Nice rational set of questions and observations.
Berkshire doesn't break out the detailed figures for most of the businesses in their SEC filings so we don't have a clear picture of what NJ's financial performance is. Operating income is the figure they sometimes report and this is income before interest, any special charges, and income taxes. The $200 million figure that is talked about has to be reduced by these items before we can compute ROI.
BK paid about $700 million for the business in the 1990's and since then funded the expansion of the US operations and the startup of Middle East and Europe. In addition, they had to fund all the losses incurred prior to 2007 or so which totaled approximately $700 million. We don't know for certain, but their investment in the company is far greater than $1 billion.
A question that won't go away is how does NJ with declining sales, excess aircraft, write downs, and other headwind issues report these remarkable results when the rest of the industry is in the tank? No idea how this is possible...rumors include that under Sokol they changed some accounting for expenses such as hourly charges for engine overalls and discontinuing MSP type items. In other words, they don't expense on an hourly basis anymore and have gone to expensing these items as incurred. Another thought is they front loaded a tremendous amount of future expense when they took the write offs in 2009.
If Sokol was able to turnaround the company and really make the numbers, he deserves a medal for being a financial wizard. It is really perplexing that a business that was growing so much for all these years couldn't turn a profit, but once it starts shrinking, it posts relatively steady profits.
There have been a couple of posts about comparing AMEX and NJ. Two entirely different financial models in that AMEX turns margins on processing transactions in which they don't have any investment. Making 3% (before expenses) on processing a trillion dollars of credit card charges is lot different than selling products/services and trying to make a profit on every item sold.
