filings.toolsItem 15. Exhibits and Financial Statement Schedules
22K characters. Original on sec.gov · Markdown
Item 15. Exhibits and Financial Statement Schedules
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(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:
(b) Exhibits
See the “Exhibit Index” at page K-113.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of
Berkshire Hathaway Inc.
Omaha, Nebraska
Opinion on the Financial Statement Schedule
We have audited the consolidated financial statements of Berkshire Hathaway Inc. and subsidiaries (the “Company”) as of December 31, 2018 and 2017, and for each of the three years in the period ended December 31, 2018, and the Company’s internal control over financial reporting as of December 31, 2018, and have issued our report thereon dated February 23, 2019; such consolidated financial statements and report are included elsewhere in this Form 10-K. Our audits also included the financial statement schedule of the Company listed in the Index at Item 15. This financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statement schedule based on our audits. In our opinion, such financial statement schedule, when considered in relation to the financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
Change in Accounting Principle
As discussed in Note 1 to the financial statements of the Company, the Company has changed its method of accounting for investments in equity securities (excluding equity method investments) in 2018 due to the adoption of ASU 2016-01 “Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities.”
/s/ Deloitte & Touche LLP
Omaha, Nebraska
February 23, 2019
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Table of Contents
BERKSHIRE HATHAWAY INC.
(Parent Company)
Condensed Financial Information
(Dollars in millions)
Schedule I
Balance Sheets
| December 31, | ||||||||
| 2018 | 2017 | |||||||
| Assets: | ||||||||
| Cash and cash equivalents | $ | 3,437 | $ | 4,039 | ||||
| Short-term investments in U.S. Treasury Bills | 22,957 | 13,132 | ||||||
| Investments in and advances to/from consolidated subsidiaries | 328,898 | 335,668 | ||||||
| Investment in The Kraft Heinz Company | 13,813 | 17,635 | ||||||
| Other assets | 80 | 79 | ||||||
| $ | 369,185 | $ | 370,553 | |||||
| Liabilities and Shareholders’ Equity: | ||||||||
| Accounts payable, accrued interest and other liabilities | $ | 1,507 | $ | 196 | ||||
| Income taxes, principally deferred | 2,104 | 3,294 | ||||||
| Notes payable and other borrowings | 16,871 | 18,767 | ||||||
| 20,482 | 22,257 | |||||||
| Berkshire Hathaway shareholders’ equity | 348,703 | 348,296 | ||||||
| $ | 369,185 | $ | 370,553 | |||||
Statements of Earnings and Comprehensive Income
| Year ended December 31, | ||||||||||||
| 2018 | 2017 | 2016 | ||||||||||
| Income items: | ||||||||||||
| From consolidated subsidiaries: | ||||||||||||
| Dividends | $ | 9,658 | $ | 5,367 | $ | 9,862 | ||||||
| Undistributed earnings (losses) | (3,952 | ) | 37,832 | 13,264 | ||||||||
| 5,706 | 43,199 | 23,126 | ||||||||||
| Investment gains (losses) | (4 | ) | (1 | ) | 700 | |||||||
| Equity in net earnings (losses) of The Kraft Heinz Company | (2,730 | ) | 2,938 | 923 | ||||||||
| Other income | 649 | 350 | 262 | |||||||||
| 3,621 | 46,486 | 25,011 | ||||||||||
| Cost and expense items: | ||||||||||||
| General and administrative | 216 | 159 | 80 | |||||||||
| Interest expense | 601 | 522 | 452 | |||||||||
| Foreign exchange (gains) losses Euro-denominated senior notes | (366 | ) | 1,008 | (244 | ) | |||||||
| Income tax expense (benefit) | (851 | ) | (143 | ) | 649 | |||||||
| (400 | ) | 1,546 | 937 | |||||||||
| Net earnings attributable to Berkshire Hathaway shareholders | 4,021 | 44,940 | 24,074 | |||||||||
| Other comprehensive income attributable to Berkshire Hathaway shareholders | (2,211 | ) | 21,273 | 3,316 | ||||||||
| Comprehensive income attributable to Berkshire Hathaway shareholders | $ | 1,810 | $ | 66,213 | $ | 27,390 | ||||||
See Note to Condensed Financial Information
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BERKSHIRE HATHAWAY INC.
