(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 ☒ 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 RegulationS-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 ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, ~~or a~~ smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-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 Rule12b-2 of the Act). Yes ☐ No ☒

Number of shares of common stock outstanding as of October ~~27, 2016:~~26, 2017:

~~(dollars~~December 31, 20162-3Consolidated Statements of Earnings—Third Quarter and First Nine Months 2017 and 20164Consolidated Statements of Comprehensive Income—Third Quarter and First Nine Months 2017 and 20165Consolidated Statements of Changes in ~~millions)~~

~~See accompanying~~ Shareholders’ Equity—First Nine Months 2017 and 20165Consolidated Statements of Cash Flows—First Nine Months 2017 and 20166Notes to Consolidated Financial Statements7-24

~~See accompanying Notes to Consolidated Financial Statements~~*

~~BERKSHIRE HATHAWAY INC.~~

~~and Subsidiaries~~

~~CONSOLIDATED STATEMENTS OF EARNINGS~~

~~(dollars in millions except~~Equivalent Class B shares outstanding are 1,500 times the equivalent Class A amount. Net earnings per equivalent Class B share ~~amounts)~~

Third Quarter First Nine Months
2016 2015 2016 2015
(Unaudited) (Unaudited)
Revenues:

Insurance and Other:

Insurance premiums earned
$ 11,364 $ 10,514 $ 33,287    $ 30,454
Sales and service revenues
30,536 27,436 89,357    80,169
Interest, dividend and other investment income
1,276 1,132 4,284    3,758
Investment gains/losses
735 8,339 3,221    8,571

43,911 47,421 130,149    122,952

Railroad, Utilities and Energy:

Revenues
10,330 10,697 28,026    30,454

Finance and Financial Products:

Sales and service revenues
1,588 1,379 4,557    3,984
Interest, dividend and other investment income
366 329 1,109    1,077
Investment gains/losses
2,415 (73) 2,422    154
Derivative gains/losses
458 (764) (332 ) 380

4,827 871 7,756    5,595

59,068 58,989 165,931    159,001

Costs and expenses:

Insurance and Other:

Insurance losses and loss adjustment expenses
7,615 6,831 22,325    19,524
Life, annuity and health insurance benefits
1,339 1,165 3,747    4,083
Insurance underwriting expenses
2,001 1,875 5,948    5,505
Cost of sales and services
24,472 22,297 71,617    65,145
Selling, general and administrative expenses
3,959 3,721 11,747    10,177
Interest expense
259 88 674    449

39,645 35,977 116,058    104,883

Railroad, Utilities and Energy:

Cost of sales and operating expenses
6,763 7,018 19,421    20,985
Interest expense
681 672 1,962    1,957

7,444 7,690 21,383    22,942

Finance and Financial Products:

Cost of sales and services
886 736 2,529    2,134
Selling, general and administrative expenses
465 409 1,301    1,176
Interest expense
103 105 307    301

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

48,543 44,917 141,578    131,436

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

Net earnings
7,333 9,527 18,072    18,867
Less: Earnings attributable to noncontrolling interests
135 99 284    262

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

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

Average shares outstanding and net earnings per share are shown on an equivalent Class A common stock basis. Equivalent Class B shares outstanding are 1,500 times the equivalent Class A amount. Net earnings per equivalent Class B share outstanding are outstanding areone-fifteen-hundredth (1/1,500) ~~of the equivalent Class A amount.~~

~~See accompanying Notes to Consolidated Financial Statements~~

~~BERKSHIRE HATHAWAY INC.~~

~~and Subsidiaries~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

~~(dollars in millions)~~

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








Other comprehensive income:

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








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








Comprehensive income
   6,351    2,261    13,871         8,293
Comprehensive income attributable to noncontrolling interests
   132    47    267         217








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

~~CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY~~

~~(Unaudited)~~

~~(dollars in millions)~~

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












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












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












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

~~See accompanying Notes to Consolidated Financial Statements~~

~~BERKSHIRE HATHAWAY INC.~~

~~and Subsidiaries~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(dollars in millions)~~

   First Nine Months
   2016 2015
   (Unaudited)
Cash flows from operating activities:

Net earnings
   $ 18,072    $ 18,867
Adjustments to reconcile net earnings to operating cash flows:

Investment gains/losses
   (5,643 ) (8,725 )
Depreciation and amortization
   6,605    5,801
Other
   27    620
Changes in operating assets and liabilities:

Losses and loss adjustment expenses
   2,615    1,195
Deferred charges reinsurance assumed
   182    369
Unearned premiums
   1,906    2,311
Receivables and originated loans
   (3,445 ) (3,021 )
Derivative contract assets and liabilities
   137    (296 )
Income taxes
   3,601    5,954
Other
   1,114    1,080


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


Cash flows from investing activities:

Purchases of fixed maturity securities
   (6,009 ) (5,365 )
Purchases of equity securities
   (5,185 ) (8,809 )
Purchase of Kraft Heinz Company common stock
   —    (5,258 )
Sales of fixed maturity securities
   1,121    791
Redemptions and maturities of fixed maturity securities
   6,640    4,421
Sales and redemptions of equity securities
   19,989    5,755
Purchases of loans and finance receivables
   (224 ) (144 )
Collections of loans and finance receivables
   271    345
Acquisitions of businesses, net of cash acquired
   (30,815 ) (4,802 )
Purchases of property, plant and equipment
   (9,429 ) (11,803 )
Other
   (611 ) 21


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


Cash flows from financing activities:

Proceeds from borrowings of insurance and other businesses
   9,385    3,271
Proceeds from borrowings of railroad, utilities and energy businesses
   2,234    4,468
Proceeds from borrowings of finance businesses
   4,740    998
Repayments of borrowings of insurance and other businesses
   (1,921 ) (1,875 )
Repayments of borrowings of railroad, utilities and energy businesses
   (1,879 ) (1,050 )
Repayments of borrowings of finance businesses
   (1,220 ) (1,254 )
Changes in short term borrowings, net
   888    (508 )
Acquisitions of noncontrolling interests
   (3 ) (71 )
Other
   (28 ) (181 )


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


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


Increase in cash and cash equivalents
   13,105    2,991
Cash and cash equivalents at beginning of year
   71,730    63,269


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


* Cash and cash equivalents are comprised of the following:

Beginning of year—

Insurance and Other
   $ 61,181      $ 57,974
Railroad, Utilities and Energy
   3,437    3,001
Finance and Financial Products
   7,112    2,294


   $ 71,730      $ 63,269


End of third quarter—

Insurance and Other
   $ 68,269      $ 56,166
Railroad, Utilities and Energy
   3,893    4,691
Finance and Financial Products
   12,673    5,403


   $ 84,835      $ 66,260

~~See accompanying Notes to Consolidated Financial Statements~~

~~BERKSHIRE HATHAWAY INC.~~

~~and Subsidiaries~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2016~~

~~Note 1. General~~

~~Financial information in this Quarterly Report reflects any~~equivalent Class A amount.

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 Form10-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. As of September 30, 2017, our aggregate holdings in U.S. Treasury Bills were approximately $80.6 billion, of which $66.6 billion had maturities greater than three months when acquired. Accordingly, we revised the comparative 2016 Consolidated Statement of Cash Flows to reflect this change.

Financial information in this Quarterly Report reflects 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 and gains and losses associated with the periodic revaluation of certain assets and liabilities denominated in foreign currencies can cause significant variations in periodic net earnings.

In May 2014, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued ASU2014-09 “Revenue from Contracts with Customers.” ASU2014-09 applies to contracts with customers, excluding, most notably, insurance and leasing contracts. ~~ASU 2014-09 prescribes a~~The framework ~~in accounting for revenues from contracts within its scope, including~~prescribed by ASU2014-09 includes (a) identifying the contract, (b) identifying the related 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. Based on our evaluations, we do not currently believe the adoption of ASU2014-09 will have a material effect on our Consolidated Financial Statements. However, the timing of the recognition of revenue and related costs may change with respect to certain of our contracts with customers. For instance, revenues and costs for certain contracts may be recognized over time rather than when the product or service is delivered, as is the current practice. In addition, certain contracts may be treated as leases for accounting purposes, rather than contracts with customers subject to ASU2014-09. Our evaluations of these and other issues and implementation efforts concerning ASU2014-09 are ongoing and also ~~prescribes additional financial statement presentations and disclosures.~~include consideration of the new disclosure requirements. We ~~currently expect to~~will adopt ASU2014-09 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 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.method.

In January 2016, the FASB issued ASU2016-01 “Financial Instruments—Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU2016-01 generally requires that investments in equity ~~investments~~securities (excluding equity method investments) be measured at fair value with changes in fair value recognized in net ~~income.~~earnings. Under existing GAAP, changes in fair value ofavailable-for-sale equity ~~investments~~securities are recorded in other comprehensive income. Given the current magnitude of our investments in equity ~~investments,~~securities, the adoption of ASU2016-01 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. We will adopt ASU2016-01 ~~is effective for annual and interim periods beginning after December 15, 2017, with the cumulative effect of the adoption made to the balance sheet~~ as of January 1, 2018. As of that date, the ~~date of adoption. Thus, the adoption will result in a reclassification of the related~~ accumulated net unrealized appreciation relating to our investments in equity securities, which is currently included in accumulated other comprehensive income, will be reclassified to retained ~~earnings, with no impact on Berkshire shareholders’ equity.~~earnings.

In February 2016, the FASB issued ASU2016-02 “Leases.” ASU2016-02 requires a lessee to recognize in the statement of financial position a liability to make lease payments and aright-of-use asset representing its right to use the underlying asset for the lease term ~~along with~~and also requires additional qualitative and quantitative disclosures. ASU2016-02 is effective for ~~annual and interim~~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 ASU2016-13 “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 andavailable-for-sale debt securities. Currently, credit losses are recognized and measured when such losses become probable based on the prevailing facts and circumstances. ASU2016-13 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 ASU2017-04 “Simplifying the Test for Goodwill Impairment.” ASU2017-04 eliminates the requirement to determine the implied value of goodwill in measuring an impairment loss. Upon adoption, the measurement of a goodwill impairment will represent the excess of the reporting unit’s carrying value over fair value, limited to the carrying value of goodwill. ASU2017-04 is effective for goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted.

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 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 PCC manufactures extruded seamless pipe, fittings and forgings for power generation and oil and gas applications.

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

~~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 acquisition date fair values of certain assets and liabilities, particularly property, plant and equipment and intangible assets, and related estimated useful lives are provisional and are subject to revision as the related valuations are completed. We expect such values will be finalized as of December 31, 2016.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).


	PCC		Duracell		PCC		Duracell
Cash and cash equivalents	$	250	$	1,807	$	250	$	1,807
Inventories		3,430		326		3,430		319
Property, plant and equipment		2,772		364		2,765		359
Goodwill		15,880		614		16,011		866
Other intangible assets		24,197		2,024		23,527		1,550
Other assets		1,914		256		1,916		242

Assets acquired	$	48,443	$	5,391	$	47,899	$	5,143


Accounts payable, accruals and other liabilities	$	2,442	$	392	$	2,442	$	410
Notes payable and other borrowings		5,251		—		5,251		—
Income taxes, principally deferred		8,092		760		7,548		494

Liabilities assumed	$	15,785	$	1,152	$	15,241	$	904

Net assets	$	32,658	$	4,239	$	32,658	$	4,239

The following table sets forth certain unaudited pro forma consolidated earnings data for the first nine 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 nine 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 September 30, ~~2016~~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
September 30, 2016
September 30, 2017
U.S. Treasury, U.S. government corporations and agencies	$	4,549	$	17	$	(1	)	$	4,565	$	4,327	$	5	$	(11	)	$	4,321
States, municipalities and political subdivisions		1,216		64		(1	)		1,279		988		51		(1	)		1,038
Foreign governments		9,454		362		(21	)		9,795		8,556		233		(24	)		8,765
Corporate bonds		6,996		800		(7	)		7,789		6,525		628		(4	)		7,149
Mortgage-backed securities		1,068		156		(5	)		1,219		877		109		(3	)		983

	$	23,283	$	1,399	$	(35	)	$	24,647	$	21,273	$	1,026	$	(43	)	$	22,256

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).


	September 30, 2016			December 31, 2015			September 30, 2017		December 31, 2016
Insurance and other		$	24,613		$	25,988	$	22,228	$	23,432
Finance and financial products			34			39
Finance and financial products *								28		33

		$	24,647		$	26,027	$	22,256	$	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 September 30, ~~2016,~~2017, approximately ~~92%~~93% 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 September 30, ~~2016~~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 (in millions).~~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		$8,007		$10,773		$1,076		$2,359		$1,068		$23,283	$	6,901	$	10,825	$	572	$	2,098	$	877	$	21,273
Fair value		8,068		11,224		1,177		2,959		1,219		24,647		6,962		11,050		624		2,637		983		22,256

Investments in equity securities as of September 30, ~~2016~~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
September 30, 2016 *
September 30, 2017 *
Banks, insurance and finance	$	19,852	$	21,695	$	(173	)	$	41,374	$	26,792	$	45,910	$	—		$	72,702
Consumer products		5,149		16,790		—			21,939		20,097		23,910		—			44,007
Commercial, industrial and other		32,517		7,904		(1,199	)		39,222		29,290		12,398		(747	)		40,941

	$	57,518	$	46,389	$	(1,372	)	$	102,535	$	76,179	$	82,218	$	(747	)	$	157,650


	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 September 30, ~~2016~~2017 and December 31, 2015, 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 September 30, 2016, ~~and December 31, 2015,~~ unrealized losses on equity securities in a continuous unrealized loss position for more than twelve consecutive months were ~~$995~~$94 million and ~~$989~~$551 million, respectively.

Unrealized losses at September 30, 2016 included $941 million related to our investment in IBM common stock of which $855 million had been in a continuous unrealized loss position for more than twelve months. Unrealized losses represented 7% 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).


	September 30, 2016		December 31, 2015		September 30, 2017		December 31, 2016
Insurance and other	$	100,757	$	110,212	$	151,639	$	120,471
Railroad, utilities and energy *		1,476		1,238		2,087		1,186
Finance and financial products		302		372
Finance and financial products *						3,924		375

	$	102,535	$	111,822	$	157,650	$	122,032

~~Other investments include~~In June 2013, Berkshire invested $12.25 billion in a newly-formed company, H.J. Heinz Holding Corporation (“Heinz Holding”). The investment consisted of 425 million shares of common stock, warrants to acquire approximately 46 million additional shares of common stock at $0.01 per share and cumulative compounding 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 are shown in our Consolidated Balance Sheets as follows (in millions).

During 2008, we purchased $2.1 billion of Wrigley preferred stock that was acquired pursuant to a shareholder agreement in conjunction with Mars Incorporated’s acquisition of Wrigley. Pursuant to certain put and call provisions in the shareholder agreement, up to 50% of our original investment was redeemable over a 90-day period that was scheduled to begin on October 6, 2016. On August 8, 2016, we entered into a stock purchase agreement with Mars, under which Mars agreed to acquire all of the Wrigley preferred stock for approximately $4.56 billion, which included a prorated dividend that would have otherwise been payable on October 6, 2016. The transaction was completed on September 27, 2016.

~~We own 3,000,000 shares of Series A Cumulative Convertible Perpetual~~ Preferred ~~Stock of Dow (“Dow Preferred”~~Stock”) with a liquidation ~~value~~preference of ~~$1,000 per share. Each~~$8 billion. An affiliate of 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 ~~the Dow Preferred is convertible into 24.201 shares of Dow~~Heinz Holding 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~~stock. Heinz Holding 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.acquired H.J. Heinz Company.

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 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 and Tim Hortons. 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.10

In June 2015, Berkshire exercised the aforementioned common stock warrants. On July 1, 2015, Berkshire and 3G 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 acquired all of the outstanding common stock of Kraft Foods Group, Inc. (“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 interests in Kraft Heinz 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 $15.7 billion at September 30, 2017 and $15.3 billion at December 31, 2016. Our earnings determined under the equity method for the first nine months were $800 million in 2017 and $671 million in 2016. We received dividends on the common stock of $594 million in the first nine months of 2017 and $561 million in the first nine months of 2016, which we recorded as reductions of our investment. In the first nine months of 2016, we also received dividends of $180 million on our Preferred Stock investment, which Kraft Heinz redeemed for cash of $8.32 billion on June 7, 2016.

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 June 7, 2013, Berkshire and an affiliate of the global investment firm 3G Capital (such affiliate, “3G”), each made equity~~Other investments in 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”). Berkshire’s initial investments consisted of 425 million shares of Heinz Holding common stock, warrants, which were exercised in June 2015, to acquire approximately 46 million additional shares of common stock at one cent per share, and cumulative compounding preferred stock (“Preferred Stock”) with a liquidation preference of $8 billion. The aggregate cost of our investments was $12.25 billion. 3G also acquired 425 million shares of Heinz Holding common stock for $4.25 billion. On June 7, 2016, our Preferred Stock investment was redeemed for cash of $8.32 billion. Prior to its redemption, the Preferred Stock was entitled to dividends at 9% per annum.

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

On July 2, 2015, Heinz Holding acquired Kraft Foods Group, Inc. (“Kraft”). Upon completion of the acquisition, Heinz Holding was renamed The Kraft Heinz Company (“Kraft Heinz”). Kraft Heinz is one of the largest manufacturers and marketers of food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee, and other grocery products, in the world. Kraft Heinz’s leading iconic brands include~~Kraft, Heinz, ABC, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Maxwell House, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta.~~

In connection with Heinz Holding’s acquisition of Kraft, Kraft shareholders received one share of newly issued Heinz Holding common stock for each share of Kraft common stock and a special cash dividend of $16.50 per share. Following the issuance of these additional shares, Berkshire and 3G together owned approximately 51% of the outstanding Kraft Heinz common stock, with Berkshire owning approximately 26.8% and 3G owning 24.2%. We account for our investment in Kraft Heinz common stock on the equity method. Under the equity method, the issuance of shares by an investee is accounted for by the investor as if the investor had sold a proportionate share of its investment. As a result, we recorded a non-cash pre-tax holding gain of approximately $6.8 billion in the third quarter of 2015, representing the excess of the fair value of Kraft Heinz common stock at the date of the merger over our carrying value associated with the reductionare shown in our ~~ownership.~~

~~A summary of our investments in Kraft Heinz~~Consolidated Balance Sheets as follows (in millions).

In 2011, we acquired 50,000 shares of 6%Non-Cumulative Perpetual Preferred Stock of Bank of America Corporation (“BAC”) with a liquidation value of $100,000 per share (“BAC Preferred”) and warrants to purchase up to 700,000,000 shares of common stock of BAC (“BAC Warrants”) at $7.142857 per share (up to $5 billion in the aggregate). On August 24, 2017, we exercised all of our BAC Warrants and acquired 700,000,000 shares of BAC common stock. We also surrendered substantially all of our BAC Preferred as payment of the $5 billion cost to exercise the BAC Warrants and acquire the BAC common stock. At September 30, 2017, our investment in BAC common stock is included in investments in equity ~~method earnings~~securities.

