CONSOLIDATED BALANCE SHEETS
(dollars in millions except per share amounts)

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"). Certain amounts in 2000 have been reclassified to conform with current year presentation.

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. Realized investment gains/losses are recorded when investments are sold, other-than-temporarily impaired or in certain situations, as required by GAAP, when investments are marked-to-market with the corresponding gain or loss included in earnings. Variations in amount and timing of realized investment gains/losses can cause significant variations in periodic net earnings.

In June 2001, the Financial Accounting Standards Board ("FASB") issued two Statements of Financial Accounting Standards ("SFAS"). SFAS No. 141 "Business Combinations" requires usage of the purchase method for all business combinations initiated after June 30, 2001, and prohibits the usage of the pooling of interests method of accounting for business combinations. The provisions of SFAS No. 141 relating to the application of the purchase method are generally effective for business combinations completed after July 1, 2001. Such provisions include guidance on the identification of the acquiring entity, the recognition of intangible assets other than goodwill acquired in a business combination and the accounting for negative goodwill.

SFAS No. 142 "Goodwill and Other Intangible Assets" changes the current accounting model that requires amortization of goodwill, supplemented by impairment tests, to an accounting model that is based solely upon impairment tests. SFAS No. 142 also provides guidance on accounting for identifiable intangible assets that may or may not require amortization. The provisions of SFAS No. 142 related to accounting for goodwill and intangible assets will be generally effective for Berkshire at the beginning of 2002, except that certain provisions related to goodwill and other intangible assets are effective for business combinations completed after July 1, 2001.

Berkshire has not completed its assessment of these new accounting standards, although it expects that the provisions of SFAS No. 142 related to accounting for goodwill will have a significant impact on its consolidated earnings in 2002 when compared to consolidated earnings for years prior to 2002.

During the first quarter of 2001, Berkshire completed two significant business acquisitions. In addition, Berkshire completed six significant acquisitions in 2000. Information concerning seven of these acquisitions follows. Information concerning the other acquisition is contained in Note 4 (Investments in MidAmerican Energy Holdings Company).

On January 8, 2001, Berkshire acquired approximately 87.3% of the common stock of Shaw for $19 per share. An investment group consisting of Robert E. Shaw, Chairman and CEO of Shaw, Julian D. Saul, President of Shaw, certain family members and related family interests of Messrs. Shaw and Saul, and certain other directors and members of management acquired the remaining 12.7% of Shaw.

Shaw is the world's largest manufacturer of tufted broadloom carpet and rugs for residential and commercial applications throughout the United States and exports to most markets worldwide. Shaw markets its residential and commercial products under a variety of brand names.

On February 27, 2001, Berkshire acquired Johns Manville. Under the terms of the Merger Agreement, Berkshire purchased all of the outstanding shares of Johns Manville common stock for $13 per share.

Johns Manville is a leading manufacturer of insulation and building products. Johns Manville manufactures and markets products for building and equipment insulation, commercial and industrial roofing systems, high-efficiency filtration media, and fibers and non-woven mats used as reinforcements in building and industrial applications.

Berkshire paid approximately $3,830 million in cash to shareholders of Shaw and Johns Manville in connection with the acquisitions.

Effective February 18, 2000, Wesco Financial Corporation, an indirect 80.1% owned subsidiary of Berkshire, acquired CORT. CORT is a leading national provider of rental furniture, accessories and related services in the "rent-to-rent" segment of the furniture industry.

Effective July 3, 2000, Berkshire acquired Ben Bridge. Ben Bridge is the leading operator of upscale jewelry stores based in major shopping malls in the Western United States.

Effective August 1, 2000, Berkshire acquired Justin. Principal businesses of Justin include: Acme Building Brands, a leading manufacturer and producer of face brick, concrete masonry products and ceramic and marble floor and wall tile and Justin Brands, a leading manufacturer of Western footwear under a number of brand names.

Effective August 8, 2000, Berkshire acquired USIC. USIC is the parent of the United States Liability Insurance Group, one of the premier U.S. writers of specialty insurance.

Effective December 18, 2000, Berkshire acquired Benjamin Moore. Benjamin Moore is a formulator, manufacturer and retailer of a broad range of architectural and industrial coatings, available principally in the United States and Canada.

Aggregate consideration paid for the five business acquisitions consummated in 2000 totaled $2,370 million, consisting of $2,146 million in cash and the remainder in Berkshire Class A and Class B common stock.

The results of operations for each of these entities are included in Berkshire's consolidated results of operations from the effective date of each merger. The following table sets forth certain unaudited consolidated earnings data for the first half of 2000, as if each of the seven acquisitions discussed above were consummated on the same terms at the beginning of 2000. Pro forma results for the first half of 2001 were not materially different from reported results. Dollars are in millions except per share amount.

On July 30, 2001, Berkshire entered into an Agreement and Plan of Merger with XTRA Corporation ("XTRA"). Pursuant to the merger agreement, Berkshire will offer to purchase through a cash tender offer all of the outstanding shares of XTRA for $55.00 per share (approximately $590 million in the aggregate). The tender offer is expected to commence on August 14, 2001. The offer is conditioned on, among other things, there being tendered and not withdrawn prior to the expiration date of the offer a majority of the outstanding shares of XTRA common stock and is subject to certain regulatory approvals. Following the tender offer, a Berkshire subsidiary will merge with XTRA. XTRA, headquartered in Westport, Connecticut, is a leading operating lessor of transportation equipment. It leases over-the-road trailers, marine containers and intermodal equipment.

