UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2007

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

For the transition period from                      to                     

BERKSHIRE HATHAWAY INC.

(Exact name of registrant as specified in its charter)

Delaware		47-0813844
(State or other jurisdiction of		(I.R.S. Employer Identification Number)
incorporation or organization)

1440 Kiewit Plaza, Omaha, Nebraska 68131

(402) 346-1400

(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 þ NO o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ      Accelerated filer o       Non-accelerated filer o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

Number of shares of common stock outstanding as of July 27, 2007:

Class A — 1,088,878
Class B — 13,753,590

 

 

		FORM 10-Q		Q/E 6/30/07

BERKSHIRE HATHAWAY INC.

		Page No.
Part I — Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets — June 30, 2007 and December 31, 2006			2-3
Consolidated Statements of Earnings — Second Quarter and First Six Months 2007 and 2006			4
Condensed Consolidated Statements of Cash Flows — First Six Months 2007 and 2006			5
Notes to Interim Consolidated Financial Statements			6-14
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			15-26
Item 3. Quantitative and Qualitative Disclosures About Market Risk			26
Item 4. Controls and Procedures			26
Part II – Other Information
Item 1. Legal Proceedings			27
Item 1A. Risk Factors			27
Item 4. Submission of Matters to a Vote of Security Holders			27
Item 6. Exhibits			28
Signature			28
Exhibit 31 Rule 13a-14(a)/15d-14(a) Certifications			29-30
Exhibit 32 Section 1350 Certifications			31-32

		FORM 10-Q		Q/E 6/30/07

Part I Financial Information

BERKSHIRE HATHAWAY INC.
and Subsidiaries

		June 30,				December 31,
		2007				2006
		(Unaudited)
ASSETS
Insurance and Other:
Cash and cash equivalents		$	39,936			$	37,977
Investments:
Fixed maturity securities			24,917				25,300
Equity securities			73,610				61,533
Other			802				905
Receivables			14,095				12,881
Inventories			5,598				5,257
Property, plant and equipment			9,645				9,303
Goodwill			25,845				25,678
Deferred charges reinsurance assumed			4,039				1,964
Other			7,154				6,538
			205,641				187,336
Utilities and Energy:
Cash and cash equivalents			1,178				343
Property, plant and equipment			24,922				24,039
Goodwill			5,570				5,548
Other			6,415				6,560
			38,085				36,490
Finance and Financial Products:
Cash and cash equivalents			5,836				5,423
Investments in fixed maturity securities			2,875				3,012
Loans and finance receivables			11,953				11,498
Goodwill			1,013				1,012
Other			3,648				3,666
			25,325				24,611
		$	269,051			$	248,437

See accompanying Notes to Interim Consolidated Financial Statements

		FORM 10-Q		Q/E 6/30/07

BERKSHIRE HATHAWAY INC.
and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(dollars in millions except per share amounts)

		June 30,				December 31,
		2007				2006
		(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Insurance and Other:
Losses and loss adjustment expenses		$	56,450			$	47,612
Unearned premiums			7,505				7,058
Life and health insurance benefits			3,758				3,600
Other policyholder liabilities			3,937				3,938
Accounts payable, accruals and other liabilities			10,725				9,654
Income taxes, principally deferred			21,112				19,170
Notes payable and other borrowings			3,108				3,698
			106,595				94,730
Utilities and Energy:
Accounts payable, accruals and other liabilities			6,245				6,693
Notes payable and other borrowings			18,214				16,946
			24,459				23,639
Finance and Financial Products:
Derivative contract liabilities			4,580				3,883
Accounts payable, accruals and other liabilities			3,439				3,543
Notes payable and other borrowings			12,273				11,961
			20,292				19,387
Total liabilities			151,346				137,756
Minority shareholders’ interests			2,433				2,262
Shareholders’ equity:
Common stock:
Class A, $5 par value; Class B, $0.1667 par value			8				8
Capital in excess of par value			26,927				26,522
Accumulated other comprehensive income			23,684				22,977
Retained earnings			64,653				58,912
Total shareholders’ equity			115,272				108,419
		$	269,051			$	248,437

See accompanying Notes to Interim Consolidated Financial Statements

		FORM 10-Q		Q/E 6/30/07

BERKSHIRE HATHAWAY INC.
and Subsidiaries

		Second Quarter								First Six Months
		2007				2006				2007				2006
		(Unaudited)								(Unaudited)
Revenues:
Insurance and Other:
Insurance premiums earned		$	5,950			$	5,836			$	19,464			$	11,358
Sales and service revenues			14,758				12,736				27,981				24,728
Interest, dividend and other investment income			1,284				1,124				2,404				2,155
Investment gains/losses			605				167				1,047				609
			22,597				19,863				50,896				38,850
Utilities and Energy:
Operating revenues			3,003				2,617				6,227				4,672
Other			57				71				106				209
			3,060				2,688				6,333				4,881
Finance and Financial Products:
Interest income			429				402				850				800
Investment gains/losses			4				101				5				108
Derivative gains/losses			319				191				462				545
Other			938				940				1,719				1,764
			1,690				1,634				3,036				3,217
			27,347				24,185				60,265				46,948
Costs and expenses:
Insurance and Other:
Insurance losses and loss adjustment expenses			3,176				3,517				14,035				6,867
Life and health insurance benefits			380				381				815				796
Insurance underwriting expenses			1,420				1,361				2,713				2,607
Cost of sales and services			11,985				10,437				22,850				20,420
Selling, general and administrative expenses			1,761				1,440				3,402				2,818
Interest expense			37				46				80				90
			18,759				17,182				43,895				33,598
Utilities and Energy:
Cost of sales and operating expenses			2,408				2,147				4,896				3,741
Interest expense			280				263				552				444
			2,688				2,410				5,448				4,185
Finance and Financial Products:
Interest expense			152				137				300				274
Other			932				854				1,734				1,676
			1,084				991				2,034				1,950
			22,531				20,583				51,377				39,733
Earnings before income taxes and minority interests			4,816				3,602				8,888				7,215
Income taxes			1,617				1,208				3,005				2,450
Minority shareholders’ interests			81				47				170				105
Net earnings		$	3,118			$	2,347			$	5,713			$	4,660
Average common shares outstanding *			1,545,206				1,541,641				1,544,008				1,541,286
Net earnings per common share *		$	2,018			$	1,522			$	3,700			$	3,023

