost basis~~first quarter of 2016 included approximately $1.1 billion from the ~~investment, but not~~exchange of our P&G common stock in 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~~acquisition of ~~the balance sheet date.~~Duracell.

~~Inventories at June 30, 2016 include approximately $3.6 billion related to PCC and Duracell.~~

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

~~Trade and other receivables at June 30, 2016 include approximately $1.8 billion related to PCC and Duracell.~~

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


	June 30, 2016		December 31, 2015		March 31, 2017			December 31, 2016
Loans and finance receivables before allowances and discounts	$	13,547	$	13,186	$	13,776		$	13,728
Allowances for uncollectible loans		(182)		(182)		(177	)		(182	)
Unamortized acquisition discounts		(277)		(232)		(234	)		(246	)

	$	13,088	$	12,772	$	13,365		$	13,300

Loans and finance receivables are predominantly installment loans originated or acquired by our manufactured housing ~~installment loans.~~business. Provisions for loan losses in the first ~~six months~~quarter of 2017 and 2016 were ~~$78~~$38 million ~~in 2016~~ and ~~$77~~$37 million, ~~in 2015.~~respectively. Loan charge-offs, net of recoveries, in the first ~~six months~~quarter were ~~$78~~$43 million in ~~2016~~2017 and ~~$93~~$38 million in ~~2015.~~2016. At ~~June 30, 2016,~~March 31, 2017, 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 ~~June 30, 2016,~~March 31, 2017, approximately 98% of the loan balances were determined to be performing and approximately 95% of the loan balances were current as to payment status.

A summary of property, plant and equipment of our insurance and other businesses follows (in millions).

~~Property, plant and equipment at June 30, 2016 included approximately $3.2 billion related to PCC and Duracell.~~

A summary of property, plant and equipment of our railroad and our utilities and energy businesses follows (in millions).

The utility generation, transmission and distribution systems and interstate natural gas pipeline assets are owned by regulated public utility and natural gas pipeline subsidiaries.

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	June 30, 2016		December 31, 2015		Ranges of estimated useful life		March 31, 2017			December 31, 2016
Assets held for lease	5 – 35 years	$	11,769	$	11,317		5 – 35 years	$	11,993		$	11,902
Land	—		222		220		—		224			224
Buildings, machinery and other	3 – 50 years		1,267		1,207		3 – 50 years		1,335			1,302

			13,258		12,744				13,552			13,428
Accumulated depreciation			(3,596)		(3,397)				(3,829	)		(3,739	)

		$	9,662	$	9,347			$	9,723		$	9,689

A summary of depreciation expense for the first quarters of 2017 and 2016 follows (in millions).


	First Six Months				First Quarter
	2016		2015		2017		2016
Insurance and other	$	1,037	$	824	$	542	$	493
Railroad, utilities and energy		2,298		2,155		1,175		1,141
Finance and financial products		308		296		159		152

	$	3,643	$	3,275	$	1,876	$	1,786

A reconciliation of the change in the carrying value of goodwill is as follows (in millions).


	June 30, 2016		December 31, 2015		March 31, 2017			December 31, 2016
Balance at beginning of year	$	62,708	$	60,714	$	79,486		$	62,708
Acquisitions of businesses		16,772		2,563		540			17,650
Other, including foreign currency translation		(303)		(569)		(75	)		(872	)

Balance at end of period	$	79,177	$	62,708	$	79,951		$	79,486


	June 30, 2016						December 31, 2015						March 31, 2017				December 31, 2016
	Gross carrying amount			Accumulated amortization			Gross carrying amount			Accumulated amortization			Gross carrying amount		Accumulated amortization		Gross carrying amount		Accumulated amortization
Insurance and other		$	41,360		$	6,181		$	14,610		$	5,462		$40,334		$6,862		$39,976		$6,495
Railroad, utilities and energy			894			266			888			239		901		298		898		293

		$	42,254		$	6,447		$	15,498		$	5,701		$41,235		$7,160		$40,874		$6,788

Trademarks and trade names		$	6,034		$	801		$	3,041		$	765		$ 5,264		$ 634		$ 5,175		$ 616
Patents and technology			4,389			2,237			4,252			2,050		4,393		2,424		4,341		2,328
Customer relationships			28,727			2,511			5,474			2,131		28,449		3,099		28,243		2,879
Other			3,104			898			2,731			755		3,129		1,003		3,115		965

		$	42,254		$	6,447		$	15,498		$	5,701		$41,235		$7,160		$40,874		$6,788

Other intangible assets at June 30, 2016 included preliminary fair values of intangible assets of PCC and Duracell of approximately $26 billion, which included approximately $17.5 billion in customer relationships and trade names that were preliminarily determined to have indefinite lives. Amortization expense in the first ~~six months~~quarter was ~~$716~~$367 million in ~~2016~~2017 and ~~$537~~$339 million in ~~2015.~~2016. Intangible assets with indefinite lives ~~excluding business acquisitions completed in 2016,~~ were approximately $3$18.7 billion as of ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015.~~2016.

~~Derivative~~We are party to derivative contracts ~~have been entered into~~ primarily through our finance and financial products and our utilities and energy businesses. ~~Derivative~~Currently, the derivative contracts of our finance and financial products ~~businesses consist of~~include equity index put option contracts written between 2004 and ~~a credit default contract. A summary of the~~2008. The liabilities and related notional values of ~~these~~such contracts follows (in millions).

~~The~~We record derivative ~~contracts of our finance and financial products businesses are recorded~~contract liabilities at fair value and include 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 follows (in millions).


	Second Quarter				First Six Months						First Quarter
	2016		2015		2016			2015			2017		2016
Equity index put options	$	(83)	$	(138)	$	(879	)	$	1,173		$	460		$(796)
Credit default		103		(36)		89			(29	)
Other												—		(14)

	$	20	$	(174)	$	(790	)	$	1,144		$	460		$(810)

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

The aggregate intrinsic value (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 ~~$2.0 billion~~$700 million at ~~June 30, 2016~~March 31, 2017 and ~~$1.1~~$1.0 billion at December 31, ~~2015.~~2016. 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 ~~4.4~~3.7 years at ~~June 30, 2016.~~March 31, 2017.

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 ~~June 30, 2016,~~March 31, 2017, 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.

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 and were ~~$109~~$128 million as of ~~June 30, 2016~~March 31, 2017 and ~~$103~~$142 million as of December 31, ~~2015.~~2016. Derivative contract liabilities are included in accounts payable, accruals and other liabilities and were ~~$199~~$156 million as of ~~June 30, 2016~~March 31, 2017 and ~~$237~~$145 million as of December 31, ~~2015.~~2016. Net derivative contract assets or liabilities of our regulated utilities that are probable of recovery through rates, ~~of our regulated utilities~~ are offset by regulatory liabilities or 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.

A summary of supplemental cash flow information is presented in the following table (in millions).


	First Six Months			First Quarter
	2016		2015	2017		2016
Cash paid during the period for:
Income taxes	$	1,055	$ 1,128		$ 26		$ 231
Interest:
Insurance and other businesses		253	185		306		181
Railroad, utilities and energy businesses		1,406	1,319		737		731
Finance and financial products businesses		184	215		78		63
Non-cash investing and financing activities:
Liabilities assumed in connection with business acquisitions		16,997	2,478		142		16,842
Equity securities exchanged in connection with business acquisition		4,239	—		—		4,239

The liabilities for unpaid losses and loss adjustment expenses (also referred to as “claim liabilities”) under our short duration property and casualty insurance and reinsurance contracts are based upon estimates of the ultimate claim costs associated with claim occurrences as of the balance sheet date and include estimates for incurred-but-not-reported (“IBNR”) claims. Reconciliations of the changes in claim liabilities for the three months ending March 31, 2017 and 2016 follows (in millions).

Incurred losses and loss adjustment expenses in the preceding table reflect the losses and loss adjustment expenses recorded in earnings in each period related to insured events occurring in the current year and in prior years. We present incurred and paid losses under retroactive reinsurance contracts and discount accretion separately. Such amounts relate to prior years’ underlying loss events.

Incurred losses and loss adjustment expenses in the first quarter of 2017 reflected increases of $118 million for prior accident years’ events compared to decreases of $372 million in the first quarter of 2016. In 2017, incurred losses for prior years’ events included increases related to our reinsurance businesses, partly offset by reductions attributable to our primary insurance operations. Incurred losses for prior years’ events in 2017 of our reinsurance operations included increases in the estimated liabilities for certain personal injury claims in the United Kingdom due to a regulatory decision that increases calculated lump sum settlement amounts. In addition, we increased liability estimates for claims under certain reinsurance contracts due to reported hurricane and earthquake losses from events in 2016, as well as for estimates of IBNR losses. Incurred losses and loss adjustment expenses in 2016 for prior accident years’ events derived primarily from our direct insurance businesses, and to a lesser extent, from our reinsurance businesses.

In January 2017, Berkshire’s subsidiary, National Indemnity Company (“NICO”), entered into a retroactive reinsurance agreement with various subsidiaries of American International Group, Inc. (collectively, “AIG”). Under the agreement, NICO agreed to indemnify AIG for 80% of up to $25 billion, excess of $25 billion retained by AIG, of losses and allocated loss adjustment expenses with respect to certain commercial insurance loss events occurring in years prior to 2016, for cash consideration of $10.2 billion. The transaction became effective on February 2, 2017. Berkshire agreed to guarantee the timely payment of all amounts due to AIG under the agreement.

We account for the AIG agreement as retroactive reinsurance of short-duration insurance contracts. As of the effective date, we recorded premiums earned and losses and loss adjustment expenses incurred of $10.2 billion from this contract. We also recorded unpaid losses and loss adjustment expenses of $16.4 billion, representing the estimated ultimate liabilities assumed and a deferred charge reinsurance assumed asset of $6.2 billion, representing the excess of those liabilities over the premiums earned. The deferred charge asset will be amortized over the estimated claims settlement period using the interest method based on the estimated timing and amount of future loss payments. Amortization charges are included in losses and loss adjustment expenses in the Consolidated Statements of Earnings.

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 ~~June 30, 2016.~~March 31, 2017.


							Weighted Average Interest Rate	March 31, 2017		December 31, 2016
	Weighted Average Interest Rate		June 30, 2016		December 31, 2015		Weighted Average Interest Rate	March 31, 2017		December 31, 2016
Insurance and other:
Berkshire Hathaway Inc. (“Berkshire”) due 2016-2047		2.3%	$	18,035	$	9,799
Issued by Berkshire due 2017-2047							2.1%		$17,845		$17,703
Short-term subsidiary borrowings		2.1%		2,172		1,989	2.7%		2,135		2,094
Other subsidiary borrowings due 2016-2044		3.9%		7,360		2,811
Other subsidiary borrowings due 2017-2045							4.0%		7,436		7,378

			$	27,567	$	14,599			$27,416		$27,175

OnIn January 8, 2016, Berkshire entered into a $10 billion 364-day revolving credit agreement. Borrowings under the credit agreement were unsecured and there were no materially restrictive covenants. In connection with the PCC acquisition, Berkshire borrowed $10 billion under the credit agreement. In March 2016,2017, Berkshire issued ~~€2.75~~€1.1 billion in senior unsecured notes. The notes ~~consisting~~consisted of ~~€1.0 billion of 0.50% notes due in 2020, €1.0 billion of 1.30% notes due in 2024 and €750~~€550 million of ~~2.15% notes due in 2028. In March 2016, Berkshire also issued $5.5 billion in senior unsecured notes consisting of $1.0 billion of 2.20%~~0.25% notes due in 2021 ~~$2.0 billion~~and €550 million of ~~2.75%~~0.625% notes due in ~~2023 and $2.5~~2023. In January 2017, senior notes of $1.1 billion of 3.125% notes due in 2026. The proceeds from these debt issues were used in the repayment of all outstanding borrowings under the aforementioned credit agreement. In June 2016, the revolving credit agreement was terminated. Other subsidiary borrowings at June 30, 2016 included $4.6 billion attributable to PCC.matured.

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 debt. These borrowing arrangements generally contain various covenants including, but not limited to, leverage ratios, interest coverage ratios and debt service coverage ratios. During the first three months of 2017, BHE subsidiaries issued approximately $850 million of debt with maturity dates ranging from 2027 to 2047 and a weighted average interest rate of 3.6%.

BNSF’s borrowings are primarily senior unsecured debentures. In ~~May 2016,~~March 2017, BNSF issued $1.25 billion of senior unsecured debentures consisting of $500 million of 3.25% debentures due in 2027 and $750 million of ~~3.9%~~4.125% debentures due in ~~2046.~~2047. As of ~~June 30, 2016,~~March 31, 2017, 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.

In ~~March 2016,~~January 2017, BHFC issued ~~$3.5~~$1.3 billion of senior notes consisting of ~~$750~~$950 million of ~~1.45% notes due in 2018, $1.0 billion~~ floating rate ~~notes that mature in 2018, $1.25 billion of 1.70%~~ notes due in 2019 and ~~$500~~$350 million of floating rate notes ~~that mature~~due in ~~2019.~~2020. In January 2017, senior notes of $1.05 billion matured. The borrowings of BHFC, a wholly owned finance subsidiary of Berkshire, are fully and unconditionally guaranteed by Berkshire.

As of ~~June 30, 2016,~~March 31, 2017, our subsidiaries ~~also~~ had unused lines of credit and commercial paper capacity aggregating approximately ~~$8.5~~$7.4 billion to support short-term borrowing programs and provide additional liquidity. Such unused lines of credit included about ~~$4.4~~$3.9 billion related to BHE and its subsidiaries. In addition to BHFC’s borrowings, at March 31, 2017, Berkshire ~~guarantees certain other subsidiary borrowings, which aggregated~~guaranteed approximately $3.3 billion ~~at June 30, 2016.~~of other subsidiary borrowings. 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.