(Parent Company)
Condensed Financial Information
(Dollars in millions)
Schedule I (continued)
Statements of Cash Flows
| Year ended December 31, | ||||||||||||
| 2018 | 2017 | 2016 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net earnings attributable to Berkshire Hathaway shareholders | $ | 4,021 | $ | 44,940 | $ | 24,074 | ||||||
| Adjustments to reconcile net earnings to cash flows from operating activities: | ||||||||||||
| Investment gains (losses) | 4 | 1 | (700 | ) | ||||||||
| Undistributed earnings of consolidated subsidiaries | 3,952 | (37,832 | ) | (13,264 | ) | |||||||
| Income taxes payable | (972 | ) | (135 | ) | 629 | |||||||
| Other | 3,062 | (1,234 | ) | (161 | ) | |||||||
| Net cash flows from operating activities | 10,067 | 5,740 | 10,578 | |||||||||
| Cash flows from investing activities: | ||||||||||||
| Redemption of Kraft Heinz Company preferred stock | — | — | 8,320 | |||||||||
| Investments in and advances to/from consolidated subsidiaries, net | 460 | (239 | ) | (26,398 | ) | |||||||
| Purchases of U.S. Treasury Bills | (29,740 | ) | (19,663 | ) | (9,350 | ) | ||||||
| Sales and maturities of U.S. Treasury Bills | 21,442 | 14,847 | 1,145 | |||||||||
| Net cash flows from investing activities | (7,838 | ) | (5,055 | ) | (26,283 | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from borrowings | 17 | 1,201 | 9,278 | |||||||||
| Repayments of borrowings | (1,563 | ) | (1,145 | ) | (1,125 | ) | ||||||
| Acquisition of treasury stock | (1,346 | ) | — | — | ||||||||
| Other | 61 | 77 | 164 | |||||||||
| Net cash flows from financing activities | (2,831 | ) | 133 | 8,317 | ||||||||
| Increase (decrease) in cash and cash equivalents | (602 | ) | 818 | (7,388 | ) | |||||||
| Cash and cash equivalents at beginning of year | 4,039 | 3,221 | 10,609 | |||||||||
| Cash and cash equivalents at end of year | $ | 3,437 | $ | 4,039 | $ | 3,221 | ||||||
| Other cash flow information: | ||||||||||||
| Income taxes paid | $ | 2,790 | $ | 2,076 | $ | 3,583 | ||||||
| Interest paid | 388 | 386 | 307 |
Note to Condensed Financial Information
Berkshire acquired 50% of the outstanding common stock of Heinz Holding Company in 2013. After a series of transactions in 2015, that interest represented 26.8% of the outstanding common stock of The Kraft Heinz Company (“Kraft Heinz”). Berkshire currently owns 26.7% of the outstanding shares of Kraft Heinz common stock. Reference is made to Note 5 to the Consolidated Financial Statements for additional information concerning Berkshire’s investment in Kraft Heinz.
Prior to 2018, the Parent Company issued Euro-denominated senior notes and the aggregate par amount outstanding of these borrowings was €6.85 billion as of December 31, 2018 and 2017. The gains and losses from the periodic remeasurement of the Euro notes due to changes in foreign currency exchange rates are included in earnings.
Parent Company debt maturities over the next five years are as follows: 2019—$752 million; 2020—$1,149 million; 2021—$2,131 million; 2022—$613 million and 2023—$3,991 million. Berkshire guarantees debt obligations of certain of its subsidiaries, which as of December 31, 2018, totaled approximately $12.4 billion. Such guarantees are an absolute, unconditional and irrevocable guarantee for the full and prompt payment when due of all present and future payment obligations. Berkshire also provides guarantees in connection with equity index put option contracts and certain retroactive reinsurance contracts of subsidiaries. The amounts of subsidiary payments under these contracts, if any, is contingent upon the outcome of future events.
In December 2017, the Tax Cuts and Jobs Act of 2017 (“TCJA”) was enacted, which reduced the Parent Company’s income tax expense in 2017 by $550 million, primarily due to the reduction in deferred tax liabilities attributable to the lower U.S. statutory rate, partly offset by a one-time income tax expense on certain accumulated undistributed earnings of foreign subsidiaries. The effects of the TCJA on income tax expense of consolidated subsidiaries is included in undistributed earnings in consolidated subsidiaries.
