Office of the City Clerk - Record #: O2014-9516

• Record #: O2014-9516
• Type: Ordinance
• Status: Passed
• Intro date: 11/19/2014
• Current Controlling Legislative Body: Committee on Housing and Real Estate
• Final action: 12/10/2014
• Title: Sale of City-owned property at 3151 W Washington Blvd to Wells Fargo Bank, National Association
• Sponsors: Emanuel, Rahm
• Topic: PROPERTY - Sale

Date	Journal Page Number	Action By	Action	Result
12/10/2014	100352	City Council	Passed	Pass
12/3/2014		Committee on Housing and Real Estate	Recommended to Pass	Pass
11/19/2014	97428	City Council	Referred

OFFICE OF THE MAYOR

CITY OF CHICAGO

RAHM EMANUEL

MAYOR

November 19, 2014

TO THE HONORABLE, THE CITY COUNCIL OF THE CITY OF CHICAGO

Ladies and Gentlemen:

At the request of the Commissioner of Planning and Development, I transmit herewith ordinances authorizing the sale of City-owned property.

Your favorable consideration of these ordinances will be appreciated.

 

Mayor

Very truly yours,

ORDINANCE

WHEREAS, the City of Chicago ("City") is a home rule unit of government by virtue of the provisions ofthe Constitution ofthe State of Illinois of 1970, and as such, may exercise any power and perform any function pertaining to its government and affairs; and

WHEREAS, the City is the owner ofthe parcel of property located at 3151 W. Washington Street, Chicago, Illinois, which is legally described on Exhibit A attached hereto (the "City Property"), which City Property is located in the Midwest Redevelopment Project Area established pursuant to ordinances adopted by the City Council of the City (the "City Council") on May 17, 2000, and published in the Journal of Proceedings ofthe City Council (the "Journal") for such date at pages 30775 through 30953, and amended pursuant to ordinance adopted by the City Council on May 9, 2012, and published in the Journal for such date at pages 25884 through 26069; and

WHEREAS, a three-unit condominium building (the "Condominium Building") that was to have been developed solely on the parcel of property located at 3153 W. Washington Street, Chicago, Illinois, which is legally described on Exhibit B attached hereto (the "Developer Property"), was constructed on the Development Property and, without the City's consent, on the City Property (i.e., encroaches on the City Property), as shown in the plat of survey attached hereto as Exhibit C; and

WHEREAS, Wells Fargo Bank, National Association ("Grantee"), with a principal place of business at 1 Home Campus, Des Moines, Iowa, 50328, administers one of the units in the Condominium Building on behalf of the owner US Bank National Association, as Trustee for SASCO 2007-WF1, and has offered to purchase the City Property from the City for the sum of Twenty Thousand and No/100 Dollars ($20,000.00), for the benefit of each of the unit owners of the Condominium Building; and

WHEREAS, pursuant to Resolution No. 14-097-21 adopted on October 16, 2014, by the Plan Commission of the City of Chicago (the "Commission"), the Commission recommended to the City Council the approval of the negotiated sale of the Property to the Grantee; and

WHEREAS, public notice advertising the City's intent to enter into a negotiated sale ofthe Property with the Grantee and requesting alternative proposals appeared in the Chicago Sun-Times, a newspaper of general circulation, on September 26, and October 3 and 10, 2014; and

WHEREAS, no alternative proposals were received by the deadline indicated in the aforesaid notice; now, therefore,

BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CHICAGO:

SECTION 1. The City Council of the City hereby approves the sale of the Property to the Grantee for the amount of Twenty Thousand and No/100 Dollars ($20,000.00).

SECTION 2. The Mayor or his proxy is authorized to execute, and the City Clerk or Deputy City Clerk is authorized to attest, a quitclaim deed conveying the Property to the Grantee, for the benefit of each of the unit owners of the Condominium Building.

1

SECTION 3. If any provision of this ordinance shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such provision shall not affect any of the other provisions of this ordinance.

SECTION 4. All ordinances, resolutions, motions or orders inconsistent with this ordinance are hereby repealed to the extent of such conflict.

SECTION 5. This ordinance shall take effect upon its passage and approval.

2

EXHIBIT A

Legal Description of City Property (Subject to Title Commitment and Survey)

LOT 10 IN ALLERTON'S SUBDIVISION OF BLOCK 22 OF D.S. LEE AND OTHERS' SUBDIVISION OF THE SOUTHWEST 1/4 OF SECTION 12, TOWNSHIP 39 NORTH, RANGE 13, EAST OF THE THIRD PRINCIPAL MERIDIAN, IN COOK COUNTY, ILLINOIS.

P.I.N.: 16-12-324-003-0000

Commonly known as 3151 W. Washington Boulevard, Chicago, Illinois 60612

EXHIBIT B

Legal Description of Developer Property (Subject to Title Commitment and Survey)

LOT 11 IN ALLERTON'S SUBDIVISION OF BLOCK 22 OF D.S. LEE AND OTHERS' SUBDIVISION OF THE SOUTHWEST 1/4 OF SECTION 12, TOWNSHIP 39 NORTH, RANGE 13, EAST OF THE THIRD PRINCIPAL MERIDIAN, IN COOK COUNTY, ILLINOIS.

P.I.N.s: 16-12-324-039-1001 16-12-324-039-1002 16-12-324-039-1003

Commonly known 3153 W. Washington Boulevard, Units 1, 2 and 3, Chicago, Illinois 60612

4

5

EXHIBIT C ^p'at of Survey [Attached]

OmCE:

1636 West 87th Street Chigogo. Illinois 60620 Tel: (773) 233-8510 Fox: (773) 233-0849 P.O. Box 208561

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101 10 IN ALLERTON'S SUBDIVISION OF BLOCK 22 OF 0. S. LEE AND OTHERS' SUBDMSION Or THE SOUTHWEST 1/4 Of SECTION 12, TOWNSHIP 39 NORTH. RANGE 13. EAST OF THE THIRD PRINCIPAL MERIDIAN. IN COOK COUNTY, ILLINOIS.

(COMMONir KNOWN AS: 3151 W. WASHINGTON BLVD CHICAGO. ILLINOIS)

Plot of Surveys Topography Mortgoge Inspections Condominiums Lend Development Legqt Descriptions

BtrVBr

LEGEND

HAG' NAIL SET SET IRON PIPE .     IRON PIPE FOUND -4-    CUT CROSS- FOUND OR SET 4_ PROPERTY LINE (140 45)    RECORDED DATA 140.45      MEASURED DIMENSION (£) NOTCH

WIRE FENCE WOOD FENCE

CHAIN LINK FENCE (C.LF.) WROUCHT IRON FENCE (W.I.F)

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REVISED DATE: 03/02/06 P.I.N: 16-12-324-003-0000 BOOK NO.: 219 SURVEYOR: KG. FIELD DATE: 02/13/06 DIMENSIONS ARE NOT TO BE SCALED. ORDER NO.: 06-32SF-11 C4-N SCALE: 1" = 20 FEET ORDERED BY: CLARKE CONSTRUCTION MEMBER: I.P.L.S.A.

A.C.S.M.

THIS PROFESSIONAL SERVICE CONFORMS TO THE CURRENT ILLINOIS MINIMUM STANDAROS OF PRACTICE APPLICABLE TO BOUNDARY SURVEYS. ILLINOIS PROFESSIONAL LAND SURVEYOR NO. 035-0003083.

14th DAY

WF. I ,R. PASS & ASSOCIATES, P.C, DO HEREBY CERTIFY THAT WE HAVE SURVEYED THE ABOVE DESCRIBED PROPERTY AND 70 THE BEST Of OUR KNOWLEDGE. INFORMATION AND BELIEF. THE PLAT HEREON DRAWN IS A REPRESENTATION OF SAID SURVEY.

OVEN UNDER MY HAND AND SEAL THIS OF FEBRUARY 2006.

LICENSE EXPIRATION DATE: 11/30/06

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION I - GENERAL INFORMATION

1. Legal name of the Disclosing Party submitting this EDS. Include d/b/a/ if applicable: Wells Fargo Bank, National Association

Check ONE of the following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

1. [Tithe Applicant

OR

1. [ ] a legal entity holding a direct or indirect interest in the Applicant. State the legal name ofthe

Applicant in which the Disclosing Party holds an interest:      

OR

3.      [] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:      

Wells Fargo Bank, National Association

1. Business address ofthe Disclosing Party:       

1 Home Campus, Des Moines, IA 50328

^ 9ee9ar@ioekeiord.com Email:

312-443-1775 312-896-6798

1. Telephone:      Fax:      

Courtney Nogar

1. Name of contact person:      
2. Federal Employer Identification No. (if you have one):      
3. Brief description of contract, transaction or other undertaking (referred to below as the "Matter") to which this EDS pertains. (Include project number and location of property, if applicable):

Purchase of the vacant lot located at 3153 Washington

Department of Planning and Development

1. Which City agency or department is requesting this EDS?      

If the Matter is a contract being handled by the City's Department of Procurement Services, please complete the following:

N/A N/A

Specification #      and Contract #      

□

ver. 01-01-12      Page 1 of 13

SECTION II - DISCLOSURE OF OWNERSHIP INTERESTS

A. NATURE OF THE DISCLOSING PARTY

1. Indicate the nature of the Disclosing Party:

] Person      [ ] Limited liability company

] Publicly registered business corporation      [ ] Limited liability partnership

] Privately held business corporation      [ ] Joint venture

] Sole proprietorship      [ ] Not-for-profit corporation

] General partnership      (Is the not-for-profit corporation also a 501(c)(3))?

] Limited partnership      [ ] Yes      [ ] No

] Trust      [x| Other (please specify)

National Banking Association

1. For legal entities, the state (or foreign country) of incorporation or organization, if applicable: United States of America

3.   For legal entities not organized in the State oflllinois: Has the organization registered to do business in the State oflllinois as a foreign entity?

[ ] Yes      No      [ ] N/A

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

1.   List below the full names and titles of all executive officers and all directors of the entity. NOTE: For not-for-profit corporations, also list below all members, if any, which are legal entities. If there are no such members, write "no members." For trusts, estates or other similar entities, list below the legal titleholder(s).

If the entity is a general partnership, limited partnership, limited liability company, limited liability partnership or joint venture, list below the name and title of each general partner, managing member, manager or any other person or entity that controls the day-to-day management of the Disclosing Party. NOTE: Each legal entity listed below must submit an EDS on its own behalf.

Name Title See Attachment "A"

2.   Please provide the following information concerning each person or entity having a direct or indirect beneficial interest (including ownership) in excess of 7.5% of the Disclosing Party. Examples of such an interest include shares in a corporation, partnership interest in a partnership or joint venture,

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ATTACHMENT "A"

WELLS FARGO BANK, NATIONAL ASSOCIATION

Directors and Regulation O Executive Officers (Effective as of: May 15,2014)

Directors

Michael J. Heid Michael J. Loughlin Avid Modjtabai Nicholas G. Moore Philip J. Quigley John R. Shrewsberry Timothy J. Sloan John G. Stumpf Carrie L. Tolstedt

Regulation O Executive Officers

Patricia R. Callahan

David M. Carroll Michael J. Heid Richard D. Levy Michael J. Loughlin Avid Modjtabai Kevin A. Rhein

John R. Shrewsberry

Timothy J. Sloan James M. Strother John G. Stumpf Carrie L. Tolstedt

Senior Executive Vice President & Chief Administrative Officer

Senior Executive Vice President

Executive Vice President

Executive Vice President & Controller

Senior Executive Vice President & Chief Risk Officer

Senior Executive Vice President

Senior Executive Vice President & Chief Information Officer

Senior Executive Vice President & Chief Financial Officer

Senior Executive Vice President (Head of Wholesale Banking)

Senior Executive Vice President & General Counsel

Chairman of the Board

President & Chief Executive Officer

interest of a member or manager in a limited liability company, or interest of a beneficiary of a trust, estate or other similar entity. If none, state "None." NOTE: Pursuant to Section 2-154-030 ofthe Municipal Code of Chicago ("Municipal Code"), the City may require any such additional information from any applicant which is reasonably intended to achieve full disclosure.

Name      Business Address      Percentage Interest in the

Disclosing Party

Wells Fargo & Company, 420 Montgomery Street, San Francisco, CA 94104    indirectly owns 97.88% WFC Holdings Corporation, 420 Montgomery Street, San Francisco, CA 94104 directly owns 100%

SECTION HI -- BUSINESS RELATIONSHIPS WITH CITY ELECTED OFFICIALS

Has the Disclosing Party had a "business relationship," as defined in Chapter 2-156 ofthe Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Y es      [/J N 0 See Attachment "B"

If yes, please identify below the name(s) of such City elected official(s) and describe such relationship(s):

SECTION IV - DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

The Disclosing Party must disclose the name and business address of each subcontractor, attorney, lobbyist, accountant, consultant and any other person or entity whom the Disclosing Party has retained or expects to retain in connection with the Matter, as well as the nature of the relationship, and the total amount of the fees paid or estimated to be paid. The Disclosing Party is not required to disclose employees who are paid solely through the Disclosing Party's regular payroll.

"Lobbyist" means any person or entity who undertakes to influence any legislative or administrative action on behalf ofany person or entity other than: (1) a not-for-profit entity, on an unpaid basis, or (2) himself. "Lobbyist" also means any person or entity any part of whose duties as an employee of another includes undertaking to influence any legislative or administrative action.

If the Disclosing Party is uncertain whether a disclosure is required under this Section, the Disclosing Party must either ask the Cily whether disclosure is required or make the disclosure.

Page 3 of 13

Attachment "B"

Section III - Business Relationships with City Elected Officials

The undersigned warrants, to the best of his knowledge after due inquiry, that the Disclosing Party has had no business relationship with any City elected official in 12 months before the date the undersigned has signed this EDS.

Note that in the ordinary course of its business, Wells Fargo Bank, N.A. makes loans of various types with individuals and businesses. We have determined that these loans do not constitute a "business relationship" as defined in Chapter 2-156 ofthe Municipal Code.

Note further that the Disclosing Party has no way of identifying spouses or domestic partners of any City elected official, or the identities of any entities in which any city elected official or his or her spouse or domestic partner has a financial interest, and thus limits its certification to "City elected officials" as specially required by Section III. Specifically, we made due inquiry with respect to the City's Aldermen, the Mayor, the Treasurer and the City Clerk.

3S26054

Name (indicate whether Business retained or anticipated Address to be retained)

Locke Lorde LLP 111 S. Wacker Drive

Relationship to Disclosing Parly (subcontractor, attorney, lobbyist, etc.)

Counsel to Wells Fargo

Fees (indicate whether paid or estimated.) NOTE: "hourly rate" or "t.b.d." is not an acceptable response. $10,000

Chicago, IL 60606

(Add sheets if necessary)

[ ] Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V -- CERTIFICATIONS

1. COURT-ORDERED CHILD SUPPORT COMPLIANCE

Under Municipal Code Section 2-92-415, substantial owners of business entities that contract with the City must remain in compliance with their child support obligations throughout the contract's term.

Has any person who directly or indirectly owns 10% or more ofthe Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[ ] Yes      [ ] No      f^No person directly or indirectly owns 10% or more of the

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

[ ] Yes      [ ] No

1. FURTHER CERTIFICATIONS

1.   Pursuant to Municipal Code Chapter 1-23, Article I ("Article I")(which the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Party submitting this EDS is the Applicant and is doing business with the City, then the Disclosing Party certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, attempted, or conspiracy to commit bribery, theft, fraud, forgery, perjury, dishonesty or deceit against an officer or employee of the City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance with Article I is a continuing requirement for doing business with the City. NOTE: If Article I applies to the Applicant, the permanent compliance timeframe in Article I supersedes some five-year compliance timeframes in certifications 2 and 3 below.

Page 4 of 13

2. The Disclosing Party and, if the Disclosing Party is a legal entity, all of those persons or entities identified in Section II.B.l. of this EDS:

1. are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, state or local unit of government;
2. have not, within a five-year period preceding the date of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or state antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
3. are not presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) with committing any of the offenses set forth in clause B.2.b. of this Section V;
4. have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
5. have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.

3.   The certifications in subparts 3, 4 and 5 concern:

•      the Disclosing Party;

• any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection with the Matter, including but not limited to all persons or legal entities disclosed under Section IV, "Disclosure of Subcontractors and Other Retained Parties");
• any "Affiliated Entity" (meaning a person or entity that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Party, or is, with the Disclosing Party, under common control of another person or entity. Indicia of control include, without limitation: interlocking management or ownership; identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entity following the ineligibility of a business entity to do business with federal or state or local government, including the City, using substantially the same management, ownership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entity means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, with the Contractor, is under common control of another person or entity;
• any responsible official of the Disclosing Party, any Contractor or any Affiliated Entity or any other official, agent or employee of the Disclosing Party, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official ofthe Disclosing Party, any Contractor or any Affiliated Entity (collectively "Agents").

Page 5 of 13

Neither the Disclosing Party, nor any Contractor, nor any Affiliated Entity of either the Disclosing Party or any Contractor nor any Agents have, during the five years before the date this EDS is signed, or, with respect to a Contractor, an Affiliated Entity, or an Affiliated Entity of a Contractor during the five years before the date of such Contractor's or Affiliated Entity's contract or engagement in connection with the Matter:

1. bribed or attempted to bribe, or been convicted or adjudged guilty of bribery or attempting to bribe, a public officer or employee of the City, the State of Illinois, or any agency of the federal government or of any state or local government in the United States of America, in that officer's or employee's official capacity;
2. agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
3. made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
4. violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

1. Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense ofany state or of the United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
2. Neither the Disclosing Party nor any Affiliated Entity is listed on any of the following lists maintained by the Office of Foreign Assets Control ofthe U.S. Department ofthe Treasury or the Bureau of Industry and Security of the U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List and the Debarred List.
3. The Disclosing Party understands and shall comply with the applicable requirements of Chapters 2-55 (Legislative Inspector General), 2-56 (Inspector General) and 2-156 (Governmental Ethics) of the Municipal Code.
4. If the Disclosing Party is unable to certify to any of the above statements in this Part B (Further Certifications), the Disclosing Party must explain below:

See Attachment "C"

Page 6 of 13

ATTACHMENT "C"

ATTACHMENT TO SECTION V, PART B-CERTAIN OFFENSES INVOLVING CCC AND SISTER AGENCIES AND SECTION V, PART C-FURTHER CERTIFICATIONS

The Disclosing Party certifies the accuracy ofthe certifications contained in Section V,

paragraph B (1-3) and C (1-5) only as to itself, and certifies that to the best of the Disclosing Party's knowledge after due inquiry: (i) the statements in paragraphs B (1-3) and C (1-5) are accurate with respect to the executive officers and directors of the Disclosing Party identified in Section II.B.l.a of the EDS and (ii) the statements in paragraphs C (3-5) are accurate with respect to any "Contractors" of the Disclosing Party identified in Section IV ofthe EDS.

Notwithstanding the forgoing, in the ordinary course of its business, Wells Fargo receives various complaints and lawsuits which contain an assortment of allegations, some of which may result in judgments against Wells Fargo. Like all major institutions, Wells Fargo is subject to various litigations and proceedings pursuant to which judgments, injunctions or liens may be issued. Wells Fargo responds regularly to inquiries and investigations by governmental entities and, as a highly regulated diversified financial institution has in the past entered into settlements of some of those investigations, including the one specified below. Wells Fargo Bank, N.A. has paid municipal fines in connection with a small number of houses for alleged violations of local housing ordinances, some of which are characterized as misdemeanors. However, there have been no judgments, injunctions or liens arising out of such litigations or proceedings in the last five years that would materially impair Wells Fargo's ability as of this date to conduct its business or meet its obligations under the transaction to which this EDS relates. Also in the ordinary course of its business, Wells Fargo regularly enters into financial transactions of various types with public entities throughout the United States. It is possible that one or more public entities have terminated a transaction for cause or default.

For a description of certain legal proceedings, please see the Wells Fargo's SEC filings, https://www.wellsfargo.com/invest relations/filings, a summary of which are on file with the City. The City also has on file the Wells Fargo press release dated December 8, 2011 regarding the municipal derivatives bid practices settlement with the Office of the Comptroller of the Currency, Securities and Exchange Commission, the U.S. Internal Revenue Service, U.S. Department of Justice and a group of state Attorneys General. On February 9, 2012, Wells Fargo & Company issued a press release regarding an agreement with the federal government and state attorneys general concerning mortgage servicing, foreclosure and origination issues, and filed an SEC Form 8-K in accordance therewith. Material updates to Wells Fargo's SEC filings will be provided in connection with future EDS filings.

994822v8

WELLS FARGO & COMPANY SEC FILINGS (Attachment "C") Legal Proceedings Section from 10-K filed 2/28/08 (Wachovia)

Wachovia and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wachovia and/or its subsidiaries with respect to transactions in which Wachovia and/or our subsidiaries acted as banker, lender, underwriter, financial advisor or broker or in activities related thereto. In addition, Wachovia and its subsidiaries may be requested to provide information or otherwise cooperate with governmental authorities in the conduct of investigations of other persons or industry groups. It is Wachovia's policy to cooperate in all regulatory inquiries and investigations.

Although there can be no assurance as to the ultimate outcome, Wachovia and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each such case. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

In the Matter ofKPMG LLP Certain Auditor Independence Issues. The SEC has requested Wachovia to produce certain information concerning any agreements or understandings by which Wachovia referred clients to KPMG LLP during the period January 1, 1997 to November 2003 in connection with an inquiry regarding the independence of KPMG LLP as Wachovia's outside auditors during such period. Wachovia is continuing to cooperate with the SEC in its inquiry, which is being conducted pursuant to a formal order of investigation entered by the SEC on October 21, 2003. Wachovia believes the SEC's inquiry relates to certain tax services offered to Wachovia customers by KPMG LLP during the period from 1997 to early 2002, and whether these activities might have caused KPMG LLP not to be "independent" from Wachovia, as defined by applicable accounting and SEC regulations requiring auditors of an SEC-reporting company to be independent ofthe company. Wachovia and/or KPMG LLP received fees in connection with a small number of personal financial consulting transactions related to these services. KPMG LLP has confirmed to Wachovia that during all periods covered by the SEC's inquiry, including the present, KPMG LLP was and is "independent" from Wachovia under applicable accounting and SEC regulations.

Financial Advisor Wage/Hour Class Action Litigation. Wachovia Securities, LLC, Wachovia's retail securities brokerage subsidiary, is a defendant in multiple state and nationwide putative class actions alleging unpaid overtime wages and improper wage deductions for financial advisors. In December 2006 and January 2007, related cases pending in U.S. District courts in several states were consolidated for case administrative purposes in the U.S. District Court for the Central District of California pursuant to two orders of the Multi-District Litigation Panel. There is an additional case alleging a statewide class under California law, which is currently pending in Superior Court in Los Angeles County, California. Wachovia believes that it has meritorious defenses to the claims asserted in these lawsuits, which are part of an industry trend of related wage/hour class action litigation, and intends to defend vigorously the cases.

Adelphia Litigation. Certain Wachovia affiliates are defendants in an adversary proceeding previously pending in the United States Bankruptcy Court for the Southern District of New York related to the bankruptcy of Adelphia Communications Corporation ("Adelphia"). In February 2006, an order was entered moving the case to the United States District Court for the Southern District of New York. The Official Committee of Unsecured Creditors in Adelphia's bankruptcy case has filed claims on behalf of Adelphia against over 300 financial services companies, including the Wachovia affiliates. The complaint asserts claims against the defendants under state law, bankruptcy law and the Bank Holding Company Act and seeks equitable relief and an unspecified amount of compensatory and punitive damages. The Official Committee of Equity Security Holders has sought leave to intervene in that complaint and sought leave to bring additional claims against certain of the financial services companies, including the Wachovia affiliates, including additional federal and state claims. On August 30, 2005, the bankruptcy court granted the creditors' committee and the equity holders' committee standing to proceed with their claims. On June 11, 2007, the court granted in part and denied in part the motions to dismiss filed by Wachovia and other defendants. On July 11, 2007, Wachovia and other defendants requested leave to appeal the partial denial of the motions to dismiss. On January 17, 2008, the district court affirmed the decision ofthe bankruptcy court on the motion to dismiss with the exception that it dismissed one additional claim.

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In addition, certain affiliates of Wachovia, together with numerous other financial services companies, have been named in several private civil actions by investors in Adelphia debt and/or equity securities, alleging among other claims, misstatements in connection with Adelphia securities offerings between 1997 and 2001. Wachovia affiliates acted as an underwriter in certain of those securities offerings, as agent and/or lender for certain Adelphia credit facilities, and as a provider of Adelphia's treasury/cash management services. These complaints, which seek unspecified damages, have been consolidated in the United States District Court for the Southern District of New York. In separate orders entered in May and July 2005, the District Court dismissed a number ofthe securities law claims asserted against Wachovia, leaving some securities law claims pending. Wachovia still has a pending motion to dismiss with respect to these claims. On June 15, 2006, the District Court signed the preliminary order with respect to a proposed settlement of the securities class action pending against Wachovia and the other financial services companies. At a fairness hearing on the settlement on November 10,2006, the District Court approved the settlement. Wachovia's share ofthe settlement, $1,173 million, was paid in November 2006. The other private civil actions have not been settled.

Le-Nature's, Inc. Wachovia Bank, N.A. is the administrative agent on a $285 million credit facility extended to Le-Nature's, Inc. in September 2006, of which approximately $270 million was syndicated to other lenders by Wachovia Capital Markets, LLC as Lead Arranger and Sole Bookrunner. Le-Nature's was the subject of a Chapter 7 bankruptcy petition which was converted to a Chapter 11 bankruptcy petition in November 2006 in U.S. Bankruptcy Court in Pittsburgh, Pennsylvania following a report by a court-appointed custodian in a proceeding in Delaware that revealed fraud and significant accounting irregularities on the part of Le-Nature's management, including maintenance of a dual set of financial records. On March 14, 2007, Wachovia filed an action against several hedge funds in Superior Court for the State ofNorth Carolina entitled Wachovia Bank, National Association and Wachovia Capital Markets LLC v. Harbinger Capital Partners Master Fund I, Ltd. et al, alleging that the hedge fund defendants had acquired a significant quantity of the outstanding debt with full knowledge of the Le Nature's fraud and with the intention of pursuing alleged fraud and other tort claims against Wachovia purportedly related to its role in the Le-Nature's credit facility. The assertion of such claims would constitute a violation of North Carolina's legal and public policy prohibitions on champerty and maintenance. A preliminary injunction has been entered by the Court that, among other things, prohibits defendants from asserting any such claims in any other forum, but allowing these defendants to bring any claims they believe they possess against Wachovia as compulsory counterclaims in the North Carolina action. On September 18, 2007, these defendants filed an action in the U.S. District Court for the Southern District of New York against Wachovia Capital Markets LLC, a third party and two members of Le-Nature's management asserting claims arising under federal RICO laws. Three original purchasers of the debt also joined the action and asserted various tort claims, including fraud. Wachovia has filed a motion in the North Carolina court seeking to have these defendants held in contempt for violating the preliminary injunction and is seeking dismissal of the New York action. Wachovia, which itself was victimized by the Le-Nature's fraud, will pursue its rights against Le-Nature's and in this litigation vigorously.

Interchange Litigation. Wachovia Bank, N.A. and Wachovia are named as defendants in seven putative class actions filed on behalf of a plaintiff class of merchants with regard to the interchange fees associated with Visa and Mastercard payment card transactions. These actions have been consolidated with more than 40 other actions, which did not name Wachovia as a defendant, in the United Stated District Court for the Eastern District of New York. Visa, Mastercard and several banks and bank holding companies are named as defendants in various of these actions which were consolidated before the Court pursuant to orders ofthe Judicial Panel on Multidistrict Litigation. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, Mastercard and their member banks unlawfully collude to set interchange fees. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. The payment card association defendants and banking defendants are aggressively defending the consolidated action. Wachovia, along with other members of Visa, is a party to Loss and Judgment Sharing Agreements, which provide that Wachovia, along with other member banks of Visa, will share, based on a formula, in any losses in connection with certain litigation specified in the Agreements, including the Interchange Litigation. On November 7, 2007, Visa announced that it had reached a settlement with American Express in connection with certain litigation which is covered by Wachovia's obligations as a Visa member bank and by the Loss Sharing Agreement.

Payment Processing Center. On February 17, 2006, the U.S. Attorney's Office for the Eastern District of Pennsylvania filed a civil fraud complaint against a former Wachovia Bank, N.A. customer. Payment Processing Center ("PPC"). PPC

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was a third party payment processor for telemarketing and catalogue companies. On April 12, 2007, a civil class action, Faloney et al. v. Wachovia, was filed against Wachovia in the U.S. District Court for the Eastern District of Pennsylvania by a putative class of consumers who made purchases through telemarketer customers of PPC. The suit alleges that between April 1, 2005 and February 21, 2006, Wachovia conspired with PPC to facilitate PPC's purported violation of RICO. The Office of the Comptroller of the Currency is conducting a formal investigation of Wachovia's handling of the PPC account relationship and of five other customers engaged in similar businesses. Wachovia is vigorously defending the civil lawsuit and is cooperating with government officials in the investigations of PPC and Wachovia's handling of the PPC customer relationship.

Municipal Derivatives Bid Practices Investigation. The Department of Justice ("DOJ") and the SEC, beginning in November 2006, have been requesting information from a number of financial institutions, including Wachovia Bank, N.A.'s municipal derivatives group, generally with regard to competitive bid practices in the municipal derivative markets. In connection with these inquiries, Wachovia Bank, N.A. has received subpoenas from both the DOJ and SEC seeking documents and information. The DOJ and the SEC have advised Wachovia Bank, N A that they believe certain of its employees engaged in improper conduct in conjunction with certain competitively bid transactions and, in November 2007, the DOJ notified two Wachovia Bank, N.A. employees, both of whom are on administrative leave, that they are regarded as targets ofthe DOJ's investigation. Wachovia Bank, N.A. has been cooperating and continues to fully cooperate with the government investigations.

Other Regulatory Matters. Governmental and self-regulatory authorities have instituted numerous ongoing investigations of various practices in the securities and mutual fund industries, including those discussed in Wachovia's previous filings with the SEC and those relating to sales practices and record retention. The investigations cover advisory companies to mutual funds, broker-dealers, hedge funds and others. Wachovia has received subpoenas and other requests for documents and testimony relating to the investigations, is endeavoring to comply with those requests, is cooperating with the investigations, and where appropriate, is engaging in discussions to resolve the investigations. Wachovia is continuing its own internal review of policies, practices, procedures and personnel, and is taking remedial action where appropriate.

Outlook. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wachovia believes that the eventual outcome of the actions against Wachovia and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wachovia's consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wachovia's results of operations for any particular period.

Legal Proceedings Section from 1st Quarter 2008 10-Q filed S/12/08 (Wachovia)

Wachovia and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wachovia and/or its subsidiaries with respect to transactions in which Wachovia and/or our subsidiaries acted as banker, lender, underwriter, financial advisor or broker or in activities related thereto. In addition, Wachovia and its subsidiaries may be requested to provide information or otherwise cooperate with governmental authorities in the conduct of investigations of other persons or industry groups. It is Wachovia's policy to cooperate in all regulatory inquiries and investigations.

Although there can be no assurance as to the ultimate outcome, Wachovia and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each such case. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

The following supplements certain matters previously reported in Wachovia's Annual Report on Form 10-K for the year ended December 31, 2007.

Le-Nature's, Inc. Wachovia Bank, N.A. is the administrative agent on a $285 million credit facility extended to Le-Nature's, Inc. in September 2006, of which approximately $270 million was syndicated to other lenders by Wachovia

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Capital Markets, LLC as Lead Arranger and Sole Bookrunner. Le-Nature's was the subject of a Chapter 7 bankruptcy petition which was converted to a Chapter 11 bankruptcy petition in November 2006 in U.S. Bankruptcy Court in Pittsburgh, Pennsylvania following a report by a court-appointed custodian in a proceeding in Delaware that revealed fraud and significant accounting irregularities on the part of Le-Nature's management, including maintenance of a dual set of financial records. On March 14, 2007, Wachovia filed an action against several hedge funds in Superior Court for the State of North Carolina entitled Wachovia Bank, National Association and Wachovia Capital Markets LLC v. Harbinger Capital Partners Master Fund 1, Ltd. et al., alleging that the hedge fund defendants had acquired a significant quantity of the outstanding debt with full knowledge of the Le Nature's fraud and with the intention of pursuing alleged fraud and other tort claims against Wachovia purportedly related to its role in the Le-Nature's credit facility. The assertion of such claims would constitute a violation of North Carolina's legal and public policy prohibitions on champerty and maintenance. A preliminary injunction was entered by the Court that, among other things, prohibited defendants from asserting any such claims in any other forum. On September 18, 2007, these defendants filed an action in the U.S. District Court for the Southern District of New York against Wachovia Capital Markets LLC, a third party and two members of Le-Nature's management asserting claims arising under federal RICO laws. Three original purchasers ofthe debt also joined the action and asserted various tort claims, including fraud. On March 13, 2008 the North Carolina judge granted Defendants' motion to stay the North Carolina action and modified the injunction to allow the Defendants to attempt to assert claims in the New York action, which they have now done. Wachovia has appealed this decision to the North Carolina Court of Appeals. Wachovia has filed a motion to dismiss the New York action which remains pending; if that motion is granted, the North Carolina judge has indicated that he will revisit the stay order. On April 4, 2008, Le-Nature's Director of Accounting pled guilty to four felony counts in federal district court in Pittsburgh, including one count of bank fraud for defrauding Wachovia. On April 28, 2008 holders of Le-Nature's Senior Subordinated Notes, an offering which was underwritten by Wachovia in June 2003, sued in state court in California alleging various fraud claims relating to that offering. Wachovia itself was victimized by the Le-Nature's fraud, and will pursue its rights against Le-Nature's and defend its interests vigorously in all litigation.

Payment Processing Center. On February 17, 2006, the U.S. Attorney's Office for the Eastern District of Pennsylvania filed a civil fraud complaint against a former Wachovia Bank, N.A. customer. Payment Processing Center ("PPC"). PPC was a third party payment processor for telemarketing and catalogue companies. On April 12, 2007, a civil class action, Faloney et al. v, Wachovia, was filed against Wachovia in the U.S. District Court for the Eastern District of Pennsylvania by a putative class of consumers who made purchases through telemarketer customers of PPC. The suit alleges that between April 1, 2005 and February 21, 2006, Wachovia conspired with PPC to facilitate PPC's purported violation of RICO. On February 15, 2008, a second putative class action, Harrison v. Wachovia, was filed in the U.S. District Court for the Eastern District of Pennsylvania by a putative class of consumers who made purchases through telemarketing customers of three other third party payment processors which banked with Wachovia. This suit alleges that Wachovia conspired with these payment processors to facilitate purported violations of RICO. On April 24, 2008, Wachovia and the Office of the Comptroller of the Currency ("OCC") entered into an Agreement to resolve the OCC's investigation into Wachovia's relationship with PPC and three other companies. The Agreement provides, among other things, that (i) Wachovia will provide restitution to consumers, (ii) will create a segregated account in the amount of $125 million to cover the estimated maximum cost of the restitution, (iii) will fund organizations that provide education for consumers over a two year period in the amount of $8.9 million, (iv) will make various changes to its policies and procedures related to customers that use remotely created checks and (v) will appoint a special Compliance Committee to oversee compliance with the Agreement Wachovia and the OCC also entered into a Consent Order for Payment of a Civil Money Penalty whereby Wachovia, without admitting or denying the allegations contained therein, agreed to payment of a $10 million civil money penalty. Wachovia is cooperating with government officials and is vigorously defending the civil lawsuits.

Municipal Derivatives Bid Practices Investigation. The Department of Justice ("DOJ") and the SEC, beginning in November 2006, have been requesting information from a number of financial institutions, including Wachovia Bank, N.A.'s municipal derivatives group, generally with regard to competitive bid practices in the municipal derivative markets. In connection with these inquiries, Wachovia Bank, N.A. has received subpoenas from both the DOJ and SEC seeking documents and information. The DOJ and the SEC have advised Wachovia Bank, N.A. that they believe certain of its employees engaged in improper conduct in conjunction with certain competitively bid transactions and, in November 2007, the DOJ notified two Wachovia Bank, N.A. employees, both of whom are on administrative leave, that they are regarded as targets of the DOJ's investigation. Wachovia Bank, N.A. has been cooperating and continues to fully cooperate with the government investigations. In addition, Wachovia Bank N.A. and other financial institutions

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have been named as defendants in four substantially identical purported class actions filed in different U.S. Distinct Courts. The complaints allege that Wachovia Bank, N.A. and various co-defendant financial institutions engaged in an anti-competitive conspiracy regarding bids for municipal derivatives (including Guaranteed Investment Contracts) sold to issuers of municipal bonds. All the complaints assert claims for violations of Section 1 ofthe Sherman Act, and one complaint also asserts a claim for unjust enrichment The defendants have filed motions to consolidate these actions into one proceeding. Wachovia intends to vigorously defend its rights in these actions.

Auction Rate Securities. Since February 2008 the auctions which set the rates for most auction rate securities have failed resulting in a lack of liquidity for these auction rate securities. Wachovia Securities, LLC and affiliated firms have received inquiries and subpoenas from the SEC and several state regulators requesting information concerning the underwriting, sale and subsequent auctions of municipal auction rate securities and auction rate preferred securities. Further review and inquiry is anticipated by the regulatory authorities and Wachovia will cooperate fully. Wachovia and Wachovia Securities, LLC have been named in a civil suit captioned Judy M. Waldman Trustee v. Wachovia Corporation and Wachovia Securities LLC filed March 19, 2008 in the United States District Court for the Southern District of New York. The suit seeks class action status for customers who purchased and continue to hold auction rate securities based upon alleged misrepresentations made with respect to the quality, risk and characteristics of auction rate securities. Wachovia intends to vigorously defend the civil litigation.

Other Regulatory Matters and Government Investigations. In the course of its banking and financial services businesses, Wachovia and its affiliates are subject to information requests and investigations by governmental and self-regulatory authorities. These authorities have instituted numerous ongoing investigations of various practices in the banking, securities and mutual fund industries, including those discussed in Wachovia's previous filings with the SEC and those relating to anti-money laundering, sales practices, record retention and other laws and regulations involving our customers and their accounts.

In general, the investigations cover advisory companies to mutual funds, broker-dealers, hedge funds and others and may involve the activities of customers or third parties with respect to accounts maintained by Wachovia or transactions in which Wachovia may be involved. Wachovia has received subpoenas and other requests for documents and testimony relating to the investigations, is endeavoring to comply with those requests, is cooperating with the investigations, and where appropriate, is engaging in discussions to resolve the investigations or take other remedial actions. These investigations include an investigation being conducted by the U.S. Attorney's Office for the Southern District of Florida into, among other matters, Wachovia's correspondent banking relationship with certain non-domestic exchange houses and Bank Secrecy Act and anti-money laundering compliance. In November 2007, Wachovia determined that it would stop providing correspondent banking services to non-domestic exchange houses and licensed foreign remittance companies. Wachovia is producing documents and is cooperating fully with the U.S. Attorney's Office's investigation.

Outlook. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wachovia believes that the eventual outcome of the actions against Wachovia and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wachovia's consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wachovia's results of operations for any particular period.

Legal Proceedings Section from 2nd Quarter 2008 10-Q filed 8/11/08 (Wachovia)

Adelphia Litigation. On July 17, 2008, the U.S. District Court for the Southern District of New York issued a ruling dismissing all of the creditors' committee and equity holders' committee bankruptcy-related claims.

Le-Nature's, Inc. The U.S. Bankruptcy Court confirmed Le-Nature's Plan of Reorganization and it became effective on July 28, 2008. Such plan includes the appointment of a liquidation trustee, who could bring claims on behalf of the estate against Wachovia and other third parties.

Municipal Derivatives Bid Practices Investigation. Wachovia Bank, N.A. has been informed that in connection with the bidding of various financial instruments associated with municipal securities, the Staff ofthe Securities and Exchange Commission is considering recommending that the Commission institute civil and/or administrative proceedings

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against Wachovia Bank, N.A. In addition, Wachovia has received subpoenas from various states attorneys general regarding these matters. Wachovia Bank, N.A. is cooperating with the government investigations. Four previously disclosed purported private class actions have been assigned to the Southern District of New York for consolidated pre-trial proceedings. Two additional complaints were recently filed in California state court asserting claims similar to those in the purported class actions, along with claims under California law.

Golden West and Related Litigation. A purported securities class action, Lipetz v. Wachovia Corporation, et al, has been filed in the U.S. District Court for the Southern District of New York by purported Wachovia shareholders alleging violations of Sections 10 and 20 of the Securities Exchange Act of 1934. Among other allegations, plaintiffs allege Wachovia's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. ("Golden West") mortgage portfolio, Wachovia's exposure to other mortgage related products such as collateralized debt obligations ("CDOs"), control issues and auction rate securities.

A purported class action, Miller, et al. v. Wachovia Corporation, et al, has been filed against Wachovia, its board of directors and certain senior officers in the New York Supreme Court for the County of Nassau, since removed by Wachovia to the U.S. District Court for the Eastern District of New York, relating to Wachovia's May 2007 issuance of trust preferred securities. The plaintiffs allege violations of Sections 11, 12 and 15 ofthe Securities Act of 1933 as a result of allegedly misleading disclosures relating to the Golden West mortgage portfolio. Seven purported class actions have been filed against Wachovia, its board of directors and certain senior officers in the U.S. District Court for the Southern District of New York on behalf of Wachovia employees who held shares of Wachovia common stock in their Wachovia Savings Plan accounts. The plaintiffs allege breach of fiduciary duty under ERISA, among other things, claiming that the defendants should not have permitted Wachovia common stock to remain an investment option in the Savings Plan because alleged misleading disclosures relating to the Golden West mortgage portfolio, exposure to CDOs and other problem loans, and other alleged misstatements made its stock a risky and imprudent investment for employee retirement accounts. In addition, several purported shareholders have submitted notices that they may initiate, and one purported shareholder has filed a complaint, Estate of Joseph Romain v. Wachovia Corporation, et al, in the U.S. District Court for the Southern District of New York initiating, shareholder derivative claims alleging breaches of fiduciary duty against Wachovia's board of directors and various senior officers arising out of various alleged failures of controls relating to its disclosures regarding the Golden West mortgage portfolio, CDOs, and other alleged control issues involving anti-money laundering, bank owned life insurance, auction rate securities, municipal derivatives bid practices and the previously disclosed settlement with the OCC in the Payment Processing Center matter. These matters are in a preliminary stage. Wachovia intends to defend vigorously each such case.

Auction Rate Securities. Wachovia is engaged in active settlement discussions with various state regulators and the SEC of ongoing investigations concerning the underwriting, sale and subsequent auctions of certain auction rate securities by Wachovia Securities, LLC, and Wachovia Capital Markets, LLC, including the likelihood of liquidity solutions. See also "Management's Discussion & Analysis" in the Financial Supplement contained in Exhibit (19) to this Report

Outlook Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wachovia believes that the eventual outcome of the actions against Wachovia and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wachovia's consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wachovia's results of operations for any particular period.

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8-K August 15, 2008 (Wachovia)

Terms ofthe agreement in principle include the following:

•   Wachovia will offer to purchase at par ARS held by all individuals, charities and religious organizations, as well as ARS held by small and medium-sized businesses with account values and household values of $10 million or less, that were purchased at Wachovia on or before Feb. 13, 2008. These purchases will commence no later than November 10, 2008, and conclude no later than Nov. 28,2008, for clients who accept this offer. ARS that arc the subject of functioning auctions will not be eligible for purchase.

• Wachovia will offer to purchase at par ARS held by all other clients that were purchased at Wachovia on or before Feb. 13, 2008. These purchases will commence no later than June 10, 2009, for clients who accept this offer and conclude no later than June 30, 2009. ARS that are the subject of functioning auctions will not be eligible for purchase.
• Wachovia will also reimburse investors who can reasonably be identified and who would have been covered by the offer but who sold their ARS below par, between Feb. 13, 2008, and the date of entry of the settlement, for the difference between par and the price at which the investor sold the ARS. The reimbursement will be made by Nov. 28, 2008.
• In addition to Wachovia's offer to purchase ARS from clients, Wachovia will offer loans to affected clients in need of liquidity until the ARS repurchases occur.
• Wachovia will refund refinancing fees to municipal ARS issuers who issued ARS in the initial primary market between Aug. 1, 2007, and Feb. 13,2008, and refinanced those securities after Feb. 13, 2008.
• Wachovia will pay a total fine of $50 million to the state regulatory agencies, which will be distributed to the States as determined by the North American Securities Administrators Association and the State of New York.
• Wachovia neither admits nor denies allegations of wrongdoing.

As previously disclosed in Wachovia's Second Quarter Report on Form 10-Q filed with the Securities and Exchange Commission on Aug. 11, 2008, in connection with the expectation of a potential settlement of ARS matters, Wachovia recorded a $500 million pre-tax increase to legal reserves, including amounts reserved for estimated market valuation losses on affected ARS, for the second quarter of 2008, based on estimates and assumptions at the time of the filing. Based on the terms of today's agreement in principle, the timing and currently estimated amounts of ARS to be purchased in the offer, current market conditions, expected future redemptions, and expected sales by Wachovia to third parties of a portion of ARS to be purchased in the offer, Wachovia currently expects to record a further $275 million pre-tax increase to legal reserves in the third quarter of 2008. Wachovia also currently expects that its Tier 1 capital ratio will decrease by approximately 8 basis points in the third quarter 2008, reflecting the additional increase in legal reserves and the capital impact ofthe offers. Wachovia does not currently expect that the purchase of ARS under the agreement in principle will have a material effect on capital, liquidity or overall financial results through expected maturities or redemptions ofthe ARS purchased, or alter Wachovia's previously announced focus on improving its Tier 1 capital ratio.

Wachovia currently estimates that the par value of ARS currently outstanding and eligible for purchase under the above offers totals approximately $8.5 billion. Following the purchases of ARS by Wachovia pursuant to the offers, and based on expected future redemptions and the expected sales of ARS to third parties described

Legal Proceedings Section from 3rd Quarter 2008 10-Q filed 10/30/08 (Wachovia)

Le Nature's, inc. On August 26, 2008, the U.S. District Court dismissed the case pending against Wachovia in the Southern District of New York. Plaintiffs have appealed that ruling. Plaintiffs also filed a case asserting similar allegations in the New York State Supreme Court for the County of Manhattan; Wachovia has filed a motion to stay this case pending final resolution of the federal action. In addition, the Bondholder case filed against Wachovia in California has been transferred by the U.S. District Court for the Northern District of California to the U.S. District Court for the Western District of Pennsylvania.

Interchange Litigation. On October 14, 2008, Visa announced an agreement in principle to settle litigation commenced by Discover Card against it. Wachovia has certain obligations to Visa as a member bank and in connection with its previously disclosed Loss Sharing agreement with Visa. Wachovia has fully reserved for these obligations.

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Payment Processing Center. On August 14, 2008, Wachovia reached agreements to settle the Faloney and Harrison class action lawsuits. The settlements have received preliminary approval from the U.S. District Court for the Eastern District of Pennsylvania, with a fairness hearing scheduled for January 2009.

Municipal Derivatives Bid Practices Investigation. Wachovia, along with numerous other financial institutions, has received a number of additional civil complaints from various municipalities filed in various state and federal courts. A number of the federal cases are in the process of being consolidated through the Multi-District Litigation procedures.

Auction Rate Securities. On August 15, 2008, Wachovia announced it had reached settlements in principle with the Secretary of State for the State of Missouri (as the lead state in the North American Securities Administrators Association task force investigating the marketing and sale of auction rate securities), with the New York State Attorney General's Office and with the SEC of their respective investigations of sales practice and other issues related to the sales of auction rate securities ("ARS") by certain affiliates and subsidiaries of Wachovia. Without admitting or denying liability, the agreements in principle require that Wachovia purchase certain ARS sold to customers in accounts at Wachovia, reimburse investors who sold ARS purchased at Wachovia for less than par, provide liquidity loans to customers at no net interest until the ARS are repurchased, offer to participate in special arbitration procedures with customers who claim consequential damages from the lack of liquidity in ARS and refund refinancing fees to certain municipal issuers who issued ARS and later refinanced those securities through Wachovia. Wachovia, without admitting or denying liability, will also pay a total fine of $50 million to the state regulatory agencies and agree to entry of consent orders by the two state regulators and an injunction by the SEC. Wachovia intends to begin buying back the ARS in November 2008. In addition, Wachovia is a defendant in three new purported civil class actions relating to its sale of ARS.

Baytide Petroleum v. Wachovia Securities, LLC, et al. was filed in the U.S. District Court for the Northern District of Oklahoma. The other two cases, Mayfield v. Wachovia Securities, LLC, et al. and Mayor and City of Baltimore v. Wachovia Securities, LLC, et al., were both filed in the U.S. District Court for the Southern District of New York and allege identical antitrust related claims.

Golden West and Related Litigation. On October 14, 2008, the New York City Pension Funds was named the lead plaintiff in the Lipetz matter and an order is in place setting the timeframe for filing an amended complaint and response thereto. The plaintiff in Estate of Romain voluntarily dismissed its shareholder derivative case against Wachovia. A new shareholder derivative case, Arace v Wachovia Corporation, etal., was filed on September 10, 2008, in the U.S. District Court for the Southern District of New York.

Evergreen Ultra Short Opportunities Fund (the "Fund") Investigation. The SEC and the Secretary of the Commonwealth, Securities Division, ofthe Commonwealth of Massachusetts are conducting separate investigations of Evergreen Investment Management Company, LLC ("EIMCO") and Evergreen Investment Services, Inc. ("EIS") concerning alleged issues surrounding the drop in net asset value of the Fund in May and June 2008. In addition, various Evergreen entities are defendants in three purported class actions, Keefe v. EIMCO , et al.; Krantzberg v. Evergreen Fixed Income Trust, et al.; and Mierzwinski v. EIMCO, et al., all filed in the U.S. District Court for the District of Massachusetts and related to the same events. The cases generally allege that investors in the Fund suffered losses as a result of (i) misleading statements in the Fund's prospectus, (ii) the failure to accurately price securities in the Fund at different points in time and (iii) the failure of the Fund's risk disclosures and description of its investment strategy to inform investors adequately ofthe actual risks ofthe fund.

Merger Related Litigation. On October 4, 2008, Citigroup, Inc. ("Citigroup") purported to commence an action in the Supreme Court in the State of New York captioned Citigroup, Inc. v. Wachovia Corp., et al., naming as defendants Wachovia, Wells Fargo, and the directors of both companies. The complaint alleged that Wachovia breached an exclusivity agreement with Citigroup, which by its terms was to expire on October 6, 2008, by entering into negotiations and an eventual acquisition agreement with Wells Fargo, and that Wells Fargo and the individual defendants had tortiously interfered with the same contract. In the complaint, Citigroup seeks $20 billion in compensatory damages and $40 billion in punitive damages. After significant procedural activity over the week of October 4-9, including a voluntary dismissal and re-filing of the action in amended form, the case was removed on October 9 to the U.S. District Court for the Southern District of New York. On October 10, Citigroup filed a motion to remand the case to the New York state court, and filed a new proposed amended complaint. The proposed amended complaint includes claims for breach of contract, tortious interference with contract, unjust enrichment, promissory estoppel, and quantum meruit. In the proposed amended complaint, which the court has not yet approved, Citigroup

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seeks $20 billion in compensatory damages, $20 billion in restitutionary and unjust enrichment damages, and $40 billion in punitive damages. On October 24, Wachovia and Wells Fargo filed a joint response to the motion to remand. On October 4, 2008, Wachovia filed a complaint in the U. S. District Court for the Southern District of New York, captioned Wachovia Corp. v. Citigroup, Inc. The complaint seeks declaratory relief, stating that the Wells Fargo merger agreement is valid, proper, and not prohibited by the exclusivity agreement. On October 5, Wachovia filed a motion for a preliminary injunction seeking to prevent Citigroup from interfering with or impeding its merger with Wells Fargo. On October9, 2008, Citigroup issued a press release stating that Citigroup would no longer seek to enjoin the merger, but would continue to seek compensatory and punitive damages against Wachovia and Wells Fargo. On October 14, 2008, Wells Fargo filed a related complaint in the U. S. District Court for the Southern District of New York, captioned Wells Fargo v. Citigroup, Inc. The complaint seeks declaratory and injunctive relief, stating that the Wells Fargo merger agreement is valid, proper, and not prohibited by the exclusivity agreement. Citigroup has moved to dismiss the complaint. On October 8, 2008, a purported class action complaint captioned Irving Ehrenhaus v. John D. Baker, et al., was filed in the Superior Court for the County of Mecklenburg in the State of North Carolina. The complaint names as defendants Wachovia, Wells Fargo, and the directors of Wachovia. The complaint alleges that the Wachovia directors breached their fiduciary duties in approving the merger with Wells Fargo at an allegedly inadequate price, and that the Wells Fargo directors aided and abetted the alleged breaches of fiduciary duty. The action seeks to enjoin the Wells Fargo merger, or to recover compensatory or rescissory damages if the merger is consummated, as well as an award of attorneys' fees and costs. Plaintiffs have asked the Court for expedited discovery and to set a hearing date for a preliminary injunction motion to enjoin the shareholder vote and the closing of the transaction.

Data Treasury Litigation. Wachovia Bank, N.A. and Wachovia Corporation are among over 55 defendants named in two actions asserting patent infringement claims filed by Data Treasury Corporation in the U.S. District Court for the Eastern District of Texas. Data Treasury seeks a declaration that its patents are valid and have been infringed, and seeks damages and permanent injunctive relief. One ofthe cases is stayed pending re-examination ofthe patents by the U.S. Patent Office and the other case is currently in discovery.

Outlook. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wachovia believes that the eventual outcome of the actions against Wachovia and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wachovia's consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wachovia's results of operations for any particular period.

FORM 1 O K WELLS FARGO & COMPANY- Filori February 27. 2009 fWells)

ITEM 3.      LEGAL PROCEEDINGS

Information in response to this Item 3 can be found in the 2008 Annual Report to Stockholders under "Financial Statements - Notes to Financial Statements - Note 15 (Guarantees and Legal Actions]" on pages 128-131. That information is incorporated into this report by reference.

NOTE 1S WELLS FARGO & COMPANY 2008 ANNUAL REPORT: fWellsl Legal Actions

Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with governmental authorities in the conduct of investigations of other persons or industry groups. Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each case, other than matters we describe as having settled. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

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ADELPHIA LITIGATION Wachovia Bank, NA. and Wachovia Capital Markets, LLC, are defendants in an adversary proceeding previously pending in the United States Bankruptcy Court for the Southern District of New York related to the bankruptcy of Adelphia Communications Corporation (Adelphia). The Official Committee of Unsecured Creditors in Adelphia's bankruptcy case filed the claims; the current plaintiff is the Adelphia Recovery Trust, which was substituted as the plaintiff pursuant to Adelphia's confirmed plan of reorganization. In February 2006, an order was entered moving the case to the United States District Court for the Southern District of New York. The complaint asserts claims against the defendants under state law, bankruptcy law and the Bank Holding Company Act and seeks equitable relief and an unspecified amount of compensatory and punitive damages. On June 11, 2007, the Bankruptcy Court granted in part and denied in part the motions to dismiss filed by the two Wachovia entities and other defendants. On January 17, 2008, the District Court affirmed the decision of the Bankruptcy Court on the motion dismiss with the exception that it dismissed one additional claim. On July 17, 2008, the District Court issued a ruling dismissing all ofthe bankruptcy related claims. The remaining claims essentially allege the banks should be liable to Adelphia on theories of aiding and abetting a breach of fiduciary duty and violation of the Bank Holding Company Act The case is now in discovery.

AUCTION RATE SECURITIES On August 15, 2008, Wachovia Securities, LLC and Wachovia Capital Markets, LLC (collectively the Wachovia Securities Affiliates) announced they had reached settlements in principle with the Secretaiy of State for the State of Missouri (as the lead state in the North American Securities Administrators Association task force investigating the marketing and sale of auction rate securities), and with the New York State Attorney General's Office of their respective investigations of sales practice and other issues related to the sales of auction rate securities (ARS). Wachovia Securities also announced a settlement in principle with the Securities and Exchange Commission (SEC) of its similar investigation. Without admitting or denying liability, the agreements in principle require that the Wachovia Securities Affiliates purchase certain ARS sold to customers in accounts at the Wachovia Securities Affiliates, reimburse investors who sold ARS purchased at the Wachovia Securities Affiliates for less than par, provide liquidity loans to customers at no net interest until the ARS are repurchased, offer to participate in special arbitration procedures with customers who claim consequential damages from the lack of liquidity in ARS and refund refinancing fees to certain municipal issuers who issued ARS and later refinanced those securities through the Wachovia Securities Affiliates. Without admitting or denying liability, the Wachovia Securities Affiliates will also pay a total fine of $50 million to the state regulatory agencies and agreed to entry of consent orders by the two state regulators and Wachovia Securities, LLC agreed to entry of an injunction by the SEC. All three settlements in principle have been finalized. The Wachovia Securities Affiliates began the buy back of ARS in November 2008. The second and final phase ofthe buy back will take place in June 2009. Wells Fargo Investments, LLC (WFI), Wells Fargo Brokerage Services, LLC, and Wells Fargo Institutional Securities, LLC are engaged in discussions with regulators concerning the sale of ARS. On November 20, 2008, the State of Washington Department of Financial Institutions filed a proceeding entitled In the Matter of determining whether there has been a violation ofthe Securities Act of Washington by: Wells Fargo Investments, LLC; Wells Fargo Brokerage Services, LLC; and Wells Fargo Institutional Securities, LLC. The action seeks a cease and desist order against violations of the anti-fraud and suitability provisions of the Washington Securities Act. In addition, several purported civil class actions relating to the sale of ARS are currently pending against various Wells Fargo affiliated defendants.

DATA TREASURY LITIGATION Wells Fargo & Company, Wells Fargo Bank, N.A., Wachovia Bank, N.A. and Wachovia Corporation are among over 55 defendants named in two actions asserting patent infringement claims filed by Data Treasury Corporation in the U.S. District Court for the Eastern District of Texas. Data Treasury seeks a declaration that its patents arc valid and have been infringed, and seeks damages and permanent injunctive relief. The cases are currently in discovery.

ELAVON LITIGATION On January 16, 2009, Elavon, Inc., a provider of merchant processing services, filed a complaint in the U.S. District Court for the Northern District of Georgia against Wachovia Corporation, Wachovia Bank, N.A., Wells Fargo & Company, and Wells Fargo Bank, N.A. The complaint seeks equitable relief, including specific performance, and damages for Wachovia Bank's allegedly wrongful termination of its merchant referral contract with Elavon. The complaint also seeks damages, including punitive damages, against the Wells Fargo entities for tortious interference with contractual relations.

ERISA LITIGATION Seven purported class actions have been filed against Wachovia Corporation, its board of directors and certain senior officers in the U.S. District Court for the Southern District of New York on behalf of employees of Wachovia Corporation and its affiliates who held shares of Wachovia Corporation common stock in their Wachovia Savings Plan accounts. The plaintiffs allege breach of fiduciary duty under ERISA, among other things.

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claiming that the defendants should not have permitted Wachovia Corporation common stock to remain an investment option in the Savings Plan because alleged misleading disclosures relating to the Golden West mortgage portfolio, exposure to CDOs and other problem loans, and other alleged misstatements made its stock a risky and imprudent investment for employee retirement accounts.

GOLDEN WEST AND RELATED LITIGATION A purported securities class action, Lipetz v. Wachovia Corporation, et al, was filed on July 7, 2008, in the U.S. District Court for the Southern District of New York by purported Wachovia Corporation shareholders alleging violations of Sections 10 and 20 of the Securities Exchange Act of 1934. An amended complaint was filed on December 15, 2008. Among other allegations, plaintiffs allege Wachovia Corporation's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. (Golden West) mortgage portfolio, Wachovia Corporation's exposure to other mortgage related products such as CDOs, control issues and auction rate securities. The defendants have until February 27, 2009, to respond to the complaint. A purported class action, Miller, et al v. Wachovia Corporation, et al, was filed on January 31, 2008, against Wachovia Corporation, its board of directors and certain senior officers in the New York Supreme Court for the County of Nassau, relating to Wachovia Corporation's May 2007 issuance of trust preferred securities. The plaintiffs allege violations of Sections 11,12 and 15 ofthe Securities Act of 1933 as a result of allegedly misleading disclosures relating to the Golden West mortgage portfolio. Wachovia Corporation removed the case to the U.S. District Court for the Eastern District of New York. On January 16, 2009, the case was voluntarily dismissed by the plaintiff and, on the same day, was refiled in the Superior Court of the State of California, Alameda County. A similar case, Swiskay v Wachovia Corporation, et al, was filed on December 19, 2008, in the same court. The Swiskay case is essentially identical to the Miller case except it includes allegations relating to additional Wachovia preferred offerings. On January 21, 2009, a third case. Orange County Employees' Retirement System, et al v. Wachovia Corporation, et al, was also filed in the same California Superior Court on behalf of Orange County Employees' Retirement System and others. The complaint contains similar allegations to the Miller and Swiskay cases, except it includes some additional individuals and non-affiliated entities as defendants and adds claims relating to additional issuances of preferred stock and debt securities. Wells Fargo will file appropriate venue and other motions in response to these actions. Several government agencies are investigating matters similar to the issues raised in this litigation. Wells Fargo and its affiliates are cooperating fully.

INTERCHANGE LITIGATION Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation are named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and individual actions brought by individual merchants with regard to the interchange fees associated with Visa and MasterCard payment card transactions. These actions have been consolidated in the United States District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies are named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and their member banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other members of Visa, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other member banks of Visa, will share, based on a formula, in any losses from certain litigation specified in the Agreements, including the Interchange Litigation.

LE-NATURE'S, INC. Wachovia Bank, N.A. is the administrative agent on a $285 million credit facility extended to Le-Nature's, Inc. in September 2006, of which approximately $270 million was syndicated to other lenders by Wachovia Capital Markets, LLC. Le-Nature's was the subject of a Chapter 7 bankruptcy petition which was converted to a Chapter 11 bankruptcy petition in November 2006 in the U.S. Bankruptcy Court for the Western District of Pennsylvania. The filing was precipitated by an apparent fraud relating to Le-Nature's financial condition. On March 14, 2007, the two Wachovia entities filed an action against several hedge funds in the Superior Court for the State of North Carolina, Mecklenburg County, alleging that the hedge fund defendants had acquired a significant quantity of the outstanding debt with full knowledge of Le-Nature's fraud and with the intention of pursuing alleged fraud and other tort claims against the two Wachovia entities purportedly related to their role in Le-Nature's credit facility. A preliminary injunction was entered by the Court that, among other things, prohibited defendants from asserting any such claims in any other forum. On September 18, 2007, these defendants filed an action in the U.S. District Court for the Southern District of New York against Wachovia Capital Markets, a third party and two members of Le-Nature's management asserting claims arising under federal RICO laws. On March 13, 2008, the North Carolina judge granted Defendants' motion to stay the North Carolina action and modified the injunction to allow the Defendants to attempt

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to assert claims in the New York action. The Wachovia entities have appealed. Wachovia Capital Markets filed a motion to dismiss the New York action which was granted on August 26, 2008. Plaintiffs have appealed that ruling. Plaintiffs subsequently filed a case asserting similar allegations in the New York State Supreme Court for the County of Manhattan. On April 28, 2008, holders of Le-Nature's Senior Subordinated Notes, an offering which was underwritten by Wachovia Capital Markets in June 2003, sued alleging various fraud claims; this case is pending in the U.S. District Court for the Western District of Pennsylvania. On October 30, 2008, the liquidation trust in Le-Nature's bankruptcy filed suit against a number of individuals and entities, including Wachovia Capital Markets, LLC, and Wachovia Bank, N.A., in the U.S. District Court for the Western District of Pennsylvania, asserting a variety of claims on behalf ofthe estate.

MERGER RELATED LITIGATION On October 4, 2008, Citigroup, Inc. (Citigroup) purported to commence an action in the Supreme Court of the State of New York for the County of Manhattan, captioned Citigroup, Inc. v. Wachovia Corp., et ai, naming as defendants Wachovia Corporation (Wachovia), Wells Fargo & Company (Wells Fargo), and the directors of both companies. The complaint alleged that Wachovia Corporation breached an exclusivity agreement with Citigroup, which by its terms was to expire on October 6, 2008, by entering into negotiations and an eventual acquisition agreement with Wells Fargo, and that Wells Fargo and the individual defendants had tortiously interfered with the same contract. In the complaint, Citigroup seeks $20 billion in compensatory damages and $40 billion in punitive damages. After significant procedural activity over the week of October 4-9, 2008, including a voluntary dismissal and re-filing of the action in amended form, the case was removed on October 9, 2008, to the U.S. District Court for the Southern District of New York. On October 10, 2008, Citigroup filed a motion to remand the case to the New York state court, and filed a new proposed amended complaint. The proposed amended complaint includes claims for breach of contract, tortious interference with contract, unjust enrichment, promissory estoppel, and quantum meruit. In the proposed amended complaint, which the court has not yet approved, Citigroup seeks $20 billion in compensatory damages, $20 billion in restitutionary and unjust enrichment damages, and $40 billion in punitive damages. On October 24, 2008, Wachovia Corporation and Wells Fargo filed a join response to the motion to remand. On October 4, 2008, Wachovia Corporation filed a complaint in the U.S. District Court for the Southern District of New York, captioned Wachovia Corp. v. Citigroup, Inc. The complaint seeks declaratory relief, stating that the Wells Fargo merger agreement is valid, proper, and not prohibited by the exclusivity agreement On October 5, 2008, Wachovia filed a motion for a preliminary injunction seeking to prevent Citigroup from interfering with or impeding its merger with Wells Fargo. On October 9, 2008, Citigroup issued a press release stating that Citigroup would no longer seek to enjoin the merger, but would continue to seek compensatory and punitive damages against Wachovia Corporation and Wells Fargo. On October 14, 2008, Wells Fargo filed a related complaint in the U.S. District Court for the Southern District of New York, captioned Wells Fargo v. Citigroup, Inc. The complaint seeks declaratory and injunctive relief, stating that the Wells Fargo merger agreement is valid, proper, and not prohibited by the exclusivity agreement Citigroup has moved to dismiss the complaint. The cases have been assigned to the same judge for further proceedings.

MUNICIPAL DERIVATIVES BID PRACTICES INVESTIGATION The Department of Justice (DOJ) and the SEC, beginning in November 2006, have been requesting information from a number of financial institutions, including Wachovia Bank, N.A.'s municipal derivatives group, generally with regard to competitive bid practices in the municipal derivative markets. In connection with these inquiries, Wachovia Bank has received subpoenas from both the DOJ and SEC as well as requests from the OCC and several states seeking documents and information. The DOJ and the SEC have advised Wachovia Bank that they believe certain of its employees engaged in improper conduct in conjunction with certain competitively bid transactions and, in November 2007, the DOJ notified two Wachovia Bank employees, both of whom have since been terminated, that they are regarded as targets of the DOJ's investigation. Wachovia Bank has been cooperating and continues to fully cooperate with the government investigations.

Wachovia Bank, along with a number of other banks and financial services companies, has also been named as a defendant in a number of substantially identical purported class actions, filed in various state and federal courts by various municipalities alleging they have been damaged by the activity which is the subject ofthe governmental investigations. A number ofthe federal matters have been consolidated for pre trial proceedings.

PAYMENT PROCESSING CENTER On February 17, 2006, the U.S. Attorney's Office for the Eastern District of Pennsylvania filed a civil fraud complaint against a former Wachovia Bank, N.A. customer, Payment Processing Center (PPC). PPC was a third party payment processor for telemarketing and catalogue companies. On April 12, 2007, a civil class action, Faloney et al. v. Wachovia Bank, N.A., was filed against Wachovia Bank in the U.S. District Court for the Eastern District of Pennsylvania by a putative class of consumers who made purchases through telemarketer

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customers of PPC. The suit alleges that between April 1, 2005 and February 21, 2006, Wachovia Bank conspired with PPC to facilitate PPC's purported violation of RICO. On February 15, 2008, a second putative class action, Harrison v. Wachovia Bank, N.A., was filed in the U.S. District Court for the Eastern District of Pennsylvania by a putative class of consumers who made purchases through telemarketing customers of three other third party payment processors which banked with Wachovia Bank. This suit alleges that Wachovia Bank conspired with these payment processors to facilitate purported violations of RICO. On April 24, 2008, Wachovia and the Office ofthe Comptroller of the Currency (OCC) entered into an Agreement to resolve the OCC's investigation into Wachovia's relationship with PPC and three other companies. The Agreement provides, among other things, that (i) Wachovia will provide restitution to consumers, (ii) will create a segregated account in the amount of $125 million to cover the estimated maximum cost of the restitution, (iii) will fund organizations that provide education for consumers over a two year period in the amount of $8.9 million, (iv) will make various changes to its policies and procedures related to customers that use remotely created checks and (v) will appoint a special Compliance Committee to oversee compliance with the Agreement. Wachovia Bank and "the OCC also entered into a Consent Order for Payment of a Civil Money Penalty whereby Wachovia, without admitting or denying the allegations contained therein, agreed to payment of a $10 million civil money penalty. The OCC Agreement was amended on December 8, 2008, to provide for direct restitution payments and those payments were mailed to consumers on December 11, 2008. Wachovia Bank is cooperating with government officials to administer the OCC settlement and in their further inquiries.

On August 14, 2008, Wachovia Bank reached agreements to settle the Faloney and Harrison class action lawsuits. The settlements received approval from the U.S. District Court for the Eastern District of Pennsylvania on January 23, 2009.

OTHER REGULATORY MATTERS AND GOVERNMENT INVESTIGATIONS In the course of its banking and financial services businesses. Wells Fargo and its affiliates are subject to information requests and investigations by governmental and self-regulatory authorities. These authorities have instituted various ongoing investigations of various practices in the banking, securities and mutual fund industries, including those relating to anti-money laundering, sales practices, record retention and other laws and regulations involving our customers and their accounts.

In general, the investigations cover advisory companies to mutual funds, broker-dealers, hedge funds and others and may involve the activities of customers or third parties with respect to accounts maintained by Wells Fargo affiliates or transactions in which Wells Fargo affiliates may be involved. Wells Fargo affiliates have received subpoenas and other requests for documents and testimony relating to the investigations, is endeavoring to comply with those requests, is cooperating with the investigations, and where appropriate, is engaging in discussions to resolve the investigations or take other remedial actions. These investigations include an investigation being conducted by the U.S. Attorney's Office for the Southern District of Florida into, among other matters, Wachovia Bank, N.A.'s correspondent banking relationship with certain non-domestic exchange houses and Bank Secrecy Act and anti-money laundering compliance. Wachovia Bank is cooperating fully with the U.S. Attorney's Office's investigation.

FORM 10-0 WELLS FARGO & COMPANY - Filed August 7. 2009 fWellsl (For the quarterly period ended June 30, 2009)

Legal Actions

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2008 Form 10-K for events occurring in the most recent quarter.

Auction Rate Securities On June 30, 2009, Wachovia completed the second, and final, phase of its buy back of qualifying securities as required in its regulatory settlements with the SEC and various state securities regulators.

ERISA Litigation On June 18, 2009, the U.S. District Court for the Southern District of New York entered a Memorandum and Order transferring these consolidated cases to the U.S. District Court for the Western District of North Carolina.

Golden West and Related Litigation On May 8, 2009 and on June 12, 2009, two additional cases (not class actions) containing allegations similar to the allegations in the In re Wachovia Equity Securities Litigation, and captioned, Stichting Pensioenfonds ABP v. Wachovia Corp. et al and FC Holdings AB, et al v. Wachovia Corp., et al, respectively.

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were filed in the U.S. District Court for the Southern District of New York. On June 22, 2009, the U.S. District Court for the Northern District of California entered an Order To Transfer Three Related Actions Pursuant To U.S.C. Section 1404(a) whereby the Court transferred the Miller, et al. v. Wachovia Corporation, et al.; Swiskay, et al. v. Wachovia Corporation, et al.; and Orange County Employees' Retirement System, et al. v. Wachovia Corporation, et al. cases to the U.S. District Court for the Southern District of New York.

Merger Related Litigation On July 13, 2009, the U.S. District Court for the Southern District of New York issued an Opinion and Order denying Citigroup's motion for partial judgment on the pleadings in the Wachovia Corp. v. Citigroup, Inc. case. The Court held that an Exclusivity Agreement, entered into between Citigroup and Wachovia on September 29, 2008, and which formed the basis for a substantial portion of the allegations of Citigroup's complaint against Wachovia and Wells Fargo, was void as against public policy by enactment of Section 126(c) of the Emergency Economic Stabilization Act on October 3, 2008.

Illinois Attorney General Litigation On July 31, 2009, the Attorney General for the State oflllinois filed a civil lawsuit against Wells Fargo & Company, Wells Fargo Bank, N.A. and Wells Fargo Financial Illinois, Inc. in the Circuit Court for Cook County, Illinois. The Illinois Attorney General alleges that the Wells Fargo defendants engaged in illegal discrimination by "reverse redlining" and by steering African- American and Latino customers into high cost, subprime mortgage loans while other borrowers with similar incomes received lower cost mortgages. Illinois also alleges that Wells Fargo Financial Illinois, Inc. misled Illinois customers about the terms of mortgage loans. Illinois' complaint against all Wells Fargo defendants is based on alleged violation of the Illinois Human Rights Act and the Illinois Fairness in Lending Act. The complaint also alleges that Wells Fargo Financial Illinois, Inc. violated the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Uniform Deceptive Trade Practices Act. Illinois' complaint seeks an injunction against the defendants' alleged violation of these Illinois statutes, restitution to consumers and civil money penalties.

FORM 10-0 WELLS FARGO & COMPANY - Filed November 6.2009 fWellsl

(For the quarterly period ended October 30,2009)

Item 1. Legal Proceedings Legal Actions

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2008 Form 10-K for events occurring in the most recent quarter.

Elavon On September 29, 2009, Elavon filed an amended complaint adding an additional party to the litigation. On October 13, 2009, the court entered an order granting the motion to dismiss of Wells Fargo & Company and Wells Fargo Bank, N.A. dismissing the tortious interference with contract and the punitive damages counts as against those entities.

Golden West and Related Litigation On September 15, 2009 and on September 25, 2009, two additional cases (not class actions) containing allegations similar to the allegations in the In re Wachovia Equity Securities Litigation, and captioned, Deka Investment GmbH v. Wachovia Corp. et al. and Forsta AP-Fonden v. Wachovia Corp., et al., respectively, were filed in the U.S. District Court for the Southern District of New York. Following the transfer ofthe Miller, et al. v. Wachovia Corporation, et al.; Swiskay, et al. v. Wachovia Corporation, et al.; and Orange County Employees' Retirement System, et al. v. Wachovia Corporation, et al. cases to the U.S. District Court for the Southern District of New York, a consolidated class action complaint was filed on September 4, 2009 and the matter is now captioned In Re Wachovia Preferred Securities and Bond/Notes Litigation. On September 29, 2009, a non-class action case containing allegations similar to the allegations in the In re Wachovia Preferred Securities and Bond/Notes litigation, and captioned City of Livonia Employees' Retirement System v. Wachovia Corp et al., was filed in the Southern District of New York. In addition, a number of other actions containing allegations similar to those in the In re Wachovia Equity Securities Litigation have been filed in state courts in North Carolina and South Carolina by individual shareholders.

Illinois Attorney General Litigation On October 9, 2009, the Company filed a motion to dismiss Illinois' complaint.

Le-Nature's, Inc. On August 1, 2009, the trustee under the indenture for Le-Nature's Senior Subordinated Note filed claims against Wachovia Capital Markets seeking recovery for the bondholders under a variety of theories. On

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September 16, 2009, the Judge in the action brought by the Litigation Trustee dismissed a cause of action for breach of fiduciary duty but denied the remainder of Wachovia's motion to dismiss. On October 2, 2009, the Second Circuit affirmed the dismissal ofthe action filed by certain bank debt holders in the Southern District of New York. The action filed on behalf of holders of Le-Nature's Senior Subordinated Notes is now pending in the Superior Court ofthe State of California, County of Los Angeles.

Municipal Derivatives Bid Practices Investigation On April 30,2009, the Court granted a motion filed by Wachovia and certain other defendants to dismiss the Consolidated Class Action Complaint and dismissed all claims against Wachovia, with leave to replead; a Second Consolidated Amended Complaint was filed on June 18,2009, and a motion to dismiss this complaint has been filed and briefed. Putative class and individual actions brought in California were also amended on September 15, 2009, including five non-class complaints filed in California which were amended with new allegations and the addition of Wells Fargo & Co. as a defendant. All matters are being coordinated in the Southern District of New York.

Outlook Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Source: WELLS FARGO & CO/MN, 10-Q, November 06, 2009 Powered by Morningstar® Document Research™ 8-K Filed March 17,2010 (Wells)

Wachovia Bank, N.A., said today that it has entered into agreements with the U.S. Department of Justice and banking regulators concerning previously disclosed compliance matters that occurred prior to its acquisition by Wells Fargo & Company. The agreements address Wachovia's Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance program and primarily relate to customer accounts held by Mexican money exchange houses in Wachovia's Global Financial Institutions and Trade Services (GFITS) division between 2004 and 2007.

As part ofthe agreements, Wachovia will pay a total of $160 million. Wells Fargo learned about these matters before acquiring Wachovia and established reserves in prior periods that will fully cover the settlement amounts.

The agreements consist ofthe following:

• Wachovia Bank, N.A. has entered into a deferred prosecution agreement with the U.S. Attorney's Office for the Southern District of Florida and the U.S. Department of Justice. Under the agreement, the bank acknowledges that its AML compliance programs were inadequate and agrees to forfeit $110 million and implement certain remedial measures, ln one year, if Wachovia has complied with the terms ofthe agreement, the Department of Justice will ask a U.S. court to dismiss all charges against the bank. The agreement states that there is no evidence or allegation that Wells Fargo's AML program is deficient
• Wachovia Bank, N.A. has entered into a Consent Order with the Office of the Comptroller ofthe Currency (OCC), in which it has committed to take the necessary steps to address deficiencies and enhance its BSA and AML policies and procedures related to foreign correspondent banking activities. Wachovia has also agreed to pay the OCC a civil money penalty of $50 million.
• Wachovia Bank, N.A. has also agreed to a Consent to the Assessment of Civil Money Penalty with the Financial Crimes Enforcement Network of the United States Department of Treasury (FinCEN). The $110 million penalty imposed by FinCEN will be satisfied by the $110 million forfeiture made to the Department of Justice.

The focus of these investigations was primarily in the GFITS division of Wachovia Bank from 2004 to 2007, well before Wells Fargo acquired Wachovia at the end of 2008. By early 2008, Wachovia Bank had exited all relationships with foreign money exchange houses. Wachovia Bank has fully cooperated with the Federal Government throughout the course of its investigation. That cooperation has continued since the merger of Wachovia and Wells Fargo.

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Wachovia has made significant enhancements to its AML and BSA compliance program that have strengthened its ability to guard against unlawful use of its system by wrongdoers. Over the past three years, Wachovia, and since January 2009, Wachovia as part of Wells Fargo, has invested $42 million evaluating and improving the BSA/AML compliance program. Since its acquisition by Wells Fargo, Wachovia has also been subject to Wells Fargo's BSA/AML compliance program and compliance and operational risk management, oversight and independent testing. The company continues to dedicate significant resources to this area, and is committed to maintaining compliant and effective BSA/AML practices and policies and a strong compliance culture across the integrated organization. In addition to this matter, Wachovia Bank, N.A. and the Department of Justice have resolved the remaining outstanding issues related to relationships Wachovia had from 2003 to 2008 with payment processors for telemarketing companies, including Payment Processing Center, LLC. Wachovia reached a settlement with the OCC on 2008 and has paid restitution to consumers who may have been subject to fraud by the telemarketers.

These settlements complete all pending bank-specific investigations of Wachovia's correspondent banking business.

Wachovia Bank, N.A., is a subsidiary of Wells Fargo & Company.

Wells Fargo & Company is a diversified financial services company with $1.2 trillion in assets, providing banking, insurance, investments, mortgage and consumer finance through more than 10,000 stoi'es and 12,000 ATMs and the internet (wellsfargo.com) across North America and internationally.

10 O filed 5/10/2010-Wells

Legal Actions occurring in first quarter 2010.

Auction Rate Securities Plaintiffs have appealed the January 26, 2010, dismissal of two civil class actions pending against Wells Fargo affiliated defendants.

Casa de Cambio Investigation In March 2010, Wachovia Bank, N.A. entered into a Deferred Prosecution Agreement with the U.S. Attorney's Office for the Southern District of Florida and U.S. Department of Justice, and entered into separate consent agreements with the Office of the Comptroller of the Currency and the Financial Crimes Enforcement Network to resolve those agencies' investigations into these matters, the substance of which occurred prior to Wachovia's acquisition by Wells Fargo & Company. The Deferred Prosecution Agreement was approved on March 17, 2010, by the U.S. District Court for the Southern District of Florida. Wachovia Bank, N.A. paid a total of $160 million to satisfy the forfeitures and penalties provided for in the various agreements and further agreed to continue certain remediation and compliance efforts. Settlement of this matter was previously described in a Form 8-K filed on March 17, 2010.

ERISA Litigation On April 6, 2010, the U.S. District Court for the District of Minnesota certified a class of participants in Wells Fargo's 401(k) Plan in a case captioned Figas v. Wells Fargo & Company, et al. Figas purports to bring claims on behalf of participants who had assets in certain Wells Fargo affiliated funds from November 2, 2001, to September 22, 2009, alleging breach of fiduciary duty in connection with the offer of Wells Fargo affiliated funds as investment choices in the Plan.

Golden West and Related Litigation On May 3, 2010, the judge in the Southern District of New York issued an order granting Plaintiffs leave to amend the class action and other complaints pending in that court, and directing the parties to submit a schedule for the filing of the amended complaints and new motions to dismiss. This order terminates the motions to dismiss the prior complaints which had been pending.

In re Wells Fargo Mortgage-Backed Certificates Litigation and Mortgage Related Investigations This lawsuit is comprised of several securities law based putative class actions, consolidated in the U.S. District Court for the Northern District of California on July 16, 2009. The case is brought against several Wells Fargo mortgage-backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs allege that the offering documents contained untrue statements of material fact, or omitted to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The allegations are regarding the underwriting standards used in connection with the origination of the underlying mortgages, the maximum loan-to-value ratios used to qualify borrowers, and the appraisals of the properties underlying the mortgages. Motions to dismiss, filed on behalf of all defendants, were granted in part and denied in part by a court order entered on April 22, 2010. The plaintiffs were granted leave to amend some of their claims.

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Certain government entities are conducting investigations into the mortgage lending practices of various Wells Fargo affiliated entities, including whether borrowers were steered to more costly mortgage products. Wells Fargo intends to cooperate fully with these investigations.

LeNature's Inc. On March 15, 2010, the Mecklenburg County Superior Court entered an order allowing the hedge fund defendants to assert their tort claims in the New York state action. The holders of LeNature's Senior Subordinated Notes filed an amended complaint in the California action, and Wachovia has filed its demurrer to that complaint. The action filed by the trustee under the indenture for the Senior Subordinated Notes offering was dismissed by the U.S. District Court for the Western District of Pennsylvania on April 16,2010.

Municipal Derivatives Bid Practice Investigation Defendants' motion to dismiss the second consolidated amended complaint was denied by the U.S. District Court for the Southern District of New York on March 25, 2010. On April 26, 2010, the same court also denied motions to dismiss eleven related cases filed by municipalities in California.

Payment Processing Center On March 17, 2010, the U.S. District Court for the Southern District of Florida approved a Deferred Prosecution Agreement between the U.S. Department of Justice and Wachovia Bank, N.A., which resolved the Department of Justice's investigation into this matter. The Company believes all pending governmental investigations relating to this matter are now concluded.

10 Q filed 6/10/2010 -Wells

Legal Actions occurring in first quarter 2010 (Amended August 6,2010)

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2009 Form 10-K and our First Quarter Form 10-Q for events occurring in second quarter 2010.

Data Treasury Litigation On June 15, 2010, Wells Fargo entered into a confidential settlement agreement which settled all claims of Data Treasury against Wells Fargo and Wachovia. The estimated liability for this matter had been accrued for in previous quarters and the settlement did not have a material adverse effect on Wells Fargo's consolidated financial statements for the period ended June 30,2010.

Golden West and Related Litigation Amended complaints were filed in all the actions in May 2010 and renewed motions to dismiss have been filed in each case.

In Re Wells Fargo Mortgage-Backed Certificates Litigation On May 28, 2010, plaintiffs filed an amended consolidated complaint. On June 25,2010, Wells Fargo moved to dismiss the amended complaint On June 29,2010 and on July 15, 2010, two complaints, the first captioned The Charles Schwab Corporation vs. Merrill Lynch, Pierce, Fenner & Smith, Inc., et al., and the second captioned The Charles Schwab Corporation v. BNP Paribas Securities Corp., et al., were filed in the Superior Court for the State of California, San Francisco County against a number of defendants, including Wells Fargo Bank, N.A. and Wells Fargo Asset Securities Corporation. As against the Wells Fargo entities, the new cases assert opt out claims relating to the claims alleged in the Mortgage-Backed Certificates Litigation.

LeNature's Inc. On July 7, 2010, the demurrer to the California noteholder action was overruled. On May 10, 2010, the New York State Court granted the motion to dismiss two counts of the complaint and denied the motion to dismiss two other counts.

Municipal Derivatives Bid Practice Investigation In May 2010, four additional complaints were filed in California state courts by four additional California municipalities containing allegations virtually identical to the allegations ofthe eleven complaints previously filed by various California municipalities.

Municipal Derivatives Bid Practice Investigation In May 2010, four additional complaints were filed in California state courts by four additional California municipalities containing allegations virtually identical to the allegations ofthe eleven complaints previously filed by various California municipalities.

10-Q Filed November 5, 2010 Wells

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Legal Actions

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2009 Form 10-K and our 2010 First and Second Quarter Form 10-Q for events occurring in third quarter 2010.

Adelphia Litigation On September 21,2010, an agreement in principle was reached between the Adelphia Resolution Trust and all of the defendant banks to settle the remaining claims against the Banks. The agreement is subject to approval by the Court. A hearing on approval of the settlement is scheduled for November 18,2010.

ERISA Litigation On August 6,2010, an order was entered by the U.S. District Court for the Western District ofNorth Carolina dismissing, with prejudice, the plaintiffs' complaint in the In re Wachovia Corporation ERISA Litigation case. Plaintiffs have appealed. On October 18, 2010, an agreement in principle was reached to settle the Figas v. Wells Fargo & Company, et al. case. The agreement is subject to approval by the Court and an independent fiduciary.

Golden West and Related Litigation Two individual shareholder actions in South Carolina have been dismissed and the shareholders have appealed.

Municipal Derivatives Bid Practice Investigation On September 21, 2010 a complaint, captioned Active Retirement Community, Inc. d/b/a Jefferson's Ferry v. Bank of America, N.A., et al, was filed in the U.S. District Court for the Eastern District of New York. The case asserts claims against Wachovia Bank, N.A. and Wells Fargo & Company that are substantially similar to other previously disclosed civil cases.

Order of Posting Litigation A series of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the Banks post debit card transactions to consumer deposit accounts. There are currently twelve such cases pending against Wells

Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), all but three of which have been consolidated in multi-district litigation proceedings in the U.S. District Court for the Southern District of Florida. On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., one ofthe three cases that were not consolidated in the multi-district proceedings, enjoining the Bank's use ofthe high to low posting method for debit card transactions with respect to the plaintiff class of California depositors, directing that the Bank establish a different posting methodology and ordering remediation in the approximate amount of $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. Wells Fargo will appeal.

In Re Wells Fargo Mortgage-Backed Certificates Litigation and Related Mortgage Litigation and Investigations On October 5, 2010, Wells Fargo's motion to dismiss the amended complaint in the Northern District of California was granted in part and denied in part

On October IS, 2010, three actions, captioned Federal Home Loan Bank of Chicago v. Banc of America Funding Corporation, et al. (filed in the Cook County Circuit Court, State oflllinois); Federal Home Loan Bank of Chicago v. Banc of America Securities LLC, et al. (filed in the Superior Court of the State of California for the County of Los Angeles); and Federal Home Loan Bank of Indianapolis v. Banc of America Mortgage America Securities, Inc., etal. (filed in the Superior Court ofthe State of Indiana for the County of Marion), named multiple defendants, described as issuers/depositors, and underwriters/dealers of private label mortgage-backed securities, in an action asserting claims that defendants used false and misleading statements in offering documents for the sale of such securities. The Bank of Chicago asserts that it purchased approximately $4.2 billion and the Bank of Indianapolis asserts that it purchased nearly $3 billion of such securities from the defendants. Plaintiffs seek rescission ofthe sales and damages understate securities and other laws and Section 11 ofthe Securities Act of 1933. Wells Fargo Asset Securities Corporation, Wells Fargo Bank, N.A. and Wells Fargo & Company were named among the defendants. In addition, various class actions have been filed against Wells Fargo Bank, N.A. and other banks challenging aspects ofthe foreclosure process, alleging, among other things, that banks improperly split notes and mortgages, use inappropriate foreclosure plaintiffs, misapply payments in violation ofthe terms of notes and mortgages, and submit fraudulent and inaccurate foreclosure affidavits. Wells Fargo Bank, N.A. has received inquiries from state Attorneys General, other state and federal regulators and officers, and legislative committees into its mortgage foreclosure practices and procedures. Wells Fargo is appropriately responding to these inquiries as well as internally reviewing its practices and procedures. At present, Wells Fargo cannot estimate the possible loss or range of loss with respect to the allegations concerning the mortgage related litigation and investigations described above.

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Outlook In accordance with ASC 450 (formerly FAS 5), Wells Fargo has established estimated liabilities for litigation matters with loss contingencies that are both probable and estimable. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess ofthe estimated liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial statements. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's consolidated financial statements for any particular period.

Wells Fargo & Company 10-K for fiscal year 12/31/2010 issued 2/25/2011 ITEM 3.    LEGAL PROCEEDINGS

Information in response to this Item 3 can be found in the 2010 Annual Report to Stockholders under "Financial Statements -Notes to Financial Statements - Note 14 (Guarantees and Legal Actions)." That information is incorporated into this item by reference.

Legal Actions

Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups. Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each case, other than matters we describe as having settled. Reserves are established for

legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

ADELPHIA LITIGATION Wachovia Bank, N.A. and Wachovia Capital Markets, LLC, along with numerous other financial institutions were defendants in a case pending in the United States District Court for the Southern District of New York related to the bankruptcy of Adelphia Communications Corporation (Adelphia). The plaintiff was the Adelphia Recovery Trust. The complaint asserted claims against the defendants under state law, bankruptcy law and the Bank Holding Company Act and sought equitable relief and an unspecified amount of compensatory and punitive damages. On September 21, 2010, an agreement was reached between the Adelphia Resolution Trust and all of the defendant banks to settle the claims against the banks for the total amount of $175 million. Wachovia's share was a fraction of that amount and was not material to Wells Fargo. The settlement has been approved by the Court and the case is concluded.

ELAVON LITIGATION On January 16, 2009, Elavon, Inc., a provider of merchant processing services, filed a complaint in the U.S. District Court for the Northern District of Georgia against Wachovia Corporation, Wachovia Bank, N.A., Wells Fargo & Company, and Wells Fargo Bank, N.A. The complaint seeks equitable relief, including specific performance, and damages for Wachovia Bank's allegedly wrongful termination of its merchant referral contract with Elavon. Discovery has been completed and both parties have moved for summary judgment on various claims or defenses.

ERISA LITIGATION A purported class action, captioned In re Wachovia Corporation ERISA Litigation , was pending against Wachovia Corporation, its board of directors and certain senior officers, in the U.S. District Court for the Western District ofNorth Carolina. The case was filed on behalf of employees of Wachovia Corporation and its affiliates who held shares of Wachovia Corporation common stock in their Wachovia Savings Plan accounts. On August 6, 2010, an order was entered by the Court dismissing, with prejudice, the plaintiffs' complaint. The dismissal was appealed. On December 8, 2010, an agreement in principle was reached to settle the case for $12.35 million. The settlement is subject to Court approval. A hearing on approval ofthe settlement has not yet been scheduled.

On April 6, 2010, the U.S. District Court for the District of Minnesota certified a class of participants in Wells Fargo's 401(k) Plan in a case captioned Figas v. Wells Fargo & Company, et al. Figas purports to bring claims on behalf of

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participants who had assets in certain Wells Fargo affiliated funds from November 2, 2001, to September 22, 2009, alleging breach of fiduciary duty in connection with the offer of Wells Fargo affiliated funds as investment choices in the Plan. On October 18, 2010, an agreement in principle was reached to settle the Figas v. Wells Fargo & Company, et al. case. The agreement is subject to approval by the Court and an independent fiduciary.

ILLINOIS ATTORNEY GENERAL LITIGATION On July 31, 2009, the Attorney General for the State oflllinois filed a civil lawsuit against Wells Fargo & Company, Wells Fargo Bank, N.A. and Wells Fargo Financial Illinois, Inc. in the Circuit Court for Cook County, Illinois. The Illinois Attorney General alleges that the Wells Fargo defendants engaged in illegal discrimination by "reverse redlining" and by steering African-American and Latino customers into high cost, subprime mortgage loans while other borrowers with similar incomes received lower cost mortgages. Illinois also alleges that Wells Fargo Financial Illinois, Jnc. misled Illinois customers about the terms of mortgage loans. Illinois' complaint against all Wells Fargo defendants is based on alleged violation of the Illinois Human Rights Act and the Illinois Fairness in Lending Act. The complaint also alleges that Wells Fargo Financial Illinois, Inc. violated the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois

Uniform Deceptive Trade Practices Act. Illinois' complaint seeks an injunction against the defendants' alleged violation of these Illinois statutes, restitution to consumers and civil money penalties. On October 9, 2009, the Company filed a motion to dismiss Illinois' complaint, and is awaiting the Court's ruling.

IN RE WELLS FARGO MORTGAGE-BACKED CERTIFICATES LITIGATION This lawsuit is comprised of several securities law based putative class actions, consolidated in the U.S. District Court for the Northern District of California on July 16, 2009. The case is brought against several Wells Fargo mortgage-backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs allege that the offering documents contain untrue statements of material fact, or omit to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The allegations are regarding the underwriting standards used in connection with the

origination of the underlying mortgages, the maximum loan-to-value ratios used to qualify borrowers, and the appraisals of the properties underlying the mortgages. Motions to dismiss, filed on behalf of all defendants, were granted in part and denied in part by a court order entered on April 22, 2010. The plaintiffs were granted leave to amend some of their claims. On May 28, 2010, plaintiffs filed an amended consolidated complaint. On June 25, 2010, Wells Fargo moved to dismiss the amended complaint. On October 5, 2010, Wells Fargo's motion to dismiss the amended complaint was granted in part and denied in part.

On June 29, 2010 and on July 15, 2010, two complaints, the first captioned The Charles Schwab Corporation vs. Merrill Lynch, Pierce, Fenner & Smith, Inc., el al., and the second captioned The Charles Schwab Corporation v. BNP Paribas Securities Corp., et al, were filed in the Superior Court for the State of California, San Francisco County against a number of defendants, including Wells Fargo Bank, N.A. and Wells Fargo Asset Securities Corporation. As against the Wells Fargo entities, the new cases assert opt out claims relating to the claims alleged in the Mortgage-Backed Certificates Litigation.

On October 15, 2010, three actions, captioned Federal Nome Loan Bank of Chicago v. Banc of America Funding Corporation, et al. (filed in the Cook County Circuit Court, State oflllinois); Federal Home Loan Bank of Chicago v. Banc of America Securities LLC, et al. (filed in the Superior Court ofthe State of California for the County of Los Angeles); and Federal Home Loan Bank of Indianapolis v. Banc of America Mortgage America Securities, Inc., et al. (filed in the Superior Court of the State of Indiana for the County of Marion), named multiple defendants, described as issuers/depositors, and underwriters/dealers of private label mortgage-backed securities, in an action asserting claims that defendants used false and misleading statements in offering documents for the sale of such securities. The Bank of Chicago asserts that it purchased approximately $4.2 billion and the Bank of Indianapolis asserts that it purchased nearly $3 billion of such securities from the defendants. Plaintiffs seek rescission ofthe sales and damages under state securities and other laws and Section 11 ofthe Securities Act of 1933. Wells Fargo Asset Securities Corporation, Wells Fargo Bank, N.A. and Wells Fargo & Company were named among the defendants.

INTERCHANGE LITIGATION Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation arc named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and in individual actions brought by individual merchants with regard to the interchange fees associated with Visa and MasterCard payment card transactions. These actions have been consolidated in the United States District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies are named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are

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anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation.

LE-NATURE'S, INC. Wachovia Bank, N.A. was the administrative agent on a $285 million credit facility extended to LeNature's, Inc. in September 2006, of which approximately $270 million was syndicated to other lenders by Wachovia Capital Markets, LLC. Le-Nature's was the subject of a Chapter 7 bankruptcy petition, which was converted to a Chapter 11 bankruptcy petition in November 2006 in the U.S. Bankruptcy Court for the Western District of Pennsylvania. The filing was precipitated by an apparent fraud relating to Le-Nature's financial condition. Wachovia Capital Markets, LLC and/or Wachovia Bank, N.A. are named as defendants in a number of lawsuits including the following: (1) a case filed in the New York State Supreme Court for the County of Manhattan by hedge fund purchasers ofthe bank debt seeking to recover from Wachovia on various theories of liability (On May 10, 2010, the Court granted Wachovia's motion to dismiss two counts of the complaint and denied the motion to dismiss two other counts); (2) a case filed on April 28, 2008, by holders of a LeNature's Senior Subordinated Notes offering underwritten by Wachovia Capital Markets in June 2003, alleging various fraud claims, pending in the Superior Court of the State of California for the County of Los Angeles; and (3) an action filed on October 30, 2008, on behalf of the liquidation trust created in Le-Nature's bankruptcy against a number of individuals and entities, including Wachovia Capital Markets, LLC and Wachovia Bank, N.A., in the U.S. District Court for the Western District of Pennsylvania, asserting a variety of claims on behalf of the bankruptcy estate. On September 16, 2009, the Court dismissed a cause of action for breach of fiduciary duty but denied the remainder of Wachovia's motion to dismiss. Discovery is underway in these matters.

MERGER RELATED LITIGATION On October 4, 2008, Citigroup, Inc. purported to commence an action in the Supreme Court ofthe State of New York for the County of Manhattan, captioned Citigroup, Inc. v. Wachovia Corp., et al, naming as defendants Wachovia Corporation, Wells Fargo & Company, and the directors of both companies. The complaint alleged that Wachovia breached an exclusivity agreement with Citigroup, which by its terms was to expire on October 6, 2008, by entering into negotiations and an eventual acquisition agreement with Wells Fargo, and that Wells Fargo and the individual defendants had tortiously interfered with the same contract. On October 4, 2008, Wachovia filed a complaint in the U.S. District Court for the Southern District of New York, captioned Wachovia Corp. v. Citigroup, Inc. The complaint sought declaratory and injunctive relief, stating that the Wells Fargo merger agreement is valid, proper, and not prohibited by the exclusivity agreement. On March 20, 2009, the

U.S. District Court for the Southern District of New York remanded the Citigroup, Inc. v. Wachovia Corp., et al case to the Supreme Court of the State of New York for the County of Manhattan, but retained jurisdiction over the Wachovia v. Citigroup case. These cases were settled by Wells Fargo's payment of $100 million to Citigroup in November, 2010. On November 23,2010, both cases were dismissed at the request ofthe parties.

MORTGAGE FORECLOSURE DOCUMENT LITIGATION Seven purported class actions and several individual borrower actions related to foreclosure document practices were filed in late 2010 and in early 2011 against Wells Fargo Bank, N.A. in its status as mortgage servicer. The cases have been brought in state and federal courts. Ofthe individual borrower cases, the majority are filed in state courts in California and Ohio. Two other class actions were filed against Wells Fargo Bank, but Wells Fargo is named as a defendant as corporate trustee of the mortgage trust and not as a mortgage servicer. The actions generally claim that Wells Fargo submitted "fraudulent" or "untruthful" affidavits or other foreclosure documents to courts to support foreclosures filed in the state. Specifically, plaintiffs allege that Wells Fargo signers did not have personal knowledge ofthe facts alleged in the documents and did not verify the information in the documents ultimately filed with courts to foreclose. Plaintiffs attempt to state legal claims ranging from wrongful foreclosure to deceptive practices to fraud and seek relief ranging from cancellation of notes and mortgages to money damages.

On December 20, 2010, the New Jersey Supreme Court, the New Jersey Administrative Office ofthe Courts, and the Superior Court of New Jersey for Mercer County jointly began an action against Wells Fargo and other large mortgage servicing companies in state court in New Jersey. This action seeks to enjoin pending foreclosures and sales and to require servicers to certify and prove compliance with new foreclosure procedures in New Jersey, or be held in contempt of court. Wells Fargo has filed its initial response to the New Jersey action.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Several government agencies are conducting investigations or examinations of various mortgage related practices of Wells Fargo Bank. The investigations relate to two main topics, (1) whether Wells Fargo may have violated fair lending or other laws and regulations relating to mortgage origination practices; and (2) whether Wells Fargo's practices and procedures relating to mortgage foreclosure affidavits and documents relating to the chain of title to notes and mortgage documents are adequate. With regard to the investigations into foreclosure practices, it is likely that one or more of the government agencies will initiate some type of enforcement action

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againsl Wells Fargo, which may include civil money penalties. Wells Fargo continues to provide information requested by the various agencies.

MUNICIPAL DERIVATIVES BID PRACTICES INVESTIGATION The Department of Justice (DOJ) and the SEC, beginning in November 2006, have been requesting information from a number of financial institutions, including Wachovia Bank, N.A.'s municipal derivatives group, generally with regard to competitive bid practices in the municipal derivative markets. In connection with these inquiries, Wachovia Bank has received subpoenas from both the DOJ and SEC as well as requests from other regulatory agencies and several states seeking documents and information. The DOJ and the SEC have advised Wachovia Bank that they believe certain of its employees engaged in improper conduct in conjunction with certain competitively bid transactions and, in November 2007, the DOJ notified two Wachovia Bank employees, both of whom have since been terminated, that they are regarded as targets of the DOJ's investigation. Wachovia Bank has been cooperating fully with the government investigations.

Wachovia Bank, along with a number of other banks and financial services companies, has also been named as a defendant in a number of substantially identical purported class actions filed in various state and federal courts by various municipalities alleging they have been damaged by the activity which is the subject ofthe government investigations. These cases are now consolidated under the caption In re Municipal Derivatives Antitrust Litigation in the U.S. District Court for the Southern District of New York. On April 30, 2009, the Court granted a motion filed by Wachovia and certain other defendants to dismiss the Consolidated Class Action Complaint and dismissed all claims against Wachovia, with leave to replead. A Second Consolidated Amended Complaint was filed on June 18,2009, and a motion to dismiss that complaint was denied. A number of putative class and individual actions have also been brought in various courts, including complaints which were amended with new allegations and the addition of Wells I-argo & Co. as a defendant. These cases all have allegations substantially similar to those in the consolidated class complaint. All ofthe cases are being coordinated in the U.S. District Court for the Southern District of New York.

ORDER OF POSTING LITIGATION A series of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the Banks post debit card transactions to consumer deposit accounts. There are currently 12 such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), all but three of which have been consolidated in multi-district litigation proceedings in the U.S. District Court for the Southern District of Florida. On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., one ofthe three cases that were not consolidated in the multi-district proceedings, enjoining the Bank's use of the high to low posting method for debit card transactions with respect to the plaintiff class of California depositors, directing that the Bank establish a different posting methodology and ordering remediation in the approximate amount of $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. On October 28, 2010, Wells Fargo appealed to the U.S. Court of Appeals for the Ninth Circuit.

WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION

A purported securities class action, Lipetz v. Wachovia Corporation, et al., was filed on July 7, 2008, in the U.S. District Court for the Southern District of New York alleging violations of Sections 10 and 20 of the Securities Exchange Act of 1934. An amended complaint was filed on December 15, 2008. Among other allegations, plaintiffs allege Wachovia's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. mortgage portfolio, Wachovia's exposure to other mortgage related products such as CDOs, control issues and auction rate securities. On March 19, 2009, the defendants filed a motion to dismiss the amended class action complaint in the Lipetz case, which has now been re-captioned as In re Wachovia Equity Securities Litigation. There arc four additional cases (not class actions) containing allegations similar to the allegations in the In re Wachovia Equity Securities Litigation captioned Stichting Pensioenfonds ABP v. Wachovia Corp. et al, FC Holdings AB, et al. v. Wachovia Corp., et al, Deka Investment GmbH v. Wachovia Corp. et al. andForsta AP-Fonden v. Wachovia Corp., et al, respectively, which were filed in the U.S. District Court for the Southern District of New York, and there are a number of other similar actions filed in state courts in North Carolina and South Carolina by individual shareholders. Two of the individual shareholder actions in South Carolina have been dismissed and the shareholders have appealed.

After a number of procedural motions, three purported class action cases alleging violations of Sections 11, 12, and 15 of the Securities Act of 1933 as a result of allegedly misleading disclosures relating to the Golden West mortgage portfolio in connection with Wachovia's issuance of various preferred securities and bonds were transferred to the U.S. District Court for the Southern District of New York. A consolidated class action complaint was filed on September 4, 2009, and the matter is now captioned In Re Wachovia Preferred Securities and Bond/Notes Litigation. On September 29, 2009, a non-class action case containing allegations similar to the allegations in the In re Wachovia Preferred Securities and Bond/Notes litigation, and captioned City of Livonia Employees' Retirement System v. Wachovia Corp et al, was filed in the Southern District of New York. On May 3, 2010, the judge in the Southern District of New York issued an order granting Plaintiffs leave to

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amend the class action and other complaints pending in that court, and directing the parties to submit a schedule for the filing of the amended complaints and new motions to dismiss. This order terminates the motions to dismiss the prior complaints which had been pending. Amended complaints were filed in all the actions in May 2010 and renewed motions to dismiss have been filed in each case.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end ofthe range of potential litigation losses in excess ofthe Company's best estimates within the range of potential losses used in establishing the total litigation liability was $1.2 billion as of December 31, 2010. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Note 11: Leffal Actions 10-O May fi. 2011 Wftlls

Note 11: Legal Actions      

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2010 Form 10-K for events occurring in first quarter 2011.

ERISA LITIGATION A hearing on final approval ofthe settlement ofthe In re Wachovia Corporation ERISA Litigation is scheduled before the U.S. District Court for the Western District ofNorth Carolina on August 25, 2011.

A hearing on final approval of the settlement of Figas v. Wells Fargo & Company, et al. is scheduled before the U.S. District Court for the District of Minnesota on July 21,2011.

IN RE WELLS FARGO MORTGAGE-BACKED CERTIFICATES LITIGATION A hearing on plaintiffs' motion for class certification has been scheduled for June 23,2011.

MORTGAGE FORECLOSURE DOCUMENT LITIGATION On March 29, 2011, Wells Fargo, along with other mortgage servicers, entered into a stipulation in connection with the action commenced by the New Jersey Supreme Court, the New Jersey Administrative Office of the Courts and the Superior Court of New Jersey for Mercer County providing for the appointment of a special master to review mortgage foreclosure affidavit processes.

MORTGAGE RELATED REGULATORY INVESTIGATIONS On March 31, 2011, Wells Fargo Bank, N.A. (the Bank) entered into a Consent Order with the Office of the Comptroller ofthe Currency (OCC) under which the OCC made certain findings in connection with the Bank's foreclosure practices, which findings the Bank neither admitted nor denied. The Bank agreed in the consent order, among other things, and subject to the OCC's approval (i) to establish a Compliance Committee to monitor and coordinate the Bank's compliance with the Consent Order; (ii) to create a comprehensive Action Plan describing the actions needed to achieve compliance with the Consent Order; (iii) to submit an acceptable compliance plan to ensure that its mortgage servicing and foreclosure operations, including loss mitigation and loan modification, comply with legal requirements, OCC supervisory guidance, and the terms of the Consent Order; (iv) to submit a plan to ensure appropriate controls and oversight of the Bank's activities with respect to the Mortgage Electronic Registration System; (v) to take certain other actions with respect to its mortgage servicing and foreclosure operations; and (vi) to conduct a foreclosure review through an independent consultant on certain residential foreclosure actions. On April 4, 2011, Wells Fargo & Company (Wells Fargo) entered into a Consent Order with the Board of Governors ofthe Federal Reserve pursuant to which Wells Fargo agreed, among other things, (i) to ensure the Bank's compliance with the OCC Consent Order; (ii) to develop for the Federal Reserve's approval a written plan to enhance its Enterprise Risk Management with respect to oversight of residential mortgage loan servicing; (iii) to develop for the Federal Reserve's approval a written plan to enhance its enterprise-wide compliance program with respect to oversight of residential mortgage loan

servicing; and (iv) to develop for the Federal Reserve's approval a written plan to enhance the internal audit program with respect to residential mortgage loan servicing. Neither Consent Order provided for civil money penalties but both government entities reserved the ability to seek such penalties and Wells Fargo reserved the ability to oppose the imposition of such penalties. In addition, as previously disclosed in our 2010 Form 10-K, other government agencies, including state attorneys general and the U.S. Department of Justice, continue to investigate various mortgage related practices ofthe Bank

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and other major mortgage servicers. Wells Fargo continues to cooperate with these investigations. These investigations could result in material fines, penalties, equitable remedies (including requiring default servicing or other process changes), or other enforcement actions, and result in significant legal costs in responding to governmental investigations and additional litigation.

WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION On March 31, 2011, the U.S. District Court for the Southern District of New York entered a Decision and Order granting Wachovia's motions to dismiss the In re Wachovia Equity Securities Litigation and the Stichting Pensioenfonds ABP, FC Holdings AB, Dcka Investment GmbH and Forsta AP-Fonden cases. By the same Decision and Order, the Court granted in part and denied in part Wachovia's motion to dismiss the In re Wachovia Preferred Securities and Bond/Notes Litigation , allowing that case to go forward after limiting the number of offerings at issue.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end of the range of potential litigation losses in excess of the Company's best estimates within the range of potential losses used in establishing the total litigation liability was $1.7 billion as of March 31, 2011. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Wells Fargo & Company Note 11: Legal Actions As Presented in August 5, 2011 10-Q

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2010 Fonn 10-K, and Part II, Item 1 (Legal Proceedings) of our 2011 first quarter Quarterly Report on Form 10-Q for events occurring in second quarter 2011.

ELAVON LITIGATION On May 23, 2011, the Court entered an order granting plaintiffs motion for partial summary judgment and denying Wells Fargo's motion for partial summary judgment, ruling that Wells Fargo's termination ofthe contract at issue was invalid and dismissing several of Wells Fargo's affirmative defenses. The Court has set a trial date of the remaining issues for September 21, 2011.

ERISA LITIGATION The U.S. District Court for the District of Minnesota is considering final approval of the $17.5 million settlement in Figas v. Wells Fargo & Company, et al.

IN RE WELLS FARGO MORTGAGE-BACKED CERTIFICATES LITIGATION On May 27, 2011, Wells Fargo and the plaintiffs agreed to settle the matter captioned In re Wells Fargo Mortgage-Backed Securities Litigation for $125 million. On July 26, 2011, the Court entered an order preliminarily approving the settlement.

On April 20, 2011, a case captioned Federal Home. Loan of Boston v. Ally Financial, Inc., et al., was filed in the Superior Court of the Commonwealth of Massachusetts for the County of Suffolk. The case names, among a large number of parties, Wells Fargo & Company, Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, National Association as parties and contains allegations substantially similar to the cases filed by the other Federal Home Loan Banks.

On April 28, 2011, a case captioned The Union Central Life Insurance Company, et al. v. Credit Suisse First Boston Securities Corp., et al., was filed in the U.S. District Court for the Southern District of New York. Among other defendants, it names Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, National Association. The case asserts various state law fraud claims and claims for violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of three insurance companies, relating to offerings of mortgage-backed securities from 2005 through 2007.

In addition, there are other cases involving other issuers of mortgage-backed certificates where Wells Fargo may have indemnity obligations because the pools of mortgages backing the certificates contain mortgages originated by Wells Fargo.

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MORTGAGE RELATED REGULATORY INVESTIGATIONS On March 31, 2011, Wells Fargo Bank, N.A. (the Bank) entered into a Consent Order with the Office of the Comptroller of the Currency (OCC) under which the OCC made certain findings in connection with the Bank's foreclosure practices, which findings the Bank neither admitted nor denied. The Bank agreed in the consent order, among other things, and subject to the OCC's approval (i) to establish a Compliance Committee to monitor and coordinate the Bank's compliance with the Consent Order;

1. to create a comprehensive Action Plan describing the actions needed to achieve compliance with the Consent Order;
2. to submit an acceptable compliance plan to ensure that its mortgage servicing and foreclosure operations, including loss mitigation and loan modification, comply with legal requirements, OCC supervisory guidance, and the terms ofthe Consent Order; (iv) to submit a plan to ensure appropriate controls and oversight of the Bank's activities with respect to the Mortgage Electronic Registration System; (v)to take certain other actions with respect to its mortgage servicing and foreclosure operations; and (vi) to conduct a foreclosure review through an independent consultant on certain residential foreclosure actions. On April 4, 2011, Wells Fargo & Company (Wells Fargo) entered into a Consent Order with the Board of Governors of the Federal Reserve pursuant to which Wells Fargo agreed, among other things, (i) to ensure the Bank's compliance with the OCC Consent Order; (ii) to develop for the Federal Reserve's approval a written plan to enhance its Enterprise Risk Management with respect to oversight of residential mortgage loan servicing; (iii) to develop for the Federal Reserve's approval a written plan to enhance its enterprise-wide compliance program with respect to oversight of residential mortgage loan servicing; and (iv) to develop for the Federal Reserve's approval a written plan to enhance the internal audit program with respect to residential mortgage loan servicing. Neither Consent Order provided for civil money penalties but both government entities reserved the ability to seek such penalties and Wells Fargo reserved the ability to oppose the imposition of such penalties.

On July 20, 2011, Wells Fargo & Company and Wells Fargo Financial, Inc. entered into an Order to Cease and Desist and Order of Assessment of a Civil Money Penalty Issued Upon Consent (the "Order") with the Board of Governors of the Federal Reserve System (FRB) which resolved an investigation of Wells Fargo Financial's mortgage lending activities by the FRB. The Order provides, among other things, that (i) Wells Fargo shall submit to the FRB within 90 days of the Order a plan, acceptable to the FRB, for overseeing fraud prevention and detection and for compliance with certain federal and state laws applicable to unfair and deceptive practices and certain other laws applicable to mortgage lending; (ii) Wells Fargo shall submit to the FRB within 90 days of the Order a plan, acceptable to the FRB, for overseeing the implementation and modification of incentive compensation and performance management programs for sales, sales management and underwriting personnel with respect to mortgage lending within the Wells Fargo organization; (iii) Wells Fargo shall submit within 90 days ofthe Order a plan, acceptable to the FRB, for the remediation to borrowers who entered into loans with Wells Fargo Financial beginning January 1, 2004 through September 2008 where the loans were based on income documents that were altered or falsified by sales personnel; (iv) Wells Fargo shall submit within 90 days of the Order a plan, acceptable to the FRB, for the remediation to borrowers who received mortgage loans through Wells Fargo Financial at non-prime prices during the period from January 1, 2006 through September 2008 but whose mortgage loans may have qualified for prime pricing. In addition to these provisions to submit plans for compliance and compensation changes and for remediation payments to certain Wells Fargo Financial borrowers, the Order imposes a civil money penalty of $85 million on Wells Fargo.

Other government agencies, including state attorneys general and the U.S. Department of Justice, continue to investigate various mortgage related practices of the Bank. These investigations could result in material fines, penalties, equitable remedies (including requiring default servicing or other process changes), or other enforcement actions, and result in significant legal costs in responding to governmental investigations and additional litigation.

WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION The plaintiffs in the In re Wachovia Equity Securities Litigation and the Stichting Pensioenfords ABP, FC Holdings AB, Deka Investments GmbH and Forsta AP-Fonden cases have appealed the March 31, 2011 Decision and Order dismissing their cases.

Wells Fargo and the plaintiffs have agreed in principle to settle the In re Wachovia Preferred Securities and Bond/Notes Litigation for $590 million. The proposed settlement is subject to Court approval. The proposed settlement amount has been reflected in Wells Fargo's financial statements and will not have a material adverse effect on Wells Fargo's consolidated financial position.

OUTLOOK The Company establishes a liability for contingent litigation losses when it determines that a potential loss is both probable and estimable. In addition, for significant matters, the Company determines a range of potential loss that is

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reasonably possible. The high end of the range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.6 billion as of June 30, 2011. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

WELLS FARGO & COMPANY FORM 10-Q

For the quarterly period ended September 30, 2011 Note 11: Legal Actions

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our Annual Report on Form 10-K for the year ended December 31, 2010 and in Part II, Item 1 (Legal Proceedings) of our Quarterly Reports on Form 10-Q for the periods ended March 31, 2011 and June 30,2011.

ELAVON LITIGATION The parties have agreed to settle the case. Payment will occur upon final documentation of the settlement. The settlement was accounted for in prior periods and will not have an adverse effect on the Company's consolidated financial position.

ERISA LITIGATION The U.S. District Court for the District of Minnesota granted final approval ofthe $17.5 million settlement in Figas v. Wells Fargo & Company, et al., on August 9, 2011.

The U. S. District Court for the Western District ofNorth Carolina granted final approval of the $12.4 million settlement in In re Wachovia Corporation ERISA Litigation on October 24,2011.

ILLINOIS ATTORNEY GENERAL LITIGATION On October 26, 2011 the Illinois Court issued an order granting, in part, and denying, in part, Wells Fargo's motion to dismiss. The Court dismissed Wells Fargo & Company as a party and dismissed Count III of the complaint, which alleged violations ofthe Illinois Fair Lending Act. The Court denied the remainder of the motion to dismiss.

IN RE WELLS FARGO MORTGAGE-BACKED CERTIFICATES LITIGATION On May 27,2011, Wells Fargo and the plaintiffs agreed to settle the matter captioned In re Wells Fargo Mortgage-Backed Securities Litigation for $125 million. On July 26, 2011, the Court entered an order preliminarily approving the settlement. The hearing on final approval ofthe settlement took place on October 27, 2011, and we await the Court's ruling. Some class members have opted out ofthe settlement, with the most significant being the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and American International Group, Inc.

On April 20, 2011, a case captioned Federal Home Loan of Boston v. Ally Financial, Inc., et al., was filed in the Superior Court of the Commonwealth of Massachusetts for the County of Suffolk. The case names, among a large number of parties, Wells Fargo & Company, Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, National Association as parties and contains allegations substantially similar to the cases filed by the other Federal Home Loan Banks.

On April 28,2011, a case captioned The Union Central Life Insurance Company, el al. v. Credit Suisse First Boston Secimties Corp., el al, was filed in the U.S. District Court for the Southern District of New York. Among other defendants, it names Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, National Association. The case asserts various state law fraud claims and claims for violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of three insurance companies, relating to offerings of mortgage-backed securities from 2005 through 2007.

In addition, there are other cases involving other issuers of mortgage-backed certificates where Wells Fargo may have indemnity obligations because the pools of mortgages backing the certificates contain mortgages originated by Wells Fargo.

LE-NATURE'S, INC. The Le-Nature's cases have settled for the total sum of $95 million. The settlement was accounted for in prior periods and payment did not have an adverse effect on Wells Fargo's consolidated financial position.

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MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request ofthe Securities and Exchange Commission in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages.

The actions have been consolidated in the United States District Court for the Central District of California. On July 26,2011, the District Court certified a class consisting of holders of notes issued by affiliates of Medical Capital Corporation and, on October 18, 2011, the Ninth Circuit Court of Appeals denied a petition seeking to appeal the class, certification order.

MUNICIPAL DERIVATIVES BID PRACTICES INVESTIGATION The plaintiffs and Wells Fargo agreed to settle the In re Municipal Derivatives Antitrust Litigation on October 21, 2011. The settlement is subject to court approval and, if approved, will result in Wells Fargo paying an amount equal to the greater of $37 million or 65% of the restitution amount of a future settlement, if any, with the various state Attorneys General of their investigation of Wachovia.

OUTLOOK The Company establishes a liability for contingent litigation losses when it determines that a potential loss is both probable and estimable. In addition, for significant matters, the Company determines a range of potential loss that is reasonably possible. The high end ofthe range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.6 billion as of September 30, 2011. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of t he established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position.

Note 15: Legal Actions (Annual Report 2011) - as presented in 10-K issued 2/28/2012

Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.

Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each case, other than matters we describe as having settled. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

ILLINOIS ATTORNEY GENERAL LITIGATION On July 31, 2009, the Attorney General for the State oflllinois filed a civil lawsuit against Wells Fargo & Company, Wells Fargo Bank, N.A. and Wells Fargo Financial Illinois, Inc. in the Circuit Court for Cook County, Illinois. The Illinois Attorney General alleges that the Wells Fargo defendants engaged in illegal discrimination by "reverse redlining" and by steering African-American and Latino customers into high cost, subprimc mortgage loans while other borrowers with similar incomes received lower cost mortgages. Illinois also alleges that Wells Fargo Financial Illinois, Inc. misled Illinois customers about the terms of mortgage loans. Illinois' complaint against all Wells Fargo defendants is based on alleged violation ofthe Illinois Human Rights Act and the Illinois Fairness in Lending Act. The complaint also alleges that Wells Fargo Financial Illinois, Inc. violated the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Uniform Deceptive Trade Practices Act. Illinois' complaint seeks an injunction against the defendants' alleged violation of these Illinois statutes, restitution to consumers and civil money penalties. On October 26, 2011, the Illinois Court issued an order granting, in part, and denying, in part, Wells Fargo's motion to dismiss. The Court dismissed Wells Fargo & Company as a party and dismissed Count III of the complaint, which alleged violations of the Illinois Fair Lending Act. The Court denied the remainder of the motion to dismiss.

INTERCHANGE LITIGATION Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation arc named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and in individual actions brought by individual merchants with regard to the interchange fees associated

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with Visa and MasterCard payment card transactions. These actions have been consolidated in the United States District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies are named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request of the Securities and Exchange Commission (SEC) in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. The actions have been consolidated in the United States District Court for the Central District of California. On July 26, 2011, the District Court certified a class consisting of holders of notes issued by affiliates of Medical Capital Corporation and, on October 18, 2011, the Ninth Circuit Court of Appeals denied a petition seeking to appeal the class certification order.

MORTGAGE-BACKED CERTIFICATES LITIGATION Several securities law based putative class actions were consolidated in the U.S. District Court for the Northern District of California on July 16, 2009, under the caption In re Wells Fargo Mortgage-Backed Certificates Litigation. The case asserted claims against several Wells Fargo mortgage backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs alleged that the offering documents contain untrue statements of material fact, or omit to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The parties agreed to settle the case on May 27, 2011, for $125 million. Final approval of the settlement was entered on November 14, 2011. Some class members opted out of the settlement, with the most significant being the Federal National Mortgage Association (Fannie Mac), the Federal Home Loan Mortgage Corporation (Freddie Mac) and American International Group, Inc.

On June 29, 2010, and on July 15, 2010, two complaints, the first captioned The Charles Schwab Corporation vs. Merrill Lynch, Pierce, Fenner & Smith, Inc., et al., and the second captioned The Charles Schwab Corporation v. BNP Paribas Securities Corp., et al., were filed in the Superior Court for the State of California, San Francisco County against a number of defendants, including Wells Fargo Bank, N.A. and Wells Fargo Asset Securities Corporation. As against the Wells Fargo entities, the new cases assert opt out claims relating to the claims alleged in the Mortgage-Backed Certificates Litigation.

On October 15, 2010, three actions, captioned Federal Home Loan Bank of Chicago v. Banc of America Funding Corporation, et al. (filed in the Cook County Circuit Court, State of Illinois); Federal Home Loan Bank of Chicago v. Banc of America Securities LLC, et al. (filed in the Superior Court of the State of California for the County of Los Angeles); and Federal Home Loan Bank of Indianapolis v. Banc of America Mortgage America Securities, Inc., et al. (filed in the Superior Court of the State of Indiana for the County of Marion), named multiple defendants, described as issuers/depositors, and underwriters/dealers of private label mortgage-backed securities, in an action asserting claims that defendants used false and misleading statements in offering documents for the sale of such securities. The Bank of Chicago asserts that it purchased approximately $4.2 billion and the Bank of Indianapolis asserts that it purchased nearly $3 billion of such securities from the defendants. Plaintiffs seek rescission of the sales and damages under state securities and other laws and Section 11 of the Securities Act of 1933. Wells Fargo Asset Securities Corporation, Wells Fargo Bank, N.A. and Wells Fargo & Company were named among the defendants.

On April 20, 2011, a case captioned Federal Home Loan of Boston v. Ally Financial, Inc., et al., was filed in the Superior Court of the Commonwealth of Massachusetts for the County of Suffolk. The case names, among a large number of parties, Wells Fargo & Company, Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N.A. as parties and contains allegations substantially similar to the cases filed by the other Federal Home Loan Banks.

On April 28, 2011, a case captioned The Union Central Life Insurance Company, ct al. v. Credit Suisse First Boston Securities Corp., et al., was filed in the U.S. District Court for the Southern District of New York. Among other defendants, it names Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N.A. The case asserts various

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state Jaw fraud claims and claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of three insurance companies, relating to offerings of mortgage-backed securities from 2005 through 2007.

In addition, there are other mortgage-related threatened or asserted claims by entities or investors where Wells Fargo may have indemnity or repurchase obligations, or as to which it has entered into agreements to toll the relevant statutes of limitations.

MORTGAGE FORECLOSURE DOCUMENT LITIGATION Eight purported class actions and several individual borrower actions related to foreclosure document practices were filed in late 2010 and in early 2011 against Wells Fargo Bank, N.A. in its status as mortgage servicer or corporate trustee of mortgage trusts. The cases have been brought in state and federal courts. Five of the class actions have been dismissed or otherwise resolved. Ofthe individual borrower cases, the majority are filed in state courts in California and Ohio. The actions generally claim that Wells Fargo submitted "fraudulent" or "untruthful" affidavits or other foreclosure documents to courts to support foreclosures filed in the state. Specifically, plaintiffs allege that Wells Fargo signers did not have personal knowledge of the facts alleged in the documents and did not verify the information in the documents ultimately filed with courts to foreclose. Plaintiffs attempt to state legal claims ranging from wrongful foreclosure to deceptive practices or fraud and seek relief ranging from cancellation of notes and mortgages to money damages.

MORTGAGE RELATED REGULATORY INVESTIGATIONS On April 13, 2011, Wells Fargo Bank, N.A. entered into a Consent Order with the OCC and Wells Fargo & Company entered into a Consent Order with the Board of Governors of the Federal Reserve System in connection with Wells Fargo's mortgage foreclosure practices. The Consent Orders require Wells Fargo to develop and implement certain compliance programs and to take other remedial steps, which Wells Fargo is doing. On February 9, 2012, the OCC and Federal Reserve announced that they had also imposed civil money penalties of $83 million and $85 million, respectively, related to the Consent Orders. These penalties will be satisfied through payments made under a separate simultaneous settlement in principle, announced on the same day, among the Department of Justice (DOJ), a task force of Attorneys General from 49 states, other government entities, Wells Fargo and four other mortgage servicers related to mortgage servicing and foreclosure practices. Under the settlement in principle, Wells Fargo agreed to the following commitments, comprised of three components totaling $5.3 billion:

Consumer Relief Program For qualified borrowers with financial hardship and a loan owned and serviced by Wells Fargo, a commitment to provide $3.4 billion in aggregate consumer relief and assistance programs, including expanded first and second mortgage modifications that broaden the use of principal reduction to help customers achieve affordability, an expanded short sale program that includes waivers of deficiency balances, forgiveness of arrearages for unemployed borrowers, cash-for-keys payments to borrowers who voluntarily vacate properties, and "anti-blight" provisions designed to reduce the impact on communities of vacant properties. As of December 31, 2011, the expected impact ofthe Consumer Relief Program was covered in our allowance for credit losses and in the nonaccretablc difference relating to our purchased credit-impaired residential mortgage portfolio.

Refinance Program For qualified borrowers with little or negative equity in their home and a loan owned and serviced by Wells Fargo, an expanded first-lien refinance program commitment estimated to provide $900 million of aggregate payment relief over the life of the refinanced loans. The Refinance Program will not result in any current-period charge as its impact will be recognized over a period of years in the form of lower interest income as qualified borrowers benefit from reduced interest rates on loans refinanced under the program.

Foreclosure Assistance Payment $1 billion paid directly to the federal government and the participating states for their use to address the impact of foreclosure challenges as they see fit and which may include direct payments to consumers. As of December 31,2011, we had fully accrued for the Foreclosure Assistance Payment.

Government agencies continue investigations or examinations of other mortgage related practices of Wells Fargo. The investigations relate lo two main topics, (1) whether Wells Fargo may have violated fair lending or other laws and regulations relating to mortgage origination practices; and (2) whether Wells Fargo properly disclosed in offering documents for its residential mortgage-backed securities the facts and risks associated with those securities. Wells Fargo has received a Wells notice from SEC staff relating to Wells Fargo's disclosures in mortgage-backed securities offering documents. Wells Fargo continues to provide information requested by the various agencies in connection with certain investigations.

MUNICIPAL DERIVATIVES BID PRACTICES INVESTIGATION The DOJ and the SEC, beginning in November 2006, requested information from a number of financial institutions, including Wachovia Bank, N.A.'s municipal derivatives group, with regard to competitive bid practices in the municipal derivative markets. Other state and federal

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agencies subsequently also began investigations of the same practices. On December 8, 2011, a global resolution of the Wachovia Bank investigations was announced by DOJ, the Internal Revenue Service, the SEC, the OCC and a group of State Attorneys General. The investigations were settled with Wachovia Bank agreeing to pay a total of approximately $148 million in penalties and remediation to the various agencies.

Wachovia Bank, along with a number of other banks and financial services companies, was named as a defendant in a number of substantially identical purported class actions and individual actions filed in various state and federal courts by various municipalities alleging they have been damaged by the activity which is the subject of the government investigations. These cases were either consolidated under the caption In re Municipal Derivatives Antitrust Litigation or administered jointly with that action in the U.S. District Court for the Southern District of New York. The plaintiffs and Wells Fargo agreed to settle the In re Municipal Derivatives Antitrust Litigation on October 21, 2011. The settlement is subject to court approval and, if finally approved, will result in Wells Fargo paying the amount of $37 million. The settlement was preliminarily approved on December 27, 2011.

ORDER OF POSTING LITIGATION A series of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the Banks post debit card transactions to consumer deposit accounts. There are currently several such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), most of which have been consolidated in multidistrict litigation proceedings in the U.S. District Court for the Southern District of Florida. The bank defendants moved to compel these cases to arbitration under recent Supreme Court authority. On November 22, 2011, the Judge denied the motion. The Banks have appealed the decision to the U.S. Court of Appeals for the Eleventh Circuit.

On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., a case that was not consolidated in the multi-district proceedings, enjoining the Bank's use ofthe high to low posting method for debit card transactions with respect to the plaintiff class of California depositors, directing that the Bank establish a different posting methodology and ordering remediation of approximately $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. On October 28, 2010, Wells Fargo appealed to the U.S. Court of Appeals for the Ninth Circuit.

WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION A securities class action, now captioned In re Wachovia Equity Securities Litigation, has been pending under various names since July 7, 2008, in the U.S. District Court for the Southern District of New York alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Among other allegations, plaintiffs allege Wachovia's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. mortgage portfolio, Wachovia's exposure to other mortgage related products such as CDOs, control issues and auction rate securities. There are four additional cases (not class actions) containing allegations similar to the allegations in the In re Wachovia Equity Securities Litigation captioned Stichting Pensioenfonds ABP v. Wachovia Corp. et al., FC Holdings AB, et al. v. Wachovia Corp., ct al., Deka Investment GmbH v. Wachovia Corp. et al. and Forsta AP-Fonden v. Wachovia Corp., et al. , respectively, which were filed in the U.S. District Court for the Southern District of New York. On March 31, 2011, the U.S. District Court for the Southern District of New York entered a Decision and Order granting Wachovia's motions to dismiss the In re Wachovia Equity Securities Litigation and the Stichting Pensioenfonds ABP, FC Holdings AB, Deka Investment GmbH and Forsta AP-Fonden cases. Plaintiffs and Wells Fargo have agreed to settle the Equity Securities Litigation for $75 million and on January 27, 2012, the Court entered an order preliminarily approving the settlement. A fairness hearing on final approval of the settlement is scheduled for June 1, 2012.

After a number of procedural motions, three purported class action cases alleging violations of Sections 11, 12, and 15 of the Securities Act of 1933 as a result of allegedly misleading disclosures relating to the Golden West mortgage portfolio in connection with Wachovia's issuance of various preferred securities and bonds were transferred to the U.S. District Court for the Southern District of New York. A consolidated class action complaint was filed on September 4, 2009, and the matter was captioned In Re Wachovia Preferred Securities and Bond/Notes Litigation. On March 31, 2011, by the same Decision and Order referenced above, the court also granted in part and denied in part Wachovia's motion to dismiss the In re Wachovia Preferred Securities and Bond/Notes Litigation , allowing that case to go forward after limiting the number of offerings at issue. Wells Fargo and the plaintiffs agreed to settle the In re Wachovia Preferred Securities and Bond/Notes Litigation for $590 million. The proposed settlement was preliminarily approved by the Court on August 9, 2011. The hearing on final approval was held on November 14, 2011, and a judgment approving class action settlements was filed on January 3, 2012.

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There are a number of other similar actions filed in state courts in North Carolina and South Carolina by individual shareholders. Two of the individual shareholder actions in South Carolina have been dismissed and the shareholders have appealed. On December 22, 2011, the dismissal of the Rivers v. Wachovia Corporation, et al. case, one ofthe two South Carolina actions, was affirmed by the U.S. Court of Appeals for the Fourth Circuit.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end ofthe range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.2 billion as of December 31, 2011. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Form 10-Q

WELLS FARGO & COMPANY/MN - WFC

Filed:- May 08, 2012 (period: March 31, 2012)

Note 11: Legal Actions

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2011 Form 10-K for events occurring in first quarter 2012.

MORTGAGE-BACKED CERTIFICATES LITIGATION On April 28,2011, a case captioned The Union Central Life Insurance Company, et al. v. Credit Suisse First Boston Securities Corp., et al., was filed in the U.S. District Court for the Southern District of New York. Among other defendants, it names Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N.A. The case asserts various state law fraud claims and claims for violations of Sections 10(b) and 20(a) ofthe Securities Exchange Act of 1934 on behalf of three insurance companies, relating to offerings of mortgage-backed securities from 2005 through 2007. In February 2012, the plaintiffs and Wells Fargo agreed to a settlement in principle of claims against the Wells Fargo entities and are in the process of documenting that settlement.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Government agencies continue investigations or examinations of other mortgage related practices of Wells Fargo. The investigations relate to two main topics: (1) whether Wells Fargo may have violated fair lending or other laws and regulations relating to mortgage origination practices; and (2) whether Wells Fargo properly disclosed in offering documents for its residential mortgage-backed securities the facts and risks associated with those securities. With respect to (1), the Department of Justice has advised Wells Fargo that it believes it can bring claims against Wells Fargo for monetary damages and civil penalties under fair lending laws. We believe such claims should not be brought and continue seeking to demonstrate to the Department of Justice our compliance with fair lending laws.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end of the range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $927 million as of March 31, 2012. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess ofthe established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

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Form 10-Q

WELLS FARGO & COMPANY/MN - WFC

Note 11: Legal Actions 10-Q Filed August 7, 2012 (period: June 30, 2012)

The following supplements our discussion of certain matters previously reported in Part 1, Item 3 (Legal Proceedings) of our 2011 Form 10-K, for events occurring in first quarter 2012, and Part II, Item 1 (Legal Proceedings) of our 2012 first quarter Quarterly Report on Form 10-Q for events occurring in second quarter 2012.

ILLINOIS ATTORNEY GENERAL LITIGATION On July 31, 2009, the Attorney General for the State oflllinois filed a civil lawsuit against Wells Fargo & Company, Wells Fargo Bank, N.A. and Wells Fargo Financial Illinois, Inc. in the Circuit Court for Cook County, Illinois. The Illinois Attorney General alleges that the Wells Fargo defendants engaged in discrimination by "reverse redlining" and by steering African-American and Latino customers into high cost, subprime mortgage loans while other borrowers with similar incomes received lower cost mortgages. Illinois also alleges that Wells Fargo Financial Illinois, Inc. misled Illinois customers about the terms of mortgage loans. Illinois' complaint against all Wells Fargo defendants is based on alleged violation of the Illinois Human Rights Act and the Illinois Fairness in Lending Act. On July 12, 2012, the case was resolved by entry of a Final Judgment and Consent Decree by the Circuit Court. The resolution calls for Illinois to receive $8 million in victim relief and certain community assistance as provided for in a settlement with the Civil Rights Division of the Department of Justice (DOJ) described in more detail in the Mortgage Related Regulatory Investigations section below.

INTERCHANGE LITIGATION Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation are named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and in individual actions brought by individual merchants with regard to the interchange fees associated with Visa and MasterCard payment card transactions. These actions have been consolidated in the United States District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies are named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13, 2012, Visa, MasterCard and the financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants to resolve the consolidated class actions and reached a separate settlement in principle of the consolidated individual actions. The proposed settlement payments for the consolidated class and individual actions are approximately $6.6 billion. The class settlement also provides for the distribution to class merchants of 10 basis points of default interchange across all credit rate categories for a period of eight consecutive months. The settlements are subject to further approval.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request ofthe Securities and Exchange Commission (SEC) in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. The actions have been consolidated in the United States District Court for the Central District of California. Wells Fargo has reached a conditional settlement in principle with the receiver for Medical Capital Corporation and its affiliates.