Our financial assets and liabilities are summarized below as of ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 with fair values shown according to the fair value hierarchy (in millions). The carrying values of cash and cash equivalents, ~~receivables~~U.S. Treasury Bills, receivable 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)
June 30, 2016
March 31, 2017
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies	$ 3,536	$ 3,536	$ 2,407	$ 1,129	$ —		$ 4,641		$ 4,641		$ 3,187		$ 1,454		$ —
States, municipalities and political subdivisions	1,331	1,331	—	1,331	—		1,105		1,105		—		1,105		—
Foreign governments	9,922	9,922	7,656	2,266	—		8,669		8,669		6,835		1,834		—
Corporate bonds	7,694	7,694	—	7,589	105		7,467		7,467		—		7,405		62
Mortgage-backed securities	1,297	1,297	—	1,297	—		1,051		1,051		—		1,051		—
Investments in equity securities	104,234	104,234	104,198	35	1		135,020		135,020		135,012		8		—
Investment in Kraft Heinz common stock	15,752	28,795	28,795	—	—		15,431		29,553		29,553		—		—
Other investments	20,826	20,826	351	—	20,475		18,412		18,412		—		—		18,412
Loans and finance receivables	13,088	13,450	—	14	13,436		13,365		13,639		—		14		13,625
Derivative contract assets⁽¹⁾	109	109	2	12	95		128		128		1		20		107
Derivative contract liabilities:
Railroad, utilities and energy⁽¹⁾	199	199	5��	157	37		156		156		3		127		26
Finance and financial products:
Equity index put options	4,431	4,431	—	—	4,431		2,430		2,430		—		—		2,430
Credit default	195	195	—	195	—
Notes payable and other borrowings:
Insurance and other	27,567	28,982	—	28,982	—		27,416		28,022		—		28,022		—
Railroad, utilities and energy	58,595	68,757	—	68,757	—		60,925		67,655		—		67,655		—
Finance and financial products	15,251	16,068	—	15,656	412		15,615		16,064		—		15,725		339
December 31, 2015

December 31, 2016
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies	$ 3,427	$ 3,427	$ 2,485	$ 942	$ —		$ 4,527		$ 4,527		$ 3,099		$1,428		$ —
States, municipalities and political subdivisions	1,764	1,764	—	1,764	—		1,216		1,216		—		1,216		—
Foreign governments	11,468	11,468	9,188	2,280	—		9,001		9,001		7,237		1,764		—
Corporate bonds	7,926	7,926	—	7,826	100		7,604		7,604		—		7,540		64
Mortgage-backed securities	1,442	1,442	—	1,442	—		1,117		1,117		—		1,117		—
Investments in equity securities	111,822	111,822	111,786	35	1		122,032		122,032		122,031		—		1
Investment in Kraft Heinz common stock	15,714	23,679	23,679	—	—		15,345		28,418		28,418		—		—
Investment in Kraft Heinz Preferred Stock	7,710	8,363	—	—	8,363
Other investments	21,717	21,717	315	—	21,402		17,256		17,256		—		—		17,256
Loans and finance receivables	12,772	13,112	—	16	13,096		13,300		13,717		—		13		13,704
Derivative contract assets⁽¹⁾	103	103	—	5	98		142		142		5		43		94
Derivative contract liabilities:
Railroad, utilities and energy⁽¹⁾	237	237	13	177	47		145		145		3		114		28
Finance and financial products:
Equity index put options	3,552	3,552	—	—	3,552		2,890		2,890		—		—		2,890
Credit default	284	284	—	—	284
Notes payable and other borrowings:
Insurance and other	14,599	14,773	—	14,773	—		27,175		27,712		—		27,712		—
Railroad, utilities and energy	57,739	62,471	—	62,471	—		59,085		65,774		—		65,774		—
Finance and financial products	11,951	12,363	—	11,887	476		15,384		15,825		—		15,469		356

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 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 ~~six~~three months ending ~~June 30,~~March 31, 2017 and 2016 ~~and 2015~~ follow (in millions).


	Investments in fixed maturity securities				Investments in equity securities and other investments				Net derivative contract liabilities				Investments in fixed maturity securities				Investments in equity securities and other investments			Net derivative contract liabilities
Six months ending June 30, 2016
Three months ending March 31, 2017
Balance at December 31, 2016														$	64		$	17,257		$	(2,824	)
Gains (losses) included in:
Earnings															—			—			499
Other comprehensive income															1			1,156			(2	)
Regulatory assets and liabilities															—			—			1
Acquisitions, dispositions and settlements															(3	)		—			(23	)
Transfers into/out of Level 3															—			(1	)		—

Balance at March 31, 2017														$	62		$	18,412		$	(2,349	)

Three months ending March 31, 2016
Balance at December 31, 2015		$	100			$	21,403			$	(3,785	)		$	100		$	21,403		$	(3,785	)
Gains (losses) included in:
Earnings			—				—				(737	)			—			—			(766	)
Other comprehensive income			1				(927	)			—				2			(1,920	)		(6	)
Regulatory assets and liabilities			—				—				(11	)			—			—			(6	)
Acquisitions, dispositions and settlements			5				—				(35	)			4			—			(14	)
Transfers into/out of Level 3			(1	)			—				195				(1	)		—			—

Balance at June 30, 2016		$	105			$	20,476			$	(4,373	)
Balance at March 31, 2016														$	105		$	19,483		$	(4,577	)

Six months ending June 30, 2015
Balance at December 31, 2014		$	8			$	21,996			$	(4,759	)
Gains (losses) included in:
Earnings			—				—				1,200
Other comprehensive income			—				(329	)			(3	)
Regulatory assets and liabilities			—				—				(17	)
Dispositions and settlements			(1	)			—				(51	)
Transfers into/out of Level 3			—				—				3

Balance at June 30, 2015		$	7			$	21,667			$	(3,627	)

Gains and losses included in earnings are included as components of investment gains/losses, derivative gains/losses and other revenues, as appropriate and are primarily related to changes in the ~~fair~~ values of derivative contracts and settlement transactions. Gains and losses included in other comprehensive income are primarily ~~represent~~ the net change in unrealized appreciation of ~~investments.~~investments and the reclassification of investment appreciation in net earnings, as appropriate in our Consolidated Statements of Comprehensive Income.

Quantitative information as of ~~June 30, 2016,~~March 31, 2017, 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

$16,093

Discounted cash flow

Expected duration

5 years

$ 7,730

Discounted cash flow

Expected duration

7 years

Discount for transferability restrictions and subordination

134 basis points

Discount for transferability restrictions and subordination

145 basis points

Common stock warrants

4,382

Warrant pricing model

Discount for transferability and hedging restrictions

10,682

Warrant pricing model

Discount for transferability and hedging restrictions

Net derivative liabilities:

Equity index put options

4,431

Option pricing model

Volatility

21%

2,430

Option pricing model

Volatility

19%

~~Other~~Our other investments ~~consist of perpetual~~currently include 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.~~redemption rights. 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 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~~certain of the contracts have relatively long durations. For these and other reasons, we classified these contracts as Level 3. The methods we use to value these contracts are those that we believe 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 index price, contract duration and dividend and interest rate inputs (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.~~dates. Increases or decreases in the volatility inputs will produce increases or decreases in the fair values of the liabilities.

Changes in Berkshire’s issued, treasury and outstanding common stock during the first ~~six months~~quarter of ~~2016~~2017 are shown in the table below.

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 ~~1,643,813~~1,644,559 shares outstanding as of ~~June 30, 2016~~March 31, 2017 and ~~1,643,393~~1,644,321 shares outstanding as of December 31, ~~2015.~~2016. In addition to our common stock, 1,000,000 shares of preferred stock are authorized, but none are issued.

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 ~~six~~three months ending ~~June 30,~~March 31, 2017 and 2016 ~~and 2015~~ follows (in millions).


	Unrealized appreciation of investments				Foreign currency translation				Prior service and actuarial gains/losses of defined benefit pension plans				Other				Accumulated other comprehensive income				Unrealized appreciation of investments, net			Foreign currency translation			Prior service and actuarial gains/losses of defined benefit pension plans			Other			Accumulated other comprehensive income
Six months ending June 30, 2016
Balance at December 31, 2015		$	38,598			$	(3,856	)		$	(762	)		$	2			$	33,982
Three months ending March 31, 2017
Balance at December 31, 2016																						$43,176			$(5,268	)		$ (593	)		$(17	)		$37,298
Other comprehensive income, net before reclassifications			(1,971	)			(78	)			(5	)			(22	)			(2,076	)		5,497			475			(22	)		(6	)		5,944
Reclassifications from accumulated other comprehensive income			(1,180	)			—				35				16				(1,129	)		(198	)		—			18			8			(172	)

Balance at June 30, 2016		$	35,447			$	(3,934	)		$	(732	)		$	(4	)		$	30,777
Balance at March 31, 2017																						$48,475			$(4,793	)		$ (597	)		$(15	)		$43,070

Reclassifications from other comprehensive income into net earnings:
Investment gains/losses		$	(1,816	)		$	—			$	—			$	—			$	(1,816	)		$ (305	)		$ —			$ —			$—			$ (305	)
Other			—				—				51				35				86			—			—			24			14			38

Reclassifications before income taxes			(1,816	)			—				51				35				(1,730	)		(305	)		—			24			14			(267	)
Applicable income taxes			(636	)			—				16				19				(601	)		(107	)		—			6			6			(95	)

		$	(1,180	)		$	—			$	35			$	16			$	(1,129	)		$ (198	)		$ —			$ 18			$ 8			$ (172	)

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 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.

In the third quarter of 2016, NICO 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 December 31, 2016 were approximately $5.5 billion and $2.1 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 expected to be completed in late 2017.

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~~paper, which is limited to $1.5 billion. Berkadia’s commercial paper outstanding is supported by a surety policy issued by a Berkshire insurance subsidiary. Leucadia has agreed to indemnify us for one-half of any losses ~~incurred~~we incur under the policy. Berkadia’s maximum outstanding balance of commercial paper borrowings is currently limited to $1.5 billion. On June 30, 2016, the aggregate amount of Berkadia commercial paper outstanding was $1.47 billion.

Our operating businesses include a large and diverse group of insurance, finance, manufacturing, service and retailing businesses. Our ~~manufacturing~~reportable business segments are organized in a manner that reflects how management views those business activities. Certain businesses ~~include PCC~~have been grouped together for segment reporting based upon similar products or product lines, marketing, selling and ~~Duracell, which were acquired in~~distribution characteristics, even though those business units are operated under separate local management. Revenues by segment for the first quarter of ~~2016. Revenues by segment~~2017 and 2016 were as follows (in millions).


	Second Quarter				First Six Months				First Quarter
	2016		2015		2016		2015		2017		2016
Operating Businesses:
Insurance group:
Insurance:
Underwriting:
GEICO	$	6,247	$	5,619	$	12,297	$	11,004	$	6,845	$	6,050
General Re		1,389		1,494		2,779		2,992		1,391		1,390
Berkshire Hathaway Reinsurance Group		1,652		1,978		3,895		3,425
Berkshire Hathaway Primary Group		1,511		1,309		2,952		2,519
BHRG										11,841		2,243
BH Primary										1,676		1,441
Investment income		1,236		1,338		2,385		2,428		1,132		1,149

Total insurance group		12,035		11,738		24,308		22,368
Total insurance										22,885		12,273
BNSF		4,585		5,369		9,352		10,971		5,185		4,767
Berkshire Hathaway Energy		4,299		4,543		8,417		8,874		4,257		4,118
Manufacturing		12,201		9,524		22,755		18,387		12,097		10,554
McLane Company		12,049		12,293		23,850		23,936		12,101		11,801
Service and retailing		6,385		6,294		12,276		10,815		6,093		5,891
Finance and financial products		1,989		1,799		3,715		3,353		1,865		1,726

		53,543		51,560		104,673		98,704		64,483		51,130
Reconciliation of segments to consolidated amount:
Investment and derivative gains/losses		663		188		1,703		1,603		775		1,040
Income from Kraft Heinz		386		—		626		231
Eliminations and other		(132)		(380)		(139)		(526)
Corporate, eliminations and other										(71)		(7)

	$	54,460	$	51,368	$	106,863	$	100,012	$	65,187	$	52,163

Earnings before income taxes by segment for the first quarter of 2017 and 2016 were as follows (in millions).


	Second Quarter				First Six Months				First Quarter
	2016		2015		2016		2015		2017		2016
Operating Businesses:
Insurance group:
Insurance:
Underwriting:
GEICO	$	150	$	53	$	414	$	213	$	175	$	264
General Re		2		107		44		60		(143)		42
Berkshire Hathaway Reinsurance Group		184		(411)		105		48
Berkshire Hathaway Primary Group		174		203		295		378
BHRG										(600)		(79)
BH Primary										189		121
Investment income		1,235		1,334		2,377		2,421		1,129		1,142

Total insurance group		1,745		1,286		3,235		3,120
Total insurance										750		1,490
BNSF		1,238		1,536		2,496		3,208		1,345		1,258
Berkshire Hathaway Energy		666		649		1,235		1,245		615		569
Manufacturing		1,687		1,393		3,169		2,598		1,487		1,482
McLane Company		129		147		265		278		88		136
Service and retailing		457		498		781		882		393		324
Finance and financial products		583		550		1,061		994		466		478

		6,505		6,059		12,242		12,325		5,144		5,737
Reconciliation of segments to consolidated amount:
Investment and derivative gains/losses		663		188		1,703		1,603		775		1,040
Income from Kraft Heinz		386		—		626		231
Interest expense, not allocated to segments		31		(189)		(317)		(308)		(211)		(348)
Eliminations and other		(213)		(212)		(426)		(358)
Investments in Kraft Heinz										239		240
Corporate, eliminations and other										(259)		(213)

	$	7,372	$	5,846	$	13,828	$	13,493	$	5,688	$	6,456

Item 2. Management’s Discussion and Analysis of Financial Condition and 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.~~interests (in millions).


	Second Quarter					First Six Months				First Quarter
	2016		2015			2016		2015		2017			2016
Insurance – underwriting	$	337	$	(38	)	$	550	$	442	$	(267	)	$	213
Insurance – investment income		978		977			1,897		1,852		908			919
Railroad		772		963			1,556		2,008		838			784
Utilities and energy		482		502			923		923		501			441
Manufacturing, service and retailing		1,493		1,309			2,759		2,432		1,317			1,266
Finance and financial products		396		370			707		659		303			311
Investment and derivative gains/losses		394		123			2,246		1,043		504			1,852
Other		149		(193	)		(48)		(182)		(44	)		(197	)

Net earnings attributable to Berkshire Hathaway shareholders	$	5,001	$	4,013		$	10,590	$	9,177	$	4,060		$	5,589

Through our subsidiaries, we engage in a number of diverse business activities. ~~Our~~We manage 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 the operating businesses. 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 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 2122 to the accompanying Consolidated Financial Statements) should be read in conjunction with this discussion.

Our insurance ~~underwriting operations~~businesses generated ~~increased net earnings~~an after-tax loss from underwriting in the ~~second~~first quarter of 2017 due primarily to increased loss estimates for prior years’ loss events, higher losses from current year catastrophe events and ~~first six months of 2016 compared to 2015. The increases reflected variations in the foreign currency exchange gains/losses~~increased deferred charge amortization related to ~~claim liabilities denominated in foreign currencies under certain Berkshire Hathaway Reinsurance Group retroactive~~our property and casualty reinsurance ~~and periodic payment annuity contracts, as well as increased underwriting gains from GEICO, offset by lower gains from General Re and Berkshire Hathaway Primary Group operations.~~businesses. Our railroad business generated ~~significantly lower net~~increased earnings in the ~~second~~first quarter ~~and first six months~~ of ~~2016~~2017 compared to ~~2015, primarily due to a 7.5% year-to-date decline~~2016, reflecting an increase in unit ~~volume. Net earnings of our utilities~~volume, partly offset by increased fuel and other costs. Our utility and energy ~~businesses were relatively unchanged~~business produced higher earnings in the ~~second~~first quarter ~~and first six months~~ of ~~2016~~2017 compared to ~~2015. Net~~2016, reflecting a lower effective income tax rate and an overall increase in pre-tax earnings from the various operating businesses within this group. Earnings from our manufacturing, service and retailing businesses in 2017 increased 4.0% over the first quarter of 2016, ~~increased 14.1% in the second quarter and 13.4%~~reflecting increases from businesses acquired in the first ~~six months as compared to 2015, reflecting the impact~~quarter of ~~the PCC~~2016 (PCC and ~~Duracell acquisitions,~~Duracell), partly offset by ~~lower aggregate earnings~~losses and impairment charges related to the disposition of a prior bolt-on acquisition by one of our manufacturing businesses.

Investment and derivative gains/losses in the first quarter of 2017 included after-tax gains of approximately $300 million from changes in the ~~other businesses within this group.~~

fair values of derivative contracts. In the first quarter of 2016, changes in derivative contract liabilities produced after-tax losses of approximately $525 million. After-tax gains from investments were approximately $200 million in 2017 and of $2.4 billion in 2016. After-tax investment ~~and derivative~~ gains in the ~~second~~first quarter ~~and first six months were $394 million and $2.25 billion, respectively, in 2016 compared to $123 million and $1.04 billion, respectively, in 2015. Gains in the first six months~~ of 2016 included a non-cash ~~after-tax~~ gain of approximately $1.9 billion related to the exchange of P&G common stock for 100% of the common stock of Duracell. We believe that investment and derivative gains/losses are often meaningless in terms of understanding our reported results or evaluating our economic performance. ~~Investment and derivative~~These gains and losses have caused and will likely continue to cause significant volatility in our periodic earnings.

