UNITED STATESSECURITIES 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, 2019
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period fromtoCommission file number 001-14905

BERKSHIRE HATHAWAY INC.
(Exact name of Registrant as specified in its charter)

Delaware47-0813844

State or other jurisdiction ofincorporation or organization(I.R.S. Employer
Identification No.)3555 Farnam Street, Omaha, Nebraska

68131(Address of principal 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 classClass A Common StockClass B Common Stock0.750% Senior Notes due 2023
1.125% Senior Notes due 2027
1.625% Senior Notes due 2035
0.500% Senior Notes due 2020
1.300% Senior Notes due 2024
2.150% Senior Notes due 2028
0.250% Senior Notes due 2021
0.625% Senior Notes due 2023
2.375% Senior Notes due 2039
2.625% Senior Notes due 2059

Trading Symbols
BRK.A
BRK.B
BRK23
BRK27
BRK35
BRK20
BRK24
BRK28
BRK21
BRK23A
BRK39
BRK59

Name of each exchange on which registered
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the 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 ☑

No ☐

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and(2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant toRule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes ☑ No ☐Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☑ Accelerated filer ☐ Nonaccelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period forcomplying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
State the aggregate market value of the voting stock held by non-affiliates of the Registrant as of June 30, 2019: $417,300,000,000*
Indicate the number of shares outstanding of each of the Registrant’s classes of common stock:
February 13, 2020—Class A common stock, $5 par value
700,396 shares
February 13, 2020—Class B common stock, $0.0033 par value
1,385,994,959 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Registrant’s Annual Meeting to be held May 2, 2020 are incorporated in Part III.
* This aggregate value is computed at the last sale price of the common stock as reported on the New York Stock Exchange on June 30,
2019. It does not include the value of Class A common stock and Class B common stock held by Directors and Executive Officers of
the Registrant and members of their immediate families, some of whom may not constitute “affiliates” for purpose of the Securities
Exchange Act of 1934.

Table of Contents
Page No.

Part I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.

Business Description
Risk Factors
Unresolved Staff Comments
Description of Properties
Legal Proceedings
Mine Safety Disclosures

K-1
K-21
K-25
K-25
K-27
K-27
Part II

Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.

Item 9.
Item 9A.
Item 9B.

Market for Registrant’s Common Equity, Related Security Holder Matters and Issuer
Purchases of Equity Securities
Selected Financial DataManagement’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Consolidated Balance Sheets—
December 31, 2019 and December 31, 2018
Consolidated Statements of Earnings—
Years Ended December 31, 2019, December 31, 2018, and December 31, 2017
Consolidated Statements of Comprehensive Income—Years Ended December 31, 2019, December 31, 2018, and December 31, 2017
Consolidated Statements of Changes in Shareholders’ Equity—
Years Ended December 31, 2019, December 31, 2018, and December 31, 2017
Consolidated Statements of Cash Flows—
Years Ended December 31, 2019, December 31, 2018, and December 31, 2017
Notes to Consolidated Financial Statements
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information

K-29
K-31
K-32
K-62
K-63
K-66
K-68
K-69
K-69
K-70
K-71
K-112
K-112
K-112

Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions and Director Independence
Principal Accountant Fees and Services

K-112
K-112
K-112
K-112
K-112

Part IV
Item 15.