MORTGAGE-BACKED CERTIFICATES LITIGATION On April 28, 2011, a case captioned The Union Central Life Insurance Company, et al. v. Credit Suisse First Boston Securities Corp., et al., was filed in the U.S. District Court for the Southern District of New York. Among other defendants, it named Wells Fargo Asset Securities Corporation and Wells Fargo Bank, N.A. The case asserted various state law fraud claims and claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of three insurance companies, relating to offerings of mortgage-backed securities from 2005 through 2007. In June 2012, the plaintiffs and Wells Fargo entered into a final settlement agreement and the claims against Wells Fargo were voluntarily dismissed with prejudice.

On April 20, 2011, a case captioned Federal Home Loan of Boston v. Ally Financial, Inc., et al., was filed in the Superior Court of the Commonwealth of Massachusetts for the County of Suffolk. The complaint names, among a large

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number of defendants, Wells Fargo & Company, Wells Fargo Asset Securities Corporation, and Wells Fargo Bank, N.A., and contains allegations substantially similar to the cases filed by the other Federal Home Loan Banks. Plaintiffs seek rescission of the sales of private label mortgage-backed securities and damages under state securities and other laws. Defendants removed the case to the U. S. District Court for the District of Massachusetts.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Government agencies and authorities continue investigations or examinations of certain mortgage related practices of Wells Fargo. The current investigations relate to two main topics: (1) whether Wells Fargo complied with laws and regulations relating to mortgage origination practices, including laws and regulations related to fair lending and Federal Housing Administration insured residential home loans; and (2) whether Wells Fargo properly disclosed in offering documents for its residential mortgage-backed securities the facts and risks associated with those securities. On July 12, 2012, the DOJ filed a complaint captioned United States of America v. Wells Fargo Bank, N.A. in the U.S. District Court for the District of Columbia. The complaint alleged violations of the Fair Housing Act and the Equal Credit Opportunity Act (ECOA) with respect to Wells Fargo's residential mortgage lending operations during the period 2004 - 2008. Simultaneously with the filing of the complaint, a Consent Decree executed between the DOJ and Wells Fargo was filed providing for a consensual resolution ofthe complaint. In the Consent Decree, Wells Fargo denied that it had violated the Fair Housing Act or ECOA, but agreed to resolve the matter by paying $125 million in connection with pricing and product placement allegations primarily relating to mortgages priced and sold to consumers by third party brokers through the Wholesale Division of Wells Fargo Home Mortgage. In addition, Wells Fargo agreed to pay $50 million to fund a community support program in approximately eight cities or metropolitan statistical areas, with details yet to be agreed upon between the DOJ and Wells Fargo. Wells Fargo also agreed to undertake an internal lending compliance review of a small percentage of subprime mortgages delivered through its Retail channel during the period 2004 - 2008 and will rebate to borrowers as appropriate. Ofthe $125 million, $8 million and $2 million are specifically allocated to Illinois and Pennsylvania, respectively, to resolve matters in those states.

SECURITIES LENDING LITIGATION Wells Fargo Bank, N.A. is involved in ten separate pending actions brought by securities lending customers of Wells Fargo and Wachovia Bank in various courts. In general, each ofthe cases alleges that Wells Fargo violated fiduciary and contractual duties by investing collateral for loaned securities in investments that suffered losses. One case, brought by the City of St. Petersburg in the U.S. District Court for the Middle District of Florida, resulted in an April 2012 verdict against Wells Fargo in the amount of $10 million plus interest. Wells Fargo has filed post-trial motions to set aside the verdict. In addition, on March 27, 2012, a class of Wells Fargo securities lending customers was certified in a case captioned City of Farmington Hills Employees Retirement System v. Wells Fargo Bank, N.A., which is pending in the U.S. District Court for the District of Minnesota. Wells Fargo sought interlocutory review of the class certification in the U.S. Court of Appeals for the Eighth Circuit. The Eighth Circuit declined such review on May 7, 2012.

WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION A securities class action, now captioned In re Wachovia Equity Securities Litigation, has been pending under various names since July 7, 2008, in the U.S. District Court for the Southern District of New York alleging violations of Sections 10(b) and 20(a) ofthe Securities Exchange Act of 1934. Among other allegations, plaintiffs allege Wachovia's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. mortgage portfolio, Wachovia's exposure to other mortgage related products such as CDOs, control issues and auction rate securities. On March 31, 2011, the U.S. District Court for the Southern District of New York entered a Decision and Order granting Wachovia's motions to dismiss the In re Wachovia Equity Securities Litigation and the Stichting Pensioenfonds ABP, FC Holdings AB, Deka Investment GmbH and Forsta AP-Fonden cases. Plaintiffs and Wells Fargo have agreed to settle the Equity Securities Litigation for $75 million and on January 27, 2012, the Court entered an order preliminarily approving the settlement. On June 12,2012, an Order finally approving the class action settlement was entered.

There were four similar actions filed in state courts in North Carolina and South Carolina by individual shareholders. Three of these individual shareholder actions have been finally dismissed and the dismissal ofthe fourth is on appeal.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end of the range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.2 billion as of June 30, 2012. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells

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Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Note 11: Legal Actions 10-Q Period ending September 30,2012 - Filed November 6, 2012

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2011 Form 10-K, and Part II, Item 1 (Legal Proceedings) of our 2012 first and second quarter Quarterly Reports on Form 10-Q for events occurring in third quarter 2012.

FHA INSURANCE LITIGATION On October 9, 2012, the United States filed a complaint, captioned United States of America v. Wells Fargo Bank, N.A. , in the U.S. District Court for the Southern District of New York. The complaint makes claims with respect to Wells Fargo's FHA lending program for the period 2001 to 2010. The complaint alleges, among other allegations, that Wells Fargo improperly certified certain FHA mortgage loans for FHA insurance that did not qualify for the program, and therefore Wells Fargo should not have received insurance proceeds from FHA when some of the loans later defaulted. The complaint further alleges Wells Fargo knew some of the mortgages did not qualify for insurance, and did not disclose the deficiencies to FHA before making insurance claims.

MORTGAGE FORECLOSURE DOCUMENT LITIGATION As previously disclosed, eight purported class actions and several individual borrower actions related to foreclosure document practices were filed in late 2010 and in early 2011 against Wells Fargo Bank, N.A. in its status as mortgage servicer or corporate trustee of mortgage trusts. Five of those cases had been previously dismissed or otherwise resolved. Two of the three remaining purported class actions were dismissed or otherwise resolved on October 3 and October 25, 2012. As a result, seven of the eight purported class actions have now been dismissed or otherwise resolved.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Government agencies and authorities continue investigations or examinations of certain mortgage related practices of Wells Fargo. The current investigations primarily relate to: (I) whether Wells Fargo complied with applicable laws, regulations and documentation requirements relating to mortgage origination and securitizations, including those at the former Wachovia Corporation; and (2) whether Wells Fargo properly disclosed in offering documents for its residential mortgage-backed securities the facts and risks associated with those securities. As previously disclosed, on July 12, 2012, the DOJ filed a complaint captioned United States of America v. Wells Fargo Bank, N.A. in the U.S. District Court for the District of Columbia. The complaint alleged violations ofthe Fair Housing Act and the Equal Credit Opportunity Act (ECOA) with respect to Wells Fargo's residential mortgage lending operations during the period 2004 - 2008. Simultaneously with the filing of the complaint, a Consent Decree executed between the DOJ and Wells Fargo was filed providing for a consensual resolution ofthe complaint. In the Consent Decree, Wells Fargo denied that it had violated the Fair Housing Act or ECOA, but agreed to resolve the matter by paying $125 million in connection with pricing and product placement allegations primarily relating to mortgages priced and sold to consumers by third party brokers through the Wholesale Division of Wells Fargo Home Mortgage. In addition, Wells Fargo agreed to pay $50 million to fund a community support program in approximately eight cities or metropolitan statistical areas, with details yet to be agreed upon between the DOJ and Wells Fargo. Wells Fargo also agreed to undertake an internal lending compliance review of a small percentage of subprime mortgages delivered through its Retail channel during the period 2004 - 2008 and will rebate to borrowers as appropriate. Ofthe $125 million, $8 million and $2 million are specifically allocated to Illinois and Pennsylvania, respectively, to resolve matters in those states. On September 20, 2012, the Court entered a Memorandum Opinion and Order approving and entering the Consent Order.

ORDER OF POSTING LITIGATION As previously disclosed, a series of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the Banks posted debit card transactions to consumer deposit accounts. There remain several such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), most of which have been consolidated in multi-district litigation proceedings in the U.S. District Court for the Southern District of Florida. The bank defendants moved to compel these cases to arbitration under recent Supreme Court authority. On November 22, 2011, the Judge denied the motion. On October 26, 2012, the U.S. Court of Appeals for the Eleventh Circuit affirmed the District Court's denial ofthe motion to compel arbitration.

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WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION As previously disclosed, a securities class action, now captioned In re Wachovia Equity Securities Litigation, had been pending under various names since July 7, 2008, in the U.S. District Court for the Southern District of New York alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Among other allegations, plaintiffs alleged Wachovia's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. mortgage portfolio, Wachovia's exposure to other mortgage related products such as CDOs, control issues and auction rate securities. There were four additional cases (not class actions) containing allegations similar to the allegations in the In re Wachovia Equity Securities Litigation captioned Stichting Pensioenfonds ABP v. Wachovia Corp. et al., FC Holdings AB, et al. v. Wachovia Corp., et al., Deka Investment GmbH v. Wachovia Corp. et al. and Forsta AP-Fonden v. Wachovia Corp., et al. , respectively, which were filed in the U.S. District Court for the Southern District of New York. On March 31, 2011, the U.S. District Court for the Southern District of New York entered a Decision and Order granting Wachovia's motions to dismiss the In re Wachovia Equity Securities Litigation and the Stichting Pensioenfonds ABP, FC Holdings AB, Deka Investment GmbH and Forsta AP-Fonden cases and all of those cases have subsequently been resolved. Plaintiffs and Wells Fargo agreed to settle the Equity Securities Litigation for $75 million and on January 27, 2012, the Court entered an order preliminarily approving the settlement. On June 12, 2012, an Order finally approving the class action settlement was filed.

There were four previously disclosed individual actions, containing allegations similar to the main In re Wachovia Equity Securities Litigation matter, filed in state courts in North Carolina and South Carolina. All four of those cases have now been finally dismissed.

OUTLOOK: When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end ofthe range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.2 billion as of September 30, 2012. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess ofthe established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Form 8-K Filed November 28, 2012 (period: November 20,2012)

Mortgage Related Regulatory Investigations

Wells Fargo & Company (the "Company") previously disclosed the receipt of a Wells notice from the staff ofthe Securities and Exchange Commission (the "Commission") relating to the Company's disclosures in mortgage-backed securities offering documents. On November 20, 2012, the Company was notified by the Commission's staff that this investigation has been completed and the staff does not intend to recommend any enforcement action by the Commission.

Form 8-K

WELLS FARGO & COMPANY/MN - WEFGL Filed: December 21, 2012 (period: December 17, 2012)

TO:   ALL HOLDERS OF WELLS FARGO & COMPANY ("WELLS FARGO") COMMON STOCK AS OF DECEMBER 13, 2012, WHO CONTINUE TO HOLD SUCH SHARES AS OF MARCH S, 2013 ("CURRENT WELLS FARGO SHAREHOLDERS")

PLEASE TAKE NOTICE that the parties have reached a proposed settlement to resolve the derivative claims asserted on behalf of Wells Fargo in Feuer v. Thompson et al., Civil Action No. 10-0279 YGR, Northern District of California, and Rogers v. Thompson et al., Civil Action No. 12-0203 YGR, Northern District of California, referred to collectively below as "the Derivative Actions." The proposed settlement also will resolve claims set forth in certain Demand Letters (as defined in

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the parties' Stipulation of Settlement). The claims asserted in the Derivative Actions, the Demand Letters, and certain other proceedings are collectively referred to as the "Released Claims."

PLEASE BE FURTHER ADVISED that pursuant to an Order ofthe United States District Court for the Northern District of California, a hearing will be held before the Honorable Yvonne Gonzalez Rogers, in Courtroom 5 of the United States Courthouse, 1301 Clay Street, Oakland, California, at 3:00 p.m., on March 5, 2013, to determine whether (i) the proposed settlement should be approved by the Court as fair, reasonable, and adequate; (ii) the Derivative Actions should be dismissed with prejudice; (iii) the individual defendants should be released from liability for any ofthe Released Claims; and (iv) the Court should award attorneys' fees and reimbursement of expenses for Plaintiffs' Counsel, and in what amount.

Plaintiffs' Counsel intend to apply to the Court for an award of attorneys' fees and expenses (the "Fee Application") in an amount not to exceed $2.5 million. Any attorneys'

NOTICE TO SHAREHOLDERS      NO. 10-CV-00279 YGR

NO. 12-CV-00203 YGR

fees and expenses awarded by the Court will be paid exclusively by Wells Fargo. The Fee Application will be filed with the Court by January 4, 2013, and available to Wells Fargo Shareholders by January 6, 2013. Wells Fargo has not agreed to any fee award and reserves the right to oppose the Fee Application, in whole or in part, regardless ofthe amount sought.

The proposed settlement obligates Wells Fargo's Board of Directors to implement certain governance improvements as more fully set forth in the Stipulation of Settlement. It does not involve the payment of any funds by the defendants to Wells Fargo or to any of the plaintiffs. You may obtain detailed information about the terms ofthe proposed settlement, including the Complaints, motions to dismiss, the Stipulation of Settlement, the Preliminary Approval Order, the Fee Application and other documents, as well as all papers to be submitted in connection with the final approval process—at the website www.WFWachoviaDerivativeSettIement.com, or by contacting Counsel for Plaintiffs at any of the addresses below.

If you are a Current Wells Fargo Shareholder, you may have certain rights in connection with the proposed settlement, including the right to object to any aspect of the settlement. Every objection must be in writing and contain: (i) your name, address and telephone number; (ii) the number of shares of Wells Fargo stock you currently hold, together with third-party documentary evidence, such as the most recent account statement, showing such share ownership; and (iii) a detailed statement of your objections to any matter before the Court and all grounds therefore, including any supporting documents to be considered by the Court. If you do not submit written objections TO BE RECEIVED NO LATER THAN February 15, 2013, you shall not be entitled to contest the proposed settlement or Fee Application unless otherwise ordered by the Court for good cause shown. All such objections must identify the case number and must be filed with the Court at:

Clerk of the Court United States District Court 1301 Clay Street Oakland, CA 94612

Form 8-K

WELLS FARGO & COMPANY/MN - WEFGL Filed: January 11,2013 (period: January 11, 2013)

Independent Foreclosure Review Settlement

On January 7, 2013, the Company announced that, along with nine other mortgage servicers, it entered into settlement agreements with the Office ofthe Comptroller ofthe Currency (OCC) and the Federal Reserve Board (FRB) that would end their IFR programs created by Article VII of an April 2011 Interagency Consent Order and replace it with an accelerated remediation process.

In aggregate, the servicers have agreed to make direct, cash payments of $3.3 billion and to provide $5.2 billion in additional assistance, such as loan modifications, to consumers. Wells Fargo's portion ofthe cash settlement is $766 million, which is based on the proportionate share of Wells Fargo-serviced loans in the overall IFR population. Wells Fargo recorded a pre-tax charge of $644 million in fourth quarter 2012 to fully reserve for its cash payment portion of the settlement and additional remediation-related costs. The Company also committed an additional $1.2 billion to foreclosure prevention actions. This

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commitment did not result in any charge as the Company believes that this commitment is covered through the existing allowance for credit losses and the nonaccretable difference relating to the purchased credit-impaired loan portfolios. With this settlement, the Company will no longer incur costs associated with the independent foreclosure reviews, which had recently approximated $125 million per quarter for external consultants and additional staffing.

"In addition to the benefit to our customers, we are very pleased to have put this legacy issue behind us and to have removed the future costs associated with independent foreclosure reviews," said Stumpf.

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Note 15: Legal Actions

Wells Fargo and certain of our subsidiaries arc involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from Ihe conduct of our business activities. These proceedings include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.

Although there can be no assmance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe wc have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and wc intend to defend vigorously each case, other than matters wc describe as having settled. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

FHA INSURANCE LITIGATION On October 9,2012, the United States filed a complaint, captioned United Stales ofAmerica v. Wells Fargo Bank, N.A., in the U.S. District Court for the Southern District of New York. The complaint makes claims with respect to Wells Fargo's Federal Housing Administration (FHA) lending program for the period 2001 to 2010. The complaint alleges, among other allegations, that Wells Fargo improperly certified certain FHA mortgage loans for United States Department of Housing and Urban Development (HUD) insurance that did not qualify for the program, and therefore Wells Fargo should not have received insurance proceeds from HUD when some ofthe loans later defaulted. The complaint further alleges Wells Fargo knew some ofthe mortgages did not qualify for insurance and did not disclose the deficiencies to HUD before making insurance claims. On December 1,2012, Wells Fargo filed a motion in the U.S. District Court for the District of Columbia seeking to enforce a release of Wells Far go given by the United States, which was denied on February 12, 2013. On December 14,2012, the United States filed an amended complaint. On January 16,2013, Wells Fargo filed a motion in the Southern District of New York to dismiss the amended complaint.

INTERCHANGE LITIGATION Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation are named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants an,d in individual actions brought by individual merchants with regard to the interchange fees associated with Visa and MasterCard payment card transactions. These actions have been consolidated in the U.S. District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies arc named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws

and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants arc anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, arc parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13,2012, Visa, MasterCard and the financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants to resolve the consolidated class actions and reached a separate settlement in principle ofthe consolidated individual actions. The proposed settlement payments by all defendants in the consolidated class and individual actions total approximately $6.6 billion. The class settlement also provides for the distribution to class merchants oflO basis points of default interchange across all credit rate categories for a period of eight consecutive months. The Court has granted preliminary approval ofthe settlements. The settlements are subject to further review and approval by the Court.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request of the Securities and Exchange Commission (SEC) in August 2009. Since September 2009,

Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. The actions have been consolidated in the U.S. District Court for the Central District of California. On July 26, 2011, the District Court certified a class consisting of holders of notes issued by affiliates of Medical Capital Corporation and, on October 18, 2011, the Ninth Circuit Court of Appeals denied a petition seeking to appeal the class certification order. A previously disclosed potential settlement of the case was not consummated and the case is in discovery.

MARYLAND MORTGAGE LENDING LITIGATION On

December 26, 2007, a class action complaint captioned Denise Minter, et al, v. Wells Fargo Bank, N.A., et al, was filed in the U.S. District Court for the District of Maryland. The complaint alleges that Wells Fargo and others violated provisions of the Real Estate Settlement Procedures Act and other laws by conducting mortgage lending business improperly through a general partnership, Prosperity Mortgage Company. The complaint asserts that Prosperity Mortgage Company was not a legitimate affiliated business and instead operated to conceal Wells Fargo Bank, N.A.'s role in the loans at issue. A plaintiff class of borrowers who received a mortgage loan from Prosperity that was funded by Prosperity's line of credit with Wells Fargo Bank,

190

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Note IS: Legal Actions (continued)

N.A. from 1993 to May 31,2012 has been certified. The Court has scheduled a trial in this case for May 6, 2013. A second, related case is also pending in the same Court. On July 8, 2008, a class action complaint captioned Stacey and Bradley Peliy, el al, v. Wells Fargo Bank, N.A., et al, was filed. The complaint alleges that Wells Fargo and others violated the Maryland Finder's Fee Act in the closing of mortgage loans in Maryland. The Court certified a plaintiff class of borrowers whose loans are secured by Maryland real property, which loans showed Prosperity Mortgage Company as the lender receiving a fee for services, and were funded through a Wells Fargo line of credit to Prosperity from 1993 to May 31, 2012. The Court has scheduled a trial in this case for March 18, 2013.

MORTGAGE-BACKED CERTIFICATES LITIGATION Several securities law based putative class actions were consolidated in the U.S. District Court for the Northern District of California on July 16, 2009, under the caption In re Wells Fargo Mortgage-Backed Certificates Litigation. The case asserted claims against several Wells Fargo mortgage backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs alleged that the offering documents contain untrue statements of material fact, or omit to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The parties agreed to settle the case on May 27, 2011, for SI 25 million. Final approval ofthe settlement was entered on November 14,2011. Some class members opted out ofthe settlement, with the most significant being the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

On June 29, 2010, and on July 15,2010, two complaints, the first captioned The Charles Schwab Corporation vs. Merrill Lynch, Pierce, Fenner & Smith, Inc., el ai, and the second captioned The Charles Schwab Corporation v. BNP ParibasSecurities Corp., et al, were filed in the Superior Court for the State of California, San Francisco County against a number of defendants, including Wells Fargo Bank, N.A. and Wells Fargo Asset Securities Corporation. As against the Wells Fargo entities, the new cases assert opt out claims relating to the claims alleged in the Mortgage-Backed Certificates Litigation.

On October 15,2010, three actions, captioned Federal Home Loan Bank of Chicago v. Banc ofAmerica Funding Corporation, et al. (filed in the Cook County Circuit Court, State oflllinois); Federal Home Loan Bank of Chicago v. Banc of America Securities LLC, et al. (filed in the Superior Court ofthe State of California for the County of Los Angeles); and Federal Home Loan Bank of Indianapolis v. Banc of America Mortgage America Securities, Inc., el al. (filed in the Superior Court of the State oflndiana for the County of Marion), named multiple defendants, described as issuers/depositors, and underwriters/dealers of private label mortgage-backed securities, in an action asserting claims that defendants used false and misleading statements in offering documents for the sale of such securities. Plaintiffs seek rescission of the sales and damages under state securities and other laws and Section 11 ofthe Securities Act of 1933. Wells Fargo Asset Securities Corporation, Wells Fargo Bank, N.A. and Wells Fargo &

Company were named among the defendants. On April 20, 2011, a case captioned Federal Home Loan of Boston v. Ally Financial, Inc., el al., was filed in the Superior Court ofthe Commonwealth of Massachusetts for the County of Suffolk. The case names, among a large number of parties, Wells Fargo & Company, Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N.A. as parties and contains allegations substantially similar to the cases filed by the other Federal Home Loan Banks.

In addition, there arc other mortgage-related threatened or asserted claims by entities or investors where Wells Fargo may have indemnity or repurchase obligations, or as to which it has entered into agreements to toll the relevant statutes of limitations.

MORTGAGE FORECLOSURE DOCUMENT LITIGATION Eight purported class actions and several individual borrower actions related to foreclosure document practices were filed in late 2010 and in early 2011 against Wells Fargo Bank, N.A. in its status as mortgage servicer or corporate trustee of mortgage trusts. The cases were brought in state and federal courts. All eight cases have been dismissed or otherwise resolved.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Government agencies and authorities continue investigations or examinations of certain mortgage related practices of Wells Fargo. Wells Fargo, for itself and for predecessor institutions, has responded, and continues to respond, to requests from government agencies seeking information regarding the origination, underwriting and securitization of residential mortgages, including sub-prime mortgages. On February 24,2012, Wells Fargo received a Wells Notice from SEC Staff relating to Wells Fargo's disclosures in mortgage-backed securities offering documents. On November 20,2012, the SEC Staff advised Wells Fargo it did not intend to take action on the subject matter of the Wells Notice.

IN RE MUNICIPAL DERIVATIVES ANTITRUST LITIGATION Wachovia Bank, along with several other banks and financial services companies, was named as a defendant beginning in April 2008 in a number of substantially identical purported class actions and individual actions filed in various state and federal courts by various municipalities alleging they have been damaged by alleged anticompetitive activity of the defendants. These cases were either consolidated under the caption In re Municipal Derivatives Antiinist Litigation or administered jointly with that action in the U.S. District Court for the Southern District of New York. The plaintiffs and Wells Fargo agreed to settle the In re Municipal Derivatives Antitrust Litigation on October 21,2011. The settlement received final approval on December 14, 2012. A number of municipalities have opted out ofthe settlement, but the remaining potential claims are not material.

ORDER OF POSTING LITIGATION A scries of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the

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Souice WELLS FARGO 8 CCMPANY/MN, 1C-K. Febiuaij 21. 2013

The Information contained herein may not be copied, adapted or distributed mid ts not wot/anted lo be accurate, complete or timely. Tiio user assumes alt risks for any dnmages or losses otlslnti (torn any use. of this Information, except to the extent such damages or losses cannot be limited or excluded by applicable law Past financial pcrtoimanc* is no guarantee ct future icsuffs

high lo low order in which the Banks post debit card transactions to consumer deposit accounts. There are currently several such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), most of which have been consolidated in multidistrict litigation proceedings in the U.S. District Court for flic Southern District of Florida. The bank defendants moved to compel these cases to arbitration under recent Supreme Court authority. On November 22,2011, the Judge denied the motion. The Banks appealed the decision to the U.S. Court of Appeals for the Eleventh Circuit. On October 26,2012, the Eleventh Circuit affirmed the District Court's denial ofthe motion.

On August 10,2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., a case that was not consolidated in the multi-district proceedings, enjoining the Bank's use ofthe high to low posting method for debit card transactions with respect lo the plaintiff class of California depositors, directing that the Bank establish a different posting methodology and ordering remediation of approximately $203 million. On October 26,2010, a final judgment was entered in Gutierrez. On October 28,2010, Wells Fargo appealed to the U.S. Court of Appeals for the Ninth Circuit. On December 26, 2012, the Ninth Circuit reversed the order requiring Wells Fargo to change its order of posting and vacated the portion ofthe order granting remediation of approximately $203 million on the grounds of federal pre-emption. The Ninth Circuit affirmed the District Court's finding that Wells Fargo violated a California state law prohibition on fraudulent representations and remanded the case to the District Court for further proceedings.

SECURITIES LENDING LITIGATION Wells Fargo Bank, N.A. is involved in several separate pending actions brought by securities lending customers of Wells Fargo and Wachovia

Bank in various courts, ln general, each of the cases alleges that Wells Fargo violated fiduciary and contractual duties by investing collateral for loaned securities in investments that suffered losses. In addition, on March 27, 2012, a class of Wells Fargo securities lending customers was certified in a case captioned City of Farming/on Hills Employees Retirement System v. Wells Fargo Bank, N.A., which is pending in the U.S. District Court for the District of Minnesota. Wells Fargo sought interlocutory review ofthe class certification in the U.S. Court of Appeals for the Eighth Circuit. The Eighth Circuit declined such review on May 7, 2012.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end ofthe range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.0 billion as of December 31, 2012. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess ofthe established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

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Source- WELLS FARGO 6 CGMPANY/MN, 10-K. Febiusrv 21. 2013

rjie Information contained herein may not lie copied, adapted or distributed slid Is not warranted lo be accurate, complete or timely The user assumes oil risks lor any damages or losses nrlslnn Iron! any use of this Information, except to the extent such damages or losses cannot be limited or excluded by applicable la*. Past financial performance Is no guarantee ol future results

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2012 Form 10-K for events occurring during first quarter 2013.

FHA INSURANCE LITIGATION On October 9, 2012, the United States filed a complaint, captioned United States of America v. Wells Fargo Bank, N.A., in the U.S. District Court for the Southern District of New York. The complaint makes claims with respect to Wells Fargo's Federal Housing Administration (FHA) lending program for the period 2001 to 2010. The complaint alleges, among other allegations, that Wells Fargo improperly certified " certain FHA mortgage loans for United States Department of Housing and Urban Development (HUD) insurance that did not qualify for the program, and therefore Wells Fargo should not have received insurance proceeds from HUD when some ofthe loans later defaulted. The complaint further alleges Wells Fargo knew some ofthe mortgages did not qualify for insurance and did not disclose the deficiencies to HUD before making insurance claims. On December 1, 2012, Wells Fargo filed a motion in the U.S. District Court for the District of Columbia seeking to enforce a release of Wells Fargo given by the United States, which was denied on February 12,2013. On April 11, 2013, Wells Fargo filed a notice of appeal. On December 14, 2012, the United States filed an amended complaint. On January 16, 2013, Wells Fargo filed a motion in the Southern District of New York to dismiss the amended complaint. Oral argument of the motion was held on April 17, 2013.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request ofthe Securities and Exchange Commission (SEC) in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. On April 16,2013, the parties reached a settlement in principle of all claims which provides for Wells Fargo to pay $105 million to the plaintiffs. The settlement is subject to Court approval.

MARYLAND MORTGAGE LENDING LITIGATION On July 8, 2008, a class action complaint captioned Stacey and Bradley Petry, et al, v. Wells Fargo Bank, N.A., et al., was filed. The complaint alleges that Wells Fargo and others violated the Maryland Finder's Fee Act in the closing of mortgage loans in Maryland. On March 13, 2013, the Court held the plaintiff class did not have sufficient evidence to proceed to trial, which was previously set for March 18,2013. The Court is considering whether to dismiss the case or to certify an appellate question to the Maryland Court of Appeals.

MORTGAGE-BACKED CERTIFICATES LITIGATION Several securities law based putative class actions were consolidated in

the U.S. District Court for the Northern District of California on July 16, 2009, under the caption In re Wells Fargo Mortgage-Backed Certificates Litigation. The case asserted claims against several Wells Fargo mortgage-backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs alleged that the offering documents contain untrue statements of material fact, or omit to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The parties agreed to settle the case on May 27, 2011, for $ 125 million. Final approval ofthe settlement was entered on November 14, 2011. Some class members opted out ofthe settlement. Wells Fargo settled the opt out claims of Federal National Mortgage Association for an amount that was within a previously established accrual.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end ofthe range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.1 billion as of March 31, 2013. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible (hat the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Wells Fargo & Company 10-Q

Note 11: Legal Actions June 30, 2013

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2012 Form 10-K and Part II, Item 1 (Legal Proceedings) of our 2013 first quarter Quarterly Report on Form 10-Q for events occurring during second quarter 2013.

MEDICAL, capital CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request ofthe Securities and Exchange Commission (SEC) in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. On April 16, 2013, the parties reached a settlement, subject to Court approval, of all claims which provides for Wells Fargo to pay $105 million to the plaintiffs. The Court gave preliminary approval to the settlement on May 6,2013.

MARYLAND MORTGAGE lending litigation On December 26, 2007, a class action complaint captioned Denise Minter, et al, v. Wells Fargo Bank, NA., et al, was filed in the U.S. District Court for the District of Maryland. The complaint alleges that Wells Fargo and others violated provisions ofthe Real Estate Settlement Procedures Act and other laws by conducting mortgage lending business improperly through a general partnership, Prosperity Mortgage Company. The complaint asserts that Prosperity Mortgage Company was not a legitimate affiliated business and instead operated to conceal Wells Fargo Bank, N-A.'s role in the loans at issue. A plaintiff class of borrowers who received a mortgage loan from Prosperity Mortgage Company that was funded by Prosperity Mortgage Company's line of credit with Wells Fargo Bank, N.A. from 1993 to May 31,2012, had been certified. Prior to trial, the Court narrowed the class action to borrowers who were referred to Prosperity Mortgage Company by Wells Fargo's partner and whose loans were transferred to Wells Fargo Bank, N.A. from 1993 to May 31,2012. On May 6,2013, the case went to trial. On June 6, 20J3, the jury returned a verdict in favor of all defendants, including Wells Fargo. The plaintiffs have requested a new trial on the named plaintiffs' individual claims, and have filed a notice of appeal.

On July 8, 2008, a class action complaint captioned Stacey and Bradley Petry, el al., v. Wells Fargo Bank, NA., et al, was filed. The complaint alleges that Wells Fargo and others violated the Maryland Finder's Fee Act in the closing of mortgage loans in Maryland. On March 13,2013, the Court held the plaintiff class did not have sufficient evidence to proceed to trial, which was previously set for March 18,2013. On June 20,2013, the Court entered judgment in favor ofthe defendants. The plaintiffs have appealed.

ORDER OK posting LITIGATION A series of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the banks post debit card transactions to consumer deposit accounts. There are currently several such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), most of which have been consolidated in multi-district litigation proceedings in the U.S. District Court for the Southern District of Florida. The bank defendants moved to compel these cases to arbitration under recent Supreme Court authority. On November 22, 2011, the Judge denied the motion. The bank defendants appealed the decision to the U.S. Court of Appeals for the Eleventh Circuit. On October 26, 2012, the Eleventh Circuit affirmed the District Court's denial ofthe motion. Wells Fargo renewed its motion to compel arbitration with respect to the unnamed putative class members. On April 8, 2013, the District Court denied the motion. Wells Fargo has appealed the decision to the Eleventh Circuit. On August 10,2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, NA., a case that was not consolidated in the multi-district proceedings, enjoining the bank's use of the high to low posting method for debit card transactions with respect to the plaintiff class of California depositors, directing the bank to establish a different posting methodology and ordering remediation of approximately $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. On October 28, 2010, Wells Fargo appealed to the U.S. Court of Appeals for the Ninth Circuit. On December 26, 2012, the Ninth Circuit reversed the order requiring Wells Fargo to change its order of posting and vacated the portion ofthe order granting remediation of approximately $203 million on the grounds of federal preemption. The Ninth Circuit affirmed the District Court's finding that Wells Fargo violated a California state law prohibition on fraudulent representations and remanded the case to the District Court for further proceedings. On May 14, 2013, the District Court entered an order indicating it will reinstate the judgment of approximately $203 million against Wells Fargo and enjoined Wells Fargo from making or disseminating additional misrepresentations about its order of posting of transactions. Wells Fargo has appealed the order to the Ninth Circuit. On August 5,2013, the District Court entered a judgment against Wells Fargo in the approximate amount of $203 million, together with post-judgment interest thereon from October 25, 2010.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate

within the range. The high end of the range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.1 billion as of June 30,2013. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

io-Q

Note 11: Legal Actions - September 30, 2013

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2012 Form 10-K and Part II, Item 1 (Legal Proceedings) of our 2013 first and second quarter Quarterly Reports on Form 10-Q for events occurring during third quarter 2013.

FHA INSURANCE LITIGATION On October 9, 2012, the United States filed a complaint, captioned United States of America v. Wells Fargo Bank, NA., in the U.S. District Court for the Southern District of New York. The complaint makes claims with respect to Wells Fargo's Federal Housing Administration (FHA) lending program for the period 2001 to 2010. The complaint alleges, among other allegations, that Wells Fargo improperly certified certain FHA mortgage loans for United States Department of Housing and Urban Development (HUD) insurance that did not qualify for the program, and therefore Wells Fargo should not have received insurance proceeds from HUD when some of the loans later defaulted. The complaint further alleges Wells Fargo knew some of the mortgages did not qualify for insurance and did not disclose the deficiencies to HUD before making insurance claims. On December 1,

1. Wells Fargo filed a motion in the U.S. District Court for the District of Columbia seeking to enforce a release of Wells Fargo given by the United States, which was denied on February 12, 2013. On April 11, 2013, Wells Fargo appealed the decision to the U.S. Court of Appeals for the District of Columbia Circuit, and filed its initial appellate brief on September 20, 2013. On December 14, 2012, the United States filed an amended complaint. On January 16,
2. Wells Fargo filed a motion in the Southern District of New York to dismiss the amended complaint. On September 24, 2013, the Court entered an order denying the motion with respect to the government's federal statutory claims and granting in part, and denying in part, the motion with respect to the government's common law claims.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request of the Securities and Exchange Commission (SEC) in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. On April 16, 2013, the parties reached a settlement, subject to Court approval, of all claims which provides for Wells Fargo to pay $105 million to the plaintiffs. The Court gave final approval to the settlement on August 12, 2013.

MORTGAGE-BACKED CERTIFICATES LITIGATION Several securities law based putative class actions were consolidated in the U.S. District Court for the Northern District of California on July 16, 2009, under the caption In re Wells Fargo Mortgage-Backed Certificates Litigation. The case asserted claims against several Wells Fargo mortgage-backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs alleged that the offering documents contain untrue statements of material fact, or omit to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The parties agreed to settle the case on May 27, 2011, for $125 million. Final approval of the settlement was entered on November 14, 2011. Some class members, including Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC), opted out ofthe settlement. Wells Fargo settled the opt out claims of FNMA in first quarter 2013 and settled the opt out claims of FHLMC in third quarter 2013, in each case for an amount that was within a previously established accrual. Both settlements included the Federal Housing Finance Agency, as conservator of FNMA and FHLMC. The combined amount of the settlements was approximately $335 million.

On October 15, 2010, three actions, captioned Federal Home Loan Bank of Chicago v. Banc of America Funding Corporation, et al. (filed in the Cook County Circuit Court, State of Illinois); Federal Home Jxian Bank of Chicago v. Banc of America Securities LLC, et al. (filed in the Superior Court of the State of California for the County of I-os Angeles); and Federal Home Loan Bank of Indianapolis v. Banc of America Mortgage America Securities, Inc., et al. (filed in the Superior Court of the State of Indiana for the County of Marion), named multiple defendants, described as issuers/depositors, and underwriters/dealers of private label mortgage-backed securities, in an action asserting claims that defendants used false and misleading statements in offering documents for the sale of such securities. Plaintiffs seek rescission of the sales and damages under state securities and other laws and Section 11 of the Securities Act of 1933. Wells Fargo Asset Securities Corporation, Wells Fargo Bank, N.A. and Wells Fargo & Company were named among the defendants. Wells Fargo has reached a settlement in principle with the Federal Home Loan Bank of Indianapolis to settle the claims against it in the Federal Home Loan Bank of Indianapolis v. Banc of America Mortgage America Securities, Inc., et al. action for an amount within a previously established accrual. Wells Fargo has also reached a settlement in principle with the Federal Home Loan Bank of Chicago to settle the claims against it in the Federal Home Loan Bank of Chicago v. Banc of America Funding Corporation, et al. and Federal Home Loan Bank of Chicago u. Banc of America Securities LLC actions for an amount within a previously established accrual.

On April 20, 2011, a case captioned Federal Home Loan Bank of Boston v. Ally Financial, Inc., et al., was filed in the Superior Court of the Commonwealth of Massachusetts for the County of Suffolk. The case names, among a large number of parties, Wells Fargo & Company, Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N A. as parties and asserts claims that defendants used false and misleading statements in offering documents for the sale of mortgage-backed securities. Wells Fargo settled the claims of the Federal Home Loan Bank of Boston for an amount within a previously established accrual and was dismissed, with prejudice, from the Federal Home Loan Bank of Boston v. Ally Financial, Inc., et al. action on September 30, 2013.

ORDER OF POSTING LITIGATION On August 10, 20J0', the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., a case that was not consolidated in the multi-district proceedings, enjoining the bank's use ofthe high to low posting method for debit card transactions with respect to the plaintiff class of California depositors, directing the bank to establish a different posting methodology and ordering remediation of approximately $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. On October 28,2010, Wells Fargo appealed lo the U.S. Court of Appeals for the Ninth Circuit. On December 26,2012, the Ninth Circuit reversed the order requiring Wells Fargo to change its order of posting and vacated the portion ofthe order granting remediation of approximately $203 million on the grounds of federal preemption. The Ninth Circuit affirmed the District Court's finding that Wells Fargo violated a California state law prohibition on fraudulent representations and remanded the case to the District Court for further proceedings. On August 5, 2013, the District Court entered a judgment against Wells Fargo in the approximate amount of $203 million, together with post-judgment interest thereon from October 25, 2010, and, effective as of July 15, 2013, enjoined Wells Fargo from making or disseminating additional misrepresentations about its order of posting of transactions. On August 7, 2013, Wells Fargo appealed the judgment to the Ninth Circuit.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end of the range of reasonably possible potential litigation losses in excess of the Company's liability for probable and estimable losses was $1.0 billion as of September 30, 2013. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

1

Wells Fargo & Company 10-K February 26, 2014

Note 15: Legal Actions      _____      

Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wells Fargo and/or our subsidiaries with respect to cotpcrate related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition. Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.

Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each case, other than matters we describe as having settled. Reserves arc established for legal claims when payments associated with the claims become probable and the costs con be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

FHA INSURANCE LITIGATION On October 9,2012, the United States filed a complaint, captioned United Stales of America v. Wells Fargo Bank, N.A., in the U.S. District Court for the Southern District of'Ncw York. The complaint makes claims with respect to Wells Fargo's Federal Housing Administration (FHA) lending program for Ihe period 2001 to 2010. The complaint alleges, among other allegations, (hat Wells Fargo improperly certified certain FHA mortgage loans for United States Department of Housing and Urban Development (HUD) insurance that did not qualify for the program, and therefore Wells Fargo should not have received insurance proceeds from HUD when some ofthe loans later defaulted. The complaint further alleges Wells Fargo knew some ofthe mortgages did not qualify for insurance and did not disclose Ihe deficiencies lo HUD before making insurance claims. On December 1,2012, Wells Fargo filed a motion in the U.S. District Court for the District of Columbia seeking lo enforce a release of Wells Fargo given by Ihe United States, which was denied on February 12.2013. On April 11,2013, Wells Fargo appealed the decision to the U.S. Court of Appeals for the District of Columbia Circuit, with appellate briefing completed on November 26, 2013. On December 14, 2012, Ihe United Slates filed an amended complaint. On January 16, 2013, Wells Fargo filed a motion in Ihe Southern District of New York lo dismiss the amended complaint. On September 24,2013, (he Court entered an order denying Ihe motion with respect lo the government's federal statutory claims and granting in part, and denying in part, the motion with respect lo the government's common law claims. On January 10, 2014, Ihe United Slates filed a second amended complaint.

INTERCHANGE LITIGATION Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation are named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and in individual actions brought by individual merchants with regard to the interchange fees associated with Visa and MasterCard payment card transactions. These actions have been consolidated in the U.S. District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies arc named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege thai enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13, 2012, Visa, MasterCard and Ihe financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants to resolve Ihe consolidated class actions and reached a separate settlement in principle of Ihe consolidated individual actions The proposed settlement payments by all defendants in the consolidated class and individual actions total approximately $6.6 billion. The class settlement also provides for the distribution to class merchants of 10 basis points of default interchange across all credit rate categories for a period of eight consecutive months. The Court granted final approval ofthe settlement, which is proceeding. Merchants have filed several "opt-out" actions.

MARYLAND MORTGAGE LENDING LITIGATION On December 26, 2007, a class action complaint captioned Denise Mutter, et al v. Wells Fargo Bank, N.A., el al., was filed in the U.S. District Court for the District of Maryland. The complaint alleges that Wells Fargo and others violated provisions ofthe Real Estate Settlement Procedures Act and other laws by conducting mortgage lending business improperly through a general partnership. Prosperity Mortgage Company. The complaint asserts that Prosperity Mortgage Company was not a legitimate affilialed business and instead operated lo conceal Wells Fargo Bank, N.A.'s role in the loans al issue. A plaintiff class of borrowers who received a mortgage loan from Prosperity Mortgage Company that was funded by Prosperity Mortgage Company's line of credit with Wells Fargo Bank, N.A. from 1993 to May 31,2012, had been certified. Prior to trial, Ihe Court narrowed the class action lo borrowers who were referred to Prosperity Mortgage Company by Wells Fargo's partner and whose loans were transferred to Wells Fargo Bank, N.A. from 1993 to May 31, 2012. On May 6, 2013, the case went to trial. On June 6, 2013, the jury returned a verdict in favorof all defendants, including Wells Fargo. The plaintiffs have appealed.

On July 8, 2008, a class action complaint captioned Slaccy and Bradley Petty, et ai. v. Wells Fai go Bank, N.A., cl al., was filed. The complaint alleges that Wells Fargo and others violated the Maryland Finder's Fee Act in the closing of mortgage loans in Maryland. On March 13,2013, the Court held the plaintiff class did not have sufficient evidence to proceed lo (rial, which was previously set for March 18, 2013. On June 20,2013, the Court entered judgment in favor of the defendants. The plaintiffs have appealed.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Government agencies continue investigations or examinations of certain mortgage related practices of Wells Fargo and predecessor institutions. Wells Fargo, for itself and for predecessor institutions, has

SO)

powered by Murningslar '■ Document Research^1,

Souice WEUS fAflGO h COMPANY/MM. 10-K. February 26. 2014

nic Information contained herein may not tic copied, adapted or distributed and Is not warranted to be accurate, complete or timely. The user assumes alt risks (or any damages or losses arising Iront uny use ot this Inlormalion. eicept lo the extent such damages or losses cannot bo limited or excluded hy applicable law Pasl financial performance Is no guarantee of future results.

Note 15:  Legal Actions (continued)

responded, and continues to respond, to requests from government agencies seeking information regarding the origination, underwriting and securitization of residential mortgages, including sub-prime mortgages.

ORDER OF POSTING ijtigation A scries of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the banks post debit card transactions to consumer deposit accounts. There arc currently several such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), most of which have been consoJidatcd in multi-district litigation proceedings in the U.S. District Coun for the Southern District of Florida. The bank defendants moved to compel these cases to arbitration under recent Supreme Court authority. On November 22, 2011, the Judge denied the motion. The bank defendants appealed the decision to the U.S. Court of Appeals for the Eleventh Circuit. On October 26, 2012, the Eleventh Circuit affirmed the District Court's denial of the motion. Wells Fargo renewed its motion to compel arbitration with respect to the unnamed putative class members. On April 8₍ 2013, the District Court denied the motion. Wells Fargo has appealed the decision to the Eleventh Circuit.

On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., a case that was not consolidated in the multi-district proceedings, enjoining the bank's use ofthe high to low posting method for debit card transactions with respect lo the plaint iff class of California depositors, directing the bank to establish a different posting methodology and ordering remediation of approximately $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. On October 28, 2010, Wells Fargo appealed to the U.S. Court of Appeals for the Ninth Circuit. On December 26, 2012, the Ninth Circuit reversed the order requiring Wells Fargo to change its order of posting and vacated the portion of the order granting remediation of approximately $203 million on the grounds of federal preemption. The Ninth Circuit affirmed the District Court's finding that Wells Fargo violated a California stale law prohibition on fraudulent representations and remanded the case to the District Court for further proceedings. On August 5, 2013, the District Court entered a judgment against Wells Fargo in the approximate amount of $203 million, together with post-judgment interest thereon from October 25, 2010, and, effective as of July 15,2013, enjoined Wells Fargo from making or disseminating additional misrepresentations about its order of posting of transactions. On August 7, 2013, Wells Fargo appealed the judgment to the Ninth Circuit.

SECURITIES LENDING LITIGATION Wells Fargo Bank, N.A. is involved in five separate pending actions brought by securities lending customers of Wells Fargo and Wachovia Bank in various courts. In general, each ofthe cases alleges that Wells Fargo violated fiduciary and contractual duties by investing collateral for loaned securities in investments that suffered losses. One ofthe cases, filed on March 27, 2012, is composed of a class of Wells Fargo securities lending customers in a case captioned City ofFanttington Hills Employees Retirement System v. WcHs Fat go Bank, NA. The class action is pending in the U.S. District Court for the District of Minnesota.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end ofthe range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $951 million as of December 31, 2013. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess ofthe established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Source. WELLS FARGO 6 COMAXWAN. 10-K February 26. _0K)      Powered by Morningslar" DownifiiU Res_a'eh^SM

Hie Information contained herein nwy not L'c copied, adapted or distributed and ts not Warranted lo be accurate, complete or timely. The user assume:, all risks (or any damages or losses arising from any use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance Is no guarantee of tulure results

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

1. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a complete list of all current employees of the Disclosing Party who were, at any time during the 12-month period preceding the execution date of this EDS, an employee, or elected or appointed official, ofthe City of Chicago (if none, indicate with "N/A" or "none").

The Disclosing Party certifies that as of the date hereof, to the best ofthe Disclosing Party's knowledge after due inquiry, the answer with respect to this

question is: None. Please notelhat the foregoing answer is based on an email questionnaire distributed on March 10,2014 to all Illinois-based employees of

Wells Fargo fiantr, N A. anrl fhose employees that that work- in the Bank's government and institutional hanking group, and on an email questionnaire

distributed on March 10,2014 to those employees that work in the Bank's community lending and investment group, and may accordingly have a material

relationship with Hi. City.      

□

1. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a complete list of all gifts that the Disclosing Party has given or caused to be given, at any time during the 12-month period preceding the execution date of this EDS, to an employee, or elected or appointed official, of the City of Chicago. For purposes of this statement, a "gift" does not include: (i) anything made generally available to City employees or to the general public, or (ii) food or drink provided in the course of official City business and having a retail value of less than $20 per recipient (if none, indicate with "N/A" or "none"). As to any gift listed below, please also list the name ofthe City recipient.

The Disclosing Party certifies that as ofthe date hereof, to the best ofthe Disclosing Parly's knowledge after due inquiry, the answer with respect to this question is: None. -Pfcttse note that the fuicguing answei is based un an eiiiairrrucstiumiaiie disliibuted on Maicli 10, 2014 tu all Illinuis-baseU employees uf~Wells Paigu Bank, N.A. and those employees that that work in the Bank's government and institutional banking group, and on an email questionnaire distributed on March 10,2014 to those employees that work in the Bank's community lending and investment group, and may accordingly have a material relationship with the City.

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

1. The Disclosing Party certifies that the Disclosing Party (check one)

[x] is      [ ] is not

a "financial institution" as defined in Section 2-32-455(b) ofthe Municipal Code.

1. If the Disclosing Party IS a financial institution, then the Disclosing Party pledges:

"We are not and will not become a predatory lender as defined in Chapter 2-32 of the Municipal Code. We further pledge that none of our affiliates is, and none of them will become, a predatory lender as defined in Chapter 2-32 of the Municipal Code. We understand that becoming a predatory lender or becoming an affiliate of a predatory lender may result in the loss of the privilege of doing business with the City."

If the Disclosing Party is unable to make this pledge because it or any of its affiliates (as defined in Section 2-32-455(b) of the Municipal Code) is a predatory lender within the meaning of Chapter 2-32 of the Municipal Code, explain here (attach additional pages if necessary):

Page 7 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-156 of the Municipal Code have the same meanings when used in this Part D.

1. In accordance with Section 2-156-110 ofthe Municipal Code: Does any official or employee of the City have a financial interest in his or her own name or in the name of any other person or entity in the Matter?

[ ] Yes      P3 No

NOTE:  If you checked "Yes" to Item D.L, proceed to Items D.2. and D.3. If you checked "No" to Item D.l., proceed to Part E.

1. Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase of any property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit of the City (collectively, "City Property Sale"). Compensation for property taken pursuant lo the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

[/fees      [ ] No

1. If you checked "Yes" to Item D.L, provide the names and business addresses of the City officials or employees having such interest and identify the nature of such interest:

Name      Business Address      Nature of Interest

N/A

4. The Disclosing Party further certifies that no prohibited financial interest in the Matter will be acquired by any City official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please check either 1. or 2. below. If the Disclosing Party checks 2., the Disclosing Party must disclose below or in an attachment to this EDS all information required by paragraph 2. Failure to

Page 8 of 13

comply with these disclosure requirements may make any contract entered into with the City in connection with the Matter voidable by the City.

      I. The Disclosing Party verifies that the Disclosing Party has searched any and all records of

the Disclosing Party and any and all predecessor entities regarding records of investments or profits from slavery or slaveholder insurance policies during the slavery era (including insurance policies issued to slaveholders that provided coverage for damage to or injury or death of their slaves), and the Disclosing Party has found no such records.

*      2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the

Disclosing Party has found records of investments or profits from slavery or slaveholder insurance policies. The Disclosing Party verifies that the following constitutes full disclosure of all such records, including the names of any and all slaves or slaveholders described in those records: See Attachment "D"

SECTION VI -- CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

NOTE: If the Matter is federally funded, complete this Section VI. If the Matter is not federally funded, proceed to Section VII. For purposes of this Section VI, tax credits allocated by the City and proceeds of debt obligations of the City are not federal funding.

A. CERTIFICATION REGARDING LOBBYING

1.   List below the names of all persons or entities registered under the federal Lobbying

Disclosure Act of 1995 who have made lobbying contacts on behalf ofthe Disclosing Party with

respect to the Matter: (Add sheets if necessary): N/A

(If no explanation appears or begins on the lines above, or if the letters "NA" or if the word "None" appear, it will be conclusively presumed that the Disclosing Party means that NO persons or entities registered under the Lobbying Disclosure Act of 1995 have made lobbying contacts on behalf of the Disclosing Party with respect to the Matter.)

2.   The Disclosing Party has not spent and will not expend any federally appropriated funds to pay any person or entity listed in Paragraph A.l. above for his or her lobbying activities or to pay any person or entity to influence or attempt to influence an officer or employee ofany agency, as defined by applicable federal law, a member of Congress, an officer or employee ofCongress, or an employee of a member of Congress, in connection with the award of any federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, loan, or cooperative agreement.

Page 9 of 13

1. The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy of the statements and information set forth in paragraphs A.l. and A.2. above.
2. The Disclosing Party certifies that either: (i) it is not an organization described in section 501(c)(4) of the Internal Revenue Code of 1986; or (ii) it is an organization described in section 501(c)(4) of the Internal Revenue Code of 1986 but has not engaged and will not engage in "Lobbying Activities".
3. If the Disclosing Party is the Applicant, the Disclosing Party must obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration ofthe Matter and must make such certifications promptly available to the City upon request.

B. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

If the Matter is federally funded, federal regulations require the Applicant and all proposed subcontractors to submit the following information with their bids or in writing at the outset of negotiations.

Is the Disclosing Party the Applicant?

[ ] Yes      |*| No

If "Yes," answer the three questions below:

1. Have you developed and do you have on file affirmative action programs pursuant to applicable federal regulations? (See 41 CFR Part 60-2.)

[ ] Yes      [ ] No

1. Have you filed with the Joint Reporting Committee, the Director ofthe Office of Federal Contract Compliance Programs, or the Equal Employment Opportunity Commission all reports due under the applicable filing requirements?

[]Yes []No

1. Have you participated in any previous contracts or subcontracts subject to the equal opportunity clause?

[]Yes []No

If you checked "No" to question 1. or 2. above, please provide an explanation:

Page 10 of 13

SECTION VII- ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

The Disclosing Party understands and agrees that:

1. The certifications, disclosures, and acknowledgments contained in this EDS will become part ofany contract or other agreement between the Applicant and the City in connection with the Matter, whether procurement, City assistance, or other City action, and are material inducements to the City's execution of any contract or taking other action with respect to the Matter. The Disclosing Party understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
2. The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entities seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.cityofchicago.org/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (312) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

1. If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
2. It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all of the information provided on this EDS and any attachments to this EDS may be made available to the public on the Internet, in response to a Freedom of Information Act request, or otherwise. By completing and signing this EDS, the Disclosing Party waives and releases any possible rights or claims which it may have against the City in connection with the public release of information contained in this EDS and also authorizes the City to verify the accuracy of any information submitted in this EDS.

E.      The information provided in this EDS must be kept current. In the event of changes, the Disclosing

Party must supplement this EDS up to the time the City takes action on the Matter. If the Matter is a

contract being handled by the City's Department of Procurement Services, the Disclosing Parly must

update this EDS as the contract requires. NOTE: With respect to Matters subject to Article I of

Chapter 1-23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified

offenses), the information provided herein regarding eligibility must be kept current for a longer period,

as required by Chapter 1-23 and Section 2-154-020 of the Municipal Code.

The Disclosing Party represents and warrants that:

Page 11 of 13

F.1.    The Disclosing Party is not delinquent in the payment of any tax administered by the Illinois Department of Revenue, nor are the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or other charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, property taxes or sales taxes.

F.2    If the Disclosing Party is the Applicant, the Disclosing Party and its Affiliated Entities will not use, nor permit their subcontractors to use, any facility listed by the U.S. E.P.A. on the federal Excluded Parties List System ("EPLS") maintained by the U. S. General Services Administration.

F.3     If the Disclosing Party is the Applicant, the Disclosing Party will obtain from any contractors/subcontractors hired or to be hired in connection with the Matter certifications equal in form and substance to those in F.1. and F.2. above and will not, without the prior written consent of the City, use any such contractor/subcontractor that does not provide such certifications or that the Disclosing Party has reason to believe has not provided or cannot provide truthful certifications.

NOTE: If the Disclosing Party cannot certify as to any of the items in F.I., F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

Under penalty of perjury, the person signing below: (1) warrants that he/she is authorized to execute this EDS and Appendix A (if applicable) on behalf of the Disclosing Party, and (2) warrants that all certifications and statements contained in this EDS and Appendix A (if applicable) are true, accurate and complete as ofthe date furnished to the City.

Wells Fargo Bank^National Association

 

(Print or type name of person signing)

Executive Vice President (Print or type title of person signing)

Signed and sworn to before me on (date) -JUVlg^ tod ^at .^V,VYiNe^ tVl       County,   V^mjl^d Wy, (state).

PATRICIA A. RUEDENBERG

4-73gtov^AJ0uA- ^^^yJ2^h^u^-^ Notary Public.

( \      NOTARY PUBLIC • MINNESOTA

Commission

expires:    If&l ^/rf.T^O    . W

Page 12 of 13

SLAVERY ERA BUSINESS SUMMARY

After years of research, Wells Fargo has found no records that indicate it - or any entities it acquired before the Wachovia merger - had ever financed slavery, held slaves as collateral, owned slaves, or profited from slavery.

With the Wachovia merger, Wells Fargo inherited hundreds of Wachovia's predecessor financial institutions, including two that had extensive involvement in slavery. In 2005 Wachovia announced these findings and apologized for the role its predecessors played and renewed its commitment to preserve and promote the history of the African-American experience in our nation. Wells Fargo shares that commitment and affirms its long-standing opposition to slavery.

The following narrative summarizes the results of the research that has been performed regarding Wachovia Bank and its ties to slavery.

SUMMARY OF RESEARCH

External research has revealed that two predecessor institutions ofthe undersigned, the Georgia Railroad & Banking Company and the Bank of Charleston, owned slaves.

Due to incomplete records, the undersigned cannot determine exactly how many slaves either the Georgia Railroad and Banking Company or the Bank of Charleston owned. Through specific transactional records, researchers determined that the Georgia Railroad and Banking Company owned at least 162 slaves, and the Bank of Charleston accepted at least 529 slaves as collateral on mortgaged properties or loans, and acquired an undetermined number of these individuals when customers defaulted on their loans.

The Georgia Railroad and Banking Company was founded in 1833 to complete a railroad line between the City of Augusta and the interior of the state of Georgia. The company relied on slave labor for the construction and maintenance of this railway. According to the existing and searchable bank records, 162 slaves were owned or authorized to be purchased by the Georgia Railroad and Banking Company between 1836 and 1842. In addition, the company awarded work to contractors who purchased at least 400 slaves to perform work on the railways.

The Bank of Charleston, founded in 1834, issued loans and mortgages where enslaved individuals were used as collateral. A review of the bank's account ledgers revealed a minimum of 24 transactions involving reference to 529 enslaved individuals being used as collateral. In most cases, the loan was paid on schedule, and the bank never took possession of slaves that were pledged as collateral on the loan. In several documented instances, however, customers defaulted on their loans and the Bank of Charleston took actual possession of slaves. The total number of slaves of whom the bank took possession cannot be accurately tallied due to the lack of records.

EDOCS #2073307 (Rev. 07.02.2013)

In addition, ten predecessor companies were determined to have profited more indirectly from slavery through the following means:

Founders, directors, or account holders who owned slaves and/or profited directly from slavery;

• Investing in or transacting business with companies or individuals that owned slaves;

Investing in the bonds of slave states and municipalities;

Investing in U.S. government bonds during years when the United States

permitted and profited from slave labor directly through taxation.

These institutions are:

• Bank ofNorth America (Philadelphia, Pa.)
• Bank of Baltimore

The Philadelphia Bank (later Philadelphia National Bank) Farmers' & Mechanics' Bank of Philadelphia

Pennsylvania Company for Insurances on Lives and the Granting of Annuities

• State Bank of Elizabeth (Elizabeth, N.J.) State Bank of Newark (Newark, N.J.) Savings Bank of Baltimore
• Girard National Bank

The Carswell Group (established in 1868, acquired by Palmer & Cay, Inc. in 1985)

• The Trenton Banking Company

EDOCS #2073307 (Rev. 07.02.2013)

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED CITY OFFICIALS AND DEPARTMENT HEADS

This Appendix is to be completed only by (a) the Applicant, and (b) any legal entity which has a direct ownership interest in the Applicant exceeding 7.5 percent. It is not to be completed by any legal entity which has only an indirect ownership interest in the Applicant.

Under Municipal Code Section 2-154-015, the Disclosing Party must disclose whether such Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently has a "familial relationship" with any elected city official or department head. A "familial relationship" exists if, as of the date this EDS is signed, the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof is related to the mayor, any alderman, the city clerk, the city treasurer or any city department head as spouse or domestic partner or as any of the following, whether by blood or adoption: parent, child, brother or sister, aunt or uncle, niece or nephew, grandparent, grandchild, father-in-law, mother-in-law, son-in-law, daughter-in-law, stepfather or stepmother, stepson or stepdaughter, stepbrother or stepsister or half-brother or half-sister.

"Applicable Party" means (1) all executive officers ofthe Disclosing Party listed in Section II.B.l.a., if the Disclosing Party is a corporation; all partners of the Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners of the Disclosing Party, if the Disclosing Party is a limited partnership; all managers, managing members and members of the Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers of the Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Does the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently have a "familial relationship" with an elected city official or department head?

[ ] Yes      [x] No

If yes, please identify below (1) the name and title of such person, (2) the name ofthe legal entity to which such person is connected; (3) the name and title ofthe elected city official or department head to whom such person has a familial relationship, and (4) the precise nature of such familial relationship.

See Familial Relationship Attachment Appendix A

Page 13 of 13

Attachment to City of Chicago Economic Disclosure Statement and Affidavit Appendix A

Familial Relationships with Elected City Officials and Department Heads

To the best of the Disclosing Party's knowledge, after due inquiry, the Disclosing Party has no familial relationships as referenced in this Appendix A. Please note, that the Disclosing Party has limited its inquiry to the Persons identified in Section II.B.l of the EDS.

787080

(DO NOT SUBMIT THIS PAGE WITH YOUR EDS. The purpose of this page is for you to , recertify your EDS prior to submission to City Council or on the date of closing. If unable to recertify truthfully, the Disclosing Party must complete a new EDS with correct or corrected information)

RECERTIFICATION

Generally, for use with City Council matters. Not for City procurements unless requested.

This recertification is being submitted in connection with purchase of 3151 W, Washington from the City

[identify the Matter]. Under penalty of perjury, the person signing below: (1) warrants that

he/she is authorized to execute this EDS recertification on behalf of the Disclosing Party, (2)

warrants that all certifications and statements contained in the Disclosing Party's original EDS

are true, accurate and complete as of the date furnished to the City and continue to be true,

accurate and complete as of the date of this recertification, and (3) reaffirms its

acknowledgments.

 

 

Wells Fargo Bank, National Association (Print or type legal name of Disclosing Party)

By: //

Title of signatory:

 

Signed and sworn to before me on [date] ^o>>£tWtac r \M 3lQ)M, by

~Tc^  ft. f arv->pbe\\   , at  Ve.rvnep>o   County, fyl./yvrScvYtx [state].

 

Commission expires:    \-   \ •- ^.C^^Q

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION I - GENERAL INFORMATION

A. Legal name of the Disclosing Party submitting this EDS. Include d/b/a/ if applicable: WFC Holdings Corporation

Check ONE ofthe following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

1. [ ] the Applicant

OR

1. f*] a legal entity holding a direct or indirect interest in the Applicant. State the legal name of the Applicant in which the Disclosing Party holds an interest: Wells Fargo Bank, National Association

OR

3.      [] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:      

420 Montgomery Street

B. Business address of the Disclosing Party:       

San Francisco, CA 94163

312-443-1775      312-896-6798 cnogar@lockelord.com

1. Telephone:      Fax:      Email:      

Courtney Nogar

1. Name of contact person:      

1. Federal Employer Identification No. (if you have one):'.            -            :      
2. Brief description of contract, transaction or other undertaking (referred to below as the "Matter") to which this EDS pertains. (Include project number and location of property, if applicable):

Purchase of the vacant lot located at 3153 Washington

Department of Planning and Development

1. Which City agency or department is requesting this EDS?_      

If the Matter is a contract being handled by the City's Department of Procurement Services, please complete the following:

N/A N/A

Specification #      and Contract #      

Ver. 01-01-12

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SECTION II -

- DISCLOSURE OF OWNERSHIP INTERESTS

A. NATURE OF THE DISCLOSING PARTY

1.   Indicate the nature of the Disclosing Party:

[ ] Person      [ ]      Limited liability company

[ ] Publicly registered business corporation      [ ]      Limited liability partnership

p] Privately held business corporation      [ ]      Joint venture

[ ] Sole proprietorship      [ ]      Not-for-profit corporation

[ ] General partnership      (Is the not-for-profit corporation also a 501(c)(3))?

[ ] Limited partnership      [ ] Yes      [ ] No

[ ] Trust      [ ]      Other (please specify)

1. For legal entities, the state (or foreign country) of incorporation or organization, if applicable: Delaware
2. For legal entities not organized in the State oflllinois: Has the organization registered to do business in the State oflllinois as a foreign entity?

[ ] Yes      H No      [ ] N/A

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

1.   List below the full names and titles of all executive officers and all directors of the entity. NOTE: For not-for-profit corporations, also list below all members, if any, which arc legal entities. If there arc no such members, write "no members." For trusts, estates or other similar entities, list below the legal titleholder(s).

If the entity is a general partnership, limited partnership, limited liability company, limited liability partnership or joint venture, list below the name and title of each general partner, managing member, manager or any other person or entity that controls the day-to-day management ofthe Disclosing Party. NOTE: Each legal entity listed below must submit an EDS on its own behalf.

Name Title See Attachment "A"

2.   Please provide the following information concerning each person or entity having a direct or indirect beneficial interest (including ownership) in excess of 7.5% ofthe Disclosing Party. Examples of such an interest include shares in a corporation, partnership interest in a partnership or joint venture,

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ATTACHMENT "A"

WFC HOLDINGS CORPORATION DIRECTORS

Jon R. Campbell Director James M. Strother Director Richard D. Levy Director

WFC HOLDINGS CORPORATION EXECUTIVES:

Timothy J. Sloan       Senior Executive Vice President and Chief Financial Officer James M. Strother       Executive Vice President Carrie Lynn Tolstedt President

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interest of a member or manager in a limited liability company, or interest of a beneficiary of a trust, estate or other similar entity. If none, state "None." NOTE: Pursuant to Section 2-154-030 of the Municipal Code of Chicago ("Municipal Code"), the City may require any such additional information from any applicant which is reasonably intended to achieve full disclosure.

Name      Business Address      Percentage Interest in the

Disclosing Party

Wells Fargo & Company, 420 Montgomery Street, San Francisco, CA 94104 100%

SECTION III - BUSINESS RELATIONSHIPS WITH CITY ELECTED OFFICIALS

Has the Disclosing Party had a "business relationship," as defined in Chapter 2-156 of the Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Yes      [x] No

If yes, please identify below the name(s) of such City elected official(s) and describe such

relationship(s):

See Attachment "B"

SECTION IV - DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

The Disclosing Party must disclose the name and business address of each subcontractor, attorney, lobbyist, accountant, consultant and any other person or entity whom the Disclosing Party has retained or expects to retain in connection with the Matter, as well as the nature of the relationship, and the total amount of the fees paid or estimated to be paid. The Disclosing Party is not required to disclose employees who are paid solely through the Disclosing Party's regular payroll.

"Lobbyist" means any person or entity who undertakes to influence any legislative or administrative action on behalf ofany person or entity other than: (1) a not-for-profit entity, on an unpaid basis, or (2) himself. "Lobbyist" also means any person or entity any part of whose duties as an employee of another includes undertaking to influence any legislative or administrative action.

If the Disclosing Party is uncertain whether a disclosure is required under this Section, the Disclosing Party must either ask the City whether disclosure is required or make the disclosure.

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Attachment "B"

Section III - Business Relationships with City Elected Officials

The undersigned warrants, to the best of his knowledge after due inquiry, that the Disclosing Party has had no business relationship with any City elected official in 12 months before the date the undersigned has signed this EDS.

Note that in the ordinary course of its business, Wells Fargo Bank, N.A. makes loans of various types with individuals and businesses. We have determined that these loans do not constitute a "business relationship" as defined in Chapter 2-156 of the Municipal Code.

Note further that the Disclosing Party has no way of identifying spouses or domestic partners of any City elected official, or the identities of any entities in which any city elected official or his or her spouse or domestic partner has a financial interest, and thus limits its certification to "City elected officials" as specially required by Section III. Specifically, we made due inquiry with respect to the City's Aldermen, the Mayor, the Treasurer and the City Clerk.

35260S4

Name (indicate whether Business retained or anticipated Address to be retained)

Relationship to Disclosing Party (subcontractor, attorney, lobbyist, etc.)

Fees (indicate whether paid or estimated.) NOTE: "hourly rate" or "t.b.d." is not an acceptable response.

(Add sheets if necessary)

Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V - CERTIFICATIONS

1. COURT-ORDERED CHILD SUPPORT COMPLIANCE

Under Municipal Code Section 2-92-415, substantial owners of business entities that contract with the City must remain in compliance with their child support obligations throughout the contract's term.

Has any person who directly or indirectly owns 10% or more of the Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[ ] Yes      [ ] No      No person directly or indirectly owns 10% or more of the

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

[ ] Yes      [ ] No

1. FURTHER CERTIFICATIONS

1.   Pursuant to Municipal Code Chapter 1 -23, Article I ("Article I")(which the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Party submitting this EDS is the Applicant and is doing business with the City, then the Disclosing Party certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, attempted, or conspiracy to commit bribery, theft, fraud, forgery, perjury, dishonesty or deceit against an officer or employee of the City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance with Article I is a continuing requirement for doing business with the City. NOTE: If Article I applies to the Applicant, the permanent compliance timeframe in Article I supersedes some five-year compliance timeframes in certifications 2 and 3 below.

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2. The Disclosing Parly and, if the Disclosing Parly is a legal entity, all of those persons or entities identified in Section II.B. 1. of this EDS:

1. are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, state or local unit of government;
2. have not, within a five-year period preceding the date of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or state antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
3. are not presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) with committing any ofthe offenses set forth in clause B.2.b. of this Section V;
4. have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
5. have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.

3.   The certifications in subparts 3, 4 and 5 concern:

• the Disclosing Party;
• any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection with the Matter, including but not limited to all persons or legal entities disclosed under Section IV, "Disclosure of Subcontractors and Other Retained Parties");
• any "Affiliated Entity" (meaning a person or entity that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Party, or is, with the Disclosing Party, under common control of another person or entity. Indicia of control include, without limitation: interlocking management or ownership; identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entity following the ineligibility of a business entity to do business with federal or state or local government, including the City, using substantially the same management, ownership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entity means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, with the Contractor, is under common control of another person or entity;
• any responsible official of the Disclosing Party, any Contractor or any Affiliated Entity or any other official, agent or employee ofthe Disclosing Party, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official of the Disclosing Party, any Contractor or any Affiliated Entity (collectively "Agents").

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Neither the Disclosing Party, nor any Contractor, nor any Affiliated Entity of either the Disclosing Party or any Contractor nor any Agents have, during the five years before the date this EDS is signed, or, with respect to a Contractor, an Affiliated Entity, or an Affiliated Entity of a Contractor during the five years before the date of such Contractor's or Affiliated Entity's contract or engagement in connection with the Matter:

1. 1. bribed or attempted to bribe, or been convicted or adjudged guilty of bribery or attempting to bribe, a public officer or employee of the City, the State oflllinois, or any agency ofthe federal government or ofany state or local government in the United States of America, in that officer's or employee's official capacity;
   2. agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
   3. made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
2. violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

1. Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense ofany state or of the United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
2. Neither the Disclosing Party nor any Affiliated Entity is listed on any of the following lists maintained by the Office of Foreign Assets Control of the U.S. Department ofthe Treasury or the Bureau of Industry and Security ofthe U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List and the Debarred List.
3. The Disclosing Party understands and shall comply with the applicable requirements of Chapters 2-55 (Legislative Inspector General), 2-56 (Inspector General) and 2-156 (Governmental Ethics) of the Municipal Code.
4. If the Disclosing Party is unable to certify to any of the above statements in this Part B (Further Certifications), the Disclosing Party must explain below:

See Attachment "C"

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ATTACHMENT "C"

ATTACHMENT TO SECTION V, PART B-CERTAIN OFFENSES INVOLVING CCC AND SISTER AGENCIES AND SECTION V, PART C-FURTHER CERTIFICATIONS

The Disclosing Party certifies the accuracy of the certifications contained in Section V,

paragraph B (1-3) and C (1-5) only as to itself, and certifies that to the best of the Disclosing Party's knowledge after due inquiry: (i) the statements in paragraphs B (1-3) and C (1-5) are accurate with respect to the executive officers and directors ofthe Disclosing Party identified in Section II.B.l.a ofthe EDS and (ii) the statements in paragraphs C (3-5) arc accurate with respect to any "Contractors" ofthe Disclosing Party identified in Section IV ofthe EDS.

Notwithstanding the forgoing, in the ordinary course of its business, Wells Fargo receives various complaints and lawsuits which contain an assortment of allegations, some of which may result in judgments against Wells Fargo. Like all major institutions, Wells Fargo is subject to various litigations and proceedings pursuant to which judgments, injunctions or liens may be issued. Wells Fargo responds regularly to inquiries and investigations by governmental entities and, as a highly regulated diversified financial institution has in the past entered into settlements of some of those investigations, including the one specified below. Wells Fargo Bank, N.A. has paid municipal fines in connection with a small number of houses for alleged violations of local housing ordinances, some of which are characterized as misdemeanors. However, there have been no judgments, injunctions or liens arising out of such litigations or proceedings in the last five years that would materially impair Wells Fargo's ability as of this date to conduct its business or meet its obligations under the transaction to which this EDS relates. Also in the ordinary course of its business, Wells Fargo regularly enters into financial transactions of various types with public entities throughout the United States. It is possible that one or more public entities have terminated a transaction for cause or default.

For a description of certain legal proceedings, please sec the Wells Fargo's SEC filings, https://www.wellsfargo.com/invest _relations/filines, a summary of which are on file with the City. The City also has on file the Wells Fargo press release dated December 8, 2011 regarding the municipal derivatives bid practices settlement with the Office ofthe Comptroller of the Currency, Securities and Exchange Commission, the U.S. Internal Revenue Service, U.S. Department of Justice and a group of state Attorneys General. On February 9, 2012, Wells Fargo & Company issued a press release regarding an agreement with the federal government and state attorneys general concerning mortgage servicing, foreclosure and origination issues, and filed an SEC Form 8-K in accordance therewith. Material updates to Wells Fargo's SEC filings will be provided in connection with future EDS filings.

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WELLS FARGO & COMPANY SEC FILINGS (Attachment "C")

Lepal Proceedings Section from 10-K filed 2/28/08 (Wachovia)

Wachovia and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wachovia and/or its subsidiaries with respect to transactions in which Wachovia and/or our subsidiaries acted as banker, lender, underwriter, financial advisor or broker or in activities related thereto. In addition, Wachovia and its subsidiaries may be requested to provide information or otherwise cooperate with governmental authorities in the conduct of investigations of other persons or industry groups. It is Wachovia's policy to cooperate in all regulatory inquiries and investigations.

Although there can be no assurance as to the ultimate outcome, Wachovia and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and wc intend to defend vigorously each such case. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

In the Matter of KPMG LLP Certain Auditor Independence Issues. The SEC has requested Wachovia to produce certain information concerning any agreements or understandings by which Wachovia referred clients to KPMG LLP during the period January 1, 1997 to November 2003 in connection with an inquiry regarding the independence of KPMG LLP as Wachovia's outside auditors during such period. Wachovia is continuing to cooperate with the SEC in its inquiry, which is being conducted pursuant to a formal order of investigation entered by the SEC on October 21, 2003. Wachovia believes the SEC's inquiry relates to certain tax services offered to Wachovia customers by KPMG LLP during the period from 1997 to early 2002, and whether these activities might have caused KPMG LLP not to be "independent" from Wachovia, as defined by applicable accounting and SEC regulations requiring auditors of an SEC-reporting company to be independent ofthe company. Wachovia and/or KPMG LLP received fees in connection with a small number of personal financial consulting transactions related to these services. KPMG LLP has confirmed to Wachovia that during all periods covered by the SEC's inquiry, including the present, KPMG LLP was and is "independent" from Wachovia under applicable accounting and SEC regulations.

Financial Advisor Wage/Hour Class Action Litigation. Wachovia Securities, LLC, Wachovia's retail securities brokerage subsidiary, is a defendant in multiple state and nationwide putative class actions alleging unpaid overtime wages and improper wage deductions for financial advisors. In December 2006 and January 2007, related cases pending in U.S. District courts in several states were consolidated for case administrative purposes in the U.S. District Court for the Central District of California pursuant to two orders of the Multi-District Litigation Panel. There is an additional case alleging a statewide class under California law, which is currently pending in Superior Court in Los Angeles County, California. Wachovia believes that it has meritorious defenses to the claims asserted in these lawsuits, which are part of an industry trend of related wage/hour class action litigation, and intends to defend vigorously the cases.

Adelphia Litigation. Certain Wachovia affiliates are defendants in an adversary proceeding previously pending in the United States Bankruptcy Court for the Southern District of New York related to the bankruptcy of Adelphia Communications Corporation ("Adelphia"). In February 2006, an order was entered moving the case to the United States District Court for the Southern District of New York The Official Committee of Unsecured Creditors in Adelphia's bankruptcy case has filed claims on behalf of Adelphia against over 300 financial services companies, including the Wachovia affiliates. The complaint asserts claims against the defendants under state law, bankruptcy law and the Bank Holding Company Act and seeks equitable relief and an unspecified amount of compensatoiy and punitive damages. The Official Committee of Equity Security Holders has sought leave to intervene in that complaint and sought leave to bring additional claims against certain of the financial services companies, including the Wachovia affiliates, including additional federal and state claims. On August 30, 2005, the bankruptcy court granted the creditors' committee and the equity holders' committee standing to proceed with their claims. On June 11, 2007, the court granted in part and denied in part the motions to dismiss filed by Wachovia and other defendants. On July 11, 2007, Wachovia and other defendants requested leave to appeal the partial denial of the motions to dismiss. On January 17, 2008, the district court affirmed the decision of the bankruptcy court on the motion to dismiss with the exception that it dismissed one additional claim.

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Jn addition, certain affiliates of Wachovia, together with numerous other financial services companies, have been named in several private civil actions by investors in Adelphia debt and/or equity securities, alleging among other claims, misstatements in connection with Adelphia securities offerings between 1997 and 2001. Wachovia affiliates acted as an underwriter in certain of those securities offerings, as agent and/or lender for certain Adelphia credit facilities, and as a provider of Adelphia's treasury/cash management services. These complaints, which seek unspecified damages, have been consolidated in the United States District Court for the Southern District of New York, ln separate orders entered in May and July 2005, the District Court dismissed a number ofthe securities law claims asserted against Wachovia, leaving some securities law claims pending. Wachovia still has a pending motion to dismiss with respect to these claims. On June 15, 2006, the District Court signed the preliminary order with respect to a proposed settlement of the securities class action pending against Wachovia and the other financial services companies. At a fairness hearing on the settlement on November 10, 2006, the District Court approved the settlement Wachovia's share of the settlement, $1,173 million, was paid in November 2006. The other private civil actions have not been settled.

Le-Nature's, Inc. Wachovia Bank, N.A. is the administrative agent on a $285 million credit facility extended to LeNature's, Inc. in September 2006, of which approximately $270 million was syndicated to other lenders by Wachovia Capital Markets, LLC as Lead Arranger and Sole Bookrunner. Le-Nature's was the subject of a Chapter 7 bankruptcy petition which was converted to a Chapter 11 bankruptcy petition in November 2006 in U.S. Bankruptcy Court in Pittsburgh, Pennsylvania following a report by a court-appointed custodian in a proceeding in Delaware that revealed fraud and significant accounting irregularities on the part of Le-Nature's management, including maintenance of a dual set of financial records. On March 14, 2007, Wachovia filed an action against several hedge funds in Superior Court for the State of North Carolina entitled Wachovia Bank, National Association and Wachovia Capital Markets LLC v. Harbinger Capital Partners Master Fund 1, Ltd. et al., alleging that the hedge fund defendants had acquired a significant quantity of the outstanding debt with full knowledge of the Le Nature's fraud and with the intention of pursuing alleged fraud and other tort claims against Wachovia purportedly related to its role in the Le-Nature's credit facility. The assertion of such claims would constitute a violation of North Carolina's legal and public policy prohibitions on champerty and maintenance. A preliminary injunction has been entered by the Court that, among other things, prohibits defendants from asserting any such claims in any other forum, but allowing these defendants to bring any claims they believe they possess against Wachovia as compulsory counterclaims in the North Carolina action. On September 18, 2007, these defendants filed an action in the U.S. District Court for the Southern District of New York against Wachovia Capital Markets LLC, a third party and two members of Le-Nature's management asserting claims arising under federal RICO laws. Three original purchasers of the debt also joined the action and asserted various tort claims, including fraud. Wachovia has filed a motion in the North Carolina court seeking to have these defendants held in contempt for violating the preliminary injunction and is seeking dismissal ofthe New York action. Wachovia, which itself was victimized by the Le-Nature's fraud, will pursue its rights against Le-Nature's and in this litigation vigorously.

Interchange Litigation. Wachovia Bank, N.A and Wachovia are named as defendants in seven putative class actions filed on behalf of a plaintiff class of merchants with regard to the interchange fees associated with Visa and Mastercard payment card transactions. These actions have been consolidated with more than 40 other actions, which did not name Wachovia as a defendant, in the United Stated District Court for the Eastern District of New York. Visa, Mastercard and several banks and bank holding companies are named as defendants in various of these actions which were consolidated before the Court pursuant to orders of the Judicial Panel on Multidistrict Litigation. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, Mastercard and their member banks unlawfully collude to set interchange fees. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. The payment card association defendants and banking defendants are aggressively defending the consolidated action. Wachovia, along with other members of Visa, is a party to Loss and Judgment Sharing Agreements, which provide that Wachovia, along with other member banks of Visa, will share, based on a formula, in any losses in connection with certain litigation specified in the Agreements, including the Interchange Litigation. On November 7, 2007, Visa announced that it had reached a settlement with American Express in connection with certain litigation which is covered by Wachovia's obligations as a Visa member bank and by the Loss Sharing Agreement.

Payment Processing Center. On February 17, 2006, the U.S. Attorney's Office for the Eastern District of Pennsylvania filed a civil fraud complaint against a former Wachovia Bank, N.A. customer, Payment Processing Center ("PPC"). PPC

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was a third party payment processor for telemarketing and catalogue companies. On April 12, 2007, a civil class action, Faloney et al. v. Wachovia, was filed against Wachovia in the U.S. District Court for the Eastern District of Pennsylvania by a putative class of consumers who made purchases through telemarketer customers of PPC. The suit alleges that between April 1, 2005 and February 21, 2006, Wachovia conspired with PPC to facilitate PPC's purported violation of RICO. The Office of the Comptroller of the Currency is conducting a formal investigation of Wachovia's handling of the PPC account relationship and of five other customers engaged in similar businesses. Wachovia is vigorously defending the civil lawsuit and is cooperating with government officials in the investigations of PPC and Wachovia's handling of the PPC customer relationship.

Municipal Derivatives Bid Practices Investigation. The Department of Justice ("DOJ") and the SEC, beginning in November 2006, have been requesting information from a number of financial institutions, including Wachovia Bank, N.A.'s municipal derivatives group, generally with regard to competitive bid practices in the municipal derivative markets. In connection with these inquiries, Wachovia Bank, N.A. has received subpoenas from both the DOJ and SEC seeking documents and information. The DOJ and the SEC have advised Wachovia Bank, N.A. that they believe certain of its employees engaged in improper conduct in conjunction with certain competitively bid transactions and, in November 2007, the DOJ notified two Wachovia Bank, N.A. employees, both of whom are on administrative leave, that they are regarded as targets ofthe DOJ's investigation. Wachovia Bank, N.A. has been cooperating and continues to fully cooperate with the government investigations.

Other Regulatory Matters. Governmental and self-regulatory authorities have instituted numerous ongoing investigations of various practices in the securities and mutual fund industries, including those discussed in Wachovia's previous filings with the SEC and those relating to sales practices and record retention. The investigations cover advisory companies to mutual funds, broker-dealers, hedge funds and others. Wachovia has received subpoenas and other requests for documents and testimony relating to the investigations, is endeavoring to comply with those requests, is cooperating with the investigations, and where appropriate, is engaging in discussions to resolve the investigations. Wachovia is continuing its own internal review of policies, practices, procedures and personnel, and is taking remedial action where appropriate.

Outlook. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wachovia believes that the eventual outcome of the actions against Wachovia and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wachovia's consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wachovia's results of operations for any particular period.

Legal Proceedings Section from 1st Quarter 200fi 10-Q filed 5/12/08 (Wachovia)

Wachovia and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wachovia and/or its subsidiaries with respect to transactions in which Wachovia and/or our subsidiaries acted as banker, lender, underwriter, financial advisor or broker or in activities related thereto. In addition, Wachovia and its subsidiaries may be requested to provide information or otherwise cooperate with governmental authorities in the conduct of investigations of other persons or industry groups. It is Wachovia's policy to cooperate in all regulatory inquiries and investigations.

Although there can be no assurance as to the ultimate outcome, Wachovia and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each such case. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

The following supplements certain matters previously reported in Wachovia's Annual Report on Form 10-K for the year ended December 31,2007.

Le-Nature's, Inc. Wachovia Bank, N.A. is the administrative agent on a $285 million credit facility extended to LeNature's, Inc. in September 2006, of which approximately $270 million was syndicated to other lenders by Wachovia

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Capita] Markets, LLC as Lead Arranger and Sole Bookrunner. Le-Nature's was the subject of a Chapter 7 bankruptcy petition which was converted to a Chapter 11 bankruptcy petition in November 2006 in U.S. Bankruptcy Court in Pittsburgh, Pennsylvania following a report by a court-appointed custodian in a proceeding in Delaware that revealed fraud and significant accounting irregularities on the part of Le-Nature's management, including maintenance of a dual set of financial records. On March 14, 2007, Wachovia filed an action against several hedge funds in Superior Court for the Stale of North Carolina entitled Wachovia Bank, National Association and Wachovia Capital Markets LLC v. Harbinger Capital Partners Master Fund 1, Ltd. et al., alleging that the hedge fund defendants had acquired a significant quantity of the outstanding debt with full knowledge of the Le Nature's fraud and with the intention of pursuing alleged fraud and other tort claims against Wachovia purportedly related to its role in the Le-Nature's credit facility. The assertion of such claims would constitute a violation of North Carolina's legal and public policy prohibitions on champerty and maintenance. A preliminary injunction was entered by the Court that, among other things, prohibited defendants from assorting any such claims in any other forum. On September 18, 2007, these defendants filed an action in the U.S. District Court for the Southern District of New York against Wachovia Capital Markets LLC, a third party and two members of Le-Nature's management asserting claims arising under federal RICO laws. Three original purchasers of the debt also joined the action and asserted various tort claims, including fraud. On March 13, 2008 the North Carolina judge granted Defendants' motion to stay the North Carolina action and modified the injunction to allow the Defendants to attempt to assert claims in the New York action, which they have now done. Wachovia has appealed this decision to the North Carolina Court of Appeals. Wachovia has filed a motion to dismiss the New York action which remains pending; if that motion is granted, the North Carolina judge has indicated that he will revisit the stay order. On April 4, 2008, Le-Nature's Director of Accounting pled guilty to four felony counts in federal district court in Pittsburgh, including one count of bank fraud for defrauding Wachovia. On April 28, 2008 holders of Le-Nature's Senior Subordinated Notes, an offering which was underwritten by Wachovia in June 2003, sued in state court in California alleging various fraud claims relating to that offering. Wachovia itself was victimized by the Le-Nature's fraud, and will pursue its rights against Le-Nature's and defend its interests vigorously in all litigation.

Payment Processing Center. On February 17, 2006, the U.S. Attorney's Office for the Eastern District of Pennsylvania filed a civil fraud complaint against a former Wachovia Bank, N.A. customer. Payment Processing Center ("PPC"). PPC was a third party payment processor for telemarketing and catalogue companies. On April 12, 2007, a civil class action, Faloney et al. v. Wachovia, was filed against Wachovia in the U.S. District Court for the Eastern District of Pennsylvania by a putative class of consumers who made purchases through telemarketer customers of PPC. The suit alleges that between April 1, 2005 and February 21, 2006, Wachovia conspired with PPC to facilitate PPC's purported violation of RICO. On February 15, 2008, a second putative class action, Harrison v. Wachovia, was filed in the U.S. District Court for the Eastern District of Pennsylvania by a putative class of consumers who made purchases through telemarketing customers of three other third party payment processors which banked with Wachovia. This suit alleges that Wachovia conspired with these payment processors to facilitate purported violations of RICO. On April 24, 2008, Wachovia and the Office of the Comptroller of the Currency ("OCC") entered into an Agreement to resolve the OCC's investigation into Wachovia's relationship with PPC and three other companies. The Agreement provides, among other things, that (i) Wachovia will provide restitution to consumers, (ii) will create a segregated account in the amount of $125 million to cover the estimated maximum cost of the restitution, (iii) will fund organizations that provide education for consumers over a two year period in the amount of $8.9 million, (iv) will make various changes to its policies and procedures related to customers that use remotely created checks and (v) will appoint a special Compliance Committee to oversee compliance with the Agreement Wachovia and the OCC also entered into a Consent Order for Payment of a Civil Money Penalty whereby Wachovia, without admitting or denying the allegations contained therein, agreed to payment of a $10 million civil money penalty. Wachovia is cooperating with government officials and is vigorously defending the civil lawsuits.

Municipal Derivatives Bid Practices Investigation. The Department of Justice ("DOJ") and the SEC, beginning in November 2006, have been requesting information from a number of financial institutions, including Wachovia Bank, N.A.'s municipal derivatives group, generally with regard to competitive bid practices in the municipal derivative markets. In connection with these inquiries, Wachovia Bank, N.A. has received subpoenas from both the DOJ and SEC seeking documents and information. The DOJ and the SEC have advised Wachovia Bank, N.A. that they believe certain of its employees engaged in improper conduct in conjunction with certain competitively bid transactions and, in November 2007, the DOJ notified two Wachovia Bank, N.A. employees, both of whom are on administrative leave, that they are regarded as targets of the DOJ's investigation. Wachovia Bank, N.A. has been cooperating and continues to fully cooperate with the government investigations. In addition, Wachovia Bank N.A. and other financial institutions

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have been named as defendants in four substantially identical purported class actions filed in different U.S. District Courts. The complaints allege that Wachovia Bank, N.A. and various co-defendant financial institutions engaged in an anti-competitive conspiracy regarding bids for municipal derivatives (including Guaranteed Investment Contracts) sold to issuers of municipal bonds. All the complaints assert claims for violations of Section 1 ofthe Sherman Act, and one complaint also asserts a claim for unjust enrichment. The defendants have filed motions to consolidate these actions into one proceeding. Wachovia intends to vigorously defend its rights in these actions.

Auction Rate Securities. Since February 2008 the auctions which set the rates for most auction rate securities have failed resulting in a lack of liquidity for these auction rate securities. Wachovia Securities, LLC and affiliated firms have received inquiries and subpoenas from the SEC and several state regulators requesting information concerning the underwriting, sale and subsequent auctions of municipal auction rate securities and auction rate preferred securities. Further review and inquiry is anticipated by the regulatory authorities and Wachovia will cooperate fully. Wachovia and Wachovia Securities, LLC have been named in a civil suit captioned Judy M. Waldman Trustee v. Wachovia Corporation and Wachovia Securities LLC filed March 19, 2008 in the United States District Court for the Southern District of New York. The suit seeks class action status for customers who purchased and continue to hold auction rate securities based upon alleged misrepresentations made with respect to the quality, risk and characteristics of auction rate securities. Wachovia intends to vigorously defend the civil litigation.

Other Regulatory Matters and Government Investigations. In the course of its banking and financial services businesses, Wachovia and its affiliates are subject to information requests and investigations by governmental and self-regulatory authorities. These authorities have instituted numerous ongoing investigations of various practices in the banking, securities and mutual fund industries, including those discussed in Wachovia's previous filings with the SEC and those relating to anti-money laundering, sales practices, record retention and other laws and regulations involving our customers and their accounts.

In general, the investigations cover advisory companies to mutual funds, broker-dealers, hedge funds and others and may involve the activities of customers or third parties with respect to accounts maintained by Wachovia or transactions in which Wachovia may be involved. Wachovia has received subpoenas and other requests for documents and testimony relating to the investigations, is endeavoring to comply with those requests, is cooperating with the investigations, and where appropriate, is engaging in discussions to resolve the investigations or take other remedial actions. These investigations include an investigation being conducted by the U.S. Attorney's Office for the Southern District of Florida into, among other matters, Wachovia's correspondent banking relationship with certain non-domestic exchange houses and Bank Secrecy Act and anti-money laundering compliance. In November 2007, Wachovia determined that it would stop providing correspondent banking services to non-domestic exchange houses and licensed foreign remittance companies. Wachovia is producing documents and is cooperating fully with the U.S. Attorney's Office's investigation.

Outlook. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wachovia believes that the eventual outcome of the actions against Wachovia and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wachovia's consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wachovia's results of operations for any particular period.

Legal Proceedings Section from 2nd Quarter 2008 10-Q filed 8/11/08 fWachovial

Adelphia Litigation. On July 17, 2008, the U.S. District Court for the Southern District of New York issued a ruling dismissing all of the creditors' committee and equity holders' committee bankruptcy-related claims.

Le-Nature's, Inc. The U.S. Bankruptcy Court confirmed Le-Nature's Plan of Reorganization and it became effective on July 28, 2008. Such plan includes the appointment of a liquidation trustee, who could bring claims on behalf of the estate against Wachovia and other third parties.

Municipal Derivatives Bid Practices Investigation. Wachovia Bank, N.A. has been informed that in connection with the bidding of various financial instruments associated with municipal securities, the Staff of the Securities and Exchange Commission is considering recommending that the Commission institute civil and/or administrative proceedings

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against Wachovia Bank, N.A. In addition, Wachovia has received subpoenas from various states attorneys general regarding these matters. Wachovia Bank, N.A. is cooperating with the government investigations. Four previously disclosed purported private class actions have been assigned to the Southern District of New York for consolidated pre-trial proceedings. Two additional complaints were recently filed in California state court asserting claims similar to those in the purported class actions, along with claims under California law.

Golden West and Related Litigation. A purported securities class action, Lipetz v. Wachovia Corporation, et al, has been filed in the U.S. District Court for the Southern District of New York by purported Wachovia shareholders alleging violations of Sections 10 and 20 of the Securities Exchange Act of 1934. Among other allegations, plaintiffs allege Wachovia's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. ("Golden West") mortgage portfolio, Wachovia's exposure to other mortgage related products such as collateralized debt obligations ("CDOs"), control issues and auction rate securities.

A purported class action, Miller, et al. v. Wachovia Corporation, et al, has been filed against Wachovia, its board of directors and certain senior officers in the New York Supreme Court for the County of Nassau, since removed by Wachovia to the U.S. District Court for the Eastern District of New York, relating to Wachovia's May 2007 issuance of trust preferred securities. The plaintiffs allege violations of Sections 11,12 and 15 of the Securities Act of 1933 as a result of allegedly misleading disclosures relating to the Golden West mortgage portfolio. Seven purported class actions have been filed against Wachovia, its board of directors and certain senior officers in the U.S. District Court for the Southern District of New York on behalf of Wachovia employees who held shares of Wachovia common stock in their Wachovia Savings Plan accounts. The plaintiffs allege breach of fiduciary duty under ERISA, among other things, claiming that the defendants should not have permitted Wachovia common stock to remain an investment option in the Savings Plan because alleged misleading disclosures relating to the Golden West mortgage portfolio, exposure to CDOs and other problem loans, and other alleged misstatements made its stock a risky and imprudent investment for employee retirement accounts. In addition, several purported shareholders have submitted notices that they may initiate, and one purported shareholder has filed a complaint, Estate of Joseph Romain v. Wachovia Corporation, etal, in the U.S. District Court for the Southern District of New York initiating, shareholder derivative claims alleging breaches of fiduciary duty against Wachovia's board of directors and various senior officers arising out of various alleged failures of controls relating to its disclosures regarding the Golden West mortgage portfolio, CDOs, and other alleged control issues involving anti-money laundering, bank owned life insurance, auction rate securities, municipal derivatives bid practices and the previously disclosed settlement with the OCC in the Payment Processing Center matter. These matters are in a preliminary stage. Wachovia intends to defend vigorously each such case.

Auction Rate Securities. Wachovia is engaged in active settlement discussions with various state regulators and the SEC of ongoing investigations concerning the underwriting, sale and subsequent auctions of certain auction rate securities by Wachovia Securities, LLC, and Wachovia Capital Markets, LLC, including the likelihood of liquidity solutions. See also "Management's Discussion & Analysis" in the Financial Supplement contained in Exhibit (19) to this Report.

Outlook. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wachovia believes that the eventual outcome of the actions against Wachovia and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wachovia's consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wachovia's results of operations for any particular period.

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8-K August 15,2008 (Wachovia)

Terms ofthe agreement in principle include the following:

•  Wachovia will offer to purchase at par ARS held by all individuals, charities and religious organizations, as well as ARS held by small and medium-sized businesses with account values and household values of $10 million or less, that were purchased at Wachovia on or before Feb. 13, 2008. These purchases will commence no later than November 10, 2008, and conclude no later than Nov. 28, 2008, for clients who accept this offer. ARS that are the subject of functioning auctions will not be eligible for purchase.

• • Wachovia will offer to purchase at par ARS held by all other clients that were purchased at Wachovia on or before Feb. 13, 2008. These purchases will commence no later than June 10, 2009, for clients who accept this offer and conclude no later than June 30, 2009. ARS that are the subject of functioning auctions will not be eligible for purchase.
  • Wachovia will also reimburse investors who can reasonably be identified and who would have been covered by the offer but who sold their ARS below par, between Feb. 13, 2008, and the dale of entry ofthe settlement, for the difference between par and the price at which the investor sold the ARS. The reimbursement will be made by Nov. 28,2008.
  • In addition to Wachovia's offer to purchase ARS from clients, Wachovia will offer loans to affected clients in need of liquidity until the ARS repurchases occur.
  • Wachovia will refund refinancing fees to municipal ARS issuers who issued ARS in the initial primary market between Aug. 1, 2007, and Feb. 13, 2008, and refinanced those securities after Feb. 13, 2008.
  • Wachovia will pay a total fine of $50 million to the slate regulatory agencies, which will be distributed to the States as determined by the North American Securities Administrators Association and the State of New York.
• Wachovia neither admits nor denies allegations of wrongdoing.

As previously disclosed in Wachovia's Second Quarter Report on Form 10-Q filed with the Securities and Exchange Commission on Aug. 11,2008, in connection with the expectation of a potential settlement of ARS matters, Wachovia recorded a $500 million pre-tax increase to legal reserves, including amounts reserved for estimated market valuation losses on affected ARS, for the second quarter of 2008, based on estimates and assumptions at the time of the filing. Based on the terms of today's agreement in principle, the timing and currently estimated amounts of ARS to be purchased in the offer, current market conditions, expected future redemptions, and expected sales by Wachovia to third parties of a portion of ARS to be purchased in the offer, Wachovia currently expects lo record a further $275 million pre-tax increase to legal reserves in the third quarter of 2008. Wachovia also currently expects that its Tier 1 capital ratio will decrease by approximately 8 basis points in the third quarter 2008, reflecting the additional increase in legal reserves and the capital impact ofthe offers. Wachovia does not currently expect that the purchase of ARS under the agreement in principle will have a material effect on capital, liquidity or overall financial results through expected maturities or redemptions ofthe ARS purchased, or alter Wachovia's previously announced focus on improving its Tier 1 capital ratio.

Wachovia currently estimates that the par value of ARS currently outstanding and eligible for purchase under the above offers totals approximately $8.5 billion. Following the purchases of ARS by Wachovia pursuant to the offers, and based on expected future redemptions and the expected sales of ARS to third parties described

Legal Proceedings Section from 3rd Quarter 2008 10-Q filed 10/30/08 fWachovia)

Le Nature's, Inc. On August 26, 2008, the U.S. District Court dismissed the case pending against Wachovia in the Southern District of New York. Plaintiffs have appealed that ruling. Plaintiffs also filed a case asserting similar allegations in the New York State Supreme Court for the County of Manhattan; Wachovia has filed a motion to stay this case pending final resolution of the federal action. In addition, the Bondholder case filed against Wachovia in California has been transferred by the U.S. District Court for the Northern District of California to the U.S. District Court for the Western District of Pennsylvania.

Interchange Litigation. On October 14, 2008, Visa announced an agreement in principle to settle litigation commenced by Discover Card against it. Wachovia has certain obligations to Visa as a member bank and in connection with its previously disclosed Loss Sharing agreement with Visa. Wachovia has fully reserved for these obligations.

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Payment Processing Center. On August 14, 2008, Wachovia reached agreements to settle the Faloney and Harrison class action lawsuits. The settlements have received preliminary approval from the U.S. District Court for the Eastern District of Pennsylvania, with a fairness hearing scheduled for January 2009.

Municipal Derivatives Bid Practices Investigation. Wachovia, along with numerous other financial institutions, has received a number of additional civil complaints from various municipalities filed in various state and federal courts. A number of the federal cases are in the process of being consolidated through the Multi-District Litigation procedures.

Auction Rate Securities. On August 15, 2008, Wachovia announced it had reached settlements in principle with the Secretary of State for the State of Missouri (as the lead state in the North American Securities Administrators Association task force investigating the marketing and sale of auction rate securities), with the New York State Attorney General's Office and with the SEC of their respective investigations of sales practice and other issues related to the sales of auction rate securities ("ARS") by certain affiliates and subsidiaries of Wachovia. Without admitting or denying liability, the agreements in principle require that Wachovia purchase certain ARS sold to customers in accounts at Wachovia, reimburse investors who sold ARS purchased at Wachovia for less than par, provide liquidity loans to customers at no net interest until the ARS are repurchased, offer to participate in special arbitration procedures with customers who claim consequential damages from the lack of liquidity in ARS and refund refinancing fees to certain municipal issuers who issued ARS and later refinanced those securities through Wachovia. Wachovia, without admitting or denying liability, will also pay a total fine of $50 million to the state regulatory agencies and agree to entry of consent orders by the two state regulators and an injunction by the SEC. Wachovia intends to begin buying back the ARS in November 2008. In addition, Wachovia is a defendant in three new purported civil class actions relating to its sale of ARS.

Baytide Petroleum v. Wachovia Securities, LLC, et al. was filed in the U.S. District Court for the Northern District of Oklahoma. The other two cases, Mayfield v. Wachovia Securities, LLC, et al. and Mayor and City of Baltimore v. Wachovia Securities, LLC, et al., were both filed in the U.S. District Court for the Southern District of New York and allege identical antitrust related claims.

Golden West and Related Litigation. On October 14, 2008, the New York City Pension Funds was named the lead plaintiff in the Lipetz matter and an order is in place setting the timeframe for filing an amended complaint and response thereto. The plaintiff in Estate of Romain voluntarily dismissed its shareholder derivative case against Wachovia. A new shareholder.derivative case, Arace v Wachovia Corporation, et al., was filed on September 10, 2008, in the U.S. District Court for the Southern District of New York.

Evergreen Ultra Short Opportunities Fund (the "Fund") Investigation. The SEC and the Secretary of the Commonwealth, Securities Division, ofthe Commonwealth of Massachusetts are conducting separate investigations of Evergreen Investment Management Company, LLC ("EIMCO") and Evergreen Investment Services, Inc. ("EIS") concerning alleged issues surrounding the drop in net asset value of the Fund in May and June 2008. In addition, various Evergreen entities are defendants in three purported class actions, Keefe v. EIMCO , et al.; Krantzberg v. Evergreen Fixed Income Trust, et al.; and Mierzwinski v. EIMCO , et al., all filed in the U.S. District Court for the District of Massachusetts and related to the same events. The cases generally allege that investors in the Fund suffered losses as a result of (i) misleading statements in the Fund's prospectus, (ii) the failure to accurately price securities in the Fund at different points in time and (iii) the failure of the Fund's risk disclosures and description of its investment strategy to inform investors adequately of the actual risks ofthe fund.

Merger Related Litigation. On October 4, 2008, Citigroup, Inc. ("Citigroup") purported to commence an action in the Supreme Court in the State of New York captioned Citigroup, Inc. v. Wachovia Corp., et al., naming as defendants Wachovia, Wells Fargo, and the directors of both companies. The complaint alleged that Wachovia breached an exclusivity agreement with Citigroup, which by its terms was to expire on October 6, 2008, by entering into negotiations and an eventual acquisition agreement with Wells Fargo, and that Wells Fargo and the individual defendants had tortiously interfered with the same contract. In the complaint, Citigroup seeks $20 billion in compensatory damages and $40 billion in punitive damages. After significant procedural activity over the week of October 4-9, including a voluntary dismissal and re-filing of the action in amended form, the case was removed on October 9 to the U.S. District Court for the Southern District of New York. On October 10, Citigroup filed a motion to remand the case to the New York state court, and filed a new proposed amended complaint. The proposed amended complaint includes claims for breach of contract, tortious interference with contract, unjust enrichment, promissory estoppel, and quantum meruit. In the proposed amended complaint, which the court has not yet approved, Citigroup

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seeks $20 billion in compensatory damages, $20 billion in restitutionary and unjust enrichment damages, and $40 billion in punitive damages. On October 24, Wachovia and Wells Fargo filed a joint response to the motion to remand. On October 4, 2008, Wachovia filed a complaint in the U. S. District Court for the Southern District of New York, captioned Wachovia Corp. v. Citigroup, Inc. The complaint seeks declaratory relief, stating that the Wells Fargo merger agreement is valid, proper, and not prohibited by the exclusivity agreement On October 5, Wachovia filed a motion for a preliminary injunction seeking to prevent Citigroup from interfering with or impeding its merger with Wells Fargo. On October9,2008, Citigroup issued a press release stating that Citigroup would no longer seek to enjoin the merger, but would continue to seek compensatory and punitive damages against Wachovia and Wells Fargo. On October 14, 2008, Wells Fargo filed a related complaint in the U. S. District Court for the Southern District of New York, captioned Wells Fargo v. Citigroup, Inc. The complaint seeks declaratory and injunctive relief, stating that the Wells Fargo merger agreement is valid, proper, and not prohibited by the exclusivity agreement. Citigroup has moved to dismiss the complaint On October 8, 2008, a purported class action complaint captioned Irving Ehrenhaus v. John D. Baker, et al., was filed in the Superior Court for the County of Mecklenburg in the State of North Carolina. The complaint names as defendants Wachovia, Wells Fargo, and the directors of Wachovia. The complaint alleges that the Wachovia directors breached their fiduciary duties in approving the merger with Wells Fargo at an allegedly inadequate price, and that the Wells Fargo directors aided and abetted the alleged breaches of fiduciary duty. The action seeks to enjoin the Wells Fargo merger, or to recover compensatory or rescissory damages if the merger is consummated, as well as an award of attorneys' fees and costs. Plaintiffs have asked the Court for expedited discovery and to set a hearing date for a preliminary injunction motion to enjoin the shareholder vote and the closing ofthe transaction.

Data Treasury Litigation. Wachovia Bank, N.A. and Wachovia Corporation are among over 55 defendants named in two actions asserting patent infringement claims filed by Data Treasury Corporation in the U.S. District Court for the Eastern District of Texas. Data Treasury seeks a declaration that its patents are valid and have been infringed, and seeks damages and permanent injunctive relief. One ofthe cases is stayed pending re-examination ofthe patents by the U.S. Patent Office and the other case is currently in discovery.

Outlook. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wachovia believes that the eventual outcome of the actions against Wachovia and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wachovia's consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wachovia's results of operations for any particular period.

FORM 1 OK WELLS FARGO & COMPANY- Filed February 7.7. 2009 fWellsl

ITEM 3.      LEGAL PROCEEDINGS

Information in response to this Item 3 can be found in the 2008 Annual Report to Stockholders under "Financial Statements - Notes to Financial Statements - Note 15 (Guarantees and Legal Actions)" on pages 128-131. That information is incorporated into this report by reference.

NOTE 1 £ WELLS FARGO & COMPANY2008 ANNUAL REPORT: fWellsl Legal Actions

Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries^may be requested to provide information or otherwise cooperate with governmental authorities in the conduct of investigations of other persons or industry groups. Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe wc have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each case, other than matters we describe as having settled. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

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ADELPHIA LITIGATION Wachovia Bank, NA. and Wachovia Capital Markets, LLC, are defendants in an adversary proceeding previously pending in the United States Bankruptcy Court for the Southern District of New York related to the bankruptcy of Adelphia Communications Corporation (Adelphia). The Official Committee of Unsecured Creditors in Adelphia's bankruptcy case filed the claims; the current plaintiff is the Adelphia Recovery Trust, which was substituted as the plaintiff pursuant to Adelphia's confirmed plan of reorganization. In February 2006, an order was entered moving the case to the United States District Court for the Southern District of New York. The complaint asserts claims against the defendants under state law, bankruptcy law and the Bank Holding Company Act and seeks equitable relief and an unspecified amount of compensatory and punitive damages. On June 11, 2007, the Bankruptcy Court granted in part and denied in part the motions to dismiss filed by the two Wachovia entities and other defendants. On January 17, 2008, the District Court affirmed the decision of the Bankruptcy Court on the motion dismiss with the exception that it dismissed one additional claim. On July 17, 2008, the District Court issued a ruling dismissing all ofthe bankruptcy related claims. The remaining claims essentially allege the banks should be liable to Adelphia on theories of aiding and abetting a breach of fiduciary duty and violation of the Bank Holding Company Act. The case is now in discovery.

AUCTION RATE SECURITIES On August IS, 2008, Wachovia Securities, LLC and Wachovia Capital Markets, LLC (collectively the Wachovia Securities Affiliates) announced they had reached settlements in principle with the Secretary of State for the State of Missouri (as the lead state in the North American Securities Administrators Association task force investigating the marketing and sale of auction rate securities), and with the New York State Attorney General's Office of their respective investigations of sales practice and other issues related to the sales of auction rate securities (ARS). Wachovia Securities also announced a settlement in principle with the Securities and Exchange Commission (SEC) of its similar investigation. Without admitting or denying liability, the agreements in principle require that the Wachovia Securities Affiliates purchase certain ARS sold to customers in accounts at the Wachovia Securities Affiliates, reimburse investors who sold ARS purchased at the Wachovia Securities Affiliates for less than par, provide liquidity loans to customers at no net interest until the ARS are repurchased, offer to participate in special arbitration procedures with customers who claim consequential damages from the lack of liquidity in ARS and refund refinancing fees to certain municipal issuers who issued ARS and later refinanced those securities through the Wachovia Securities Affiliates. Without admitting or denying liability, the Wachovia Securities Affiliates will also pay a total fine of $50 million to the state regulatory agencies and agreed to entry of consent orders by the two state regulators and Wachovia Securities, LLC agreed to entry of an injunction by the SEC. All three settlements in principle have been finalized. The Wachovia Securities Affiliates began the buy back of ARS in November 2008. The second and final phase ofthe buy back will take place in June 2009. Wells Fargo Investments, LLC (WFI), Wells Fargo Brokerage Services, LLC, and Wells Fargo Institutional Securities, LLC are engaged in discussions with regulators concerning the sale of ARS. On November 20, 2008, the State of Washington Department of Financial Institutions filed a proceeding entitled In the Matter of determining whether there has been a violation of the Securities Act of Washington by: Wells Fargo Investments, LLC; Wells Fargo Brokerage Services, LLC; and Wells Fargo Institutional Securities, LLC. The action seeks a cease and desist order against violations of the anti-fraud and suitability provisions of the Washington Securities Act. In addition, several purported civil class actions relating to the sale of ARS are currently pending against various Wells Fargo affiliated defendants.

DATA TREASURY LITIGATION Wells Fargo & Company, Wells Fargo Bank, N.A., Wachovia Bank, N.A. and Wachovia Corporation are among over 55 defendants named in two actions asserting patent infringement claims filed by Data Treasury Corporation in the U.S. District Court for the Eastern District of Texas. Data Treasury seeks a declaration that its patents arc valid and have been infringed, and seeks damages and permanent injunctive relief. The cases are currently in discovery.

ELAVON LITIGATION On January 16, 2009, Elavon, Inc., a provider of merchant processing services, filed a complaint in the U.S. District Court for the Northern District of Georgia against Wachovia Corporation, Wachovia Bank, N.A., Wells Fargo & Company, and Wells Fargo Bank, N.A. The complaint seeks equitable relief, including specific performance, and damages for Wachovia Bank's allegedly wrongful termination of its merchant referral contract with Elavon. The complaint also seeks damages, including punitive damages, against the Wells Fargo entities for tortious interference with contractual relations.

ERISA LITIGATION Seven purported class actions have been filed against Wachovia Corporation, its board of directors and certain senior officers in the U.S. District Court for the Southern District of New York on behalf of employees of Wachovia Corporation and its affiliates who held shares of Wachovia Corporation common stock in their Wachovia Savings Plan accounts. The plaintiffs allege breach of fiduciary duty under ERISA, among other things,

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claiming that the defendants should not have permitted Wachovia Corporation common stock to remain an investment option in the Savings Plan because alleged misleading disclosures relating to the Golden West mortgage portfolio, exposure to CDOs and other problem loans, and other alleged misstatements made its stock a risky and imprudent investment for employee retirement accounts.

GOLDEN WEST AND RELATED LITIGATION A purported securities class action, Lipetz v. Wachovia Corporation, et ai, was filed on July 7, 2008, in the U.S. District Court for the Southern District of New York by purported Wachovia Corporation shareholders alleging violations of Sections 10 and 20 of the Securities Exchange Act of 1934. An amended complaint was filed on December 15, 2008. Among other allegations, plaintiffs allege Wachovia Corporation's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. (Golden West) mortgage portfolio, Wachovia Corporation's exposure to other mortgage related products such as CDOs, control issues and auction rate securities. The defendants have until February 27, 2009, to respond to the complaint. A purported class action, Miller, etal. v. Wachovia Corporation, etal., was filed on January 31, 2008, against Wachovia Corporation, its board of directors and certain senior officers in the New York Supreme Court for the County of Nassau, relating to Wachovia Corporation's May 2007 issuance of trust preferred securities. The plaintiffs allege violations of Sections 11,12 and 15 ofthe Securities Act of 1933 as a result of allegedly misleading disclosures relating to the Golden West mortgage portfolio. Wachovia Corporation removed the case to the U.S. District Court for the Eastern District of New York. On January 16, 2009, the case was voluntarily dismissed by the plaintiff and, on the same day, was refiled in the Superior Court of the State of California, Alameda County. A similar case, Swiskay v Wachovia Corporation, et al, was filed on December 19, 2008, in the same court. The Swiskay case is essentially identical to the Miller case except it includes allegations relating to additional Wachovia preferred offerings. On January 21, 2009, a third case, Orange County Employees' Retirement System, et al. v. Wachovia Corporation, et al., was also filed in the same California Superior Court on behalf of Orange County Employees' Retirement System and others. The complaint contains similar allegations to the Miller and Swiskay cases, except it includes some additional individuals and non-affiliated entities as defendants and adds claims relating to additional issuances of preferred stock and debt: securities. Wells Fargo will file appropriate venue and other motions in response to these actions. Several government agencies are investigating matters similar to the issues raised in this litigation. Wells Fargo and its affiliates are cooperating fully.

INTERCHANGE LITIGATION Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation are named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and individual actions brought by individual merchants with regard to the interchange fees associated with Visa and MasterCard payment card transactions. These actions have been consolidated in the United States District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies are named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and their member banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants arc anticompetitive. Wells Fargo and Wachovia, along with other members of Visa, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other member banks of Visa, will share, based on a formula, in any losses from certain litigation specified in the Agreements, including the Interchange Litigation.

LE-NATURE'S, INC. Wachovia Bank, N.A. is the administrative agent on a $285 million credit facility extended to LeNature's, Inc. in September 2006, of which approximately $270 million was syndicated to other lenders by Wachovia Capital Markets, LLC. Le-Nature's was the subject of a Chapter 7 bankruptcy petition which was converted to a Chapter 11 bankruptcy petition in November 2006 in the U.S. Bankruptcy Court for the Western District of Pennsylvania. The filing was precipitated by an apparent fraud relating to Le-Nature's financial condition. On March 14, 2007, the two Wachovia entities filed an action against several hedge funds in the Superior Court for the State of North Carolina, Mecklenburg County, alleging that the hedge fund defendants had acquired a significant quantity of the outstanding debt with full knowledge of Le-Nature's fraud and with the intention of pursuing alleged fraud and other tort claims against the two Wachovia entities purportedly related to their role in Le-Nature's credit facility. A preliminary injunction was entered by the Court that, among other things, prohibited defendants from asserting any such claims in any other forum. On September 18, 2007, these defendants filed an action in the U.S. District Court for the Southern District of New York against Wachovia Capital Markets, a third party and two members of Le-Nature's management asserting claims arising under federal RICO laws. On March 13, 2008, the North Carolina judge granted Defendants' motion to stay the North Carolina action and modified the injunction to allow the Defendants to attempt

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to assert claims in the New York action. The Wachovia entities have appealed. Wachovia Capital Markets fded a motion to dismiss the New York action which was granted on August 26, 2008. Plaintiff's have appealed that ruling. Plaintiffs subsequently filed a case asserting similar allegations in the New York State Supreme Court for the County of Manhattan. On April 28, 2008, holders of Le-Nature's Senior Subordinated Notes, an offering which was underwritten by Wachovia Capital Markets in June 2003, sued alleging various fraud claims; this case is pending in the U.S. District Court for the Western District of Pennsylvania. On October 30, 2008, the liquidation trust in LeNature's bankruptcy filed suit against a number of individuals and entities, including Wachovia Capital Markets, LLC, and Wachovia Bank, N.A., in the U.S. District Court for the Western District of Pennsylvania, asserting a variety of claims on behalf of the estate.

MERGER RELATED LITIGATION On October 4, 2008, Citigroup, Inc. (Citigroup) purported to commence an action in the Supreme Court of the State of New York for the County of Manhattan, captioned Citigroup, Inc. v. Wachovia Corp., et al, naming as defendants Wachovia Corporation (Wachovia), Wells Fargo & Company (Wells Fargo), and the directors of both companies. The complaint alleged that Wachovia Corporation breached an exclusivity agreement with Citigroup, which by its terms was to expire on October 6, 2008, by entering into negotiations and an eventual acquisition agreement with Wells Fargo, and that Wells Fargo and the individual defendants had tortiously interfered with the same contract. In the complaint, Citigroup seeks $20 billion in compensatory damages and $40 billion in punitive damages. After significant procedural activity over the week of October 4-9, 2008, including a voluntary dismissal and re-filing of the action in amended form, the case was removed on October 9, 2008, to the U.S. District Court for the Southern District of New York. On October 10, 2008, Citigroup filed a motion to remand the case to the New York state court, and filed a new proposed amended complaint. The proposed amended complaint includes claims for breach of contract, tortious interference with contract, unjust enrichment, promissory estoppel, and quantum meruit In the proposed amended complaint, which the court has not yet approved, Citigroup seeks $20 billion in compensatory damages, $20 billion in restitutionary and unjust enrichment damages, and $40 billion in punitive damages. On October 24, 2008, Wachovia Corporation and Wells Fargo filed a join response to the motion to remand. On October 4, 2008, Wachovia Corporation filed a complaint in the U.S. District Court for the Southern District of New York, captioned Wachovia Corp. v. Citigroup, Inc. The complaint seeks declaratory relief, stating that the Wells Fargo merger agreement is valid, proper, and not prohibited by the exclusivity agreement. On October 5, 2008, Wachovia filed a motion for a preliminary injunction seeking to prevent Citigroup from interfering with or impeding its merger with Wells Fargo. On October 9, 2008, Citigroup issued a press release stating that Citigroup would no longer seek to enjoin the merger, but would continue to seek compensatoiy and punitive damages against Wachovia Corporation and Wells Fargo. On October 14, 2008, Wells Fargo filed a related complaint in the U.S. District Court for the Southern District of New York, captioned Wells Fargo v. Citigroup, Inc. The complaint seeks declaratory and injunctive relief, stating that the Wells Fargo merger agreement is valid, proper, and not prohibited by the exclusivity agreement. Citigroup has moved to dismiss the complaint The cases have been assigned to the same judge for further proceedings.

MUNICIPAL DERIVATIVES BID PRACTICES INVESTIGATION The Department of Justice (DOJ) and the SEC, beginning in November 2006, have been requesting information from a number of financial institutions, including Wachovia Bank, N.A.'s municipal derivatives group, generally with regard to competitive bid practices in the municipal derivative markets. In connection with these inquiries, Wachovia Bank has received subpoenas from both the DOJ and SEC as well as requests from the OCC and several states seeking documents and information. The DOJ and the SEC have advised Wachovia Bank that they believe certain of its employees engaged in improper conduct in conjunction with certain competitively bid transactions and, in November 2007, the DOJ notified two Wachovia Bank employees, both of whom have since been terminated, that they are regarded as targets of the DOJ's investigation. Wachovia Bank has been cooperating and continues to fully cooperate with the government investigations.

Wachovia Bank, along with a number of other banks and financial services companies, has also been named as a defendant in a number of substantially identical purported class actions, filed in various state and federal courts by various municipalities alleging they have been damaged by the activity which is the subject ofthe governmental investigations. A number of the federal matters have been consolidated for pre trial proceedings.

PAYMENT PROCESSING CENTER On February 17, 2006, the U.S. Attorney's Office for the Eastern District of Pennsylvania filed a civil fraud complaint against a former Wachovia Bank, N.A. customer. Payment Processing Center (PPC). PPC was a third party payment processor for telemarketing and catalogue companies. On April 12, 2007, a civil class action, Faloney et al v. Wachovia Bank, N.A., was filed against Wachovia Bank in the U.S. District Court for the Eastern District of Pennsylvania by a putative class of consumers who made purchases through telemarketer

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customers of PPC. The suit alleges that between April 1, 2005 and February 21, 2006, Wachovia Bank conspired with PPC to facilitate PPC's purported violation of RICO. On February 15, 2008, a second putative class action, Harrison v. Wachovia Bank, N.A, was filed in the U.S. District Court for the Eastern District of Pennsylvania by a putative class of consumers who made purchases through telemarketing customers of three other third party payment processors which banked with Wachovia Bank. This suit alleges that Wachovia Bank conspired with these payment processors to facilitate purported violations of RICO. On April 24, 2008, Wachovia and the Office ofthe Comptroller of the Currency (OCC) entered into an Agreement to resolve the OCC's investigation into Wachovia's relationship with PPC and three other companies. The Agreement provides, among other things, that (i) Wachovia will provide restitution to consumers, (ii) will create a segregated account in the amount of $125 million to cover the estimated maximum cost of the restitution, (iii) will fund organizations that provide education for consumers over a two year period in the amount of $8.9 million, (iv) will make various changes to its policies and procedures related to customers that use remotely created checks and (v) will appoint a special Compliance Committee to oversee compliance with the Agreement. Wachovia Bank and the OCC also entered into a Consent Order for Payment of a Civil Money Penalty whereby Wachovia, without admitting or denying the allegations contained therein, agreed to payment of a $10 million civil money penalty. The OCC Agreement was amended on December 8, 2008, to provide for direct restitution payments and those payments were mailed to consumers on December 11, 2008. Wachovia Bank is cooperating with government officials to administer the OCC settlement and in their further inquiries.

On August 14, 2008, Wachovia Bank reached agreements to settle the Faloney and Harrison class action lawsuits. The settlements received approval from the U.S. District Court for the Eastern District of Pennsylvania on January 23, 2009.

OTHER REGULATORY MATTERS AND GOVERNMENT INVESTIGATIONS In the course of its banking and financial services businesses, Wells Fargo and its affiliates are subject to information requests and investigations by governmental and self-regulatory authorities. These authorities have instituted various ongoing investigations of various practices in the banking, securities and mutual fund industries, including those relating to anti-money laundering, sales practices, record retention and other laws and regulations involving our customers and their accounts.

In general, the investigations cover advisory companies to mutual funds, broker-dealers, hedge funds and others and may involve the activities of customers or third parties with respect to accounts maintained by Wells Fargo affiliates or transactions in which Wells Fargo affiliates may be involved. Wells Fargo affiliates have received subpoenas and other requests for documents and testimony relating to the investigations, is endeavoring to comply with those requests, is cooperating with the investigations, and where appropriate, is engaging in discussions to resolve the investigations or take other remedial actions. These investigations include an investigation being conducted by the U.S. Attorney's Office for the Southern District of Florida into, among other matters, Wachovia Bank, N.A.'s correspondent banking relationship with certain non-domestic exchange houses and Bank Secrecy Act and anti-money laundering compliance. Wachovia Bank is cooperating fully with the U.S. Attorney's Office's investigation.

FORM 1 n-O WELLS FARGO & COMPANY - Filed August 7. 2009 fWellsl (For the quarterly period ended June 30, 2009)

Legal Actions

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2008 Form 10-K for events occurring in the most recent quarter.

Auction Rate Securities On June 30, 2009, Wachovia completed the second, and final, phase of its buy back of qualifying securities as required in its regulatory settlements with the SEC and various state securities regulators.

ERISA Litigation On June 18, 2009, the U.S. District Court for the Southern District of New York entered a Memorandum and Order transferring these consolidated cases to the U.S. District Court for the Western District of North Carolina.

Golden West and Related Litigation On May 8, 2009 and on June 12, 2009, two additional cases (not class actions) containing allegations similar to the allegations in the In re Wachovia Equity Securities Litigation, and captioned, Stichting Pensioenfonds ABP v. Wachovia Corp. et al. and FC Holdings AB, et al. v. Wachovia Corp., et ai, respectively,

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were filed in the U.S. District Court for the Southern District of New York. On June 22, 2009, the U.S. District Court for the Northern District of California entered an Order To Transfer Three Related Actions Pursuant To U.S.C. Section 1404(a) whereby the Court transferred the Miller, et al. v. Wachovia Corporation, et al.; Swiskay, et al. v. Wachovia Corporation, et al; and Orange County Employees' Retirement System, et al. v. Wachovia Corporation, et al. cases to the U.S. District Court for the Southern District of New York.

Merger Related Litigation On July 13, 2009, the U.S. District Court for the Southern District of New York issued an Opinion and Order denying Citigroup's motion for partial judgment on the pleadings in the Wachovia Corp. v. Citigroup, Inc. case. The Court held that an Exclusivity Agreement, entered into between Citigroup and Wachovia on September 29, 2008, and which formed the basis for a substantial portion of the allegations of Citigroup's complaint against Wachovia and Wells Fargo, was void as against public policy by enactment of Section 126(c) of the Emergency Economic Stabilization Act on October 3, 2008.

Illinois Attorney General Litigation On July 31, 2009, the Attorney General for the State oflllinois filed a civil lawsuit against Wells Fargo & Company, Wells Fargo Bank, N.A. and Wells Fargo Financial Illinois, Inc. in the Circuit Court for Cook County, Illinois. The Illinois Attorney General alleges that the Wells Fargo defendants engaged in illegal discrimination by "reverse redlining" and by steering African- American and Latino customers into high cost, subprime mortgage loans while other borrowers with similar incomes received lower cost mortgages. Illinois also alleges that Wells Fargo Financial Illinois, Inc. misled Illinois customers about the terms of mortgage loans. Illinois' complaint against all Wells Fargo defendants is based on alleged violation of the Illinois Human Rights Act and the Illinois Fairness in Lending Act. The complaint also alleges that Wells Fargo Financial Illinois, Inc. violated the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Uniform Deceptive Trade Practices Act. Illinois' complaint seeks an injunction against the defendants' alleged violation of these Illinois statutes, restitution to consumers and civil money penalties.

FORM 10-Q WELLS FARGO & COMPANY - Filed Novemhr-r fi. 2009 I Wells!

(For the quarterly period ended October 30, 2009)

Item 1. Legal Proceedings Legal Actions

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2008 Form 10-K for events occurring in the most recent quarter.

Elavon On September 29, 2009, Elavon filed an amended complaint adding an additional party to the litigation. On October 13, 2009, the court entered an order granting the motion to dismiss of Wells Fargo & Company and Wells Fargo Bank, N.A. dismissing the tortious interference with contract and the punitive damages counts as against those entities.

Golden West and Related Litigation On September 15, 2009 and on September 25, 2009, two additional cases (not class actions) containing allegations similar to the allegations in the In re Wachovia Equity Securities Litigation, and captioned, Deka Investment GmbH v. Wachovia Corp. et al. and Forsta AP-Fonden v. Wachovia Corp., et al., respectively, were filed in the U.S. District Court for the Southern District of New York. Following the transfer of the Miller, et al. v. Wachovia Corporation, et al.; Swiskay, et al. v. Wachovia Corporation, et al.; and Orange County Employees' Retirement System, et al. v. Wachovia Corporation, et al. cases to the U.S. District Court for the Southern District of New York, a consolidated class action complaint was filed on September 4, 2009 and the matter is now captioned In Re Wachovia Preferred Securities and Bond/Notes Litigation. On September 29, 2009, a non-class action case containing allegations similar to the allegations in the ln re Wachovia Preferred Securities and Bond/Notes litigation, and captioned City of Livonia Employees' Retirement System v. Wachovia Corp ct al., was filed in the Southern District of New York. In addition, a number of other actions containing allegations similar to those in the In re Wachovia Equity Securities Litigation have been filed in state courts in North Carolina and South Carolina by individual shareholders.

Illinois Attorney General Litigation On October 9, 2009, the Company filed a motion to dismiss Illinois' complaint.

Le-Nature's, Inc. On August 1, 2009, the trustee under the indenture for Le-Nature's Senior Subordinated Note filed claims against Wachovia Capital Markets seeking recovery for the bondholders under a variety of theories. On

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September 16, 2009, the Judge in the action brought by the Litigation Trustee dismissed a cause of action for breach of fiduciary duty but denied the remainder of Wachovia's motion to dismiss. On October 2, 2009, the Second Circuit affirmed the dismissal ofthe action filed by certain bank debt holders in the Southern District of New York. The action filed on behalf of holders of Le-Nature's Senior Subordinated Notes is now pending in the Superior Court of the State of California, County of Los Angeles.

Municipal Derivatives Bid Practices Investigation On April 30, 2009, the Court granted a motion filed by Wachovia and certain other defendants to dismiss the Consolidated Class Action Complaint and dismissed all claims against Wachovia, with leave to replead; a Second Consolidated Amended Complaint was filed on June 18, 2009, and a motion to dismiss this complaint has been filed and briefed. Putative class and individual actions brought in California were also amended on September 15, 2009, including five non-class complaints filed in California which were amended with new allegations and the addition of Wells Fargo & Co. as a defendant. All matters are being coordinated in the Southern District of New York.

Outlook Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Source: WELLS FARGO &C0/MN, 10-Q, November 06, 2009 Powered by Morningstar© Document Research⁵" 8-K Filed March 17, 2010 (Wells)

Wachovia Bank, N.A., said today that it has entered into agreements with the U.S. Department of Justice and banking regulators concerning previously disclosed compliance matters that occurred prior to its acquisition by Wells Fargo & Company. The agreements address Wachovia's Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance program and primarily relate to customer accounts held by Mexican money exchange houses in Wachovia's Global Financial Institutions and Trade Services (GFITS) division between 2004 and 2007.

As part of the agreements, Wachovia will pay a total of $160 million. Wells Fargo learned about these matters before acquiring Wachovia and established reserves in prior periods that will fully cover the settlement amounts.

The agreements consist of the following:

• Wachovia Bank, N.A. has entered into a deferred prosecution agreement with the U.S. Attorney's Office for the Southern District of Florida and the U.S. Department of Justice. Under the agreement, the bank acknowledges that its AML compliance programs were inadequate and agrees to forfeit $110 million and implement certain remedial measures. In one year, if Wachovia has complied with the terms of the agreement, the Department of Justice will ask a U.S. court to dismiss all charges against the bank. The agreement states that there is no evidence or allegation that Wells Fargo's AML program is deficient
• Wachovia Bank, N.A. has entered into a Consent Order with the Office of the Comptroller of the Currency (OCC), in which it has committed to take the necessary steps to address deficiencies and enhance its BSA and AML policies and procedures related to foreign correspondent banking activities. Wachovia has also agreed to pay the OCC a civil money penalty of $50 million.

Wachovia Bank, N.A. has also agreed to a Consent to the Assessment of Civil Money Penalty with the Financial Crimes Enforcement Network ofthe United States Department of Treasury (FinCEN). The $110 million penalty imposed by FinCEN will be satisfied by the $110 million forfeiture made to the Department of Justice.

The focus of these investigations was primarily in the GFITS division of Wachovia Bank from 2004 to 2007, well before Wells Fargo acquired Wachovia at the end of 2008. By early 2008, Wachovia Bank had exited all relationships with foreign money exchange houses. Wachovia Bank has fully cooperated with the Federal Government throughout the course of its investigation. That cooperation has continued since the merger of Wachovia and Wells Fargo.

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Wachovia has made significant enhancements to its AML and BSA compliance program that have strengthened its ability to guard against unlawful use of its system by wrongdoers. Over the past three years, Wachovia, and since January 2009, Wachovia as part of Wells Fargo, has invested $42 million evaluating and improving the BSA/AML compliance program. Since its acquisition by Wells Fargo, Wachovia has also been subject to Wells Fargo's BSA/AML compliance program and compliance and operational risk management, oversight and independent testing. The company continues to dedicate significant resources to this area, and is committed to maintaining compliant and effective BSA/AML practices and policies and a strong compliance culture across the integrated organization. In addition to this matter, Wachovia Bank, N.A. and the Department of Justice have resolved the remaining outstanding issues related to relationships Wachovia had from 2003 to 2008 with payment processors for telemarketing companies, including Payment Processing Center, LLC. Wachovia reached a settlement with the OCC on 2008 and has paid restitution to consumers who may have been subject to fraud by the telemarketers.

These settlements complete all pending bank-specific investigations of Wachovia's correspondent banking business.

Wachovia Bank, N.A., is a subsidiary of Wells Fargo & Company.

Wells Fargo & Company is a diversified financial services company with $1.2 trillion in assets, providing banking, insurance, investments, mortgage and consumer finance through more than 10,000 stores and 12,000 ATMs and the internet (wellsfargo.com) across North America and internationally.

10 0 filed 5/10/2010 -Wells

Legal Actions occurring in first quarter 2010.

Auction Rate Securities Plaintiffs have appealed the January 26, 2010, dismissal of two civil class actions pending against Wells Fargo affiliated defendants.

Casa de Cambio Investigation In March 2010, Wachovia Bank, N.A. entered into a Deferred Prosecution Agreement with the U.S. Attorney's Office for the Southern District of Florida and U.S. Department of Justice, and entered into separate consent agreements with the Office of the Comptroller ofthe Currency and the Financial Crimes Enforcement Network to resolve those agencies' investigations into these matters, the substance of which occurred prior to Wachovia's acquisition by Wells Fargo & Company. The Deferred Prosecution Agreement was approved on March 17, 2010, by the U.S. District Court for the Southern District of Florida. Wachovia Bank, N.A. paid a total of $160 million to satisfy the forfeitures and penalties provided for in the various agreements and further agreed to continue certain remediation and compliance efforts. Settlement of this matter was previously described in a Form 8-K filed on March 17, 2010.

ERISA Litigation On April 6, 2010, the U.S. District Court for the District of Minnesota certified a class of participants in Wells Fargo's 401(k) Plan in a case captioned Figas v. Wells Fargo & Company, et al. Figas purports to bring claims on behalf of participants who had assets in certain Wells Fargo affiliated funds from November 2, 2001, to September 22, 2009, alleging breach of fiduciary duty in connection with the offer of Wells Fargo affiliated funds as investment choices in the Plan.

Golden West and Related Litigation On May 3, 2010, the judge in the Southern District of New York issued an order granting Plaintiffs leave to amend the class action and other complaints pending in that court, and directing the parties to submit a schedule for the filing of the amended complaints and new motions to dismiss. This order terminates the motions to dismiss the prior complaints which had been pending.

In re Wells Fargo Mortgage-Backed Certificates Litigation and Mortgage Related Investigations This lawsuit is comprised of several securities law based putative class actions, consolidated in the U.S. District Court for the Northern District of California on July 16, 2009. The case is brought against several Wells Fargo mortgage-backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs allege that the offering documents contained untrue statements of material fact, or omitted to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The allegations are regarding the underwriting standards used in connection with the origination of the underlying mortgages, the maximum loan-to-value ratios used to qualify borrowers, and the appraisals of the properties underlying the mortgages. Motions to dismiss, filed on behalf of all defendants, were granted in part and denied in part by a court order entered on April 22, 2010. The plaintiffs were granted leave to amend some of their claims.

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Certain government entities are conducting investigations into the mortgage lending practices of various Wells Fargo affiliated entities, including whether borrowers were steered to more costly mortgage products. Wells Fargo intends to cooperate fully with these investigations.

LeNature's Inc. On March IS, 2010, the Mecklenburg County Superior Court entered an order allowing the hedge fund defendants to assert their tort claims in the New York state action. The holders of LeNature's Senior Subordinated Notes filed an amended complaint in the California action, and Wachovia has filed its demurrer to that complaint. The action filed by the trustee under the indenture for the Senior Subordinated Notes offering was dismissed by the U.S. District Court for the Western District of Pennsylvania on April 16, 2010.

Municipal Derivatives Bid Practice Investigation Defendants' motion to dismiss the second consolidated amended complaint was denied by the U.S. District Court for the Southern District of New York on March 25, 2010. On April 26, 2010, the same court also denied motions to dismiss eleven related cases filed by municipalities in California.

