Business Acquisitions

BHE owns a highly diversified portfolio of businesses comprised primarily of regulated utilities. Consistent with BHE's strategy to grow and further diversify through a disciplined acquisition approach, the Company closed on several acquisitions during 2015, 2014 and 2013.

AltaLink

Transaction Description

On December 1, 2014, BHE completed its acquisition of AltaLink and AltaLink became an indirect wholly owned subsidiary of BHE ("AltaLink Transaction"). Under the terms of the Share Purchase Agreement, dated May 1, 2014, among BHE and SNC-Lavalin Group Inc. ("SNC-Lavalin"), BHE paid C$3.1 billion (US$2.7 billion) in cash to SNC-Lavalin for 100% of the equity interests of AltaLink. BHE funded the total purchase price with $1.5 billion of junior subordinated debentures issued and sold to subsidiaries of Berkshire Hathaway, $1.0 billion borrowed under its commercial paper program and cash on hand.

ALP is a regulated electric transmission business, headquartered in Calgary, Alberta. ALP owns 8,100 miles of transmission lines and 300 substations in Alberta and operates under a cost-of-service regulatory model, including a forward test year, overseen by the Alberta Utilities Commission ("AUC").

The transaction was approved by both the SNC-Lavalin and BHE boards of directors in May 2014. In June 2014, an Advance Ruling Certificate was received from the Commissioner of Competition, providing clearance for the AltaLink acquisition. In July 2014, the Canadian Minister of Industry approved the transaction under the Investment Canada Act, determining that the AltaLink Transaction constitutes a net benefit to Canada. In November 2014, approval by the AUC was received. In connection with the approval of the transaction under the Investment Canada Act, various commitments were made to the Canadian Minister of Industry. The commitments included, among others:


•	AltaLink will remain locally managed and incorporated under the laws of Canada, with its headquarters, senior management team and operations located in Alberta.


•	AltaLink's independent board of directors will continue to be comprised of a majority of Canadians.


•	There will be no reductions in employment levels at AltaLink as a result of the transaction.


•	Reinvest 100% of AltaLink’s earnings back into AltaLink, elsewhere in Alberta or other regions of Canada for five years. This commitment will support AltaLink’s C$2.7 billion investment in Alberta's energy infrastructure planned over the next three years, subject to continued oversight by the AUC and the Alberta Electric System Operator.


•	Spend at least C$27 million to pursue joint development opportunities with Canadian partners in Canada and the United States.


•	Invest at least C$3 million of new funds to support Alberta-based academic programs focused on energy-related topics, cultural organizations and community-based programs.


•	Maintain AltaLink's commitment to provide C$3 million over three years in community and charitable contributions across Alberta.


•	Share best practices with AltaLink on safety, customer satisfaction, cybersecurity and supplier diversity at no cost.


•	Provide opportunities for Albertan and other Canadian companies to supply products and services to other BHE businesses.

Included in BHE's Consolidated Statement of Operations within the BHE Transmission reportable segment for the year ended December 31, 2014 is $13 million of net income as a result of including AltaLink's revenue and expenses from December 1, 2014. Additionally, BHE incurred $3 million of direct transaction costs associated with the AltaLink Transaction that are included in operating expense on the Consolidated Statement of Operations for the year ended December 31, 2014.

Allocation of Purchase Price

The operations of ALP are subject to the rate-setting authority of the AUC and are accounted for pursuant to GAAP, including the authoritative guidance for regulated operations. The rate-setting and cost recovery provisions establish rates on a cost-of-service basis designed to allow ALP an opportunity to recover its costs of providing service and a return on its investment in rate base. Except for certain assets not currently in rates, the fair value of ALP's assets acquired and liabilities assumed subject to these rate-setting provisions are assumed to approximate their carrying values and, therefore, no fair value adjustments have been reflected related to these amounts.

The fair value of AltaLink's assets acquired and liabilities assumed not subject to the rate-setting provisions discussed above was determined using an income approach. This approach is based on significant estimates and assumptions, including Level 3 inputs, which are judgmental in nature. The estimates and assumptions include the projected timing and amount of future cash flows, discount rates reflecting the risk inherent in the future cash flows and future market prices.

AltaLink's non-regulated assets acquired and liabilities assumed consist principally of AltaLink Investments, L.P.'s and AltaLink Holdings, L.P.'s senior bonds and debentures. The fair value of these liabilities was determined based on quoted market prices.

The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date (in millions):



	Fair Value

Current assets, including cash and cash equivalents of $15	$	174
Property, plant and equipment	5,610
Goodwill	1,744
Other long-term assets	141
Total assets	7,669

Current liabilities, including current portion of long-term debt of $79	866
Subsidiary debt, less current portion	3,772
Deferred income taxes	85
Other long-term liabilities	218
Total liabilities	4,941

Net assets acquired	$	2,728

During 2015, the Company made revisions to certain assets not currently in rates, the fair value of certain contracts and certain contingencies based upon the receipt of additional information about the facts and circumstances that existed as of the acquisition date. Provisional amounts were subject to further revision for up to 12 months following the acquisition date until the related valuations were completed.