Exhibits and Financial Statement Schedules

Exhibit Index
Signatures

K-112
K-116
K-118

Part I
Item 1. Business Description
Berkshire Hathaway Inc. (“Berkshire,” “Company” or “Registrant”) is a holding company owning subsidiaries
engaged in a large number of diverse business activities. The most important of these are insurance businesses conducted on
both a primary basis and a reinsurance basis, a freight rail transportation business and a group of utility and energy generationand distribution businesses. Berkshire also owns and operates numerous other businesses engaged in a variety of activities, as
identified herein. Berkshire is domiciled in the state of Delaware, and its corporate headquarters is in Omaha, Nebraska.
Berkshire’s operating businesses are 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 of the operating businesses.
Berkshire’s corporate senior management team 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 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.
Berkshire and its consolidated subsidiaries employ approximately 391,500 people worldwide.
Insurance and Reinsurance Businesses
Berkshire’s insurance and reinsurance business activities are conducted through numerous domestic and foreign-based
insurance entities. Berkshire’s insurance businesses provide insurance and reinsurance of property and casualty and life,
accident and health risks worldwide.
In direct or primary insurance activities, the insurer assumes the risk of loss from persons or organizations that are
directly subject to the risks. Such risks may relate to property, casualty (or liability), life, accident, health, financial or otherperils that may arise from an insurable event. In reinsurance activities, the reinsurer assumes defined portions of risks that
other direct insurers or reinsurers assumed in their own insuring activities.
Reinsurance contracts are normally classified as treaty or facultative contracts. Treaty reinsurance refers to reinsurance
coverage for all or a portion of a specified group or class of risks ceded by the direct insurer, while facultative reinsurance
involves coverage of specific individual underlying risks. Reinsurance contracts are further classified as quota-share orexcess. Under quota-share (proportional or pro-rata) reinsurance, the reinsurer shares proportionally in the original premiums
and losses of the direct insurer or reinsurer. Excess (or non-proportional) reinsurance provides for the indemnification of thedirect insurer or reinsurer for all or a portion of the loss in excess of an agreed upon amount or “retention.” Both quota-shareand excess reinsurance contracts may provide for aggregate limits of indemnification.
Insurance and reinsurance are 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 bedomestic 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, financial ratings, underwriting consistency,
service, business ethics, price, performance, capacity, policy terms and coverage conditions.
Insurers based in the United States (“U.S.”) are subject to regulation by their states of domicile and by those states inwhich they are licensed to write policies on an admitted basis. The primary focus of regulation is to assure that insurers arefinancially solvent and that policyholder interests are otherwise protected. States establish minimum capital levels for
insurance companies and establish guidelines for permissible business and investment activities. States have the authority tosuspend or revoke a company’s authority to do business as conditions warrant. States regulate the payment of dividends byinsurance companies to their shareholders and other transactions with affiliates. Dividends, capital distributions and othertransactions of extraordinary amounts are subject to prior regulatory approval.
Insurers may market, sell and service insurance policies in the states where they are licensed. These insurers arereferred 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
through admitted insurers. Non-admitted insurance, often referred to as “excess and surplus” lines, is procured by either statelicensed surplus lines brokers who place risks with insurers not licensed in that state or by the insured party’s direct
procurement from non-admitted insurers. Non-admitted insurance is subject to considerably less regulation with respect topolicy rates and forms. Reinsurers are normally not required to obtain regulatory approval of premium rates or reinsurance
contracts.

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The insurance regulators of every state participate in the National Association of Insurance Commissioners (“NAIC”).
The NAIC adopts forms, instructions and accounting procedures for use by U.S. insurers and reinsurers in preparing andfiling annual statutory financial statements. However, an insurer’s state of domicile has ultimate authority over these matters.
In 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, risk
management, compliance with financial regulation standards and risk-based capital reporting requirements.
U.S. states, through the NAIC, and international insurance regulators through the International Association of
Insurance Supervisors (“IAIS”) have been developing standards and best practices focused on establishing a common set ofprinciples (“Insurance Core Principles”) and framework (“ComFrame”) for the regulation of large multi-national insurancegroups. The standards address a variety of topics regarding supervision, coordination of regulators, insurance capital
standards, risk management and governance. While the IAIS standards do not have legal effect, the states and the NAIC are
implementing, and are expected to continue to implement, various regulatory tools and mandates. For example, the U.S. state
regulators now require insurance groups to file an annual report, called an Own Risk Solvency Assessment or ORSA, withthe group’s lead regulator. U.S. state regulators formed supervisory colleges intended to promote communication andcooperation amongst the various domestic international insurance regulators. The Nebraska Department of Insurance acts as
the lead group wide supervisor for our group of insurance companies and chairs the Berkshire supervisory college. The NAIC
is also developing further tools, including a group capital calculation tool and various liquidity assessments, that could be
imposed on insurance groups in the future.
Berkshire’s insurance companies maintain capital strength at exceptionally high levels, which differentiates them fromtheir competitors. Collectively, the combined statutory surplus of Berkshire’s U.S. based insurers was approximately$216 billion at December 31, 2019. Berkshire’s major insurance subsidiaries are rated AA+ by Standard & Poor’s and A++(superior) by A.M. Best with respect to their financial condition and claims paying ability.
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, 2027 through other Acts, most recently the Terrorism Risk Insurance
Program Reauthorization Act of 2019 (the “2019 TRIA Reauthorization”). Hereinafter these Acts are collectively referred toas TRIA. Under TRIA, the Department of the Treasury is charged with certifying “acts of terrorism.” Coverage under TRIA
occurs if the industry insured loss for certified events occurring during the calendar year exceeds $200 million in 2020, or
any calendar year thereafter.
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 of the federal share of any 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 personal andcommercial 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.
During 2020 and thereafter, in the event of a certified act of terrorism, the federal government will reimburse insurers(conditioned on their satisfaction of policyholder notification requirements) for 80% of their insured losses in excess of an
insurance group’s deductible. Under the Program, the deductible is 20% of the aggregate direct subject earned premium for
relevant commercial lines of business in the immediately preceding calendar year. The aggregate deductible in 2020 for
Berkshire’s insurance group is expected to approximate $1.3 billion. There is also an aggregate program limit of $100 billion
on the amount of the federal government coverage for each TRIA year.
The extent of insurance regulation varies significantly among the countries in which our non-U.S. operations conductbusiness. While each country imposes licensing, solvency, auditing, and financial reporting requirements, the type and extent
of the requirements differ substantially. For example:• in some countries, insurers are required to prepare and file monthly and/or quarterly financial reports, and inothers, only annual reports;• some regulators require intermediaries to be involved in the sale of insurance products, whereas other regulators
permit direct sales contact between the insurer and the customer;• the extent of restrictions imposed upon an insurer's use of local and offshore reinsurance vary;• policy form filing and rate regulation vary by country;• the frequency of contact and periodic on-site examinations by insurance authorities differ by country;• the scope and prescriptive requirements of an insurer’s risk management and governance framework varysignificantly by country; and• regulatory requirements relating to insurer dividend policies vary by country.