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 subjected themselves to in their own insuring activities. Our insurance and reinsurance businesses ~~are: (1)~~are disaggregated as follows: 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)~~

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.~~gains/losses.

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

The timing and amount of ~~large property~~ catastrophe losses can produce significant volatility in our periodic underwriting results, particularly with respect to our reinsurance businesses. 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~~time and the 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 earnings. ~~Variations~~Our periodic underwriting results may also include significant gains and losses arising from the changes in the valuation of non-U.S. Dollar denominated reinsurance liabilities of our U.S. based insurance subsidiaries as a result of foreign currency exchange rate fluctuations. Foreign currency exchange rates can ~~produce~~be volatile and the resulting impact on our underwriting earnings can be relatively ~~significant foreign currency exchange gains and losses in our periodic earnings with respect to non-U.S. dollar liabilities of our U.S.-based insurance 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 statutory accounting rules (“Statutory Surplus”). Statutory Surplus of our insurance businesses was approximately $124 billion at December 31, 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.significant. Underwriting results of our insurance businesses are summarized below. Amounts are in millions.


	Second Quarter				First Six Months				First Quarter
	2016		2015		2016		2015		2017			2016
Underwriting gain (loss) attributable to:
GEICO	$	150	$	53	$	414	$	213	$	175		$	264
General Re		2		107		44		60		(143	)		42
Berkshire Hathaway Reinsurance Group		184		(411)		105		48		(600	)		(79	)
Berkshire Hathaway Primary Group		174		203		295		378		189			121

Pre-tax underwriting gain (loss)		510		(48)		858		699		(379	)		348
Income taxes and noncontrolling interests		173		(10)		308		257		(112	)		135

Net underwriting gain (loss)	$	337	$	(38)	$	550	$	442	$	(267	)	$	213

GEICO 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 most 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 service to customers, with the goal of establishing long-term customer relationships. GEICO’s underwriting results are summarized ~~below. Dollars are~~below (dollars in ~~millions.~~millions).


	Second Quarter								First Six Months								First Quarter
	2016				2015				2016				2015				2017				2016
	Amount		%		Amount		%		Amount		%		Amount		%		Amount		%		Amount		%
Premiums written	$	6,229			$	5,591			$	12,794			$	11,477			$	7,587			$	6,565

Premiums earned	$	6,247		100.0	$	5,619		100.0	$	12,297		100.0	$	11,004		100.0	$	6,845		100.0	$	6,050		100.0

Losses and loss adjustment expenses		5,173		82.8		4,699		83.6		9,996		81.3		9,015		81.9		5,590		81.7		4,823		79.7
Underwriting expenses		924		14.8		867		15.4		1,887		15.3		1,776		16.1		1,080		15.7		963		15.9

Total losses and expenses		6,097		97.6		5,566		99.0		11,883		96.6		10,791		98.0		6,670		97.4		5,786		95.6

Pre-tax underwriting gain	$	150			$	53			$	414			$	213			$	175			$	264

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

Premiums written and earned in the ~~second~~first quarter of 2017 were $7,587 million and ~~first six months of 2016 were $6.2 billion~~$6,845 million, respectively, and ~~$12.8 billion, respectively,~~represented increases of ~~11.4%~~15.6% and ~~11.5%~~13.1%, respectively, compared to the second quarter and first six months of 2015. Premiums earned in 2016 increased $628 million (11.2%) in the second quarter and $1.3 billion (11.8%) in the first six months, as compared to the same periods in 2015.2016. These increases reflected voluntary auto policy-in-force growth of ~~4.2%~~9.2% and increased ~~average~~ premiums per auto policy of approximately ~~7.1%~~4.7% over the past twelve months, ~~due~~which was attributable to rate increases, coverage changes and changes in state and risk mix. Throughout 2015, we experienced increases in claims frequencies and severities across all of our major coverages, which resulted in relatively significant increases in our loss ratios. As a result, we implemented premium rate increases where necessary. Voluntary auto new business sales in ~~2016 increased 4.2% in the second quarter and 1.9% in~~ the first ~~six months~~quarter of 2017 increased 30.2% compared to ~~2015. The growth in voluntary auto new business sales accelerated in June and has continued in July. During~~ the first ~~six months~~quarter of ~~2016, voluntary~~2016. Voluntary auto policies-in-force increased by approximately ~~394,000.~~568,000 during the first quarter of 2017.

In the second quarter and first six months of 2016, our pre-tax underwriting gains were $150 million and $414 million, respectively, increases of $97 million and $201 million, respectively, compared to the same periods in 2015. Losses and loss adjustment expenses ~~incurred in 2016 increased $474 million (10.1%) in the second quarter and $981 million (10.9%)~~ in the first ~~six months, as compared to 2015. In 2016, our loss ratio (the ratio~~quarter of 2017 increased $767 million (15.9%) over 2016. Incurred losses and loss adjustment expenses ~~to earned premiums) declined 0.8 percentage points~~were reduced $93 million in 2017 and $143 million in 2016 from the ~~second quarter and 0.6 percentage points~~re-estimation of unpaid liabilities for prior years’ claims. Claims frequencies in the first ~~six months as compared to 2015, reflecting the impact~~quarter of ~~the aforementioned premium rate increases, partly offset by increased storm losses. Claims frequencies (claim counts per exposure unit) in the first six months of 2016~~2017 for property damage and collision coverages were relatively unchanged compared to 2016, and increased two to three percent for bodily injury coverage. Claim frequencies for personal injury protection coverage decreased ~~in the~~approximately one ~~to two~~ percent ~~range, which was primarily attributable to mild weather~~ in the first ~~quarter. Claim frequencies for bodily injury coverage for the first six months~~quarter of ~~2016 were relatively unchanged from 2015.~~2017. Average claims severities were higher in the first ~~six months~~quarter of ~~2016~~2017 for ~~physical~~property damage, collision and ~~collision~~bodily injury coverages (four to six percent range) ~~and bodily injury coverage (five to seven percent range)~~. In addition, in each period, we experienced storm losses of approximately ~~$290~~$100 million ~~in the first six months~~representing approximately 1.5% and 1.7%, respectively, of ~~2016, compared to $124 million in the first six months of 2015.~~premiums earned.

Underwriting expenses in the ~~second~~first quarter ~~and first six months~~ of ~~2016~~2017 were ~~$924~~$1,080 million, ~~and $1.9 billion, respectively, increases~~an increase of ~~$57~~$117 million ~~(6.6%~~(12.1%) ~~and $111 million (6.3%), respectively,~~ over ~~2015.~~2016. Our expense ratio (underwriting expenses to premiums earned) in the ~~second~~first quarter ~~and first six months~~ of ~~2016 declined 0.6 and 0.8~~2017 decreased 0.2 percentage points ~~respectively,~~ compared to ~~2015.~~2016. The largest components of underwriting expenses are employee-related expenses (salaries and benefits) and advertising costs. The ~~increases~~increase in underwriting expenses ~~reflect~~reflects the increase in policies-in-force.

General Re conducts a reinsurance business offering property and casualty coverages to clients worldwide through General Reinsurance Corporation, Germany-based General Reinsurance AG, Faraday Holdings in London and other wholly-owned affiliates. We write life and health ~~coverages to clients worldwide. We write property and casualty~~ reinsurance ~~in North America~~primarily on a direct basis through General Reinsurance Corporation and internationally through Germany-based General Reinsurance AG and other wholly-owned affiliates. Property and casualty reinsurance is also written in broker markets through Faraday in London. Life and health reinsurance is written in North America through General Re Life Corporation and ~~internationally through~~ General Reinsurance AG. ~~General Re strives~~We strive to generate underwriting profits in essentially all of ~~its~~our 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.~~table (in millions).


	Premiums earned								Pre-tax underwriting gain (loss)										First Quarter
	Second Quarter				First Six Months				Second Quarter				First Six Months						Premiums written				Premiums earned				Pre-tax underwriting gain (loss)
	2016		2015		2016		2015		2016		2015		2016			2015			2017		2016		2017		2016		2017		2016
Property/casualty	$	624	$	706	$	1,276		$1,436	$	23	$	88	$	53		$	74		$	1,130	$	992	$	654	$	652	$	(143)	$	30
Life/health		765		788		1,503		1,556		(21)		19		(9	)		(14	)		742		740		737		738		—		12

	$	1,389	$	1,494	$	2,779		$2,992	$	2	$	107	$	44		$	60		$	1,872	$	1,732	$	1,391	$	1,390	$	(143)	$	42

~~In the second quarter and first six months of 2016, property/~~Property/casualty premiums written ~~declined $23~~in the first quarter of 2017 increased $138 million ~~(5%~~(14%) ~~and $214 million (13%), respectively, while premiums earned decreased $82 million (12%) and $160 million (11%), respectively, as~~ compared to ~~2015.~~2016. Adjusting for changes in foreign currency exchange rates, premiums written in ~~the second quarter and first six months of 2016 declined 4% and 11%, respectively, while premiums earned in the second quarter and first six months of 2016 declined 11% and 10%, respectively,~~2017 increased 16% compared to ~~2015. Our premium~~2016, reflecting higher volume ~~declined~~ in both ~~the~~ direct and broker markets. ~~Insurance industry~~Premiums earned in the first quarter of 2017 were essentially unchanged from 2016 and increased 2% before the effects of foreign currency exchange rate changes. Industry capacity dedicated to property and casualty markets remains high and price competition in most ~~property/casualty~~ reinsurance markets persists. WeWhile we continue to decline business when we believe prices are ~~inadequate. However,~~inadequate, we remain prepared to write substantially more business, when ~~more~~ appropriate prices ~~can be attained relative to the risks assumed.~~are attainable.

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

In the second quarter and first six months of 2016, our property business generated pre-tax underwriting gains of $23 million and $78 million, respectively, compared to gains of $104 million and $99 million, respectively, in 2015. The comparative decrease in second quarter underwriting gains was driven by a comparative increase in the current accident year loss ratio and lower gains from prior years’ business. Gains from reductions of estimated losses on prior years’ business were relatively unchanged in the first six months of 2016 as compared to 2015. While there were no significant losses from catastrophe events in the first six months of 2016 and 2015, the timing and magnitude of such losses can produce significant volatility in our periodic underwriting results.

Our ~~casualty/workers’ compensation business produced a breakeven result in the second quarter and~~property/casualty operations generated a pre-tax underwriting loss of ~~$25~~$143 million in the first ~~six months~~quarter of 2017 compared to a pre-tax underwriting gain of $30 million in 2016. In ~~2015, this~~the first quarter of 2017, we increased our estimates for unpaid losses by $142 million with respect to certain United Kingdom (“U.K.”) liability business ~~produced pre-tax underwriting~~written in prior years. The increase was the result of the U.K. Ministry of Justice’s decision to reduce the fixed discount rate required in lump sum settlement calculations of U.K. personal injury claims, referred to as the Ogden rate, from 2.5% to negative 0.75%. We expect the Ogden rate decrease will significantly increase claim costs associated with currently unsettled cases, as well as for future cases. Underwriting results for the first quarter of 2017 also included $50 million of estimated losses ~~of $16 million~~from a cyclone in ~~the second quarter and $25 million~~Australia in March 2017. There were no significant catastrophe loss events in the first ~~six months. Underwriting~~quarter of 2016.

Life/health premiums written and earned in the first quarter of 2017 were relatively unchanged from 2016. The life/health operations produced pre-tax break-even results in the first ~~six months~~quarter of ~~2016 and 2015 included net losses on current year business, partially offset by~~2017, compared to pre-tax underwriting gains ~~from reductions~~ of ~~estimated losses on prior years’ business of $110~~$12 million in 2016 and $106 million in 2015. The gains from prior years’ business were net of recurring charges for discount accretion on workers’ compensation liabilities and deferred charge amortization on retroactive reinsurance contracts. Casualty losses tend to be 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.

~~In the second~~2016. First quarter and first six months of 2016, life/health premiums earned decreased $23 million (3%) and $53 million (3%), respectively, compared to 2015. Adjusting for changes in foreign currency exchange rates, premium volume in the first six months of 2016 was relatively unchanged from 2015. The life/health business produced pre-tax underwriting losses of $9 million in the first six months of 2016 compared to losses of $14 million in the first six months of 2015. Underwriting results in ~~the first six months of 2016 and 2015~~2017 reflected ~~underwriting~~a comparative decline in pre-tax gains from ~~our~~ international life business ~~offset by~~of $3 million and a comparative increase in pre-tax losses from business in North America of $9 million. The increase in pre-tax losses in North America was primarily attributable to an increase in large individual and group life claims. Underwriting results also include pre-tax losses from the ~~periodic~~recurring discount accretion on long-term care liabilities and higher than expected individual life claim frequency in North America. Additionally, our international underwriting results were adversely affected by increased liabilities for estimated premium deficiencies on certain disability business in the second quarter of 2016 and foreign currency exchange losses in 2015.liabilities.

BHRG 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 on property/casualty exposures as well as life reinsurance and periodic payment annuity business. A summary of BHRG’s underwriting results ~~are summarized in the table below. Amounts are in millions.~~follows (in millions).


	Premiums earned								Pre-tax underwriting gain (loss)										First Quarter
	Second Quarter				First Six Months				Second Quarter				First Six Months						Premiums written				Premiums earned				Pre-tax underwriting gain (loss)
	2016		2015		2016		2015		2016		2015		2016			2015			2017		2016		2017		2016		2017			2016
Property/casualty	$	1,067	$	911	$	2,194	$	1,827	$	249	$	15	$	375		$	422		$	1,461	$	1,612	$	1,088	$	1,127	$	(269	)	$	126
Retroactive reinsurance		2		3		582		3		9		(283)		(82	)		(285	)		10,185		580		10,185		580		(259	)		(91	)
Life and annuity		583		1,064		1,119		1,595		(74)		(143)		(188	)		(89	)		568		536		568		536		(72	)		(114	)

	$	1,652	$	1,978	$	3,895	$	3,425	$	184	$	(411)	$	105		$	48		$	12,214	$	2,728	$	11,841	$	2,243	$	(600	)	$	(79	)

Premiums written and earned in the ~~second~~first quarter of 2017 decreased 9% and ~~first six months of 2016 increased $386 million (57%) and $624 million (30%)~~3%, respectively, compared to 2015, while premiums earned increased $156 million (17%) and $367 million (20%), respectively. These increases were attributable to a quota-share contract with Insurance Australia Group Ltd., which became effective on July 1, 2015, partially offset by lower premiums from property catastrophe and other property/casualty business.2016. Our premium volume is generally constrained for most property/casualty reinsurance coverages, ~~and for property catastrophe coverages in particular~~ as rates, in our view, are generally inadequate. ~~However, we~~We have the capacity and desire to write more business when ~~appropriate pricing can be obtained.~~prices are appropriate.

Our property/casualty business generated pre-tax underwriting ~~gains~~losses of ~~$249 million and $375~~$269 million in the ~~second~~first quarter ~~and first six months, respectively,~~ of ~~2016~~2017 compared to ~~$15~~pre-tax gains of $126 million ~~and $422 million, respectively,~~ in ~~2015.~~2016. The ~~pre-tax~~comparative decline in first quarter underwriting ~~gains in the first six months of 2016 and 2015 were~~results was primarily due to ~~reductions~~increases in estimated ultimate liabilities for prior years’ loss events and an increase in current year catastrophe losses. In 2017, we incurred losses of approximately $270 million related to prior years’ loss events and estimated losses onof $52 million from a cyclone in Australia in March. The losses for prior years’ ~~business.~~loss events primarily related to unanticipated reported claims from hurricane and earthquake events in 2016 and from increases in estimated incurred-but-not reported losses. In the first quarter of 2016, changes in our estimated ultimate liabilities for prior years’ loss events were insignificant and we incurred no significant losses from catastrophe loss events.