See accompanying Notes to Interim Consolidated Financial Statements

		FORM 10-Q		Q/E 6/30/07

BERKSHIRE HATHAWAY INC.
and Subsidiaries

		First Six Months
		2007				2006
		(Unaudited)
Net cash flows from operating activities		$	7,432			$	3,451
Cash flows from investing activities:
Purchases of fixed maturity securities			(3,352	)			(4,693	)
Purchases of equity securities			(11,456	)			(4,648	)
Sales of fixed maturity securities			4,454				1,218
Redemptions and maturities of fixed maturity securities			6,265				4,928
Sales of equity securities			2,092				1,581
Purchases of loans and finance receivables			(276	)			(158	)
Principal collections on loans and finance receivables			379				595
Acquisitions of businesses, net of cash acquired			(1,218	)			(5,759	)
Purchases of property, plant and equipment			(2,552	)			(1,830	)
Other			184				773
Net cash flows from investing activities			(5,480	)			(7,993	)
Cash flows from financing activities:
Proceeds from borrowings of finance businesses			401				29
Proceeds from borrowings of utilities and energy businesses			1,948				1,711
Proceeds from other borrowings			54				130
Repayments of borrowings of finance businesses			(184	)			(214	)
Repayments of borrowings of utilities and energy businesses			(217	)			(245	)
Repayments of other borrowings			(551	)			(188	)
Change in short term borrowings			(580	)			201
Other			384				169
Net cash flows from financing activities			1,255				1,593
Increase (decrease) in cash and cash equivalents			3,207				(2,949	)
Cash and cash equivalents at beginning of year *			43,743				45,018
Cash and cash equivalents at end of first six months *		$	46,950			$	42,069
Supplemental cash flow information:
Cash paid during the period for:
Income taxes		$	1,367			$	2,327
Interest of finance and financial products businesses			287				260
Interest of utilities and energy businesses			562				434
Interest of insurance and other businesses			80				89
Non-cash investing activity:
Investments received in connection with the Equitas reinsurance transaction			6,529				—
Liabilities assumed in connection with acquisitions of businesses			184				9,659

* Cash and cash equivalents are comprised of the following:
Beginning of year —
Insurance and Other		$	37,977			$	40,471
Utilities and Energy			343				358
Finance and Financial Products			5,423				4,189
		$	43,743			$	45,018
End of first six months —
Insurance and Other		$	39,936			$	37,269
Utilities and Energy			1,178				394
Finance and Financial Products			5,836				4,406
		$	46,950			$	42,069

See accompanying Notes to Interim Consolidated Financial Statements

		FORM 10-Q		Q/E 6/30/07

BERKSHIRE HATHAWAY INC.

Note 1. General

     The accompanying unaudited Consolidated Financial Statements include the accounts of Berkshire Hathaway Inc. (“Berkshire” or “Company”) consolidated with the accounts of all its subsidiaries and affiliates in which Berkshire holds a controlling financial interest as of the financial statement date. Reference is made to Berkshire’s most recently issued Annual Report on Form 10-K (“Annual Report”) that included information necessary or useful to understanding Berkshire’s businesses and financial statement presentations. In particular, Berkshire’s significant accounting policies and practices were presented as Note 1 to the Consolidated Financial Statements included in the Annual Report. Certain amounts in 2006 have been reclassified to conform with the current year presentation. Financial information in this Report reflects any adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary to a fair statement of results for the interim periods in accordance with generally accepted accounting principles (“GAAP”).

     For a number of reasons, Berkshire’s 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 relatively more significant to results of interim periods than to results for a full year. Investment gains/losses are recorded when investments are sold, other-than-temporarily impaired or in instances as required under GAAP, when investments are marked-to-market. Variations in the amounts and timing of investment gains/losses can cause significant variations in periodic net earnings.

Note 2. Business acquisitions

     Berkshire’s long-held acquisition strategy is to purchase businesses with consistent earnings, good returns on equity, able and honest management and at sensible prices. In 2006, Berkshire completed several business acquisitions. On March 21, 2006, the acquisition of PacifiCorp, a regulated electric utility providing service to customers in six Western states, was completed for approximately $5.1 billion in cash through 88%-owned MidAmerican Energy Holdings Company. On July 5, 2006, Berkshire acquired 80% of the Iscar Metalworking Companies (“IMC”) for cash in a transaction that valued IMC at $5 billion. IMC is an industry leader in the metal cutting tools business through its Iscar, TaeguTec, Ingersoll and other IMC companies. IMC provides a comprehensive range of tools for metalworking applications.

