In Matt rose at RNSE and Greg Abel at Midameric tstanding CEOs They extraordinary ma who have develoned usineses tat serve hoth their customers and owuers well Each has my gratitude and each deserves yours.Here are the key figures for their businesses: MidAmerican (89.8%owned) Earings (in millions) 2012 2017 U.K.utilitie 468 236 279 Western utilities 73 77 Pipelines 381 meservices..................................... r (net) Opera ting earnings before corporate interest and taxes ,95 1.982 Income taxes 172 315 Net earnings S1472 S1331 Earnings applicable to Berkshire $1.323 S1.204 BNSE S20.835 1054 expenses 14835 1424 ings before interest and taxes 5.301 560 Income taxes 2.005 1.769 Net earnings S3.372 s2.971 eved readers will notice an incongruity in the midamerican earnings tabulation.What in the world haeateokerae eidoinid"eltdCaninal-ntensive is HomeSer Businesses? Well its o n2000 At tha time,I focused on MidAmerican's utility operations and barely noticed HomeServices.which then owned only a few real estate brokerage companies. 6.icinstedin $4 billon of home salesu compni y00 reside P 67 of the Prudential and Real Living fran chis their sales We have ment to purchase the balance of those rations within five ears.In the comin eewill gradually rebrand both our franchisees and the fanchise firms we ow as Berkshire Hathaw the hou ke Ron peltic expect earings to rise significantly. ing a depressed period.Now,as In Matt Rose, at BNSF, and Greg Abel, at MidAmerican, we have two outstanding CEOs. They are extraordinary managers who have developed businesses that serve both their customers and owners well. Each has my gratitude and each deserves yours. Here are the key figures for their businesses: MidAmerican (89.8% owned) Earnings (in millions) 2012 2011 U.K. utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 429 $ 469 Iowa utility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236 279 Western utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 737 771 Pipelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383 388 HomeServices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 39 Other (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 36 Operating earnings before corporate interest and taxes ................... 1,958 1,982 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314 336 Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 315 Net earnings .................................................... $ 1,472 $ 1,331 Earnings applicable to Berkshire .................................... $ 1,323 $ 1,204 BNSF Earnings (in millions) 2012 2011 Revenues ....................................................... $20,835 $19,548 Operating expenses ............................................... 14,835 14,247 Operating earnings before interest and taxes ........................... 6,000 5,301 Interest (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 623 560 Income taxes .................................................... 2,005 1,769 Net earnings .................................................... $ 3,372 $ 2,972 Sharp-eyed readers will notice an incongruity in the MidAmerican earnings tabulation. What in the world is HomeServices, a real estate brokerage operation, doing in a section entitled “Regulated, Capital-Intensive Businesses?” Well, its ownership came with MidAmerican when we bought control of that company in 2000. At that time, I focused on MidAmerican’s utility operations and barely noticed HomeServices, which then owned only a few real estate brokerage companies. Since then, however, the company has regularly added residential brokers – three in 2012 – and now has about 16,000 agents in a string of major U.S. cities. (Our real estate brokerage companies are listed on page 107.) In 2012, our agents participated in $42 billion of home sales, up 33% from 2011. Additionally, HomeServices last year purchased 67% of the Prudential and Real Living franchise operations, which together license 544 brokerage companies throughout the country and receive a small royalty on their sales. We have an arrangement to purchase the balance of those operations within five years. In the coming years, we will gradually rebrand both our franchisees and the franchise firms we own as Berkshire Hathaway HomeServices. Ron Peltier has done an outstanding job in managing HomeServices during a depressed period. Now, as the housing market continues to strengthen, we expect earnings to rise significantly. 11