We currently own Class A 9% Cumulative Compounding Perpetual Preferred Shares of Restaurant Brands International, Inc. (“RBI”) having a stated value of $3 billion (“RBI Preferred”). RBI is domiciled in Canada. We are entitled to dividends on the ~~common stock and~~RBI Preferred on a cumulative basis at 9% per annum plus an additional amount, if necessary, to produce anafter-tax yield as if the dividends ~~earned~~were paid by a U.S.-based company. The RBI Preferred is redeemable by RBI beginning on December 12, 2017. In the second quarter of 2017, RBI announced its intention to redeem all or a portion of the RBI Preferred. On October 25, 2017, RBI’s Board of Directors approved the redemption of all of the RBI Preferred ~~Stock in~~on December 12, 2017. The redemption price will be based on 109.9% of the ~~first nine months~~stated value but it is subject to adjustment pursuant to the terms of 2016 and 2015 were $851 million and $329 million, respectively, and are included in interest, dividend and other investment income in our Consolidated Statements of Earnings. Preferred Stock dividends received in the ~~first nine months of 2016 were $180 million. In 2015, Preferred Stock dividends received were $180 million in the third quarter and $540 million in the first nine months.~~

~~Summarized consolidated financial information of Kraft Heinz follows (in millions).~~related securities purchase agreement.

Our consolidated effective income tax rates for the third quarter and first nine months of ~~2016~~2017 were 25.3% and 27.2%, respectively, and 30.3% and 25.8%, ~~respectively. In 2015, our effective income tax rates were 32.3% for~~respectively, in the third quarter and ~~31.6% for the~~ first nine ~~months.~~months of 2016. Our effective income tax rate normally reflects recurring benefits ~~from the recurring impact of~~from: (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 apre-tax gain of $1.1 billion for financial reporting purposes. The exchange transaction was structured as atax-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 aone-time reduction of certain deferred income tax liabilities (approximately $750 million) that were recorded in 2005 in connection with our exchange of The Gillette Company common stock for P&G common stock upon the merger of those two companies. The P&G/Duracell exchange produced a 4.7 percentage point reduction in our consolidated effective income tax rate for the first nine months of 2016.

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


	Third Quarter				First Nine Months				Third Quarter						First Nine Months
	2016		2015		2016		2015		2017			2016			2017			2016
Fixed maturity securities—
Gross gains from sales and redemptions	$	5	$	6	$	44	$	88
Gross losses from sales and redemptions		(24)		(44)		(41)		(128)
Gross gains									$	56		$	5		$	82		$	44
Gross losses										(2	)		(24	)		(16	)		(41	)
Equity securities—
Gross gains from sales and redemptions		3,173		8,407		5,720		8,855
Gross losses from sales and redemptions		(13)		(75)		(76)		(95)
Gross gains										1,011			3,173			1,795			5,720
Gross losses										(419	)		(13	)		(626	)		(76	)
Other-than-temporary impairment losses		—		(26)		(63)		(26)		—			—			—			(63	)
Other		9		(2)		59		31		11			9			27			59

	$	3,150	$	8,266	$	5,643	$	8,725	$	657		$	3,150		$	1,262		$	5,643

We record investments in equity and fixed maturity securities classified asavailable-for-sale at fair value and record the difference between fair value and cost in other comprehensive income. We recognize investment gains and losses when we sell or otherwise dispose such securities. We realized apre-tax gain of approximately $1.0 billion in the third quarter of 2017 related to the surrender of substantially all of our BAC Preferred as described in Note 7. Gains from ~~sales and redemptions of~~ equity securities in the third quarter of 2016 included ~~gains of~~ approximately $2.4 billion from the disposition of our investment in Wrigley preferred ~~stock in the third quarter, and in~~stock. In the first nine months of 2016, gains from equity securities also included $610 million from the redemption of our investment in Kraft Heinz Preferred Stock and anon-cash holding gain of approximately $1.1 billion from the exchange of our P&G common stock in connection with the acquisition of Duracell. The non-cash gain from the P&G/Duracell exchange represented the excess of the fair value of net assets of Duracell over the cost basis of the P&G stock exchanged. Gains from sales and redemptions of equity securities in the third quarter and first nine months of 2015 included a non-cash holding gain of approximately $6.8 billion in connection with our investment in Kraft Heinz common stock.

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 losses recognized in earnings represent reductions in the cost basis of the investment, but not the fair value. Accordingly, such losses that are included in earnings are generally offset by a credit to other comprehensive income, producing no net effect on shareholders’ equity as of the balance sheet date.

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

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


	September 30, 2016		December 31, 2015		September 30, 2017			December 31, 2016
Insurance premiums receivable	$	10,226	$	8,843	$	11,317		$	10,462
Reinsurance recoverable on unpaid losses		3,482		3,307		3,254			3,338
Trade and other receivables		14,181		11,521		15,443			13,630
Allowances for uncollectible accounts		(345)		(368)		(362	)		(333	)

	$	27,544	$	23,303	$	29,652		$	27,097

~~Trade and other receivables at September 30, 2016 included approximately $1.9 billion related~~

Notes to ~~PCC and Duracell.~~Consolidated Financial Statements(Continued)

A summary of loans and finance receivables of our finance and financial products businesses ~~are summarized as~~ follows (in millions).


	September 30, 2016		December 31, 2015		September 30, 2017			December 31, 2016
Loans and finance receivables before allowances and discounts	$	13,663	$	13,186	$	13,983		$	13,728
Allowances for uncollectible loans		(183)		(182)		(180	)		(182	)
Unamortized acquisition discounts		(267)		(232)		(210	)		(246	)

	$	13,213	$	12,772	$	13,593		$	13,300

Loans and finance receivables are ~~predominantly~~primarily installment loans originated or acquired by our manufactured housing ~~installment loans.~~business. Provisions for loan losses in both the first nine months of ~~2016~~2017 and ~~2015~~2016 were $124 ~~million and $119 million, respectively.~~million. Loan charge-offs, net of recoveries, in the first nine months ~~of 2016~~were $126 million in 2017 and ~~2015 were~~ $123 million ~~and $136 million, respectively.~~in 2016. At September 30, ~~2016,~~2017, we evaluated approximately 98% of the manufactured housing 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 ornon-performing. At September 30, ~~2016,~~2017, we considered approximately ~~98%~~99% of the loan balances ~~were determined~~ to be performing and approximately ~~94%~~95% of the loan balances ~~were~~ current as to payment status. In June 2017, we agreed to provide a Canadian-based financial institution with a C$2 billion (approximately $1.6 billion)one-year secured revolving credit facility. The credit facility expires on June 29, 2018. As of September 30, 2017, there were no outstanding loans under the credit facility.

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

~~Property, plant and equipment at September 30, 2016 included approximately $3.3 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).

Note 12. Property, plant and equipment and assets held for lease(Continued)

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		September 30, 2016		December 31, 2015		Ranges of estimated useful life	September 30, 2017			December 31, 2016
Assets held for lease		5 – 35 years	$	11,906	$	11,317	5 – 35 years	$	12,287		$	11,902
Land		—		223		220	—		230			224
Buildings, machinery and other		3 – 50 years		1,289		1,207	3 – 50 years		1,413			1,302

				13,418		12,744			13,930			13,428
Accumulated depreciation				(3,681)		(3,397)			(3,993	)		(3,739	)

			$	9,737	$	9,347		$	9,937		$	9,689

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


	September 30, 2016		December 31, 2015		September 30, 2017		December 31, 2016
Balance at beginning of year	$	62,708	$	60,714	$	79,486	$	62,708
Acquisitions of businesses		17,016		2,563		1,199		17,650
Other, including foreign currency translation		(332)		(569)		197		(872	)

Balance at end of period	$	79,392	$	62,708	$	80,882	$	79,486


	September 30, 2016						December 31, 2015						September 30, 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		$	41,575		$	6,541		$	14,610		$	5,462	$	40,528	$	7,554	$	39,976	$	6,495
Railroad, utilities and energy			897			279			888			239		974		323		898		293

		$	42,472		$	6,820		$	15,498		$	5,701	$	41,502	$	7,877	$	40,874	$	6,788

Trademarks and trade names		$	6,049		$	821		$	3,041		$	765	$	5,352	$	672	$	5,175	$	616
Patents and technology			4,455			2,329			4,252			2,050		4,487		2,605		4,341		2,328
Customer relationships			28,851			2,721			5,474			2,131		28,497		3,517		28,243		2,879
Other			3,117			949			2,731			755		3,166		1,083		3,115		965

		$	42,472		$	6,820		$	15,498		$	5,701	$	41,502	$	7,877	$	40,874	$	6,788

Other intangible assets at September 30, 2016 included preliminary fair values of intangible assets of PCC and Duracell of approximately $26.2 billion, which included approximately $17.6 billion in customer relationships and trade names that were preliminarily determined to have indefinite lives. Amortization expense in the first nine months ~~of 2016~~was $1,108 million in 2017 and ~~2015 was~~ $1,085 million ~~and $837 million, respectively.~~in 2016. Intangible assets with indefinite lives ~~excluding intangible assets related to business acquisitions completed in 2016,~~ were approximately ~~$3.0~~$18.8 billion as of September 30, ~~2016~~2017 and $18.7 billion as of 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. ~~During 2016,~~Currently, the derivative contracts of our finance and financial products businesses ~~consisted 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).


	Third Quarter				First Nine Months					Third Quarter				First Nine Months
	2016		2015		2016			2015		2017		2016		2017		2016
Equity index put options	$	458	$	(802)	$	(421	)	$	371	$	308	$	458	$	703	$	(421	)
Credit default		—		38		89			9		—		—		—		89

	$	458	$	(764)	$	(332	)	$	380	$	308	$	458	$	703	$	(332	)

The equity index put option contracts are European style options written ~~between 2004 and~~prior to March 2008 on four major equity indexes. ~~These~~The contracts ~~will~~ 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~~aggregate premiums of $4.2 billion on these contracts at the contract 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 $1.6 billion~~$640 million at September 30, ~~2016~~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 ~~4.2~~3.2 years at September 30, ~~2016.~~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 September 30, ~~2016,~~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 eitherA- by Standard & Poor’s or A3 by Moody’s, collateral of up to $1.1 billion could be required to be posted.

In July 2016, our last remaining credit default contract was terminated by mutual agreement with the counterparty. We paid $195 million upon termination of the contract.

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 ~~$105~~$136 million as of September 30, ~~2016~~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 ~~$198~~$131 million as of September 30, ~~2016~~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~~Supplemental cash flow information ~~is presented in the following table~~follows (in millions).


	First Nine Months				First Nine Months
	2016		2015		2017		2016
Cash paid during the period for:
Income taxes	$	2,237	$	2,575	$	1,774	$	2,237
Interest:
Insurance and other businesses		499		312		747		499
Railroad, utilities and energy businesses		2,130		2,043		2,111		2,130
Finance and financial products businesses		263		274		296		263
Non-cash investing and financing activities:
Liabilities assumed in connection with business acquisitions		17,319		2,792		685		17,319
Equity securities exchanged in connection with business acquisition		4,239		—		—		4,239
Equity securities surrendered in connection with warrant exercise						4,965		—

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 forincurred-but-not-reported (“IBNR”) claims. Reconciliations of the changes in claim liabilities for the nine months ending September 30, 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 accident years. Incurred losses with respect to current accident year events in 2017 included approximately $3 billion from hurricanes Harvey, Irma and Maria and an earthquake in Mexico that occurred in the third quarter.

Incurred losses and loss adjustment expenses in the first nine months of 2017 and 2016 included decreases of $510 million and $1,453 million, respectively, in the estimated ultimate liabilities for prior accident years’ events. In the first nine months of 2017, we decreased prior accident years’ losses and loss adjustment expenses by $569 million with respect to primary insurance operations (primarily healthcare malpractice and workers’ compensation coverages), which was partly offset by a slight overall increase attributable to reinsurance operations. In the first nine months of 2016, we reduced estimated ultimate liabilities for prior accident years’ events for reinsurance operations ($697 million) and primary insurance ($756 million). The reductions related to reinsurance operations were primarily attributable to lower than expected reported losses, while the reductions for primary insurance primarily related to private passenger automobile, healthcare malpractice and workers’ compensation coverages.

In January 2017, a Berkshire subsidiary, National Indemnity Company (“NICO”), entered into a retroactive reinsurance agreement with various subsidiaries of American International Group, Inc. (collectively, “AIG”). NICO received cash consideration of $10.2 billion and 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. 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 accounted 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. We also recorded a liability for 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 the liability over the premiums earned. This 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 September 30, ~~2016.~~2017.


	Weighted Average Interest Rate		September 30, 2016		December 31, 2015		Weighted Average Interest Rate		September 30, 2017		December 31, 2016
Insurance and other:
Berkshire Hathaway Inc. (“Berkshire”) due 2016-2047		2.2%	$	18,108	$	9,799
Issued by Berkshire:
U.S. Dollar denominated borrowings due 2017-2047								2.8%	$	10,614	$	11,709
Euro denominated borrowings due 2020-2035								1.1%		8,032		5,994
Short-term subsidiary borrowings		2.2%		2,019		1,989		2.9%		1,819		2,094
Other subsidiary borrowings due 2016-2044		4.0%		7,387		2,811
Other subsidiary borrowings due 2017-2045								3.6%		6,797		7,378

			$	27,514	$	14,599			$	27,262	$	27,175

OnIn January ~~8, 2016, Berkshire entered into a $10 billion 364-day revolving credit agreement. In connection with the PCC acquisition, Berkshire borrowed $10 billion under the credit agreement. In March 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. 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 matured. In the first nine months of ~~3.125%~~2017, the carrying value of Berkshire’s Euro denominated senior notes increased $860 million due ~~in 2026. The proceeds from these debt issues were used~~to changes in the ~~repayment~~Euro/U.S. Dollar exchange rates. This increase produced a corresponding charge topre-tax earnings of ~~all outstanding borrowings under the aforementioned credit agreement. In June 2016, the revolving credit agreement was terminated. In August 2016, Berkshire issued $750~~$860 million in ~~senior unsecured notes consisting~~the first nine months of ~~$500~~2017, recorded as additionalnon-cash interest expense, of which $263 million ~~of 1.15% notes due~~was recorded in ~~2018 and $250 million of floating rate notes due in 2018, to replace $750 million of maturing debt. Other subsidiary borrowings at September 30, 2016 included $4.7 billion attributable to PCC.~~the third quarter.

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 nine months of 2017, BHE and its subsidiaries issued approximately $1.7 billion of debt with maturity dates ranging from 2022 to 2057 and a weighted average interest rate of 3.4%.

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. In May 2017, $650 million of BNSF debentures matured. As of September 30, ~~2016,~~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 million of 1.45% notes due in 2018, $1.0 billion of floating rate notes due in 2018, $1.25 billion of 1.70% notes due in 2019 and $500 million of floating rate notes due in 2019. In August 2016, BHFC issued $1.25 billion of senior notes consisting of $1 billion of 1.30% notes due in 2019 and $250$950 million of floating rate notes due in 2019 ~~primarily to replace $1~~and $350 million of floating rate notes due in 2020. In the first nine months of 2017, senior notes of $2.8 billion ~~of maturing debt.~~matured. The borrowings of BHFC, a wholly owned finance subsidiary of Berkshire, are fully and unconditionally guaranteed by Berkshire.

As of September 30, ~~2016,~~2017, our subsidiaries ~~also~~ had unused lines of credit and commercial paper capacity aggregating approximately ~~$8.2~~$9.2 billion to support short-term borrowing programs and provide additional liquidity. Such unused lines of credit included about ~~$4.0~~$5.5 billion related to BHE and its subsidiaries. In addition to BHFC’s borrowings, ~~Berkshire guarantees certain other subsidiary borrowings, which aggregated approximately $3.2 billion~~ at September 30, ~~2016.~~2017, Berkshire guaranteed approximately $2.1 billion 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 September 30, ~~2016~~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, U.S. Treasury Bills, receivables and accounts payable, accruals and other liabilities are considered to be reasonable estimates of their fair values.


	Carrying Value		Fair Value		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Value		Fair Value		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2016
September 30, 2017
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations and agencies		$ 4,565		$ 4,565		$ 3,318		$ 1,247		$ —	$	4,321	$	4,321	$	2,752	$	1,569	$	—
States, municipalities and political subdivisions		1,279		1,279		—		1,279		—		1,038		1,038		—		1,038		—
Foreign governments		9,795		9,795		7,704		2,091		—		8,765		8,765		6,849		1,916		—
Corporate bonds		7,789		7,789		—		7,682		107		7,149		7,149		—		7,142		7
Mortgage-backed securities		1,219		1,219		—		1,219		—		983		983		—		983		—
Investments in equity securities		102,535		102,535		102,534		—		1		157,650		157,650		157,641		9		—
Investment in Kraft Heinz common stock		15,711		29,130		29,130		—		—		15,695		25,238		25,238		—		—
Other investments		17,493		17,493		376		—		17,117		3,311		3,311		—		3,311		—
Loans and finance receivables		13,213		13,650		—		14		13,636		13,593		13,886		—		17		13,869
Derivative contract assets⁽¹⁾		105		105		1		5		99		136		136		1		19		116
Derivative contract liabilities:
Railroad, utilities and energy⁽¹⁾		198		198		5		161		32		131		131		1		113		17
Finance and financial products:
Equity index put options		3,973		3,973		—		—		3,973		2,187		2,187		—		—		2,187
Notes payable and other borrowings:
Insurance and other		27,514		29,119		—		29,119		—		27,262		28,093		—		28,093		—
Railroad, utilities and energy		58,811		69,130		—		69,130		—		61,147		68,881		—		68,881		—
Finance and financial products		15,473		16,251		—		15,862		389		13,081		13,578		—		13,577		1

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 nine months ending September 30, ~~2016~~2017 and ~~2015~~2016 follow (in millions).


													Investments in fixed maturity securities			Investments in equity securities and other investments			Net derivative contract liabilities
Nine months ending September 30, 2017
Balance at December 31, 2016													$	64		$	17,257		$	(2,824	)
Gains (losses) included in:
Earnings														—			—			822
Other comprehensive income														1			1,156			(3	)
Regulatory assets and liabilities														—			—			(5	)
Acquisitions, dispositions and settlements														(58	)		—			(78	)
Transfers into/out of Level 3														—			(18,413	)		—

Balance at September 30, 2017													$	7		$	—		$	(2,088	)
	Investments in fixed maturity securities				Investments in equity securities and other investments				Net derivative contract liabilities
Nine months ending September 30, 2016
Balance at December 31, 2015		$	100			$	21,403			$	(3,785	)	$	100		$	21,403		$	(3,785	)
Gains (losses) included in:
Earnings			—				2,409				(221	)		—			2,409			(221	)
Other comprehensive income			3				(2,233	)			(2	)		3			(2,233	)		(2	)
Regulatory assets and liabilities			—				—				(12	)		—			—			(12	)
Acquisitions, dispositions and settlements			5				(4,461	)			(81	)		5			(4,461	)		(81	)
Transfers into/out of Level 3			(1	)			—				195			(1	)		—			195

Balance at September 30, 2016		$	107			$	17,118			$	(3,906	)	$	107		$	17,118		$	(3,906	)

Nine months ending September 30, 2015
Balance at December 31, 2014		$	8			$	21,996			$	(4,759	)
Gains (losses) included in:
Earnings			—				—				467
Other comprehensive income			—				(1,722	)			(5	)
Regulatory assets and liabilities			—				—				(21	)
Acquisition, dispositions and settlements			103				—				(65	)
Transfers into/out of Level 3			—				—				3

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

Gains and losses included in earnings are included as components of investment gains/losses, derivative gains/losses orand 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.

As disclosed in Note 7, in the third quarter of 2017, we exercised our BAC Warrants to acquire BAC common stock. As payment of the cost to acquire the BAC common stock, we surrendered substantially all of our BAC Preferred. Additionally, we expect that RBI will redeem our RBI Preferred investment in the fourth quarter of 2017. In the second quarter of 2017, we concluded the Level 3 inputs used in the previous fair value determinations of the BAC Warrants, BAC Preferred Stock and RBI Preferred were not significant and we transferred these measurements from Level 3 to Level 2. In the third quarter of 2016, our investment in Wrigley preferred stock was redeemed.