     In 2006, Berkshire also acquired three relatively smaller businesses. On February 28, 2006, the acquisition of Business Wire, a leading global distributor of corporate news, multimedia and regulatory filings, was completed. On May 19, 2006, the acquisition of 85% of Applied Underwriters (“Applied”), an industry leader in integrated workers’ compensation solutions, was completed. Under certain conditions, existing minority shareholders of Applied may acquire up to an additional 4% interest in Applied from Berkshire. On August 2, 2006, the acquisition of Russell Corporation, a leading branded athletic apparel and sporting goods business, was completed. The aggregate consideration for these three businesses was approximately $1.4 billion.

     On March 30, 2007, Berkshire completed the acquisition of TTI, Inc., a privately held electronic components distributor headquartered in Fort Worth, Texas. TTI, Inc. is a leading distributor specialist of passive, interconnect and electromechanical components.

     The results of operations for each of these businesses are included in Berkshire’s consolidated results from the effective date of each acquisition. The following table sets forth certain unaudited pro forma consolidated earnings data for the first six months of 2006, as if each acquisition was consummated on the same terms at the beginning of that year. Pro forma consolidated revenues and net earnings for the first six months of 2007 were not materially different from the amounts reported. Amounts are in millions, except earnings per share.

		2006
Total revenues		$	50,296
Net earnings			4,730
Earnings per equivalent Class A common share			3,069

		FORM 10-Q		Q/E 6/30/07

Notes To Interim Consolidated Financial Statements (Continued)

Note 3. Investments in fixed maturity securities

     Data with respect to investments in fixed maturity securities follows (in millions).

		Insurance and other								Finance and financial products
		June 30, 2007				Dec. 31, 2006				June 30, 2007				Dec. 31, 2006
Amortized cost		$	23,914			$	23,796			$	1,280			$	1,439
Gross unrealized gains			1,238				1,636				94				102
Gross unrealized losses			(235	)			(132	)			(5	)			(4	)
Fair value		$	24,917			$	25,300			$	1,369			$	1,537

     Certain other fixed maturity investments of finance businesses are classified as held-to-maturity, which are carried at amortized cost. The carrying value and fair value of these investments totaled $1,506 million and $1,575 million at June 30, 2007, respectively. At December 31, 2006, the carrying value and fair value of held-to-maturity securities totaled $1,475 million and $1,627 million, respectively. Unrealized losses at June 30, 2007 and December 31, 2006 included $114 million and $69 million, respectively, related to securities that have been in an unrealized loss position for 12 months or more. Berkshire has the ability and intent to hold these securities until fair value recovers.

Note 4. Investments in equity securities

     Data with respect to investments in equity securities are shown in the tabulation below (in millions).

		June 30,				December 31,
		2007				2006
Total cost		$	39,152			$	28,353
Gross unrealized gains			34,671				33,217
Gross unrealized losses			(213	)			(37	)
Total fair value		$	73,610			$	61,533

     Unrealized losses at June 30, 2007 and December 31, 2006 consisted primarily of securities whose cost exceeded fair value for less than twelve months.

Note 5. Loans and receivables

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

		June 30,				December 31,
		2007				2006
Insurance premiums receivable		$	4,552			$	4,418
Reinsurance recoverables			3,171				2,961
Trade and other receivables			6,793				5,884
Allowances for uncollectible accounts			(421	)			(382	)
		$	14,095			$	12,881

     Loans and finance receivables of finance and financial products businesses are comprised of the following (in millions).

		June 30,				December 31,
		2007				2006
Consumer installment loans and finance receivables		$	10,770			$	10,325
Commercial loans and finance receivables			1,334				1,336
Allowances for uncollectible loans			(151	)			(163	)
		$	11,953			$	11,498

		FORM 10-Q		Q/E 6/30/07

Notes To Interim Consolidated Financial Statements (Continued)

Note 6. Property, plant and equipment of utilities and energy businesses

     Property, plant and equipment of utilities and energy businesses follow (in millions).

		Ranges of				June 30,				December 31,
		estimated useful life				2007				2006
Cost:
Utility generation and distribution system		5-85 years				$	28,891			$	27,687
Interstate pipeline assets		3-67 years					5,339				5,329
Independent power plants and other assets		3-30 years					1,814				1,770
Construction in progress							2,037				1,969
							38,081				36,755
Accumulated depreciation and amortization							(13,159	)			(12,716	)
						$	24,922			$	24,039

     The utility generation and distribution system and interstate pipeline assets are the regulated assets of public utility and natural gas pipeline subsidiaries. At June 30, 2007 and December 31, 2006, accumulated depreciation and amortization related to regulated assets totaled $12.3 billion and $11.9 billion, respectively. Substantially all of the construction in progress at June 30, 2007 and December 31, 2006 relates to the construction of regulated assets.

Note 7. Inventories

     Inventories are comprised of the following (in millions).

		June 30,				December 31,
		2007				2006
Raw materials		$	820			$	700
Work in process and other			445				402
Finished manufactured goods			1,757				1,817
Purchased goods			2,576				2,338
		$	5,598			$	5,257

Note 8. Income taxes, principally deferred

     A summary of income tax liabilities follows (in millions).