Payment Processing Center On March 17, 2010, the U.S. District Court for the Southern District of Florida approved a Deferred Prosecution Agreement between the U.S. Department of Justice and Wachovia Bank, N.A., which resolved the Department of Justice's investigation into this matter. The Company believes all pending governmental investigations relating to this matter are now concluded.

10 Q filed 6/10/2010 -Wells

Legal Actions occurring in first quarter 2010 (Amended August 6,2010)

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2009 Form 10-K and our First Quarter Form 10-Q for events occurring in second quarter 2010.

Data Treasury Litigation On June 15, 2010, Wells Fargo entered into a confidential settlement agreement which settled all claims of Data Treasury against Wells Fargo and Wachovia. The estimated liability for this matter had been accrued for in previous quarters and the settlement did not have a material adverse effect on Wells Fargo's consolidated financial statements for the period ended June 30, 2010.

Golden West and Related Litigation Amended complaints were filed in all the actions in May 2010 and renewed motions to dismiss have been filed in each case.

In Re Wells Fargo Mortgage-Backed Certificates Litigation On May 28, 2010, plaintiffs filed an amended consolidated complaint On June 25, 2010, Wells Fargo moved to dismiss the amended complaint. On June 29, 2010 and on July 15, 2010, two complaints, the first captioned The Charles Schwab Corporation vs. Merrill Lynch, Pierce, Fenner & Smith, Inc., et al., and the second captioned The Charles Schwab Corporation v. BNP Paribas Securities Corp., et al., were filed in the Superior Court for the State of California, San Francisco County against a number of defendants, including Wells Fargo Bank, N.A. and Wells Fargo Asset Securities Corporation. As against the Wells Fargo entities, the new cases assert opt out claims relating to the claims alleged in the Mortgage-Backed Certificates Litigation.

LeNature's Inc. On July 7, 2010, the demurrer to the California noteholder action was overruled. On May 10, 2010, the New York State Court granted the motion to dismiss two counts of the complaint and denied the motion to dismiss two other counts.

Municipal Derivatives Bid Practice Investigation In May 2010, four additional complaints were filed in California state courts by four additional California municipalities containing allegations virtually identical to the allegations ofthe eleven complaints previously filed by various California municipalities.

Municipal Derivatives Bid Practice Investigation In May 2010, four additional complaints were filed in California state courts by four additional California municipalities containing allegations virtually identical to the allegations ofthe eleven complaints previously filed by various California municipalities.

10-Q Filed November 5, 2010 Wells

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Legal Actions

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2009 Form 10-K and our 2010 First and Second Quarter Form 10-Q for events occurring in third quarter 2010.

Adelphia Litigation On September 21,2010, an agreement in principle was reached between the Adelphia Resolution Trust and all of the defendant banks to settle the remaining claims against the Banks. The agreement is subject to approval by the Court A hearing on approval of the settlement is scheduled for November 18,2010.

ERISA Litigation On August 6,2010, an order was entered by the U.S. District Court for the Western District ofNorth Carolina dismissing, with prejudice, the plaintiffs' complaint in the In re Wachovia Corporation ERISA Litigation case. Plaintiffs have appealed. On October 18,2010, an agreement in principle was reached to settle the Figas v. Wells Fargo & Company, et al. case. The agreement is subject to approval by the Court and an independent fiduciary.

Golden West and Related Litigation Two individual shareholder actions in South Carolina have been dismissed and the shareholders have appealed.

Municipal Derivatives Bid Practice Investigation On September 21, 2010 a complaint, captioned Active Retirement Community, Inc. d/b/a Jefferson's Ferry v. Bank of America, N.A., et al., was filed in the U.S. District Court for the Eastern District of New York. The case asserts claims against Wachovia Bank, N.A. and Wells Fargo & Company that are substantially similar to other previously disclosed civil cases.

Order of Posting Litigation A series of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the Banks post debit card transactions to consumer deposit accounts. There are currently twelve such cases pending against Wells

Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), all but three of which have been consolidated in multi-district litigation proceedings in the U.S. District Court for the Southern District of Florida. On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., one ofthe three cases that were not consolidated in the multi-district proceedings, enjoining the Bank's use ofthe high to low posting method for debit card transactions with respect to the plaintiff class of California depositors, directing that the Bank establish a different posting methodology and ordering remediation in the approximate amount of $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. Wells Fargo will appeal.

In Re Wells Fargo Mortgage-Backed Certificates Litigation and Related Mortgage Litigation and Investigations On October 5, 2010, Wells Fargo's motion to dismiss the amended complaint in the Northern District of California was granted in part and denied in part.

On October 15, 2010, three actions, captioned Federal Home Loan Bank of Chicago v. Banc of America Funding Corporation, et al. (filed in the Cook County Circuit Court, State of Illinois); Federal Home Loan Bank of Chicago v. Banc of America Securities LLC, et al. (filed in the Superior Court ofthe State of California for the County of Los Angeles); and Federal Home Loan Bank of Indianapolis v. Banc of America Mortgage America Securities, Inc., etal. (filed in the Superior Court of the State of Indiana for the County of Marion), named multiple defendants, described as issuers/depositors, and underwriters/dealers of private label mortgage-backed securities, in an action asserting claims that defendants used false and misleading statements in offering documents for the sale of such securities. The Bank of Chicago asserts that it purchased approximately $4.2 billion and the Bank of Indianapolis asserts that it purchased nearly $3 billion of such securities from the defendants. Plaintiffs seek rescission ofthe sales and damages under state securities and other laws and Section 11 of the Securities Act of 1933. Wells Fargo Asset Securities Corporation, Wells Fargo Bank, N.A. and Wells Fargo & Company were named among the defendants. In addition, various class actions have been filed against Wells Fargo Bank, N.A. and other banks challenging aspects ofthe foreclosure process, alleging, among other things, that banks improperly split notes and mortgages, use inappropriate foreclosure plaintiffs, misapply payments in violation of the terms of notes and mortgages, and submit fraudulent and inaccurate foreclosure affidavits. Wells Fargo Bank, N.A. has received inquiries from state Attorneys General, other state and federal regulators and officers, and legislative committees into its mortgage foreclosure practices and procedures. Wells Fargo is appropriately responding to these inquiries as well as internally reviewing its practices and procedures. At present, Wells Fargo cannot estimate the possible loss or range of loss with respect to the allegations concerning the mortgage related litigation and investigations described above.

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Outlook In accordance with ASC 450 (formerly FAS 5), Wells Fargo has established estimated liabilities for litigation matters with loss contingencies that are both probable and estimable. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess ofthe estimated liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial statements. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's consolidated financial statements for any particular period.

Wells Fargo & Company 10-K for fiscal year 12/31/2010 issued 2/25/2011 ITEM 3.    LEGAL PROCEEDINGS

Information in response to this Item 3 can be found in the 2010 Annual Report to Stockholders under "Financial Statements — Notes to Financial Statements - Note 14 (Guarantees and Legal Actions)." That information is incorporated into this item by reference.

Legal Actions

Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups. Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each case, other than matters we describe as having settled. Reserves are established for

legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

ADELPHIA LITIGATION Wachovia Bank, N.A. and Wachovia Capital Markets, LLC, along with numerous other financial institutions were defendants in a case pending in the United States District Court for the Southern District of New York related to the bankruptcy of Adelphia Communications Corporation (Adelphia). The plaintiff was the Adelphia Recovery Trust. The complaint asserted claims against the defendants under state law, bankruptcy law and the Bank Holding Company Act and sought equitable relief and an unspecified amount of compensatory and punitive damages. On September 21, 2010, an agreement was reached between the Adelphia Resolution Trust and all of the defendant banks to settle the claims against the banks for the total amount of $175 million. Wachovia's share was a fraction of that amount and was not material to Wells Fargo. The settlement has been approved by the Court and the case is concluded.

ELAVON LITIGATION On January 16, 2009, Elavon, Inc., a provider of merchant processing services, filed a complaint in the U.S. District Court for the Northern District of Georgia against Wachovia Corporation, Wachovia Bank, N.A., Wells Fargo & Company, arid Wells Fargo Bank, N.A. The complaint seeks equitable relief, including specific performance, and damages for Wachovia Bank's allegedly wrongful termination of its merchant referral contract with Elavon. Discovery has been completed and both parties have moved for summary judgment on various claims or defenses.

ERISA LITIGATION A purported class action, captioned In re Wachovia Corporation ERISA Litigation , was pending against Wachovia Corporation, its board of directors and certain senior officers, in the U.S. District Court for the Western District ofNorth Carolina. The case was filed on behalf of employees of Wachovia Corporation and its affiliates who held shares of Wachovia Corporation common stock in their Wachovia Savings Plan accounts. On August 6, 2010, an order was entered by the Court dismissing, with prejudice, the plaintiffs' complaint. The dismissal was appealed. On December 8, 2010, an agreement in principle was reached to settle the case for $12.35 million. The settlement is subject to Court approval. A hearing on approval of the settlement has not yet been scheduled.

On April 6, 2010, the U.S. District Court for the District of Minnesota certified a class of participants in Wells Fargo's 401(k) Plan in a case captioned Figas v. Wells Fargo & Company, et al. Figas purports to bring claims on behalf of

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participants who had assets in certain Wells Fargo affiliated funds from November 2, 2001, to September 22, 2009, alleging breach of fiduciary duty in connection with the offer of Wells Fargo affiliated funds as investment choices in the Plan. On October 18, 2010, an agreement in principle was reached to settle the Figas v. Wells Fargo & Company, et al case. The agreement is subject to approval by the Court and an independent fiduciary.

ILLINOIS ATTORNEY GENERAL LITIGATION On July 31,2009, the Attorney General for the State oflllinois filed a civil lawsuit against Wells Fargo & Company, Wells Fargo Bank, N.A. and Wells Fargo Financial Illinois, Inc. in the Circuit Court for Cook County, Illinois. The Illinois Attorney General alleges that the Wells Fargo defendants engaged in illegal discrimination by "reverse redlining" and by steering African-American and Latino customers into high cost, subprime mortgage loans while other borrowers with similar incomes received lower cost mortgages. Illinois also alleges that Wells Fargo Financial Illinois, Inc. misled Illinois customers about the terms of mortgage loans. Illinois' complaint against all Wells Fargo defendants is based on alleged violation of the Illinois Human Rights Act and the Illinois Fairness in Lending Act. The complaint also alleges that Wells Fargo Financial Illinois, Inc. violated the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois

Uniform Deceptive Trade Practices Act. Illinois' complaint seeks an injunction against the defendants' alleged violation of these Illinois statutes, restitution to consumers and civil money penalties. On October 9, 2009, the Company filed a motion to dismiss Illinois' complaint, and is awaiting the Court's ruling.

IN RE WELLS FARGO MORTGAGE-BACKED CERTIFICATES LITIGATION This lawsuit is comprised of several securities law based putative class actions, consolidated in the U.S. District Court for the Northern District of California on July 16, 2009. The case is brought against several Wells Fargo mortgage-backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs allege that the offering documents contain untrue statements of material fact, or omit to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The allegations are regarding the underwriting standards used in connection with the

origination of the underlying mortgages, the maximum loan-to-value ratios used to qualify borrowers, and the appraisals of the properties underlying the mortgages. Motions to dismiss, filed on behalf of all defendants, were granted in part and denied in part by a court order entered on April 22, 2010. The plaintiffs were granted leave to amend some of their claims. On May 28, 2010, plaintiffs filed an amended consolidated complaint. On June 25, 2010, Wells Fargo moved to dismiss the amended complaint. On October 5, 2010, Wells Fargo's motion to dismiss the amended complaint was granted in part and denied in part.

On June 29, 2010 and on July 15, 2010, two complaints, the first captioned The Charles Schwab Corporation vs. Merrill Lynch, Pierce, Fenner & Smith, Inc., et al, and the second captioned The Charles Schwab Corporation v. BNP Paribas Securities Corp., et al, were filed in the Superior Court for the State of California, San Francisco County against a number of defendants, including Wells Fargo Bank, N.A. and Wells Fargo Asset Securities Corporation. As against the Wells Fargo entities, the new cases assert opt out claims relating to the claims alleged in the Mortgage-Backed Certificates Litigation.

On October 15, 2010, three actions, captioned Federal Home Loan Bank of Chicago v. Banc of America Funding Corporation, et al. (filed in the Cook County Circuit Court, State of Illinois); Federal Home Loan Bank of Chicago v. Banc of America Securities LLC, et al (filed in the Superior Court of the State of California for the County of Los Angeles); and Federal Home Loan Bank of Indianapolis v. Banc ofAmerica Mortgage America Securities, Inc., et al. (filed in the Superior Court of the State of Indiana for the County of Marion), named multiple defendants, described as issuers/depositors, and underwriters/dealers of private label mortgage-backed securities, in an action asserting claims that defendants used false and misleading statements in offering documents for the sale of such securities. The Bank of Chicago asserts that it purchased approximately $4.2 billion and the Bank of Indianapolis asserts that it purchased nearly $3 billion of such securities from the defendants. Plaintiffs seek rescission ofthe sales and damages under state securities and other laws and Section 11 ofthe Securities Act of 1933. Wells Fargo Asset Securities Corporation, Wells Fargo Bank, N.A. and Wells Fargo & Company were named among the defendants.

INTERCHANGE LITIGATION Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation are named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and in individual actions brought by individual merchants with regard to the interchange fees associated with Visa and MasterCard payment card transactions. These actions have been consolidated in the United States District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies arc named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and stale antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are

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anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation.

LE-NATURE'S, INC. Wachovia Bank, N.A. was the administrative agent on a $285 million credit facility extended to LeNature's, Inc. in September 2006, of which approximately $270 million was syndicated to other lenders by Wachovia Capital Markets, LLC. Le-Nature's was the subject of a Chapter 7 bankruptcy petition, which was converted to a Chapter II bankruptcy petition in November 2006 in the U.S. Bankruptcy Court for the Western District of Pennsylvania. The filing was precipitated by an apparent fraud relating to Le-Nature's financial condition. Wachovia Capital Markets, LLC and/or Wachovia Bank, N.A. are named as defendants in a number of lawsuits including the following: (1) a case filed in the New York State Supreme Court for the County of Manhattan by hedge fund purchasers of the bank debt seeking to recover from Wachovia on various theories of liability (On May 10, 2010, the Court granted Wachovia's motion to dismiss two counts of the complaint and denied the motion to dismiss two other counts); (2) a case filed on April 28, 2008, by holders of a LeNature's Senior Subordinated Notes offering underwritten by Wachovia Capital Markets in June 2003, alleging various fraud claims, pending in the Superior Court of the State of California for the County of Los Angeles; and (3) an action filed on October 30, 2008, on behalf of the liquidation trust created in Le-Nature's bankruptcy against a number of individuals and entities, including Wachovia Capital Markets, LLC and Wachovia Bank, N.A., in the U.S. District Court for the Western District of Pennsylvania, asserting a variety of claims on behalf of the bankruptcy estate. On September 16, 2009, the Coun dismissed a cause of action for breach of fiduciary duty but denied the remainder of Wachovia's motion to dismiss. Discovery is underway in these matters.

MERGER RELATED LITIGATION On October 4, 2008, Citigroup, Inc. purported to commence an action in the Supreme Court of the State of New York for the County of Manhattan, captioned Citigroup, Inc. v. Wachovia Corp., et al., naming as defendants Wachovia Corporation, Wells Fargo & Company, and the directors of both companies. The complaint alleged that Wachovia breached an exclusivity agreement with Citigroup, which by its terms was to expire on October 6, 2008, by entering into negotiations and an evcnnial acquisition agreement with Wells Fargo, and that Wells Fargo and the individual defendants had tortiously interfered with the same contract. On October 4, 2008, Wachovia filed a complaint in the U.S. District Court for the Southern District of New York, captioned Wachovia Corp. v. Citigroup, Inc. The complaint sought declaratory and injunctive relief, stating that the Wells Fargo merger agreement is valid, proper, and not prohibited by the exclusivity agreement. On March 20, 2009, the

U.S. District Court for the Southern District of New York remanded the Citigroup, Inc. v. Wachovia Corp., etal. case to the Supreme Court ofthe State of New York for the County of Manhattan, but retained jurisdiction over the Wachovia v. Citigroup case. These cases were settled by Wells Fargo's payment of $100 million to Citigroup in November, 2010. On November 23, 2010, both cases were dismissed at the request of the parties.

MORTGAGE FORECLOSURE DOCUMENT LITIGATION Seven purported class actions and several individual borrower actions related to foreclosure document practices were filed in late 2010 and in early 2011 against Wells Fargo Bank, N.A. in its status as mortgage servicer. The cases have been brought in state and federal courts. Of the individual borrower cases, the majority are filed in state courts in California and Ohio. Two other class actions were filed against Wells Fargo Bank, but Wells Fargo is named as a defendant as corporate trustee of the mortgage trust and not as a mortgage servicer. The actions generally claim that Wells Fargo submitted "fraudulent" or "untruthful" affidavits or other foreclosure documents to courts to support foreclosures filed in the state. Specifically, plaintiffs allege that Wells Fargo signers did not have personal knowledge ofthe facts alleged in the documents and did not verify the information in the documents ultimately filed with courts to foreclose. Plaintiffs attempt to state legal claims ranging from wrongful foreclosure to deceptive practices to fraud and seek relief ranging from cancellation of notes and mortgages to money damages.

On December 20, 2010, the New Jersey Supreme Court, the New Jersey Administrative Office of the Courts, and the Superior Court of New Jersey for Mercer County jointly began an action against Wells Fargo and other large mortgage servicing companies in state court in New Jersey. This action seeks to enjoin pending foreclosures and sales and to require servicers to certify and prove compliance with new foreclosure procedures in New Jersey, or be held in contempt of court. Wells Fargo has filed its initial response to the New Jersey action.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Several government agencies are conducting investigations or examinations of various mortgage related practices of Wells Fargo Bank. The investigations relate to two main topics, (1) whether Wells Fargo may have violated fair lending or other laws and regulations relating to mortgage origination practices; and (2) whether Wells Fargo's practices and procedures relating to mortgage foreclosure affidavits and documents relating to the chain of title to notes and mortgage documents arc adequate. With regard to the investigations into foreclosure practices, it is likely that one or more of the government agencies will initiate some type of enforcement action

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against Wells Fargo, which may include civil money penalties. Wells Fargo continues to provide information requested by the various agencies.

MUNICIPAL DERIVATIVES BID PRACTICES INVESTIGATION The Department of Justice (DOJ) and the SEC, beginning in November 2006, have been requesting information from a number of financial institutions, including Wachovia Bank, N.A.'s municipal derivatives group, generally with regard to competitive bid practices in the municipal derivative markets. In connection with these inquiries, Wachovia Bank has received subpoenas from both the DOJ and SEC as well as requests from other regulatory agencies and several states seeking documents and information. The DOJ and the SEC have advised Wachovia Bank that they believe certain of its employees engaged in improper conduct in conjunction with certain competitively bid transactions and, in November 2007, the DOJ notified two Wachovia Bank employees, both of whom have since been terminated, that they are regarded as targets of the DOJ's investigation. Wachovia Bank has been cooperating fully with the government investigations.

Wachovia Bank, along with a number of other banks and financial services companies, has also been named as a defendant in a number of substantially identical purported class actions filed in various state and federal courts by various municipalities alleging they have been damaged by the activity which is the subject ofthe government investigations. These cases are now consolidated under the caption In re Municipal Derivatives Antitrust Litigation in the U.S. District Court for the Southern District of New York. On April 30, 2009, the Court granted a motion filed by Wachovia and certain other defendants to dismiss the Consolidated Class Action Complaint and dismissed all claims against Wachovia, with leave to replead. A Second Consolidated Amended Complaint was filed on June 18, 2009, and a motion to dismiss that complaint was denied. A number of putative class and individual actions have also been brought in various courts, including complaints which were amended with new allegations and the addition of Wells Fargo & Co. as a defendant. These cases all have allegations substantially similar to those in the consolidated class complaint. All ofthe cases arc being coordinated in the U.S. District Court for the Southern District of New York.

ORDER OF POSTING LITIGATION A series of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the Banks post debit card transactions to consumer deposit accounts. There are currently 12 such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), all but three of which have been consolidated in multi-district litigation proceedings in the U.S. District Court for the Southern District of Florida. On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., one ofthe three cases that were not consolidated in the multi-district proceedings, enjoining the Bank's use ofthe high to low posting method for debit card transactions with respect to the plaintiff class of California depositors, directing that the Bank establish a different posting methodology and ordering remediation in the approximate amount of $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. On October 28, 2010, Wells Fargo appealed to the U.S. Court of Appeals for the Ninth Circuit.

WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION

A purported securities class action, Lipetz v. Wachovia Corporation, et al., was filed on July 7, 2008, in the U.S. District Court for the Southern District of New York alleging violations of Sections 10 and 20 of the Securities Exchange Act of 1934. An amended complaint was filed on December 15, 2008. Among other allegations, plaintiffs allege Wachovia's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. mortgage portfolio, Wachovia's exposure to other mortgage related products such as CDOs, control issues and auction rate securities. On March 19, 2009, the defendants filed a motion to dismiss the amended class action complaint in the Lipetz case, which has now been re-captioned as In re Wachovia Equity Securities Litigation. There are four additional cases (not class actions) containing allegations similar to the allegations in the In re Wachovia Equity Securities Litigation captioned Stichting Pensioenfonds ABP v. Wachovia Corp. el al, FC Holdings AB, et al v. Wachovia Corp., et al, Deka Investment GmbH v. Wachovia Corp. et al. and Forsta AP-Fonden v. Wachovia Corp., et al, respectively, which were filed in the U.S. District Court for the Southern District of New York, and there are a number of other similar actions filed in state courts in North Carolina and South Carolina by individual shareholders. Two of the individual shareholder actions in South Carolina have been dismissed and the shareholders have appealed.

After a number of procedural motions, three purported class action cases alleging violations of Sections 11, 12, and 15 of the Securities Act of 1933 as a result of allegedly misleading disclosures relating to the Golden West mortgage portfolio in connection with Wachovia's issuance of various preferred securities and bonds were transferred to the U.S. District Court for the Southern District of New York. A consolidated class action complaint was filed on September 4, 2009, and the matter is now captioned In Re Wachovia Preferred Securities and Bond/Notes Litigation. On September 29, 2009, a non-class action case containing allegations similar to the allegations in the //; re Wachovia Preferred Securities and Bond/Notes litigation, and captioned City of Livonia Employees' Retirement System v. Wachovia Corp et al, was filed in the Southern District of New York. On May 3, 2010, the judge in the Southern District of New York issued an order granting Plaintiffs leave to

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amend the class action and other complaints pending in that court, and directing the parties to submit a schedule for the filing ofthe amended complaints and new motions to dismiss. This order terminates the motions to dismiss the prior complaints which had been pending. Amended complaints were filed in all the actions in May 2010 and renewed motions to dismiss have been filed in each case.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end ofthe range of potential litigation losses in excess of the Company's best estimates within the range of potential losses used in establishing the total litigation liability was $1.2 billion as of December 31, 2010. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Note 11: Legal Actions 10-0 May 6.2011 Wells

Note 11: Legal Actions      

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2010 Form 10-K. for events occurring in first quarter 2011.

ERISA LITIGATION A hearing on final approval of the settlement of the In re Wachovia Corporation ERISA Litigation is scheduled before the U.S. District Court for the Western District ofNorth Carolina on August 25, 2011.

A hearing on final approval ofthe settlement of Figas v. Wells Fargo & Company, et al. is scheduled before the U.S. District Court for the District of Minnesota on July 21, 2011.

IN RE WELLS FARGO MORTGAGE-BACKED CERTIFICATES LITIGATION A hearing on plaintiffs' motion for class certification has been scheduled for June 23, 2011.

MORTGAGE FORECLOSURE DOCUMENT LITIGATION On March 29, 2011, Wells Fargo, along with other mortgage servicers, entered into a stipulation in connection with the action commenced by the New Jersey Supreme Court, the New Jersey Administrative Office of the Courts and the Superior Court of New Jersey for Mercer County providing for the appointment of a special master to review mortgage foreclosure affidavit processes.

MORTGAGE RELATED REGULATORY INVESTIGATIONS On March 31, 2011, Wells Fargo Bank, N.A. (the Bank) entered into a Consent Order with the Office ofthe Comptroller of the Currency (OCC) under which the OCC made certain findings in connection with the Bank's foreclosure practices, which findings the Bank neither admitted nor denied. The Bank agreed in the consent order, among other things, and subject to the OCC's approval (i) to establish a Compliance Committee to monitor and coordinate the Bank's compliance with the Consent Order; (ii) to create a comprehensive Action Plan describing the actions needed to achieve compliance with the Consent Order; (iii) to submit an acceptable compliance plan to ensure that its mortgage servicing and foreclosure operations, including loss mitigation and loan modification, comply with legal requirements, OCC supervisory guidance, and the terms of the Consent Order; (iv) to submit a plan lo ensure appropriate controls and oversight of the Bank's activities with respect to the Mortgage Electronic Registration System; (v) to take certain other actions with respect to its mortgage servicing and foreclosure operations; and (vi) to conduct a foreclosure review through an independent consultant on certain residential foreclosure actions. On April 4, 201), Wells Fargo & Company (Wells Fargo) entered into a Consent Order with the Board of Governors ofthe Federal Reserve pursuant lo which Wells Fargo agreed, among other things, (i) to ensure the Bank's compliance with the OCC Consent Order; (ii) to develop for the Federal Reserve's approval a written plan to enhance its Enterprise Risk Management with respect to oversight of residential mortgage loan servicing; (iii) to develop for the Federal Reserve's approval a written plan to enhance its enterprise-wide compliance program with respect to oversight of residential mortgage loan

servicing; and (iv) to develop for the Federal Reserve's approval a written plan to enhance the internal audit program with respect fo residential mortgage loan servicing. Neither Consent Order provided for civil money penalties but both government entities reserved the ability to seek such penalties and Wells Fargo reserved the ability to oppose the imposition of such penalties. In addition, as previously disclosed in our 2010 Form 10-K, other government agencies, including state attorneys general and the U.S. Department of Justice, continue to investigate various mortgage related practices ofthe Bank

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and other major mortgage servicers. Wells Fargo continues to cooperate with these investigations. These investigations could result in material fines, penalties, equitable remedies (including requiring default servicing or other process changes), or other enforcement actions, and result in significant legal costs in responding to governmental investigations and additional litigation.

WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION On March 31, 2011, the U.S. District Court for the Southern District of New York entered a Decision and Order granting Wachovia's motions to dismiss the In re Wachovia Equity Securities Litigation and the Stichting Pensioenfonds ABP, FC Holdings AB, Deka Investment GmbH and Forsta AP-Fondcn cases. By the same Decision and Order, the Court granted in part and denied in part Wachovia's motion to dismiss the In re Wachovia Preferred Securities and Bond/Notes Litigation , allowing that case to go forward after limiting the number of offerings at issue.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end ofthe range of potential litigation losses in excess of the Company's best estimates within the range of potential losses used in establishing the total litigation liability was $1.7 billion as of March 31, 2011. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Wells Fargo & Company Note 11: Legal Actions As Presented in August 5,2011 10-Q

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) ofour2010Form 10-K, and Part II, Item 1 (Legal Proceedings) of our 2011 first quarter Quarterly Report on Form 10-Q for events occurring in second quarter 2011.

ELAVON LITIGATION On May 23, 2011, the Court entered an order granting plaintiffs motion for partial summary judgment and denying Wells Fargo's motion for partial summary judgment, ruling that Wells Fargo's termination ofthe contract at issue was invalid and dismissing several of Wells Fargo's affirmative defenses. The Court has set a trial date of the remaining issues for September 21, 2011.

ERISA LITIGATION The U.S. District Court for the District of Minnesota is considering final approval ofthe $17.5 million settlement in Figas v. Wells Fargo & Company, et al.

IN RE WELLS FARGO MORTGAGE-BACKED CERTIFICATES LITIGATION On May 27, 2011, Wells Fargo and the plaintiffs agreed to settle the matter captioned In re Wells Fargo Mortgage-Backed Securities Litigation for $125 million. On July 26, 2011, the Court entered an order preliminarily approving the settlement.

On April 20, 2011, a case captioned Federal Home Loan of Boston v. Ally Financial, Inc., et al., was filed in the Superior Court ofthe Commonwealth of Massachusetts for the County of Suffolk. The case names, among a large number of parlies, Wells Fargo & Company, Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, National Association as parties and contains allegations substantially similar to the cases filed by the other Federal Home Loan Banks.

On April 28, 2011, a case captioned The Union Central Life Insurance Company, et al. v. Credit Suisse First Boston Securities Corp., et al., was filed in the U.S. District Court for the Southern District of New York. Among other defendants, it names Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, National Association. The case asserts various state law fraud claims and claims for violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of three insurance companies, relating to offerings of mortgage-backed securities from 2005 through 2007.

In addition, there are other cases involving other issuers of mortgage-backed certificates where Wells Fargo may have indemnity obligations because the pools of mortgages backing the certificates contain mortgages originated by Wells Fargo.

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MORTGAGE RELATED REGULATORY INVESTIGATIONS On March 31, 2011, Wells Fargo Bank, N.A. (the Bank) entered into a Consent Order with the Office of the Comptroller of the Currency (OCC) under which the OCC made certain findings in connection with the Bank's foreclosure practices, which findings the Bank neither admitted nor denied. The Bank agreed in the consent order, among other things, and subject to the OCC's approval (i) to establish a Compliance Committee to monitor and coordinate the Bank's compliance with the Consent Order;

1. to create a comprehensive Action Plan describing the actions needed to achieve compliance with the Consent Order;
2. to submit an acceptable compliance plan to ensure that its mortgage servicing and foreclosure operations, including loss mitigation and loan modification, comply with legal requirements, OCC supervisory guidance, and the terms ofthe Consent Order; (iv) to submit a plan to ensure appropriate controls and oversight of the Bank's activities with respect to the Mortgage Electronic Registration System; (v)to take certain other actions with respect to its mortgage servicing and foreclosure operations; and (vi) to conduct a foreclosure review through an independent consultant on certain residential foreclosure actions. On April 4, 2011, Wells Fargo & Company (Wells Fargo) entered into a Consent Order with the Board of Governors of the Federal Reserve pursuant to which Wells Fargo agreed, among other things, (i) to ensure the Bank's compliance with the OCC Consent Order; (ii) to develop for the Federal Reserve's approval a written plan to enhance its Enterprise Risk Management with respect to oversight of residential mortgage loan servicing; (iii) to develop for the Federal Reserve's approval a written plan to enhance its enterprise-wide compliance program with respect to oversight of residential mortgage loan servicing; and (iv) to develop for the Federal Reserve's approval a written plan to enhance the internal audit program with respect to residential mortgage loan servicing. Neither Consent Order provided for civil money penalties but both government entities reserved the ability to seek such penalties and Wells Fargo reserved the ability to oppose the imposition of such penalties.

On July 20, 2011, Wells Fargo & Company and Wells Fargo Financial, Inc. entered into an Order to Cease and Desist and Order of Assessment of a Civil Money Penalty Issued Upon Consent (the "Order") with the Board of Governors of the Federal Reserve System (FRB) which resolved an investigation of Wells Fargo Financial's mortgage lending activities by the FRB. The Order provides, among other things, that (i) WelJs Fargo shall submit to the FRB within 90 days of the Order a plan, acceptable to the FRB, for overseeing fraud prevention and detection and for compliance with certain federal and state laws applicable to unfair and deceptive practices and certain other laws applicable to mortgage lending; (ii) Wells Fargo shall submit to the FRB within 90 days of the Order a plan, acceptable to the FRB, for overseeing the implementation and modification of incentive compensation and performance management programs for sales, sales management and underwriting personnel with respect to mortgage lending within the Wells Fargo organization; (iii) Wells Fargo shall submit within 90 days of the Order a plan, acceptable to the FRB, for the remediation to borrowers who entered into loans with Wells Fargo Financial beginning January 1, 2004 through September 2008 where the loans were based on income documents that were altered or falsified by sales personnel; (iv) Wells Fargo shall submit within 90 days of the Order a plan, acceptable to the FRB, for the remediation to boiTowers who received mortgage loans through Wells Fargo Financial at non-prime prices during the period from January 1, 2006 through September 2008 but whose mortgage loans may have qualified for prime pricing. In addition to these provisions to submit plans for compliance and compensation changes and for remediation payments to certain Wells Fargo Financial borrowers, the Order imposes a civil money penalty of $85 million on Wells Fargo.

Other government agencies, including state attorneys general and the U.S. Department of Justice, continue to investigate various mortgage related practices of the Bank. These investigations could result in material fines, penalties, equitable remedies (including requiring default servicing or other process changes), or other enforcement actions, and result in significant legal costs in responding to governmental investigations and additional litigation.

WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION The plaintiffs in the In re Wachovia Equity Securities Litigation and the Stichting Pcnsioenfords ABP, FC Holdings AB, Deka Investments GmbH and Forsta AP-Fonden cases have appealed the March 31, 2011 Decision and Order dismissing their cases.

Wells Fargo and the plaintiffs have agreed in principle to settle the In re Wachovia Preferred Securities and Bond/Notes Litigation for $590 million. The proposed settlement is subject to Court approval. The proposed settlement amount has been reflected in Wells Fargo's financial statements and will not have a material adverse effect on Wells Fargo's consolidated financial position.

OUTLOOK The Company establishes a liability for contingent litigation losses when it determines that a potential loss is both probable and estimable. In addition, for significant matters, the Company determines a range of potential loss that is

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reasonably possible. The high end of the range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.6 billion as of June 30, 2011. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

WELLS FARGO & COMPANY FORM 10-Q

For the quarterly period ended September 30, 2011 Note 11: Legal Actions

The following supplements our discussion of certain matters previously reported in Part 1, Item 3 (Legal Proceedings) of our Annual Report on Form 10-K for the year ended December 31, 2010 and in Part II, Item 1 (Legal Proceedings) of our Quarterly Reports on Form 10-Q for the periods ended March 31, 2011 and June 30,2011.

ELAVON LITIGATION The parties have agreed to settle the case. Payment will occur upon final documentation ofthe settlement. The settlement was accounted for in prior periods and will not have an adverse effect on the Company's consolidated financial position.

ERISA LITIGATION The U.S. District Court for the District of Minnesota granted final approval ofthe $17.5 million settlement in Figas v. Wells Fargo & Company, et al, on August 9, 2011.

The U. S. District Court for the Western District ofNorth Carolina granted final approval of the $12.4 million settlement in In re Wachovia Corporation ERISA Litigation on October 24, 2011.

ILLINOIS ATTORNEY GENERAL LITIGATION On October 26, 2011 the Illinois Court issued an order granting, in part, and denying, in part, Wells Fargo's motion to dismiss. The Court dismissed Wells Fargo & Company as a party and dismissed Count III ofthe complaint, which alleged violations of the Illinois Fair Lending Act. The Court denied the remainder of the motion to dismiss.

IN RE WELLS FARGO MORTGAGE-BACKED CERTIFICATES LITIGATION On May 27,2011, Wells Fargo and the plaintiffs agreed to settle the matter captioned ln re Wells Fargo Mortgage-Backed Securities Litigation for $125 million. On July 26, 2011, the Court entered an order preliminarily approving the settlement. The hearing on final approval ofthe settlement took place on October 27, 2011, and we await the Court's ruling. Some class members have opted out ofthe settlement, with the most significant being the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and American International Group, Inc.

On April 20,2011, a case captioned Federal Home Loan of Boston v. Ally Financial, Inc., et al., was filed in the Superior Court of the Commonwealth of Massachusetts for the County of Suffolk. The case names, among a large number of parties, Wells Fargo & Company, Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, National Association as parties and contains allegations substantially similar to the cases filed by the other Federal Home Loan Banks.

On April 28, 2011, a case captioned The Union Central Life Insurance Company, et al v. Credit Suisse First Boston Securities Corp., et al, was filed in the U.S. District Court for the Southern District of New York. Among other defendants, it names Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, National Association. The case asserts various state law fraud claims and claims for violations of sections 10(b) and 20(a) ofthe Securities Exchange Act of 1934 on behalf of three insurance companies, relating to offerings of mortgage-backed securities from 2005 through 2007.

In addition, there arc other cases involving other issuers of mortgage-backed certificates where Wells Fargo may have indemnity obligations because the pools of mortgages backing the certificates contain mortgages originated by Wells Fargo.

LE-NATURE'S, INC. The Le-Nature's cases have settled for the total sum of $95 million. The settlement was accounted for in prior periods and payment did not have an adverse effect on Wells Fargo's consolidated financial position.

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MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request ofthe Securities and Exchange Commission in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages.

The actions have been consolidated in the United States District Court for the Central District of California. On July 26, 2011, the District Court certified a class consisting of holders of notes issued by affiliates of Medical Capital Corporation and, on October 18, 2011, the Ninth Circuit Court of Appeals denied a petition seeking to appeal the class certification order.

MUNICIPAL DERIVATIVES BID PRACTICES INVESTIGATION The plaintiffs and Wells Fargo agreed to settle the In re Municipal Derivatives Antitrust Litigation on October 21, 2011. The settlement is subject to court approval and, if approved, will result in Wells Fargo paying an amount equal to the greater of $37 million or 65% ofthe restitution amount of a future settlement, if any, with the various state Attorneys General of their investigation of Wachovia.

OUTLOOK The Company establishes a liability for contingent litigation losses when it determines that a potential loss is both probable and estimable. In addition, for significant matters, the Company determines a range of potential loss that is reasonably possible. The high end ofthe range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.6 billion as of September 30, 2011. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess ofthe established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position.

Note 15: Legal Actions (Annual Report 2011) - as presented in 10-K issued 2/28/2012

Wells Fargo and certain of our subsidiaries arc involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.

Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each case, other than matters we describe as having settled. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

ILLINOIS ATTORNEY GENERAL LITIGATION On July 31, 2009, the Attorney General for the State oflllinois filed a civil lawsuit against Wells Fargo & Company, Wells Fargo Bank, N.A. and Wells Fargo Financial Illinois, Inc. in the Circuit Court for Cook County, Illinois. The Illinois Attorney General alleges that the Wells Fargo defendants engaged in illegal discrimination by "reverse redlining" and by steering African-American and Latino customers into high cost, subprime mortgage loans while other borrowers with similar incomes received lower cost mortgages. Illinois also alleges that Wells Fargo Financial Illinois, Inc. misled Illinois customers about the terms of mortgage loans. Illinois' complaint against all Wells Fargo defendants is based on alleged violation ofthe Illinois Human Rights Act and the Illinois Fairness in Lending Act. The complaint also alleges that Wells Fargo Financial Illinois, Inc. violated the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Uniform Deceptive Trade Practices Act. Illinois' complaint seeks an injunction against the defendants' alleged violation of these Illinois statutes, restitution to consumers and civil money penalties. On October 26, 2011, the Illinois Court issued an order granting, in part, and denying, in part, Wells Fargo's motion to dismiss. The Court dismissed Wells Fargo & Company as a party and dismissed Count III of the complaint, which alleged violations ofthe Illinois Fair Lending Act. The Court denied the remainder ofthe motion to dismiss.

INTERCHANGE LITIGATION Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation arc named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and in individual actions brought by individual merchants with regard to the interchange fees associated

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with Visa and MasterCard payment card transactions. These actions have been consolidated in the United States District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies are named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request of the Securities and Exchange Commission (SEC) in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. The actions have been consolidated in the United States District Court for the Central District of California. On July 26, 2011, the District Court certified a class consisting of holders of notes issued by affiliates of Medical Capital Corporation and, on October 18, 2011, the Ninth Circuit Court of Appeals denied a petition seeking to appeal the class certification order.

MORTGAGE-BACKED CERTIFICATES LITIGATION Several securities law based putative class actions were consolidated in the U.S. District Court for the Northern District of California on July 16, 2009, under the caption In re Wells Fargo Mortgage-Backed Certificates Litigation. The case asserted claims against several Wells Fargo mortgage backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs alleged that the offering documents contain untrue statements of material fact, or omit to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The parties agreed to settle the case on May 27, 2011, for $125 million. Final approval ofthe settlement was entered on November 14, 2011. Some class members opted out of the settlement, with the most significant being the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and American International Group, Inc.

On June 29, 2010, and on July 15, 2010, two complaints, the first captioned The Charles Schwab Corporation vs. Merrill Lynch, Pierce, Fenner & Smith, Inc., et al., and the second captioned The Charles Schwab Corporation v. BNP Paribas Securities Corp., ct al., were filed in the Superior Court for the State of California, San Francisco County against a number of defendants, including Wells Fargo Bank, N.A. and Wells Fargo Asset Securities Corporation. As against the Wells Fargo entities, the new cases assert opt out claims relating to the claims alleged in the Mortgage-Backed Certificates Litigation.

On October 15, 2010, three actions, captioned Federal Home Loan Bank of Chicago v. Banc of America Funding Corporation, cl al. (filed in the Cook County Circuit Court, State of Illinois); Federal Home Loan Bank of Chicago v. Banc of America Securities LLC, ct al. (filed in the Superior Court of the State of California for the County of Los Angeles); and Federal Home Loan Bank of Indianapolis v. Banc of America Mortgage America Securities, Inc., et al. (filed in the Superior Court ofthe State of Indiana for the County of Marion), named multiple defendants, described as issuers/depositors, and underwriters/dealers of private label mortgage-backed securities, in an action asserting claims that defendants used false and misleading statements in offering documents for the sale of such securities. The Bank of Chicago asserts that it purchased approximately $4.2 billion and the Bank of Indianapolis asserts that it purchased nearly $3 billion of such securities from the defendants. Plaintiffs seek rescission of the sales and damages under state securities and other laws and Section 11 ofthe Securities Act of 1933. Wells Fargo Asset Securities Corporation, Wells Fargo Bank, N.A. and Wells Fargo & Company were named among the defendants.

On April 20, 2011, a case captioned Federal Home Loan of Boston v. Ally Financial, Inc., et al., was filed in the Superior Court of the Commonwealth of Massachusetts for the County of Suffolk. The case names, among a large number of parties, Wells Fargo & Company, Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N.A. as parties and contains allegations substantially similar to the cases filed by the other Federal Home Loan Banks.

On April 28, 2011, a case captioned The Union Central Life msurance Company, ct al. v. Credit Suisse First Boston Securities Corp., et al., was filed in the U.S. District Court for the Southern District of New York. Among other defendants, it names Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N.A. The case asserts various

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state law fraud claims and claims for violations of Sections 10(b) and 20(a) ofthe Securities Exchange Act of 1934 on behalf of three insurance companies, relating to offerings of mortgage-backed securities from 2005 through 2007.

In addition, there are other mortgage-related threatened or asserted claims by entities or investors where Wells Fargo may have indemnity or repurchase obligations, or as to which it has entered into agreements to toll the relevant statutes of limitations.

MORTGAGE FORECLOSURE DOCUMENT LITIGATION Eight purported class actions and several individual borrower actions related to foreclosure document practices were filed in late 2010 and in early 2011 against Wells Fargo Bank, N.A. in its status as mortgage servicer or coiporatc trustee of mortgage trusts. The cases have been brought in state and federal courts. Five of the class actions have been dismissed or otherwise resolved. Ofthe individual borrower cases, the majority arc filed in state courts in California and Ohio. The actions generally claim that Wells Fargo submitted "fraudulent" or "untruthful" affidavits or other foreclosure documents to courts to support foreclosures filed in the state. Specifically, plaintiffs allege that Wells Fargo signers did not have personal knowledge of the facts alleged in the documents and did not verify the information in the documents ultimately filed with courts to foreclose. Plaintiffs attempt to state legal claims ranging from wrongful foreclosure to deceptive practices or fraud and seek relief ranging from cancellation of notes and mortgages lo money damages.

MORTGAGE RELATED REGULATORY INVESTIGATIONS On April 13, 2011, Wells Fargo Bank, N.A. entered into a Consent Order with the OCC and Wells Fargo & Company entered into a Consent Order with the Board of Governors of the Federal Reserve System in connection with Wells Fargo's mortgage foreclosure practices. The Consent Orders require Wells Fargo to develop and implement certain compliance programs and to take other remedial steps, which Wells Fargo is doing. On February 9, 2012, the OCC and Federal Reserve announced that they had also imposed civil money penalties of $83 million and $85 million, respectively, related to the Consent Orders. These penalties will be satisfied through payments made under a separate simultaneous settlement in principle, announced on the same day, among the Department of Justice (DOJ), a task force of Attorneys General from 49 states, other government entities, Wells Fargo and four other mortgage servicers related to mortgage servicing and foreclosure practices. Under the settlement in principle, Wells Fargo agreed to the following commitments, comprised of three components totaling $5.3 billion:

Consumer Relief Program For qualified borrowers with financial hardship and a loan owned and serviced by Wells Fargo, a commitment to provide $3.4 billion in aggregate consumer relief and assistance programs, including expanded first and second mortgage modifications that broaden the use of principal reduction to help customers achieve affordability, an expanded short sale program that includes waivers of deficiency balances, forgiveness of arrearages for unemployed borrowers, cash-for-keys payments to borrowers who voluntarily vacate properties, and "anti-blight" provisions designed to reduce the impact on communities of vacant properties. As of December 31, 2011, the expected impact ofthe Consumer Relief Program was covered in our allowance for credit losses and in the nonaccretable difference relating to our purchased credit-impaired residential mortgage portfolio.

Refinance Program For qualified borrowers with little or negative equity in their home and a loan owned and serviced by Wells Fargo, an expanded first-lien refinance program commitment estimated to provide $900 million of aggregate payment relief over the life ofthe refinanced loans. The Refinance Program will not result in any current-period charge as its impact will be recognized over a period of years in the form of lower interest income as qualified borrowers benefit from reduced interest rates on loans refinanced under the program.

Foreclosure Assistance Payment $1 billion paid directly to the federal government and the participating states for their use to address the impact of foreclosure challenges as they see fit and which may include direct payments to consumers. As of December 31, 2011, we had fully accrued for the Foreclosure Assistance Payment.

Government agencies continue investigations or examinations of other mortgage related practices of Wells Fargo. The investigations relate to two main topics, (1) whether Wells Fargo may have violated fair lending or other laws and regulations relating to mortgage origination practices; and (2) whether Wells Fargo properly disclosed in offering documents for its residential mortgage-backed securities the facts and risks associated with those securities. Wells Fargo has received a Wells notice from SEC staff relating to Wells Fargo's disclosures in mortgage-backed securities offering documents. Wells Fargo continues to provide information requested by the various agencies in connection with certain investigations.

MUNICIPAL DERIVATIVES BID PRACTICES INVESTIGATION The DOJ and the SEC, beginning in November 2006, requested information from a number of financial institutions, including Wachovia Bank, N.A.'s municipal derivatives group, with regard to competitive bid practices in the municipal derivative markets. Other stale and federal

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agencies subsequently also began investigations ofthe same practices. On December 8, 2011, a global resolution ofthe Wachovia Bank investigations was announced by DOJ, the internal Revenue Service, the SEC, the OCC and a group of State Attorneys General. The investigations were settled with Wachovia Bank agreeing to pay a total of approximately $148 million in penalties and remediation to the various agencies.

Wachovia Bank, along with a number of other banks and financial services companies, was named as a defendant in a number of substantially identical purported class actions and individual actions fded in various state and federal courts by various municipalities alleging they have been damaged by the activity which is the subject of the government investigations. These cases were either consolidated under the caption In re Municipal Derivatives Antitrust Litigation or administered jointly with that action in the U.S. District Court for the Southern District of New York. The plaintiffs and Wells Fargo agreed to settle the In re Municipal Derivatives Antitrust Litigation on October 21, 2011. The settlement is subject to court approval and, if finally approved, will result in Wells Fargo paying the amount of $37 million. The settlement was preliminarily approved on December 27, 2011.

ORDER OF POSTING LITIGATION A scries of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the Banks post debit card transactions to consumer deposit accounts. There are currently several such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), most of which have been consolidated in multidistrict litigation proceedings in the U.S. District Court for the Southern District of Florida. The bank defendants moved to compel these cases to arbitration under recent Supreme Court authority. On November 22, 2011, the Judge denied the motion. The Banks have appealed the decision to the U.S. Court of Appeals for the Eleventh Circuit.

On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., a case that was not consolidated in the multi-district proceedings, enjoining the Bank's use ofthe high to low posting method for debit card transactions with respect to the plaintiff class of California depositors, directing that the Bank establish a different posting methodology and ordering remediation of approximately $203 million. On October 26,2010, a final judgment was entered in Gutierrez. On October 28,2010, Wells Fargo appealed to the U.S. Court of Appeals for the Ninth Circuit.

WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION A securities class action, now captioned In re Wachovia Equity Securities Litigation, has been pending under various names since July 7, 2008, in the U.S. District Court for the Southern District of New York alleging violations of Sections 10(b) and 20(a) ofthe Securities Exchange Act of 1934. Among other allegations, plaintiffs allege Wachovia's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. mortgage portfolio, Wachovia's exposure to other mortgage related products such as CDOs, control issues and auction rate securities. There are four additional cases (not class actions) containing allegations similar to the allegations in the In re Wachovia Equity Securities Litigation captioned Stichting Pensioenfonds ABP v. Wachovia Corp. et al., FC Holdings AB, et al. v. Wachovia Corp., et al., Deka Investment GmbH v. Wachovia Corp. et al. and Forsta AP-Fonden v. Wachovia Corp., et al. , respectively, which were filed in the U.S. District Court for the Southern District of New York. On March 31, 2011, the U.S. District Court for the Southern District of New York entered a Decision and Order granting Wachovia's motions to dismiss the In re Wachovia Equity Securities Litigation and the Stichting Pensioenfonds ABP, FC Holdings AB, Deka Investment GmbH and Forsta AP-Fonden cases. Plaintiffs and Wells Fargo have agreed to settle the Equity Securities Litigation for $75 million and on January 27, 2012, the Court entered an order preliminarily approving the settlement. A fairness hearing on final approval ofthe settlement is scheduled for June 1, 2012.

After a number of procedural motions, three purported class action cases alleging violations of Sections 11, 12, and 15 of the Securities Act of 1933 as a result of allegedly misleading disclosures relating lo the Golden West mortgage portfolio in connection with Wachovia's issuance of various preferred securities and bonds were transferred to the U.S. District Court for the Southern District of New York. A consolidated class action complaint was filed on September 4, 2009, and the matter was captioned In Re Wachovia Preferred Securities and Bond/Notes Litigation. On March 31, 2011, by the same Decision and Order referenced above, the court also granted in part and denied in part Wachovia's motion to dismiss the In re Wachovia Preferred Securities and Bond/Notes Litigation , allowing that case to go forward after limiting the number of offerings at issue. Wells Fargo and the plaintiffs agreed to settle the In re Wachovia Preferred Securities and Bond/Notes Litigation for $590 million. The proposed settlement was preliminarily approved by the Court on August 9, 2011. The hearing on final approval was held on November 14, 2011, and a judgment approving class action settlements was filed on January 3, 20)2.

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There are a number of other similar actions filed in state courts in North Carolina and South Carolina by individual shareholders. Two of the individual shareholder actions in South Carolina have been dismissed and the shareholders have appealed. On December 22, 2011, the dismissal of the Rivers v. Wachovia Corporation, et al. case, one ofthe two South Carolina actions, was affirmed by the U.S. Court of Appeals for the Fourth Circuit.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end of the range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.2 billion as of December 31, 2011. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Form 10-Q

WELLS FARGO & COMPANY/MN - WFC

Filed: May 08, 2012 (period: March 31, 2012)

Note 11: Legal Actions

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2011 Form 10-K for events occurring in first quarter 2012.

MORTGAGE-BACKED CERTIFICATES LITIGATION On April 28,2011, a case captioned The Union Central Life Insurance Company, et al. v. Credit Suisse First Boston Securities Corp., et al., was filed in the U.S. District Court for the Southern District of New York. Among other defendants, it names Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N.A. The case asserts various state law fraud claims and claims for violations of Sections 10(b) and 20(a) ofthe Securities Exchange Act of 1934 on behalf of three insurance companies, relating to offerings of mortgage-backed securities from 2005 through 2007. In February 2012, the plaintiffs and Wells Fargo agreed to a settlement in principle of claims against the Wells Fargo entities and arc in the process of documenting that settlement.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Government agencies continue investigations or examinations of other mortgage related practices of Wells Fargo. The investigations relate to two main topics: (1) whether Wells Fargo may have violated fair lending or other laws and regulations relating to mortgage origination practices; and (2) whether Wells Fargo properly disclosed in offering documents for its residential mortgage-backed securities the facts and risks associated with those securities. With respect to (1), the Department of Justice has advised Wells Fargo that it believes it can bring claims against Wells Fargo for monetary damages and civil penalties under fair lending laws. We believe such claims should not be brought and continue seeking to demonstrate to the Department of Justice our compliance with fair lending laws.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end ofthe range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $927 million as of March 31, 2012. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess ofthe established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

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Form 10-Q

WELLS FARGO & COMPANY/MN - WFC Note 11: Legal Actions 10-Q Filed August 7, 2012 (period: June 30, 2012)

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2011 Form 10-K, for events occurring in first quarter 2012, and Part II, Item 1 (Legal Proceedings) of our 2012 first quarter Quarterly Report on Form 10-Q for events occurring in second quarter 2012.

ILLINOIS ATTORNEY GENERAL LITIGATION On July 31, 2009, the Attorney General for the State oflllinois filed a civil lawsuit against Wells Fargo & Company, Wells Fargo Bank, N.A. and Wells Fargo Financial Illinois, Inc. in the Circuit Court for Cook County, Illinois. The Illinois Attorney General alleges that the Wells Fargo defendants engaged in discrimination by "reverse redlining" and by steering African-American and Latino customers into high cost, subprime mortgage loans while other borrowers with similar incomes received lower cost mortgages. Illinois also alleges that Wells Fargo Financial Illinois, Inc. misled Illinois customers about the terms of mortgage loans. Illinois' complaint against all Wells Fargo defendants is based on alleged violation of the Illinois Human Rights Act and the Illinois Fairness in Lending Act. On July 12, 2012, the case was resolved by entry of a Final Judgment and Consent Decree by the Circuit Court. The resolution calls for Illinois to receive S8 million in victim relief and certain community assistance as provided for in a settlement with the Civil Rights Division of the Department of Justice (DOJ) described in more detail in the Mortgage Related Regulatory Investigations section below.

INTERCHANGE LITIGATION Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation are named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and in individual actions brought by individual merchants with regard to the interchange fees associated with Visa and MasterCard payment card transactions. These actions have been consolidated in the United States District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies are named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13, 2012, Visa, MasterCard and the financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants to resolve the consolidated class actions and reached a separate settlement in principle of the consolidated individual actions. The proposed settlement payments for the consolidated class and individual actions are approximately $6.6 billion. The class settlement also provides for the distribution to class merchants of 10 basis points of default interchange across all credit rate categories for a period of eight consecutive months. The settlements are subject to further approval.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request of the Securities and Exchange Commission (SEC) in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. The actions have been consolidated in the United States District Court for the Central District of California. Wells Fargo has reached a conditional settlement in principle with the receiver for Medical Capital Corporation and its affiliates.

MORTGAGE-BACKED CERTIFICATES LITIGATION On April 28, 2011, a case captioned The Union Central Life Insurance Company, et al. v. Credit Suisse First Boston Securities Corp., et al., was filed in the U.S. District Court for the Southern District of New York. Among other defendants, it named Wells Fargo Asset Securities Corporation and Wells Fargo Bank, N.A. The case asserted various state law fraud claims and claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of three insurance companies, relating to offerings of mortgage-backed securities from 2005 through 2007. In June 2012, the plaintiffs and Wells Fargo entered into a final settlement agreement and the claims against Wells Fargo were voluntarily dismissed with prejudice.

On April 20, 2011, a case captioned Federal Home Loan of Boston v. Ally Financial, Inc., et al., was filed in (he Superior Court ofthe Commonwealth of Massachusetts for the County of Suffolk. The complaint names, among a large

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number of defendants, Wells Fargo & Company, Wells Fargo Asset Securities Corporation, and Wells Fargo Bank, N.A., and contains allegations substantially similar to the cases filed by the other Federal Home Loan Banks. Plaintiffs seek rescission of the sales of private label mortgage-backed securities and damages under state securities and other laws. Defendants removed the case to the U. S. District Court for the District of Massachusetts.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Government agencies and authorities continue investigations or examinations of certain mortgage related practices of Wells Fargo. The current investigations relate to two main topics: (1) whether Wells Fargo complied with laws and regulations relating to mortgage origination practices, including laws and regulations related to fair lending and Federal Housing Administration insured residential home loans; and (2) whether Wells Fargo properly disclosed in offering documents for its residential mortgage-backed securities the facts and risks associated with those securities. On July 12, 2012, the DOJ filed a complaint captioned United States of America v. Wells Fargo Bank, N.A. in the U.S. District Court for the District of Columbia. The complaint alleged violations of the Fair Housing Act and the Equal Credit Opportunity Act (ECOA) with respect to Wells Fargo's residential mortgage lending operations during the period 2004 - 2008. Simultaneously with the filing of the complaint, a Consent Decree executed between the DOJ and Wells Fargo was filed providing for a consensual resolution ofthe complaint. In the Consent Decree, Wells Fargo denied that it had violated the Fair Housing Act or ECOA, but agreed to resolve the matter by paying $125 million in connection with pricing and product placement allegations primarily relating to mortgages priced and sold to consumers by third party brokers through the Wholesale Division of Wells Fargo Home Mortgage. In addition, Wells Fargo agreed to pay $50 million to fond a community support program in approximately eight cities or metropolitan statistical areas, with details yet to be agreed upon between the DOJ and Wells Fargo. Wells Fargo also agreed to undertake an internal lending compliance review of a small percentage of subprime mortgages delivered through its Retail channel during the period 2004 - 2008 and will rebate to borrowers as appropriate. Ofthe $125 million, $8 million and $2 million are specifically allocated to Illinois and Pennsylvania, respectively, to resolve matters in those states.

SECURITIES LENDING LITIGATION Wells Fargo Bank, N.A. is involved in ten separate pending actions brought by securities lending customers of Wells Fargo and Wachovia Bank in various courts. In general, each of the cases alleges that Wells Fargo violated fiduciary and contractual duties by investing collateral for loaned securities in investments that suffered losses. One case, brought by the City of St. Petersburg in the U.S. District Court for the Middle District of Florida, resulted in an April 2012 verdict against Wells Fargo in the amount of $10 million plus interest. Wells Fargo has filed post-trial motions to set aside the verdict. In addition, on March 27, 2012, a class of Wells Fargo securities lending customers was certified in a case captioned City of Farming/on Hills Employees Retirement System v. Wells Fargo Bank, N.A., which is pending in the U.S. District Court for the District of Minnesota. Wells Fargo sought interlocutory review of the class certification in the U.S. Court of Appeals for the Eighth Circuit. The Eighth Circuit declined such review on May 7, 2012.

WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION A securities class action, now captioned In re Wachovia Equity Securities Litigation, has been pending under various names since July 7, 2008, in the U.S. District Court for the Southern District of New York alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Among other allegations, plaintiffs allege Wachovia's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. mortgage portfolio, Wachovia's exposure to other mortgage related products such as CDOs, control issues and auction rate securities. On March 31, 2011, the U.S. District Court for the Southern District of New York entered a Decision and Order granting Wachovia's motions to dismiss the In re Wachovia Equity Securities Litigation and the Stichting Pensioenfonds ABP, FC Holdings AB, Deka Investment GmbH and Forsta AP-Fonden cases. Plaintiffs and Wells Fargo have agreed to settle the Equity Securities Litigation for $75 million and on January 27, 2012, the Court entered an order preliminarily approving the settlement. On June 12, 2012, an Order finally approving the class action settlement was entered.

There were four similar actions filed in state courts in North Carolina and South Carolina by individual shareholders. Three of these individual shareholder actions have been finally dismissed and the dismissal ofthe fourth is on appeal.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end of the range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.2 billion as of June 30, 2012. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions againsl Wells

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Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Note 11: Legal Actions 10-Q Period ending September 30,2012 - Filed November 6,2012

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2011 Form 10-K, and Part II, Item 1 (Legal Proceedings) of our 2012 first and second quarter Quarterly Reports on Form 10-Q for events occurring in third quarter 2012.

FHA INSURANCE LITIGATION On October 9, 2012, the United States filed a complaint, captioned United States of America v. Wells Fargo Bank, N.A. , in the U.S. District Court for the Southern District of New York. The complaint makes claims with respect to Wells Fargo's FHA lending program for the period 2001 to 2010. The complaint alleges, among other allegations, that Wells Fargo improperly certified certain FHA mortgage loans for FHA insurance that did not qualify for the program, and therefore Wells Fargo should not have received insurance proceeds from FHA when some of the loans later defaulted. The complaint further alleges Wells Fargo knew some of the mortgages did not qualify for insurance, and did not disclose the deficiencies to FHA before making insurance claims.

MORTGAGE FORECLOSURE DOCUMENT LITIGATION As previously disclosed, eight purported class actions and several individual borrower actions related to foreclosure document practices were filed in late 2010 and in early 2011 against Wells Fargo Bank, N.A. in its status as mortgage servicer or corporate trustee of mortgage trusts. Five of those cases had been previously dismissed or otherwise resolved. Two of the three remaining purported class actions were dismissed or otherwise resolved on October 3 and October 25, 2012. As a result, seven ofthe eight purported class actions have now been dismissed or otherwise resolved.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Government agencies and authorities continue investigations or examinations of certain mortgage related practices of Wells Fargo. The current investigations primarily relate to: (1) whether Wells Fargo complied with applicable laws, regulations and documentation requirements relating to mortgage origination and securitizations, including those at the former Wachovia Corporation; and (2) whether Wells Fargo properly disclosed in offering documents for its residential mortgage-backed securities the facts and risks associated with those securities. As previously disclosed, on July 12, 2012, the DOJ filed a complaint captioned United States of America v. Wells Fargo Bank, N.A. in the U.S. District Court for the District of Columbia. The complaint alleged violations of the Fair Housing Act and the Equal Credit Opportunity Act (ECOA) with respect to Wells Fargo's residential mortgage lending operations during the period 2004 - 2008. Simultaneously with the filing of the complaint, a Consent Decree executed between the DOJ and Wells Fargo was filed providing for a consensual resolution ofthe complaint. In the Consent Decree, Wells Fargo denied that it had violated the Fair Housing Act or ECOA, but agTeed to resolve the matter by paying $125 million in connection with pricing and product placement allegations primarily relating to mortgages priced and sold to consumers by third party brokers through the Wholesale Division of Wells Fargo Home Mortgage. In addition, Wells Fargo agreed to pay $50 million to fund a community support program in approximately eight cities or metropolitan statistical areas, with details yet to be agreed upon between the DOJ and Wells Fargo. Wells Fargo also agreed to undertake an internal lending compliance review of a small percentage of subprime mortgages delivered through its Retail channel during the period 2004 - 2008 and will rebate to borrowers as appropriate. Ofthe $125 million, $8 million and $2 million are specifically allocated to Illinois and Pennsylvania, respectively, to resolve matters in those states. On September 20, 2012, the Court entered a Memorandum Opinion and Order approving and entering the Consent Order.

ORDER OF POSTING LITIGATION As previously disclosed, a series of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the Banks posted debit card transactions to consumer deposit accounts. There remain several such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), most of which have been consolidated in multi-district litigation proceedings in the U.S. District Court for the Southern District of Florida. The bank defendants moved to compel these cases to arbitration under recent Supreme Court authority. On November 22, 2011, the Judge denied the motion. On October 26, 2012, the U.S. Court of Appeals for the Eleventh Circuit affirmed the District Court's denial ofthe motion to compel arbitration.

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WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION As previously disclosed, a securities class action, now captioned In re Wachovia Equity Securities Litigation, had been pending under various names since July 7, 2008, in the U.S. District Court for the Southern District of New York alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Among other allegations, plaintiffs alleged Wachovia's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. mortgage portfolio, Wachovia's exposure to other mortgage related products such as CDOs, control issues and auction rate securities. There were four additional cases (not class actions) containing allegations similar to the allegations in the In re Wachovia Equity Securities Litigation captioned Stichting Pensioenfonds ABP v. Wachovia Corp. et al., FC Holdings AB, ct al. v. Wachovia Corp., et al., Deka Investment GmbH v. Wachovia Corp. ct al. and Forsta AP-Fonden v. Wachovia Corp., et al. , respectively, which were filed in the U.S. District Court for the Southern District of New York. On March 31, 2011, the U.S. District Court for the Southern District of New York entered a Decision and Order granting Wachovia's motions to dismiss the In re Wachovia Equity Securities Litigation and the Stichting Pensioenfonds ABP, FC Holdings AB, Deka Investment GmbH and Forsta AP-Fonden cases and all of those cases have subsequently been resolved. Plaintiffs and Wells Fargo agreed to settle the Equity Securities Litigation for $75 million and on January 27, 2012, the Court entered an order preliminarily approving the settlement. On June 12, 2012, an Order finally approving the class action settlement was filed.

There were four previously disclosed individual actions, containing allegations similar to the main In re Wachovia Equity Securities Litigation matter, filed in state courts in North Carolina and South Carolina. All four of those cases have now been finally dismissed.

OUTLOOK: When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end of the range of reasonably possible potential litigation losses in excess of the Company's liability for probable and estimable losses was $1.2 billion as of September 30, 2012. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Form 8-K Filed November 28,2012 (period: November 20,2012)

Mortgage Related Regulatory Investigations

Wells Fargo & Company (the "Company") previously disclosed the receipt of a Wells notice from the staff ofthe Securities and Exchange Commission (the "Commission") relating to the Company's disclosures in mortgage-backed securities offering documents. On November 20, 2012, the Company was notified by the Commission's staff that this investigation has been completed and the staff does not intend to recommend any enforcement action by the Commission.

Form 8-K

WELLS FARGO & COMPANY/MN - WEFGL Filed: December 21, 2012 (period: December 17, 2012)

TO   ALL IIOLDERS OF WELLS FARGO & COMPANY ("WELLS FARGO") COMMON STOCK AS OF DECEMBER 13,2012, WHO CONTINUE TO HOLD SUCH SHARES AS OF MARCH 5,2013 ("CURRENT WELLS FARGO SHAREHOLDERS")

PLEASE TAKE NOTICE that the parties have reached a proposed settlement to resolve the derivative claims asserted on behalf of Wells Fargo in Feuer v. Thompson et al., Civil Action No. 10-0279 YGR, Northern District of California, and Rogers v. Thompson ct al., Civil Action No. 12-0203 YGR, Northern District of California, referred to collectively below as "the Derivative Actions." The proposed settlement also will resolve claims set forth in certain Demand Letters (as defined in

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the parties' Stipulation of Settlement). The claims asserted in the Derivative Actions, the Demand Letters, and certain other proceedings arc collectively referred to as the "Released Claims."

PLEASE BE FURTHER ADVISED that pursuant to an Order of the United States District Court for the Northern District of California, a hearing will be held before the Honorable Yvonne Gonzalez Rogers, in Courtroom 5 ofthe United States Courthouse, 1301 Clay Street, Oakland, California, at 3:00 p.m., on March 5, 2013, to determine whether (i) the proposed settlement should be approved by the Court as fair, reasonable, and adequate; (ii) the Derivative Actions should be dismissed with prejudice; (iii) the individual defendants should be released from liability for any ofthe Released Claims; and (iv) the Court should award attorneys' fees and reimbursement of expenses for Plaintiffs' Counsel, and in what amount.

Plaintiffs' Counsel intend to apply to the Court for an award of attorneys' fees and expenses (the "Fee Application") in an amount not to exceed $2.5 million. Any attorneys'

NOTICE TO SHAREHOLDERS      NO. 10-CV-00279 YGR

NO. 12-CV-00203 YGR

fees and expenses awarded by the Court will be paid exclusively by Wells Fargo. The Fee Application will be filed with the Court by January 4, 2013, and available to Wells Fargo Shareholders by January 6, 2013. Wells Fargo has not agreed to any fee award and reserves the right to oppose the Fee Application, in whole or in part, regardless ofthe amount sought.

The proposed settlement obligates Wells Fargo's Board of Directors to implement certain governance improvements as more fully set forth in the Stipulation of Settlement. It does not involve the payment ofany funds by the defendants to Wells Fargo or to any ofthe plaintiffs. You may obtain detailed information about the terms ofthe proposed settlement, including the Complaints, motions to dismiss, the Stipulation of Settlement, the Preliminary Approval Order, the Fee Application and other documents, as well as all papers to be submitted in connection with the final approval process—at the website www.WFWachoviaDerivativeSettlemcnt.com, or by contacting Counsel for Plaintiffs at any of the addresses below.

If you are a Current Wells Fargo Shareholder, you may have certain rights in connection with the proposed settlement, including the right to object to any aspect of the settlement. Every objection must be in writing and contain: (i) your name, address and telephone number; (ii) the number of shares of Wells Fargo stock you currently hold, together with third-party documentary evidence, such as the most recent account statement, showing such share ownership; and (iii) a detailed statement of your objections to any matter before the Court and all grounds therefore, including any supporting documents to be considered by the Court. If you do not submit written objections TO BE RECEIVED NO LATER THAN February 15, 2013, you shall not be entitled to contest the proposed settlement or Fee Application unless otherwise ordered by the Court for good cause shown. All such objections must identify the case number and must be filed with the Court at:

Clerk ofthe Court United States District Court 1301 Clay Street Oakland, CA 94612

Form 8-K

WELLS FARGO & COMPANY/MN - WEFGL Filed: January 11,2013 (period: January 11,2013)

Independent Foreclosure Review Settlement

On January 7. 2013, the Company announced that, along with nine other mortgage servicers, it entered into settlement agreements with the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board (FRB) that would end their IFR programs created by Article VII of an April 2011 Interagency Consent Order and replace it with an accelerated remediation process.

In aggregate, the servicers have agreed to make direct, cash payments of $3.3 billion and to provide $5.2 billion in additional assistance, such as loan modifications, to consumers. Wells Fargo's portion ofthe cash settlement is $766 million, which is based on the proportionate share of Wells Fargo-serviced loans in the overall CFR population. Wells Fargo recorded a pre-tax charge of $644 million in fourth quarter 2012 to fully reserve for its cash payment portion of the settlement and additional remediation-related costs. The Company also committed an additional $1.2 billion to foreclosure prevention actions. This

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commitment did not result in any charge as the Company believes that this commitment is covered through the existing allowance for credit losses and the nonaccrclable difference relating to the purchased credit-impaired loan portfolios. With this settlement, the Company will no longer incur costs associated with the independent foreclosure reviews, which had recently approximated $125 million per quarter for external consultants and additional staffing.

"In addition to the benefit to our customers, we are very pleased to have put this legacy issue behind us and to have removed the future costs associated with independent foreclosure reviews," said Stumpf.

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10-K February 27, 2013 Wells Fargo & Company

Note 15: Legal Actions

Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning mallei's arising from the conduct of our business activities. These proceedings include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.

Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe wc have a meritorious defense and will deny, liability in all significant litigation pending against us, including the mailers described below, and we intend to defend vigorously each case, other than matters wc describe as having settled. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

FHA INSURANCE LITIGATION On October 9,2012, the United States filed a complaint, captioned United States of America v. Wells Fargo Bank, N.A., in the U.S. District Court for the Southern District of New York. The complaint makes claims with respect to Wells Fargo's Federal Housing Administration (FHA) lending program for (he period 2001 to 2010. The complaint alleges, among other allegations, that Wells Fargo improperly certified certain FHA mortgage loans for United States Department of Housing and Urban Development (HUD) insurance that did not qualify for the program, and therefore Wells Fargo should not have received insurance proceeds from HUD when some ofthe loans later defaulted. The complaint further alleges Wells Fargo knew some ofthe mortgages did not qualify for insurance and did not disclose the deficiencies to HUD before making insurance claims. On December 1, 2012, Wells Fargo filed a motion in the U.S. District Court for the District of Columbia seeking to enforce a release of Wells Fargo given by the United Slates, which was denied on February 12,2013. On December 14, 2012, the United States filed an amended complaint. On January 16, 2013, Wells Fargo filed a motion in the Southern District of New York to dismiss the amended complaint.

INTERCHANGE LITIGATION Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation arc named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and in individual actions brought by individual merchants with regard to the interchange fees associated with Visa and MasterCard payment card transactions. These actions have been consolidated in the U.S. District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies arc named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws

and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants arc anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13,2012, Visa, MasterCard and the financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants to resolve (he consolidated class actions and reached a separate settlement in principle of the consolidated individual actions. The proposed settlement payments by all defendants in the consolidated class and individual actions total approximately $6.6 billion. The class settlement also provides for the distribution to class merchants of 10 basis points of default interchange across all credit rate categories for a period of eight consecutive months. The Court has granted preliminary approval ofthe settlements. The settlements arc subject to further review and approval by the Court.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request ofthe Securities and Exchange Commission (SEC) in August 2009. Since September 2009,

Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. The actions have been consolidated in the U.S. District Court for the Central District of California. On July 26, 2011, the District Court certified a class consisting of holders of notes issued by affiliates of Medical Capital Corporation and, on October 18, 2011, the Ninth Circuit Court of Appeals denied a petition seeking to appeal the class certification order. A previously disclosed potential settlement of the case was not consummated and the case is in discovery.

MARYLAND MORTGAGE LENDING LITIGATION On

December 26,2007, a class action complaint captioned Denise Minter, et al., v. Wells Faigo Bank. N.A., et al., was filed in the U.S. District Court for the District of Maryland. The complaint alleges that Wells Fargo and others violated provisions ofthe Real Estate Settlement Procedures Act and other laws by conducting mortgage lending business improperly through a general partnership, Prosperity Mortgage Company. The complaint asserts that Prosperity Mortgage Company was not a legitimate affiliated business and instead operated to conceal Wells Fargo Bank, N.A.'s role in the loans at issue. A plaintiff class of borrowers who received a mortgage loan from Prosperity that was funded by Prosperity's line of credit with Wells Fargo Bank,

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The Information contained herein may not be copied, adapted or distributed and fs not warranted to be accurate, complete or timely. Tlw. uses assumes uli risks for any damages or losses vrfalnu frutn any use ot this Information, except to the extent such damages or tosses cannot be limited cr excluded by applicable fa*v. Past financial performance Is no guarantee of future itsutls.

Note 15: Legal Actions (continued)

N.A. from 1993 to May 31, 2012 has been certified. The Court has scheduled a trial in this case for May 6, 2013. A second, related case is also pending in the same Court. On July 8, 2008, a class action complaint captioned Stacey and Bindley Petty, etal, v. Wells Fargo Bank, N.A., et al, was filed. The complaint alleges that Wells Fargo and others violated Ihe Maryland Finder's Fee Act in the closing of mortgage loans in Maryland. The Court certified a plaintiff class of borrowers whose loans are secured by Maryland real property, which loans showed Prosperity Mortgage Company as the lender receiving a fee for services, and were funded through a Wells Fargo line of credit to Prosperity from 1993 to May 31, 2012. The Court has scheduled a trial in this case for March 18,2013.

MORTGAGE-BACKED CERTIFICATES LITIGATION Several securities law based putative class actions were consolidated in the U.S. District Court for the Northern District of California on July 16, 2009, under the caption ln re Wells Fargo Mortgage-Backed Certificates Litigation. The case asserted claims against several Wells Fargo mortgage backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs alleged that (he offering documents contain untrue statements of material fact, or omit to state material facts necessary to make Uie registration statements and accompanying prospectuses not misleading. The parties agreed to settle the case on May 27, 2011, for $ 125 million. Final approval of the settlement was entered on November 14,2011. Some class members opted out ofthe settlement, with the most significant being the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

On June 29,2010, and on July 15,2010, two complaints, the first captioned 77ie Charles Schwab Corporation vs. Merrill Lynch, Pierce, Fenner & Smith, Inc., et al., and the second captioned The Charles Schwab Corporation v. BNP ParibasSecurities Corp., ct ai, were filed in the Superior Court for the State of California, San Francisco County against a number of defendants, including Wells Fargo Bank, N.A. and Wells Fargo Asset Securities Corporation. As against the Wells Fargo entities, the new cases assert opt out claims relating to the claims alleged in the Mortgage-Backed Certificates Litigation.

On October 15,2010, three actions, captioned Federal Home Loan Bank of Chicago v. Banc ofAmerica Funding Corporation, et al. (filed in the Cook County Circuit Court, State oflllinois); Federal Home Loan Bank of Chicago v. Banc ofAmerica Securities LLC, et al. (filed in the Superior Court ofthe State of California for the County of Los Angeles); and Federal Home Loan Bank of Indianapolis v. Banc ofAmerica Mortgage America Securities, Inc., et al. (filed in the Superior Court of the State of Indiana for the County of Marion), named multiple defendants, described as issuers/depositors, and underwriters/dealers of private label mortgage-backed securities, in an action asserting claims that defendants used false and misleading statements in offering documents for the sale of such securities. Plaintiffs seek rescission of the sales and damages under state securities and other laws and Section 11 of the Securities Act of 1933. Wells Fargo Asset Securities Corporation, Wells Fargo Bank, N.A. and Wells Fargo &

Company were named among the defendants. On April 20,2011, a case captioned Federal Home Loan of Boston v. Ally Financial, Inc., et al., was filed in the Superior Court ofthe Commonwealth of Massachusetts for the County of Suffolk. The case names, among a'large number of parties. Wells Fargo & Company, Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N.A. as parties and contains allegations substantially similar to the cases filed by the other Federal Home Loan Banks.

In addition, there arc other mortgage-related threatened or asserted claims by entities or investors where Wells Fargo may have indemnity or repurchase obligations, or as to which it has entered into agreements to toll the relevant statutes of limitations.

MORTGAGE FORECLOSURE DOCUMENT LITIGATION Eight purported class actions and several individual borrower actions related to foreclosure document practices were filed in late 2010 and in early 2011 against Wells Fargo Bank, N.A. in its status as mortgage servicer or corporate trustee of mortgage trusts. The cases were brought in state and federal courts. All eight cases have been dismissed or otherwise resolved.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Government agencies and authorities continue investigations or examinations of certain mortgage related practices of Wells Fargo. Wells Fargo, for itself and for predecessor institutions, has responded, and continues to respond, to requests from government agencies seeking information regarding the origination, underwriting and securitization of residential mortgages, including sub-prime mortgages. Ou February 24, 2012, Wells Fargo received a Wells Notice from SEC Staff relating to Wells Fargo's disclosures in mortgage-backed securities offering documents. On November 20,2012, the SEC Staff advised Wells Fargo it did not intend to take action on the subject matter ofthe Wells Notice.

IN RE MUNICIPAL DERIVATIVES ANTITRUST LITIGATION Wachovia Bank, along with several other banks and financial services companies, was named as a defendant beginning in April 2008 in a number of substantially identical purported class actions and individual actions filed in various slate and federal courts by various municipalities alleging they have been damaged by alleged anticompetitive activity ofthe defendants. These cases were either consolidated under the caption In re Municipal Derivatives Antitrust Litigation or administered jointly with that action in the U.S. District Court for the Southern District of New York. The plaintiffs and Wells Fargo agreed to settle the ln re Municipal Derivatives Antitrust Litigation on October 21,2011. The settlement received final approval on December 14, 2012. A number of municipalities have opted out ofthe settlement, but the remaining potential claims are not material.

ORDER OF POSTING LITIGATION A scries of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the

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Souicc: WEILS FARGO 6 COMPANY/MN, 10-K. Febiuaiy 27. 2013

llto Information contained herein may not be copied, adapted or distributed and ts not warranted to be accurate, complete ot timely. Tho user assumes oil risks for any damages cr losses cilalng from uny use ot this Information, except to the extent such damages or losses cannot be limited vr cr.cUn.ied hy applicable fnw t'asf financial performance Is no guarantee of future results

high to low order in which (he Banks post debit card transactions to consumer deposit accounts. There are currently several such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), most of which have been consolidated in multidistrict litigation proceedings in the U.S. District Court for the Southern District of Florida. The bank defendants moved to compel these cases to arbitration under recent Supreme Court authority. On November 22, 2011, the Judge denied the motion. The Banks appealed the decision to the U.S. Court of Appeals for the Eleventh Circuit. On October 26,2012, the Eleventh Circuit affirmed the District Court's denial ofthe motion.

On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., a case that was not consolidated in the multi-district proceedings, enjoining the Bank's use of the high to low posting method for debit card transactions with respect to the plaintiff class of California depositors, directing that the Bank establish a different posting methodology and ordering remediation of approximately $203 million. On October 26,2010, a final judgment was entered in Gutierrez. On October 28, 2010, Wells Fargo appealed to the U.S. Court of Appeals for the Ninth Circuit. On December 26, 2012, the Ninth Circuit reversed the order requiring Wells Fargo to change its order of posting and vacated the portion of the order granting remediation of approximately $203 million on the grounds of federal pre-emption. The Ninth Circuit affirmed the District Court's finding that Wells Fargo violated a California state law prohibition on fraudulent representations and remanded the case to the District Court for further proceedings.

SECURITIES LENDING LITIGATION Wells Fargo Bank, N.A. is involved in several separate pending actions brought by securities lending customers of Wells Fargo and Wachovia

Bank in various courts. In general, each of the cases alleges that Wells Fargo violated fiduciary and contractual duties by investing collateral for loaned securities in investments that suffered losses. In addition, on March 27, 2012, a class of Wells Fargo securities lending customers was certified in a case captioned City of Fanninglon Hills Employees Retirement System v. Wells Fargo Bank, N.A., which is pending in the U.S. District Court for the District of Minnesota. Wells Fargo sought interlocutory review of the class certification in the U.S. Court of Appeals for the Eighth Circuit. The Eighth Circuit declined such review on May 7, 2012.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers lo be the best estimate within the range. The high end ofthe range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $ 1.0 billion as of December 31, 2012. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

192

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Source WELLS FARGO 6 COMPANY/MN. 10-K. February 27. 2013

77j<? fntannatlan contained herein may net he copied, adapted or distributed and Is not warranted lo be accurate, complete or timely The user assumes all risks lor any damages or losses aitshiei from any use ol this Inlormalion. except to the extent such daatages or losses cannot be limited or excluded by applicable laiv Past financial pcrfoimance Is no guarantee of future lesulls.

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2012 Form 10-K for events occurring during first quarter 2013.

FHA INSURANCE LITIGATION On October 9,2012, the United States filed a complaint, captioned United Stales of America v. Wells Fargo Bank, N.A., in the U.S. District Court for the Southern District of New York. The complaint makes claims with respect to Wells Fargo's Federal Housing Administration (FHA) lending program for the period 2001 to 2010. The complaint alleges, among other allegations, that Wells Fargo improperly certified certain FHA mortgage loans for United States Department of Housing and Urban Development (HUD) insurance that did not qualify for the program, and therefore Wells Fargo should not have received insurance proceeds from HUD when some ofthe loans later defaulted. The complaint further alleges Wells Fargo knew some ofthe mortgages did not qualify for insurance and did not disclose the deficiencies to HUD before making insurance claims. On December 1, 2012, Wells Fargo filed a motion in the U.S. District Court for the District of Columbia seeking to enforce a release of Wells Fargo given by the United States, which was denied on February 12,2013. On April 11, 2013, Wells Fargo filed a notice of appeal. On December 14, 2012, the United Slates filed an amended complaint. On January 16, 2013, Wells Fargo filed a motion in the Southern District of New York to dismiss the amended complaint. Oral argument ofthe motion was held on April 17, 2013.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request ofthe Securities and Exchange Commission (SEC) in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. On April 16, 2013, the parties reached a settlement in principle of all claims which provides for Wells Fargo to pay $105 million to the plaintiffs. The settlement is subject to Court approval.

MARYLAND MORTGAGE LENDING LITIGATION On July 8, 2008, a class action complaint captioned Stacey and Bradley Petry, et al, v. Wells Fargo Bank, N.A., et al., was filed. The complaint alleges that Wells Fargo and others violated the Maryland Finder's Fee Act in the closing of mortgage loans in Maryland. On March 13, 2013, the Court held the plaintiff class did not have sufficient evidence to proceed to trial, which was previously set for March 18,2013. The Court is considering whether to dismiss the case or to certify an appellate question to the Maryland Court of Appeals.

MORTGAGE-BACKED CERTIFICATES LITIGATION Several securities law based putative class actions were consolidated in

the U.S. District Court for the Northern District of California on July 16, 2009, under the caption In re Wells Fargo Mortgage-Backed Certificates Litigation. The case asserted claims against several Wells Fargo mortgage-backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs alleged that the offering documents contain untrue statements of material fact, or omit to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The parties agreed to settle the case on May 27,2011, for $125 million. Final approval of the settlement was entered on November 14, 2011. Some class members opted out ofthe settlement. Wells Fargo settled the opt out claims of Federal National Mortgage Association for an amount that was within a previously established accrual.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential Josses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end ofthe range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.1 billion as of March 31, 2013. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess ofthe established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Wells Fargo & Company 10-Q

Note 11: Legal Actions June 30, 2013

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2012 Form 10-K and Part II, Item 1 (Legal Proceedings) of our 2013 first quarter Quarterly Report on Form 10-Q for events occurring during second quarter 2013.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request of the Securities and Exchange Commission (SEC) in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions Drought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. On April 16, 2013, the parties reached a settlement, subject to Court approval, of all claims which provides for Wells Fargo to pay $105 million to the plaintiffs. The Court gave preliminary approval to the settlement on May 6, 2013.

MARYLAND MORTGAGE LENDING LITIGATION On December 26,2007, a class action complaint captioned Demise Minter, et al, v. Wells Fargo Bank, NA., et al, was filed in the U.S. District Court for the District of Maryland. The complaint alleges that Wells Fargo and others violated provisions of the Real Estate Settlement Procedures Act and other laws by conducting mortgage lending business improperly through a general partnership, Prosperity Mortgage Company. The complaint asserts that Prosperity Mortgage Company was not a legitimate affiliated business and instead operated to conceal Wells Fargo Bank, N.A's role in the loans at issue. A plaintiff class of borrowers who received a mortgage loan from Prosperity Mortgage Company that was funded by Prosperity Mortgage Company's line of credit with Wells Fargo Bank, N.A. from 1993 to May 31, 2012, had been certified. Prior to trial, the Court narrowed the class action to borrowers who were referred to Prosperity Mortgage Company by Wells Fargo's partner and whose loans were transferred to Wells Fargo Bank, N.A. from 1993 to May 31,2012. On May 6,2013, the case went to trial. On June 6, 2013, the jury returned a verdict in favor of all defendants, including Wells Fargo. The plaintiffs have requested a new trial on the named plaintiffs' individual claims, and have filed a notice of appeal.

On July 8, 2008, a class action complaint captioned Stacey and Bradley Petry, et al, v. Wells Fargo Bank, NA., et al., was filed. The complaint alleges that Wells Fargo and others violated the Maryland Finder's Fee Act in the closing of mortgage loans in Maryland. On March 13, 2013, the Court held the plaintiff class did not have sufficient evidence to proceed to trial, which was previously set for March 18,2013. On June 20, 2013, the Court entered judgment in favor ofthe defendants. The plaintiffs have appealed.

ORDER OF POSTING LITIGATION A series of putative class actions have been filed against Wachovia Bank, N.A and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the banks post debit card transactions to consumer deposit accounts. There are currently several such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), most of which have been consolidated in multi-district litigation proceedings in the U.S. District Court for the Southern District of Florida. The bank defendants moved to compel these cases to arbitration under recent Supreme Court authority. On November 22, 2011, the Judge denied the motion. The bank defendants appealed the decision to the U.S. Court of Appeals for the Eleventh Circuit. On October 26, 2012, the Eleventh Circuit affirmed the District Court's denial ofthe motion. Wells Fargo renewed its motion to compel arbitration with respect to the unnamed putative class members. On April 8, 2013, the District Court denied the motion. Wells Fargo has appealed the decision to the Eleventh Circuit. On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, NA., a case that was not consolidated in the multi-district proceedings, enjoining the bank's use of the high to low posting method for debit card transactions with respect to the plaintiff class of California depositors, directing the bank to establish a different posting methodology and ordering remediation of approximately $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. On October 28, 2010, Wells Fargo appealed to the U.S. Court of Appeals for the Ninth Circuit. On December 26, 2012, the Ninth Circuit reversed the order requiring Wells Fargo to change its order of posting and vacated the portion of the order granting remediation of approximately $203 million on the grounds of federal preemption. The Ninth Circuit affirmed the District Court's finding that Wells Fargo violated a California state law prohibition on fraudulent representations and remanded the case to the District Court for further proceedings. On May 14, 2013, the District Court entered an order indicating it will reinstate the judgment of approximately $203 million against Wells Fargo and enjoined Wells Fargo from making or disseminating additional misrepresentations about its order of posting of transactions. Wells Fargo has appealed the order to the Ninth Circuit. On August 5, 2013, the District Court entered a judgment against Wells Fargo in the approximate amount of $203 million, together with post-judgment interest thereon from October 25, 2010.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate

within the range. The high end of the range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.1 billion as of June 30, 2013. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

lo-Q

Note 11: Legal Actions - September 30, 2013

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2012 Form 10-K and Part II, Item 1 (Legal Proceedings) of our 2013 first and second quarter Quarterly Reports on Form 10-Q for events occurring during third quarter 2013.

FHA INSURANCE LITIGATION On October 9, 2012, the United States filed a complaint, captioned United States of America v. Wells Fargo Bank, NA., in the U.S. District Court for the Southern District of New York. The complaint makes claims with respect to Wells Fargo's Federal Housing Administration (FHA) lending program for the period 2001 to 2010. The complaint alleges, among other allegations, that Wells Fargo improperly certified certain FHA mortgage loans for United States Department of Housing and Urban Development (HUD) insurance that did not qualify for the program, and therefore Wells Fargo should not have received insurance proceeds from HUD when some of the loans later defaulted. The complaint further alleges Wells Fargo knew some of the mortgages did not qualify for insurance and did not disclose the deficiencies to HUD before making insurance claims. On December l,

1. Wells Fargo filed a motion in the U.S. District Court for the District of Columbia seeking to enforce a release of Wells Fargo given by the United States, which was denied on February 12, 2013. On April 11, 2013, Wells Fargo appealed the decision to the U.S. Court of Appeals for the District of Columbia Circuit, and filed its initial appellate brief on September 20, 2013. On December 14, 2012, the United States filed an amended complaint. On January 16,
2. Wells Fargo filed a motion in the Southern District of New York to dismiss the amended complaint. On September 24, 2013, the Court entered an order denying the motion with respect to the government's federal statutory claims and granting in part, and denying in part, the motion with respect to the government's common law claims.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Banlc, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request of the Securities and Exchange Commission (SEC) in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. On April 16, 2013, the parties reached a settlement, subject to Court approval, of all claims which provides for Wells Fargo to pay $105 million to the plaintiffs. The Court gave final approval to the settlement on August 12, 2013.

MORTGAGE-BACKED CERTI FI GATES LITIGATION Several securities law based putative class actions were consolidated in the U.S. District Court for the Northern District of California on July 16, 2009, under the caption In re Wells Fargo Mortgage-Backed Certificates Litigation. The case asserted claims against several Wells Fargo mortgage-backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs alleged that the offering documents contain untrue statements of material fact, or omit to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The parties agreed to settle the case on May 27, 2011, for $125 million. Final approval ofthe settlement was entered on November 14, 2011. Some class members, including Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC), opted out of the settlement. Wells Fargo settled the opt out claims of FNMA in first quarter 2013 and settled the opt out claims of FHLMC in third quarter 2013, in each case for an amount that was within a previously established accrual. Both settlements included the Federal Housing Finance Agency, as conservator of FNMA and FHLMC. The combined amount of the settlements was approximately $335 million.

On October 15, 2010, three actions, captioned Federal Home Loan Bank of Chicago v. Banc of America Funding Corporation, et al. (filed in the Cook County Circuit Court, State of Illinois); Federal Home Loan Bank of Chicago v. Banc of America Securities LLC, et al. (filed in the Superior Court of the State of California for the County of Los Angeles); and Federal Home Loan Bank of Indianapolis v. Banc of America Mortgage America Securities, Inc., et al. (filed in the Superior Court of the State of Indiana for the County of Marion), named multiple defendants, described as issuers/depositors, and underwriters/dealers of private label mortgage-backed securities, in an action asserting claims that defendants used false and misleading statements in offering documents for the sale of such securities. Plaintiffs seek rescission of the sales and damages under state securities and other laws and Section 11 of the Securities Act of 1933. Wells Fargo Asset Securities Corporation, Wells Fargo Bank, N.A. and Wells Fargo & Company were named among the defendants. Wells Fargo has reached a settlement in principle with the Federal Home Loan Bank of Indianapolis to settle the claims against it in the Federal Home Loan Bank of Indianapolis v. Banc of America Mortgage America Securities, Inc., et al. action for an amount within a previously established accrual. Wells Fargo has also reached a settlement in principle with the Federal Home Ix>an Bank of Chicago to settle the claims against it in the Federal Home Loan Bank of Chicago v. Banc of America Funding Corporation, et al. and Federal Home Loan Bank of Chicago v. Banc of America Securities LLC actions for an amount within a previously established accrual.

On April 20, 2011, a case captioned Federal Home Loan Bank of Boston v. Ally Financial, Inc., et al., was filed in the Superior Court of the Commonwealth of Massachusetts for the County of Suffolk. The case names, among a large number of parties, Wells Fargo & Company, Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N.A. as parties and asserts claims that defendants used false and misleading statements in offering documents for the sale of mortgage-backed securities. Wells Fargo settled the claims of the Federal Home Loan Bank of Boston for an amount within a previously established accrual and was dismissed, with prejudice, from the Federal Home Loan Bank of Boston v. Ally Financial, Inc., et al. action on September 30,2013.

ORDER OFPOSTING LITIGATION On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., a case that was not consolidated in the multi-district proceedings, enjoining the bank's use ofthe high to low posting method for debit card transactions with respect to tire plaintiff class of California depositors, directing the bank to establish a different posting methodology and ordering remediation of approximately $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. On October 28,2010, Wells Fargo appealed to the U.S. Court of Appeals for the Ninth Circuit. On December 26, 2012, the Ninth Circuit reversed the order requiring Wells Fargo to change its order of posting and vacated the portion of the order granting remediation of approximately $203 million on the grounds of federal preemption. The Ninth Circuit affirmed the District Court's finding that Wells Fargo violated a California state law prohibition on fraudulent representations and remanded the case lo the District Court for further proceedings. On August 5, 2013, the District Court entered a judgment against Wells Fargo in the approximate amount of $203 million, together with post-judgment interest thereon from October 25, 2010, and, effective as of July 15, 2013, enjoined Wells Fargo from making or disseminating additional misrepresentations about its order of posting of transactions. On August 7, 2013, Wells Fargo appealed the judgment to the Ninth Circuit.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end of the range of reasonably possible potential litigation losses in excess of the Company's liability for probable and estimable losses was $1.0 billion as of September 30, 2013. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

10-K February 26, 2014 Wells Fargo & Company

Note 35: Kepal Actions      __      

Wells Fargo and certain of our subsidiaries arc involved in a number of judicial, regulatory and arbitration proceedings concerning mailers arising from Ihe conduct of our business activities. These proceedings include actions brought against Wells Faigo ami/or our subsidiaries with respect to corporate related matters and transactions in which Wells Fargo ajid/or our subsidiaries were involved. In addition. Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.

Although there can be no assurance as to the ultimate outcome. Wells Forgo ond/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the mailers described below, and wc intend to defend vigorously each case, other than matters we describe as having settled. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than Ihe amounts reserved for those claims.

FHA insurance litigation On October 9, 2012, the United States filed a complaint, captioned United States of America v. Wells Fargo Bank. N.A., in the U.S District Court for the Southern District of New York. The complaint makes claims with respect to Wells Fargo's Fedeial Housing Administration (FHA) lending program for the period 2001 to 2010. The complaint alleges, among other allegations, that Wells Fargo improperly certified certain FHA mortgage loans for United Slates Department of Housing and Urban Development (HUD) insurance that did not qualify for the program, and therefore Wells Fargo should not have received insurance proceeds from HUD when some ofthe loans later defaulted. The complaint further alleges Wells Fargo knew some of the mortgages did not qualify for insurance and did not disclose the deficiencies to HUD before making insurance claims. On December 1,2012, Wells Fargo filed a motion in the U S. District Court for the District of Columbia seeking to enforce a release of Wells Faigo given by the United States, which was denied on February 12, 2013 On April 11, 2013, Wells Fargo appealed the decision to the U.S. Court of Appeals for the District of Columbia Circuit, with appellate briefing completed on November 26, 2013. On December 14, 2012, the United States filed an amended complaint. On January 16, 2013, Wells Fargo filed a motion in the Southern District of New York to dismiss the amended complaint. On September 24, 2013, (he Court entered an order denying the motion with respect lo the government's federal statutory claims and granting in part, and denying in pan, the motion with respect to the government's common law claims. On January 10,2014, the United States filed a second amended complaint.

INTERCHANGE litigation Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation ore named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and in individual actions brought by individual merchants with regard to the inteichange fees associated with Visa and MasterCard payment card transactions. These aclioiis have been consolidated in the U.S. District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies arc named as defendants in various of these actions The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully colluded to set interchange rates Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo ond Wachovia, along with other defendants and entities, arc parties lo Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13, 2012. Visa, MasterCard and the financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants to resolve the consolidated class actions and reached a separate settlement in principle ofthe consolidated individual actions. The proposed settlement payments by all defendants in the consolidated class and individual actions total approximately $6.6 billion. The class settlement also provides for the distribution to class merchants of 10 basis points of default interchange across all credit rate categories for a period of eight consecutive months. The Court granted final approval ofthe settlement, which is proceeding. Merchants have filed several "opt-out¹* actions.

MARYLAND MORTGAGE LENDING LITIGATION On December 26, 2007, a class action complaint captioned Denise Mmter, et al v Wells Fargo Bank. N.A., et al. was filed in the U.S. District Court for the District of Maryland. The complaint alleges that Wells Fargo and others violated provisions ofthe Real Estate Settlement Procedures Act and other laws by conducting mortgage lending business improperly through a general partnership, Prosperity Mortgage Company. The complaint asserts that Prosperity Mortgage Company was not a legitimate affiliated business and instead operated to conceal Wells Fargo Bank, N.A.'s role in the loans at issue A plaintiff class of borrowers who received a mortgage loan from Prosperity Mortgage Company that was funded by Prosperity Mortgage Company's line of credit with Wells Fargo Bank, N.A. from 1993 lo May 31,2012, had been certified. Prior to trial, the Court narrowed the class action to borrowers who were referred to Prosperity Mortgage Company by Wells Fargo's partner and whose loans were transferred to Wells Fargo Bank, N.A. from 1993 to May 31,2012. On May 6,2013, the case went to trial. On June 6, 2013, the jury relumed a verdict in favor of all defendants, including Wells Fargo. The plaintiffs have appealed.

On July 8, 2008, a class action complaint captioned Stacey andBradley Petry. elal.v Wells Fargo Bank, N.A., etal was filed. The complaint alleges that Wells Fargo and others violated the Maryland Finder's Fee Act in the closing of mortgage loans in Maryland. On March 13, 20J3, the Court held the plaintiff class did not have sufficient evidence lo proceed to trial, which was previously set for March 18,2013. On June 20,2013, the Court entered judgment in favor ofthe defendants. The plaintiffs have appealed.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Government agencies continue investigations or examinations of certain mortgage related practices of Wells Fargo and predecessor institutions. Wells Fargo, for itself and for predecessor institutions, has

201

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Source WELLS fARGO b COMPAWY/MN. 10-K. February 26. 2014

I fie Information contained herein moy not be cuplcd. adaptedor distributed ana Is not warranted to be accurate, compfeto or timely. The user assumes all risks far any damages or lusset arising fiom any use ol tuts Information, except to the extent such damages or lvs\es cannot bo limited or excluded hy applicable law. Past financial performance Is no guarantee of future tQ&ufts-

Note 15:  Legal Actions (continued)

responded, and continues to respond, to requests from government agencies seeking information regarding (he origination, underwriting and securitization of residential mortgages, including sub-prime mortgages.

ORDER OF POSTING Li 11G ATI ON A series of putative class actions have been filed against Wechovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the banks post debit card transactions lo consumer deposit accounts. There are currently several such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), most of which have been consolidated in multi-district litigation proceedings in the U.S. District Court for the Southern District of Florida. The bank defendants moved to compel these cases to arbitration under recent Supreme Court authoriry. On November 22, 2011, the Judge denied the motion The bant defendants appealed die decision to the U.S. Court of Appeals for the Eleventh Circuit. On October 26, 2012, the Eleventh Circuit affirmed tltc District Court's denial ofthe motion. Wells Fargo renewed its motion to compel arbitration with respect to the unnamed putative class members. On April 8, 2013, the District Court denied the motion. Wells Fargo has appealed lhc decision to the Eleventh Circuit.

On August 10,2010, the U.S District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., a case that was not consolidated in the multi-district proceedings, enjoining the bank's use of the high to low posting method for debit card transactions with respect lo the plaintiff class of California depositors, directing the bank to establish a different posting methodology and ordering remediation of approximately $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. On October 28, 2010, Wells Fargo appealed to lhc U.S Court of Appeals for the Ninth Circuit. On December 26, 2012, the Ninlh Circuit reversed the order requiring Wells Fargo to change its order of posting and vacated the portion ofthe order granting remediation of appioximatcly S203 million on ihe grounds of federal preemption The Ninth Circuit affirmed ihe District Court's finding that Wells Fargo violated a California state Jaw prohibition on fraudulent representations and remanded the case to the District Court for further proceedings. On August 5, 2013, the District Court entered a judgment against Wells Fargo in the approximate amount ofS203 million, together with post-judgment interest thereon from October 25, 2010, and, effective as of July 15, 2013, enjoined Wells Fargo from making or disseminating additional misrepresentations about its order of posting of transactions. On August 7,2013, Wells Fargo appealed the judgment to (he Ninth Circuit.

SECURITIES LENDING litigation Wells Fargo Bank, N.A. is involved in five separate pending actions brought by securities lending customers of Wells Fargo and Wachovia Bank in various courts, ln general, each ofthe cases alleges that Wells Fargo violated fiduciary and contractual duties by investing collateral for loaned securities in investments that suffered losses. One of the cases, filed on March 27,2012, is composed of a class of Wells Fargo securities lending customers in a case captioned City ojFaintington Hills Employees Retirement System v. Wells Fargo Bank. N.A. The class action is pending in the U.S. District Court for the District of Minnesota.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end ofthe range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $951 million as of December 31,2013. For these matters and olhcrs where an unfavorable outcome is reasonably possible but not probable, there maybe a range of possible losses in excess ofthe established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves. Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position However, in the event of unexpected future developments, it is possible (hat the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Souicc: WELLS FARGO ft COMPANY/MN. 10-K February 26. 2014      Poweied by MumitigMar • DxunieitLRraja'ch*¹

Vie Information contained herein n'ny not bn copied, sdsptedor dt-jtilputed and Is not warranted In be accurate, complete or timely The user assumes tilt risks (or any damages or losr.es attaint, (runt any uso ot this Information, except to the extent such damages orlosses cannot be limited or excluded by applicable tow. Past financial performance Is no guarantee ot tuture results.

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

1. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a complete list of all current employees of the Disclosing Party who were, at any time during the 12-month period preceding the execution date of this EDS, an employee, or elected or appointed official, of the City of Chicago (if none, indicate with "N/A" or "none").

The Disclosing Party certifies that as ofthe dale hereof, to the best of the Disclosing Parry's knowledge after due inquiry, die answer with respect to this question is: None. Please note that the toregoing answer is based on an email questionnaire distributed on March IU, 2014 to all Illinois-based

-employees of Well; Fargn Bank, N-A.^and-tliOsexiriployeasJhaUh.it work in the Bank's gnvrrnmcnt-and institutional banking group, and on an      

email questionnaire distributed on March 10, 2014 to those employees that work in the Bank's community lending and investment group, and may accordingly have a material relationship with the City.

1. To the best of the Disclosing Party's knowledge after reasonable inquiry, the following is a complete list of all gifts that the Disclosing Party has given or caused to be given, at any time during the 12-month period preceding the execution date of this EDS, to an employee, or elected or appointed official, of the City of Chicago. For purposes of this statement, a "gift" does not include: (i) anything made generally available to City employees or to the general public, or (ii) food or drink provided in the course of official City business and having a retail value of less than $20 per recipient (if none, indicate with "N/A" or "none"). As to any gift listed below, please also list the name of the City recipient.

The Disclosing Party certifies that as ofthe dale hereof, to the best of the Disclosing Party's knowledge after due inquiry, the answer with respect to this question is: None. Please note that the foregoing answer is based on an email questionnaire distributed on March 10, 2014 -to all Illinois-based employees oHVells Fargo-Btmk, N.A. andiho&c employees that that work in the Bank^-govcnuiicnt and institutionai—

banking group, and on an email questionnaire distributed on March 10. 2014 to those employees that work in the Bank's communitv      

lending and investment group, and may accordingly have a material relationship with (he City.

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

1. The Disclosing Party certifies that the Disclosing Party (check one)

H is      [ ] is not

a "financial institution" as defined in Section 2-32-455(b) of the Municipal Code.

1. If the Disclosing Party IS a financial institution, then the Disclosing Party pledges:

"We are not and will not become a predatory lender as defined in Chapter 2-32 of the Municipal Code. We further pledge that none of our affiliates is, and none of them will become, a predatory lender as defined in Chapter 2-32 of the Municipal Code. We understand that becoming a predatory lender or becoming an affiliate of a predatory lender may result in the loss of the privilege of doing business with the City."

If the Disclosing Party is unable to make this pledge because it or any of its affiliates (as defined in Section 2-32-455(b) of the Municipal Code) is a predatory lender within the meaning of Chapter 2-32 ofthe Municipal Code, explain here (attach additional pages if necessary):

Page 7 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-156 ofthe Municipal Code have the same meanings when used in this Part D.

1. In accordance with Section 2-156-110 ofthe Municipal Code: Does any official or employee ofthe City have a financial interest in his or her own name or in the name ofany other person or entity in the Matter?

[ ] Yes      [*] No

NOTE:  If you checked "Yes" to Item D.l., proceed to Items D.2. and D.3. If you checked "No" to Item D.l., proceed to Part E.

1. Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase of any property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit of the City (collectively, "City Property Sale"). Compensation for property taken pursuant to the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

[/fees      [ ] No

1. If you checked "Yes" to Item D.L, provide the names and business addresses ofthe City officials or employees having such interest and identify the nature of such interest:

Name      Business Address      Nature of Interest

N/A

4. The Disclosing Party further certifies that no prohibited financial interest in the Matter will be acquired by any City official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please check either 1. or 2. below. If the Disclosing Party checks 2., the Disclosing Party must disclose below or in an attachment to this EDS all information required by paragraph 2. Failure to

Page 8 of 13

comply with these disclosure requirements may make any contract entered into with the City in connection with the Matter voidable by the City.

      1. The Disclosing Party verifies that the Disclosing Party has searched any and all records of

the Disclosing Party and any and all predecessor entities regarding records of investments or profits from slavery or slaveholder insurance policies during the slavery era (including insurance policies issued to slaveholders that provided coverage for damage to or injury or death of their slaves), and the Disclosing Party has found no such records.

*      2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the

Disclosing Party has found records of investments or profits from slavery or slaveholder insurance policies. The Disclosing Party verifies that the following constitutes full disclosure of all such records, including the names of any and all slaves or slaveholders described in those records: See Attachment "D"

SECTION VI -- CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

NOTE: If the Matter is federally funded, complete this Section VI. If the Matter is not federally funded, proceed to Section VII. For purposes of this Section VI, tax credits allocated by the City and proceeds of debt obligations ofthe City arc not federal funding.

A. CERTIFICATION REGARDING LOBBYING

1.   List below the names of all persons or entities registered under the federal Lobbying Disclosure Act of 1995 who have made lobbying contacts on behalf of the Disclosing Party with respect to the Matter: (Add sheets if necessary):

N/A

(If no explanation appears or begins on the lines above, or if the letters "NA" or if the word "None" appear, it will be conclusively presumed that the Disclosing Party means that NO persons or entities registered under the Lobbying Disclosure Act of 1995 have made lobbying contacts on behalf ofthe Disclosing Party with respect to the Matter.)

2.   The Disclosing Parly has not spent and will not expend any federally appropriated funds to pay any person or entity listed in Paragraph A.l. above for his or her lobbying activities or to pay any person or entity to influence or attempt to influence an officer or employee ofany agency, as defined by applicable federal law, a member ofCongress, an officer or employee of Congress, or an employee of a member ofCongress, in connection with the award ofany federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, loan, or-cooperative agreement.

Page 9 of 13

Attachment "D"

SLAVERY ERA BUSINESS SUMMARY

After years of research, Wells Fargo has found no records that indicate it - or any entities it acquired before the Wachovia merger - had ever financed slavery, held slaves as collateral, owned slaves, or profited from slavery.

With the Wachovia merger, Wells Fargo inherited hundreds of Wachovia's predecessor financial institutions, including two that had extensive involvement in slavery. In 2005 Wachovia announced these findings and apologized for the role its predecessors played and renewed its commitment to preserve and promote the history ofthe African-American experience in our nation. Wells Fargo shares that commitment and affirms its long-standing opposition to slavery.

The following narrative summarizes the results of the research that has been performed regarding Wachovia Bank and its ties lo slavery.

SUMM ARY OF RESEARCH

External research has revealed that two predecessor institutions ofthe undersigned, the Georgia Railroad & Banking Company and the Bank of Charleston, owned slaves.

Due to incomplete records, the undersigned cannot determine exactly how many slaves either the Georgia Railroad and Banking Company or the Bank of Charleston owned. Through specific transactional records, researchers determined that the Georgia Railroad and Banking Company owned at least 162 slaves, and the Bank of Charleston accepted at least 529 slaves as collateral on mortgaged properties or loans, and acquired an undetermined number of these individuals when customers defaulted on their loans.

The Georgia Railroad and Banking Company was founded in 1833 to complete a railroad line between the City of Augusta and the interior of the state of Georgia. The company relied on slave labor for the construction and maintenance of this railway. According to the existing and searchable bank records, 162 slaves were owned or authorized to be purchased by the Georgia Railroad and Banking Company between 1836 and 1842. In addition, the company awarded work to contractors who purchased at least 400 slaves to perform work on the railways.

The Bank of Charleston, founded in 1834, issued loans and mortgages where enslaved individuals were used as collateral. A review of the bank's account ledgers revealed a minimum of 24 transactions involving reference to 529 enslaved individuals being used as collateral. In most cases, the loan was paid on schedule, and the bank never took possession of slaves that were pledged as collateral on the loan. In several documented instances, however, customers defaulted on their loans and the Bank of Charleston took actual possession of slaves. The total number of slaves of whom the bank took possession cannot be accurately tallied due to the lack of records.

EDOCS A2073307 (Rev. 07.02.2013)

In addition, ten predecessor companies were determined to have profited more indirectly from slavery through the following means:

• Founders, directors, or account holders who owned slaves and/or profited directly from slavery;

Investing in or transacting business with companies or individuals that owned slaves;

• Investing in the bonds of slave states and municipalities;

Investing in U.S. government bonds during years when the United States permitted and profited from slave labor directly through taxation.

These institutions are:

.   Bank ofNorth America (Philadelphia, Pa.) Bank of Baltimore

• The Philadelphia Bank (later Philadelphia National Bank) Farmers' & Mechanics' Bank of Philadelphia

•      Pennsylvania Company for Insurances on Lives and the Granting of Annuities .   State Bank of Elizabeth (Elizabeth, N.J.)

State Bank of Newark (Newark, N.J.) Savings Bank of Baltimore

• Girard National Bank
• The Carswell Group (established in 1868, acquired by Palmer & Cay, Inc. in 1985)

The Trenton Banking Company

EDOCS #2073307 (Rev. 07.02.2013)

1. The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy of the statements and information set forth in paragraphs A.l. and A.2. above.
2. The Disclosing Party certifies that either: (i) it is not an organization described in section 501(c)(4) of the Internal Revenue Code of 1986; or (ii) it is an organization described in section 501(c)(4) of the Internal Revenue Code of 1986 but has not engaged and will not engage in "Lobbying Activities".
3. If the Disclosing Party is the Applicant, the Disclosing Party must obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration ofthe Matter and must make such certifications promptly available to the City upon request.

B. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

If the Matter is federally funded, federal regulations require the Applicant and all proposed subcontractors to submit the following information with their bids or in writing at the outset of negotiations.

Is the Disclosing Party the Applicant?

[ ] Yes      pg No

If "Yes," answer the three questions below:

1. Have you developed and do you have on file affirmative action programs pursuant to applicable federal regulations? (See 41 CFR Part 60-2.)

[ ] Yes      [ ] No

1. Have you filed with the Joint Reporting Committee, the Director of the Office of Federal Contract Compliance Programs, or the Equal Employment Opportunity Commission all reports due under the applicable filing requirements?

[ ] Yes      [ ] No

1. Have you participated in any previous contracts or subcontracts subject to the equal opportunity clause?

[ ] Yes      [ ] No

If you checked "No" to question 1. or 2. above, please provide an explanation:

Page 10 of 13

SECTION VII - ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

The Disclosing Party understands and agrees that:

1. The certifications, disclosures, and acknowledgments contained in this EDS will become part of any contract or other agreement between the Applicant and the City in connection with the Matter, whether procurement, City assistance, or other City action, and are material inducements to the City's execution of any contract or taking other action with respect to the Matter. The Disclosing Party understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
2. The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entities seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.cityofchicago.org/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (312) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

1. If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
2. It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all of the information provided on this EDS and any attachments to this EDS may be made available to the public on the Internet, in response to a Freedom of Information Act request, or otherwise. By completing and signing this EDS, the Disclosing Party waives and releases any possible rights or claims which it may have against the City in connection with the public release of information contained in this EDS and also authorizes the City to verify the accuracy of any information submitted in this EDS.

E.      The information provided in this EDS must be kept current. In the event of changes, the Disclosing

Parly must supplement this EDS up to the time the City takes action on the Matter. If the Matter is a

contract being handled by the City's Department of Procurement Services, the Disclosing Party must

update this EDS as the contract requires. NOTE: With respect to Matters subject to Article I of

Chapter 1 -23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified

offenses), the information provided herein regarding eligibility must be kept current for a longer period,

as required by Chapter 1-23 and Section 2-154-020 of the Municipal Code.

The Disclosing Party represents and warrants that:

Page 11 of 13

I

■■" 1

F.1.    The Disclosing Party is not delinquent in the payment ofany tax administered by the Illinois Department of Revenue, nor are the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or other charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, properly taxes or sales taxes.

F.2    If the Disclosing Party is the Applicant, the Disclosing Party and its Affiliated Entities will not use, nor permit their subcontractors to use, any facility listed by the U.S. E.P.A. on the federal Excluded Parries List System ("EPLS") maintained by the U. S. General Services Administration.

F.3     If the Disclosing Party is the Applicant, the Disclosing Party will obtain from any contractors/subcontractors hired or to be hired in connection with the Matter certifications equal in form and substance to those in F.1. and F.2. above and will not, without the prior written consent ofthe City, use any such contractor/subcontractor that does not provide such certifications or that the Disclosing Party has reason to believe has not provided or cannot provide truthful certifications.

NOTE: If the Disclosing Party cannot certify as to any of the items in F.I., F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

Under penalty of perjury, the person signing below: (1) warrants that he/she is authorized to execute this EDS and Appendix A (if applicable) on behalf of the Disclosing Party, and (2) warrants that all certifications and statements contained in this EDS and Appendix A (if applicable) are true, accurate and complete as ofthe date furnished to the City.

 

(Print or type name of person signing)

WFC Holdings Corporation (Print or type^ame of Disclosing Party)

Executive Vice President

(Print or type title of person signing)

^JNotary Public.

 

Signed and sworn to before me on (date) xJlme^ ll/2-Pl

Page 12 of 13

i

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED CITY OFFICIALS AND DEPARTMENT HEADS

This Appendix is to be completed only by (a) the Applicant, and (b) any legal entity which has a direct ownership interest in the Applicant exceeding 7.5 percent. It is not to be completed by any legal entity which has only an indirect ownership interest in the Applicant.

Under Municipal Code Section 2-154-015, the Disclosing Party must disclose whether such Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently has a "familial relationship" with any elected city official or department head. A "familial relationship" exists if, as of the date this EDS is signed, the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof is related to the mayor, any alderman, the city clerk, the city treasurer or any city department head as spouse or domestic partner or as any of the following, whether by blood or adoption: parent, child, brother or sister, aunt or uncle, niece or nephew, grandparent, grandchild, father-in-law, mother-in-law, son-in-law, daughter-in-law, stepfather or stepmother, stepson or stepdaughter, stepbrother or stepsister or half-brother or half-sister.

"Applicable Party" means (I) all executive officers of the Disclosing Party listed in Section H.B.l.a., if the Disclosing Party is a corporation; all partners of the Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners ofthe Disclosing Party, if the Disclosing Party is a limited partnership; all managers, managing members and members ofthe Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers ofthe Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Does the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently have a "familial relalionship" with an elected city official or department head?

[ JYes ['JNo

If yes, please identify below (1) the name and title of such person, (2) the name of the legal entity to which such person is connected; (3) the name and title of the elected city official or department head to whom such person has a familial relationship, and (4) the precise nature of such familial relationship.

Familial Attachment

Page 13 of 13

Attachment to City of Chicago Econon„c Disclosure Statement and Affidavit Appendix A

s and Department Heads

Familial Relationships with Elected City Officials

7S7080

EDS      *      * ^ SSafeS

(DO NOT SUBMIT THIS PAGE WITH YOUR EDS. The purpose of this page is for you to recertify your EDS prior to submission to City Council or on the date of closing. If unable to recertify truthfully, the Disclosing Party must complete a new EDS with correct or corrected information)

RECERTIFICATION

Generally, for use with City Council matters. Not for City procurements unless requested.

This recertification is being submitted in connection with purchase of 3151 W. Washington from the City

[identify the Matter]. Under penalty of perjury, the person signing below: (1) warrants that

he/she is authorized to execute this EDS recertification on behalf of the Disclosing Party, (2)

warrants that all certifications and statements contained in the Disclosing Party's original EDS

are true, accurate and complete as of the date furnished to the City and continue to be true,

accurate and complete as of the date of this recertification, and (3) reaffirms its

acknowledgments.

 

WFC Holdings Corporation

(Print or type legal name of Disclosing Party)

 

Title of signatory:

 

Signed and sworn to before me on [date] V^oy crrQper IM.^o'iM, by

Tt,^   fi. Caw^beW        at Vyeonepio    County, (v^nnrs^ [state].

 

Commission expires:      \ - "^A - 90^^

Ver. ll-OI-OS

:^%LORiLBOECKEL-KREIDT;

NOTARY PUBLIC - MINNESOTA \ ^mstrm COMMISSION EXPIRES 01/31/20201

j      CITY OF CHICAGO

ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

SECTION I - GENERAL INFORMATION

A. Legal name of the Disclosing Party submitting this EDS. Include d/b/a/ if applicable: WELLS FARGO & COMPANY

Check ONE ofthe following three boxes:

Indicate whether the Disclosing Party submitting this EDS is:

1. [ ] the Applicant

OR

1. [/] a legal entity holding a direct or indirect interest in the Applicant. State the legal name of the Applicant in which the Disclosing Party holds an interest: Wells Fargo Bank, National Association

OR

3.      [] a legal entity with a right of control (see Section II.B.l.) State the legal name of the entity in

which the Disclosing Party holds a right of control:      

B. Business address ofthe Disclosing Party:     420 Montgomery Street      

San Francisco, CA 94163

1. Telephone: 312-443-1775        _Fax: 312-896-6798      Email: cnogar@lockelord.com
2. Name of contact person: Courtney Nogar      
3. Federal Employer Identification No. (if you have one): ;      _;      . . _.       
4. Brief description of contract, transaction or other undertaking (referred to below as the "Matter") to which this EDS pertains. (Include project number and location of property, if applicable): Purchase of the vacat lot located at 3153 Washington

G. Which City agency or department is requesting this EDS? Department of Planning and Development

If the Matter is a contract being handled by the City's Department of Procurement Services, please complete the following:

Specification #      and Contract #      

Ver. 01-01-12

Page 1 of 13

SECTION II - DISCLOSURE OF OWNERSHIP INTERESTS

A. NATURE OF THE DISCLOSING PARTY 1.   Indicate the nature of the Disclosing Party:

[ ]      Person      [ ]

[/[      Publicly registered business corporation      [ ]

[ ]      Privately held business corporation      [ ]

[ ]      Sole proprietorship      [ ]

[ ]      General partnership      (Is

[ ]      Limited partnership

[ ]      Trust      [ ]

Limited liability company Limited liability partnership Joint venture

Not-for-profit corporation

the not-for-profit corporation also a 501(c)(3))?

[ ] Yes      [ ] No

Other (please specify)

2. For legal entities, the state (or foreign country) of incorporation or organization, if applicable: Delaware

3.   For legal entities not organized in the State oflllinois: Has the organization registered to do business in the State oflllinois as a foreign entity?

[ ] Yes      \/\ No      [ ] N/A

B. IF THE DISCLOSING PARTY IS A LEGAL ENTITY:

1.   List below the full names and titles of all executive officers and all directors of the entity. NOTE: For not-for-profit corporations, also list below all members, if any, which are legal entities. If there are no such members, write "no members." For trusts, estates or other similar entities, list below the legal titleholder(s).

If the entity is a general partnership, limited partnership, limited liability company, limited liability partnership or joint venture, list below the name and title of each general partner, managing member, manager or any other person or entity that controls the day-to-day management ofthe Disclosing Party. NOTE: Each legal entity listed below must submit an EDS on its own behalf.

Name Title SEE ATTACHMENT "A"

2.   Please provide the following information concerning each person or entity having a direct or indirect beneficial interest (including ownership) in excess of 7.5% ofthe Disclosing Party. Examples of such an interest include shares in a corporation, partnership interest in a partnership or joint venture,

Page 2 of 13

WELLS FARGO & COMPANY Effective 5/15/2014

EXECUTIVE OFFICERS

John G. Stumpf Patricia R. Callahan David M. Carroll Hope A. Hardison Michael J. Heid Richard D. Levy Michael J. Loughlin Avid Modjtabai Kevin A. Rhein Timothy J. Sloan John R. Shrewsberry James M. Strother Carrie L. Tolstedt

Chairman, President and Chief Executive Officer

Senior Executive Vice President and Chief Administrative Officer

Senior Executive Vice President (Wealth, Brokerage & Retirement)

Executive Vice President (Human Resources)

Executive Vice President (Home Lending)

Executive Vice President and Controller (Principal Accounting Officer)

Senior Executive Vice President and Chief Risk Officer

Senior Executive Vice President (Consumer Lending)

Senior Executive Vice President and Chief Information Officer

Senior Executive Vice President (Wholesale Banking)

Senior Executive Vice President and Chief Financial Officer

Senior Executive Vice President and General Counsel

Senior Executive Vice President (Community Banking)

DIRECTORS

John D. Baker II Elaine L. Chao John S. Chen Lloyd H. Dean Susan E. Engel Enrique Hernandez, Jr. Donald M. James Cynthia H. Milligan Federico F. Pena James H. Quigley Judith M. Runstad Stephen W. Sanger John G. Stumpf Susan G. Swenson

interest of a member or manager in a limited liability company, or interest of a beneficiary of a trust, estate or other similar entity. If none, state "None." NOTE: Pursuant to Section 2-154-030 of the Municipal Code of Chicago ("Municipal Code"), the City may require any such additional information from any applicant which is reasonably intended to achieve full disclosure.

Name      Business Address      Percentage Interest in the

Disclosing Party

See Attachment "B"

SECTION III - BUSINESS RELATIONSHIPS WITH CITY ELECTED OFFICIALS

Has the Disclosing Party had a "business relationship," as defined in Chapter 2-156 ofthe Municipal Code, with any City elected official in the 12 months before the date this EDS is signed?

[ ] Yes      [/] No

If yes, please identify below the name(s) of such City elected official(s) and describe such relationship(s):

SECTION IV - DISCLOSURE OF SUBCONTRACTORS AND OTHER RETAINED PARTIES

The Disclosing Party must disclose the name and business address of each subcontractor, attorney, lobbyist, accountant, consultant and any other person or entity whom the Disclosing Party has retained or expects to retain in connection with the Matter, as well as the nature ofthe relationship, and the total amount ofthe fees paid or estimated to be paid. The Disclosing Party is not required to disclose employees who are paid solely through the Disclosing Party's regular payroll.

"Lobbyist" means any person or entity who undertakes to influence any legislative or administrative action on behalf ofany person or entity other than: (1) a not-for-profit entity, on an unpaid basis, or (2) himself. "Lobbyist" also means any person or entity any part of whose duties as an employee of another includes undertaking to influence any legislative or administrative action.

If the Disclosing Party is uncertain whether a disclosure is required under this Section, the Disclosing Party must either ask the City whether disclosure is required or make the disclosure.

Page 3 of 13

Attachment "B"

Section II - Disclosure of Ownership Interests

Based on the amended Schedule 13G filed on February 14, 2014 with the SEC by Berkshire Hathaway Inc., Warren Buffett, Berkshire Hathaway, Inc. and certain entities controlled by or under common control with Berkshire Hathaway (the "Reporting Persons"), held as of 12/31/2013, approximately 9.2% of outstanding publicly traded common stock of Wells Fargo & Company ("Wells Fargo"). On information and belief, and in reliance on the statements made by the Reporting Persons in such Schedule 13G, the reported holdings represented shares of Wells Fargo's common stock acquired by these Reporting Persons as passive investors in market transactions, without any intent to acquire control of Wells Fargo. Neither Warren Buffett, nor any representatives of any of the Reporting Persons named in the Schedule 13G currently serves as a director of Wells Fargo. Wells Fargo & Company does not know if the Reporting Persons currently hold more that 7.5% of its outstanding common stock. In any event. Wells Fargo has no authority or ability to require the Reporting Persons to file, and the Reporting Persons are under no obligation to assist or cooperate with Wells Fargo in filing an EDS.

Berkshire Hathaway, Inc. is a public company and attached hereto as Attachment E is a copy of its most recent 10-K, which Wells Fargo has obtained from http://www.sec.gov.

Section III - Business Relationships with City Elected Officials

The undersigned warrants, to the best of his knowledge after due inquiry, that the Disclosing Party has had no business relationship with any City elected official in 12 months before the date the undersigned has signed this EDS.

Note that in the ordinary course of its business, Wells Fargo Bank, N.A. makes loans of various types with individuals and businesses. We have determined that these loans do not constitute a "business relationship" as defined in Chapter 2-156 ofthe Municipal Code.

Note further that the Disclosing Party has no way of identifying spouses or domestic partners of any City elected official, or the identities of any entities in which any city elected official or his or her spouse or domestic partner has a financial interest, and thus limits its certification to "City elected officials" as specially required by Section III. Specifically, we made due inquiry with respect to the City's Aldermen, the Mayor, the Treasurer and the City Clerk.

1469102v2

Name (indicate whether    Business      Relationship to Disclosing Party   Fees (indicate whether

retained or anticipated       Address       (subcontractor, attorney,      paid or estimated.) NOTE:

to be retained)      lobbyist, etc.)      "hourly rate" or "t.b.d." is

not an acceptable response.

(Add sheets if necessary)

[/] Check here if the Disclosing Party has not retained, nor expects to retain, any such persons or entities. SECTION V - CERTIFICATIONS

1. COURT-ORDERED CHILD SUPPORT COMPLIANCE

Under Municipal Code Section 2-92-415, substantial owners of business entities that contract with the City must remain in compliance with their child support obligations throughout the contract's term.

Has any person who directly or indirectly owns 10% or more of the Disclosing Party been declared in arrearage on any child support obligations by any Illinois court of competent jurisdiction?

[ ] Yes      \/\ No      [] No person directly or indirectly owns 10% or more of the

Disclosing Party.

If "Yes," has the person entered into a court-approved agreement for payment of all support owed and is the person in compliance with that agreement?

[ ] Yes      [ ] No

1. FURTHER CERTIFICATIONS

1.   Pursuant to Municipal Code Chapter 1-23, Article I ("Article l")(which the Applicant should consult for defined terms (e.g., "doing business") and legal requirements), if the Disclosing Party submitting this EDS is the Applicant and is doing business with the City, then the Disclosing Party certifies as follows: (i) neither the Applicant nor any controlling person is currently indicted or charged with, or has admitted guilt of, or has ever been convicted of, or placed under supervision for, any criminal offense involving actual, attempted, or conspiracy to commit bribery, theft, fraud, forgery, perjury, dishonesty or deceit against an officer or employee of the City or any sister agency; and (ii) the Applicant understands and acknowledges that compliance with Article I is a continuing requirement for doing business with the City. NOTE: If Article I applies to the Applicant, the permanen t compliance timeframe in Article I supersedes some five-year compliance timeframes in certifications 2 and 3 below.

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2. The Disclosing Party and, if the Disclosing Party is a legal entity, all of those persons or entities identified in Section II.B.l. of this EDS:

1. are not presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from any transactions by any federal, state or local unit of government;
2. have not, within a five-year period preceding the date of this EDS, been convicted of a criminal offense, adjudged guilty, or had a civil judgment rendered against them in connection with: obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction; a violation of federal or state antitrust statutes; fraud; embezzlement; theft; forgery; bribery; falsification or destruction of records; making false statements; or receiving stolen property;
3. are not presently indicted for, or criminally or civilly charged by, a governmental entity (federal, state or local) with committing any ofthe offenses set forth in clause B.2.b. of this Section V;
4. have not, within a five-year period preceding the date of this EDS, had one or more public transactions (federal, state or local) terminated for cause or default; and
5. have not, within a five-year period preceding the date of this EDS, been convicted, adjudged guilty, or found liable in a civil proceeding, or in any criminal or civil action, including actions concerning environmental violations, instituted by the City or by the federal government, any state, or any other unit of local government.

3.   The certifications in subparts 3, 4 and 5 concern:

• • the Disclosing Party;
• any "Contractor" (meaning any contractor or subcontractor used by the Disclosing Party in connection with the Matter, including but not limited to all persons or legal entities disclosed under Section IV, "Disclosure of Subcontractors and Other Retained Parties");
• any "Affiliated Entity" (meaning a person or entity that, directly or indirectly: controls the Disclosing Party, is controlled by the Disclosing Party, or is, with the Disclosing Party, under common control of another person or entity. Indicia of control include, without limitation: interlocking management or ownership; identity of interests among family members, shared facilities and equipment; common use of employees; or organization of a business entity following the ineligibility of a business entity to do business with federal or state or local government, including the City, using substantially the same management, ownership, or principals as the ineligible entity); with respect to Contractors, the term Affiliated Entity means a person or entity that directly or indirectly controls the Contractor, is controlled by it, or, with the Contractor, is under common control of another person or entity;
• any responsible official of the Disclosing Party, any Contractor or any Affiliated Entity or any other official, agent or employee of the Disclosing Party, any Contractor or any Affiliated Entity, acting pursuant to the direction or authorization of a responsible official of the Disclosing Party, any Contractor or any Affiliated Entity (collectively "Agents").

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Neither the Disclosing Party, nor any Contractor, nor any Affiliated Entity of either the Disclosing Party or any Contractor nor any Agents have, during the five years before the date this EDS is signed, or, with respect to a Contractor, an Affiliated Entity, or an Affiliated Entity of a Contractor during the five years before the date of such Contractor's or Affiliated Entity's contract or engagement in connection with the Matter:

1. bribed or attempted to bribe, or been convicted or adjudged guilty of bribery or attempting to bribe, a public officer or employee of the City, the State oflllinois, or any agency of the federal government or of any state or local government in the United States of America, in that officer's or employee's official capacity;
2. agreed or colluded with other bidders or prospective bidders, or been a party to any such agreement, or been convicted or adjudged guilty of agreement or collusion among bidders or prospective bidders, in restraint of freedom of competition by agreement to bid a fixed price or otherwise; or
3. made an admission of such conduct described in a. or b. above that is a matter of record, but have not been prosecuted for such conduct; or
4. violated the provisions of Municipal Code Section 2-92-610 (Living Wage Ordinance).

1. Neither the Disclosing Party, Affiliated Entity or Contractor, or any of their employees, officials, agents or partners, is barred from contracting with any unit of state or local government as a result of engaging in or being convicted of (1) bid-rigging in violation of 720 ILCS 5/33E-3; (2) bid-rotating in violation of 720 ILCS 5/33E-4; or (3) any similar offense of any state or ofthe United States of America that contains the same elements as the offense of bid-rigging or bid-rotating.
2. Neither the Disclosing Party nor any Affiliated Entity is listed on any of the following lists maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the Bureau of Industry and Security of the U.S. Department of Commerce or their successors: the Specially Designated Nationals List, the Denied Persons List, the Unverified List, the Entity List and the Debarred List.
3. The Disclosing Party understands and shall comply with the applicable requirements of Chapters 2-55 (Legislative Inspector General), 2-56 (Inspector General) and 2-156 (Governmental Ethics) of the Municipal Code.

7.      If the Disclosing Party is unable to certify to any ofthe above statements in this Part B (Further

Certifications), the Disclosing Parly must explain below: SEE ATTACHMENT "C"

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ATTACHMENT "C

ATTACHMENT TO SECTION V, PART B-CERTAIN OFFENSES INVOLVING CCC AND SISTER AGENCIES AND SECTION V, PART C-FURTHER CERTIFICATIONS

The Disclosing Party certifies the accuracy of the certifications contained in Section V,

paragraph B (1-3) and C (1-5) only as to itself, and certifies that to the best ofthe Disclosing Party's knowledge after due inquiry: (i) the statements in paragraphs B (1-3) and C (1 -5) are accurate with respect to the executive officers and directors of the Disclosing Party identified in Section II.B.l .a of the EDS and (ii) the statements in paragraphs C (3-5) are accurate with respect to any "Contractors" ofthe Disclosing Party identified in Section IV ofthe EDS.

Notwithstanding the forgoing, in the ordinary course of its business, Wells Fargo receives various complaints and lawsuits which contain an assortment of allegations, some of which may result in judgments against Wells Fargo. Like all major institutions, Wells Fargo is subject to various litigations and proceedings pursuant to which judgments, injunctions or liens may be issued. Wells Fargo responds regularly to inquiries and investigations by governmental entities and, as a highly regulated diversified financial institution has in the past entered into settlements of some of those investigations, including the one specified below. Wells Fargo Bank, N.A. has paid municipal fines in connection with a small number of houses for alleged violations of local housing ordinances, some of which are characterized as misdemeanors. However, there have been no judgments, injunctions or liens arising out of such litigations or proceedings in the last five years that would materially impair Wells Fargo's ability as of this date to conduct its business or meet its obligations under the transaction to which this EDS relates. Also in the ordinary course of its business, Wells Fargo regularly enters into financial transactions of various types with public entities throughout the United States. It is possible that one or more public entities have terminated a transaction for cause or default.

For a description of certain legal proceedings, please see the Wells Fargo's SEC filings, https://www.wellsfargo.com/invest relations/filings, a summary of which are on file with the City. The City also has on file the Wells Fargo press release dated December 8, 2011 regarding the municipal derivatives bid practices settlement with the Office of the Comptroller of the Currency, Securities and Exchange Commission, the U.S. Internal Revenue Service, U.S. Department of Justice and a group of state Attorneys General. On February 9, 2012, Wells Fargo & Company issued a press release regarding an agreement with the federal government and state attorneys general concerning mortgage servicing, foreclosure and origination issues, and filed an SEC Form 8-K in accordance therewith. Material updates to Wells Fargo's SEC filings will be provided in connection with future EDS filings.

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WELLS FARGO & COMPANY SEC FILINGS (Attachment "C")

Legal Proceedings Section from 10-K filed 2/28/08 (WachoviaT

Wachovia and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wachovia and/or its subsidiaries with respect to transactions in which Wachovia and/or our subsidiaries acted as banker, lender, underwriter, financial advisor or broker or in activities related thereto. In addition, Wachovia and its subsidiaries may be requested to provide information or otherwise cooperate with governmental authorities in the conduct of investigations of other persons or industry groups. It is Wachovia's policy to cooperate in all regulatory inquiries and investigations.

Although there can be no assurance as to the ultimate outcome, Wachovia and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each such case. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

In the Matter of KPMG LLP Certain Auditor Independence Issues. The SEC has requested Wachovia to produce certain information concerning any agreements or understandings by which Wachovia referred clients to KPMG LLP during the period January 1, 1997 to November 2003 in connection with an inquiry regarding the independence of KPMG LLP as Wachovia's outside auditors during such period. Wachovia is continuing to cooperate with the SEC in its inquiry, which is being conducted pursuant to a formal order of investigation entered by the SEC on October 21, 2003. Wachovia believes the SEC's inquiry relates to certain tax services offered to Wachovia customers by KPMG LLP during the period from 1997 to early 2002, and whether these activities might have caused KPMG LLP not to be "independent" from Wachovia, as defined by applicable accounting and SEC regulations requiring auditors of an SEC-reporting company to be independent ofthe company. Wachovia and/or KPMG LLP received fees in connection with a small number of personal financial consulting transactions related to these services. KPMG LLP has confirmed to Wachovia that during all periods covered by the SEC's inquiry, including the present, KPMG LLP was and is "independent" from Wachovia under applicable accounting and SEC regulations.

Financial Advisor Wage/Hour Class Action Litigation. Wachovia Securities, LLC, Wachovia's retail securities brokerage subsidiary, is a defendant in multiple state and nationwide putative class actions alleging unpaid overtime wages and improper wage deductions for financial advisors. In December 2006 and January 2007, related cases pending in U.S. District courts in several states were consolidated for case administrative purposes in the U.S. District Court for the Central District of California pursuant to two orders ofthe Multi-District Litigation Panel. There is an additional case alleging a statewide class under California law, which is currently pending in Superior Court in Los Angeles County, California. Wachovia believes that it has meritorious defenses to the claims asserted in these lawsuits, which are part of an industry trend of related wage/hour class action litigation, and intends to defend vigorously the cases.