Quantitative information as of September 30, ~~2016,~~2017, with respect to significant 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).

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

Our equity index put option 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 ~~the~~ index price, contract duration and dividend and interest ~~rates~~rate inputs (including a Berkshirenon-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. 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 nine months 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 toone-fifteen-hundredth (1/1,500) of such rights of Class A common stock. Each Class B common share possesses voting rights equivalent toone-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 ~~1,644,031~~1,644,716 shares outstanding as of September 30, ~~2016~~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 inafter-tax accumulated other comprehensive income attributable to Berkshire Hathaway shareholders and significant amounts reclassified out of accumulated other comprehensive income for the nine months ending September 30, ~~2016~~2017 and ~~2015~~2016 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
Nine months ending September 30, 2016
Balance at December 31, 2015		$	38,598		$	(3,856	)		$	(762)		$	2			$	33,982
2017
Balance at December 31, 2016																			$	43,176		$	(5,268	)	$	(593	)	$	(17	)	$	37,298
Other comprehensive income, net before reclassifications			(912)			(101	)			(39)			(26	)			(1,078	)		11,734			1,946			(90	)		19			13,609
Reclassifications from accumulated other comprehensive income			(3,188)			—				59			23				(3,106	)
Reclassifications from accumulated other comprehensive income into net earnings																				(803	)		—			61			18			(724	)

Balance at September 30, 2016		$	34,498		$	(3,957	)		$	(742)		$	(1	)		$	29,798
Balance at September 30, 2017																			$	54,107		$	(3,322	)	$	(622	)	$	20		$	50,183

Reclassifications from other comprehensive income into net earnings:
Reclassifications into net earnings:
Investment gains/losses		$	(4,904)		$	—			$	—		$	—			$	(4,904	)	$	(1,235	)	$	—		$	—		$	—		$	(1,235	)
Other			—			—				79			41				120			—			—			82			32			114

Reclassifications before income taxes			(4,904)			—				79			41				(4,784	)		(1,235	)		—			82			32			(1,121	)
Applicable income taxes			(1,716)			—				20			18				(1,678	)		(432	)		—			21			14			(397	)

		$	(3,188)		$	—			$	59		$	23			$	(3,106	)	$	(803	)	$	—		$	61		$	18		$	(724	)

2016
Balance at December 31, 2015																			$	38,598		$	(3,856	)	$	(762	)	$	2		$	33,982
Other comprehensive income, net before reclassifications																				(912	)		(101	)		(39	)		(26	)		(1,078	)
Reclassifications from accumulated other comprehensive income into net earnings																				(3,188	)		—			59			23			(3,106	)

Balance at September 30, 2016																			$	34,498		$	(3,957	)	$	(742	)	$	(1	)	$	29,798

Reclassifications into net earnings:
Investment gains/losses																			$	(4,904	)	$	—		$	—		$	—		$	(4,904	)
Other																				—			—			79			41			120

Reclassifications before income taxes																				(4,904	)		—			79			41			(4,784	)
Applicable income taxes																				(1,716	)		—			20			18			(1,678	)

																			$	(3,188	)	$	—		$	59		$	23		$	(3,106	)

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.

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

In the third quarter of 2016, ~~our wholly-owned subsidiary, National Indemnity Company~~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 June 30, ~~2016~~2017 were approximately $5.5 billion and ~~$1.9~~$2.1 billion, respectively. The acquisition price will be based on 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~~We currently ~~expected to~~expect this acquisition will be completed in ~~late 2017.~~early 2018.

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. A significant source of funding for Berkadia’s operations is through the issuance of commercial 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 forone-half of any losses we incur under the policy.

On July 7, 2017, Berkshire Hathaway Energy Company (“BHE”) agreed to acquire 80.03% of the outstanding equity interests of Oncor Electric Delivery Company LLC (“Oncor”) for $9 billion pursuant to an agreement between BHE and Energy Future Holdings Corp. (“EFH”). In August 2017, the agreement to acquire Oncor was terminated by EFH.

On October 3, 2017, we entered into an investment agreement and an equity purchase agreement whereby we acquired a 38.6% interest in Pilot Travel Centers LLC, d/b/a Pilot Flying J (“Pilot Flying J”). Pilot Flying J, headquartered in Knoxville, Tennessee, is one of the largest operators of travel centers in North America, with more than 27,000 team members, 750 locations across the U.S. and Canada, and approximately $20 billion in annual revenues. The Haslam family currently owns a 50.1% interest in Pilot Flying J and a third party owns the remaining 11.3% interest. In addition, on October 3, 2017, we entered into an agreement to acquire in 2023 an additional 41.4% interest in Pilot Flying J with the Haslam family retaining a 20% interest. As a result, Berkshire will become the majority owner in 2023.

Our operating businesses include a large and diverse group of insurance, railroad, utilities and energy, 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 the first quarter of 2016.~~distribution characteristics, even though those business units are operated under separate local management. Revenues by segment for the third quarter and first nine months of 2017 and 2016 were as follows (in millions).


	Third Quarter				First Nine Months				Third Quarter							First Nine Months
	2016		2015		2016		2015		2017				2016			2017			2016
Operating Businesses:
Insurance group:
Underwriting:
GEICO	$	6,474	$	5,788	$	18,771	$	16,792	$	7,543			$	6,474		$	21,632		$	18,771
General Re		1,389		1,405		4,168		4,397		1,630				1,389			4,599			4,168
Berkshire Hathaway Reinsurance Group		1,872		1,892		5,767		5,317		2,324				1,872			15,951			5,767
Berkshire Hathaway Primary Group		1,629		1,429		4,581		3,948		1,852				1,629			5,287			4,581
Investment income		1,043		1,046		3,428		3,474		1,248				1,043			3,664			3,428

Total insurance group		12,407		11,560		36,715		33,928		14,597				12,407			51,133			36,715
BNSF		5,167		5,600		14,519		16,571		5,314				5,167			15,749			14,519
Berkshire Hathaway Energy		5,198		5,144		13,615		14,018		5,370				5,198			14,250			13,615
Manufacturing		12,082		9,181		34,837		27,568		12,819				12,082			37,654			34,837
McLane Company		12,271		12,264		36,121		36,200		12,798				12,271			37,480			36,121
Service and retailing		6,331		6,151		18,607		16,966		6,527				6,331			19,170			18,607
Finance and financial products		1,962		1,725		5,677		5,078		2,187				1,962			6,085			5,677

		55,418		51,625		160,091		150,329		59,612				55,418			181,521			160,091
Reconciliation of segments to consolidated amount:
Investment and derivative gains/losses		3,608		7,502		5,311		9,105		965				3,608			1,965			5,311
Income from Kraft Heinz		225		98		851		329
Eliminations and other		(183)		(236)		(322)		(762)		(52	)			(183	)		(256	)		(142	)

	$	59,068	$	58,989	$	165,931	$	159,001	$	60,525			$	58,843		$	183,230		$	165,260
												��

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 ~~in millions.~~after deducting income taxes and exclude earnings attributable to noncontrolling interests (in millions).


	Third Quarter						First Nine Months				Third Quarter						First Nine Months
	2016			2015			2016		2015		2017			2016			2017			2016
Insurance – underwriting	$	272		$	414		$	822	$	856	$	(1,439	)	$	272		$	(1,728	)	$	822
Insurance – investment income		850			840			2,747		2,692		1,044			850			2,917			2,747
Railroad		1,020			1,156			2,576		3,164		1,042			1,020			2,838			2,576
Utilities and energy		932			786			1,855		1,709		963			932			1,980			1,855
Manufacturing, service and retailing		1,702			1,177			4,461		3,609		1,694			1,702			4,673			4,461
Finance and financial products		337			303			1,044		962		341			337			976			1,044
Investment and derivative gains/losses		2,347			4,877			4,593		5,920		623			2,347			1,270			4,593
Other		(262	)		(125	)		(310)		(307)		(201	)		(262	)		(537	)		(310	)

Net earnings attributable to Berkshire Hathaway shareholders	$	7,198		$	9,428		$	17,788	$	18,605	$	4,067		$	7,198		$	12,389		$	17,788

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 theday-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.

~~Earnings of our~~Our insurance businesses generatedafter-tax losses from underwriting ~~operations were lower~~ in the third quarter and first nine months of ~~2016 as compared~~2017. Underwriting results in the third quarter of 2017 included estimatedpre-tax losses of approximately $3.0 billion ($1.95 billionafter-tax) attributable to ~~2015. In~~three major hurricanes in the U.S. and Puerto Rico and an earthquake in Mexico. Underwriting results in 2017 also includedafter-tax foreign currency exchange rate losses from the revaluation of certainnon-U.S. Dollar denominated reinsurance liabilities. Suchafter-tax losses were $80 million in the third quarter and $276 million for the first nine months of 2017 compared to gains of $46 million and $269 million in the comparable 2016 ~~the Berkshire Hathaway Reinsurance and Primary Groups generated lower net underwriting earnings while GEICO and General Re had earnings increases.~~ periods.

Our railroad business ~~generated lower net~~produced increased earnings in the third quarter (2%) and first nine months (10%) of 2017 compared to 2016, reflecting increased unit volume. Earnings of our utility and energy business were also higher in the third quarter and first nine months of 2017 compared to 2016, primarily due to a 6.6% year-to-date decline in unit volume. Earnings of our utilities and energy businesses increased in the third quarter and first nine months of 2016 which was attributable to increased reflecting slightly higherpre-tax earnings and lower effective income tax rates. ~~The increases in net earnings from~~Earnings of our manufacturing, service and retailing businesses in the third quarter of 2017 were relatively unchanged and increased 4.8% in the first nine months compared to the same periods in 2016. Earnings in the first nine months of 2017 reflected comparatively higher earnings from several of our larger operations and the impact of ~~the PCC~~businesses acquired in 2016 and ~~Duracell acquisitions,~~2017, partly offset by ~~lower aggregate earnings from~~losses and impairment charges related to the ~~other businesses within this group.~~disposition of a priorbolt-on acquisition by one of our manufacturing businesses.

After-tax investment and derivative gains in the third quarter and first nine months of 2017 were ~~approximately~~$623 million and $1.3 billion, respectively, and $2.3 billion in the third quarter and $4.6 billion ~~respectively,~~ in ~~2016 compared to $4.9 billion and $5.9 billion, respectively, in 2015.~~ the first nine months of 2016.After-tax investment gains in the third quarter of 2016 included approximately $1.6 billion from the sale of our Wrigley preferred stock investment and in the first nine months of 2016 also includednon-cash gains of approximately $1.9 billion related to the exchange of P&G common stock for 100% of the common stock of Duracell. ~~After-tax investment~~

In the first nine months of 2017, net unrealized gains related to our investments in equity securities(after-tax and ~~derivative~~net of noncontrolling interests) included in other comprehensive income were approximately $10.9 billion. Beginning in 2018, unrealized gains and losses on equity securities will be included in earnings after the ~~third quarter~~adoption of ~~2015 included non-cash holding gains of approximately $4.4 billion in connection with our investment in Kraft Heinz common stock.~~a new accounting standard required under U.S. GAAP. We believe that investment and derivative gains/losses, whether realized from sales or unrealized from changes in market prices, are often meaningless in terms of understanding our reported results or evaluating our economic performance. Investment and derivative gains and losses have caused and will ~~likely~~ continue to cause significant volatility in our periodic earnings.

Other earnings in 2017 and 2016 includedafter-tax foreign currency exchange rate losses related to parent company Euro denominated notes payable. Such losses, which related to revaluations of the debt due to changes in exchange rates, were $172 million in the third quarter and $571 million in the first nine months of 2017 compared to $48 million in the third quarter and $107 million in the first nine months of 2016.

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

We engage in both primary insurance and reinsurance of ~~property/~~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~~assumed 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;~~managers, while 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.

The timing and amount of ~~large property~~significant catastrophe losses can produce significant volatility in our periodic underwriting results, particularly with respect to our reinsurance businesses. ~~In the first nine months~~Generally, we considerpre-tax catastrophe losses in excess of ~~2016, we had no~~$100 million from a current year event as significant, ~~catastrophe losses. Based on preliminary estimates, we believe that losses arising from Hurricane Matthew~~and in ~~October 2016 will not be material. In~~ the third quarter of ~~2015,~~2017, we ~~recorded estimated losses of $130 million~~had four such events. There were no significant events in ~~connection with a property loss event in China.~~2016. 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~~decreases or ~~increase~~increases topre-tax earnings. ~~Variations in foreign currency exchange rates can produce relatively~~Our periodic underwriting results may also include significant ~~foreign currency exchange~~ gains and losses arising from the changes in ~~our periodic earnings with respect to~~ the valuation ofnon-U.S. ~~dollar~~Dollar denominated reinsurance liabilities of our U.S.-based insurance ~~subsidiaries.~~

~~A key marketing strategy~~subsidiaries as a result of foreign currency exchange rate fluctuations. Foreign currency exchange rates can be volatile and the resulting impact on our insurance businesses is the maintenance of extraordinary capital strength. A measure of capital strength is combined shareholders’ equity determined pursuant to U.S. statutory accounting rules (“Statutory Surplus”). Statutory Surplus of our insurance businesses was approximately $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.underwriting earnings can be relatively significant. Underwriting results of our insurance businesses are summarized below. Amounts are in millions.


	Third Quarter				First Nine Months				Third Quarter						First Nine Months
	2016		2015		2016		2015		2017			2016			2017			2016
Underwriting gain (loss) attributable to:
GEICO	$	138	$	258	$	552	$	471	$	(416	)	$	138		$	(122	)	$	552
General Re		100		(2)		144		58		(504	)		100			(622	)		144
Berkshire Hathaway Reinsurance Group		(19)		199		86		247		(1,341	)		(19	)		(2,341	)		86
Berkshire Hathaway Primary Group		190		188		485		566		52			190			473			485

Pre-tax underwriting gain		409		643		1,267		1,342
Pre-tax underwriting gain (loss)										(2,209	)		409			(2,612	)		1,267
Income taxes and noncontrolling interests		137		229		445		486		(770	)		137			(884	)		445

Net underwriting gain	$	272	$	414	$	822	$	856
Net underwriting gain (loss)									$	(1,439	)	$	272		$	(1,728	)	$	822

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).


	Third Quarter								First Nine Months								Third Quarter									First Nine Months
	2016				2015				2016				2015				2017					2016				2017					2016
	Amount		%		Amount		%		Amount		%		Amount		%		Amount			%		Amount		%		Amount			%		Amount		%
Premiums written	$	6,977			$	6,141			$	19,771			$	17,618			$	8,130				$	6,977			$	22,987				$	19,771

Premiums earned	$	6,474		100.0	$	5,788		100.0	$	18,771		100.0	$	16,792		100.0	$	7,543			100.0	$	6,474		100.0	$	21,632			100.0	$	18,771		100.0

Losses and loss adjustment expenses		5,335		82.4		4,658		80.4		15,331		81.7		13,673		81.4		6,933			91.9		5,335		82.4		18,631			86.1		15,331		81.7
Underwriting expenses		1,001		15.5		872		15.1		2,888		15.4		2,648		15.8		1,026			13.6		1,001		15.5		3,123			14.5		2,888		15.4

Total losses and expenses		6,336		97.9		5,530		95.5		18,219		97.1		16,321		97.2		7,959			105.5		6,336		97.9		21,754			100.6		18,219		97.1

Pre-tax underwriting gain	$	138			$	258			$	552			$	471			$	(416	)			$	138			$	(122	)			$	552

Premiums written in the third quarter and first nine months of 2017 increased approximately $1.15 billion (16.5%) and $3.2 billion (16.3%), respectively, compared to 2016. Premiums earned in 2017 increased 16.5% in the third quarter and 15.2% in the first nine months compared to the same periods in 2016. Over the past year, voluntary autopolicies-in-force grew approximately 9.9% and premiums per auto policy increased 6.0%. The increase in average premiums per policy was attributable to rate increases, coverage changes and changes in state and risk mix. Voluntary auto new business sales in 2017 increased 15.8% in the first nine months compared to the same period in 2016. Voluntary autopolicies-in-force increased approximately 1,144,000 during the first nine months of 2017.

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

~~Premiums written in~~In the third quarter and first nine months of ~~2016 were $7.0 billion and $19.8 billion, respectively, increases of 13.6% and 12.2%, respectively,~~2017, we incurredpre-tax underwriting losses compared topre-tax gains in the corresponding 2016 periods. In the third quarter of 2017, our underwriting results included significant losses from hurricanes Harvey and ~~first nine months of 2015. Premiums earned~~Irma. Our underwriting results in ~~2016~~2017 were also affected by increased ~~$686 million (11.9%~~average claims severities.

Losses and loss adjustment expenses in 2017 increased approximately $1.6 billion (30.0%) in the third quarter and ~~$2.0~~$3.3 billion ~~(11.8%~~(21.5%) in the first nine months, as compared to the same periods in 2015. These increases reflected voluntary auto policy-in-force growth of 5.2% and increased average premiums per auto policy of approximately 6.9% over the past twelve months, which were attributable to rate increases, coverage changes and changes in state and risk mix. Throughout 2015, we experienced increases in claims frequencies and severities across all of our major coverages. As a result, we implemented premium rate increases as necessary. Voluntary auto new business sales in 2016 increased 16.5% in the third quarter and 6.8% in the first nine months compared to ~~2015. The significant growth~~the corresponding periods in voluntary auto new business during the third quarter has continued in October. In 2016, voluntary auto policies-in-force increased by approximately 276,000 in the third quarter and 670,000 in the first nine months.

~~Losses and loss adjustment expenses incurred in 2016 increased $677 million (14.5%) in the third quarter and $1.7 billion (12.1%) in the first nine months, as compared to 2015. In 2016, our~~2016. Our loss ratio (the ratio of losses and loss adjustment expenses to earned premiums) for the third quarter and first nine months of 2017 increased ~~2.0~~9.5 percentage points and 4.4 percentage points, respectively, compared to the same periods in 2016. In the third quarter of 2017, we incurred estimated losses related to hurricanes Harvey and Irma of approximately $500 million (6.6% of premiums earned in the third quarter and ~~0.3 percentage points~~2.3% in the first nine months as compared to 2015, reflecting increased storm losses and claims severity, partly offset by the aforementioned premium rate increases. Claims frequencies (claim counts per exposure unit) in the first nine months of 2016 for property damage and collision coverages were relatively unchanged as the decreases experienced in the first quarter were offset by subsequent increases. Claim frequencies for bodily injury coverage for the first nine months of 2016 were relatively unchanged from 2015.months). Average claims severities were higher in the first nine months of ~~2016~~2017 for ~~physical~~property damage and collision coverages (four to six percent range) and bodily injury coverage (five to seven percent range). ~~In addition, storm-related losses (primarily from hail and flooding)~~Claims frequencies in the ~~third quarter and~~ first nine months of ~~2016~~2017 were ~~approximately $90 million and $380 million, respectively,~~relatively flat compared to ~~$5 million~~2016 for property damage, collision and ~~$129 million, respectively,~~bodily injury coverages and decreased about three percent for personal injury protection coverage. Losses and loss adjustment expenses in the ~~corresponding 2015 periods.~~first nine months of 2017 includedpre-tax losses of $37 million from there-estimation of liabilities for prior years’ claims compared topre-tax gains of $382 million in 2016.