		June 30,				December 31,
		2007				2006
Payable currently		$	770			$	189
Deferred			19,449				18,271
Other			893				710
		$	21,112			$	19,170

     Berkshire and its subsidiaries’ income tax returns are continuously under audit by Federal and various state, local and foreign taxing authorities. Berkshire’s consolidated Federal income tax return liabilities have been settled with the Internal Revenue Service (“IRS”) through 1998. The IRS has completed its audit of the 1999 through 2001 tax returns and has proposed adjustments to increase Berkshire’s tax liabilities which Berkshire has protested. The examination is in the IRS’ appeals process. The IRS also completed its audit of the 2002 through 2004 tax returns and issued a report in late March 2007 proposing additional adjustments to increase Berkshire’s tax liabilities. Berkshire filed a protest with respect to certain of the proposed adjustments during the second quarter of 2007. The unsettled issues primarily relate to the timing of deductions for unpaid losses and loss adjustment expenses and other liabilities of property and casualty insurance subsidiaries. Berkshire does not currently believe that the potential audit adjustments will have a material effect on its Consolidated Financial Statements. See Note 14 for additional information regarding Berkshire’s estimated liabilities for uncertainties/unrecognized tax benefits which are shown as other income taxes in the table above.

		FORM 10-Q		Q/E 6/30/07

Notes To Interim Consolidated Financial Statements (Continued)

Note 9. Notes payable and other borrowings

     Notes payable and other borrowings of Berkshire and its subsidiaries are summarized below (in millions).

		June 30,				December 31,
		2007				2006
Insurance and other:
Issued by parent company due 2007-2033		$	591			$	894
Issued by subsidiaries and guaranteed by Berkshire:
Commercial paper and other short-term borrowings			1,250				1,355
Other debt due 2009-2035			240				240
Issued by subsidiaries and not guaranteed by Berkshire due 2007-2041			1,027				1,209
		$	3,108			$	3,698
Utilities and energy:
Issued by MidAmerican and its subsidiaries and not guaranteed by Berkshire:
MidAmerican senior unsecured debt due 2007-2037		$	5,028			$	4,479
Operating subsidiary and project debt due 2007-2037			12,883				12,014
Other			303				453
		$	18,214			$	16,946
Finance and financial products:
Issued by Berkshire Hathaway Finance Corporation and guaranteed by Berkshire:
Notes due 2007		$	700			$	700
Notes due 2008			3,099				3,098
Notes due 2010			1,994				1,994
Notes due 2012-2015			3,041				3,039
Issued by other subsidiaries and guaranteed by Berkshire due 2007-2027			831				398
Issued by other subsidiaries and not guaranteed by Berkshire due 2007-2030			2,608				2,732
		$	12,273			$	11,961

     Operating subsidiary and project debt of utilities and energy businesses represents amounts issued by subsidiaries of MidAmerican pursuant to separate financing agreements. All or substantially all of the assets of certain utility subsidiaries are or may be pledged or encumbered to support or otherwise secure the debt. These borrowing arrangements generally contain various covenants including, but not limited to, leverage ratios, interest coverage ratios and debt service coverage ratios. As of June 30, 2007, MidAmerican and its subsidiaries were in compliance with all applicable covenants.

Note 10. Common stock

     The following table summarizes Berkshire’s common stock activity during the first six months of 2007.

		Class A common stock				Class B common stock
		(1,650,000 shares authorized)				(55,000,000 shares authorized)
		Issued and Outstanding				Issued and Outstanding
Balance at December 31, 2006			1,117,568				12,752,431
Issuance of shares on exercise of SQUARZ warrants			2,325				41,706
Conversions of Class A common stock to Class B common stock and other			(30,933	)			955,857
Balance at June 30, 2007			1,088,960				13,749,994

     Each share of Class A common stock is convertible, at the option of the holder, into thirty shares of Class B common stock. Class B common stock is not convertible into Class A common stock. Class B common stock has economic rights equal to one-thirtieth (1/30) of the economic rights of Class A common stock. Accordingly, on an equivalent Class A common stock basis, there are 1,547,293 shares outstanding at June 30, 2007 and 1,542,649 shares outstanding at December 31, 2006. Each Class A common share is entitled to one vote per share. Each Class B common share possesses the voting rights of one-two-hundredth (1/200) of the voting rights of a Class A share. Class A and Class B common shares vote together as a single class.

     During 2007, holders of all outstanding SQUARZ securities exercised the warrant component of the securities and received Class A and Class B shares. In connection with these exercises, Berkshire received $333 million.

		FORM 10-Q		Q/E 6/30/07

Notes To Interim Consolidated Financial Statements (Continued)

Note 11. Comprehensive income

     Berkshire’s comprehensive income for the second quarter and first six months of 2007 and 2006 is shown in the table below (in millions).

		Second Quarter								First Six Months
		2007				2006				2007				2006
Net earnings		$	3,118			$	2,347			$	5,713			$	4,660
Other comprehensive income:
Increase (decrease) in unrealized appreciation of investments			2,637				(572	)			771				1,366
Applicable income taxes and minority interests			(929	)			199				(270	)			(478	)
Other			218				257				265				385
Applicable income taxes and minority interests			(41	)			(19	)			(59	)			(61	)
			1,885				(135	)			707				1,212
Comprehensive income		$	5,003			$	2,212			$	6,420			$	5,872

Note 12. Equitas reinsurance agreement

     In November 2006, the Berkshire Hathaway Reinsurance Group’s lead insurance entity National Indemnity Company (“NICO”) and Equitas, a London based entity established to reinsure and manage the 1992 and prior years’ non-life insurance and reinsurance liabilities of the Names or Underwriters at Lloyd’s of London, entered into an agreement for NICO to initially provide up to $5.7 billion and potentially provide up to an additional $1.3 billion of reinsurance to Equitas in excess of its undiscounted loss and allocated loss adjustment expense reserves as of March 31, 2006. The transaction became effective on March 30, 2007.