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EXHIBIT INDEX
| Exhibit No. | ||
| 2(i) | Agreement and Plan of Merger dated as of June 19, 1998 between Berkshire 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. | |
| 2(iii) | Agreement and Plan of Merger dated August 8, 2015, by and among Berkshire, NW Merger Sub Inc. and Precision Castparts Corporation (“PCC”) | |
| Incorporated by reference to Exhibit 2.1 to PCC’s Current Report on Form 8-K filed on August 10, 2015 (SEC File No. 001-10348) | ||
| 3(i) | Restated Certificate of Incorporation | |
| Incorporated by reference to Exhibit 3(i) to Form 10-K filed on March 2, 2015. | ||
| 3(ii) | By-Laws | |
| Incorporated by reference to Exhibit 3(ii) to Form 8-K filed on May 4, 2016. | ||
| 4.1 | Indenture, dated as of December 22, 2003, between Berkshire 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. SEC File No. 333-112486 | ||
| 4.2 | Indenture, dated as of February 1, 2010, among Berkshire Hathaway Inc., 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. SEC File No. 333-164611 | ||
| 4.3 | Indenture, dated as of January 26, 2016, by and among Berkshire Hathaway Inc., 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 January 26, 2016. SEC File No. 333-209122 | ||
| 4.4 | Indenture, dated as of December 1, 1995, between BNSF and The First National Bank of Chicago, as trustee. | |
| Incorporated by reference to Exhibit 4 on Form S-3 of BNSF filed on February 8, 1999. | ||
| 4.5 | Indenture, dated as of October 4, 2002, by and between MidAmerican Energy Holdings Company and The Bank of New York, Trustee. | |
| Incorporated by reference to Exhibit 4.1 to the Berkshire Hathaway Energy Company Registration Statement No. 333-101699 dated December 6, 2002. | ||
| 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% of the total assets of the Registrant and its subsidiaries on a consolidated basis as of December 31, 2018. The Registrant hereby agrees to furnish to the Commission upon request a copy of any 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. Incorporated by reference to Exhibit 10.1 on Form 8-K of Berkshire Hathaway Inc. filed on February 14, 2013. | |
| 14 | Code of Ethics | |
| Berkshire’s Code of Business Conduct and Ethics is posted on its Internet website at www.berkshirehathaway.com | ||
| 21 | Subsidiaries of Registrant | |
| 23 | Consent of Independent Registered Public Accounting Firm | |
| 31.1 | Rule 13a—14(a)/15d-14(a) Certification | |
| 31.2 | Rule 13a—14(a)/15d-14(a) Certification | |
| 32.1 | Section 1350 Certification | |
| 32.2 | Section 1350 Certification | |
| 95 | Mine Safety Disclosures | |
| 101 | The following financial information from Berkshire Hathaway Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018, formatted in XBRL (Extensible Business Reporting Language) includes: (i) the Consolidated Balance Sheets as of December 31, 2018 and 2017, (ii) the Consolidated Statements of Earnings for each of the three years ended December 31, 2018, 2017 and 2016, (iii) Consolidated Statements of Comprehensive Income for each of the three years ended December 31, 2018, 2017 and 2016, (iv) the Consolidated Statements of Changes in Shareholders’ Equity for each of the three years ended December 31, 2018, 2017 and 2016, (v) the Consolidated Statements of Cash Flows for each of the three years ended December 31, 2018, 2017 and 2016 and (vi) the Notes to Consolidated Financial Statements and Schedule I, tagged in summary and detail. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BERKSHIRE HATHAWAY INC. | ||
| Date: February 23, 2019 | /S/ MARC D. HAMBURG | |
| Marc D. Hamburg Senior Vice President and Principal Financial Officer |
Pursuant to the requirements of the 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.
| /S/ WARREN E. BUFFETT Warren E. Buffett | Chairman of the Board of Directors—Chief Executive Officer | February 23, 2019 Date | ||
| /S/ GREGORY E. ABEL Gregory E. Abel | Director—Vice Chairman—Non Insurance Operations | February 23, 2019 Date | ||
| /S/ HOWARD G. BUFFETT Howard G. Buffett | Director | February 23, 2019 Date | ||
| /S/ STEPHEN B. BURKE Stephen B. Burke | Director | February 23, 2019 Date | ||
| /S/ SUSAN L. DECKER Susan L. Decker | Director | February 23, 2019 Date | ||
| /S/ WILLIAM H. GATES III William H. Gates III | Director | February 23, 2019 Date | ||
| /S/ DAVID S. GOTTESMAN David S. Gottesman | Director | February 23, 2019 Date | ||
| /S/ CHARLOTTE GUYMAN Charlotte Guyman | Director | February 23, 2019 Date | ||
| /S/ AJIT JAIN Ajit Jain | Director—Vice Chairman—Insurance Operations | February 23, 2019 Date | ||
| /S/ CHARLES T. MUNGER Charles T. Munger | Director—Vice Chairman | February 23, 2019 Date | ||
| /S/ THOMAS S. MURPHY Thomas S. Murphy | Director | February 23, 2019 Date | ||
| /S/ RONALD L. OLSON Ronald L. Olson | Director | February 23, 2019 Date | ||
| /S/ WALTER SCOTT, JR. Walter Scott, Jr. | Director | February 23, 2019 Date | ||
| /S/ MERYL B. WITMER Meryl B. Witmer | Director | February 23, 2019 Date | ||
| /S/ MARC D. HAMBURG Marc D. Hamburg | Senior Vice President—Principal Financial Officer | February 23, 2019 Date | ||
| /S/ DANIEL J. JAKSICH Daniel J. Jaksich | Vice President—Principal Accounting Officer | February 23, 2019 Date |
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