Underwriting expenses in the third quarter and first nine months of ~~2016 were $1.0 billion and $2.9 billion, respectively, increases of $129~~2017 increased $25 million ~~(14.8%~~(2.5%) and ~~$240~~$235 million ~~(9.1%~~(8.1%), respectively, ~~over 2015.~~compared to 2016. Our expense ~~ratio~~ratios (underwriting expenses to premiums earned) in ~~2016 increased 0.4~~2017 declined 1.9 percentage points in the third quarter and ~~decreased 0.4~~0.9 percentage points in the first nine months compared to ~~2015.~~2016. The largest components of underwriting expenses are employee-related ~~expenses~~ (salaries and benefits) and advertising, ~~costs. The increases in underwriting expenses reflected the increases in policies-in-force.~~which increased at a slower rate than premiums earned.

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. ~~Property and casualty reinsurance is written primarily on a direct basis, but is~~We also ~~written through brokers and intermediaries. Life~~write life and health reinsurance ~~is written~~ primarily on a direct basis through General Re Life Corporation and 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)
	Third Quarter				First Nine Months				Third Quarter				First Nine Months				Premiums earned								Pre-tax underwriting gain (loss)
	2016		2015		2016		2015		2016		2015		2016		2015		Third Quarter				First Nine Months				Third Quarter					First Nine Months
																	2017		2016		2017		2016		2017			2016		2017			2016
Property/casualty	$	643	$	683	$	1,919	$	2,119	$	66	$	(9)	$	119	$	65	$	844	$	643	$	2,275	$	1,919	$	(561	)	$	66	$	(718	)	$	119
Life/health		746		722		2,249		2,278		34		7		25		(7)		786		746		2,324		2,249		57			34		96			25

	$	1,389	$	1,405	$	4,168	$	4,397	$	100	$	(2)	$	144	$	58	$	1,630	$	1,389	$	4,599	$	4,168	$	(504	)	$	100	$	(622	)	$	144

In the third quarter and first nine months of ~~2016,~~2017, property/casualty premiums written were relatively unchanged from 2015, reflecting a modest increase in North America, offset by modestly lower volume in international markets. In the first nine months, property/casualty premiums written in 2016 declined $215earned increased $201 million ~~(9%~~(31%) ~~compared to 2015, primarily due to lower volume in international treaty~~ and ~~broker market business, and to a lesser degree, to unfavorable foreign currency exchange rate changes. In 2016, premiums earned decreased $40~~$356 million ~~(6%~~(19%) ~~in the third quarter and $200 million (9%) in the first nine months as~~, respectively, compared to the ~~same periods~~corresponding 2016 periods. These increases reflected higher written premiums in ~~2015. The declines~~both direct and broker markets, primarily derived from new business and increased participations for renewal business. Despite the increase in ~~earned premiums reflected lower~~premium volume ~~and unfavorable changes~~ in ~~foreign currency exchange rates. Insurance~~2017, industry capacity dedicated to property and casualty markets remains high and price competition in most ~~property/casualty~~ reinsurance markets persists. We continue to decline business when we believe prices are inadequate. ~~However,~~

Our property/casualty operations incurredpre-tax underwriting losses of $561 million in the third quarter and $718 million in the first nine months of 2017 compared topre-tax underwriting gains of $66 million and $119 million, respectively, in the comparable 2016 periods. In the third quarter of 2017, we ~~remain prepared~~incurred estimated losses aggregating $835 million from hurricanes Harvey, Irma and Maria and an earthquake in Mexico. In the first nine months of 2017, we also incurred estimated losses of approximately $50 million from a cyclone in Australia. Losses from catastrophe events in the first nine months of 2016 were not significant.

In the first nine months of 2017, we also increased our estimates for unpaid losses by approximately $140 million with respect to ~~write substantially more~~certain United Kingdom (“U.K.”) liability business ~~when more appropriate prices can be attained.~~written in prior years. The increase was the result of the U.K. Ministry of Justice’s decision in the first quarter to reduce the fixed discount rate required in lump sum settlement calculations of U.K. personal injury claims. The discount rate, referred to as the Ogden rate, was reduced from 2.5% to negative 0.75%. We expect this reduction in the Ogden rate will significantly increase claim costs associated with currently unsettled cases, as well as for future cases. The Ogden rate is subject to adjustment in the future at the discretion of the U.K Government and significant changes in that rate may have a significant effect on our claim liability estimates.

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

Our property business generated pre-tax underwriting gains of $76 million in the third quarter and $154 million in the first nine months of 2016 compared to gains of $15 million and $114 million, respectively, in the corresponding 2015 periods. There were no significant catastrophe losses during the first nine months of 2016, while underwriting results in 2015 included estimated losses of $44 million from an explosion in Tianjin, China during the third quarter. In the first nine months of 2016, we recognized pre-tax gains from reductions of estimated losses on prior years’ business of approximately $160 million, which were relatively unchanged from 2015.

Our casualty/workers’ compensation business produced pre-tax underwriting losses of $10 million in the third quarter and $35 million in the first nine months of 2016 and pre-tax losses of $24 million in the third quarter and $49 million in the first nine months of 2015. Underwriting results in 2016 and 2015 included net losses on current year business and charges for recurring discount accretion on workers’ compensation liabilities and deferred charge amortization on retroactive reinsurance contracts, partially offset by gains from reductions of estimated losses on prior years’ business. 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.

InLife/health premiums earned in the third quarter and first nine months of ~~2016, life/health premiums earned~~2017 increased ~~$24~~$40 million ~~(3%~~(5%) and ~~decreased $29~~$75 million ~~(1%~~(3%), respectively, compared to ~~2015. Adjusting for changes~~2016. The increases reflected growth in ~~foreign currency exchange rates, premiums earned in 2016 increased $31~~North America and several international markets. Our life/health operations producedpre-tax underwriting gains of $57 million ~~(4%)~~ in the third quarter and $32 million (1%) in the first nine months, reflecting growth across a number of non-U.S. markets, particularly in Asia and the United Kingdom. Our life/health business produced pre-tax underwriting gains of $25$96 million in the first nine months of ~~2016 compared to losses~~2017, increases of $7$23 million inover the third quarter and $71 million over the first nine months of 2015. In the first nine months of 2016, underwriting results reflected gains from our international life business offset by losses from the recurring discount accretion on long-term care liabilities and higher than expected individual life claim frequency in North America. Our international underwriting2016. Underwriting results in ~~2016 were adversely affected by increased~~2017 reflected lower underwriting expenses and the impact of increasing liabilities for estimated premium deficiencies on certain disability business in 2016. Underwriting results in the ~~second quarter, partly offset by reductions in both foreign currency exchange~~first nine months of 2017 and 2016 also includedpre-tax losses from the runoff of U.S. long-term care and disability business of $58 million and $48 million, respectively, primarily due to the ~~adverse impact from lower interest rates compared to 2015.~~periodic discount accretion on long-term care liabilities.

BHRG underwritesexcess-of-loss reinsurance and quota-share coverages on property and casualty risks for insurers and reinsurers worldwide, including property catastrophe insurance and reinsurance. 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~~follows (in millions).


	Premiums earned								Pre-tax underwriting gain (loss)										Premiums earned								Pre-tax underwriting gain (loss)
	Third Quarter				First Nine Months				Third Quarter				First Nine Months						Third Quarter				First Nine Months				Third Quarter						First Nine Months
	2016		2015		2016		2015		2016		2015		2016			2015			2017		2016		2017		2016		2017			2016			2017			2016
Property/casualty	$	1,164	$	1,341	$	3,358	$	3,168	$	40	$	315	$	415		$	737		$	1,217	$	1,164	$	3,488	$	3,358	$	(927	)	$	40		$	(1,144	)	$	415
Retroactive reinsurance		—		1		582		4		(114)		2		(196	)		(283	)		550		—		10,736		582		(285	)		(114	)		(875	)		(196	)
Life and annuity		708		550		1,827		2,145		55		(118)		(133	)		(207	)		557		708		1,727		1,827		(129	)		55			(322	)		(133	)

	$	1,872	$	1,892	$	5,767	$	5,317	$	(19)	$	199	$	86		$	247		$	2,324	$	1,872	$	15,951	$	5,767	$	(1,341	)	$	(19	)	$	(2,341	)	$	86

~~Premiums written in~~In the third quarter and first nine months of ~~2016 decreased $945~~2017, premiums earned increased $53 million ~~(50.2%~~(5%) and ~~$322~~$130 million ~~(8.2%~~(4%), respectively, compared to 2015. The decline during the third quarter was primarily due to the impact of the quota-share contract with Insurance Australia Group Ltd. (“IAG”), which became effective on July 1, 2015. Premiums written in2016. In the third quarter of ~~2015 included~~2017, we earned premiums on certain contracts where policy limits were fully exhausted as a ~~quota-share percentage~~result of ~~IAG’s unearned~~catastrophe losses. Such premiums ~~in-force as of the effective date.~~would have been otherwise earned in future periods. Premiums ~~earned decreased $177 million (13.2%) in the third quarter and increased $190 million (6.0%) in~~written for the first nine months of 2017 declined 5% compared to 2015. The increase in the first nine months was primarily attributable to increased premiums earned from the IAG contract, partially offset by lower premiums from property business. Our premium volume is generally constrained for most property/casualty reinsurance coverages, and for property catastrophe reinsurance in particular as2016. Premium rates, in our view, are generally ~~inadequate. However,~~inadequate and we have ~~the capacity and desire to write more business when appropriate pricing can be obtained.~~constrained our volumes.

Our ~~property/casualty business generated~~ pre-tax underwriting ~~gains of $40 million and $415~~losses were $927 million in the third quarter and $1.1 billion in the first nine months of 2017. In the third quarter of 2017, we incurred estimated losses of approximately $1.45 billion related to hurricanes Harvey, Irma and Maria and an earthquake in Mexico. Underwriting results in the first nine months of 2017 also included estimated losses of $110 million from a cyclone in Australia. In the first nine months of 2016, ~~respectively,~~we incurred no significant losses from catastrophe loss events. In the first nine months of 2017, we also increased estimated ultimate liabilities for prior years’ loss events by approximately $200 million, compared to ~~$315~~reductions of such liabilities of approximately $290 million in 2016. These increases and ~~$737~~decreases produced corresponding decreases and increases inpre-tax underwriting earnings in those periods.

We periodically write retroactive reinsurance contracts, which provide indemnification of losses and loss adjustment expenses with respect to past loss events. In January 2017, NICO entered into an aggregateexcess-of-loss retroactive reinsurance agreement with AIG (the “AIG Agreement”) that became effective on February 2, 2017. In connection with the AIG Agreement, we received cash premiums of $10.2 billion. As of the effective date, we also recorded losses and loss adjustment expenses incurred of $10.2 billion. Thus, on the effective date, the AIG Agreement had no effect on ourpre-tax underwriting results. See Note 16 to the accompanying Consolidated Financial Statements.

Pre-tax underwriting results in 2017 included losses of $60 million ~~respectively,~~ in ~~2015. In~~ the third quarter and $251 million in the first nine months from changes in foreign currency exchange rates, which increased foreign currency denominated liabilities of ~~2015,~~U.S subsidiaries. In 2016, foreign currency exchange rate changes reduced such liabilities and resulted inpre-tax gains of $21 million in the ~~property/casualty business incurred losses of $86~~third quarter and $198 million ~~from an explosion~~ in ~~Tianjin, China. The declines in pre-tax underwriting gains in 2016 were primarily due to comparatively lower gains from reductions of estimated losses on prior years’ events.~~the first nine months.

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

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

Pre-tax underwriting results from retroactive reinsurance contracts also include foreign currency transaction gains/losses associated with foreign currency denominated liabilities of U.S.-based subsidiaries. In 2016, foreign currency gains were $21 million in the third quarter and $198 million in the first nine months. In 2015, foreign currency gains were $120 million in the third quarter and $92 million in the first nine months. Before foreign currency gains/losses, retroactive reinsurance contracts producedpre-tax losses in the first nine months of $394 million in 2016 and $375 million in 2015, primarily from recurring periodic deferred charge amortization. Gross unpaid losses assumed under retroactive reinsurance contracts were approximately $23.7 billion at September 30, 2016 and at December 31, 2015. Unamortized deferred charges related to such reinsurance contracts were approximately $7.4 billion at September 30, 2016 and $7.6 billion at December 31, 2015.

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

~~Periodic payment annuity contracts generated pre-tax~~ underwriting losses of $61 million in the third quarter and $123 million in the first nine months of 2016 and $6 million in the third quarter and $159 million in the first nine months of 2015. Our periodic payment annuity liabilities under certain contracts of a U.S. subsidiary are denominated in foreign currencies, most significantly the Great Britain Pound (“GBP”). In 2016, the value of the U.S. Dollar strengthened versus the GBP, producing reductions in our liabilities in U.S. Dollars and resulting in pre-tax gains of $216 million in the first nine months of 2016 and $53 million in the first nine months of 2015. Before the impact of foreign currency exchange rate changes, pre-tax underwriting losses from annuity contracts were $111$225 million and ~~$339~~$624 million in the third quarter and first nine months of ~~2016,~~2017, respectively, ~~compared to $66~~and $135 million and ~~$212~~$394 million, respectively, in the ~~corresponding 2015~~comparable 2016 periods. ~~This business is expected to generate underwriting~~The comparative increases inpre-tax losses in 2017 were primarily attributable to ~~the recurring accretion of discounted annuity liabilities. The increases in underwriting losses (before foreign currency impacts) reflected increased liabilities~~deferred charge amortization from ~~new business~~contracts written over the past ~~two years~~twelve months, including the aforementioned AIG Agreement, partly offset by comparatively lower amortization on prior years’ contracts.

Liabilities for losses and ~~the impact of lower interest rates, which increased expected future~~ loss ~~payments under certain~~adjustment expenses associated with our retroactive reinsurance ~~contracts. Aggregate annuity liabilities~~contracts were approximately ~~$9.6~~$40.7 billion at September 30, ~~2016~~2017 and ~~$8.7~~$24.7 billion at December 31, ~~2015.~~2016. Unamortized deferred charges related to these contracts were approximately $13.5 billion at September 30, 2017 and $8.0 billion at December 31, 2016. The increases in such liabilities and deferred charges were primarily due to the AIG agreement.

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

Periodic payment annuity premiums consist of upfront consideration received under direct and assumed contracts that provide for structured settlement annuity payments, typically over very long periods. Premiums earned in the third quarter and first nine months of ~~2016, life reinsurance premiums were relatively unchanged~~2017 declined compared to ~~2015. The life reinsurance business produced a pre-tax underwriting loss~~the same periods in 2016, due to lower volumes. Liabilities under certain of $9our contracts are denominated in foreign currencies. During 2017, the value of the U.S. Dollar weakened producingpre-tax losses of $63 million in the third quarter and ~~a pre-tax gain of $5~~$173 million in the first nine months of ~~2016. Underwriting~~2017. In 2016, foreign currency exchange rate changes producedpre-tax gains of $50 million in the third quarter and $216 million in the first nine months.

Before foreign currency gains and losses, ~~of $81~~pre-tax underwriting losses from periodic payment annuity contracts were $122 million in the third quarter and $355 million in the first nine months of ~~2015 included losses of $53~~2017 and $111 million ~~incurred in connection with business terminated~~and $339 million, respectively, in the ~~second quarter.~~third quarter and first nine months of 2016. We expect these contracts will generatepre-tax losses over time attributable to the accretion of discounted annuity liabilities. Discounted periodic payment annuity liabilities were approximately $10.9 billion at September 30, 2017, and our weighted average discount rate was approximately 4.1%.

The comparative improvements in our underwriting results in 2017 from life reinsurance reflected decreased benefit liabilities on certain blocks of business. Underwriting results from our variable annuity business (reinsurance contracts that provide guarantees on closed blocks of variable annuity business) reflected changes in liabilities for guaranteed benefits, resulting from changes in securities markets and interest rates and from the periodic recognition of expected profit margins. Our estimated liabilities for variable annuity guarantees were approximately $1.9 billion at September 30, 2017 and $2.1 billion at December 31, 2016. Periodic underwriting results from these contracts can be volatile reflecting the volatility of securities markets, interest rates and foreign currency exchange rates.

The Berkshire Hathaway Primary Group (“BH Primary”) consists of a wide variety of independently managed underwriting businesses 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, National Indemnity Company (“NICO Primary”), Berkshire Hathaway Homestate Companies (“BHHC”), Berkshire Hathaway Specialty Insurance (“BH Specialty”) and Berkshire Hathaway GUARD Insurance Companies (“GUARD”). Other BH Primary insurers include U.S. Liability Insurance Company, Applied Underwriters and Central States Indemnity Company.

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

~~Our variable annuity business primarily consists~~A summary of ~~contracts that provide guarantees on closed blocks of variable annuity business~~BH Primary’s underwriting results follows (dollars in millions).

Premiums written ~~by other insurers. The periodic underwriting gains and losses~~ in each period reflect changes in liabilities for guaranteed benefits which are impacted by changes in securities markets and interest rates. Periodic results from these contracts can be volatile reflecting changes in investment market conditions, which impact the underlying insured exposures. In the third quarter and first nine months in 2017 increased 9.1% and 11.8%, respectively, over the same periods in 2016. All of ~~2016,~~ the ~~pre-tax underwriting gains were primarily due to better than expected equity market performance, which was more than offset~~BH Primary insurers generated increased premiums written in the first nine months of ~~2016~~2017, led by ~~lower interest rates. In~~BH Specialty (23%), GUARD (26%) and BHHC (10%). Premiums earned increased $223 million (13.7%) in the third quarter ~~of 2015, pre-tax underwriting losses were primarily due to lower equity markets~~ and ~~interest rates which partly offset the underwriting gains in the first six months.~~

~~The Berkshire Hathaway Primary Group (“BH Primary”~~$706 million (15.4%) consists of several independently managed insurance businesses. These businesses include: MedPro Group, providers of healthcare malpractice insurance coverages; National Indemnity Company’s primary group (“NICO Primary”), writers of commercial motor vehicle and general liability coverages; U.S. Investment Corporation, whose subsidiaries underwrite specialty insurance coverages; a group of companies referred to as Berkshire Hathaway Homestate Companies (“BHHC”), providers of commercial multi-line and workers’ compensation insurance; Berkshire Hathaway Specialty Insurance (“BH Specialty”), which concentrates on providing large scale insurance solutions for commercial property and casualty risks; Applied Underwriters, a provider of integrated workers’ compensation solutions; Berkshire Hathaway GUARD Insurance Companies (“GUARD”), providers of workers’ compensation and commercial property and casualty insurance coverage to small and mid-sized businesses; and Central States Indemnity Company, a provider of credit and Medicare Supplement insurance.

~~Premiums earned~~ in the first nine months ~~of 2016 were $4.58 billion, an increase of 16.0%~~as compared to ~~2015. The increase in premiums was primarily attributable to volume increases from BH Specialty, MedPro Group, BHHC and GUARD.~~ 2016.

The BH Primary insurers produced ~~aggregate~~ pre-tax underwriting gains of ~~$485~~$52 million in the third quarter and $473 million in the first nine months of ~~2016~~2017. In the third quarter of 2017, losses and ~~$566~~loss adjustment expenses included approximately $225 million ~~in 2015. Combined~~(12% of premiums earned) related to hurricanes Harvey, Irma and Maria. Losses and loss ~~ratios were 61%~~adjustment expenses in the first nine months of 2017 and 2016 also included net reductions of estimated ultimate liabilities for prior years’ loss events of $606 million and ~~59%~~$373 million, respectively, which produced corresponding increases in ~~2015.~~pre-tax underwriting gains. The ~~comparative increase in~~gains from the ~~loss ratio reflected comparative declines in favorable loss~~ development of prior years’ ~~loss events, partly offset by lower loss ratios on current year~~claim estimates in 2017 were primarily attributable to healthcare malpractice and workers’ compensation business. ~~Our primary insurers~~Many of our businesses write ~~considerable amounts~~significant levels of liability and workers’ compensation business and the related claim costs may be subject to higher severity and longer-claims tails, which ~~can have extended claim tails. It should not be assumed that the current claim experience~~may contribute to significant claims development gains or ~~underwriting results will continue into~~losses in the future.