     NICO received substantially all of Equitas’ assets as consideration under the arrangement. The fair value of such consideration was $7.1 billion and included approximately $540 million in cash and miscellaneous receivables plus a combination of fixed maturity and equity securities which were delivered in April 2007. Under the transaction, NICO has agreed to pay all claims and related costs that arise from the underlying insurance and reinsurance contracts of Equitas, subject to the aforementioned aggregate limit of indemnification. On the effective date, the aggregate limit of indemnification, which does not include unallocated loss adjustment expenses, was $13.8 billion.

     The Equitas agreement was accounted for as reinsurance in accordance with SFAS No. 113 “Accounting for short duration and long duration reinsurance contracts.” Accordingly, premiums earned of $7.1 billion and losses incurred of $7.1 billion are reflected in the Consolidated Statement of Earnings for the first six months of 2007. Losses incurred consists of an estimated liability for unpaid losses and loss adjustment expenses of $9.3 billion less an asset for unamortized deferred charges on reinsurance assumed of $2.2 billion. The deferred charge asset will be amortized and charged to earnings as a component of losses and loss adjustment expenses incurred over the expected remaining loss settlement period using the interest method.

Note 13. Pension plans

     The components of net periodic pension expense for the second quarter and first six months of 2007 and 2006 are as follows (in millions).

		Second Quarter								First Six Months
		2007				2006				2007				2006
Service cost		$	51			$	46			$	101			$	86
Interest cost			108				97				219				176
Expected return on plan assets			(109	)			(100	)			(218	)			(184	)
Amortization of prior service costs and gains/losses			18				21				34				34
		$	68			$	64			$	136			$	112

		FORM 10-Q		Q/E 6/30/07

Notes To Interim Consolidated Financial Statements (Continued)

Note 14. Accounting pronouncements adopted during 2007

     Berkshire adopted FASB Interpretation No.48 “Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109” (“FIN 48”) as of January 1, 2007. Under FIN 48, a tax position taken is recognized if it is determined that the position will “more-likely-than-not” be sustained upon examination. FIN 48 also establishes measurement guidance with respect to positions that have met the recognition threshold. Upon adoption of FIN 48 Berkshire increased its aggregate income tax liability by $12 million. The cumulative net effect of adopting FIN 48 was recorded as a reduction to retained earnings of $24 million, partially offset by adjustments to items that are not recognized in net earnings. As of January 1, 2007, the income tax liability for uncertainties/unrecognized tax benefits was $857 million. Included in this amount was an accrual for interest and penalties of $124 million. As of the adoption date, the liability included $672 million which if recognized would have an impact on Berkshire’s effective tax rate. Berkshire classifies interest and penalties associated with income tax liabilities as a component of income tax expense.

     Berkshire adopted FASB Staff Position No. AUG AIR-1, “Accounting for Planned Major Maintenance Activities” (“AUG AIR-1”) in the first quarter of 2007. AUG AIR-1 prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities in which such maintenance costs are ratably recognized by accruing a liability in periods before the maintenance is performed. Upon the adoption of AUG AIR-1, Berkshire elected to use the direct expense method where maintenance costs are expensed as incurred. Previously, certain maintenance costs related to the fractional aircraft ownership business were accrued in advance. As of January 1, 2007, accrued liabilities of $83 million were reduced to zero and the cumulative net after-tax effect of $52 million was recorded as a credit to retained earnings. AUG AIR-1 is to be applied retrospectively. However, the net impact of retrospectively adopting AUG AIR-1 was not significant in each of the past three years and in the aggregate. Accordingly, Berkshire’s Consolidated Financial Statements for prior periods have not been restated.

Note 15. Accounting pronouncements to be adopted in the future

     In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value as the price received to transfer an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS 157 establishes a framework for measuring fair value by creating a hierarchy for observable independent market inputs and unobservable market assumptions. SFAS 157 further expands disclosures about such fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007 and may be adopted earlier but only if the adoption is in the first quarter of the fiscal year.

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115” (“SFAS 159”). SFAS 159 permits entities to elect to measure many financial instruments and certain other items at fair value. Upon adoption of SFAS 159, an entity may elect the fair value option for eligible items that exist at the adoption date. Subsequent to the initial adoption, the election of the fair value option should only be made at initial recognition of the asset or liability or upon a remeasurement event that gives rise to new-basis accounting. SFAS 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value nor does it eliminate disclosure requirements included in other accounting standards. SFAS 159 is effective for fiscal years beginning after November 15, 2007 and may be adopted earlier but only if the adoption is in the first quarter of the fiscal year.

     Berkshire is continuing to evaluate the impact that the adoption of SFAS 157 and SFAS 159 will have on its consolidated financial position but currently does not anticipate that the adoption of these accounting pronouncements will have a material effect on its consolidated financial position.