On March 14, 2000, Berkshire invested approximately $1.24 billion in common stock and a non-dividend paying convertible preferred stock of a newly formed entity that merged with and into MidAmerican Energy Holdings Company ("MidAmerican"). Such investment gives Berkshire about a 9.7% voting interest and a 76% economic interest in MidAmerican on a fully-diluted basis. Berkshire subsidiaries also acquired approximately $455 million of an 11% non-transferable trust preferred security. Mr. Walter Scott, Jr., a member of Berkshire’s Board of Directors, controls approximately 86% of the voting interest in MidAmerican.

MidAmerican is a global leader in the production of energy from diversified fuel sources including geothermal, natural gas, hydroelectric, nuclear and coal. MidAmerican also is a leader in the supply and distribution of energy in the U.S. and U.K. consumer markets.

Berkshire’s aggregate investments in MidAmerican are included in the Consolidated Balance Sheets as Investments in MidAmerican Energy Holdings Company. Berkshire is accounting for the common and non-dividend paying convertible preferred stock pursuant to the equity method. The carrying value of these equity method investments totaled $1,316 million at June 30, 2001 and $1,264 million at December 31, 2000.

The Consolidated Statements of Earnings reflect, as Income from MidAmerican Energy Holdings Company, Berkshire’s proportionate share of MidAmerican’s net income with respect to the investments accounted for pursuant to the equity method, as well as interest earned on the 11% trust preferred security. Income derived from equity method investments totaled $60 million for the first half of 2001 and $12 million for the period beginning on March 14, 2000 and ending June 30, 2000.

Data with respect to investments in securities with fixed maturities (other than securities with fixed maturities held by finance and financial products businesses ¾  See Note 10) are shown in the tabulation below (in millions).

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 1,527,140 shares outstanding at June 30, 2001 and 1,526,230 shares outstanding at December 31, 2000.

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.

Berkshire’s comprehensive income for the second quarter and first half of 2001 and 2000 is shown in the table below (in millions). Other comprehensive income consists principally of unrealized gains and losses on investments and foreign currency translation adjustments associated with foreign-based business operations.

*Building products businesses include Johns Manville, Benjamin Moore and Acme Building Brands. See Note 2.

On February 26, 2001, Berkshire and Leucadia National Corporation ("Leucadia"), through Berkadia LLC, a newly formed and jointly owned entity formed for this purpose, committed to loan up to $6 billion on a senior secured basis (the "Term Loan") to FINOVA Capital Corporation, ("FNV Capital") a subsidiary of The FINOVA Group ("FNV"). The loan commitment was made in connection with a proposed restructuring of all of FNV Capital’s outstanding bank debt and publicly traded debt securities. FNV, FNV Capital and other affiliates filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code on March 7, 2001. The bankruptcy court approved an amended reorganization plan on June 14, 2001. The amended reorganization plan was confirmed by the bankruptcy court on August 10, 2001. The reorganization is expected to become effective on or about August 21, 2001.

Berkadia received a $60 million commitment fee upon execution of the commitment letter. Berkadia is due an additional $60 million commitment fee on the funding date of the Term Loan. The Term Loan, which must be repaid in full five years from the date of issuance, will be secured by all assets of FNV Capital and will bear interest at a floating rate of LIBOR plus 2.25% (225 basis points). Under the provisions of the Term Loan, mandatory quarterly prepayments will be required to the extent FNV has available cash.

Berkadia’s commitment to fund the Term Loan is guaranteed by Berkshire and Leucadia and expires on August 31, 2001. Berkadia expects to finance the Term Loan through a third party lending facility. Berkshire will provide Berkadia’s lenders with a 90% primary guaranty of such financing and will also provide a secondary guaranty to the 10% primary guaranty provided by Leucadia.

The FNV bankruptcy plan ("Plan") provides that the proceeds from the Berkadia Loan and FNV’s available cash at the effective date of the Plan will be used to repay 70% of the principal amount outstanding of all FNV Capital debt that was outstanding at the date of the FNV bankruptcy filing. The Plan also provides that the FNV obligations with respect to the remaining 30% of the principal outstanding will be replaced by newly issued 7.5% Senior Secured Notes due November 15, 2009 with Contingent Interest due 2016 ("Senior Notes").

At the time of the FNV bankruptcy filing, Berkshire subsidiaries held approximately $1.43 billion par amount of FNV Capital bonds and bank loans. Accordingly, upon consummation of the Plan, Berkshire will receive approximately $1 billion in cash and $430 million principal of the Senior Notes. In addition upon the issuance of the Senior Notes, Berkshire will commence a tender offer for up to $500 million principal amount of the Senior Notes at a price equal to 70% of the principal amount. Berkshire has agreed to hold the Senior Notes for a minimum of four years.

Net earnings for the second quarter and first half of 2001 and 2000 are disaggregated in the table that follows. Amounts are after deducting minority interests and income taxes. Dollar amounts are in millions.

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 have subjected themselves to in their own insuring activities. Berkshire’s principal insurance businesses are: (1) GEICO, the sixth largest auto insurer in the United States, (2) General Re, one of the four largest reinsurers in the world, (3) Berkshire Hathaway Reinsurance Group ("BHRG") and (4) Berkshire Hathaway Primary Insurance Group.

GEICO Corporation through its affiliates ("GEICO") provides private passenger auto insurance to customers in 48 states and the District of Columbia. GEICO policies are marketed mainly through direct response methods, in which insureds apply directly to the company for insurance coverage over the telephone, through the mail or via the Internet. This is a significant element in GEICO’s strategy to be a low cost insurer and, yet, provide high value to policyholders.

GEICO’s pre-tax underwriting results for the second quarter and first half of 2001 and 2000 are summarized in the table below. Dollar amounts are in millions.