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


	Third Quarter				First Nine Months				Third Quarter				First Nine Months
	2016		2015		2016		2015		2017		2016		2017		2016
Interest income	$	224	$	221	$	668	$	675	$	344	$	224	$	870	$	668
Dividend income		805		824		2,738		2,791		902		805		2,788		2,738

Net investment income before income taxes and noncontrolling interests		1,029		1,045		3,406		3,466
Investment income before income taxes and noncontrolling interests										1,246		1,029		3,658		3,406
Income taxes and noncontrolling interests		179		205		659		774		202		179		741		659

Net investment income	$	850	$	840	$	2,747	$	2,692	$	1,044	$	850	$	2,917	$	2,747

Pre-tax investment income in the third quarter and first nine months of ~~2016 declined $16~~2017 increased $217 million ~~(2%~~(21%) and ~~$60~~$252 million ~~(2%~~(7%), respectively, ~~from 2015, due primarily~~compared to ~~lower dividends from foreign issuers as a result of investment dispositions~~the same periods in ~~2015, partly offset by increased dividends from domestic issuers.~~2016. The increases in interest income reflected higher interest rates on short-term investments and certain fixed maturity investments. We continue to hold significant amounts of cash and cash equivalents and U.S. Treasury Bills earning ~~very~~ low yields. We believe that maintaining ample liquidity is paramount and we insist on safety over yield with respect to such balances.

The increases in dividend income for the third quarter and first nine months reflected increased rates, increased overall investment levels and an aggregate increase from our investments in Bank of America, partially offset by the impact of the conversion of our $3 billion investment in Dow Chemical Company (“Dow”) 8.5% preferred stock into Dow common stock at the end of 2016.

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 ~~$91~~$113 billion at September 30, ~~2016~~2017 and ~~$88~~$91 billion at December 31, ~~2015.~~2016. The increase in float in the first nine months of 2017 reflected increases in net unpaid losses and loss adjustment expenses, including liabilities assumed under retroactive reinsurance contracts written in 2017, estimated liabilities related to catastrophe events, and overall growth of our insurance operations. Ourpre-tax underwriting losses were approximately $2.6 billion in the first nine months of 2017 and our average cost of float was ~~negative as our insurance businesses overall generated pre-tax underwriting gains in each period.~~approximately 2.5%.

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).


	September 30, 2016		December 31, 2015		September 30, 2017		December 31, 2016
Cash and cash equivalents	$	50,242	$	43,762
Cash and cash equivalents and U.S. Treasury Bills					$	68,974	$	48,888
Equity securities		100,277		109,607		150,819		119,780
Fixed maturity securities		23,630		23,621		21,532		22,778
Other investments		15,415		15,998		3,303		14,364

	$	189,564	$	192,988	$	244,628	$	205,810

Fixed maturity ~~investments~~securities as of September 30, ~~2016~~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	$	4,053	$	16	$	4,069	$	3,942	$	(6	)	$	3,936
States, municipalities and political subdivisions		1,180		62		1,242		964		50			1,014
Foreign governments		9,319		341		9,660		8,554		209			8,763
Corporate bonds, investment grade		5,491		515		6,006		5,471		413			5,884
Corporate bonds, non-investment grade		1,280		277		1,557		868		210			1,078
Mortgage-backed securities		949		147		1,096		753		104			857

	$	22,272	$	1,358	$	23,630	$	20,552	$	980		$	21,532

U.S. government obligations are rated AA+ or Aaa by the major rating agencies and approximately ~~87%~~88% 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 belowBBB- 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).


	Third Quarter				First Nine Months				Third Quarter				First Nine Months
	2016		2015		2016		2015		2017		2016		2017		2016
Revenues	$	5,167	$	5,600	$	14,519	$	16,571	$	5,314	$	5,167	$	15,749	$	14,519


Operating expenses:
Compensation and benefits		1,193		1,220		3,535		3,826		1,160		1,193		3,685		3,535
Fuel		533		670		1,359		2,080		595		533		1,777		1,359
Purchased services		562		633		1,789		1,909		608		562		1,843		1,789
Depreciation and amortization		534		503		1,584		1,488		591		534		1,756		1,584
Equipment rents, materials and other		462		497		1,379		1,538		397		462		1,335		1,379

Total operating expenses		3,284		3,523		9,646		10,841		3,351		3,284		10,396		9,646
Interest expense		250		238		744		683		253		250		761		744

		3,534		3,761		10,390		11,524		3,604		3,534		11,157		10,390

Pre-tax earnings		1,633		1,839		4,129		5,047		1,710		1,633		4,592		4,129
Income taxes		613		683		1,553		1,883		668		613		1,754		1,553

Net earnings	$	1,020	$	1,156	$	2,576	$	3,164	$	1,042	$	1,020	$	2,838	$	2,576

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

Consolidated revenues in the third quarter and first nine months of ~~2016~~2017 were ~~approximately $5.2~~$5.3 billion and ~~$14.5~~$15.7 billion, respectively, representing ~~decreases~~increases of ~~$433~~$147 million ~~(7.7%~~(2.8%) and ~~$2.1~~$1.23 billion ~~(12.4%~~(8.5%), respectively, versus the corresponding periods in ~~2015.~~ 2016.Pre-tax earnings in the third quarter and first nine months of ~~2016 declined~~2017 increased 4.7% and 11.2% ~~and 18.2%~~, respectively, compared to the same periods in ~~2015. In 2016, our revenues and earnings were negatively impacted by lower volumes versus 2015, particularly in the coal and petroleum products categories.~~2016.

In the first nine months of ~~2016,~~2017, revenues reflected a 2.4% comparative ~~declines~~increase in average revenue per car/unit ~~(6.5%)~~ and a 6.0% increase in ~~volumes (6.6%).~~volume. Ouryear-to-date volume was 7.6 million cars/units compared to 7.2 million in 2016. Our overall volume growth moderated in the third quarter of 2017 compared to the growth experienced in the first half of the year and we expect continued moderation in the fourth quarter. The ~~decrease~~increase in average revenue per car/unit was primarily attributable to ~~lower~~higher fuel surcharge revenue ~~driven by lower fuel prices~~ and business mix changes. The fuel price impact on fuel surcharges generally lags its impact on fuel costs. This timing difference contributed to the decline in earnings in the first quarter of 2016 as compared to 2015 because the price of fuel declined more significantly in early 2015. The effect of the timing difference has moderated since the first quarter and is not expected to be significant in the fourth quarter.increased rates per car/unit.

Freight revenues from consumer products in 2017 were $1.8 billion in the third quarter and $5.2 billion in the first nine months, representing increases of ~~2016~~7.6% and 8.2%, respectively, compared to 2016. The revenue increases reflected volume increases of 7.4% in the third quarter and 6.3% in the first nine months as well as higher average revenue per car/unit. The volume increases were ~~$1.7~~primarily attributable to improving economic conditions, normalizing of retail inventories, new services and higher market share, which benefited domestic intermodal, international intermodal and automotive volumes.

Freight revenues from industrial products in 2017 were $1.3 billion ~~a decline of 3.4% from 2015, driven by a 3.6% decline~~ in ~~volume. Revenues~~the third quarter and $3.8 billion for the first nine months, or increases of ~~2016 were $4.8 billion, a decline of 2.2% from 2015. Volume for the first nine months of 2016 was relatively flat, as increased automotive volumes, due to the addition of a new customer,~~4.0% and ~~domestic intermodal volumes were offset by lower international intermodal volumes attributable to soft economic activity and excess retail inventories.~~

~~In the third quarter and first nine months of 2016, freight revenues from industrial products were $1.2 billion and $3.6 billion, respectively, which decreased 15.2% and 15.8%~~5.1%, respectively, from the comparable ~~2015~~2016 periods. The ~~decreases reflected lower volumes (8.0%~~increases were attributable to higher average revenue per car/unit, as well as volume increases of 2.0% in the third quarter and ~~7.5%~~2.2% in the first nine ~~months), primarily~~months. Volumes in 2017 were higher for sand and other commodities that support drilling. In addition, broad strengthening in the industrial sector drove greater demand for steel and taconite. These volume increases were partially offset by lower petroleum products ~~reflecting~~volume due to pipeline displacement of U.S. crude rail traffic as well as lower aggregates and ~~lower U.S. oil production. This decline was partially offset by increased~~ plastics ~~products~~ volume. For the first nine months of 2016, we also experienced lower demand for taconite and steel products partially offset by increased movements of non-owned rail equipment. With oil production at low levels, along with pipeline displacement of rail, we expect comparative volume declines in petroleum and related products for the remainder of 2016.

Freight revenues ~~in 2016~~ from agricultural products ~~increased 7.8%~~in 2017 decreased 9.4% in the third quarter to ~~$1.1 billion~~$992 million and ~~decreased 1.8%~~increased 4.0% to ~~$3.1~~$3.2 billion in the first nine months compared to the same periods in ~~2015.~~2016. The ~~increase in revenue~~decrease in the third quarter ~~of 2016~~ was driven by a volume ~~increase~~decrease of ~~13.2%~~12.0% compared to ~~2015.~~2016, partially offset by higher average revenue per car/unit. The volume decrease in the third quarter was driven by lower grain exports, partially offset by higher domestic grain. Revenue growth in the first nine months reflected higher average revenue per car/unit as well as volume increases of 0.7%. The volume growth in the first nine months of ~~2016~~2017 was ~~primarily attributable to lower average revenue per car, partly offset by a volume increase of 6.7%. In the third quarter and first nine months of 2016 volumes increased~~ primarily due to higher ~~corn, soybeans~~shipments of domestic grain, as well as ethanol and ~~wheat~~other grain products, partially offset by lower grain exports.

Freight revenues ~~in 2016~~ from coal ~~declined 18.5%~~in 2017 increased 5.9% in the third quarter to $1.0 billion and ~~33.0%~~20.7% in the first nine months to ~~$2.4~~$2.9 billion compared to ~~the same periods~~2016. The increase in ~~2015. Coal~~revenues reflected higher volumes, ~~declined 13.0%~~1.9% in the third quarter and ~~26.5%~~12.4%year-to-date, as well as higher average revenue per car/unit. The volume increases in ~~the first nine months~~2017 were due to continued effects of ~~2016. In recent years, demand for coal by utilities has declined as other fuel sources, particularly natural gas, have increased. Coal volumes in 2015 also benefitted from~~ higher ~~demand in the early part of the year as utility customers restocked coal inventories. Although~~ natural gas prices, ~~have risen in~~which led to increased utility coal usage. This was partially offset by the ~~third quarter, we expect declines in coal volumes for the rest~~effects of ~~2016, driven by coal~~ unit retirements of coal generating facilities, increased renewable generation and ~~elevated utility~~ coal ~~inventories.~~inventory adjustments at customer facilities.

Operating expenses in the third quarter and first nine months of ~~2016~~2017 were ~~$3.3~~$3.4 billion and ~~$9.6~~$10.4 billion, respectively, ~~representing decreases~~increases of ~~$239~~$67 million ~~(6.8%~~(2.0%) and ~~$1.2 billion (11.0%~~$750 million (7.8%), respectively, compared to the same periods in ~~2015.~~2016. Our ratios of operating expenses to revenues ~~in 2016 increased 0.7~~decreased 0.5 percentage points to ~~63.6%~~63.1% in the third quarter and ~~1.0~~0.4 percentage points to ~~66.4%~~66.0% for the first nine months of 2017 versus the corresponding ~~2015~~prior year periods.

Compensation and benefits expenses decreased ~~$27~~$33 million ~~(2.2%~~(2.8%) for the third quarter of 2017 and ~~$291~~increased $150 million ~~(7.6%~~(4.2%) for the first nine months ~~of 2016 as~~ compared to ~~2015.~~2016. The ~~declines were~~third quarter decrease was due to lower wages and headcount, partially offset by higher health and welfare costs and volume-related increases. Theyear-to-date increase was primarily due to ~~lower employment levels, as a result of lower freight volumes,~~higher health and ~~productivity improvements,~~welfare costs and volume-related increases, partially offset by ~~inflation.~~ lower headcount.

Fuel expenses ~~declined $137~~increased $62 million ~~(20.4%~~(11.6%) for the third quarter of 2017 due to higher average fuel prices and lower efficiency. Fuel expenses increased $418 million (30.8%) for the first nine months compared to 2016 primarily due to higher average fuel prices and increased volumes, partially offset by improved efficiency. Purchased services increased $46 million (8.2%) in the third quarter and ~~$721~~$54 million ~~(34.7%~~(3.0%) in the first nine months of ~~2016~~2017 as compared to ~~2015~~2016. The increases are due to ~~lower average fuel prices~~higher purchased transportation costs of our logistics services business and ~~lower volumes. Purchased services declined $71~~a prior year insurance recovery which reduced expenses in 2016.

Depreciation and amortization expense increased $57 million ~~(11.2%~~(10.7%) infor the third quarter of 2017 and ~~$120~~$172 million ~~(6.3%~~(10.9%) infor the first nine months ~~of 2016 as~~ compared to ~~2015,~~2016 due to ~~volume-based and other cost reductions. Depreciation expense increased $31 million (6.2%) in the third quarter and $96 million (6.5%) in the first nine months~~a larger base of ~~2016 as compared to 2015, due to increased~~depreciable assets in ~~service reflecting our ongoing capital additions and improvement programs.~~service. In the third quarter and first nine months of ~~2016,~~2017, equipment rents, materials and other expense declined ~~$35~~$65 million ~~(7.0%~~(14.1%) and ~~$159~~$44 million ~~(10.3%~~(3.2%), respectively, compared to ~~the same periods of 2015.~~2016. These declines resulted from lower ~~freight volumes and productivity improvements in both periods, as well as, lower derailment~~personal injury and other casualty related costs inoffset by higher equipment related material costs.

BNSF’s effective income tax rate was 38.2% and 37.6% for the ~~nine-month period.~~

~~Interest expense in~~nine months ended September 30, 2017 and 2016, respectively. The increase was primarily driven by a tax rate increase enacted by the State of Illinois during the third quarter ~~and first nine months~~ of 2016 was $250 million and $744 million, respectively, increases of $12 million (5.0%) and $61 million (8.9%), respectively, compared to 2015. 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.2017.

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

We hold ~~an 89.9%~~a 90.2% 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.

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).


		Third Quarter								First Nine Months									Third Quarter								First Nine Months
		Revenues				Earnings				Revenues				Earnings					Revenues				Earnings				Revenues				Earnings
		2016		2015		2016		2015		2016		2015		2016		2015			2017		2016		2017		2016		2017		2016		2017		2016
PacifiCorp		$	1,445	$	1,432	$	365	$	354	$	3,952	$	3,977	$	867	$	799		$	1,443	$	1,445	$	389	$	365	$	3,991	$	3,952	$	912	$	867
MidAmerican Energy Company			806		685		241		163		2,031		2,017		389		310			832		806		250		241		2,209		2,031		402		389
NV Energy			997		1,130		345		340		2,335		2,688		495		529			1,057		997		347		345		2,412		2,335		539		495
Northern Powergrid			220		264		57		95		749		852		274		352			220		220		48		57		685		749		215		274
Natural gas pipelines			204		198		59		52		709		743		288		277			198		204		60		59		706		709		303		288
Other energy businesses			703		686		204		191		1,677		1,782		336		341			655		703		198		204		1,736		1,677		311		336
Real estate brokerage			823		749		89		80		2,162		1,959		187		166			965		823		81		89		2,511		2,162		197		187

		$	5,198	$	5,144					$	13,615	$	14,018						$	5,370	$	5,198					$	14,250	$	13,615

Earnings before corporate interest and income taxes (“EBIT”)	Earnings before corporate interest and income taxes (“EBIT”)						1,360		1,275						2,836		2,774	Earnings before corporate interest and income taxes (“EBIT”)						1,373		1,360						2,879		2,836
Corporate interest	Corporate interest						114		122						355		376	Corporate interest						111		114						332		355
Income taxes and noncontrolling interests	Income taxes and noncontrolling interests						314		367						626		689	Income taxes and noncontrolling interests						299		314						567		626

Net earnings attributable to Berkshire Hathaway shareholders	Net earnings attributable to Berkshire Hathaway shareholders					$	932	$	786					$	1,855	$	1,709	Net earnings attributable to Berkshire Hathaway shareholders					$	963	$	932					$	1,980	$	1,855

PacifiCorp operates a regulated electric utility in portions of several Western states, including Utah, Oregon and Wyoming. ~~PacifiCorp’s~~Revenues in the third quarter were essentially unchanged and in the first nine months of 2017 increased 1% compared with the same periods in 2016. Retail revenues in the third quarter of 2017 declined slightly compared to 2016 and for the first nine months increased slightly, reflecting higher volumes, partly offset by lower average rates. In the first nine months of ~~2016 were $1.45 billion~~2017, wholesale and ~~$3.95 billion, respectively, and were relatively unchanged from 2015. Revenues in 2016 reflected~~other revenues increased, retail revenues and lower wholesale revenues. The year-to-date increase in retail revenues was primarily due to higher retail rates as average customer loads were relatively unchanged. The declines in wholesale revenues were attributable to ~~lower~~higher volumes and average ~~prices.~~ rates.

EBIT increased $24 million (7%) in the third quarter and $45 million (5%) in the first nine months of ~~2016 increased $11 million (3.1%) and $68 million (8.5%), respectively, from~~2017 as compared to the same periods ~~of 2015.~~in 2016. The comparative increases were primarily due to increased gross margins ~~as energy costs declined due to~~and lower ~~fuel prices~~operations and ~~changes in fuel mix.~~maintenance expenses, partially offset by increased depreciation and amortization associated with additional plantin-service.

MEC operates a regulated electric and natural gas utility primarily in Iowa and Illinois. Revenues ~~increased $121 million (17.7%)~~ in the third quarter and first nine months of ~~2016~~2017 increased $26 million (3%) and $178 million (9%), respectively, as compared to ~~2015, while~~the same periods in 2016. In the third quarter and first nine months of 2017, electric operating revenues increased $15 million and $105 million, respectively, as compared to the same periods in 2016. The increase inyear-to-date electric revenues was attributable to higher wholesale and other revenues ($53 million) and retail revenues ($52 million). The increase in wholesale and other electric revenues reflected comparative increases in volumes, average rates and transmission fees. The increase in retail electric revenues was primarily attributable to higher recoveries through bill riders (which are substantially offset by increases in costs of sales and operating and income tax expenses) and fromnon-weather usage and rate factors, partially offset by the unfavorable impact of milder temperatures in 2017. Natural gas operating revenues in the first nine months ~~were comparatively flat versus 2015. The revenue increase in the third quarter was~~of 2017 increased $55 million compared to 2016, due primarily ~~due~~ to higher retail and wholesale electric revenues ($107 million). The increase in retail electric revenues resulted primarily from a 3.6% increase in customer load and higher electric rates, and the increase in wholesale revenues was due to increased wholesale prices and volumes and transmission revenue. Revenues in the first nine months of 2016 included increased electric revenues ($100 million), which were largely offset by lower natural gas revenues ($69 million) and other revenues. The decline in natural gas revenues was primarily due to lower averageper-unit cost of gas sold, ~~($61 million)~~ which is offset in cost of ~~sales, and a 6.3% decline in retail sales volumes, primarily from warmer winter temperatures in 2016.~~ sales.