Adelphia Litigation. Certain Wachovia affiliates are defendants in an adversary proceeding previously pending in the United States Bankruptcy Court for the Southern District of New York related to the bankruptcy of Adelphia Communications Corporation ("Adelphia"). In February 2006, an order was entered moving the case to the United States District Court for the Southern District of New York. The Official Committee of Unsecured Creditors in Adelphia's bankruptcy case has filed claims on behalf of Adelphia against over 300 financial services companies, including the Wachovia affiliates. The complaint asserts claims against the defendants under state law, bankruptcy law and the Bank Holding Company Act and seeks equitable relief and an unspecified amount of compensatory and punitive damages. The Official Committee of Equity Security Holders has sought leave to intervene in that complaint and sought leave to bring additional claims against certain ofthe financial services companies, including the Wachovia affiliates, including additional federal and state claims. On August 30, 2005, the bankruptcy court granted the creditors' committee and the equity holders' committee standing to proceed with their claims. On June 11, 2007, the court granted in part and denied in part the motions to dismiss filed by Wachovia and other defendants. On July 11, 2007, Wachovia and other defendants requested leave to appeal the partial denial of the motions to dismiss. On January 17, 2008, the district court affirmed the decision ofthe bankruptcy court on the motion to dismiss with the exception that it dismissed one additional claim.

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In addition, certain affiliates of Wachovia, together with numerous other financial services companies, have been named in several private civil actions by investors in Adelphia debt and/or equity securities, alleging among other claims, misstatements in connection with Adelphia securities offerings between 1997 and 2001. Wachovia affiliates acted as an under writer in certain of those securities offerings, as agent and/or lender for certain Adelphia credit facilities, and as a provider of Adelphia's treasury/cash management services. These complaints, which seek unspecified damages, have been consolidated in the United States District Court for the Southern District of New York. In separate orders entered in May and July 2005, the District Court dismissed a number ofthe securities law claims asserted against Wachovia, leaving some securities law claims pending. Wachovia still has a pending motion to dismiss with respect to these claims. On June 15, 2006, the District Court signed the preliminary order with respect to a proposed settlement of the securities class action pending against Wachovia and the other financial services companies. At a fairness hearing on the settlement on November 10, 2006, the District Court approved the settlement. Wachovia's share ofthe settlement, $1,173 million, was paid in November 2006. The other private civil actions have not been settled.

Le-Nature's, Inc. Wachovia Bank, N.A. is the administrative agent on a $285 million credit facility extended to LeNature's, Inc. in September 2006, of which approximately $270 million was syndicated to other lenders by Wachovia Capital Markets, LLC as Lead Arranger and Sole Bookrunner. Le-Nature's was the subject of a Chapter 7 bankruptcy petition which was converted to a Chapter 11 bankruptcy petition in November 2006 in U.S. Bankruptcy Court in Pittsburgh, Pennsylvania following a report by a court-appointed custodian in a proceeding in Delaware that revealed fraud and significant accounting irregularities on the part of Le-Nature's management, including maintenance of a dual set of financial records. On March 14, 2007, Wachovia filed an action against several hedge funds in Superior Court for the State ofNorth Carolina entitled Wachovia Bank, National Association and Wachovia Capital Markets LLC v. Harbinger Capital Partners Master Fund I, Ltd. et al., alleging that the hedge fund defendants had acquired a significant quantity of the outstanding debt with full knowledge of the Le Nature's fraud and with the intention of pursuing alleged fraud and other tort claims against Wachovia purportedly related to its role in the Le-Nature's credit facility. The assertion of such claims would constitute a violation of North Carolina's legal and public policy prohibitions on champerty and maintenance. A preliminary injunction has been entered by the Court that, among other things, prohibits defendants from asserting any such claims in any other forum, but allowing these defendants to bring any claims they believe they possess against Wachovia as compulsory counterclaims in the North Carolina action. On September 18, 2007, these defendants filed an action in the U.S. District Court for the Southern District of New York against Wachovia Capital Markets LLC, a third party and two members of Le-Nature's management asserting claims arising under federal RICO laws. Three original purchasers of the debt also joined the action and asserted various tort claims, including fraud. Wachovia has filed a motion in the North Carolina court seeking to have these defendants held in contempt for violating the preliminary injunction and is seeking dismissal ofthe New York action. Wachovia, which itself was victimized by the Le-Nature's fraud, will pursue its rights against Le-Nature's and in this litigation vigorously.

Interchange Litigation. Wachovia Bank, N.A. and Wachovia are named as defendants in seven putative class actions filed on behalf of a plaintiff class of merchants with regard to the interchange fees associated with Visa and Mastercard payment card transactions. These actions have been consolidated with more than 40 other actions, which did not name Wachovia as a defendant, in the United Stated District Court for the Eastern District of New York. Visa, Mastercard and several banks and bank holding companies are named as defendants in various of these actions which were consolidated before the Court pursuant to orders ofthe Judicial Panel on Multidistrict Litigation. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, Mastercard and their member banks unlawfully collude to set interchange fees. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. The payment card association defendants and banking defendants arc aggressively defending the consolidated action. Wachovia, along with other members of Visa, is a party to Loss and Judgment Sharing Agreements, which provide that Wachovia, along with other member banks of Visa, will share, based on a formula, in any losses in connection with certain litigation specified in the Agreements, including the Interchange Litigation. On November 7, 2007, Visa announced that it had reached a settlement with American Express in connection with certain litigation which is covered by Wachovia's obligations as a Visa member bank and by the Loss Sharing Agreement.

Payment Processing Center. On February 17, 2006, the U.S. Attorney's Office for the Eastern District of Pennsylvania filed a civil fraud complaint against a former Wachovia Bank, N.A. customer. Payment Processing Center ("PPC"). PPC

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was a third party payment processor for telemarketing and catalogue companies. On April 12, 2007, a civil class action, Faloney et al. v. Wachovia, was filed against Wachovia in the U.S. District Court for the Eastern District of Pennsylvania by a putative class of consumers who made purchases through telemarketer customers of PPC. The suit alleges that between April 1, 2005 and February 21, 2006, Wachovia conspired with PPC to facilitate PPC's purported violation of RICO. The Office of the Comptroller ofthe Currency is conducting a formal investigation of Wachovia's handling of the PPC account relationship and of five other customers engaged in similar businesses. Wachovia is vigorously defending the civil lawsuit and is cooperating with government officials in the investigations of PPC and Wachovia's handling of the PPC customer relationship.

Municipal Derivatives Bid Practices Investigation. The Department of Justice ("DOJ") and the SEC, beginning in November 2006, have been requesting information from a number of financial institutions, including Wachovia Bank, N.A.'s municipal derivatives group, generally with regard to competitive bid practices in the municipal derivative markets. In connection with these inquiries, Wachovia Bank, N.A. has received subpoenas from both the DOJ and SEC seeking documents and information. The DOJ and the SEC have advised Wachovia Bank, N.A. that they believe certain of its employees engaged in improper conduct in conjunction with certain competitively bid transactions and, in November 2007, the DOJ notified two Wachovia Bank, N.A. employees, both of whom are on administrative leave, that they are regarded as targets of the DOJ's investigation. Wachovia Bank, N.A. has been cooperating and continues to fully cooperate with the government investigations.

Other Regulatory Matters. Governmental and self-regulatory authorities have instituted numerous ongoing investigations of various practices in the securities and mutual fund industries, including those discussed in Wachovia's previous filings with the SEC and those relating to sales practices and record retention. The investigations cover advisory companies to mutual funds, broker-dealers, hedge funds and others. Wachovia has received subpoenas and other requests for documents and testimony relating to the investigations, is endeavoring to comply with those requests, is cooperating with the investigations, and where appropriate, is engaging in discussions to resolve the investigations. Wachovia is continuing its own internal review of policies, practices, procedures and personnel, and is taking remedial action where appropriate.

Outlook. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wachovia believes that the eventual outcome of the actions against Wachovia and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wachovia's consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wachovia's results of operations for any particular period.

Legal Proceedings Section from 1st Quarter 200810-Q filed 5/12/08 (Wachovia)

Wachovia and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wachovia and/or its subsidiaries with respect to transactions in which Wachovia and/or our subsidiaries acted as banker, lender, underwriter, financial advisor or broker or in activities related thereto. In addition, Wachovia and its subsidiaries may be requested to provide information or otherwise cooperate with governmental authorities in the conduct of investigations of other persons or industry groups. It is Wachovia's policy to cooperate in all regulatory inquiries and investigations.

Although there can be no assurance as to the ultimate outcome, Wachovia and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each such case. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

The following supplements certain matters previously reported in Wachovia's Annual Report on Form 10-K for the year ended December 31, 2007.

Le-Nature's, Inc. Wachovia Bank, N.A. is the administrative agent on a $285 million credit facility extended to LeNature's, Inc. in September 2006, of which approximately $270 million was syndicated to other lenders by Wachovia

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Capital Markets, LLC as Lead Arranger and Sole Bookrunner. Le-Nature's was the subject of a Chapter 7 bankruptcy petition which was converted to a Chapter 11 bankruptcy petition in November 2006 in U.S. Bankruptcy Court in Pittsburgh, Pennsylvania following a report by a court-appointed custodian in a proceeding in Delaware that revealed fraud and significant accounting irregularities on the part of Le-Nature's management, including maintenance of a dual set of financial records. On March 14, 2007, Wachovia filed an action against several hedge funds in Superior Court for the State of North Carolina entitled Wachovia Bank, National Association and Wachovia Capital Markets LLC v. Harbinger Capital Partners Master Fund I, Ltd. et al, alleging that the hedge fund defendants had acquired a significant quantity of the outstanding debt with full knowledge of the Le Nature's fraud and with the intention of pursuing alleged fraud and other tort claims against Wachovia purportedly related to its role in the Le-Nature's credit facility. The assertion of such claims would constitute a violation of North Carolina's legal and public policy prohibitions on champerty and maintenance. A preliminaiy injunction was entered by the Court that, among other things, prohibited defendants from asserting any such claims in any other forum. On September 18, 2007, these defendants filed an action in the U.S. District Court for the Southern District of New York against Wachovia Capital Markets LLC, a third party and two members of Le-Nature's management asserting claims arising under federal RICO laws. Three original purchasers of the debt also joined the action and asserted various tort claims, including fraud. On March 13, 2008 the North Carolina judge granted Defendants' motion to stay the North Carolina action and modified the injunction to allow the Defendants to attempt to assert claims in the New York action, which they have now done. Wachovia has appealed this decision to the North Carolina Court of Appeals. Wachovia has filed a motion to dismiss the New York action which remains pending; if that motion is granted, the North Carolina judge has indicated that he will revisit the stay order. On April 4, 2008, Le-Nature's Director of Accounting pled guilty to four felony counts in federal district court in Pittsburgh, including one count of bank fraud for defrauding Wachovia. On April 28, 2008 holders of Le-Nature's Senior Subordinated Notes, an offering which was underwritten by Wachovia in june 2003, sued in state court in California alleging various fraud claims relating to that offering. Wachovia itself was victimized by the Le-Nature's fraud, and will pursue its rights against Le-Nature's and defend its interests vigorously in all litigation.

Payment Processing Center. On February 17, 2006, the U.S. Attorney's Office for the Eastern District of Pennsylvania filed a civil fraud complaint against a former Wachovia Bank, N.A. customer. Payment Processing Center ("PPC"). PPC was a third party payment processor for telemarketing and catalogue companies. On April 12, 2007, a civil class action, Faloney et al. v. Wachovia, was filed against Wachovia in the U.S. District Court for the Eastern District of Pennsylvania by a putative class of consumers who made purchases through telemarketer customers of PPC. The suit alleges that between April 1, 2005 and February 21, 2006, Wachovia conspired with PPC to facilitate PPC's purported violation of RICO. On February 15, 2008, a second putative class action, Harrison v. Wachovia, was filed in the U.S. District Court for the Eastern District of Pennsylvania by a putative class of consumers who made purchases through telemarketing customers of three other third party payment processors which banked with Wachovia. This suit alleges that Wachovia conspired with these payment processors to facilitate purported violations of RICO. On April 24, 2008, Wachovia and the Office of the Comptroller of the Currency ("OCC") entered into an Agreement to resolve the OCC's investigation into Wachovia's relationship with PPC and three other companies. The Agreement provides, among other things, that (i) Wachovia will provide restitution to consumers, (ii) will create a segregated account in the amount of $125 million to cover the estimated maximum cost of the restitution, (iii) will fund organizations that provide education for consumers over a two year period in the amount of $8.9 million, (iv) will make various changes to its policies and procedures related to customers that use remotely created checks and (v) will appoint a special Compliance Committee to oversee compliance with the Agreement. Wachovia and the OCC also entered into a Consent Order for Payment of a Civil Money Penalty whereby Wachovia, without admitting or denying the allegations contained therein, agreed to payment of a $10 million civil money penalty. Wachovia is cooperating with government officials and is vigorously defending the civil lawsuits.

Municipal Derivatives Bid Practices Investigation. The Department of Justice ("DOJ") and the SEC, beginning in November 2006, have been requesting information from a number of financial institutions, including Wachovia Bank, N.A.'s municipal derivatives group, generally with regard to competitive bid practices in the municipal derivative markets. In connection with these inquiries, Wachovia Bank, N.A. has received subpoenas from both the DOJ and SEC seeking documents and information. The DOJ and the SEC have advised Wachovia Bank, N.A. that they believe certain of its employees engaged in improper conduct in conjunction with certain competitively bid transactions and, in November 2007, the DOJ notified two Wachovia Bank, N.A. employees, both of whom are on administrative leave, that they are regarded as targets ofthe DOJ's investigation. Wachovia Bank, N.A. has been cooperating and continues to fully cooperate with the government investigations. In addition, Wachovia Bank N.A. and other financial institutions

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have been named as defendants in four substantially identical purported class actions filed in different U.S. District Courts. The complaints allege that Wachovia Bank, N.A. and various co-defendant financial institutions engaged in an anti-competitive conspiracy regarding bids for municipal derivatives (including Guaranteed Investment Contracts) sold to issuers of municipal bonds. All the complaints assert claims for violations of Section 1 ofthe Sherman Act, and one complaint also asserts a claim for unjust enrichment. The defendants have filed motions to consolidate these actions into one proceeding. Wachovia intends to vigorously defend its rights in these actions.

Auction Rate Securities. Since February 2008 the auctions which set the rates for most auction rate securities have failed resulting in a lack of liquidity for these auction rate securities. Wachovia Securities, LLC and affiliated firms have received inquiries and subpoenas from the SEC and several state regulators requesting information concerning the underwriting, sale and subsequent auctions of municipal auction rate securities and auction rate preferred securities. Further review and inquiry is anticipated by the regulatory authorities and Wachovia will cooperate fully. Wachovia and Wachovia Securities, LLC have been named in a civil suit captioned Judy M. Waldman Trustee v. Wachovia Corporation and Wachovia Securities LLC filed March 19, 2008 in the United States District Court for the Southern District of New York. The suit seeks class action status for customers who purchased and continue to hold auction rate securities based upon alleged misrepresentations made with respect to the quality, risk and characteristics of auction rate securities. Wachovia intends to vigorously defend the civil litigation.

Other Regulatory Matters and Government Investigations. In the course of its banking and financial services businesses, Wachovia and its affiliates are subject to information requests and investigations by governmental and self-regulatory authorities. These authorities have instituted numerous ongoing investigations of various practices in the banking, securities and mutual fund industries, including those discussed in Wachovia's previous filings with the SEC and those relating to anti-money laundering, sales practices, record retention and other laws and regulations involving our customers and their accounts.

In general, the investigations cover advisory companies to mutual funds, broker-dealers, hedge funds and others and may involve the activities of customers or third parties with respect to accounts maintained by Wachovia or transactions in which Wachovia may be involved. Wachovia has received subpoenas and other requests for documents and testimony relating to the investigations, is endeavoring to comply with those requests, is cooperating with the investigations, and where appropriate, is engaging in discussions to resolve the investigations or take other remedial actions. These investigations include an investigation being conducted by the U.S. Attorney's Office for the Southern District of Florida into, among other matters, Wachovia's correspondent banking relationship with certain non-domestic exchange houses and Bank Secrecy Act and anti-money laundering compliance. In November 2007, Wachovia determined that it would stop providing correspondent banking services to non-domestic exchange houses and licensed foreign remittance companies. Wachovia is producing documents and is cooperating fully with the U.S. Attorney's Office's investigation.

Outlook. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wachovia believes that the eventual outcome of the actions against Wachovia and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wachovia's consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wachovia's results of operations for any particular period.

Legal Proceedings Section from 2nd Quarter 2008 10-Q filed 8/11/08 (Wachovia)

Adelphia Litigation. On July 17, 2008, the U.S. District Court for the Southern District of New York issued a ruling dismissing all of the creditors' committee and equity holders' committee bankruptcy-related claims.

Le-Nature's, Inc. The U.S. Bankruptcy Court confirmed Le-Nature's Plan of Reorganization and it became effective on July 28, 2008. Such plan includes the appointment of a liquidation trustee, who could bring claims on behalf of the estate against Wachovia and other third parties.

Municipal Derivatives Bid Practices Investigation. Wachovia Bank, N.A. has been informed that in connection with the bidding of various financial instruments associated with municipal securities, the Staff of the Securities and Exchange Commission is considering recommending that the Commission institute civil and/or administrative proceedings

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against Wachovia Bank, N.A. In addition, Wachovia has received subpoenas from various states attorneys general regarding these matters. Wachovia Bank, N.A. is cooperating with the government investigations. Four previously disclosed purported private class actions have been assigned to the Southern District of New York for consolidated pre-trial proceedings. Two additional complaints were recently filed in California state court asserting claims similar to those in the purported class actions, along with claims under California law.

Golden West and Related Litigation. A purported securities class action, Lipetz v. Wachovia Corporation, et ai, has been filed in the U.S. District Court for the Southern District of New York by purported Wachovia shareholders alleging violations of Sections 10 and 20 ofthe Securities Exchange Act of 1934. Among other allegations, plaintiffs allege Wachovia's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. ("Golden West") mortgage portfolio, Wachovia's exposure to other mortgage related products such as collateralized debt obligations ("CDOs"), control issues and auction rate securities.

A purported class action, Miller, et al. v. Wachovia Corporation, et ai, has been filed against Wachovia, its board of directors and certain senior officers in the New York Supreme Court for the County of Nassau, since removed by Wachovia to the U.S. District Court for the Eastern District of New York, relating to Wachovia's May 2007 issuance of trust preferred securities. The plaintiffs allege violations of Sections 11, 12 and 15 ofthe Securities Act of 1933 asa result of allegedly misleading disclosures relating to the Golden West mortgage portfolio. Seven purported class actions have been filed against Wachovia, its board of directors and certain senior officers in the U.S. District Court for the Southern District of New York on behalf of Wachovia employees who held shares of Wachovia common stock in their Wachovia Savings Plan accounts. The plaintiffs allege breach of fiduciary duty under ERISA, among other things, claiming that the defendants should not have permitted Wachovia common stock to remain an investment option in the Savings Plan because alleged misleading disclosures relating to the Golden West mortgage portfolio, exposure to CDOs and other problem loans, and other alleged misstatements made its stock a risky and imprudent investment for employee retirement accounts. In addition, several purported shareholders have submitted notices that they may initiate, and one purported shareholder has filed a complaint, Estate of Joseph Romain v. Wachovia Corporation, et ai, in the U.S. District Court for the Southern District of New York initiating, shareholder derivative claims alleging breaches of fiduciary duty against Wachovia's board of directors and various senior officers arising out of various alleged failures of controls relating to its disclosures regarding the Golden West mortgage portfolio, CDOs, and other alleged control issues involving anti-money laundering, bank owned life insurance, auction rate securities, municipal derivatives bid practices and the previously disclosed settlement with the OCC in the Payment Processing Center matter. These matters are in a preliminary stage. Wachovia intends to defend vigorously each such case.

Auction Rate Securities. Wachovia is engaged in active settlement discussions with various state regulators and the SEC of ongoing investigations concerning the underwriting, sale and subsequent auctions of certain auction rate securities by Wachovia Securities, LLC, and Wachovia Capital Markets, LLC, including the likelihood of liquidity solutions. See also "Management's Discussion & Analysis" in the Financial Supplement contained in Exhibit (19) to this Report

Outlook. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wachovia believes that the eventual outcome of the actions against Wachovia and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wachovia's consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wachovia's results of operations for any particular period.

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8-K August IS, 2008 (Wachovia)

Terms ofthe agreement in principle include the following:

♦   Wachovia will offer to purchase at par ARS held by all individuals, charities and religious organizations, as well as ARS held by small and medium-sized businesses with account values and household values of $10 million or less, that were purchased at Wachovia on or before Feb. 13, 2008. These purchases will commence no later than November 10, 2008, and conclude no later than Nov. 28, 2008, for clients who accept this offer. ARS that are the subject of functioning auctions will not be eligible for purchase.

• Wachovia will offer to purchase at par ARS held by all other clients that were purchased at Wachovia on or before Feb. 13, 2008. These purchases will commence no later than June 10, 2009, for clients who accept this offer and conclude no later than June 30, 2009. ARS that are the subject of functioning auctions will not be eligible for purchase.
• Wachovia will also reimburse investors who can reasonably be identified and who would have been covered by the offer but who sold their ARS below par, between Feb. 13, 2008, and the date of entry of the settlement, for the difference between par and the price at which the investor sold the ARS. The reimbursement will be made by Nov. 28, 2008.
• Jn addition to Wachovia's offer to purchase ARS from clients, Wachovia will offer loans to affected clients in need of liquidity until the ARS repurchases occur.
• Wachovia will refund refinancing fees to municipal ARS issuers who issued ARS in the initial primary market between Aug. 1, 2007, and Feb. 13, 2008, and refinanced those securities after Feb. 13, 2008.
• Wachovia will pay a total fine of $50 million to the state regulatory agencies, which will be distributed to the States as determined by the North American Securities Administrators Association and the State of New York.
• Wachovia neither admits nor denies allegations of wrongdoing.

As previously disclosed in Wachovia's Second Quarter Report on Form 10-Q filed with the Securities and Exchange Commission on Aug. 11, 2008, in connection with the expectation of a potential settlement of ARS matters, Wachovia recorded a $500 million pre-tax increase to legal reserves, including amounts reserved for estimated market valuation losses on affected ARS, for the second quarter of 2008, based on estimates and assumptions at the time ofthe filing. Based on the terms of today's agreement in principle, the timing and currently estimated amounts of ARS to be purchased in the offer, current market conditions, expected future redemptions, and expected sales by Wachovia to third parties of a portion of ARS to be purchased in the offer, Wachovia currently expects to record a further $275 million pre-tax increase to legal reserves in the third quarter of 2008. Wachovia also currently expects that its Tier 1 capital ratio will decrease by approximately 8 basis points in the third quarter 2008, reflecting the additional increase in legal reserves and the capital impact ofthe offers. Wachovia does not currently expect that the purchase of ARS under the agreement in principle will have a material effect on capital, liquidity or overall financial results through expected maturities or redemptions of the ARS purchased, or alter Wachovia's previously announced focus on improving its Tier 1 capital ratio.

Wachovia currently estimates that the par value of ARS currently outstanding and eligible for purchase under the above offers totals approximately $8.5 billion. Following the purchases of ARS by Wachovia pursuant to the offers, and based on expected future redemptions and the expected sales of ARS to third parties described

Legal Proceedings Section from 3rd Quarter 2008 10-0 filed 10/30/08 (Wachovia)

Lc Nature's, Inc. On August 26, 2008, the U.S. District Court dismissed the case pending against Wachovia in the Southern District of New York. Plaintiffs have appealed that ruling. Plaintiffs also filed a case asserting similar allegations in the New York State Supreme Court for the County of Manhattan; Wachovia has filed a motion to stay this case pending final resolution of the federal action. In addition, the Bondholder case filed against Wachovia in California has been transferred by the U.S. District Court for the Northern District of California to the U.S. District-Court for the Western District of Pennsylvania.

Interchange Litigation. On October 14, 2008, Visa announced an agreement in principle to settle litigation commenced by Discover Card against it. Wachovia has certain obligations to Visa as a member bank and in connection with its previously disclosed Loss Sharing agreement with Visa. Wachovia has fully reserved for these obligations.

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Payment Processing Center. On August 14, 2008, Wachovia reached agreements to settle the Faloney and Harrison class action lawsuits. The settlements have received preliminary approval from the U.S. District Court for the Eastern District of Pennsylvania, with a fairness hearing scheduled for January 2009.

Municipal Derivatives Bid Practices Investigation. Wachovia, along with numerous other financial institutions, has received a number of additional civil complaints from various municipalities filed in various state and federal courts. A number of the federal cases are in the process of being consolidated through the Multi-District Litigation procedures.

Auction Rate Securities. On August 15, 2008, Wachovia announced it had reached settlements in principle with the Secretary of State for the State of Missouri (as the lead state in the North American Securities Administrators Association task force investigating the marketing and sale of auction rate securities), with the New York State Attorney General's Office and with the SEC of their respective investigations of sales practice and other issues related to the sales of auction rate securities ("ARS") by certain affiliates and subsidiaries of Wachovia. Without admitting or denying liability, the agreements in principle require that Wachovia purchase certain ARS sold to customers in accounts at Wachovia, reimburse investors who sold ARS purchased at Wachovia for less than par, provide liquidity loans to customers at no net interest until the ARS are repurchased, offer to participate in special arbitration procedures with customers who claim consequential damages from the lack of liquidity in ARS and refund refinancing fees to certain municipal issuers who issued ARS and later refinanced those securities through Wachovia. Wachovia, without admitting or denying liability, will also pay a total fine of $50 million to the state regulatory agencies and agree to entry of consent orders by the two state regulators and an injunction by the SEC. Wachovia intends to begin buying back the ARS in November 2008. In addition, Wachovia is a defendant in three new purported civil class actions relating to its sale of ARS.

Baytide Petroleum v. Wachovia Securities, LLC, et al. was filed in the U.S. District Court for the Northern District of Oklahoma. The other two cases, Mayfield v. Wachovia Securities, LLC, et al. and Mayor and City of Baltimore v. Wachovia Securities, LLC, et al., were both filed in the U.S. District Court for the Southern District of New York and allege identical antitrust related claims.

Golden West and Related Litigation. On October 14, 2008, the New York City Pension Funds was named the lead plaintiff in the Lipetz matter and an order is in place setting the timeframe for filing an amended complaint and response thereto. The plaintiff in Estate of Romain voluntarily dismissed its shareholder derivative case against Wachovia. A new shareholder derivative case, Arace v Wachovia Corporation, et al., was filed on September 10, 2008, in the U.S. District Court for the Southern District of New York.

Evergreen Ultra Short Opportunities Fund (the "Fund") Investigation. The SEC and the Secretary of the Commonwealth, Securities Division, ofthe Commonwealth of Massachusetts are conducting separate investigations of Evergreen Investment Management Company, LLC ("EIMCO") and Evergreen Investment Services, Inc. ("EIS") concerning alleged issues surrounding the drop in net asset value of the Fund in May and June 2008. In addition, various Evergreen entities are defendants in three purported class actions, Keefe v. EIMCO , et al.; Krantzberg v. Evergreen Fixed Income Trust, et al.; and Mierzwinski v. EIMCO, et al., all filed in the U.S. District Court for the District of Massachusetts and related to the same events. The cases generally allege that investors in the Fund suffered losses as a result of (i) misleading statements in the Fund's prospectus, (ii) the failure to accurately price securities in the Fund at different points in time and (iii) the failure of the Fund's risk disclosures and description of its investment strategy to inform investors adequately of the actual risks ofthe fund.

Merger Related Litigation. On October 4, 2008, Citigroup, Inc. ("Citigroup") purported to commence an action in the Supreme Court in the State of New York captioned Citigroup, Inc. v. Wachovia Corp., et al., naming as defendants Wachovia, Wells Fargo, and the directors of both companies. The complaint alleged that Wachovia breached an exclusivity agreement with Citigroup, which by its terms was to expire on October 6, 2008, by entering into negotiations and an eventual acquisition agreement with Wells Fargo, and that Wells Fargo and the individual defendants had tortiously interfered with the same contract. In the complaint, Citigroup seeks $20 billion in compensatory damages and $40 billion in punitive damages. After significant procedural activity over the week of October 4-9, including a voluntary dismissal and re-filing of the action in amended form, the case was removed on October 9 to the U.S. District Court for the Southern District of New York. On October 10, Citigroup filed a motion to remand the case to the New York state court, and filed a new proposed amended complaint. The proposed amended complaint includes claims for breach of contract, tortious interference with contract, unjust enrichment, promissory estoppel, and quantum meruit. In the proposed amended complaint, which the court has not yet approved, Citigroup

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seeks $20 billion in compensatory damages, $20 billion in institutionary and unjust enrichment damages, and $40 billion in punitive damages. On October 24, Wachovia and Wells Fargo filed a joint response to the motion to remand. On October 4, 2008, Wachovia filed a complaint in the U. S. District Court for the Southern District of New York, captioned Wachovia Corp. v. Citigroup, Inc. The complaint seeks declaratory relief, stating that the Wells Fargo merger agreement is valid, proper, and not prohibited by the exclusivity agreement. On October 5, Wachovia filed a motion for a preliminary injunction seeking to prevent Citigroup from interfering with or impeding its merger with Wells Fargo. On 0ctober9, 2008, Citigroup issued a press release stating that Citigroup would no longer seek to enjoin the merger, but would continue to seek compensatory and punitive damages against Wachovia and Wells Fargo. On October 14, 2008, Wells Fargo filed a related complaint in the U. S. District Court for the Southern District of New York, captioned Wells Fargo v. Citigroup, Inc. The complaint seeks declaratory and injunctive relief, stating that the Wells Fargo merger agreement is valid, proper, and not prohibited by the exclusivity agreement. Citigroup has moved to dismiss the complaint On October 8, 2008, a purported class action complaint captioned Irving Ehrenhaus v. John D. Baker, et al., was filed in the Superior Court for the County of Mecklenburg in the State of North Carolina. The complaint names as defendants Wachovia, Wells Fargo, and the directors of Wachovia. The complaint alleges that the Wachovia directors breached their fiduciary duties in approving the merger with Wells Fargo at an allegedly inadequate price, and that the Wells Fargo directors aided and abetted the alleged breaches of fiduciary duty. The action seeks to enjoin the Wells Fargo merger, or to recover compensatory or rescissory damages if the merger is consummated, as well as an award of attorneys' fees and costs. Plaintiffs have asked the Court for expedited discovery and to set a hearing date for a preliminary injunction motion to enjoin the shareholder vote and the closing ofthe transaction.

Data Treasury Litigation. Wachovia Bank, N.A. and Wachovia Corporation are among over 55 defendants named in two actions asserting patent infringement claims filed by Data Treasury Corporation in the U.S. District Court for the Eastern District of Texas. Data Treasury seeks a declaration that its patents are valid and have been infringed, and seeks damages and permanent injunctive relief. One of the cases is stayed pending re-examination of the patents by the U.S. Patent Office and the other case is currently in discovery.

Outlook. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wachovia believes that the eventual outcome of the actions against Wachovia and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wachovia's consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wachovia's results of operations for any particular period.

FORM 10-K WELLS FARGO & COMPANY- Filed February 27.2009 (Wells)

ITEM 3.      LEGAL PROCEEDINGS

Information in response to this Item 3 can be found in the 2008 Annual Report to Stockholders under "Financial Statements - Notes to Financial Statements - Note 15 (Guarantees and Legal Actions)" on pages 128-131. That information is incorporated into this report by reference.

NOTE 15 WELLS FARGO & COMPANY 2008 ANNUAL REPORT: (Wells) Legal Actions

Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition. Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with governmental authorities in the conduct of investigations of other persons or industry groups. Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each case, other than matters we describe as having settled. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

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ADELPHIA LITIGATION Wachovia Bank, N.A. and Wachovia Capital Markets, LLC, are defendants in an adversary proceeding previously pending in the United States Bankruptcy Court for the Southern District of New York related to the bankruptcy of Adelphia Communications Corporation (Adelphia). The Official Committee of Unsecured Creditors in Adelphia's bankruptcy case filed the claims; the current plaintiff is the Adelphia Recovery Trust, which was substituted as the plaintiff pursuant to Adelphia's confirmed plan of reorganization. In February 2006, an order was entered moving the case to the United States District Court for the Southern District of New York. The complaint asserts claims against tire defendants under state law, bankruptcy law and the Bank Holding Company Act and seeks equitable relief and an unspecified amount of compensatory and punitive damages. On June 11, 2007, the Bankruptcy Court granted in part and denied in part the motions to dismiss filed by the two Wachovia entities and other defendants. On January 17, 2008, the District Court affirmed the decision of the Bankruptcy Court on the motion dismiss with the exception that it dismissed one additional claim. On July 17, 2008, the District Court issued a ruling dismissing all ofthe bankruptcy related claims. The remaining claims essentially allege the banks should be liable to Adelphia on theories of aiding and abetting a breach of fiduciary duty and violation ofthe Bank Holding Company Act. The case is now in discovery.

AUCTION RATE SECURITIES On August 15, 2008, Wachovia Securities, LLC and Wachovia Capital Markets, LLC (collectively the Wachovia Securities Affiliates) announced they had reached settlements in principle with the Secretary of State for the State of Missouri (as the lead state in the North American Securities Administrators Association task force investigating the marketing and sale of auction rate securities), and with the New York State Attorney General's Office of their respective investigations of sales practice and other issues related to the sales of auction rate securities (ARS). Wachovia Securities also announced a settlement in principle with the Securities and Exchange Commission (SEC) of its similar investigation. Without admitting or denying liability, the agreements in principle require that the Wachovia Securities Affiliates purchase certain ARS sold to customers in accounts at the Wachovia Securities Affiliates, reimburse investors who sold ARS purchased at the Wachovia Securities Affiliates for less than par, provide liquidity loans to customers at no net interest until the ARS are repurchased, offer to participate in special arbitration procedures with customers who claim consequential damages from the lack of liquidity in ARS and refund refinancing fees to certain municipal issuers who issued ARS and later refinanced those securities through the Wachovia Securities Affiliates. Without admitting or denying liability, the Wachovia Securities Affiliates will also pay a total fine of $50 million to the state regulatory agencies and agreed to entiy of consent orders by the two state regulators and Wachovia Securities, LLC agreed to entry of an injunction by the SEC. All three settlements in principle have been finalized. The Wachovia Securities Affiliates began the buy back of ARS in November 2008. The second and final phase ofthe buy back will take place in June 2009. Wells Fargo Investments, LLC (WFI), Wells Fargo Brokerage Services, LLC, and Wells Fargo Institutional Securities, LLC are engaged in discussions with regulators concerning the sale of ARS. On November 20, 2008, the State of Washington Department of Financial Institutions filed a proceeding entitled 7n the Matter of determining whether there has been a violation of the Securities Act of Washington by: Wells Fargo Investments, LLC; Wells Fargo Brokerage Services, LLC; and Wells Fargo Institutional Securities, LLC. The action seeks a cease and desist order against violations of the anti-fraud and suitability provisions of the Washington Securities Act. In addition, several purported civil class actions relating to the sale of ARS are currently pending against various Wells Fargo affiliated defendants.

DATA TREASURY LITIGATION Wells Fargo & Company, Wells Fargo Bank, N.A., Wachovia Bank, N.A. and Wachovia Corporation are among over 55 defendants named in two actions asserting patent infringement claims filed by Data Treasury Corporation in the U.S. District Court for the Eastern District of Texas. Data Treasury seeks a declaration that its patents are valid and have been infringed, and seeks damages and permanent injunctive relief. The cases are currently in discovery.

ELAVON LITIGATION On January 16, 2009, Elavon, Inc., a provider of merchant processing services, filed a complaint in the U.S. District Court for the Northern District of Georgia against Wachovia Corporation, Wachovia Bank, N.A., Wells Fargo & Company, and Wells Fargo Bank, N.A. The complaint seeks equitable relief, including specific performance, and damages for Wachovia Bank's allegedly wrongful termination of its merchant referral contract with Elavon. The complaint also seeks damages, including punitive damages, against the Wells Fargo entities for tortious interference with contractual relations.

ERISA LITIGATION Seven purported class actions have been filed against Wachovia Corporation, its board of directors and certain senior officers in the U.S. District Court for the Southern District of New York on behalf of employees of Wachovia Corporation and its affiliates who held shares of Wachovia Corporation common stock in their Wachovia Savings Plan accounts. The plaintiffs allege breach of fiduciary duty under ERISA, among other things.

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claiming that the defendants should not have permitted Wachovia Corporation common stock to remain an investment option in the Savings Plan because alleged misleading disclosures relating to the Golden West mortgage portfolio, exposure to CDOs and other problem loans, and other alleged misstatements made its stock a risky and imprudent investment for employee retirement accounts.

GOLDEN WEST AND RELATED LITIGATION A purported securities class action, Lipetz v. Wachovia Corporation, et ai, was filed on July 7, 2008, in the U.S. District Court for the Southern District of New York by purported Wachovia Corporation shareholders alleging violations of Sections 10 and 20 of the Securities Exchange Act of 1934. An amended complaint was filed on December 15, 2008. Among other allegations, plaintiffs allege Wachovia Corporation's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. (Golden West) mortgage portfolio, Wachovia Corporation's exposure to other mortgage related products such as CDOs, control issues and auction rate securities. The defendants have until February 27, 2009, to respond to the complaint. A purported class action, Miller, et al. v. Wachovia Corporation, et ai, was filed on January 31, 2008, against Wachovia Corporation, its board of directors and certain senior officers in the New York Supreme Court for the County of Nassau, relating to Wachovia Corporation's May 2007 issuance of trust preferred securities. The plaintiffs allege violations of Sections 11,12 and 15 ofthe Securities Act of 1933 as a result of allegedly misleading disclosures relating to the Golden West mortgage portfolio. Wachovia Corporation removed the case to the U.S. District Court for the Eastern District of New York. On January 16, 2009, the case was voluntarily dismissed by the plaintiff and, on the same day, was refiled in the Superior Court ofthe State of California, Alameda County. A similar case, Swiskay v Wachovia Corporation, etal., was filed on December 19, 2008, in the same court. The Swiskay case is essentially identical to the M/7/er case except it includes allegations relating to additional Wachovia preferred offerings. On January 21, 2009, a third case, Orange County Employees'Retirement System, etal. v. Wachovia Corporation, et ai, was also filed in the same California Superior Court on behalf of Orange County Employees' Retirement System and others. The complaint contains similar allegations to the Miller and Swiskay cases, except it includes some additional individuals and non-affiliated entities as defendants and adds claims relating to additional issuances of preferred stock and debt securities. Wells Fargo will file appropriate venue and other motions in response to these actions. Several government agencies are investigating matters similar to the issues raised in this litigation. Wells Fargo and its affiliates are cooperating fully.

INTERCHANGE LITIGATION Wells Fargo Bank, NA, Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation are named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and individual actions brought by individual merchants with regard to the interchange fees associated with Visa and MasterCard payment card transactions. These actions have been consolidated in the United States District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies are named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and their member banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other members of Visa, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other member banks of Visa, will share, based on a formula, in any losses from certain litigation specified in the Agreements, including the Interchange Litigation.

LE-NATURE'S, INC. Wachovia Bank, N.A. is the administrative agent on a $285 million credit facility extended to LeNature's, Inc. in September 2006, of which approximately $270 million was syndicated to other lenders by Wachovia Capital Markets, LLC. Le-Nature's was the subject of a Chapter 7 bankruptcy petition which was converted to a Chapter 11 bankruptcy petition in November 2006 in the U.S. Bankruptcy Court for the Western District of Pennsylvania. The filing was precipitated by an apparent fraud relating to Le-Nature's financial condition. On March 14, 2007, the two Wachovia entities filed an action against several hedge funds in the Superior Court for the State of North Carolina, Mecklenburg County, alleging that the hedge fund defendants had acquired a significant quantity of the outstanding debt with full knowledge of Le-Nature's fraud and with the intention of pursuing alleged fraud and other tort claims against the two Wachovia entities purportedly related to their role in Le-Nature's credit facility. A preliminary injunction was entered by the Court that, among other things, prohibited defendants from asserting any such claims in any other forum. On September 18, 2007, these defendants filed an action in the U.S. District Court for the Southern District of New York against Wachovia Capital Markets, a third party and two members of Le-Nature's management asserting claims arising under federal RICO laws. On March 13, 2008, the North Carolina judge granted Defendants' motion to stay the North Carolina action and modified the injunction to allow the Defendants to attempt

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to assert claims in the New York action. The Wachovia entities have appealed. Wachovia Capital Markets filed a motion to dismiss the New York action which was granted on August 26, 2008. Plaintiffs have appealed that ruling. Plaintiffs subsequently filed a case asserting similar allegations in the New York State Supreme Court for the County of Manhattan. On April 28, 2008, holders of Le-Naturc's Senior Subordinated Notes, an offering which was underwritten by Wachovia Capital Markets in June 2003, sued alleging various fraud claims; this case is pending in the U.S. District Court for the Western District of Pennsylvania. On October 30, 2008, the liquidation trust in LeNature's bankruptcy filed suit against a number of individuals and entities, including Wachovia Capital Markets, LLC, and Wachovia Bank, N.A., in the U.S. District Court for the Western District of Pennsylvania, asserting a variety of claims on behalf of the estate.

MERGER RELATED LITIGATION On October 4, 2008, Citigroup, Inc. (Citigroup) purported to commence an action in the Supreme Court of the State of New York for the County of Manhattan, captioned Citigroup, Inc. v. Wachovia Corp., et al., naming as defendants Wachovia Corporation (Wachovia), Wells Fargo & Company (Wells Fargo), and the directors of both companies. The complaint alleged that Wachovia Corporation breached an exclusivity agreement with Citigroup, which by its terms was to expire on October 6, 2008, by entering into negotiations and an eventual acquisition agreement with Wells Fargo, and that Wells Fargo and the individual defendants had tortiously interfered with the same contract. In the complaint, Citigroup seeks $20 billion in compensatory damages and $40 billion in punitive damages. After significant procedural activity over the week of October 4-9, 2008, including a voluntary dismissal and re-filing of the action in amended form, the case was removed on October 9, 2008, to the U.S. District Court for the Southern District of New York. On October 10, 2008, Citigroup filed a motion to remand the case to the New York state court, and filed a new proposed amended complaint. The proposed amended complaint includes claims for breach of contract, tortious interference with contract, unjust enrichment, promissory estoppel, and quantum meruit. In the proposed amended complaint, which the court has not yet approved, Citigroup seeks $20 billion in compensatory damages, $20 billion in restitutionary and unjust enrichment damages, and $40 billion in punitive damages. On October 24, 2008, Wachovia Corporation and Wells Fargo filed a join response to the motion to remand. On October 4, 2008, Wachovia Corporation filed a complaint in the U.S. District Court for the Southern District of New York, captioned Wachovia Corp. v. Citigroup, Inc. The complaint seeks declaratory relief, stating that the Wells Fargo merger agreement is valid, proper, and not prohibited by the exclusivity agreement. On October 5, 2008, Wachovia filed a motion for a preliminary injunction seeking to prevent Citigroup from interfering with or impeding its merger with Wells Fargo. On October 9, 2008, Citigroup issued a press release stating that Citigroup would no longer seek to enjoin the merger, but would continue to seek compensatory and punitive damages against Wachovia Corporation and Wells Fargo. On October 14, 2008, Wells Fargo filed a related complaint in the U.S. District Court for the Southern District of New York, captioned Wells Fargo v. Citigroup, Inc. The complaint seeks declaratory and injunctive relief, stating that the Wells Fargo merger agreement is valid, proper, and not prohibited by the exclusivity agreement. Citigroup has moved to dismiss the complaint The cases have been assigned to the same judge for further proceedings.

MUNICIPAL DERIVATIVES BID PRACTICES INVESTIGATION The Department of Justice (DOJ) and the SEC, beginning in November 2006, have been requesting information from a number of financial institutions, including Wachovia Bank, N.A.'s municipal derivatives group, generally with regard to competitive bid practices in the municipal derivative markets. In connection with these inquiries, Wachovia Bank has received subpoenas from both the DOJ and SEC as well as requests from the OCC and several states seeking documents and information. The DOJ and the SEC have advised Wachovia Bank that they believe certain of its employees engaged in improper conduct in conjunction with certain competitively bid transactions and, in November 2007, the DOJ notified two Wachovia Bank employees, both of whom have since been terminated, that they are regarded as targets of the DOJ's investigation. Wachovia Bank has been cooperating and continues to fully cooperate with the government investigations.

Wachovia Bank, along with a number of other banks and financial services companies, has also been named as a defendant in a number of substantially identical purported class actions, filed in various state and federal courts by various municipalities alleging they have been damaged by the activity which is the subject ofthe governmental investigations. A number ofthe federal matters have been consolidated for pre trial proceedings.

PAYMENT PROCESSING CENTER On February 17, 2006, the U.S. Attorney's Office for the Eastern District of Pennsylvania filed a civil fraud complaint against a former Wachovia Bank, N.A. customer, Payment Processing Center (PPC). PPC was a third party payment processor for telemarketing and catalogue companies. On April 12, 2007, a civil class action, Faloney et al v. Wachovia Bank, N.A., was filed against Wachovia Bank in the U.S. District Court for the Eastern District of Pennsylvania by a putative class of consumers who made purchases through telemarketer

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customers of PPC. The suit alleges that between April 1, 2005 and February 21, 2006, Wachovia Bank conspired with PPC to facilitate PPC's purported violation of RICO. On February 15, 2008, a second putative class action, Harrison v. Wachovia Bank, N.A., was filed in the U.S. District Court for the Eastern District of Pennsylvania by a putative class of consumers who made purchases through telemarketing customers of three other third party payment processors which banked with Wachovia Bank. This suit alleges that Wachovia Bank conspired with these payment processors to facilitate purported violations of RICO. On April 24, 2008, Wachovia and the Office ofthe Comptroller ofthe Currency (OCC) entered into an Agreement to resolve the OCC's investigation into Wachovia's relationship with PPC and three other companies. The Agreement provides, among other things, that (i) Wachovia will provide restitution to consumers, (ii) will create a segregated account in the amount of $125 million to cover the estimated maximum cost of the restitution, (iii) will fund organizations that provide education for consumers over a two year period in the amount of $8.9 million, (iv) will make various changes to its policies and procedures related to customers that use remotely created checks and (v) will appoint a special Compliance Committee to oversee compliance with the Agreement. Wachovia Bank and the OCC also entered into a Consent Order for Payment of a Civil Money Penalty whereby Wachovia, without admitting or denying the allegations contained therein, agreed to payment of a $10 million civil money penalty. The OCC Agreement was amended on December 8, 2008, to provide for direct restitution payments and those payments were mailed to consumers on December 11, 2008. Wachovia Bank is cooperating with government officials to administer the OCC settlement and in their further inquiries.

On August 14, 2008, Wachovia Bank reached agreements to settle the Faloney and Harrison class action lawsuits. The settlements received approval from the U.S. District Court for the Eastern District of Pennsylvania on January 23, 2009.

OTHER REGULATORY MATTERS AND GOVERNMENT INVESTIGATIONS In the course of its banking and financial services businesses, Wells Fargo and its affiliates are subject to information requests and investigations by governmental and self-regulatory authorities. These authorities have instituted various ongoing investigations of various practices in the banking, securities and mutual fund industries, including those relating to anti-money laundering, sales practices, record retention and other laws and regulations involving our customers and their accounts.

In general, the investigations cover advisory companies to mutual funds, broker-dealers, hedge funds and others and may involve the activities of customers or third parties with respect to accounts maintained by Wells Fargo affiliates or transactions in which Wells Fargo affiliates may be involved. Wells Fargo affiliates have received subpoenas and other requests for documents and testimony relating to the investigations, is endeavoring to comply with those requests, is cooperating with the investigations, and where appropriate, is engaging in discussions to resolve the investigations or take other remedial actions. These investigations include an investigation being conducted by the U.S. Attorney's Office for the Southern District of Florida into, among other matters, Wachovia Bank, N.A.'s correspondent banking relationship with certain non-domestic exchange houses and Bank Secrecy Act and anti-money laundering compliance. Wachovia Bank is cooperating fully with the U.S. Attorney's Office's investigation.

FORM 10-0 WELLS FARGO & COMPANY - Filed August 7. 2009 fWellsl

(For the quarterly period ended June 30, 2009)

Legal Actions

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2008 Form 10-K for events occurring in the most recent quarter.

Auction Rate Securities On June 30, 2009, Wachovia completed the second, and final, phase of its buy back of qualifying securities as required in its regulatory settlements with the SEC and various state securities regulators.

ERISA Litigation On June 18, 2009, the U.S. District Court for the Southern District of New York entered a Memorandum and Order transferring these consolidated cases to the U.S. District Court for the Western District of North Carolina.

Golden West and Related Litigation On May 8, 2009 and on June 12, 2009, two additional cases (not class actions) containing allegations similar to the allegations in the In re Wachovia Equity Securities Litigation, and captioned, Stichting Pensioenfonds ABP v. Wachovia Corp. et al. and FC Holdings AB, et al. v. Wachovia Corp., et ai, respectively,

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were filed in the U.S. District Court for the Southern District of New York. On June 22, 2009, the U.S. District Court for the Northern District of California entered an Order To Transfer Three Related Actions Pursuant To U.S.C. Section 1404(a) whereby the Court transferred the Miller, et al. v. Wachovia Corporation, et al; Swiskay, et al. v. Wachovia Corporation, et al.; and Orange County Employees' Retirement System, et al. v. Wachovia Corporation, et al. cases to the U.S. District Court for the Southern District of New York.

Merger Related Litigation On July 13, 2009, the U.S. District Court for the Southern District of New York issued an Opinion and Order denying Citigroup's motion for partial judgment on the pleadings in the Wachovia Corp. v. Citigroup, Inc. case. The Court held that an Exclusivity Agreement, entered into between Citigroup and Wachovia on September 29, 2008, and which formed the basis for a substantial portion of the allegations of Citigroup's complaint against Wachovia and Wells Fargo, was void as against public policy by enactment of Section 126(c) ofthe Emergency Economic Stabilization Act on October 3, 2008.

Illinois Attorney General Litigation On July 31, 2009, the Attorney General for the State oflllinois filed a civil lawsuit against Wells Fargo & Company, Wells Fargo Bank, N.A. and Wells Fargo Financial Illinois, Inc. in the Circuit Court for Cook County, Illinois. The Illinois Attorney General alleges that the Wells Fargo defendants engaged in illegal discrimination by "reverse redlining" and by steering African- American and Latino customers into high cost, subprime mortgage loans while other borrowers with similar incomes received lower cost mortgages. Illinois also alleges that Wells Fargo Financial Illinois, Inc. misled Illinois customers about the terms of mortgage loans. Illinois' complaint against all Wells Fargo defendants is based on alleged violation of the Illinois Human Rights Act and the Illinois Fairness in Lending Act. The complaint also alleges that Wells Fargo Financial Illinois, Inc. violated the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Uniform Deceptive Trade Practices Act Illinois' complaint seeks an injunction against the defendants' alleged violation of these Illinois statutes, restitution to consumers and civil money penalties.

FORM 10-0 WELLS FARGO ft COMPANY - Filed Nnvemher fi. 2009 fWellsl

(For the quarterly period ended October 30, 2009)

Item 1. Legal Proceedings Legal Actions

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2008 Form 10-K for events occurring in the most recent quarter.

Elavon On September 29, 2009, Elavon filed an amended complaint adding an additional party to the litigation. On October 13, 2009, the court entered an order granting the motion to dismiss of Wells Fargo & Company and Wells Fargo Bank, N.A. dismissing the tortious interference with contract and the punitive damages counts as against those entities.

Golden West and Related Litigation On September 15, 2009 and on September 25, 2009, two additional cases (not class actions) containing allegations similar to the allegations in the In re Wachovia Equity Securities Litigation, and captioned, Deka Investment GmbH v. Wachovia Corp. et al. and Forsta AP-Fonden v. Wachovia Corp., et al., respectively, were filed in the U.S. District Court for the Southern District of New York. Following the transfer ofthe Miller, et al. v. Wachovia Corporation, et al.; Swiskay, et al. v. Wachovia Corporation, et al.; and Orange County Employees' Retirement System, et al. v. Wachovia Corporation, et al. cases to the U.S. District Court for the Southern District of New York, a consolidated class action complaint was filed on September 4, 2009 and the matter is now captioned In Re Wachovia Preferred Securities and Bond/Notes Litigation. On September 29, 2009, a non-class action case containing allegations similar to the allegations in the In re Wachovia Preferred Securities and Bond/Notes litigation, and captioned City of Livonia Employees' Retirement System v. Wachovia Corp et al., was filed in the Southern District of New York In addition, a number of other actions containing allegations similar to those in the In re Wachovia Equity Securities Litigation have been filed in state courts in North Carolina and South Carolina by individual shareholders.

Illinois Attorney General Litigation On October 9, 2009, the Company filed a motion to dismiss Illinois' complaint.

Le-Nature's, Inc. On August 1, 2009, the trustee under the indenture for Le-Nature's Senior Subordinated Note filed claims against Wachovia Capital Markets seeking recovery for the bondholders under a variety of theories. On

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September 16, 2009, the Judge in the action brought by the Litigation Trustee dismissed a cause of action for breach of fiduciary duty but denied the remainder of Wachovia's motion to dismiss. On October 2, 2009, the Second Circuit affirmed the dismissal of the action filed by certain bank debt holders in the Southern District of New York. The action filed on behalf of holders of Le-Nature's Senior Subordinated Notes is now pending in the Superior Court ofthe State of California, County of Los Angeles.

Municipal Derivatives Bid Practices Investigation On April 30,2009, the Court granted a motion filed by Wachovia and certain other defendants to dismiss the Consolidated Class Action Complaint and dismissed all claims against Wachovia, with leave to replead; a Second Consolidated Amended Complaint was filed on June 18, 2009, and a motion to dismiss this complaint has been filed and briefed. Putative class and individual actions brought in California were also amended on September 15, 2009, including five non-class complaints filed in California which were amended with new allegations and the addition of Wells Fargo & Co. as a defendant. All matters are being coordinated in the Southern District of New York.

Outlook Based on information currently available, advice of counsel, available insurance coverage and established reserves. Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position or results of operations. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Source: WELLS FARGO & CO/MN, 10-Q, November 06, 2009 Powered by Momingstar® Document Research™ 8-K Filed March 17, 2010 (Wells)

Wachovia Bank, N.A., said today that it has entered into agreements with the U.S. Department of Justice and banking regulators concerning previously disclosed compliance matters that occurred prior to its acquisition by Wells Fargo & Company. The agreements address Wachovia's Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance program and primarily relate to customer accounts held by Mexican money exchange houses in Wachovia's Global Financial Institutions and Trade Services (GFITS) division between 2004 and 2007.

As part of the agreements, Wachovia will pay a total of $160 million. Wells Fargo learned about these matters before acquiring Wachovia and established reserves in prior periods that will fully cover the settlement amounts.

The agreements consist of the following:

• Wachovia Bank, N.A. has entered into a deferred prosecution agreement with the U.S. Attorney's Office for the Southern District of Florida and the U.S. Department of Justice. Under the agreement, the bank acknowledges that its AML compliance programs were inadequate and agrees to forfeit $110 million and implement certain remedial measures. In one year, if Wachovia has complied with the terms of the agreement, the Department of Justice will ask a U.S. court to dismiss all charges against the bank. The agreement states that there is no evidence or allegation that Wells Fargo's AML program is deficient
• Wachovia Bank, N.A. has entered into a Consent Order with the Office of the Comptroller of the Currency (OCC), in which it has committed to take the necessary steps to address deficiencies and enhance its BSA and AML policies and procedures related to foreign correspondent banking activities. Wachovia has also agreed to pay the OCC a civil money penalty of $50 million.

Wachovia Bank, N.A. has also agreed to a Consent to the Assessment of Civil Money Penalty with the Financial Crimes Enforcement Network ofthe United States Department of Treasury (FinCEN). The $110 million penalty imposed by FinCEN will be satisfied by the $110 million forfeiture made to the Department of Justice.

The focus of these investigations was primarily in the GFITS division of Wachovia Bank from 2004 to 2007, well before Wells Fargo acquired Wachovia at the end of 2008. By early 2008, Wachovia Bank had exited all relationships with foreign money exchange houses. Wachovia Bank has fully cooperated with the Federal Government throughout the course of its investigation. That cooperation has continued since the merger of Wachovia and Wells Fargo.

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Wachovia has made significant enhancements to its AML and BSA compliance program that have strengthened its ability to guard against unlawful use of its system by wrongdoers. Over the past three years, Wachovia, and since January 2009, Wachovia as part of Wells Fargo, has invested $42 million evaluating and improving the BSA/AML compliance program. Since its acquisition by Wells Fargo, Wachovia has also been subject to Wells Fargo's BSA/AML compliance program and compliance and operational risk management, oversight and independent testing. The company continues to dedicate significant resources to this area, and is committed to maintaining compliant and effective BSA/AML practices and policies and a strong compliance culture across the integrated organization. In addition to this matter, Wachovia Bank, N.A. and the Department of Justice have resolved the remaining outstanding issues related to relationships Wachovia had from 2003 to 2008 with payment processors for telemarketing companies, including Payment Processing Center, LLC. Wachovia reached a settlement with the OCC on 2008 and has paid restitution to consumers who may have been subject to fraud by the telemarketers.

These settlements complete all pending bank-specific investigations of Wachovia's correspondent banking business.

Wachovia Bank, N.A., is a subsidiary of Wells Fargo & Company.

Wells Fargo & Company is a diversified financial services company with $1.2 trillion in assets, providing banking, insurance, investments, mortgage and consumer finance through more than 10,000 stores and 12,000 ATMs and the internet (wellsfargo.com) across North America and internationally.

10Ofiled.q/l0/2010-Welk

Legal Actions occurring in first quarter 2010.

Auction Rate Securities Plaintiffs have appealed the January 26, 2010, dismissal of two civil class actions pending against Wells Fargo affiliated defendants.

Casa de Cambio Investigation In March 2010, Wachovia Bank, N.A. entered into a Deferred Prosecution Agreement with the U.S. Attorney's Office for the Southern District of Florida and U.S. Department of Justice, and entered into separate consent agreements with the Office of the Comptroller ofthe Currency and the Financial Crimes Enforcement Network to resolve those agencies' investigations into these matters, the substance of which occurred prior to Wachovia's acquisition by Wells Fargo & Company. The Deferred Prosecution Agreement was approved on March 17, 2010, by the U.S. District Court for the Southern District of Florida. Wachovia Bank, N.A. paid a total of $160 million to satisfy the forfeitures and penalties provided for in the various agreements and further agreed to continue certain remediation and compliance efforts. Settlement of this matter was previously described in a Form 8-K filed on March 17,2010.

ERISA Litigation On April 6, 2010, the U.S. District Court for the District of Minnesota certified a class of participants in Wells Fargo's 401(k) Plan in a case captioned Figas v. Wells Fargo & Company, et al. Figas purports to bring claims on behalf of participants who had assets in certain Wells Fargo affiliated funds from November 2, 2001, to September 22, 2009, alleging breach of fiduciary duty in connection with the offer of Wells Fargo affiliated funds as investment choices in the Plan.

Golden West and Related Litigation On May 3, 2010, the judge in the Southern District of New York issued an order granting Plaintiffs leave to amend the class action and other complaints pending in that court, and directing the parties to submit a schedule for the filing of the amended complaints and new motions to dismiss. This order terminates the motions to dismiss the prior complaints which had been pending.

In re Wells Fargo Mortgage-Backed Certificates Litigation and Mortgage Related Investigations This lawsuit is comprised of several securities law based putative class actions, consolidated in the U.S. District Court for the Northern District of California on July 16, 2009. The case is brought against several Wells Fargo mortgage-backed securities trusts. Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs allege that the offering documents contained untrue statements of material fact, or omitted to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The allegations are regarding the underwriting standards used in connection with the origination of the underlying mortgages, the maximum loan-to-value ratios used to qualify borrowers, and the appraisals of the properties underlying the mortgages. Motions to dismiss, filed on behalf of all defendants, were granted in part and denied in part by a court order entered on April 22, 2010. The plaintiffs were granted leave to amend some of their claims.

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Certain government entities are conducting investigations into the mortgage lending practices of various Wells Fargo affiliated entities, including whether borrowers were steered to more costly mortgage products. Wells Fargo intends to cooperate fully with these investigations.

LeNature's Inc. On March 15, 2010, the Mecklenburg County Superior Court entered an order allowing the hedge fund defendants to assert their tort claims in the New York state action. The holders of LeNature's Senior Subordinated Notes filed an amended complaint in the California action, and Wachovia has filed its demurrer to that complaint. The action filed by the trustee under the indenture for the Senior Subordinated Notes offering was dismissed by the U.S. District Court for the Western District of Pennsylvania on April 16,2010.

Municipal Derivatives Bid Practice Investigation Defendants' motion to dismiss the second consolidated amended complaint was denied by the U.S. District Court for the Southern District of New York on March 25, 2010. On April 26, 2010, the same court also denied motions to dismiss eleven related cases filed by municipalities in California.

Payment Processing Center On March 17, 2010, the U.S. District Court for the Southern District of Florida approved a Deferred Prosecution Agreement between the U.S. Department of Justice and Wachovia Bank, N.A., which resolved the Department of Justice's investigation into this matter. The Company believes all pending governmental investigations relating to this matter are now concluded.

10 Q filed 6/10/2010 -Wells

Legal Actions occurring in first quarter 2010 (Amended August 6,2010)

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2009 Form 10-K and our First Quarter Form 10-Q for events occurring in second quarter 2010.

Data Treasury Litigation On June 15, 2010, Wells Fargo entered into a confidential settlement agreement which settled all claims of Data Treasury against Wells Fargo and Wachovia. The estimated liability for this matter had been accrued for in previous quarters and the settlement did not have a material adverse effect on Wells Fargo's consolidated financial statements for the period ended June 30, 2010.

Golden West and Related Litigation Amended complaints were filed in all the actions in May 2010 and renewed motions to dismiss have been filed in each case.

In Re Wells Fargo Mortgage-Backed Certificates Litigation On May 28,2010, plaintiffs filed an amended consolidated complaint. On June 25,2010, Wells Fargo moved to dismiss the amended complaint. On June 29,2010 and on July 15, 2010, two complaints, the first captioned The Charles Schwab Corporation vs. Merrill Lynch, Pierce, Fenner & Smith, Inc., et al., and the second captioned The Charles Schwab Corporation v. BNP Paribas Securities Corp., et al., were filed in the Superior Court for the State of California, San Francisco County against a number of defendants, including Wells Fargo Bank, N.A. and Wells Fargo Asset Securities Corporation. As against the Wells Fargo entities, the new cases assert opt out claims relating to the claims alleged in the Mortgage-Backed Certificates Litigation.

LeNature's Inc. On July 7, 2010, the demurrer to the California noteholder action was overruled. On May 10, 2010, the New York State Court granted the motion to dismiss two counts ofthe complaint and denied the motion to dismiss two other counts.

Municipal Derivatives Bid Practice Investigation In May 2010, four additional complaints were filed in California state courts by four additional California municipalities containing allegations virtually identical to the allegations ofthe eleven complaints previously filed by various California municipalities.

Municipal Derivatives Bid Practice Investigation In May 2010, four additional complaints were filed in California state courts by four additional California municipalities containing allegations virtually identical to the allegations of the eleven complaints previously filed by various California municipalities.

10-Q Filed November 5, 2010 Wells

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Legal Actions

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2009 Form 10-K and our 2010 First and Second Quarter Form 10-Q for events occurring in third quarter 2010.

Adelphia Litigation On September 21, 2010, an agreement in principle was reached between the Adelphia Resolution Trust and all ofthe defendant banks to settle the remaining claims against the Banks. The agreement is subject to approval by the Court. A hearing on approval of the settlement is scheduled for November 18, 2010.

ERISA Litigation On August 6, 2010, an order was entered by the U.S. District Court for the Western District ofNorth Carolina dismissing, with prejudice, the plaintiffs' complaint in the In re Wachovia Corporation ERISA Litigation case. Plaintiffs have appealed. On October 18, 2010, an agreement in principle was reached to settle the Figas v. Wells Fargo & Company, et al. case. The agreement is subject to approval by the Court and an independent fiduciary.

Golden West and Related Litigation Two individual shareholder actions in South Carolina have been dismissed and the shareholders have appealed.

Municipal Derivatives Bid Practice Investigation On September 21, 2010 a complaint, captioned Active Retirement Community, Inc. d/b/a Jefferson's Ferry v. Bank of America, N.A., ct al., was filed in the U.S. District Court for the Eastern District of New York. The case asserts claims against Wachovia Bank, N.A. and Wells Fargo & Company that are substantially similar to other previously disclosed civil cases.

Order of Posting Litigation A series of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the Banks post debit card transactions to consumer deposit accounts. There are currently twelve such cases pending against Wells

Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), all but three of which have been consolidated in multi-district litigation proceedings in the U.S. District Court for the Southern District of Florida. On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., one of the three cases that were not consolidated in the multi-district proceedings, enjoining the Bank's use of the high to low posting method for debit card transactions with respect to the plaintiff class of California depositors, directing that the Bank establish a different posting methodology and ordering remediation in the approximate amount of $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. Wells Fargo will appeal.

In Re Wells Fargo Mortgage-Backed Certificates Litigation and Related Mortgage Litigation and Investigations On October 5, 2010, Wells Fargo's motion to dismiss the amended complaint in the Northern District of California was granted in part and denied in part.

On October 15, 2010, three actions, captioned Federal Home Loan Bank of Chicago v. Banc of America Funding Corporation, et al. (filed in the Cook County Circuit Court, State oflllinois); Federal Home Loan Bank of Chicago v. Banc of America Securities LLC, etal. (filed in the Superior Court of the State of California for the County of Los Angeles); and Federal Home Loan Bank of Indianapolis v. Banc of America Mortgage America Securities, Inc., et al. (filed in the Superior Court of the State of Indiana for the County of Marion), named multiple defendants, described as issuers/depositors, and underwriters/dealers of private label mortgage-backed securities, in an action asserting claims that defendants used false and misleading statements in offering documents for the sale of such securities. The Bank of Chicago asserts that it purchased approximately $4.2 billion and the Bank of Indianapolis asserts that it purchased nearly $3 billion of such securities from the defendants. Plaintiffs seek rescission ofthe sales and damages under state securities and other laws and Section 11 ofthe Securities Act of 1933. Wells Fargo Asset Securities Corporation, Wells Fargo Bank, N.A. and Wells Fargo & Company were named among the defendants. In addition, various class actions have been filed against Wells Fargo Bank, N A. and other banks challenging aspects ofthe foreclosure process, alleging, among other things, that banks improperly split notes and mortgages, use inappropriate foreclosure plaintiffs, misapply payments in violation ofthe terms of notes and mortgages, and submit fraudulent and inaccurate foreclosure affidavits. Wells Fargo Bank, N.A. has received inquiries from state Attorneys General, other state and federal regulators and officers, and legislative committees into its mortgage foreclosure practices and procedures. Wells Fargo is appropriately responding to these inquiries as well as internally reviewing its practices and procedures. At present, Wells Fargo cannot estimate the possible loss or range of loss with respect to the allegations concerning the mortgage related litigation and investigations described above.

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Outlook In accordance with ASC 450 (formerly FAS 5), Wells Fargo has established estimated liabilities for litigation matters with loss contingencies that are both probable and estimable. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess ofthe estimated liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial statements. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's consolidated financial statements for any particular period.

Wells Fargo & Company 10-K for fiscal year 12/31/2010 issued 2/25/2011 ITEM 3.    LEGAL PROCEEDINGS

Information in response to this Item 3 can be found in the 2010 Annual Report to Stockholders under "Financial Statements -Notes to Financial Statements -Note 14 (Guarantees and Legal Actions)." That information is incorporated into this item by reference.

Legal Actions

Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups. Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each case, other than matters we describe as having settled. Reserves are established for

legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

ADELPHIA LITIGATION Wachovia Bank, N.A. and Wachovia Capital Markets, LLC, along with numerous other financial institutions were defendants in a case pending in the United States District Court for the Southern District of New York related to the bankruptcy of Adelphia Communications Corporation (Adelphia). The plaintiff was the Adelphia Recovery Trust. The complaint asserted claims against the defendants under state law, bankruptcy law and the Bank Holding Company Act and sought equitable relief and an unspecified amount of compensatory and punitive damages. On September 21, 2010, an agreement was reached between the Adelphia Resolution Trust and all of the defendant banks to settle the claims against the banks for the total amount of $175 million. Wachovia's share was a fraction of that amount and was not material to Wells Fargo. The settlement has been approved by the Court and the case is concluded.

ELAVON LITIGATION On January 16, 2009, Elavon, Inc., a provider of merchant processing services, filed a complaint in the U.S. District Court for the.Northern District of Georgia against Wachovia Corporation, Wachovia Bank, N.A., Wells Fargo & Company, and Wells Fargo Bank, N.A. The complaint seeks equitable relief, including specific performance, and damages for Wachovia Bank's allegedly wrongful termination of its merchant referral contract with Elavon. Discovery has been completed and both parties have moved for summary judgment on various claims or defenses.

ERISA LITIGATION A purported class action, captioned In re Wachovia Corporation ERISA Litigation , was pending against Wachovia Corporation, its board of directors and certain senior officers, in the U.S. District Court for the Western District ofNorth Carolina. The case was filed on behalf of employees of Wachovia Corporation and its affiliates who held shares of Wachovia Corporation common stock in their Wachovia Savings Plan accounts. On August 6, 2010, an order was entered by the Court dismissing, with prejudice, the plaintiffs' complaint. The dismissal was appealed. On December 8, 2010, an agreement in principle was reached to settle the case for $12.35 million. The settlement is subject to Court approval. A hearing on approval of the settlement has not yet been scheduled.

On April 6, 2010, the U.S. District Court for the District of Minnesota certified a class of participants in Wells Fargo's 401(k) Plan in a case captioned Figas v. Wells Fargo & Company, et al. Figas purports to bring claims on behalf of

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participants who had assets in certain Wells Fargo affiliated funds from November 2, 2001, to September 22, 2009, alleging breach of fiduciary duty in connection with the offer of Wells Fargo affiliated funds as investment choices in the Plan. On October 18, 2010, an agreement in principle was reached to settle the Figas v. Wells Fargo & Company, et al. case. The agreement is subject to approval by the Court and an independent fiduciary.

ILLINOIS ATTORNEY GENERAL LITIGATION On July 31, 2009, the Attorney General for the State oflllinois filed a civil lawsuit against Wells Fargo & Company, Wells Fargo Bank, N.A. and Wells Fargo Financial Illinois, Inc. in the Circuit Court for Cook County, Illinois. The Illinois Attorney General alleges that the Wells Fargo defendants engaged in illegal discrimination by "reverse redlining" and by steering African-American and Latino customers into high cost, subprime mortgage loans while other borrowers with similar incomes received lower cost mortgages. Illinois also alleges that Wells Fargo Financial Illinois, Inc. misled Illinois customers about the terms of mortgage loans. Illinois' complaint against all Wells Fargo defendants is based on alleged violation ofthe Illinois Human Rights Act and the Illinois Fairness in Lending Act. The complaint also alleges that Wells Fargo Financial Illinois, Inc. violated the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois

Uniform Deceptive Trade Practices Act. Illinois' complaint seeks an injunction against the defendants' alleged violation of these Illinois statutes, restitution to consumers and civil money penalties. On October 9,2009, the Company filed a motion to dismiss Illinois' complaint, and is awaiting the Court's ruling.

IN RE WELLS FARGO MORTGAGE-BACKED CERTIFICATES LITIGATION This lawsuit is comprised of several securities law based putative class actions, consolidated in the U.S. District Court for the Northern District of California on July 16, 2009. The case is brought against several Wells Fargo mortgage-backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs allege that the offering documents contain untrue statements of material fact, or omit to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The allegations are regarding the underwriting standards used in connection with the

origination of the underlying mortgages, the maximum loan-to-value ratios used to qualify borrowers, and the appraisals of the properties underlying the mortgages. Motions to dismiss, filed on behalf of all defendants, were granted in part and denied in part by a court order entered on April 22, 2010. The plaintiffs were granted leave to amend some of their claims. On May 28, 2010, plaintiffs filed an amended consolidated complaint. On June 25, 2010, Wells Fargo moved to dismiss the amended complaint. On October 5, 2010, Wells Fargo's motion to dismiss the amended complaint was granted in part and denied in part.

On June 29, 2010 and on July 15, 2010, two complaints, the first captioned The Charles Schwab Corporation vs. Merrill Lynch, Pierce, Fenner & Smith, Inc., et al, and the second captioned The Charles Schwab Corporation v. BNP Paribas Securities Corp., et al, were filed in the Superior Court for the State of California, San Francisco County against a number of defendants, including Wells Fargo Bank, N.A. and Wells Fargo Asset Securities Corporation. As against the Wells Fargo entities, the new cases assert opt out claims relating to the claims alleged in the Mortgage-Backed Certificates Litigation.

On October 15, 2010, three actions, captioned Federal Home Loan Bank of Chicago v. Banc of America Funding Corporation, et al. (filed in the Cook County Circuit Court, State oflllinois); Federal Home Loan Bank of Chicago v. Banc of America Securities LLC, et al. (filed in the Superior Court of the State of California for the County of Los Angeles); and Federal Home Loan Bank of Indianapolis v. Banc of America Mortgage America Securities, Inc., el al. (filed in the Superior Court of the State of Indiana for the County of Marion), named multiple defendants, described as issuers/depositors, and underwriters/dealers of private label mortgage-backed securities, in an action asserting claims that defendants used false and misleading statements in offering documents for the sale of such securities. The Bank of Chicago asserts that it purchased approximately $4.2 billion and the Bank of Indianapolis asserts that it purchased nearly $3 billion of such securities from the defendants. Plaintiffs seek rescission of the sales and damages under state securities and other laws and Section 11 of the Securities Act of 1933. Wells Fargo Asset Securities Corporation, Wells Fargo Bank, N.A. and Wells Fargo & Company were named among the defendants.

INTERCHANGE LITIGATION Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation are named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and in individual actions brought by individual merchants with regard to the interchange fees associated with Visa and MasterCard payment card transactions. These actions have been consolidated in the United States District Court for the Eastern District of New York. Visa, MasteiCard and several banks and bank holding companies are named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are

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anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation.

LE-NATURE'S, INC. Wachovia Bank, N.A. was the administrative agent on a $285 million credit facility extended to LeNature's, Inc. in September 2006, of which approximately $270 million was syndicated to other lenders by Wachovia Capital Markets, LLC. Le-Naturc's was the subject of a Chapter 7 bankruptcy petition, which was converted to a Chapter 11 bankruptcy petition in November 2006 in the U.S. Bankr uptcy Court for the Western District of Pennsylvania. The filing was precipitated by an apparent fraud relating to Le-Nature's financial condition. Wachovia Capital Markets, LLC and/or Wachovia Bank, N.A. are named as defendants in a number of lawsuits including the following: (1) a case filed in the New York State Supreme Court for the County of Manhattan by hedge fund purchasers ofthe bank debt seeking to recover from Wachovia on various theories of liability (On May 10, 2010, the Court granted Wachovia's motion to dismiss two counts of the complaint and denied the motion to dismiss two other counts); (2) a case filed on April 28, 2008, by holders of a LeNature's Senior Subordinated Notes offering underwritten by Wachovia Capital Markets in June 2003, alleging various fraud claims, pending in the Superior Court of the State of California for the County of Los Angeles; and (3) an action filed on October 30, 2008, on behalf of the liquidation trust created in Le-Nature's bankruptcy against a number of individuals and entities, including Wachovia Capital Markets, LLC and Wachovia Bank, N.A., in the U.S. District Court for the Western District of Pennsylvania, asserting a variety of claims on behalf of the bankruptcy estate. On September 16, 2009, the Court dismissed a cause of action for breach of fiduciary duty but denied the remainder of Wachovia's motion to dismiss. Discovery is underway in these matters.

MERGER RELATED LITIGATION On October 4, 2008, Citigroup, Inc. purported to commence an action in the Supreme Court of the State of New York for the County of Manhattan, captioned Citigroup, Inc. v. Wachovia Corp., et al, naming as defendants Wachovia Corporation, Wells Fargo & Company, and the directors of both companies. The complaint alleged that Wachovia breached an exclusivity agreement with Citigroup, which by its terms was to expire on October 6, 2008, by entering into negotiations and an eventual acquisition agreement with Wells Fargo, and that Wells Fargo and the individual defendants had tortiously interfered with the same contract. On October 4, 2008, Wachovia filed a complaint in the U.S. District Court for the Southern District of New York, captioned Wachovia Corp. v. Citigroup, Inc. The complaint sought declaratory and injunctive relief, stating that the Wells Fargo merger agreement is valid, proper, and not prohibited by the exclusivity agreement. On March 20, 2009, the

U.S. District Court for the Southern District of New York remanded the Citigroup, Inc. v. Wachovia Corp., et al case to the Supreme Court of the State of New York for the County of Manhattan, but retained jurisdiction over the Wachovia v. Citigroup case. These cases were settled by Wells Fargo's payment of $100 million to Citigroup in November, 2010. On November 23, 2010, both cases were dismissed at the request ofthe parties.

MORTGAGE FORECLOSURE DOCUMENT LITIGATION Seven purported class actions and several individual borrower actions related to foreclosure document practices were filed in late 2010 and in early 2011 against Wells Fargo Bank, N.A. in its status as mortgage servicer. The cases have been brought in state and federal courts. Of the individual borrower cases, the majority are filed in state courts in California and Ohio. Two other class actions were filed against Wells Fargo Bank, but Wells Fargo is named as a defendant as corporate trustee of the mortgage trust and not as a mortgage servicer. The actions generally claim that Wells Fargo submitted "fraudulent" or "untruthful" affidavits or other foreclosure documents to courts to support foreclosures filed in the state. Specifically, plaintiffs allege that Wells Fargo signers did not have personal knowledge of the facts alleged in the documents and did not verify the information in the documents ultimately filed with courts to foreclose. Plaintiffs attempt to state legal claims ranging from wrongful foreclosure to deceptive practices to fraud and seek relief ranging from cancellation of notes and mortgages to money damages.

On December 20, 2010, the New Jersey Supreme Court, the New Jersey Administrative Office of the Courts, and the Superior Court of New Jersey for Mercer County jointly began an action againsl Wells Fargo and other large mortgage servicing companies in state court in New Jersey. This action seeks to enjoin pending foreclosures and sales and to require servicers to certify and prove compliance with new foreclosure procedures in New Jersey, or be held in contempt of court. Wells Fargo has filed its initial response to the New Jersey action.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Several government agencies are conducting investigations or examinations of various mortgage related practices of Wells Fargo Bank. The investigations relate to two main topics, (1) whether Wells Fargo may have violated fair lending or other laws and regulations relating to mortgage origination practices; and (2) whether Wells Fargo's practices and procedures relating to mortgage foreclosure affidavits and documents relating to the chain of title to notes and mortgage documents are adequate. With regard to the investigations into foreclosure practices, it is likely that one or more ofthe government agencies will initiate some type of enforcement action

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againsl Wells Fargo, which may include civil money penalties. Wells Fargo continues to provide information requested by the various agencies.

MUNICIPAL DERIVATIVES BID PRACTICES INVESTIGATION The Department of Justice (DOJ) and the SEC, beginning in November 2006, have been requesting information from a number of financial institutions, including Wachovia Bank, N.A.'s municipal derivatives group, generally with regard to competitive bid practices in the municipal derivative markets. In connection with these inquiries, Wachovia Bank has received subpoenas from both the DOJ and SEC as well as requests from other regulatory agencies and several states seeking documents and information. The DOJ and the SEC have advised Wachovia Bank that they believe certain of its employees engaged in improper conduct in conjunction with certain competitively bid transactions and, in November 2007, the DOJ notified two Wachovia Bank employees, both of whom have since been terminated, that they are regarded as targets of the DOJ's investigation. Wachovia Bank has been cooperating fully with the government investigations.

Wachovia Bank, along with a number of other banks and financial services companies, has also been named as a defendant in a number of substantially identical purported class actions filed in various state and federal courts by various municipalities alleging they have been damaged by the activity which is the subject ofthe government investigations. These cases are now consolidated under the caption In re Municipal Derivatives Antitrust Litigation in the U.S. District Court for the Southern District of New York. On April 30, 2009, the Court granted a motion filed by Wachovia and certain other defendants to dismiss the Consolidated Class Action Complaint and dismissed all claims against Wachovia, with leave to replead. A Second Consolidated Amended Complaint was filed on June 18, 2009, and a motion to dismiss that complaint was denied. A number of putative class and individual actions have also been brought in various courts, including complaints which were amended with new allegations and the addition of Wells Fargo & Co. as a defendant. These cases all have allegations substantially similar to those in the consolidated class complaint. All ofthe cases are being coordinated in the U.S. District Court for the Southern District of New York.

ORDER OF POSTING LITIGATION A series of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the Banks post debit card transactions to consumer deposit accounts. There are currently 12 such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), all but three of which have been consolidated in multi-district litigation proceedings in the U.S. District Court for the Southern District of Florida. On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., one of the three cases that were not consolidated in the multi-district proceedings, enjoining the Bank's use ofthe high to low posting method for debit card transactions with respect to the plaintiff class of California depositors, directing that the Bank establish a different posting methodology and ordering remediation in the approximate amount of $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. On October 28, 2010, Wells Fargo appealed to the U.S. Court of Appeals for the Ninth Circuit.

WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION

A purported securities class action, Lipetz v. Wachovia Corporation, et al, was filed on July 7, 2008, in the U.S. District Court for the Southern District of New York alleging violations of Sections 10 and 20 of the Securities Exchange Act of 1934. An amended complaint was filed on December 15, 2008. Among other allegations, plaintiffs allege Wachovia's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. mortgage portfolio, Wachovia's exposure to other mortgage related products such as CDOs, control issues and auction rate securities. On March 19, 2009, the defendants filed a motion to dismiss the amended class action complaint in the Lipetz case, which has now been re-captioned as In re Wachovia Equity Securities Litigation. There are four additional cases (not class actions) containing allegations similar to the allegations in the In re Wachovia Equity Securities Litigation captioned Stichting Pensioenfonds ABP v. Wachovia Corp. et al., FC Holdings AB, et al. v. Wachovia Corp., et al., Deka Investment GmbH v. Wachovia Corp. et al. and Forsta AP-Fonden v. Wachovia Corp., et al., respectively, which were filed in the U.S. District Court for the Southern District of New York, and there arc a number of other similar actions filed in state courts in North Carolina and South Carolina by individual shareholders. Two ofthe individual shareholder actions in South Carolina have been dismissed and the shareholders have appealed.

After a number of procedural motions, three purported class action cases alleging violations of Sections 11, 12, and 15 of the Securities Act of 1933 as a result of allegedly misleading disclosures relating to the Golden West mortgage portfolio in connection with Wachovia's issuance of various preferred securities and bonds were transferred to the U.S. District Court for the Southern District of New York. A consolidated class action complaint was filed on September 4, 2009, and the matter is now captioned In Re Wachovia Preferred Securities and Bond/Notes Litigation. On September 29, 2009, a non-class action case containing allegations similar to the allegations in the In re Wachovia Preferred Securities and Bond/Notes litigation, and captioned City of Livonia Employees' Retirement System v. Wachovia Corp et al., was filed in the Southern District of New York. On May 3, 2010, the judge in the Southern District of New York issued an order granting Plaintiffs leave to

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amend the class action and other complaints pending in that court, and directing the parties to submit a schedule for the filing ofthe amended complaints and new motions to dismiss. This order terminates the motions to dismiss the prior complaints which had been pending. Amended complaints were filed in all the actions in May 2010 and renewed motions to dismiss have been filed in each case.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end ofthe range of potential litigation losses in excess ofthe Company's best estimates within the range of potential losses used in establishing the total litigation liability was $1.2 billion as of December 31, 2010. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions againsl Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Note 11: Legal Actions 10-Q May 6.2011 Wells

Note 11; Legal Actions      

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2010 Form 10-K for events occurring in first quarter 2011.

ERISA LITIGATION A hearing on final approval of the settlement of the In re Wachovia Corporation ERISA Litigation is scheduled before the U.S. District Court for the Western District ofNorth Carolina on August 25, 2011.

A hearing on final approval ofthe settlement of Figas v. Wells Fargo & Company, ct al. is scheduled before the U.S. District Court for the District of Minnesota on July 21, 2011.

IN RE WELLS FARGO MORTGAGE-BACKED CERTIFICATES LITIGATION A hearing on plaintiffs' motion for class certification has been scheduled for June 23, 2011.

MORTGAGE FORECLOSURE DOCUMENT LITIGATION On March 29, 2011, Wells Fargo, along with other mortgage servicers, entered into a stipulation in connection with the action commenced by the New Jersey Supreme Court, the New Jersey Administrative Office of the Courts and the Superior Court of New Jersey for Mercer County providing for the appointment of a special master to review mortgage foreclosure affidavit processes.

MORTGAGE RELATED REGULATORY INVESTIGATIONS On March 31, 2011, Wells Fargo Bank, N.A. (the Bank) entered into a Consent Order with the Office ofthe Comptroller ofthe Currency (OCC) under which the OCC made certain findings in connection with the Bank's foreclosure practices, which findings the Bank neither admitted nor denied. The Bank agreed in the consent order, among other things, and subject to the OCC's approval (i) to establish a Compliance Committee to monitor and coordinate the Bank's compliance with the Consent Order; (ii) to create a comprehensive Action Plan describing the actions needed to achieve compliance with the Consent Order; (iii) to submit an acceptable compliance plan to ensure that its mortgage servicing and foreclosure operations, including loss mitigation and loan modification, comply with legal requirements, OCC supervisory guidance, and the terms of the Consent Order; (iv) to submit a plan to ensure appropriate controls and oversight of the Bank's activities with respect to the Mortgage Electronic Registration System; (v) to take certain other actions with respect to its mortgage servicing and foreclosure operations; and (vi) to conduct a foreclosure review through an independent consultant on certain residential foreclosure actions. On April 4, 2011, Wells Fargo & Company (Wells Fargo) entered into a Consent Order with the Board of Governors ofthe Federal Reserve pursuant to which Wells Fargo agreed, among other things, (i) to ensure the Bank's compliance with the OCC Consent Order; (ii) to develop for the Federal Reserve's approval a written plan to enhance its Enterprise Risk Management with respect to oversight of residential mortgage loan servicing; (iii) to develop for the Federal Reserve's approval a written plan to enhance its enterprise-wide compliance program with respect to oversight of residential mortgage loan

servicing; and (iv) to develop for the Federal Reserve's approval a written plan to enhance the internal audit program with respect to residential mortgage loan servicing. Neither Consent Order provided for civil money penalties but both government entities reserved the ability to seek such penalties and Wells Fargo reserved the ability to oppose the imposition of such penalties. In addition, as previously disclosed in our 2010 Form 10-K, other government agencies, including state attorneys general and the U.S. Department of Justice, continue to investigate various mortgage related practices ofthe Bank

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and other major mortgage servicers. Wells Fargo continues to cooperate with these investigations. These investigations could result in material fines, penalties, equitable remedies (including requiring default servicing or other process changes), or other enforcement actions, and result in significant legal costs in responding to governmental investigations and additional litigation.

WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION On March 31, 2011, the U.S. District Court for the Southern District of New York entered a Decision and Order granting Wachovia's motions to dismiss the In re Wachovia Equity Securities Litigation and the Stichting Pensioenfonds ABP, FC Holdings AB, Deka Investment GmbH and Forsta AP-Fonden cases. By the same Decision and Order, the Court granted in part and denied in part Wachovia's motion to dismiss the In re Wachovia Preferred Securities and Bond/Notes Litigation , allowing that case to go forward after limiting the number of offerings at issue.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end of the range of potential litigation losses in excess of the Company's best estimates within the range of potential losses used in establishing the total litigation liability was $1.7 billion as of March 31, 2011. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Wells Fargo & Company Note 11: Legal Actions As Presented in August 5,2011 10-Q

The following supplements and amends our discussion of certain matters previously reported in Item 3 (Legal Proceedings) of our 2010 Fonn 10-K, and Part IT, Item 1 (Legal Proceedings) of our 2011 first quarter Quarterly Report on Form 10-Q for events occurring in second quarter 2011.

ELAVON LITIGATION On May 23, 2011, the Court entered an order granting plaintiffs motion for partial summary judgment and denying Wells Fargo's motion for partial summary judgment, ruling that Wells Fargo's termination of the contract at issue was invalid and dismissing several of Wells Fargo's affirmative defenses. The Court has set a trial date of the remaining issues for September 21, 2011.

ERISA LITIGATION The U.S. District Court for the District of Minnesota is considering final approval ofthe $17.5 million settlement in Figas v. Wells Fargo & Company, et al.

IN RE WELLS FARGO MORTGAGE-BACKED CERTIFICATES LITIGATION On May 27, 2011, Wells Fargo and the plaintiffs agreed to settle the matter captioned In re Wells Fargo Mortgage-Backed Securities Litigation for $125 million. On July 26, 2011, the Court entered an order preliminarily approving the settlement.

On April 20, 2011, a case captioned Federal Home Loan of Boston v. Ally Financial, Inc., et al., was filed in the Superior Court ofthe Commonwealth of Massachusetts for the County of Suffolk. The case names, among a large number of parties, Wells Fargo & Company, Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, National Association as parties and contains allegations substantially similar to the cases filed by the other Federal Home Loan Banks.

On April 28, 2011, a case captioned The Union Central Life Insurance Company, et al. v. Credit Suisse First Boston Securities Corp., et al., was filed in the U.S. District Court for the Southern District of New York. Among other defendants, it names Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, National Association. The case asserts various state law fraud claims and claims for violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of three insurance companies, relating to offerings of mortgage-backed securities from 2005 through 2007.

In addition, there are other cases involving other issuers of mortgage-backed certificates where Wells Fargo may have indemnity obligations because the pools of mortgages backing the certificates contain mortgages originated by Wells Fargo.

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MORTGAGE RELATED REGULATORY INVESTIGATIONS On March 31, 2011, Wells Fargo Bank, N.A. (the Bank) entered into a Consent Order with the Office of the Comptroller of the Currency (OCC) under which the OCC made certain findings in connection with the Bank's foreclosure practices, which findings the Bank neither admitted nor denied. The Bank agreed in the consent order, among other things, and subject to the OCC's approval (i) to establish a Compliance Committee to monitor and coordinate the Bank's compliance with the Consent Order;

1. to create a comprehensive Action Plan describing the actions needed to achieve compliance with the Consent Order;
2. to submit an acceptable compliance plan to ensure that its mortgage servicing and foreclosure operations, including loss mitigation and loan modification, comply with legal requirements, OCC supervisory guidance, and the terms ofthe Consent Order; (iv) to submit a plan to ensure appropriate controls and oversight ofthe Bank's activities with respect to the Mortgage Electronic Registration System; (v) to take certain other actions with respect to its mortgage servicing and foreclosure operations; and (vi) to conduct a foreclosure review through an independent consultant on certain residential foreclosure actions. On April 4, 2011, Wells Fargo & Company (Wells Fargo) entered into a Consent Order with the Board of Governors of the Federal Reserve pursuant to which Wells Fargo agreed, among other things, (i) to ensure the Bank's compliance with the OCC Consent Order; (ii) to develop for the Federal Reserve's approval a written plan to enhance its Enterprise Risk Management with respect to oversight of residential mortgage loan servicing; (iii) to develop for the Federal Reserve's approval a written plan to enhance its enterprise-wide compliance program with respect to oversight of residential mortgage loan servicing; and (iv) to develop for the Federal Reserve's approval a written plan to enhance the internal audit program with respect to residential mortgage loan servicing. Neither Consent Order provided for civil money penalties but both government entities reserved the ability to seek such penalties and Wells Fargo reserved the ability to oppose the imposition of such penalties.

On July 20, 2011, Wells Fargo & Company and Wells Fargo Financial, Inc. entered into an Order to Cease and Desist and Order of Assessment of a Civil Money Penalty Issued Upon Consent (the "Order") with the Board of Governors of the Federal Reserve System (FRB) which resolved an investigation of Wells Fargo Financial's mortgage lending activities by the FRB. The Order provides, among other things, that (i) Wells Fargo shall submit to the FRB within 90 days of the Order a plan, acceptable to the FRB, for overseeing fraud prevention and detection and for compliance with certain federal and state laws applicable to unfair and deceptive practices and certain other laws applicable to mortgage lending; (ii) Wells Fargo shall submit to the FRB within 90 days of the Order a plan, acceptable to the FRB, for overseeing the implementation and modification of incentive compensation and performance management programs for sales, sales management and underwriting personnel with respect to mortgage lending within the Wells Fargo organization; (iii) Wells Fargo shall submit within 90 days of the Order a plan, acceptable to the FRB, for the remediation to borrowers who entered into loans with Wells Fargo Financial beginning January 1, 2004 through September 2008 where the loans were based on income documents that were altered or falsified by sales personnel; (iv) Wells Fargo shall submit within 90 days ofthe Order a plan, acceptable to the FRB, for the remediation to borrowers who received mortgage loans through Wells Fargo Financial at non-prime prices during the period from January 1, 2006 through September 2008 but whose mortgage loans may have qualified for prime pricing. In addition to these provisions to submit plans for compliance and compensation changes and for remediation payments to certain Wells Fargo Financial borrowers, the Order imposes a civil money penalty of $85 million on Wells Fargo.

Other government agencies, including state attorneys general and the U.S. Department of Justice, continue to investigate various mortgage related practices of the Bank. These investigations could result in material fines, penalties, equitable remedies (including requiring default servicing or other process changes), or other enforcement actions, and result in significant legal costs in responding to governmental investigations and additional litigation.

WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION The plaintiffs in the In re Wachovia Equity Securities Litigation and the Stichting Pensioenfords ABP, FC Holdings AB, Deka Investments GmbH and Forsta AP-Fonden cases have appealed the March 31, 2011 Decision and Order dismissing their cases.

Wells Fargo and the plaintiffs have agreed in principle to settle the In re Wachovia Preferred Securities and Bond/Notes Litigation for $590 million. The proposed settlement is subject to Court approval. The proposed settlement amount has been reflected in Wells Fargo's financial statements and will not have a material adverse effect on Wells Fargo's consolidated financial position.

OUTLOOK The Company establishes a liability for contingent litigation losses when it determines that a potential loss is both probable and estimable. In addition, for significant matters, the Company determines a range of potential loss that is

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reasonably possible. The high end ofthe range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was Si.6 billion as of June 30, 2011. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, il is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

WELLS FARGO & COMPANY FORM 10-Q

For the quarterly period ended September 30, 2011 Note 11: Legal Actions

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our Annual Report on Form 10-K for the year ended December 31, 2010 and in Part II , Item 1 (Legal Proceedings) of our Quarterly Reports on Form 10-Q for the periods ended March 31, 2011 and June 30,2011.

ELAVON LITIGATION The parties have agreed to settle the case. Payment will occur upon final documentation ofthe settlement. The settlement was accounted for in prior periods and will not have an adverse effect on the Company's consolidated financial position.

ERISA LITIGATION The U.S. District Court for the District of Minnesota granted final approval ofthe $17.5 million settlement in Figas v. Wells Fargo & Company, et al, on August 9, 2011.

The U. S. District Court for the Western District ofNorth Carolina granted final approval of the $12.4 million settlement in In re Wachovia Corporation ERISA Litigation on October 24, 2011.

ILLINOIS ATTORNEY GENERAL LITIGATION On October 26, 2011 the Illinois Court issued an order granting, in part, and denying, in part, Wells Fargo's motion to dismiss. The Court dismissed Wells Fargo & Company as a party and dismissed Count III of the complaint, which alleged violations of the Illinois Fair Lending Act. The Court denied the remainder ofthe motion to dismiss.

IN RE WELLS FARGO MORTGAGE-BACKED CERTIFICATES LITIGATION On May 27, 2011, Wells Fargo and the plaintiffs agreed to settle the matter captioned In re Wells Fargo Mortgage-Backed Securities Litigation for $125 million. On July 26, 2011, the Court entered an order preliminarily approving the settlement. The hearing on final approval ofthe settlement took place on October 27, 2011, and we await the Court's ruling. Some class members have opted out ofthe settlement, with the most significant being the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and American International Group, Inc.

On April 20, 2011, a case captioned Federal Home Loan of Boston v. Ally Financial, Inc., et al, was filed in the Superior Court ofthe Commonwealth of Massachusetts for the County of Suffolk. The case names, among a large number of parties, Wells Fargo & Company, Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, National Association as parties and contains allegations substantially similar to the cases filed by the other Federal Home Loan Banks.

On April 28, 2011, a case captioned The Union Central Life Insurance Company, et al. v. Credit Suisse First Boston Securities Corp., et al, was filed in the U.S. District Court for the Southern District of New York. Among other defendants, it names Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, National Association. The case asserts various state law fraud claims and claims for violations of sections 10(b) and 20(a) ofthe Securities Exchange Act of 1934 on behalf of three insurance companies, relating to offerings of mortgage-backed securities from 2005 through 2007.

In addition, there are other cases involving other issuers of mortgage-backed certificates where Wells Fargo may have indemnity obligations because the pools of mortgages backing the certificates contain mortgages originated by Wells Fargo.

LE-NATURE'S, INC. The Le-Nature's cases have settled for the total sum of $95 million. The settlement was accounted for in prior periods and payment did not have an adverse effect on Wells Fargo's consolidated financial position.

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MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request of the Securities and Exchange Commission in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages.

The actions have been consolidated in the United States District Court for the Central District of California. On July 26, 2011, the District Court certified a class consisting of holders of notes issued by affiliates of Medical Capital Corporation and, on October 18, 2011, the Ninth Circuit Court of Appeals denied a petition seeking to appeal the class certification order.

MUNICIPAL DERIVATIVES BID PRACTICES INVESTIGATION The plaintiffs and Wells Fargo agreed to settle the In re Municipal Derivatives Antitrust Litigation on October 21, 2011. The settlement is subject to court approval and, if approved, will result in Wells Fargo paying an amount equal to the greater of $37 million or 65% ofthe restitution amount of a future settlement, if any, with the various state Attorneys General of their investigation of Wachovia.

OUTLOOK The Company establishes a liability for contingent litigation losses when it determines that a potential loss is both probable and estimable. In addition, for significant matters, the Company determines a range of potential loss that is reasonably possible. The high end ofthe range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.6 billion as of September 30, 2011. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess ofthe established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position.

Note 15: Legal Actions (Annual Report 201T) - as presented in 10-K issued 2/28/2012

Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct of our business activities. These proceedings include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.

Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and we intend to defend vigorously each case, other than matters we describe as having settled. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

ILLINOIS ATTORNEY GENERAL LITIGATION On July 31, 2009, the Attorney General for the State oflllinois filed a civil lawsuit against Wells Fargo & Company, Wells Fargo Bank, N.A. and Wells Fargo Financial Illinois, Inc. in the Circuit Court for Cook County, Illinois. The Illinois Attorney General alleges that the Wells Fargo defendants engaged in illegal discrimination by "reverse redlining" and by steering African-American and Latino customers into high cost, subprime mortgage loans while other borrowers with similar incomes received lower cost mortgages. Illinois also alleges that Wells Fargo Financial Illinois, Inc. misled Illinois customers about the terms of mortgage loans. Illinois' complaint against all Wells Fargo defendants is based on alleged violation of the Illinois Human Rights Act and the Illinois Fairness in Lending Act. The complaint also alleges that Wells Fargo Financial Illinois, Inc. violated the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Uniform Deceptive Trade Practices Act. Illinois' complaint seeks an injunction against the defendants' alleged violation of these Illinois statutes, restitution to consumers and civil money penalties. On October 26, 2011, the Illinois Court issued an order granting, in part, and denying, in part, Wells Fargo's motion to dismiss. The Court dismissed Wells Fargo & Company as a party and dismissed Count III ofthe complaint, which alleged violations of the Illinois Fair Lending Act. The Court denied the remainder ofthe motion to dismiss.

INTERCHANGE LITIGATION Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation arc named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and in individual actions brought by individual merchants with regard to the interchange fees associated

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with Visa and MasterCard payment card transactions. These actions have been consolidated in the United States District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies are named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request of the Securities and Exchange Commission (SEC) in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. The actions have been consolidated in the United States District Court for the Central District of California. On July 26, 2011, the District Court certified a class consisting of holders of notes issued by affiliates of Medical Capital Corporation and, on October 18, 2011, the Ninth Circuit Court of Appeals denied a petition seeking to appeal the class certification order.

MORTGAGE-BACKED CERTIFICATES LITIGATION Several securities law based putative class actions were consolidated in the U.S. District Court for the Northern District of California on July 16, 2009, under the caption In re Wells Fargo Mortgage-Backed Certificates Litigation. The case asserted claims against several Wells Fargo mortgage backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs alleged that the offering documents contain untrue statements of material fact, or omit to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The parties agreed to settle the case on May 27, 2011, for $125 million. Final approval of the settlement was entered on November 14, 2011. Some class members opted out ofthe settlement, with the most significant being the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and American International Group, Inc.

On June 29, 2010, and on July 15, 2010, two complaints, the first captioned The Charles Schwab Corporation vs. Merrill Lynch, Pierce, Fenner& Smith, Inc., et al., and the second captioned The Charles Schwab Corporation v. BNP Paribas Securities Corp., ct al., were filed in the Superior Court for the State of California, San Francisco County against a number of defendants, including Wells Fargo Bank, N.A. and Wells Fargo Asset Securities Corporation. As against the Wells Fargo entities, the new cases assert opt out claims relating to the claims alleged in the Mortgage-Backed Certificates Litigation.

On October 15, 2010, three actions, captioned Federal Home Loan Bank of Chicago v. Banc of America Funding Corporation, ct al. (filed in the Cook County Circuit Court, State oflllinois); Federal Home Loan Bank of Chicago v. Banc of America Securities LLC, et al. (filed in the Superior Court of the State of California for the County of Los Angeles); and Federal Home Loan Bank of Indianapolis v. Banc of America Mortgage America Securities, Inc., et al. (filed in the Superior Court of the State of Indiana for the County of Marion), named multiple defendants, described as issuers/depositors, and underwriters/dealers of private label mortgage-backed securities, in an action asserting claims that defendants used false and misleading statements in offering documents for the sale of such securities. The Bank of Chicago asserts that it purchased approximately $4.2 billion and the Bank of Indianapolis asserts that it purchased nearly $3 billion of such securities from the defendants. Plaintiffs seek rescission of the sales and damages under state securities and other laws and Section 11 ofthe Securities Act of 1933. Wells Fargo Asset Securities Corporation, Wells Fargo Bank, N.A. and Wells Fargo & Company were named among the defendants.

On April 20, 2011, a case captioned Federal Home Loan of Boston v. Ally Financial, Inc., et al., was filed in the Superior Court of the Commonwealth of Massachusetts for the County of Suffolk. The case names, among a large number of parties, Wells Fargo & Company, Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N.A. as parties and contains allegations substantially similar to the cases filed by the other Federal Home Loan Banks.

On April 28, 2011, a case captioned The Union Central Life Insurance Company, et al. v. Credit Suisse First Boston Securities Corp., ct al., was filed in the U.S. District Court for the Southern District of New York. Among other defendants, it names Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N.A. The case asserts various

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state law fraud claims and claims for violations of Sections 10(b) and 20(a) ofthe Securities Exchange Act of 1934 on behalf of three insurance companies, relating to offerings of mortgage-backed securities from 2005 through 2007.

In addition, there are other mortgage-related threatened or asserted claims by entities or investors where Wells Fargo may have indemnity or repurchase obligations, or as to which it has entered into agreements to toll the relevant statutes of limitations.

MORTGAGE FORECLOSURE DOCUMENT LITIGATION Eight purported class actions and several individual borrower actions related to foreclosure document practices were filed in late 2010 and in early 2011 against Wells Fargo Bank, N.A. in its status as mortgage servicer or corporate trustee of mortgage trusts. The cases have been brought in state and federal courts. Five ofthe class actions have been dismissed or otherwise resolved. Ofthe individual borrower cases, the majority are filed in state courts in California and Ohio. The actions generally claim that Wells Fargo submitted "fraudulent" or "untruthful" affidavits or other foreclosure documents to courts to support foreclosures filed in the state. Specifically, plaintiffs allege that Wells Fargo signers did not have personal knowledge of the facts alleged in the documents and did not verify the information in the documents ultimately filed with courts to foreclose. Plaintiffs attempt to state legal claims ranging from wrongful foreclosure lo deceptive practices or fraud and seek relief ranging from cancellation of notes and mortgages to money damages.

MORTGAGE RELATED REGULATORY INVESTIGATIONS On April 13, 2011, Wells Fargo Bank, N.A. entered into a Consent Order with the OCC and Wells Fargo & Company entered into a Consent Order with the Board of Governors of the Federal Reserve System in connection with Wells Fargo's mortgage foreclosure practices. The Consent Orders require Wells Fargo to develop and implement certain compliance programs and to take other remedial steps, which Wells Fargo is doing. On February 9, 2012, the OCC and Federal Reserve announced that they had also imposed civil money penalties of S83 million and $85 million, respectively, related to 1he Consent Orders. These penalties will be satisfied through payments made under a separate simultaneous settlement in principle, announced on the same day, among the Department of Justice (DOJ), a task force of Attorneys General from 49 states, other government entities, Wells Fargo and four other mortgage servicers related to mortgage servicing and foreclosure practices. Under the settlement in principle, Wells Fargo agreed to the following commitments, comprised of three components totaling $5.3 billion:

Consumer Relief Program For qualified borrowers with financial hardship and a loan owned and serviced by Wells Fargo, a commitment to provide $3.4 billion in aggregate consumer relief and assistance programs, including expanded first and second mortgage modifications that broaden the use of principal reduction to help customers achieve affordability, an expanded short sale program that includes waivers of deficiency balances, forgiveness of arrearages for unemployed borrowers, cash-for-keys payments to borrowers who voluntarily vacate properties, and "anti-blight" provisions designed to reduce the impact on communities of vacant properties. As of December 31, 2011, the expected impact ofthe Consumer Relief Program was covered in our allowance for credit losses and in the nonaccretable difference relating to our purchased credit-impaired residential mortgage portfolio.

Refinance Program For qualified borrowers with little or negative equity in their home and a loan owned and serviced by Wells Fargo, an expanded first-lien refinance program commitment estimated to provide $900 million of aggregate payment relief over the life of the refinanced loans. The Refinance Program will not result in any current-period charge as its impact will be recognized over a period of years in the form of lower interest income as qualified borrowers benefit from reduced interest rates on loans refinanced under the program.

Foreclosure Assistance Payment $1 billion paid directly to the federal government and the participating states for their use to address the impact of foreclosure challenges as they see fit and which may include direct payments to consumers. As of December 31, 2011, we had fully accrued for the Foreclosure Assistance Payment.

Government agencies continue investigations or examinations of other mortgage related practices of Wells Fargo. The investigations relate to two main topics, (1) whether Wells Fargo may have violated fair lending or other laws and regulations relating to mortgage origination practices; and (2) whether Wells Fargo properly disclosed in offering documents for its residential mortgage-backed securities the facts and risks associated with those securities. Wells Fargo has received a Wells notice from SEC staff relating to Wells Fargo's disclosures in mortgage-backed securities offering documents. Wells Fargo continues to provide information requested by the various agencies in connection with certain investigations.

MUNICIPAL DERIVATIVES BID PRACTICES INVESTIGATION The DOJ and the SEC, beginning in November 2006, requested information from a number of financial institutions, including Wachovia Bank, N.A.'s municipal derivatives group, with regard to competitive bid practices in the municipal derivative markets. Other state and federal

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agencies subsequently also began investigations ofthe same practices. On December 8, 2011, a global resolution ofthe Wachovia Bank investigations was announced by DOJ, the Internal Revenue Service, the SEC, the OCC and a group of State Attorneys General. The investigations were settled with Wachovia Bank agreeing to pay a total of approximately $148 million in penalties and remediation to the various agencies.

Wachovia Bank, along with a number of other banks and financial services companies, was named as a defendant in a number of substantially identical purported class actions and individual actions filed in various state and federal courts by various municipalities alleging they have been damaged by the activity which is the subject of the government investigations. These cases were cither consolidated under the caption In re Municipal Derivatives Antitrust Litigation or administered jointly with that action in the U.S. District Court for the Southern District of New York. The plaintiffs and Wells Fargo agreed to settle the In re Municipal Derivatives Antitrust Litigation on October 21, 2011. The settlement is subject to court approval and, if finally approved, will result in Wells Fargo paying the amount of $37 million. The settlement was preliminarily approved on December 27, 2011.

ORDER OF POSTING LITIGATION A series of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the Banks post debit card transactions to consumer deposit accounts. There are currently several such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), most of which have been consolidated in multidistrict litigation proceedings in the U.S. District Court for the Southern District of Florida. The bank defendants moved to compel these cases to arbitration under recent Supreme Court authority. On November 22, 2011, the Judge denied the motion. The Banks have appealed the decision to the U.S. Court of Appeals for the Eleventh Circuit.

On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., a case that was not consolidated in the multi-district proceedings, enjoining the Bank's use ofthe high to low posting method for debit card transactions with respect to the plaintiff class of California depositors, directing that the Bank establish a different posting methodology and ordering remediation of approximately $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. On October 28, 2010, Wells Fargo appealed to the U.S. Court of Appeals for the Ninth Circuit.

WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION A securities class action, now captioned In re Wachovia Equity Securities Litigation, has been pending under various names since July 7, 2008, in the U.S. District Court for the Southern District of New York alleging violations of Sections 10(b) and 20(a) ofthe Securities Exchange Act of 1934. Among other allegations, plaintiffs allege Wachovia's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. mortgage portfolio, Wachovia's exposure to other mortgage related products such as CDOs, control issues and auction rate securities. There are four additional cases (not class actions) containing allegations similar to the allegations in the In re Wachovia Equity Securities Litigation captioned Stichting Pensioenfonds ABP v. Wachovia Corp. et al., FC Holdings AB, et al. v. Wachovia Corp., et al., Deka Investment GmbH v. Wachovia Corp. et al. and Forsta AP-Fonden v. Wachovia Corp., et al. , respectively, which were filed in the U.S. District Court for the Southern District of New York. On March 31, 2011, the U.S. District Court for the Southern District of New York entered a Decision and Order granting Wachovia's motions to dismiss the In re Wachovia Equity Securities Litigation and the Stichting Pensioenfonds ABP, FC Holdings AB, Deka Investment GmbH and Forsta AJP-Fonden cases. Plaintiffs and Wells Fargo have agreed to settle the Equity Securities Litigation for $75 million and on January 27, 2012, the Court entered an order preliminarily approving the settlement. A fairness hearing on final approval ofthe settlement is scheduled for June 1, 2012.

After a number of procedural motions, three purported class action cases alleging violations of Sections 11, 12, and 15 of the Securities Act of 1933 as a result of allegedly misleading disclosures relating to the Golden West mortgage portfolio in connection with Wachovia's issuance of various preferred securities and bonds were transferred to the U.S. District Court for the Southern District of New York. A consolidated class action complaint was filed on September 4, 2009, and the matter was captioned In Re Wachovia Preferred Securities and Bond/Notes Litigation. On March 31, 2011, by the same Decision and Order referenced above, the court also granted in part and denied in part Wachovia's motion to dismiss the In re Wachovia Preferred Securities and Bond/Notes Litigation , allowing that case to go forward after limiting the number of offerings at issue. Wells Fargo and the plaintiffs agreed to settle the In re Wachovia Preferred Securities and Bond/Notes Litigation for $590 million. The proposed settlement was preliminarily approved by the Court on August 9, 2011. The hearing on final approval was held on November 14, 2011, and a judgment approving class action settlements was filed on January 3,2012.

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There are a number of other similar actions filed in state courts in North Carolina and South Carolina by individual shareholders. Two ofthe individual shareholder actions in South Carolina have been dismissed and the shareholders have appealed. On December 22, 2011, the dismissal of the Rivers v. Wachovia Corporation, et al. case, one ofthe two South Carolina actions, was affirmed by the U.S. Court of Appeals for the Fourth Circuit.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end ofthe range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.2 billion as of December 31, 2011. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Form 10-Q

WELLS FARGO & COMPANY/MN - WFC

Filed: May 08, 2012 (period: March 31, 2012)

Note 11: Legal Actions

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2011 Form 10-K for events occurring in first quarter 2012.

MORTGAGE-BACKED CERTIFICATES LITIGATION On April 28,201 ], a case captioned The Union Central Life Insurance Company, et al. v. Credit Suisse First Boston Securities Corp., et al., was filed in the U.S. District Court for the Southern District of New York. Among other defendants, it names Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N.A. The case asserts various state law fraud claims and claims for violations of Sections 10(b) and 20(a) ofthe Securities Exchange Act of 1934 on behalf of three insurance companies, relating to offerings of mortgage-backed securities from 2005 through 2007. In February 2012, the plaintiffs and Wells Fargo agreed to a settlement in principle of claims against the Wells Fargo entities and are in the process of documenting that settlement.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Government agencies continue investigations or examinations of other mortgage related practices of Wells Fargo. The investigations relate to two main topics: (1) whether Wells Fargo may have violated fair lending or other laws and regulations relating to mortgage origination practices; and (2) whether Wells Fargo properly disclosed in offering documents for its residential mortgage-backed securities the facts and risks associated with those securities. With respect to (1), the Department of Justice has advised Wells Fargo that it believes it can bring claims againsl Wells Fargo for monetary damages and civil penalties under fair lending laws. We believe such claims should not be brought and continue seeking to demonstrate to the Department of Justice our compliance with fair lending laws.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end of the range of reasonably possible potential litigation losses in excess of the Company's liability for probable and estimable losses was $927 million as of March 31, 2012. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess ofthe established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

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Form 10-Q

WELLS FARGO & COMPANY/WIN - WFC

Note 11: Legal Actions 10-Q Filed August 7,2012 (period: June 30,2012)

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2011 Form 10-K, for events occurring in first quarter 2012, and Part 11, Item 1 (Legal Proceedings) of our 2012 first quarter Quarterly Report on Form 10-Q for events occurring in second quarter 2012.

ILLINOIS ATTORNEY GENERAL LITIGATION On July 31, 2009, the Attorney General for the State oflllinois filed a civil lawsuit against Wells Fargo & Company, Wells Fargo Bank, N.A. and Wells Fargo Financial Illinois, Inc. in the Circuit Court for Cook County, Illinois. The Illinois Attorney General alleges that the Wells Fargo defendants engaged in discrimination by "reverse redlining" and by steering African-American and Latino customers into high cost, subprime mortgage loans while other borrowers with similar incomes received lower cost mortgages. Illinois also alleges that Wells Fargo Financial Illinois, Inc. misled Illinois customers about the terms of mortgage loans. Illinois' complaint against all Wells Fargo defendants is based on alleged violation of the Illinois Human Rights Act and the Illinois Fairness in Lending Act. On July 12, 2012, the case was resolved by entry of a Final Judgment and Consent Decree by the Circuit Court. The resolution calls for Illinois to receive $8 million in victim relief and certain community assistance as provided for in a settlement with the Civil Rights Division of the Department of Justice (DOJ) described in more detail in the Mortgage Related Regulatory Investigations section below.

INTERCHANGE LITIGATION Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation are named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and in individual actions brought by individual merchants with regard to the interchange fees associated with Visa and MasterCard payment card transactions. These actions have been consolidated in the United States District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies are named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13, 2012, Visa, MasterCard and the financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants to resolve the consolidated class actions and reached a separate settlement in principle of the consolidated individual actions. The proposed settlement payments for the consolidated class and individual actions are approximately $6.6 billion. The class settlement also provides for the distribution to class merchants of 10 basis points of default interchange across all credit rate categories for a period of eight consecutive months. The settlements are subject to further approval.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request ofthe Securities and Exchange Commission (SEC) in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. The actions have been consolidated in the United States District Court for the Central District of California. Wells Fargo has reached a conditional settlement in principle with the receiver for Medical Capital Corporation and its affiliates.

MORTGAGE-BACKED CERTIFICATES LITIGATION On April 28, 2011, a case captioned The Union Central Life Insurance Company, et al. v. Credit Suisse First Boston Securities Corp., et al., was filed in the U.S. District Court for the Southern District of New York. Among other defendants, it named Wells Fargo Asset Securities Corporation and Wells Fargo Bank, N.A. The case asserted various state law fraud claims and claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of three insurance companies, relating to offerings of mortgage-backed securities from 2005 through 2007. In June 2012, the plaintiffs and Wells Fargo entered into a final settlement agreement and the claims against Wells Fargo were voluntarily dismissed with prejudice.

On April 20, 2011, a case captioned Federal Home Loan of Boston v. Ally Financial, Inc., el al, was filed in the Superior Court ofthe Commonwealth of Massachusetts for the County of Suffolk. The complaint names, among a large

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number of defendants, Wells Fargo & Company, Wells Fargo Asset Securities Corporation, and Wells Fargo Bank, N.A., and contains allegations substantially similar to the cases filed by the other Federal Home Loan Banks. Plaintiffs seek rescission of the sales of private label mortgage-backed securities and damages under state securities and other laws. Defendants removed the case to the U. S. District Court for the District of Massachusetts.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Government agencies and authorities continue investigations or examinations of certain mortgage related practices of Wells Fargo. The current investigations relate to two main topics: (1) whether Wells Fargo complied with laws and regulations relating to mortgage origination practices, including laws and regulations related to fair lending and Federal Housing Administration insured residential home loans; and (2) whether Wells Fargo properly disclosed in offering documents for its residential mortgage-backed securities the facts and risks associated with those securities. On July 12, 2012, the DOJ filed a complaint captioned United States of America v. Wells Fargo Bank, N.A. in the U.S. District Court for the District of Columbia. The complaint alleged violations of the Fair Housing Act and the Equal Credit Opportunity Act (ECOA) with respect to Wells Fargo's residential mortgage lending operations during the period 2004 - 2008. Simultaneously with the filing of the complaint, a Consent Decree executed between the DOJ and Wells Fargo was filed providing for a consensual resolution ofthe complaint. In the Consent Decree, Wells Fargo denied that it had violated the Fair Housing Act or ECOA, but agreed to resolve the matter by paying $125 million in connection with pricing and product placement allegations primarily relating to mortgages priced and sold to consumers by third party brokers through the Wholesale Division of Wells Fargo Home Mortgage. In addition, Wells Fargo agreed to pay $50 million to fund a community support program in approximately eight cities or metropolitan statistical areas, with details yet to be agreed upon between the DOJ and Wells Fargo. Wells Fargo also agreed to undertake an internal lending compliance review of a small percentage of subprime mortgages delivered through its Retail channel during the period 2004 - 2008 and will rebate to borrowers as appropriate. Ofthe $125 million, $8 million and $2 million are specifically allocated to Illinois and Pennsylvania, respectively, to resolve matters in those states.

SECURITIES LENDING LITIGATION Wells Fargo Bank, N.A. is involved in ten separate pending actions brought by securities lending customers of Wells Fargo and Wachovia Bank in various courts. In general, each ofthe cases alleges that Wells Fargo violated fiduciary and contractual duties by investing collateral for loaned securities in investments that suffered losses. One case, brought by the City of St. Petersburg in the U.S. District Court for the Middle District of Florida, resulted in an April 2012 verdict against Wells Fargo in the amount of $10 million plus interest. Wells Fargo has filed post-trial motions to set aside the verdict. In addition, on March 27, 2012, a class of Wells Fargo securities lending customers was certified in a case captioned City of Farmington Hills Employees Retirement System v. Wells Fargo Bank, N.A., which is pending in the U.S. District Court for the District of Minnesota. Wells Fargo sought interlocutory review of the class certification in the U.S. Court of Appeals for the Eighth Circuit. The Eighth Circuit declined such review on May 7, 2012.

WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION A securities class action, now captioned In rc Wachovia Equity Securities Litigation, has been pending under various names since July 7, 2008, in the U.S. District Court for the Southern District of New York alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Among other allegations, plaintiffs allege Wachovia's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. mortgage portfolio, Wachovia's exposure to other mortgage related products such as CDOs, control issues and auction rate securities. On March 31, 2011, the U.S. District Court for the Southern District of New York entered a Decision and Order granting Wachovia's motions to dismiss the In re Wachovia Equity Securities Litigation and the Stichting Pensioenfonds ABP, FC Holdings AB, Deka Investment GmbH and Forsta AP-Fonden cases. Plaintiffs and Wells Fargo have agreed to settle the Equity Securities Litigation for $75 million and on January 27, 2012, the Court entered an order preliminarily approving the settlement. On June 12, 2012, an Order finally approving the class action settlement was entered.

There were four similar actions filed in state courts in North Carolina and South Carolina by individual shareholders. Three of these individual shareholder actions have been finally dismissed and the dismissal ofthe fourth is on appeal.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount il considers to be the best estimate within the range. The high end of the range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.2 billion as of June 30, 2012. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells

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Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Note 11: Legal Actions 10-Q Period ending September 30,2012 - Filed November 6,2012

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2011 Form 10-K, and Part II, Item 1 (Legal Proceedings) of our 2012 first and second quarter Quarterly Reports on Form 10-Q for events occurring in third quarter 2012.

FHA INSURANCE LITIGATION On October 9, 2012, the United States filed a complaint, captioned United States of America v. Wells Fargo Bank, N.A. , in the U.S. District Court for the Southern District of New York. The complaint makes claims with respect to Wells Fargo's FHA lending program for the period 2001 to 2010. The complaint alleges, among other allegations, that Wells Fargo improperly certified certain FHA mortgage loans for FHA insurance that did not qualify for the program, and therefore Wells Fargo should not have received insurance proceeds from FHA when some of the loans later defaulted. The complaint further alleges Wells Fargo knew some of the mortgages did not qualify for insurance, and did not disclose the deficiencies to FHA before making insurance claims.

MORTGAGE FORECLOSURE DOCUMENT LITIGATION As previously disclosed, eight purported class actions and several individual borrower actions related to foreclosure document practices were filed in late 2010 and in early 2011 against Wells Fargo Bank, N.A. in its status as mortgage servicer or corporate trustee of mortgage trusts. Five of those cases had been previously dismissed or otherwise resolved. Two of the three remaining purported class actions were dismissed or otherwise resolved on October 3 and October 25, 2012. As a result, seven of the eight purported class actions have now been dismissed or otherwise resolved.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Government agencies and authorities continue investigations or examinations of certain mortgage related practices of Wells Fargo. The current investigations primarily relate to: (1) whether Wells Fargo complied with applicable laws, regulations and documentation requirements relating to mortgage origination and securitizations, including those at the former Wachovia Corporation; and (2) whether Wells Fargo properly disclosed in offering documents for its residential mortgage-backed securities the facts and risks associated with those securities. As previously disclosed, on July 12, 2012, the DOJ filed a complaint captioned United States of America v. Wells Fargo Bank, N.A. in the U.S. District Court for the District of Columbia. The complaint alleged violations ofthe Fair Housing Act and the Equal Credit Opportunity Act (ECOA) with respect to Wells Fargo's residential mortgage lending operations during the period 2004 - 2008. Simultaneously with the filing ofthe complaint, a Consent Decree executed between the DOJ and Wells Fargo was filed providing for a consensual resolution ofthe complaint. In the Consent Decree, Wells Fargo denied that it had violated the Fair Housing Act or ECOA, but agreed to resolve the matter by paying $125 million in connection with pricing and product placement allegations primarily relating to mortgages priced and sold to consumers by third party brokers through the Wholesale Division of Wells Fargo Home Mortgage. In addition, Wells Fargo agreed to pay $50 million to fund a community support program in approximately eight cities or metropolitan statistical areas, with details yet to be agreed upon between the DOJ and Wells Fargo. Wells Fargo also agreed to undertake an internal lending compliance review of a small percentage of subprime mortgages delivered through its Retail channel during the period 2004 - 2008 and will rebate to borrowers as appropriate. Ofthe $125 million, $8 million and $2 million are specifically allocated to Illinois and Pennsylvania, respectively, to resolve matters in those states. On September 20, 2012, the Court entered a Memorandum Opinion and Order approving and entering the Consent Order.

ORDER OF POSTING LITIGATION As previously disclosed, a series of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the Banks posted debit card transactions to consumer deposit accounts. There remain several such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), most of which have been consolidated in multi-district litigation proceedings in the U.S. District Court for the Southern District of Florida. The bank defendants moved to compel these cases to arbitration under recent Supreme Court authority. On November 22, 2011, the Judge denied the motion. On October 26, 2012, the U.S. Court of Appeals for the Eleventh Circuit affirmed the District Court's denial ofthe motion to compel arbitration.

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WACHOVIA EQUITY SECURITIES AND BONDS/NOTES LITIGATION As previously disclosed, a securities class action, now captioned In re Wachovia Equity Securities Litigation, had been pending under various names since July 7, 2008, in the U.S. District Court for the Southern District of New York alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Among other allegations, plaintiffs alleged Wachovia's common stock price was artificially inflated as a result of allegedly misleading disclosures relating to the Golden West Financial Corp. mortgage portfolio, Wachovia's exposure to other mortgage related products such as CDOs, control issues and auction rate securities. There were four additional cases (not class actions) containing allegations similar to the allegations in the In re Wachovia Equity Securities Litigation captioned Stichting Pensioenfonds ABP v. Wachovia Corp. et al., FC Holdings AB, et al. v. Wachovia Corp., et al., Deka Investment GmbH v. Wachovia Corp. et al. and Forsta AP-Fonden v. Wachovia Corp., et al. , respectively, which were filed in the U.S. District Court for the Southern District of New York. On March 31, 2011, the U.S. District Court for the Southern District of New York entered a Decision and Order granting Wachovia's motions to dismiss the In re Wachovia Equity Securities Litigation and the Stichting Pensioenfonds ABP, FC Holdings AB, Deka Investment GmbH and Forsta AP-Fonden cases and all of those cases have subsequently been resolved. Plaintiffs and Wells Fargo agreed to settle the Equity Securities Litigation for $75 million and on January 27, 2012, the Court entered an order preliminarily approving the settlement. On June 12, 2012, an Order finally approving the class action settlement was filed.

There were four previously disclosed individual actions, containing allegations similar to the main In re Wachovia Equity Securities Litigation matter, filed in state courts in North Carolina and South Carolina. All four of those cases have now been finally dismissed.

OUTLOOK: When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end of the range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.2 billion as of September 30, 2012. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Form 8-K Filed November 28, 2012 (period: November 20, 2012)

Mortgage Related Regulatory Investigations

Wells Fargo & Company (the "Company") previously disclosed the receipt of a Wells notice from the staff of the Securities and Exchange Commission (the "Commission") relating to the Company's disclosures in mortgage-backed securities offering documents. On November 20, 2012, the Company was notified by the Commission's staff that this investigation has been completed and the staff does not intend to recommend any enforcement action by the Commission.

Form 8-K

WELLS FARGO & COMPANY/MN - WEFGL Filed: December 21,2012 (period: December 17,2012)

TO:   ALL HOLDERS OF WELLS FARGO & COMPANY ("WELLS FARGO") COMMON STOCK AS OF DECEMBER 13,2012, WHO CONTINUE TO HOLD SUCH SHARES AS OF MARCH 5,2013 ("CURRENT WELLS FARGO SHAREHOLDERS")

PLEASE TAKE NOTICE that the parties have reached a proposed settlement to resolve the derivative claims asserted on behalf of Wells Fargo in Feucr v. Thompson et al., Civil Action No. 10-0279 YGR, Northern District of California, and Rogers v. Thompson et al., Civil Action No. 12-0203 YGR, Northern District of California, referred to collectively below as "the Derivative Actions." The proposed settlement also will resolve claims set forth in certain Demand Letters (as defined in

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the parties' Stipulation of Settlement). The claims asserted in the Derivative Actions, the Demand Letters, and certain other proceedings are collectively referred to as the "Released Claims."

PLEASE BE FURTHER ADVISED that pursuant to an Order ofthe United States District Court for the Northern District of California, a hearing will be held before the Honorable Yvonne Gonzalez Rogers, in Courtroom 5 ofthe United States Courthouse, 1301 Clay Street, Oakland, California, at 3:00 p.m., on March 5, 2013, to determine whether (i) the proposed settlement should be approved by the Court as fair, reasonable, and adequate; (ii) the Derivative Actions should be dismissed with prejudice; (iii) the individual defendants should be released from liability for any of the Released Claims; and (iv) the Court should award attorneys' fees and reimbursement of expenses for Plaintiffs' Counsel, and in what amount.

Plaintiffs' Counsel intend to apply to the Court for an award of attorneys' fees and expenses (the "Fee Application") in an amount not to exceed $2.5 million. Any attorneys'

NOTICE TO SHAREHOLDERS      NO. 10-CV-00279 YGR

NO. 12-CV-00203 YGR

fees and expenses awarded by the Court will be paid exclusively by Wells Fargo. The Fee Application will be filed with the Court by January 4, 2013, and available to Wells Fargo Shareholders by January 6, 2013. Wells Fargo has not agreed to any fee award and reserves the right to oppose the Fee Application, in whole or in part, regardless ofthe amount sought.

The proposed settlement obligates Wells Fargo's Board of Directors to implement certain governance improvements as more fully set forth in the Stipulation of Settlement. It does not involve the payment of any funds by the defendants to Wells Fargo or to any of the plaintiffs. You may obtain detailed information about the terms ofthe proposed settlement, including the Complaints, motions to dismiss, the Stipulation of Settlement, the Preliminary Approval Order, the Fee Application and other documents, as well as all papers to be submitted in connection with the final approval process—at the website www.WFWachoviaDerivativeScttlement.com, or by contacting Counsel for Plaintiffs at any ofthe addresses below.

If you are a Current Wells Fargo Shareholder, you may have certain rights in connection with the proposed settlement, including the right to object to any aspect of the settlement. Every objection must be in writing and contain: (i) your name, address and telephone number; (ii) the number of shares of Wells Fargo stock you currently hold, together with third-party documentary evidence, such as the most recent account statement, showing such share ownership; and (iii) a detailed statement of your objections to any matter before the Court and all grounds therefore, including any supporting documents to be considered by the Court. If you do not submit written objections TO BE RECEIVED NO LATER THAN February 15, 2013, you shall not be entitled to contest the proposed settlement or Fee Application unless otherwise ordered by the Court for good cause shown. All such objections must identify the case number and must be filed with the Court at:

Clerk of the Court United States District Court 1301 Clay Street Oakland, CA 94612

Form 8-K

WELLS FARGO & COMPANY/MN - WEFGL Filed: January 11, 2013 (period: January 11, 2013)

Independent Foreclosure Review Settlement

On January 7, 2013, the Company announced that, along with nine other mortgage servicers, it entered into settlement agreements with the Office ofthe Comptroller of the Currency (OCC) and the Federal Reserve Board (FRB) that would end their JJ-R programs created by Article VII of an April 2011 Interagency Consent Order and replace it with an accelerated remediation process.

In aggregate, the servicers have agreed to make direct, cash payments of $3.3 billion and to provide $5.2 billion in additional assistance, such as loan modifications, to consumers. Wells Fargo's portion ofthe cash settlement is $766 million, which is based on the proportionate share of Wells Fargo-serviced loans in the overall IFR population. Wells Fargo recorded a pre-tax charge of $644 million in fourth quarter 2012 to fully reserve for its cash payment portion ofthe settlement and additional remediation-related costs. The Company also committed an additional $1.2 billion to foreclosure prevention actions. This

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commitment did not result in any charge as the Company believes that this commitment is covered through the existing allowance for credit losses and the nonaccretable difference relating to the purchased credit-impaired loan portfolios. With this settlement, the Company will no longer incur costs associated with the independent foreclosure reviews, which had recently approximated $125 million per quarter for external consultants and additional staffing.

"In addition to the benefit to our customers, we arc very pleased to have put this legacy issue behind us and to have removed the future costs associated with independent foreclosure reviews," said Stumpf.

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Note 15: Legal Actions

Wells Fargo and certain of our subsidiaries arc involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from (he conduct of our business activities. These proceedings include actions brought against Wells Fargo and/or our subsidiaries with respect to coiporate related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.

Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe wc have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and wc inlend to defend vigorously each case, other than matters we describe as having settled. Reserves arc established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than lhc amounts reserved for those claims.

FHA INSURANCE LI TIGATION On October 9, 2012, the United States filed a complaint, captioned United Slates of America v. Wells Fargo Bank, AM., in the U.S. District Court for the Southern District of New YorJc. The complaint makes claims with respect lo Wells Fargo's Federal Housing Administration (FHA) lending program for the period 2001 to 2010. The complaint alleges, among other allegations, that Wells Fargo improperly certified certain FHA mortgage loans for United Slates Department of Housing and Urban Development (HUD) insurance that did not qualify for the program, and therefore Wells Fargo should not have received insurance proceeds from HUD when some ofthe loans later defaulted. The complaint further alleges Wells Fargo knew some of the mortgages did not qualify for insurance and did not disclose the deficiencies to HUD before making insurance claims. On December 1, 2012, Wells Fargo filed a motion in the U.S. District Court for the District of Columbia seeking to enforce a release of Wells Fargo given by the United States, which was denied on February 12,2013. On December 14, 2012, the United States filed an amended complaint. On January 16, 2013, Wells Fargo filed a motion in the Southern District of New York to dismiss the amended complaint.

INTERCHANGE LITIGATION Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation arc named as defendants, separately or in combination, in putative class actions filed on behalf of a plaintiff class of merchants and in individual actions brought by individual merchants with regard to the interchange fees associated with Visa and MasterCard payment card transactions. These actions have been consolidated in the U.S. District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies are named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws

and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants arc anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13, 2012, Visa, MasterCard and the financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants lo resolve the consolidated class actions and reached a separate settlement in principle ofthe consolidated individual actions. The proposed settlement payments by all defendants in the consolidated class and individual actions total approximately $6.6 billion. The class settlement also provides for the distribution to class merchants of 10 basis points of default interchange across all credit rate categories for a period of eight consecutive months. The Court has granted preliminary approval ofthe settlements. The settlements arc subject to further review and approval by the Court.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request ofthe Securities and Exchange Commission (SEC) in August 2009. Since September 2009,

Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. The actions have been consolidated in the U.S. District Court for the Central District of California. On July 26, 2011, the District Court certified a class consisting of holders of notes issued by affiliates of Medical Capital Corporation and, on October 18, 2011, the Ninth Circuit Court of Appeals denied a petition seeking to appeal the class certification order. A previously disclosed potential settlement of the case was not consummated and the case is in discovery.

MARYLAND MORTGAGE LENDING LITIGATION On

December 26, 2007, a class action complaint captioned Denise Mintei; et al., v. Wells Fargo Bank, N.A., et al, was filed in the U.S. District Court for the District of Maryland. The complaint alleges that Wells Fargo and others violated provisions of the Real Estate Settlement Procedures Act and other laws by conducting mortgage lending business improperly through a general partnership, Prosperity Mortgage Company. The complaint asserts that Prosperity Mortgage Company was not a legitimate affiliated business and instead operated to conceal Wells Fargo Bank, N.A.'s role in the loans at issue. A plaintiff class of borrowers who received a mortgage loan from Prosperity that was funded by Prosperity's line of credit with Wells Fargo Bank,

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Souim: WEUS FARGO 6 C0MPANY/MN. 10-K. February 21. 2013

niu Irifonnjtlon contained herein may not be copied, adapted er distributed ami Is not wananied lo be eccutatc complete er timely The user assumes all risks tor any damages or losses arising Irom tiny use of Hits Information, exrepj lo the extern such damages or losses cannot be limned or excluded by applicable laiv. Past financial pcrloitnanco is no guarantee ot future results.

Note 15: Legal Actions (continued)

N.A. from 1993 to May 31, 2012 has been certified. The Court has scheduled a trial in this case for May 6, 2013. A second, related case is also pending in the same Court. On July 8, 2008, a class action complaint captioned Staccy and Bradley Petty, et al., v. (Yells Fargo Bank, N.A., et al., was filed. The complaint alleges that Wells Fargo and others violated the Maryland Finder's Fee Act in the closing of mortgage loans in Maryland. The Court certified a plaintiff class of borrowers whose loans are secured by Maryland real property, which loans showed Prosperity Mortgage Company as the lender receiving a fee for services, and were funded through a Wells Fargo line of credit to Prosperity from 1993 to May 31, 2012. The Court has scheduled a trial in this case for March 18, 2013.

MORTGAGE-BACKED CERTIFICATES LITIGATION Several securities law based putative class actions were consolidated in the U.S. District Court for the Northern District of California on July 16, 2009, under the caption In re Wells Fargo Mortgage-Backed Certificates Litigation. The case asserted claims against several Wells Fargo mortgage backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs alleged that the offering documents contain untrue statements of material fact, or omit to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The parties agreed to settle the case on May 27, 2011, for $125 million. Final approval ofthe settlement was entered on November 14,2011. Some class members opted out of the settlement, with the most significant being the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

On June 29, 2010, and on July 15, 2010, two complaints, the first captioned 77je Charles Schwab Corporation vs. Merrill Lynch, Pierce, Fenner & Smith, Inc., et al, and the second captioned 7Vie Charles Schwab Corporation v BNP ParibasSecurities Corp., et al, were filed in the Superior Court for the State of California, San Francisco County against a number of defendants, including Wells Fargo Bank, N.A. and Wells Fargo Asset Securities Corporation. As against the Wells Fargo entities, ihe new cases assert opt out claims relating to the claims alleged in the Mortgage-Backed Certificates Litigation.