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Significant variations can also be found in the size, structure, and resources of the local regulatory departments thatoversee insurance activities. Certain regulators prefer close relationships with all subject insurers and others operate a riskbased approach.
Berkshire’s insurance group operates in some countries through subsidiaries and in some countries through branches ofsubsidiaries. Berkshire insurance subsidiaries are located in several countries, including Germany, the United Kingdom,
Ireland, Australia and South Africa, and also maintain branches in other countries, including Canada, various members of theEuropean Union, Australia, New Zealand, Singapore, Hong Kong, Macau and Dubai. Most of these foreign jurisdictions
impose local capital requirements. Other legal requirements include discretionary licensing procedures, local retention offunds and records, and data privacy and protection program requirements. Berkshire’s international insurance companies arealso subject to multinational application of certain U.S. laws.
There are various regulatory bodies and initiatives that impact Berkshire in multiple international jurisdictions and thepotential for significant effect on the Berkshire insurance group could be heightened as a result of recent industry andeconomic developments.
On June 23, 2016, the United Kingdom (“UK”) voted in a national referendum to withdraw from the EU (“Brexit”),
which resulted in the UK’s withdrawal from the EU on January 31, 2020. In anticipation of the UK leaving the EU, Berkshire
Hathaway European Insurance DAC in Ireland was established to permit property and casualty insurance and reinsurance
businesses to continue to operate in the European Union following Brexit. Following the withdrawal of the UK from the EU
as result of Brexit, Berkshire expects to continue to maintain a substantial presence in London.
Berkshire’s insurance underwriting operations include the following groups: (1) GEICO, (2) Berkshire Hathaway
Primary Group and (3) Berkshire Hathaway Reinsurance Group. Except for retroactive reinsurance and periodic payment
annuity products that generate significant amounts of up-front premiums along with estimated claims expected to be paid
over very long time periods (creating “float,” see Investments section below), Berkshire expects to achieve a net underwriting
profit over time and to reject inadequately priced risks. Underwriting profit is defined as earned premiums less associatedincurred losses, loss adjustment expenses and underwriting and policy acquisition expenses. Underwriting profit does notinclude income earned from investments. Berkshire’s insurance businesses employ approximately 50,000 people. Additional
information related to each of Berkshire’s underwriting groups follows.
GEICO—GEICO is headquartered in Chevy Chase, Maryland. GEICO’s 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, GEICO Secure Insurance Company,
GEICO County Mutual Insurance Company and GEICO Marine Insurance Company. The GEICO companies primarily offer
private passenger automobile insurance to individuals in all 50 states and the District of Columbia. GEICO also insures
motorcycles, all-terrain vehicles, recreational vehicles, boats and small commercial fleets and acts as an agent for otherinsurers who offer homeowners, renters, life and identity management insurance to individuals who desire insurance
coverages other than those offered by GEICO.
GEICO’s marketing is primarily through direct response methods in which applications for insurance are submitted
directly to the companies via the Internet or by telephone, and to a lesser extent, through captive agents. GEICO conducts
business through regional service centers and claims adjustment and other facilities in 39 states.
The automobile insurance business is highly competitive in the areas of price and service. GEICO competes for private
passenger automobile insurance customers in the preferred, standard and non-standard risk markets with other companies thatsell directly to the customer as well as with companies that use agency sales forces, including State Farm, Allstate (including
Esurance), Progressive and USAA. Significant advertising campaigns and competitive rates contributed to a cumulative
increase in voluntary policies-in-force of approximately 35% over the past five years. According to most recently published
A.M. Best data for 2018, the five largest automobile insurers had a combined market share in 2018 of approximately 57%,
with GEICO’s market share being second largest at approximately 13.4%. Since the publication of that data, GEICO’s
management estimates its current market share is approximately 13.6%. Seasonal variations in GEICO’s insurance business
are not significant. However, extraordinary weather conditions or other factors may have a significant effect upon thefrequency or severity of automobile claims.
State insurance departments stringently regulate private passenger auto insurance. As a result, it is difficult for
insurance companies to differentiate their products. Competition for private passenger automobile insurance, which issubstantial, 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 to manage and settle claims. The name and reputation of GEICO are material assets andmanagement protects it and other service marks through appropriate registrations.