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

~~Retroactive~~We periodically write retroactive reinsurance contracts, which provide indemnification of losses and loss adjustment expenses with respect to past loss ~~events,~~events. In January 2017, NICO entered into an aggregate excess-of-loss retroactive reinsurance agreement with AIG (the “AIG Agreement”) that became effective on February 2, 2017. We received cash premiums of $10.2 billion in connection with the AIG Agreement and ~~related claims are generally expected to be paid over long periods~~we also recorded losses and loss adjustment expenses incurred of ~~time. At~~$10.2 billion, representing our initial estimate of the ~~inception~~unpaid losses and loss adjustment expenses assumed of $16.4 billion, partly offset by a ~~contract,~~ deferred charge ~~assets are recorded for~~asset of $6.2 billion. Thus, on the ~~excess, if any, of~~effective date, the ~~estimated ultimate losses payable over the premiums earned. Deferred charges are subsequently amortized over the estimated claims payment period based~~AIG Agreement had no effect 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 changesour pre-tax underwriting results. See Note 16 to the ~~estimated timing and amount of future loss payments are included in periodic earnings.~~accompanying Consolidated Financial Statements.

Pre-tax underwriting ~~results~~losses from retroactive reinsurance contracts ~~include~~in the first quarter were $259 million in 2017 and $91 million in 2016. In each period, underwriting results included deferred charge amortization and foreign currency transaction ~~gains/~~gains and losses associated with the revaluation of foreign currency denominated liabilities of U.S.-based subsidiaries. ~~In 2016, foreign currency gains were $158 million in the second quarter and $177 million~~Exchange rate changes in the first ~~six months. In 2015, foreign currency~~quarter produced pre-tax losses ~~were $152~~of $89 million in ~~the second quarter~~2017 and ~~$28~~pre-tax gains of $19 million in ~~the first six months.~~2016. Before such foreign currency gains/losses, retroactive reinsurance contracts produced first quarter pre-tax losses of $170 million in 2017 and $110 million in 2016. The increase in pre-tax underwriting losses was primarily due to deferred charge amortization related to the AIG contract and another retroactive reinsurance contract written in December 2016, partly offset by a net gain in the first ~~six months~~quarter of ~~$259 million in 2016 and $257 million in 2015, which were primarily~~2017 from ~~recurring periodic~~the commutation of an unrelated retroactive reinsurance contract. We currently estimate deferred charge ~~amortization. Gross unpaid~~amortization for the year ending December 31, 2017 will be approximately $975 million, which includes amortization related to the aforementioned AIG Agreement.

Liabilities for losses ~~assumed under~~and loss adjustment expenses associated with our retroactive reinsurance contracts were approximately ~~$24.0~~$40.3 billion at ~~June 30, 2016~~March 31, 2017 and ~~$23.7~~$24.7 billion at December 31, ~~2015.~~2016. Unamortized deferred charges related to ~~such reinsurance~~these contracts were approximately ~~$7.6~~$13.8 billion ~~as of June 30, 2016~~at March 31, 2017 and $8.0 billion at December 31, ~~2015. As previously stated, the amortization of deferred charge balances will be charged to earnings in the future.~~2016.

A summary of BHRG’s life and annuity underwriting results ~~are summarized as~~ follows (in millions).


	Premiums earned								Pre-tax underwriting gain (loss)									First Quarter
	Second Quarter				First Six Months				Second Quarter					First Six Months				Premiums earned				Pre-tax underwriting gain (loss)
	2016		2015		2016		2015		2016		2015			2016		2015		2017		2016		2017		2016
Periodic payment annuity	$	195	$	674	$	404	$	867	$	8	$	(163	)	$	(62)	$	(153)	$	220	$	209	$	(145)	$	(70)
Life reinsurance		383		385		706		718		3		(59	)		14		(68)		344		323		(5)		11
Variable annuity guarantee		5		5		9		10		(85)		79			(140)		132
Variable annuity																			4		4		78		(55)

	$	583	$	1,064	$	1,119	$	1,595	$	(74)	$	(143	)	$	(188)	$	(89)	$	568	$	536	$	(72)	$	(114)

Premiums earned in 2016 from periodic payment annuity contracts declined $479 million (71%) in the second quarter and $463 million (53%) in the first six months compared to the same periods in 2015. The comparative declines were primarily due to a sizable annuity reinsurance contract written in the second quarter of 2015. There were no such reinsurance contracts written in 2016. Periodic payment annuity contracts generated pre-tax underwriting ~~gains of $8 million in the second quarter and~~ losses of ~~$62~~$145 million and $70 million in the first ~~six months~~quarter of ~~2016. In 2015, this business~~2017 and 2016, respectively. Liabilities under certain contracts of a U.S. domiciled subsidiary are denominated in foreign currencies, primarily the British Pound. Changes in the exchange rates produce changes in the values of related liabilities, which are reflected in pre-tax earnings. Exchange rate changes in the first quarter produced pre-tax losses of ~~$163~~$24 million in ~~the second quarter~~2017 and ~~$153~~pre-tax gains of $40 million in ~~the first six months.~~2016. Before ~~the impact of~~such foreign currency ~~exchange rate changes on foreign currency denominated liabilities of U.S.-based subsidiaries, annuity contracts produced~~revaluation gains and losses, pre-tax underwriting losses ~~of $118 million and $228~~were $121 million in ~~the second quarter and first six months, respectively, of 2016~~2017 compared to ~~losses of $72~~$110 million ~~and $146 million, respectively,~~ in ~~2015. This business is expected to~~2016. We expect these contracts will generate pre-tax underwriting losses attributable to the recurring accretion of discounted annuity liabilities. The ~~increases~~increase in underwriting losses in ~~2016 compared to 2015~~2017 reflected increased average liabilities from new business ~~written over the past year and the impact of lower interest rates which increased expected future loss payments under certain reinsurance contracts. Aggregate~~written. Discounted periodic payment annuity liabilities were approximately ~~$9.1~~$10.2 billion at ~~June 30, 2016~~March 31, 2017 and ~~$8.7 billion at December 31, 2015.~~the weighted average interest rate of these contracts was approximately 4.1%.

~~In the second quarter and first six months of 2016, life reinsurance premiums were relatively unchanged compared to 2015.~~ The life reinsurance business produced pre-tax underwriting losses of $5 million in the first quarter of 2017, compared to pre-tax underwriting gains of $3$11 million ~~and $14 million, respectively,~~ in ~~the second quarter and first six months of 2016,~~2016. The deterioration in underwriting results was attributable to increased liabilities for future policyholder benefits, reflecting lower ~~claims~~expected net cash flow with respect to a certain block of business.

The variable annuity business primarily consists of reinsurance contracts that provide guarantees on closed blocks of variable annuity business written by other insurers. In the first quarter, these contracts produced pre-tax underwriting gains of $78 million in 2017 and pre-tax underwriting ~~expenses.~~losses of $55 million in 2016. Underwriting gains and losses in each period reflected changes in liabilities for guaranteed benefits, which were affected by changes in securities markets and interest rates, as well as from the ~~second quarter and first six months~~periodic amortization of ~~2015~~expected profit margins included ~~pre-tax losses of $53 million~~ in ~~connection with business terminated in the second quarter.~~our liabilities estimates.

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

Our variable annuity business primarily consists of contracts that provide guarantees on closed blocks of variable annuity business written by other insurers. The periodic underwriting gains and losses in each period reflect the impacts of changes in equity markets and interest rates which produce increases or decreases in estimated liabilities for guaranteed minimum benefits. Periodic results from these contracts can be volatile reflecting changes in investment market conditions, which impact the underlying insured exposures. In the first six months of 2016, the pre-tax underwriting losses were primarily due to lower interest rates, which resulted in increased estimated liabilities. In the first six months of 2015, pre-tax underwriting gains were primarily due to rising equity markets and interest rates, which resulted in lower estimated liabilities.

The Berkshire Hathaway Primary Group (“BH Primary”) consists of ~~several~~a wide variety of independently managed insurance ~~businesses. These~~underwriting businesses ~~include:~~that primarily provide a variety of commercial insurance products, including healthcare malpractice, workers’ compensation, automobile, general liability, property and various specialty coverages for small, medium and large clients. The largest of these insurers include the MedPro Group, ~~providers of healthcare malpractice insurance coverages;~~ National Indemnity ~~Company’s primary group~~Company (“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 workers’ compensation;~~ 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;~~. Other BH Primary insurers include U.S. Liability Insurance Company, Applied Underwriters and Central States Indemnity ~~Company, a provider~~Company. A summary of ~~credit~~BH Primary’s underwriting results follows (dollars in millions).

~~Premiums~~ earned in the first ~~six months~~quarter of ~~2016 were $2.95 billion~~2017 increased $280 million (18%) and $235 million (16%), respectively, compared to ~~$2.52 billion in 2015. The increase in premiums was~~2016. These increases were primarily attributable to volume increases from BH Specialty, ~~MedPro Group,~~ BHHC and GUARD. The BH Primary insurers produced aggregate pre-tax underwriting gains of ~~$295~~$189 million in the first ~~six months~~quarter of ~~2016~~2017 and ~~$378~~$121 million in ~~2015. Combined loss ratios were 62% in~~2016. In the first ~~six months~~quarter, losses and loss adjustment expenses included reductions of ~~2016 and 58% in 2015. The comparative increase in the first six months of 2016 loss ratio reflected comparative declines in favorable loss development of~~estimated ultimate liabilities for prior years’ loss events ~~partly offset by improved~~of $168 million in 2017 and $119 million in 2016, which produced corresponding increases in pre-tax underwriting results on current year business. Our primary insurers write considerable amounts of liability and workers’ compensation business, which can have extended claim tails. It should not be assumed that the current claim experience or underwriting results will continue into the future.gains.

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


	Second Quarter				First Six Months				First Quarter
	2016		2015		2016		2015		2017		2016
Interest income	$	214	$	234	$	444	$	454	$	246	$	230
Dividend income		1,021		1,100		1,933		1,967		883		912

Investment income before income taxes and noncontrolling interests		1,235		1,334		2,377		2,421
Investment income before taxes and noncontrolling interests										1,129		1,142
Income taxes and noncontrolling interests		257		357		480		569		221		223

Net investment income	$	978	$	977	$	1,897	$	1,852	$	908	$	919

Pre-tax investment income in the ~~second~~first quarter ~~and first six months~~ of ~~2016 declined $99~~2017 decreased $13 million ~~(7%) and $44 million (2%~~(1%) from ~~2015, due primarily to lower dividends from foreign issuers as a result of investment dispositions in 2015,~~2016, which reflected decreased dividend income partly offset by increased ~~dividends from domestic issuers.~~interest income. We continue to hold significant cash, cash equivalents and ~~cash equivalent balances~~U.S. Treasury Bills earning very low ~~yields.~~yields, although such yields were higher in 2017 than in 2016. We believe that maintaining ample liquidity is paramount and we insist on safety over yield with respect to such balances. The decrease in dividends in 2017 reflected Dow Chemical Company’s redemption of our $3 billion investment in 8.5% preferred stock in December 2016, partly offset by increased dividend income from investments in other equity securities.

Invested assets of our insurance businesses derive from shareholder capital, including reinvested earnings, 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 ~~$90~~$105 billion at ~~June 30, 2016~~March 31, 2017 and ~~$88~~$91 billion at December 31, ~~2015. The~~2016. Our average cost of float was ~~negative~~approximately 0.4% in the first quarter of 2017, as ~~our insurance businesses overall~~we generated an aggregate pre-tax underwriting ~~gains~~loss of $379 million. The increase in ~~each period.~~float in the first quarter of 2017 was primarily attributable to the AIG Agreement.

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

A summary of cash and investments held in our insurance businesses ~~follows. Amounts are in millions.~~follows (in millions).


	June 30, 2016		December 31, 2015		March 31, 2017		December 31, 2016
Cash and cash equivalents	$	44,986	$	43,762
Cash, cash equivalents and U.S. Treasury Bills						$ 56,090		$ 48,888
Equity securities		102,017		109,607		132,587		119,780
Fixed maturity securities		23,141		23,621		22,298		22,778
Other investments		14,487		15,998		15,293		14,364

	$	184,631	$	192,988		$226,268		$205,810

Fixed maturity investments as of ~~June 30, 2016~~March 31, 2017 were as ~~follows. Amounts are in millions.~~follows (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	$	3,498	$	25	$	3,523	$	4,361	$	4	$	4,365
States, municipalities and political subdivisions		1,224		64		1,288		1,037		54		1,091
Foreign governments		9,398		309		9,707		8,463		189		8,652
Corporate bonds, investment grade		5,277		493		5,770		5,516		459		5,975
Corporate bonds, non-investment grade		1,439		252		1,691		1,047		222		1,269
Mortgage-backed securities		1,002		160		1,162		835		111		946

	$	21,838	$	1,303	$	23,141	$	21,259	$	1,039	$	22,298

U.S. government obligations are rated AA+ or Aaa by the major rating agencies and approximately ~~88%~~87% of all state, municipal and political subdivisions, foreign government obligations and mortgage-backed securities were rated AA or ~~higher.~~higher by the major rating agencies. 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.

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


	Second Quarter				First Six Months				First Quarter
	2016		2015		2016		2015		2017			2016
Revenues	$	4,585	$	5,369	$	9,352	$	10,971	$	5,185		$	4,767

Operating expenses:
Compensation and benefits		1,134		1,268		2,342		2,606		1,283			1,208
Fuel		431		697		826		1,410		605			395
Purchased services		589		628		1,227		1,276		626			638
Depreciation and amortization		530		489		1,050		985		573			520
Equipment rents, materials and other		414		523		917		1,041		501			503

Total operating expenses		3,098		3,605		6,362		7,318		3,588			3,264
Interest expense		249		228		494		445		252			245

		3,347		3,833		6,856		7,763		3,840			3,509

Pre-tax earnings		1,238		1,536		2,496		3,208		1,345	��		1,258
Income taxes		466		573		940		1,200		507			474

Net earnings	$	772	$	963	$	1,556	$	2,008	$	838		$	784

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

Consolidated revenues in the ~~second~~first quarter ~~and first six months~~ of ~~2016~~2017 were ~~approximately $4.6~~$5.2 billion, ~~and $9.4 billion, respectively,~~ representing ~~decreases~~an increase of ~~$784~~$418 million ~~(14.6%~~(8.8%) ~~and $1.6 billion (14.8%), respectively, versus the corresponding periods in 2015.~~compared to 2016. Pre-tax earnings in the ~~second~~first quarter ~~and first six months~~ of ~~2016 declined 19.4% and 22.2%, respectively,~~2017 were $1.3 billion, an increase of $87 million (6.9%) compared to the same periods in 2015. In 2016, our revenues and earnings were negatively impacted by lower volumes, particularly in the coal and petroleum products categories. Our system velocity and on-time performance continued to improve.2016.

In the first ~~six months~~quarter of ~~2016,~~2017, revenues reflected a 2.7% comparative ~~declines~~increase in average revenue per car/unit ~~(8.3%)~~ and a 6.4% increase in ~~volumes (7.5%).~~volume. Our aggregate volume was 2.5 million cars/units compared to 2.3 million in 2016. The ~~decrease~~increase in average revenue per car/unit was primarily attributable to ~~lower~~higher fuel surcharge revenue, driven by ~~lower~~higher fuel prices, as well as increased rates per car/unit and to business mix ~~changes, partially offset by increased rate~~changes.