On October 15,2010, three actions, captioned Federal Home Loan Bank of Chicago v. Banc of America Funding Corporation, et al. (filed in Die Cook County Circuit Court, Slate oflllinois); Federal Home Loan Bank of Chicago v. Banc ofAmerica Securities LLC, et al. (filed in the Superior Court ofthe State of California for the County of Los Angeles); and Federal Home Loan Bank of Indianapolis v. Banc ofAmerica Mortgage America Securities, Inc., et al. (filed in the Superior Court of the Stale of Indiana for the County of Marion), named multiple defendants, described as issuers/depositors, and underwriters/dealers of private label mortgage-backed securities, in an action asserting claims that defendants used false and misleading statements in offering documents for the sale of such securities. Plaintiffs seek rescission ofthe sales and damages under state securities and other laws and Section 11 ofthe Securities Act of 1933. Wells Fargo Asset Securities Coiporation, Wells Fargo Bank, N.A. and Wells Fargo &

Company were named among the defendants. On April 20, 2011, a case captioned Federal Home Loan of Boston v. Ally Financial, Inc., et al., was filed in the Superior Court of the Commonwealth of Massachusetts for the County of Suffolk. The case names, among a large number of parlies, Wells Fargo & Company, Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N.A. as parties and contains allegations substantially similar to the cases filed by the other Federal Home Loan Banks.

In addition, there are other mortgage-related threatened or asserted claims by entities or investors where Wells Fargo may have indemnity or repurchase obligations, or as to which it has entered into agreements to toll Ihe relevant statutes of limitations.

MORTGAGE FORECLOSURE DOCUMENT LITIGATION Eight purported class actions and several individual borrower actions related to foreclosure document practices were filed in late 2010 and in early 2011 againsl Wells Fargo Bank, N.A. in its status as mortgage servicer or corporate trustee of mortgage trusts. The cases were brought in state and federal courts. All eight cases have been dismissed or otherwise resolved.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Government agencies and authorities continue investigations or examinations of certain mortgage related practices of Wells Fargo. Wells Fargo, for itself and for predecessor institutions, has responded, and continues to respond, to requests from government agencies seeking information regarding the origination, underwriting and securitization of residential mortgages, including sub-prime mortgages. On February 24, 2012, Wells Fargo received a Wells Notice from SEC Staff relating to Wells Fargo's disclosures in mortgage-backed securities offering documents. On November 20, 2012, the SEC Staff advised Wells Fargo it did not intend to take action on the subject matter of the Wells Notice.

IN RE MUNICIPAL DERIVATIVES ANTITRUST LITIGATION Wachovia Bank, along with several other banks and financial services companies, was named as a defendant beginning in April 2008 in a number of substantially identical purported class actions and individual actions filed in various state and federal courts by various municipalities alleging they have been damaged by alleged anticompetitive activity of the defendants. These cases were either consolidated under the caption In re Municipal Derivatives Antitrust Litigation or administered jointly with thai action in (he U.S. District Court for the Southern District of New York. The plaintiffs and Wells Fargo agreed to settle the//) re Municipal Derivatives Antitrust Litigation on October 21, 2011. The settlement received final approval on December 14,2012. A number of municipalities have opted out ofthe settlement, but the remaining potential claims are not material.

ORDER OF POSTING LITIGATION A series of pulativc class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the

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Hie Inlormalion conUltiad herein may net be copied, adapted or distributed end Is not warranted lobe accurate, complete or timely. Tlie user assumes all risks lor any damages or losses arising from tiny use of nils Information, except lo the extent such damages orlosscis cannot be limited or ex eluded by applicable law. Past linanc.ial performance Is no guarantee ol future results.

high to low order in which (he Banks post debit card transactions to consumer deposit accounts. There are currently several such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), most of which have been consolidated in multidistrict litigation proceedings in the U.S. District Court for the Southern District of Florida. The bank defendants moved to compel these cases to arbitration under recent Supreme Court authority. On November 22, 2011, the Judge denied the motion. The Banks appealed the decision to the U.S. Court of Appeals for lhc Eleventh Circuit. On October 26,2012, the Eleventh Circuit affirmed the District Court's denial of lhc motion.

On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., a case that was not consolidated in the multi-district proceedings, enjoining lhc Bank's use ofthe high to low posting method for debit card transactions with respect (o the plaintiff class of California depositors, directing that the Bank establish a different posting methodology and ordering remediation of approximately S203 million. On October 26, 2010, a final judgment was entered in Gutierrez. On October 28,2010, Wells Fargo appealed to the U.S. Court of Appeals for the Ninth Circuit. On December 26, 2012, the Ninth Circuit reversed the order requiring Wells Fargo to change its order of posting and vacated the portion ofthe order granting remediation of approximately $203 million on the grounds of federal pre-emption. The Ninth Circuit affirmed lhc District Court's finding that Wells Fargo violated a California slate law prohibition on fraudulent representations and remanded the case to the District Court for further proceedings.

SECURITIES LENDING LITIGATION Wells Fargo Bank, N.A. is involved in several separate pending actions brought by securities lending customers of Wells Fargo and Wachovia

Bank in various courts. In general, each of the cases alleges that Wells Fargo violated fiduciary and contractual duties by investing collateral for loaned securities in investments that suffered losses. In addition, on March 27, 2012, a class of Wells Fargo securities lending customers was certified in a case captioned CityofFarmington Hills Employees Retirement System v. Wells Fargo Bank, N.A., which is pending in the U.S. District Court for ihe District of Minnesota. Wells Fargo sought interlocutory review ofthe class certification in the U.S. Court of Appeals for the Eighth Circuit. The Eighth Circuit declined such review on May 7, 2012.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end of the range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $ 1.0 billion as of December 31,2012. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matlers described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that lhc ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

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Somco. WELLS fAUGO & CGMPANY/MN, 10-K. Tebrirjiy 27. 2013

lite information contained herein may net ba copied, adapted or distributed and Is not warranted lo be accurate, complete or timely. The user assumes all risks for any damages or losses adding from any use of this information, except lo the extent such damages or looses cannot be limited or excluded by applicable law. Past financial pciiaimance Is no guarantee of future results

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2012 Form 10-K for events occurring during first quarter 2013.

FHA INSURANCE LITIGATION On October 9, 2012, the United States filed a complaint, captioned United States of America v. Wells Fargo Bank, N.A., in the U.S. District Court for the Southern District of New York. The complaint makes claims with respect to Wells Fargo's Federal Housing Administration (FHA) lending program for the period 2001 to 2010. The complaint alleges, among other allegations, (hat Wells Fargo improperly certified certain FHA mortgage loans for United States Department of Housing and Urban Development (HUD) insurance that did not qualify for the program, and therefore Wells Fargo should not have received insurance proceeds from HUD when some ofthe loans later defaulted. The complaint further alleges Wells Fargo knew some ofthe mortgages did not qualify for insurance and did not disclose the deficiencies to HUD before making insurance claims. On December 1, 2012, Wells Fargo filed a motion in the U.S. District Court for the District of Columbia seeking to enforce a release of Wells Fargo given by the United States, which was denied on February 12, 2013. On April 11, 2013, Wells Fargo filed a notice of appeal. On December 14, 2012, the United States filed an amended complaint. On January 16, 2013, Wells Fargo filed a motion in the Southern District ofNew York to dismiss the amended complaint. Oral argument of the motion was held on April 17, 2013.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request ofthe Securities and Exchange Commission (SEC) in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. On April 16, 2013, the parties reached a settlement in principle of all claims which provides for Wells Fargo to pay $105 million to the plaintiffs. The settlement is subject to Court approval.

MARYLAND MORTGAGE LENDING LITIGATION On July 8, 2008, a class action complaint captioned Stacey and Bradley Petty, etal, v. Wells Fargo Bank, N.A., et al, was filed. The complaint alleges that Wells Fargo and others violated the Maryland Finder's Fee Act in the closing of mortgage loans in Maryland. On March 13, 2013, the Court held the plaintiff class did not have sufficient evidence to proceed to trial, which was previously set for March 18, 2013. The Court is considering whether to dismiss the case or to certify an appellate question to the Maryland Court of Appeals.

MORTGAGE-BACKED CERTIFICATES LITIGATION Several securities law based putative class actions were consolidated in

the U.S. District Court for the Northern District of California on July 16, 2009, under the caption //; re Wells Fargo Mortgage-Backed Certificates Litigation. The case asserted claims against several Wells Fargo mortgage-backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs alleged that the offering documents contain untrue statements of material fact, or omit to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The parties agreed to settle the case on May 27, 2011, for $125 million. Final approval ofthe settlement was entered on November 14, 2011. Some class members opted out ofthe settlement. Wells Fargo settled the opt out claims of Federal National Mortgage Association for an amount that was within a previously established accrual.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end of the range of reasonably possible potential litigation losses in excess of the Company's liability for probable and estimable losses was $1.1 billion as of March 31, 2013. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess ofthe established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Wells Fargo & Company 10-Q

Note 11: Legal Actions June 30, 2013

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2012 Form 10-K and Part II, Item 1 (Legal Proceedings) of our 2013 first quarter Quarterly Report on Form 10-Q for events occurring during second quarter 2013.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture trustee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request ofthe Securities and Exchange Commission (SEC) in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. On April 16, 2013, the parties reached a settlement, subject to Court approval, of all claims which provides for Wells Fargo to pay S105 million to the plaintiffs. The Court gave preliminary approval to the settlement on May 6,2013.

Maryland MORTGAGE LENDING UTIGATJON On December 26, 2007, a class action complaint captioned Denise Minler, et al, v. Wells Fargo Bank, NA., et al, was filed in the U.S. District Court for the District of Maryland. The complaint alleges that Wells Fargo and others violated provisions of the Real Estate Settlement Procedures Act and other laws by conducting mortgage lending business improperly through a general partnership, Prosperity Mortgage Company. The complaint asserts that Prosperity Mortgage Company was not a legitimate affilialed business and instead operated to conceal Wells Fargo Bank, N.A.'s role in the loans at issue. A plaintiff class of borrowers who received a mortgage loan from Prosperity Mortgage Company that was funded by Prosperity Mortgage Company's line of credit with Wells Fargo Bank, N.A. from 1993 to May 31, 2012, had been certified. Prior to trial, the Court narrowed the class action to borrowers who were referred to Prosperity Mortgage Company by Wells Fargo's partner and whose loans were transferred to Wells Fargo Bank, N.A. from 1993 to May 31,2012. On May 6, 2013, the case went to trial. On June 6, 2013, the jury returned a verdict in favor of all defendants, including Wells Fargo. The plaintiffs have requested a new trial on the named plaintiffs' individual claims, and have filed a notice of appeal.

On July 8, 2008, a class action complaint captioned Stacey and Bradley Petry, et al, v. Wells Fargo Bank, NA., et al., was filed. The complaint alleges that Wells Fargo and others violated the Maryland Finder's Fee Act in the closing of mortgage loans in Maryland. On March 13, 2013, the Court held the plaintiff class did not have sufficient evidence to proceed to trial, which was previously set for March 18,2013. On June 20,2013, the Court entered judgment in favor ofthe defendants. The plaintiffs have appealed.

order of POSTING litigation A series of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the banks post debit card transactions to consumer deposit accounts. There are currently several such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), most of which have been consolidated in multi-district litigation proceedings in the U.S. District Court for the Southern District of Florida. The bank defendants moved to compel these cases to arbitration under recent Supreme Court authority. On November 22, 2011, the Judge denied the motion. The bank defendants appealed the decision to the U.S. Court of Appeals for the Eleventh Circu it. On October 26, 2012, the Eleventh Circuit affirmed the District Court's denial of the motion. Wells Fargo renewed its motion to compel arbitration with respect to the unnamed putative class members. On April 8, 2013, the District Court denied the motion. Wells Fargo has appealed the decision to the Eleventh Circuit. On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, NA., a case that was not consolidated in the multi-district proceedings, enjoining the bank's use of the high to low posting method for debit card transactions with respect to the plaintiff class of California depositors, directing the bank to establish a different posting methodology and ordering remediation of approximately $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. On October 28, 2010, Wells Fargo appealed to the U.S. Court of Appeals for the Ninth Circuit. On December 26, 2012, the Ninth Circuit reversed the order requiring Wells Fargo to change its order of posting and vacated the portion ofthe order granting remediation of approximately $203 million on the grounds of federal preemption. The Ninth Circuit affirmed the District Court's finding that Wells Fargo violated a California state law prohibition on fraudulent representations and remanded the case to the District Court for further proceedings. On May 14, 2013, the District Court entered an order indicating il will reinstate the judgment of approximately $203 million against Wells Fargo and enjoined Wells Fargo from making or disseminating additional misrepresentations about its order of posting of transactions. Wells Fargo has appealed the order to the Ninth Circuit. On August 5, 2013, the District Court entered a judgment against Wells Fargo in the approximate amount of $203 million, together with post-judgment interest thereon from October 25, 2010.

OUTIjOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate

within the range. The high end of the range of reasonably possible potential litigation losses in excess ofthe Company's liability for probable and estimable losses was $1.1 billion as of June 30,2013. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess ofthe established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome ofthe actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, maybe material to Wells Fargo's results of operations for any particular period.

September 30, 2013

io-Q

Note 11: Legal Actions —

The following supplements our discussion of certain matters previously reported in Part I, Item 3 (Legal Proceedings) of our 2012 Form 10-K and Part II, Item 1 (Legal Proceedings) of our 2013 first and second quarter Quarterly Reports on Form 10-Q for events occurring during third quarter 2013.

FHA INSURANCE LITIGATION On October 9, 2032, the United States filed a complaint, captioned United States of America v. Wells Fargo Bank, NA., in the U.S. District Court for the Southern District of New York. The complaint makes claims with respect to Wells Fargo's Federal Housing Administration (FHA) lending program for the period 2001 to 2010. The complaint alleges, among other allegations, that Wells Fargo improperly certified certain FHA mortgage loans for United States Department of Housing and Urban Development (HUD) insurance that did not qualify for the program, and therefore Wells Fargo should not have received insurance proceeds from HUD when some of the loans later defaulted. The complaint further alleges Wells Fargo knew some of the mortgages did not qualify for insurance and did not disclose the deficiencies to HUD before making insurance claims. On December 1,

1. Wells Fargo filed a motion in the U.S. District Court for the District of Columbia seeking to enforce a release of Wells Fargo given by the United States, which was denied on February 12, 2013. On April 11, 2013, Wells Fargo appealed the decision to the U.S. Court of Appeals for the District of Columbia Circuit, and filed its initial appellate brief on September 20, 2013. On December 14, 2032, the United States filed an amended complaint. On January 16,
2. Wells Fargo filed a motion in the Southern District of New York to dismiss the amended complaint. On September 24, 2013, the Court entered an order denying the motion with respect to the government's federal statutory claims and granting in part, and denying in part, the motion with respect to the government's common law claims.

MEDICAL CAPITAL CORPORATION LITIGATION Wells Fargo Bank, N.A. served as indenture tmstee for debt issued by affiliates of Medical Capital Corporation, which was placed in receivership at the request ofthe Securities and Exchange Commission (SEC) in August 2009. Since September 2009, Wells Fargo has been named as a defendant in various class and mass actions brought by holders of Medical Capital Corporation's debt, alleging that Wells Fargo breached contractual and other legal obligations owed to them and seeking unspecified damages. On April 16, 2013, the parties reached a settlement, subject to Court approval, of all claims which provides for Wells Fargo to pay $105 million to the plaintiffs. The Court gave final approval to the settlement on August 12,2013.

MORTGAGE-BACKED CERTIFICATES LITIGATION Several securities law based putative class actions were consolidated in the U.S. District Court for the Northern District of California on July 16, 2009, under the caption ln re Wells Fargo Mortgage-Backed Certificates Litigation. The case asserted claims against several Wells Fargo mortgage-backed securities trusts, Wells Fargo Bank, N.A. and other affiliated entities, individual employee defendants, along with various underwriters and rating agencies. The plaintiffs alleged that the offering documents contain untrue statements of material fact, or omit to state material facts necessary to make the registration statements and accompanying prospectuses not misleading. The parties agreed to settle the case on May 27, 2011, for $125 million. Final approval of the settlement was entered on November 14, 2011. Some class members, including Federal National Mortgage Association (FNMA) and Federal Home I.oan Mortgage Corporation (FHLMC), opted out of the settlement. Wells Fargo settled the opt out claims of FNMA in first quarter 2013 and settled the opt out claims of FHLMC in third quarter 2013, in each case for an amount that was within a previously established accrual. Both settlements included the Federal Housing Finance Agency, as conservator of FNMA and FHLMC. The combined amount of the settlements was approximately $335 million.

On October 15, 2010, three actions, captioned Federal Home Loan Bank of Chicago v. Banc of America Funding Corporation, et al. (filed in the Cook County Circuit Court, State of Illinois); Federal Home Loan Bank of Chicago v. Banc of America Securities LLC, et al. (filed in the Superior Court ofthe State of California for the County of Los Angeles); and Federal Home Loan Bank of Indianapolis v. Banc of America Mortgage America Securities, Inc., et al. (filed in the Superior Court of the State of Indiana for the County of Marion), named multiple defendants, described as issuers/depositors, and underwriters/dealers of private label mortgage-backed securities, in an action asserting claims that defendants used false and misleading statements in offering documents for the sale of such securities. Plaintiffs seek rescission of the sales and damages under state securities and other laws and Section 11 of the Securities Act of 1933. Wells Fargo Asset Securities Corporation, Wells Fargo Bank, N.A. and Wells Fargo & Company were named among the defendants. Wells Fargo has reached a settlement in principle with the Federal Home Loan Bank of Indianapolis to settle the claims against it in the Federal Home Loan Bank of Indianapolis v. Banc of America Mortgage America Securities, Inc., etal. action for an amount within a previously established accrual. Wells Fargo has also reached a settlement in principle with the Federal Home Loan Bank of Chicago to settle the claims against it in the Federal Home Loan Bank of Chicago v. Banc of America Funding Corporation, et al. and Federal Home Loan Bank of Chicago v. Banc of America Securities LLC actions for an amount within a previously established accrual.

On April 20, 2011, a case captioned Federal Home Loan Bank of Boston v. Ally Financial, Inc., et al., was filed in the Superior Court of the Commonwealth of Massachusetts for the County of Suffolk. The case names, among a large number of parties, Wells Fargo & Company, Wells Fargo Asset Securitization Corporation and Wells Fargo Bank, N.A. as parties and asserts claims that defendants used false and misleading statements in offering documents for the sale of mortgage-backed securities. Wells Fargo settled the claims of the Federal Home Loan Bank of Boston for an amount within a previously established accrual and was dismissed, with prejudice, from the Federal Home Loan Bank of Boston v. Ally Financial, Inc., et al. action on September 30, 2013.

ORDER OF POSTING LITIGATION On August 10, 2010, the U.S. District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., a case that was not consolidated in the multi-district proceedings, enjoining the bank's use ofthe high to low posting method for debit card transactions with respect to the plaintiff class of California depositors, directing the bank to establish a different posting methodology and ordering remediation of approximately $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. On October 28, 2010, Wells Fargo appealed to the U.S. Court of Appeals for the Ninth Circuit. On December 26,2012, the Ninth Circuit reversed the order requiring Wells Fargo to change its order of posting and vacated the portion of the order granting remediation of approximately $203 million on the grounds of federal preemption. The Ninth Circuit affirmed the District Court's finding that Wells Fargo violated a California state law prohibition on fraudulent representations and remanded the case to the District Court for further proceedings. On August 5, 2013, the District Court entered a judgment against Wells Fargo in the approximate amount of $203 million, together with post-judgment interest thereon from October 25, 2010, and, effective as of July 15, 2013, enjoined Wells Fargo from making or disseminating additional misrepresentations about its order of posting of transactions. On August 7, 2033, Wells Fargo appealed the judgment to the Ninth Circuit.

OUTLOOK When establishing a liability for contingent litigation losses, the Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate within the range. The high end of the range of reasonably possible potential litigation losses in excess of the Company's liability for probable and estimable losses was $1.0 billion as of September 30, 2013. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess of the established liability that cannot be estimated. Based on information currently available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the matters described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, il is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

Wells Fargo and certain of our subsidiaries arc involved in a number of judicial, regulatory and arbitration proceedings concerning matters arising from the conduct ofour business activities These proceedings include actions brought against Wells Fargo and/oi our subsidiaries with respect lo corporate related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition. Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.

Alihough there con be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant litigation pending against us, including the matters described below, and wc intend to defend vigorously each case, other than matters wc describe os having settled. Reserves are established for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims.

FHA INSURANCE LITIGATION On October 9, 2012, the United States filed a complaint, captioned United Stales ofAmciica v Wells Fargo Bank, N.A., in the U.S. District Court for the Southern District of New York. The complaint makes claims with respect lo Wells Fargo's Federal Housing Administration (FHA) lending program for the period 2001 to 2010 The complaint alleges, among other allegations, that Wells Fargo improperly certified certain FHA mortgage loans for United States Department of Housing and Urban Development (HUD) insurance that did not qualify for the program, and therefore Wells Fargo should not have received insurance proceeds from HUD when some ofthe loans later defaulted The complaint further alleges Wells Fargo knew some ofthe mortgages did not qualify for insurance and did not disclose the deficiencies to HUD before making insurance claims. On December 1,2012, Wells Fargo filed amotion in the U.S. District Court for the District of Columbia seeking to enforce a release of Wells Fargo given by the United States, which was denied on February 12, 2013. On April II, 2013, Wells Fargo appealed the decision to the U S. Coun of Appeals for the District of Columbia Circuit, with appellate briefing completed on November 26, 2013. On December 14, 2012, the United States filed an amended complaint. On January 16, 2013, Wells Fargo filed a motion in the Southern District of New York to dismiss the amended complaint On September 24,2013, the Court entered an order denying the motion with respect to the government's federal statutory claims and granting in part, and denying in part, the motion with respect to the government's common law claims. On January 10, 2014, the United States filed a second amended complaint.

interchange litigation Welts Fargo Bank, N A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation arc named as defendants, separately or in combination, in putative class actions filed on bebalf of a plaintiff class of merchants and in individual actions brought by individual merchants with regard to the interchange fees associated with Visa and MasterCard payment card transactions. These actions have been consolidated in the U.S. District Court for the Eastern District of New York. Visa, MasterCard and several banks and bank holding companies are named as defendants in various of these actions. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13. 2012, Visa, MasterCard and the financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants lo resolve the consolidated class actions and reached a separate settlement in principle ofthe consolidated individual actions. The proposed settlement payments by all defendants in the consolidated class and individual actions total approximately 56.6 billion. The class settlement also provides for the distribution to class merchants of 10 basis points of default interchange across all credit rate categories for a period of eight consecutive months. The Court granted final approval ofthe settlement, which is proceeding. Merchants have filed several "opt-out" actions

MARYLANDMORTCACEJLENDJNGUTIGATJOiN On December 26,2007. a class action complaint captioned DeniseM'mter, etal. v. Wells Fargo Bank, NA., et al.,was filed in the U.S. District Court for the District of Maryland. The complaint alleges that Wells Fargo and others violated provisions of the Real Estate Settlement Procedures Act and other laws by conducting mortgage lending business improperly Ihiough a general partnership, Prosperity Mortgage Company. The complaint asserts that Prosperity Mortgage Company was not a legitimate affiliated business and instead operated lo conceal Wells Fargo Bank, N A.'s role in the loans at issue A plaintiff class of borrowers who received a mortgage loan from Prosperity Mortgage Company that was funded by Prosperity Mortgage Company's line of credit with Wells Fargo Bank, N.A. from 1993 to May 31, 2012, had been certified. Prior to trial, the Court narrowed the class action to borrowers who were referred to Prosperity Mortgage Company by Wells Fargo's partner and whose loans were transferred to Wells Fargo Bank, N.A. from 1993 to May 31, 2012. On May 6,2013, the case went lo trial. On June 6,2013, the jury returned a verdict in favor of all defendants, including Wells Fargo The plaintiffs have appealed.

On July 8, 2008, a class action complaint captioned Stacey andBradley Petty, etal v. Wells Fat go Bank, N.A., et al._% was filed. The complaint alleges that Wells Fargo and others violated the Maryland Finder's Fee Act in the closing of mortgage loans in Maryland. On March 13.2013, the Court held the plaintiff class did not have sufficient evidence to proceed to trial, which was previously set for March 18,2013. On June 20,2013, the Court entered judgment in favor ofthe defendants. The plaintiffs have appealed.

MORTGAGE RELATED REGULATORY INVESTIGATIONS Government agencies continue investigations or examinations of certain mortgage related practices of Wells Fargo and predecessor institutions. Wells Fargo, for itself and for predecessor institutions, has

201

Powered In' MontingsLar' Document Research'*

Souice. WELLS FAR GO 6 COMPANY/MM, 10-K. February tb. 2Q]4

77ie tn(oriTi3tton contained herein nicy not tie copied, adapted cr distributed and Is not warranted to be accurate, complete or timely. Tim user assumes ull risks lor ^ny damages or tosses Driving from any use ot this Intornvitlon, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee ol future icsulls.

Note 15:  Legal Actions (continued)

responded, and continues lo respond, to requests from government agencies seeking information regarding lhc origination, underwriting and securitization of residential mortgages, including sub-prime mortgages.

ORDER OF POSTING litigation A scries of putative class actions have been filed against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the high to low order in which the banks post debit card transactions to consumer deposit accounts. There arc currently several such cases pending against Wells Fargo Bank (including the Wachovia Bank cases to which Wells Fargo succeeded), most of which have been consolidated in multi-district litigation proceedings in the U.S. District Court for the Southern District ofFlorida. The bank defendants moved to compel these cases to arbitration under recent Supreme Court authority. On November 22, 2011, the Judge denied the motion. The bank defendants appealed Ihe decision to the U.S. Court of Appeals for the Eleventh Circuit On October 26, 2012, the Eleventh Circuit affirmed the District Court's denial of the motion. Wells Fargo renewed its motion to compel arbitration with respect to the unnamed puiativc class members. On April 8, 2013, lhc District Court denied the motion. Wells Fargo has appealed the decision to the Eleventh Circuit.

On August 10, 2010, the U.S District Court for the Northern District of California issued an order in Gutierrez v. Wells Fargo Bank, N.A., a case that was not consolidated in the multi-district proceedings, enjoining the bank's use ofthe high lo low posting method for debit card transaciions with respect lo the plaintiff class of California depositors, directing the bank to establish a different posting methodology and ordering remediation of approximately $203 million. On October 26, 2010, a final judgment was entered in Gutierrez. On October 28, 2010. Wells Fargo appealed to the U.S Court of Appeals for the Ninlh Circuit. On December 26,2012, the Ninlh Circuit reversed the order requiring Wells Fargo lo change its order of posting and vacated the portion ofthe order granting remediation of approximately $203 million on the grounds nf federal preemption. The Ninth Circuit affirmed the District Court's finding that Wells Fargo violated a California slate law prohibition on fraudulent representations and remanded the case to lhc District Court for further proceedings. On August 5, 2013, the District Court entered a judgment against Wells Fargo in the approximate amount of $203 million, together with post-judgment interest Ihereon from October 25,2010, and. effective as of July 15,2013, enjoined Wells Fargo from making or disseminating additional misrepresentations about its order of posting of transactions. On August 7,2013, Wells Fargo appealed the judgment to Ihe Ninth Circuit.

SECURITIES LENDING LITIGATION Wells Fargo Bank, N.A. is involved in five separate pending actions brought by securities lending customers of Wells Fargo and Wachovia Bank in various courts In general, each ofthe cases alleges that Wells Fargo violated fiduciary and conli actual duties by investing collateral for loaned securities in investments that suffered losses. One of the cases, filed on March 27,2012, is composed of a class of Wells Fargo securities lending customers in a case captioned City of Faniiinglon Hills Employees Retirement System v. Wells Fargo Bank, N.A The class action is pending in the U S. District Court for the District of Minnesota.

OUTLOOK When establishing a liability for contingent litigation losses, lhc Company determines a range of potential losses for each matter that is both probable and estimable, and records the amount it considers to be the best estimate wilhin the range. The high end ofthe range of reasonably possible potential litigation losses in excess of the Company's liability for probable andcsliniahlc losses was $951 million as of December 31, 2013. For these matters and others where an unfavorable outcome is reasonably possible but not probable, there may be a range of possible losses in excess ofthe established liability that cannot be estimated. Based on information cuireutly available, advice of counsel, available insurance coverage and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries, including the martcrs described above, will not, individually or in the aggregate, have a material adverse effect on Wells Fargo's consolidated financial position. However, in the event of unexpected future developments, it is possible that the ultimate resolution of those matters, if unfavorable, may be material to Wells Fargo's results of operations for any particular period.

 

Powered Ijy Morriingslar'' Document Resarclr"

Source VYCUS FARGO 6 COMPANY/MM. KM.'. February 2G. ZOK

nio Inlannitlan contained herein may not tic copied, adapted or distributed and ts not wauanted lo be accurate, comtittteor timely. Ilw user assumes all risks lor any damages or tosses ailslnn from any use of this Inlormalion. ercepl to the extent such damages or losses cannot be limited or excluded by applicable law. Past Imanclat pcrioimjnca Is no guarantee ol future resells.

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

8.   To the best ofthe Disclosing Party's knowledge after reasonable inquiry, the following is a complete list of all current employees of the Disclosing Party who were, at any time during the 12-montb period preceding the execution date of this EDS, an employee, or elected or appointed official, ofthe City of Chicago (if none, indicate with "N/A" or "none").

The Disclosing Party certifies that as of the date hereof, to the best of the Disclosing Party's knowledge after due inquiry, the answer with respect to this question rsrNonu. Please nute that the foiegoing answai Is based on an email questionnaire disliibuled on Maiuh It)r2014 lu altttlliiufa-uaseitumpluyetjs'cfWBlTsTaiHo Bank. N.A. and those employees that that work in the Bank's government and institutional banking group, and on an email questionnaire distributed on March 10, 2014 to those employees that work in the Bank's community lending and Investment group, and may accordingly have a material relationship with the City.

9.   To the best ofthe Disclosing Party's knowledge after reasonable inquiry, the following is a complete list of all gifts that the Disclosing Party has given or caused to be given, at any time during the 12-month period preceding the execution date of this EDS, to an employee, or elected or appointed official, of the City of Chicago. For purposes of this statement, a "gift" does not include: (i) anything made generally available to City employees or to the general public, or (ii) food or drink provided in the course of official City business and having a retail value of less than $20 per recipient (if none, indicate with "N/A" or "none"). As to any gift listed^iclow, please also list the name of the City recipient.

The Disclosing Party certifies that as of the date hereof, to the best of the bisclosing Party's knowledge after due inquiry, the answer with respect to this question is. Nune. PleasHTiotH thai IIiu (uieyring^rrsvreris1>asedxirraii email queslionnafiu distiibutud un Maiuh tO, 2014 lu all Illiiiuis-ljasuU miipluyuus unJVetls-pargo Bank, N.A. and those employees that that work in the Bank's government and institutional banking group, and on an email questionnaire distributed on March 10, 2014 to those employees that work in the Bank's community lending and investment group, and may accordingly have a material relationship with the City.

C. CERTIFICATION OF STATUS AS FINANCIAL INSTITUTION

1. The Disclosing Party certifies that the Disclosing Party (check one)

f/] is      [ ] is not

a "financial institution" as defined in Section 2-32-455(b) ofthe Municipal Code.

1. If the Disclosing Party IS a financial institution, then the Disclosing Party pledges:

"We are not and will not become a predatory lender as defined in Chapter 2-32 of the Municipal Code. We further pledge that none of our affiliates is, and none of them will become, a predatory lender as defined in Chapter 2-32 of the Municipal Code. We understand that becoming a predatory lender or becoming an affiliate of a predatory lender may result in the loss of the privilege of doing business with the City."

If the Disclosing Party is unable to make this pledge because it or any of its affiliates (as defined in Section 2-32-455(b) ofthe Municipal Code) is a predatory lender within the meaning of Chapter 2-32 ofthe Municipal Code, explain here (attach additional pages if necessary):

Page 7 of 13

If the letters "NA," the word "None," or no response appears on the lines above, it will be conclusively presumed that the Disclosing Party certified to the above statements.

D. CERTIFICATION REGARDING INTEREST IN CITY BUSINESS

Any words or terms that are defined in Chapter 2-156 of the Municipal Code have the same meanings when used in this Part D.

1. In accordance with Section 2-156-110 of the Municipal Code: Does any official or employee ofthe City have a financial interest in his or her own name or in the name of any other person or entity in the Matter?

[ ] Yes      \/\ No

NOTE: If you checked "Yes" to Item D.l., proceed to Items D.2. and D.3. If you checked "No" to Item D. 1., proceed to Part E.

1. Unless sold pursuant to a process of competitive bidding, or otherwise permitted, no City elected official or employee shall have a financial interest in his or her own name or in the name of any other person or entity in the purchase ofany property that (i) belongs to the City, or (ii) is sold for taxes or assessments, or (iii) is sold by virtue of legal process at the suit of the City (collectively, "City Property Sale"). Compensation for property taken pursuant to the City's eminent domain power does not constitute a financial interest within the meaning of this Part D.

Does the Matter involve a City Property Sale?

f/] Yes      [ ] No

1. If you checked "Yes" to Item D.l., provide the names and business addresses ofthe City officials or employees having such interest and identify the nature of such interest:

Name      Business Address      Nature of Interest

N/A

4. The Disclosing Party further certifies that no prohibited financial interest in the Matter will be acquired by any City official or employee.

E. CERTIFICATION REGARDING SLAVERY ERA BUSINESS

Please check cither 1. or 2. below. If the Disclosing Party checks 2., the Disclosing Party must disclose below or in an attachment to this EDS all information required by paragraph 2. Failure to

Page 8 of 13

comply with these disclosure requirements may make any contract entered into with the City in connection with the Matter voidable by the City.

      1. The Disclosing Party verifies that the Disclosing Party has searched any and all records of

the Disclosing Party and any and all predecessor entities regarding records of investments or profits from slavery or slaveholder insurance policies during the slavery era (including insurance policies issued to slaveholders that provided coverage for damage to or injury or death of their slaves), and the Disclosing Party has found no such records.

/ 2. The Disclosing Party verifies that, as a result of conducting the search in step 1 above, the Disclosing Party has found records of investments or profits from slavery or slaveholder insurance policies. The Disclosing Party verifies that the following constitutes full disclosure of all such records, including the names ofany and all slaves or slaveholders described in those records:

SEE ATTACHMENT"D"

SECTION VI - CERTIFICATIONS FOR FEDERALLY FUNDED MATTERS

NOTE: If the Matter is federally funded, complete this Section VI. If the Matter is not federally funded, proceed to Section VII. For purposes of this Section VI, tax credits allocated by the City and proceeds of debt obligations of the City are not federal funding.

A. CERTIFICATION REGARDING LOBBYING

1.   List below the names of all persons or entities registered under the federal Lobbying

Disclosure Act of 1995 who have made lobbying contacts on behalf of the Disclosing Party with

respect to the Matter: (Add sheets if necessary): N/A

(If no explanation appears or begins on the lines above, or if the letters "NA" or if the word "None" appear, it will be conclusively presumed that the Disclosing Party means that NO persons or entities registered under the Lobbying Disclosure Act of 1995 have made lobbying contacts on behalf of the Disclosing Party with respect to the Matter.)

2.   The Disclosing Party has not spent and will not expend any federally appropriated funds to pay any person or entity listed in Paragraph A.l. above for his or her lobbying activities or to pay any person or entity to influence or attempt to influence an officer or employee ofany agency, as defined by applicable federal law, a member ofCongress, an officer or employee ofCongress, or an employee of a member of Congress, in connection with the award ofany federally funded contract, making any federally funded grant or loan, entering into any cooperative agreement, or to extend, continue, renew, amend, or modify any federally funded contract, grant, loan, or cooperative agreement.

Page 9 of 13

1. The Disclosing Party will submit an updated certification at the end of each calendar quarter in which there occurs any event that materially affects the accuracy ofthe statements and information set forth in paragraphs A.l. and A.2. above.
2. The Disclosing Party certifies that either: (i) it is not an organization described in section 501(c)(4) ofthe Internal Revenue Code of 1986; or (ii) it is an organization described in section 501(c)(4) of the Internal Revenue Code of 1986 but has not engaged and will not engage in "Lobbying Activities".
3. If the Disclosing Party is the Applicant, the Disclosing Party must obtain certifications equal in form and substance to paragraphs A.l. through A.4. above from all subcontractors before it awards any subcontract and the Disclosing Party must maintain all such subcontractors' certifications for the duration ofthe Matter and must make such certifications promptly available to the City upon request.

B. CERTIFICATION REGARDING EQUAL EMPLOYMENT OPPORTUNITY

If the Matter is federally funded, federal regulations require the Applicant and all proposed subcontractors to submit the following information with their bids or in writing at the outset of negotiations.

Is the Disclosing Party the Applicant?

[ ] Yes      \/\ No

If "Yes," answer the three questions below:

1. Have you developed and do you have on file affirmative action programs pursuant to applicable federal regulations? (See 41 CFR Part 60-2.)

[ ] Yes      [ ] No

1. Have you filed with the Joint Reporting Committee, the Director ofthe Office of Federal Contract Compliance Programs, or the Equal Employment Opportunity Commission all reports due under the applicable filing requirements?

[ ] Yes      [ ] No

1. Have you participated in any previous contracts or subcontracts subject to the equal opportunity clause?

[ ] Yes      [ ] No

If you checked "No" to question 1. or 2. above, please provide an explanation:

Page 10 of 13

SECTION VII - ACKNOWLEDGMENTS, CONTRACT INCORPORATION, COMPLIANCE, PENALTIES, DISCLOSURE

The Disclosing Party understands and agrees that:

1. The certifications, disclosures, and acknowledgments contained in this EDS will become part of any contract or other agreement between the Applicant and the City in connection with the Matter, whether procurement, City assistance, or other City action, and are material inducements to the City's execution of any contract or taking other action with respect to the Matter. The Disclosing Party understands that it must comply with all statutes, ordinances, and regulations on which this EDS is based.
2. The City's Governmental Ethics and Campaign Financing Ordinances, Chapters 2-156 and 2-164 of the Municipal Code, impose certain duties and obligations on persons or entities seeking City contracts, work, business, or transactions. The full text of these ordinances and a training program is available on line at www.cityofchicago.org/Ethics, and may also be obtained from the City's Board of Ethics, 740 N.

Sedgwick St., Suite 500, Chicago, IL 60610, (312) 744-9660. The Disclosing Party must comply fully with the applicable ordinances.

1. If the City determines that any information provided in this EDS is false, incomplete or inaccurate, any contract or other agreement in connection with which it is submitted may be rescinded or be void or voidable, and the City may pursue any remedies under the contract or agreement (if not rescinded or void), at law, or in equity, including terminating the Disclosing Party's participation in the Matter and/or declining to allow the Disclosing Party to participate in other transactions with the City. Remedies at law for a false statement of material fact may include incarceration and an award to the City of treble damages.
2. It is the City's policy to make this document available to the public on its Internet site and/or upon request. Some or all of the information provided on this EDS and any attachments to this EDS may be made available to the public on the Internet, in response to a Freedom of Information Act request, or otherwise. By completing and signing this EDS, the Disclosing Party waives and releases any possible rights or claims which it may have against the City in connection with the public release of information contained in this EDS and also authorizes the City to verify the accuracy ofany information submitted in this EDS.

E.      The information provided in this EDS must be kept current. In the event of changes, the Disclosing

Party must supplement this EDS up to the time the City takes action on the Matter. If the Matter is a

contract being handled by the City's Department of Procurement Services, the Disclosing Party must

update this EDS as the contract requires. NOTE: With respect to Matters subject to Article I of

Chapter 1 -23 ofthe Municipal Code (imposing PERMANENT INELIGIBILITY for certain specified

offenses), the information provided herein regarding eligibility must be kept current for a longer period,

as required by Chapter 1-23 and Section 2-154-020 ofthe Municipal Code.

The Disclosing Party represents and warrants that:

Page 11 of 13

SLAVERY ERA BUSINESS SUMMARY

After years of research, Wells Fargo has found no records that indicate it - or any entities it acquired before the Wachovia merger - had ever financed slavery, held slaves as collateral, owned slaves, or profited from slavery.

With the Wachovia merger, Wells Fargo inherited hundreds of Wachovia's predecessor financial institutions, including two that had extensive involvement in slavery. In 2005 Wachovia announced these findings and apologized for the role its predecessors played and renewed its commitment to preserve and promote the history ofthe African-American experience in our nation. Wells Fargo shares that commitment and affirms its long-standing opposition to slavery.

The following narrative summarizes the results of the research that has been performed regarding Wachovia Bank and its ties to slavery.

SUMMARY OF RESEARCH

External research has revealed that two predecessor institutions ofthe undersigned, the Georgia Railroad & Banking Company and the Bank of Charleston, owned slaves.

Due to incomplete records, the undersigned cannot determine exactly how many slaves either the Georgia Railroad and Banking Company or the Bank of Charleston owned. Through specific transactional records, researchers determined that the Georgia Railroad and Banking Company owned at least 162 slaves, and the Bank of Charleston accepted at least 529 slaves as collateral on mortgaged properties or loans, and acquired an undetermined number of these individuals when customers defaulted on their loans.

The Georgia Railroad and Banking Company was founded in 1833 to complete a railroad line between the City of Augusta and the interior ofthe state of Georgia. The company relied on slave labor for the construction and maintenance of this railway. According to the existing and searchable bank records, 162 slaves were owned or authorized to be purchased by the Georgia Railroad and Banking Company between 1836 and 1842. In addition, the company awarded work to contractors who purchased at least 400 slaves to perform work on the railways.

The Bank of Charleston, founded in 1834, issued loans and mortgages where enslaved individuals were used as collateral. A review of the bank's account ledgers revealed a minimum of 24 transactions involving reference to 529 enslaved individuals being used as collateral. In most cases, the loan was paid on schedule, and the bank never took possession of slaves that were pledged as collateral on the loan. In several documented instances, however, customers defaulted on their loans and the Bank of Charleston took actual possession of slaves. The total number of slaves of whom the bank took possession cannot be accurately tallied due to the lack of records.

EDOCS #2073307 (Rev. 07.02.2013)

In addition, ten predecessor companies were determined to have profited more indirectly from slavery through the following means:

• Founders, directors, or account holders who owned slaves and/or profited directly from slavery;

Investing in or transacting business with companies or individuals that owned slaves;

• Investing in the bonds of slave states and municipalities;

Investing in U.S. government bonds during years when the United States permitted and profited from slave labor directly through taxation.

These institutions are:

Bank ofNorth America (Philadelphia, Pa.) Bank of Baltimore

• The Philadelphia Bank (later Philadelphia National Bank) Farmers' & Mechanics' Bank of Philadelphia

Pennsylvania Company for Insurances on Lives and the Granting of Annuities .   State Bank of Elizabeth (Elizabeth, N.J.) State Bank of Newark (Newark, N.J.) Savings Bank of Baltimore Girard National Bank

The Carswell Group (established in 1868, acquired by Palmer & Cay, Inc. in 1985)

The Trenton Banking Company

EDOCS #2073307 (Rev. 07.02.2013)

F.I.    The Disclosing Party is not delinquent in the payment ofany tax administered by the Illinois Department of Revenue, nor are the Disclosing Party or its Affiliated Entities delinquent in paying any fine, fee, tax or other charge owed to the City. This includes, but is not limited to, all water charges, sewer charges, license fees, parking tickets, property taxes or sales taxes.

F.2     If the Disclosing Party is the Applicant, the Disclosing Party and its Affiliated Entities will not use, nor permit their subcontractors to use, any facility listed by the U.S. E.P.A. on the federal Excluded Parties List System ("EPLS") maintained by the U. S. General Services Administration.

F.3     If the Disclosing Party is the Applicant, the Disclosing Party will obtain from any contractors/subcontractors hired or to be hired in connection with the Matter certifications equal in form and substance to those in F.1. and F.2. above and will not, without the prior written consent ofthe City, use any such contractor/subcontractor that does not provide such certifications or that the Disclosing Party has reason to believe has not provided or cannot provide truthful certifications.

NOTE: If the Disclosing Party cannot certify as to any of the items in F.1., F.2. or F.3. above, an explanatory statement must be attached to this EDS.

CERTIFICATION

Under penalty of perjury, the person signing below: (1) warrants that he/she is authorized to execute this EDS and Appendix A (if applicable) on behalf ofthe Disclosing Party, and (2) warrants that all certifications and statements contained in this EDS and Appendix A (if applicable) are true, accurate and complete as of the date furnished to the City.

Wells Fargo & Company (Print or type^fame of Disclosing Party)

By.- Af^^:      

/ (Sign here)

^     Jon/K. Campbell      

(Prir^oj>type name of person signing)

Executive Vice President (Print or type title of person signing)

 

Signed and sworn to before me on (date) ^JLUfl€^-at towi-epirt     County, (VlWgSpVcX. (state).

Notary Public.

 

Commission expires:_

PATRICIA A. RUEDENBERG^

NOTARY PUBLIC - MINNESOTA X MY COMMISSION'EXPIRES 01/31/15 \

Page 12 of 13

CITY OF CHICAGO ECONOMIC DISCLOSURE STATEMENT AND AFFIDAVIT

APPENDIX A

FAMILIAL RELATIONSHIPS WITH ELECTED CITY OFFICIALS AND DEPARTMENT HEADS

This Appendix is to be completed only by (a) the Applicant, and (b) any legal entity which has a direct ownership interest in the Applicant exceeding 7.5 percent. It is not to be completed by any legal entity which has only an indirect ownership interest in the Applicant.

Under Municipal Code Section 2-154-015, the Disclosing Par ty must disclose whether such Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently has a "familial relationship" with any elected city official or department head. A "familial relationship" exists if, as ofthe date this EDS is signed, the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof is related to the mayor, any alderman, the city clerk, the city treasurer or any city department head as spouse or domestic partner or as any ofthe following, whether by blood or adoption: parent, child, brother or sister, aunt or uncle, niece or nephew, grandparent, grandchild, father-in-law, mother-in-law, son-in-law, daughter-in-law, stepfather or stepmother, stepson or stepdaughter, stepbrother or stepsister or half-brother or half-sister.

"Applicable Party" means (1) all executive officers ofthe Disclosing Party listed in Section H.B.l.a., if the Disclosing Party is a corporation; all partners of the Disclosing Party, if the Disclosing Party is a general partnership; all general partners and limited partners of the Disclosing Party, if the Disclosing Party is a limited partnership; all managers, managing members and members of the Disclosing Party, if the Disclosing Party is a limited liability company; (2) all principal officers of the Disclosing Party; and (3) any person having more than a 7.5 percent ownership interest in the Disclosing Party. "Principal officers" means the president, chief operating officer, executive director, chief financial officer, treasurer or secretary of a legal entity or any person exercising similar authority.

Does the Disclosing Party or any "Applicable Party" or any Spouse or Domestic Partner thereof currently have a "familial relationship" with an elected city official or department head?

[ ] Yes      [*] No

If yes, please identify below (1) the name and title of such person, (2) the name of the legal entity to which such person is connected; (3) the name and title ofthe elected city official or department head to whom such person has a familial relationship, and (4) the precise nature of such familial relationship.

Page 13 of 13

Attachment to City of Chicago Economic Disclosure Statement and Affidavit Appendix A

Familial Relationships with Elected City Officials and Department Heads

To the best of the Disclosing Party's knowledge, after due inquiry, the Disclosing Party has no familial relationships as referenced in this Appendix A. Please note, that the Disclosing Party has limited its inquiry to the Persons identified in Section II.B.l ofthe EDS.

787080

Morningstar® Document Research FORM 10-K

BERKSHIRE HATHAWAY INC-BRK.B

Filed: March 03, 2014 (period: December 31, 2013)

Annual report with a comprehensive overview of the company

The Information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use ot this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance Is no guarantee of future results.

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013 Commission (lie number 001-14905

BERKSHIRE HATHAWAY INC.

(Eiuct nJirif nf Reginrant is specified in iLs charter)

Delaware 47-0813844

State or other jurisdiction of      (I.K.S. Employer

incorporation or organization      Identification Number)

3555 Fainam Street, Omaha, Nebraska 68131

(Addict! orprindpal executive office)      (Zip Code)

Registrant's telephone number, including area code (402) 346-1400 Securities registered pursuant to Section 12(b) of the Act:

Title of each cl:m      Name ofeach exchange on which registered

Class A common stock, $5.00 Par Value      New York Slock Exchange

Class B common stock, $0.0033 Par Value      New York Stock Exchange

Securities registered pursuant to Section 12(g) ofthe Act: NONE

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes 0   No □

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) ofthe Act.   Yes □   No 0

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) ofthe Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.   Yes 0   No □

Indicate by check mark whether (he Registrant has submitted electronically and posted on its corporate Website, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T during the preceding 12 months.   Yes 0   No □

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K. is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. □

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Sec the definitions of "large accelerated filer," "'accelerated filer" and "smaller reporting company" in Rule )2b-2 ofthe Exchange Act.:

I-argc accelerated filer 0      Accelerated filer □      Non accelerated filer □      Smaller reporting company □

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes □   No 0

Stale the aggregate market value of the voting stock held by non-affiliates ofthe Registrant as of lune 30,2013: $205,145,000,000*

Indicate number of shares outstanding of each ofthe Registrant's classes of common stock:

February 18, 2014—Class A common stock, $5 par value      857,911 shares

February 18, 2014—Class B common stock, $0.0033 par value      1,179,141,327 shares

DOCUMENTS INCORPORATED BY REFERENCE

Document      Incorporated In

Proxy Statement for Registrant's Annual Meeting to be held May 3, 2014      Part HI

* This aggregate value is computed at the last sale price ofthe common stock on June 30, 2013. It does not include the value of Class A common stock (367,832 shares) and Class B common stock (84,449,183 shaics) held by Directors and Executive Officers ofthe Registrant and members of their immediate families, some of whom may not constitute "affiliates" for purpose ofthe Securities Exchange Act of 1934.

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Source' BERKSHIRE HATHAWAY INC. I O K. M-3ich03. 2UM

TJie Information contained herein may not be copied, adapted or distributed end ts not wamnted to be accurate, complete of timely. The user assumes alt risks (or any damages or losses arising horn any uic ol this Information, except to the extent such damages or tosses cannot be limited or excluded by applicable Istvt Fast financial performance Is no guarantee ot future results.

Tabic of Contents

Table of Contents

Fagf No.

Part I

Item 1.            Business      1

Item 1A.         Risk Factors      22

Item JB.          Unresolved Staff Comments      25

Item 2.             Description of Properties      25

Item 3.            Legal Proceedings      28

Item 4.           Mine Safety Disclosures      28

Part 11

Item 5.      Market for Registrant's Common Equity. Related Security Holder Matters and Issuer Purchases of Krinitv

Securities      29

Item 6.           Selected Financial Data      30

Item 7.            Management's Discussion and Analysis of Financial Condition and Results of Operations      31

Item 7A.          Quantitative and Qualitative Disclosures About Market Risk      64

Item 8.            Financial Statements and Supplementary Data      6 5

Consolidated Balance Sheets—

December 31. 2013 and December 31.2012      66

Consolidated Statements of Earnings—

Years Ended December 31. 2013. December 31. 2012, and December 31. 2011      67

Consolidated Statements of Comprehensive income—

Years Ended December 31.2013. December 31. 2012. and December 31. 2011      68

Consolidated Statements of Changes in Shareholders' Eouitv—

Years Ended December 31. 2013. December 31. 2012. and December 31. 2011      68

Consolidated Statements of Cash Flows—

Years Ended December 31. 2013. December 31. 2012. and December 31. 2011      69

Notes to Consolidated Financial Statements      70

Item 9.             Changes in and Disagreements with Accountants on Accounting and Financial Disclosure      104

Item 9A.           Controls and Procedures      104

Itcm9B.          Other Information      104

Part III

Item 10.           Directors, Executive Officers and Corporate Governance      105

Item 11.           Executive Compensation      105

Item 12.          Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters      105

Item 13.           Certain Relationships and Related Transactions and Director Independence      105

Item 14.           Principal Accountant Fees and Services      105

Part IV

Item 15.           Exhibits and Financial Statement Schedules      105

Signatures      106

Exhibit Index      110

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Table of Contents

Part I

Item 1. Business

Berkshire Hathaway Inc. ("Berkshire," "Company" or "Registrant") is a holding company owning subsidiaries engaged in a number of diverse business activities. The most important of these arc insurance businesses conducted on both a primary basis and a icinsurance basis, a freight rail transportation business and a group of utility and energy generation and distribution businesses. Berksliiic also owns and operates a large number of other businesses engaged in a variety of activities, as identified herein. Berkshire is domiciled in the slate of Delaware, and its corporate headquarters arc located in Omaha, Nebraska.

Berkshire's operating businesses arc managed on an unusually decentralized basis. There are essentially no centralized or integrated business functions (such as sales, marketing, purchasing, legal or human resources) and there is minimal involvement by Berkshire's corporate headquarters in the day-to-day business activities ofthe operating businesses. Berkshire's corporate office senior management participates in and is ultimately responsible for significant capital allocation decisions, investment activities and the selection of the Chief Executive to head each of the operating businesses. It also is responsible for establishing and monitoring Berkshire's corporate governance efforts, including, but not limited to, communicating the appropriate "tone at the top" messages to its employees and associates, monitoring governance efforts, including those at the operating businesses, and participating in the resolution of governance-related issues as needed.

Berkshire and its consolidated subsidiaries employ approximately 302,000 persons world-wide, of which 25 are located al the corporate headquarters.

Insurance and Reinsurance Businesses

Berkshire's insurance and reinsurance business activities arc conducted through numerous domestic and foreign-based insurance entities. Bcrkshiie's insurance businesses provide insurance and reinsurance of properly and casualty risks world-wide and also reinsure life, accident and health risks worldwide.

In primary (or direct) insurance activities, the insurer assumes the risk of loss from persons oi organizations that arc diicctly subject to the risks. Such risks may relate to property, casualty (or liability), life, accident, health, financial or other perils that may arise from an insurable event, ln reinsurance activities, the rcinsuier assumes defined portions of risks that other primary insurers oi reinsurers have assumed in their own insuring activities.

Reinsurance contracts arc normally classified as treaty or facultative contracts. Treaty reinsurance refers to reinsurance coverage for all or a portion of a specified class of risks ceded by the primary insurer, while facultative reinsurance involves coverage of specific individual risks. Reinsurance contracts are further classified as quota-share or excess. Under quota-share (proportional or pro-rata) reinsurance, the rcinsuier shares proportionally in the original premiums, losses and expenses ofthe primary insurer or reinsurer. Excess (or non-proportional) reinsurance provides for the indemnification ofthe primary insurer or reinsurer for all or a portion of the loss in excess of an agreed upon amount or "retention." Both quota-share and excess reinsurance contracts may provide for aggregate limits of indemnification.

Insurance and reinsurance arc generally subject to regulatory oversight throughout the world. Except for regulatory considerations, there are virtually no barriers to entry into the insurance and reinsurance industry. Competitors may be domestic or foreign, as well as licensed or unlicensed. The number of competitors within the industry is not known. Insurers and reinsurers compete on the basis of reliability, financial strength and stability, ratings, underwriting consistency, service, business ethics, price, performance, capacity, policy terms and coverage conditions.

Insurers and reinsurers based in the United States are subject to regulation by their slate of domicile and by those states in which they are licensed or write policies on a non-admitted basis. The primary focus of regulation is to assure that insurers are financially solvent and that policyholder interests are otherwise protected. Stales establish minimum capital levels for insurance companies and establish guidelines for permissible business and investment activities. States have the authority to suspend or revoke a given company's authority to do business as conditions warrant. States regulate the payment of dividends by insurance companies to their shareholders and other transactions with affiliates. Dividends and capital distributions and other transactions of extraordinary amounts arc subject to prior regulatory approval.

Insurers may market, sell and service insurance policies jn the states where they are licensed. These insurers are referred to as admitted insurers. Admitted insurers are generally required to obtain regulatory approval of their policy forms and premium rates. Non-admitted insurance markets have developed to provide insurance that is otherwise unavailable from the admitted

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insurance markets of a state. Non-admitted insurance, often referred to as "excess and surplus" lines, is piocured by either stale-licensed surplus lines brokers who place risks with insurers not licensed in that state or by the insmcd party's direct procurement from non-admitted insurers. Non-admitted insurance is subject to considerably less regulation with respect to policy rates and forms. Reinsurers arc normally not required to obtain regulatory approval of premium rates and policy forms.

The insurance regulators of every state participate in the National Association oflnsurancc Commissioners ("NAJC"). The NAIC adopts forms, instructions and accounting procedures for use by U.S. insurers and reinsurers in preparing and filing annual statutory financial statements. However, an insurer's state of domicile has ultimate authority over these matters, ln addition to its activities relating to the annual statement, the NAIC develops or adopts statutory accounting principles, model laws, regulations and programs for use by its members. Such matters deal with regulatory oversight of solvency, compliance with financial regulation standards and risk-based capital reporting requirements.

Berkshire's insurance companies maintain capital strength at exceptionally high levels. This strength differentiates Berkshire's insurance companies from their competitors. Collectively, the aggregate statutoiy surplus of Berkshire's U.S. based insurers was approximately $129 billion at December 31, 2013. All of Berkshire's major insurance subsidiaries arc rated AA+ by Standard & Poor's and A++ (superior) by A.M. Best with respect to their financial condition and operating performance.

The Terrorism Risk Insurance Act of 2002 established within the Department of the Treasury a Terrorism Insurance Program ("Program") for commercial property and casualty insurers by providing federal reinsurance of insured terrorism losses. The Program currently extends to December 31, 2014 through other Acts, most recently the Terrorism Risk Insurance Program Reauthorization Act of 2007. Hereinafter these Acts are collectively referred to as TRIA. Under TR1A, the Department ofthe Treasury is charged with certifying "acts of terrorism." Coverage under TRIA occurs when the industry insured loss for a certified event exceeds S100 million. To be eligible for federal reinsurance, insurers must make available insurance coverage for acts of terrorism, by providing policyholders with clear and conspicuous notice of the amount of premium that will be charged for this coverage and ofthe federal share ofany insured losses resulting from any act of terrorism. Assumed reinsurance is specifically excluded from TRIA participation. TRIA currently also excludes certain forms of direct insurance (such as commercial auto, burglary, theft, surety and certain professional liability lines) Reinsurers are not required to offer terrorism coverage and are not eligible for federal reinsurance of terrorism losses.

In the event of a certified act of terrorism, the federal government will reimburse insurers (conditioned on their satisfaction of policyholder notification icquirements) for 85% of their insured losses in excess of an insurance group's deductible. Under the Program currently in effect, the deductible is 20% ofthe aggregate direct subject earned premium for relevant commercial lines of business in the immediately preceding calendar year. The aggregate deductible in 2014 for Berkshire's consolidated insurance and reinsurance businesses will be approximately $575 million. There is also an aggregate limit of $100 billion on the amount ofthe federal government coverage for each TRIA year. It is not currently known whether TRIA will be extended beyond 2014.

Regulation ofthe insurance industry outside of the United States is subject to the differing laws and regulations of each country in which an insurer has operations or writes premiums. Some jurisdictions impose complex regulatory' requirements on insurance businesses while other jurisdictions impose fewer requirements. In certain foreign countries, reinsurers arc required to be licensed by governmental authorities. These licenses may be subject to modification, suspension or revocation dependent on such factors as amount and types of insurance liabilities and minimum capital and solvency tests. The violation of regulatory requirements may result in fines, censures and/or criminal sanctions in various jurisdictions. Berkshire subsidiaries have historically provided insuring capacity to insurance syndicates at Lloyd's of London. Such capacity entitles the Berkshire subsidiaries to a share ofthe risks and rewards ofthe activities ofthe syndicates in pioportion to the amount of capacity provided. This business is subject to regulation by the United Kingdom's Prudential Regulation Authority which maintains comprehensive rules and regulations covering the legal, financial and operating activities of managing agents and syndicates.

Berkshire's insurance underwriting operations are comprised ofthe following sub-groups: (1) GEICO and its subsidiaries, (2) General Re and its subsidiaries, (3) Berkshire Hathaway Reinsurance Group and (4) Berkshire Hathaway Primary Group. Except for certain retioactive reinsurance products that generate significant amounts of up-front picmiuins along with estimated claims expected to be paid over very long periods of time creating "float" (sec Investments section below), Berkshire expects to achieve a net underwriting profit over time and will reject inadequately priced risks. Underwriting ptofit is earned premiums less associated inclined losses, loss adjustment expenses and underwriting and policy acquisition expenses. Underwriting profit docs not include investment income earned from investments. Bcikshirc's insurance subsidiaries employ approximately 36,000 persons in (he aggregate. Additional information related to each of Berkshire's four underwriting groups follows.

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Source BERKSHIRE HATHAWAY INC. 10-K, Mrjich OJ. 2014

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GEICO—GEICO is headquartered in Chevy Chase, Maryland and its insurance subsidiaries consist of: Government Employees Insurance Company, GEICO General Insurance Company, GEICO Indemnity Company, GEICO Casualty Company, GEICO Advantage Insurance Company, GEICO Choice Insurance Company and GEICO Secure Insurance Company. These companies primarily offer private passenger automobile insurance to individuals in all 50 states and (he District of Columbia. In addition, GEICO insures motorcycles, all-terrain vehicles, recreational vehicles and small commercial fleets and acts as an agen( for other insurers who offer homeowneis, boat and life insurance to individuals. GEICO markets its policies primarily through direct response methods in which applications for insurance are submitted directly to the companies via the Internet or by telephone.

GEICO competes foi private passenger auto insurance customers with other companies that sell directly to the customer as well as with companies that use agency sales forces. The automobile insurance business is highly competitive in the areas of price and service. Some insurance companies may exacerbate price competition by selling their products for a period of time at less than adequate rates. GEICO will not knowingly follow that strategy.

As a result of an aggressive advertising campaign and competitive rates, voluntary policics-in-forcc have increased about 40% over the past five years. GEICO was the third largest private passenger auto insurer in the United States in terms of premium volume in 2012. According to A.M. Best data for 2012, the five largest automobile insurers have a combined market share of 52%. with GEICO's market share being approximately 9.7%. Since the publication of that data, management believes that GEICO's current market share has grown to approximately 10.4% and that it is now the second largest private passenger auto insurer in the United States. Seasonal variations in GEICO's insurance business arc not significant. However, extraordinary weather conditions or other factors may have a significant effect upon the frequency or severity of automobile claims.

Private passenger auto insurance is stringently regulated by state insurance departments. As a result, it is difficult for insurance companies to differentiate their products. Competition for private passenger automobile insurance, which is substantial, tends to focus on price and level of customer service provided. GEICO's cost-efficient direct response marketing methods and emphasis on customer satisfaction enable it to offer competitive rates and value to its customers. GEICO primarily uses its own claims staff lo manage and settle claims.

The name and reputation of GEICO is a material asset and management protects it and other service marks through appropriate registrations.

General Re—General Re Corporation ("General Re") is the holding company of General Reinsurance Coiporation ("GRC") and its subsidiaries and affiliates. GRC's subsidiaries include General Reinsurance AG, a major international reinsurer based in Germany. General Re subsidiaries currently conduct business activities globally in 51 cities and provide insurance and reinsurance coverages throughout the world. General Re provides property/casualty insurance and reinsurance, life/health reinsurance and other reinsurance intermediary and risk management services, underwriting management and investment management services. General Re is one ofthe largest reinsurers in the world based on premium volume and shareholder capital.

Property/Casualty Reinsurance

General Re's property/casualty reinsurance business in North America is conducted through GRC domiciled in Delaware and licensed in the District of Columbia and all states but Hawaii where it is an accredited reinsurer. Property/casualty operations in North America arc headquartered in Stamford, Connecticut, and arc also conducted through 16 branch offices in the U.S. and Canada. Reinsurance activities are marketed directly to clients without involving a broker or intermediary. Coverages are written primarily on an excess basis and under treaty and facultative contracts. In 2013, approximately 35% ofnet written premiums in North America iclalcd to casualty reinsurance coverages and 46% related to property reinsurance coverages.

General Re's property/casualty business in North America also includes a few smaller specialty insurers (primarily the General Star and Genesis companies domiciled in Delaware and Connecticut.) These specialty insurers underwrite primarily liability and workers' compensation coverages on an excess and surplus basis and excess insurance for self-insured programs. In 2013, Ihe specialty insurers represented approximately 19% of General Re's North American property/casualty net written premiums.

General Re's international property/casualty reinsurance business operations arc conducted through internationally-based subsidiaries on a direct basis (via General Reinsurance AG as well as several other General Re subsidiaries and branches in 23 countries) and through brokers (primarily via Faraday, which owns the managing agent of Syndicate 435 at Lloyd's of London

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Table of Contents

and provides capacity and participates in 100% of the results of Syndicate 435). Coverages arc written on both a quota-share and excess basis for multiple lines of property, aviation and casualty reinsurance coverage. In 2013, international-based property/casualty operations principally wrote direct reinsurance in the form of treaties with lesser amounts written on a facultative basis.

Life/Health Reinsurance

General Re's North American and international life, health, long-term care and disability reinsurance coverages arc written on an individual and group basis. Most of this business is written on a proportional treaty basis, with the exception ofthe U.S. group health and disability business which is predominately written on an excess treaty basis. Lesser amounts of life and disability business arc written on a facultative basis. The life/health business is marketed on a direct basis. In 2013, approximately 42% of life/health net premiums were written in the United Slates, 25% in Western Europe and the remaining 33% throughout the rest ofthe world.

Berkshire Hathaway Reinsurance Group—The Berkshire Hathaway Reinsurance Group ("BHRG") operates from offices located in Stamford, Connecticut. Business activities arc conducted through a group of subsidiary companies, led by National Indemnity Company ("NICO") and Columbia Insurance Company ("Columbia"). BHRG provides principally excess and quota-share reinsurance to other property and casualty insurers and reinsurers. BHRG also offers life reinsurance and annuity contracts through Berkshire Hathaway Life Insurance Company of Nebraska ("BHLN") and financial guaranty insurance through Berkshire Hathaway Assurance Corporation.

The type and volume of insurance and reinsurance business written by BHRG is dependent on current market conditions, including prevailing premium rates and coverage terms as perceived by management, and can change rapidly. The level of BHRG's underwriting activities often fluctuates significantly from year to year depending on the perceived level of price adequacy in specific insurance and reinsurance markets.

BHRG writes catastrophe exccss-of-loss treaty reinsurance contracts. BHRG also writes individual policies for primarily large or otherwise unusual discrete risks on both an excess direct and facultative reinsurance basis, referred to as "individual risk," which includes policies covering terrorism, natural catastrophe and aviation risks. A catastrophe excess-of-Ioss policy provides protection to the counterparty from the accumulation of primarily property losses arising from a single loss event or series of related events Catastrophe and individual risk policies may provide significant amounts of indemnification per contract and a single loss event may produce losses under a number of contracts. As a result, catastrophe and individual risk business can produce extremely volatile periodic underwriting results. The extraordinary financial strength of NICO and Columbia are believed to be the primary reasons why BHRG has become a major provider of such coverages.

BHRG periodically assumes risks under retroactive reinsurance contracts. Retroactive reinsurance contracts afford protection to ceding companies against the adverse development of claims arising under policies issued in prior years. Coverage under such contracts is provided on an excess basis or immediately with respect to losses payable after the inception ofthe contract. Coverage provided is normally subject to a large aggregate limit of indemnification. Significant amounts of asbestos, environmental and latent injury claims may arise under the contracts. Under certain contracts, the limits of indemnification provided are exceptionally large. In 2007, an agreement became effective between NICO and Equitas. a London based entity established lo reinsure and manage the 1992 and prior years' non-life liabilities of the Names or Underwriters at Lloyd's of London. Under the agreement NICO provides up to S7 billion of new reinsurance to Equitas. In 2009, NICO agreed to provide up to 5 billion Swiss Francs of aggregate excess retroactive protection to Swiss Reinsurance Company Ltd. and its affiliates ("Swiss Re"). In 2010, NICO entered into a reinsurance agreement with Continental Casualty Company, a subsidiaiy of CNA Financial Corporation ("CNA"), and several of CNA's other insurance subsidiaries (collectively the "CNA Companies") under which NICO assumed Ihe asbestos and environmental pollution liabilities ofthe CNA Companies subject to a maximum limit of indemnification of S4 billion. In 201 l.NICO entered into a contract with Eaglestonc Reinsurance Company, a subsidiary of American International Group, Inc. ("AIG"). Under Ihe contract, NICO agreed lo reinsure the bulk of AIG's U.S. asbestos liabilities up to a maximum limit of indemnification of $3.5 billion.

In BHRG's retroactive reinsurance business, the concept of time-value-of-moucy is an important clement in establishing prices and contract terms, since the payment of losses under the insurance contracts arc often expected lo occur over lengthy periods of time. Losses payable under the contracts are normally expected lo exceed premiums and therefore, produce underwriting losses. This business is accepted, in part, because ofthe large amounts of policyholder funds ("float") generated for investment, Ihe economic benefit of which will be reflected through investment results in future periods.

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77ie Infonnitlon contained herein may not tm copied, adapted or distributed and ts not warranted fo be accurate, complete or timely The user assunws all risks far any damages or losses arising front any use of this information, except to the extent such drmtges or lossns cannot be limited or excluded hy applicable law Past financial performance is no guarantee ot future rosuUs

Tabto of Contents

BHRG also underwrites traditional non-catastrophe insurance and reinsurance coverages, referred to as multi-line property/casualty business and beginning on Januaiy 1, 2008, it included a five-year 20% quota-share of property and casualty business underwritten by Swiss Re and its major property/casually affiliates. This contract expired with respect to business incepting after December 31,2012 and is now in run-off.

For many years, BHLN has offered annuity insurance and reinsurance products, in which it usually receives an upfront premium and makes a stream of annuity payments in the future. In 2010, BHLN entered info a life reinsurance contract with Swiss Re Life & Health America Inc. ("SRLHA"), a subsidiary of Swiss Re. Under the agreement, BHLN assumed the liabilities and subsequent renewal premiums associated with a closed block of yearly renewable term reinsurance business. The agreement, as amended in 2013, is expected to remain in-forcc for several decades. Al the end of 2010, BHLN also acquired the life reinsurance business of Sun Life Assurance Company of Canada.

In the first quarter of 2013, BHRG reinsured certain guaranteed minimum death benefit coverages on a portfolio of variable annuity reinsurance contracts that have been in run-off for a number of years under a 100% coinsurance reinsurance treaty with Connecticut General Life Insurance Company ("CGLIC"). The CGLIC contract will remain in force until the natural expiry ofthe underlying business, subject lo an aggregate limit of indemnification of S3.82 billion.

Berkshire Hathaway Primary Group—The Berkshire Hathaway Primary Group ("BH Primary") is a collection of independently managed primary insurance operations that provide a wide variety of insurance coverages to policyholders located principally in the United Slates. These various operations arc discussed below.

NICO and certain affiliates (referred to as the National Indemnity Primary Group) underwrite motor vehicle and general liability insurance to commercial enterprises on both an admitted and excess and surplus basis. This business is written nationwide, primarily through insurance agents and brokers and is based in Omaha, Nebraska.

A collection of insurance companies referred to internally as the "Berkshire Hathaway Homestate Companies" ("BHHC") primarily offer standalone workers' compensation, commercial auto and commercial property coverages. Over the past five years, BHHC has developed a national reach, with the ability to provide first dollar and sinalj to mid-range deductible workers' compensation coverage to employers in all stales, except those where coverage is available only tlirough stale operated workers compensation funds. As a result, the volume of workers' compensation business written over that period has grown significantly. BHHC serves a diverse client base. BHHC's business is generated primarily through independent agents and BHHC employees adjust substantially all of related claims.

Medical Protective Corporation ("McdPro") offers products and solutions through its subsidiaries (The Medical Protective Company and Princeton Insurance Company, which was acquired at the end of 2011) and is a national leader in providing healthcare malpractice insurance coverage and risk solutions for physicians, dentists, hospitals and health systems, as well as other healthcare facilities and healthcare providers. McdPro has provided iusuiancc coverage to protect healthcare providers against losses since 1899. McdPro's insurance policies arc distributed primarily through a nationwide network of appointed agents and brokers. MedPro offers strong claims handling and administration, risk management solutions, and a wide range of insurance coveiage features Uiough a team of experienced professional employees.

U.S. Investment Corporation ("USIC"), through its four subsidiaries led by United States Liability Insurance Company, is a specialty insurer that underwrites commercial, professional and personal lines of insurance on an admitted and excess and surplus basis. Policies arc marketed in all 50 states and the District of Columbia through wholesale and retail insurance agents. USIC companies underwrite and market 110 distinct specially property and casualty insurance products.

Applied Underwriters, Inc. ("Applied") is a leading provider of payroll and insurance services to small and mid-sized employers. Applied, through its subsidiaries principally markets SolutionOne*. a product that bundles workers' compensation and other employment related insurance coverages and business services into a seamless package that is designed to reduce the risks and remove the burden of administrative and regulatory requirements faced by small to mid-sized employers. Applied also markets EquityComp* which is a workers' compensation-only product targeted to medium sized employers with a profit sharing component.

In the fourth quarter of 2012, NICO acquired Clal U.S. Holdings, which owns GUARD Insurance Gioup ("GUARD"). GUARD is based in Wilkes-Barre, Pennsylvania and through four insurance subsidiaries provides commercial property and casualty insurance coverage to small- and mid-sized businesses.

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Son.ce BERKSHIRE HATHAWAY INC. 10-K, MaichfB. 201-1

77ie information contained herein may not be copied, adapted or distributed and Is not wnrt anted In be accurate, complete or ttmety. The veer assumes all risks for any damages or losses vrlalrtg from tiny use of Hits information, except fo the extent such damages or losses cannot be limited or exchtdnd by applicable law Past financial pciloi mince is no guarantee of future rcsittls.

Tabic of Contents

III 2007, Berkshire acquired Boat America Corporation, which owns Seaworthy Insurance Company and controls ihe Boat Owners Association ofthe United States (collectively "BoatU.S."). BoatU.S. provides insurance, safely and other services to recreational watcrcraft owners and enthusiasts. Central States Indemnity Company of Omaha, located in Omaha, Nebraska, historically provided credit and income protection insurance and related services to credit and debit card holders nationwide and recently began writing Medicare Supplement insurance.

Berkshiie Hathaway Specialty Insurance ("BHS1") was formed in April 2013 with the goal of providing customers with tailored solutions for large and complex risks ranging from natural catastrophes, lo securities litigation, to construction liabilities. BHSI currently provides primary and excess commercial property, casualty, healthcare professional liability, executive and professional lines insurance and related programs. To date, BHSI's business has principally been written on an excess & surplus lines basis in the U.S. market. Eventually, BHSI also plans to write policies on an admitted basis. BHSI has established a home office in Boston and regional underwriting offices in Atlanta, Chicago, Los Angeles and New York. BHSI expects to write business through wholesale and retail insurance brokers, as well as managing general agents. The type and volume of business written by BHSI will depend on prevailing premium rates and coverage terms that arc deemed acceptable by its management.

6

Soii.-ce BERKSHIRE HATHAWAY INC. 10-K. Much 03. 2014      I'owaied by Mraning.'.tar Oocunient Research¹'"

77ie Inlormalion contained herein may not bo copied, adapted or distributed and Is not warranted lo be accurate, complete er timely. The user assumes alt risks for any damages or losses arising Itom uny use of this Inlormalion. except to Ihe extern such damages or losses cannot be limited or excluded by applicable law. Past financial periormance Is no guarantee 01 tutor e results

Tabic of Contents

Property and casual!}' loss liabilities

Berkshire's property and casualty insurance companies establish liabilities for estimated unpaid losses and loss adjustment expenses with respect to claims occurring on or before the balance sheet date. Such estimates include provisions for reported claims or case estimates, provisions for incurrcd-but-not-reported ("IBNR") claims and legal and administrative costs to settle claims. The estimates of unpaid losses and amounts recoverable under reinsurance are established and continually reviewed by using a variety of actuarial, statistical and analytical teclmiques. Reference is made to "Critical Accounting Policies," included in Item 7 of this Report.

The table below presents the development of Berkshire's net unpaid losses for property/casualty contracts from 2003 through 2012 and net unpaid loss data as of December 31, 2013. Data in the labie related to acquisitions is included from Ihe acquisition date forward. Berkshire's management believes that the liabilities established as of December 31,2013 are reasonable and adequate. However, due to (he inherent uncertainties in the rcsen'ing process, it cannot be assured that such balances will ultimately prove to be adequate. Dollar amounts are in millions.

ZOOS 'S4S.034 ' 2,798

50,832 '.

(2.812) ,,\'48,020'^:

$ 60,075-2.269 62.344 (2.735) ^: 59.609

S63.SI9 2.130 . 65.949 (2,953) :'62.996 ^r

J 56,002 '

2.732 • 58.734 .' 13.139) '•"'55,595 "

S56.620 2,616

.59.23*6 \^: (3,210)

.56,026. ■'

S 47,612 -

2,793 !'50^65^!;i

(2.869) .47.536'-'

S 59.416 ^!

2.473 : 61.889. (2.9221 'SS.967'

5 64,160 1,990 66,150; (7,925) 63.2.25 ' (1.990) (4.019)

. % 64,866 1.866 '-.■'. 66;732'. (3.0SS) ' 63.677-' (1.866) i (4,359)'

(2,798)       (2.793).      (2.732)      (2.6)6),       P.473)       (2,269) (2.130)

(3,810)' .-.: ^JH.139)

S55.557

S42.723     S41.8I.I      $47,288     S48.836     549,955 S51.228

554,787 ' 53.600

49,960 49,143

.47.636 46,793 ■^J46,699

^;47,293 45,675 45.337." 44.914

46.916 45.902

. 44.665 ¹ 44.618

•^s 44;406.'

'40.456,-40.3SQ 39J9S : 38,003

-.'-37>«-' 37,631 .

42:468 41.645 41.676 40.884 39,888 ' 40.008. . 39.796

(4.387)

(211);

S (4,598)

       '985

(4,470)

      533

(3,937) •1.990 .

(4,537) . '■ '-(57) S (4,630) .' 1,826

(6,438) '143 '

S(<>,295) .'.   ■ 1.716

, (3.127) ^: (287) S (3,414)

- "542'

(3,038) (366) S (3,404) ; ^: '2,317 .

(S.I 48)

;.'■■■ 102 :

S (5,046) i;S79. :

(1,659)

      (93)

S (1,752) ■ ■ .186 ^:

S (1.938)

S 10.978

S (5.927)    S (6,456)

5 (5,583)    S (3,956)

S 10,628 .""17.260

S 8,854 '-. . 14.593 18,300

S 8,315 13,999 16.900 19.478 21,786

5 8,486 : 13.394 17,557 19,608 21,660 23.595 '

S 8,865 " 13,581 16,634 ■   19.724 ;

21.143 ' 22.678 V 23.892

S 9,345 . 15,228 18,689 ^: 20,890 23,507 ' 24.935 26.266 " 26.97.8

Unpaid losses per Consolidated Balance Sleet     ".: .      S 45,393      . 545.219

Reserve discounts      2.435      2.611

Unpaid losses bcfwc'diaiunls'                      •; '/.: .:      ^:   47.828      47,830

Ceded losses      (2.5971      (2.405)

(2,611)

(2.777)       (2.188)       (1.964V       (3:987) "'.   (3.9?>) ' (.3.957)

(2,435) -(3,OS7)

S 39.709      S 40.087     S 42.834     S 42.779     5 48,876     S49.487     SS2.S37     S 53.530     S56.727     S 57.2)6 557,452

Net'unpaid losses '.-''"' :.] ■)      4\?)l      ^:45.42S

Reserve discounts

Deferred charges    '  :'r: ^:"      ■.'.■ ■"'"

Net unpaid losses, nel of discounta'deferred charges

Liability rc-«tiriiatcd: '.'■"                 '     '".',.      .'.      ' "•'•

lycnilatcr      S40.61S      S 39,002

1. years lalet                    .                     ■■■'.-      39.723      '39.456
2. years lain       , .,40,916      39.608

. .   .4 years lalci        , ''.'"-".      41.4IS      3S.9T1

5 years (iter                                 .        40,891      ,39.317

.-'•'. 6yetiAUtn    'V'.'-l" ■ ■ ;■ .      41.458  ' 38.804

7 years later .   „_                   ...      41,061      38,060

SyCTrjlitct.         ■.        ■-   ' ■ ■  ■■."'.         ■     '      40.412      38.280

9years later      40,700      38,189

■.• ■:-10 years later. '•', '          .'■' '                    ;.'    '■      40.778.      ' .

Cumulative deficiency (redundancy)      1,069      (1,898)

Cuniutalivc forciEncxcnangccflcctf .".'           . :      '    (2.48)      ' ■ •- .177

S (1,854)    5 (4.171)

Net deficiency (ledmidancy)      S    821      J (1,721)

Deferred chargechanges and reserve discounts •'■       ■              2,675 ' : .2-2.452 I

Deficiency (redundancy) before deferred charges and reserve

discounts

Gimttlative paynvents-■■"               ^  .        .'^v. '■-,'.    .      '.'!)■''

lycarlatcr                    .     ,. .      S 8,828      5 7,793

1. 1. years lalci    .   .         ■ •          '■    "''   '      13,462-;"'-'02.666 .
2. years later      17,429.      16,463

'':-'■■" 4 yean later'': r,".' :        '                            :.      ¹ 20.494      18,921

1. years later            2.2,517      20,650.
2. years Inlet . r~ ' -'. s ■';'■ ' ■ ■■ -^: 24.070      ' 22.865-

7ycarslaiei . . . .26,300      24,232

SycariUct     .   .             -:';.""  ■ "'■;•      27.292      ' 25.430

.9 years lawi                                        ......   , 28.414      26,624.

.!       10 years later                         ^:'    ■^:.-=-^;.      '2.9.559      ■-: ."

Iticamomns of tc-csliinatcd liabilities in the tabic ol>ovc related to these operations arc based on the applicable foreign currency exchange rates as ofthe end ofthe re-estimation period The cumulative foreign exchange cfTecl lepicsenls the cuntu[ali\ e effect of changes in foreign caelijnge rates Irom the onginal balance sheet date to tl;e end ofthe re-estimation period.

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Table of Contents

The first section of the table reconciles the estimated liability for unpaid losses and loss adjustment expenses recorded al the balance sheet date for each ofthe indicated years from the gross liability reflected in Berkshire's Consolidated Balance Sheet to the net amount, after reductions for amounts recoverable under ceded reinsurance, deferred charges on retroactive reinsurance contracts and loss reserve discounts.

Certain workers' compensation loss liabilities are discounted for both statutory and GAAP reporting purposes at an interest rate of 4.5% per annum for claims occurring before 2003 and at 1% per annum for claims occurring after 2002. In addition, deferred charges arc recorded as assets at the inception of rctioactivc reinsurance contracts for the excess ofthe unpaid losses and loss adjustment expenses over the premiums received. The deferred charges are subsequently amortized over the expected claim payment period. Deferred charge amortization and loss reserve discount accretion arc recorded as components of insurance losses and loss adjustment expenses incurred.

The second section ofthe table shows the re-cslimaled net unpaid losses, including the impact of changes in related reserve discounts and deferred charges, based on experience as of the end of each succeeding year. The re-estimated amount also reflects the effect of loss payments and re-estimation of remaining unpaid liabilities. The line labeled "cumulative deficiency (redundancy)" represents the aggregate increase (decrease) in the initial estimates from the original balance sheet date through December 31, 2013. These amounts have been reported in earnings over lime as components of losses and loss adjustment expenses and include accumulated reserve discount accretion and deferred charge amortization. Due to the significance ofthe deferred charges and reserve discounts, the cumulative changes in such balances which arc included in the cumulative deficiency/redundancy amounts are also provided.

The redundancies or deficiencies shown in each column should be viewed independently of the other columns because redundancies or deficiencies arising in earlier years may be included as components of redundancies or deficiencies in the more recent years. Liabilities assumed under retroactive reinsurance contracts are treated as occurrences in the yeai the contract was entered into, as opposed to when the underlying losses actually occuiTed, which is prior to the contract date.

The third part ofthe table shows the cumulative amount of net losses and loss adjustment expenses paid with respect to recorded net liabilities as ofthe end of each succeeding year. While the information in the table provides a historical perspective on the adequacy of unpaid losses and loss adjustment expenses established in previous years, and the subsequent payments of claims, readers are cautioned against extrapolating redundancies or deficiencies ofthe past on current unpaid loss balances.

Investments—Invested assets of insurance businesses derive from shareholder capital as well as funds provided from policyholders through insurance and reinsurance business ("float"). Float is an approximation of the amount of net policyholder funds available for investment. That term denotes the sum of unpaid losses and loss adjustment expenses, life, annuity and health benefit liabilities, unearned premiums and other policyholder liabilities less the aggregate amount of premium balances receivable, losses recoverable from reinsurance ceded, defined policy acquisition costs, deferred charges on rcinsuiancc contracts and related deferred income taxes. On a consolidated basis, the amount of float has grown from approximately $58 billion at the end of2008 to appioximatcly $77 billion at the end of 2013, primarily through internal growth. BHRG and General Re accounted for approximately 74% ofthe consolidated float as of December 31,2013. Equally important as the amount ofthe float is its cost, represented by Berkshire's periodic net underwriting gain or loss. The increases in the amount of float plus the substantial amounts of shareholder capital devoted to insurance and reinsurance activities have generated meaningful increases in the levels of investments and investment income over the past five years.

Investment portfolios of insurance subsidiaries include ownership of equity securities of other publicly traded companies which are concentrated in relatively few companies and large amounts of fixed maturity securities and cash and cash equivalents. Fixed maturity investments consist of obligations of (he U.S. Government, U.S. states and municipalities, mortgage-backed securities issued primarily by the three major U.S. Government and Government-sponsored agencies, as well as obligations of foreign governments and corporate obligations. Investment portfolios are primarily managed by Berkshire's corporate office. Generally, there arc no targeted investment allocation rates established by management with respect to investment activities. Rather, management may increase or decrease investments in response to perceived changes in opportunities for income or price appreciation relative to risks associated with the issuers ofthe securities.

Railroad Business

On February 12, 2010, Berkshire completed its acquisition of Burlington Northern Santa Fe Corporation through the merger of a wholly-owned merger subsidiary and Burlington Northern Santa Fe Corporation The merger subsidiary was the surviving entity and was renamed Burlington Northern Santa Fc, LLC ("BNSF"). BNSF is based in Fort Worth, Texas, and through BNSF Railway Company operates one ofthe largest railroad systems in North America. BNSF had about 43,000

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Tabic of Contents

employees at the end of 2013. BNSF Railway operates one ofthe largest railroad networks in North America with approximately 32,500 route miles of track (excluding multiple main tracks, yard tracks and sidings) in 28 states and two Canadian provinces. BNSF Railway owns approximately 23,000 route miles, including easements, and operates on approximately 9,500 route miles of trackage rights that permit BNSF Railway to operate its trains with its crews over other railroads' tiacks. As of December 31, 2013, the total BNSF Railway system, including single and multiple main tracks, yard tracks and sidings, consisted of approximately 51,000 operated miles of track, all of which arc owned by or held under casement by BNSF Railway except for approximately 10,500 miles operated under trackage rights.

In serving the Midwest, Pacific Northwest, Western, Southwestern and Southeastern regions and ports ofthe country, BNSF transports a range of products and commodities derived from manufacturing, agricultural and natural resource industries. Over half ofthe freight revenues of BNSF arc covered by contractual agreements of varying durations, while the balance is subject to common caiTicr published prices or quotations offcicd by BNSF. BNSF's financial performance is influenced by, among other things, general and industry economic conditions at the international, national and regional levels. BNSF's primary routes, including trackage rights, allow it to access major cities and ports in the western and southern'United States as well as parts of Canada and Mexico. In addition to major cities and ports, BNSF efficiently serves many smaller markets by working closely with approximately 200 shortline partners BNSF has also entered into marketing agreements with other rail carriers, expanding the marketing reach for each railroad and their customers. For the year ending December 31, 2013, approximately 33% of freight revenues were derived from consumer products, 27% from industrial products, 23% from coal and 17% from agricultural products.

Regulatory Matters

BNSF is subject to federal, state and local laws and regulations generally applicable to all of its businesses. Rail operations are subject to the regulatory jurisdiction of the Surface Transportation Board ("STB") ofthe United Slates Department of Transportation ("DOT"), the Federal Railroad Administration of the DOT, the Occupational Safety and Health Administration ("OSHA"), as well as other federal, state and Canadian regulatory agencies. The STB has jurisdiction over disputes and complaints involving certain rates, routes and services, the sale or abandonment of rail lines, applications for line extensions and construction and consolidation or merger with, or acquisition of contiol of rail common earners. Hie outcome of STB proceedings can affect the profitability of BNSF's business.

The DOT and OSHA have jurisdiction under several federal statutes over a number of safely and health aspects of rail operations, including the transportation of hazardous materials. State agencies regulate some aspects of rail operations with respect to health and safety in areas not otherwise preempted by federal law.

Environmental Matters

BNSF's rail operations, as well as those of its competitors, are also subject to extensive federal, state and local environmental regulation covering discharges to water, air emissions, toxic substances and the generation, handling, storage, transportation and disposal of waste and hazardous materials. This regulation has the effect of increasing the cost and liabilities associated with rail operations. Environmental risks are also inherent in rail operations, which frequently involve transporting chemicals and other hazardous materials.

Many of BNSF's land holdings are and have been used for industrial or transportation-related purposes oi leased to commercial or industrial companies whose activities may have resulted in discharges onto the property. As a result, BNSF is now subject to, and will from time to time continue to be subject to, environmental cleanup and enforcement actions. In particular, the federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), also known os ihe Superfund law, generally imposes joint and seveial liability for the cleanup and enforcement costs on current and former owncis and operators of a site, without regard to fault or the legality ofthe original conduct. Accordingly, BNSF may be responsible under CERCLA and other federal and state stahites for all or part ofthe costs to clean up sites at which certain substances may have been released by BNSF, its current lessees, former owners or lessees of properties, or other third parties. BNSF may also be subject to claims by third parties for investigation, cleanup, restoration or other environmental costs under environmental statutes or common law with respect to properties they own that have been impacted by BNSF operations.

Competition

The business environment in which BNSF operates is highly competitive. Depending on the specific market, deregulated motor carriers and other railroads, as well as river barges, ships and pipelines in certain markets, may exert pressure on price

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and service levels. The presence of advanced, high service truck lines with expedited delivery, subsidized infrastructure and minimal empty mileage continues to affect the market for non-bulk, lime-sensitive freight. The potential expansion of longer combination vehicles could further encroach upon markets traditionally served by railroads. In order to remain competitive, BNSF and other lailroads continue to develop and implement operating efficiencies to improve productivity.

As railroads streamline, rationalize and otherwise enhance their franchises, competition among rail carriers intensifies. BNSF's primary rail competitor in the Western region of the United States is the Union Pacific Railroad Company. Other Class I railroads and numerous regional railroads and motor carriers also operate in parts ofthe same territories seivcd by BNSF. Based on weekly reporting by the Association of American Railroads, BNSF's share ofthe western United States rail traffic in 2013 was approximately 49.5 percent.

Utilities and Energy Businesses

Berkshire cuncntly owns an 89.8% voting common stock interest in MidAmerican Energy Holdings Company ("MidAmerican"), an international energy company with subsidiaries that generate, transmit, store, distribute and supply energy. MidAmerican's businesses arc managed as separate operating units. MidAmerican's domestic regulated energy interests arc currently comprised of four regulated utility companies serving approximately 4.5 million retail customers, two interstate natural gas pipeline companies with approximately 16.400 miles of pipeline and a design capacity of approximately 7.7 billion cubic feet of natural gas per day and a 50% interest in electricity transmission businesses. Its Great Britain electricity distribution subsidiaries serve about 3.9 million electricity end-users. In addition, MidAmerican's interests include a diversified portfolio of domestic independent power projects, a hydroelectric facility in the Philippines, the second-largest residential real estate brokerage firm in the United States, and the second-largest residential real estate brokerage franchise network in the United Stales. MidAmerican employs approximately 19,700 persons in connection with its various operations.

General Mailers

PacifiCorp is a regulated electric utility company headquartered in Oregon, serving electric customers in portions of Utah, Oregon, Wyoming, Washington, Idaho and California. The combined service territory's diverse regional economy ranges from rural, agricultural and mining areas to urban, manufacturing and government service centers. No single segment ofthe economy dominates the service territory, which helps mitigate PacifiCorp "s exposure to economic fluctuations. In addition to retail sales, PacifiCorp sells electricity on a wholesale basis.

MidAmerican Energy Company ("MEC") is a regulated electric and natural gas utility company headquartered in Iowa, serving electric and natural gas customers primarily in Iowa and also in portions oflllinois, South Dakota and Nebraska. MEC has a diverse customer base consisting of urban and rural residential customers and a variety of commercial and industrial customers. In addition to retail sales and natural gas transportation, MEC sells electricity principally to markets operated by regional transmission organizations and regulated natural gas on a wholesale basis and sells electricity and natural gas services in deregulated markets.

NV Energy, Inc. ("NV Energy"), acquired by MidAmerican on December 19, 2013, is an energy holding company headquartered in Nevada, primarily consisting of two regulated utility subsidiaries, Nevada Power Company ("Nevada Power") and Sierra Pacific Power Company ("Sierra Pacific") (collectively, the "Nevada Utilities"). Nevada Power serves electric customers in southern Nevada and Sierra Pacific serves electric and natural gas customers in northern Nevada. The Nevada Utilities' combined service territory's economy includes gaming, mining, recreation, warehousing, manufacturing and governmental. In addition to retail sales, the Nevada Utilities sell electricity on a wholesale basis.

As vertically integrated utilities, MidAmerican's domestic utilities own approximately 24,000 net MW of generation capacity. There are seasonal variations in these businesses that arc principally related to the use of electricity for air conditioning and natural gas for heating. Typically, regulated electric revenues arc higher in the summer months, while regulated natural gas revenues are higher in the winter months.

The natural gas pipelines consist of Northern Natural Gas Company ("Northern Natural") and Kern River Gas Transmission Company ("Kern River"). Northern Nahu al is based in Nebraska and owns the largest interstate natur al gas pipeline system in the United States, as measured by pipeline miles, icaching from southern Texas to Michigan's Upper Peninsula. Northern Natural's pipeline system consists of approximately 14,700 miles of natural gas pipelines. Northern Natural's extensive pipeline system, which is interconnected with many interstate and intrastate pipelines in the national grid system, has access lo supplies from multiple major supply basins and provides transportation services lo utilities and numerous

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other customers. Northern Natural also operates three underground natural gas storage facilities and two liquefied natural gas storage peaking units. Northern Natural's pipeline system experiences significant seasonal swings in demand and revenue, with the highest demand typically occurring during the months of November through March.

Kcm River is based in Utah and owns an interstate natural gas pipeline system that consists of approximately 1,700 miles and extends from supply areas in the Rocky Mountains to consuming markets in Utah, Nevada and California. Kcm River transports natural gas for electric utilities and natural gas distribution utilities, major oil and natural gas companies or affiliates of such companies, electricity generating companies, cneigy marketing and trading companies, and financial institutions.

The Great Britain utilities consist of Northern Powergrid (Northeast) Limited ("Northern Powergrid (Northeast)") and Northern Powergrid (Yorkshire) pic ("Northern Powergrid (Yorkshire)"), which own a substantial electricity distribution network that delivers electricity to end-users in northeast England in an area covering approximately 10,000 square miles. The distribution companies primarily charge supply companies regulated tariffs for the use of electrical infrastructure.

MidAmerican Rcncwables is based in Iowa and owns interests in independent power projects that arc in service or under construction in California, Illinois, Arizona, the Philippines, Texas, New York and Hawaii. These independent power projects, consisting of solar, natural gas, wind, gcothennal and hydroelectric generating facilities, produce energy that is sold principally under long-term power purchase agreements.

Regulatory Mailers

PacifiCorp, MEC and the Nevada Utilities arc subject to comprehensive regulation by various federal, state and local agencies. The Federal Energy Regulatory Commission ("FERC") is an independent agency with broad authority to implement provisions ofthe Federal Power Act, the Natural Gas Act ("NGA"), the Energy Policy Act of 2005 and other federal statutes. The FERC regulates rates for wholesale sales of electricity; transmission of electricity, including pricing and regional planning for the expansion of transmission systems, electric system reliability; utility holding companies; accounting and records retention; securities issuances; construction and operation of hydroelectric facilities; and other matters. The FERC also has the enforcement authority to assess civil penalties of up to $1 million per day per violation of rules, regulations and orders issued under the Federal Power Act. MEC is also subject to regulation by the Nuclear Regulatory Commission pursuant to the Atomic Energy Act of 1954, as amended, with respect to its owneiship ofthe Quad Cities Nuclear Station.

Except in Oregon, Washington, Nevada and Illinois, where certain customers have the right to choose alternative electricity service suppliers, MidAmerican's utilities have an exclusive right to serve retail customers within (heir service territories and, in turn, have an obligation to provide service to those customers. Historically, state regulatory commissions have established retail electric and natural gas rales on a cosl-of-service basis, which are designed to allow a utility an opportunity to recover what each state regulatory commission deems to be the utility's reasonable costs of providing services, including a fair opportunity to cam a reasonable return on its investments based on its cost of debt and equity. The retail electric rates of PacifiCorp, MEC and the Nevada Utilities are generally based on the cost of providing traditional bundled services, including generation, transmission and distribution services.

The natural gas pipelines are subject to regulation by various federal, state and local agencies. The natural gas pipeline and storage operations of Northern Natural and Kcm River are regulated by the FERC pursuant to the NGA and the Natural Gas Policy Act of 1978. Under this authority, the FERC regulates, among other items, (a) rates, charges, terms and conditions of service and (b) the construction and operation of interstate pipelines, storage and related facilities, including the extension, expansion or abandonment of such facilities. Interstate natural gas pipeline companies are also subject to regulations administrated by the Office of Pipeline Safety within the Pipeline and Hazardous Materials Safety Administration, an agency within the DOT. Federal pipeline safety regulations are issued pursuant to the Natural Gas Pipeline Safety Act of 1968, as amended, which establishes safety requirements in the design, construction, operation and maintenance of interstate natural gas pipeline facilities.

Northern Powergrid (Northeast) and Northern Powergrid (Yorkshire) each charge fees for the use of their distribution systems that arc controlled by a formula prescribed by the British electricity regulatory body, the Gas and Electricity Markets Authority. The current five-year price control period is scheduled to end March 31, 2015.

Environmental Matters

MidAmerican and its energy businesses arc subject to federal, state, local and foreign laws and regulations regarding air and water quality, renewable portfolio standards, emissions performance standards, climate change, coal combustion bypioduct disposal, liazaidous and solid waste disposal, protected species ond other environmental matters that have the potential to impact

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MidAmerican's current and future opeiations. In addition to imposing continuing compliance obligations, Ihcse laws and regulations, such as the Federal Clean Air Act, provide regulators with the authority to levy substantial penalties for noncompliance including fines, injunctive relief and other sanctions.

The Federal Clean Air Act, as well as state laws and regulations impacting air emissions, provides a framework for protecting and improving the nation's air quality and controlling sources of air emissions. These laws and regulations continue to be promulgated and implemented and will impact the operation of MidAmerican's generating facilities and require them to reduce emissions at those facilities to comply with the requirements.

Renewable portfolio standards have been established by certain state governments and generally require electricity providers to obtain a minimum percentage of their power from renewable cncigy resources by a certain date. Utah, Oregon, Washington, California, Iowa and Nevada have adopted renewable portfolio standards. In addition, (he potential adoption of state or federal clean energy standards, which include low-carbon, non-carbon and renewable electricity generating resources, may also impact electricity generators and natural gas providers.

Comprehensive climate change legislation has not been adopted by Congress; however, regulation of greenhouse gas emissions under various provisions of the Federal Clean Air Act has continued since the Environmental Protection Agency's December 2009 findings that greenhouse gas emissions threaten public health and welfare. Since that determination, significant sources of greenhouse gas emissions have been required to report their greenhouse gas emissions and to undergo a best available control technology determination in conjunction with permitting greenhouse gas emissions. As part of President Obama's Climate Action Plan isstied in June 2013, the Environmental Protection Agency was required lo re-propose by September 2013 greenhouse gas new source performance standards that had originally been proposed in 2012 for new fossil-fueled power plants. The re-proposed standards for new sources were released in September 2013 and generally propose a standard of 1,000 pounds ofcaibon dioxide per megawatt hour for natural gas-fueled combustion turbines and 1,100 pounds of carbon dioxide per megawatt hour for coal-fueled units, ln addition, the Climate Action Plan required the Environmental Protection Agency to issue proposed standards or guidelines to address greenhouse gas emissions from existing fossil-fueled electric generating units by June 2014, lo finalize those standards or guidelines by June 2015, and lo require states to submit implementation plans by June 2016.

While the debate continues at the federal and international level over the direction of climate change policy, several states have continued to implement state-specific laws or regional initiatives to report or mitigate greenhouse gas emissions. In addition, governmental, nongovernmental and environmental organizations have become more active in pursuing climate change related litigation under existing laws.

The impact of future federal, regional, state and international accords, legislation, regulation or judicial proceedings related to climate change cannot be quantified in any meaningful range at this time. New requirements limiting greenhouse gas emissions could have a material adverse impact on MidAmerican.

MidAmerican continues to take actions to mitigate greenhouse gas emissions. For example, as of December 31, 2013, MidAmerican owned 4,747 megawatts of wind-powered generating capacity in operation and under construction, which when completed is estimated to cost approximately $9 billion, and owned 1,271 megawatts of solar generating capacity in operation and under construction, which when completed is estimated to cost approximately $6 billion.

Non-Energy Businesses

MidAmerican also owns HomcServiccs of America, Inc. ("HomcScrviccs"), the second largest full-service residential real estate brokerage firm in the United States. In addition to providing traditional residential real estate brokerage services, HomeServiccs offers other integrated real estate services, including mortgage originations and mortgage banking primarily through joint ventures and subsidiaries, title and closing services, property and casualty insurance, home warranties, relocation services and other home-related services. It operates under 30 residential real estate brand names with over 22,000 sales agents and in over 450 brokerage offices in 25 states.

HomcScrviccs' principal sources of revenue arc dependent on residential real estate sales, which are generally higher in the second and third quarters of each year. This business is highly competitive and subject to the general real estate market conditions.

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In October 2012, HomcServices acquired a 66.7% interest in the second largest residential real estate brokerage franchise network hi the United States, which offers and sells independently owned and operated residential real estate brokerage franchises. HomcServices' franchise network currently includes over 500 franchisees in over 1,600 brokerage offices in 49 states with over 44,000 sales associates under three brand names. In exchange for certain fees, HomcServices provides the right to use the Berkshire Hathaway HomcScrviccs, Piudculial and Real Living brand names and other related service marks. In 2013, HomcServices began rebranding certain of its Prudential franchisees as Berkshire Hathaway HomcServices. As of December 31, 2013, 60 franchisees were rebranded. This activity will continue in 2014 with plans to rcbrand the majority ofthe remaining franchisees. HomcServices also provides orientation programs, training and consultation services, advertising programs, and other services.

Manufacturing, Service and Retailing Businesses

Berkshire's numerous and diverse manufacturing, service and retailing businesses are described below.

Marmon—In 2008, Berkshire acquired approximately 64% ofthe outstanding common stock of Marmon Holdings, Inc. ("Marmon"), a private company then owned by trusts for the benefit of members of the Pritzker Family of Chicago. On various dates in 2010, 2012 and 2013, Berkshire acquired additional shares of outstanding stock held by noncontrolling shareholders and as of December 31, 2013 owned substantially all of Marmon. Marmon is currently comprised of three autonomous companies consisting of eleven diverse business sectors and approximately 160 independent manufacturing and service businesses.

Mannon's three companies and their respective scclois are as follows:

Marmon Emiineeied Industrial & Metal Components. Inc. ("Engineered Components")

Distribution Services, supplying specially metal pipe and tubing, bar and sheet products to markets including construction, industrial, aerospace and many others;

Electrical & Plumbing Products Distribution, supplying electrical building wire primarily for residential and commercial construction, and copper tube for the plumbing, HVAC, refrigeration and industrial markets, through the wholesale channel; and

Industrial Products, consisting of metal fasteners and fastener coalings for the construction, industrial and other markets, gloves for industrial markets, portable lighting equipment for mining and safety markets, overhead electrification equipment for mass transit systems, custom-machined aluminum and brass forgings for the construction, energy, recreation and other industries, brass fittings and valves for commercial and industrial applications, and drawn aluminum tubing and extruded aluminum shapes for the construction, automotive, appliance, medical and other markets.

Marmon Natural Resource & Transportation Services. Inc. ("Natural Resources")

Crane Services, providing (he leasing and operation of mobile cranes primarily to the energy, mining and petrochemical markets;

Engineered Wire & Cable, supplying electrical and electronic wire and cable for energy related markets and other industries; and

Transportation Services & Engineered Products, including manufacturing, leasing and maintenance of railroad tank cars, leasing of intcrmodal tank containers, in-plant rail services, manufacturing of bi-modal railcar movers, wheel, axle and gear sets for light rail transit and gear products for locomotives, manufacturing of steel tank heads, and services, equipment and technology for processing and distributing sulfur.

Mamion Retail & End User Technologies. Inc. ("Retail Technologies")

Food Service Equipment, supplying commercial food preparation equipment for restaurants and shopping carts for retail stores;

Highway Technologies, primarily serving (he heavy-duty highway transportation industry with trailers, fifth wheel coupling devices and undercarriage products such as brake parts and suspension systems, and also serving the light vehicle aftcrmarket with clutches and related products;

Retail Home Improvement Products, supplying electrical and plumbing products through the home center channel;

Retail Store Fixtures, providing shelving systems, other merchandising displays and related services for retail stores, as well as work and garden gloves sold at retail; and

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Water Treatment, including residential water softening, purification and refrigeration filtration systems, treatment systems for industrial markets including power generation, oil and gas, chemical, and pulp and paper, gear drives for irrigation systems and cooling towers, and air-cooled heat exchangers.

Marmon businesses operate approximately 300 manufacturing, distribution and service facilities, and employ approximately 17,000 people worldwide.

McLane Company— McLane Company, Inc. ("McLane") provides wholesale distribution services in all 50 states to customers that include convenience stores, discount retailers, wholesale clubs, drag stores, military bases, quick service restaurants and casual dining restaurants. McLane provides wholesale distribution services to Wal-Mart Stores, Inc. ("Wal-Mart"), which accounts for approximately 25% of McLane's revenues. A curtailment of purchasing by Wal-Mart could have a material adverse impact on McLane's periodic revenues and earnings. McLanc's business model is based on a high volume of sales, rapid inventory turnover and tight expense control. Operations are cuirently divided into four business units: grocery distribution, foodservicc distribution, beverage distribution, and softwaic development. In 2013, the grocery and foodservicc units comprised approximately 98.5% of the (otal revenues ofthe company. McLane and its subsidiaries employ approximately 21,000 employees.

McLanc's grocery distribution unit, based in Temple, Texas, maintains a dominant market share within the convenience store industry and serves most ofthe national convenience store chains and major oil company retail outlets. Grocery operations provide products to more than 50,000 retail locations nationwide, including Wal-Mart. McLanc's grocery distribution unit operates 23 facilities in 19 states.

McLane's foodservicc distribution unit, based in Carrollton, Texas, focuses on serving the quick service restaurant industry with high quality, timely-dclivcrcd products Operations are conducted through 18 facilities in 16 states. The foodservicc distribution unit services more than 20,000 chain restaurants nationwide. On August 24, 2012, McLane acquired Meadowbrook Meat Company (MBM). MBM, based in Rocky Mount, North Carolina is a large customized foodservicc distributor for national restaurant chains. MBM operates from 37 distribution facilities in 16 states. MBM services approximately 15,000 chain restaurants nationwide.

On April 23, 2010, McLane acquired Kahn Ventures, parent company of Empire Distributors and Empire Distributors of North Carolina. Kahn Ventures and its subsidiaries arc wholesale distributors of distilled spirits, wine and beer. Operations are conducted through nine distribution centers in two states. On December 31,2010, Kahn Ventures acquired Horizon Wine and Spirits, Inc. and on April 30,2012 acquired Delta Wholesale Liquors. Operations of Horizon and Delta arc conducted through three distribution centers located in Tennessee. The beverage unit services more than 19,000 retail locations in the Southeastern United States.

Other Manufacturing, Service and Retailing Businesses

Apparel Manufacturing—Berkshire's apparel manufacturing businesses include manufacturers of a variety of clothing and footwear. Businesses engaged in the manufacture and distribution of clothing products include Fruit ofthe Loom, Inc. ("Fruit"), Russell Brands, LLC ("Russell"), Vanity Fair Brands, LP ("VFB"), Garan and Fcchheimcr Brothers Berkshire's footwear businesses include H.H. Brown Shoe Group, Justin Brands and Brooks Sports. These businesses employ approximately 39,000 persons in the aggregate.

Fruit, Russell and VFB (together "FOL") are headquartered in Bowling Green, Kentucky. FOL is primarily a vertically integrated manufacturer and distributor of basic apparel, underwear, casualwear and athletic apparel and hardgoods. Products, under the Fruit of the Loom® and JERZEES® labels are primarily sold in the mass merchandise and wholesale markets. In the VFB product line. VassarettiP, liestform® and Curvation® are sold in the mass merchandise market, while Vanity Fair® and Lily of France® products are sold in Ihe mid-tier chains and department stores. FOL also markets and sells athletic uniforms, apparel, sports equipment and balls to team dealers; collegiate licensed tec shirts and fleecewear to college bookstores and mid-tier merchants; and athletic apparel, sports equipment and balls to sporting goods retailers under the Russell Athletic® and Spalding® brands. Additionally, Spalding® markets and sells balls in the mass merchandise market and dollar store channels, ln 2013, approximately 33% of FOL's sales were to Wal-Mart.

FOL generally performs its own spinning, knitting, cloth finishing, cutting, sewing and packaging for apparel. For the North American market which comprised about 82% of FOL's net sales in 2013, the majority of its capital-intensive spinning operations are located in highly automated facilities in the United States with cloth manufacturing performed both in the U.S. and Honduras. Labor-intensive cutting, sewing and packaging operations arc located in lower labor cost facilities in Central

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America and the Caribbean. For the European market, products are either sourced from third-party contractors in Europe or Asia or sewn in Morocco from (cxti)cs internally produced in Morocco. FOL's bras, athletic equipment, sporting goods and other athletic apparel lines arc generally sourced from third-party contractors located primarily in Asia.

U.S grown cotton and polyester fibers are the main raw materials used in the manufachiring of FOL's apparel products and arc purchased from a limited number of third-party supplieis. Management currently believes there are readily available alternative sources of raw materials. However, if relationships with suppliers cannot be maintained or delays occur in obtaining alternative sources of supply, production could be adversely affected, which could have a concsponding adverse effect on results of operations. Additionally, raw materials are subject to price volatility caused by weather, supply conditions, government regulations, economic climate and other unpredictable factors. FOL has secured contracts to purchase cotton to meet the majority of its production plans for 2014. In 2012 and 2013, cotton market prices were in the range of $0.70 to $0.90 per pound which approximates the ten year average price. FOL's markets are highly competitive, consisting of many domestic and foreign manufacturers and distributors. Competition is gcncially based upon price, product style and quality and customer service.

Garan designs, manufactures, imports and sells apparel primarily for children, including boys, girls, toddlers and infants. Products are sold under its own trademark Garanimals* and customer private label brands. Garan also licenses its registered trademark Garanimals* to third parties for apparel and non-apparcl products. Garan conducts its business through operating subsidiaries located in the United States, Central America and Asia. Substantially all of Garan's products arc sold through its distribution centers in the United Slates. Wal-Mait accounted for over 90% of Garan's sales m 2013. Fcchheimer Brothers manufactures, distributes and sells uniforms, principally for lhc public service and safety markets, including police, fire, postal and military markets. Fcchheimer Brothers is based in Cincinnati, Ohio.

Justin Brands and H.H. Brown Shoe Group manufacture and distribute work, nigged outdoor and casual shoes and western-style footwear under a number of brand names, including Justin. Tony Lama®, Nocona®, Chippewa®, S0RN®, ii'0'C®, Carolina®, So/ft. Double-H Boots®. Eiirosoft®, and Softspols®. Brooks Sports markets and sells performance running footwear and apparel to specialty and national retailers under Brooks® and Moving Comfort® brands. In 2013 and 2012, Brooks® achieved a #1 market share position in performance running footwear with specialty retailers. A significant volume of the shoes sold by Berkshire's shoe businesses are manufactured or purchased from sources outside the United States. Products are sold worldwide through a variety of channels including department stores, footwear chains, specialty stores, catalogs and the Internet, as well as through company-owned retail stores.

Building Products Manufacturing—Acme Brick Company ("Acme") headquartered in Fort Worth, Texas, manufactures and distributes clay bricks {Acme Brick* and Jenkins Brick), concrete block (Featherlite) and cut limestone (Texas Quarries), ln addition, Acme and its subsidiaries distribute a number of other building products of oilier manufacturers, including floor and wall tile, wood flooring and olher masonry products. Products arc sold primarily in the South Central and South Eastern United States through company-operated sales offices. Acme distributes products primarily to homebuilders and masonry and general contractors.

Acme and its affiliates operate 26 clay brick manufacturing facilities located in eight states, six concrete block facilities in Texas and two stone fabrication facilities located in Texas and Alabama. In addition, Acme and its subsidiaries operate a glass block fabrication facility, a concrete bagging facility and a stone burnishing facility all located in Texas. The demand for Acme's products is seasonal, with higher sales in the warmer weather months and is subject to the level of construction activity which is cyclical. Acme also owns and leases properties and mineral rights that supply raw materials used in many of its manufactured products. Acme's raw materials supply is believed to be adequate into the foreseeable future.

Benjamin Moore & Co. ("Benjamin Moore"), headquartered in Montvale, New Jersey, is a leading foi mulator, manufacturer and retailer of a broad range of architectural coatings, available principally in the United Stales and Canada. Products include water-based and solvent-based general purpose coatings (paints, stains and clear finishes) for use by the general public, contractors and industrial and commercial users. Pioducts are marketed under various registered braud names, including, but not limited to, Aura®, Nattura®. Regal*; Super Spec', MoorGard®, ben®, Coronado®, Jnsl-x® and Lenmar®.

Benjamin Moore and its manufacturing subsidiaries rely primarily on an independent dealer network for distribution of its products. Benjamin Moore's distribution network includes approximately 72 company-owned stores as well as over 4,200 third party retailers currently representing over 6,300 storefronts in the United States and Canada. Benjamin Moore's company-owned stores represent several multiple-outlet chains in various parts of (he United States and Canada serving primarily contraclois and general consumers. The independent dealer channel offers a broad array of pioducts including Benjamin Moore®, Coronado® and Insl-.x® biands and other competitor coalings, wall coverings, window treatments and sundries, ln

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addition, Benjamin Moore operates an on-line "pick up in store" program, which allows consumers to place orders via an c-commcrcc site or for national accounts and government agencies via its customer information center. These orders may be picked up at the customer's nearest dealer.

Johns Manvillc ("JM") is a leading manufacturer and marketer of premium-quality products foi building insulation, mechanical insulation, commercial roofing and roof insulation, as well as fibers and nonwovens for commercial, industrial and residential applications. JM serves markets that include aerospace, automotive and transportation, air handling, appliance, HVAC, pipe insulation, filtration, waterproofing, building, flooring, interiors and wind energy. Fiber glass is the basic material in a majority of JM's products, although JM also manufactures a significant portion of its products with other materials to satisfy the broader needs of its customers. Raw materials are readily available in sufficient quantities from various sources for JM to maintain and expand its current production levels. JM regards its patents and licenses as valuable, however it docs not consider any of its businesses to be materially dependent on any single patent or license. JM is headquartered in Denver, Colorado, and operates 45 manufacturing facilities in North America, Europe and China and conducts research and development at its technical center in Littleton, Colorado and at other facilities in the U.S. and Europe.

JM sells its products thiough a wide variety of channels including contractors, distributors, retailers, manufacturers and fabricators. JM holds leadership positions in all ofthe key markets that it serves and typically competes with a few large global and national competitors and several smaller regional competitors. JM's products compete primarily on the basis of value, product differentiation and customization and breadth of product line. Sales of JM's products arc moderately seasonal due to increases in construction activity that typically occur in the second and third quarters ofthe calendar year. JM is seeing a trend in customer purchasing decisions being determined based on the sustainable and energy efficient attributes of its products, services and operations.

MiTck is headquartered in Chesterfield, Missouri and is a leading provider of engineered connector products, engineering software and services and computer-driven manufacturing machinery to the truss fabrication segment ofthe building components industry. Primary customers are truss fabricators who manufacture pre-fabricatcd roof and floor trusses and wall panels for the residential building market as well as the light commercial and institutional construction industry. MiTek also participates in the light gauge steel framing market under the Ultra-Span* name, manufactures and markets assembly line machinery used by the lead acid battery industry, manufactures and maikets a line of masonry connector products and manufactures and markets air handling systems used in commercial building. In 2013, MiTek acquired Benson Industries, Inc., a market leading company providing design, engineering, supply and installations of quality curtainwall and external cladding worldwide and acquired Cubic Designs, Inc., a premier provider of prc-cngineered, prefabricated mezzanine systems and related structures. MiTek operates on six continents with sales into approximately 100 countries. MiTek has 43 manufacturing facilities located in 13 countries and 52 sales/engineering offices located in 20 countries.

The Shaw Industries Gioup, Inc. ("Shaw"), headquartered in Dallon, Georgia, is the world's largest caipct manufacturer based on both revenue and volume of production. Shaw designs and manufactures over 3,000 styles of tufted carpet, tufted and woven rugs, laminate and wood flooring for residential and commercial use under about 30 brand and trade names and under certain private labels. Shaw also provides installation services and sells ceramic and vinyl tile along with sheet vinyl. Shaw's manufacturing operations are fully integrated from the processing of raw materials used to make fiber through the finishing of caipct. Shaw's caipct, rugs and hard surface products are sold in a broad range of prices, patterns, colors and textures. Shaw acquired Sportexe (now Shaw Sports Turf) in 2009 and Southwest Greens International, LLC in 2011 which provides an entiy into the synthetic sports turf, golf greens and landscape turf markets.

Shaw products are sold wholesale to over 32,000 retailers, dishibutors and commercial users throughout the United States, Canada and Mexico and arc also exported to various overseas markets. Shaw's wholesale products arc marketed domestically by over 2,000 salaried and commissioned sales personnel directly to retailers and distributors and lo laige national accounts. Shaw's nine caipet, three hard surface, one rug and one sample full-service distribution facilities and 23 redistribution centers, along with centralized management information systems, enable it to provide prompt efficient delivery of its products to both its retail customers and wholesale distributors.

Substantially all caipct manufactured by Shaw is tufted carpet made from nylon, polypropylene and polyester, ln the tufting process, yam is inserted by multiple needles into a synthetic backing, forming loops which may be cut or left uncut, depending on the desired texture or construction. During 2013, Shaw processed approximately 98% of its requirements for caipct yam in its own yam processing facilities. The availability of raw materials continues to be good but margins are impacted by petro-chcmical and natural gas price changes. Raw material cost changes are periodically factored into selling prices lo customers.

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Sosiicc BERKSHIRE HATHAWAY INC. 10-K. March Oi. 2011

The titfannatlan centaliieif hcrqln may not tm copied, adapted or distributed and (s not. warranted io &<.* accurate, cotuprele or timely. Tire user asivmes alt risks (or any damages Cr losses seising fronr uny use of (bis information, except lo tbe extent such damages or losses cannot be limned or excluded by applicable taw. Past financial periormar.ee Is no guarantee of future results

Table of Contents

The floor covering industry is highly competitive with more than 100 companies engaged in the manufacture and sale of caipet in the United Slates and numerous manufacturers engaged in hard surface floor covering pioduclion and sales. According to industry estimates, carpet accounts for approximately 55% ofthe total United Stales consumption of all flooring types. The principal competitive measures within the floor covering industry are quality, style, price and service.

Demand for products of Berkshire's building pioducts businesses is affected to varying degrees by commercial construction and industrial activity in the U.S. and Europe and Ihe level of U.S. housing construction. The building pioducts businesses are subject to a variety of federal, state and local environmental laws and regulations. These laws and regulations regulate the discharge of materials into the air, land and water and govern the use and disposal of hazardous substances. The building products manufacturers employ approximately 36,000 persons in Ihe aggregate.

Other Manufacturing

In September 2011, Berkshire acquired The Lubrizol Corporation ("Lubrizol"). Lubrizo) is a specialty chemical company that produces and supplies technologies for (he global transportation, industrial and consumer maikels Lubrizol operates two business sectors: (1) Lubrizol Additives, which includes engine additives, driveline additives and industrial specialties products; and (2) Lubrizol Advanced Materials, which includes personal and home care, engineered polymers, performance coatings, and life science polymers products. Lubrizol's products arc used in a broad range of applications including engine oils, transmission fluids, gear oils, specialty driveline lubricants, fuel additives, refineries and oilfields, metalworking fluids, compressor lubricants, greases for transportation and industrial applications, over-the-counter pharmaceutical pi oducts, perfonnance coatings, personal care products, sporting goods and plumbing and fire sprinkler systems. Lubrizol is an industry leader in many ofthe markets in which it competes. Its principal lubricant additives competitors arc Infineum International Ltd., Chevron Oronite Company and Afton Chemical Corporation. The advanced materials industry is highly fragmented with a variety of competitors in each product line.

From a base of approximately 2,075 patents, Lubrizol uses its technological leadership position in product development and formulation expertise to improve the quality, value and performance of its products, as well as to help minimize the environmental impact of those products. Lubrizol uses many specialty and commodity chemical raw materials in its manufacturing processes and uses base oil in processing and blending additives. Raw materials arc primarily feedstocks derived from petroleum and petrochemicals and, generally, aic obtainable from several sources. The materials that Lubrizol chooses to purchase from a single source typically are subject to long-term supply contracts to ensure supply reliability. Lubrizol markets its products worldwide through a direct sales organization and sales agents and distributors where neccssaiy. Lubrizol's customers principally consist of major global and regional oil companies and industrial and consumer pi oducts companies that arc located in more than 110 countries. Some of its largest customers also may be suppliers, ln 2013, no single customer accounted for more than 10% of Lubrizol's consolidated revenues.

Lubrizol continues to implement a multi-year phased investment plan to increase global manufacturing capacity, upgrade operations and ensure compliance with health, safety and environmental requirements. As part of the investment plan, in August 2013, Lubrizol completed construction of its 5310 million additives manufacturing facility and icscarch laboratory in Zhuhai, China, and Lubrizol is implementing plans to invest approximately $150 million to increase chlorinated polyvinyl chloride resin and compounding capacity by the end of 2014 to meet global customer demand. Capital spending in 2013 was approximately $350 million. Capital expenditures over the next thicc years arc expected to approximate $1.5 billion.

Lubrizol is subject to foreign, federal, state and local laws to protect the environment and limit manufacturing waste and emissions. The company believes that its policies, practices and procedures are designed to limit Ihe risk of environmental damage and consequent financial liability. Nevertheless, the operation of manufacturing plants entails ongoing environmental risks, and significant costs or liabilities could be incurred in the future.

Lubrizol operates facilities in 27 countries (including production facilities in 16 countries and laboratories in 14 countries). On August 30, 2013, Lubrizol completed the acquisition of Chcmtool, Inc., a leading global supplier of custom formulated greases and lubricants.

Berkshire acquired an 80% interest in IMC International Metalworking Companies B.V. ("IMC B.V.") in 2006. On April 29, 2013, Berkshire acquired the remaining 20% nonconlrolling interests of IMC B.V. Through its subsidiaries, IMC B.V. is one ofthe world's three largest multinational manufacturers of consumable precision carbide metal cutting tools for applications in a broad range of industrial end markets. IMC B.V.'s principal brand names include ISCAR*, TaeguTeC, Jngersoll*, Tungalo)®, Unitac», UOP h.te.di^ and Outiltcc*. IMC B.V.'s manufacturing facilities are located mainly in Israel, United States, Germany, Italy, France, Switzerland, South Korea, China, India, Japan and Brazil.

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Source BCRKS1 IIHC HATHAWAY IMC. I O K, Much 03. 201 i

the liilotmatlan contained hereto may not ho copied, adapted or distributed and ts not v/ari anted to be accurate, complete or timely Tlte user assumes alt risks tot any damages or losses arising tiom any use ot this information, except to the extent such damages or losses cannot be limited ot excluded by applicable law. Past financial performance Is no guarantee ol future results.

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IMC 15 V. has five primary product lines: milling tools, gripping tools, turning/thread tools, drilling tools and tooling. The main products arc split within each product line between consumable cemented tungsten carbide inserts and steel tool holders. Inserts comprise the vast majority of sales and earnings. Metal cutting inserts arc used by industrial manufactures to cut metals and are consumed dur ing their use in cutting applications. IMC B.V. manufactures hundreds of types of highly engineered inserts within each product line that arc tailored to maximize productivity and meet the technical requirements of customers.

IMC B.V.'s global sales and marketing network has representatives in virtually every major manufacturing center around the world staffed with highly skilled engineers and technical personnel. IMC B.V.'s customer base is very diverse, with its primary customers being large, multinational businesses in the automotive, aerospace, engineering and machinery industries. IMC B V. operates a regional central warehouse system with locations in Israel, United States, Belgium, Korea and Brazil. Additional small quantities of pioducts arc maintained at local IMC B.V. offices in order to provide on-time customer support and inventory management

IMC B.V. competes in the metal cutting tools segment of the global metalworking tools market. The segment includes hundreds of participants who range from small, private manufacturers of specialized products for niche applications and markets to larger, global multinationals with a wide assortment of products and extensive distribution networks.

Forest River, Inc. ("Forest River") is a manufacturer of recreational vehicles, utility, cargo and office trailers, buses and pontoon boats, headquartered in Elkhart, Indiana. Its products arc sold in the United States and Canada through an independent dealer network. Forest River has manufacturing facilities in six states.

CTB International Corp. ("CTB"), headquartered in Milford, Indiana, is a leading global designer, manufacturer and marketer of agricultural systems and solutions for preserving grain, producing poultry, pigs and eggs, and lor processing poultry. CTB operates from facilities located around the globe and supports customers in more than 100 countries primarily through a worldwide network of independent distributors and dealers.

The Scott Fctzer companies are a diversified group of 20 businesses that manufacture, distribute, service and finance a wide variety of products for residential, industrial and institutional use. The two most significant of these businesses arc Kirby home cleaning systems and Campbell Hausfcld. Albccca Inc. ("Albccca"), headquartered in Norcross, Georgia, docs business primarily under the Larson-JitM* name. Albccca designs, manufactures and distributes a complete line of high quality, branded custom framing products, including wood and metal moulding, matboard, foamboard, glass, equipment and other framing supplies in (he U.S., Canada and 15 countries outside ofNorth America. Richline Group, Inc. is the business platform providing financial, operations and marketing support to its four independent strategic business units: Richline Brands, LeachGamcr, Rio Grande and Inverness. Each business unit is uniquely a manufacturer and marketer of precious metal pioducts to specific target markets including large jewelry chains, department stores, shopping networks, mass merchandisers, e-commercc retailers and artisans plus worldwide manufacturers and wholesalers.

Berkshire's other manufacturers employ approximately 38,000 persons in the aggregate. Other Service Businesses

FlightSafety International Inc. ("FlightSafety"), headquartered at New York's LaGuardia Aiiport, is an industry leader in professional aviation training services to individuals, businesses (including certain commercial aviation companies) and U.S. and foreign governments. FlightSafety primarily provides high technology training to pilots, aircraft maintenance technicians, flight attendants and dispatchers who operate and support a wide variety of business, commercial and military aircraft. FlightSafety operates a large flccl of advanced full flight simulators at its learning centers and training locations in the United States, Brazil, Canada, China, France, Japan, Norway, South Africa, the Netherlands, and the United Kingdom. The vast majority of FlightSafety's instructors, training programs and flight simulators arc qualified by the United States Aviation Administration and other aviation regulatory agencies around the world.

FlightSafety is also a leader in the design and manufacture of full flight simulators, visual systems, displays, and other advanced technology (r aining devices. This equipment is used to support FlightSafety training programs and is offered for sale to airlines and government and military organizations around the world Manufacturing facilities are located in Oklahoma, Missouri and Texas. FlightSafety strives to maintain and manufacture simulators and develop courseware using state ofthe art technology and invests in research and development as il builds new equipment and training programs.

NeUcts Inc. ("Netlets") is the world's leading provider of fractional ownership programs for general aviation aircraft. NetJets' executive offices and U.S. operations aie located in Columbus, Ohio, with mos! of its logistical and flight operations based at Port Columbus International Airport. NeUcts' European operations are based in Lisbon, Portugal. The fractional

18

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Sowce. BERKSHIRE HATHAWAY INC. 10-K. Maich 03. 2011

Tlie fnfotmatlon contained herein may net bo copied, adapted or distributed and ts not warranted lo be accurate, complete er timely Tim user assumes all risks (or any damages or losses tithing from any use of tills Information, except to the extent such damages or losses cannot be limited or excluded by applicable lm*. Past timnclal performance h no guarantee of future losulls.

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ownership concept is designed (o meel lhc needs of customers who cannot justify the purchase of an entire aircraft based upon expected usage. In addition, fractional ownership programs are available for corpoiatc flight departments seeking to outsource their general aviation needs or looking for additional capacity for peak periods and for others (hat previously chartered aircraft.

NeUets' fractional aircraft ownership programs permit customers to acquire a specific percentage of a certain aircraft type and allow customers to utilize the aircraft for a specified number of flight hours per annum, hi addition, NctJcts offers prepaid flight cards and aviation solutions that provide aircraft management, ground support and flight operation services under a number of programs including NeUets Shares⁷¹", NeUets Leases™ and the Marquis Jet Card¹-. In 2010, NeUets introduced the NeUets Signature Series¹*¹ of aircraft, which have been customized from design through production based on feedback from owners.

NeUcts is subject lo (he rules and regulations of the Federal Aviation Administration, (he National Institute of Civil Aviation of Portugal, and the European Aviation Safety Agency. Regulations address aircraft registration, maintenance requirements, pilot qualifications and airport operations, including flight planning and scheduling as well as security issues and other matters. NeUets places great emphasis on safety and customer service. Its programs are designed to offer customers guaranteed availability of aircraft, low and predictable operating costs and increased liquidity.

TTI, Inc. ("TTI"), headquartered in Fort Worth, Texas, is a global specialty distributor of passive, interconnect, electromechanical and discrete components used by customers in the manufacturing and assembling of electronic products. TTI's customer base includes original equipment manufacturers, electronic manufacturing services, original design manufacturers, military and commercial customers, as well as design and system engineers. TTI services a variety of industries including telecommunications, medical devices, computers and office equipment, aerospace, automotive and consumer electronics. TTI's business model covers design through production in the electronic component supply chain and consists of its core business, which supports high volume production business and its catalog division, which supports a broader base of customers with lower volume purchases.

TTI's franchise distribution agreements with the industry's leading suppliers allow it to uniquely leverage its product cost and to expand its business by providing new lines and products to its customers. TTI operates sales offices and distribution centers from more than 100 locations throughout North America, Europe, Asia and Israel. In April 2012, TTI acquired Sagcr Electrical Supply Company, Inc. ("Sagcr"), a leading distributor of electronic components headquartered in Middleborough, Massachusetts. Sager's business model and focus on electromechanical products allows TTI to further provide customers and suppliers a unique combination of operational excellence and innovative business solutions and to expand its customer base.

Business Wire provides electronic dissemination of full-text news releases to the media, online services and databases and the global investment community in 150 countries and in 45 languages. Roughly 90% ofthe company's revenue comes from its core business of news distribution. The Buffalo News and BH Media Group, Inc. ("BHMG") arc publishers of 31 daily and 41 weekly newspapers in upstate New York, New Jersey, Nebraska, Iowa, Oklahoma, Texas, Virginia, Tennessee, North Carolina, South Carolina, Alabama and Florida In 2013, BHMG acquired four daily newspapers in Oklahoma, Virginia, North Carolina and New Jersey. The newspapers operate in small to mid-sized markets with strong local community connections. International Dairy Queen services a worldwide system of over 6,300 stores operating under the names Dai/y Queen³', Orange Julius* and Karnielkorn* that offer various dairy desserts, beverages, prepared foods, blended fruit drinks, popcorn and other snack foods. Precision Steel and its affiliates operate steel service centers in the Chicago and Charlotte metropolitan areas. The service centers buy stainless steel, low carbon sheet and strip steel, coated metals, spring steel, and other metals, cut these metals to order, and sell them to customers involved in a wide variety of industries.

Berkshire's service businesses employ approximately 21,000 persons in the aggregate.

Retailing Businesses—Berkshire's retailing businesses principally consist of several independently managed home furnishings and jewelry operations. These retailers employ approximately 15,000 persons. Information regarding each of these operations follows.

The home furnishings businesses arc the Nebraska Furniture Mart ("NFM"), R.C. Willey Home Furnishings ("R.C. Willcy"), Star Furniture Company ("Star") and Jordan's Furniture, Inc. ("Jordan's"). NFM, R.C. Willcy, Star and Jordan's each offer a wide selection of furniture, bedding and accessories. In addition, NFM and R.C. Willey sell a full line of major household appliances, elcchonics, computers and other home furnishings. NFM, R.C. Willcy, Star and Jordan's also offci customer financing to complement their retail operations. An important feature of each of these businesses is their ability to control costs and to produce high business volume by offering significant value to their customers.

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Source BERKSHIRE HATHAWAY INC. 10-K.'/orcli 03. 2014

Tlie Inloimatlon contained herein may net he copied, adapted or distributed and ts not war ranted lo be accurate, complete or timely The user assumes oil risks lor any damages or losses arising Irom any use ot this Inlormalion, eiccp! lo the oxtcnt such damages or losses cannot be limited or excluded by applicable lavr Past financial pcrloimance Is no guarantee ol lulure results.

Table of Contents

NFM operates its business from two very large retail complexes with almost one million square feet of retail space and sizable warehouse and administrative facilities in Omaha, Nebraska and Kansas City, Kansas. NFM is the largest furniture retailer in each of its markets. NFM also owns Homemakcrs Furniture located in Des Moines, Iowa, which has approximately 215,000 square feet of retail space. In late 20) 1, NFM announced (hat it plans to build a new retail store, warehouse and administrative facility in a suburb of Dallas, Texas. The store is expected to include approximately 1.8 million square feet of retail and warehouse space and anchor a multi-use retail and entertainment development site. The completion ofthe new facilities is scheduled for 2015.

R.C. Willey, based in Salt Lake City, Utah, is ihe dominant home furnishings retailer in the Intcrmountain West region ofthe United States. R.C. Willcy operates 11 retail stores, two retail clearance facilities and three distribution centers. These facilities include approximately 1.7 million square feet of retail space with eight stoics located in Utah, one stoic in Idaho, tluec stores in Nevada and one store in California. Star's retail facilities include about 700,000 square feet of retail space in 11 locations in Texas with eight in Houston. Star maintains a dominant position in each of its markets. Jordan's operates a furniture retail business from five locations with approximately 625,000 square feet of retail space in Massachusetts, New Hampshire and Rhode Island supported by an 800,000 square foot distribution center in Taunton, Massachusetts. Jordan's is the largest furniture retailer, as measured by sales, in the Massachusetts and New Hampshire areas. Jordan's is well known in its markets for its unique store arrangements and advertising campaigns.

Borsheim Jewelry Company, Inc. ("Borsheims") operates from two locations in Nebraska, a 62,000 square foot flagship store in Omaha and a 5,500 square foot outlet store in Gretna. Borsheims is a high volume retailer of fine jewelry, watches, crystal, china, stemware, flatware, gifts and collectibles. Helzbcrg's Diamond Shops, Inc. ("Helzberg") is based in North Kansas City, Missouri, and operates a chain of 234 retail jewelry stores in 37 states, which includes approximately 500,000 square feel of retail space. Helzbcrg's stores are located in malls, lifestyle centers, power strip centers and outlet malls, and all stores operate under the name Helzberg Diamonds® or Helzberg Diamonds Outlet*. The Ben Bridge Corporation ("Ben Bridge Jeweler"), based in Seattle, Washington, operates a chain of 80 upscale retail jewelry stores located in 11 states that are primarily in the Western United States and Canada. Fifteen of its retail locations are concept stores that sell only PANDORA jewelry. Principal products include finished jewelry and timepieces. Ben Bridge Jeweler stores arc located primarily in major shopping malls. Bcikshire's retail jewelry operations are subject (o seasonality with approximately 36% of annual revenues earned in the fourth quarter.

Also included in Berkshire's group of retailing businesses is See's Candies ("See's"), which produces boxed chocolates and other confectionery products with an emphasis on quality and distinctiveness in two large kitchens in Los Angeles and San Francisco and one smaller facility in Burlingame, California. See's operates over 200 retail and quantity discount stores located mainly in California and other Western stales. See's revenues are highly seasonal with approximately 45% of total annual revenues earned in the monlhs of November and December. The Pampered Chef, LTD ("TPC") is a premier direct seller of high quality kitchen tools with operations in the United States, Canada, United Kingdom, Germany and Mexico. TPC product portfolio consists of approximately 500 TPC branded items in twelve categories, which arc researched, designed and tested by TPC and manufactured by thiid-party suppliers. TPC products arc available primarily through a sales force of independent consultants.

Oriental Trading Company, Inc. ("OTC") is a leading multi-channel retailer and online destination for value-priced parly supplies, arts and crafts, toys and novelties, school supplies, educational games, home decor and giftwarc. OTC, based in Omaha, Nebraska, serves a bioad base of nearly four million customers annually including consumers, schools, churches, non-profit organizations and other businesses. OTC operates a number of websites and utilizes multiple print and online marketing efforts.