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Berkshire Hathaway Primary Group—The Berkshire Hathaway Primary Group (“BH Primary”) is a collection of
independently managed insurers that provide a wide variety of insurance coverages to policyholders located principally in the
United States. These various operations are discussed below.
NICO and certain affiliates (“NICO Primary”) underwrite commercial motor vehicle and general liability insurance onan admitted basis and on an excess and surplus basis. Insurance coverages are offered nationwide primarily through insurance
agents and brokers.
The Berkshire Hathaway Homestate Companies (“BHHC”) is a group of insurers offering workers’ compensation,commercial auto and commercial property coverages to a diverse client base. BHHC has a national reach, with the ability toprovide first-dollar and small to large deductible workers’ compensation coverage to employers in all states, except thosewhere coverage is available only through state-operated workers’ compensation funds. NICO Primary and BHHC are eachbased in Omaha, Nebraska.
Berkshire Hathaway Specialty Insurance (“BH Specialty”) provides commercial property, casualty, healthcare
professional liability, executive and professional lines, surety, travel, medical stop loss and homeowners insurance. BH
Specialty writes business on both an excess and surplus lines basis and an admitted basis in the U.S., and on a locallyadmitted basis outside the U.S. BH Specialty is based in Boston, Massachusetts, with regional offices currently in several
cities in the U.S. and international offices located in Australia, New Zealand, Canada and several countries in Asia andEurope. BH Specialty currently intends to further expand its operations. BH Specialty writes business through wholesale andretail insurance brokers, as well as managing general agents.
MedPro Group (“MedPro”) is a leading provider of healthcare liability (“HCL”) insurance in the United States.
MedPro provides customized HCL insurance, claims, patient safety and risk solutions to physicians, surgeons, dentists andother healthcare professionals, as well as hospitals, senior care and other healthcare facilities. Additionally, MedPro provides
HCL insurance solutions in Europe, delivers liability insurance to other professionals, and offers specialized accident andhealth insurance solutions to colleges and other customers through its subsidiaries and other Berkshire affiliates. MedPro isbased in Fort Wayne, Indiana.
U.S. Liability Insurance Company (“USLI”) includes a group of five specialty insurers that underwrite commercial,professional and personal lines insurance on an admitted basis, as well as an excess and surplus basis. USLI markets policies
in all 50 states and the District of Columbia and Canada through wholesale and retail insurance agents. USLI companies also
underwrite and market a wide variety of specialty insurance products. USLI is based in Wayne, Pennsylvania.
The Berkshire Hathaway GUARD Insurance Companies (“GUARD”) is a group of five insurance companies thatprovide workers’ compensation, business owners’, commercial auto, commercial package and homeowners’ products to over
350,000 small and mid-sized businesses. GUARD also offers complementary professional liability and umbrella products
nationwide. Policies are offered through independent agents and retail and wholesale brokers. GUARD is based in WilkesBarre, Pennsylvania. Central States Indemnity Company of Omaha, based in Omaha, Nebraska, primarily writes Medicare
Supplement insurance.
On October 1, 2018, NICO acquired MLMIC Insurance Company (“MLMIC”). MLMIC has been the leading writer of
medical professional liability insurance in New York State for over 40 years. MLMIC distributes its policies mostly on a
direct basis to medical and dental professionals, health care providers and hospitals. In October 2019, Berkshire sold its 81%
interest in Applied Underwriters, Inc. (“Applied”).
Berkshire Hathaway Reinsurance Group—Berkshire’s combined global reinsurance business, referred to as theBerkshire Hathaway Reinsurance Group (“BHRG”), offers a wide range of coverages on property, casualty, life and healthrisks to insurers and reinsurers worldwide. Reinsurance business is written through National Indemnity Company (“NICO”),
domiciled in Nebraska, its subsidiaries and various other insurance subsidiaries wholly owned by Berkshire (collectively, the“NICO Group”) and General Re Corporation, domiciled in Delaware, and its subsidiaries (collectively the “General Re
Group”). BHRG’s underwriting operations in the U.S. are based in Stamford, Connecticut. BHRG also conducts businessactivities globally in 23 countries.
The type and volume of business written is dependent on market conditions, including prevailing premium rates andcoverage terms. The level of underwriting activities often fluctuates significantly from year to year depending on theperceived level of price adequacy in specific insurance and reinsurance markets as well as from the timing of particularly
large reinsurance transactions.

