BERKSHIRE HATHAWAY

Management’s Discussion (Continued)
Foreign Currency Risk
We generally do not use derivative contracts to hedge foreign currency price changes primarily because of the natural hedging
that occurs between assets and liabilities denominated in foreign currencies in our Consolidated Financial Statements. In addition, we
hold investments in major multinational companies that have significant foreign business and foreign currency risk of their own, such
as The Coca-Cola Company. Our net assets subject to translation are primarily in our insurance and utilities and energy businesses, and
to a lesser extent in our manufacturing and services businesses. The translation impact is somewhat offset by transaction gains or
losses on net reinsurance liabilities of certain U.S. subsidiaries that are denominated in foreign currencies as well as the equity index
put option liabilities of U.S. subsidiaries relating to contracts that would be settled in foreign currencies.
Commodity Price Risk
Our diverse group of operating businesses use commodities in various ways in manufacturing and providing services. As
such, we are subject to price risks related to various commodities. In most instances, we attempt to manage these risks through
the pricing of our products and services to customers. To the extent that we are unable to sustain price increases in response to
commodity price increases, our operating results will likely be adversely affected. We utilize derivative contracts to a limited
degree in managing commodity price risks, most notably at MidAmerican. MidAmerican’s exposures to commodities include
variations in the price of fuel required to generate electricity, wholesale electricity that is purchased and sold and natural gas
supply for customers. Commodity prices are subject to wide price swings as supply and demand are impacted by, among many
other unpredictable items, weather, market liquidity, generating facility availability, customer usage, storage and transmission
and transportation constraints. To mitigate a portion of the risk, MidAmerican uses derivative instruments, including forwards,
futures, options, swaps and other agreements, to effectively secure future supply or sell future production generally at fixed
prices. The settled cost of these contracts is generally recovered from customers in regulated rates. Financial results would be
negatively impacted if the costs of wholesale electricity, fuel or natural gas are higher than what is permitted to be recovered in
rates. MidAmerican also uses futures, options and swap agreements to economically hedge gas and electric commodity prices
for physical delivery to non-regulated customers. The table that follows summarizes our commodity price risk on energy
derivative contracts of MidAmerican as of December 31, 2012 and 2011 and shows the effects of a hypothetical 10% increase
and a 10% decrease in forward market prices by the expected volumes for these contracts as of each date. The selected
hypothetical change does not reflect what could be considered the best or worst case scenarios. Dollars are in millions.
Fair Value
Net Assets
(Liabilities) Hypothetical Price Change
Estimated Fair Value after
Hypothetical Change in
Price
December 31, 2012 .................................... $(235) 10% increase $(187)
10% decrease (285)
December 31, 2011 .................................... $(445) 10% increase $(348)
10% decrease (542)
FORWARD-LOOKING STATEMENTS
Investors are cautioned that certain statements contained in this document as well as some statements in periodic press releases
and some oral statements of Berkshire officials during presentations about Berkshire or its subsidiaries are “forward-looking”
statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Forward-looking statements
include statements which are predictive in nature, which depend upon or refer to future events or conditions, which include words such
as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates” or similar expressions. In addition, any statements concerning
future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects and
possible future Berkshire actions, which may be provided by management, are also forward-looking statements as defined by the Act.
Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties
and assumptions about Berkshire and its subsidiaries, economic and market factors and the industries in which we do business, among
other things. These statements are not guaranties of future performance and we have no specific intention to update these statements.
Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number
of factors. The principal important risk factors that could cause our actual performance and future events and actions to differ
materially from such forward-looking statements include, but are not limited to, changes in market prices of our investments in fixed
maturity and equity securities, losses realized from derivative contracts, the occurrence of one or more catastrophic events, such as an
earthquake, hurricane or act of terrorism that causes losses insured by our insurance subsidiaries, 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.
96