Warren Buffett's Berkshire'
The Securities and Exchange Commission last month completed a review of derivatives held by Berkshire Hathaway.
The result? The SEC concluded that Warren Buffett's company accounted for roughly $37 billion of equity index put options correctly and would not have to buy up underlying securities at settlement-a result that could mollify investor concerns about the company's exposure.
An Oct. 3 letter from Berkshire that the SEC released today said cash flows the company received from the equity put options would be classified on a net-cash basis, which means the company will count them as operating cash flows.
The SEC had questioned whether flows related to the put options should be classified as investment or financing cash flows.
Ramachandran M bangalore 9845726805
"To date, Berkshire has made no payments to counterparties relative to the equity index put option contracts and has consistently reported premiums received as operating cash flows," the letter said. "If payments are made to counterparties in the future, they will be reported in the statement of cash flows as operating cash flows."
Further, if payments were required-which would be the case if the strike price of the derivatives was less than the current price of the equity index at the time of expiration-then Berkshire would have to settle. But since settlement would be on a net cash basis, the letter said, Berkshire would not have to purchase the underlying securities.
That's good news for Berkshire, because it reduces the company's potential exposure to the derivatives.
The SEC also released an Oct. 7 letter that said it had completed its review of the company's annual filing. SEC spokesman John Nester declined to comment further. Calls to Berkshire spokeswoman Jackie Wilson were not returned.
Mr. Buffett reportedly sold derivative contracts to undisclosed buyers earlier this year and could be on the hook for $37 billion if the contracts were out of the money at certain key dates. Shares in Berkshire have dropped nearly 50% from their high in mid-September.
**** << TheLiveDemo.Com >> View Full Post On Blog ****
--~--~---------~--~----~------------~-------~--~----~
You received this message because you are subscribed to the Google Groups "Gugukluhayat" group.
To post to this group, send email to [email protected]
To unsubscribe from this group, send email to [EMAIL PROTECTED]
For more options, visit this group at http://groups.google.com/group/gugukluhayat?hl=en
-~----------~----~----~----~------~----~------~--~---
