Berkshire Hathaway Says Profit Doubles

August 12, 2003

Berkshire Hathaway Inc. said on Friday second-quarter profit more than doubled, helped by rising insurance rates and investment gains from U.S. government bond sales.

The Omaha, Neb.-based company, whose patchwork of businesses includes Geico, Dairy Queen and Fruit of the Loom, reported net income of $2.23 billion, or $1,452 per share, compared with $1.05 billion, or $681 per share, a year earlier.

Berkshire said investment gains rose more than 20-fold to $905 million, from $43 million.

It said it realized more than $600 million of after-tax gains in the quarter from selling U.S government-issued bonds, as yields fell to 45-year lows. Yields have risen steadily since mid-June.

Earnings excluding investment gains, which Berkshire said is a more accurate gauge of its performance, rose 32 percent to $1.32 billion, from $1 billion.

Revenue rose to $14.4 billion from $10 billion, which Berkshire said grew abnormally because of its acquisition of grocery distributor McLane Co. from Wal-Mart Stores Inc., which was announced in May.

Berkshire said its insurance operations benefited because there were no major insured catastrophes during the quarter.

The huge profit helped inject cash flow into the company, which Buffett uses to invest in stocks, bonds or buying companies outright. The company had $24.43 billion in cash at the end of June, up from $16.1 billion at the end of March.

Berkshire on Thursday announced the completion of the hotly contested $1.7 billion acquisition of Clayton Homes. But a Tennessee appeals court on Friday froze the deal to let a lower court reconsider a shareholder suit seeking to block the merger. The lower court was given two weeks to resolve the matter.

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