Note 16. Contingencies

     Berkshire and its subsidiaries are parties in a variety of legal actions arising out of the normal course of business. In particular, such legal actions affect Berkshire’s insurance and reinsurance businesses. Such litigation generally seeks to establish liability directly through insurance contracts or indirectly through reinsurance contracts issued by Berkshire subsidiaries. Plaintiffs occasionally seek punitive or exemplary damages. Berkshire does not believe that such normal and routine litigation will have a material effect on its 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 in substantial amounts.

     a) Governmental Investigations

     Berkshire, General Re Corporation (“General Re”) and certain of Berkshire’s insurance subsidiaries, including General Reinsurance Corporation (“General Reinsurance”) and National Indemnity Company (“NICO”) have been continuing to cooperate fully with the U.S. Securities and Exchange Commission (“SEC”), the U.S. Department of Justice, the U.S.

		FORM 10-Q		Q/E 6/30/07

Notes To Interim Consolidated Financial Statements (Continued)

Note 16. Contingencies (Continued)

Attorney for the Eastern District of Virginia and the New York State Attorney General (“NYAG”) in their ongoing investigations of non-traditional products. General Re originally received subpoenas from the SEC and NYAG in January 2005. Berkshire, General Re, General Reinsurance and NICO have been providing information to the government relating to transactions between General Reinsurance or NICO (or their respective subsidiaries or affiliates) and other insurers in response to the January 2005 subpoenas and related requests and, in the case of General Reinsurance (or its subsidiaries or affiliates), in response to subpoenas from other U.S. Attorneys conducting investigations relating to certain of these transactions. In particular, Berkshire and General Re have been responding to requests from the government for information relating to certain transactions that may have been accounted for incorrectly by counterparties of General Reinsurance (or its subsidiaries or affiliates). Berkshire understands that the government is evaluating the actions of General Re and its subsidiaries, as well as those of their counterparties, to determine whether General Re or its subsidiaries conspired with others to misstate counterparty financial statements or aided and abetted such misstatements by the counterparties. The government has interviewed a number of current and former officers and employees of General Re and General Reinsurance as well as Berkshire’s Chairman and CEO, Warren E. Buffett, in connection with these investigations.

     In one case, a transaction initially effected with American International Group (“AIG”) in late 2000 (the “AIG Transaction”), AIG has corrected its prior accounting for the transaction on the grounds, as stated in AIG’s 2004 10-K, that the transaction was done to accomplish a desired accounting result and did not entail sufficient qualifying risk transfer to support reinsurance accounting. General Reinsurance has been named in related civil actions brought against AIG. As part of their ongoing investigations, governmental authorities have also inquired about the accounting by certain of Berkshire’s insurance subsidiaries for certain assumed and ceded finite reinsurance transactions.

     In June 2005, John Houldsworth, the former Chief Executive Officer of Cologne Reinsurance Company (Dublin) Limited (“CRD”), a subsidiary of General Re, and Richard Napier, a former Senior Vice President of General Re who had served as an account representative for the AIG account, each pleaded guilty to a federal criminal charge of conspiring with others to misstate certain AIG financial statements in connection with the AIG Transaction and entered into a partial settlement agreement with the SEC with respect to such matters. In addition, Ronald Ferguson, General Re’s former Chief Executive Officer, Elizabeth Monrad, General Re’s former Chief Financial Officer, Christopher Garand, a former General Reinsurance Senior Vice President and Robert Graham, a former General Reinsurance Senior Vice President and Assistant General Counsel — are awaiting trial in the U.S. District Court for the District of Connecticut on charges of conspiracy to violate securities laws and to commit mail fraud, securities fraud, making false statements to the SEC and mail fraud in connection with the AIG Transaction. The trial is currently set for December 2007. Each has pleaded not guilty to all charges. Each of these individuals, who had previously received a “Wells” notice in 2005 from the SEC, is also the subject of an SEC enforcement action for allegedly aiding and abetting AIG’s violations of the antifraud provisions and other provisions of the federal securities laws in connection with the AIG Transaction. The SEC case is presently stayed. Joseph Brandon, the Chief Executive Officer of General Re, also received a “Wells” notice from the SEC in 2005.

     Various state insurance departments have issued subpoenas or otherwise requested that General Reinsurance, NICO and their affiliates provide documents and information relating to non-traditional products. The Office of the Connecticut Attorney General has also issued a subpoena to General Reinsurance for information relating to non-traditional products. General Reinsurance, NICO and their affiliates have been cooperating fully with these subpoenas and requests.

     Kolnische Ruckversicherungs-Gesellschaft AG (“Cologne Re”) is cooperating fully with requests for information and orders to produce documents from the German Federal Financial Supervisory Authority regarding the activities of Cologne Re relating to “finite reinsurance” and regarding transactions between Cologne Re or its subsidiaries, including CRD, and certain counterparties.

     In April 2005, the Australian Prudential Regulation Authority (“APRA”) announced an investigation involving financial or finite reinsurance transactions by General Reinsurance Australia Limited (“GRA”), a subsidiary of General Reinsurance. An inspector was appointed by APRA under section 52 of the Insurance Act 1973 to conduct an investigation of GRA’s financial or finite reinsurance business. GRA and General Reinsurance cooperated fully with this investigation. On June 28, 2007, APRA announced that it had concluded its investigation and imposed a condition on GRA’s license that requires it to maintain a majority of independent directors on its local board.

     CRD is also providing information to and cooperating fully with the Irish Financial Services Regulatory Authority in its inquiries regarding the activities of CRD. The Office of the Director of Corporate Enforcement in Ireland is conducting a preliminary evaluation in relation to CRD concerning, in particular, transactions between CRD and AIG. CRD is cooperating fully with this preliminary evaluation.