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Property/casualty
The NICO Group offers traditional property/casualty reinsurance on both an excess-of-loss and a quota-share basis,
catastrophe excess-of-loss treaty and facultative reinsurance, and primary insurance on an excess-of-loss basis for large or
unusual risks for clients worldwide. The NICO Group periodically participates in underwriting placements with major
brokers in the London Market through Berkshire Hathaway International Insurance, Ltd., based in Great Britain. Business iswritten through intermediary brokers or directly with the insured or reinsured.
The type and volume of business written by the NICO Group may vary significantly from period to period resulting
from changes in perceived premium rate adequacy and from unique or large transactions. A significant portion of NICO
Group’s annual reinsurance premium volume currently derives from a 20% quota-share agreement with Insurance Australia
Group Limited (“IAG”) that expires July 1, 2025. IAG is a multi-line insurer in Australia, New Zealand and other Asia
Pacific countries. The General Re Group conducts a global property and casualty reinsurance business. Reinsurance contracts
are written on both a quota-share and excess basis for multiple lines of business. Contracts are primarily in the form oftreaties, and to a lesser degree, on a facultative basis.
General Re Group conducts business in North America primarily through General Reinsurance Corporation (“GRC”),
which is licensed in the District of Columbia and all states, except Hawaii, where it is an accredited reinsurer. GRC conducts
operations in North America from its headquarters in Stamford, Connecticut and through 13 branch offices in the U.S. andCanada.
In North America, the General Re Group includes General Star National Insurance Company, General Star Indemnity
Company and Genesis Insurance Company, which offer a broad array of specialty and surplus lines and property, casualty
and professional liability coverages. Such business is marketed through a select group of wholesale brokers, managing
general underwriters and program administrators, and offer solutions for the unique needs of public entity, commercial andcaptive customers.
General Re Group’s international reinsurance business is conducted on a direct basis through General Reinsurance AG(“GRAG”), based in Cologne Germany, and through several other subsidiaries and branches in 23 countries. International
business is also written through brokers, including Faraday Underwriting Limited (“Faraday”), a wholly-owned subsidiary.
Faraday owns the managing agent of Syndicate 435 at Lloyd’s of London and provides capacity and participates in 100% of
the results of Syndicate 435.
Life/health
The General Re Group also conducts a global life and health reinsurance business. In the U.S. and internationally, theGeneral Re Group writes life, disability, supplemental health, critical illness and long-term care coverages. The life/healthbusiness is marketed on a direct basis. Approximately 27% of the aggregate life/health net premiums written by the General
Re Group were in the United States, compared to 18% in Western Europe and 55% throughout the rest of the world.
Berkshire Hathaway Life Insurance Company of Nebraska (“BHLN”), a subsidiary of NICO, and its affiliates write
reinsurance covering various forms of traditional life insurance exposures and, on a limited basis, health insurance exposures.
BHLN and its affiliates have also periodically reinsured certain guaranteed minimum death, income, and similar benefit
coverages on closed-blocks of variable annuity reinsurance contracts.
Retroactive reinsurance
NICO also periodically writes retroactive reinsurance contracts. Retroactive reinsurance contracts indemnify cedingcompanies against the adverse development of claims arising from loss events that have already occurred under property andcasualty policies issued in prior years. Coverages under such contracts are provided on an excess basis (above a statedretention) or for losses payable immediately after the inception of the contract. Contracts are normally subject to aggregate
limits of indemnification and are occasionally exceptionally large in amount. Significant amounts of asbestos, environmental
and latent injury claims may arise under these contracts. For instance, in January 2017, NICO entered into a retroactive
reinsurance agreement with various subsidiaries of American International Group, Inc. (collectively, “AIG”). Under theagreement, NICO agreed to indemnify AIG for 80% of up to $25 billion in excess of $25 billion retained by AIG, of losses
and allocated loss adjustment expenses with respect to certain commercial insurance loss events occurring in years prior to
2016.
The concept of time-value-of-money is an important element in establishing retroactive reinsurance contract prices andterms, since loss payments may occur over decades. Normally, expected ultimate losses payable under these policies are
expected to exceed premiums, thus producing underwriting losses. Nevertheless, this business is written, in part, because of
the large amounts of policyholder funds generated for investment, the economic benefit of which will be reflected throughinvestment results in future periods.