Freight revenues from consumer products were $1.7 billion in the first quarter of 2017, an increase of 8.8% from 2016. The increase reflected higher average revenue per car/~~unit.~~unit and volume increases of 5.6%. Consumer products volumes benefited from higher domestic intermodal, international intermodal, and automotive volumes. The ~~fuel price impact on fuel surcharges generally lags its impact on fuel costs. The impact from this timing difference resulted in a decline in earnings compared~~increases were primarily attributable to ~~the first six months~~improving economic conditions, normalizing of ~~2015 because the price of fuel declined more significantly in 2015.~~retail inventories and higher market share.

~~In the second quarter and first six months of 2016, freight~~Freight revenues from industrial products were $1.2 billion ~~and $2.4 billion, respectively, which decreased 14.3% and 16.1%, respectively, from the comparable 2015 periods. The decreases reflected lower volumes (5.2% in the second quarter and 7.2%~~ in the first ~~six months),~~quarter of 2017, an increase of 3.9% compared with 2016. The increase was primarily ~~for petroleum~~due to higher average revenue per car/unit. Overall, industrial products volumes in the first quarter of 2017 were slightly higher than in 2016. We experienced volume increases in minerals and other commodities that support domestic drilling ~~which reflects~~activity, decreases in petroleum products volume, due primarily to pipeline displacement of U.S. crude ~~rail~~ traffic, and lower ~~U.S. production. In addition, we experienced lower demand for taconite and steel products, partly offset by increased movements of non-owned rail equipment and increased~~ plastics ~~products~~ volume. ~~With oil at low production levels, along with pipeline displacement, we expect comparative volume declines in petroleum-related categories for the remainder of 2016.~~

Freight revenues ~~in 2016~~ from agricultural products ~~decreased 1.7% in the second quarter~~increased to ~~$0.9 billion and decreased 6.4% to $2.0~~$1.1 billion in the first ~~six months~~quarter of 2017, an increase of 5.7% compared to the same ~~periods~~period in ~~2015.~~2016. The ~~decreases were primarily attributable to lower average revenue per car, partly offset by volume increases. Volumes increased~~increase was primarily due to higher ~~grain exports.~~

~~Freight revenues in 2016 from coal declined 41.6% in the second quarter to $0.7 billion and 40.0% in~~average revenue per car/unit, as well as volume growth of 1.8%. In the first ~~six months to $1.4 billion compared to the same periods in 2015. Coal volumes declined 33.4% in the first six months~~quarter of ~~2016. In recent years demand for coal~~2017, we experienced higher grain exports, partially offset by utilities has declined, as other fuel sources, particularly natural gas, have increased. Coal volumes in 2015 also benefitted from higher demand in the early part of the year as utility customers restocked coal inventories. Utility coal inventories remain relatively high and natural gas prices are relatively low, so we expect declines in coal volume over the remainder of 2016.lower domestic grain shipments.

Freight revenues from ~~consumer products~~coal increased 23.2% to $960 million in the ~~second~~first quarter of 2017 compared to 2016, ~~were $1.6 billion, a decline of 5.3% from 2015,~~ reflecting ~~a 3.5% decline~~an 18.5% increase in ~~volume~~volumes and ~~lower~~higher average revenue per car/unit. The volume ~~reduction was primarily~~increases in 2017 were due to ~~lower intermodal volume,~~mild winter weather in the first quarter of 2016 and higher natural gas prices in the first quarter of 2017. Together, these factors led to increased utility coal usage in 2017, which ~~we attribute to soft economic activity and excess retail inventories, partially~~was partly offset by ~~increased automotive volumes due to~~ the ~~addition~~effects of ~~a new automotive customer. Revenues for the first six months~~retirements of 2016 were $3.2 billion, a decline of 1.5% from 2015, as lower average revenue per car/unit more than offset a 2.3% increase in volume. The comparative year-to-date increase in volumes was primarily due to increases in the domestic intermodal and automotive categories.coal generating facilities.

Operating expenses in the ~~second~~first quarter ~~and first six months~~ of ~~2016~~2017 were ~~$3.1~~$3.6 billion, ~~and $6.4 billion, respectively, representing decreases~~an increase of ~~$507~~$324 million ~~(14.1%~~(9.9%) ~~and $956 million (13.1%), respectively,~~ compared to the ~~same periods in 2015. Our ratios~~first quarter of 2016, and our ratio of operating expenses to revenues ~~in 2016~~ increased ~~0.5~~0.7 percentage points to ~~67.6% in the second quarter and 1.3 percentage points to 68.0% for the first six months versus the corresponding 2015 periods.~~69.2%. Compensation and benefits expenses ~~in 2016 decreased $134~~increased $75 million ~~(10.6%~~(6.2%) ~~for the second quarter and $264 million (10.1%) for the first six months as~~ compared to ~~2015.~~2016. The ~~declines were~~increase was primarily due to ~~lower employment levels in response to decreased volumes~~higher health and ~~productivity improvements,~~welfare costs, wage inflation, and volume-related increases, partially offset by ~~wage inflation.~~productivity improvements. Fuel expenses inincreased $210 million (53.2%) compared to 2016, ~~declined $266 million (38.2%) in the second quarter and $584 million (41.4%) in the first six months~~ due to ~~significantly lower~~higher average fuel prices and ~~lower volumes.~~increased volumes, partially offset by improved efficiency. Depreciation and amortization expense ~~in 2016~~ increased ~~8.4% in the second quarter and 6.6% in the first six months as~~$53 million (10.2%) compared to ~~2015,~~2016 due to ~~increased~~a larger base of depreciable assets in service reflecting our ongoing capital additions and improvement programs. In the second quarter and first six months of 2016, equipment rents, materials and other expense declined $109 million (20.8%) and $124 million (11.9%), respectively, compared to the same periods of 2015, as a result of lower volumes and productivity improvements in both periods, as well as, lower derailment and other casualty related costs in the six-month period.service.

Interest expense in the ~~second~~first quarter ~~and first six months~~ of ~~2016~~2017 was ~~$249~~$252 million, ~~and $494~~an increase of $7 million ~~respectively, increases of $21 million (9.2%~~(2.9%) ~~and $49 million (11.0%), respectively,~~ compared to ~~2015.~~2016, which was primarily due to an increase in average outstanding debt. BNSF funds its capital expenditures with cash flow from operations and new debt issuances. ~~The increased interest expense in 2016 resulted from higher average outstanding debt.~~

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

We hold ~~an 89.9%~~a 90% ownership interest in Berkshire Hathaway Energy Company (“BHE”), which operates ~~an international~~a global 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. Other energy businesses include AltaLink, L.P. (“AltaLink”), a regulated electricity transmission-only business in Alberta, Canada and a diversified portfolio of independent power projects. In addition, BHE also operates the second-largest residential real estate brokerage firm and one of the largest residential real estate brokerage franchise networks in the United States.

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

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

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.~~below (in millions).


		Second Quarter								First Six Months								First Quarter
		Revenues				Earnings				Revenues				Earnings				Revenues				Earnings
		2016		2015		2016		2015		2016		2015		2016		2015		2017		2016		2017		2016
PacifiCorp		$	1,243	$	1,282	$	258	$	248	$	2,507	$	2,545	$	502	$	445	$	1,292	$	1,264	$	265	$	244
MidAmerican Energy Company			593		583		95		73		1,225		1,332		148		147		708		632		62		53
NV Energy			714		842		118		120		1,338		1,558		150		189		594		624		51		32
Northern Powergrid			250		264		92		97		529		588		217		257		245		279		103		125
Natural gas pipelines			189		211		49		40		505		545		229		225		318		316		200		180
Other energy businesses			466		601		78		111		974		1,096		132		150		513		508		41		54
Real estate brokerage			844		760		95		87		1,339		1,210		98		86		587		495		3		3

		$	4,299	$	4,543					$	8,417	$	8,874					$	4,257	$	4,118

Earnings before corporate interest and income taxes (“EBIT”)	Earnings before corporate interest and income taxes (“EBIT”)						785		776						1,476		1,499						725		691
Corporate interest	Corporate interest						119		127						241		254						110		122
Income taxes and noncontrolling interests	Income taxes and noncontrolling interests						184		147						312		322						114		128

Net earnings attributable to Berkshire Hathaway shareholders	Net earnings attributable to Berkshire Hathaway shareholders					$	482	$	502					$	923	$	923					$	501	$	441

PacifiCorp operates a regulated electric utility in portions of several Western states, including Utah, Oregon and Wyoming. PacifiCorp’s revenues in the ~~second~~first quarter of 2017 were $1.3 billion, an increase of 2% from 2016. The increase was primarily due to a 2.8% increase in retail customer volume and ~~first six months of 2016 were $1.24 billion and $2.51 billion, respectively, decreases of $39 million (3%) and $38 million (1%), respectively, from 2015. Revenues in 2016 reflected~~higher wholesale electricity prices, partly offset by lower average retail ~~customer loads and wholesale volumes, partially offset by higher retail rates.~~prices attributable to changes in mix. EBIT in the ~~second~~first quarter ~~and first six months~~ of ~~2016~~2017 were ~~$258~~$265 million, ~~and $502~~an increase of $21 million ~~respectively, increases of $10 million (4%~~(9%) ~~and $57 million (13%), respectively, from the same periods of 2015.~~compared to 2016. The ~~increases were~~increase was primarily due to ~~increased~~an increase in gross margins ~~as energy costs declined more than revenues. The declines~~($8 million), reflecting the increase in ~~energy costs were~~revenues and lower operating expenses ($13 million), which was primarily ~~attributable~~due to lower ~~fuel prices~~pension and ~~changes in fuel mix.~~plant maintenance expenses.

MEC operates a regulated electric and natural gas utility primarily in Iowa and Illinois. Revenues in ~~2016 increased $10 million (2%) in the second quarter and declined $107 million (8%) in~~ the first ~~six months as~~quarter of 2017 were $708 million, an increase of $76 million (12%) compared to ~~the same periods in 2015.~~2016. The ~~revenue~~ increase ~~in the second quarter~~ was primarily due to ~~higher electric revenues ($20 million), partly offset by lower natural gas revenues. The increase~~increases in ~~second quarter electric revenues resulted primarily from increased retail customer load, partly offset by lower wholesale volume. The decline in revenues for the first six months included lower~~regulated natural gas revenues ($7736 million) and ~~lower~~electric revenues ($34 million). The comparative increase in first quarter natural gas revenues reflected higher average per-unit costs of gas sold ($40 million), which are offset in cost of sales. In the first quarter of 2017, retail natural gas volumes decreased (5.4%), while wholesale volumes increased (6.9%). The increase in electric revenues was attributable to higher wholesale volumes and prices ($21 million) and increased retail revenues ($13 million). The increase in retail revenues reflected increased recoveries through bill riders (which are substantially offset by increases in costs and expenses) and from non-weather usage and rate factors, partially offset by the impact of warmer winter temperatures in 2017. Electric retail customer volumes in the first quarter of 2017 increased 1.6% compared to 2016. EBIT in the first quarter of 2017 were $62 million, an increase of $9 million (17%) compared to 2016. The increase in 2017 was primarily attributable to an increase in gross margin, partly offset by increased depreciation, maintenance and other operating expenses.

NV Energy operates regulated electric and ~~other revenues.~~natural gas utilities in Nevada. Revenues in the first quarter of 2017 were $594 million, a decrease of $30 million (5%) versus 2016. In the first quarter of 2017, electric revenues declined $19 million and natural gas revenues declined $12 million as compared to 2016. The decline in ~~natural~~electric revenues reflected lower retail revenues resulting from lower energy costs and lower revenues from customer efficiency incentive programs, which are both passed on to customers, and from lower commercial and industrial customer volumes. Natural gas ~~revenues~~operating revenue decreased primarily due to lower energy rates, partially offset by higher customer usage. EBIT in the first quarter of 2017 were $51 million, an increase of $19 million (59%) compared to 2016. The increase was primarily due to lower ~~average per-unit cost of gas sold ($62 million) which is offset in cost of sales,~~other operating expenses and lower volumes. EBIT in the second quarter of 2016 were $95 million, an increase of $22 million (30%) over the second quarter of 2015. EBIT in the first six months of 2016 were relatively unchanged from 2015. In 2016, gross margins increased comparedinterest expense. Operating expenses declined primarily due to ~~2015, which were partially offset by higher depreciation~~lower planned maintenance and ~~amortization and interest expenses. In addition, EBIT in the first six months of 2015 included a gain of $13 million from the sale of a~~other generating ~~facility lease.~~costs.

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

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

NV Energy operates regulated electric and natural gas utilities in Nevada. Revenues in the second quarter and first six months of 2016 were $714 million and $1.34 billion, respectively, decreases of $128 million (15%) and $220 million (14%), 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 the first six months of 2016 increased 1.3% compared to 2015. EBIT were relatively unchanged in the second quarter of 2016 and fell $39 million in the first six months of 2016 compared to 2015. In 2016, gross margins increased slightly as energy costs declined slightly more than revenues. However, operating expenses in 2016 increased $12 million (5%) in the second quarter and $42 million (9%) in the first six months compared to 2015. These increases resulted from higher property and other taxes and depreciation and amortization. In addition, operating expenses in the first six months of 2015 included non-recurring benefits from reductions in certain accrued liabilities, as well as higher planned maintenance and other generating costs in 2016.

Revenues in the ~~second~~first quarter ~~and first six months~~ of ~~2016~~2017 declined ~~$14~~$34 million ~~(5%~~(12%) to ~~$250 million and $59 million (10%) to $529 million, respectively, as compared to 2015.~~$245 million. The ~~decreases were~~decrease was primarily due to the unfavorable impact from a stronger U.S. Dollar ($38 million) and lower distribution revenue ($2 million), partially offset by higher smart metering revenue of ~~$17 million in the second quarter and $33 million in the first six months. In the first six months of 2016, revenues also declined, primarily~~$6 million. Distribution revenue decreased due to the recovery in 2016 of the December 2013 customer rebate of $11 million, unfavorable movements in regulatory provisions of $6 million and lower units distributed of $5 million, partially offset by higher tariff rates ~~from a new price control period that became effective April 1, 2015.~~of $20 million. EBIT ~~in the second quarter and first six months of 2016 declined $5~~decreased $22 million ~~(5%~~(18%) ~~to $92 million and $40 million (16%) to $217 million, respectively, as~~ compared to ~~2015,~~2016, primarily due to the ~~lower revenues and the~~ stronger U.S. ~~Dollar.~~Dollar of $16 million and higher depreciation of $7 million from additional assets placed in-service.

Revenues in the ~~second~~first quarter of 2017 of $318 million were relatively unchanged from 2016, as higher transportation revenues and ~~first six months~~higher gas sales of ~~2016 declined $22~~$4 million ~~(10%)~~related to ~~$189~~system balancing activities (largely offset in cost of sales) at Northern Natural Gas were offset by lower transportation revenues at Kern River. EBIT in 2017 increased $20 million ~~and $40 million (7%~~(11%) ~~to $505 million, respectively, as~~ compared to ~~2015. The revenue declines~~2016, primarily due to a reduction in ~~2016 reflected lower gas sales from balancing activities in~~expenses and regulatory liabilities related to the ~~second quarter and lower transportation revenues~~impact of an alternative rate structure approved by Kern River’s regulators in the first quarter ~~resulting~~of 2017, as well as from lower volumes and rates in part due to comparatively warmer temperatures. EBIT in 2016 increased $9 million (23%) in the second quarter and $4 million (2%) in the first six months versus 2015. The increases in the second quarter reflected lower operating expenses, due primarily to the timing of pipeline maintenance and integrity projects, and lower interest expense, which more than offset the declines inhigher transportation revenues.