Finance and Financial Products

Clayton Homes, Inc. ("Clayton"), which is headquartered near Knoxvillc, Tennessee, is a vertically integrated manufactured housing company. At December 31, 2013, Clayton operated 35 manufacturing plants in 12 slates. Clayton's homes arc marketed in 48 states through a network of 1,528 retailers, including 322 company-owned home centers. Financing is offered through its finance subsidiaries to purchasers of Clayton's manufactured homes as well as those purchasing homes from selected independent retailers.

Clayton competes at the manufacturing, retail and finance levels on the basis of price, service, delivery capabilities and product performance and considers the ability to make financing available to retail purchasers a major factor affecting the market acceptance of its pioduct. Retail sales are supported by Clayton's offering of various finance and insurance programs.

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Source 8E8K$Hlr)E HATHA WAV INC. 10-K. Much 03. 2014

nic Information contained herein tuny net tic copied, adapted or dlslilbuled and Is not war tattled to be aecuiate.comijlelc of timely. The user assumes all risks lor.toy damages or tosses arlslno from any use ot this Inlormalion, except to the extent such damages or losses cannot be limited or excluded by applicable law Past financial performance is no guarantee ot tuluie lesulls.

Table of Contents

Finance programs include home note and mortgage originations supporting company-owned home centers and select independent retailers. Proprietary loan underwriting guidelines have been developed and include gross income, debt to income limits and credit score requirements, which arc considered in evaluating loan applicants. Approximately 62% ofthe originations arc home-only loans and the remaining 38% have land as additional collateral. The average down payment is about 20%, which may be from cash or land equity. Each loan with land will have an independent appraisal in order to establish the value ofthe land. Originations arc all at fixed rales and foi fixed terms. Loans outstanding also include bulk purchases of contracts and mortgages from banks and other lenders. Clayton also provides inventory financing to certain independent retailers and services housing contracts and mortgages that were not purchased or originated. The bulk contract purchases and servicing arrangements may relate to the portfolios of other lenders or finance companies, governmental agencies, or other entities that purchase and hold housing contracts and mortgages. Clayton also acts as agent on physical damage insurance policies, home buyer protection plan policies and other programs.

XTRA Corporation ("XTRA"), headquartered in St. Louis, Missouri, is a leading transportation equipment lessor operating under the XTRA Lease * brand name. XTRA manages a diverse fleet of approximately 80,000 units located at 56 facilities throughout the United States. The fleet includes ovcr-the-road and storage trailers, chassis, temperature controlled vans and flatbed trailers. XTRA is one of the largest lessors (in terms of units available) of over-the-road trailers in North America. Transportation equipment customers lease equipment to cover cyclical, seasonal and geographic needs and as a substitute for purchasing. Therefore, as a provider of marginal capacity of transportation equipment, XTRA's utilization rates (the number of units on lease lo total units available) and operating results tend to be cyclical. In addition, transportation providers often use leasing to maximize their asset utilization and reduce capital expenditures. By maintaining a large fleet, XTRA is able lo provide customers with a broad selection of equipment and quick response times.

CORT Business Services Corporation is the leading national provider of rental relocation services including rental furniture, accessories and related services in the "rent-to-rcnt" segment ofthe furniture rental industry BH Finance invests in fixed-income financial instruments pursuant to proprietary strategies with the objective of earning above average investment returns. BH Finance also enters into derivative contracts and assumes foreign currency, equity price and credit default risk. This business is conducted fiom Berkshire's coiporate headquarters. Management recognizes and accepts (hat losses may occur due to the nature of these activities as well as (he markets in general. Berkshire's finance and financial products businesses employ approximately 14,000 persons.

Additional information with respect to Berkshire's businesses

The amounts of revenue, earnings before taxes and identifiable assets attributable to the aforementioned business segments arc included in Note 23 to Berkshire's Consolidated Financial Statements contained in Item 8, Financial Statements and Supplementary Data. Additional information regarding Berkshire's investments in fixed maturity securities, equity securities and other investments is included in Notes 3,4 and 5 to Berkshire's Consolidated Financial Statements.

On June 7, 2013, Berkshire and an affiliate of the global investment firm 3G Capital (such affiliate, "3G"), through a newly formed holding company, H.J. Heinz Holding Corporation ("Heinz Holding"), acquired H.J. Heinz Company ("Heinz"). Berkshire and 3G each made equity investments in Heinz Holding, which, together with debt financing obtained by Heinz Holding, was used to acquire Heinz for approximately $23.25 billion. Additional information concerning these investments is included in Note 6 to the Registrant's Consolidated Financial Statements.

Heinz is one ofthe world's leading marketers and producers of healthy, convenient and affordable foods specializing in ketchup, sauces, meals, soups, snacks and infant nutrition. Heinz is a global family of leading branded products, including Heinz * Ketchup, sauces, soups, beans, pasta, infant foods, Ore-Ida* potato products, Weight Watchers* Smart Ones* entrees and T.G.I. Friday's* snacks.

Berkshire maintains a website (http://www berkshirehathaway.com) where its annual reports, certain corporate governance documents, press releases, interim shareholder reports and links lo its subsidiaries' websites can be found. Berkshire's periodic reports filed with the SEC, which include Form 10-K, Form 10-Q, Form 8-K and amendments thereto, may be accessed by the public free of charge fiom the SEC and through Berkshire. Electronic copies of these reports can be accessed at the SEC's website (http//www.sec gov) and indirectly through Berkshire's website (http://www.berkshireliathaway.com). Copies of these reports may also be obtained, free of charge, upon written request to: Berkshire Hathaway Inc., 3555 Famara Street, Omaha, NE 68131, Attn: Corporate Secretaiy. The public may read or obtain copies of these reports from the SEC at the SEC's Public Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549 (1-800-SEC-O330).

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Source-" RCRKSHIHC HATHAWAY INC. 10-K. March 03. 201-1

Tlie Information contained her tin may net bo copied, adapted or distributed end ts not wananied to be accurate, complela or timely. The user assumes alt risks for any damages or losses arising from any uso ot this Information, except to the extent such damages or losses cannot be limited cr excluded by applicable taw Past financial performance is no guarantee of future results

Table of Contents

Item 1A.    Risk Factors

Berkshire and its subsidiaries (referred lo herein as "wc," "us," "our" or similar expressions) are subject to certain risks and uncertainties in our business operations which are described below. The risks and uncertainties described below are not the only risks we face. Additional risks and uncertainties that are not presently known or are currently deemed immaterial may also impair our business operations.

Our tolerance for risk in our insurance businesses may result in significant underwriting losses.

When properly paid for (lie risk assumed, wc have been and will continue to be willing to assume more risk from a single event than any other insurer has knowingly assumed. Accordingly, wc could incur a significant loss from a single event. We may also write coverages for losses arising from acts of terrorism. We attempt to take into account all possible correlations and avoid writing groups of policies from which pre-tax losses might aggregate above $10 billion. Currently, wc estimate that our aggregate exposure from a single risk under outstanding policies is significantly below S10 billion. However, it is possible that despite our efforts, losses may aggregate in ways that were not anticipated. Our tolerance for significant insurance losses will likely result in lower reported earnings (or net losses) in a future period.

The degree of estimation error inherent in the process of estimating property and casualty insurance loss reserves may result in significant underwriting losses.

The principal cost associated with the property and casualty insurance business is claims. In writing property and casualty insurance policies, we receive premiums today and promise to pay covered losses in the future However, it will take decades before all claims that have occurred as ofany given balance sheet date will be reported and settled. Although wc believe that liabilities for unpaid losses are adequate, wc will not know whether these liabilities or (lie premiums charged for the coverages provided were sufficient until well after (he balance sheet date. Except for certain product lines, our objective is to generate underwriting profits over the long-term. Estimating insurance claim costs is inherently imprecise. Our estimated unpaid losses arising under contracts covering property and casualty insurance risks arc large ($65 billion at December 31, 2013) so even small percentage increases to the aggregate liability estimate can result in materially lower future periodic reported earnings.

Investments are unusually concentrated and fair values are subject to loss in value.

We concentrate a high percentage of our investments in equity securities in a small number of companies and diversify our investment portfolios far less than is conventional in the insurance industry. A significant decline in the fair values of our larger investments may produce a material decline in our consolidated shareholders' equity and our consolidated book value per share. Under certain circumstances, significant declines in the fair values of these investments may require the recognition of othcr-than-tcmporary impairment losses.

A large percentage of our investments are held in our insurance companies and a decrease in the fair values of our investments could produce a large decline in statutory surplus. Our large statutory surplus serves as a competitive advantage, and a material decline could have a material adverse affect our ability to write new insurance business thus affecting our future underwriting profitability.

Derivative contracts may require significant future cash settlement payments and result in significant losses.

Wc have assumed the risk of potentially significant losses under equity index put option and credit default contracts. Although we received considerable premiums as compensation for accepting these risks, there is no assurance that the premiums we received will exceed our aggregate loss or settlement payments. Our risks of losses under equity index put option contracts arc based on declines in equity prices of stocks comprising certain major stock indexes. The contracts expire beginning in 2018 and we could be required to make payments when these contracts expire if equity index prices arc significantly below the strike prices specified in the contracts. Our risks under credit default contracts arc limited to specified municipalities, amounts per municipality and aggregate contract limits. The deterioration of Ihe financial condition ofthe referenced mimicipalities could result in significant losses.

Equity index put option and credit default contracts arc recorded at fair value in our Consolidated Balance Sheet and the periodic changes in fair values are reported in earnings. The valuations of these contracts and the impact on our earnings can be particularly significant reflecting the volatility of equity and credit markets. Adverse changes in equity and credit markets may result in material losses in periodic earnings.

22

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Source BfRKSllirtC HATHAWAY INC. 10-K, Maich03. 201-1

flic Infoimatlon contained herein may net bo copfed, adapted or distributed and la not wart anted to be accurate, complete or timely r/ic user assumes alt ttsks (or any damages or losses aitstny from any uso of this Inlormalion. except to the extent such damages or tosses cannot be limited or excluded by applicable /.nv Past financial pcrtonnance is no guarantee ol future results.

Table of Contents

Wc arc dependent on a few key people for our major investment and capital allocation decisions.

Major investment decisions and all major capital allocation decisions are made by Warren E. Buffett, Chairman ofthe Board of Directors and CEO, age 83, in consultation with Charles T. Munger, Vice Chairman ofthe Board of Directors, age 90. If for any reason the services of our key personnel, particularly Mr. Buffett, were to become unavailable, there could be a material adverse effect on our operations. However, Berkshire's Board of Directors has identified certain cunrent Berkshire subsidiary managers who, in their judgment, arc capable of succeeding Mr. Buffett. Berkshire's Board has agreed on a replacement for Mr. Buffett should a replacement be needed currently. The Board continually monitors this risk and could alter its current view regarding a replacement for Mr. Buffett in the future. We believe that the Board's succession plan, together with the outstanding managers running our numerous and highly diversified operating units helps to mitigate this risk.

Wc need qualified personnel to manage and operate our various businesses.

In our decentralized business model, we need qualified and competent management to direct day-to-day business activities of our operating subsidiaries. Our operating subsidiai ies also need qualified and competent personnel in executing their business plans and serving their customers, suppliers and other stakeholders. Changes in demographics, training requirements and the unavailability of qualified personnel could negatively impact our operating subsidiaries ability to meet demands of customers to supply goods and services. Recruiting and retaining qualified pcrsoimcl is important to all of our operations. Although wc have adequate personnel for the current business environment, unpredictable increases in demand for goods and services may exacerbate the risk of not having sufficient numbers of trained personnel, which could have a negative impact on our operating results, financial condition and liquidity.

The past growth rate in Berkshire's book value per share is not an indication of future results.

In the years since our present management acquired connol of Berkshire, our book value per share has grown at a highly satisfactory rate. Because of the large size of our capital base (shareholders' equity of approximately $222 billion as of December 31,2013), our book value per share will very likely not increase in the futuie at a rate even close to its past rate.

Risks unique to our regulated businesses

Insurance Businesses

Our insurance businesses are subject to regulation in the jurisdictions in which wc operate. Such regulations may relate lo among other things, the types of business that can be written, the lates that can be charged for coverage, the level of capital that must be maintained, and restrictions on the types and size of investments that can be made. Regulations may also restrict the timing and amount of dividend payments. Accordingly, changes in regulations related to these or other matters or regulatory actions imposing restrictions on our insurance companies, may adversely impact our results of operations.

Railroad Business

Our railroad business conducted tlrrough BNSF is subject to a significant number of governmental laws and regulations with respect to rates and practices, railroad operations and a variety of health, safety, labor, environmental and other matters. Failure to comply with applicable laws and regulations could have a material adverse effect on BNSF's business. Governments may change the legislative and/or regulatory framework within which BNSF operates without providing any recourse for any adverse effects that the change may have on the business. Federal legislation enacted in 2008 mandates the implementation of positive train control technology by December 31, 2015, on certain mainline track where intercity and commuter passenger railroads operate and where toxic-by-inhalation ("TEH") hazardous materials are transported. This type of technology is new and deploying it across BNSF Railway's system and other railroads may pose significant operating and implementation risks and requires significant capital expenditures.

BNSF derives a significant amount of revenue from the transportation of coal. To the extent that changes in government environmental policies limit or restrict the usage of coal as a source of fuel in generating electricity or alternate fuels, such as natural gas, displace coal on a competitive basis, BNSF's revenues and earnings could be adversely affected. As a common carrier, BNSF is also required to transport TIH chemicals and other hazardous materials. An accidental release of hazardous materials could expose BNSF to significant claims, losses, penalties and environmental remediation obligations. Increased economic regulation of the rail industry could negatively impact BNSF's ability to determine prices for rail seivices and to make capital improvements to its rail network, resulting in an adverse effect on our results of operations, financial condition or liquidity.

23

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Sowce OCIIKSHIRC HATHAWAY INC. 10-K. Maich 03. 201-1

rlio Inlotmation contained herein may not lie copied, adapted or distributed mid Is nol warranted to be accurate, complete or timely. The user assumes all rlsKs tor any damages or losses arising Irom ony use ol Oils Information, cicopl lo the extent such damages or fosses cannot be llmfted or excluded by applicable law. Past tmanciat performance Is no guarantee of future lesults

Tabic of Contents

Utilities mid Energy Businesses

Our utilities and energy businesses are highly regulated by numerous federal, state, local and foreign governmental authorities in the jurisdictions in which they operate. These laws and regulations arc complex, dynamic and subject to new interpretations or change. Regulations affect almost every aspect of our utilities and encigy businesses, have broad application and limit their management's ability to independently make and implement decisions regarding numerous matters, includmg acquiring businesses; constructing, acquiring or disposing of operating assets; operating and maintaining generating facilities 2nd transmission and distribution system assets," complying with pipeline safety and integrity and environmental requirements; setting rates charged to customers; establishing capital structures and issuing debt or equity securities; transacting between our domestic utilities and our other subsidiaries and affiliates; and paying dividends or similar distributions. Failure to comply with or rcinterpretations of existing regulations and new legislation or regulations, such as those relating to air and water quality, renewable portfolio standards, cyber security, emissions performance standards, climate change, coal combustion byproduct disposal, hazardous and solid waste disposal, protected species and other environmental matters, or changes in the nature ofthe regulatory process may have a significant adverse impact on our financial results.

Our utilities and energy businesses require significant amounts of capital to construct, operate and maintain generation, transmission and distribution systems to meet their customers' needs and reliability criteria. Additionally, such systems may need to be operational for very long periods of time in order to justify the financial investment. The risk of operational or financial failure of capital projects is not necessarily recoverable through rates that are charged to customers.

Competition and technology may erode our business franchises and result in lower earnings.

Each of our operating businesses face intense competitive pressures within markets in which they operate. While wc manage our businesses with the objective of achieving long-term sustainable growth by developing and strengthening competitive advantages*, many factors, including market and technology changes, may erode or prevent the strengthening of competitive advantages. Accordingly, future operating results will depend to some degree on whether our operating units are successful in protecting or enhancing their competitive advantages. If our operating businesses arc unsuccessful in these efforts, our periodic operating results in the future may decline from current levels.

Deterioration of general economic conditions may significantly reduce our operating earnings and impair our ability to access capital markets at a reasonable cost.

Our operating businesses arc subject to normal economic cycles affecting the economy in general or the industries in which they operate. To the extent that the recoveiy from (he recent economic recession conh'nues to be slow or the economy worsens for a prolonged period of time, one or more of our significant operations could be materially harmed. In addition, our utilities and energy businesses, our raihoad business and our manufactured housing business regularly utilize debt as a component of their capital structures. These businesses depend on having access to borrowed funds through the capital markets at reasonable rates. To the extent that access to the capital markets is restricted or the cost of funding increases, these operations could be adversely affected.

Civil unrest and terrorism acts could hurt our operating businesses.

Historically, wc derived a relatively small amount of our revenues and earnings from international markets. Globally, our businesses arc conducted primarily in regions where relatively stable political conditions have prevailed. However, certain of our business operations are subject to relatively higher risks from unstable political conditions and civil unrest. Further, terrorism activities deriving from unstable conditions or acts intended to compromise the integrity or security of our computer networks and information systems, in general could produce significant losses to our worldwide operations. Our business operations could be adversely affected directly through the loss of human resources or destruction of production facilities and information systems.

Regulatory changes may adversely impact our future operating results.

In recent years, partially in response to the financial markets crises and the global economic recessions, and social and environmental issues, regulatory initiatives have accelerated in the United States and abroad. Such initiatives address for example, the regulation of banks and other major financial institutions, environmental and global-warming matters and health care reform. It is not yet clear whether or not these initiatives will result in significant changes to existing laws and regulations. Many of the regulations associated with enacted legislation have yet lo be written or the costs of compliance associated with enacted legislation may not be fully known or understood. These initiatives and tire related costs to comply with such initiatives could have a significant negative impact on our operating businesses, as well as on lhc businesses that we have a significant but not controlling economic interest Accordingly, we cannot predict whether such initiatives will have a material adverse impact on our consolidated financial position, results of operations or cash flows.

24

Source BERKS!IIRC HATHAWAY INC. 10-K. Maich 03. 201-1      l-owetea by Moriungsla'" Documsril Research¹'

nio liitetmatlati contained herein may nttl bo copied, adapted or distributed and Is not war I anted to be accurate, complete or timely The user assumes all risks tor any damages or louses uilslmj liomany use ol this Inlormalion, except to the extent such damages or losses cannot be limited or excluded by applicable laiv. Past financial ilertoimance Is no guarantee ol tutuie iesulis

Table of Contents

Hem IB.    Unresolved Staff Comments None.

Item 2.      Description of Properties

The properties used by Berkshire's business segments arc summarized in this section. Berkshire's railroad and utilities and energy businesses, in particular, utilize considerable physical assets in their businesses.

Railroad Business

Through BNSF Railway, BNSF operates a railroad network in North America with approximately 32,500 route miles of track (excluding multiple main tracks, yard tracks and sidings) in 28 states and two Canadian provinces. BNSF owns approximately 23,000 route miles, including casements, and operates on approximately 9,500 route miles of trackage rights that permit BNSF to operate its trains with its crews over other railroads' tracks. The total BNSF Railway system, including single and multiple main tracks, yard tracks and sidings, consists of approximately 51,000 operated miles of track, all of which are owned by or held under easement by BNSF except for approximately 10,500 miles operated under trackage rights.

BNSF operates various facilities and equipment to support its transportation system, including its infrastructure and locomotives and freight cars. It also owns or leases other equipment to support rail operations, including containeis, chassis and vehicles. Support facilities for rail operations include yards and terminals throughout its rail network, system locomotive shops to perform locomotive servicing and maintenance, a centralized network operations center for train dispatching and network operations monitoring and management in Fort Worth, Texas, regional dispatching centers, computers, telecommunications equipment, signal systems and other support systems. Transfer facilities are maintained for rail-to-rail as well as intcrmodal transfer of containers, trailers and other freight traffic and include approximately 30 intennodal hubs located across the system. BNSF owns or holds under non-cancelable leases exceeding one year approximately 7,000 locomotives and 74,000 freight cars, in addition to maintenance of way and other equipment.

Utilities and Energy Businesses

MidAmerican's energy properties consist ofthe physical assets necessary to support its electricity and natural gas businesses. Properties of MidAmerican's electricity businesses include electric generation, transmission and distribution facilities, as well as coal mining assets that support certain of MidAmerican's electric generating facilities. Properties of MidAmerican's natural gas businesses include natural gas distribution facilities, interstate pipelines, storage facilities, compressor stations and meter stations. In addition to these physical assets, MidAmerican has rights-of-way, mineral rights and water rights that enable MidAmerican to utilize its facilities. Pursuant to separate financing agreements, a majority of these properties arc pledged or encumbered to support or otherwise provide the security for the lelatcd subsidiary debt. MidAmerican or its affiliates own or have interests in the following types of electric generation facilities at December 31, 2013:

10,580 9,306 3,741 ^:

Fnf rfv Source

Coal ...;-.: •

Natural gas and other Wind !. '■■■.<; Hydroelectric

Nuclear/;.?; Solar

Geothermal. ,'-

PacifiCoip, MEC and NV Energy •y. .'_•:■;;■■*

PacifiCorp, MEC, NV Energy and MidAmerican Rcnewablcs

■•PacifiCorp, MEC and MidAmerican Reriewables PacifiCorp, MEC and MidAmerican Renewablcs

mec      .'.,■ :-~s"?^:-wd

MidAmerican Renewablcs

PacifiCorp and MidAmerican'Renewablcs' ".'■

Location by SiftnlOcnncc

Iowa; Wyoming.JJtah, Nevada, , . •.••<■.

. Arizona-, Colorado and Montana Nevada, Utah, Iowa, Illinois, Washington, Oregon, Texas, New York and Arizona

rflowa,Wyoming^Wasbingtpn;.Califorhia, Oregon' -

and Illinois      7^  .''■ O''■'■.■■.■"'.' ' :, '- ' V

Washington, Oregon, The Philippines, Idaho, California, Utah, Hawaii, Montana, Illinois and Wyoming

.Illinois.   .    _:      ""'      J'*.':':- ■ ■:/'■■

California and Arizona

California and Utah      . . ■

Total

N«l MW

Facility

Net Capacity <MW) t'l

1,309 1,816 588 361

. 17,638 9,954 3,750

1,282

454 440

             198

35,416 26,001

(I)   Facility Net Capacity (MW) represents (except for wind-powered generation facilities, which arc nominal ratings) either: 1) PacifiCorp—the total capability of a generating unit as demonstrated by actual operating or lest experience, less power generated and used for auxiliaries and other station uses, and is determined using average annual temperatures;

25

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Source. BERKSHIRE. HATHAWAY li\T. 10-K. March 03. 2014

Hie Inlonnatlou contained herein may not Ire copied, adapted er distributed snd Is not warranted to be accurate, complelo or timely. Ttic user assumes oil risks lot any damages ot losses arising liontunyusc oltlils Information, except lo the extent such damages or tosses cannot be limited or excluded by applicable law Past financial perfoimance Is no guarantee ol tuture results

Table of Contents

2) MEC—the totalfacility accredited net generating capacity based on MEC's accreditation approved by the Midcontinent Independent System Operator. lnc.;3) NV Energy—the total capability of a generating unit, less auxiliary and station demands, available at peak summer conditions; or 4) MidAmerican Renewablcs—the contract capacity for most facilities. Net MW Owned indicates MidAmerican's ownership ofFacility Net Capacity (MW).

Additionally, as of December 31, 2013, MidAjnerican's subsidiaries have electric generating facilities that arc under construction in Iowa, California and Utah having total Facility Net Capacity and Net MW Owned of 2,482 MW.

PacifiCorp, MEC and NV Energy own electric transmission and distribution systems, including approximately 24,200 miles of transmission lines and approximately 1,700 substations, gas distribution facilities, including approximately 25,700 miles of gas mains and service lines, and an estimated 8S million tons of recoverable coal reserves in mines owned or leased in Wyoming, Utah and Colorado.

Northern Natural's pipeline system consists of approximately 14,700 miles of natural gas pipelines, including approximately 6,300 miles of mainline tiansmission pipelines and approximately 8,400 miles of branch and lateral pipelines. Northern Natural's end-use and distribution market area includes points in Iowa, Nebraska, Minnesota, Wisconsin, South Dakota, Michigan and Illinois and its natural gas supply and delivery service area includes points in Kansas, Texas, Oklahoma and New Mexico. Storage services arc provided tlirough the operation of one underground natural gas storage field in Iowa, two underground natural gas storage facilities in Kansas and two liquefied natural gas storage peaking units, one in Iowa and one in Minnesota.

Kem River's system consists of approximately 1,700 miles of natural gas pipelines, including approximately 1,400 miles of mainline section, including 100 miles of lateral pipelines, and approximately 300 miles of common facilities. Kern River owns the entire mainline section, which extends from the system's point of origination in Wyoming through the Central Rocky Mountains area into California.

Northern Powergrid (Northcast)'s and Northern Powergrid (Yorkshire)'s electricity distribution network includes approximately 18,000 miles of overhead lines, approximately 40,000 miles of underground cables and approximately 700 major substations.

Other Segments

The physical properties used by Berkshire's other significant business segments are summarized below:

Insurance.Group: GEICO

General Re

BHRG

•;*BH Primary Group

Marmon

U.S. U.S.

Nori-U.S;-

u.s. .

Non-U.S. U.S. ' .'

U.S.

Chevy Chase, MD and 6 other states •• Various locations in 37 states.;:.; M^!;.:":?S:;

Stamford, CT Various locations

.• Cologne, Germany     ^; ■ , "•■ vC'-JSj" .;.' Various locations in 23 countries

Stamford, CT arid 9 other location's': ;

Various locations in 5 countries

: Omaha, NE, Fort Wayiie, D>I^.PrmcetohVv NJ and Wilkes-Banc, PA ^:: ;'.     '" ;;'•• Various locations, in 19 slates'. . ' ,,'i' '., i'V:;'

Various locations

Type of Propertv/Faclllty

Offices ^:  Offices ;.   •^: ,.'■

Offices Offices

^: Offices Offices

• Offices

Offices

Offices :      ; .

^Offices-, .'^;,"

Manufacturing plants

Manufacturing plants

Offices

Offices

Warehouses

Warehouses

Properties

13 .104

1

26

■ 2 28

•■ jo 9

•: :'. ii)

' 52

81 27 5

20 30 31

OnncdV Leased

Owned Leased

Owned Leased

Owned Leased

Leased

Leased

Owned_r

.Leased]

Owned Leased Owned Leased Owned Leased

26

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Son.-co BERKSHIRE HATHAWAY INC. 10-K. rVi.nch 03. 2011

77ie fnformattan contalnod herein niny not be copied, adapted or distributed and ts not warranted lo be accurate, complete or timely The user assumes all risks for any damages or losses arising from any usa of (his Information, except fo the extent such damages or losses cannot be limned or exchnted by applicable law. Past financial performance fs no guarantee of tuiur* results-

Tabic of Contents

McLane Company

Other businesses:; ■ ':'■■' Other Manufacturing

Other Service

Retailing

Finance & Financial Products

Country      Location      

U.S.

■^:N6h-U;S. /.Various locations in'21:c6ui)unes'^

Various locations

U.S.      Various locations

Nbn-U:S.   Various locations in over 60 countries

U.S.      Various locations

'NoiV-UiS.': i.Various locations in 30 countries

U.S.      Various locations

:^N^inLLS- »\ Locations-in 4 countries;■

U.S.      Various locations

'Non-U:S.   United Kingdom ,•."",:

Typf of Propcrty/racHitv

Manufacturing plants j ■ Manufacturing plants Olfices .   . • ■[}..._[ ■_;Officcs'":^. ^:>J,'^iv Warehouses'"'•   -.- ." ^: .Warehouses '

Distribution centers/Offices Distribution centers/Offices

Manufacturing plants Manufacturing plants Offices/Warehouses Offices/Warehouses Retail

Retail/Showroom

Manufacfaring plants Manufacmnng plants ;

.Offices/Warehp^s,::-.;■■■■^ OfficesWarehous'es.;'.../.'. >„■ Retail *_v ■'"•'• ';.''

Training facilities/Hangars Training facilities/Hangars Offices/Warehouses Offices AV arehouscs Plants Plants Retail

' ,0ffices/War'diouses/ ;. : - Flangars/^ra'iningfacili.ties:. Offices/Warehouses/ . ;Hangais/Training facilities ;

OfficcsAVarehouses/Plants Offices/Warehouses Retail Retail

Retail/Offices       "_;/i-"<"-

Manufacturing plants Manufacturing plants O fficcs/W archouses Offices/Warehouses Leasing/Showroom/Rctail Leasing/Showioom/Retail Housing communities

Leasing/Warehouses

Number of

Properties

:: :'4o.

■

''' "i it

14 X

51 43

299 49

167

278 27

126

182 V 98 ^;- '51,. '" 387

;^; 17

21 123 52 140 25 6 6

•20 108

25 19 33 545

35 1

16 48 223 233 27

Ounedf Leatcq

Owned Incased '. Owned : Leased 'Owned Leased

Owned Leased

Owned Leased Owned Leased Owned Leased

Owned _; Leased

Owned: : . Leased . ;Lcascd

Owned Leased Owned Leased Owned Leased Owned

:Owned Leased

Owned Leased Owned Leased

. Leased

Owned Leased Owned Leased Owned Leased Owned

■. Leased

27

Gou cn nrRKSHIRE HATHAWAY INC. 10-K. Match 03. 201-1      Powo.tetl hr Watimigstar"" Doco.nctit Iteeatch"

77,0 Inlormalion contained herein may not be captcO, adapted or distributed .,,,1 Is not warranted lo PC accurate complete or timely The "'''"^Jl^g™? ^M""⁹"    ^IMS" """ⁿ⁰ "">' im^'ZS except to the extent such damages or losse.ic.mnot be limited or excluded hy applicable law. f\i st Imaneral performance ,s no guarantee ol IMure results

Tablo of Contents

Item 3.       Legal Proceedings

We arc parties in a variety of legal actions arising out of the normal course of business. In particular, such legal actions affect our insurance and reinsurance businesses. Such litigation generally seeks to establish liability directly through insurance contracts or indirectly through reinsurance contracts issued by Berkshire subsidiaries. Plaintiffs occasionally seek punitive or exemplary damages. Wc do not believe that such normal and routine litigation will have, a material effect on our financial condition or results of operations.

Item 4.       Mine Safety Disclosures

Information regarding the Company's mine safety violations and other legal matters disclosed in accoidance with Section 1503 (a) ofthe Dodd-Frank Reform Act is included in Exhibit 95 to this Form 10-K.

Executive Officers ofthe Registrant

Following is a list ofthe Registrant's named executive officers:

Name      \_Tf     Position with nenlctrant      _c             . since

Warren E. Buffett   ' ^:    V      83   Cliaiiman ofthe Board      ' r^'^-::/:"^'^>wn;_;/V 1970

Charles T. Mungcr      90    Vice Chairman of the Board 1978

Each executive officer serves, in accordance with the by-laws ofthe Registrant, until the first meeting ofthe Board of Directors following the next annual meeting of shareholders and until his respective successor is chosen and qualified or until he sooner dies, resigns, is removed or becomes disqualified. Mr. Buffett and Mr. Mungcr also serve as directors of the Registrant.

28

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Source- BERKSHIRE HATHAWAY INC. 10-K, March 03. 2014

Ihe Inlaimatlon contained herein may not Ije copied, adapted ordlslrlbuted and Is not warranted lo be accurate, complete or timely The user assumes all tlsks lor any damages or losses lirlainn Iromanyuse of litis Inlormalion, except to the extent such damages or losses cannot be limited or excluded by applicable tan. Past financial performance Is no gusrar.teo of future lesulls.

Table of Contents

Part II

lfcm 5.       Market for Registrant's Common Equity, Related Security Holder Matters and Issuer Purchases of Equity Securities Market Information

Berkshire's Class A and Class B common slock arc listed for trading on the New York Stock Exchange, trading symbol: BRK.A and BRK.B. The following table sets forth the high and low sales prices per share, as reported on the New York Stock Exchange Composite List during the periods indicated:

Hlrh      Low      High      Low      High      Low      .     nigh      '.ow

First Quarter '   ^{:             :}- ; "'' j':'; ; ■    ;    $156,634      '$ 136,'850      'S 10-1,48      $ 91:29      S!23;578      $1 13,855      $'82,47      ;$75.86

Second Quarter                                            173,810      154,145      115.98      102.69      124,950      117,551      83.33      78.21

Third Quarter .'                         ' '"''.V.        178,900      / 166,168      ^: 11.9.30      110.72      '   134,892      123,227      .    R9.')5-      82.12

Fourth Quarter                                            177,950      166,510      118.66      110.84      136,345      125,950      90.93      83.85

Shareholders

Berkshire had approximately 2,900 record holders of its Class A common slock and 19,300 record holders of its Class B common stock at February 14, 2014. Record owners included nominees holding at least 450,000 shares of Class A common stock and 1,170,000,000 shares of Class B common stock on behalf of bencficial-but-not-of-record owners.

Dividends

Berkshire has not declared a cash dividend since 1967.

Common Stock Repurchase Program

In September 2011, Berkshire's Board of Directors ("Berkshire's Board") approved a common stock repurchase program under which Berkshire may repurchase its Class A and Class B shares at prices no higher than a 10% premium over the book value of the shares. In December 2012, Berkshire's Board amended the repurchase program by raising the price limit to no higher than a 20% premium over book value. Berkshire may repurchase shares in the open market or through privately negotiated transactions. Berkshire's Board authorization does not specify a maximum number of shares to be repurchased. However, repurchases will not be made if they would reduce Berkshire's consolidated cash equivalent holdings below 520 billion. The rcpuichase program is expected to continue indefinitely and the amount of repurchases will depend entirely upon the level of cash available, the attractiveness of investment and business opportunities cither at hand or on the horizon, and the degree of discount ofthe market price relative to management's estimate of intrinsic value. The repurchase program docs not obligate Berkshire to repurchase any dollar amount or number of Class A or Class B shares and there is no expiration date to the piogram. There were no shaie purchases in 2013. In December 2012, Berkshire repurchased 9,475 Class A shares and 606,499 Class B shares for approximately $1.3 billion through a privately negotiated transaction and market purchases.

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Sotuce BERKSHIRE HATHAWAY l,\'C. I U K. M.nch 03. 201-1

Tito Information contained herein mny not tm copied, adapted or distributed and Is not warranted to be accurate, complete or timely. The user assumes all ttsks for any damages or losses nthtng from any uso of this inlormalion, except to the extent such damages or tosses rannot be limited or excluded by applicable taw. Past financial performance Is no guarantee of future results

Table of Contents

Item 6.

Selected Financial Data

Selected Financial Data for flic Past Five Years

(dollars in millions except per-share data)

S J 1,850-: S:. 8,977 :■ $  6,215   $ 7,928

Revenues:!"-';-      ■ . '■      -.-'■"■:' .'■/■"      ■' -v.-y"'.!^'X'-[y

Insurance premiums earned

Sales and service revenues       ■      //;>".-'''   .' .,.^:'^:.-;:';?'\;'.--' ,'■'

Revenues of railroad, utilities and energy businesses <» 'i' Interest, dividend and other investment income   ;. ' "     .-'.    ■    y ■ -j_;;V. h Interest and other revenues of finance and financial pioducts businesses Investment aiidderivatiyc gains/iosses fi)'.,'.?' i:'p^y '.;. :■.--'■ Total revenues

Earnings:¹ :.-■'-.'',■■::\C   ,', ,,      :--',- ■ ['V',      ; j'¹/';   .' .-'

Net earnings attributable to Berkshire Hathaway <²>

Net earnings per-share attributable to Berksiiire;Hatha>vay sliarcholdei'S; (>) .

Year-end data:

Total assets   ^:   _;        ''.':'-■'."   '. i.-'"■ Notes payable and other borrowings:

Insurance and other businesses      -_;.■-      " .' ■

Raihoad, utilities aud energy businesses ">

^;    Finance and financial products businesses   -      - '■':■■

Berkshire Hathaway shareholders' equity • :Class"Aequivalent common shares outstanding,in thousands '<."•';::■■■'■■ Berkshire Hathaway shareholders' equity per outstanding Class A equivalent common share

2012

34,545 -83,268 32,582 ,4,534 4,109

2013

$ 36,684 :94,806 34,757 4,'939 4,291

2010

30,749 67,225 26,364 .5,215 4,286 i 2,346

2011

32,075 72,803 30,839

. 4,792 4,009

' '(830)

2009

$ 27,884' 62;,S55 11,443 '   . 5;53l 4,293

^: / :;787,

6_i6731;-- 3,425-

SI 82,150   $162,463   S 143,688   $136,185   $ 112,493

S 19,476   $ 14,824   $ 10,254   $ 12,967   $ 8,055

5.193 .

13;768' 32,580 14,036 164,850 1-651 .

12;902 46,655 12,667 221,890 -.1,644

13,535 36,156 ^; 13,045 187,647 1,643.

'. 12,471 31,626 14,477 157,318 1.648

S484-.931 $427,452   5 392^47.  $372,229   $297; 119 '

4,561 19,579 13,769 • 131,102 '■' 1,552

S 134,973   $ 114,214   $ 99,860   $ 95,453   $ 84,487

C7h February 12, 20/0, BNSF became a wholly-owned subsidiary of Berkshire and BNSF's accounts are consolidated in Berkshire's financial statements beginning on that date. From December 31, 200S to Fcbruaiy 12, 2010, Berkshire's investment in BNSF common stock was accountedfor pursuant to the equity method.

Investment gains/losses include realized gains and losses and non-cash other-than-temporary impairment losses. Derivative gains/losses include significant amounts related to non-cash changes in Ihe. fair value of long-term contracts arising from short-term changes in equity prices, interest rates and foreign currency rales, among other market factors. After-tax investment and derivative gains/losses were $4.3 billion in 2013. $2.2 billion in 2012, $(521) million in 2011, $1.87 billion in 2010 and $486 million in 2009.

Represents net earnings per equivalent Class A common share. Net earnings per Class B common share is equal to 1/1,500 of such amount.

30

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Source' BERKSHIRE HATHAWAY INC. 10-K. March 03. 201-1

Hip tnfonnatlon contained herein nmy not lie copied, adapted or distributed and is not vtarr anted to be accurate, complete or timely. The user assumes nit risks tot any damages oi losses arising Itom ony use of this Inlormalion, excejil lo the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance Is no guarantee of future rosulls.

Table of Contents

Item 7.       Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations

Net earnings attributable to Berkshire Hathaway shareholders for each of the past three years arc disaggi egatcd in the table that follows Amounts arc after deducting income taxes and exclude earnings attributable to noncontrolling interests. Amounts are in millions.

2011

$ .154 ' 3,555 2,972 1,204

■:; 3,039

516 : ,(665) (521)

Insurance—underwriting   .'•"•      ■'■■■■■ ■      '" ■■

Insurance - investment income

Railroad -jV      ■      X''' ¹ " ■

Utilities and energy Manufacmring,^:sero Finance and financial products

Oi'^KvS'^io:^:-^ .■ Investment and derivative gains/losses

'■'.Netearnings attributable to'Berlcshire Hathaway shareholders

S; 1,046 3,397 ; 3,372 • 1,323 3,699 557

' (797) 2,227

S 1,9.95 3,708 3,793 1,470 4,230 . 657

.,; (714)'^: 4,337

$19,476 r ,$14.824 .$10,254

Through our subsidiaries, we engage in a number of diverse business activities. Our operating businesses arc managed on an unusually decentralized basis. There arc essentially no centralized or integrated business functions (such as sales, marketing, purchasing, legal or human resources) and there is minimal involvement by our corporate headquarters in the day-to-day business activities of the operating businesses. Our senior corporate management team participates in and is ultimately responsible for significant capital allocation decisions, inveshnent activities and the selection ofthe Chief Executive to head each of the operating businesses. It also is responsible for establishing and monitoring Berkshire's corporate governance practices, including, but not limited to, communicating the appropriate "tone at the top" messages to its employees and associates, monitoring governance efforts, including those at the operating businesses, and participating in the resolution of governance-related issues as needed. The business segment data (Note 23 to the Consolidated Financial Statements) should be read in conjunction with this discussion.

Our insurance businesses generated after-tax earnings from underwriting in each ofthe last three years. Periodic earnings from insurance underwriting are significantly impacted by lhc magnitude of catastrophe loss events occurring during the period. In 2013, wc incurred after-tax losses of approximately S285 million from two catastrophe events in Europe. Insurance underwriting earnings in 2012 included after-tax losses of approximately $725 million from Hurricane Sandy, ln 2011, underwriting earnings included aftei-tax losses of approximately $1.7 billion from several different catastrophe events occurring in that year.

Our railroad and utilities and energy businesses generated significant earnings in each of the last three years. Earnings from our manufacturing, service and retailing businesses in 2013 increased about 14.4% over 2012, which was partially attributable to bolt-on business acquisitions completed during the last two years and reductions in earnings attributable to noncontrolling interests. Earnings from our manufacturing, service and retailing businesses in 2012 increased significantly over 2011 due primarily to the impact ofthe acquisition of The Lubrizol Corporation ("Lubrizol"), which was completed on September 16,2011.

In 2013 and 2012, after-lax investment and derivative gains were approximately S4.3 billion and $2.2 billion, respectively. In each year, after-tax gains included gains from the reductions in estimated liabilities under equity index put option contracts and dispositions of investments, partially offset by olher-than-tcmporary impairment ("O l 11") losses. Investment gaius in 2013 also included after-tax gains associated with the fair value increases of certain investment securities where the gains or losses were reflected in periodic earnings In 2012, after-tax investment and derivative gains also included gains from settlements and expirations of credit default contracts. In 2011, after-tax investment and derivative losses were $521 million, reflecting after-tax losses of SI .2 billion related to increases in liabilities under our equity index put option contracts and OTTI losses of $590 million related to certain equity and fixed maturity securities, partially offset by after-tax investment gains of SI .2 billion from the redemptions of our Goldman Sachs and General Electric Preferred Stock investments. We believe that investment and derivatives 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.

31

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Soiree BERKSHIRE HATHAWAY INC. 10-K. Match 03. 2014

n»u tnloimatlon contained herein may not be copied, adapted or distributed and Is not warranted lo be accurate, complete or timely. Ttte userassumea all ifsks for any damages or tosses arising Ircm any use cf this Information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance Is no guarantee cl luture results.

Table of Contents

Management's Discussion (Continued) Insurance—Underwriting

Wc engage in both primary insurance and reinsurance of property/casualty, life and health risks. In primary insurance activities, we assume defined portions of the risks of loss from persons or organizations that are directly subject to the risks. In reinsurance activities, we assume defined portions of similar or dissimilar risks that other insurers or reinsurers have subjected themselves to in their own insuring activities. Our insurance and reinsurance businesses arc: (1) GEICO, (2) General Re, (3) Berkshire Hathaway Reinsurance Group ("BHRG") and (4) Berkshire Hathaway Primary Group.

Our management views insurance businesses as possessing two distinct operations - underwriting and investing. Underwriting decisions are the responsibility ofthe unit managers; investing decisions, with limited exceptions, arc the responsibility of Berkshire's Chairman and CEO, Warren E. Buffett. Accordingly, wc evaluate performance of underwriting operations without any allocation of investment income. Underwriting results represent insurance premiums earned less insurance losses, benefits and underwriting expenses incurred.

The timing and amount of catastrophe losses can produce significant volatility in our periodic underwriting results, particularly with respect to BHRG and General Re. For the purpose of this discussion, wc considered catastrophe losses significant if the pre-tax losses incurred from a single event (or scries of related events such as tornadoes) exceeded $75 million on a consolidated basis. In 2013, we incurred pre-tax losses of $43(5 million related to two events in Europe. In 2012, we incurred pre-tax losses of approximately $1.1 billion attributable to Hurricane Sandy, which included approximately $490 million incuncd by GEICO. In 2011, we incurred pre-tax losses of approximately $2.6 billion, arising from nine events. The largest losses were from the earthquakes in Japan ($1.25 billion) and New Zealand ($650 million) in the first quarter. Additionally, we incurred losses from several weather related events in the Pacific Rim and the U.S.

Our periodic underwriting results may be affected significantly by changes in estimates for unpaid losses ond loss adjustment expenses, including amounts established for occurrences in prior years. In 2011, we reduced estimated liabilities related to certain retroactive reinsurance contracts which resulted in an increase in pre-tax underwriting earnings of approximately $S75 million. These reductions were primarily due to lower than expected loss experience of one ceding company. Actual claim settlements and revised loss estimates will develop over time, which will likely differ from the liability estimates recorded as of year-end (approximately $65 billion). Accordingly, the unpaid loss estimates i ecorded as of December 31, 2013 may develop upward or downward in future periods, producing a corresponding decrease or increase, respectively, to pre-tax earnings.

Our periodic underwriting results may also include significant foreign currency transaction gains and losses arising from the changes in the valuation of certain non-U.S. Dolla; denominated reinsurance liabilities of our U.S. based subsidiai ies as a result of foreign currency exchange rate fluctuations. Historically, currency exchange rates have been volatile and the resulting impact on our underwriting earnings has been relatively significant. These gains and losses arc included in underwriting expenses.

A key marketing strategy of our insurance businesses is the maintenance of extr aordinary capital strength. Statutory surplus of our insurance businesses was approximately $129 billion at December 31, 2013. This superior capital strength creates opportunities, especially with respect to reinsurance activities, to negotiate and enter into insurance and reinsurance contracts specially designed lo meet the unique needs of insurance and reinsurance buyers.

Underwriting results from our insurance businesses are summarized below. Amounts arc in millions.

21)13      2012      2011

Underwriting gain (loss) attributable to:    ■. -   ,             ' .          '._      ;'■      -

GEICO                                                                   '      $1,127      $   680      $576

.. ■Gcncraj.Rc\Hn:-/-;/.-',.,-,--.                                        \    '■^r ' ' '■      '^;, .;'                     ■ •    ^:,     "_::'      283      -.355'       144'

Berkshire Hathaway Reinsurance Group      1,294      304      (714)

lkikshireHathawayI'rmiaryGroup' T'             '":■''■:;■?)'';''}'.'','■''.      \.■   ■'■    . ■   -v. ':':'^:.-^::-V'^;"■ 385      '._:286-      ■ 242-

Pre-tax underwriting gain      3,089      1,625      248

Income taxes and noncontrolling interests              ;'  ;    ■; ■;.^:'.':^ii.         -.      -_;                                           1,094 .      579       94

Net underwriting gain      $1,995      $ 1,046      $ 154

32

Powered lr/ Murnirinsla'" Document Reseurdr'¹

Soiree BERKSHIRE HATHAWAY INC. 10-K, March 03. 201-1

Tlie Itilcrinition contained herein may ne, be coplotl, adapted vr distributed end Is not warranted to be accurate, complete or timely. Tlic user assumes an risks lor any damages or lossas atlslng Irom any use 01 this inlormalion, except to the extent such damages or losses cannot he limited or excluded by applicable laiv. Past financial performance is no guarantee ol tuture results.

Table of Contents

Management's Discussion (Continued)

Insurance—Underwriting (Continued)

GEICO

Through GEICO, wc primarily write private passenger automobile insurance, offering coverages to insureds in all 50 states and the District of Columbia. GEICO's policies arc marketed mainly by direct response methods in which customers apply for coverage directly to the company via the Internet or over the telephone. This is a significant element in our strategy to be a low-cost auto insurer. In addition, wc su ivc to provide excellent service to customers, with the goal of establishing long-term customer relationships. GEICO's underwriting results arc summarized below. Dollars arc in millions.

:$ 19,083

Premiums" written      ' ' ;■:

Premiums earned

Losses'aricl loss adjustment expenses ". Underwriting expenses Total losses and expenses -,. Pre-tax underwriting gain

;S15;664: $ 15,363 V 12,013 2,774

100.0 78i2 18.1

,S17;129-

75.9 20.0

14,255 3,190

.76.7" 17.2

$18,572    1000   $16,740 100.0

12,700 3,360

680

$ 1,127

17,445    93.9'    16,060    95.9     14,787 _96.3;

$ 576

Premiums written in 2013 were $19 1 billion, an increase of 11.4% over premiums written in 2012. Premiums earned in 2013 increased approximately $1.8 billion (10.9%) compared to premiums earned in 2012. The growth in premiums written and earned reflected an increase in voluntary auto policics-in-forcc of 7.8% over the past year and, to a lesser degree, higher average premiums per policy. The increase in pohcies-in-forcc reflected a 12.1% increase in voluntary auto new business sales. Voluntary auto policics-in-forcc at December 31, 2013 were approximately 898,000 greater than at December 31, 2012.

Losses and loss adjustment expenses incurred in 2013 increased $1.56 billion (12.2%) compared to 2012. The loss ratio (the ratio of losses and loss adjustment expenses incurred to premiums earned) was 76.7% in 2013 compared to 75.9% in 2012. In 2013, claims frequencies for property damage and collision coverages generally increased in the two to four percent range compared to 2012. Physical damage claims severities increased in the three to four percent range in 2013. In addition, average bodily injury claims frequencies increased in the one to two percent range. Bodily injury claims severities increased in the one to three percent range, although severities for personal injury protection coverage declined, primarily in Florida. In both 2013 and 2012, losses and loss adjustment expenses incurred were favorably impacted by reductions of estimates for prior years' losses.

Underwriting expenses incurred in 2013 declined $170 million (5.1%) compared with 2012. Underwriting expenses in 2012 were impacted by a change in U.S GAAP concerning deferred policy acquisition costs ("DPAC"). DPAC represents the underwriting costs that are capitalized and expensed as premiums are earned over (he policy period. The new accounting standard, which wc adopted on a prospective basis as of January 1, 2012, accelerates the timing of when certain underwriting costs arc recognized in earnings. We estimate that GEICO's underwriting expenses in 2012 would have been about $410 million less had we computed DPAC under the prior accounting standard. The effect of transitioning to this new accounting standard was completed in 20)2. Excluding the effects of the accounting change in 2012, the ratio of underwriting expenses to premiums earned (the "expense ratio") in 2013 declined by approximately 0.4 percentage points from 2012.

Premiums earned in 2012 were approximately $16.7 billion, an incicaseof $1.4 billion (9.0%) over 2011. The growth in premiums earned for voluntary auto was 9.0% as a result of a 6.5% increase in policies-in-forcc and an increase in average premium per policy as compared to 2011. Voluntary auto new business sales in 2012 increased slightly compared with 2011. Voluntary auto policies-in-force at December 31,2012 were approximately 704,000 greater than at December 31, 2011.

Losses and loss adjustment expenses incurred in 2012 were S12.7 billion, an increase of $687 million (5.7%) over 2011. The loss ratio was 75.9% in 2012 and 78.2% in 2011. Losses and loss adjustment expenses in 2012 included $490 million related to Hurricane Sandy. With the exception of Hurricane Sandy, GEICO's catastrophe losses tend to occur regularly and arc normally not individually significant in amoiml.

Despite the losses from Hurricane Sandy, our loss ratio declined in 2012 as compared to 2011. Claims frequencies for property damage and collision coverages were down about one percent, comprehensive coverage frequencies were down about ten percent, excluding Hurricane Sandy, and frequencies for bodily injury coverages were relatively unchanged. Physical

33

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Source BERKSHIRE HA1HAWAY INC. 10-K. March 03. 201-1

77ic Information contained herein may not I/O copied, adapted or distributed and Is not warranted to be accurate, complete or timely The user assumes all risks lor any damages or losses arising Iron! any use of this Inlormalion, ctccpt lo the extent such damages or losses cannot be limited ot excluded by applicable law. Past financial performance Is no guarantee ol tulure results.

Table of Contents

Management's Discussion (Continued)

Insurance—Underwriting (Continued)

GEICO (Continued)

damage severities increased in the two to four percent range and bodily injury severities increased in the one to three percent range from 2011.

Underwriting expenses incurred in 2012 increased $586 million (21.1%) compared with 2011. The increase was primarily the result ofthe change in U.S. GAAP concerning DPAC discussed previously. We estimate that GEICO's underwriting expenses in 2012 would have been about $410 million less had we computed DPAC under the prior accounting standard. Based on that estimate, GEICO's expense ratio in 2012 would have been less than in 2011.

General Re

Through General Re, wc conduct a reinsurance business offering property and casualty and life and health coverages to clients worldwide. Wc write property and casualty reinsurance in North America on a direct basis through General Reinsurance Corporation and internationally through Germany-based General Reinsurance AG and other wholly-owned affiliates. Property and casualty reinsurance is also written in broker markets through Faraday in London. Life and health reinsurance is written in North America through General Re Life Corporation and internationally through General Reinsurance AG. General Re strives to generate underwriting profits in essentially all of its product lines. Our management does not evaluate underwriting performance based upon market share and our underwriters arc instructed to reject inadequately priced risks. General Re's underwriting results are summarized in the following table. Amounts are in millions.

Premiums written             Preiniini» earned            Pre-lnx underwriting fain (loss!

2012      2011      2013      2012      2011      2013      2012 2011

Property/casualty      : ■}'i  ;      $2,97?. "' $2,982 \ $2,910.   S 3,007    S;2_;904    $2;941.    $   148    $ 399 . S 7.

Life/health      2,991       3,002      2,909 "" 2,977      2,966      2,875        135    _jM) 137

^V!^"^!,;; ; "      r'      $5;963    $5,984 ; $S,819: yS5,984   ^: 5 5,870 , $51816    $ 283    $: 355^:;._: S 144

Property/casualty

Property/casualty premiums written in 2013 were relatively unchanged while premiums earned increased $103 million (3.5%), versus the corresponding 2012 period. Excluding the effects of foreign currency exchange rate changes, premiums written and premiums earned in 2013 increased $8 million (0 3%) and $83 million (2.9%), respectively, versus 2012. This was primarily due to increases in European treaty business. Price competition in most property and casualty lines persists. Our underwriters continue to exercise discipline by declining offers to write business where prices are deemed inadequate. We remain prepared to increase premium volumes should market conditions improve.

Property/casualty operations in 2013 produced net underwriting gains of $148 million which consisted of $153 million of gains from our property business and $5 million of losses from casualty/workers' compensation business. In 2013, property results included catastrophe losses of approximately $400 million attributable to a hailstorm ($280 million) and floods ($120 million) in Europe. The liming and magnitude of catastrophe and large individual losses has produced and is expected to continue to produce significant volatility in periodic underwriting results. Property underwriting results also included gains from reductions of $375 million in loss reserve estimates for prior years' loss events as a result of lower than expected losses reported from ceding companies. The underwriting loss from casualty/workers' compensation business included $141 million of losses attributable to discount accretion related to prior years' workers' compensation liabilities and net underwriting losses attributable to current year business, offset by reductions in estimated liabilities for prior year losses.

Premiums written in 2012 increased $72 million (2.5%), while premiums earned declined $37 million (1.3%) from 2011. Excluding the effects of foreign currency exchange rate changes, premiums written increased $158 million (5.4%) compared lo 2011 which reflected increased volume in most of our major markets around the globe. Before the effects of currency exchange, premiums earned in 2012 increased $61 million (2.1%) over 2011 which was primarily attributable to an increase in European property treaty business.

Undci-writing gains were $399 million in 2012 and consisted of $352 million of gains from our property business and $47 million of gains from casualty/workers' compensation business. Our property results included $266 million of catastrophe losses primarily attributable to Hurricane Sandy ($226 million), an earthquake in Northern Italy and various tornadoes in the Midwest. The underwriting gains from casualty/workers' compensation business included lower than expected losses from prior years'

34

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Soiree. BERKSHIRE HATHAWAY [HC. HH'. M.nch 03. 201-1

nic trilonnarlon containedlierelti nrey not tie copied, adapted or distributed Mildts not wailanted to be accurate, complete or timely. Hie user assumes all rises lor any damages or losses erlalng from tiny use of this Inlormalion, except to the cxtonl such damages or losses cannol be limited or excluded by applicable law. Past financial performance Is no guarantee ol luture tesults

Table of Contents

Management's Discussion (Continued)

Insurance—Underwriting (Continued)

Property/casualty (Continued)

casualty business, offset in part by discount accretion of workers' compensation liabilities and deferred charge amortization on retroactive reinsurance contracts.

Underwriting gains were $7 million in 2011 and consisted of a net underwriting gain of $127 million from casually/workers' compensation business substantially offset by a net underwriting loss of $120 million from property business. Our property results in 2011 included $861 million of catastrophe losses. The catastrophe losses were primarily attributable to earthquakes in New Zealand ($235 million) and Japan ($189 million), as well as several weather related loss events in the United States, Europe and Australia, with losses ranging from about $30 million to $75 million per event. The underwriting gain of $ 127 million from casualty/workers' compensation business reflected overall reductions in loss reserve estimates for prior years' loss events, which was partially offset by discount accretion associated with workers' compensation liabilities and deferred charge amortization.

Life/health

In 2013, premiums written decreased $ 11 million (0.4%), while premiums earned increased $ 11 million (0.4%) compared with 2012. Adjusting for the effects of currency exchange rate changes, premiums written in 2013 increased S9 million (0.3%) over 2012 and premiums earned were $32 million (1.1%), higher than 2012. The increases, before foreign currency effects, were primarily attributable to increased non-U.S. life business. Life/health operations in 2013 produced net underwriting gains of $135 million, which were driven by lower than expected mortality, offset in part by discount accretion in the long-term care business.

Premiums written in 2012 increased $93 million (3.2%) and earned premiums increased $91 million (3.2%) from 2011. Excluding the effects of foreign currency exchange rate changes, premiums written and earned in 2012 increased $239 million (8.2%) and $236 million (8.2%), respectively, compared to 2011. The increases in premiums written and earned were primarily attributed to increased writings in non-U.S. life business. The underwriting results for 2012 were negatively impacted by a premium deficiency reserve that was established on the run off of the U.S. long-term care book of business as well as greater than expected claims frequency and duration in the individual and group disability business in Australia. Underwriting results for 2011 included losses of $15 million attributable to the earthquake in Japan, offset by lower than expected mortality in the life business.

Berkshire Hathaway Reinsurance Gi oup

Through BHRG, we underwrite cxccss-of-loss reinsurance and quota-share coverages on property and casualty risks for insurers and reinsurers worldwide. BHRG's business includes catastrophe exccss-of-loss reinsurance and excess primary insurance and facultative reinsurance for large or otherwise unusual property risks referred to as individual risk. BHRG also writes retroactive reinsurance, which provides indemnification of losses and loss adjustment expenses with respect to past loss events. Multi-line property/casualty refers to various coverages written on both a quota-share and excess basis and includes a 20% quota-share contract with Swiss Reinsurance Company Ltd. ("Swiss Re") covering substantially all of Swiss Re's property/casualty risks incepting between January 1, 2008 and December 31,2012. The Swiss Re quota-share contract is now in run-off. BHRG's underwriting activities also include life reinsurance and traditional annuity businesses. BHRG's underwriting results arc summarized in the table below. Amounts are in millions.

Catastrophe and.ihdividual'risk'' Retroactive reinsurance Other,multi^line prp^ Life and annuity

;: 801;

328 4,348. -3,309

Premiums earned

2012

$ 816;

"717'

• * 5,306 ■ 2,833

2011 S/.751 2,011 ' 4,224 2,161

581 (321) 655 379

; .400:

(201) .295. (190)

rre-ras. underwriting eaioAoss

2013

$..(321) 645

V (338) (700)

$8,786    '$9,672    $9,147   ;$ 1,294 ^: . .S .304 . S (714)

Catastrophe and individual risk premiums written were $807 million in 2013, $785 million in 2012, and $720 million in 2011. The level of business written in a given period will vary significantly depending on changes in market conditions and

35

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Source. BERKSHIRE HATHAWAY INC. 10-K. March 03. 2014

Tl'.e Information contained herein may not Oo copied, adapted or dtaltlboled and Is not warranted to be accurate, complete or timely. The user assumes all risks lor any damages or losses arising Irom any use ol this tnlorntallon, except to the extent such damages or losses cannot be hmlled or excluded by applicable law Past financial performance ts no guarantee ol tulure lesults.

Table of Contents

Management's Discussion (Continued)

Insurance—Underwriting (Continued)

Berkshire Hathaway Reinsurance Group (Continued)

management's assessment ofthe adequacy of premium rates. Wc have constrained the volume of business written in recent years. However, wc have the capacity and desire to write substantially more business when appropriate pricing can be obtained.

Periodic underwriting results of our catastrophe and individual risk business are subject to extraordinary volatility, depending on the timing and magnitude of significant catastrophe losses. In 2013, we incurred losses of $20 million from floods in Europe, while in 2012 we incurred losses of $96 million in connection with Hurricane Sandy. In 2011, we incurred losses of approximately $800 million attributable to the earthquakes in Japan ($700 million) and New Zealand (S100 million).

Retroactive reinsurance policies provide indemnification of unpaid losses and loss adjustment expenses with respect to past loss events, and related claims are generally expected to be paid over long periods of time. Premiums and limits of indemnification are often very large in amount. Coverages are generally subject to policy limits. Premiums earned in 2013, 2012 and 2011 were attributed to a relatively small number of contracts. Premiums earned under retroactive reinsurance contracts in 2011 included approximately $1.7 billion from a reinsurance contract with Eaglcstone Reinsurance Company, a subsidiaiy of American International Group, Inc. ("AIG"). Under the contract, wc agreed to reinsure the bulk of AIG's U.S. asbestos liabilities. The agreement provides for a maximum limit of indemnification of $3.5 billion.

Underwriting results attributable to retroactive reinsurance include the recurring periodic amortization of deferred charges that arc established with respect to these contracts. At the inception of a contract, deferred charge assets arc recorded as the excess, if any, of the estimated ultimate losses payable over the premiums earned. Deferred charge balances arc subsequently amortized over the estimated claims payment period using the interest method, which reflects estimates ofthe timing and amount of loss payments. The original estimates ofthe timing and amount of ultimate loss payments are periodically analyzed against actual experience and revised based on an actuarial evaluation ofthe expected remaining losses. Amortization charges and deferred charge adjustments resulting from changes to the estimated timing and amount of future loss payments arc included as a component of losses and loss adjustment expenses.

The underwriting losses from retroactive policies of $321 million in 2013 and $201 million in 2012 primarily represented the amortization of defciTed charges. In 2013, wc increased undiscounted estimated liabilities by approximately $300 million related to prior years' contracts, which was partially offset by increases in related deferred charge balances. In 2011, the net underwriting gain from retroactive reinsurance contracts of $645 million reflected the favorable impact of an $865 million reduction in the estimated liabilities related to an adverse loss development contract with Swiss Re, which was attributable to better than expected loss experience.

Gross unpaid losses from retroactive reinsurance contracts were approximately $ 17.7 billion as of December 31, 2013, $18.0 billion at December 31, 2012 and SI 8.8 billion at December 31,2011. At December 31, 20) 3 and 2012 unamortized deferred charges related to BHRG's reuoactivc reinsurance contracts were approximately $4.25 billion and $3.90 billion, respectively.

Premiums earned from multi-line property/casualty business in 2013 declined $958 million (18%) compared to 2012, while premiums earned in 2012 increased approximately $1.1 billion (26%) over 2011. As previously noted, the Swiss Re 20% quota-share contract expired on December 31,2012. As a result, premiums earned in 2013 from that conlract declined $1.9 billion (57%) compared with 2012. Premiums earned under the Swiss Re quota-share contract were $3.4 billion in 2012 and $2.9 billion in 2011. Premiums earned in 2013 from multi-line business, othci than from the Swiss Re quota-share contract, increased $981 million (52%) over 2012, which was primarily attributable to increased properly quota-share business.

Multi-line property/casualty generated pre-tax underwriting gains of $655 million in 2013 and $295 million in 2012. This business produced pre-tax underwriting losses of $338 million in 2011. Periodic underwriting results can be significantly impacted by catastrophe losses and foreign currency transaction gains or losses associated with the changes in the valuation of certain reinsurance liabilities of U.S.-bascd subsidiaries (including liabilities arising under retroactive reinsurance contracts), which are denominated in foreign currencies.

Multi-line property/casualty underwriting results in 2013 included losses of $16 million from floods and a hailstorm in Europe. Underwriting results in 2012 included estimated losses of $268 million from Hurricane Sandy. Catastiophc losses were approximately $933 million in 2011, which arose primarily from the earthquakes in Japan ($375 million) and New Zealand ($300 million) and from floods in Thailand ($150 million). The catastrophe losses in 2011 and 2012 arose primarily under the

36

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Soiiicc BERKSHIRE HATHAWAY INC. 10-K. Maich 03. 201-1

riic tntonnancn contained heroin may not tie copied, adapted or distributed end Is not e/attanled lo be accurate, comptelo er timely. The user assumes all ttsks lor any damages or losses ettslng trom any use ol this Inlormalion, etcept lu the extent such damages or losses cannot be limited or excluded by applicable law. Past financial pciioimance Is no guarantee ottuturc losulls.

Tabic of Contents

Management's Discussion (Continued)

Insurance—Underwriting (Continued)

Berkshire Hathaway Reinsurance Group (Continued)

Swiss Re quota-share contract Underwriting results included foreign currency transaction losses of 528 million in 2013 and $123 million in 2012 and gains of $140 million in 2011.

Life and annuity premiums earned in 2013 increased $476 million (17%) over premiums earned in 2012. In 2013, premiums earned included $1.7 billion received in connection with a new reinsurance contract which provides coverage of guaranteed minimum death benefits on a portfolio of variable annuity reinsurance contracts that have been in run-off for a number of years. Premiums earned in 2013 also included $1.4 billion from traditional annuity insurance and reinsurance contracts that provide for streams of periodic payments in the future in exchange for upfront consideration. Annuity premiums in 2012 were $794 million. These increases were partially offset by the reversal of premiums previously earned (approximately $1.3 billion) under the Swiss Re Life & Health America Inc. ("SRLHA") yearly renewable term life insurance contract as a result of contract amendments in 2013. The amendments essentially commuted coverage with respect to a number ofthe underlying contracts in exchange for payments to SRLHA of $675 million.

The life and annuity business produced pre-tax underwriting gains of $379 million in 2013. The underwriting gains in 2013 included a one-time pre-tax gain of $255 million attributable to the aforementioned amendments to the SRLHA contract as the reversal of premiums earned was more than offset by the rcvcisal of life benefits incurred. The one-time underwriting gain related to the SRLHA contract partially offset the significant underwriting losses incurred under that contract over the pievious three years. Underwriting results in 2013 also included pre-tax gains of approximately $250 million related to (he variable annuity guarantee business written in 2013. The gains were primarily attributable to the impact of rising equity markets which lowered estimates of liabilities for guaranteed minimum benefits. The annuity business normally generates periodic underwriting losses as a result ofthe periodic accretion of discounted annuity liabilities. Periodic underwriting results arc also impacted by adjustments for mortality experience and changes in foreign currency exchange rates applicable to certain ofthe contracts. Annuity business produced net underwriting losses of $178 million in 2013.

The life and annuity business generated pie-tax underwriting losses of $190 million in 2012 and 5700 million in 2011. Annuity business produced net underwriting losses of $159 million in 2012 and $118 million in 2011. In 2011, wc also recorded a pre-tax underwriting loss of $642 million with respect to the SRLHA contract Mortality rates under that contract persistently exceeded the assumptions we made at the inception ofthe contract. During the fourth quarter of 2011, after considerable internal actuarial analysis, our management concluded that future mortality rates arc expected to be greater than our original assumptions. As a result, we increased our estimated liabilities for future policyholder benefits to reflect the new assumptions.

Berkshire Hathaway Primary Group

The Berkshire Hathaway Primary Group ("BH Primary") consists of a wide variety of independently managed insurance businesses. These businesses include: Medical Protective Company and Princeton Insurance Company ("Princeton," acquired in December 2011), providers of healthcare malpractice insurance coverages; National Indemnity Company's primary group, writers of commercial motor vehicle and general liability coverages; U.S. Investment Corporation, whose subsidiaries underwrite specially insurance coverages; a group of companies referred to internally as "Berkshire Hathaway Homcslate Companies," providers of commercial multi-line insurance, including workers' compensation; Central States Indemnity Company, a provider of credit and disability insurance; Applied Underwriters, a provider of integrated workers' compensation solutions; and BoatU.S., a writer of insurance for owners of boats and small walercraft. In the fourth quarter of 2012, we acquired GUARD Insurance Group ("GUARD"), a provider of workers' compensation and complimentary commercial property and casually insurance coverage to small and mid-sized businesses. In the second quarter of 2013, wc formed Berkshire 1 lathaway Specialty Insurance which concentrates on providing large scale capacity solutions for commercial property and casualty risks.

Premiums earned in 2013 by BH Primary aggregated $3,342 million, an increase of $1,079 million (48%) ovci 2012. Piemiums earned in 2012 by BH Primary were 52,263 million, an increase of $514 million (29%) over 2011. The comparative increases in 2013 and 2012 reflected the impact of the GUARD acquisition in 2012 and Princeton at the end of 2011. In addition, Bcikshire Hathaway Homcstatc Companies' premiums earned increased 5301 million in 2013 and $188 million in 2012 compared to the corresponding prior years, due primarily to significantly higher workers' compensation insurance volume. BH Primary produced under-writing gains of $385 million in 20)3, $286 million in 2012 and $242 million in 2011. The gains reflected a generally favorable claim environment over the three years, which resulted in loss ratios of 60% in 2013, 58% in 2012 and 52% in 2011.

37

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Source nRKSIIint" HATHAWAY INC. 10-K. March 03. 201-1

riic Inlormalion contained hctelri may not bo copied, adapted or distributed and Is not warranted lo be accurate, complete or timely. Tiro user assumes all risks lor any damages or losses Bilstng Irem anyuso of Ibis Inlormalion, except lo tire extent such damages or losses cannot be limited or excluded by atipticable law. Past financial performance Is no guarantee ol luture icsulls.

Table of Contents

Management's Discussion (Continued) Insurance—Investment Income

A summary of net investment income of our insurance operations follows. Amounts are in millions.

Investment income before taxes.and noncontrolling interests

Income taxes and noncontrolling interests

Net" investment-income.      ■*■"■(»>■:"■ '■■

$4,713 1,005

$ 4,454 1,057

$ 4;725 1,170

$3,70$      3,397;::;:;$ 3;555^:

Investment income consists of interest and dividends earned on cash and investments of our insurance businesses. Pre-tax investment income in 2013 increased $259 million (5.8%) compared to 2012. The increase was primarily attributable to increased dividends earned on equity investments, which reflected increased dividend rates for certain of our larger equity holdings as well as increased overall investments in equity securities.

Beginning with the fourth quarter of 2013, investment income no longer includes interest from our investments in "Wriglcy 11.45% subordinated notes ($4.4 billion par), as a result ofthe repurchase of those notes by Mars/Wrigley. In addition, other higher yielding fixed maturity investments were redeemed in 2013 or will mature in 2014. Investment income in 2014 is expected lo decline compared to 2013 given that investment opportunities currently available will likely generate considerably lower yields We continue to hold significant cash and cash equivalents earning very low yields. However, we believe that maintaining ample liquidity is paramount and we insist on safety over yield with respect to cash and cash equivalents.

Pre-tax investment income in 2012 declined $271 million (6%) compared to 2011. The decline reflected the redemptions in 2011 of our investments in Goldman Sachs 10% Preferred Slock (insurance subsidiaries held 87% ofthe $5 billion aggregate investment) and in General Electric 10% Preferred Slock (53 billion aggregate investment). Dividends earned by our insurance subsidiaries from these investments were $420 million in 2011. Investment income in 2012 reflected dividends earned for the full year from our investment in September 2011 in Bank of America 6% Preferred Stock (insurance subsidiaries hold 80% of the $5 billion aggregate investment) and increased dividend rates with respect to several of our common stock investments.

Invested assets derive from shareholder capital and reinvested earnings as well as net liabilities under insurance conliacts or "float." The major components of float are unpaid losses, life, annuity and health benefit liabilities, unearned premiums and other liabilities to policyholders less premium and reinsurance receivables, deferred charges assumed under retroactive reinsurance contracts and deferred policy acquisition costs. Float approximated $77 billion at December 31, 2013, $73 billion at December 31, 2012, and $70 billion at December 31, 2011. The cost of float was negative over the last three years as our insurance business generated underwriting gains in each year.

A summary of cash and investments held in our insurance businesses as of December 31, 2013 and 2012 follows. Other investments include investments in The Dow Chemical Company and Bank of America Corporation. See Note 5 to the Consolidated Financial Statements. Amounts are in millions.

Cash and cash equivalents Equity securities Fixed maturity securities Other investments

      December 31.      

2013      2012

$ ■ 32,572 :      ^; $ 26,458

114,832      86,694

'-:','.':■  27,059      35.243

12,334      10,184

_; V    $186,797      $158,579 \

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Source BERKSHIRE HATHAWAY IMC. 10-K. March 03. 2014

Tlie Inlonnalloti contained herein may not he copied, adapted or distributed end is not warranted lo be accurate, complete or timely. The user assumes alt risks (ot any damages or losses arising trow any use of ttils Inlormalion, except fo the extent such damages or losses cannot be limited or excluded by applicable law Past financial performance Is no guarantee ol lutuie t ostitis.

Table of Contents

Management's Discussion (Continued)

Insurance—Investment Income (Continued)

Fixed maturity investments as of December 31, 2013 were as follows. Amounts are in millions.

Amortized      Uureilized      Carrying

eost      gaini/lostes      value

U.S. Treasuiy, U.S. government corporations and agencies                        '    :';■:'-'" .- ^;.     . :   ^;.         S 2,650      y'■ 8 ^:-      '■:'$. 2,658

States, municipalities and political subdivisions                                                                                    2,221      124      2,345

Foreign governments^:           '     ^:'   •'           -_: •  ^; •       .     ;_;      ^:.           '         \    ■ ■■ '.'                   9,871      71      9,942

Coiporale bonds, investment grade                                                                                                  6.116      552      6,668

Corporate bonds, non-investment grade                                                                        ..                    3,047;      619.      ,3,666

Mortgage-backed securities                                                                                                                   1,596      184      1,780

$25,501      $1,558      S27,059

U.S. government obligations are rated AA+ or Aaa by the major rating agencies and approximately 86% of all state, municipal and political subdivisions, foreign government obligations and mortgage-backed securities were rated AA or higher. Non-investment grade securities represent securities that are rated below BBB- or Baa3. Foreign government securities include obligations issued or unconditionally guaranteed by national or provincial government entities.

Railroad ("Burlington Northern Santa Fe")

Burlington Northern Santa Fe Corporation ("BNSF") operates one of the largest railroad systems in North America with approximately 32,500 route miles of track in 28 states and two Canadian provinces. BNSF's major business groups are classified by product shipped and include consumer products, coal, industrial products and agricultural products. Earnings of BNSF arc summarized below (in millions).

Revenues   , .      .

Operating expenses:

Compensation and benefits

Fuel

.Purchased services .-Depreciation and amortization Equipment rents, materials and other Total operating expenses Interest expense

Pie-tax earnings . Income taxes Net earnings ■ ■'

4,505 4.459 2,374 1,889 1,608 14,835 ... .623 15,458 5,377 2,005

-1,315 4,267 2,218 1,807 1,640 14,247 560 14,807 ■4,741 1,769

$ 22,014    _;$ 20,835 $19,548

.4,651 4,503 2,418 1,973 1,812 15,357 • 729. 16,086 5,928: 2,135

$ 3,793 .   $ 3,372     S 2,972

Revenues for 2013 were approximately S22.0 billion, an increase of $1.2 billion (5.7%) over 2012. The overall ycar-to-date increase in revenues reflected a 4.5% increase in cars/units handled and a slight increase in average revenue per car/unit, attributable to rates, ln 2013, BNSF generated higher revenues from industrial products, consumer products and coal, partially offset by lower revenues from agricultural products.

In 2013, industrial products revenues of S5.7 billion increased 14% versus 2012, driven by an 11% increase in volume, reflecting significantly higher petroleum products volumes. Consumer pioducts revenues in 2013 were $7.0 billion, an increase of 6% over 2012 that was primarily attributable to volume increases fiom domestic intermodal business and higher export demand. Coal revenues were $5.0 billion in 2013, an increase of 2.6% over 2012, which was attributable to increased volume. The volume increase reflected increased coal demand as a result of higher natural gas prices and reduced utility stockpiles, partially offset by severe weather issues impacting service levels. In 2013, agricultural products revenues of $3.6 billion declined 4% versus 2012 due to volume declines, which were mainly attributable to lower grain exports as a result ofthe drought conditions in the U.S. in 2012 and strong global competition.

39

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Source BERKSHIRE HATHAWAY INC. 10-K, March 03. 20H

T7ii» Information contained herein nitty not bo copied, adapted or distributed si id Is not warranted to be accurate, cainolete ortlrnety Tire user assumes all risks (or any damages or losses arising from uny use of this Information, ercept to the extent such damages or losses cannot be limned or excluded by applicable law. Past financial performance Is no guarantee of future results.

Table of Contents

Management's Discussion (Continued)

Railroad ("Burlington Northern Santa Fe") (Continued)

Revenues (and revenues per car/unit) in each period include fuel surcharges to customers under programs intended to recover incremental fuel costs when fuel prices exceed threshold fuel prices. Surcharges vary by product7commodity, and therefore amounts earned in a given period are impacted by business mix and volume as well as fuel costs. Fuel surcharges increased 3% in 2013 as compared to 2012.

Operating expenses in 2013 were approximately $15.4 billion, an increase of $522 million (3.5%) compared to 2012. Compensation and benefits expenses in 2013 increased $146 million (3.2%) in 2013 as compared to 2012, reflecting volume-related cost increases and wage inflation. In 2013, fuel expenses increased $44 million (1%) versus 2012, as the impact of higher volume was partially offset by lower average fuel prices. Purchased services expenses in 2013 increased 2% versus 2012, due primarily to volume-related costs, including purchased transportation for BNSF Logistics LLC, a wholly-owned, third-party logistics business. In 2013, equipment rents, materials and other expenses increased $204 million (13%) over 2012. The increase was primarily due lo higher property taxes, crew travel costs, derailment-related costs and locomotive material expenses in 2013. Interest expense in 2013 increased $106 million (17%) compared to 2012 due to higher average outstanding debt balances.

Revenues in 2012 were approximately $20.8 billion, an increase of $1.3 billion (7%) over 2011. Overall, the revenue increase in 2012 reflected higher average revenues per car/unit of approximately 4% as well as a 2% increase in cars/units handled ("volume"). Revenues in each period include fuel surcharges to customers under programs intended to recover incremental fuel costs when fuel prices exceed threshold fuel prices. Fuel surcharges in 2012 increased 6% over 2011, and are reflected in average revenue per car/unit

The increase in overall volume during 2012 included increases in consumer products (4%) and industrial products (13%), partially offset by declines in coal (6%) and agricultural products (3%). The consumer pi oducts volume increase was primarily attributable to higher domestic intcrmodal and automotive volume. Industrial products volume increased primarily as a result of increased shipments of petroleum and construction products. The decline in coal unit volume in 2012 was attributed to lower coal demand as a result of low natural gas prices and high utility stockpiles. Agricultural product volume declined in 2012 compared to 2011, reflecting lower wheat and com shipments for export partially offset by higher soybean and U.S. com shipments.

Operating expenses in 2012 increased $588 million (4%) compared to 2011. Compensation and benefits expenses in 2012 increased $190 million (4%) over 2011 due to the increased volume as well as wage inflation, partially offset by increased productivity and lower weather-related costs. Fuel expenses in 2012 increased $192 million (4.5%) due to higher fuel prices and increased volume, partially offset by improved fuel efficiency Fuel efficiency in 2011 was negatively impacted by severe weather conditions Puicliased services costs in 2012 increased SI 56 million (7%) compared to 2011 due primarily lo increased volume, increased purchased transportation services of BNSF Logistics and increased equipment maintenance costs, partially offset by lower weather-related costs. Interest expense in 2012 increased $63 million (11%) versus 20) 1, due principally to higher average outstanding debt balances.

Utilities and Energy ("MidAmerican ")

Wc hold an 89.8% ownership interest in MidAmerican Energy Holdings Company ("MidAmerican"), which operates an international energy business. MidAmerican's domestic regulated utility interests are currently comprised of four companies, PacifiCorp, MidAmerican Energy Company ("MEC"), as well as Nevada Power Company and Sierra Pacific Power Company (together, "NV Encigy").NV Energy was acquired on December 19,2013. MidAmerican also owns two domestic regulated interstate natural gas pipeline companies. In Great Britain, MidAmerican subsidiaries operate two regulated electricity distribution businesses referred to as Northern Powergrid. The rates that our regulated businesses charge customers for energy and services are based in large part on the costs of business operations, including a return on capital, and are subject to regulatory approval. To the extent these operations are not allowed to include such costs in the approved rates, operating results will be adversely affected In addition, MidAmerican also operates a diversified portfolio of independent power projects and the second-largest residential real estate brokerage firm and franchise network in the United States.

40

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Source BERKSHIRE HATHAWAY INC. 10-K, March 03, 201-1

The tnlotmallan contalnett herein nmy not lie copied, adapted or distributed and Is not vtattantcd lo be accurate, complete or timely The user assumes all ttsks lor any damages or tosses otlslntt trotn any use ot litis Inlormalion. except to the extent such damages or losses cannot be limited or excluded by applicable Inn: Past financial performance is no guarantee olluture results.

Table of Contents

Management's Discussion (Continued)

Utilities and Energy ("MidAmerican ") (Continued)

Revenues and earnings of MidAmerican are summarized below. Revenues and earnings of NV Energy since December 19,2013 are included in other. Amounts are in millions.

2011

4,639 3,530

. :993 1,016

" J;007'." 106

771 279 .388; 469 '. 39 36

PacifiCorp v.:!      "!   ■     - '^fr'C'

MidAmerican Energy Company Natural gas pipelines -      ... ■■.',". Northern Powergrid

Real estate brokerage ' .,''^;:"' ' U-;cf^; Other

Earnings before corporate interest and income taxes

Corporate interest      \ '

Income taxes and noncontrolling interests

Net earnings.      \\.; ■■        " "■ " ;

Net earnings attributable to Berkshire

S 5,215 3,453 971 1,026 1,822 256

S-4;950 : 3,275

';. 978. 1,036 1,333 . 175

i.S12//43    S 11,747 $11,291

.737 236 ^:383 429

: 82

9i

2013

••$

; Y982 230 .■•385.' 362

:139

1,958 314 ■ 172

1,982 336 315

      4

2,102 ' ^;296 170

. .$1,636    $ 1,472    S 1,331 $ 1,470     $ 1,323     $ 1,204

PacifiCorp operates a regulated utility business in portions of several Western states, including Utah, Oregon and Wyoming. PacifiCorp's revenues in 2013 were $5.2 billion, an increase of $265 million (5%) compared to 2012. The increase was primarily due to higher retail revenues of $337 million, partially offset by lower renewable encigy credits (S74 million). The incicasc in retail revenues reflected higher prices approved by regulators and higher retail customer loads. PacifiCorp's earnings before corporate interest and taxes ("EDIT") in 2013 were $982 million, an increase of $245 million (33%) compared to 2012. The comparative increase in EBIT was primarily due to charges of $165 million in 2012 related to litigation, fire and other damage claims, and, to a lesser extent, the increase in revenues. Before the impact ofthe aforementioned claims, pie-tax earnings in 2013 as a percentage of revenues were relatively unchanged from 2012.

In 2012, PacifiCorp's revenues increased $311 million (7%) over revenues in 2011. The increase was primarily due to higher retail revenues of $244 million, which were due to higher prices approved by regulators across most of PacifiCorp's jurisdictions and to a lesser degree from increased revenues from renewable energy credits, hi 2012, PacifiCorp also experienced generally higher customer load in Utah, which was offset by lower industrial customer load in Wyoming and Oregon, attributable to certain large customers electing to self-generate their own power and by lower residential customer load in Oregon as a result of unfavorable weather. EBIT in 2012 declined $34 million (4%) compared to the corresponding 2011 period. EBIT in 2012 was negatively impacted by the aforementioned litigation, fire and other claims ($165 million), which more than offset the increase in operating earnings from higher revenues and otherwise higher operating margins.

MEC operates a regulated utility business primarily in Iowa and Illinois. MEC's revenues in 2013 increased S178 million (5%) over 2012. Revenues in 2013 reflected higher regulated electric and natural gas revenues and lower nonrcgulated and other revenues. In 2013, regulated retail electric operating revenues increased $82 million, while regulated natural gas revenues increased $165 million compared to 20)2. The increase in regulated electric revenues was primarily due to higher regulatory rates in Iowa and Illinois and increases in retail customer load. The increase in regulated natural gas revenues was primarily due to higher retail volumes and increases in recoveries through ad justment clauses as a result of a higher average per-unit cost of gas sold. Nonregulated and other operating revenues in 2013 declined $67 million in comparison with 2012 due primarily to lower electricity volumes and prices. MEC's EBIT in 2013 declined $6 million (3%) compared to 2012. The decline in EBIT was due to lower regulated and nonrcgulated electric operating earnings, partially offset by higher natural gas earnings.

MEC's revenues in 2012 declined $255 million (7%) compared to 2011, reflecting declines in natural gas revenues of $110 million and nonrcgulated and other operating revenues of $178 million. In 2012, MEC's regulated electric revenues increased 2% to approximately $1.7 billion. The decline in natural gas revenues reflected lower average per-unit cost of natural gas sold and lowci volumes. The nonregulated and other operating revenues decline was due to generally lower electricity and natural gas prices. MEC's EBIT in 2012 declined $43 million (15%) compared to 2011 due primarily to increased depreciation expense of S56 million and higher general and administrative expenses, partially offset by lower inteiest expense.

41

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Source BERKSHIRE HATHAWAY INC. tO K. Marco 03. 201-1

lha information contained herein mny not bo copied, adapted or distributed andfs not watt anted lo be accurate, ctunpUtlc or timely The user assumes nil risks for any damages or losses arising from any use of this Information. e*c*pt fo the extent such damages or losses cannot be limited or excluded by applicable law Past financial performance is no yuatantcv of future results

Table of Confents

Management's Discussion (Continued)

Utilities and Energy ("MidAmerican ") (Continued)

In 2013, natural gas pipelines' revenues and EBIT were $971 million and $385 million, respectively, which were relatively imchanged from 2012. In 2012, natural gas pipelines' revenues and EBIT declined $15 million and $5 million, respectively, compared to 2011. In 2012, natural gas revenues increased from expansion projects and from higher transportation and storage rates in certain markets, which were more than offset by lower volumes of gas sales and the impact of contract expirations. In 20] 2, EBIT also reflected increased depreciation expense, partially offset by lower interest expense.

In 2013, Northern Powergrid revenues declined $10 million (1%) compared to 2012. EBIT in 2013 was $362 million, a decline of $67 million versus 2012. EBIT in 2013 was negatively impacted by fourth quarter rebates 1o customers and higher rcgulatoiy rate provisions in 2013, which reduced revenues, and from higher distribution operating expenses and the foreign currency translation effect of a stronger U.S. Dollar versus the U.K. Pound Sterling. Operating expenses in 2013 included increased pension costs and higher depreciation expenses. EBIT in 2013 also included a $9 million loss from the write-off of hydrocarbon well exploration costs.

Northern Powergrid's revenues in 2012 increased $20 million (2%) while EBIT declined $40 million (9%) compared to 2011. In 2012, revenues were negatively impacted by currency-related declines from a stronger U.S. Dollar. Excluding currency related impacts, distribution revenues increased $28 million in 2012, reflecting higher tanlTrates ($76 million), partially offset by the impact of higher regulatory provisions in 2011 (S55 million). Northern Powergrid's EBIT in 2012 was negatively affected by increases in pension expense ($44 million) and distribution operating expenses ($21 million), which more than offset the increase in distribution revenues.

Real estate brokerage revenues in 2013 increased $489 million (37%) over 2012, while EBIT increased $57 million (70%) versus 2012. The increases in revenues and EBIT wcic attributable to increases in closed brokerage transactions and higher average home sales prices from existing business and the impact of businesses acquired during the last two years. Real estate brokerage revenues in 2012 increased $326 million (32%) and EBIT increased $43 million (110%) over 2011. The revenue increase included $123 million from businesses acquired in 2012. The increase in revenues in 2012 also reflected a 16% increase in closed sales transactions and higher average home sale prices from existing businesses. The increase in real estate brokerage EBIT in 2012 reflected the impact of business acquisitions in 2012 as well as the aforementioned increase in closed sales transactions.

MidAmerican's other activities primarily consist of a portfolio of independent power projects, including solar and wind-powered electricity generation projects placed in service in late 2012 and throughout 2013. In 2013, other activities also included the results ofNV Energy since the December 19, 2013 acquisition date. The increase in revenues from other activities in 2013 was S81 million, which was primarily attributable to revenues from the new solar and wind-powered facilities, partially offset by the impact of one-time customer refunds issued by NV Energy and impairment losses associated with MidAmerican's interests in certain geolhcnnal electricity generation projects. EBIT in 2013 from other activities declined $87 million compared to 2012, as the impacts of the aforementioned losses associated with gcothcrmal projects and NV Energy acquisition costs and customer refunds, more than offset the increase in earnings fr om the new solar and wind-powered electricity generation projects.

Corporate interest includes interest on the unsecured debt issued by MidAmerican Energy Holding Company. Coiporatc interest expense in 2014 is expected to increase compared to recent years as a result of new borrowings in connection with the NV Energy acquisition, including borrowings from certain Berkshire insurance subsidiaries.

MidAmerican's consolidated income tax expense as percentages of pre-tax earnings were 7% in 2013, 9% in 2012 and 18% in 2011. In each year, MidAmerican's utility subsidiaries generated significant production (ax credits. In addition, pie-tax earnings of Northern Powergrid are taxed at lower rates in the U.K. and each year also benefitted from reductions of deferred income taxes as a result of lower enacted corporate income tax rates in the U.K.

42

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Source BERKSHIRE HATHAWAY INC. 10-K, March 03. 2014

nio Inlurmatton contained herein meynottre copied, adapted or distributed ond is not warranted lo be accurate, coniplelo or timely. The user assumes a'l risks lor any damages ot losses arising liom any use ol this Information, cicapl lo the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance Is no guarantee ollutute tesutls.

Table of Contents

Management's Discussion (Continued)

Manufacturing, Sei-vice and Retailing

A summary of revenues and earnings of our manufacturing, service and retailing businesses follows. Amounts arc in millions.

Eiminet

Ma'inion.   ■ ; ^'.'w-''/; McLane Company

Oth'et manufacturing  . jc 'y'C'f't? Other service

Retailing^"".      ■"{■C/. 'f;

Pie-tax earnings

Income taxes and noncontrolling interests

2011

S.6;925 33,279

.21,191 7,438 3,573

? • 7,17-1 . 37,437 26,757 P

8,175 ' 3,715 ' .:

2013

:--:: $. 6,9.79 45,930 •;vj'■•    : 29,098 8,996 :• .4,288

$95,291     $83,255    $ 72,406

2012

$.1,137 403 3,319 966

:l ; .306

$1,176 486 3,608 . 1,096 376

6,742 2,512

2011

6,131

2,432'

Y$ 992 370 52,397 ' 977 301

; 5,037 1,998

$ 4,230 '^: $3,699  . $ 3,039

Marmon

Tluough Marmon, we operate approximately 160 manufacturing and service businesses within eleven diverse business sectors that arc further organized in three separate companies. Those companies and constituent sectors arc:

Company Sector

Marmon Engineered Industrial & Metal Components ("Engineered Components"     Electrical & Plumbing Products Distribution, Distribution Services,

)      Industrial Products

Marmon Natural Rcsoutccs & Transportation Services ("Natural Resources")       Transportation Services & Engineered Products, Engineered Wire &

Cable, Crane Services

Marmon Retail & End User 7'cchnologics ("Retail Technologies")      Highway Technologies, Water Treatment, Retail Store Fixtures, Food

Service Equipment, Retail Home Improvement Products

Marmon's consolidated revenues in 2013 were approximately $7.0 billion, 2.7% below 2012, with almost 60% of the decline associated with metals price deflation. Consolidated pre-tax earnings were $1.2 billion, an increase of 3.4% over 2012. Pre-tax earnings in 2013 as a percentage of revenues was 16.9% in 2013 compared with 15.9% in 2012. This margin improvement is a direct result of Marmon's focus on niche products/markets, product/service innovation and improvement in operating efficiency and productivity. The pre-tax earnings information in the paragraphs that follow, exclude unallocated corporate expenses of $30 million in 2013 and $34 million in 2012.

Engineered Components' 2013 revenues were $2.3 billion, a decline of 5% as compared to 2012. The revenue decline was primarily due to the impact of lower metals (steel and copper) costs, which arc passed on to customers with minimal margin, as well as reductions in volume in Distribution Services, partially offset by increased volume in Ihe Industrial Products sector. Engineered Components' pre-tax earnings were $204 million in 2013, representing a decline of 4% from earnings in 2012. The decline in pre-tax earnings in 2013 reflected reduced margins in the Distribution Services sector, attributable to lower sales volumes and steel price reductions. Electrical & Plumbing Products sector 2013 pre-tax earnings increased over 2012, despite lower revenues. Restructuring actions taken in 2012 and 2013 have provided the impetus for improved pre-tax earnings in this sector. Industrial Products sector pre-tax earnings increase in 2013 over 2012 was driven by higher volumes and improved product mix.

Natural Resources' revenues were $2.5 billion in 2013, a decline of 3% compared to 2012. The decrease in revenues was attributable to several nonrecurring large prior year projects in the Transportation Services & Engineered Products ("TSEP") and Engineered Wire and Cable sectors and lower revenues from external tank car sales, partially offset by higher rail leasing revenues attributable to higher lease rates and new tank car fleet additions. Natural Resources' pre-tax earnings were $718 million in 2013, an increase of 3% over 2012. Earnings in 2013 reflected higher rail leasing rates and new tank car fleet

43

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Soi.xe BERKSHIRE HATHAWAY INC. 10-K. March 03. 201 -1

Hie Inlormalion contained herein may not be copied, adapted or distributed and Is not warranted to be accurate, complete or timely. Tho user assumes all risks (or any damages or losses ailslntj horn any usa of this Information, excopt to the extent such damages or losses cannot be limited or excluded hy applicable law. Past financial performance K no guarantor ot future results

Table of Contents

Management's Discussion (Continued)

Manufacturing, Service and Retailing (Continued)

Marmon (Continued)

additions which more than offset the prior year higher project revenues, higher railcar repair costs and lower sales volume of external tank cars.

Retail Technologies' revenues were $2.2 billion in 2013. unchanged from 2012. Revenues increased in 2013 in Highway Technologies' driven by growth in the automotive clutch and heavy duty truck axle businesses, Retail Store Fixtures, as a result of a significant store fixture display product rollout for a key customer and Water Treatment, driven by growUi in residential products. These revenue increases were offset by a revenue decrease at Retail Home Improvement Products due to a planned reduction in revenues from lower margin products. Retail Technologies' pre-tax earnings in 2013 were $284 million which represented an increase of 8% over 2012. The pic-tax earnings increases were primarily due to revenue growth in the Highway Technologies, Retail Store Fixtures and Water Treatment sectors, as well as cost savings related to 2012 restructuring actions taken in the Retail Store Fixtures sector.

Marmon's consolidated revenues in 2012 were S7.2 billion, an increase of 3.6% over 2011. Consolidated pre-tax earnings were Sl.l billion in 2012, an increase of 14.6% over 2011. In 2012 pre-tax earnings as a percentage of revenues were 15.9% compared to 14.3% in 2011.

Engineered Components' 2012 revenues were $2.4 billion, a decline of 2% as compared to 2011. The revenue decline was primarily due to lower volume and copper pricing in the Electrical & Plumbing Products sector driven by lower HVAC demand and continued softness in commercial construction in 2012, offset in part by a 2012 bolt-on acquisition and increased market share in certain market niches in the Distribution Services sector. Engineered Components' pre-tax earnings were $214 million, an increase of 3% from 2011. The increase in pre-tax earnings in 2012 reflected the growth in market share and higher margins in the Distribution Services sector, partially offset by the revenue declines in the Electrical & Plumbing Products sector.

Natural Resouices' revenues were $2.6 billion in 2012, an increase of 10% compared to 2011. The increase in revenues was attributable to bolt-on acquisitions in the Crane Services and Engineered Wire & Cable sectors in 2012 and growth in the TSEP sector. Higher rail fleet utilization and higher lease rates, offset in part by lower external tank car sales provided most of TSEP's growth, with sulfur equipment installations in the Middle East providing the balance. Natural Resources' pre-tax earnings were $695 million in 2012, an increase of 23% from earnings in 2011. Earnings in 2012 reflected (he impact of the aforementioned bolt-on acquisitions, higher rail fleet utilization and lease rates and Middle East projects, as well cost savings relating to restructuring actions taken in 2011 in the Engineered Wire & Cable sector.

Retail Technologies' revenues were $2.2 billion in 2012, an increase of 3% compared to 2011. The 2012 revenue increase is due to the full year impact of a bolt-on acquisition made in December 2011 and growth in Highway Technologies commercial and heavy haul trailer pi oducts along with increased growth in projects for the Canadian Tar Sands area in the Water Treatment sector. These increases were partially offset by a decline in the Retail Store Fixtures sector due to reduced volume from its major customer, which resulted in a 14% decline in revenues. Retail Technologies' pre-tax 2012 earnings were $262 million which represented an increase of 3% over 2011. The pre-tax earnings increase was primarily due to revenue giowth in the Highway Technologies and Water Treatment sectors offset in part by the decline in the Retail Store Fixtures sector previously discussed.

McLane Company

Thr ough McLane, we operate a wholesale distribution business that provides grocery and non-food products to retailers, convenience stores and restaurants. Through its subsidiaries, McLane also operates as a wholesale dish ibutor of distilled spirits, wine and beer. On August 24, 2012, McLane acquired Mcadowbrook Meat Company, Inc. ("MBM"). MBM, based in Rocky Mount, North Carolina, is a large customized foodservicc distributor for national restaurant chains with annual revenues of approximately $6 billion. MBM's revenues and earnings are included in McLanc's results beginning as of the acquisition date. McLanc's grocery and foodservicc businesses arc maikcd by high sales volume and very low profit maigins. McLane's significant customers include Wal-Mart, 7-Elcvcn and Yum! Brands. Approximately 25% of McLanc's consolidated revenues in 2013 were attributable to Wal-Mart. A curtailment of purchasing by Wal-Mart or another of its significant customers could have a material adverse impact on McLanc's periodic revenues and earnings.

44

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Source: BERKSHIRE HATHAWAY IMC. 10-K. Maich 03. 2010

I7ie Information contained herein may not be copied, adapted ot distributed and is not warranted lo be accurate, complelo or timely. Tiro user assumes alt ttsks for any damages or losses arising trenr any use of Ibis Inlormalion, erce.pl to the extern such damages or losses cannot be limited or excluded by applicable lavr. Past financial iKdormance Is no guarantee ol tulurc tesulls

Table of Contents

Management's Discussion (Continued)

Manufacturing, Service and'Retailing (Continued)

McLane Company (Continued)

McLane's revenues in 20)3 were approximately $45.9 billion, representing an increase of approximately $8.5 billion (22.7%) over revenues in 2012. The increase in revenues in 2013 reflected the impact of MBM, as well as ycar-to-datc revenue increases ranging from 10% to 15% in the grocery, other foodservicc and beverage businesses. Revenues of each of these businesses in 2013 included the impact of new customers added over the past two years. McLane's pre-tax earnings in 2013 increased $83 million (20.6%) over earnings in 2012. The increase in 2013 pre-tax earnings reflected the increases in revenues, including the impact of the MBM acquisition, and a gain from lhc sale of its Brazil-based logistics business, partially offset by slightly lower operating margins.

McLanc's revenues were approximately $37.4 billion in 2012, an increase of about $4.2 billion (12.5%) over 2011. The increase in revenues was attributable to the MBM acquisition, as well as 6% to 8% revenue increases in McLanc's grocery, foodservicc and beverage business units. The increases in grocery and foodservice revenues reflected manufactur er price incr eases as well as increased volume. Pre-tax earnings in 2012 were S403 million, an increase of S33 million (9%) over 2011. The overall increase in earnings reflected the increases in revenues as pre-tax margin rates were relatively unchanged.

Other manufacturing

Our other manufacturing businesses include several manufacturers of building products (Acme Building Brands, Benjamin Moore, Johns Manville, Shaw and MiTek) and apparel (led by Fruit ofthe Loom which includes Russell athletic apparel and Vanity Fair Brands women's intimate apparel). Also included in this group are Lubrizol Corpor ation ("Lubrizol"), a specialty chemical manufacturer that wc acquired on September 16,2011, IMC International Metalworking Companies ("Iscar"), an industry leader in the metal cutting tools business with operations worldwide, Forest River, a leading manufacturer of leisure vehicles and CTB, a manufacturer of equipment and systems for the livestock and agricultural industries.

Other manufacturing revenues in 2013 increased $2.3 billion (8.7%) to $29.1 billion. Forest River generated revenues of $3.3 billion in 2013. a 24% increase over 2012. The increase reflected a 17% volume increase and higher average sales prices, attributable to price and product mix changes. Revenues in 2013 from our building products businesses increased 8% to about $9.6 billion. These businesses benefitted from the generally improved residential and commercial construction markets. Apparel revenues in 2013 increased 3.5% to about $4.3 billion. Our other businesses in this group produced revenues in 2013 of $11.9 billion m the aggregate, an increase of about 8% over 2012. Most ofthe increase in revenues of these other businesses was attributable to bolt-on acquisitions during the last two years.

Pre-tax earnings of our other manufacturing businesses in 2013 were S3.6 billion, an increase of $289 million (8.7%) versus 2012. Increased earnings were generated by Forest River (32%), building products businesses (13%) and apparel businesses (25%) compared to 2012. Pre-tax earnings of lscar and Lubrizol were roughly unchanged from 2012. In addition, bolt-on acquisitions during the last two years contributed to the overall increased earnings.

Revenues of our other manufacturing businesses in 2012 were approximately $26.8 billion, an increase of approximately $5.6 billion (26%) over 2011. Excluding Lubrizol, revenues in 2012 grew 6% over 2011. Revenues of Forest River incieased 27%, which was attributable to increased volume and average sales prices. Revenues from building products and apparel businesses increased 4% and 5%, respectively, as compared with 2011. However, revenues of Iscar and CTB (before the impact of bolt-on acquisitions) declined compared to 2011 as a result of weakness in demand, particularly in non-U.S. markets.

Pre-tax earnings of our other manufacturing businesses were approximately $3.3 billion in 2012, an increase of $922 million (38%) over earnings in .

2011.      Excluding the impact of Lubrizol, earnings of our other manufacturing businesses in 2012 increased 6% compared to 2011. The increase was primarily

attributable to increased earnings from building pioducts, apparel and Forest River, partially offset by lower earnings from Iscar, CTB and Scott Fctzer. In

2012,      our Shaw carpet and flooring business benefited from the impact of price increases at the end of 2011 and the beginning of 2012, as well as from

relatively stable raw material costs, which resulted in higher margins. Our apparel businesses benefitted from past pricing actions and stabilizing raw material

costs. On the other hand, our other businesses that manufacture products that arc primarily for commercial and industrial customers, particularly those with

significant business in overseas markets, such as CTB and Iscar, were negatively impacted in 2012 by slowing economic conditions in certain of those

markets.

45

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Soiree BERKSHIRE HATHAWAY INC. 10-K. March 03. 201-1

rjic- inloimatlon contained herein may not bo copied, adapted ot distributed end ts not watt anted lo bo sccutate, complete or timely. The user assumes nit tlslts lot any damages ot losses eihtng Itomony use olthts inlormalion, except lo the extent such damages or losses cannot be limited or excluded by applicable Jaw. Past financial pcdoimance Is no guarantee of future tesulls.

Table of Contents

Management's Discussion (Conlinued)

Manufacturing, Service and Retailing (Continued)

Other service

Our other service businesses include NctJcts, the world's leading provider of fractional ownership programs for general aviation aircraft and FlightSafety, a provider of high technology training to operators of aircraft. Among the other businesses included in this group are: TTI, a leading electronic components distributor; Business Wire, a leading distributor of corporate news, multimedia and regulatory filings; Dairy Queen, which licenses and services a system of over 6,300 stores that offer prepared dairy treats and food; the Buffalo News; the BH Media Group ("BH Media"), which includes the Omaha World-Herald, as well as 29 other daily newspapers and numerous other publications; and businesses that provide management and other services to insurance companies.

Revenues of our other service businesses in 2013 were $9.0 billion, an increase of $821 million (10%) over revenues in 2012. In 2013, revenues of NctJets increased $288 million (7.5%), driven by higher sales of fractional aircraft shares, while TTI's revenues increased $255 million (11%) over 2012. Revenues of BH Media increased $207 million (66%), attributable to the impact of business acquisitions during the last two years. Pre-tax earnings of $1.1 billion in 2013 increased $130 million (13%) compared to 2012. The increase in earnings was primarily attributable to BH Media, FlightSafety, TTI and NeUets. The earnings increase of BH Media was due to bolt-on acquisitions during the lost two years. TTI's earnings increased 10% in 2013 versus 2012, due to higher sales and changes in product mix. TTI continues to be impacted by price competition, which pressures overall gross sales margins. FlightSafcty's earnings increased 11% in 2013, reflecting increased training revenues and relatively unchanged operating expenses. In 2013, Netjcts' earnings increased 7% as improved flight operations margins, fractional sales margins and reduced net financing costs more lhan offset the increase in comparative aircraft value impairment charges.

Revenues of our other service businesses in 2012 were approximately $8.2 billion, an increase of S737 million (10%) over 2011. The increase in revenues in 2012 was primarily attributable lo the inclusion of the BH Media Group and a comparative revenue increase from Tfl, principally due to its bolt-on business acquisitions in 2012. Pre-tax earnings of 5966 million in 2012 declined $11 million (1%) from earnings in 2011. Earnings of NetJets and FlightSafety in 2012 were relatively unchanged from 2011. Earnings of other service businesses in 2012 included earnings ofthe BH Media Group, which were more than offset by lower earnings from TTI due primarily to weaker customer demand and intensifying price competition over the past year.

Retailing

Our retailing operations consist of four home furnishings businesses (Nebraska Furniture Mart, R.C. Willcy, Star Furniture and Jordan's), three jewelry businesses (Borsheims, Hclzbcrg and Ben Bridge), See's Candies; Pampered Chef, a direct seller of high quality kitchen tools; and Oriental Trading Company ("OTC"), a direct retailer of party supplies, school supplies and toys and novelties, which wc acquired on November 27,2012.

Revenues of our retailing businesses in 2013 were S4.3 billion, an increase of $573 million (15%) over 2012. Pre-tax earnings in 2013 of these businesses increased $70 million (23%) as compared to earnings in 2012. The comparative increases in revenues and earnings were primarily attributable to the inclusion of OTC for the full year in 2013. Otherwise, earnings of the home furnishings and jewelry retail groups increased in 2013, while earnings of Pamper ed Chef and See's Candies declined.

Revenues and pre-tax earnings in 2012 from the retailing businesses increased $ 142 million (4%) and $5 million (2%), respectively, over revenues and earnings in 2011. Increased revenues from the home furnishings and jewelry businesses as well as the inclusion of OTC from its acquisition date were partially offset by lower revenues from Pampered Chef. Increased earnings of our home furnishings retailers were substantially offset by lower earnings from our jewelry businesses and Pampered Chef.

46

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7Jiu Information contained herein nitty not t& copied, adapted or distributed and ts not warranted to be accurate, complete or timely, tho user assumes all tlsks for any damages or losses arising from any use of this Inlormalion. except to the extent such damages or losses cannot be limited or excluded by nppllcnble law. Past financial performance Is no guarantee of future rosulis

Table of Contenls

Management's Discussion (Continued) Finance and Financial Pi oducts

Our finance and financial products businesses include manufactured housing and finance (Clayton Homes), transportation equipment leasing (XTRA), furniture leasing (CORT) as well as various miscellaneous financing activities. A summary of revenues and earnings from our finance and financial products businesses follows. Amounts are in millions.

Manufactured housing and finance _: :■: Furniture/transportation equipment leasing Other •      -.il-":^:: -:-v^;;-v ='■

Pre-tax earnings',■■ , '' ^:     '      ^;._:" Income taxes and noncontrolling interests

2012

■ $3,014-753

^:".-:;v343':;

2013

$3,1.99 772 32C

201)

$2,932 739 J.'--^:- '343 ;

$4,291     $4,110 $4,014

2013

$.416

¹⁶⁵

:. 404

985 328

$255.

148 ■ '. 445

848 291

2011

$ 154 155 .465

■ 774 258

•S657 . $557 $516

Clayton Homes' revenues and pre-tax earnings in 20)3 increased $185 million (6%) and $161 million (63%), respectively, compared to 2012. In 2013, Clayton Homes' pre-tax earnings benefitted from increased home sales, lower loan loss provisions and an increase in net interest income, as lower interest expense more than offset reductions m interest income on loan portfolios. Home unit sales increased 9% in 2013. Loan loss provisions in 2013 were lower reflecting comparatively lower foreclosures volume and loss rates. Clayton Homes' manufactured housing business continues to operate at a competitive disadvantage compared lo traditional single family bousing markets, which receive significant interest rate subsidies from the U.S. Government through government agency insured mortgages. For the most part, these subsidies are not available to factory built homes. Nevertheless, Clayton Homes remains the largest manufactured housing business in the United States and we believe that it will continue to operate profitably, even under the prevailing conditions.

Clayton Homes' pre-tax earnings in 2012 increased $101 million (66%) over earnings in 2011. Earnings in 2012 were impacted by the increased unit sales, which impiovcd manufacturing and other operating efficiencies. Earnings also benefited from reduced insurance claims and a decline in credit losses. The decline in interest income on loan portfolios was more than offset by interest expense athibutablc to a decline in borrowings and lower interest rates.

Pre-tax earnings of"CORT and XTRA in 2013 increased SI 7 million (11%) to $165 million, as compared to 2012. The increase reflected increased lease revenues and earnings of XTRA, which benefitted from increases in working units arid average rental rates, relatively stable operating expenses and a foreign currency related gain in 2013.

Pre-tax earnings of CORT and XTRA in 2012 were $148 million, a decline of $7 million (5%) versus 2011. In 2012, CORT's earnings increased over 2011 due to a 5% iucrcase rn rental income and relatively stable selling, general and administrative expenses, which improved operating margins. In 2012, earnings from XTRA declined primarily due to increased depreciation expense and lower foreign currency exchange gains.

Other earnings include interest and dividends from a portfolio of fixed maturity and equity investments and our share ofthe earnings of a commercial mortgage servicing business in which wc own a 50% interest. Other earnings previously included interest income from a relatively small number of long-held commercial r eal estate loans. These loans were repaid in full during the third and fourth quarters of 2012. In addition, other earnings includes income from interest rate spicads charged to Clayton Homes on borrowings by a Berkshire financing subsidiary that aic used lo fund loans to Claytou Homes and from guaranty fees charged to NctJcts. Corresponding expenses arc included in Clayton Homes' and NeUets' results. Guaranty fees charged lo NetJcts were $11 million in 2013, $30 million in 2012 and $41 million in 2011 and interest spreads charged to Clayton Homes were $78 million in 2013, $90 million in 2012 and $100 million in 2011.

47

Source. BERKSHIRE HATHAWAY INC. 10-K. Man h 03. 201 -1      Powered by Mornings-la: '■ Document Research*

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Table of Contents

Management's Discussion (Continued)

Investment and Derivative Gains/Losses

A summary of investment and derivative gains and losses and olhcr-than-lcmporary impairment losses on investments follows. Amounts arc in millions.

$ 2,830 5

it; (228)-' 1,458 ■4,065

2,843 (2)3) VM22) 2,608

Investment gains/losses:

Sales and other disposals •    '"•'/...^'Insiiraiiceand;ouW v.'    '   . .'/;. ; Finance and financial products

- Other;than-tem^      .::

Other

Derivative gains/losses:

l^rnr/imc'ex put option contracts .'      '■■■ ^;;-f^:: ■'■

Credit default contracts

Other derivative contracts "^:-

Gains/losses before income taxes and noncontrolling interests

Income taxes and noncontrolling interests

Net gains/losses'.'•'      ■'^i;:. . . " ;_:;

$1_;288 2

^: (337)

      509

1,462

201)

51,991 162 ^; (908)

      29

1,274 ■':

997 894

72.

1,963 3,425 1,198

6,673 2,336

(1,787)

(251)

: (66)

(2,104)

(830)

      (309)

S 4,337     $2,227     $ (521)

Investment gains/losses arise primarily from the sale or redemption of investments or when investments arc carried at fair value with the periodic changes in fair values recorded in earnings. The timing of gains or losses from sales or redemptions can have a material effect on periodic earnings. Investment gains and losses usually have minimal impact on the periodic changes in our consolidated shareholders' equity since most of our investments are recorded at fair value with (he unrealized gains arrd losses included in shareholders* equity as a component of accumulated other comprehensive income.

We believe the amount of investment gains/losses included in earnings in any given period typically has little analytical or predictive value. Our decisions to sell securities are not motivated by the impact that the resulting gains or losses will have on our reported earnings. Although our management does not consider investment gains and losses in a given period as necessarily meaningful or useful in evaluating periodic earnings, we are providing information to explain the nature of such gains and losses when they arc reflected in earnings.

Pre-tax investment gains/losses m 2013 were 54,065 million. Investment gains in 2013 included approximately $2.1 billion related to our investments in General Electric and Goldman Sachs common stock warrants and Wrigley subordinated notes. Beginning in 2013, the unrealized gains or losses associated with the wan-ants were included in earnings. These warrants were exercised in October 2013 on a cashless basis in exchange for shares of General Electric and Goldman Sachs common stock with an aggregate value of approximately $2.4 billion. The Wrigley subordinated notes were repurchased for cash of 55.08 billion, resulting in a pre-tax investment gain of$680 million. Pre-tax investment gains were approximately 51.5 billion in 2012 and were primarily attributable to sales of equity securities. Investment gains in 2011 included aggregate pre-tax gains of SI .8 billion from the redemptions of our Goldman Sachs and General Electric preferred stock investments.

In each of Oie three years ending December 31, 20)3, wc recognized OTTI losses on certain of our equity and fixed maturity investments. OTTI losses on fixed maturity investments were S228 million in 2013, S337 million in 2012 and S402 million in 2011, and substantially all ofthe losses related to our investments in Texas Competitive Electric Holdings ("TCEH") bonds. In 2011, we also recognized aggregate OTTI losses of $506 million related to our investments in equity securities, a portion of which related to certain components of our Wells Fargo common slock investments. The OITI losses on equity securities irr 2011 averaged about 7.5% ofthe original cost ofthe impaired securities. In each case, the issuer had been profitable in recent periods and in some cases highly profitable.

Although we have periodically recorded OTTI losses in earnings in each ofthe past three years, we continue to own certain of these securities. In cases where the market values of these investments have increased since the dates the OTTI losses were recorded in earnings, these increases are not reflected in earnings but are instead included in shareholders' equity as a

48

Source. BERKSHIRC HATHAWAY iNf. 10-K. March 03. 2014      Powered by Morrmnj-.tar • Document Rs-.earctr

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Tafafe of Contents

Management's Discussion (Continued)

Investment and Derivative Gains/Losses (Continued)

component of accumulated other comprehensive income. When recorded, OTTI losses have no impact whatsoever on the asset values otherwise recorded in our Consolidated Balance Sheets or on our consolidated shareholders' equity. In addition, the recognition of such losses in earnings rather than in accumulated other comprehensive income docs not necessarily indicate that sales are imminent or planned and sales ultimately may not occur for a number of years. Furthermore, the recognition of OTTI losses docs not necessarily indicate that the loss in value of the security is permanent or that the market price of the security will not subsequently increase to and ultimately exceed our original cost.

As of December 31,2013, consolidated gross unrealized losses on our investments in equity and fixed maturity securities determined on an individual purchase lot basis were S289 million. We have concluded that as of December 31, 2013, such losses were not other than temporary. We consider several factors in determining whether or not impairments arc deemed to be other than temporary, including the current and expected long-term business prospects and if applicable, the creditworthiness ofthe issuer, our ability and intent to hold the investment until the price recovers and the length of time and relative magnitude ofthe price decline.

Derivative gains/losses primarily represent the changes in fair value of our credit default and equity index put option contracts. Periodic changes in the fair values of these contracts are reflected in earnings and can be significant, reflecting the volatility of underlying credit and equity markets.

In 2013, our equity index put option contracts generated a pre-tax gain of $2.8 billion, which was due to changes in fair values ofthe contracts as a result of overall higher equity index values, favorable currency movements and modestly higher interest rate assumptions. Our ultimate payment obligations, if any, under our remaining equity index put option contracts will be determined as ofthe contract expiration dates, which begin in 2018, and will be based on the intrinsic value as defined under the contracts as of those dates. As of December 31, 2013, the intrinsic value of these contracts was approximately $1.7 billion and our recorded liability at fair value was approximately $4.7 billion.

In 2012, we recorded pre-tax gains from our equity index put option contracts of approximately S1.0 billion. These gains were due to increased index values, foreign currency exchange rale changes and valuation adjustments on a small number of contracts where contractual settlements are determined differently than the standard determination of intrinsic value, partially offset by lower interest rate assumptions. In 2011, we recorded pre-tax losses of approximately $1.8 billion on our equity index put option contracts. The losses reflected declines ranging fiom about 5.5% to 17% with respect to three ofthe four equity indexes covered under our contracts and lower interest rate assumptions.

Our credit default contracts generated pre-tax losses of S213 million in 2013, which was due to increases in estimated liabilities of a municipality issuer contract that relates to more than 500 municipal debt issues. Our credit default contract exposures associated with corporate issuers expired in December 2013. There were no losses paid in 2013. Our remaining credit default derivative contract exposures are currently limited to the municipality issuer contract.

In 2012, we recognized pre-tax gains of S894 million on credit default contracts. Such gains were attributable to narrower spreads and reduced time exposure, as well as from settlements related to the termination of certain contracts. Wc recorded pre-tax losses of $251 million on our credit default contracts in 2011. The losses in 2011 were primarily related to our contracts involving non-investment grade corporate issucis due lo widening credit default spreads and loss events. In 2012 and 2011, credit loss payments were $68 million and $86 million, respectively.

Financial Condition

Our balance sheet continues to reflect significant liquidity and a strong capital base. Our consolidated shareholders' equity at December 31, 2013 was S221.9 billion, an increase of S34.24 billion since the beginning ofthe year. Our consolidated shareholders' equity at December 31, 2013 is net of a reduction of approximately $1.8 billion as a result of acquisitions of noncontrolling interests as discussed below and in Note 22 to the accompanying Consolidated Financial Statements.

Consolidated cash and investments of our insurance and other businesses approximated $199.2 billion (excludes our investments in H J. Heinz Holding Corporation) at December 31, 2013, including cash and cash equivalents of $42.6 billion. As of December 31, 2013, our insurance subsidiaries held approximately $186.8 billion in cash and investments.

49

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Table of Contents

Management's Discussion (Continued) Financial Condition (Continued)

In 2013, we used cash of approximately $ 15 billion in the aggregate to fund Berkshire's investments in H.J. Heinz Holding Corporation ("Heinz Holding") and to acquire certain noncontrolling interests in our subsidiaries. On June 7, 2013, wc invested $12.25 billion in Heinz Holding which acquired H.J. Heinz Company. Our investments in Heinz Holding consist of common stock, common stock warrants and preferred stock. Berkshire currently holds 50% ofthe voting interests in Heinz Holding. During 2013, Berkshire acquired noncontrolling interests of Marmon and International Metalworking Companies B.V., the parent company of Iscar. Cash paid in 2013 in connection with these acquisitions was approximately $2.9 billion and an additional $1.2 billion is payable in March 2014.

On October 1, 2013, we received cash of approximately $5.1 billion in connection with Mars/Wriglcy's repurchase of our investment in Wrigley subordinated notes. In January 2013, Berkshire issued $2.6 billion of parent company senior unsecured notes with maturities ranging from 2016 to 2043. The proceeds were used lo fund the repayment of $2.6 billion of notes that matured in February 2013. On January 1,2014, Marmon completed its acquisition ofthe beverage dispensing and merchandising operations of British engineering company IM1 pic for approximately $1.1 billion. The acquisition was funded with existing cash balances.

Berkshire's Board of Directors has authorized Berkshire to repurchase its Class A and Class B common shares at prices no higher than a 20% premium over the book value of the shares. Berkshire may repurchase shares al management's discretion. The repurchase program is expected to continue indefinitely, but does not obligate Berkshire to repurchase any dollar amount or number of Class A or Class B common shares. Repurchases will not be made if they would reduce Berkshire's consolidated cash and cash equivalent holdings below $20 billion. Financial strength and redundant liquidity will always be of paramount importance at Berkshire. There were no share repurchases during 2013. In December 2012, Beikshire acquired 9,475 Class A shares and 606,499 Class B shares for approximately $1.3 billion.

On December 19,2013, MidAmerican completed its acquisition of NV Energy, Inc. ("NV Energy"), an energy holding company serving electric and natural gas customers in Nevada. MidAmerican purchased all outstanding shares of NV Energy's common stock for cash of approximately $5.6 billion. The acquisition was funded through a combination of cash provided by MidAmerican's shareholders of $3.6 billion (including approximately $3.5 billion provided by Berkshire) and the issuance by MidAmerican of $2.0 billion of senior unsecured debt.

Our railroad, utilities and energy businesses (conducted by BNSF and MidAmerican) maintain very large investments in capital assets (property, plant and equipment) and will regularly make capital expenditures in the normal course of business, ln 2013, aggregate capital expenditures of these businesses were $8.2 billion, including $4.3 billion by MidAmerican and $3.9 billion by BNSF. BNSF and MidAmerican have forecasted aggregate capital expenditures in 2014 of approximately $11.1 billion. Future capital expenditures arc expected to be funded by cash flows from operations and debt issuances, ln 2013. BNSF issued $3.0 billion in new debentures consisting of $1.5 billion of debentures due in 2023 and 51.5 billion of debentures due in 2043. BNSF's outstanding debt was approximately $17.0 billion as of December 31, 2013. In 2013, MidAmerican and its subsidiaries issued new term debt of approximately $4.5 billion, including the new senior unsecured debt issued in funding the NV Energy acquisition, and repaid borrowings of approximately $2.0 billion. MidAmerican's aggregate outstanding borrowings as of December 31, 2013 were approximately $29.6 billion which includes approximately $5.3 billion of NV Energy's debt. BNSF and MidAmerican have aggregate debt and capital lease maturities in 2014 of $2.1 billion. Berkshire's commitment to provide up to $2 billion of additional capital to MidAmerican to permit the repayment of its debt obligations or to fund its regulated utility subsidiaries expired on February 28, 2014 and has not been renewed. Berkshire docs not guarantee the repayment of debt issued by BNSF, MidAmerican or any of their subsidiaries.

Assets ofthe finance and financial products businesses, which consisted primarily of loans and finance receivables, cash and cash equivalents and fixed maturity and equity investments, were approximately $26.2 billion and $25.4 billion as of December 31,2013 and December 31, 2012, respectively. Liabilities were $19.0 billion as of December 31,2013 and $22.1 billion as of December 31,2012. As of December 31,2013, notes payable and other borrowings of finance and financial products businesses were $12.7 billion and included approximately $11.2 billion of notes issued by Berkshire Hathaway Finance Corporation ("BHFC"). During 2013, BHFC issued $3.45 billion aggregate of new senior notes and repaid $3.45 billion of maturing senior notes. In January 2014, an additional $750 million of BHFC debt matured and was refinanced with a corresponding amount of new debt. We currently intend to issue additional new debt through BHFC to replace some or all of its upcoming debt maturities. The proceeds from the BHFC notes are used (o finance originated loans and acquired loans of Clayton Homes. The full and timely payment of principal and interest on the BHFC notes is guaranteed by Berkshire.

50

Eouice BERKSHIRE HATHAWAY INC. 10-K. Much 03. 201-1      Pciweitu by Mumingslar '• Oot.jmnnt HfiSL-a'Cr

)/io Information contained herein nwy not Oo copied, adapted ot distributed and Is not wet i anted to be occunte, complete, or timely. Tho user assumes all risks for any damages or losses nrtelnn from any use ot this Information, exceptio the ejctenl such damages or losses cannot be limited or excluded by applicable law Past financial performance Is no guarantee of future results.

Table of Contents

Management's Discussion (Continued) Financial Condition (Continued)

As described in Note 12 to the Consolidated Financial Statements, wc are party to equity index put option and credit default contracts. With limited exception, these contracts contain no collateral posting requirements under any circumstances, including changes in either the lair value or intrinsic value of the contracts or a downgrade in Berkshire's credit ratings. At December 31, 2013, the net liabilities recorded for such contracts were approximately $5.3 billion and wc had no collateral posting requirements.

We regularly access the credit markets, particularly through our railroad, utilities and energy and finance and financial products businesses. Restricted access to credit markets at affordable rates in (he future could have a significant negative impact on our operations.

In 2010, (he Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Reform Act") was signed into law. The Reform Act reshapes financial regulations in the United States by creating new regulators, regulating new markets and market participants and providing new enforcement powers to regulators. Virtually all major areas ofthe Reform Act have been subject to extensive rulemaking proceedings being conducted both jointly and independently by multiple regulatory agencies, some of which have been completed and others that arc expected to be finalized during the next several months. Although the Reform Act may adversely affect some of our business activities, it is not currently expected to have a material impact on our consolidated financial results or financial condition.

Contractual Obligations

We arc party to contracts associated with ongoing business and financing activities, which will result in cash payments to counterparties in future periods Certain obligations reflected in our Consolidated Balance Sheets, such as notes payable, require future payments on contractually specified dates and in fixed and determinable amounts. Other obligations pertain to the acquisition of goods or services in the future, such as minimum rentals under operating leases, that are not currently reflected in the financial statements. Such obligations will be reflected in future periods as (he goods arc delivered or services provided Amounts due as ofthe balance sheet date for purchases where the goods and services have been received and a liability incurred are not included in the following table to the extent that such amounts are due within one year of the balance sheet date.

The liming and/or amount of the payments under certain contracts arc contingent upon the outcome of future events. Actual payments will likely vary, perhaps significantly, from estimates reflected in tbc tabic that follows. Most significantly, the timing and amount of payments arising under property and casualty insurance contracts are contingent upon the outcome of claim settlement activities or events that may occur over many years. In addition, obligations arising under life, annuity and health insurance benefits arc estimated based on assumptions as to future premiums, allowances, mortality, morbidity, expenses and policy lapse rates, as applicable. The amounts presented in the following table are based on the liability estimates reflected in our Consolidated Balance Sheet as of December 31,2013. Although certain insurance losses and loss adjustment expenses and life, annuity and health benefits are ceded to others under reinsurance contracts, receivables recorded in the Consolidated Balance Sheet are not reflected in the table below. A summary of contractual obligations as of December 31,2013 follows. Amounts arc in millions.

Tola!      Z014      l\)la-l\)lb      ZU17-ZUI3      AllcrZOlo

5 113,862      $ 8,789      $14,521      $17,510      ' $ 73,042

8,614      1,245      2,062      1,512      3,795

50,297.    i 15,496      10,541      7,295 /- 16,965

66,732      14,412      14,914      8,434      28,972

•■' 21,390 '/,;.: .^; 1,436      :      78 . \   ■■ 179      19,697

20,768      5,304      1,496      1,190      12,778

$281,663      $46,682      $43,612      $36,120      $155,249

      Eilimatttl payments due by period

Notes payable and othei borrowings") , : Operating leases

Purchase obligations ;,'' .     -.t: .'^;i:v Losses and loss adjustment expenses P) Life, annuity and health insurance benefits'O) Other w

Total     ■      '-; V '   • \

'''     Include.': interest

"'     Before reserve discounts of $1,866 million.

^,:l     Amounts represent estimated undiscounted benefit obligations net of estimated future premiums, as applicable. "'     Includes derivative contract liabilities.

51

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Source BERKSHIRE HATHAWAY INC. 10-K, Mai th 03. 201-'

Nie mtannatlon contained heroin may not he copied, adapted or distributed end Is not warranted to be accurate, complete or ninety The user assumes at! risks Tot any damages ot losses arising fiom any use of this Inlotmallon. ekcept to the extent such damages oi losses cannot be limited or excluded by applicable law Past financial pedoimancels no guarantee ot tuture results

Table of Contents

Management's Discussion (Continued) Critical Accounting Policies

Certain accounting policies require us lo make estimates and judgments that affect the amounts reflected in Ihe Consolidated Financial Statements. Such estimates arc necessarily based on assumptions about numerous factors involving varying, and possibly significant, degrees of judgment and uncertainty. Accordingly, certain amounts currently recorded in the financial statements, with the benefit of hindsight, will likely be adjusted in (he future based on additional infonnation made available and changes in other facts and circumstances.

Property and casualty losses

A summary of out consolidated liabilities for unpaid property and casualty losses is presented in the table below. Except for certain workers' compensation liabilities, all liabilities for unpaid property and casually losses (referred to in this section as "gross unpaid losses") arc reflected in the Consolidated Balance Sheets without discounting for time value, regardless of the length of the claim-tail. Amounts are in millions.

Nft unpaid lows *

Utf. 31,3012 S 9,791

14,740 : 26,328

6,171 $ 57,030

GK1CO:      ' -',

General Re

BHRG      \ ' '.

Berkshire Hathaway Primary Group Total' ■

Per. 31.2013 $10,644

14,664 . 25,314 6,737

Dec. 31, 2012

;^:.s--io,3oo.^:

15,961 .31,186 6,713

Cro» popiin* \essts

Pre. 31.2013

•.$.11'342' 15,668 ¹ 30,446 7,4,6' $64,866

•S 64,160^:      S 57,359

* Net of reinsurance recoverable and deferred charges on reinsurance assumed and before foreign currency translation effects.

Wc record liabilities for unpaid losses and loss adjustment expenses under property and casualty insurance and reinsurance contract based upon estimates ofthe ultimate amounts payable under the contracts with respect to losses occurring on or before the balance sheet date. The timing and amount of loss payments is subject to a gr eat degree of variability and is contingent upon, among other things, the timing of claim reporting from insureds and ccdants and Ihe determination ofthe ultimate loss amount through the loss adjustment process. A variety oftcchniqucs are used in establishing the liabilities for unpaid losses. Regardless of the techniques used, significant judgments and assumptions arc necessary in projecting the ultimate amounts payable in the future. As a icsulf, uncertainties are imbedded in and permeate the actuarial loss reserving techniques and processes used.

As ofany balance sheet date, not all claims that have occurred have been reported and not all reported claims have been settled. Loss and loss adjustment expense reserves include provisions for reported claims (referred to as "case reserves") and for claims that have not been reported (referred to as incurred but not yet reported ("IBIs'R") reserves). The lime period between the loss occurrence date and settlement payment date is referred to as the "claim-tail." Property claims usually have fairly short claim-tails and, absent litigation, arc reported and settled within a few years of occurrence. Casualty losses usually have very long claim-tails, occasionally extending for decades. Casualty claims arc more susceptible to litigation and can be significantly affected by changing contract interpretations. The legal environment and judicial process further contributes to extending claim-tails.

Receivables arc recorded with respect to losses ceded to other reinsurers and arc estimated in a manner similar to liabilities for insurance losses. In addition, reinsurance receivables may ultimately prove to be uncollectible if the reinsurer is unable to perform under the contract. Reinsurance contracts do not relieve the ceding company of its obligations to indemnify its own policyholders.

Wc utilize processes and techniques to establish liability estimates that arc believed to best fit the particular business. Additional information regarding those processes and techniques of our significant insurance businesses (GEICO, General Rc and BHRG) follows.

GEICO

GEICO's gross unpaid losses and loss adjustment expense liabilities as of December 31, 2013 were $11.3 billion, which included 58.0 billion of reported aver age, case and case development reserves and $3 3 billion of 1BNR reserves. GEICO predominantly writes private passenger auto insurance. Auto insurance claims generally have a relatively short claim-tail. Ilic

52

Soutcc BERKSHIRE HATHAWAY INC. 10-K. Mairli 03. 701 i      Powered by Motniigsiar*- Document Research⁵*'

17)0 Information contained herein may not tip copied, adapted or distributed and Is not watt anted to be accutatc. complete or timely Tile uset assumes all risks lor any damages ot losses atlalno Irom anyusool this Information, except lo the extent such damages cr losses cannot be limited or excluded by applicable law. Past financial performance Is no guarantee ol future results.

I

Table of Contents

Management's Discussion (Continued)

Property and casually losses (Continued)

GEICO (Continued)

key assumptions affecting our reserve estimates include projections of ultimate claim counts ("frequency") and average loss per claim ("severity").

Our reserving methodologies produce reserve estimates based upon the individual claims (or a "giound-up" approach), which yields an aggregate estimate of the ultimate losses and loss adjustment expenses. Ranges of loss estimates arc not determined in (he aggregate.

Our actuaries establish and evaluate unpaid loss reserves using recognized standard actuarial loss development methods and techniques. The significant reserve components (and percentage of gross reserves as of December 31, 2013) are: (1) average reserves (15%), (2) case and case development reserves (60%) and (3) IBNR reserves (25%). Each component of loss reserves is affected by the expected frequency and average severity of claims. Reserves are analyzed using statistical techniques on historical claims data and adjusted when appropriate to reflect perceived changes in loss patterns. Data is analyzed by policy coverage, rated state, reporting date and occurrence date, among other ways. A brief discussion of each reserve component follows.

We establish average lcscive amounts for reported auto damage claims and new liability claims prior to the development of an individual case reserve. The average reserves are intended to represent a reasonable estimate for incurred claims for claims when adjusters have insufficient time and information to make specific claim estimates and for a large number of minor physical damage claims that arc paid within a relatively short time aftei being reported. Average reseive amounts arc driven by the estimated average severity per claim and the number of new claims opened.

Our claims adjusters generally establish individual liability claim case loss and loss adjustment expense reserve estimates as soon as the specific facts and merits of each claim can be evaluated. Case reserves represent the amounts that in the judgment ofthe adjusters are reasonably expected to be paid in the future to completely settle the claim, including expenses. Individual case reserves are revised over time as more information becomes known.

For most liability coveiages, case reserves alone are an insufficient measure of the ultimate cost due in part to the longer claim-tail, the greater chance of protracted litigation and the incompleteness of facts available at the time the case reserve is established. Therefore, wc establish additional case development reserve estimates, which are usually percentages of the case reserve. As of December 31,2013, case development reserves averaged approximately 25% of total established case reserves. In general, case development factors arc selected by a retrospective analysis of the overall adequacy of historical case resen'es. Case development factors are reviewed and revised periodically.

For unreported claims, IBNR reserve estimates are calculated by fust projecting the ultimate number of claims expected (reported and unreported) for each significant coverage by using historical quarterly and monthly claim counts to develop age-to-agc projections ofthe ultimate counts by accident quarter. Reported claims arc subtracted from the ultimate claim projections to produce an estimate ofthe number of unreported claims. The number of unreported claims is multiplied by an estimate of the average cost per unreported claim to produce the IBNR reserve amount. Actuarial techniques arc difficult lo apply reliably in certain situations, such as to new legal precedents, class action suits or recent catastrophes. Consequently, supplemental IBNR reserves for these types of events may be established through the collaborative effort of actuarial, claims and other management personnel.

For each significant coverage, we test die adequacy of Ihe total loss reserves using one or more actuarial projections based on claim closure models, paid loss triangles and incurred loss triangles. Each type of projection analyzes loss occurrence data for claims occurring in a given period and projects the ultimate cost.

Unpaid loss and loss adjustment expense estimates recorded at the end of 2012 developed downward by $238 million when reevaluated through December 31, 2013, producing a corresponding increase to pre-tax earnings in 2013. These downward reserve developments represented approximately 1.3% of earned premiums in 2013 and approximately 2.3% of prior yeai-cnd recorded liabilities. Reserving assumptions at December 31, 2013 were modified appropriately to reflect the most recent frequency and severity icsulls. Future reserve development will depend on whether actual frequency and severity are more or less than anticipated.

53

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Source BERKSHIRE HATHAWAY INC. 10-K. March 03. 2014

Hit? Information contained herein nutynot be copied, adapted or distributed and is not warranted lo N? accurate, complete or timely Tho user assume* all rlsKS for any damages or losses arising from any use of this intormaben, except to the extent such damages or losses cannot be limited or excluded by applicable tow Past financial performance is no guarantee ot future results.

Tabic of Contents

Management's Discussion (Continued)

Property and casualty losses (Continued)

GEICO (Continued)

Within the automobile line of business, reserves for liability coverages arc more uncertain due to the longer claim-tails. Approximately 92% of GEICO's reserves as of December 31, 2013 were for automobile liability, of which bodily injury ("BI") coverage accounted for approximately 55%. We believe it is reasonably possible that the average BI severity will change by at least one percentage point from the severity used. If actual BI severity changes one percentage point from what was used in establishing the reserves, our reserves would develop up or down by approximately $165 million resulting in a corresponding decrease or increase in pie-tax earnings. Many of the same economic forces that would likely cause BI severity to be different from expected would likely also cause severities for other injury coverages to differ in the same direction.

GEICO's exposure to highly uncertain losses is believed to be limited to certain commercial excess umbrella policies written during a period from 1981 to 1984. Remaining liabilities associated with such exposure are currently a relatively insignificant component of GEICO's total reserves (approximately 1.3%) and there is minimal apparent asbestos or environmental liability exposure. Related claim activity over the past year was insignificant.

General Re and BHRG

Liabilities for unpaid property and casualty losses and loss adjustment expenses of our General Re and BHRG underwriting units derive primarily from assumed reinsurance. Additional uncertainties are unique, lo the processes used in estimating such reinsurance liabilities. The nature, extent, timing and perceived reliability of information received from ceding companies varies widely depending on the type of coverage, the contractual reporting terms (which arc affected by market conditions and practices) and other factors. Contract terms, conditions and coverages tend to lack standardization and may evolve more rapidly than under primary insurance policies. Wc are unable to reliably measure the ongoing economic impact of such uncertainties.