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Periodic payment annuity
BHLN writes periodic payment annuity insurance policies and reinsures existing annuity-like obligations. Under thesepolicies, BHLN receives upfront premiums and agrees in the future to make periodic payments that often extend for decades.
These policies, generally relate to the settlement of underlying personal injury or workers’ compensation cases of otherinsurers, known as structured settlements. Similar to retroactive reinsurance contracts, time-value-of-money concepts are an
important factor in establishing such premiums and underwriting losses are expected from the periodic accretion of timevalue discounted liabilities.
Investments of insurance businesses—Berkshire’s insurance subsidiaries hold significant levels of invested assets.
Investment portfolios are managed by Berkshire’s Chief Executive Officer and other in-house investment managers.
Investments include a very large portfolio of publicly traded equity securities, which are concentrated in relatively few
issuers, as well as fixed maturity securities and cash and short-term investments. Generally, there are no targeted allocations
by investment type or attempts to match investment asset and insurance liability durations. However, investment portfolios
have historically included a much greater proportion of equity securities than is customary in the insurance industry.
Invested assets derive from shareholder capital as well as funds provided from policyholders through insurance andreinsurance business (“float”). Float is the approximate amount of net policyholder funds generated through underwriting
activities that is available for investment. The major components of float are unpaid losses and loss adjustment expenses, life,
annuity and health benefit liabilities, unearned premiums and other policyholder liabilities less premium and reinsurance
receivables, deferred policy acquisition costs and deferred charges on reinsurance contracts. On a consolidated basis, float has
grown from approximately $84 billion at the end of 2014 to approximately $129 billion at the end of 2019, primarily throughinternal growth. The cost of float can be measured as the net pre-tax underwriting loss as a percentage of average float. Overthe past five years, with the exception of 2017, Berkshire’s cost of float was negative, as its insurance businesses produced
net underwriting gains.
Railroad Business—Burlington Northern Santa Fe
Burlington Northern Santa Fe, LLC (“BNSF”) is based in Fort Worth, Texas, and through BNSF Railway Company(“BNSF Railway”) operates one of the largest railroad systems in North America. BNSF Railway had approximately 40,750
employees at the end of 2019. BNSF also operates a relatively smaller third-party logistics services business.
In serving the Midwest, Pacific Northwest, Western, Southwestern and Southeastern regions and ports of the UnitedStates, BNSF transports a range of products and commodities derived from manufacturing, agricultural and natural resource
industries. Freight revenues are covered by contractual agreements of varying durations or common carrier published prices
or company quotations. 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 Railway efficiently serves
many smaller markets by working closely with approximately 200 shortline railroads. BNSF Railway has also entered into
marketing agreements with other rail carriers, expanding the marketing reach for each railroad and their customers. For theyear ending December 31, 2019, approximately 35% of freight revenues were derived from consumer products, 27% fromindustrial products, 21% from agricultural products and 17% from coal.
Regulatory Matters
BNSF is subject to federal, state and local laws and regulations generally applicable to its businesses. Rail operations
are subject to the regulatory jurisdiction of the Surface Transportation Board (“STB”) the Federal Railroad Administration of
the United States Department of Transportation (“DOT”), the Occupational Safety and Health Administration (“OSHA”), as
well as other federal and state regulatory agencies and Canadian regulatory agencies for operations in Canada. 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 the merger with or acquisition of control of rail common carriers. The
outcome of STB proceedings can affect the profitability of BNSF Railway’s business.
The DOT and OSHA have jurisdiction under several federal statutes over a number of safety and health aspects of rail
operations, including the transportation of hazardous materials. BNSF Railway is required to transport these materials to theextent of its common carrier obligation. State agencies regulate some aspects of rail operations with respect to health andsafety in areas not otherwise preempted by federal law.