EBIT ~~increased $78 million (47.9%)~~ in the third quarter and ~~$79~~first nine months of 2017 increased $9 million ~~(25.5%~~(4%) and $13 million (3%), respectively, compared to the same periods in 2016. These increases reflected comparative increases in electric gross margins of $15 million in the third quarter and $75 million in the first nine months, ~~of 2016 as compared to 2015. The increase in EBIT was primarily due to increased gross margins from electric revenues~~ partially offset by ~~higher~~increased depreciation, maintenance and ~~amortization from additional assets placed in service~~other operating expenses and ~~higher~~ interest ~~expenses. In addition, EBIT in the first nine months of 2015 included a gain of $13 million from the sale of a generating facility lease.~~expense.

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 increased $60 million (6%) in the third quarter and ~~first nine months of 2016 were approximately $1.0 billion and $2.3 billion, respectively, decreases of $133~~$77 million (11.8%) and $353 million (13.1%), respectively, versus the same periods in 2015. The declines were primarily attributable to lower electric retail rates resulting from lower energy costs. Electric retail customer load in the first nine months of 2016 increased 1.4% compared to 2015. EBIT were relatively unchanged in the third quarter and fell $34 million (6.4%(3%) in the first nine months of ~~2016~~2017 compared to ~~2015. In 2016,~~ the ~~negative impact~~same periods in 2016. These increases were due primarily to increases in retail electric operating revenues of ~~the revenue declines were substantially offset by the declines in energy costs. However, operating expenses increased $6~~$58 million ~~(2%)~~ in the third quarter and ~~$48~~$81 million ~~(7%)~~ in the first nine ~~months compared~~months. The increases in retail electric revenues included a combination of increased rates from pass-through cost adjustments and higher volumes, partly offset by lower revenues from energy efficiency programs, which are offset by lower operating expenses. In 2017, NV Energy also experienced retail electric revenue declines from the transition of certain commercial and industrial customers electing to ~~2015. The year-to-date increase resulted primarily~~purchase power from ~~higher depreciation~~alternative sources and ~~amortization and property and other taxes. In addition,~~thus becoming distribution service only customers. Natural gas operating ~~expenses~~revenue declined $15 million in the first nine months of ~~2015 included non-recurring benefits~~2017, primarily due to lower rates, partially offset by higher customer usage.

EBIT in the third quarter was relatively unchanged from ~~reductions~~the same period in ~~certain accrued liabilities.~~2016, as lower gross margins were offset by lower operating expenses. In the first nine months of 2017, EBIT increased $44 million (9%) compared to the same period in 2016, primarily due to lower operating and interest expenses.

Revenues in the third quarter of 2017 were unchanged and ~~first nine months of 2016~~ declined ~~$44~~$64 million ~~(16.7%~~(9%) ~~to $220 million and $103 million (12.1%) to $749 million, respectively, as compared to 2015. The unfavorable impact from a stronger U.S. Dollar reduced revenues by $40 million~~ in ~~the third quarter and $72 million in the first nine months. In~~ the first nine months of ~~2016,~~2017 compared to the same periods in 2016. Unfavorable foreign currency translation effects of a comparatively stronger U.S. Dollar in the first nine months of 2017 resulted in a $66 million decline in comparative revenues, ~~also declined, due to lower tariff rates from a new price control period that became effective April 1, 2015.~~substantially all of which occurred in the first half of the year. Otherwise, the comparative declines in distribution revenues were substantially offset by higher smart metering revenue. EBIT in the third quarter and first nine months of ~~2016~~2017 declined ~~$38~~$9 million ~~(40.0%~~(16%) ~~to $57~~and $59 million ~~and $78 million (22.2%~~(22%) ~~to $274 million,~~, respectively, as compared to ~~2015.~~the same periods in 2016. The EBIT declines were primarily due to ~~the impact of lower tariff rates and the stronger U.S. Dollar,~~foreign currency translation effects, as well as ~~increases in~~from higher depreciation expense attributable to additional assets placedin-serviceand ~~other operating~~increased pension expenses.

Revenues in the ~~third quarter of 2016 increased 3.0% and for the~~ first nine months of 2017 declined ~~4.6% as~~slightly compared to ~~2015. The revenue increase~~the same period in ~~the third quarter was~~2016. In 2017, higher gas sales, primarily ~~attributable to~~from system balancing activities (largely offset in cost of sales), and higher transportation revenues ~~from expansion projects. For~~at Northern Natural Gas were offset by lower transportation revenues at Kern River. EBIT in the first nine months of ~~2016,~~2017 increased $15 million (5%) compared to the ~~decline~~same period in 2016. The increase was primarily due to a reduction in expenses and regulatory liabilities related to the impact of ~~lower gas sales from balancing activities and lower transportation revenues from lower volumes and rates, in part due to comparatively milder temperatures~~an alternative rate structure approved by Kern River’s regulators in the first ~~quarter. EBIT~~quarter of 2017 and from the changes in 2016 increased $7 million (13.5%) in the third quarter and $11 million (4.0%) in the first nine months versus 2015. These increases reflected lower interest expense in 2016, as a result of lower average debt balances, partly offset by increased depreciation expense.transportation revenues.

Revenues in the third quarter of ~~2016 increased $17~~2017 declined $48 million ~~(2.5%~~(7%) and for the first nine months declined $105 million (5.9%) compared to the corresponding 2015 periods. The increase in third quarter revenues was primarily attributable to increased revenues from AltaLink as a result of increased assets in service. The declines in comparative revenues in the first nine months ~~were principally attributable~~increased $59 million (4%) compared to ~~lower revenues~~the same periods in 2016. Revenues in 2017 reflected comparative declines of 20% in the third quarter and 13% in the first nine months from ~~AltaLink~~the unregulated service business and comparative increases of 4% in the third quarter and 11% in the first nine months from ~~our unregulated retail services business. AltaLink’s year-to-date~~renewable energy. The comparative revenue ~~decline reflected~~increase in the ~~impact~~first nine months of 2017 also included the effects of a ~~regulatory~~ decision in ~~the second quarter that resulted in one-time net reductions in revenue,~~May 2016 by AltaLink’s regulator, which ~~more than offset increased revenues from additional assets placed in service. The regulatory decision~~ changed the timing of whenconstruction-in-progress expenditures included in the rate base are billable to customers and earned in ~~revenues, but had no impact on~~revenues. The decision resulted in aone-time net ~~earnings as~~reduction in revenue in the ~~one-time revenue reduction was offset by one-time~~second quarter of 2016, with offsetting reductions in expenses.

~~EBIT in the third quarter of 2016 increased $13 million (6.8%) over 2015, while~~ EBIT in the first nine months of 2017 declined ~~$5 million (1.5%)~~7% compared to ~~2015. The increase~~the same period in ~~third quarter EBIT was primarily due to~~2016, which reflected lower earnings from renewable energy and the unregulated retail services business, partly offset by increased earnings from ~~our renewable energy and transmission businesses, while the decline in the first nine months reflected lower solar generation primarily from transformer related forced outages.~~AltaLink.

Revenues in the third quarter and first nine months of ~~2016~~2017 increased ~~9.9% to $823 million~~17% and ~~10.4% to $2.16 billion,~~16%, respectively, as compared to ~~2015.~~the same periods in 2016. The revenue increases were primarily ~~attributable~~due to ~~increased closed brokerage transactions (primarily as a result of~~recent business ~~acquisitions)~~acquisitions and ~~from modest increases~~an increase in average home sales prices ~~as well as higher mortgage revenues.~~for existing businesses. EBIT declined 9% in the third quarter and increased 5% in the first nine months of ~~2016 increased $9 million (11.3%) and $21 million (12.7%), respectively,~~2017 as compared to ~~2015,~~2016. Earnings in 2017 reflected a favorable impact from franchise businesses, partially offset by lower earnings from brokerage businesses, which were primarily ~~reflecting the increases in~~due to higher operating expenses, and lower mortgage ~~revenues.~~

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

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

revenue. Overall, ouryear-to-date 2017pre-tax margin rate declined 0.8 percentage points compared to 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 effective income tax ~~rate~~rates for the first nine months ~~was~~of 2017 and 2016 were approximately ~~15.9%~~13% and 16%, respectively. The effective tax rate in ~~2016 and 19.8%~~2017 decreased primarily due to an increase in ~~2015. BHE’s effective income tax rates regularly reflect significant~~ production tax credits ~~from wind-powered electricity generation placed in service. In addition, pre-tax earnings~~recognized, partially offset by the impact of ~~Northern Powergrid and AltaLink are taxed at lower statutory rates~~a decline in the ~~U.K. and Canada, respectively, compared to the~~United Kingdom statutory income tax rate enacted in the ~~U.S.~~third quarter of 2016.

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.~~follows (in millions).


		Third Quarter								First Nine Months								Third Quarter								First Nine Months
		Revenues				Earnings*				Revenues				Earnings*				Revenues				Earnings *				Revenues				Earnings *
		2016		2015		2016		2015		2016		2015		2016		2015		2017		2016		2017		2016		2017		2016		2017		2016
Manufacturing		$	12,082	$	9,181	$	1,981	$	1,259	$	34,837	$	27,568	$	5,150	$	3,857	$	12,819	$	12,082	$	2,002	$	1,981	$	37,654	$	34,837	$	5,428	$	5,150
Service and retailing			18,602		18,415		555		484		54,728		53,166		1,601		1,644		19,325		18,602		536		555		56,650		54,728		1,641		1,601

		$	30,684	$	27,596					$	89,565	$	80,734					$	32,144	$	30,684					$	94,304	$	89,565

Pre-tax earnings							2,536		1,743						6,751		5,501						2,538		2,536						7,069		6,751
Income taxes and noncontrolling interests	Income taxes and noncontrolling interests						834		566						2,290		1,892						844		834						2,396		2,290

						$	1,702	$	1,177					$	4,461	$	3,609					$	1,694	$	1,702					$	4,673	$	4,461

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)~~International (“CTB”)), and a variety of industrial products for diverse markets (Marmon, Scott Fetzer and ~~Scott Fetzer)~~LiquidPower Specialty Products (“LSPI”)). 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 on 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 andpre-tax earnings of our manufacturing operations ~~follows. Amounts are in millions.~~follows (in millions).


	Third Quarter								First Nine Months								Third Quarter								First Nine Months
	Revenues				Pre- tax earnings				Revenues				Pre- tax earnings				Revenues				Pre-tax earnings				Revenues				Pre-tax earnings
	2016		2015		2016		2015		2016		2015		2016		2015		2017		2016		2017		2016		2017		2016		2017		2016
Industrial products	$	6,400	$	4,208	$	1,347	$	753	$	18,599	$	12,917	$	3,534	$	2,387	$	6,657	$	6,400	$	1,247	$	1,347	$	19,802	$	18,599	$	3,508	$	3,534
Building products		2,841		2,809		362		346		8,149		7,846		909		917		3,124		2,841		407		362		8,983		8,149		1,057		909
Consumer products		2,841		2,164		272		160		8,089		6,805		707		553		3,038		2,841		348		272		8,869		8,089		863		707

	$	12,082	$	9,181	$	1,981	$	1,259	$	34,837	$	27,568	$	5,150	$	3,857	$	12,819	$	12,082	$	2,002	$	1,981	$	37,654	$	34,837	$	5,428	$	5,150

Aggregate revenues from manufacturing increased $737 million (6.1%) in the third quarter and $2.8 billion (8.1%) in the first nine months of 2017 compared to the same periods in 2016.Pre-tax earnings in the third quarter of 2017 were approximately $2.0 billion, relatively unchanged from the third quarter of 2016 and $5.4 billion in the first nine months, an increase of $278 million (5.4%), over earnings in the corresponding 2016 period. Operating results of our industrial products and consumer products businesses included the results of PCC and Duracell from their respective acquisition dates.Pre-tax earnings in the first nine months of 2017 includedpre-tax losses of approximately $190 million in connection with the disposition of an underperformingbolt-on business acquired by Lubrizol in 2014.

Revenues of our industrial products businesses in the third quarter and first nine months of 2017 increased $257 million (4.0%) and $1.2 billion (6.5%), respectively, compared to the corresponding 2016 periods. Marmon and IMC produced comparative third quarter andyear-to-date revenue increases. The IMC increases were primarily due to increased customer demand and unit sales. Marmon’s revenues increased 11% in the third quarter and 6% in the first nine months of 2017 versus 2016, reflecting a mixture of increases from business acquisitions and higher average metal prices. Marmon’s highway transportation, retail food and restaurant equipment businesses generated volume-based revenue growth in the third quarter, while engineered wire/cable and retail store product businesses experienced volume-based revenue declines compared to 2016.

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

~~Aggregate~~PCC’s revenues ~~in 2016 were approximately $12.1 billion~~ in the third quarter ~~and $34.8 billion in the first nine months, representing increases~~ of ~~approximately $2.9 billion (31.6%) and $7.3 billion (26.4%), respectively,~~2017 were relatively unchanged from ~~the corresponding 2015 periods. Pre-tax earnings were approximately $2.0 billion in the third quarter and $5.2 billion~~2016. PCC’s revenues increased 10% in the first nine months of ~~2016, representing~~2017 compared to the eight month post-acquisition period in 2016. On a comparable fullyear-to-date basis, PCC’s revenues increased approximately 2% compared to 2016. In 2017, PCC produced revenue increases from structural castings, airfoils and forged products and from new business acquisitions, partly offset by lower revenues from airframe products. PCC is presently transitioning into product lines for new programs within the aerospace markets, which are expected to produce future revenue increases, but may have negative effects on revenues in the near term as prior programs wind down. Industrial gas turbine demand is expected to substantially decrease in the fourth quarter of ~~$722 million (57.3%)~~2017.

Lubrizol’s revenues increased 1.5% in the third quarter and ~~$1.3 billion (33.5%), respectively,~~first nine months compared to the same periods in ~~2015. Excluding PCC and Duracell, aggregate pre-tax earnings increased 2.9%~~2016, primarily due to higher unit volumes. CTB’s revenues in the third quarter declined 6% and ~~were relatively unchanged~~ in the first nine ~~months.~~months of 2017 increased 1% compared to 2016, reflecting relatively weak demand and selling price pressures.

~~Revenues~~ businesses in the third quarter and first nine months of ~~2016 increased approximately $2.2 billion (52.1%~~2017 decreased $100 million (7.4%) and ~~$5.7 billion (44.0%~~$26 million (1%), respectively, ~~versus~~compared to the same periods in ~~2015. These increases~~2016. The comparative decline in the third quarter earnings was primarily attributable to a reclassification to “other” earnings (see page 40) in the third quarter of 2016 of certain acquisition accounting related amortization expenses that were ~~due~~reflected in PCC’s pre-tax earnings in the first and second quarters of 2016. Otherwise,pre-tax earnings of our industrial products businesses in the third quarter of 2017 increased 6.9% compared to 2016. PCC’spre-tax earnings in the third quarter of 2017 declined 5% compared to 2016, as adjusted for the aforementioned reclassification, and in first nine months of 2017, increased 5% compared to the ~~inclusion of PCC, partially offset by revenue declines of $210 million (5.0%)~~eight month post-acquisition date period in 2016.

Pre-tax earnings from IMC and Marmon in the third quarter and ~~$832 million (6.4%)~~first nine months of 2017 increased compared to the same periods in 2016. The increases were attributable to increased sales, ongoing expense control efforts and lower foreign currency exchange losses. Lubrizol’spre-tax earnings increased slightly in the third quarter of 2017 and decreased 29% in the first nine months ~~across our other businesses. In 2016, sales volumes of our other businesses were lower~~ compared to ~~2015, reflecting sluggish demand for most products, and particularly for products sold to businesses~~the same periods in ~~the oil and gas and heavy equipment industries. In addition, lower costs~~2016. Lubrizol recognizedpre-tax losses of ~~oil-based raw materials and metals and increased competitive pressures continued to lower average selling prices.~~

~~Pre-tax earnings in 2016 increased $594~~approximately $190 million ~~(78.9%) in the third quarter and $1,147 million (48.1%)~~ in the first nine months ~~as compared to 2015. The increases~~of 2017, substantially all of which was in ~~pre-tax earnings reflected the inclusion of PCC, partially offset by comparative declines in earnings (7.1% for the third quarter and 6.3% for~~ the first ~~nine months) from our other businesses, primarily IMC International, Lubrizol~~quarter, related to the disposition of an underperformingbolt-on business and ~~several of Marmon’s businesses. Generally, these businesses were negatively affected by a combination of weaker customer demand~~related intangible asset impairments and ~~price and mix changes and increased~~ restructuring costs, partly offset by the impacts of cost containment initiatives and lower average material prices. We expect the prevailing market conditions to continue during the remainder of 2016 and we may take additional cost containment actions in response to further slowdowns in customer demand.charges.

Revenues in the third quarter and first nine months of ~~2016~~2017 increased ~~$32~~$283 million ~~(1.1%~~(10.0%) and ~~$303~~$834 million ~~(3.9%~~(10.2%), respectively, compared to the same periods in ~~2015. In~~2016. The increases were primarily due to the ~~third quarter, volume-driven revenue~~effect ofbolt-on business acquisitions (Shaw and MiTek) and sales volume increases ~~achieved by MiTek and Johns Manville were partially offset by revenue declines at~~(MiTek, Benjamin Moore and ~~Shaw. In the first nine months, the revenue increase reflected increased unit sales across most of our product categories, and was~~Johns Manville), partly offset by lower average sales prices and changes in product mix.

Pre-tax earnings in 2016 increased $16 million (4.6%) in the third quarter and decreased $8 million (0.9%) in the first nine months as compared to the corresponding periods in 2015. In the first nine months, the favorable impact from increased sales volume and lower manufacturing costs attributable to deflation in certain commodity unit costs was essentially offset by increased charges related to asset impairments, pension settlements and environmental claims.

~~Revenues~~ in the third quarter and first nine months of ~~2016 were approximately $2.8 billion and $8.1 billion, respectively, increases of $677~~2017 increased $45 million ~~(31.3%~~(12.4%) and ~~approximately $1.3 billion (18.9%~~$148 million (16.3%), respectively, compared to the ~~corresponding 2015 periods.~~same periods in 2016. The ~~increases~~comparative earnings increase in the first nine months reflected the ~~inclusion~~impact of approximately $100 million in asset impairment, pension settlement and environmental claim charges recorded in 2016 by Shaw and Benjamin Moore (most of which was recorded in the first six months of 2016), and earnings from recentbolt-on acquisitions, partly offset by comparative declines in the average gross margin rates.

Revenues increased $197 million (6.9%) in the third quarter and $780 million (9.6%) in the first nine months of 2017 compared to the same periods in 2016. These increases were driven by comparative revenue increases from Duracell and ~~increases~~Forest River. Duracell’s revenues in the third quarter and first nine months of 2017 increased 6% and 40%, respectively, compared to the third quarter and seven month post-acquisition date period in 2016. Forest River’s revenues ~~of 19%~~increased 17% in the third quarter and 12% in the first nine months ~~which were~~of 2017 compared to the same periods in 2016, primarily ~~attributable~~due to ~~increased~~increases in unit sales. Apparel and footwear revenues ~~in the third quarter increased $18 million (1.6%) and~~ in the first nine months of 2017 declined ~~$56 million (1.8%)~~1% compared to ~~2015.~~2016.