The nahire and extent of loss information provided under many facultative, per occurrence excess or retroactive contracts may not differ significantly from the information received under a primary insurance contract. This occurs when our personnel either work closely with the ceding company in settling individual claims or manage the claims themselves. However, loss information related to aggregate excess-of-loss contracts, including catastrophe losses and quota-share treaties, is often less detailed Occasionally, loss information is reported in a summary format rather than on an individual claim basis. Loss data is usually provided through periodic reports and may include the amount of ceded losses paid where reimbursement is sought as well as case loss reserve estimates. Ceding companies infrequently provide IBNR estimates lo reinsurers.

Each of our reinsurance businesses has established practices to identify and gather needed information from clients. These practices include, for example, comparison of expected premiums to reported premiums to help identify delinquent client reports and claim reviews to facilitate loss reporting and identify inaccurate or incomplete claim reporting. We periodically evaluate and modify these practices as conditions, risk factors and unanticipated areas of exposures are identified.

The timing of claim reporting to reinsurers is typically delayed in comparison with claim reporting to primary insurers. In some instances, multiple reinsurers assume and cede parts of an underlying risk thereby causing multiple contractual intermediaries between us and the primary insured. In these instances, the claim reporting delays are compounded. The relative impact of reporting delays on the reinsurer varies depending on the type of coverage, contractual reporting terms and other factois. Contracts covering casualty losses on a per occurrence excess basis may experience longer delays in reporting due lo the length of the claim-tail as regards to the underlying claim. In addition, ceding companies may not report claims until they conclude it is reasonably possible that the reinsurer will be affected, usually determined as a function of its estimate ofthe claim amount as a percentage ofthe reinsurance contract retention. However, the timing of reporting large per occurrence excess property losses or property catastrophe losses may not vary significantly from primary insurance.

Under contracts where periodic premium and claims reports are required from ceding companies, such reports arc generally required at quarterly intervals which in the U.S. range from 30 to 90 days after the end of the accounting period. Outside the U.S., reinsurance reporting practices vary, ln certain countries, clients report annually, often 90 to 180 days after the end of the annual period. The different client reporting practices generally do not result in a significant increase in risk or uncertainty as the actuarial r eserving methodologies arc adjusted to compensate for the delays.

Premium and loss data is provided to us through at least one intermediary (the primary insurer), so there is a risk that the loss data provided is incomplete, inaccurate or the claim is outside the coverage terms Information provided by ceding

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Source BERKSHIRE HATHAWAY INC. 10-K, Maich 03. 201-1

I7ie information contained herein may not bo copied, adapted or distributed and Is not warranted to be accurate, complete or timely. Tire user assumes all ttsks lor any dprnages or tosses arising Irom any ur.a of this Inlormalion, except to the extent such damages or losses cannot be limned or excluded by applicable law. Past ttnanctnt itertormance Is no guarantee ol future results.

Table of Contents

Management's Discussion (Continued)

Property and casualty losses (Continued)

General Re and BHRG (Continued)

companies is reviewed for completeness and compliance with the contract terms. Generally, wc arc permitted under the contracts to access the cedant's books and records with respect to the subject business, thus providing us the ability to conduct audits to determine the accuracy and completeness of information. Audits are conducted as we deem appropriate.

In the normal course of business, disputes with clients occasionally arise concerning whether certain claims are covered under our reinsurance policies. Wc resolve most coverage disputes through the involvement of our claims department personnel and the appropriate client personnel or through independent outside counsel. If disputes cannot be resolved, our contracts generally specify whether arbitration, litigation, or an alternative dispute resolution process will be invoked. There arc no coverage disputes at this time for which an adverse resolution would likely have a material impact on our consolidated results of operations or financial condition.

General Re

General Re's gross and net unpaid losses and loss adjustment expenses and gross reserves by major line of business as of December 31,2013 are summarized below. Amounts are in millions.

Reported case reserves •'. •'•;■■>. y.-IBNR reserves

Gloss reserves .      V .^: '

Ceded reserves and deferred charges Net reserves ■'■■"'y.

Ling ofomlne»

$ 7,809      ^Workers' compensation in

7,859 Mass tort-asbestos/environmenlal •1.5,668     Aulo liability   . '

(1,004)    Other casualty o>

$14,664      'Oth.cr general. liability";'-

Property

J «/ V::      Total-      '■. '

-_;$

2,830 1,539 3,769 2,288 .2,462-2,780

$15,668

Net of discounts of $1,866 million. ^,:>     Includes directors and officers, errors and omissions, medical malpractice and umbrella coverage.

General Re's loss reserve estimation process is based upon a ground-up approach, beginning with case estimates and supplemented by additional case reserves ("ACRs") and IBNR reserves. The critical processes in establishing loss reserves involve the establishment of ACRs by claim examiners, the determination of expected ultimate loss ratios which drive IBNR reserve amounts and the comparison of case reserve reporting trends to the expected loss reporting patterns. Recorded reserve amounts are subject to "tail risk" where reported losses develop beyond the maximum expected loss emergence time period.

We do not routinely determine loss reserve ranges. Wc believe that the techniques necessary to make such determinations have not sufficiently developed and that the myriad of assumptions required render such resulting r anges to be unreliable. In addition, claim counts or average amounts per claim are not utilized because clients do not consistently provide reliable data in sufficient detail.

Upon notification of a reinsurance claim from a ceding company, our claim examiners make independent evaluations of loss amounts. In some cases, examiners' estimates differ from amounts reported by ceding companies. If the examiners' estimates arc significantly greater than the ceding company's estimates, the claims arc further investigated. If deemed appropriate, ACRs ar e established above the amount reported by the ceding company. As of December 31,2013, ACRs aggregated approximately $2.2 billion bcfoi e discounts and were concentrated in workers' compensation reserves, and to a lcssei extent in professional liability reserves. Our examiners also periodically conduct detailed claim reviews of individual clients and case reserves are often increased as a result. In 2013, we conducted 266 claim reviews.

Our actuaries classify all loss and premium data into segments ("reserve cells") primarily based on product (e.g., treaty, facultative and program) and line of business (e.g., auto liability, property, etc.). For each reserve ceil, premiums and losses are aggregated by accident year, policy year or underwriting year (depending on client reporting practices) and analyzed over time. We internally refer to these loss aggregations as loss triangles, which serve as the primary basis for our IBNR reserve calculations. We review over 300 reserve cells for our North American business and approximately 900 reserve cells with respect to our international business.

55

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Source BERKSHIRE HATHAWAY INC. 10-K, March 03. 2014

7)ie Information contatiutf herein may not be copied, adapted or distributed and ts net warranted lo be uccuiate, complete or timely. The user assumes all risks for any damages nr losses arising from nny uso of this Inlormalion, except to the extent such damages or losses cannot be limited or excluded by applicable law Past hnanclalperformance Is no guarantee of future results

Table of Contents

Management's Discussion (Continued)

Property and casualty losses (Continued)

General Re (Continued)

We use loss triangles to determine the expected case loss emergence patterns for most coverages and, in conjunction with expected loss ratios by accident year, loss triangles are further used to determine IBNR reserves. While additional calculations form the basis for estimating the expected loss emergence pattern, the determination ofthe expected loss emergence pattern is not strictly a mechanical process. In instances where the historical loss data is insufficient, we use estimation formulas along with reliance on other loss triangles and judgment. Factors affecting our loss development triangles include but arc not limited to the following: changes in client claims practices, changes in claim examiners' use of ACRs or the frequency of client company claim reviews, changes in policy terms and coverage (such as client loss retention levels and occurrence and aggregate policy limits), changes in loss trends and changes in legal trends that result in unanticipated losses, as well as other somces of statistical variability. Collectively, these factors influence the selection ofthe expected loss emergence patterns.

We select expected loss ratios by reserve cell, by accident year, based upon reviewing forecasted losses and indicated ultimate loss ratios that are predicted from aggregated pricing statistics. Indicated ultimate loss ratios are calculated using the selected loss emergence pattern, reported losses and earned premium. If the selected emergence pattern is not accurate, then the indicated ultimate loss ratios may not be accurate, which can affect the selected loss ratios and hence the IBNR reserve. As with selected loss emergence patterns, selecting expected loss ratios is not a strictly mechanical process and judgment is used in the analysis of indicated ultimate loss ratios and department pricing loss ratios.

We estimate IBNR reserves by reserve cell, by accident year, using the expected loss emergence patterns and the expected loss ratios. The expected loss emergence patterns and expected loss ratios arc the critical IBNR reserving assumptions and aie updated annually. Once the annual IBNR reserves arc determined, our actuaries calculate expected case loss emergence for the upcoming calendar year. These calculations do not involve new assumptions and use the prior year-end expected loss emergence patterns and expected loss ratios. The expected losses are then allocated into interim estimates that are compared to actual reported losses in the subsequent year. This comparison provides a test ofthe adequacy of prior year-end IBNR reserves and forms the basis for possibly changing IBNR reserve assumptions during the course ofthe year.

In 2013, our reported claims for prior years' workers' compensation losses were less than expected by S23S million. However, further analysis ofthe workers' compensation reserve cells by segment indicated the need for maintaining IBNR reserves. These developments precipitated a net increase of SI 12 million in nominal IBNR reserve estimates for unreported occurrences. After adjusting for the Si 2d million net increase in liabilities from changes in net reserve discounts during the year, the net increase in workers' compensation losses from prior years' occurrences had a minimal impact on pre-tax earnings in 2013. To illustrate the sensitivity of changes in expected loss emergence patterns and expected loss ratios for our significant cxcess-of-loss workers' compensation reserve cells, an increase often points in the tail ofthe expected emergence pattern and an increase often percent in (he expected loss ratios would pioducc a net increase in oui nominal IBNR reserves as of December 31, 2013 of approximately $795 million and $441 million on a discounted basis. The increase in discounted reserves would produce a corresponding decrease in pre-tax earnings. Wc believe ii is reasonably possible for the tail ofthe expected loss emergence patterns and expected loss ratios to increase at these rates.

Our other casualty and general liability reported losses (excluding mass tort losses) developed favorably in 2013 relative to expectations. Casually losses tend to be long-tail and it should not be assumed that favorable loss experience in a given year means that loss reserve amounts currently established will continue to develop favorably. For our significant other casually and general liability reserve cells (including medical malpractice, umbrella, aulo and general liability), an increase of five points in (he tails of the expected emergence patterns and an increase of five percent in expected loss ratios (one percent for large international proportional reserve cells) would produce a net increase in our nominal IBNR reserves and a corresponding reduction in pre-tax earnings of approximately $978 million. We believe it is reasonably possible for the tails ofthe expected loss emergence patterns and expected loss ratios to increase at these rates in any ofthe individual aforementioned reserve cells. However, given the diversification in worldwide business, more likely outcomes are believed to be less than $978 million.

In 2013, our property results included estimated losses incurred of $400 million from significant catastrophe events during the year. In 2013, reported claims for prior years' properly loss events were less than expected, and we reduced our estimated ultimate liabilities by $375 million. However, the nature of property loss experience tends to be more volatile because of the effect of catastrophes and large individual property losses.

5 6

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Source BERKSHIRE HATHAWAY \KC. 10-K, March 03. 201-1

l}\o information contMnr.it herein moynot be copied, sdaptcd or distributed and Is net warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arlslnri from any use of this Information, ewcept to th-s oxtent such damages or losses cannot be limited or excluded hy applicable law Past financial f)crfarm,ince /i no guarantee of future rtisulls.

Table of Contents

Management's Discussion (Continued)

Property and casualty losses (Continued)

General Re (Continued)

In certain reserve cells within excess directors and officers and errors and omissions ("D&O and E&O") coverages, IBNR reserves are based on estimated ultimate losses without consideration of expected emergence patterns. These cells often involve a spike in loss activity arising from recent industiy developments making it difficult to select an expected loss emergence pattern. For our large D&O and E&O reserve cells, an increase often points in the tail of the expected emergence pattern (for those cells where emergence patterns are considered) and an increase often percent in the expected loss ratios would produce a net increase in nominal IBNR reserves and a corresponding reduction in pre-tax earnings of approximately $153 million. Wc believe il is reasonably possible for the tail ofthe expected loss emergence patterns and expected loss ratios to increase at these rates.

Overall industry-wide loss experience data and informed judgment are used when internal loss data is of limited reliability, such as in setting the estimates for mass tort, asbestos and hazardous waste (collectively, "mass tort") claims. Gross unpaid mass tort liabilities at December 31,20)3 and 2012 were approximately 51.5 billion and $1.6 billion, respectively and net of reinsurance, were approximately $1.2 billion at the end of each ofthe last two years. Mass tort net claims paid were $72 million in 2013. In 2013, ultimate loss estimates for asbestos and environmental claims were increased by $30 million. In addition to the previously described methodologies, wc consider "survival ratios" based on average net claim payments in recent years versus net unpaid losses as a rough guide to reserve adequacy. The survival ratio based on claim payments made over the last three years was approximately 15.6 years as of December 31,2013. The reinsurance industry's survival ratio for asbestos and pollution reserves was approximately 14.5 years based on the three years ending December 31, 2012 Estimating mass tort losses is very difficult due to the changing legal environment. Although such reserves arc believed to be adequate, significant reserve increases may be required in the future if new exposures or claimants are identified, new claims arc reported or new theories of liability emerge.

BHRG

BHRG's unpaid losses and loss adjustment expenses as of December 31, 2013 are summarized as follows. Amounts arc in millions.

Rejibrtcd case reserves   '- i IBNR reserves Retroactive ■ Gross reserves

Deferred charges and ceded reserves Net reserves

$2,090 2,542

$_: 3,202 4.896 . 17.716

$4,632 $25,814

$ S,292 7,438 17.716 30,446 (5,132)

$25,314

In general, the methodologies wc use to establish loss reserves vary widely and encompass many ofthe common methodologies employed in the actuarial field today. Certain traditional methodologies such as paid and incurred loss development techniques, incurred and paid loss Bomhueiter-Ferguson techniques and frequency and severity techniques arc utilized, as well as ground-up tccliniques where appropriate. Additional judgments must also be employed lo consider changes in contract conditions and terms as well as the incidence of litigation or legal and regulatory change.

Our gross loss reserves related to retroactive reinsurance policies were predominately for casualty or liability losses. Our retroactive policies relate to loss events occurring before a specified date on or before the contract date and include exccss-of-loss contracts, in which losses above a contractual retention are indemnified or contracts that indemnify all losses paid by the counterparty after the policy effective date. Wc paid retroactive reinsurance losses and loss adjustment expenses of approximately 51.3 billion m 2013. The classification "reported case reserves" has no practical analytical value with respect to retroactive policies since the amount is often derived from reports in bulk fiom ceding companies, who may have inconsistent definitions of "case rcseives." Wc review and establish loss reserve estimates, including estimates of IBNR reserves, in lhc aggregate by contiact. In 2013, we increased reserves for prior years' retroactive reinsurance contracts by approximately $300 million, which related primarily to asbestos and environmental risks assumed.

57

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Source BERKSHIRE HATHAWAY INC. 10-K. March 03 201-1

ffta litfonnattoti contained hctetri niey tier occupied. adaptt?d or distributed arid ts not wair anted to be accurate, ttmitte      The user assumes alt risks lor anydamages or losses arising/torn any use ol this

Inlormalion, eyce.pl to Hie extent such damages oi losses cannot be llmtted or excluded by applicable law. Past financial fjerioimance Is no guarantee ot lulute results-

Table of Contents

Management's Discussion (Continued)

Property and casualty losses (Continued)

BHRG (Continued)

In establishing retroactive reinsurance reserves, we often analyze historical aggregate loss payment patterns and project losses into the future under various scenarios. The claim-tail is expected to be very long for many policies and may last several decades. Wc assign judgmental probability factors to these aggregate loss payment scenarios and an expectancy outcome is determined. We monitor claim payment activity and review ceding company reports and other information concerning the underlying losses. Since the claim-tail is expected to be very long for such contracts, wc reassess expected ultimate losses as significant events related to (he underlying losses arc reported or revealed during (he monitoring and review process.

BHRG's liabilities for environmental, asbestos and latent injuiy losses and loss adjustment expenses were approximately $11.9 billion at December 31, 2013 and $12.4 billion at December 31, 2012 and were concentrated within retroactive reinsurance contracts. Wc paid losses of approximately $874 million in 2013 attributable to these exposures. BHRG, as a reinsurer, does not receive consistently reliable information regarding asbestos, environmental and latent injury claims from all ceding companies, particularly with respect to multi-line tieaty or aggregate excess-of-loss policies. Periodically, we conduct a grouud-up analysis ofthe underlying loss data of the reinsured to make an estimate of ultimate reinsured losses. When detailed loss information is unavailable, our estimates can only be developed by applying recent industry trends and projections to aggregate client data. Judgments in these areas necessarily include the stability ofthe legal and regulator)' environment under which these claims will be adjudicated. Potential legal reform and legislation could also have a significant impact on establishing loss reserves for mass tort claims in the future.

We currently believe that maximum losses payable under our retroactive policies will not exceed approximately $35 billion due to the aggregate contract limits that are applicable to most of these contracts. Absent significant judicial or legislative changes affecting asbestos, environmental or latent injuiy cxposuics, wc also believe it unlikely that our reported year end gross unpaid losses of $17.7 billion will develop upward to the maximum loss payable or downward by more than 15%.

Certain of our reinsurance contracts arc expected to have a low frequency of claim occurrence combined with a potential for high severity of claims, such as property losses from catastrophes and aviation risks related to our catastrophe and individual risk business. Loss rescives related lo catastrophe and individual risk contracts were approximately $800 million at December 31, 2013. Estimated ultimate liabilities for prior years' events were reduced by about S200 million in 2013, which produced a corresponding increase in pre-tax earnings. Reserving techniques for catastrophe and individual risk contracts generally rely more on a pcr-policy assessment ofthe ultimate cost associated with the individual loss event rather than with an analysis ofthe historical development patterns of past losses. Absent litigation affecting the interpretation of coverage terms, the expected claim-tail is relatively short and thus the estimation error in the initial reserve estimates usually emerges within 24 months after the loss event-Other reinsurance reserves (approximately $11.9 billion as of December 31, 2013) consisted of a variety of traditional property and casualty coverages written primarily under cxcess-of-Ioss and quota-share treaties. Liabilities as of December 31, 2013, included approximately $4.0 billion related lo the 20% quota-share contract with Swiss Re, which is now in run-off. Reinsurance reserve amounts are generally based upon loss estimates reported by ceding companies and IBNR reserves that are primarily a function of reported losses from ceding companies and anticipated loss ratios established on a portfolio basis, supplemented by management's judgment ofthe impact of major catastrophe events as they become known. Anticipated loss ratios are based upon management's judgment considering the type of business covered, analysis of each ceding company's loss history and evaluation of thai portion of the underlying contracts underwritten by each ceding company, which are in turn ceded to BHRG. A range of reserve amounts as a result of changes in underlying assumptions is not prepared.

Derivative contract liabilities

Our Consolidated Balance Sheets include significant derivative contract liabilities that arc measured at fair value. Our most significant derivative contract exposures relate to equity index put option contracts written between 2004 and 2008. These contracts were entered into in over-the-counter markets. Certain elements of the teirns and conditions of these contracts are not standard and we arc not required to post collateral under most of these contracts. Furthermore, there is no source of independent data available to us showing trading volume and actual prices of completed transactions. As a result, the values of these liabilities arc based on valuation models that wc believe would be used by market participants. Such models or oilier valuation techniques use inputs that arc observable in the marketplace, while others are unobservablc. Unobscrvablc inputs require us to make certain projections and assumptions about the information that would be used by market participants in establishing

58

i'oweie.t by Mominij:;U^r' Document Hc-rjiM'crt'"

Source. BERKSHIRE HATHAWAY INC. 10-K. Wairh 03. 201-1

JltO Information contained herein may not to copied, adapted or dhtitbuted and Is not woiranted lo be accurate, complete or Urnety. The user asaumeu all risks for any damages or losses arising fronniny usa of this fatofiMllen. except to Ihe extent juch damages or tosses cannctbe limtttdor excluded by appitcaWe luvt. Past financial performance fs no guarantee cf future rcstrlfs-

Table of Contents

Management's Discussion (Continued)

Derivative contract liabilities (Continued)

prices. We believe that the fair values produced for long-duration options is inherently subjective. The values of contracts in an actual exchange arc affected by market conditions and perceptions of the buyers and sellers. Actual values in an exchange may differ significantly from the values produced by any mathematical model.

We determine the estimated fair value of equity index put option contracts using a Black-Scholes based option valuation model. Inputs to the model include (he current index value, strike price, interest rate, dividend rate and contract expiration dale. The weighted average interest and dividend rales used as of December 31,2013 were 2.5% and 3.6%, respectively, and were approximately 2.1 % and 3.3%, respectively, as of December 31, 2012. The interest rates as of December 31, 2013 and 2012 were approximately 64 basis points and 95 basis points (on a weighted average basis), respectively, over benchmark interest rates arrd represented our estimate of our nonperformance risk. Wc believe that the most significant economic risks under these contracts relate to changes in the index value component and, to a lesser degree, the foreign currency component.

The Black-Scholes based model also incorporates volatility estimates that measure potential price changes over time. Our contracts have an average remaining matarity of about 7 year s. The weighted average volatility used as of December 31, 2013 was approximately 20.7%, compared to 20.9% as of December 31,2012. The weighted average volatilities arc based ou the volatility input for each equity index put option contract weighted by the notional value of each equity index put option contract as compared fo the aggregate notional value of all equity index put option contracts. The volatility input for each equity index put option contract reflects our expectation of future price volatility. The impact on fair value as of December 31, 2013 ($4.7 billion) from changes in (he volatility assumption is summarized in the table that follows. Dollars are in millions.

Hviwlhchcal cliantc in tolalilitv fnfrcnnaf-c nninul            Hvnrillicrlcal fair vnlnc

Increase 2 percentage points      *.'-y\_:i-'.■                                                                                                     ... $     ,'. . 5,067

Increase 4 percentage points      5,479

Dccreasc.2percentage points";,      " ry.='.; V > ;;.>^;.i^:s;',-'''v'/- ■';[ ■] ..".'■,   : _',']. ; ■     '   ; ,■ •'     '■ ^:.-      ■ "-.                            f.--!v '4,284

Decrease 4 percentage points      3,923

For several years, we also have had exposures relating to a number of credit default contracts written involving corporate and slate/municipality issuers. During 2013, al) credit default conhacts involving corporate issuers expired and at December 31, 2013, our remaining exposures relate to state/municipality exposures which begin to expire in 2019. The fair values of our slate/municipality contracts are geneially based on bond pricing data on the underlying bond issues and credit spread estimates. We monitor and review pricing data and spread estimates for consistency as well as reasonableness with respect to current mar ket conditions. We make no significant adjustments to the pricing data or inputs obtained.

Prices in a cuiTcnt market trade involving identical (or sufficiently similar) risks and contract terms as our equity index put option or credit default contracts could differ significantly from the fair values used irr the financial statements. Wc do not operate as a derivatives dealer and currently do not utilize offsetting strategics to hedge our equity index put option or credit default contracts. Wc currently intend to allow these contracts to ran off to their respective expiration dates.

Other Critical Accounting Policies

Wc recor d deferred charges with respect to liabilities assumed under retroactive reinsurance contracts. At the inception of these contracts, the deferred charges represent the excess, if any, of the estimated ultimate liability for unpaid losses over the consideration received. Deferred charges arc amortized using the interesl method over an estimate ofthe ultimate claim payment period with the periodic amortization reflected in earnings as a component of losses and loss adjustment expenses. Deferred charge balances are adjusted periodically to reflect new projections of the amount and timing of remaining loss payments. Adjustments to deferred charge balances resulting from changes to these assumptions are determined retrospectively from the inception ofthe contract. Unamortized deferred charges were approximately $4.35 billion at December 31,2013. Significant changes in the estimated amount and the timing of payments of unpaid losses may have a significant effect on unamortized deferred charges and the amount of periodic amortization.

5 9

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Source BCRKSHIRL" HATHAWAY INC. 10-K. March 03. 2014

flic Inlormalion contained heroin may not ho copied, adapted or distributed and Is net warranted to be accurate, complete or Itmety. The user assumes all risks lor any damages or losses arising ttom tiny use of tills Information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance Is no guarantee ol tuluie tcsulls.

Table of Contents

Management's Discussion (Continued)

Other Critical Accounting Policies (Continued)

Our Consolidated Balance Sheet includes goodwill of acquired businesses of $57.0 billion, which includes approximately $2.7 billion associated with our various acquisitions in 2013. We evaluate goodwill for impairment at least annually and wc conducted our most recent annual review during the fourth quarter of 2013. Our review includes determining the estimated fair values of our reporting units. There arc several methods of estimating a reporting unit's fair vahic, including market quotations, underlying asset and liability fair value determinations and other valuation techniques, such as discounted projected future net earnings or net cash flows and multiples of earnings. We primarily use discounted projected future earnings or cash flow methods. The key assumptions and inputs used in such methods may include forecasting revenues and expenses, operating cash flows and capital expenditures, as well as an appropriate discount rate and other inputs. A significant amount of judgment is required in estimating the fair value of a reporting unit and in performing goodwill impairment tests. Due to the inherent uncertainty in forecasting cash flows and earnings, actual results may vary significantly from me forecasts. If the carrying amount of a reporting unit, including goodwill, exceeds lhc estimated fair value, then, as rcquiicd by GAAP, wc estimate the fair values ofthe individual assets (including identifiable intangible assets) and liabilities ofthe reporting unit. The excess ofthe estimated fair value ofthe reporting unit over the estimated fair value of its net assets establishes the implied value of goodwill. The excess ofthe recorded amount of goodwill over the implied value is charged to earnings as an impairment loss.

Market Risk Disclosures

Our Consolidated Balance Sheets include a substantial amount of assets and liabilities whose fair values arc subject to market risks. Our significant market risks are primarily associated with interest rates, equity prices, foreign currency exchange rates and commodity prices. The fair values of our investment portfolios and equity index put option contracts remain subject to considerable volatility. The following sections address the significant market risks associated with our business activities.

Interest Rate Risk

We regularly invest in bonds, loans or other interest rate sensitive instruments. Our strategy is to acquire such securities that aic attractively priced in relation to the perceived credit risk. Management recognizes and accepts that losses may occur with respect lo assets. We also issue debt in the ordinary course of business to fund business operations, business acquisitions and for other general purposes. Wc strive to maintain high credit ratings so that the cost of our debt is minimized. Wc rarely utilize derivative products, such as interest rate swaps, to manage interest rate risks.

The fair values of our fixed maturity investments and notes payable and other borrowings will fluctuate in response to changes in market interest rates. In addition, changes in interest rate assumptions used in our equity index put option contract models cause changes in reported liabilities with respect to those coutracts. Increases and decreases in interest rates generally translate iuto decreases and increases in fair values of those instruments. Additionally, fair values of interest rate sensitive instruments may be affected by the creditworthiness ofthe issuer, prepayment options, relative values of alternative investments, the liquidity of the instrument and other general market conditions. The fair values of fixed interest rale instruments may be more sensitive to interest rate changes than variable rate instruments.

The following table summarizes the estimated effects of hypothetical changes in interest rates on our significant assets and liabilities that are subject to interest rate risk. It is assumed that the interest rate changes occur immediately and uniformly to each category of instrument containing interest rate risk, and that there are no significant changes to other factors used to determine the value of the instrument. The hypothetical changes in interest rates do not reflect what could be deemed best or worst case scenarios. Variations in inter est rates could produce significant changes in the timing of repayments due to

60

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Source BERKSHIRE HATHAWAY INC. 10-K, March 03. 201-1

Hie Information contained herein may not tie copied, adapted or distributed and Is not warranted lo be accurate, complete or timely, tire user assumes all risks lor any damages or losses arising from any use ot this Inlormalion, except to the extent such damages or losses cannut be limited or excluded by applicable law. Past financial peiioimance Is no guarantee ot tutuie results.

Table of Contents

Management's Discussion (Continued) Interest Rate Risk (Continued)

prepayment options available to the issuer. For these reasons, actual results might differ from those reflected in the tabic. Dollars are in millions.

estimated Ftir Value after 1l\ polliclicil Clmngc In Interest! Rales

aoo bp

incrwc

$ 27,870 7,757 11,255.

12,104 .42,500 11,867 3,200

$36,592 ■'• 7,744 11,229

13,398 35,495 12,950 5,131

December.!}, 2013   :     ; _: Assets:

.'    -     ■ • Investments jnfixeii maturity securities Othci" investments m •;' ~     Loans and financeifccervables: '* •' Liabilities:

:i,   - Notes payablc'arid other borrowings:>-' Insurance and other ■■■■' _: Railroad, utiliiies'and energy ; Finance and financial products ■       ■'. i ■■; Equity index put option contracts    .' December 31, 2012

Assets:      ■  . ■

Investments in fixed maturity securities

•?■'-">;; ' ■' Other^,invcshne_;nls:i^,>.';;      ■ ; _::' ".;.■'

Loans and finance receivables

- ' Liabilities:      '':-.'■ -1'.-' ■■

Notes payable and other borrowings: .; vi';.'Insurance and other '];':"■

Railroad, utilities and energy

V'^:;'•■:'■      :Finance and financial products

Equity index put option contracts

S 29,370 8,592 .^: .'.12,002

13,147 49,8.79 13,013 4,667

S 38,425 :8,606 "l 1,991

14,284 42,074 ' 14,005 7,502

100 bp decrease

30,160 9,021 12.412

13,776 54,522 13,703 5,589

39,333 9,003 12,410

14,794 46,268 14,597 8,980

(bp^buii points)

100 bp liicrwT

$28,591 " 8,166 '11,617'

12,595 45,906 12,405 ,"■' 3,876

$ 37,493 8,169 11,598

13,815.

38,519 13.432 6,226

300 bp iiicrc.lf

$27,259 7,370 10,915

11,663 _:39,554 11,385 ' 2,626

$ 35,783 •   ? 7,343 10,883

13,018 32,902 12-519 4,198

Includes other investments that are subject to a significant level of interest rate risk.

Equity Price Risk

Historically, wc have maintained large amounts of invested assets in exchange traded equity securities Suatcgically, wc strive to invest in businesses that possess excellent economics, with able and honest management and at sensible prices and prefer to invest a meaningful amount in each investee. Consequently, equity investments arc concentrated in relatively few issuers. At December 31, 2013, approximately 55% ofthe total fail value of equity investments was concentrated within four companies.

Wc often hold equity investments for long periods of time so wc ore not troubled by short-term price volatility with respect to our investments provided that the underlying business, economic and management characteristics ofthe investees remain favorable. Wc strive to maintain above average levels of shareholder capital to provide a margin of safely against short-term price volatility.

Market prices for equity securities arc subject to fluctuation and consequently the amount realized in the subsequent sale of an investment may significantly differ from the reported market value. Fluctuation in the market price of a security may result fiom perceived changes in the underlying economic characteristics of the investee, the relative price of alternative investments and general market conditions

Wc are also subject to equity price risk with respect to our equity index put option contracts. While our ultimate potential loss with respect to these contracts is determined from the movement of the underlying stock index between the contract inception date and expiration date, fair values of these contracts are also affected by changes in other factors such as interest rates, expected dividend rates and the remaining duration ofthe contract. These contracts expire between 2018 and 2026 and may not be unilaterally settled before their respective expiration dates.

61

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Source BERKSHIRE HATHAWAY INC. 10-K. Marco 03. 201-1

llm Information contained herein may net be copied, adapted or distributed and Is not vienanted to be accurate, complete, or limely. The user assumes utl tlsks lor any damages or losses arising from any use ot this Inlormalion, except to the extant such damages or losses cannot be limited or excluded by applicable lav.'. Past financial performance Is no guarantee ol future results.

Table of Contents

Management's Discussion (Continued) Equity Price Risk (Continued)

The following table summarizes our equity and other investments and derivative contract liabilities with significant equity price risk as of December 31, 2013 and 2012. The effects of a hypothetical 30% increase and a 30% decrease in market prices as of those dates are also shown. The selected 30% hypothetical changes do not reflect what could be considered the best or worst case scenarios. Indeed, results could be far worse due both to the nature of equity markets and the aforementioned concentrations existing in our equity investment portfolio. Dollar amounts arc in millions.

December3], 7013     ' ■ '    :!>:. ■■•%■ Assets:

.      'Equity* securities     •'      v ■

Other investments <')

,.      Liabilities: .

Equity index put option contracts

December 31, 2012 ,.      ; .   ^: ■ "]\X

Assets'.

,'•   ^:   -Equity securities' -

Other investments (»

■ v.-Liabilities: . ;^!' jK^:j

Equity index put option contracts

$117,505 13,226

4,667

$ 88,346 10,136

7,502

Uypolhrticat PrKe Chang*

.'-3.0% increase _::30% decrease 30% increase 30% deciease

30% increase 30% decrease

", 30%'increase " ^30% decrease' 30% increase 30% decrease

30% increase 30% decrease

EftimatcJ Fair Value after

llwotht-tlcal Changr In Prices

$ 152,757 ■ .': 82,254 17,172 9,359

2,873 7,987

;$. 116,357 61,408 12,775 7,664

5,009 11.482

Hypothetic tit rcrcfoUcc Increase (Decrease) In Shareholders' Equity

10.3 (10.3) 1.2 d-1)

0.5 (1.0)

•9.7 (93): 0.9 (0.9)

0.9 (1.4)

"'     Includes other investments that possess significant equity price risk.

Foreign Currency Risk

Wc generally do not use derivative contracts to hedge foreign currency price changes primarily because of the natural hedging that occuis between assets and liabilities denominated in foreign currencies in our Consolidated Financial Statements. In addition, wc hold investments in common stocks of major multinational companies such as The Coca-Cola Company that have significant foreign business and foreign currency risk of their own. Our net assets subject to translation are primarily in our insuiance, utilities and energy businesses, and to a lesser extent in our manufacturing and services businesses. The translation impact is somewhat offset by transaction gams or losses on net reinsurance liabilities of certain U.S. subsidiaries that are denominated in foreign currencies as well as the equity index put option liabilities of U.S. subsidiaries relating to contracts that would be settled in foreign currencies.

Commodity Price Risk

Our subsidiaries use commodities in various ways in manufacturing and providing services. As such, we are subject to price risks related to various commodities. In most instances, we attempt to manage these risks through the pricing of our products and services to customcis. To the extent that wc are unable to sustain price increases in response to commodity price increases, our operating results will likely be adversely affected. We utilize derivative contracts to a limited degree in managing commodity price risks, most notably at MidAmerican. MidAmerican's exposures to commodities include variations in the price of fuel required to generate electricity, wholesale electricity that is purchased and sold and natural gas supply for customcis. Commodity prices arc subject to wide price swings as supply and demand arc impacted by, among many other unpredictable items, weather, market liquidity, generating facility availability, customer usage, storage and transmission and transportation constraints. To mitigate a portion ofthe risk, MidAmerican uses derivative instruments, including forwards, futures, options, swaps and other agreements, to effectively secure future supply or sell future production generally at fixed prices. The settled cost of these contracts is generally recovered from customers in regulated rales. Financial results would be negatively impacted

62

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Source. BERKSHIRE HATHAWAY INC. 10-K. Much 03. 2011

Hie Information contained herein may hot be copied, adapted or distributed and Is not watt anted lo be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any trse utthls information, except to the extent such damages or losses cannot he limited or excluded by applicable laiv Past financial ticrlormsnce Is no guarantee ol future icsutts

Table of Content:

Management's Discussion (Continued) Commodity Price Risk (Continued)

if the costs of wholesale electricity, fuel or natural gas are higher than what is permitted to be recovered in rates. MidAmerican also uses futures, options and swap agreements to economically hedge gas and electric commodity prices for physical delivery to non-rcgulatcd customers. The table that follows summarizes our commodity price risk on energy derivative contracts of MidAmerican as of December 31, 2013 and 2012 and shows the effects of a hypothetical 10% increase and a 10% decrease in forward market prices by the expected volumes for these contracts as of each date. The selected hypothetical change does not reflect what could be considered the best or worst case scenarios. Dollars are in millions.

Fair Value      Estimated Fair Value after

Net Assets      Hypothetical Change in

(Liabilities!             Hmotwctfcnl Price Cdanpe      .      .      Trice      

December 31,2013 ^;:'^-)'yr ■ y]. %■ V '/          . = ■■.;^;:':        - l ^: - ' - :   $   (140)     •       ': . 10% increase      .'           -S     ' ■. :. (72)

rO'y-■ . '■i^;°&'³^C\';-j]^'-<- /-'-A":. ■ "■ '■^ ■■AA'A-^::^ 'A...' ' - AA{A\AA^:'AAA_:''.   10% decrease      -7.; ]:.,■ ^:                  ... (208)

December 31,2012                                                                             $  (235)                    10% increase      $ (187)

10% decrease      (285)

FORWARD-LOOKING STATEMENTS

Investors are cautioned that certain statements contained in this document as well as some statements in periodic press releases and some oral statements of Berkshire officials during presentations about Berkshire or its subsidiaries aie "forward-looking" statements within the meaning ofthe Private Securities Litigation Reform Act of 1995 (the "Act"). Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, which include words such as "expects," "anticipates," "intends," "plans," "believes," "estimates" or similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects and possible future Berkshire actions, which may be provided by management, arc also forward-looking statements as defined by the Act. Forward-looking statements are based on current expectations and projections about future events and arc subject to risks, uncertainties and assumptions about Berkshire and its subsidiaries, economic and market factors and the industries in which we do business, among other things. These statements are not guaranties of future pei formancc and we have no specific intention to update these statements.

Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors. The principal important risk factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements include, but are not limited to, changes in market prices of our investments in fixed maturity and equity securities, losses realized from derivative contracts, the occurrence of one or more catastrophic events, such as an earthquake, hurricane or act of terrorism that causes losses insured by our insurance subsidiaries, changes in laws or regulations affecting our insurance, railroad, utilities and energy and finance subsidiaries, changes in federal income tax laws, and changes in general economic and market factors that affect the prices of securities or the industries in which we do business.

63

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Soiree ilERKSHWlE HATHAWAY INC. 10-K. Maicli 03. 2014

77io Inlormalion contained herein may not (re copied, adapted cr distributed and Is not warranted lo be accurate, complete or timely The user assumes all risks tor any damages or tosses arising from anyrrse ottbls Inlotmallon. etrcept to the extent such damages or tosses camwt be limited cr excluded by applicable taw Past Unsocial performance Is no guarantee el tuture tosulls.

Table of Contents

Item 7A.     Quantitative and Qualitative Disclosures About Market Risk

Sec "Market Risk Disclosures" contained in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Management's Report on Internal Control Over Financial Reporting

Management of Berkshire Hathaway Inc. is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a-l 5(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, wc conducted an evaluation ofthe effectiveness ofthe Company's internal control over financial reporting as of December 31, 20)3 as required by the Securities Exchange Act of 1934 Rule 13a-15(c). In making this assessment, wcused the criteria set forth in the framework in Internal Control - Integrated Framework (1992) issued by the Coiiunitlce of Sponsoring Organizations of the Trcadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework (1992), our management concluded that our internal control over financial reporting was effective as of December 31, 2013.

The effectiveness of our internal control over financial reporting as of December 31,2013 has been audited by Dcloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which appears on page 65.

Berkshire Hathaway Inc. February 28,2014

64

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Source BERKSHIRE HATHAWAY INC. 10-K. Vardi 03. 201-1

Uw fnfonnatlcn contained herein may not ho copied, adapted or distributed and Is not watt anted lo be accurate, complete or timely Ihe user assumes all risks lor anydamages or losses arising from any uso of this Information, except to the extent such damages or lossas cannot be limited or excluded by applicable law Past financial performance Is no guarantee ol future rosulis.

Table of Contents

Item 8.       Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBUC ACCOUNTING FTRM

To the Board of Directors and Shareholders of Berkshire Hathaway Inc. Omaha, Nebraska

We have audited the accompanying consolidated balance sheets of Berkshire Hathaway Inc. and subsidiaries (the "Company") as of December 31,2013 and 2012, and the related consolidated statements of earnings, comprehensive income, changes in shareholders' equity, and cash flows for each ofthe three years in the period ended December 31,2013. We also have audited the Company's internal control over financial reporting as of December 31,2013, based on criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations ofthe Trcadway Commission. The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment ofthe effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company's internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards ofthe Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements aie free of material misstatement and whether effective internal contiol over financial reporting was maintained in al] material respects. Our audits ofthe financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. Wc believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directois, management, and other personnel to provide reasonable assurance regarding the icliability of financial reporting and the preparation of financial statements for external puiposcs in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets ofthe company; (2) provide reasonable assurance that transactions arc recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company arc being made only in accordance with authorizations of management and directois ofthe company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or impioper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that (lie degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above picscnl fairly, in all material respects, the financial position of Berkshire Hathaway Inc. and subsidiaries as of December 31, 2013 and 2012, and the results of their operations and their cash flows for each ofthe llrrce years in the period ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Contiol - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations ofthe Trcadway Commission.

Isl Deloitte & Touchc LLP

Omaha, Nebiaska February 28, 2014

65

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Source BERKSHIRE HATHAWAY INC. 10-K. tench 03. 201"

TTip informal/an contained herein may not he copied, adapted or distributed and ts not warranted lo be accurate, complete or timely The user assumes all risks lor any damages or looses arising from unyuso of this Inlormalion, except to the extent such damages or lassos cannot be limited or exctudad by applicable low. Past fman'cM performance is no guarantee of future results.

Table of Contents

assets     •■    ■   -       ■■'.->-*      " '■

Insurance and Other: ,\'l. -"Xrish and cash equivalents ' . bwcstmenls:

Fixed maturity securities   ' •

Equity securities      .       . ...

■ 'i '■ . ' Other- .'- - '■ ' -:^;'\ ■ '''' Investments in HJ. Heinz Holdiiifi.Corporation . Receivables ' '■■■■'■'.;■. 'V"

Inventories              

'^^.-^Proptrty.'phnl andequipment.' r  ..;      . -r Goodwill

^:'.btlier       :      '■   •"- ■ ~- -

Rultraad,'VttUties amiEitervy: ■ _ Cash and cash equivalents -Piopcity.plantendcquipnieiil  " -' Goodwill V-othcr /    ' ■

Finance and Financial Troducts: -

Cash and cash equivalents •   j ^V'lnvestments in equity and fixed maturity securities

Other investments .^T ^< :L6ans and fiuancc receivables; •

Goodwill      .       ..

'. ^"-"dther.^ C ■ ■■      .■'.-■'      y -

BERKSHIRE HATHAWAY INC. and Subsidiaries

CONSOLIDATED BALANCE SHEETS (dollars in millions)

.28;785. 115.464 ' d'2,334.

12,111 ; 20,'497. 9,945 19,732 33.372 ■19.244 314.098

3,400. 102,482 22,603 16.149 144.634

S 42.614 .    J 42,358 .;

36,708 : 87,081 v'.16,'l 84 ■'

.■21.753V! 9,675

^i; ikiti^;

33.274 17.875 278.096

2.172 ' 1,506 5,617 12,826 ■ , .1.036 3.042'' 26.199

2,570 87,684.5 20.213 -13.441 ■ 123.908

.2,064,. . 1.432 4,882 :;'12;809;; 1.0J6 3.225 25.448

LIABILITIES AND SHAREHOLDERS' EQUITY" Insurance and Other:

Losses and loss adjustment expenses ■■ XJiicanicdprcniimits ;

Life, annuity and health insurance benefits ; V. . Accoiuils payable.-accruals and other liabllrliej

Notes payable and other borrowings

Railroad, Utilities and Energy: ^      

' ..Acwunls payable, accruals ond other liabilities ■ Notes payable and other borrowings

Finance and Finaru iai Products:

;._:AccDur.tspayabIc,accttialsundoIherIiabili(ics ' ^; Derivative conlritl liabilities .. Notes payublc and other borrowings

Income" taxes, principally deferred¹    .. ^: .

Total liabilities

Shareholders', equity. • ':■-

Common stock

• Capital in excess of par value'"'*'     '     ' '        .'• '

Accumulated other comprehensive income

. u Retained earnings      -    .u ■ ■

Treasury stock, at cost

^:.     . .-      ...    Itcrksliiti-Hathaway shareholders'cqtiily,

Nonconrrollinf, intcicsls

Total shareholders' cquiry

S .64.866 ■ 10.770 11.681 22,254' 12.902 'A '122.473^:

"':    14.557 .^; 46.655

1.024 5.331 12.667 19.022

35.472 : 44,025 "." 143.7487" 11.363) 221,890 '

2.595 224.485 S 484,931

$ 64.160 10.237 10.943. , 21.149 13.535 '■' j7fl:o?4'

.;■ . 13.113 36.156 49,269

1.099 7.933

I3;045^:.

22.077

235.864

37.230 27,500 ... 124.272-(1.3631 187.647 3.941 ^:   191,588 ; $427.452

See accompanying Notes to Consolidated Financial Statements 66

Source BERKSHIRE HATHAWAY INC. 10-K. Math 03. 201-1      "'<>*«'«•"   MoinngM*'' Document Research⁵'

V,e,,,lorma,lon_Conut,,ed,,e,e,.in,ayno,t_ncop,e_t,dap,edordis,rtbuledand,s

Information, except to the extent such damages or losses cannot he limited or excluded hy applicable lore Past financial performance Is no guatanteo ol tuluie lesulls.

Table of Contents

BERKSHIRE HATHAWAY INC. and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS

(dollars in millions except per-share amounts)

Year Ended December 31.

Revenues:       . J.,;v; \-,-:.

Iusuianceand Oilierr....... ,

:•.'■' -'.Insurance rtfcmiunis earned -- ■ ■: '<■;■'

Sales and scrytcc revenues .: ■ ^: ■' Interest, dividend and other investment income :

Investment gains/losses

:S ■.-'36.684 94,806

■■\'^:'-. 4.939 3.881 j4Q3',0

S- 34.545 83,268 4,534:'' 990 123.317 -

$. 32,075': 72,803 . ;4,792 1.06S ■'' ^:U0.735.^:

Railroad, Utilities and F.nere\': >'. Operating revenues. ':.:' Other

:■ 34.649

      108

: 32,383

      199

32:582 -

' 30,721

      118

Finance and Financial Products:

. . Inlcicst, dividend and other investment income

Investment gouts/losses

.     Derivalise caiAs/lossei ■      . ^

Other

T.469, 184 -i«M . 2.822

- - 7.083'

■1,572 472 .K963 2,537

6.5447

1.618 20.9 (2.104) 2.391 2.114

Oosis and expenses: !" _'";■.■";■ 7■ ' ■"""

Insurance and Other:

'     : ^;: Insurance losses'attd loss adjustment expenses -Life, annuity and health insurance benefits : Insurance underwriting expenses' "■, i

Cost ofsales and services . Selling, general and administrative eX|Kitses Interest expense

21,275 5.U72 ■7.248 . 77,053 - 11,917 426 ■ 122.991

20,113 5,114

' 7,693 • 67,536 10.503

      397

111.356

20.829 4.879 '.6.119

59,839 8.670 -308

100.644

Railroad, Utilities and Energy;

Cost of sales and operating expense! Interest expense

'25.157 1.865

23.816. 1.745

. 22;736. 1.703

Finance and Financial Products: ' : rintCTtstexpense'■      * : Other

' 510 2.831

:' 602 2 708

653 2.638

Earhinci before Income taxes. . ^;.? ■: ^ :

Income lax cvpensc

Netearninpi      [t\;~- i\ ,■   ' .'      .:■ . ...

Less: Earnings attributable 10 noncontrolling interests Net earnings a'trribufable "to Berkshire Hatnaway shareholders '     7 '

Average common.shores outstanding • Net earnings per share attributable to Berkshire Hathaway shareholders *

'■■28.796 8.951 19,845

      369

'■■      19,476 ' 1,643,613

:i ii,850

",.22.236 6.9Z4 015.312 488

1,651,294 5 8.977

15:314 -4.568 10.746 492 S V 10,254 . 1,649,891 '■ t "6:215 '.

*Average shares outstanding include average Class A common shares and average Class B common shares determined on an equivalent Class A common stock basis. Net earnings per common share, attributable to Berkshire Hathaway shown above represents net earnings per equivalent Class A common share. Net earnings per Class B common share is ecpial to one-fifleen-hundredlh (1/1,500) of such amount or $7.90 per share for 2013, $5.98 per share for 2012 and $4.14 per share for 2011.

See accompanying Notes to Consolidated Financial Statements

67

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the Intotrnatlan contained herein may not bo copied, adapted or distributed and Is not warranted lo be accurate, complete or timely. The user assumes alt risks for any damages or losses arising trom unyuse of this Information, except lo Ihe extent such damages or tosses cannot be limited or excluded by applicable law. Past financial performance Is no guarantee ot future results

Table of Contents

BERKSHIRE HATHAWAY INC. and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollars in millions)

Year Ended December M.

Net earnings-. ;t'<':< feS-^' '•!.•'•' -      ■'-'     '■'";" ■

Oilier comprehensive income:

., .:.'Net change in m      1-? z\ '    . ■ v.

Applicable income taxes 'Reclassification-of inyestmcrit appreciation'm

Applicable income taxes

. Foreign cuiTcricytenslation';'.,;.; .--      '-.•'- ; .      .^:'.

Applicable income (axes

-.Prior service;cqst and actuarial gains/losses of defined benefit pension plans

Applicable income taxes

■       Other, net ,      :.   -        , ■''■■■j;.'.,-.      v;-\'.!' .   "■''■; 'VV      '. '

Other comprehensive income, net

Comprehensive income    ' .       . .\.;':?~': ■      •'    '." '."■':

Comprehensive income attributable to noncontrolling interests Comprehensive incomeattributableto Berkshire'Hathaway shareholders '

25,111 (8.69J) ' (2,447) 856 - (82) 34

• 2,602 " "(950)

:.138

16,571 36,416 394

(2,146) 811 (1245) 436 (126) (18) (1,121)

401 . (104) (3,112) 7.634 385

_;S 19,845 _v.:■ $15,312. :■ SI0,746

15,700 (5,434) (953) 334

^;276

(9)

:'.'-*,""^:''5.'i; (26)

(32);

9,861 75,173 .' 503

$ 36,022     $24,670     $ 7,249

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(dollars in millions)

Berkshire Hathaway shareholders' equity

Balance at December 31,2010 .    ,.:^;   ■■^Jl ■ Net ear nings .;Other.corijpreh'e^ Issuance (repurchase) of common stock • Trarisactibns with noncontrolling interests Balance at December 31, 2011

. Net earnings . •   •''.     -.'',-,^!',:'';. -.C Other comprehensive income, net Issuance (repurchase) of common stbckV Transactions with noncontrolling interests Balance at December"31,2012      ^: 7:^ Net earnings

Othercpmprchferisive income, net:_f ';, Issuance of common stock - I'ransactibnsAvithndhcbhtrollirig interests^ Balance at December 31,2013

Accumulated

oilitr cumprtrhensne

Retained eatninffs

Treasury

stock

S . 20,583 ,

. (3,005)

- 76" 17,654

9,846

27,500.

16,546

      (21)

Common stock and capital In caress of par value

;$ '37,541

S 99.J94     S , — 10,254 —

"'—' "(67)

355 (81)

37,815

109,448 (67) ■ • 14,824 v;4;.! ';^-:;>

—    :. ti;296)

118 (695)

'37,238

124,272; (1,363) 19,476 —

92 (1,850)

S   35,480      S 44,025      $ 143,748      $ (1,363)

Non-controlling interests

$5,616 . 492 (107).

(1,890) 4,111

^: '^: ■■ 488 15

(673) r^;:' 3,941 V 369

" 25'

(1,740) $2,595

$ 162;934 10,746 ^; (3,112) 288

_(1,895)

168,961 " s 15.312 '

9,861 : (1,178) (1,368) 1.91,588. 19,845 16,571 92 (3,611) $ 224,485

See accompanying Notes to Consolidated Financial Statements 68

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Source. BERKSHIRE HATHAWAY INC. 10-K. March 03. 2011

7Jie tnfotruatlaa containedherein may not bo copied, adapted or distributed md is not warranted lo be accurate, complete or timely. The user assumes all risks for any damages or losses wising from any use of this Information, except to the extent such damages or tosses cannot be limited or excluded by applicable la-v Past financial performance is no guarantee of future rcsufts.

Table of Contents

BERKSHIRE HATHAWAY INC. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in millions)

Vor Ended Dcccmljcr3l.

$ 10,746 (1,274)

Cash flows from operating activities: ■.,'■■'.'■;;.

Net earnings      . .

Adjustments'to reconcile^

Investment (gains) losses       ,

^:'-       Depreciation and amdftzatibn^-. :,      i^; - ^:'y'

Other

Changes in operating assets and liabilities'be

Losses and loss adjustment expenses

^:7 - "Deferred charges reinsurance assumed .;..." >■-.-■       ; —

Unearned premiums

"'Receivables arid originated loans ;   >'.':-7_;7_;;-      . :^:"^:<;-h

Derivative contract assets and liabilities

■■'■        Income, taxes      '^:'^{; ;}'''"■

Other

Net cash flows from pperaring.activitics :        ^;:7 :_:      7,':: ■    ;.

Cash flows from investing activities:

^: ^Purchases of fixedmaturity securities ;'-.-,■ :V        '■'; . ^:v^:-.";^;^B'"7

Purchases of equity securities

_;/i Purchases of other investments- ' .      _:.   -. 'i.;'

Sales of fixed maturity securities

Redemptions and maturities of fixed maturity securities_:

Sales and redemptions of equity securities      

Purchases pf loans and Chance receivables^;:      .;    _: * -^fi;:;i -^:.

Collections of loans and finance receivables

Acquisitiohs.of businesses, net of cashacquired - . 7

Purchases of property, plant and equipment

Other      ;;. _::V-■      '■'■''"^:' :      "■" '•' -^:'^;''■^;" •

Net cash flows from investing activities Cash flovvs front financing activities: .        ,-7-7 •

Proceeds from borrowings of insurance and other businesses ^ Proceeds; from.borrowings of railroad, utilities "and energy businesses _: Proceeds from borrowings of finance businesses : Repayments of boipwings.of insurance and ptherbusiricsses 7 • Repayments of borrowings of raihoad, utilities and energy businesses Repayments of borrowings of finance businesses _;   . .» ■ 1

Changes in short term borrowings, net      

: Acquisitions of noncontrolling interests and treasury stock . i   -'    ; ■; ■-. Other

Net cash flows from financing activities   -7 3.     ,.^:     • _;- . Effects of foreign currency exchange rate changes Increase (decrease) in cash and cash equivalents 7.-^; Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year*    ..,■' ..."

* Cash and cash equivalents al end of year arc comprised of the following: Insurance and Other       -   . 7

Railroad, Utilities and Energy       

Finance andFinancial'Products      ■■-'■ ' ■ ■  ■-• '"   ' ■

$ 15,312

(1,462) 7 ;.:6,T54     _:: 5,492 "' (213) 2

$ 19,845

3,063 (329) 852 :0,159) 1,881 7 1,493 (291) 20,476

7 (7i362) (15,660) (5,000) 3,353 ::.' 6,872 14,163 ■ (4.657) 2,915 (8,^:685) (8,191) A- ■ 63

(421)

: 121

1,134 : (1,610) (2,183) "'"•   1, 710 ^:

2,408 . 20,950

^: '(8,250) (7,376)

2,982 6,064 8,088 ; ' ' .(650) 1,714 ;'   (3,188); (9,775) :    (183) ;

(4,065) ;V. 6,508 ' 373

578 ^;- - (340) 519 .1,035 '; (2,430) r - 3.514 2,167 27,704

. (7,546) (8,558) (12,250) 4,311 11,203 3,869 . (490) 654

•■Li (M31) (11,087) (1,210)

1,820 4,707 2,352 (2,078) (2,119) (3,131) ([309) _; ^r(2,096)

      48

(806)

      123

: 9,693 37,299

2,091 ^{: :}2;290

1,562 ; -(2,307)

(2,335)

. (1;959)

301

• (1,878)

      18

:■ (2,217)

      2

, 7 (928) 38,227 $ 37,299

'$ 33,513 2,246 1.540

(27,535)       (10,574) (19,189)

2,622

V 7,491

3,462

■ (2,835)

(1,596)

(3,842)

(1,317)

(2,890)

(134)

961

      64

: i,i94

46,992

$ 42,614 3.400 . 2.172

$ 48,186 $46,992

$ 42.358 2,570 :-2,064.

$ 48,186      $ 46,992      $ 37,299

See accompanying Notes to Consolidated Financial Statements 69

BERKSHIRE HATHAWAY INC. 10-K. Mach 03. 2014      by Morningslar"- Oownvml Rou-ari

Table of Contents

BERKSHIRE HATHAWAY INC. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2013

(I)   Significantaccounting policies and practices

(a)      Nature of operations and basis of consolidation

Berkshire Hathaway Inc. ("Berkshire") is a holding company owning subsidiaries engaged in a number of diverse business activities, including insurance and rcinsuiancc, freight rail liansportation, utilities and energy, finance, manufacturing, service and retailing, ln these notes the terms "us." "wc," or "our" refer to Berkshire and its consolidated subsidiaries. Further information regarding our reportable business segments is contained in Note 23. Significant business acquisitions completed over the past three years arc discussed in Note 2.

The accompanying Consolidated Financial Statements include the accounts of Berkshire consolidated with the accounts of all subsidiaries and affiliates in which we hold a controlling financial interest as ofthe financial statement date. Normally a controlling financial interest reflects ownership of a majority of the voting interests. We consolidate a variable interest entity ("VIE") when wc possess both the power to direct the activities ofthe VIE that most significantly impact its economic performance and wc arc cither obligated to absorb 1he losses that could potentially be significant to the VIE or we hold the right to receive benefits from the VIE that could potentially be significant to the VIE.

Intercompany accounts and transactions have been eliminated. In prior years, we presented certain relatively large private placement investments as other investments in the Consolidated Balance Sheets and Statements of Cash Flows and Notes to the Consolidated Financial Statements. At December 31, 2013, we included these investments as components of investments in fixed maturity or equity securities. Prior year presentations were reclassified to conform with the current year presentation.

1. Use of estimates in preparation of financial statements

The preparation of our Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States ("GAAP") requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dale ofthe financial statements and Ore reported amounts of revenues and expenses during the period. In particular, estimates of unpaid losses and loss adjustment expenses and related rccoverablcs under reinsurance for property and casualty insurance are subject to considerable estimation error due to the inherent uncertainty in projecting ultimate claim amounts. In addition, estimates and assumptions associated with the amortization of deferred charges reinsurance assumed, determinations of fair values of certain financial instruments and evaluations of goodwill for impairment require considerable judgment. Actual results may differ from the estimates used in preparing our Consolidated Financial Statements.

1. Cash and cash equivalents

Cash equivalents consist of funds invested in U.S. Treasury Bills, money market accounts, demand deposits and other investments with a maturity of tlucc months or less when purchased.

1. Investments

Wc determine the appropriate classification of investments in fixed maturity and equity securities at the acquisition date and re-evaluate the classification al each balance sheet date. Held-to-maturity investments are carried at amortized cost, reflecting the ability and intent to hold the securities to matur ity. Trading investments arc securities acquired with the intent to sell in the near term and are carried at fair value. All other securities arc classified as available-for-salc and are carried at fair value with net unrealized gains or losses reported as a component of accumulated other comprehensive income. Substantially all of our investments in equity and fixed maturity securities arc classified as available-for-salc.

We utilize the equity method to account for investments when wc possess (he ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The ability to exercise significant influence is presumed when an investor possesses more than 20% ofthe voting interests ofthe investee. This presumption may be overcome based on specific facts and circumstances that demonstrate that the ability to exercise significant influence is restricted. Wc apply the equity method lo investments in common stock and to other investments when such other investments possess substantially identical subordinated interests to common slock.

70

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Table of Contents

Notes to Consolidated Financial Statements (Continued)

(1)    Significant accounting policies and practices (Continued)

1. Investments (Continued)

In applying Ihe equity method, wc record Ihe investment at cost and subsequently increase or decrease the carrying amount ofthe investment by our proportionate share ofthe net earnings or losses and other comprehensive income ofthe investee. We record dividends or other equity distributions as reductions in the carrying value ofthe investment. In the event that net losses of the investee reduce the carrying amount to zero, additional net losses may be recorded if other investments in the investee are at-risk, even if we have not committed to provide financial support to the investee. Such additional equity method losses, if any, arc based upon the change in our claim ou the investee's book value.

Investment gains and losses arise when investments arc sold (as determined on a specific identification basis) or arc othcr-than-temporarily impaired. If a decline in the value of an investment below cost is deemed other than temporary, the cost of the investment is written down to fail value, with a corresponding charge to earnings. Factors considered in determining whether an impairment is other than temporary include: the financial condition, business prospects and creditworthiness ofthe issuer, the relative amount of the decline, our ability and intent to hold the investment until the fair value recovers and the length of time that fair value has been less than cost. With respect to an investment in a fixed maturity security, wc recogni7.e an other-than-temporary impairment if we (a) intend to sell or expect to be required lo sell the security before its amortized cost is recovered or (b) do not expect lo ultimately recover the amortized cost basis even if we do not intend to sell the security. We lecognizc losses under (a) in earnings and under (b) wc recognize the credit loss component in earnings and the difference between fair value and the amortized cost basis net ofthe credit loss in other comprehensive income.

1. Receivables, loans and finance receivables

Receivables ofthe insurance and other businesses arc stated net of estimated allowances for uncollectible balances. Allowances for uncollectible balances arc provided when it is probable counterparties or customers will be unable to pay all amounts due based on the contractual terms. Receivables arc generally written off against allowances after all reasonable collection efforts arc exhausted.

Loans and finance receivables consist primarily of manufactured housing installment loans originated or purchased. Loans and finance receivables are staled at amortized cost based on our ability and intent to hold such loans and receivables lo maturity and are stated net of allowances for uncollectible accounts. Amortized cost represents acquisition cost, plus or minus origination and commitment costs paid or fees received, which together with acquisition premiums or discounts, arc deferred and amortized as yield adjustments over the life ofthe loan. Loans and finance receivables include loan sccuntizations issued when we have the power to direct and the right to receive residual returns. Substantially all of these loans are secured by real or personal property or other assets of the borrower.

Allowances for credit losses from manufactured housing loans include estimates of losses on loans currently in foreclosure and losses on loans not curr ently in foreclosure. Estimates of losses on loans in foreclosure are based on historical experience and collateral recovery rates. Estimates of losses on loans not currently in foreclosure consider historical default rates, collateral rccoveiy rates and existing economic conditions. Allowances for credit losses also incorporate the historical average lime elapsed from the last payment until foreclosure.

Loans in which payments arc delinquent (with no grace period) are considered past due. Loans which are over 90 days past due or in foreclosure are placed on nonaccrual status and interest previously accrued but not collected is reversed. Subsequent amounts received on the loans aic first applied to the principal and interest owed for (he most delinquent amount. Interest income accruals are resumed once a loan is less than 90 days delinquent.

Loans in the for eclosure process arc considered non-performing. Once a loan is in foreclosure, interest income is not recognized unless the foreclosure is cured or the loan is modified. Once a modification is complete, interest income is recognized based on the terms of the new loan. Loans that have gone thr ough foreclosure are charged off when the collateral is sold. Loans not in foreclosure are evaluated for charge off based on individual circumstances concerning the future collectabilily ofthe loan and the condition ofthe collateral securing the loan.

71

Povvmro' fjy Mornmusiar '■ Oocrnieni Rc-s^jrcri^"'¹

Source BERKSHIRE HATHAWAY (NC. 10-1-'. March 03. 20 M

rite Information contained heroin may not fa? copied, adapted or distributed and Is not war i anted lo be accurate, complete or timely. The user assumes all risks lor any damages or tosses arising Irom any use of this Inlormalion, except to the extent such damages or losses cannot be limited or excluded by applicable law Past linanclal pedormance Is no guarantee ot lutore results

Table of Contents

Notes to Consolidated Financial Statements (Continued) (1)    Significant accounting policies and practices (Continued) (j) Derivatives

We cany derivative contracts at fair value. Such balances reflect reductions permitted under master netting agreements with counterparties. The changes in fair value of derivative contracts that do not qualify as hedging instruments for financial reporting puiposcs are recorded in earnings.

Cash collateral received from or paid to counteqiaities to secure derivative contract assets or liabilities is included in other liabilities or other assets. Securities received from counterparties as collateral arc not recorded as assets and securities delivered to counterparties as collateral continue to be reflected as assets in our Consolidated Balance Sheets.

1. Fair value measurements

As defined under GAAP, fair value is the price ll)3t would be received to sell an asset or paid to transfer a liability between market participants in the principal market or in the most advantageous market when no principal market exists. Adjustments to transaction prices or quoted market prices may be required in illiquid or disorderly markets in order to estimate fair value. Alternative valuation techniques may be appropriate under the circumstances to determine the value that would be received to sell an asset or paid lo transfer a liability in an or derly tr ansaction. Market participants are assumed to be independent, knowledgeable, able and willing to transact an exchange and not acting under duress. Nonperformance or credit risk is considered in determining the fair value of liabilities. Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, estimates of fair value presented herein arc not necessarily indicative ofthe amounts that could be realized in a current or future market exchange.

1. Inventories

Inventories consist of manufactured goods and goods acquired for resale. Manufactured inventory costs include r aw mater ials, direct and indirect labor and factory overhead. Inventories arc stated at the lower of cost or market. As of December 31, 2013, approximately 42% of our consolidated inventory cost was determined using the last-in-first-out ("LIFO") method, 32% using the first-in-first-out ("FIFO") method, with the remainder using the specific identification method or average cost methods. With respect to inventories carried at LIFO cost, the aggregate difference in value between LIFO cost and cost determined under the FIFO method was $796 million and $793 million as of December 31,2013 and 2012, respectively.

(i)      Property, plant and equipment

Additions to property, plant and equipment arc recorded at cost and consist of major additions, improvements and betterments. With respect lo constructed assets, all construction related material, direct labor and contiact services as well as certain indirect costs are capitalized. Indirect costs include interest over tiro construction period. With respect to constructed assets of certain of our regulated utility and ener gy subsidiaries that are subject to authoritative guidance for regulated opcratiorrs, capitalized costs also include an equity allowance for funds used during construction, which represents the equity funds necessary' to finance the construction ofthe domestic regulated facilities. Also see Note l(p).

Normal repairs and maintenance and other costs that do not improve the property, extend the useful life or otherwise do not meet capitalization criteria arc charged to expense as incurred. Rail grinding costs related to our railroad properties are expensed as incurred.

Dcpiecialion is provided principally on the straight-line method over estimated useful lives or mandated recovery periods as prescribed by regulatory authorities. Depreciation of assets of our regulated utilities and railroad is generally provided using group depreciation methods where rates are based on periodic depreciation studies approved by the applicable regulator. Under group depreciation, a single depreciation rate is applied to the gross investment in a particular class of property, despite differences in the service life or salvage value of individual property units within the same class. When our regulated utilities or railroad letires or sells a component of the assets accounted for using group depreciation methods, no gain or loss is recognized. Gains or losses on disposals of all other assets are recorded through earnings.

Our businesses evaluate property, plant and equipment for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable or the assets arc being held for sale. Upon the occurrence of a triggering event, we assess whether the estimated undiscounled cash flows expected from Ihe use of

72

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Source BERKSHIRE HATHAWAY INC. 10-K. Maich 03. 201-1

Ihv intunnattoo contained herein may not txi copied, adapted or dlntrlbuted and ts not watr anted to be accurate, complete) or timely. Tho user assumes all risks for any damages or losses arising front nny usq ot this Intormalton, except fo tho extent such damages or losses cannot bo limited or excluded by applicable tmv Past financlnt performance Is no guarantee of future results

Table of Contents

Notes to Consolidated Financial Statements (Continued)

(1)    Significant accounting policies and practices (Continued)

(i)    Property, plant ond equipment (Continued)

the asset plus residual value from the ultimate disposal exceeds the carrying value ofthe asset. If the carrying value exceeds the estimated recoverable amounts, we write down the asset to the estimated fair value. Impairment losses are included in earnings, except with respect to impairment of assets of our regulated utility and energy subsidiaries when the impacts of regulation are considered in evaluating the carrying value of regulated assets.

(j)    Goodwill and other intangible assets

Goodwill represents (he excess of the purchase price over the fair value of identifiable net assets acquired in business acquisitions. We evaluate goodwill for impairment at least annually. When evaluating goodwill for impairment wc estimate the fair value ofthe reporting unit. There are several methods that may be used to estimate a reporting unit's fair value, including market quotations, asset and liability fair values and other valuation techniques, including, but not limited to, discounted projected funirc net earnings or net cash flows and multiples of earnings. If the carrying amount of a reporting unit, including goodwill, exceeds the estimated fair value, then the identifiable assets and liabilities ofthe reporting unit ore estimated at fair value as of the current testing dale. The excess ofthe estimated fair value ofthe reporting unit over the current estimated fair value of net assets establishes the implied value of goodwill. The excess ofthe recorded goodwill over the implied goodwill value is charged to earnings as an impairment loss. Significant judgment is required in estimating the fair value of the reporting unit and performing goodwill impairment tests.

Intangible assets with definite lives are amortized based on the estimated pattern in which the economic benefits are expected to be consumed or on a slraighl-linc basis over their estimated economic lives. Intangible assets with definite lives are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. Intangible assets with indefinite lives are tested for imparnnent at least aimtially and when events or changes in circumstances indicate that it is more likely than not that the asset is impaired,

(k)    Revenue recognition

Insuiancc premiums for prospective property/casualty and health insurance and reinsurance are earned over lhc loss exposure or coverage period, in proportion to the level of protection provided. In most cases, premiums arc recognized as revenues ratably over the term ofthe contract with unearned premiums computed on a monthly or daily pro-rata basis. Premiums for retroactive property/casualty reinsurance policies are earned at the inception ofthe contracts, as all ofthe underlying loss events covered by these policies occurred in the past. Premiums for life reinsurance and annuity contracts are earned when due. Premiums ear ned arc stated net of amounts ceded to reinsurers. For contracts containing experience rating provisions, premiums are based upon estimated loss experience under the contracts.

Sales revenues derive from the sales of manufactured products and goods acquired for resale. Revenues from sales are recognized upon passage of title lo the customer, which generally coincides with customer pickup, product delivery or acceptance, depending on terms of the sales arrangement.

Service revenues are recognized as the services arc performed. Services provided pursuant to a contract arc cither recognized over the contract period or upon completion of the elements specified in the contract depending on the terms ofthe contract. Revenues related to the sales of fractional ownership interests in aircraft are recognized r atably over the term of the related management services agreement as the transfer of ownership interest in the aircraft is inseparable from the management services agreement.

Operating revenues of utilities and energy businesses resulting from the distribution and sale of natural gas and electricity to customers is recognized when the service is rendered or the energy is delivered. Revenues include unbilled as well as billed amounts. Rates charged arc generally subject to federal and state regulation or established under contractual arrangements. When prclimrnary rates arc permitted to be billed prior to final approval by the applicable regulator, certain revenue collected may be subject to refund and a liability for estimated refunds is recorded.

Railroad transportation revenues are recognized based upon the proportion of service provided as ofthe balance sheet date. Customer incentives, which are primarily provided for shipping a specified cumulative volume or shipping to/from specific locations, are recorded as a pro-rata reduction lo revenue based on actual or projected future customer shipments Wren using projected shipments, wc rely on historic trends as well as economic and other indicators to estimate the liability for customer incentives.

73

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Source. MFRKSIIIRf 1IATHAWAY INC. 10-K. Much 03. 201-1

T7ie Inlormalion contained herein may not oc copied, adapted or distributed and ts not warranted to be accurate, coiniileteor timely the user assumes utl risks tor any damages or losses arising Irom any use of this Information, ctcc.pt to the extent such damages or tosses cannot be limited or excluded by applicable law. fast financial poitoimance is no guarantee of future lesutls.

Table of Contents

Notes to Consolidated Financial Statements (Continued)

(J)    Significant accounting policies and practices (Continued)

(k)    Revenue recognition (Continued)

Interest income from investments in fixed maturity securities and loans is earned under the interest method, which reflects accrual of interest due under terms of the agreements as well as amortization of acquisition premiums, accruablc discounts and capitalized loan origination fees, as applicable. Dividends from equity securities are recognized when earned, which is usually on the ex-dividend date.

(I)    L osscs and loss adjustment expenses

Liabilities for losses and loss adjustment expenses ai e established under properly/casualty insurance and reinsurance contracts issued by our insurance subsidiaries for losses that have occuned as ofthe balance sheet date. The liabilities for losses and loss adjustment expenses are recorded at the estimated ultimate payment amounts, except that amounts arising from certain workers' compensation reinsurance business arc discounted. Estimated ultimate payment amounts are based upon (1) reports of losses from policyholders, (2) individual case estimates and (3) estimates of incurred but not reported losses.

Provisions for losses and loss adjustment expenses are charged to earnings after deducting amounts recovered and estimates of recoverable amounts undei ceded reinsuiance contracts. Reinsurance contracts do not relieve the ceding company of its obligations to indemnify policyholders with respect to the underlying insurance and reinsurance contracts.

The estimated liabilities of workers' compensation claims assumed under certain reinsurance contracts are discounted based upon an annual discount rale of 4.5% for claims arising prior to January 1, 2003 and 1% for claims arising thereafter, consistent with discount rales used under insurance statutory accounting principles. The change in such reserve discounts, including the periodic discount accretion is included in earnings as a component of losses and loss adjustment expenses.

(m)  Deferred charges i einsurance assumed

The excess, if any, ofthe estimated ultimate liabilities for claims and claim settlement costs over the premiums earned with respect to retroactive property/casualty reinsurance contracts arc established as deferred charges at inception of such contracts. Deferred charges are subsequently amortized using the interest method over the expected claim settlement periods. Changes to the estimated timing or amount of loss payments pioduce changes in periodic amortization. Changes in such estimates arc applied retrospectively and are included in insurance losses and loss adjustment expenses in the period of the change. The unamortized balances arc included in other assets and were $4,359 million and $4,019 million at December 31, 2013 and 2012, respectively.

(n)   Insurance policy acquisition costs

With regards to insurance policies issued or renewed on or after January 1, 20)2, incremental costs that are directly related to the successful acquisition of new or renewal of insurance contracts are capitalized, subject to ultimate recover ability, and arc subsequently amortized to under-writing expenses as the related premiums arc earned. Direct incremental acquisition costs include commissions, premium taxes, and certain other costs associated with successful efforts. All other underwriting costs arc expensed as incurred Prior to January 1, 2012, in addition to these direct incremental costs, capitalized costs also included certain advertising and other costs that arc no longer eligible to be capitalized. The rccoverability of capitalized insurance policy acquisition costs generally reflects anticipation of investment income. The unamortized balances arc included in other assets and were $1,601 million and $1,682 million at December 31, 2013 and 2012, rcspccttvely.

(p)   Regulated utilities and energy businesses

Certain domestic energy subsidiaries prepare their financial statements in accordance with authoritative guidance for regulated operations, reflecting the economic effects of regulation from the ability to recover certain costs from customers and the requirement to return revenues to customers in the futur e through the regulated rate-setting process Accordingly, certain costs arc deferred as regulatory assets and obligations are accrued as regulatory liabilities. These assets and liabilities will be amortized into operating expenses and revenues over various future periods. At December 31, 2013, our Consolidated Balance Sheet includes $3,515 million in regulatory assets and $2,665 million

74

Source. (3ERKSI ItnL HATHAWAY INC. t O K. Much 03. 201-1      Powered by Morriincjsta' " Document Research*

T7ie Information conialnod herein may not lm copied, adapted or distributed and Is not watt anted to be accurate, complete or timely The user Jiiurncs all risks for any damages or losses arising front any use of this information, except to ttie extent such damages or losses cannot be limited Or excluded by applicable lew. Past f'rnaw.lat performance Is no guarantee of future results

Table of Contents

Notes to Consolidated Financial Statements (Continued)

(I)    Significant accounting policies and practices (Continued)

(p)   Regulated utilities and energy businesses (Continued)

in regulatory liabilities. At December 31,2012, our Consolidated Balance Sheet includes $2,909 million in regulatory assets and $1,813 million in regulatory liabilities. Regulatory assets and liabilities are components of other assets and other liabilities of utilities and energy businesses.

Regulatory assets and liabilities are continually assessed for probable future inclusion in regulatory rates by considering factors such as applicable regulatory or legislative changes and recent rale orders received by other regulated entities. If future inclusion in regulatory rates ceases lo be probable, the amount no longer probable of inclusion in regulatory rates is charged or credited to earnings (or other comprehensive income, if applicable) or relumed to customers.

(q)   Life, annuity and health insurance benefits

The liability for insurance benefits under life contracts has been computed based upon estimated future investment yields, expected mortality, morbidity, and lapse or withdrawal rates and reflects estimates for future premiums and expenses under the contracts. These assumptions, as applicable, also include a margin for adverse deviation and may vary with the characteristics ofthe reinsurance contract's date of issuance, policy duration and couutry of risk. The interest rate assumptions used may vary by reinsurance contiact or jurisdiction and generally range from approximately 3% to 7%. Annuity contracts arc discounted based on the implicit rate of return as ofthe inception ofthe contiacts and such interest rates range from approximately 1 % to 7%.

(r)    Foreign currency

The accounts of our non-U.S. based subsidiaries arc measured in most instances using the local currency ofthe subsidiary as the functional currency. Revenues and expenses of these businesses are generally translated into U.S. Dollars at the average exchange rate for the period. Assets and liabilities are translated at the exchange rate as ofthe end ofthe reporting period. Gains or losses from translating the financial statements of foreign-based operations arc included in shareholders' equity as a component of accumulated other comprehensive income. Gains and losses arising from transactions denominated in a currency other than Ihe functional currency ofthe reporting entity arc included in earnings.

(s)   Income taxes

Berkshire files a consolidated federal income tax return in the United States, which includes our eligible subsidiaries. In addition, wc file income fax returns in state, local and foreign jurisdictions as applicable. Provisions for current income tax liabilities arc calculated and accrued on income and expense amounts expected to be included in the income tax returns for the current year. Income taxes reported in earnings also include deferred income tax provisions.

Deferred income taxes are calculated under die liability method. Deferred income tax assets and liabilities are computed on differences between the financial statement bases and tax bases of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities that arc associated with components of other comprehensive income are charged or credited directly to other comprehensive income. Otherwise, changes in deferred income tax assets and liabilities arc included as a component of income tax expense. The effect on defened income tax assets and liabilities attributable to changes in enacted tax rates arc charged or credited to income tax expense in the period of enactment. Valuation allowances are established for certain deferred tax assets where realization is not likely.

Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions are judged lo not meet Ihe "morc-hkely-lhan-not" threshold based on the technical merits ofthe positions. Estimated interest and penalties related to uncertain tax positions arc generally included as a component of income tax expense.

(t)    New accounting pronouncements adopted in 20 J 3

In February 2013, theFASB issued ASU 2013-02, "Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income." ASU 2013-02 requires additional disclosures concerning the amounts reclassified out of each component of accumulated other comprehensive income and into net earnings during the reporting period. Wc adopted ASU 2013-02 on January 1, 2013 and the required disclosures are included in Note 20.

75

Soti'ce BfRKSIIIflt HATHAWAY INC. I frit. March 03. ?0I4      Powered by Morningr.tv' Document Research'"

Oic Intonnatton contained herein may not tie coplcrl, adspled er distributed and is not wattanted lo be accurate, complete or timely Ilia user assumes all risks tor any damages oi losses arising from any use ot this information, except to the extent such damages or tosses cannot be limited cr excluded by applicable law Past financial pcrioimance Is no guarantee ol future tesults

Table of Contents

Notes to Consolidated Financial Statements (Continued)

(1)    Significant accounting policies and practices (Continued)

(t)    New accounting pronouncements adopted in 2013 (Continued)

In December 2011, the FASB issued ASU 2011-11, "Disclosures about Offsetting Assets and Liabilities" and in Januaiy 2013, the FASB issued ASU 2013-01, "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities." ASU 2011-11, as clarified, applies to derivatives, repurchase agreements and securities lending transactions and requires companies to disclose gross and net infoimation about financial instruments and derivatives eligible for offset and to disclose financial instruments and derivatives subject to master netting arrangements in financial statements. In July 2012, the FASB issued ASU 2012-02, "Testing Indefinite-Lived Intangible Assets for Impairment." ASU 2012-02 allows an entity to first assess qualitative factors in determining whether it is morc-Iikcly-than not that an indefinite-lived intangible asset is impaired, and if certain criteria arc met, permits the entity to forego performing a quantitative impairment test. ASU's 2011-11 and 2012-02 were adopted on Januaiy 1,2013 and had an immaterial effect on our Consolidated Financial Statements.

(it)   New accounting pronouncements to be adopted subsequent to December 31, 2013

In February 2013, the FASB issued ASU 2013-04, "Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date." ASU 2013-04 requires an entity lo measure obligations resulting from joint and several liability arrangements for which lhc total amount of the obligation is fixed at the reporting dale as the amount the reporting entity agreed to pay plus additional amounts the reporting entity expects to pay on behalf of its co-obligors. ASU 2013-04 is effective for interim and annual reporting periods beginning after December 15,2013.

In January 2014, the FASB issued ASU 2014-01 "Accounting for Investments in Qualified Affordable Housing Tax Credits." ASU 2014-01 permits an entity to elect the proportional amortization method of accounting for limited liability investments in qualified affordable housing projects if certain criteria arc met. Under the proportional amortization method, the investment is amortized in proportion to the tax benefits received and the amortization charge is reported as a component of income tax expense. ASU 2014-01 is effective for fiscal years beginning after December 15, 2014 with early adoption pennitted. If elected, the proportional amortization method is required to be applied retrospectively. Wc aic currently evaluating the effect these standards will have on our Consolidated Financial Statements.

(2)   Significantbusiness acquisitions

Our long-held acquisition strategy is to acquire businesses at sensible prices that have consistent earning power, good returns on equity and able and honest management.

On December 19,2013, MidAmerican acquired NV Energy, Inc. ("NV Energy"), an energy holding company serving approximately 1.2 million electric and 0.2 million retail natural gas customers in Nevada. NV Energy's principal operating subsidiaries, Nevada Power Company and Sierra Pacific Power Company, arc regulated utilities. Under the tcims ofthe acquisition agreement, MidAmerican acquired all outstanding shares of NV Energy's common stock for approximately $5.6 billion. We accounted for the acquisition pursuant to the acquisition method. NV Energy's financial results are included in our Consolidated Financial Statements beginning on the acquisition date.

The following table sets forth certain unaudited pio forma consolidated earnings data for 2013 and 2012, as if the NV Energy acquisition was consummated on the same terms at the beginning of 2012 (in millions, except per share amounts).

      Dfccinbf r M.      

2013      701Z

Revenues      '     .      ,        '      -'A-   A:.;.-     : ■'■      ■ -      ^:.    $185,095     SI 65,312

Net earnings attributable to Berkshire Hathaway shareholders      19,720      15,010

Net earnings per equivalent .Class A common share attributable to Berkshire Hathaway shareholders      -      1K998 9,090

76

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Spurco BERKSHIRE HATHAWAY INC. fO-K. Match 03. 2011

77)0 Information contained herein may not tie copied, adapted or distributed and Is not warranted to be accurate, complete or timely. Tha user assumes alt risks (or any damages or losses arising from any usn of this Information, except to the extent such damages or losses cannot be limited or excluded by applicable fan: Past financial performance Is no guarantee ot future results.

Tabic of Contents

Notes to Consolidated Financial Statements (Continued)

(2)    Significant business acquisitions (Continued)

The following table summarizes the preliminary fair values ofthe assets acquired and liabilities assumed at the date of acquisition for NV Energy (in millions).

December 19, ... 2013

Property, plant and equipment      '■   ■                                 -'               '. ^;    ■'■                              S      9,623

Goodwill      2,280

Othcrassek; including cash of S304 million.......      ■'' ,' .      :                               ; '             ''./'■'       2,369

Assets acquired      S      14,272

Accounts payable, accruals and other liabilities      ■ '                "   '         ■ ...      . '  .                            .V         ■:-.!?       '"V           S      3,380

Notes payable and other borrowings      5,296

Liabilities assumed   7.        .-. ; '    ' _;'.            . ■  ■       ' . .            ...    .■:,:.,.:■■-'■'.';}      '.        S      8,676

Net assets acquired      $      5,596

In September 2011, Berkshire acquired The Lubrizol Corporation ("Lubrizol") pursuant to an agreement under which we acquired all ofthe outstanding shares of Lubrizol common stock for cash of approximately $8.7 billion. Lubrizol, based in Cleveland, Ohio, is an innovative specialty chemical company that produces and supplies technologies to customers in the global transportation, industrial and consumer markets. These technologies include additives for engine oils, other tr ansportation-related fluids and industrial lubr icants, as well as additives for gasoline and diesel fuel. In addition, Lubrizol makes ingredients and additives for personal care products and pharmaceuticals; specially materials, including plastics; and performance coatings. Lubrizol's industry-leading lecluiologics in additives, ingredients and compounds enhance (he quality, performance and value of customers' products, while reducing their environmental impact. Wc accounted for the Lubrizol acquisition pursuant to the acquisition method. Lubrizol's financial results are included in our Consolidated Financial Statements beginning as ofthe acquisition date.

In 2012 and 2013, wc also completed several smaller-sized business acquisitions, most of which were considered as "bolt-on" acquisitions to several of our existing business operations. Aggregate consideration paid for business acquisitions for 2013 was approximately $1.1 billion and for 2012 was approximately S3.2 billion, which included $438 million for entities that will develop, construct and subsequently operate renewable energy generation facilities. Wc do not believe that these acquisitions were material, individually or in the aggregate, to our Consolidated Financial Statements.

77

Source. BERKSHIRE HATHAWAY Ia'C. 10-K, tViarrri 03. 2014      Powered by MoruingstorDocument Besea-ch"

r/ie tnlorinatlon contained herein may net tro copied, adapted or distributed end Is not warranted 10 be accurate, cornplelo or timely. Trio user assumes all risks lor any damages or losses arising Iron! any use olllils inlormalion, except lo the extent such damages or losses cannot be trmtted or excluded by applicable law. Past llnanclalperformance is no guarantee ol future results.

Table of Contents

Notes to Consolidated Financial Statements (Continued) (3)    Investments in fixed maturity securities

Investments in securities with fixed maturities as of December 31,2013 and 2012 are summarized by type below (in millions).

December 31, 2013:'. ]      ' .■w$A^:A.'->v <"'■'■'?■:

Available for sale:

-: ,U.S:'Treasu^      cqiporations'and agencies ■

States, municipalities and political subdivisions

;   ■   Foreign governments      ■ 'V;v:^;.^::';'"^: "a."--' '■';•.;"„

Corporate bonds

Mot igage-b'acked securities      [■.'■. ■■

Held to maturity:.  ' ^;:' ^:';   _{;  :}\'"-_-r u*^iri"'=^:!:^:~... ■ Win. Wrigley Jr. Company notes

December 31, 2012

Available for sale:   •      • Y; ■"' .' ;7'.'y-.   v YY

U.S. Treasury, U.S. government corporations and agencies States, municipalities and political subdivisions' , ' ,     ;; . Foreign governments . . Corporate bonds Y" , . •:       . '  Gr-YYV'' .^: Y;i'-. '■■■' Mortgage-backed securities

Held to maturity:

Wm. Wrigley Jr. Company notes   .  7 . f .   • ^: ;'. ^:.^!:

Unrealized r.tmts

F«lr

Value

Cm-rjiiie; Value

Amortized Cost

.(8) (5) (HO)

(V⁵) ,_(*)

; 16

129 182 1,190

'•218 1,735

S 2,650 2,221 : 11,001 9,383 . l",S30 27,085

679

$.2,658

'2,345

; 11,073 10,558 2,040 28,674

679

Unrealized Gain;

s

S 2,658;'

2,345 ^:  11,073 .:

(146) _

10,558 ■ 2,040-;

28,674

696

17 —

$ 33

178;

302 • 2,254 318 3,085

_ 8_75. $3,960

$27,764      $1,752-Y -i $ (146),k _;$ 29,37.0 c. _;$ 29,353

$ 2,775 v 2,913 11,355 1.2,66.1 2,587

$ 2,775 2,913 11,355 12,661 ' 2,587

(45) O) (I)

32,291% i;.;. 32,291

(55)

$ 2,742 2,735 11,098 . 10.410 2,276" 29,261

6,134

5,259

$ 38,425      $ 37,550

5,259 $ 34,520

Investments in fixed maturity securities are reflected in our Consolidated Balance Sheets as follows (in millions).

December 31.      

2013 2012

Insurance and other .   ■'.-; \  ' J^-y.y,'■^■:^;i/X ._; 7 .-''^WY^YK      '} ,    ■ .   ';.' ■ '■   ''"■      $28,785;   Y $36,708

Finance and financial pioducts      568 842

A ■■■\,^-A\':.iA    ' '.-.7'.-:.'K'.'^;';.^;      • $29,353. 537,550

In 2008, we acquired $4.4 billion par amount of 11.45% Wm. Wrigley Jr. Company ("Wrigley") subordinated notes originally due in 2018 in conjunction with Mars, Incorporatcd's ("Mars") acquisition of Wrigley. On August 30,2013, the subordinated note agreement was amended to permit a repurchase of all ofthe Wrigley subordinated notes on October 1, 2013 at a price of 115.45% of par and on that date the subordinated notes were repurchased for $5.08 billion, plus accrued interest. The subordinated notes were previously classified as held-to-maturity. In 2009, we also acquired Wrigley 5% senior notes, which are due in December 2014. The Wrigley senior notes are classified as held-to-maturity.

Investments in foreign government securities include securities issued by national and provincial government entities as well as instruments that arc unconditionally guaranteed by such entities. As of December 31, 2013, approximately 94% of foreign government holdings were rated AA or higher by at least one of the ma jor rating agencies and securities issued or guaranteed by the United Kingdom, Germany, Australia, Canada and The Netherlands represented 78% of these investments. Unrealized losses on all fixed maturity investments in a continuous unrealized loss position for more than twelve consecutive months were $26 million as of December 31, 2013 and $9 million as of December 31,2012.

78

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Somce BERKSHIRE HATHAWAY INC. 10-K. Match 03. 20I-1

Tlw liilorinatlon contained herein may not l>o copied, adapted or distributed and is not warranted to be accurate, complete or timely lite user assumes alt risks lor any damages or losses atlstng trvnt any use ol this Inlormalion, except lo the extent such damages or losses cannot be limned or excluded by applicable law. Past financial pcrioimsnce ts no guarantee ol future icsulls.

Tabic of Contents

Notes to Consolidated Financial Statements (Continued)

(3)   Investments in fixed maturity securities (Continued)

The amortized cost and estimated fair value of securities with fixed maturities at December 31,2013 arc summarized below by contractual maturity • dates. Actual maturities will differ from contractual maturities because issuers of certain ofthe securities retain early call or prepayment rights. Amounts arc in millions.

Amortized cost. Fair value

Due in one imrof lc»

$ 8,371. 8,499

yearthrough five yean

S 11,022 11,499

jearsthrough ten

3,601,

4,021

Due after ten if uri

.$2,940 ,'. 3,311

Mortgagi:-securities

$ 1,830 2,040

;.$ 27,764;:! 29,370

(4)    Investments in equity securities

Investments inequity securities as of December 31,2013 and 2012 are summarized based on the primary industry ofthe investee in the table below (in millions).

December 3J. 20]3 * Banks, insurance and finance Consumer products;-- ';.**•.• Commercial, industrial and other

Unrealized Gain;

Fair Value

S 50,441 24,936 42,128'

Unrealized Loiles

$ 22,420      $ 28,021

(143)

7,0X2      17;854

29,949      12,322

$59,451      $58,197      S (143) 5117,505.:

As ofDecember 31, 2013, approximately 55% of the aggregate fair value was concentrated in the equity securities of four companies (American Express Company—$13.8 billion; Wells Fargo & Company—$21.9 billion; International Business Machines Corporation—$12.8 billion; and The Coca-Cola Company—$16.5 billion).

Decembei 31, 2012 * \ ■■ : Banks, insurance and finance Consumer products,', • . Commercial, industrial and other

Unrealized Caini

514,753 : 14,917 7,687

Fiir

Value

S 33,900

22,463 31,983

Unrealised

$ (203) (290)

$19,350 7,-546

24,586      

■ $51,482 ;   S 37,357 ^v ' $' (493) - S88.346

* As ofDecember 31, 2012, approximately 59% of the aggregate fair value was concentrated in the equity securities of four companies (American Express Company—$8.7 billion; Wells Fargo & Company—$15.6 billion; International Business Machines Corporation—$13.0 billion; and The Coca-Cola Company—$14.5 billion).

In 2008, we acquired 50,000 shares of 10% Cumulative Pcipctual Preferred Stock of The Goldman Sachs Group, Inc. ("GS") ("GS Preferred") and warrants to purchase 43,478,260 shares of common stock of GS ("GS Warrants") for a combined cost of $5 billion In 2008, we also acquired 30,000 shares of 10% Cumulative Perpetual Preferred Stock of General Electric ("GE") ("GE Preferred") and warrants to purchase 134,831,460 shares of common stock of GE ("GE Warrants") for a combined cost of $3 billion. The GS Preferred and GE Preferred shares were redeemed by GS and GE in 2011. When originally issued, the GS Warrants were exercisable until October 1, 2013 for an aggregate cost of $5 billion ($115/share), and the GE Warrants were exercisable until October 16, 2013 for an aggregate cost of'$3 billion ($22.25/share). In the first quarter of 2013, the terms ofthe GE Warrants and IheGS Warrants were amended to provide solely for cashless exercises, whereupon we would receive shares of GS and GE common stock based on the excess, if any, ofthe market prices, as defined, over the exercise pr ices, without payment of additional consideration. The warrants were exercised in October 2013 and wc received 13,062,594 shares of GS common stock and 10,710,644 shares of GE common stock. Our investments in the GS Warrants and GE Warrants and the common stock received upon the exercises of these warrants arc included in the preceding tables.

As of December 31, 2013 and 2012, we concluded (hat there were no unrealized losses that were other than temporary. Our conclusions were based on: (a) our ability and intent to hold the securities to recovery; (b) our assessment that the underlying business and financial condition of each of these issuers was favorable; (c) our opinion that the relative price declines were not

79

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Source BERKSHIRE HATHAWAY INC. 10-K. March 03. 2014

T7ic Information contained herein may not be cvplcil. adapted or distributed and Is not warranted to be accurate, complete or timely, lire user assumes oil risks tor any damages oi losses arising Ironl any uso of Ibis Information, except to the extent such damages oi tosses cannot be limited or excluded by applicable law Past financialiicrionpance Is no guarantee of futuie insults

Table of Contents

Notes to Consolidated Financial Statements (Continued) (A)    Investments in equity securities (Continued)

significant; and (d) our belief that market prices will increase to and exceed our cost. As of December 31,2013 and 2012, unrealized losses on equity securities in a continuous unrealized loss position for more than twelve consecutive months were $52 million and $45 million, respectively.

Investments in equity securities arc reflected in our Consolidated Balance Sheets as follows (in millions).

1012

Insurance and other          :     .      '   '             .^:                •      ~r.-.:'"!'% '-I'Z'^: ■              r^:           V.    ^;    $115,464      S87,081

Railroad, utilities and energy * .''!"3      675

Finance and financial products                 '. •  ■           .■: !;■.'>-_•■ ,V ' ,y   ij.. v; fi. ■■ '_:-_ri~a .'   ■ "<"-."■       'v                    • ^:938;-.'.590;

$117,505      S 88,346

* Included in other asset.'.

(5) Overinvestments

Other investments include preferred stock of Wrigley, The Dow Chemical Company ("Dow") and Bank of America Corporation ("BAC") as well as warrants lo purchase common stock of BAC. Information concerning each of these investments follows.

In 2008, we acquired $2.1 billion liquidation amount of Wrigley preferred stock in conjunction with Mars' acquisition of Wrigley. The Wrigley preferred stock is entitled to dividends at a rate of 5% per annum. This investment is included in our Finance and Financial Products businesses.

In 2009, we acquired 3,000,000 shares of Scries A Cumulative Convertible Perpetual Preferred Stock of Dow ("Dow Preferred") for a cost of $3 billion. Each share ofthe Dow Preferred is convertible into 24.201 shares of Dow common stock (equivalent to a conversion price of $41.32 per share). Beginning in April 2014, Dow shall have the right, at its option, to cause some or all ofthe Dow Preferred lo be converted into Dow common stock al the then applicable conversion rate, if Dow's common stock price exceeds S53.72 per share for any 20 trading days in a consecutive 30-day window ending on the day before Dow exercises its option. The Dow Preferred is entitled to dividends at a rate of 8.5% per annum. The Dow Preferred is included in our Insurance and Other businesses.

In 2011, wc acquired 50,000 shares of 6% Cumulative Perpetual Preferred Stock of BAC ("BAC Preferred") and warrants to purchase 700,000,000 shares of common stock of BAC ("BAC Warrants") for a combined cost of SS billion. The BAC Preferred is redeemable at any time by BAC at a price of $105,000 per share ($5.25 billion in aggregate). The BAC Warrants expire in 2021 and are exercisable for an additional aggregate cost of $5 billion ($7.142857/share). The BAC Preferred and BAC WaiTauls are included in our Insurance and Other businesses (80%) and our Finance and Financial Products businesses (20%).

Our other investments are classified as availablc-for-sale and are carried at fair value, ln the aggregate, the cost of these investments was approximately $10.0 billion and the fair value was approximately $17.9 billion and $15.1 billion at December 31,2013 and 2012, respectively.

(6)   Invcstmcntsin H.J. Heinz Holding Corporation

On June 7, 2013, Berkshire and an affiliate ofthe global investment firm 3G Capital (such affiliate, "3G"), through a newly formed holding company, H.J. Heinz Holding Corporation ("Heinz Holding"), acquired H.J. Heinz Company ("Heinz"). Berkshire and 3G each made equity investments in Heinz Holding, which, together with debt financing obtained by Heinz Holding, was used to acquire all outstanding common stock of Heinz for approximately $23.25 billion in the aggregate.

Heinz is one of the world's leading marketers and producers of healthy, convenient and affordable foods specializing in ketchup, sauces, meals, soups, snacks and infant nutrition. Heinz is a global family of leading branded products, including Heinz « Ketchup, sauces, soups, beans, pasta, infant foods, Ore-Ida*' potato products, Weight Watchers* Smart Ones¹ entrees and T.G.I. Friday's^ snacks.

80

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Source BERKSHIRE HATHA WAV INC. 10-K, Mmcli 03. 2014

The Information contained herein may not be copied, adapted or distributed ami ts not warranted to be accutale, complete or timely. The user assumes all risks tor any damages or losses arising front any use of this Information, except lo the extent such damages or losses cannot be limited or excluded by applicable taw Past linanctal pctioimance Is no guarantee ol future icsulls

Table of Contents

Notes to Consolidated Financial Statements (Continued)

(6)    Investments in H.J. Heinz Holding Corporation (Continued)

Berkshire's investments in Heinz Holding consist of 425 million shares of common stock, warrants to acquire approximately 46 million additional shares of common slock, and cumulative compounding preferred stock ("Preferred Stock") with a liquidation preference of $8 billion. The aggregate cost of these investments was $12.25 billion. 3G acquired 425 million shares of Heinz Holding common stock for S4.2S billion. In addition, Heinz Holding reserved 39.6 million shares of common stock for issuance under stock options.

The Preferred Slock possesses no voting rights except as required by law or for certain matters specified in the Heinz Holding charter. The Preferred Stock is entitled to dividends at 9% per annum whether or not declared, is senior in priority to the common slock and is callable after June 7, 2016 at the liquidation value plus an applicable piemium and any accrued and unpaid dividends. Under the Heinz Holding charter and a shareholders' agreement entered into as of the acquisition dale (the "shareholders' agreement"), after June 7,2021, Berkshire can cause Heinz Holding to attempt lo sell shares of common stock through public offerings or other issuances ("redemption offerings"), the proceeds of which would be required to be used to redeem any outstanding shares of Preferred Stock. The waiTants are exercisable for one cent per share and expire on June 7, 2018.

Berkshire and 3G each currently own 50% ofthe outstanding shares of common stock and possess equal voting interests in Heinz Holding. Under the shareholders' agreement, unless and until Heinz Holding engages in a public offering, Berkshire and 3G each must approve all significant transactions and governance matters involving Heinz Holding and Heinz so long as Berkshire and 3G each continue to hold at least 66% of their initial common stock investments, except for (i) the declaration and payment of dividends on the Preferred Stock, and actions related to a Heinz Holding call ofthe Preferred Stock, for which Berkshire docs not have a vote or approval right, and (ii) redemption offerings and redemptions resulting therefrom, which may only be triggered by Berkshire. No dividends may be paid on the common stock if there are any unpaid dividends on the Preferred Slock.

Wc are accounting for our investments in Heinz Holding common stock and common stock warrants on the equity method. Accordingly, wc have included our proportionate share of net earnings attributable to common stockholders and other comprehensive income in our Consolidated Statements of Earnings and Comprehensive Income beginning as of June 7, 2013. We have concluded that our investment in Preferred Stock represents an equity investment and it is carried at cost in our Consolidated Balance Sheet. The combined carrying value of our investments in Heinz Holding was $12.1 billion as of December 31, 2013. Dividends earned in connection wilh the Preferred Stock and our share of Heinz Holding's net loss atu ibutable to common stockholders arc included in inter est, dividend and other investment income of Insurance and Other in the Consolidated Statement of Earnings.

Summarized consolidated financial information of Heinz Holding and its subsidiaries follows (in millions)

At of Ucccmher 20, 2013

Assets ... -■ ^■:7:y''.v.y:^:;V^    A'hA'.     ■'      "'■      '"'A. ' ^{; :} A:   ^: '■ ^: ■" ■    ■ ' ' ■' A'-- -'■' ■' '. "" *$ 38,9/2

Liabilities 22,429

For rlie period June 7,2013 through December 29. 2013

Sales      AA-;~AiiIA;     ':. ' .V:>V-.     A '"AA^:Z      -A;/.  'A^::-     '^:' A- A'^- 'A:'A A-^:A      '■      $ 6,240

Net loss      S (77)

Preferred stock dividends earned by Berkshire      ".■J~. ■''. ■     .      ,        '; '        ':      ■■• '.' •       ' ■.       ^:.        ■ (408)

Net loss attributable to common stockholders      $      (485)

Earnings attributable to Bcrkshirc *      < v-        -^:      -      ...      ■' ;      ^; ."      '.'$';' 153-

* Includes dividends earned less Berkshire's share of net loss attributable to common stockholders.

81

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Source BERKSHIRE HATHAWAY INC. 10-K. March 03. 2014

Hit? fn formation con tallied herein may not do copied, adapted or distributed and (s not warranted tu be accurate, complclo or timely The user assumes all risks for any damages at lasses arising from any use ot this Information, except to the extent such drimages or tosses cannot be limited or excluded by applicable law Past financial performance is no guarantee ot future results.

Table of Contents

Notes to Consolidated Financial Statements (Continued) (7)  In vestment gains/Josses

Investment gains/losses, including othcr-than-tcmporary impairment ("OTTI") losses, for each ofthe three years ending December 31,2013 arc summarized below (in millions).

Fixed maturity securities— .y-:^: •■^:   ■   ^;i' YIY.V       ■ ■: .

Gross gains from sales and other disposals ^: .Gioss losses from sales and other disposals ";<;''      ■'; *^; Equity securities—

.Gross gains from sales and reicmptibriS r "      ^: ""]',

Gross losses from sales and redemptions OTTI losses' ^: " '' -'':'    '■:■'"-;' ^;'%-'"'■  '^1;/; '-0-_: ■'' _v / Other

$1,783 : (139)

- 1,253 • (62) ^:y- (228) 1,458

2012

; 188 (354)

1,468% (12) (337) 509

2011

; 3io

(10)

1,889 ^: (36) (908) 29

"$4,065 ' $ 1/162 '•  $ 1,274 :

Investment gains from fixed maturity investments in 2013 included a gain of $680 million related to MarsAVrigley's repurchase ofthe Wrigley subordinated notes as well as gains from the dispositions and conversions of coiporate bonds. Other investment gains/losses in 2013 included $1.4 billion related to the changes in the valuations ofthe GE and GS warrants. Investment gains from equity securities in 2011 included $1.8 billion with respect to the redemptions of our GS and GE preferred stock investments.

We record investments in equity and fixed maturity securities classified as available-for-salc at fail value and record the difference between fair value and cost in other comprehensive income. OTTI losses recognized in earnings represent reductions in the cost basis ofthe investment, but not the fair value. Accordingly, such losses that are included in earnings are generally offset by a corresponding credit to other comprehensive income and therefore have no net effect on shareholdeis' equity as of the balance sheet date.

Wc recorded OTTI losses on bonds issued by Texas Competitive Electric Holdings ("TCEH") of $228 million in 2013, $337 million in 2012 and S390 million in 2011. In 201 l,OTTI losses also included $337 million wilh respect to 103.6 million shares of our investment in Wells Fargo & Company ("Wells Fargo") common stock. These shares had an aggregate original cost of $3.6 billion. On March 31, 20) 1, when we recoidcd the losses, wc also held an additional 255.4 million shares of Wells Fargo which were acquired at an aggregate cost of $4.4 billion and which had unrealized gains of $3.7 billion. However, the unr ealized gains were not reflected in earnings but wer e instead r ecorded directly in shareholder s' equity as a component of accumulated other comprehensive income.

(8) Receivables

Receivables of insurance arrd other businesses are comprised ofthe following (in millions).

Insurance premiums receivable      % ^

Reinsurance recoverable on unpaid losses trade and bth'crrcceivables.■ \      . '■" ■,'_ Allowances for uncollectible accounts

.$•7,474 3,055 10,328.

      (360)

S. 7,845 2,925 11,369 (386)

$20/197 $21,753

Loans and finance receivables of finance and financial products businesses arc comprised ofthe following (in millions).

Consumer installment loans/commercial loans and finance receivables Allowances for uncollectible loans

$ 13,170     $ 13,170 (341) (361) $12,826 $12,809

82

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Su.ra Bl'RKSIIIIlC 11ATHAWAYINC. 10-K. March 03. 201-1

rjic /.iromur/Od contained herein may net lie copied, edapxed or distributed end Is not watianted to be accurate, complete or timely Itie user assumes alt risks tor any damages oi losses arising from any use ot tbts tnloimallon, except to the extent such damages or tosses cannot be limited or excluded hy applicable law. Past hnanctal iKitoimance Is no guarantee ot tutute results.

Table of Contents

Notes (o Consolidated Financial Statements (Continued) (8)    Receivables (Continued)

Consumer installment loans represent approximately 95% and 96% ofthe aggregate consumer installment loans, commercial loans and finance receivables as of December 31,2013 and 2012, respectively. Allowances for uncollectible loans predominantly relate to consumer installment loans. Provisions for loan losses for 2013 and 2012 were $249 million and $312 million, respectively. Loan cbarge-offs, net of recoveries, were $266 million in 2013 and $339 million in 2012. Loan amounts are net of unamortized acquisition discounts of $406 million at December 31,2013 and $459 million at December 31, 2012. At December 31,2013, approximately 94% ofthe loan balances were evaluated collectively for impairment, and the remainder were evaluated individually for impairment. As a pan ofthe evaluation process, credit quality indicators arc reviewed and loans are designated as performing or non-performing. At December 31,2013, approximately 98% of the loan balances were determined to be performing and approximately 93% of those balances were current as to payment status.

(9) Inventories

Inventories arc comprised ofthe following (in millions).

      December 31.      

2013 2012

Raw materials •      : ^;

Work in process and other Finished manufactured goods Goods acquired for resale

•    $1,82.7 S1.699. 849 883 •y^A-i?    3,212   ..." 3,187 4,057 3,906 .:.""v. ,     .$9,945 > $9,675

(10) Property, plant and equipment

Property, plant and equipment of our insurance and other businesses is comprised ofthe following (in millions).

Land . . '",   :      .: ^:,

Buildings and improvements Machinery arid;cquipiiient ';: Furniture, fixtures and other Asseis held for lease :      ; ^;

Accumulated depreciation

esllmnleri Mcful life

2-40 years '. 3 — 25 'years.;:;

2-15 years ■ 12-30 years

1,048 6,074 15,436 2,736 : 6,731 32,025

$ .1,115 6,456 16,422 \ 2,753 7,249 • 33,995

_:: (14,263)   r r(I2,837)

S 19,732

$19,188

Asseis held for lease consist primarily of railroad tank cars, intcimodal tank containers and other equipment in the transportation and equipment services businesses. As of December 31, 2013, the minimum future lease rentals to be received on assets held foi lease (including rail cars leased from others) were as follows (in millions): 2014 - $855; 2015 - $709; 2016 - $559; 2017 - $405; 2018 - $253; and thereafter - $333.

83

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Source BERKSHIRE HATHAWAY INC. 10-K. March 03. 201-1

7he tutor mattan contained herein may not ha copied, adapted or distributed and ts not warranted to be accurate, comptnto or timely The user assumes all risks lor any dornjges or lossos arising from any use of this Information, except to the extent such damages or tossos cannot be limited or excluded by applicable hw. Past financial performance Is nr. guatantva ot future results.

Table of Contents

Notes to Consolidated Financial Statements (Continued) (10) Property, plant and equipment (Continued)

Piopcrfy, plant and equipment of our railroad and our utilities and energy businesses is comprised ofthe following (in millions).

Railroad:      X";;,-i'.:j;_:-.■:■    ^{:; ;};_;y;'i-';

Land

Locomotives, freight cars and other equipment '   -Constructioh^:in progress .:       V - e;■;' Utilities and energy:

Utility-genefadpni distributioii and transmission system : Interstate pipeline assets

Independent power plants and other assets     ■•■."■;:!'■ Constniction in progress

Accumulated depreciation

Hanc,ei of cillmilcu mcful life

■' 5 - 100 years 5-37 years

5 f- SO years -\ 3-80 years 3-30 years

$   5,973      S 5,950 :> ■; .• il0,^:098 : K; y.:3 8,25 s-; 7,551 6,528

973

963-'

57,490, 6,448

.2,516 4,217

125,266-(22,784) S 102,482

42,682 6,354 i;860 2,647" 105,2.39: (17,555) S 87,684

Railroad properly, plant and equipment includes the land, other roadway, track structure and rolling stock (primarily locomotives and freight cars) of BNSF. The utility generation, distribution and transmission system and interstate pipeline assets are the regulated assets of public utility and natural gas pipeline subsidiaries. Utility and energy net property, plant and equipment at December 31, 2013 included approximately $9.6 billion attributable toNV Energy, which was acquired on December 19, 2013.

(11) Goodwill and other intangible assets

A reconciliation ofthe change in the canying value of goodwill is as follows (in millions).

December 31.

$54,-523 2,732

Balance al beginning of ycai Acquisitions of businesses Othefj including foreign .currency translation; Balance at end of year

$53,213 1,442 ('32)

$57,011 $54,523

Intangible assets other than goodwill are included in other assets and arc summarized as follows (in millions).

Accumulated atnorit/afioi.

' $. 3,723 1,231 .$ 4,954 $ 340 2,626 1,518 '' 470 $ 4,954

Accumulated timoiffraiion

:$:.'2,994: 913 $ 3,907; $ 278 2,059 1,155

y^A4m

$ 3,907

Insurance and other ' y ,■ ■ Railroad, utilities and energy

Trademarks and trade names Patents and technology ■  '; " Customer relationships Other ' ^:.'-V-'.:^:'^;

December 31. 2013

Grois earryini; amount

S 11,923

      2,214

S ^: 14,137 . $ 2,750 5,173 4,690 . .1,524 $ 14,137

December 31, 2012

Gross earning amount

S 11,737.

      2,163

.$': 13,900 $ 2,819 ' . 5,014 4,565 T,502' $ 13,900

84

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Goii'ce. BCRKSHIRf HATHAWAY INC. 10-K. March Oj. 201-1

Tile tnlorrnatlori contained herein may not be copied, adapted or distributed end la not warranted lo be accurate, complete or llrnely The user assumes all risks tor any damages or losses ailslnp Iron) any use of Ibis Information, except to tbe extent such damages or losses cannot be limited or excluded by applicable lav,' Past financial performance is no guarantee ot tuture tosults

Table of Contents

Notes to Consolidated Financial Statements (Continued)

(11) Goodwill and other intangible assets (Continued)

Amortization expense was SI,090 million in 2013, $1,008 million in 2012 and $809 million in 2011. Estimated amortization expense over the next five years is as follows (in millions): 2014 - $1,052; 2015 - $752; 2016 -$692; 2017 - $648 and 2018 - $635. Intangible assets with indefinite lives as of December 31,2013 and 2012 were $2,221 million and $2,328 million, respectively.

(12) Derivative contracts

Derivative contracts have been entered into primarily by our finance and financial products and our energy businesses. Substantially all ofthe derivative contracts of our finance and financial products businesses arc not designated as hedges for financial reporting purposes. Changes in the fair values of such contracts are reported in earnings as derivative gains/losses. We entered into these contracts with the expectation that the premiums received would exceed the amounts ultimately paid to counterparties. A summary of derivative contracts of our finance and financial products businesses follows (in millions).

      Dceeinl)cr31.2013             Peceml)cr31.20i:      

Notional Notional

Assets m       liabilities      Value      Assets Ol        Liabilities Value

Equity index put options .              ' ^        ^"v                -                       S—      $4,667 .      $32,095") •      S/-      $7,502      S 33,357<»'

Credit default                                                                                      —          648        7,792«        41         429      11,691m

Other, principally interest rate ah^^                                               ;         .      ■'■   16 '-'          ''■'■;         130-           2      ^j

$ —      $5,331      $ 171      $7,933

"^;     Represents the aggregate undiscounted amount payable at the contract expiration dates assuming that the value of each index is zero al each contract's expiration dote.

Represents the maximum undiscounted future value of losses payable under the contracts, if all underlying issuers default and the residual value of the specified obligations is zero.

"'     Included in other assets of finance and financial pi oducts businesses

Derivative gains/losses of our finance and financial products businesses included in our Consolidated Statements of Earnings weic as follows (in millions).

Equity index put opt ions: ;.-'..._::-.; i-'l,:-'.-.:^-;:'' :'^:: Credit default

Other/pniici^Jly-Mt^ea^'iatc and 'foreign currency:. ,

2013      2012 2011

■ V■■ ■ , C^:,     ^;. : " ■ $.2,843;. ■$• 997- 5(1,787)

(213)      894 (251)

■^;' >A-A.-:■; y.;:?y_;      (22) ; 1-    '.72 ". . (66)

$2,608     $1,963     5 (2,104)

We have written no new equity index put option contracts since Fcbniary 2008. The currently outstanding contracts are European style options written on four major equity indexes. Future payments, if any, under any given contract will be required if the underlying index value is below the strike price at the contract expiration date. Wc received the premiums on these contracts in full at the contract inception dales and therefore have no counterparty credit risk.

The aggregate intrinsic value (which is the undiscounted liability assuming the contracts arc settled based on the index values and foreign currency exchange rates as ofthe balance sheet date) of our equity index put option contracts was approximately $1.7 billion at December 31,2013 and $3.9 billion at December 31,2012. However, these contracts may not be unilaterally terminated or fully settled before the expiration dates which occur between June 2018 and January 2026. Therefore, the ultimate amount of cash basis gains oi losses on these contracts will not be determined for many years. The remaining weighted average life of all contracts was approximately 7.0 years al December 31, 2013.

Prior to March 2009, credit default contracts were written on various indexes of non-investment gTadc (or "high yield") coiporate issuers, as well as investment grade corporate and state/municipal debt issuers. These contracts cover the loss in value of specified debt obligations ofthe issuers arising from default events, which are usually fiom their failure to make payments or bankruptcy. Loss amounts arc subject to contract limits. During 2013, all of our remaining high yield and investment grade corporate issuer contracts expired.

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Eouicc BERKSHIRE HATHAWAY INC. 10-K, Match 03. 201-1

Ilia Information contained herein may not 1*3 cooled, adapted or distributed and Is not warranted In be accurate, complete or timely. The user assumes all risks for any damages or losses arlslnri from any use of this inlormalion, except to the extent such damages or losses cannot be limited or excluded by applicable low Past financial performance Is no guarantee ol future results

Table of Contents

Notes to Consolidated Financial Statements (Continued)

(12) Derivative contracts (Continued)

Al December 31, 2013 our remaining credit default contract exposures relate to more than 500 municipal debt issues with mahirities ranging fiom 2019 to 2054 and that have an aggregate notional value of approximate!}' S7.8 billion. The underlying debt issues have a weighted average maturity of approximately 17.75 years. Pursuant to the contract terms, future loss payments, if any, cannot be settled before the maturity dates ofthe underlying obligations. Wchave no counterparty credit risk under these contracts because all premiums were received at the inception ofthe contracts.

A limited number of our equity index put option contracts contain collateral posting requirements with respect to changes in Ihe fair value or intrinsic value of the contracts and/or a downgrade of Berkshire's credit ratings. As of December 31, 2013, wedid not have any collateral posting requirements and at December 31, 2012, our posting requirements were $40 million. If Berkshire's credit ratings (currently AA fiom Standard ct Poor's and Aa2 from Moody's) aie downgraded below cither A- by Standard & Poor's or A3 by Moody's, additional collateral of up to $1.1 billion could be required to be posted.

Our regulated utility subsidiaries are exposed lo variations in the pi ices of fuel required lo generate electricity, wholesale electricity purchased aDd sold and natural gas supplied for customers. Derivative instruments, including forward purchases and sales, futures, swaps and options, aic used to manage a portion of these price risks. Derivative contract assets arc included in other assets of railroad, utilities and energy businesses and were $87 million and $49 million as of December 31,2013 and December 31, 2012, respectively. Derivative contract liabilities are included in accounts payable, accruals and other liabilities of railroad, utilities and energy businesses and were $208 million and $234 million as of December 31,2013 and December 31, 2012, respectively. Unrealized gains and losses under the contracts of our regulated utilities that are probable of recovery through rates are recorded as regulatory assets or liabilities. Unrealized gains or losses on contracts accounted for as cash flow or fair value hedges arc recorded in other comprehensive income or in net earnings, as appropriate.

(13) Supplemental cash flow information

A summary of supplemental cash flow information for each ofthe three years ending December 31,2013 is presented in die following (able (in millions).

Cash paid during theperiod for;' ; :_:\-'A_::f"_;, .'.

Income taxes 'Interest: ;Vi

 

Insurance and other businesses Railroad, utilities and.cnefgy.busincsses"; Finance and financial products businesses

Non-cash investing and financing activities:'

Liabilities assumed in connection with business acquisitions Coriunon.stock issued in the.acquisitiori of'noncontrollinginterests: -    . .¹ Borrowings assumed in connection with certain property, plant and equipment additions

$5,401

375 1,95S 541

9,224

2012

$4,695

352 ■1,829 620

1,751

406

2011

52,885

243 "1,82, 662

5,836 245 647

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r.ou'ce BERKSHIRE HATHAWAY INC. 10-K. Maich 03. 2011

Hie information conUlnad herein may not bo coplad, adapted or distributed mi id ts not v/arranfed to be accurate, complete or timely. The user asiumcn all risks for any damages or losses arising from any use of this Information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance Is no guarantee of future results

Table of Contents

Notes to Consolidated Financial Statements (Continued) (14) Unpaid losses and loss adjustment expenses

The liabilities for unpaid losses and loss adjustment expenses arc based upon estimates ofthe ultimate claim costs associated with property and casualty claim occurrences as of the balance sheet dates including estimates for incurred but not reported ("IBNR") claims. Considerable judgment is required to evaluate claims and establish estimated claim liabilities. A reconciliation ofthe changes in liabilities for unpaid losses and loss adjustment expenses of our property/casualty insurance subsidiaries for each ofthe three years ending December 31,2013 is as follows (in millions).

Unpaid losses and loss; adjustment expenses: ■ ■ . " ■

Gross liabilities al beginning of year

,Ceded losseXarid defend charges at beginning of year-

Net balance at beginning of year

Incutrcd losses recorded during Iheyear:      ■ ,-.

Current accident year

.    Prior accident years.      ¹ '■'

Total incuncd losses

Payments during the ycar-with respect;to:      .       : : '

Current accident year

Prior accident years' =■ Total payments

Unpaid losses and loss adjustment expenses:" -,    : -;~ ■

Net balance at end of year ":;Z ' Cedcd-losses and/deferred charges at end.ofyeaf^: ...

Foreign currency translation adjustment . . Business acquisitions     ... ,L

Gross liabilities at end of year

S 64,160 (6,944) 57,216

23,027 :■■ (1,752) 21,275

(10,154) (10,978) (21,132)

57,359 •": 7.414 93

$64,866

$ 63,819 ; (7,092) 56,727

22,239

(2,126)

20,113

(9,667) (j 0,628) (20,295)

56,545 • : 6i944 ; 186 485 S 64,160

$ 60,075 (6,545) 53,530

23,031 (2,202) 20,829

(9,269) (8,854) (18,123)

56,236 7,092 (100) 591 $63,819

Incurred losses recorded during (he current year but attributable to a prior accident year ("prior accident years") reflect the amount of estimation error charged or credited to earnings in each calendar year with respect to the liabilities established as ofthe beginning of that yeai. Incurred losses shown in the preceding table include the impact of deferred charge assets established in connection with retroactive reinsurance contracts and discounting of certain assumed workers' compensation liabilities. Deferred charge and loss discount balances represent time value discounting ofthe related ultimate estimated claim liabilities.

Before the effects of deferred charges and loss discounting, we reduced the beginning of the year net losses and loss adjustment expenses liability by $1,938 million in 2013, $2,507 million in 2012 and $2,780 million in 2011. In each ofthe years, the reduction primarily derived from reinsurance assumed business and from private passenger auto and medical malpractice coverages. The reductions in liabilities related to reinsurance assumed business, excluding retroactive reinsurance, were attributable to generally lower than expected reported losses from ceding companies with respect to both property and casualty coverages. Individual underlying claim counts and average amounts per claim are not utilized by our reinsurance assumed businesses because clients do not consistently provide reliable data in sufficient detail. In 2013, wc increased liabilities under retroactive reinsurance contracts by approximately $300 million primarily due to net increases in asbestos and environmental liabilities. In 2011, we recorded a $1.1 billion reduction in retroactive reinsurance liabilities primarily due to lower than expected losses under one contract. The reductions in private passenger auto liabilities reflected lower than previously anticipated bodily injury and personal injury protection severities. The reductions in medical malpractice liabilities reflected lower than originally anticipated claims frequencies and severities. Accident year loss estimates arc regularly adjusted to consider emerging loss development patterns of prior years' losses, whether favorable or unfavorable.

Incurred losses for prior accident years also include charges associated with the changes in deferred charge balances related to retroactive reinsur ance contracts incepting prior to the beginning ofthe year and net discounts recorded on liabilities for certain workers' compensation claims. The aggregate charges included in prior accident years' incuncd losses were $186 million in 2013, $381 million in 2012 and $578 million in 2011. Net discounted workers' compensation liabilities at December 3), 2013 and 2012 were $2,066 million and $2,155 million, respectively, reflecting net discounts of SI,866 million and $1,990 million, respectively.

87

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Source BERKSHIRE HATHAWAY INC. 10-K. March 03. 201-1

nil? Inlormatlon contained heicln may not lie copied, adapted or distributed and Is not wauanled to be accurate, complete or finely Tlio user assumes all risks lot any damages or losses wising from any use ol Ibis Inlormalion. cncc.pt to too extent such damages or lasses cannot be limited or excluded by applicable law. Past financial perioimsnca Is no guarantee ol tutor* lesulls

Table of Contents

Notes to Consolidated Financial Statements (Continued')

(14)  Unpaid losses and loss adjustment expenses (Continued)

Wc arc exposed to environmental, asbestos and other latent injury claims arising from insurance and reinsurance contracts. Liability estimates for environmental and asbestos exposures include case basis reserves and also reflect reserves for legal and other loss adjustment expenses and IBNR reserves. IBNR reserves arc based upon our historic general liability exposure base and policy language, previous environmental loss experience and the assessment of current bends of environmental law, environmental cleanup costs, asbestos liability law and judgmental settlements of asbestos liabilities.

The liabilities for environmental, asbestos and other latent injury claims and claims expenses net of reinsurance recover ables were approximately S13.7 billion at December 31, 2013 and $14.0 billion at Deccmbci 31,2012. These liabilities included approximately $11.9 billion at December 31, 2013 and $ 12.4 billion at Dccerrrbcr 31, 2012 of liabilities assumed under retroactive reinsurance contracts. Liabilities arising from retroactive contracts with exposure to claims of this nature arc generally subject to aggregate policy limits. Thus, our exposure to environmental and other latent injury claims under these contracts is, likewise, limited. We monitor evolving case law and its effect on environmental and other latent injury claims. Changing government regulations, newly identified toxins, newly reported claims, new theories of liability, new contract interpretations and other factors could result in significant increases in these liabilities. Such development could be material to our results of operations. Wc arc unable to reliably estimate the amount of additional net loss or the range of net loss that is reasonably possible.

(IS)  Notes payable and other borrowings

Notes payable and other bonowings are summarized below (in millions). The weighted average interest rates and maturity date ranges shown in the following tables arc based on boiTOwings as of December 31,2013.

Insurance and other:      . . ^: ';      " ■■

Issued by Berkshire due 2014-2047 . ; , Shoit-term siibsidiaiy^:borj;owihgs■ ' ;. Other subsidiary borrowings due 2014-2035

WciKfued As el age. Interest Rate

2.7% '•0.4% 5.9%

2013

8,311 949 3,642

8,323 1,416 3,796

$12,902 $13,535.

ln 2013, Berkshire issued $2.6 billion of senior notes with interest rates ranging fr om 0.8% to 4.5% and maturities that range from 2016 to 2043 and repaid $2.6 billion of maturing senior notes.

Railroad, utilities and energy:.   fir-- "'"■'■;•■'             ;.   ;i- '.' '      ';' ;,-''       ■    •■ :; " V

Issued by MidAmerican Energy Holdings Company ("MidAmerican") and its subsidiaries:

.:'<-.■'■-.      IMiilAmcrican scriioruhsc'curcd debt-due 2014-2043V':'V;; ■:' ;;';-.:;_^;      ■■'.- ;^: Vl'

Subsidiary and other debt due 2014-2043

" Issued by BNSF due 2014-2097- '      .      -'•     :.'.-'             '._._; V'^JV.

Welchled As erase

Interest Rate

5.5% . 5.3% 5.3% '

$ 6,616 23,033

:■ iv;oo6

$46,655

i$ ^:4,621 17,002 '   -V 14,533-; $36,156

As of December 31, 2013, MidAmerican subsidiary debt included approximately $5.3 billion of debt of NV Energy and its regulated utility subsidiaries. Iu addition, MidAmerican issued S2.0 billion of senior unsecured notes in connection with funding the NV Energy acquisition. The new senior unsecured notes were issued with interest rates ranging from 1.1% to 5.15% and maturities ranging from 2017 to 2043. MidAmerican subsidiary debt represents amounts issued pursuant to separate financing agreements. All, or substantially all, of the assets of certain MidAmerican subsidiaries are, or may be, pledged or encumbered lo support or otherwise secure the debt. These borrowing arrangements generally contain various covenants including, but not limited to, leverage ratios, interest coverage ratios and debt service coverage ratios. In 2013, MidAmerican subsidiaries issued term debt of $2.5 billion in the aggregate and MidAmerican and its subsidiaries repaid approximately $2.0 billion of term debt and short-tenn bonowings.

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So.trce BERKSHIRE HATHAWAY INC. 10-K. March 03. 201-1

77io Information contained herein ntny not ixi copied, adapted or distributed and Is not warranted to be accurate, complain or lUnety The user assumes ail risks tor any damages Or losses arising from any use of litis Information, except to the extent such damages or losses cannot be limited or excluded by applicable law fast financial performance Is no guarantee ot future rezutfs.

Table of Contents

Notes to Consolidated Financial Statements (Continued)

(15) Notes payable and other borrowings (Continued)

In 2013, BNSF issued $3.0 billion of debentures with interest rates ranging from 3.0% to 5.15% and maturities in 2023 ($1.5 billion) and 2043 ($1.5 billion). BNSF's borrowings are primarily unsecured. As of December 31,2013, BNSF and MidAmerican and their subsidiaries were in compliance with all applicable debt covenants. Berkshire does not guaiantec any debt or other borrowings of BNSF, MidAmerican or their subsidiaries.

Finance and financial prod       /   '■.■''.      . ;.     ■ :*■:""■'?■■,;...' cPPPAU

Issued by Berkshire Hathaway Finance Corporation ("BHFC") due 2014-2043 ■■ ' Jlssiipd'by othersubsidiaries due 2014-2036 . ;        "      _k- ■'*■■-:''■■'■■■;'{.'■.:_.■.';

Weighted Avenge Interest Hate

3.3% 4.7%

$ 11,178 1,489 $12,667

$11,186 1.859 $ 13,045

The borrowings of BHFC, a wholly owned finance subsidiary of Berkshire, arc fully and unconditionally guaranteed by Berkshire. During 2013, S3.45 billion of BHFC senior notes matured and BHFC issued S3.45 billion of new senior notes lo replace maturing notes. The new senior notes were issued with interest rates ranging from 0.95% lo 4.3% and maturities ranging from 2017 to 2043.

Our subsidiaries have approximately S6.3 billion in (he aggregate of unused lines of credit and commercial paper capacity at December 31, 2013, lo support short-teim borrowing programs and provide additional liquidity. In addition to borrowings of BHFC, as of December 31, 2013, Berkshire guaranteed approximately S3.9 billion of other subsidiary borrowings. Generally, Berkshire's guarantee of a subsidiary's debt obligation is an absolute, unconditional and irrevocable guarantee for the full and prompt payment when due of all present and future payment obligations.

Principal repayments expected during each ofthe next five years arc as follows (in millions).

Insurance ^:and other v, .; Railroad, utilities and energy Finance^and financial products

20U

$ 2,287 -'-      $1,951      . $1,175   $1,3S5      . $1,259

2,065      1,454      1,466      1,622      4,021

1,333      1,638      1,151   [ [. 1,843'      2,226

$5,685      $ 5,043      $3,792     $4,850      $7,506

(16)  Income taxes

The liabilities for income taxes ieficcled in our Consolidated Balance Sheets arc as follows (in millions).

Cirrrently.payablc (receivable)^; Dcfcncd

ot^^^^'VP:'.":;^':; ■.

S   (395)      $:.<255)

57,442      43,883

692      J v; 866 ■

$57,739      $44,494

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lite Information contained herein may not ba copied, adapted 01 distributed and ts not wattantcd lo be accurate, coinptele or timely. Tho user assumes all risks lor any damages or losses arising Irom any use ol lids Inlormalion. except to th* extent such damages or losses cannot be limited oi excluded hv applicable law. Past financial performance Is no guarantee ot future results.

Table of Contents

Notes to Consolidated Financial Statements (Continued) (16)  Income taxes (Continued)

The lax effects of temporary differences that give rise lo significant portions of deferred tax assets and deferred tax liabilities arc shown below (in millions).

_                    .      2013      2012

Deferred tax liabilities:     ..... i:                         y] ' ■'■          -X '.      '■'■Z'-'fi    '■■       . y-ti-'lr'a-.        . i      ■      ; i

Investments - unrealised appreciation and cost basis differences      $25,660      $ 16,075

Deferred charges reinsurance assumed                     .   ..   '■•      ; ■■■      ^' A^Ppy^-jAy^^l-^ ^' .      ■. 1,392

Property, plant and equipment      32,409      29,715

^■■i-isOther^                             U 'i-v- yy yA y'-' yyA 'A- "■      V ^^C^V^v- ■? '   ' 6,278 '      6,485

65,873      53,667

De^eiired.iax;asset^^^                 i '■                V" '.^^.';\V\^;      v;'iji      '. .■-^;-

Unpaid losses and loss adjustment expenses      (817)      (924)

•'    Unearned premiums              .;-V"'V."fi"       .     • '-, .'...  ■      h. PSpA^i^'''y^ryy(fXl)'-^: ■(660);

Accrued liabilities      (3,398)      (3,466)

■■'.<     Derivative contract liabilities      ■■             > ■■. .'^;              -■"      '■ V;-'v'^:'-.'":;V'i-W.--       -^;,T;.(374)'--'      ;:;(-!,131)

Other      (3,160)      (3,603)

v;>^Vv'^^^;i-'^:'v^:::-v.■^<:-V_;: _;;:;:;^:      ■'ACAjyAi-y^-P-' (8,431) "^:-      (9,784)

Net deferred tax liability      $ 57,442      $ 43,883

Wc have not established deferred income taxes with respect to undistributed earnings of certain foreign subsidiaries. Earnings expected to remain reinvested indefinitely were approximately S9.3 billion as of December 31, 2013. Upon distribution as dividends or otherwise, such amounts would be subject to taxation in the U.S. as well as foreign countries. However, U.S. income tax liabilities would be offset, in whole or in part, by allowable tax credits deriving from income taxes previously paid to foreign jurisdictions Further, repatriation of all earnings of foreign subsidiaries would be impracticable to the extent that such earnings represent capital needed to support normal business operations in those jurisdictions. As a result, wc currently believe that any incremental U.S. income tax liabilities arising from the repatriation of distributable earnings of foreign subsidiaries would not be material.

Income tax expense reflected in our Consolidated Statements of Earnings for each of the three years ending December 31,2013 is as follows (in millions).

            2013      2012      2011

Federal         . :: . y:/':y'         %py-yy-y,'r)y\. ._:,:,\"•.".-      V •/\:.$8,T5 5'      .    $5,695     ' $ 3;474

State      258      384      444

yom^:A^:iTi"':^:y:.P--y      .   -     ":~-/ .'. '-'y^'y       ''      ypy AyAA'y 538      845:■'      650

$8,951      $ 6,924      $4,568

Current                                  "\y       '-y- '-v. ]■'•: ■ ■      '. .    . $5,168      $ 4,711 •      $2,897

Deferred      3,783      2.213      1,671

y'y- ■            ■                 ■. -y-ryy:':-!           '      ■.'. A" :     $8,951 ■•jy -'_: S 6,924      $4,568

90

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r.on.-ce BERKSHIRE HATHAWAY INC. 10-K. Maich 03. 201-1

Jlio lulormatlon contained herein may not bo copied, adapted or distributed and Is not warranted lo be accurate, complvto or timely Tito user assumes all risks tor any damages or losses arising front tiny una ot this Inlormalion, errcopt to the extent such tuimages cr losses cannot be limited or excluded by applicable low. Past financial performance ts no guarantee ol future insults.

Table of Contents

Notes to Consolidated Financial Statements (Continued) (16)  Income taxes (Continued)

Income lax expense is reconciled to hypothetical amounts computed at the U.S. federal statutory rate for each of the three years ending December 31, 2013 in the table below (in millions).

Earnings before income taxes     '   '.'■ ';. •."_;-        :.v .

Hypothetical amounts applicable to above computed at the U.S. federal statutory r ate Dividends received deduction and tax exempt interest  •;       • -p       -', v^:' State income taxes, less U.S. federal income tax benefit

Foreign lax rate differences       '■' .'■'■'      ;'■;      ';' ■'

U.S. income tax credits

Other differences, net      •      ':• ->>      ■ \'^{: ;} >:"'.;!■'    ■      ■ ■

2013      2012      2011

S28.796 ^:      '$22,236      $15,314

$ 10,079      $ 7,783      $ 5,360

"; ^:':;;(514)      ••   . (518)      (497)

168      250      289

.:^::(256)      (280)      ■ (208)'

(457)      (319)      (241)

:■ Am      .-     *■■      :A- (135)-

$ 8,951      $ 6,924      $ 4,568

We file income lax returns in the United Slates and in state, local and forergn jurisdictions. We are under examination by the taxing authorities in many of these jurisdictions. We have settled tax return liabilities with U.S. federal taxing authorities for years before 2005. The U.S. Internal Revenue Service ("IRS") has completed the exams of the 2005 though 2009 tax years. Berkshire and the IRS have informally resolved all proposed adjustments in connection with these years with the IRS Appeals division and expect formal settlements within the next twelve montlis. The IRS continues to audit Berkshire's consolidated U.S. federal income tax returns for the 2010 and 2011 tax years Wc arc also under audit or subject to audit with respect to income taxes in many state and foreign jurisdictions. It is reasonably possible that certain of our income tax examinations will be settled within the next twelve months. We currently do not believe that the outcome of unresolved issues or claims is likely to be material to our Consolidated Financial Statements.

At December 31, 2013 and 2012, net unrecognized tax benefits wcie $692 million and $866 million, respectively. Included in the balance at December 31,2013, are $560 million of tax positions that, if recognized, would impact the effective tax rate. The remaining balance in net unrecognized tax benefits principally relates to tax positions for which the ultimate recognition is highly certain bui for which there is uncertainty about the timing of such recognition. Because of the impact of deferred tax accounting, other than interest and penalties, the difference in recognition period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earliciperiod. As of December 31, 2013, we do not expect any material changes to the estimated amount of unrecognized tax benefits in the next twelve months.

(17) Dividend restrictions - Insurance subsidiaries

Payments of dividends by our insurance subsidiaries are restricted by insurance statutes and regulations. Without prior regulatory approval, our principal insurance subsidiaries may declare up to approximately $ 13 billion as ordinary dividends before the end of 2014.