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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. Such regulations effectively increase the costs and liabilities
associated with rail operations. Environmental risks are also inherent in rail operations, which frequently involve transportingchemicals and other hazardous materials.
Many of BNSF’s land holdings are or have been used for industrial or transportation-related purposes or leased tocommercial or industrial companies whose activities may have resulted in discharges onto the property. Under federal (inparticular, the Comprehensive Environmental Response, Compensation and Liability Act) and state statutes, BNSF may beheld jointly and severally liable for cleanup and enforcement costs associated with a particular site without regard to fault or
the legality of the original conduct. BNSF may also be subject to claims by third parties for investigation, cleanup, restorationor 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, may exert pressure on price andservice levels. The presence of advanced, high service truck lines with expedited delivery, subsidized infrastructure andminimal empty mileage continues to affect the market for non-bulk, time-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 railroads seek to develop and implement operating efficiencies to improve productivity.
As railroads streamline, rationalize and otherwise enhance their franchises, competition among rail carriers intensifies.
BNSF Railway’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 of the same territories servedby BNSF.
Utilities and Energy Businesses—Berkshire Hathaway Energy
Berkshire currently owns 90.9% of the outstanding common stock of Berkshire Hathaway Energy Company (“BHE”).
BHE is a global energy company with subsidiaries that generate, transmit, store, distribute and supply energy. BHE’s locallymanaged businesses are organized as separate operating units. BHE’s domestic regulated energy interests are comprised offour regulated utility companies serving approximately 5.1 million retail customers, two interstate natural gas pipelinecompanies with approximately 16,300 miles of pipeline and a design capacity of approximately 8.5 billion cubic feet of
natural gas per day and ownership interests in electricity transmission businesses. BHE’s Great Britain electricity distribution
subsidiaries serve about 3.9 million electricity end-users and its electricity transmission-only business in Alberta, Canada
serves approximately 85% of Alberta’s population. BHE’s interests also include a diversified portfolio of independent power
projects, the largest residential real estate brokerage firm in the United States, and one of the largest residential real estate
brokerage franchise networks in the United States. BHE employs approximately 23,000 people in connection with its various
operations.
General Matters
PacifiCorp is a regulated electric utility company headquartered in Oregon, serving electric customers in portions ofUtah, 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 segmentof the economy dominates the combined service territory, which helps mitigate PacifiCorp’s exposure to economic
fluctuations. In addition to retail sales, PacifiCorp sells electricity on a wholesale basis to other electricity retailers andwholesalers.
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 of Illinois, South Dakota and
Nebraska. MEC has a diverse retail customer base consisting of urban and rural residential customers and a variety ofcommercial and industrial customers. In addition to retail sales and natural gas transportation, MEC sells electricity
principally to markets operated by regional transmission organizations and natural gas on a wholesale basis.
NV Energy, Inc. (“NV Energy”) 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 retail electric customers in southern Nevada and Sierra
Pacific serves retail electric and natural gas customers in northern Nevada. The Nevada Utilities’ combined service territory’s
economy includes gaming, mining, recreation, warehousing, manufacturing and governmental services. In addition to retailsales and natural gas transportation, the Nevada Utilities sell electricity and natural gas on a wholesale basis.
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As vertically integrated utilities, BHE’s domestic utilities own approximately 29,000 net megawatts of generation
capacity in operation and under construction. The domestic utilities business is subject to seasonal variations principally
related to the use of electricity for air conditioning and natural gas for heating. Typically, regulated electric revenues arehigher in the summer months, while regulated natural gas revenues are higher in the winter months.
The Great Britain distribution companies consist of Northern Powergrid (Northeast) Limited and Northern Powergrid(Yorkshire) plc, 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 their distribution systems.
AltaLink L.P. (“AltaLink”) is a regulated electric transmission-only utility company headquartered in Calgary, Alberta.
AltaLink’s high voltage transmission lines and related facilities transmit electricity from generating facilities to major load
centers, cities and large industrial plants throughout its 87,000 square mile service territory.
The natural gas pipelines consist of Northern Natural Gas Company (“Northern Natural”) and Kern River Gas
Transmission Company (“Kern River”). Northern Natural, based in Nebraska, owns the largest interstate natural gas pipeline
system in the United States, as measured by pipeline miles, reaching from west Texas to Michigan’s Upper Peninsula.
Northern Natural’s pipeline system consists of approximately 14,600 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 to supplies from multiple major supply basins and provides transportation services to utilities and numerous othercustomers. 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.
Kern River, based in Utah, 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. Kern Rivertransports natural gas for electric and natural gas distribution utilities, major oil and natural gas companies or affiliates ofsuch companies, electric generating companies, energy marketing and trading companies, and financial institutions.
BHE Renewables is based in Iowa and owns interests in independent power projects having approximately 4,600 net
megawatts of generation capacity that are in service in California, Texas, Illinois, Nebraska, New York, Arizona, Minnesota,
Kansas, Hawaii and the Philippines. These independent power projects sell power generated primarily from wind, solar,
geothermal and hydro sources under long-term contracts. Additionally, BHE Renewables has invested over $3 billion intwenty-one wind projects sponsored by third parties, commonly referred to as tax equity investments.
Regulatory Matters
PacifiCorp, MEC and the Nevada Utilities are 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 of the Federal Power Act, the Natural Gas Act, the Energy Policy Act of 2005 and other federal
statutes. The FERC regulates rates for wholesale sales of electricity; transmission of electricity, including pricing andregional 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 $1.3 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 25% ownership of the Quad Cities
Nuclear Station.
With certain limited exceptions, BHE’s domestic utilities have an exclusive right to serve retail customers within theirservice territories and, in turn, have an obligation to provide service to those customers. In some jurisdictions, certain classesof customers may choose to purchase all or a portion of their energy from alternative energy suppliers, and in somejurisdictions retail customers can generate all or a portion of their own energy. Historically, state regulatory commissions
have established retail electric and natural gas rates on a cost-of-service basis, designed to allow a utility the opportunity torecover what each state regulatory commission deems to be the utility’s reasonable costs of providing services, including afair opportunity to earn a reasonable return on its investments based on its cost of debt and equity. The retail electric rates ofPacifiCorp, MEC and the Nevada Utilities are generally based on the cost of providing traditional bundled services, including
generation, transmission and distribution services; however, rates are available for transmission and distribution-onlyservices.
Northern Powergrid (Northeast) and Northern Powergrid (Yorkshire) each charge fees for the use of their distribution
systems that are controlled by a formula prescribed by the British electricity regulatory body, the Gas and Electricity Markets
Authority. The current eight-year price control period runs from April 1, 2015 through March 31, 2023.