Pre-tax earnings in the third quarter and first nine months of 2017 increased $76 million (27.9%) and $156 million (22.1%), respectively, compared to the same periods in 2016. The ~~year-to-date~~increases in earnings in the third quarter and first nine months of 2017 were primarily due to increased earnings from Duracell and Forest River. Duracell’s comparative results in the 2017 periods reflected significant decreases in transition costs arising from the acquisition in 2016 and otherwise improved operating results. Earnings from apparel and footwear businesses increased 9% in the third quarter and decreased 3% in the first nine months of 2017 compared to 2016. The increase in third quarter earnings was primarily due to higher earnings from our footwear businesses, while the decline in the first nine months reflected lower ~~footwear sales and the impact of the disposition of a historically unprofitable operation within~~earnings from Fruit of the Loom, ~~in 2015.~~partly offset by increased earnings from the footwear businesses.

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

Pre-tax earnings in the third quarter and first nine months of 2016 increased $112 million (70.0%) and $154 million (27.8%), respectively, compared to the same periods in 2015. The increases in third quarter earnings reflected the impact of the Duracell acquisition as well as increased earnings from Forest River and certain of our apparel businesses. Duracell contributed pre-tax earnings of $39 million in the third quarter of 2016 and $5 million from its acquisition date, reflecting the impact of transition and integration costs. Forest River generated pre-tax earnings increases of 34% in the third quarter and 24% in the first nine months, primarily due to increased unit sales and higher gross margin rates. Earnings of our apparel businesses increased 62% in the third quarter and 29% in the first nine months. The comparative increases were primarily attributable to lower restructuring costs in 2016 and a loss on the disposition of the Fruit of the Loom unprofitable operation in 2015, partly offset by lower earnings in 2016 from our footwear businesses.

~~Our~~A summary of revenues andpre-tax earnings of our service and retailing businesses ~~are comprised of a large group of independently managed businesses engaged in a variety of activities. A summary of revenues and pre-tax earnings of these operations follows. Amounts are in millions.~~follows (in millions).


	Third Quarter								First Nine Months								Third Quarter								First Nine Months
	Revenues				Pre-tax earnings				Revenues				Pre-tax earnings				Revenues				Pre-tax earnings				Revenues				Pre-tax earnings
	2016		2015		2016		2015		2016		2015		2016		2015		2017		2016		2017		2016		2017		2016		2017		2016
Service	$	2,619	$	2,469	$	305	$	287	$	7,557	$	7,579	$	826	$	919	$	2,775	$	2,619	$	315	$	305	$	8,184	$	7,557	$	926	$	826
Retailing		3,712		3,682		144		91		11,050		9,387		404		341		3,752		3,712		176		144		10,986		11,050		513		404
McLane Company		12,271		12,264		106		106		36,121		36,200		371		384		12,798		12,271		45		106		37,480		36,121		202		371

	$	18,602	$	18,415	$	555	$	484	$	54,728	$	53,166	$	1,601	$	1,644	$	19,325	$	18,602	$	536	$	555	$	56,650	$	54,728	$	1,641	$	1,601

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~~service a network of quick service restaurant franchises (Dairy Queen). Service businesses 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).

Revenues in the third quarter and first nine months of ~~2016~~2017 increased ~~$150~~$156 million ~~(6.1%~~(6%) and $627 million (8%), respectively, as compared to ~~2015, while~~2016. Theyear-to-date revenue increase was driven by TTI, NetJets and FlightSafety. Higher unit volumes and customer demand in most geographic regions and markets drove TTI’s revenue increase in 2017. NetJets’ revenue increase reflected comparatively higher aircraft sales over the first nine months of 2017 and a 5%year-to-date increase in revenue flight hours. The revenue increase at FlightSafety was primarily due to comparative increases in training hours and equipment sales.

Pre-tax earnings in the third quarter and first nine months of 2017 increased $10 million (3%) and $100 million (12%), respectively, compared to the same periods in 2016. Earnings in the third quarter of 2017 reflected higher earnings at TTI, due to the aforementioned increase in revenues, and lower earnings from NetJets and our media businesses. The comparative increase in earnings for the first nine months of 2016 were relatively unchanged from 2015. NetJets’ comparative revenues increased 3.9% in the third quarter and decreased 6.3% for the first nine months. The increase in NetJets’ third quarter revenues reflected a 2% increase in operating revenues and increased gains from aircraft dispositions, while the decline in revenues for the first nine months2017 was primarily ~~due to lower aircraft sales. TTI’s revenue increases in 2016 were 9.1% in the third quarter and 5.5% for the first nine months and were primarily due~~attributable to increased ~~sales volume in Europe~~earnings of NetJets and ~~through the Internet.~~

Pre-tax earnings increased $18 million (6.3%) in the third quarter and decreased $93 million (10.1%) in the first nine months of 2016 as compared to corresponding periods in 2015. Pre-tax earnings in the third quarter included increased earnings from NetJets andTTI, partly offset by lower earnings from ~~several of~~ our ~~other service~~media and logistics services businesses. The year-to-date decline in earnings was primarily due to lower earnings from NetJets, FlightSafety and our newspaper businesses. The decline in NetJets’ earnings for the first nine months was primarily due to increased depreciation expense and lower aircraft sales margins. TTI’s earnings were relatively flat in 2016 as changes in geographic sales mix and price competition produced lower gross margin rates, offsetting the aforementioned revenue increases.

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”), which ~~was acquired in the first quarter of 2015. BHA currently~~ includes 83over 80 auto ~~dealerships. BHA sells~~dealerships, which sell new andpre-owned automobiles and ~~offers~~offer repair and other related services and ~~products, and includes~~products. BHA also operates two related insurance businesses, two auto auctions and ~~a distributor of~~an automotive fluid maintenance ~~products.~~

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

Our other retailing businesses also 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 third quarter of 2017 increased 1.1% and declined 0.6% in the first nine months of ~~2016 increased approximately $30 million (0.8%) and $1.7 billion (17.7%), respectively, as~~2017 compared to the same periods in ~~2015. The increase~~2016. In the first nine months of 2017, BHA’s aggregate revenues, which represented 64% of our total retailing revenues, declined 2% compared to 2016, due primarily to lower vehicle units sold, partly offset by higher service, finance and insurance revenues. In the first nine months of 2017, revenues of our other retailers increased 2% compared to 2016.

Pre-tax earnings in ~~year-to-date revenues~~the third quarter and first nine months of 2017 increased $32 million (22%) and $109 million (27%), respectively, over earnings in the corresponding 2016 periods. These increases reflected comparatively higher earnings from BHA in the ~~impact~~third quarter and first nine months of ~~the BHA~~2017, primarily due to increased earnings from finance and ~~Louis acquisitions, which accounted for approximately $1.5 billion of the comparative increase. Revenues~~insurance activities and lower selling and administrative expenses, partly offset by lower auto sales margins. Earnings of our home furnishings retailers in the third quarter of 2017 were relatively flat versus 2016 and in the first nine months increased 18% compared to 2016. Theyear-to date increase was attributable to a slight increase in the overall gross margin rate and lower operating expense rates. In the third quarter and first nine months of ~~2016 increased $11 million (1.3%) and $180 million (8.5%), respectively, over 2015, primarily due to new stores opened in 2015 by Nebraska Furniture Mart and Jordan’s. Pre-tax~~2017, Pampered Chef produced comparatively higher earnings, ~~in 2016 from the retail group increased $53 million (58.2%) in the third quarter and $63 million (18.5%) in the first nine months. The increases were~~ primarily attributable to ~~BHA, Louis~~revenue increases and ~~our home furnishings businesses.~~cost management efforts.

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

McLane operates a wholesale distribution business that provides grocery andnon-food consumer products to retailers and convenience stores (“grocery”) and to restaurants (“foodservice”). McLane also operates businesses that are wholesale distributors of distilled spirits, wine and beer (“beverage”). The grocery and foodservice ~~businesses~~units are marked by high sales volumes and very low profit margins and have several significant customers, including ~~Wal-Mart, 7-Eleven~~Wal-Mart,7-Eleven and Yum! Brands. A curtailment of purchasing by any of its significant customers could have an adverse impact on McLane’s periodic revenues and earnings.

Revenues for the third quarter and first nine months of ~~2016~~2017 were ~~$12.3~~approximately $12.8 billion and ~~$36.1~~$37.5 billion, respectively, increases of 4.3% and ~~were relatively unchanged as~~3.8%, respectively, compared ~~with the~~to corresponding ~~periods~~2016 periods. The increases in ~~2015. Year-to-date~~ revenues ~~in 2016 reflected a comparative decline in grocery sales of 2%, attributable to lower unit volume, partly offset by price and mix changes. Year-to-date foodservice revenues increased 3%,~~were primarily due to ~~an overall~~a 5%year-to-date increase in ~~unit volume. Earnings~~grocery business sales.

Pre-tax earnings in the third quarter and first nine months of ~~2016~~2017 were ~~$106~~$45 million and ~~$371~~$202 million, respectively, ~~unchanged~~decreases of $61 million (58%) and $169 million (46%), respectively, compared to corresponding 2016 periods. The earnings declines reflected a 65% decline inyear-to-date earnings from our grocery operations. Throughout 2017, significant pricing pressures and an increasingly competitive business environment negatively affected our operating results, particularly with respect to the ~~third quarter of 2015~~grocery business. These conditions contributed to declining gross margin rates, which together with increased payroll and other operating expenses produced a ~~decrease of $13 million (3%) compared to~~49 basis point decline in our overall operating margin for the first nine months of 2015. Pre-tax earnings in the first nine months of 2015 included a gain of $19 million from the disposition of a subsidiary. Excluding this gain, the operating margin (ratio of earnings to revenues) in the first nine months of 2016 was 1.03%, compared to 1.01% in 2015. The grocery and foodservice business has been and is expected to continue to be highly competitive.2017.

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).


	Third Quarter								First Nine Months								Third Quarter								First Nine Months
	Revenues				Earnings				Revenues				Earnings				Revenues				Earnings				Revenues				Earnings
	2016		2015		2016		2015		2016		2015		2016		2015		2017		2016		2017		2016		2017		2016		2017		2016
Manufactured housing and finance	$	1,099	$	926	$	165	$	189	$	3,057	$	2,637	$	514	$	515	$	1,318	$	1,099	$	173	$	165	$	3,591	$	3,057	$	546	$	514
Transportation equipment leasing		655		633		235		235		2,009		1,849		731		655		652		655		219		235		1,928		2,009		649		731
Other		208		166		117		62		611		592		333		310		217		208		138		117		566		611		309		333

	$	1,962	$	1,725	$	517	$	486	$	5,677	$	5,078	$	1,578	$	1,480	$	2,187	$	1,962		530		517	$	6,085	$	5,677		1,504		1,578

Income taxes and noncontrolling interests						180		183						534		518						189		180						528		534

					$	337	$	303					$	1,044	$	962					$	341	$	337					$	976	$	1,044

Clayton Homes’ revenues in the third quarter and first nine months of 2017 increased $219 million (20%) and $534 million (17%), respectively, compared to the corresponding 2016 periods. These increases were primarily due to higher home sales, attributable to ayear-to-date increase in overall unit sales (12%) and higher average prices, primarily due to sales mix changes. In 2017, home sales included a higher mix of site built homes, which have a higher land content and, therefore, unit prices tend to be higher. Gross sales margin rates for site built homes, however, are typically lower than manufactured homes.Pre-tax earnings increased $8 million (5%) in the third quarter and $32 million (6%) in the first nine months of 2017 compared to the corresponding 2016 periods.Pre-tax earnings in the third quarter of 2017 were negatively impacted by increased insurance claim costs, due primarily to hurricanes Harvey and Irma.Pre-tax earnings in the first nine months of 2017 also reflected increased earnings from manufacturing, retailing and site-built activities, comparatively lower servicing asset impairment charges and a gain from a legal settlement, partly offset by increased employee healthcare, technology, marketing and legal expenses.

Transportation equipment leasing revenues in the third quarter were relatively flat and in the first nine months of 2017 declined $81 million (4%) compared to the corresponding 2016 periods. In the third quarter and first nine months of 2017, leasing revenues declined primarily due to lower railcar and trailer units on lease and lower railcar rental rates. We currently believe industry railcar capacity available for lease exceeds demand, which is contributing to lower lease rates. In the first nine months of 2017, we also experienced lower equipment sales to third parties, although sales during the third quarter of 2017 increased compared to 2016.

Pre-tax earnings in the third quarter and first nine months of 2017 declined $16 million (7%) and $82 million (11%), respectively, compared to the corresponding 2016 periods. These decreases reflected the aforementioned revenue declines and higher railcar repair and storage costs. Significant components of our operating costs, such as depreciation expense, do not vary proportionately to revenue changes and changes in revenues can disproportionately impact earnings.

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

Clayton Homes’ revenues in the third quarter and first nine months of 2016 increased $173 million (19%) and $420 million (16%), respectively, compared to 2015. The increases reflected a 27% increase in year-to-date revenues from home sales, due primarily to a 22% increase in units sold and changes in mix. Pre-tax earnings for the third quarter decreased 13% and in the first nine months of 2016 were flat as compared to earnings in the corresponding 2015 periods. Clayton’s earnings in 2016 were negatively impacted by increased losses from insurance claims, increased impairment charges on servicing assets and lower gross sales margins, which partially offset the benefit from the significant increases in unit sales. As of September 30, 2016, approximately 94% of the installment loan portfolio was current in terms of payment status.

Transportation equipment leasing revenues in the third quarter and first nine months of 2016 increased $22 million (3.5%) and $160 million (8.7%), respectively, compared to 2015. The increases derived primarily from the acquisition of GE’s railcar services fleet and railcar repair services business in the last half of 2015 and an increase in core fleet size, offset in part by lower utilization rates, lower crane lease demand in North America and reduced volumes in other products and services primarily related to oil and gas markets.

Pre-tax earnings in 2016 were unchanged in the third quarter and increased $76 million (11.6%) in the first nine months compared to 2015. The year-to-date increase was primarily attributable to revenue growth and lower depreciation rates for certain railcars, partially offset by higher railcar repair costs and interest expense on new borrowings from a Berkshire financing subsidiary.

~~Other~~Earnings from other finance activities include CORT furniture leasing, our share of the earnings of a commercial mortgage servicing business (“Berkadia”) in which we own a 50% joint venture interest, and interest and dividends from a portfolio of investments. InPre-tax earnings in the first nine months of ~~2016, other earnings increased $23~~2017 declined $24 million compared to ~~2015,~~2016, reflecting ~~increased~~lower interest and dividend income from investments and lower earnings from ~~investment securities and~~ CORT, partly offset by ~~lower~~higher earnings from Berkadia. 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~~The corresponding expenses are included in ~~Clayton Homes’~~the results of our manufactured housing and ~~UTLX’s results. Interest~~finance and transportation equipment leasing business groups.Pre-tax interest rate spreads charged to these businesses ~~were $55 million~~ in the first nine months of 2017 and 2016 were $57 million and ~~$47~~$55 million, ~~in 2015.~~respectively.

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


	Third Quarter					First Nine Months				Third Quarter				First Nine Months
	2016		2015			2016		2015		2017		2016		2017		2016
Investment gains/losses	$	3,150	$	8,266		$	5,643	$	8,725	$	657	$	3,150	$	1,262	$	5,643
Derivative gains/losses		458		(764	)		(332)		380		308		458		703		(332	)

Gains/losses before income taxes and noncontrolling interests		3,608		7,502			5,311		9,105		965		3,608		1,965		5,311
Income taxes and noncontrolling interests		1,261		2,625			718		3,185		342		1,261		695		718

Net gains/losses	$	2,347	$	4,877		$	4,593	$	5,920	$	623	$	2,347	$	1,270	$	4,593

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.

As discussed in Note 2 to the Consolidated Financial Statements, we will adopt a new accounting standard on January 1, 2018 that will change the reporting of unrealized gains and losses on our investments in equity securities. Beginning as of that date, unrealized gains and losses on investments in equity securities will be included in our Consolidated Statements of Earnings along with realized gains from dispositions. This new standard is required to be adopted prospectively and prior years’ statements of earnings may not be restated to reflect the change. Upon adoption of this accounting standard, we will reclassify the net unrealized gains related to our investments in equity securities from accumulated other comprehensive income to retained earnings. As of September 30, 2017, accumulatedafter-tax net unrealized appreciation related to our equity securities was approximately $53 billion.

While the adoption of this standard will not affect our total consolidated shareholders’ equity, it will almost certainly produce a very significant increase in the volatility of our periodic net earnings given the magnitude of our existing equity securities portfolio and the inherent volatility of equity securities prices. To illustrate the impact of this standard, our other comprehensive income in the third quarter and first nine months of 2017 includedafter-tax net unrealized gains from equity securities of approximately $2.8 billion and $10.9 billion, respectively. Had this new standard been in effect as of the beginning 2017, these amounts would have been included in our Consolidated Statements of Earnings. However, our consolidated comprehensive income for those periods would have been unchanged.

We believe the amount of investment gains/losses included in earnings in any given quarterly or annual 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. Market price changes related to our investment securities will likely have a material impact on our reported earnings after 2017. Although we do not consider investment gains and losses as necessarily meaningful or useful in evaluating our quarterly or annual results of operations, we provide information concerning such gains and losses when reflected in our earnings.

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

We believe the amount of investment gains/losses included in earnings in any given period typically has little analytical or predictive value. Our decisions to sell securities are not motivated by the impact that the resulting gains or losses will have on our reported earnings. Although we do not consider investment gains and losses as necessarily meaningful or useful in evaluating our periodic results, we are providing information to explain the nature of such gains and losses when reflected in our earnings.

Pre-tax investment gains in the third quarter were $657 million in 2017 and ~~first nine months of 2016 were $3.2~~$3.15 billion ~~and $5.6 billion, respectively.~~in 2016. Investment gains in the third quarter of 2016 included $2.4 billion from the disposition of our Wrigley preferred stock investment.Pre-taxinvestment ~~and~~gains in the first nine months of 2016 also included ~~$610 million from the redemption of our Kraft Heinz Preferred Stock investment and~~ $1.1 billion realized in connection with thetax-free exchange of our shares of P&G common stock for 100% of the common stock of Duracell. Income tax expense allocated to investment gains included a benefit from the reduction of certain deferred income tax liabilities in connection with the exchange of P&G common stock for Duracell. See Notes 8 and 9 to the accompanying Consolidated Financial Statements. In 2015, pre-tax investment gains included non-cash holding gains related to our investment in Kraft Heinz of $6.8 billion in the third quarter, as well as net gainsOurafter-tax gain from ~~dispositions of equity and fixed maturity securities of~~this transaction was approximately ~~$1.5 billion in the third quarter and~~ $1.9 ~~billion in the first nine months.~~

Investment gains/losses also included pre-tax other-than-temporary impairment (“OTTI”) charges of $63 million and $26 million in the first nine months of 2016 and 2015, respectively. Although we have periodically recorded OTTI charges in earnings in the past, we continue to hold certain of those securities. If the market values of those securities increase following the date OTTI charges were recorded in earnings, the increases are not reflected in earnings but are instead included in shareholders’ equity as a component of accumulated other comprehensive income. When recorded, OTTI charges have no impact whatsoever on the asset values otherwise recorded in our Consolidated Balance Sheets or on our consolidated shareholders’ equity. In addition, the recognition of such losses in earnings rather than in accumulated other comprehensive income does not necessarily indicate that sales are planned and ultimately sales may not occur for a number of years. Furthermore, the recognition of an OTTI charge does not necessarily indicate that the loss in value of the security is permanent or that the market price of the security will not subsequently increase to and ultimately exceed our original cost.