		FORM 10-Q		Q/E 6/30/07

Notes To Interim Consolidated Financial Statements (Continued)

Note 16. Contingencies (Continued)

     Berkshire cannot at this time predict the outcome of these matters and is unable to estimate a range of possible loss and cannot predict whether or not the outcomes will have a material adverse effect on Berkshire’s business or results of operations for at least the quarterly period when these matters are completed or otherwise resolved.

     b) Civil Litigation

     Reference is made to Note 21 to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2006 for detailed discussion of such actions. Material developments related to such actions since December 31, 2006 are discussed below.

     Insurance Brokerage Antitrust Litigation – Berkshire, General Re and General Reinsurance were named as defendants in this multidistrict litigation (In Re: Insurance Brokerage Antitrust Litigation, MDL No. 1663 (D.N.J.)) in which plaintiffs alleged an industry-wide scheme on the part of commercial insurance brokers and insurance companies to defraud a purported class of insurance purchasers through bid-rigging and contingent commission arrangements. On April 5, 2007, the Court dismissed all federal antitrust and RICO claims against Berkshire, General Re and General Reinsurance. On May 21, 2007, the plaintiffs concluded a settlement agreement with Berkshire, General Re and General Reinsurance that fully and finally resolved this litigation, as between these settling parties, without payment or admission of any liability on the part of these settling defendants.

Note 17. Business segment data

     Berkshire’s consolidated segment data for the second quarter and first six months of 2007 and 2006 is as follows (in millions).

		Revenues
		Second Quarter								First Six Months
		2007				2006				2007				2006
Operating Businesses:
Insurance group:
Premiums earned:
GEICO		$	2,939			$	2,737			$	5,797			$	5,375
General Re			1,494				1,487				3,096				2,921
Berkshire Hathaway Reinsurance Group			1,022				1,145				9,602				2,165
Berkshire Hathaway Primary Group			495				467				969				897
Investment income			1,247				1,110				2,334				2,133
Total insurance group			7,197				6,946				21,798				13,491
Finance and financial products			1,371				1,345				2,574				2,567
McLane Company			6,933				6,291				13,556				12,398
MidAmerican			3,060				2,688				6,333				4,881
Shaw Industries			1,407				1,539				2,692				2,978
Other businesses			6,647				5,139				12,166				9,677
			26,615				23,948				59,119				45,992
Reconciliation of segments to consolidated amount:
Investment and derivative gains/losses			928				459				1,516				1,264
Eliminations and other			(196	)			(222	)			(370	)			(308	)
		$	27,347			$	24,185			$	60,265			$	46,948

		FORM 10-Q		Q/E 6/30/07

Notes To Interim Consolidated Financial Statements (Continued)

Note 17. Business segment data (Continued)

		Earnings before taxes
		and minority interests
		Second Quarter								First Six Months
		2007				2006				2007				2006
Operating Businesses:
Insurance group:
Underwriting:
GEICO		$	325			$	288			$	620			$	599
General Re			230				109				260				180
Berkshire Hathaway Reinsurance Group			356				137				909				231
Berkshire Hathaway Primary Group			63				43				112				78
Net investment income			1,236				1,102				2,314				2,120
Total insurance group			2,210				1,679				4,215				3,208
Finance and financial products			277				343				519				594
McLane Company			72				56				130				111
MidAmerican			372				278				885				696
Shaw Industries			111				169				202				324
Other businesses			904				671				1,536				1,101
			3,946				3,196				7,487				6,034
Reconciliation of segments to consolidated amount:
Investment and derivative gains/losses			928				459				1,516				1,264
Interest expense, excluding interest allocated to business segments			(12	)			(21	)			(27	)			(39	)
Eliminations and other			(46	)			(32	)			(88	)			(44	)
		$	4,816			$	3,602			$	8,888			$	7,215

		FORM 10-Q		Q/E 6/30/07

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

Results of Operations

     Net earnings for the second quarter and first six months of 2007 and 2006 are disaggregated in the table that follows. Amounts are after deducting minority interests and income taxes. Amounts are in millions.

		Second Quarter								First Six Months
		2007				2006				2007				2006
Insurance – underwriting		$	632			$	371			$	1,233			$	701
Insurance – investment income			862				782				1,610				1,485
Utilities and energy			231				158				524				391
Manufacturing, service and retailing			645				554				1,091				932
Finance and financial products			173				215				328				372
Other			(33	)			(27	)			(63	)			(41	)
Investment and derivative gains/losses			608				294				990				820
Net earnings		$	3,118			$	2,347			$	5,713			$	4,660

     Berkshire’s 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 Berkshire’s corporate headquarters in the day-to-day business activities of the operating businesses. Berkshire’s corporate office management 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. The business segment data (Note 17 to the Interim Consolidated Financial Statements) should be read in conjunction with this discussion.

     Insurance — Underwriting

     Underwriting results from Berkshire’s insurance businesses for the second quarter and first six months of 2007 and 2006 are summarized below. Amounts are in millions.