Combined shareholders' equity of U.S. based property/casualty insurance subsidiaries determined pursuant to statutory accounting rules (Statutory Surplus as Regards Policyholders) was approximately $ 129 billion at December 31, 2013 and $106 billion at December 31, 2012. Statutory surplus differs from the corresponding amount determined on the basis of GAAP due to differences in accounting for certain assets and liabilities. For instance, deferred charges reinsurance assumed, deferred policy acquisition costs, certain unrealized gains and losses on investments in fixed maturity securities and related deferred income taxes are recognized for GAAP but not for statutory reporting puiposcs. In addition, under statutory reporting, goodwill is amortized over 10 years, whereas under GAAP, goodwill is not amortized and is subject to periodic tests for impairment

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Source BERKSHIRE HA111 AWAY INC. 10-K. Maich 03. 201-1

n>c Inlonnalloit contained heroin may not bo copied, adapted or distributed arid Is not warranted lo be accurate, complete or ninety The user assumes alt risks for any damages or losses arising trom any use otlhls Information, eicapt to the extent such damages orlossas cannot be limited or excluded hy applicable law Past financial performance is no guitantce of future losulls.

Table of Contents

Notts to Consolidated Financial Statements (Continued) (IS)  Fair value measurements

Our financial assets and liabilities are summarized below as of December 31, 2013 and December 31, 2012 with fair values shown according to the fair value hierarchy (in millions). The carrying values of cash and cash equivalents, accounts receivable and accounts payable, accruals and other liabilities are considcicd to be reasonable estimates of their fair values.

December. 31,2013    :.■■■■'      . ■

Divestments in fixed maturity securities:

, -•    ;U.S. Treasury, U.S. govcmmcnt coiroratioriS' .'■ i

 ':. and agencies      . ' ■.'■■    -^: :j. ■'--ij-;

Stales, municipalities and political subdivisions

" ;:.:^;Fbreign'governn)en(s '.      . ,        '     -^! ;'

Corporate bonds f Mortgage-backed securities «. Investments in equity securities Investment in Heinz Holding Preferred Stock Other investments Loans and finance receivables Derivative contract assets r»

Derivative contract liabilities:      ■■ ■

Railroad, utilities and energy

■ . Finance and financial products:       i, ■:,

Equity index put options

Credit default      .   ■      -p-'K

Notes payable and olher borrowings:

^;.       Insurance and other      -    , '    V ?-

Railroad, utilities and energy

~;'Financc.and financial products'      ;'.V. •:;;':

December 31, 2012

Investments^ fixed maturity securities:, y£3t U.S. Treasury, U.S. government coiporations and agencies

' .' .States, municipalities and political subdivisions^: Foreign governments

Corporate bonds      .  . -.- ,

Mortgage-backed securities

Investments jh equity securities ,    ;      '"'':';.'.-'^:'.

Other investments

Loans and finance receivables      , .    ^; , . .

Derivative contract assets t"

Derivative Contract liabilities:      *      -.'.'. '

Railioad, utilities and energy <o

':^; Finance'and;financial products:   -    . _; <V:

Equity index put opliorrs

Credit default      '      ⁵■

Notes payable and other borrowings:

.Insurance and olher      ^: ■^:;'•:-

Railroad, utilities and energy Finance and financial products   !  '"'•';    .^: ■

Cursing Value

:$>2;658 2,345 _:':r _;1^:1,073 11,237

'_:?.,oi'o.

117,505 ■ ''7,710 17.951 •_; 12,826 87

208

4,667 648

: / 12,902 46,655 ' M 2,667^:

; 2,775 '. 2,913 11,355 17,920 2,587 88,346 : 15,066 . 12,809 220

234

7,502 ''> 429

:•• 13,535 ■ 36,156 13,015 '

2,658 2,345

T 1,073.

11,254 . 2,040 117,505 '• 7,971

17,951

12,002 87

208

4,667 648

13,147 49,879 i 13,013

2,775 . 2,913 11,355 18,795

2,587 88,346 15,066

11,991 220

234

7,502

•: 429;

.14,284;.

42,074

14,005

Quoted Prices (l.escl 11

S ; 2,184 7;467

117,438

$ 1,225 4^71

87,563

1

10

Significant Oilier Observable Inputs (Level 1)

. 473 2,345 3,606 10,187 '.2,040 60

'454 15

198

13,147 49,879 12,354

1,549 2,912 6,784 12,011 2,587 64

;^l 304 128

217

14.284 42.074 13,194 :

Signincant Unouscrroblc Inputs fl.evfl 31

1,067 7

7,971 17,951 11,548 69

4,667 648

659

1

6,784

719 15,066 11,687 91

7,502

"; 429

811

Assets tit e included in olher assets and liabilities are included in accounts pawible. accruals and olher liabilities.

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Trie information contained herein mov not bo copied, adopted or distributed and Is not warranted lo be accurate, complete or timely lite user assumes all ilsks tor any damages or losses arising from any use ol this Inlormalion. except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance Is no guarantee ot tuture results.

Table of Contents

Notes to Consolidated Financial Statements (Continued)

(18) Fair value measurements (Continued)

The fair values of substantially all of our financial instruments were measured using market or income approaches. Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, the fair values presented are not necessarily indicative ofthe amounts that could be realized in an acmal current market exchange. The use of alternative market assumptions and/or estimation methodologies may have a material effect on the estimated fair value. The hieiarchy for measuring fair value consists of Levels 1 through 3, which are described below.

Level 1 - Inputs rcpiesent unadjusted quoted prices for identical assets or liabilities exchanged in active maikets.

Level 2 - Inputs include directly or indirectly observable inputs (other than Level 1 inputs) such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that may be considered in fair value determinations ofthe asseis or liabilities, such as intcicst rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that arc derived principally from or corroborated by observable market data by correlation or other means Pricing evaluations generally reflect discounted expected future cash flows, which incorporate yield curves for instruments with similar characteristics, such as credit ratings, estimated durations and yields for other instruments ofthe issuer or entities in the same industry sector.

Level 3 - Inputs include unobscrvable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regatding unobscrvable inputs because there is little, if any, market activity in the assets or liabilities and we may be unable to corroborate the related observable inputs. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in pricing assets or liabilities.

Reconciliations of assets and liabilities measured and carried at fair value on a recurring basis with the use of significant unobscrvable inputs (Level 3) for each of three years ending December 31,2013 follow (in millions).

Balance at December 31, 2010 ■ . Gains (losses) included in: -     • .Earnings     "' ^:

Other comprehensive income '   ^; 'Regulatory assets and liabilities Acquisitions

Dispositions and settlements-

Transfers into (out of) Level 3

Balance at December 31,2011

Gains (losses) included in: ' ' Earnings

Other comprehensive income Regul.at6ry!asscfs and liabilities :■

Acquisitions, dispositions and settlements

TransferS;mt6;(outof)Leyei3

Balance at December 31,2012

Gains (losses) included in: Earnings

Other comprehensive income Regulatory assets and liabilities

Dispositions and settlements

Transfers into (out of) Level 3

Balance at December 31,2013

ln> ci Intend in filed maturity securities

s ■ ;■ 8oi

17 (39)

784

. (8) ■(129):

652

312 (H)

(578):

372

Investment* in equity securities and other

investment!

$ 17,624 .

(2,133) 5.000

(8,800) 11,69)

4,094

15,785

522 3,177

^: PO

(1,495) $ 17,958 •

Net derivative contract liabilities

S (8,222)

(2,035)

(3) 144 (68) . 275

      1

(9,908)

1,873

(2) 190

(7,847)

2,652

' ■ (0 1

(60) $(5,255)

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TJic Information contained herein may net Ire copied, adapted or distributed slid ts not warranted lo be accurate, complete or timely Tito user assumes- all risks tor any damages or losses arising front any uso of this Inlormalion, except to the oxtent such damages or tosses cannot be limited or excluded by applicable law. Past financial pcrtoimancc Is no guarantee ol luture results

Table of Contents

Notes to Consolidated Financial Statements (Continued)

(18)  Fair value measurements (Continued)

Gains and losses included in earnings are included as components of investment gains/losses, derivative gains/losses and other revenues, as appropriate and are primarily related to changes in the values of derivative contracts and settlement transactions. Gains and losses included in other comprehensive income ate included as components ofthe net change in unrealized appreciation of in vestments and lhc reclassification of investment appreciation in earnings, as appropriate in the Consolidated Statements of Comprehensive Income.

In 2013, wc transferred the fair value measurements of the GS Warrants and GE Warrants out of Level 3 because we concluded that the unobscrvable inputs were no longer significant. In 2011, our investments in GS Preferred and GE Preferred were redeemed at the options of the issuers and wer e transferr ed oul of Level 3 in Ihe quarter ly periods prior lo the redemptions. In 2011, we acquired investments in BAC Preferred and BAC Warrants for an aggregate cost of $5.0 billion.

Quantitative information as of December 31, 2013, with respect to assets and liabilities measured and earned at fair value on a recurring basis with the use of significant unobscrvable inputs (Level 3) follows (in millions).

Olher investments."' .. Preferred stocks

Common stock warrants

Net derivative liabilities':

Equity index put options

Cfcdit,dcfault;SlatesV . .;  '-.municipalities V : ^: -

Principal valuation

      technique!      

$ 12,092      Discounted cash flow

5,859      Warrant pricing model

4,667      Option pricing model

648 ;      Discounted cash flow, ,

Unobaervalfe Input!

Expected duration

. Discount for transferability ' ■ restrictions^ and subordination

Discount for transferability and hedging restrictions

Volatility

Credit spreads:

Weighted Average

7 years

97 basis points.

9% 21%

124 basis points

Other investments currently consist of investments that were acquired in a few r elatively large private placement transactions and include preferred stocks and common stock warrants. These investments arc subject to contractual restrictions on transferability and/or provisions that prevent us from economically hedging our investments. In applying discounted estimated cash flow techniques in valuing the perpetual preferred stocks, we made assumptions regarding (he expected durations of the investments, as the issuers may have the right to r edeem or convert these investments. We also made estimates regarding the impact of subordination, as the preferred stocks have a lower priority rn liquidation than debt instruments ofthe issuers, which affected the discount rates used. In valuing the common slock warrants, we used a warrant valuation model. While most ofthe inputs to the model are observable, we are subject to the aforementioned contractual restrictions. We have applied discounts with respect to the contractual restrictions. Increases or decreases to these inputs would result in decreases or increases to the fair values of the investments.

Our equity index put option and credit default contracts arc not exchange traded and certain contract terms are not standard in derivatives markets. For example, we are not required to post collater al under most of our contracts and many contracts have long durations, and therefore are illiquid. For these and other reasons, we classified these contracts as Level 3. The methods we use to value these contracts are those that we believe market participants would use in determining exchange prices with respect to our contracts.

We value equity index put option contracts based on the Black-Scholes option valuation model. Inputs to this model include cuiTcnt index price, contract duration, dividend and interest rale inputs (including a Berkshire non-performance input) which are observable. However, we believe that the valuation of long-duration options using any model is inherently subjective, given the lack of observable transactions and prices, and acceptable values may be subject to wide ranges. Expected volatility inputs represent our expectations after consider ing the remaining duration of each contract and that the contracts will remain outstanding until the expiration dates without offsetting transactions occurring in the interim. Increases or decreases in the volatility inputs will produce increases or decreases in the fair values of the liabilities.

The fair values of our state and municipality credit default exposures reflect credit spreads, contract durations, interest rates, bond prices and other inputs believed to be used by market participants in estimating fair value. We utilize discounted cash flow valuation models, which incorporate the aforementioned inputs as well as our own estimates of cr edit spreads for stales and municipalities where there is no observable input. Increases or decreases to the credit spreads will produce increases or decreases in the fair values ofthe liabilities.

94

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Sourer BCffKSHffiE HATHAWAY INC. C0-K. Mated 03. 2014

The lulonnattan contained herein nwy not be copied, adspled or dhhlbuted ond Is not won anted 10 he accurate, complvto or timely. The user assumes all risks for any damages or losses arhjlnp from tiny uso of this Information, except to tha extent such damages or losses cannot b? limited or excluded hy applicable law. Past financial performance ts no guarantee ot future results.

Tabic of Contents

Notes to Consolidated Financial Statements (Continued) (19)  Common stock

Changes in Berkshire's issued and outstanding common slock during Ihe three years ending December 31, 2013 are shown in the table below.

Class A, SS Par Value      Class 1), S0.O033 rar Value

      (1.650.000 shares ainhori/fd)             0.125.000.000 shares nuthuri/cd)

Treasury Oulslaniling

Balance at December 31,2010                           ;      947,460      .   —  . 947,460      1,050,990,468      •-      1,050,990,468

Shares issued to acquire noncontrolling interests      —      —            —      3,253,472      —      3,253,472

Conversions of Class A common stock to Class 15 common stock,      *      ■                          '^:': ~_;[^      ■: * ■'.

and exercises of icplaccmenl slock options issued in a business      . , ...      .'>'_:      ...      ■•   '     :■•      -' '          :.'.

.acquisition                       ''.^;            " ■ ' " ' - }'■      (9; 118)      ^:r—'     (9,118)      15,401,421      ' — ■      15,401,421

Treasury shares acquired            —-      (98)          (98)            —      (801,985)      (801,985)

Balance at December 31,2011                              '      938,342      (98)    938,244      1,069,645,361      (801,985)      1,068,843,376

Conversions of Class A common stock to Class B common stock

and exercises of replacement stock options issued in a business

acquisition      (33,814)      —      (33,814)      53,748,595      —      53,748,595

Trcasuiy shaics acquired                                   ' ■'^;'   ,-' ¹  . . —,.      (9,475)      (9,475)      -      (606,499)      ; (606,499).

Balance at December 31,2012      904,528      (9,573)   894,955      1,123,393,956      (1,408,484)      1,121,985,472

Conversions of Class A common stock to Class B common slock      ; ■ ■         .      -      "      "';

• and exercises of replacement stock options issued in a business      ■ '      . ■  •      ■ ■ ■

acquisition      ' .:      '/\' '■ ■■ '■■ '■; ■'/'      (35,912)      (35,912)      55,381,136      —      55,381,136

BalanceatDccemhcr31,2013      868,616      (9,573)    859,043      1,178,775,092      (1,408,484)      1,177,366,608

Each Class A common share is entitled to one vote per share. Class B common stock possesses dividend and distribution rights equal to onc-fiftccn-hundredth (1/1,500) of such rights of Class A common stock. Each Class B common share possesses voting rights equivalent to one-tcn-thousandlh (1/10,000) ofthe voting rights of a Class A share. Unless otherwise required under Delaware General Corporation Law, Class A and Class B common shares vote as a single class. Each share of Class A common stock is convertible, at the option of the holder, into 1,500 sliares of Class B common slock. Class B common stock is not convertible into Class A common stock. On an equivalent Class A common slock basis, there were 1,643,954 shares outstanding as of Dcccmbei 31, 2013 and 1,642,945 shares outstanding as of Deccmbci 31, 2012. In addition lo our common stock, 1,000,000 shares of preferred stock are authorized, but none are issued and outstanding.

In September 2011, Berkshire's Board of Directors ("Berkshire's Board") approved a common stock repurchase program under which Berkshire may repurchase its Class A and Class B shares at prices no higher than a 10% premium over the book value of the shares. In December 2012, Berkshire's Board amended the repurchase program by raising Ihe price limit to no higher than a 20% premium over book value. Berkshire may repurchase shares in the open market or through privately negotiated transactions. Berkshire's Board authorization does not specify a maximum number of shares to be repurchased. However, repurchases will not be made if they would reduce Berkshire's consolidated cash equivalent holdings below S20 billion. The repurchase program is expected to continue indefinitely and the amount of repurchases will depend entirely upon the level of cash available, the attractiveness of investment and business opportunities either at hand or on the horizon, and the degree of discount ofthe market price relative to management's estimate of intrinsic value. The repurchase program docs not obligate Berkshire to repurchase any dollar amount or number of Class A or Class B shares and there is no expiration date to the program. There were no share purchases in 2013. In December 2012, Berkshire repurchased 9,475 Class A shares and 606,499 Class B shares for approximately S1.3 billion through a privately negotiated transaction and market purchases.

95

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Source. BERKSHIRE HATHAWAY INC. 10-K, March 03. 2011

the Information contained herein rmyi.ot be copied, mdsptcd or distributed and Is not warranted to be accurate, complete or timely The user aisun.cn nil rfsxs (or any damages or louses ntfclna front any use ol this Information, except to the extent such rtucrrages or losses cannot be limited or excluded hy applicable fa,v. Past financial performance is no guarantee of future results.

Table of Contents

Notes to Consolidated Financial Statements (Continued) (20)  Accumulated olher comprehensive income

A summary of the net changes in after-tax accumulated other comprehensive income attributable to Berkshire Hathaway shareholders for each of the three years ending December 31,2013 and significant amounts reclassified out of accumulated other comprehensive income for the year ended December 31, 2013 follows (in millions).

Balance at December 3i, 2010  -.!    '• . \ ^::-.  •      : w'^: }:'.]

Other comprehensive income, net

Transactions.with noncontrolling interests      ■      . ■ ,.^: ■ '' .'

Balance at Decer:iber-31, 2011 .'      j;     ■[:;■>'

Other comprehensive income, net

Tiansactkms with noncontrolling interests: -^; ■'■ "■■

Balance at December 31, 2012. -.       '     '      ' J^:_:     ■ ^:'     ■  Other comprehensive income, net before reclassifications Amounts reclassificdsfrom accumulated other comprehensive income Transactions with noncontiolling interests

Balance at December 31, 2013

Amounts reclassified from other comprehensive ^

during-2013 are'included 6n.theToliiwirig:line.itenis:    ■■; \   >    -.

Investment gains/losses:

,'...'.    Insurance and other ■'■;■;':'■■■;}"■■■:.   'V-';';v'r'\;'-■'.'•.

Finance and financial products

.      Other      ,;'.^; ■■)■. 'fi-;. V^.^      ^;=:^:_:-^.; '' '■' ■;._;; V:\-

Reclassifications before income taxes

Applicable income taxes   ¹      ■.■■:\'j^:.;-;_i\:-;-' iv.-.-.      -j-y C^-

Unrealized appreciation of investment!, net

$. 21,638 (2,144) .132 (2,012) : 19,626 9,647 (19)

9,628

29,254 .

16,379

0,591)

14,788 S 44,042

$    (2,382). (65)

(2,447) (856) $ (1,591)

Forcipn currency translation

S (240) (144)

(143) V (383) 267 ■ :,(<)'■ 263

      020)

25 .(-")

      (20)

(26)

$ (146)

;(3i)

(31)

(3D

Prior service and actuarlM giilni/lof sef of drnnnl benefit

pension plim

$ (853) (720) v(16) (736) '; (1,589) (21)

      02)

(1,601) ;

1,534 114

      0)

1,647 S 46

167:

167

■ 53

114

$=• 38-. { 3

(38)

(47)

.14 :

(33)

106

ifPlOb'

JJ6 $ 83

17,

17

10

Accumulated

other comprehensive income-

::$/-26,583 (3,005)

IfVy' " 76 (2,929) j 17,654 9,846

9,846

y : 27,500 18,044 (1,498)

      (21)

16,525 S 44,025

$ (2,382) (65) ■ 153 (2,294) ■ (?%) $ (1,498)

(21) Pension plans

Several of our subsidiaries individually sponsor defined benefit pension plans covering certain employees. Benefits under the plans are generally based on years of service and compensation, although benefits under certain plans arc based on years of service and fixed benefit rates. Our subsidiaries make contributions to the plans, generally, to meet regulatory requirements. Additional amounts may be contributed on a discretionary basis.

The components of net periodic pension expense for each of the three years ending December 31, 2013 are as follows (in millions).

Service cost  ; '■'.■"-■:■■'; •.;■':' Interest cost

Expected return on plan assets. ^: Amortization of actuarial losses and other Net pension expense ••

96

-   ²⁰¹³        .    3012      2011

:     ;S254^,.0$ⁱ247      ST9T

547        583"      568

'■>'.   H634) ,     (610)      (579)

225         220      102

■1     S 392 ^:; "'•$ 440 ',';■      $ 282

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Source BERKSHIRE HATHAWAY IMC. I0 K. Match 03. 201-1

Ibetnlormallat, contained herein may not be copied, adapts or dtslrfoulcd and fs not warranted lobe accoiale.M      Too user assumes all risks tot■ any damages ot losses prising /tool coyuse of tills

Inlormalion. except to the extent such damages or losses cannot be limited or excluded by applicable law. Past ttnanclnl peifoimance ts no guarantee ol lulure results-

Table of Contents

Notes to Consolidated Financial Statements (Continued) (21) Pension plans (Continued)

The accumulated benefit obligation is the actuarial present value of benefits earned based on service and compensation prior to the valuation date. The projected benefit obligation ("PBO") is the actuarial present value of benefits earned based upon seivicc and compensation prior to the valuation date and, if applicable, includes assumptions regarding future compensation levels. Benefit obligations under qualified U.S. defined benefit pension plans arc funded through assets held in trusts. Pension obligations under certain non-U.S. plans and non-qualified U.S. plans are unfunded. PBOs of non-qualified U.S. plans and non-U.S. plans which arc not funded through assets held in trusts were approximately $1.0 billion as of December 31, 2013 and 2012. MidAmerican's pension plans cover employees of its various regulated subsidiaries. The costs associated with these regulated operations arc generally recoverable through the regulated rate making process.

Reconciliations of the. changes in Plan assets and PBOs related lo MidAmerican's pension plans and all other pension plans for each of the two years ending December 31,2013 arc in the following tables (in millions).

31)12

i S 12,992 _:

247 .'i 583 (879) v A A ' 8 \. 1,122

$ 9,150 649 (879) 1,429

V:6; 81

■S 10,436 $ 3,637

Benefit'Obligations i -...Y;:-; •'. ' ■ Accumulated benefit obligation al end of year

PBO/at beginning of year-C    ": '.''} Service cost

Interest cost      ';{"-'.'.-'■ ' [''■'■^^.i-.

Benefits paid

Business acquisitions       ... JC .

Actuarial (gains) or losses and other

I'BO at end of year      "_: '

Plan Assets

Plan assets aibegi'rihing of year.    ...'; .'.„.:.

Employer contributions

Benefits paid ; : v "■•

Actual return on plan assets ''''„ ,'■ Business acquisitions ...

Other

Plan-assists at end of y ear .'■■-...;■;■;'...'.-... ^; Net funded status - net liability

$ 8,878      S 12,915

MldArocrlcati

$ 4,037 S' 3,863

44

:-183

(219) 413

$12,765 $ 14,073 254 " .547 (780)

823-(1,019)

$ 8,101 $9,789 208 -375 . (505)

(975)

MldATncr1cr.it _

$9

29 , 203 . 400 : (660)

::-^;s\;

709

'$ 4,664

$ -; 4,284:-'

46

: V-172-?

' (275) '•:' :^:: 823_:

$.; 5,006'i - $8,892

      (44)

3,245 193 (219) 341

91

$ 10,436 424 (780) 2,346

'      818 -33

$6,785 274 - (505) 1,849

(14)

$5,9.05 456 (660) 1,088

6' ■;

      03

;$6,785 $ 3,004

$ 13,898      $   4,284      $9 789      S 14,073

S ^; £651 ' 150

-    i (275) 497 .818 . 47

$

633

621

J18

$ ; 4,888      $8,389      $ 13,277    - $ 3,651

$ 503

The net funded status is recognized in the Consolidated Balance Sheets as follows (in millions).

$3,441

256 ... (60)

Accounts payable, accruals and other liabilities

Losses and loss adjustment expenses

Other assets '      :   ' /^:

$1,287 309 (975)

$ 621 $3,637

97

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Source. BERKSHIRE HATHAWAY INC. 10-K, March 03. 201-1

nit? tntonnailoti contained herein amy not tie copied. adapted or distributed ond ts not warranted lo be accurate, cotnptvtaor timely, the oser assumes oil risks (or any damages or losses arising from any use of tills Inlormalion, except lo the extort! such damages or losses cannot he limited ot excluded by applicable law Past financialpertotmanee Is no guarantee ct tuhrrc results

Table of Contents

Notes to Consolidated Financial Statements (Continued) (21) Pension plans (Continued)

Fair value measurements of Plan assets as of December 31, 2013 and 2012 follow (in millions).

December SI, 2013 .-'

Cash and equivalents : i     '.-Equity securities -.' ■■'    •■■ :M'■>■";

Government obligations '- ; 0.ther fixed maturity securities ;

Investment funds and olher

December 31. 2012 ?*''-f£C&\fmd equivalents

Equity securities 'V',¹':'-.'Government obligations . ...

Other fixed maturity securities '*■.;■ mvestment funds and other, .

Tol»l . Fair Value

'$" 595 7,844 ' 891 ^: :- i.901 3,046 $13,277

'$ ; 900 5,444 ,. 899 790 2_;403, $10,436

Quoted Prices 0.evcl 11

$ '355'

' 7,684 607 '81

      577

S 9,304

$ 345 5,211 '529-92 419 $ 6,596

Siriiificiot

Other Observable Inputs (Level 2)

$ 240

160

284 ;' '820 2,156 $3,660

$ 555 233 . 370 698 1,652. $ 3,508

Sicnificant Unobjervable Inputs (Level 31

313

. '313

■ .332-."

332

Refer to Note 18 for a discussion ofthe three levels m the hierarchy of fair values. Plan assets measured at fair value with significant unobscrvable inputs (Level 3) for the years ending December 31, 2013 and 2012 consisted primarily of real estate and limited partnership interests. Plan assets are generally invested with the long-term objective of earning amounts suf ficient to cover expected benefit obligations, while assuming a prudent level of risk. Allocations may change as a result of changing market conditions and investment opportunities. The expected rales of return on Plan assets reflect subjective assessments of expected invested asset returns over a penod of several years. Generally, past investment returns arc not given significant consideration when establishing assumptions for expected long-term rates of returns on Plan assets. Actual experience will differ from the assumed rates.

$816; 2018-$823;

Benefits payments expected over the next ten years arc as follows (in millions): 2014-$787; 2015 - $802; 2016- $805; 2017-and 2019 lo 2023 -$4,253. Sponsoring subsidiaries expect to contribute $276 million to defined benefit pension plans in 2014.

A reconciliation ofthe pre-tax accumulated other comprehensive income (loss) related to defined benefit pension plans for each ofthe two years ending Deccmber31, 2013 follows (in millions).

Balance 'at beginning of year_:

Amount included in net periodic pension expense ■•'.': 'Gains (losses) current period and other .;■''-Balance at end of year

S (2,521) 130 Q25)

$(2,516) 167 ■ 2,435

IS      86 $(2,516)

4.6% 6.7 ■ 3.5 4.1

Weighted average interest rate assumptions used in determining piojected benefit obligations and net periodic pension expense were as follows.

2013

Applicable toipchsioh benefit obligations:" Discount rale

Expected long-term rate of returnon plan assets Rate of compensation increase Discount rate applicable to pension expense V

2012 4.0%

.; 6.6 3.6

.4.5,.

98

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17ie Information container! herein may net ha eopled, adapted or distributed ana ts not warranted to be accurate, complete or timely The user assumes all tlsks lor any domages or losses arising from any use ot this Inlormalion. except to the extent such damages or losses cannot be limned or excluded hy applrcable low. Past financial performance Is no guarantee ol tuture results

Table of Contents

Notes to Consolidated Financial Statements (Continued)

1. Pension plans (Continued)

Several of our subsidiaries also sponsor defined contribution retirement plans, such as 401 (k) or profit sharing plans. Employee contributions to the plans are subject to regulatory limitations and the specific plan piovisions. Several ofthe plaus provide that the subsidiary match these contributions up to levels specified in (he plans and provide for additional discietionary contributions as determined by management Employer contributions expensed with respect to these plans were $690 million, $637 million and $572 million for the ycais ending December 31, 2013,2012 and 2011, respectively.

1. Contingencies and Commitments

We are parlies in a variety of legal actions arising out ofthe normal course of business. In particular, such legal actions affect our insurance and reinsurance businesses. Such litigation generally seeks to establish liability directly through insurance contracts or indirectly through reinsurance contracts issued by Berkshire subsidiaries. Plaintiffs occasionally seek punitive or exemplary damages. Wc do not believe that such normal and routine litigation will have a material effect on our financial condition or results of opeiations. Berkshire and certain of its subsidiaries arc also involved in other kinds of legal actions, some of which assert or may assert claims or seek to impose fines and penalties. We believe that any liability that may arise as a result of other pending legal actions will not have a material effect on our consolidated financial condition or results of operations.

We lease certain manufacturing, warehouse, retail and office facilities as well as certain equipment. Rent expense for all operating leases was $1,396 million in 2013, $1,401 million in 2012 and $1,288 million in 2011. Future minimum rental payments for operating leases having initial or remaining non-cancelable terms in excess of one year aic as follows. Amounts arc in millions.

After

2014      2015      2016      2017      2018      2018 Total

$1,245.      ■   '•; $1,094      ^;    $ 967      '      S 822    'A.^:}A\\.,S_:-69.l   ".    '  '     $ 3,795'      ^;"S 8,614

Our subsidiaries regularly make commitments in the ordinary course of business to purchase goods and services used in their businesses. The most significant of these commitments relate to our lailroad, utilities and energy and fractional aircraft ownership businesses. As of December 31, 2013, future purchase commitments under such arrangements are expected to be paid as follows: $15.5 billion in 2014, $6.4 billion in 2015, S4.1 billion in 2016, S3.8 billion in 2017, $3.5 billion in 2018 and $17.0 billion after 2018.

We have owned a controlling interest in Marmon Holdings, Inc. ("Marmon") since 2008 when we acquired 63.6% of its outstanding shares of common stock. In 2010, we acquired 16.6% of its outstanding common stock for approximately $1.5 billion and in 2012, we acquired an additional 9.8% of its outstanding common stock for aggregate consideration of approximately $1.4 billion. In 2013, we acquired an additional 9.7% of its outstanding common stock for aggregate consideration of approximately $1.47 billion of which $1.2 billion is payable in March 2014. As of December 31, 2013, we own substantially all of Marmon outstanding common stock. On April 29, 2013, wc acquired the remaining noncontrolling interests of IMC International Metalworking Companies B.V., the parent company of Iscar, for consideration of $2.05 billion. Berkshire now owns 100% of IMC International Metalworking Companies B.V. Each of these transactions was accounted for as an acquisition of noncontrolling interests. The differences between the consideration paid or payable and the carrying amounts of these noncontrolling interests were recorded as reductions in Berkshire's shareholders' equity and aggregated approximately $ 1.8 billion in 2013 and $700 million in 2012.

Pursuant to the terms of shareholder agreements with noncontrolling shareholders in our other less than wholly-owned subsidiaries, wc may be obligated to acquire their equity ownership interests. If we had acquired all outstanding noncontrolling interests as of December 31,2013, we estimate the cost would have been approximately $3.1 billion. However, the timing and the amount ofany such future payments that might be required are contingent on future actions of the noncontrolling owners.

On October 16, 2013, Marmon announced it entered into an agreement lo acquire the beverage dispensing and merchandising operations of British engineering company, IMI pic for approximately $1.1 billion. The acquisition closed in January 2014.

On December 30, 2013, wc entered into an agreement with Phillips 66 ("PSX") whereby wc would exchange up to the 20,668,118 shares of PSX common stock that wc owned on that date for 100% ofthe outstanding common stock of PSX's flow improver business, Phillips Specially Products Inc. ("PSPI"). Per the agreement, the exact number of shares of PSX common

99

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Source BERKSHIRE HATHAWAY INC. I0-K. Much 03. 2011

T7it' fnlormitlon contained herein may net be copied, adapted or oh It lb u ted and la not warrante/t lo tw accurate, complete or timely. The user Assumes alt risks tor any damages or losses arising from any us* of this Information, except to the e-xtcnt such damages or losses cannot be limited or excluded hy applicable tnw Past financial performance Is no guarantee of future results

Tabic of Contents

Notes to Consolidated Financial Statements (Continued) (22) Contingencies and Commitments (Continued)

stock to be exchanged was to be determined based upon the volume weighted average price of PSX common stock on the closing date. On February 25, 2014, the closing occurred and wc exchanged 17,422,615 shares of PSX common stock for the outstanding common stock of PSPI. At the time ofthe closing, the assets of PSPI included approximately $450 million of cash and cash equivalents.

Berkshire has a 50% interest in a joint venture, Berkadia Commercial Mortgage ("Bcikadia"), with Leucadia National Corporation ("Lcucadin") having (he other 50% interest. Bcikadia is a servicer of commercial ical estate loans in the U.S., performing primary, master and special servicing functions for U.S. government agency programs, commercial mortgage-backed securities transactions, banks, insurance companies and other financial institutions. A significant source of funding for Bcrkadia's operations is through the issuance of commcicial paper. Repayment of the commercial paper is supported by a $2.5 billion surety policy issued by a Bcrkshiic insurance subsidiary. Leucadia has agreed to indemnify Berkshire for one-half ofany losses incuncd under the policy. As of December 31,2013, the aggregate amount of Berkadia commercial paper outstanding was $2 47 billion.

(23) Business segment data

Our reportable business segments arc organized in a manner that reflects how management views those business activities. Certain businesses have been grouped together for segment reporting based upon similar pioducts or product lines, marketing, selling and distribution characteristics, even though those business units are operated under separate local management.

The tabular information that follows shows data of reportable segments reconciled to amounts reflected in our Consolidated Financial Statements. Intersegment transactions are not eliminated in instances where management considers those transactions in assessing the results ofthe respective segments. Furthermore, our management docs not consider investment and derivative gains/losses or amortization of purchase accounting adjustments related to Berkshire's acquisition in assessing the performance of reporting units Collectively, these items arc included in reconciliations of segment amounts to consolidated amounts.

llusincss ldcntlh

GEICO General Re

Berkshire Hathaway Reinsurance Group Berkshire Hathaway Primary Group BNSF

Clayton Homes, XTRA, CORT and other financial services ("Finance and financial products")

Marmon

McLane Company MidAmerican

Business Activity

Underwriting private passenger automobile insurance mainly by direct response methods

Underwriting cxcess-of-loss, quota-share and facultative reinsurance worldwide

Underwriting cxcess-of-loss and quota-share reinsurance for insurers and reinsurers

Underwriting multiple lines of property and casualty insurance policies for primarily commercial accounts

Operates one ofthe largest railroad systems in North America

Proprietary investing, manufactured housing and related consumer financing, transportation equipment leasing and furniture leasing

An association of approximately 160 manufacturing and service businesses that operate within 11 diverse business sectors

Wholesale distribution of groceries and non-food items

Regulated electric and gas utility, including power generation and distribution activities in the U.S. and internationally; domestic real estate brokerage

100

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}}>•> Information c i-nfj/ned herein may not be copied, adapted or distributedandts not warranted lobe accurate, complete or timely Tiic user assumes oil risks (or any damages or Josses arising from any use 0/ this Information, except fo Ihe extent such damages or losses cannot be limited or excluded hy applicable law. Past financial performance is no guarantee of future results

Table of Contents

Notes to Consolidated Financial Statements (Continued)

(23) Business segment data (Continued)

Other businesses not specifically identified with reportable business segments consist of a laigc, diverse group of manufacturing, service and retailing businesses. A disaggregation of our consolidated data for each ofthe three most recent years is presented in the tables which follow on this and the following two pages (in millions).

1,127 . 283 1,294 385 4,713 . 7,802 ■ 5,928 985 1.176 486 1,806 .5,080

23,263 20,079

6,673 (303) (?37)

Operating Businesses:i;V;S / Insurance group:

     Underwriting:      "■■ '■■."'.'','[

GEICO

■'  '    "'GeneralRc-: '.\"   '      .    ;' :

Berkshire Hathaway Reinsurance Group .{■       Berkshire Hathaway Primary Group

Investment rnconie

Total insurance group     ■      ■:.,. ■'.      V '

BNSF

Finance'and financial products \>. ■      / ■ ' . /

Marmon

McLane Company     ■-. _;~:^::)■ MidAmerrcan

Other businesses ' .      'Sv .'".''       

Reconciliation of segments to consolidated amount:;

Investment and derivative gains/losses -Interest c'xri'eirsc'j'not allcrcafed to segmchti^-' ■' ■'■ Eliminations and other

i 18,572 5,984 8,786 3,342. 4,735 4i;419 22,014 4,291 6,979 ' 45,930 12,743 42,382 175,758

6,673

(281)

16,740 5,870

9,672 2,263''^: 4,474

39,019 20,835 ; 4,110 7,171 37,437 11,747

-.38,647.

158,966

3,425

72

2t>n

15,363 5,816 9,147 . 1,749 4,746 36,821 19,548 4.014 6,925 ' 33,279 _; 11,29) .32,202 144,080

(830)

438

Karnrngs before Income taica

680 355 304 286 4,454 6,079 5,377 ■ : 848

403 1,644

■4,591-

3,425 (271) (997)

5 576 144 (714) ' 242 4,725 • 4,973 4,741 774 992 . . 370 1,659 3,675 17,184

(830) - (221). (819)

S 182.150.   S 162,463 1"$ 143,688 .   $28,796$22,236 .$15,314

Operating Businesses:- ! Insurance group

BNSF ■ -.'"        P: v^:-'V'-^:.--

Finance and financial products

Marmon . ,      , ■ 

McLane Company MidAmerican       ". . ""' Olher businesses

Capital eincndlttiret

2011

3,918, 251

" 847 225

4,307 ■

1,450

$     89    $    61     $ 40

367 81? 225 ■'3,380. 1,377

:3,548-"'- 3,325

331 514 , 188 . 2,684 1,109

1,655 182 498 159 1,577 1,289

Depreciation ol tangible atieta

2011

1,573 184 479 149 1,440 1,264

$    57    $ 56

1,480 180 484 : 129

1,333

1,021

$11,087    S9.775    S8.19J     $5,418    $5,146 $4,683

101

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Table of Contents

Notes to Consolidated Financial Statements (Continued) (23) Business segment data (Continued)

Coodvrill ftt s-ear-ftid

Idcnllriablc assets at vtnr-f nd

QpcfaHiig Businesses: Insurance group:

•^:_: ghico      ■ •A.Pu.h/yy.rfi

General Re

• ; t Berkshire HatJiaway Reinsurance'and Primary Groups , Total insurance group

BNSF      PPP- "      -^; pp^P-P

Finance and financial products

Mannoh■.'.'/'      "      -      ."^::

McLane Company

MidAmerican   ■     ¹      ";;' ■'-■;■

Other businesses

30,477 Ti.8.319 180,282

56,839 24,412 11,230 5,090 46,856 36,875

13,532 .  : 607 15,511 " 14,836 1,036 814 705 5,377 16,244

29,956 , 138.480 208,004 ^; '59,842'. 25,163 11,767 5,209 62,189 39,107

13,532

^^v .- 607 -15,511 14,819 1,036

P .-.800

701 7,784 16,360

S  1,372    S  1,372.   S 39,568 .: $ 30,986    $ 27,253

28,442 104,913" 160.608 55,282 ' 23,919 ^; 10,597.

4,107 : 42,039 34,994

S57,011    S-54,523     ,41-1,28]      361,584 '■■■ 331,546

Reconciliation of segments to consolidated amount:

Corporate and other      : ■ •.['-P-'

Goodwill

16,639 57,011

-11,345 54,523

7,888 53,213

.5484,931-   $427,452    $392,647^:

Insurance premiums written by geographic region (based upon the domicile ofthe insuicd or reinsured) are summarized below. Dollars arc in millions.

Property. /Casualty

2012      2011      2013      2012 2011

United Slates                       ■ '. " y: • :           .                               $25,704      $ 23,186      $22,253      $ 3,934      S 3,504      $ 3,100

Western Europe                                                                     '             2,234      4,387      4,495      1,339      1,114      880

All other        ■:              -          P l              " '           '   -'     '•     :' . 2,973      2,319      1,089      ;   1,026      __1,?.1_7      1,090.

$30,911      $29,892      $27,S37      $6,299      $5,835      $5,070

In 2013,2012 and 2011, premiums written and earned attributable to Western Europe were primarily in the United Kingdom, Germany, Switzerland and Luxembourg. In 2012 and 2011, property/casually insurance premiums earned included approximately $3.4 billion and $2.9 billion, rcspcclivcly, from a reinsurance contract with Swiss Reinsurance Company Ltd. and its affiliates. This contract expired at the end of 2012 and is now in run-off. Life/health insurance premiums written and earned in the United States included approximately $ 1.5 billion in 2012 and 2011 from a single contract with Swiss Re Lrfc & Health America Inc., an affiliate of Swiss Reinsurance Company Ltd. This contract was amended in 2013 which resulted in significantly reduced premiums.

Consolidated sales and service revenues in 2013, 2012 and 2011 were $94.8 billion, $83.3 billion and $72.8 billion, respectively. Approximately 85% of such amounts in 2013 were in the United Stales compared with approximately 84% in 2012 and 86% in 2011. The remainder of sales and service revenues were primarily in Europe and Canada. In each ofthe three years ending December 31, 2013, consolidated sales and service revenues included sales of approximately $13 billion in 2013 and $12 billion in 2012 and 2011 lo Wal-Marl Stores, Inc.

Approximately 96% of our revenues in 2013, 2012 and 2011 from railroad, utilities and energy businesses were in the United States, ln each year, most of the remainder was attributed to the United Kingdom. At December 31, 2013, 92% of our consolidated net property, plant and equipment was located in the United Stales with the remainder primarily in Europe and Canada.

102

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TTie Information contained herein may net be copied, adapted or distributed and Is not warranted lo be accurate, cotnplelo or timely. Tim user assumes all risks tor any damages or losses arising front any use of this information, except fo the extent such damages or losses cannot be limited or excluded by applicable low. Past financial performance is no guarantee ot future results

Table of Contents

Notes to Consolidated Financial Statements (Continued) (23) Business segment data (Continued)

Premiums written and earned by the property/casually and life/health insurance businesses are summarized below (in millions).

Frcmcrtv/CiMiiaHv

Premiums Written:

Direct ;■• '^'Assumed

Ceded

Premiums Earned: ^ Direct     ' -' Assumed : Ceded

2012

$24,292' $20,796'"      $18,512 $ 931 $ 554 S 67

i   7,339 . v/; 9,668 ' -.  9,867 ■.   5,437 , -^; ,5,3.9).;: . 5,133

(720)         (572)      (542)         (69)         (110) (130)

;$36,9Ili-|;p$29i89.2>:      $27,837 ■ - $6,299,^I$5;835^!>^$-5^070

$23,2.67 ' ^;"$ 20,204      $ 18.038    $   931    '$'. 554 ' *.S ;. 6.7.

' 7,928       '9,142      9,523       5,425      5,356 5,099

'■   . (797) I■ .-^600) '  :. (522)       (70).     . (I ll) . (130)

$ 30,398    $28,746      S 27,039    $6,286    $5,799    $ 5,036

(24) Quarterly data

A summary of revenues and earnings by quarter foi each ofthe last two years is presented in the following table. This information is unaudited. Dollars are in millions, except per share amounts.

Revenues

Net Hmings\a1iri6utabie to Berkshire.shareholders ?. ;v."      \;      ., *, .:.^:

Net earnings attributable to Berkshire shareholders per equivalent Class A common share

■      yy;mryPl. ' -;'. '--p:'->^: :;■■■'■}'•/ '.:::' ■ ^:-\       ^:''■ ^:P^:V^:y ^y:

Revenues

Net earnings attributable to Berkshire shareholders * >        • ■ -     . i . v   ^:.

Net earnings attributable to Berkshire shareholders per equivalent Class A common share

1" Quarter

$43,867 4,892 2,977

$38,147 ; ' 3,245 ■ 1,966

Quarter

$44,693 4,541 2,763

$38,546 3,108 1,882

3" Quarter

$46,541 ■ . 5,053 • 3,074

$41,050 ; 3,920 2,373

Quarter

$47,049 4,990 3,035

$ 44,720 ' 4,551 2,757

* Includes realized investment gains/losses, other-than-leinporary impairment losses on investments and derivative gains/losses. Derivative gains/losses include, significant amounts related to non-cash changes in the fair value of long-term contracts arising from short-term changes in equity prices, interest rates and foreign currency rates, among other factors. After-tax investment and derivative gains/losses for the periods pi esented above are as follows (in millions):

K}t^iil^fJaiV,^^yaihng gains/losses ^2013., Investment and derivative gains/losses — 2012

1-

Quarter

;$i,no

580

2~> Quarter

Quarter

₃,« Quarter

$ 622- $1,391 S1.214

(612)      521 1,738*

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77ie Inlormalion contained heroin may not ho coplcrl. adapted or distributed emits not vrarrinted lo be accurate, complete or ninety. The user assumes alt risks lor any damages or losses arising liom uny use ol this Inlormalion. except to the exicnt such damages or losses cannot be limited or excluded by applicable lovr. Past financial performance Is no guarantee ol tutuie results.

Table of Contents

Item 9.       Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None

Item 9A.     Controls and Procedures

At the end of the period covered by this Annual Report on Form 10-K, the Corporation carried out an evaluation, under the supervision and with the participation of the Corporation's management, including the Chairman (Chief Executive Officer) and the Senior Vice President (Chief Financial Officer), of the effectiveness ofthe design and operation ofthe Corporation's disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chairman (Chief Executive Officer) and the Senior Vice President (Chief Financial Officer) concluded that the Corporation's disclosure controls and procedures arc effective in timely alerting them to material information relating to the Corporation (including its consolidated subsidiaries) required to be included in the Corporation's periodic SEC filings. The report called for by Item 308(a) of Regulation S-K is incorporated herein by reference to Management's Report on Internal Control Over Financial Reporting, included on page 64 of this report. The attestation report called for by Item 308(b) of Regulation S-K is incorporated herein by reference to Report of Independent Registered Public Accounting Firm, included on page 65 of this report. There has been no change in the Corporation's internal control over financial reporting during the quarter ended December 31,2013 (hat has materially affected, or is reasonably likely to materially affect, the Corporation's internal control over financial reporting.

Item 9B.      Other Information None

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the tiitarmatton contained hcictiiniay net ba copied, adapicet or distributed and ts not waitanled tote accurate.cemptv      The user assumes all risks lor any damages or hisses arising trom any use ot this

Inloimallon. except lo the extent sueh damages or losses cannot be limited or excluded hy applicable taw. Past financial ixrtormance Is no guarantee oftuhue results.

Table of Contents

Part III

Except for the infonnation set forth under the caption "Executive Officcis ofthe Registrant" in Part I hereof, information required by this Part (Items 10, II, 12, 13 and 14) is incorporated by reference from the Rcgisti ant's definitive proxy statement, filed pursuant to Regulation 14A, for the Annual Meeting of Shareholders of the Registrant to be held on May 3,2014, which meeting will involve the election of directors.

Part rv

Item 15.      Exhibits and Financial Statement Schedules

(a) 1. Financial Statements

The following Consolidated Financial Statements, as well as the Report of Independent Registered Public Accounting Firm, are included in Part II Item 8 of this report:

PACE

Rcnort of Independent Registered Public Accounting Firm      6 5

Consolidated Balance Sheets—

December 31.2013 and December 31.2012 66 Consolidated Statements of Earnings—

Years Ended December 31.2013. December 31.2012. and December 31. 2011 67 Consolidated Statements ofCoinnrehensive Income—

Years Ended December 31.2013. December 31.2012. and December 31.2011 68 Consolidated Statements of Changes in Shareholders' Equity—

Ycais Ended December 31. 2013. December 31. 2012. and December 31. 2011 68 Consolidated Statements of Cash Flows—

Years Ended December 31.2013. December 31.2012. and December 31. 2011 69 Notes to Consolidated Financial Statements 70

2. Financial Statement Schedule

Rcnoit of Independent Registered Public Accounting Firm 107 Schedule I—Parent Company Condensed Financial Information

Balance Sheets as of December 31, 2013 and 2012, Statements of Earnings and Comprehensive Income and Cash Flows for the years

ended December 31, 2013, December 31, 2012 and December 3], 2011 and Note to Condensed Financial Information 108

Other schedules are omitted because they are not required, information therein is not applicable, or is reflected in the Consolidated Financial Statements or notes thcicto.

(b) Exhibits

Sec the "Exhibit Index" at page 110.

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lhc Inlormatlon contained herelrt may not ba copied, adapted or distributed and Is not wartinled lo be accurate complete or timely Tlie user assumes all risks lor any damages ot losses arising from any uso ol this Intoimnhon, except fo ihe extent such damages or tosses cannot be limited or excluded by applrcablc law Past financial ficrtarmance Is no guarantee ol luture results.

Tabic of Contents

SIGNATURES

Puisuanttothc requirements of Section 13 or 15(d) ofthe Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thcieunto duly authorized.

BERKSHIRE HATHAWAY INC.

Date: February 28, 2014

/sf Marc d. Hamburg

Marc D. Hamburg Senior VJce Preside nl and Principal Financial Orticcr

Pursuant to the requirements ofthe Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

is/  Warren E. Buffett

Wairen F ButTctt

/S/    HOWARD G. BUFFETT

IS/

Howard G. BufTelt

Stephen b. Burke

Stephen B. Burke

/s/   Susan l. decker

/si

Susan L. Decker

William h. gates hi

William H Gates III

is/   David S. Gottesman

is/

Uavid S. Cotfesuian

Charlotte guyman

/s/

Charlotte Gurman

Donald R. Keough

is/

Donald R Keough

Charles T. Munger

is/

Cfiarlci T. Mungcr

Thomas S. Murphy

/s/

Thorn « S. Murphy

RONALD L. OLSON

Ronald L. Olson

/s/   Walter Scott, Jr.

Walter Scott, Jr.

IS/    MERYL B. WITMER

IS/

iMcrilB. W/tmer

MARCD HAMBURG

IS/

Marc D Hamburg

Daniel J. jaksich

Daniel J.Jakskh

Chairman of the Board of Directors—Chief Executive Officer

Director Director Director Director Director Director Director

Vice Chairman of the Board of Directors

Director

Director

Director

Director

Senior Vice President—Principal Financial Officer Vice President—Principal Accounting Officer

February 28, 2014 Date

February 28, 2014 Date

February 28, 2014 Date

February 28, 2014 Date

February 28, 2014 Date

February 28, 2014 Date

February 28, 2014 Date

February 28,2014 Date

February 28,2014 Date

February 28, 2014 Date

February 28, 2014 Date

February 28, 2014 Date

Febr uary 28, 2014 Date

February 28, 2014 Dale

February 28,2014 Date

106

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Source: BERKSHIRE HATHAWAY INC. 10- K, March 03. 2014

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Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Berkshire Hathaway Inc. Omaha, Nebraska

We have audited the consolidated financial statements of Berkshire Hathaway Inc. and subsidiaries (the "Company") as of December 31,2013 and

1. and for each ofthe three years in the period ended December 31, 2013, and the Company's internal control over financial reporting as of December 31,
2. and have issued our report thereon dated February 28, 2014; such consolidated financial statements and report arc included elsewhere in this Form 10-K. Our audits also included the financial statement schedule of the Company listed in Item 15. This financial statement schedule is the responsibility ofthe Company's management. Our responsibility is lo express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set foith therein.

/s/ Deloitte & Touche LLP

Omaha, Nebraska February 28,2014

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Table of Contents

BERKSHIRE HATHAWAY INC.

(Parent Company) Condensed Financial Information

(Dollars in millions)

Schedule I Balance Sheets

2013

AsSCtS:;.P      T":::! V ^:

Cash and cash equivalents ;;    Ihycstmerits;iri;fixcd maturity and equity securities    :; ; Investments in and advances to/from consolidated subsidiaries ••_>. .^veshnents; in'HJ.-Heinz Holding Corporation Other assets

Liabilities and Shareholders' Equity:

■ '/Accouhts payabjel accrued interest and other liabilities .'•; •. Income taxes ':Notes;payabie^ahd owerborrowings . ■

^; _: Beikshire-HatHaway shareholders'equity      . „

; 10,557 ^;! 66 185,996

I 3,412 V A : 178

215,465 12,111 97

51

.209 853 8-311

_: $ 231,263 .   S 1961670 -

S ■

277 423

9,023 187,647

-.8,323

9,373 221,890

$ 231,263     $ 196,670

Statements of Earnings and Comprehensive Income

Year rnrlcd December 31.

133 196

,.;35;:

; 14,824 -: 9,846

Income items:.      , .

From consolidated subsidiaries:

;^'Diyidends ahd distributions      , .     ■ "•

Undistributed earnings

Other income

Cost and expense items: Interest expense

'Incomc'iaxes. '■.-.'■/ri.'.-'      '■■ ' ' '    \:      '"' ';'... ;.y^J"-.'.yy.

Net ;eamuigs attHbutable;to Berkstoc Hathaway shareholders .; ? ;■'« Other comprehensive income attributable to Berkshire Hathaway shareholders Comprehensive incOme attributable to BeikshircHathaway shareholders ;

S 6,799

      8,301_

. 15,100

15,1.88

$ 6,158 13,657 19,815 229 . 20,044;

94

364

228 . :-246 568 19,476. 16,546

S 36,022   , S 24,670

S 5,883 4,546 10,429

      101

.10,530.

66

146 ■ 64. 276 10,254 (3,005) S 7,249

See Note to Condensed Financial Information 108

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Table of Contents

BERKSHIRE HATHAWAY INC.

(Parent Company) Condensed Financial Information

(Dollars in millions)

Schedule] (continued) Statements of Cash Flows

Year tndfil Qcctmbtr 31.

Cash flows from operating activities:    ,   : ■ ■

Net earnings attributable to Berkshire Hathaway shareholders

;Adjustments to reconcile net earnings to cash flows from operating activities:

Undistributed earnings of subsidiaries

Income taxes payable      . . .      ' ^:

Olher

Net cash flows from operating activities. . Cash flows from investing activities:

Ihvesunenls in H.J. Heinz Holding Corporation .

Sales of fixed maturity securities ■ myestmcrits in and advances to subsidiaries

Net cash flows from investing activities Cash flows fiom financing activities: ' -. :

Proceeds from bon owings

Repayments of borrowings '.

Acquisitions of noncontrolling interests

.   Acquisitions of treasury stock .' ■    ■.     .      , '

Other

Net cash flows from financing activities Increase (decrease) in cash and cash equivalents ^ Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Olher cash flow information: Income taxes paid

Interest paid      _; ■" . ■ ;      . ;

(8,301) 80 101

(13,657) 396 112

$ 19,476     $ 14,824 $10,254

(4,546) : 69

      70

5,847

■ 6,327    ■■- 6,704

298 (3,633) (3,335)

(1,^5) (1,525)

1,740 (JJ51) (800) ; (1,296) > 196

(1,911) 3,268 7,289 ■

(12,250)

2,021 (2,094) (1,811)

: : (67):

      m

(1,839) 673 6,616

■■ (133) (12,683)

2,611 (2,656) (836)

      92

$ 4,080 ■ 205

3,406 180

(789) (7,145) : 10,557 $   3,412     $10,557     $ 7,289

$ 1,882 122'

Note to Condensed Financial Information

On June 7, 2013, Berkshire and an affiliate ofthe global investment firm 3G Capital (such affiliate, "3G"), through a newly formed holding company, H J. Heinz Holding Corporation ("Heinz Holding"), acquired H.J. Heinz Company ("Heinz"). Berkshire and 3G each made equity investments in Heinz Holding, which, together with debt financing obtained by Heinz Holding, was used to acquire Heinz for approximately $23.25 billion. Berkshire's investments in Heinz Holding consist of 425 million shares of common stock, warrants to acquire approximately 46 million additional shares of common stock, and cumulative compounding preferred slock ("Preferred Slock") with a liquidation preference of $8 billion. The aggregate cost of these investments was $12.25 billion. In January 2013, Berkshire issued $2.6 billion of new senior notes with interest rates ranging from 0.8% to 4.5% and maturities that iangc from 2016 to 2043. In February 2013, Berkshire repaid $2.6 billion of maturing senior notes. Berkshire's borrowings at December 31, 2013 and 2012 also included $311 million and $323 million, respectively, under investment agreements. Berkshire's aggregate borrowings as of December 31,2013, mature in each of (he next five years as follows: 2014—$751 million; 2015—S1.709 million; 2016—$1,051 million; 2017—$1,100 million; and 2018—$808 million.

Berkshire Hathaway Inc. has guaranteed debt obligations of certain of its subsidiaries. As of December 31, 2013, the unpaid balance of subsidiary debt guaranteed by Berkshire totaled approximately $15 billion. Berkshire's guarantee of subsidiary debt is an absolute, unconditional and irrevocable guarantee for the full and prompt payment when due of all present and futur e payment obligations. Berkshire also provides guarantees in connection with long-term equity index put option and credit default contracts entered into by a subsidiary. The estimated fair value of liabilities recorded under such contracts was approximately S5.3 billion as of December 31,2013. The amount of subsidiary payments under these contracts, if any, is contingent upon future events and will not be fully known for several years.

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The Information contained herein may not tw copied, adapted or distributed end It not wort anted to be accurate, complete or timely The user assumes nil risks for any damages or losses arising from any uxa of this Mormabon, except to the extent such damages or losset cannot be limited or excluded by applicable lo-'j. Past financial performance is no guarantee of future rcsulfs

Table of Contents

EXHIBIT INDEX

FAhiuu No.

2(i)      Agreement and Plan of Merger dated as of June 19, 1998 between Registrant and General Re Corporation.

Incorporated by reference to Annex I to Registration Statement No 333-61129 filed on Form S-4.

2(ii)      Agreement and Plan of Merger dated as of November 2,2009 by and among Berkshire, R Acquisition Company, LLC and BNSF.

Incorporated by reference to Annex A to Registration Statement No. 333-163343 on Form S-4.

3(i)      Restated Certificate of Incorporation

Incoiporatcd by reference to Exhibit 3(i) lo Form 10-K filed on March 1,2010.

3(n) By-Laws

Incorporated by reference to Exhibit 3.1 to Form 8-K filed on November 9, 2010.

1. Indenture, dated as of December 22,2003, between Bctkshire Hathaway Finance Corporation, Berkshire Hathaway Inc. and The

Bank of New York Mellon Trust Company, N.A. (as successor to J.P. Morgan Trust Company, National Association), as trustee. Incorporated by reference to Exhibit 4.1 on Form S-4 of Berkshire Hathaway Finance Corporation and Berkshire Hathaway Inc. filed on February 4, 2004.

1. Indenture, dated as of February 1, 2010, among Berkshire, Berkshire Hathaway Finance Corporation and The Bank of New York

Mellon Trust Company, N.A., as trustee.

Incorporated by reference to Exhibit 4.1 to Berkshire's Registration Statement on Form S-3 filed on February 1,2010. Other instruments defining the rights of holders of long-term debt of Registrant and its subsidiaries are not being filed since the total amount of securities authorized by all other such instruments does not exceed 10% ofthe total assets ofthe Registrant and its subsidiaries on a consolidated basis as of December 31, 2013. The Registrant hereby agrees to furnish fo the Commission upon request a copy ofany such debt instrument to which it is a party.

10.1      Equity Commitment Letter of Berkshire Hathaway Inc. with Hawk Acquisition Holding Corporation dated February 13, 2013.

Incoiporatcd by reference to Exhibit 10.1 on Form 8-K of Berkshire Hathaway Inc. filed on February 14,2013.

12      Calculation of Ratio of Consolidated Earnings to Consolidated Fixed Charges

14      Code of Ethics

Berkshire's Code of Business Conduct and Ethics is posted on its Internet website at mwv.bcrfahirclmthaway.com

21      Subsidiaries of Registrant

23      Consent of Independent Registered Public Accounting Finn

1. Rule J3a—14(a)/15d-14(a) Certifications
2. Section 1350 Certifications 9 5                        Mine Safety Disclosur es

101      The following financial information from Berkshire Hathaway Inc.'s Annual Report on Form 10-K for the year ended December 31,

2013, formatted in XBRL (Extensible Business Reporting Language) includes: (i) the Consolidated Balance Sheets as of December 31, 2013 and 2012, (ii) the Consolidated Statements of Earnings for each ofthe three years ended December 31,2013,2012 and 2011, (iii) Consolidated Statements of Compiehcnsivc Income for each ofthe three years ended December 31, 2013, 2012 and 2011, (iv) the Consolidated Statements of Changes in Shareholders' Equity for each of the three years ended Decembei 31,2013, 2012 and 2011, (v) the Consolidated Statements of Cash Flows for each ofthe three years ended December 31, 2013, 2012 and 2011 and (vi) the Notes to Consolidated Financial Statements and Schedule I, tagged in summary and detail.

110

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Source BERKSHIRE HATHA'A'AY IMC. 10-K. Wi.iich 03. 201-1

ihe information contained herein may not bo copied, adapted or distributed and Is not warranted lo be accurate, complete or timely. Tire usvr assumes all risks for any damages or losses arising from tiny use of this information, except to the extent such damages or losses cannot be limited or excluded hy applicable lav/. Past financial performance Is no guarmtee of future results.

Reg. S-K Item 601 Exhibit 12

BERKSHIRE HATHAWAY INC. Calculation of Ratio of Consolidated Earnings to Consolidated Fixed Charges (Dollars in millions)

Year Ended December 3).

Net earnings attributable to Beikshire Hathaway shareholders' /.      '■ ■

Income tax expense • Trainings attributable to nonconttolling interests  ^:-V.r,.V .

Earnings or loss fiom equity method investments ;• ' ^;::i>Dividcnds.fr6m equity method invcstJBcnts'-'.v¹:;^:;^^        ■ ■■      /.;'.      .*1 <!'.!?;■.;

Fixed charges

Earnings available for fixed charges   :    , -      .". -k'!'-;.".'"

Fixed charges

: _:   ^Interest on indebtedness (including amortization of debt-discount and expense) , Rentals representing interest and other

Ratio of earnings to fixed charges

$10,254, 4,568

$12,967: 5,607 •'••527. (50)

;:iv;^v.20:-

3,084

8,055 3,538

386

(427) .132 2,279

$19,476      '$ 14,824

8,951      6,924

;' . :369 ■'      4S8

3,386

3,304

255'      —"

3,219

$ 1,992 287

S 2,801 . "" 585 $' 3,386 9.58x

$ .2,744 560 £ .3,304 7.73x

S 2,664 '

      5 55

$ 3,219 5.76x

$ 32;437 .   $25.540    S18,533 - -_:;$22_;1SS   , $13.963 ^:

S 2;558 526

7.18x

$   3,084 ■. $ 2,279

6.13x

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Soiree. BERKSHIRE HATHAWAY INC. 10-K. Maich 03. 201-1

Tho ttitotmattan contained herelr, may not bo copied, adapted or distributed and Is not warranted lo be accurate, complete or timely Tha user assumes all risks lor any damages or losses arising horn any use ol this information, ercopl to the extent such damages or losses cartnolbc limited or excluded hy applicable law Past linanc.let performance rs no guarantee ot lulure ie.s:ilts.

Keg. S-K Item 601 Exhibit 21

Company Name

Acme Brick Company Acme Building Brands, Inc. Albccca Inc.

Anderson Hardwood Floors, LLC

Applied Underwriters, Inc.

Ben Bridge Corporation

Ben Bridge Jeweler, Inc.

Benjamin Moore & Co.

Benjamin Moore & Co., Limited

Benson Industries, Inc.

Berkshire Hathaway Assurance Corporation

Berkshire Hathaway Credit Corporation

Berkshire Hathaway Finance Corporation

Berkshire Hathaway Homestatc Insurance Company

Berkshire Hathaway International Insurance Limited (UK.)

Berkshire Hathaway Life Insurance Company of Nebraska

Berkshire Hathaway Specialty Insurance Company

BH Media Group, Inc.

BHSF, Inc.

BH Finance LLC

BH Shoe Holdings, Inc.

BNSF Railway Company

Boat America Corporation

Borsheim Jewelry Company, Inc.

Brooks Sports, Inc.

The Buffalo News, Inc.

Burlington Northern Santa Fe, LLC

Bushwtck Metals LLC

Business Wire, Inc.

California Insurance Company

Campbell Hausfeld/Scoll Fctzcr Company

CE Electric UK Holdings

Central States Indemnity Co. of Omaha

Central States of Omaha Companies, Inc.

Ceiro Flow Products LLC

Cerro Wire LLC

Chcmtool Incorporated

Clal U.S. Holdings, Inc.

Clayton Homes, Inc.

CMH Homes, Inc.

CMH Manufacturing, Inc.

CMH Parks, Inc.

Columbia Insurance Company

CORT Business Services Corporation

CTB International Coip.

Cubic Designs, Inc.

Cypress Insurance Company

Delta Wholesale Liquors, Inc.

Ecowater Systems LLC

Empire Distributors, Inc.

Empire Distributors ofNorth Carolina, Inc.

BERKSHIRE HATHAWAY INC. Subsidiaries of Registrant (1) December 31, 2013

Domicile or Slalc ol IncoriiorMioii

Delaware

Delaware

Georgia

Georgia

Nebraska

Washington

Washington

New Jeiscy

Canada

Oregon

New York

Nebraska

Delaware

Nebraska

United Kingdom

Nebraska

Nebraska

Delaware

Dclawaie

Nebraska

Delaware

Delaware

Virginia

Nebraska

Washington

Delaware

Delaware

Delaware

Delaware

California

Delaware

United Kingdom

Nebraska

Nebraska

Delaware

Delaware

Delaware

Delaware

Delaware

Tennessee

Tennessee

Tennessee

Nebraska

Delaware

Indiana

Wisconsin

California

Tennessee

Delaware

Georgia

Georgia

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Sot.rce BERKSHIRE HATHAWAY INC. 10-K, March 03. 2UM

ilie itilonnatlan contained hen?ht nuiy net/to copied, adapted or distributed and ts riot warranted to be accurate, complete ortlmtff. The user assumes all risks tor any damages or looses atMng front anyuso ot this Information, except to the extent such damages or /ossns cannot be limited or excluded by applicable law. Past financial performance Is no guarantee of future results

Reg. S-K Item 601 Exhibit 21

Coninntn Nantc

EXSff Worldwide, Inc.

Faraday Reinsurance Co. Limited

Faraday Underwriting Limited

The Fechhcimcr Brothcis Company

FlightSafety International Inc.

FlightSafety Services Corporation

Forest River, Inc.

Freo Group Pty Lid

Fruit of the Loom, Inc.

Garan, Incorporated

GEICO Advantage Insurance Company

GEICO Casualty Company

GEICO Choice Insurance Company

GEICO Corporation

GEICO General Insurance Company

GEICO Indemnity Company

GEICO Secure Insurance Company

GRD Holdings Corporation

Gen Re Intermediaries Corporation

General Re Life Corporation

General Re Corporation

General Re Financial Products Corporation

General Reinsurance Corporation

General Star Indemnity Company

General Star National Insurance Company

General Reinsurance AG

General Reinsurance Africa Ltd.

General Reinsurance Australia Ltd.

General Reinsurance Life Australia Ltd.

Genesis Insurance Company

Global Cranes Pty Lid

Government Employees Insurance Company

GUARD Insurance Group, Inc.

Helzbcrg's Diamond Shops, Inc.

H H. Brown Shoe Company, Inc.

Homemakers Plaza, Inc.

HomcServices of America, Inc.

Horizon Wine & Spirits - Nashville, Inc.

Horizon Wine & Spirits - Chattanooga, Inc.

International Dairy Queen, Inc.

IMC International Metalworking Companies B.V.

IMC (Germany) Holdings GmbH

Ingersoll Cutting Tool Company

Ingcisoll Werkzeuge GmbH

Iscar Ltd.

Johns Manvillc

Johns Manville Corporation

Johns Manvillc Slovakia, a.s.

Jordan's Furniture, Inc.

Justin Brands, Inc.

Justin Industries, Inc.

BERKSHIRE HATHAWAY INC. Subsidiaries of Registrant (1) December 31, 2013

Domicile or Slate orincot|iorallon

Delaware

United Kingdom

United Kingdom

Delaware

New York

Delaware

Indiana

Australia

Delaware

Virginia

Nebraska

Maryland

Nebraska

Delaware

Maryland

Maryland

Nebraska

Delaware

New York

Connecticut

Delaware

Delaware

Delaware

Delaware

Delaware

Germany

South Africa

Australia

Australia

Connecticut

Australia

Maryland

Delaware

Missouri

Delaware

Iowa

Delaware

Tennessee

Tennessee

Delaware

Netherlands

Germany

Delaware

Germany

Israel

Delaware

Delaware

Slovakia

Massachusetts

Delaware

Texas

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Soutcc BERKSHIRE HATHAWAY INC. 10-K, Match 03. 201-1

The inlonnatlan contained heroin nay not he copied, adaptedor distributed ondIs not wanantedlo be accurate, complete or timely. The user assumes all risks tor any damages or losses arising hum tiny use ol this Information, except to the extent such damages or losses cannot be limited or excluded hy applicable law Past financial performance is no guarantee of tutute icsulls.

Reg. S-K Item 601 Exhibit 21

BERKSHIRE HATHAWAY INC. Subsidiaries of Registrant (1) December 31,2013

Company Name      Domicile or Srnlc of Incorporation

Kahn Ventures, Inc.      Georgia

Kcm River Gas Transmission Company      Texas

KR Holding, LLC      Delaware

L.A. Darling Company LLC      Delaware

Larson-Juhl US LLC      Georgia

Lipolcc, S.A.      Spain

Lubrizol Advanced Materials Europe BVBA      Belgium

Lubrizol Advanced Materials International, Inc.      Delaware

Lubrizol Advanced Materials, Inc.      Delaware

The Lubrizol Coiporation      ^0nio

Lubrizol Fi ancc SAS      France

Lubrizol (Gibraltar) Limited      Gibraltar

Lubrizol (Gibraltar) Limited Luxembourg SCS      Luxembourg

Lubrizol (Gibraltar) Minority Limited      Gibraltar

Lubrizol Holdings France SAS      France

Lubrizol International, Inc.      Cayman Islands

Lubrizol Luxembourg S.a.r.l.      Luxembourg

Lubrizol Overseas Trading Corporation      Delaware

Marmon Engineered Industrial & Metal Components, Inc.      Delaware

Marmon Holdings, Inc.      Delaware

Marmon Retail & End User Technologies, Inc.      Delaware

Marmon Natural Resource & Transportation Sen-ices, Inc.      Delaware

Marmon/Kcystone LLC      Delaware

Marquis Jet Holdings, Inc.      Delaware

Marquis Jet Partners, Inc.      Delaware

McLane Company, Inc.      Texas

McLane Foodservice, Inc.      Texas

Mcadowbrook Meat Company, Inc.      North Carolina

The IMcdical Protective Company      Indiana

Medical Piotcctivc Corporation      Indiana

Mcyn Holding B.V.      Netherlands

Mcyn Food Processing Technology B.V.      Netherlands

MHC Inc.      Iowa

MidAmerican Energy Company      l°^wa

MidAmerican Energy Holdings Company      ^Iowa

MidAmerican Funding, LLC      ^Iowa

MidAmerican Renewablcs, LLC      Delaware

MidAmerican Transmission, LLC      Delaware

MiTek Industries, Inc.      Delaware

Mount Vernon Fire Insurance Company      Pennsylvania

Mouscr Electronics, Inc.      Delaware

National Fire & Marine Insurance Company      Nebraska

National Indemnity Company      Nebraska

National Indemnity Company of the South      Florida

National Indemnity Company of Mid-America      'owa

National Liability & Fire Insurance Company      Connecticut

Nebraska Furniture Mart, Inc.      Nebraska

Ncdcrlandse Reassurantie Groep NV      Netherlands

NeUets Inc.      Delaware

Nevada Power Company      Nevada

NFM of Kansas, Inc      Kansas

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Tlic ftiletmatlon contained herein moy not be copied, adapted or distributed arrd ts not warranted lo be accurate, complete or timely. The user assumes ell risks tor any damages ot looses arising from any use ol this Information, except to the extent such damages or losses cannot be limited or excluded hy applicable law Past financial performance Is no guarantee ot tutute tesulls.

Reg. S-K Hem 601 Exhibit 21

Company Name

NNGC Acquisition, LLC

Northern Electric pic.

Northern Naniral Gas Company

Northern Powergrid (Northeast) Limited

Northern Powergr id (Yorkshire) pic.

Northern Powergrid Holdings Company

Northern Powergrid Limited

NV Energy, Inc.

NVE Holdings, LLC

Oak River Insurance Company

Omaha World-Herald Company

OTC Worldwide Holdings, Inc.

Or iental Trading Company, Inc.

PacifiCorp

Princeton Insurance Company

The Pampered Chef, Ltd.

PPW Holdings LLC

Precision Steel Warehouse, Inc.

Railsplitler Holdings Corporation

R C. Willcy Home Furnishings

Redwood Fire and Casually Insurance Company

Richline Group, Inc.

RSCC Wire & Cable LLC

Russell Brands, LLC

Sager Electrical Supply Co. Inc.

ScbullerGmbll

Scott Fclzer Company

Scott Fetzer Financial Group, Inc.

See's Candies, Inc.

See's Candy Shops, Inc.

Shaw Contract Flooring Services, Inc.

Shaw Industries Group, Inc.

Sierr a Pacific Power Company

Soft! Shoe Company, LLC

Star Furniture Company

Sterling Crane LLC

TaeguTec Ltd.

TTI, Inc.

Tungaloy Corporation

Unarco Industries LLC

Union Tank Car Company

Union Underwear Company, Inc.

United Stales Liability Insurance Company

U.S Investment Corporation

U.S. Underwriters Insurance Company

Vandcrbilt Mortgage and Finance, Inc.

21st Mortgage Corporation

Vanity Fail Brands, LP

Webb Wheel Products, Inc.

Wells Lamonl LLC

BERKSHIRE HATHAWAY INC. Subsidiaries of Registrant (1) December 31,2013

Domicile or Slate, of Incorporation

Delaware

United Kingdom

Delaware

United Kingdom

United Kingdom

United Kingdom

United Kingdom

Nevada

Delaware

Nebraska

Delaware

Delaware

Delaware

Oregon

New Jersey

Illinois

Delaware

Illinois

Delaware

Ufah

Nebraska

Delaware

Delaware

Delaware

Massachusetts

Germany

Delaware

Delaware

California

California

Georgia

Georgia

Nevada

Delaware

Texas

Delaware

Korea

Delaware

Japan

Delaware

Delaware

Delaware

Pennsylvania

Penrrsylvania

North Dakota

Tennessee

Delaware

Delaware

Delaware

Delaware

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77iy Intorrnatlon contained herein moy not be copied, adopted or distributed and ts not warranted lo be accurate, complete or ttmcty The user assumes all risks lor any damages or losses arising Irom any use of this Irtlormatlon, etcepl to Ihe extent such damages or losses cannot he limited or excluded hy applicable law Past financial performance Is no guarantee ol future results.

Reg. S-K Item 601 Exhibit 21

BERKSHIRE HATHAWAY INC. Subsidiaries of Registrant (1) December 31, 2013

Company Name

World Book/Scolt Fctzcr Company, Inc. XTRA Corpoiation XTRA Finance Corporation XTRA Lease LLC XTRA LLC

Yorkshire Electricity Group pic. Yorkshire Power Group Limited

Domicile or Slate of Incorporation

Nebraska

Delaware

Delaware

Delaware

Maine

United Kingdom United Kingdom

(1)    Each of the named subsidiaries is not necessarily a "significant subsidiary" as defined in Rule l-02(w) of Regulation S-X, and Berkshire has several additional subsidiaries not named above. The unnamed subsidiaries, considered in the aggregate as a single subsidiary, would not constitute a "significant subsidiary" at the end of the year covered by this report.

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J7it? Information contained herein may no! Oo copied, td spied or dfolributud and Is not warranted to be accurate, complete or timely Ihe user assumes all risks for any damages or losses arising front any Use of this information, except to the extent such damages or tosses cannot be limited or excluded by applicable taw. Past financial performance is no guarantee oi future results

Reg. S-K Item 601 Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Wc consent to the incorporation by reference in Registration Statement No. 333- 186257 on Form S-3 and Registration Statement Nos. 333-53046, 333-64284, 333-70609, 333-74312, 333-75612, 333-101662, 333-164961, 333-164959,333-164958, 333-111614, and 333-179855 on Form S-8 of our reports dated February 28,2014, relating to the consolidated financial statements and financial statement schedule of Berkshire Hathaway Inc., and the effectiveness of Berkshire Hathaway Inc.'s internal control over financial reporting, appearing in this Annual Report on Form 10-K. of Berkshire Hathaway Inc. for the year ended December 31, 2013.

/s/ Dcloitlc & Touchc LLP

Omaha, Nebraska Febiuary 28,2014

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Source. BERKSHIRE HATIIAWAY INC. 10-K. March 03. 2014

nic Inloimstlon contained herein ntoy not bo copied, adapted or distributed end Is not warranted lo be accurate, complete or Itmely. The user assumes all risks for any damages or losses arising Iromanyuso of this Inloimatlon. eircopt to the extent such damages or losses cannot be Irmlted or excluded by applicable taw Past financial peifmmance is no guarantee ol tutuic results

EXH1BIT31.I

FORM 10-K Year ended December 31, 2013 Rule 13a-14(a)/15d-14(a) Certifications CERTIFICATIONS

I, Warren E. Buffett, certify that:

1. I have reviewed this annual report on Form 10-K of Berkshire Hathaway Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to slate a material fact necessary to make Ihe statements made, in light ofthe circumstances under which such statements were made, not misleading with respect to the period coveicd by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows ofthe registrant as of, and for, the periods presented in this report;

4      The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in

Exchange Act Rules 13a-15(e) and 15d-15(c)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the legistrant and have:

1. Designed such disclosure controls and procedures, oi caused such disclosure contiols and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
2. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
3. Evaluated the effectiveness ofthe registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as ofthe end ofthe period covered by this report based on such evaluation; and
4. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.     The registrant's other certifying officcrfs) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

1. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arc reasonably likely to adversely affect the registrant's ability lo record, process, summarize and report financial information; and
2. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 28,2014

      Isl   WARREN E. BUFFETT      

Chairman—-Principal Executive Officer

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Souxe. BERKSHIRE HATHAWAY INC. 10-K, Which 03. 2011

Ti.e Information contained herein may not be copied, adapted or distributed and Is not warranted lo be accurate, complete or timely. The user assumes all risks (or any damages or losses arlslnn from any use- of this information, except to the extent such damages or lostes cannot oc limited or excluded hy applicable law. Past financial performance Is no guarantee of future results.

EXHIBIT 31.2

FORM 10-K Year ended December 31, 2013 Rule 13a-14(a)/15d-14(a) Certifications CERTIFICATIONS

I, Marc D. Hamburg, certify that:

1.      I have reviewed this annual report on Form 10-1C of Berkshire Hathaway Inc.;

1. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit lo state a material fact necessary to make the statements made, in light ofthe circumstances under which such statements were made, not misleading with respect to the period covered by this report;
2. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
3. The registrant's other certifying officci(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(c) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the icgistrant and have:

1. 1. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to cnsuie that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   2. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding die reliability of financial lcporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   3. Evaluated the effectiveness ofthe registrant's disclosure controls and procedures and presented in this report our conclusions about the. effectiveness ofthe disclosure controls and procedures, as ofthe end ofthe period covered by this report based on such evaluation; and
   4. Disclosed in this report any change in (he registrant's internal control over financial reporting that occuiTcd during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial leporting; and
2. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee ofthe registrant's board of directors (or persons performing the equivalent functions):

1. All significant deficiencies and material weaknesses in the design or operation of internal contiol over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
2. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 28, 2014

      /s/ MARC D. HAMBURG      

Senior Vicr rmlrlcnt—Principal Financial Officer

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Souicc BERKSHIRE li/WHAYVAY INC. 10-K. Match 03. 2014

77)C tnlonnatlan contained herein may net he ctiplcd. adapted or distributed and ta not warranted to he accurate, complete or timely, rite user assumes all risks tor any damages or losses arising from any use ollhls Information, erccpt lo the extent such damages or losses cannot he limited or excluded by applicable law. Past financialiicrformance ts no guarantee ot future results.

EXHIBIT 32.2

FORM 10-K Section 1350 Certifications Year ended December 31, 2013

I, Marc D. Hamburg, Senior Vice President and Chief Financial Officer of Berkshire Hathaway Inc. (the "Company"), certify, puisuant to Section 906 ofthe Sarbancs-Oxlcy Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1)      the Annual Report on Form 10-Kof the Company for the period ended December 31, 2013 (the "Report") fully complies with the requirements of

Section 13(a) or 15(d) of ihe Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2)      the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations ofthe Company.

Dated-February 28, 2014

      IS/   MARC D HAMBURG      

Marc D, Hamburg Senior Vice Preiidrnt and Chief Financial OfTlrer

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The inform* ttati contained herein atcynotbo copied, adapted or dfatrtbuted end Is not warranted to be accurate, complete or timely Tim user assumes all risks tor any damages or tosses arising from any use of this Information, atcepi to the ex tent such damages or losses cannot be limited or excluded by applicable law Past financial performance Is no guarantee ot tuture results

EXHIBIT 95

MINE SAFETY VIOLATIONS AND OTHER LEGAL MATTER DISCLOSURES PURSUANT TO SECTION 1503(a) OF THE DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT

PacifiCorp and its subsidiaries operate coal mines and coal processing facilities and Acme Brick and its affiliates operate clay, shale and limestone excavation facilities (collectively, the "mining facilities") that aic regulated by the Federal Mine Safety and Health Administration ("MSHA") imdci the Federal Mine Safety and Health Act of 1977 (the "Mine Safety Act")- MSHA inspects mining facilities on a regular basis. The total number of reportable Mine Safely Act citations, orders, assessments and legal actions for the year ended December 31,2013 are summarized in the table below and arc subject to contest and appeal. The severity and assessment of penalties may be reduced oi, in some cases, dismissed through the contest and appeal process. Amounts are reported regardless of whether PacifiCorp or Acme has challenged or appealed the matter. Coal, clay and other reserves that are not yet mined and mines that are closed or idled arc not included in the information below as no reportable events occurred at those locations during the year ended December 31, 2013. PacifiCorp and Acme have not received any notice of a pattern, or notice ofthe potential lohavc a pattern, of violations of mandatory health or safety standards that are of such natuic as could have significantly and substantially contributed to the cause and effect of coal or other mine health or safety hazards under Section 104(e) ofthe Mine Safety Act during the year ended December 31,2013.

Mine Safety Ac!

Section KM Sfgnfficint

Total Value ol

Proposed MSHA Assessme nil tin thousands)

Total Number of Mining Related Fatalities

See (ion 107(a) Imminent Danger Orders'^

Pending as of Last

Day of fcrlodW

Section 104(d) Citations/ Orders W

Section 110(b)(2) Violation^)

Section 104(b) Order,<^J>

SubsUfltial Citation.P

Legal Actions

Instituted Resolved During During Period Period

97 225

10

■ 1.-25

19

Mining Facilities Coal.V: -:/»■■■'-,' - *" Deer Deck Bridger (surface)' . Bndgcr (underground) Cottonwood Prcpaj-atbry'PJjnt     V '  • . Wyodak Coal Crushing Facility Clay, 'shale and limestone":'. ■' Minnesota

Malvern ■ '"" Wheeler

Eureka'   ■  .■ i -    ■ \ ■ '— ■. . " Fort Smith

Kanopolis      ■ⁱ-'- ^l- ,'-'

Oklahoma Cily

Tulsa    ■■• ■-'.:      V ■ ' -^r

Denver

Ikhnc'tt ^;       '.■■!'.•'.- ■•='. *,-■/ Denton

Elgin'.      ■      - '■

McQuccncy

Garrison,.-      \> '^; .-,   .■ ,

Scaly

Texas Clay ■.'.!.';.,'■'        '" '. Leeds

Montgomery'■ ■• "A;. Lucdcrs

Cordova      ''"  • ■■■ •'

1. Citations for alleged violations of mandatory health and safety standards that could significantly or substantially contribute lo the cause and effect of a safely or health hazard under Section 104 of the Mme Safety Act. One of the citations nt Deer Creek was suhscqucnily modified by MSHA to a nonsignificant and substantial citation. Four of ihe citations at Ulidger (underground) were subsequently setllrd with the Federal Mine Safety and Health Review Commission and were reduced to nnn-significnnt and substantial citations
2. For alleged failure to totally abate the subject mailer of a Mine Safety Act Section 104(a) citation within the period specified in lhc citation.
3. For alleged unwarrantable failure (i c . .jggniviiu-d condud constituting more than oidinaty negligence) lo comply M*ilh u mandatory health or solely standard.
4. For alleged flagrant violations (i.e., rvckkss or repealed failure to make reasonable efforts to eliminate a known violation of a mandatory health oi safety standard that substantially and proximately caused, or reasonably could have been expected to cause, death or serious bodily injury)
5. For the existence of any condition or practice, in a coal or other mine which could reasonably be expected lo cause death or serious physical harm before such condition or practice cun be nbolcd
6. Amounts include 20 contest of proposed penalties under Subpart C and one contest of a citation under Subpart 13 nnd three labor-related complaints under Subpart II of the Federal Mine Safety and Health Review Commission's procedural rules The pending legal actions arc not exclusive lo citations, notices, orders and penalties assessed by MSHA durmj; the reporting period

Powered liy Muiiungslar'^- Document. Research"'

Soutce BCRKSHinf. HATHAWAY INC. 10-K. Mnich 03. 2014

T7ic Information contained herein may not ho copied, adapted or distributed end Is not wot ranted to be accurate, completer or timely Tho user assumes all risks lor any damages or losses arlvlng from any use of this Information, except to the extent such damages or lossas cannot be limited or excluded by applicable taw Past financial performance fs no guarantee of tuture recalls.

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) ofthe Securities Exchange Act of 1934

(Amendment No. )

Filed by the Registrant 0

Filed by a Party other than the Registrant □

Check the appropriate box:

• Preliminary Proxy Statement
• Confidential for Use ofthe Commission Only (as permitted by Rule 14a-6|e]|2])

0   Definitive Proxy Statement

• Definitive Additional Materials
• Soliciting Material Pursuant to § 240.14a-12

BERKSHIRE HATHAWAY INC.

(Name of Registrant as Specified In Its Charter)

(Name of Pcrson(s) Filing Proxy Statement If Other Than The Registrant) Payment of Filing Fee (Check the appropriate box): 0   No fee required

• Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1. 1. 1. Title of each class of securities lo which transaction applies:
      2. Aggregate number of securities to which transaction applies:
         1. Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: (Set forth the amount on which the filing fee is calculated and slate how it was determined.)
      3. Proposed maximum aggregate value of transaction:
      4. Total fee paid:
2. Fee paid previously with preliminary materials.
   • Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:

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BERKSHIRE HATHAWAY INC.

3555 Farnam Street Omaha, Nebraska 68131

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

May 4,2013

To The Shareholders:

Notice is hereby given that the Annual Meeting of the Shareholders of Berkshire Hathaway Inc. will be held at the CenturyLink Center Omaha, 455 North lO Street, Omaha, Nebraska, on May 4, 2013 at 3:45 p.m. for the following purposes:

1. To elect directors.
2. To act on a shareholder proposal if properly presented at the meeting.
   1. To consider and act upon any other matters that may properly come before the meeting or any adjournment thereof.

The Board of Directors has fixed the close of business on March 6, 2013 as the record date for determining the shareholders having the right to vote at the meeting or any adjournment thereof. A list of such shareholders will be available for examination by a shareholder for any purpose germane to the meeting during ordinary business hours at the offices ofthe Corporation at 3555 Farnam Street, Omaha, Nebraska, during the ten days prior to the meeting.

You are requested to date, sign and return the enclosed proxy which is solicited by the Board of Directors ofthe Corporation and will be voted as indicated in the accompanying proxy statement and proxy. A return envelope is provided which requires no postage if mailed in the United States. If mailed elsewhere, foreign postage must be affixed.

Prior to the formal annual meeting, just as in recent years, the doors will open at the CenturyLink Center at 7:00 a.m. and the movie will be shown at 8:30 a.m. At 9:30 a.m., the question and answer period will commence. The question and answer period will last until 3:30 p.m. (with a short break for lunch). After a recess, the formal Annual Meeting of Shareholders will convene at 3:45 p.m.

By order ofthe Board of Directors FORREST N. KRUTTER, Secretary

Omaha, Nebraska March 15, 2013

A shareholder may request meeting credentials for admission to the meeting by completing and promptly returning to the Company the meeting credential order form accompanying this notice. Otherwise, meeting credentials may be obtained at the meeting by persons identifying themselves as shareholders as ofthe record date. For a record owner, possession of a proxy card will be adequate identification. For a beneficial-but-not-of-record owner, a copy of a broker's statement showing shares held for his or her benefit on March 6, 2013 will be adequate identification.

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BERKSHIRE HATHAWAY INC. 3555 Farnam Street Omaha, Nebraska 68131

PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS May 4, 2013

This statement is furnished in connection with the solicitation by the Board of Directors ("Board") of Berkshire Hathaway Inc. (hereinafter "Berkshire" or "Corporation" or "Company") of proxies in the accompanying form for the Annual Meeting of Shareholders to be held on Saturday, May 4, 2013 al 3:45 p.m. and at any adjournment thereof. This proxy statement and the enclosed form of proxy were first sent to shareholders on or about March 15, 2013. If the form of proxy enclosed herewith is executed and returned as requested, il may nevertheless be revoked at any time prior to exercise by filing an instrument revoking it or a duly executed proxy bearing a later date. Solicitation of proxies will be made solely by mail at the Corporation's expense. The Corporation will reimburse brokerage firms, banks, trustees and others for their actual out-of-pocket expenses in forwarding proxy material to the beneficial owners of its common stock.

As ofthe close of business on March 6, 2013, the record date for the Annual Meeting, the Corporation had outstanding and entitled to vote 892,657 shares of Class A Common Stock (hereinafter called "Class A Stock") and 1,126,012,136 shares of Class B Common Stock (hereinafter called "Class B Stock"). Each share of Class A Stock is entitled to one vote per share and each share of Class B Stock is entitled to one-ten-thousandth (1/10,000) of one vote per share on all matters submitted to a vote of shareholders ofthe Corporation. The Class A Stock and Class B Stock vote together as a single class on the matters described in this proxy statement. Only shareholders of record at the close of business on March 6, 2013 are entitled to vote at the Annual Meeting or at any adjournment thereof.

The presence at the meeting, in person or by proxy, ofthe holders of Class A Stock and Class B Stock holding in the aggregate a majority ofthe voting power ofthe Corporation's stock entitled to vote shall constitute a quorum for the transaction of business. A plurality of the votes properly cast for the election of directors by the shareholders attending the meeting, in person or by proxy, will elect directors to office. However, pursuant to the Berkshire Hathaway Inc. Corporate Governance Guidelines, if a director nominee in an uncontested election receives a greater number of votes "withheld" from his or her election than votes "for" that director's election, the nominee shall promptly offer his or her resignation to the Board. A committee consisting of the Board's independent directors (which will specifically exclude any director who is required to offer his or her own resignation) shall consider all relevant factors and decide on behalf of the Board the action to be taken with respect to such offered resignation and will determine whether to accept the resignation or take other action. The Corporation will publicly disclose the Board's decision with regard to any resignation offered under these circumstances with an explanation of how the decision was reached, including, if applicable, the reasons for rejecting the offered resignation.

A majority of votes properly cast upon any other question shall decide the question. Abstentions will count for purposes of establishing a quorum, but will not count as votes cast for the election of directors or any other question. Accordingly, abstentions will have no effect on the election of directors and arc the equivalent of an "against" vote on mailers requiring a majority of votes properly cast to decide the question. Broker non-votes will not count for purposes of establishing a quorum or as votes cast for the election of directors or any other question and accordingly will have no effect. Shareholders who send in proxies but attend the meeting in person may vote directly if they prefer and withdraw their proxies or may allow their proxies lo be voted with the similar proxies sent in by other shareholders.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 4, 2013.

The Proxy Statement for the Annual Meeting of Shareholders to be held on May 4, 2013 and the 2012 Annual Report to the Shareholders arc available at www.bcrkshirehathaway.com/eproxy.

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1. ELECTION OF DIRECTORS

At the 2013 Annual Meeting of Shareholders, a Board of Directors consisting of 13 members will be elected, each director to hold office until a successor is elected and qualified, or until the director resigns, is removed or becomes disqualified.

The Governance, Compensation and Nominating Committee ("Governance Committee") has established certain attributes that it seeks in identifying candidates for directors. In particular the Governance Committee looks for individuals who have very high integrity, business savvy, an owner-oriented attitude and a deep genuine interest in Berkshire. These are the same attributes that Warren Buffett, Berkshire's Chairman and CEO, believes to be essential if one is to be an effective member of the Board of Directors. In considering candidates for director, the Governance Committee considers the entirety of each candidate's credentials in the context of these attributes. In the judgment of the Governance Committee as well as that ofthe Board as a whole, each ofthe candidates being nominated for director possesses such attributes.

Upon the recommendation of the Governance Committee and Mr. Buffett, the Board of Directors has nominated for election the 12 current directors of the Corporation and Ms. Meryl B. Witmer. Certain information with respect to nominees for election as directors is contained in the following table:

warren E. buffett, age 82, has been a director and the controlling shareholder of the Corporation since 1965 and has been its Chairman and Chief Executive Officer since 1970. He was a director of The Washington Post Company until May 2011.

Additional Qualifications:

Warren Buffett brings to the Board his 43 years of experience as Chairman and Chief Executive Officer ofthe Corporation.

HOWARD c buffett, age 58, has been a director of the Corporation since 1993. For more than the past five years, Mr. Buffett has been President of Buffett Farms and President ofthe Howard G. Buffett Foundation, a charitable foundation that directs funding for humanitarian and conservation related issues. He is also a director of The Coca-Cola Company, Lindsay Corporation and Sloan Implement Company.

Additional Qualifications:

Howard Buffett brings to the Board his experience as the owner of a small business, as a past senior executive of a public corporation, as a director of public corporations and as the President of a large charitable foundation.

Stephen b. burke, age 54, has been a director ofthe Corporation since 2009. Mr. Burke has been the Chief Executive Officer of NBCUniversal and Executive Vice President of Comcast Corporation since January 2011. Prior to that time, from 1998 until January 2011, he was the Chief Operating Officer of Comcast Corporation. He is also a director of JPMorgan Chase & Co.

Additional Qualifications:

Stephen Burke brings to the Board his experience as a senior executive of a public corporation and his financial expertise as a director of a major banking institution.

SUSAN l. decker, age 50, has been a director ofthe Corporation since 2007. Ms. Decker also serves on the boards of directors of Intel Corporation, Costco Wholesale Corporation and LegalZoom. During the 2009-2010 school year, she served as Entrcprencur-in-Residence at Harvard Business School. Prior to that, from June 2000 to April 2009, Ms. Decker held various executive management positions at Yahoo! Inc., a global Internet brand, including President (June 2007 to April 2009), head ofthe Advertiser and Publisher Group (December 2006 to June 2007) and Chief Financial Officer (June 2000 to June 2007). Before Yahoo!, Ms. Decker spent 14 years with Donaldson, Lufkin & Jenrette. She is a Chartered Financial Analyst and served on the Financial Accounting Standards Advisory Council for a four-year term, from 2000 to 2004.

Additional Qualifications:

Susan Decker brings to the Board her experience as a past senior executive of a public corporation and a director of public corporations and her financial expertise as a former financial analyst and a former member ofthe Financial Accounting Standards Advisory Council.

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william h. gates hi, age 57, has been a director of the Corporation since 2005. Mr. Gates currently serves as Co-chair of the Bill & Melinda Gates Foundation. For more than the past five years, Mr. Gates has also served as Chairman of the Board of Directors of Microsoft Corporation, a software company. Mr. Gates was the Chief Executive Officer of Microsoft Corporation from its incorporation in 1981 until January 2000.

Additional Qualifications:

William Gates brings to the Board his experience and financial expertise as the chairman ofthe board of directors and as a past chief executive officer of a public corporation and as the co-chair of a major charitable foundation.

david s. gottesman, age 86, has been a director ofthe Corporation since 2004. For more than the past five years, he has been a principal of First Manhattan Co., an investment advisory firm. Mr. Gottesman is Vice Chairman and a trustee of the American Museum of Natural History.

Additional Qualifications:

David Gottesman brings to the Board his experience and financial expertise as principal of a private investment manager.

charlotte guvma.n, age 56, has been a director of the Corporation since 2003. Ms. Guyman was a general manager with Microsoft Corporation until July 1999 and has been retired since that time. She is a director of Space Needle LLC and was former Chairman ofthe Board of Directors of UW Medicine, an academic medical center.

Additional Qualifications:

Charlotte Guyman brings to the Board her experience as a past senior executive of a public corporation and her financial expertise as the former chairman of a major academic medical center.

donald r. keougii, age 86, has been a director of the Corporation since 2003. For more than the past five years, he has been Chairman of Allen & Company, an investment banking firm. Mr. Kcough currently is a director of The Coca-Cola Company and is Chairman Emeritus of the University of Notre Dame.

Additional Qualifications:

Donald Keough brings to the Board his experience and financial expertise as the chairman of an investment banking firm, director of public corporations and as a past senior executive of a public corporation.

Charles T. munger, age 89, has been a director and Vice Chairman ofthe Corporation's Board of Directors since 1978. Between 1984 and 2011, he was Chairman ofthe Board of Directors and Chief Executive Officer of Wesco Financial Corporation, approximately 80%-owned by the Corporation during that period. He also served as President of Wesco Financial Corporation between 2005 and 2011. Mr. Munger is also Chairman of the Board of Directors of Daily Journal Corporation, a director of Costco Wholesale Corporation and Chairman ofthe Board of Trustees of Good Samaritan Hospital.

Additional Qualifications:

Charles Munger brings to the Board his 35 years of experience as Vice Chairman of the Corporation.

thomas s. murphy, age 87, has been a director ofthe Corporation since 2003. Mr. Murphy has been retired since 1996. He was Chairman ofthe Board and Chief Executive Officer of Capital Cities/ABC, Inc. from 1966 to 1990 and from February 1994 until his retirement in 1996.

Additional Qualifications:

Thomas Murphy brings to the Board his experience and financial expertise as a past chief executive officer of a public corporation and as a past director of public corporations.

RONALD l. OLSON, age 71, has been a director ofthe Corporation since 1997. For more than the past five years, he has been a partner in the law firm of Munger, Tolles & Olson LLP. He is also a director of City National Corporation, Edison International, Southern California Edison and The Washington Post Company and he is a trustee of Western Asset Funds.

Additional Qualifications:

Ronald Olson brings to the Board his experience and expertise in legal issues and corporate governance as a partner of a law firm and as a director of public corporations.

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Walter scott, JR., age 8), has been a director of the Corporation since 1988. For more than the past five years, he has been Chairman of the Board of Directors of Level 3 Communications, Inc., which is engaged in telecommunications and computer outsourcing and is a successor to certain businesses of Peter Kiewit Sons' Inc. He is also a director of Peter Kiewit Sons' Inc. and Valmonl Industries Inc.

Additional Qualifications:

Walter Scott brings to the Board his experience and financial expertise as a past chief executive officer and as a director of both public and private corporations and as chairman of a major charitable foundation.

meryl 8. witmer, age 51, has been nominated to fill a vacancy created by the decision ofthe Board of Directors to increase its size from twelve to thirteen members. Since January 2001, Ms. Witmer has been a managing member ofthe General Partner of Eagle Capital Partners, L.P., an investment partnership. From 1989 through the end of 2000, she was one of two General Partners at Buchanan, Parker Asset Management which managed Emerald Partners L.P., an investment partnership.

Additional Qualifications:

Meryl Witmer brings to the Board her experience and financial expertise as a.manager of an investment fund.

When the accompanying proxy is properly executed and returned, the shares it represents will be voted in accordance with the directions indicated thereon or, if no direction is indicated, the shares will be voted in favor ofthe election ofthe thirteen nominees identified above. The Corporation expects each nominee to be able to serve if elected, but if any nominee notifies the Corporation before the annual meeting that he or she is unable to do so, then the proxies will be voted for the remainder of those nominated and, as designated by the directors, may be voted (i) for a substitute nominee or nominees, or (ii) to elect such lesser number to constitute the whole Board as equals the number of nominees who are able to serve.

Directors' Independence

The Governance Committee of the Board of Directors has concluded that the following directors and Ms. Witmer are independent in accordance with the director independence standards of the Securities and Exchange Commission pursuant to Item 407(a) of Regulation S-K, and has determined that none of them has a material relationship with the Corporation which would impair his or her independence from management or otherwise compromise his or her ability to act as an independent director: Stephen B. Burke; Susan L. Decker; William H. Gates IU; David S. Gottesman; Charlotte Guyman; Donald R. Keough; Thomas S. Murphy; Waller Scott, Jr. and Meryl B. Witmer.

In making its determination with respect to Mr. Scott, the Governance Committee considered his role as a director of and the holder of 9.4% of the voting stock of MidAmerican Energy Holdings Company in which the Corporation owns approximately 89.8% of the voting stock. The Governance Committee also considered the agreement between the Corporation and Mr. Scott that requires Mr. Scott and his related family interests, before selling their MidAmerican shares, to give the Corporation the right of first refusal to purchase their shares (if the Corporation is legally permitted to buy them) or the opportunity to assign its right to purchase to a third party (if it is not legally permitted to buy them). That same agreement also gives Mr. Scott and his related family interests the right to put their shares to the Corporation (if the Corporation is legally permitted to buy them) at fair market value to be determined by independent appraisal if the sellers do not agree with the price offered by the Corporation, and payable in Berkshire shares. The Governance Committee considered these relationships in light of the attributes it believes need to be possessed by independent-minded directors, including personal financial substance and a lack of economic dependence on the Corporation, as well as business wisdom and ownership of Berkshire shares. The Governance Committee concluded that Mr. Scott's relationships, rather than interfering with his ability to be independent from management, are consistent with the business and financial substance that have made and continue to make him an independent director.

In making its determination with respect to Mr. Gates, the Governance Committee considered that Mr. Gates and his wife are trustees of the Bill & Melinda Gales Foundation ("Gates Foundation") that since 2006 received donations from Warren Buffett of 150,831,373 Class B shares of the Corporation. These shares were received in connection with Mr. Buffett's pledge to donate Class B Stock to the Gates Foundation over the remainder of Mr. Buffett's life. Terms of his pledge are described on Berkshire's website at www.berkshirehathaway.com under the heading "Letters from Warren E. Buffett Regarding

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Pledges to Make Gifts of Berkshire Stock." The Governance Committee considered these relationships in light ofthe attributes it believes need to be possessed by independent-minded directors, including personal financial substance and a lack of economic dependence on the Corporation, as well as business wisdom and ownership of Berkshire shares. The Governance Committee concluded that Mr. Gates' relationship to the Gates Foundation had no impact on his independence and that he continued to qualify as an independent director.

Howard G. Buffett is the son of Warren Buffett. Ronald L. Olson is a partner of the law firm of Munger, Tolles & Olson LLP. Munger, Tolles & Olson LLP rendered legal services to the Corporation and its subsidiaries in 2012 and has been rendering services in 2013. The Corporation and its subsidiaries paid fees of $4.2 million to Munger, Tolles & Olson LLP during 2012.

Board of Directors' Leadership Structure and Role in Risk Oversight

Warren E. Buffett is Berkshire's Chief Executive Officer and Chairman of the Board of Directors. He is Berkshire's largest shareholder and owns shares of Berkshire that represent 34.5% of the voting interest and 21.3% ofthe economic interest. As such he may be deemed to be Berkshire's controlling shareholder. It is Mr. Buffett's opinion that a controlling shareholder who is active in the business, as is currently the case and has been the case for Mr. Buffett for over the last 40 years, should hold both roles. This opinion is shared by Berkshire's Board of Directors. The Board of Directors has not named a lead independent director.

Mr. Buffett and the other members ofthe Board of Directors extensively discuss succession planning at each meeting of the Board. Upon his death or inability to manage Berkshire, no member ofthe Buffett family will be involved in managing Berkshire but, as very substantial Berkshire shareholders, the Buffett family will assist the Board of Directors in picking and overseeing the CEO selected lo succeed Mr. Buffett. At that time, Mr. Buffett believes it would be prudent to have a member of the Buffett family serve as the non-executive Chairman ofthe Board. Ultimately, however, that decision will be the responsibility ofthe then Board of Directors.

The full Board of Directors has responsibility for general oversight of risks. It receives reports from Mr. Buffett and other members of senior management at least twice a year on areas of risk facing the Corporation. Also, at least once a year, the senior management of the Corporation's significant businesses reports to the Board of Directors on risks facing their respective businesses. In addition, as part of its charier, the Audit Committee discusses Berkshire's policies with respect to risk assessment and risk management.

Board of Directors'' Meetings

Board of Directors' actions were taken in 2012 at the Annual Meeting of Directors that followed the 2012 Annual Meeting of Shareholders and at one special meeting and upon two occasions by directors' unanimous written consent. Each current director attended all meetings ofthe Board and of the Committees of the Board on which he or she served. Directors arc encouraged but not required to attend annual meetings ofthe Corporation's shareholders. All current directors ofthe Corporation attended the 2012 Annual Meeting of Shareholders.

Board of Directors' Committees

The Board of Directors has established an Audit Committee in accordance with Section 3(a)(58)A ofthe Securities Exchange Act of 1934. The Audit Committee consists of Susan L. Decker, Charlotte Guyman, Donald R. Keough and Thomas S. Murphy. The Board of Directors has determined that Mr. Murphy is an "audit committee financial expert" as that term is used in Item 401(h) of Regulation S-K promulgated under the Securities Exchange Act. All current members of the Audit Committee meet the criteria for independence set forth in Rule I0A-3 under the Securities Exchange Act and in Section 303A ofthe New York Stock Exchange Listed Company Manual. The Audit Committee assists the Board with oversight of a) the integrity ofthe Corporation's financial statements, b) the Corporation's compliance with legal and regulatory requirements and c) the qualifications and independence of the Corporation's independent public accountants and the Corporation's internal audit function. The Audit Committee meets periodically with the Corporation's independent public accountants, Director of Internal Auditing and members of management and reviews the Corporation's accounting policies and internal controls. The Audit Committee also selects the firm of independent public accountants to be retained by the Corporation to perform the audit. The Audit Committee held five meetings during 2012. The Board of Directors adopted an Audit Committee Charter on April 29, 2000, which was subsequently amended and restated on March 2, 2004. The amended Audit Committee Charter is available on Berkshire's website at www.bcrkshirehathawav.com.

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The Board of Directors has established a Governance Committee and adopted a Charter to define and outline the responsibilities of its members. A copy of the Governance Committee's Charter is available on Berkshire's website at www.berkshirehathaway .com. The Governance Committee consists of Susan L. Decker, David S. Gottesman and Walter Scott, Jr., all of whom are independent directors in accordance with the New York Stock Exchange director independence standards.

The role of the Governance Committee is to assist the Board of Directors by a) recommending governance guidelines applicable to Berkshire; b) identifying, evaluating and recommending the nomination of Board members; c) setting the compensation of Berkshire's Chief Executive Officer and performing other compensation oversight; d) reviewing related persons transactions and e) assisting the Board with other related tasks, as assigned from time to time. The Governance Committee met twice during 2012.

Director Nominations

Berkshire docs not have a policy regarding the consideration of diversity in identifying nominees for director. In identifying director nominees, (he Governance Committee does not seek diversity, however defined. Instead, as previously discussed, the Governance Committee looks for individuals who have very high integrity, business savvy, an owner-oriented attitude and a deep genuine interest in the Company. With respect to the selection of director nominees at the 2013 Annual Meeting of Shareholders, the Governance Committee recommends the Board nominate each ofthe 12 directors currently serving on the Board and Ms. Meryl Witmer.

Berkshire's Governance Committee has a policy under which it will consider recommendations presented by shareholders. A shareholder wishing to submit such a recommendation should send a letter to the Secretary ofthe Corporation at 3555 Farnam Street, Omaha, NE 68131. The mailing envelope must contain a clear notation that the enclosed letter is a "Director Nominee Recommendation." The Secretary must receive the recommendation by December 20, 2013, for it to be considered by the Committee for the 2014 Annual Meeting of Shareholders. The letter must identify the author as a shareholder and provide a brief summary ofthe candidate's qualifications. At a minimum, candidates recommended for nomination to the Board of Directors must meet the director independence standards ofthe New York Stock Exchange. The Governance Committee's policy provides that candidates recommended by shareholders will be evaluated using the same criteria as are applied to all other candidates.

Director Compensation

Directors ofthe Corporation or its subsidiaries who are employees or spouses of employees do not receive fees for attendance at directors' meetings. A director who is not an employee or a spouse of an employee receives a fee of $900 for each meeting attended in person and $300 for participating in any meeting conducted by telephone. A director who serves as a member of the Audit Committee receives a fee of $1,000 quarterly. Directors are reimbursed for their out-of-pocket expenses incurred in attending meetings of directors or shareholders. The Company does not provide directors and officers liability insurance to its directors.

The following table provides compensation information for the year ended December 31, 2012 for each non-management member of the Corporation's Board of Directors.

Fees Earned

or Paid in Cash      Total

Howard G. Buffett                                                   $          1,800      $1,800

Stephen B. Burke                                                                1,800      1,800

Susan L. Decker                                                                     5,800      5,800

William H.Gates III                                                             1,800      1,800

David S. Gottesman                                                             1,800      1,800

Charlotte Guyman                                                               5,800      5,800

Donald R. Keough                                                               5,800      5,800

Thomas S. Murphy                                                                 5,800      5,800

Ronald L. Olson                                                                  1,800      1,800

Walter Scott, Jr.                                                                  1,800      1,800

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Security Ownership of Certain Beneficial Owners and Management

Warren E. Buffet!, whose address is 3555 Farnam Street, Omaha, NE 68131, is a nominee for director and the only person known to the Corporation to be the beneficial owner of more than 5% ofthe Corporation's Class A Stock. The Bill & Melinda Gates Foundation Trust, whose address is 2365 Carillon Point, Kirkland, WA 98033, of which William H. Gates III is a trustee, is the beneficial owner of more than 5% of the Corporation's Class B Stock. Blackrock Inc. whose address is 40 East 52^nd Street, New York, NY 10022, reported on a Form 13-G filed with the Securities and Exchange Commission on February 8, 2013 it was the beneficial owner of 77,069,842 shares of Class B Common Stock. Such shares represent approximately 6.8% of the outstanding shares of Class B Common Stock and 0.8% of the aggregate voting power of Class A and Class B Common Stock. State Street Corporation, whose address is One Lincoln Street, Boston, MA 02111, reported on a Form 13-G filed with the Securities and Exchange Commission on February 11, 2013 it was the beneficial owner of 75,390,686 shares of Class B Common Stock. Such shares represent 6.7% ofthe outstanding shares of Class B Common Stock and 0.7% ofthe aggregate voting power of Class A and Class B Common Stock. Beneficial ownership ofthe Corporation's Class A and Class B Stock on March 1, 2013 by Mr. Buffett, the Bill & Melinda Gates Foundation Trust and by other executive officers and directors of the Corporation who own shares is shown in the following table:

(2)

Name

Warren E. Buffett

Howard G. Buffett

Stephen B. Burke

Susan L. Decker

William H.Gates 111

David S. Gottesman

Charlotte Guyman

Donald R. Keough

Charles T. Munger

Thomas S. Murphy

Ronald L. Olson

Walter Scott, Jr.

Directors and executive

officers as a group * less than 0.1%.

Title of Class of Stock

Class A Class B Class A Class B Class A Class B Class A Class B Class A Class B Class A Class B Class A Class B Class A Class B Class A Class B Class A Class B Class A Class B Class A Class B Class A Class B

Shares Beneficially Owned

350,000

3,525,623 1,200 2,450

3,125 4,350 84,791,173 19,538 2,393,398 100 600 100 60 6,224 750 1,203 26,976 307 17,500 100

383,144 90,761,655

(3)

(4) (4) (5) (5)

(?) (7) (S)

m

Percentage of Outstanding Stock of Respective Class <■)

39.2

0.3

0.1

* * *

0.5 7.5 2.2 0.2

0.7 *

0.1

*

* *

42.9 8.1

Percentage of Aggregate Voting Power

of Class A and

Class B ">

34.9 0.1

1.3

2.0

0.6

0.1

39.0

Percentage of Aggregate Economic Interest of Class A and Class B<">

21.4

0.1

3.7

1.3

0.4

0.1

27.0

Beneficial owners exercise both sole voting ami sole investment power unless otherwise stated Each share of Class A Slock is convertible inlo 1.500 shares of ('lass I) Slock cn ihe option ofthe shut eholder. As u resull. pursuant lo Rule I3d-3(d)(l) of the Securities Exchange Act of 193-1. u shareholder is deemed lo have beneficial ownership of lite slimes of Class B Stock which such .shareholder may acquire upon conversion of Ihe Class A Slock In order lo avoid over.slulenie.nl. ihe amount oj Class B Stock beneficially owned does not lake into account such shares of Class 13 Sftick which may he acquired upon conversion (an amount which is equal to 1.500 limes ihe number of shares oj Class A Slock held by a shui eholder). The percentage ofoutstanding Class B Slock is based on ihe total number of shares oj Class B Slock outstanding us of March 6. 2013 and does not lake into account shares of Class B Slock which may be issued upon conversion of Class A Slot. k.

Mr Buffett has entered inlo o voting agreement with Berkshire providing that, should the combined voting power ol Berkshire, shaies us lo which Mr. Bujfelt has or shares voting and investment /tower exceed -19 9% of Berkshire's tufa/ voltng power, he will vole those shales in excess of that percentage proportionately with voles oj the olher Berkslm e shar eholders

Includes 1.190 ('lass A shaies held bv a private foundalion andfor whu.li Mi. Bujfelt possesses voting and inveslmenl power but with respect lo which Mr Bufjetl disclaims anv beneficial mlel est.

(V

Includes -1.050 Class A shares held hy a single-member limited liability coin/xjity of which Mr. Gales is the sole member and H-l.79l.173 Class B shares owned hy the Bill ri Melinda Coles l-oitndatton Trust of which Mr. (rales and his wife are co-trustees bin with respect to which Mr. and Mrs. Gales disclaim any beneficial interest.

Includes 12.555 Class A shaies and 2.376,7HS Class B shares as lo which Mr. Gottesman or his wife has shored voting power and 12,350 ('lass A shares and 2.393,39N Class IS shares as to which Mr Golle.smun or his wij'e has shared inveslmenl power. Mr. Gottesman has n pecuniary interest in ti.201 Class A shores

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and 2,ti-l3 Class 8 shares included herein.

Does not include $ Class A shares owned hy Mr. Keough "v wife.

Includes }, 136 Class A shares held in two grantor retained annuity trusts und includes 67 Claw A shares and 25.J87 Class B shares owned by three trustsfor which Mr. Murphy is a trustee and ihe beneficiary.

Includes N7 Class A shares held by three trusts for which Mr Olson is sole trustee but with respect to which Mr. Olson disc/aims any beneficial interest. Does not include JO (.ia.ss A shares owned by Mr. Scoff's wife.

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Governance, Compensation and Nominating Committee Interlocks and Insider Participation

The Governance Committee of our Board of Directors currently consists of Walter Scott, Jr., David S. Gottesman and Susan L. Decker. None of these individuals has at any time been an officer or employee ofthe Company. During 2012, none of our executive officers served as a member of the board of directors or compensation committee ofany entity for which a member of our Board of Directors or Governance, Compensation and Nominating Committee served as an executive officer.

Meetings of Non-Management and Independent Directors

Two meetings of non-management directors were held during 2012. Mr. Ronald L. Olson presided as ad hoc chair ofthe meetings. In addition, following one ofthe meetings of non-management directors, a meeting of directors determined to be independent was held. Mr. Walter Scott, Jr. presided as ad hoc chair of that meeting. A shareholder or other interested party wishing to contact the non-management directors or independent directors, as applicable, should send a letter to the Secretary of the Corporation at 3555 Farnam Street, Omaha, NE 68131. The mailing envelope must contain a clear notation that the enclosed letter is to be forwarded to the Corporation's non-management directors or independent directors, as applicable.

Communications with the Board of Directors

Shareholders and other interested parties who wish to communicate with the Board of Directors or a particular director may send a letter to the Secretary ofthe Corporation al 3555 Farnam Street, Omaha, NE 68131. The mailing envelope must contain a clear notation indicating that the enclosed letter is a "Board Communication" or "Director Communication." All such letters must clearly state whether the intended recipients are all members of the Board or just certain specified individual directors. The Secretary will make copies of all such letters and circulate them to the appropriate director or directors.

Corporate Governance Guidelines

The Board of Directors has adopted Corporate Governance Guidelines to promote effective governance ofthe Corporation. The Corporate Governance Guidelines are available on Berkshire's website at www.berkshirehathaway.com.

Code of Business Conduct and Ethics

The Corporation has adopted a Code of Business Conduct and Ethics for all Berkshire directors, officers and employees as well as directors, officers and employees of each of its subsidiaries. The Code of Business Conduct and Ethics is available on Berkshire's website at www.berkshirehathaway.com.

Related Persons Transactions

The Charter ofthe Governance Committee includes procedures for the approval or ratification ofany Related Persons Transaction ("Transaction") as defined in the regulations ofthe Securities and Exchange Commission. The procedures require that all requests for approval of proposed Transactions or ratification of Transactions be referred to the Chairman of the Committee or directly to the Committee. The full Committee reviews any Transaction which the Chairman concludes is material to the Company or which the Chairman is unable to review. Only Transactions which the Committee or its Chairman finds to be in the best interests of Berkshire and its stockholders arc approved or ratified. The Chairman reports all Transactions which he reviews to the Committee annually for ratification. Berkshire is not aware ofany Transaction entered into since January 1, 2012, or currently proposed, in which a Related Person had, or will have, a direct or indirect material interest.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) ofthe Securities Exchange Act of 1934 requires the Corporation's officers and directors, and persons who own more than 10% of a registered class ofthe Corporation's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and the New York Stock Exchange. Officers, directors and greater than ten-percent shareholders are required by the regulations ofthe Securities Exchange Commission to furnish the Corporation with copies of all Section 16(a) forms they file.

Based solely on its review of the copies of such forms received by it, and written representations from certain reporting persons that no Section 16(a) forms were required for those persons, the Corporation believes that during 2012 all filing requirements applicable to its officers, directors and greater than ten-percent shareholders were complied with except as follows.

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Mr. Murphy filed a Form 5 on February 14, 2013 thai reported several gifts of Class B shares made by his now deceased wife during the period between December 3, 2004 and May 22, 2009 were not previously filed on a Form 5 for the years such gifts were made and certain sales of Class A shares by Mr. Murphy's wife during the period between December 3, 2004 and January 1, 2008 were not reported on a Form 4 when due. Mr. Murphy's Form 5 also reported that during 2010, three purchases of Class B shares by trusts of which Mr. Murphy is a trustee and beneficiary were not reported on a Form 4 when due and two sales of Class B shares owned directly by Mr. Murphy were not reported on a Form 4 when due. In addition, Mr. Gottesman filed a Form 5 on February 14, 2013 that reported a gift of Class A shares and a gift of Class B shares made during 2011 by trusts in which Mr. Gottesman has a pecuniary interest were not reported on a Form 5 for the year ended December 31, 2011.

Compensation Discussion and Analysis

Berkshire's program regarding compensation of its executive officers is different from most public company programs. Mr. Buffett's and Mr. Munger's compensation is reviewed annually by the Governance Committee ofthe Corporation's Board of Directors. Due to Mr. Buffett's and Mr. Munger's desire that their compensation remain unchanged, the Committee has not proposed an increase in Mr. Buffett's or Mr. Munger's compensation since the Committee was created in 2004. Prior to that time Mr. Buffett recommended to the Board of Directors the amount of his compensation and Mr. Munger's. Mr. Buffett's and Mr. Munger's annual compensation has each been SI 00,000 for more than 25 years and Mr. Buffett has advised the Committee that he would not expect or desire such compensation to increase in the future.

The Committee has established a policy that: (i) neither the profitability of Berkshire nor the market value of its stock are to be considered in the compensation ofany executive officer; and (ii) all compensation paid to executive officers of Berkshire be deductible under Internal Revenue Code Section 162(m). Under the Committee's compensation policy, Berkshire docs not grant stock options to executive officers. The Committee has delegated to Mr. Buffett the responsibility for setting the compensation of Mr. Hamburg, Berkshire's Senior Vice President/Chief Financial Officer.

Mr. Buffett will on occasion utilize Berkshire personnel and/or have Berkshire pay for minor items such as postage or phone calls that are personal. Mr. Buffett reimburses Berkshire for these costs by making an annual payment to Berkshire in an amount that is equal to or greater than the costs that Berkshire has incurred on his behalf. During 2012, Mr. Buffett reimbursed Berkshire $50,000. Berkshire provides personal and home security services for Mr. Buffett. The cost for these services was $323,923 in 2012 and is reflected in the Summary Compensation Table as a component of Mr. Buffett's "All Other Compensation." It should be noted that many large companies maintain security departments that provide costly services to top executives but for which no itemization is provided in their proxy statements. Mr. Buffett and Mr. Munger do not use Company cars or belong to clubs to which the Company pays dues. It should also be noted that neither Mr. Buffett nor Mr. Mungcr utilizes corporate-owned aircraft for personal use. Each of them is personally a fractional NetJets owner, paying standard rates, and they use Berkshire-owned aircraft for business purposes only.

Factors considered by Mr. Buffett in setting Mr. Hamburg's salary are typically subjective, such as his perception of Mr. Hamburg's performance and any changes in functional responsibility. Mr. Buffett also sets the compensation for each of the CEO's of Berkshire's significant operating businesses. He utilizes many different incentive arrangements, with their terms dependent on such elements as the economic potential or capital intensity ofthe business. The incentives can be large and are always tied to the operating results for which a CEO has authority. These incentives are never related to measures over which the CEO has no control.

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The following table discloses the compensation received for the three years ended December 31, 2012 by the Corporation's Chief Executive Officer, its other executive officer and its Chief Financial Officer.

SUMMARY COMPENSATION TABLE

Bonus

(3) (3) (3)

Name and

Principal Position

Warren E. Buffett Chief Executive Officer/ Chairman ofthe Board

Charles T. Munger <') Vice Chairman ofthe Board

Marc D. Hamburg Senior Vice Presidenl/CFO

Year

2012 2011 2010

2012

2011 2010

2012 2011 2010

Annual Compensation Salary

100,000 100,000 100,000

100,000

100,000 100,000

1,025,000 962,500 912,500

All Other Compensation

S 323,923 ' 391,925 ' 424,946

12,500 12,250 12,250

Total Compensation

$ 423,923 491,925 524,946

100,000

100,000 100,000

1,037,500 974,750 924,750

S323.V23. 2011 ■ - %34d.')25 and2010

O) P)

(3)

Mi. Mungcr is t ompensaled by a Berkshire subsidiary.

Represents the cosls oj personal and home security services provided for Mr. Bujfelt and paid by Berkshire (2012 -

S34".i>J6J and the value of director's fees (SJ5.000 in 2011 andS?'5,000 in 2010) received hy Mr Bufjetl from serving on ihe Board of Directors oj The Washington l'ost Company in which Berkshire has a significant ownership interest. Represents contributions lo a subsidiary's defined contribution plan in which Mr. Hamburg participates.

Advisory Vote on Executive Compensation

At our 2011 Annual Meeting, 98.9% of the votes cast on the advisory vote on the executive compensation proposal were in favor of our executive compensation policies. The Board of Directors and Governance Committee reviewed these results and determined that, given the significant level of support, no changes to our executive compensation policies were necessary at this time based on the vote results, ln addition, at our 2011 Annual Meeting, 83.6% of the votes cast were in favor of holding an advisory vote on executive compensation every three years. The Governance Committee reviewed these results and determined that our shareholders should vote on a say-on-pay proposal every three years. Accordingly, the next say-on-pay vote will be at our 2014 Annual Meeting.

Governance, Compensation and Nominating Committee Report

We have reviewed and discussed with management the Compensation Discussion and Analysis to be included in the Company's 2013 Shareholder Meeting Schedule 14A Proxy Statement, filed pursuant to Section 14(a) ofthe Securities Exchange Act of 1934 (the "Proxy"). Based on the review and discussion referred to above, we recommend that the Compensation Discussion and Analysis referred to above be included in the Company's Proxy.

Submitted by the members of the Governance, Compensation and Nominating Committee ofthe Board of Directors.

Walter Scott, Jr., Chairman Susan L. Decker David S. Gottesman

Independent Public Accountants

Deloitte & Touche LLP ("Deloitte") served as the Corporation's principal independent public accountants for 2012. Representatives from that firm will be present at the Annual Meeting of Shareholders, will be given the opportunity lo make a statement if they so desire and will be available to respond to any appropriate questions. The Corporation has not selected independent public accountants for the current year, since its normal practice is for the Audit Committee ofthe Board of Directors to make such selection later in the year.

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The following table shows the fees paid or accrued for audit services and fees paid for audit-related, tax and all other services rendered by Deloitte for each of the last two years (in millions):

2012      2011

Audit Fees <■•>                                                                                                      S26.3      $25.3

Audit-Related Fees to                                                                                               1.7      1.7

Tax Fees <^c>       L4       LO

$29.4      $28.0

1. Audit fees include fees for the audit of (he Corporation's consolidated financial statements and interim reviews of (he Corporal ion \s quarterly financial statements, audit services provided in connection with required statutory audits of many ofthe Corporation's insurance subsidiaries and certain of us non-insurance subsidiaries and comfort letters, consents and olher services related lo Securities and Exchange Commission mailers.
2. Audit-relutedfees primarily include fees for certain audits of subsidiaries not required for purposes ofDeloille's audit oj the Corporation's consolidated financial statements or for anv olher statutory or regttlatoiy requirements, audits of certain subsidiary employee benefit plans and eonsullalions on s'uriotts accounting and reporting mailers
3. Tax fees include fees for set vices relating to lax compliance, lax planning and lax advice These services include assistance regai ding federal, state and international tax complianc e, lax return preparation and lax audits.

The Audit Committee has considered whether the non-audit services provided to the Company by Deloitte impaired the independence of Deloitte and concluded that they did not.

All ofthe services performed by Deloitte were pre-approved in accordance with the pre-approval policy adopted by the Audit Committee on May 5, 2003. The policy provides guidelines for the audit, audit related, tax and olher non-audit services that may be provided by Deloitte to the Company. The policy (a) identifies the guiding principles that must be considered by the Audit Committee in approving services to ensure that Dcloille's independence is not impaired; (b) describes the audit, audit-related and tax services that may be provided and the non-audit services that are prohibited; and (c) sets forth pre-approval requirements for all permitted services. Under the policy, requests to provide services that require specific approval by the Audit Committee will be submitted to the Audit Committee by both the Company's independent auditor and its Chief Financial Officer. All requests for services to be provided by the independent auditor that do not require specific approval by the Audit Committee will be submitted to the Company's Chief Financial Officer and must include a detailed description of the services to be rendered. The Chief Financial Officer will determine whether such services are included within the list of services that have received the general pre-approval ofthe Audit Committee. The Audit Committee will be informed on a timely basis ofany such services rendered by the independent auditor.

Report of the Audit Committee

February 25, 2013

To the Board of Directors of Berkshire Hathaway Inc.

We have reviewed and discussed the consolidated financial statements ofthe Corporation and its subsidiaries to be set forth in the Corporation's 2012 Annual Report to Shareholders and at Item 8 of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2012 with management ofthe Corporation and Deloitte & Touche LLP, independent public accountants for the Corporation.

We have discussed with Deloitte & Touche LLP the matters required to be discussed by the Public Company Accounting Oversight Board ("PCAOB"). as adopted in Auditing Standard No. 16 (Communications with Audit Committees). We have received the written disclosures and the letter from Deloitte & Touche LLP required by the applicable PCAOB requirements for independent accountant communications with audit committees with respect to auditor independence and have discussed with Deloitte & Touche LLP its independence from the Corporation.

It is not the duty of the Audit Committee to plan or conduct audits or to determine that the Corporation's financial statements are complete and accurate and in accordance with generally accepted accounting principles; that is the responsibility of management and the Corporation's independent public accountants. In giving its recommendation to the Board of Directors, the Audit Committee has relied on (i) management's representation that such financial statements have been prepared with integrity and objectivity and in conformity with generally accepted accounting principles and (ii) the reports ofthe Corporation's independent public accountants with respect to such financial statements.

Based on the review and discussions with management of the Corporation and Deloitte & Touche LLP referred to above, we recommend to the Board of Directors that the Corporation publish the consolidated financial statements ofthe Corporation and subsidiaries for the year ended December 31, 2012 in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2012 and in the Corporation's 2012 Annual Report to Shareholders.

Submitted by the members ofthe Audit Committee of the Board of Directors.

Thomas S. Murphy, Chairman      Charlotte Guyman

Susan L. Decker      Donald R. Keough

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2. SHAREHOLDER PROPOSAL

Robert L. Berridge, 46 Jason Street, Arlington, MA 02476, owns in excess of 150 shares of Class B Common Stock and has given notice that a representative of his intends to present for action at the meeting the following proposal.

RESOLVED: That Berkshire Hathaway establish reasonable, quantitative goals for reduction of greenhouse gas and other air emissions at its energy-generating holdings; and that Berkshire publish a report to shareholders by September 30, 2013 (at reasonable cost and omitting proprietary information) on how it will achieve these goals - including plans to retrofit or retire existing coal-burning plants at Berkshire-held companies.

Supporting Statement:

Berkshire Hathaway owns MidAmerican Energy Holdings, whose subsidiaries generate roughly 72.7% of their electricity by burning coal.

Electricity generation accounts for more carbon dioxide ("C0₂") emissions than any other sector - more than even transportation or industry. US fossil fuel-powered plants (like MidAmerican's) account for nearly 40% of domestic and 10% of global C0₂ pollution.

Independent economists and scientists concur that the cost of reducing greenhouse gas emissions in the near-term is far lower than the cost of mitigating greenhouse gas-caused damage over the long-haul.

Therefore, Berkshire shareholders are best served by taking proactive steps in regard to greenhouse gas emissions and impending regulation. This is important to independent shareowncrs. At the 2011 annual meeting, 26.8% of shareholder votes (that were not Berkshire boardmembers or top executives) ignored the Board's recommendation and instead voted FOR this same request for reasonable goals and thoughtful planning.

Some companies act as if it is beneficial to reap profits from coal-burning electricity plants while pushing the costs of pollution and the harm to public health onto society at large ("externalizing the costs"). But with Berkshire, the prospect of externalizing costs of its coal-burning subsidiaries risks the resultant damages being "internalized" onto itself - cither by harming employees at the polluting plants, or through liability claims paid out by Berkshire insurance subsidiaries.

The US Environmental Protection Agency ("EPA") recently took steps under the Clean Air Act to require new or modified electricity-generating power plants to limit greenhouse gas emissions. They issued two significant new rules, which together set stringent limits on an array of harmful emissions from power-generating plants.

When both rules are fully in effect, Bernstein Research estimates that 15% of coal-fired power plants will be forced to close - unable to meet new safety standards - and others will require substantial investment just to remain viable.

Numerous peers to Berkshire's MidAmerican - including Calpine Corporation, Progress Energy, and Xccl Energy - have already established plans to replace their coal-fired power plants.

Other peers - including American Electric Power, Consolidated Edison, Duke Energy, Entergy, Exelon, and National Grid - have already set absolute targets for reducing greenhouse gas emissions.

Still other peers - such as CMS Energy, NiSourcc, Pinnacle West, and PSEG Power - have already set greenhouse gas intensity targets.

These forward-looking companies recognize that natural gas, efficiency, and renewable energy are far more profitable than retrofitting obsolete, highly polluting, coal-fired plants.

Berkshire Hathaway should not be a laggard in ways that create risk to shareholder value.

Therefore, please vote FOR this reasonable, forward-looking proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY FAVORS A VOTE AGAINST THE PROPOSAL FOR THE FOLLOWING REASONS:

A proposal that was substantially identical lo the current shareholder proposal was put forth by another shareholder two years ago. The Board of Directors reasons for recommending a vote against that proposal have not changed. The response provided by the Board of Directors in 2011 updated for certain changes in Berkshire's energy-generating holdings during the last two years follows.

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The Board of Directors does not believe that establishing quantitative goals for the reduction of greenhouse gas and other air emissions at its energy-generating holdings and that publishing a report that includes plans to retrofit or retire existing coal-burning plants is a prudent exercise to undertake and recommends that our shareholders vote against this proposal. We recognize the importance of reducing greenhouse gas and other emissions to our shareholders and the future of Berkshire and its subsidiary companies. Our two regulated electric utilities have reduced greenhouse gases intensity by nearly 16% since 2000 in addition to reducing the intensity of emissions by approximately 54% for sulfur dioxide, 52% for nitrogen oxides and 31% for mercury. These reductions do not include the benefits of MidAmerican's recent investment through its non-utility renewablcs group in 1,419 megawatts of solar generating capacity (124.1 megawatts are currently in service) or 381 megawatts of wind generating capacity. Even without the additional non-utility renewable capacity, the MidAmerican utilities are the largest rate-regulated owners of renewable generation. However, establishing reduction goals at this time as environmental regulation and legislation remains uncertain would be contrary to the responsibilities of our rate-regulated utilities and to our customers whose utility bills could be dramatically affected.

Proxies given without instructions will be voted Against Ihis shareholder proposal.

3. OTHER MATTERS

As ofthe date of this statement your management knows of no business to be presented to the meeting that is not referred to in the accompanying notice other than the approval ofthe minutes ofthe last Annual Meeting of Shareholders, which action will not be construed as approval or disapproval ofany ofthe matters referred to in such minutes. As to other business that may properly come before the meeting, it is intended that proxies properly executed and returned will be voted in respect thereof at the discretion ofthe person voting the proxies in accordance with his or her best judgment, including upon any shareholder proposal about which the Corporation did not receive timely notice.

Annual Report

The Annual Report to the Shareholders for 2012 accompanies this proxy statement, but is not deemed a part ofthe proxy soliciting material.

A copy of the 2012 Form 10-K report as filed with the Securities and Exchange Commission, excluding exhibits, will be mailed to shareholders without charge upon written request to: Forrest N. Krutter, Secretary, Berkshire Hathaway Inc., 3555 Farnam Street, Omaha, NE 68131. Such request must set forth a good-faith representation that the requesting party was either a holder of record or a beneficial owner of Class A or Class B Stock ofthe Corporation on March 6, 2013. Exhibits to the Form 10-K will be mailed upon similar request and payment of specified fees. The 2012 Form 10-K is also available through the Securities and Exchange Commission's World Wide Web site (www.sec.gov).

Proposals of Shareholders

Any shareholder proposal intended to be considered for inclusion in the proxy statement for presentation at the 2014 Annual Meeting must be received by the Corporation by November 18, 2013. The proposal must be in accordance with the provisions of Rule I4a-8 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934. It is suggested the proposal be submitted by certified mail - return receipt requested. Shareholders who intend to present a proposal at the 2014 Annual Meeting without including such proposal in the Corporation's proxy statement must provide the Corporation notice of such proposal no later than Januaiy 3 I, 2014. The Corporation reserves the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements.

By order ofthe Board of Directors FORREST N. KRUTTER, Secretaiy

Omaha. Nebraska March 15,2013

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P R O X Y

BERKSHIRE HATHAWAY INC. Annual Meeting of Shareholders to be held on May 4, 2013 This Proxy is Solicited on Behalf of the Board of Directors

The undersigned hereby appoints Marc D. Hamburg and Walter Scott, Jr., or either of them, as proxies, with power of substitution to each proxy and substitute, to vote the Class A Common Stock (CLA) and Class 13 Common Stock (CLB) of the undersigned at the 2013 Annual Meeting of Shareholders of Berkshire Hathaway Inc. and at any adjournment thereof, as indicated on the reverse hereof on the matters specified, and as said proxies may determine in the exercise of their best judgment on any other matters which may properly come before the meeting or any adjournment thereof.

IF PROPERLY EXECUTED AND RETURNED, THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NOT SPECIFIED, WILL BE VOTED FOR ELECTING ALL DIRECTOR NOMINEES; AND AGAINST THE SHAREHOLDER PROPOSAL.

PLEASE SIGN ON THE REVERSE SIDE AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE

SEE REVERSE SIDE

SEE REVERSE SIDE

I y I Please mark I     I votes as in

(his eiamplc.

The Board Recommends a Vote For All Nominees.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 4, 2013.

Annual Report

The following material is available at www.berkshireliathaway.com/cproxy.

Proxy Statement

□

1. Election of Directors

Nominees: Warren E. Buffett, Charles T. Munger, Howard G. Buffett, Stephen B. Burke, Susan L. Decker, William H. Gates III, David S. Gottesman, Charlotte Guyman, Donald R. Keough, Thomas S. Murphy, Ronald L. Olson, Walter Scott, Jr. and Meryl 13. Witmer

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT

□FOR j—j WITHHELD

ALL      I      I  FROM ALL

NOMINEES NOMINEES

Please sign exactly as your name appears. If acting as attorney, executor, trustee or in representative capacity, sign name and title.

Signature:       Date      

For, except vote withheld from the ahovc noinincc(s).      Signature:       Date      

The Board Recommends a Vote Against Item 2.

2. Shareholder proposal regarding greenhouse gas and other air emissions.

FOR      AGAINST ABSTAIN

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Page 18 of 18

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http://www.sec.gov/Archives/edgar/dala/1067983/000119312513109017/d467360ddefl4 8/25/2014

(DO NOT SUBMIT THIS PAGE WITH YOUR EDS. The purpose of this page is for you to recertify your EDS prior to submission to City Council or on the date of closing. If unable to recertify truthfully, the Disclosing Party must complete a new EDS with correct or corrected information)

RECERTIFICATION

Generally, for use with City Council matters. Not for City procurements unless requested.

This recertification is being submitted in connection with purchase of 3151 W. Washington from the City

[identify the Matter]. Under penalty of perjury, the person signing below; (1) wan-ants that

he/she is authorized to execute this EDS recertification on behalf of the Disclosing Party, (2)

warrants that all certifications and statements contained in the Disclosing Party's original EDS

are true, accurate and complete as of the date furnished to the City and continue to be true,

accurate and complete as of the date of this recertification, and (3) reaffirms its

acknowledgments.

 

Wells Fargo & Company

(Print or type legal name of Disclosing Party) By: //

 

Title o

 

Signed and sworn to before me on [date] H o-/gnht r~ IM, 3lD 14, by

lorv  \\.  C&v^rte' \ \  , at Vv rvw <p»r\  County, vv^rvrvrfb nictate].

 

Commission expires:     \-^\- d-Q<^-Q