As of September 30, 2016, gross unrealized losses on our investments in equity and fixed maturity securities determined on an individual purchase lot basis were approximately $1.4 billion, of which $941 million pertained to our investment in IBM common stock. We concluded that such losses were temporary. We consider several factors in determining whether or not impairments are deemed to be other than temporary, including the current and expected long-term business prospects and if applicable, the creditworthiness of the issuer, our ability and intent to hold the investment until the price recovers and the length of time and relative magnitude of the price decline.billion.

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

~~In 2016, our~~ Our equity index put option contracts producedpre-tax gains of $458 million in the third quarter and pre-tax losses of $421 million for the first nine months. In each period, these gains and losses were primarily due to changes in the index values and interest rates and the passage of time. In 2015, our equity index put option contracts produced pre-tax losses of $802 million in the third quarter and pre-tax gains of $371$703 million in the first nine months. In the third quarter of 2015, the losses were driven by lower index prices and increased expected volatility assumptions, which produced an increase in the fair value of our liabilities. The third quarter losses offset much of the gains realized in the first six months of ~~2015,~~2017, which were primarily attributable to ~~higher~~increased index ~~prices, a stronger U.S. Dollar~~values, shorter contract durations and ~~increased~~changes in expected volatilities, partly offset by unfavorable foreign currency exchange rate changes. In the first nine months of 2016, these contracts generatedpre-tax losses of $421 million, driven by lower interest ~~rates.~~rates and lower index values related to certain contracts. As of September 30, ~~2016,~~2017, equity index put option intrinsic values were ~~approximately $1.6 billion~~$640 million and our recorded liabilities at fair value were approximately ~~$4.0~~$2.2 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~~last credit default contract was ~~terminated by mutual agreement with the counterparty and we paid $195 million upon termination.~~terminated. This contract produced apre-tax ~~earnings~~ gain of $89 million in the first nine months of 2016. ~~We have no further exposure to losses under credit default contracts.~~

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

A summary ofafter-tax other earnings ~~which include corporate income (including income from our investments in Kraft Heinz), expenses and income taxes not allocated to operating businesses is summarized below. Amounts are in millions.~~(losses) follows (in millions).


	Third Quarter				First Nine Months				Third Quarter						First Nine Months
	2016		2015		2016		2015		2017			2016			2017			2016
Kraft Heinz earnings	$	146	$	115	$	552	$	315	$	215		$	146		$	725		$	552
Acquisition accounting expenses		(317)		(199)		(550)		(400)		(196	)		(290	)		(518	)		(550	)
Corporate interest expense		(116)		(41)		(297)		(216)		(238	)		(116	)		(769	)		(297	)
Other		25		—		(15)		(6)		18			(2	)		25			(15	)

Net earnings attributable to Berkshire Hathaway shareholders	$	(262)	$	(125)	$	(310)	$	(307)
Net earnings (losses) attributable to Berkshire Hathaway shareholders									$	(201	)	$	(262	)	$	(537	)	$	(310	)

Our ~~earnings in 2016 from our investments in~~after-tax Kraft Heinz ~~included lower dividends on~~earnings includes Berkshire’s share of Kraft Heinz’s earnings attributable to common shareholders determined pursuant to the ~~Preferred Stock, which was redeemed in June 2016, and increased~~ equity method earnings from our common stock investment. Our earnings, after allocated Berkshire corporate income taxes, were $146 million in the third quarter and $552 million in the first nine months of 2016.method. In ~~2015, these investments produced earnings of $115 million in the third quarter and $315 million for the first nine months.~~

~~After-tax corporate interest expense was $116 million in the third quarter and $297 million for~~ the first nine months of 2016, ~~and $41~~Kraft Heinz earnings also included $180 million ~~and $216 million, respectively,~~inpre-tax dividend income from our Preferred Stock investment, which was redeemed in the comparable 2015 periods. The increases in 2016 reflected the impact of increased average borrowings. The variations in comparative periodic after-tax corporate interest expense also reflected the impact of foreign exchange gains and losses with respect to Euro denominated debt issued by Berkshire in March 2015 (€3.0 billion par) and March 2016 (€2.75 billion par). Corporate interest included after-tax foreign currency exchange losses of $48 million in the third quarter and $107 million in the first nine months of 2016 and $4 million and $106 million, respectively, in the comparable 2015 periods. Relatively minor changes in the U.S. Dollar/Euro exchange rate can produce significant gains or losses given the current level of our Euro-denominated borrowings.

~~Also included in~~June 2016.After-tax other earnings ~~are~~(losses) also include charges ~~related to~~arising from the application of the acquisition method in connection with Berkshire’s past business acquisitions. Such charges were primarily from the amortization of intangible assets recorded in connection with those business acquisitions. ~~These charges (after-tax) were $317 million~~

In each of the last three years, Berkshire issued Euro-denominated debt and ~~$550 million~~at September 30, 2017, the aggregate par amount outstanding was €6.85 billion. Changes in foreign currency exchange rates can produce sizablenon-cash gains and losses from the periodic revaluation of these liabilities into U.S. Dollars.After-tax corporate interest expense included foreign currency exchange rate losses in the third quarter and first nine months of ~~2016, respectively, compared to $199~~2017 of $172 million and ~~$400~~$571 million, respectively, related to our Euro denominated debt. In 2016,after-tax corporate interest included foreign currency exchange rate losses of $48 million in the ~~comparable periods~~third quarter and $107 million in ~~2015.~~the first nine months. Excluding these foreign currency gains and losses,after-tax corporate interest expense in the first nine months of 2017 and 2016 was $198 million and $190 million, respectively.

Our balance sheet ~~continues to reflect~~reflects significant liquidity and a strong capital base. Our consolidated shareholders’ equity at September 30, ~~2016~~2017 was ~~$269.3~~approximately $308.3 billion, an increase of ~~$13.7~~$25.3 billion since December 31, ~~2015.~~2016. Net earnings attributable to Berkshire shareholders in the first nine months of ~~2016~~2017 were ~~$17.8~~$12.4 billion. Net unrealized appreciation of investments and foreign currency translation gains included in other comprehensive income in the first nine months of 2017 were approximately $10.9 billion and $1.9 billion, respectively.

At September 30, ~~2016,~~2017, our insurance and other businesses held cash, ~~and~~ cash equivalents and U.S. Treasury Bills of ~~$68.3~~approximately $96.6 billion and investments (excluding our investment in Kraft Heinz) of ~~$140.8~~$177.2 billion. In ~~June~~January 2017, Berkshire issued €1.1 billion of new senior notes and repaid $1.1 billion of maturing senior notes. Berkshire’s debt outstanding at September 30, 2017 was approximately $18.6 billion, an increase of $943 million from December 31, 2016, ~~we received $8.32~~of which $860 million was attributable to foreign currency exchange rate changes applicable to the €6.85 billion ~~in connection with the redemption~~par amount of our ~~Kraft Heinz Preferred Stock investment.~~

~~In January 2016, we used cash~~Euro-denominated senior notes. Berkshire term debt of ~~approximately $32.1~~$1.55 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, we 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. In August 2016, we issued $750 million of senior unsecured notes to replace $750 million of maturing notes. Overwill mature within the next twelve ~~months, $1.1 billion of parent company senior notes will mature.~~months.

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

Our railroad, utilities and energy businesses (conducted by BNSF and BHE) maintain very large investments in capital assets (property, plant and equipment) and will regularly make significant capital expenditures in the normal course of business. In the first nine months of ~~2016,~~2017, capital expenditures were $3.2 billion by BHE and $2.4 billion by BNSF. We forecast the aggregate capital expenditures of these businesses ~~were approximately $6.4 billion, including $3.5 billion by BHE and $2.9 billion by BNSF. Forecasted capital expenditures of the two businesses~~ for the remainder of ~~2016~~2017 will approximate ~~$2.5 billion. Future~~$2.6 billion and we currently expect to fund such future capital expenditures ~~are expected to be funded from~~with cash on hand, cash flows from operations and debt issuances.

BNSF’s outstanding debt ~~was approximately $22.2~~approximated $22.5 billion as of September 30, ~~2016,~~2017, an increase of ~~$429~~$487 million ~~from~~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. BNSF debentures totaling $650 million par amount will mature in March 2018. Outstanding borrowings of BHE and its subsidiaries ~~excluding its borrowings from Berkshire insurance subsidiaries,~~ were approximately ~~$36.6~~$38.6 billion ~~as of~~at September 30, ~~2016,~~2017, an increase of ~~$643 million from~~$1.6 billion since December 31, ~~2015.~~2016. During the first nine months of 2017, BHE and its subsidiaries issued approximately $1.7 billion of debt with maturity dates ranging from 2022 to 2057. Within the next twelve months, approximately $2.8 billion of BHE and subsidiary term debt will mature. 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 ~~$41.9~~$40.3 billion as of September 30, ~~2016, an increase~~2017, a decrease of ~~approximately $2.9~~$1.4 billion ~~since~~from December 31, ~~2015.~~2016. Finance assets ~~at September 30, 2016~~consist primarily ~~consisted~~ of loans and finance receivables, ~~and~~ various types of property held for lease, ~~as well as significant~~ cash, ~~and~~ cash equivalents ~~which included the proceeds of approximately $4.6 billion from the sale of our Wrigley preferred stock investment in September.~~

and U.S. Treasury Bills. Finance and financial products liabilities ~~were~~declined $2.76 billion to approximately ~~$21.1~~$17.0 billion as of September 30, ~~2016, an increase~~2017. The decrease was primarily due to a reduction in borrowings of approximately ~~$3.9~~$2.3 billion, ~~compared to December 31, 2015. The year-to-date increase was primarily attributable to new debt~~reflecting repayments of $3.6 billion, partly offset by $1.3 billion of senior unsecured notes issued in January by a wholly-owned financing subsidiary, Berkshire Hathaway Finance Corporation (“BHFC”)~~, including $3.5~~. The new BHFC notes mature in 2019 and 2020. BHFC’s outstanding borrowings were $12.9 billion at September 30, 2017. In the first six months of 2018, $4.1 billion of BHFC senior notes ~~issued in March. See Note 16 to the accompanying Consolidated Financial Statements. The proceeds were~~will mature. BHFC’s senior note borrowings 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. Over~~business. Berkshire guarantees the ~~next twelve months, $2.8 billion~~full and timely payment of ~~BHFC~~principal and interest with respect to BHFC’s senior ~~notes~~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 ~~mature.~~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 payments under certain contracts, such as insurance and reinsurance contracts, are contingent upon the outcome of 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 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 loss adjustment expenses, representing our current estimate of the claims we ultimately expect to pay under the agreement. We estimate future payments under this agreement as follows: 2020-2021 – $3.6 billion and thereafter – $12.8 billion; however, as generally noted above, actual payments under this agreement will likely vary, perhaps materially, from these estimates. Further, our liabilities for unpaid losses and loss adjustment expenses increased an additional $6.8 billion during the first nine months of ~~2016, we issued new term debt~~2017 due to various factors, including catastrophe loss events during the third quarter of 2017 and assumed debt through the PCC business acquisition. Future payments of principal and interest related to such borrowings are summarized as follows (in millions): 2016 - $225; 2017 - $424; 2018 - $3,905; 2019 - $3,362; and 2020 and after - $15,756. overall growth in our primary insurance businesses.

Except as otherwise disclosed in this Quarterly Report, our contractual obligations as of September 30, ~~2016~~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 Form10-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 Form10-K for the year ended December 31, ~~2015.~~2016.

Our Consolidated Balance Sheet as of September 30, ~~2016~~2017 includes estimated liabilities for unpaid losses and loss adjustment expenses from property and casualty insurance and reinsurance contracts of approximately ~~$75.5~~$100 billion. Due to the inherent uncertainties in the process of establishing ~~these liabilities,~~loss reserve amounts, the actual ultimate claim ~~liabilities~~amounts will likely differ from the currently recorded amounts. A very small percentage change in estimates of this magnitude ~~could have~~will result in a material effect on ~~our~~ periodic earnings. The effects from changes in these estimates are recorded as a component of insurance losses and loss adjustment expenses in the period of the change.

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

Our Consolidated Balance Sheet as of September 30, ~~2016~~2017 includes goodwill of acquired businesses of approximately ~~$79~~$81 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 ~~that adversely affect~~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 September 30, ~~2016,~~2017, there were no material changes in the market risks described in Berkshire’s Annual Report on Form10-K for the year ended December 31, ~~2015.~~2016.

As of the end of the period covered by this Quarterly Report on Form10-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 Rule13a-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 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.

Our significant business risks are described in Item 1A to Form10-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, ~~and~~ 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 nine 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 Form10-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.


		Page No.
Part I – Financial Information

~~Item 1. Financial Statements~~
	~~Consolidated Balance Sheets—September 30, 2016 and December 31, 2015~~		2
	~~Consolidated Statements of Earnings—Third Quarter and First Nine Months 2016 and 2015~~		4
	~~Consolidated Statements of Comprehensive Income—Third Quarter and First Nine Months 2016 and 2015~~		5
	~~Consolidated Statements of Changes in Shareholders’ Equity—First Nine Months 2016 and 2015~~		5
	~~Consolidated Statements of Cash Flows—First Nine Months 2016 and 2015~~		6
	~~Notes to Consolidated Financial Statements~~		~~7-24~~
~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~		~~25-43~~
~~Item 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~		44
~~Item 4.~~	~~Controls and Procedures~~		44

~~Part II – Other Information~~

~~Item 1.~~	~~Legal Proceedings~~		44
~~Item 1A.~~	~~Risk Factors~~		44
~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities~~		44
~~Item 3.~~	~~Defaults Upon Senior Securities~~		44
~~Item 4.~~	~~Mine Safety Disclosures~~		44
~~Item 5.~~	~~Other Information~~		44
~~Item 6.~~	~~Exhibits~~		45

~~Signature~~			45


	September 30, 2017			December 31, 2016
	(Unaudited)
LIABILITIES

*Insurance and Other:*
Losses and loss adjustment expenses	$	100,138		$	76,918
Unearned premiums		16,552			14,245
Life, annuity and health insurance benefits		16,919			15,977
Other policyholder liabilities		7,549			6,714
Accounts payable, accruals and other liabilities		21,763			22,164
Notes payable and other borrowings		27,262			27,175

		190,183			163,193

*Railroad, Utilities and Energy:*
Accounts payable, accruals and other liabilities		11,640			11,434
Regulatory liabilities		3,217			3,121
Notes payable and other borrowings		61,147			59,085

		76,004			73,640

*Finance and Financial Products:*
Accounts payable, accruals and other liabilities		1,688			1,444
Derivative contract liabilities		2,187			2,890
Notes payable and other borrowings		13,081			15,384

		16,956			19,718

Income taxes, principally deferred		86,559			77,944

Total liabilities		369,702			334,495


SHAREHOLDERS’ EQUITY
Common stock		8			8
Capital in excess of par value		35,684			35,681
Accumulated other comprehensive income		50,183			37,298
Retained earnings		224,166			211,777
Treasury stock, at cost		(1,763	)		(1,763	)

Berkshire Hathaway shareholders’ equity		308,278			283,001
Noncontrolling interests		3,574			3,358

Total shareholders’ equity		311,852			286,359

	$	681,554		$	620,854


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

		163,296		140,553

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

		73,495		72,766

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

		21,062		17,185

Income taxes, principally deferred		73,570		63,126

Total liabilities		331,423		293,630

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

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

Total shareholders’ equity		272,615		258,627

	$	604,038	$	552,257


	~~First Nine Months~~
	~~2015~~
~~Revenues~~		$	~~167,315~~
~~Net earnings attributable to Berkshire Hathaway shareholders~~			~~19,086~~
~~Net earnings per equivalent Class A common share attributable to Berkshire Hathaway shareholders~~			~~11,615~~


Large accelerated filer		☒	Accelerated filer	☐
	☐
Non-accelerated filer		☐	Smaller reporting company		☐
			Emerging growth company		☐


	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
First nine months of 2017
Balance at December 31, 2016	$	35,689		$	37,298		$	211,777	$	(1,763	)	$	3,358		$	286,359
Net earnings		—			—			12,389		—			308			12,697
Other comprehensive income, net		—			12,885			—		—			128			13,013
Issuance of common stock		58			—			—		—			—			58
Transactions with noncontrolling interests		(55	)		—			—		—			(220	)		(275	)

Balance at September 30, 2017	$	35,692		$	50,183		$	224,166	$	(1,763	)	$	3,574		$	311,852


First nine months of 2016
Balance at December 31, 2015	$	35,628		$	33,982		$	187,703	$	(1,763	)	$	3,077		$	258,627
Net earnings		—			—			17,788		—			284			18,072
Other comprehensive income, net		—			(4,184	)		—		—			(17	)		(4,201	)
Issuance of common stock		80			—			—		—			—			80
Transactions with noncontrolling interests		30			—			—		—			7			37

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


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

	$	10,970	$	13,022	$	17,493	$	21,717


	September 30, 2017		December 31, 2016
Assets	$	120,051	$	120,480
Liabilities		61,080		62,906


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

		$15,711		$23,424


	October 2, 2016		January 3, 2016
Assets		$121,080		$122,973
Liabilities		63,212		56,737


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

		$	15,763		$	11,916


	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 with respect to:
Current accident year events		28,632			22,737
Prior accident years’ events		(510	)		(1,453	)
Retroactive reinsurance and discount accretion		11,328			1,041

Total incurred losses and loss adjustment expenses		39,450			22,325

Paid losses and loss adjustment expenses with respect to:
Current accident year events		(11,539	)		(10,202	)
Prior accident years’ events		(9,973	)		(8,761	)
Retroactive reinsurance		(762	)		(857	)

Total payments		(22,274	)		(19,820	)

Foreign currency translation adjustment		603			(158	)

Unpaid losses and loss adjustment expenses—September 30:
Net balance		83,312			64,497
Reinsurance recoverable and deferred charges		16,826			10,972

Gross liabilities	$	100,138		$	75,469


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

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



		a. Exhibits

3(i)		~~a. Exhibits~~Restated Certificate of Incorporation Incorporated by reference to Exhibit 3(i) to Form10-K filed on March 2, 2015.

3(ii)		By-Laws Incorporated by reference to Exhibit 3(ii) to Form8-K filed on May 4, 2016.

12		Calculation of Ratio of Consolidated Earnings to Consolidated Fixed Charges

31.1		Rule13a-14(a)/15d-14(a) Certifications

31.2		Rule13a-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 Form10-Q for the quarter ended September 30, ~~2016,~~2017, formatted in XBRL (Extensible Business Reporting Language) includes: (i) the Consolidated Balance Sheets as of September 30, ~~2016~~2017 and December 31, ~~2015,~~2016, (ii) the Consolidated Statements of Earnings for each of the three-month and nine-month periods ended September 30, ~~2016~~2017 and ~~2015,~~2016, (iii) the Consolidated Statements of Comprehensive Income for each of the three-month and nine-month periods ended September 30, ~~2016~~2017 and ~~2015,~~2016, (iv) the Consolidated Statements of Changes in Shareholders’ Equity for each of the nine-month periods ended September 30, ~~2016~~2017 and ~~2015,~~2016, (v) the Consolidated Statements of Cash Flows for each of the nine-month periods ended September 30, ~~2016~~2017 and ~~2015,~~2016, and (vi) the Notes to Consolidated Financial Statements, tagged in summary and detail.


	BERKSHIRE HATHAWAY INC.
	(Registrant)

Date: November ~~4, 2016~~ 3, 2017	/S/ MARC D. HAMBURG
		(Signature)
		Marc D. Hamburg,
		Senior Vice President and
		Principal Financial Officer

Class AB —

~~784,669~~

1,336,892,283

~~Class B —~~

~~1,289,055,322~~