Goodwill

The excess of the purchase price paid over the estimated fair values of the identifiable assets acquired and liabilities assumed totaled $1.7 billion and is reflected as goodwill in the BHE Transmission reportable segment. The goodwill reflects the value for the opportunities to invest in Alberta's electric transmission infrastructure and to develop solutions to meet the long-term energy needs of Alberta. Goodwill is not amortized, but rather is reviewed annually for impairment or more frequently if indicators of impairment exist. None of the goodwill recognized is deductible for income tax purposes, and no deferred income taxes have been recorded related to the goodwill.

Pro Forma Financial Information

The following unaudited pro forma financial information reflects the consolidated results of operations of BHE, non-recurring transaction costs incurred by both BHE and AltaLink during 2014 and the amortization of the purchase price adjustments each assuming the acquisition had taken place on January 1, 2013 (in millions):



	2014		2013

Operating revenue	$	17,888	$	13,130

Net income attributable to BHE shareholders	$	2,155	$	1,667

The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future consolidated results of operations of BHE.

NV Energy, Inc.

Transaction Description

On December 19, 2013, BHE completed the merger contemplated by the Agreement and Plan of Merger dated May 29, 2013, among BHE, Silver Merger Sub, Inc. ("Merger Sub"), BHE's wholly-owned subsidiary, and NV Energy, Inc. ("NV Energy"), whereby Merger Sub was merged into NV Energy and NV Energy became an indirect wholly-owned subsidiary of BHE ("NV Energy Transaction"). BHE funded the total purchase price of $5.6 billion, or $23.75 per share for 100% of NV Energy’s outstanding common stock, by issuing $1.0 billion of common stock on December 19, 2013, issuing $2.6 billion of junior subordinated debentures to certain Berkshire Hathaway subsidiaries on December 19, 2013, and using $2.0 billion of cash, including certain proceeds from BHE's $2.0 billion senior debt issuance on November 8, 2013.

NV Energy owns two regulated public utilities, Nevada Power and Sierra Pacific (together, the "Nevada Utilities"), that provide electric service to 1.2 million regulated retail electric customers and 0.2 million regulated retail natural gas customers in Nevada.

Included in BHE's Consolidated Statement of Operations within the NV Energy reportable segment for the year ended December 31, 2013 are costs totaling $38 million, consisting of $22 million for amounts payable under NV Energy's change in control policy and $16 million for donations to NV Energy's charitable foundation, and a $20 million one-time bill credit to retail customers included as a reduction to operating revenue. Additionally, BHE incurred $5 million of direct transaction costs associated with the NV Energy Transaction that are included in operating expense on the Consolidated Statement of Operations for the year ended December 31, 2013.

Pro Forma Financial Information

The following unaudited pro forma financial information reflects the consolidated results of operations of BHE, non-recurring transaction, integration and other costs incurred by both BHE and NV Energy during 2013 totaling $74 million, after-tax, a one-time bill credit to retail customers of $13 million, after-tax, and the amortization of the purchase price adjustments each assuming the acquisition had taken place on January 1, 2012 (in millions):



	2013

Operating revenue	$	15,561

Net income attributable to BHE shareholders	$	1,867

Other

In 2015, the Company completed various other acquisitions totaling $164 million. The purchase prices were allocated to the assets acquired and liabilities assumed in each acquisition. The assets acquired consisted of property, plant and equipment, development and construction costs for renewable projects, other working capital items, goodwill of $33 million and other identifiable intangible assets. The liabilities assumed totaled $84 million.

In 2014, the Company completed various other acquisitions totaling $243 million. The purchase price for each acquisition was allocated to the assets acquired and liabilities assumed, which related primarily to property, plant and equipment of $641 million, goodwill of $80 million, long-term debt of $231 million and noncurrent deferred income tax liabilities of $170 million for the remaining 50% interest in CE Generation, LLC ("CE Generation"), development and construction costs for the 300-megawatt ("MW") TX Jumbo Road Wind, LLC wind-powered generation project ("Jumbo Road Project") and real estate brokerage and mortgage businesses. There were no other material assets acquired or liabilities assumed.

In 2013, the Company completed various other acquisitions of residential real estate brokerage and mortgage businesses totaling $240 million. The purchase prices were allocated to the assets acquired and liabilities assumed in each acquisition. The assets acquired consisted of loans receivable and other working capital items, goodwill of $188 million and other identifiable intangible assets. The liabilities assumed totaled $271 million primarily related to mortgage lines of credit secured by the loans receivable acquired and other working capital items.