Revenues in the ~~second~~first quarter ~~and first six months~~ of ~~2016 declined $135~~2017 increased $5 million ~~(22%~~(1%) to ~~$466~~$513 million, ~~and $122 million (11%) to $974 million, respectively, compared to the corresponding 2015 periods. The declines were primarily due to lower~~reflecting increased revenues from AltaLink (6%) and renewable energy (4%), partially offset by a 9% decline in revenues from the unregulated retail services business. ~~In May~~EBIT in the first quarter of 2017 declined $13 million compared to 2016 ~~AltaLink received a decision from its regulator which changes~~due to higher operating expenses of $19 million and higher depreciation and amortization of $9 million, primarily due to the ~~timing of when construction-in-progress expenditures included in rate base are billable to customers~~additional wind, solar and earned in revenues. The decision resulted in one-time net reductions in revenue, with offsetting reductions in expenses, with no impact on net earnings. Otherwise, AltaLink generated increased operating revenue in 2016, primarily from additionaltransmission assets placed in ~~service.~~

~~EBIT~~service, and increased interest expense, partially offset by an increase in ~~2016 declined $33 million (30%) in the second quarter~~revenues from AltaLink and ~~$18 million (12%) in the first six months as compared to 2015. EBIT from~~ renewable ~~energy businesses declined $25 million in the second quarter and $22 million in the first six months reflecting lower revenues and unfavorable changes in the values of certain interest rate swaps.~~energy.

Revenues in the ~~second~~first quarter ~~and first six months~~ of ~~2016~~2017 increased ~~11%~~19% to ~~$844~~$587 million ~~and 11% to $1.34 billion, respectively, as~~ compared to ~~2015. The~~2016, reflecting increases ~~were primarily attributable to increased~~in closed transactions and average home transaction prices and the impact of business acquisitions. EBIT from real estate brokerage activities were $3 million in the ~~second~~first quarter of 2017 and ~~first six months of 2016 increased $8 million (9%) and $12 million (14%), respectively, compared to 2015, reflecting the increases in revenues.~~was unchanged from 2016.

Corporate interest includes interest on unsecured debt issued by BHE and borrowings from certain Berkshire insurance subsidiaries. ~~The declines in corporate interest in 2016 were primarily due to lower average borrowings from Berkshire insurance subsidiaries.~~ BHE’s consolidated effective income tax rate for the first ~~six months~~quarter was approximately ~~16%~~9% in ~~2016~~2017 and ~~17%~~13% in ~~2015. BHE’s~~2016. The effective ~~income~~ tax ~~rates regularly reflect significant~~rate decreased primarily due to an increase in production tax credits ~~from wind-powered electricity generation placed~~recognized, the favorable impacts of rate making, and lower consolidated deferred state income tax expenses due to changes in ~~service. In addition, pre-tax~~the tax status of certain subsidiaries.

A summary of revenues and earnings of ~~Northern Powergrid~~our manufacturing, service 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.~~retailing businesses follows (in millions).

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

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

Our manufacturing group includes a variety of businesses that produce industrial, building and consumer products. Industrial products businesses include specialty chemicals (The Lubrizol ~~Corporation)~~Corporation (“Lubrizol”)), metal cutting tools/systems (IMC International Metalworking ~~Companies)~~Companies (“IMC”)), equipment and systems for the livestock and agricultural industries ~~(CTB International)~~((CTB International (“CTB”)), and a variety of industrial products for diverse markets (Marmon, Scott Fetzer and ~~Scott Fetzer)~~LiquidPower Specialty Products). Beginning on January 29, 2016, our industrial products group also includes Precision Castparts Corp. (“PCC”), a leading manufacturer of complex metal products for aerospace, power and general industrial markets.

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


	Second Quarter								First Six Months								First Quarter
	Revenues				Pre- tax earnings				Revenues				Pre- tax earnings				Revenues				Pre- tax earnings
	2016		2015		2016		2015		2016		2015		2016		2015		2017		2016		2017		2016
Industrial products	$	6,505	$	4,416	$	1,133	$	848	$	12,199	$	8,709	$	2,187	$	1,634	$	6,508	$	5,694	$	994	$ 1,054
Building products		2,847		2,710		305		341		5,308		5,037��		547		571		2,734		2,461		249	242
Consumer products		2,849		2,398		249		204		5,248		4,641		435		393		2,855		2,399		244	186

	$	12,201	$	9,524	$	1,687	$	1,393	$	22,755	$	18,387	$	3,169	$	2,598	$	12,097	$	10,554	$	1,487	$ 1,482

Aggregate first quarter revenues ~~in 2016~~ were approximately ~~$12.2~~$12.1 billion in ~~the second quarter and $22.8 billion in the first six months, representing increases~~2017, an increase of approximately ~~$2.7~~$1.5 billion ~~(28%~~(15%) ~~and $4.4 billion (24%), respectively,~~ from the corresponding 2015 periods. Pre-tax earnings in 2016 were approximately $1.7 billion in the second quarter and $3.2 billion in the first six months, representing increases of $294 million (21%) and $571 million (22%), respectively, compared to the same periods in 2015.2016. In 2016, operating results of our industrial products and consumer products businesses included the results of PCC and Duracell from their respective acquisition dates. ~~Excluding the results of PCC and Duracell, aggregate revenues in 2016 declined approximately 1% in both the second quarter and first six months versus 2015, while pre-tax~~Pre-tax earnings ~~fell 4% in the second quarter and 2%~~ in the first ~~six~~quarter was $1.5 billion in 2017, which was relatively unchanged from 2016. Pre-tax earnings in 2017 included pre-tax losses of $184 million in connection with the disposition of an underperforming bolt-on business acquired by Lubrizol in 2014. Excluding these losses, pre-tax earnings of our manufacturing businesses increased 13% compared to 2016.

Revenues in the first quarter of 2017 increased $814 million (14%) versus 2016. The increase was primarily due to inclusion of PCC for the full three months of 2017 compared to two months in the prior year period. We also experienced revenue increases from Lubrizol (5%), IMC (7%) and CTB (12%). Comparatively higher volumes drove the first quarter revenue increases of Lubrizol and IMC, while business acquisitions generated most of CTB’s increase. Marmon manufacturing revenues increased 3% in the first quarter of 2017 versus 2016, ~~as compared~~reflecting the mixture of increases from business acquisitions, metal price increases and increased volume in certain product lines, offset by lower demand at several of its business units. In 2017, while sales volumes were generally higher than the first quarter of 2016, we experienced margin pressures, particularly at Lubrizol and CTB.

Pre-tax earnings in the ~~corresponding 2015 periods.~~first quarter of 2017 declined $60 million (6%) compared to the first quarter of 2016. Pre-tax earnings in 2017 reflected earnings of PCC for the full three months, which was more than offset by lower earnings from certain of our other businesses. During the first quarter of 2017, Lubrizol recognized pre-tax losses of $184 million related to the disposition of an underperforming bolt-on business and the recognition of intangible asset impairments and restructuring charges. In the first quarter of 2017, Lubrizol, CTB, as well as other businesses, also experienced higher manufacturing costs derived from increased prices for petroleum-based materials and certain metals, which contributed to a comparative pre-tax margin decline. We continue to implement cost containment and other initiatives intended to improve productivity at several of our businesses.

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

Revenues in the second quarter and first six months of 2016 increased approximately $2.1 billion (47%) and $3.5 billion (40%), respectively, versus the same periods in 2015. These increases were primarily due to inclusion of PCC, partially offset by declines in the second quarter (6%) and first six months (7%) across our other businesses. In 2016, sales volumes were generally lower compared to 2015, particularly for products sold to businesses in the oil and gas and heavy equipment industries. In addition, lower costs of petroleum-based raw materials and metals and increased competitive pressures in 2016 continued to push selling prices lower. Changes in foreign currency exchange rates had a relatively minor impact on comparative second quarter revenues and for the first six months produced a decline of $88 million compared to 2015.

Pre-tax earnings in 2016 increased $285 million (34%) in the second quarter and $553 million (34%) in the first six months as compared to 2015. Our average pre-tax margin rate was 17.9% in the first six months of 2016, compared to 18.8% in 2015. The increases in pre-tax earnings reflected earnings of PCC, partially offset by comparative declines in earnings (8% for the second quarter and 6% for the first six months) from our other businesses, primarily IMC International, Lubrizol and Marmon’s retail fixtures and equipment, highway transportation equipment, wire products and metals distribution businesses. The declines in earnings of these businesses were attributable to the aforementioned soft market conditions, somewhat offset by the impacts of cost containment initiatives and lower average material prices. We expect the prevailing market conditions to continue over 2016 and we may take additional cost containment actions in response to further slowdowns in customer demand.

Revenues in the ~~second~~first quarter ~~and first six months~~ of ~~2016~~2017 increased ~~$137~~$273 million ~~(5%~~(11%) ~~and $271 million (5%), respectively,~~ compared to 2016. The increase reflected the ~~same periods in 2015. The revenue increases reflected~~effect of bolt-on business acquisitions (Shaw and MiTek) and sales volume increases ~~across most of our product categories,~~(MiTek and Johns Manville), partly offset by lower average sales prices and changes in product mix.

Pre-tax earnings in ~~2016 declined $36~~the first quarter of 2017 increased $7 million ~~(11%~~(3%) compared to 2016. The increase in earnings was primarily attributable to the ~~second quarter~~aforementioned increases in revenues and ~~$24 million (4%)~~lower restructuring charges, largely offset by lower gross sales margin rates in most of our businesses. The declines in gross sales margin rates were primarily due to increases in average raw material prices and contributed to an overall decline in the first ~~six months as compared~~quarter pre-tax margin from approximately 9.8% in 2016 to ~~the corresponding periods~~9.1% in 2015. In the second quarter of 2016, the favorable impact from increased sales volume was more than offset by an increase in charges related to asset impairments, pension settlements and environmental claims.2017.

Revenues were approximately $2.9 billion in the ~~second~~first quarter ~~and first six months~~ of ~~2016 were approximately $2.8 billion and $5.2 billion, respectively, increases~~2017, an increase of ~~$451~~$456 million (19%) ~~and $607 million (13%), respectively, compared to~~over 2016. The increase reflected the ~~corresponding 2015 periods. The increases reflected revenues from~~impact of the Duracell acquisition on February 29, 2016 and a ~~9.3% year-to-date~~6.7% increase in Forest River’s revenues, ~~primarily attributable~~due to ~~increased~~an increase in unit sales. Apparel revenues ~~in the first six months of 2016 declined $74 million (4%)~~were relatively unchanged compared to ~~2015, which was primarily attributable to lower footwear sales and the impact of an apparel business divested in 2015.~~2016.

Pre-tax earnings in the ~~second~~first quarter ~~and first six months~~ of ~~2016~~2017 increased ~~$45~~$58 million ~~(22%~~(31%) ~~and $42 million (11%), respectively,~~ compared to ~~the same periods in 2015. In~~ 2016, reflecting increased earnings ~~increases were generated by~~from Duracell and Forest River, which benefitted from increased sales and lower material costs, and our clothing apparel businesses, which benefitted from past restructuring activities and divestitures of unprofitable business lines. These increases were partly offset by lower ~~earnings from our footwear businesses, reflecting relatively difficult retail footwear industry conditions and from~~apparel earnings. Duracell’s results in 2016 included significant transition and integration costs ~~in connection with~~arising from the ~~Duracell~~ acquisition.

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 (in millions).

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

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~~franchise and service a network of quick service restaurants (Dairy Queen). Services also include the electronic distribution ~~services~~ of corporate news, multimedia and regulatory filings (Business Wire)~~. We are a franchisor~~, publication of ~~quick service restaurants (Dairy Queen), publish~~ newspapers and other publications (Buffalo News and the BH Media Group) and ~~operate~~operation of a television station in Miami, Florida (WPLG). We also offer third party logistics services that primarily serve the petroleum and chemical industries (Charter Brokerage).

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

Revenues in the ~~second~~first quarter ~~and first six months~~ of ~~2016 declined $108~~2017 increased $256 million ~~(4%~~(11%) ~~and $172 million (3%), respectively,~~ as compared to ~~2015. The decreases were~~2016, primarily due to ~~lower revenues from~~revenue increases of NetJets ~~partly offset by increased revenues from TTI. NetJets’ comparative revenues in 2016 declined 14% in the second quarter~~(19%) and ~~11% for the first six months,~~TTI (10%). The increase at NetJets was primarily due to ~~lower~~an increase in fractional aircraft ~~sales~~sold and, ~~lower fuel surcharge~~to a lesser degree, an increase in services revenues, attributable to ~~lower fuel prices. TTI’s revenue~~ increases in ~~2016 (8%~~pass-through costs and a 2% increase in ~~the second quarter and 4% for the first six months) were~~flight hours. The increase in TTI’s revenues was primarily due to ~~increased sales~~ volume increases in ~~Europe and through the internet.~~most of its markets. Pre-tax earnings in the ~~second~~first quarter ~~and first six months~~ of ~~2016 declined $45~~2017 increased $35 million ~~(13%~~(16%) ~~and $111 million (18%), respectively, as~~ compared to ~~corresponding periods~~2016. The increase in ~~2015. These declines~~earnings was primarily ~~reflected~~attributable to increased earnings of NetJets and TTI, partly offset by lower earnings ~~of NetJets. The declines in NetJets’ earnings were primarily due to lower aircraft sales~~from media businesses and ~~reduced margins from flight operations, due primarily to increased maintenance costs and personnel costs, as well as an increase in depreciation.~~FlightSafety.

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~~retailers also include Berkshire Hathaway Automotive (“BHA”). BHA includes 83 auto dealerships, which ~~was acquired in the first quarter of 2015. BHA currently includes 84 auto dealerships. BHA sells~~sell new and pre-owned automobiles and ~~offers~~offer repair and other related services and ~~products, and~~products. BHA also includes two related insurance businesses, two auto auctions and a distributor of automotive fluid maintenance products.

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 Germany-based retailer of motorcycle ~~accessories based in Germany which was acquired in the second quarter of 2015.~~accessories.

Revenues of our retailing businesses in the ~~second~~first quarter ~~and first six months~~ of ~~2016 increased approximately $199~~2017 decreased $54 million ~~(5.5%~~(2%) ~~and $1.6 billion (29%), respectively,~~ as compared to 2016. The decrease reflected a 2% decline in revenues at BHA, due primarily to lower vehicle units sold, and lower revenues at See’s attributable to the ~~same periods~~timing of Easter, partly offset by a slight increase in ~~2015. The increases reflected the impact of the BHA and Louis acquisitions, which accounted for approximately $183 million and $1.5 billion, respectively, of the comparative increases. Revenues~~revenues of our home furnishings retailers and increased revenues of Pampered Chef. Pre-tax earnings in the ~~second~~first quarter ~~and first six months~~ of ~~2016~~2017 from retailing increased $34 million ~~(5%~~(34%) over 2016. The increase was primarily due to BHA and ~~$170 million (13%), respectively, over 2015, driven by new stores opened by~~Nebraska Furniture Mart. The earnings increase at BHA reflected lower amortization and operating expenses, as well as a slight increase in gross margin rates due to changes in sales mix. The earnings increase of Nebraska Furniture Mart ~~and Jordan’s. The~~reflected an increase in ~~pre-tax earnings for~~ the ~~first six months was primarily attributable to BHA~~gross sales margin rate and ~~Louis.~~lower operating and depreciation expenses.

