Berkshire Hathaway Reports Lower Q3 Earnings

Berkshire Hathaway Inc. BRK BRK reported Q3 financial results Friday.

Net operating earnings came in at $4.617 billion, below the $5.053 billion reported for the prior year's period.

Net operating earnings per Class A share were $2,811, below the $3,074 reported in the year-ago period.

According the the company’s 10-Q filing:

“In the first nine months of 2014 and 2013, after-tax gains from investments were $2.71 billion and $1.76 billion, respectively. Investment gains in the first nine months of 2014 included after-tax gains of approximately $2.0 billion related to the exchanges of Phillips 66 (in the first quarter) and Graham Holdings Company (in the second quarter) common stocks for a specified subsidiary of each of those companies.

“Investment gains in 2014 were partially offset by a third quarter after-tax other-than-temporary impairment charge of $441 million related to our investment in Tesco PLC common stock. In the first nine months of 2013, we realized after-tax investment gains of approximately $1.35 billion associated with our investments in GS Warrants, GE Warrants and Wrigley subordinated notes.

“Our derivative contracts produced after-tax gains of $422 million in the first nine months of 2014 versus $1.36 billion in 2013.

“We believe that realized investment gains/losses, other-than-temporary impairment charges and derivative gains/losses are often meaningless in terms of understanding our reported results or evaluating our economic performance. These gains and losses have caused and will likely continue to cause significant volatility in our periodic earnings.”

Berkshire Hathaway Inc. Class B traded at $143.20 in the aftermarket, down 0.29 percent.