		Second Quarter								First Six Months
		2007				2006				2007				2006
Underwriting gain attributable to:
GEICO		$	325			$	288			$	620			$	599
General Re			230				109				260				180
Berkshire Hathaway Reinsurance Group			356				137				909				231
Berkshire Hathaway Primary Group			63				43				112				78
Underwriting gain – pre-tax			974				577				1,901				1,088
Income taxes and minority interests			342				206				668				387
Net underwriting gain		$	632			$	371			$	1,233			$	701

     Berkshire engages in both primary insurance and reinsurance of property and casualty risks. Through General Re, Berkshire also reinsures life and health risks. In primary insurance activities, Berkshire subsidiaries assume defined portions of the risks of loss from persons or organizations that are directly subject to the risks. In reinsurance activities, Berkshire subsidiaries assume defined portions of similar or dissimilar risks that other insurers or reinsurers subject themselves to in their own insuring activities. Berkshire’s principal insurance and reinsurance businesses are: (1) GEICO, one of the four largest auto insurers in the U.S., (2) General Re, (3) Berkshire Hathaway Reinsurance Group and (4) Berkshire Hathaway Primary Group.

     Berkshire’s management views insurance businesses as possessing two distinct operations – underwriting and investing. Underwriting decisions are the responsibility of the unit managers; investing, with limited exceptions at GEICO and at General Re’s international operations, is the responsibility of Berkshire’s Chairman and CEO, Warren E. Buffett. Accordingly, Berkshire evaluates performance of underwriting operations without any allocation of investment income.

     A significant marketing strategy followed by all of these businesses is the maintenance of extraordinary capital strength. Statutory surplus of Berkshire’s insurance businesses totaled approximately $59 billion at December 31, 2006. 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 unique needs of insurance and reinsurance buyers.

		FORM 10-Q		Q/E 6/30/07

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

     Insurance — Underwriting (Continued)

     Periodic underwriting results can be affected significantly by changes in estimates for unpaid losses and loss adjustment expenses, including amounts established for occurrences in prior years. In addition, the timing and amount of catastrophe losses can produce significant volatility in periodic underwriting results. Hurricanes and tropical storms affecting the United States and Caribbean tend to occur between June and December.

     GEICO

     GEICO provides primarily private passenger automobile coverages to insureds in 49 states and the District of Columbia. GEICO policies are marketed mainly by direct response methods in which customers apply for coverage directly to the company via the Internet, over the telephone or through the mail. This is a significant element in GEICO’s strategy to be a low cost insurer. In addition, GEICO strives to provide excellent service to customers, with the goal of establishing long-term customer relationships.

     GEICO’s pre-tax underwriting results for the second quarter and first six months of 2007 and 2006 are summarized in the table below. Dollar amounts are in millions.

		Second Quarter																First Six Months
		2007								2006								2007								2006
		Amount				%				Amount				%				Amount				%				Amount				%
Premiums earned		$	2,939				100.0			$	2,737				100.0			$	5,797				100.0			$	5,375				100.0
Losses and loss expenses			2,095				71.3				1,968				71.9				4,138				71.4				3,802				70.7
Underwriting expenses			519				17.6				481				17.6				1,039				17.9				974				18.2
Total losses and expenses			2,614				88.9				2,449				89.5				5,177				89.3				4,776				88.9
Pre-tax underwriting gain		$	325							$	288							$	620							$	599

     Premiums earned in 2007 exceeded amounts earned in 2006 by $202 million (7.4%) for the second quarter and $422 million (7.9%) for the first six months. The growth in premiums earned for voluntary auto was 7.6%, which was less than the 9.3% increase in policies-in-force during the past year as average premiums per policy continue to slowly decline. Additional rate decreases will become effective over the remainder of 2007. Policies-in-force over the last twelve months increased 9.7% in the preferred risk auto line and 8.1% in the standard and nonstandard auto lines. Voluntary auto new business sales in the first six months of 2007 increased 5.3% compared to 2006. Voluntary auto policies-in-force at June 30, 2007 were 381,000 greater than at December 31, 2006.

     Losses and loss adjustment expenses incurred in 2007 exceeded 2006 amounts by $127 million for the second quarter and $336 million for the first six months. The ratio of losses and loss adjustment expenses incurred to earned premiums was 71.4% in the first six months of 2007 compared to 70.7% in 2006. Comparatively higher loss ratios are expected over the remainder of 2007 versus 2006 as premium rate reductions take effect. During the first six months of 2007, claims frequencies for physical damage coverages increased in the one to four percent range from 2006 while frequencies for injury coverages decreased in the three to five percent range. Injury and physical damage average severities in 2007 were generally about the same as 2006. Catastrophe losses in the first six months of 2007 were $19 million compared to $39 million in 2006. Underwriting expenses for the first six months of 2007 increased 6.7% versus 2006 primarily due to increased advertising.

     General Re

     General Re conducts a reinsurance business offering property and casualty and life and health coverages to clients worldwide. Property and casualty reinsurance is written in North America on a direct basis through General Reinsurance Corporation and internationally through 95% owned Cologne Re (based in Germany) and other wholly-owned affiliates. Property and casualty reinsurance is also written through brokers with respect to Faraday in London. Life and health reinsurance is written worldwide through Cologne Re. General Re’s underwriting results for the second quarter and first six months of 2007 and 2006 are summarized below. Amounts are in millions.

		Premiums earned																Pre-tax underwriting gain/loss
		Second Quarter								First Six Months								Second Quarter								First Six Months
		2007				2006				2007				2006				2007				2006				2007				2006
Property/casualty		$	871			$	910			$	1,865			$	1,783			$	182			$	73			$	177			$	116
Life/health			623				577				1,231				1,138				48				36				83				64
		$	1,494			$	1,487			$	3,096			$	2,921			$	230			$	109			$	260			$	180