McLane operates a wholesale distribution business that provides grocery and non-food consumer products to retailers and convenience stores (“~~grocery unit”~~grocery”) and to restaurants (“~~foodservice unit”~~foodservice”). McLane also operates businesses that are wholesale distributors of distilled spirits, wine and beer (“~~beverage unit”~~beverage”). The grocery and foodservice units 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 ~~second~~first quarter ~~and~~of 2017 were $12.1 billion, an increase of 2.5% over the first ~~six months~~quarter of ~~2016 were $12.0 billion and $23.9 billion, respectively, decreases of 2.0% and 0.4%, respectively, compared with the corresponding periods~~2016. The increase in ~~2015. The year-to-date decrease~~revenues was primarily due to a ~~2% reduction~~4% increase in grocery ~~sales, partly offset by a 3% increase in foodservice~~ sales. ~~Earnings in the second quarter and first six months of 2016 were $129 million and $265 million, respectively, decreases of $18 million (12%) and $13 million (5%), respectively, compared to 2015.~~ Pre-tax earnings in the ~~2015 periods included~~first quarter of 2017 were $88 million, a ~~gain~~decrease of ~~$19~~$48 million (35%) compared to 2016, due primarily to a 51% decline in earnings from grocery operations. In the ~~disposition~~first quarter of ~~a subsidiary. Excluding this gain, the~~2017, our grocery business results were negatively affected by pricing pressures from an increasingly competitive business environment. In addition, personnel, fuel and depreciation costs increased at greater rates than revenues, negatively affecting our results. McLane’s consolidated operating margin (ratio of pre-tax earnings to revenues) in the first ~~six months~~quarter of ~~2016~~2017 was ~~1.11%, and was relatively unchanged from 2015.~~approximately 0.7% compared to 1.2% in 2016.

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

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. A summary of ~~revenues and~~ earnings from our finance and financial products businesses ~~follows. Amounts are in millions.~~follows (in millions).


	Second Quarter								First Six Months								First Quarter
	Revenues				Earnings				Revenues				Earnings				Revenues				Earnings
	2016		2015		2016		2015		2016		2015		2016		2015		2017		2016		2017		2016
Manufactured housing and finance	$	1,065	$	924	$	179	$	177	$	1,958	$	1,711	$	349	$	326	$	1,074	$	893	$	176	$	170
Transportation equipment leasing		671		618		245		215		1,354		1,216		496		420		624		683		209		251
Other		253		257		159		158		403		426		216		248		167		150		81		57

	$	1,989	$	1,799	$	583	$	550	$	3,715	$	3,353	$	1,061	$	994	$	1,865	$	1,726

Pre-tax earnings																						466		478
Income taxes and noncontrolling interests						187		180						354		335						163		167

					$	396	$	370					$	707	$	659					$	303	$	311

Clayton Homes’ revenues in the ~~second~~first quarter ~~and first six months~~ of ~~2016 increased $141~~2017 were approximately $1.1 billion, an increase of $181 million ~~(15%~~(20%) ~~and $247 million (14%), respectively,~~ compared to ~~2015.~~2016. The ~~increases reflected~~increase was primarily due to a ~~24%~~31% increase in ~~year-to-date revenues from~~ home sales, ~~due primarily to~~attributable a ~~21%~~20% increase in units sold. Pre-tax earnings in 2016 increased 1.1% in the second quarter and 7.1% for the first six months. Earnings in 2016 benefitted from improved manufacturing results attributable to the increases in unit sales, and higher average prices, primarily due to sales mix changes. In 2017, home sales included a higher mix of site built homes, which ~~were partially~~have a higher land content and therefore unit prices tend to be higher. In addition, the increased land content generally results in lower gross sales margin rates for site built homes than for typical sales of manufactured homes. Revenues from financial services in the first quarter of 2017 increased 2% compared to 2016. Pre-tax earnings increased $6 million (4%) in the first quarter of 2017 as compared to 2016. Earnings in 2017 included a gain of $11 million from a legal settlement and higher earnings from manufacturing and retail operations, partly offset by lower earnings from lending and finance activities. In 2017, the increase in financial services revenues was more than offset by increased ~~losses from insurance claims~~operating and ~~impairment charges on servicing assets. As of June 30, 2016, approximately 95% of the installment loan portfolio was current in terms of payment status.~~interest expenses.

Transportation equipment leasing revenues in the ~~second~~first quarter ~~and first six months~~ of ~~2016 increased $53~~2017 decreased $59 million (9%) ~~and $138 million (11%), respectively,~~ compared to ~~2015. The increases were~~2016, primarily due to ~~an increase in rail/tank cars on lease~~lower railcar sales, lower railcar and ~~increased sales of railcars. The increase in rail/tank cars on lease reflected a larger~~trailer fleet ~~size, due primarily to the acquisition of the GE Railcar Services fleet at the end of the third quarter of 2015, partially offset by~~utilization rates, and lower ~~utilization rates. In 2016, we also experienced lower crane lease~~volume and demand ~~in North America~~for cranes and ~~reduced volumes in~~ other products and ~~services attributable to lower oil and gas commodity prices.~~

services. Pre-tax earnings were $209 million in the ~~second~~first quarter ~~and first six months~~ of ~~2016 increased $30~~2017, a decline of $42 million ~~(14%~~(17%) ~~and $76 million (18%), respectively,~~ compared to ~~2015.~~2016. The ~~increases were~~decrease was primarily attributable to the ~~positive impact of the revenue growth and lower depreciation rates for certain railcars, partially offset by~~demand driven decline in revenues discussed previously, as well as from higher railcar repair and storage costs and additional interest ~~expense~~costs attributable to ~~new~~ borrowings from a Berkshire financing subsidiary. A significant portion of the transportation ~~equipment~~ leasing ~~expenses,~~business costs, such as depreciation, do not vary proportionately to revenue changes and therefore changes in revenues can disproportionately impact earnings.

Other earnings from 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. In ~~the first six months of 2016,~~2017, other earnings ~~decreased $32~~increased $24 million compared to ~~2015,~~2016, reflecting ~~decreased~~increased interest income and earnings from ~~investment securities and Berkadia.~~Berkadia, partly offset by lower earnings from CORT. Other earnings also includes income from interest rate spreads charged on borrowings by a Berkshire financing subsidiary that are used to finance loans and assets held for lease. Corresponding expenses are included in ~~Clayton Homes’~~the results of our manufactured housing and ~~UTLX’s results.~~finance and transportation equipment business groups. Interest rate spreads charged to these businesses were ~~$35~~$20 million in ~~the first six months of 2016~~2017 and ~~$31~~$16 million in ~~2015.~~2016.

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

A summary of investment and derivative gains and losses ~~follows. Amounts are in millions.~~follows (in millions).


	Second Quarter				First Six Months					First Quarter
	2016		2015		2016			2015		2017		2016
Investment gains/losses	$	643	$	362	$	2,493		$	459	$	315	$	1,850
Derivative gains/losses		20		(174)		(790	)		1,144		460		(810)

Gains/losses before income taxes and noncontrolling interests		663		188		1,703			1,603		775		1,040
Income taxes and noncontrolling interests		269		65		(543	)		560		271		(812)

Net gains/losses	$	394	$	123	$	2,246		$	1,043	$	504	$	1,852

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.~~investments. 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.

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 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 ~~second~~first quarter were $315 million in 2017 and $1.85 billion in 2016. Pre-tax investment gains in the first ~~six months~~quarter of 2016 ~~were $643 million and $2.5 billion, respectively, and $362 million and $459 million, respectively, in the comparable periods of 2015. Investment gains in 2016~~ included ~~$610 million from the redemption of our Kraft Heinz Preferred Stock investment in the second quarter and~~ $1.1 billion realized in connection with the tax-free exchange of shares of P&G common stock for 100% of the common stock of ~~Duracell in the first quarter.~~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 Note 3 and Note 8 to the accompanying Consolidated Financial Statements.~~Our after-tax gain from this transaction was approximately $1.9 billion.

~~Investment gains/losses included pre-tax~~We recorded no other-than-temporary impairment (“OTTI”) charges ~~of $63 million in the second quarter of 2016. There were no OTTI charges~~ in the first ~~six months~~quarters of ~~2015.~~2017 or 2016. Although we have periodically recorded OTTI charges in earnings in the past, we continue to hold ~~certain~~some of ~~those~~the related securities. If the market values of those ~~investments~~securities subsequently increase, ~~following the date OTTI charges were recorded in earnings, the~~such 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.

AsAt the beginning of ~~June 30, 2016, gross~~2018, we will adopt a new accounting standard that, among its provisions, changes the reporting of unrealized gains and losses ~~on our~~related to investments in equity securities and ~~fixed maturity securities determined on an individual purchase lot basis were approximately $2.4 billion,~~certain other investments. Upon adoption of ~~which approximately $1.5 billion pertained~~this accounting standard, we will reclassify the net unrealized gains for such investments presently reflected in accumulated other comprehensive income 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 creditworthinessretained earnings. The amount of the ~~issuer,~~reclassification will be based on our ~~ability~~equity investments at December 31, 2017. As of March 31, 2017, accumulated after-tax net unrealized gains related to equity securities and ~~intent to hold~~other investments was approximately $47.8 billion. Thereafter, the ~~investment until~~changes in the ~~price recovers~~accumulated unrealized gains and losses on equity securities, as well as realized gains and losses from sales and dispositions, will be included in our periodic Consolidated Statements of Earnings. We do not expect the adoption of this standard will affect our total consolidated shareholders’ equity. However, it will likely produce a very significant increase in the volatility of our periodic net earnings given the magnitude of our existing equity securities portfolio and the ~~length~~inherent volatility of ~~time and relative magnitude of the price decline.~~equity securities prices.

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

Derivative gains/losses ~~primarily~~currently represent the changes in fair value of our ~~credit default and~~ equity index put option ~~contracts. Periodic~~contract liabilities. The periodic changes in the fair values of these contracts are ~~reflected~~recorded in earnings and can be significant, reflecting the volatility of underlying ~~credit~~equity markets and ~~equity markets.~~the changes in the inputs used to measure such liabilities.

Derivative contracts produced pre-tax gains in the ~~second~~first quarter of ~~2016~~2017 of ~~$20~~$460 million and pre-tax losses of ~~approximately $174 million in 2015. In the first six months, these contracts produced pre-tax losses of $790~~$810 million in 2016, ~~and pre-tax~~substantially all of which derived from our equity index put options. The gains ~~of approximately $1.1 billion~~ in ~~2015. In each period, the gains and losses~~2017 related to these contracts were primarily attributable to ~~non-cash changes~~increased index values and the passage of time, while the losses in ~~the fair values of our contacts. In~~ 2016 ~~our equity index contracts produced pre-tax losses of $83 million in the second quarter and $879 million for the first six months. These losses~~ were driven by lower index values and interest rates. ~~In the first six months of 2015, the gains reflected increased index values and the favorable impact of a stronger U.S. Dollar.~~ As of ~~June 30, 2016,~~March 31, 2017, equity index put option intrinsic values were approximately ~~$2.0 billion~~$700 million and our recorded liabilities at fair value were approximately ~~$4.4~~$2.43 billion. Our ultimate payment obligations, if any, under our equity index put option contracts will be determined as of the contract expiration dates (beginning in 2018), and will be based on the intrinsic value as defined under the contracts.

~~In July 2016, our remaining credit default contract was terminated by mutual agreement~~Other

Kraft Heinz earnings includes Berkshire’s share of Kraft Heinz’s earnings attributable to common shareholders determined pursuant to the equity method. Other earnings also include charges from the application of the acquisition method in connection with Berkshire’s business acquisitions. Such charges were primarily from the ~~counterparty. We paid $195 million upon termination and have no further exposure to~~amortization of intangible assets recorded in connection with those business acquisitions, which we view as corporate expenses. Corporate interest expense included after-tax foreign exchange losses ~~under this contract. This contract produced pre-tax earnings of $103 million in the second quarter and $89 million~~ in the first ~~six months~~quarter of ~~2016.~~

Other earnings include corporate income (including income from our investments in Kraft Heinz), expenses and income taxes not allocated to operating businesses. Earnings from our investments in Kraft Heinz included dividends on the Preferred Stock, which was redeemed in June 2016, and our equity method earnings from our common stock investment. Such earnings, after allocated corporate income taxes, were $247$57 million in ~~the second quarter~~2017 and ~~$406~~$161 million in the first six months of 2016. In 2015, our investments produced earnings of $50 million in the second quarter and $200 million for the first six months. See Note 7 to the accompanying consolidated financial statements for additional information regarding these investments.

~~Other earnings also includes corporate interest expense. After-tax corporate interest in~~ 2016 produced a credit to earnings of $32 million in the second quarter and a charge of $181 million for the first six months. In 2015, after-tax corporate interest expense was $110 million in the second quarter and $175 million in the first six months. The variations in comparative after-tax corporate interest expense were primarily attributable to foreign exchange gains and losses with respect to Euro denominated debt issued by Berkshire ~~in March 2015 (€3.0~~during the last three years. Such debt is currently €6.85 billion, ~~par)~~ and ~~March 2016 (€2.75 billion par). In 2016, corporate interest included after-tax~~thus changes in foreign currency exchange rates can produce sizable remeasurement gains ~~of $101~~and losses. Excluding foreign currency effects, after-tax corporate interest expense was $67 million in ~~the second quarter~~2017 and ~~after-tax losses of $60~~$52 million in ~~the first six months. In 2015, after-tax foreign currency exchange losses were $73 million~~2016. The increase in ~~the second quarter and $102 million in the first six months. Relatively minor changes in the U.S. Dollar/Euro exchange rate can produce significant gains or losses given the level of our Euro~~interest expense was attributable to increased average outstanding borrowings.

Also included in other earnings are charges related to the amortization of fair value adjustments made in connection with several business acquisitions. These charges (after-tax) were $126 million and $233 million in the second quarter and first six months, respectively, of 2016 compared to $99 million and $201 million, respectively, in the comparable periods in 2015.

Our balance sheet ~~continues to reflect~~reflects significant liquidity and a strong capital base. Our consolidated shareholders’ equity at ~~June 30, 2016~~March 31, 2017 was ~~$263.0~~approximately $292.8 billion, an increase of ~~$7.5~~about $9.8 billion since December 31, ~~2015.~~2016. Net earnings attributable to Berkshire shareholders in the first ~~six months~~quarter of ~~2016~~2017 were ~~$10.6 billion.~~

$4.1 billion and net unrealized appreciation of investments, after taxes, increased approximately $5.3 billion during the first quarter. At ~~June 30, 2016,~~March 31, 2017, our insurance and other businesses held cash, ~~and~~ cash equivalents and U.S. Treasury Bills of ~~$61.8~~$79.4 billion and investments (excluding our ~~investments~~investment in Kraft Heinz) of ~~$140.8~~$171.6 billion. In ~~June 2016, we received a payment~~January 2017, Berkshire issued new senior notes aggregating €1.1 billion and repaid $1.1 billion of ~~$8.32 billion upon the redemption our investment~~maturing senior notes. There are no other Berkshire term debt maturities in ~~Kraft Heinz Preferred Stock.~~2017. Berkshire’s debt outstanding at March 31, 2017 was $17.8 billion.

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

In January 2016, we used cash of approximately $32.1 billion to fund the acquisition of PCC, which we funded through a combination of cash on hand and $10 billion borrowed under a new 364-day revolving credit agreement. In March 2016, Berkshire Hathaway parent company issued €2.75 billion and $5.5 billion of senior unsecured notes. The proceeds were used in the repayment of all outstanding borrowings under the aforementioned revolving credit agreement. In June, the revolving credit agreement was terminated. See Note 16 to the accompanying Consolidated Financial Statements. Over the next twelve months, $1.85 billion of parent company senior notes will mature.

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 ~~six months~~quarter of ~~2016,~~2017, capital expenditures were $865 million by BHE and $674 million by BNSF. We estimate that aggregate forecasted capital expenditures of these businesses ~~were approximately $4.1 billion, including $2.1 billion by BHE and $2.0 billion by BNSF. Forecasted capital expenditures of the two businesses~~ for the remainder of ~~2016 approximate $4.5 billion. Future~~2017 will be approximately $6.5 billion and we currently expect to fund such future capital expenditures ~~are expected to be funded from~~with cash flows from operations and debt issuances.

BNSF’s outstanding debt ~~was approximately $22.2~~approximated $23.2 billion as of ~~June 30, 2016,~~March 31, 2017, an increase of ~~$452 million from~~approximately $1.2 billion since December 31, ~~2015.~~2016. In March 2017, BNSF issued $1.25 billion of senior unsecured debentures with $500 million due in 2027 and $750 million due in 2047. Approximately $650 million of BNSF debentures mature in May 2017, and another $650 million mature in March 2018. Outstanding borrowings of BHE and its subsidiaries, excluding its borrowings from Berkshire insurance subsidiaries, were approximately ~~$36.4~~$37.7 billion ~~as of June 30, 2016,~~at March 31, 2017, an increase of ~~$404~~$643 million ~~from~~since December 31, ~~2015.~~2016. During the first three months of 2017, BHE subsidiaries issued approximately $850 million of debt with maturity dates ranging from 2027 to 2047. BHE has $656 million of debt maturities during the remainder of 2017. 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 BNSF, or BHE or any of their subsidiaries.

Finance and financial products assets were approximately ~~$41.3~~$42.1 billion as of ~~June 30, 2016, an increase of approximately $2.3 billion~~March 31, 2017, relatively unchanged since December 31, ~~2015.~~2016. Finance assets ~~also include~~consist primarily of loans and finance receivables, ~~and~~ various types of property held for lease, ~~as well as significant balances of~~ cash, ~~and~~ cash equivalents, U.S. Treasury Bills and ~~equity securities.~~

other investments. Finance and financial products liabilities were approximately ~~$21.4~~$19.5 billion as of ~~June 30, 2016, an increase of approximately $4.2 billion~~March 31, 2017, relatively unchanged compared to December 31, ~~2015. The increase was primarily attributable to new debt~~2016. Liabilities at March 31, 2017 included approximately $14.7 billion of senior unsecured notes issued by a wholly-owned financing subsidiary, Berkshire Hathaway Finance Corporation (“BHFC”). ~~In March 2016, BHFC issued $3.5 billion of senior notes. See Note 16 to the accompanying Consolidated Financial Statements.~~ The proceeds ~~were~~of BHFC’s senior notes are used to fund loans originated and acquired by Clayton Homes and ~~to fund~~ a portion of ~~existing~~ assets held for lease by our ~~rail tank car~~UTLX railcar leasing ~~business, UTLX.~~business. In January 2017, BHFC issued new senior notes aggregating $1.3 billion due in 2019 and 2020 and repaid $1.05 billion of maturing notes. Over the ~~next twelve months, $3.4~~remainder of 2017, an additional $1.75 billion of BHFC senior notes will mature. Berkshire guarantees the full and timely payment of principal and interest with respect to BHFC’s senior notes.

Berkshire’s Board of Directors has authorized Berkshire management to repurchase, at its discretion, Berkshire Class A and Class B common stock at prices no higher than a 20% premium over book value. There is no obligation to repurchase any stock and the program is expected to continue indefinitely. We will not repurchase our stock if it reduces the total amount of Berkshire’s consolidated cash, cash equivalents and U.S. Treasury Bills holdings below $20 billion. Financial strength and redundant liquidity will always be of paramount importance at Berkshire. There were no repurchases in 2017.

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~~included 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~~statements, but will be ~~reflected~~recognized in future periods as the goods are delivered or services are provided.

~~During~~The timing and amount of the ~~first six months~~payments under certain contracts, such as insurance and reinsurance contracts, are contingent upon the outcome of ~~2016,~~future events and claim settlements. Actual payments will likely vary, perhaps materially, from the estimated liabilities currently recorded in our Consolidated Balance Sheet. As previously discussed, we ~~issued new term debt~~entered into a retroactive reinsurance agreement with AIG, which became effective in February 2017. In connection with this agreement, we recorded liabilities of $16.4 billion for unpaid losses and ~~assumed debt through~~loss adjustment expenses, representing our current estimate of the ~~PCC business acquisition. Future~~claims we ultimately expect to pay under the agreement. Based on our current estimates, we project future payments ~~of principal~~under this agreement as follows: 2020-2021 – $3.6 billion and ~~interest related to such borrowings are summarized~~thereafter – $12.8 billion; however, as ~~follows (in millions): 2016 - $303; 2017 - $397; 2018 - $3,130; 2019 - $2,096; and 2020 and after - $15,798.~~ generally noted above, actual payments under this agreement will likely vary, perhaps materially, from these estimates.

Except as otherwise disclosed herein, our contractual obligations as of ~~June 30, 2016~~March 31, 2017 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, ~~2015.~~2016.

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

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, ~~2015.~~2016.

Our Consolidated Balance Sheet as of ~~June 30, 2016~~March 31, 2017 includes estimated liabilities for unpaid losses from property and casualty insurance and reinsurance contracts of approximately ~~$75~~$94 billion. Due to the inherent uncertainties in the process of establishing loss reserve amounts, the actual ultimate claim amounts will likely differ from the currently recorded amounts. A very small percentage change in estimates of this magnitude will result in a material effect on 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.

Our Consolidated Balance Sheet as of ~~June 30, 2016~~March 31, 2017 includes goodwill of acquired businesses of approximately ~~$79~~$80 billion. We evaluate goodwill for impairment at least annually and we conducted our most recent annual review during the fourth quarter of ~~2015.~~2016. Although we believe that the goodwill reflected in the Consolidated Balance Sheet is not impaired, goodwill may subsequently become impaired as a result of changes in facts and circumstances affecting the ~~valuations~~valuation of the reporting ~~units.~~unit. 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.

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 or cyber attack 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.

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 ~~June 30, 2016,~~March 31, 2017, 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, ~~2015.~~2016.

As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of the 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 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 Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings. During the quarter, there have been no significant changes in the Company’s internal control over financial reporting or in other factors that could significantly affect internal control over financial reporting.

WeBerkshire and its subsidiaries 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.

Our significant business risks are described in Item 1A to Form 10-K for the year ended December 31, ~~2015~~2016 to which reference is made herein.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities

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 the total value of Berkshire’s consolidated cash, ~~equivalent~~cash equivalents and U.S. Treasury Bills holdings 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 ~~six~~three months of ~~2016.~~2017.

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.

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.


Class A —			~~788,894~~768,910
Class B —			~~1,282,442,561~~1,313,501,653


		Page No.
Part I –Financial Information

Item 1. Financial Statements
	Consolidated Balance Sheets—~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016		2
	Consolidated Statements of Earnings—~~Second~~First Quarter 2017 and ~~First Six Months~~ 2016 ~~and 2015~~		4
	Consolidated Statements of Comprehensive Income—~~Second~~First Quarter 2017 and ~~First Six Months~~ 2016 ~~and 2015~~		5
	Consolidated Statements of Changes in Shareholders’ Equity—First ~~Six Months~~Quarter 2017 and 2016 ~~and 2015~~		5
	Consolidated Statements of Cash Flows—First ~~Six Months~~Quarter 2017 and 2016 ~~and 2015~~		6
	Notes to Consolidated Financial Statements		7-24
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25-42
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		43
Item 4.	Controls and Procedures		43

Part II –Other Information

Item 1.	Legal Proceedings		43
Item 1A.	Risk Factors		43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities		43
Item 3.	Defaults Upon Senior Securities		43
Item 4.	Mine Safety Disclosures		43
Item 5.	Other Information		43
Item 6.	Exhibits		44

Signature			44


	March 31, 2017		December 31, 2016
	(Unaudited)
ASSETS
*Insurance and Other:*
Cash and cash equivalents and U.S. Treasury Bills:
Cash and cash equivalents		$ 18,362		$ 23,581
U.S. Treasury Bills		61,052		47,338

Total cash, cash equivalents and U.S. Treasury Bills		79,414		70,919
Investments:
Fixed maturity securities		22,902		23,432
Equity securities		133,393		120,471
Other		15,293		14,364
Investment in The Kraft Heinz Company (Fair Value: March 31, 2017 – $29,553; December 31, 2016 – $28,418)		15,431		15,345
Receivables		28,870		27,097
Inventories		16,115		15,727
Property, plant and equipment		19,645		19,325
Goodwill		54,333		53,994
Other intangible assets		33,472		33,481
Deferred charges reinsurance assumed		13,830		8,047
Other		7,417		7,126

		440,115		409,328

*Railroad, Utilities and Energy:*
Cash and cash equivalents		5,584		3,939
Property, plant and equipment		124,277		123,759
Goodwill		24,234		24,111
Regulatory assets		4,617		4,457
Other		13,557		13,550

		172,269		169,816

*Finance and Financial Products:*
Cash and cash equivalents and U.S. Treasury Bills:
Cash and cash equivalents		2,017		528
U.S. Treasury Bills		9,449		10,984

Total cash, cash equivalents and U.S. Treasury Bills		11,466		11,512
Investments in equity and fixed maturity securities		410		408
Other investments		3,119		2,892
Loans and finance receivables		13,365		13,300
Property, plant and equipment and assets held for lease		9,723		9,689
Goodwill		1,384		1,381
Other		2,600		2,528

		42,067		41,710

		$ 654,451		$ 620,854


	June 30, 2016		December 31, 2015
	(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
*Insurance and Other:*
Losses and loss adjustment expenses	$	74,708	$	73,144
Unearned premiums		14,768		13,311
Life, annuity and health insurance benefits		14,974		14,497
Other policyholder liabilities		7,214		7,123
Accounts payable, accruals and other liabilities		20,468		17,879
Notes payable and other borrowings		27,567		14,599

		159,699		140,553

*Railroad, Utilities and Energy:*
Accounts payable, accruals and other liabilities		11,597		11,994
Regulatory liabilities		3,062		3,033
Notes payable and other borrowings		58,595		57,739

		73,254		72,766

*Finance and Financial Products:*
Accounts payable, accruals and other liabilities		1,548		1,398
Derivative contract liabilities		4,626		3,836
Notes payable and other borrowings		15,251		11,951

		21,425		17,185

Income taxes, principally deferred		72,180		63,126

Total liabilities		326,558		293,630

Shareholders’ equity:
Common stock		8		8
Capital in excess of par value		35,710		35,620
Accumulated other comprehensive income		30,777		33,982
Retained earnings		198,293		187,703
Treasury stock, at cost		(1,763)		(1,763)

Berkshire Hathaway shareholders’ equity		263,025		255,550
Noncontrolling interests		3,233		3,077

Total shareholders’ equity		266,258		258,627

	$	592,816	$	552,257


	PCC		Duracell
Cash and cash equivalents	$	250	$	1,807
Inventories		3,431		326
Property, plant and equipment		2,771		364
Goodwill		15,793		614
Other intangible assets		24,197		2,024
Other assets		1,914		256

Assets acquired	$	48,356	$	5,391

Accounts payable, accruals and other liabilities	$	2,445	$	392
Notes payable and other borrowings		5,251		—
Income taxes, principally deferred		8,002		760

Liabilities assumed	$	15,698	$	1,152

Net assets	$	32,658	$	4,239


	~~First Six Months~~
	~~2015~~
~~Revenues~~		~~$ 105,602~~
~~Net earnings attributable to Berkshire Hathaway shareholders~~		~~9,421~~
~~Net earnings per equivalent Class A common share attributable to Berkshire Hathaway shareholders~~		~~5,734~~


	April 1, 2017		December 31, 2016
Assets		$120,802		$120,480
Liabilities		62,858		62,906


	Carrying Value
	June 30, 2016			December 31, 2015
Common stock		$	15,752		$	15,714
Preferred Stock			—			7,710

		$	15,752		$	23,424


	July 3, 2016		January 3, 2016
Assets		$121,684		$122,973
Liabilities		63,637		56,737


	June 30, 2016		December 31, 2015
Raw materials	$	2,916	$	1,852
Work in process and other		2,464		778
Finished manufactured goods		4,289		3,369
Goods acquired for resale		6,051		5,917

	$	15,720	$	11,916


	June 30, 2016			December 31, 2015
Insurance premiums receivable		$	9,995		$	8,843
Reinsurance recoverable on unpaid losses			3,473			3,307
Trade and other receivables			14,036			11,521
Allowances for uncollectible accounts			(342)			(368)

		$	27,162		$	23,303


	Range of estimated useful life		June 30, 2016		December 31, 2015
Land		—	$	2,071	$	1,689
Buildings and improvements		5 – 40 years		8,091		7,329
Machinery and equipment		3 – 25 years		19,550		17,054
Furniture, fixtures and other		2 – 18 years		4,318		3,545

				34,030		29,617
Accumulated depreciation				(14,958)		(14,077)

			$	19,072	$	15,540


	2017		2016
Unpaid losses and loss adjustment expenses—beginning of year:
Gross liabilities		$ 76,918		$ 73,144
Reinsurance recoverable and deferred charges		(11,385)		(10,994	)

Net balance		65,533		62,150

Incurred losses and loss adjustment expenses recorded during the period:
Current accident year events		8,165		7,192
Prior accident years’ events		118		(372	)
Retroactive reinsurance and discount accretion		10,283		712

Total incurred losses and loss adjustment expenses		18,566		7,532

Paid losses and loss adjustment expenses during the period with respect to:
Current accident year events		(2,678)		(2,421	)
Prior accident years’ events		(4,222)		(3,828	)
Retroactive reinsurance		(429)		(158	)

Total payments		(7,329)		(6,407	)

Foreign currency translation adjustment		77		(21	)
Unpaid losses and loss adjustment expenses—March 31:
Net balance		76,847		63,254
Reinsurance recoverable and deferred charges		17,051		11,308

Gross liabilities		$ 93,898		$ 74,562


	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		(4,230)		—		(4,230)		6,975,341		—		6,975,341

Balance at June 30, 2016		815,872		(11,680)		804,192		1,260,841,939		(1,409,762)		1,259,432,177


	First Quarter
	Revenues				Earnings *
	2017		2016		2017		2016
Manufacturing	$	12,097	$	10,554	$	1,487	$	1,482
Service and retailing		18,194		17,692		481		460

	$	30,291	$	28,246

Pre-tax earnings						1,968		1,942
Income taxes and noncontrolling interests						651		676

					$	1,317	$	1,266


	First Quarter
	Revenues				Pre-tax earnings
	2017		2016		2017		2016
Service	$	2,617	$	2,361	$	260	$	225
Retailing		3,476		3,530		133		99
McLane Company		12,101		11,801		88		136

	$	18,194	$	17,692	$	481	$	460


		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		Rule 13a-14(a)/15d-14(a) Certifications

32.1		Section 1350 Certifications

32.2		Section 1350 Certifications

95		Mine Safety Disclosures

101		The following financial information from Berkshire Hathaway Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2016,~~March 31, 2017, formatted in XBRL (Extensible Business Reporting Language) includes: (i) the Consolidated Balance Sheets as of ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, (ii) the Consolidated Statements of Earnings for each of the three-month ~~and six-month~~ periods ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015,~~ (iii) the Consolidated Statements of Comprehensive Income for each of the three-month ~~and six-month~~ periods ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015,~~ (iv) the Consolidated Statements of Changes in Shareholders’ Equity for each of the ~~six-month~~three-month periods ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015,~~ (v) the Consolidated Statements of Cash Flows for each of the ~~six-month~~three-month periods ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015,~~ and (vi) the Notes to Consolidated Financial Statements, tagged in summary and detail.


		BERKSHIRE HATHAWAY INC. (Registrant)

Date: ~~August~~May 5, ~~2016~~2017		/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

Emerging growth company