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AltaLink is regulated by the Alberta Utilities Commission (“AUC”), pursuant to the Electric Utilities Act (Alberta), thePublic Utilities Act (Alberta), the Alberta Utilities Commission Act (Alberta) and the Hydro and Electric Energy Act(Alberta). The AUC is an independent quasi-judicial agency, which regulates and oversees Alberta’s electricity transmission
sector with broad authority that may impact many of AltaLink’s activities, including its tariffs, rates, construction, operations
and financing. Under the Electric Utilities Act, AltaLink prepares and files applications with the AUC for approval of tariffs
to be paid by the Alberta Electric System Operator (“AESO”) for the use of its transmission facilities, and the terms andconditions governing the use of those facilities. The AESO is an independent system operator in Alberta, Canada thatoversees Alberta’s integrated electrical system (“AIES”) and wholesale electricity market. The AESO is responsible fordirecting the safe, reliable and economic operation of the AIES, including long-term transmission system planning.
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 Kern River are regulated by the FERC pursuant to the Natural Gas Act andthe 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 administered 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 andmaintenance of interstate natural gas pipeline facilities.
Environmental Matters
BHE and its energy businesses are subject to federal, state, local and foreign laws and regulations regarding climatechange, renewable portfolio standards, air and water quality, emissions performance standards, coal combustion byproductdisposal, hazardous and solid waste disposal, protected species and other environmental matters that have the potential toimpact current and future operations. In addition to imposing continuing compliance obligations, these 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 forprotecting 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 BHE’s generating facilities and require them toreduce 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 energy resources by a certain date. Utah, Oregon,
Washington, California, Iowa and Nevada have adopted renewable portfolio standards. In addition, the potential adoption ofstate 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.
In December 2015, an international agreement was negotiated by 195 nations to create a universal framework forcoordinated action on climate change in what is referred to as the Paris Agreement. The Paris Agreement reaffirms the goalof limiting global temperature increase well below 2 degrees Celsius, while urging efforts to limit the increase to 1.5 degrees
Celsius; establishes commitments by all parties to make nationally determined contributions and pursue domestic measures
aimed at achieving the commitments; commits all countries to submit emissions inventories and report regularly on theiremissions and progress made in implementing and achieving their nationally determined commitments; and commits all
countries to submit new commitments every five years, with the expectation that the commitments will get more aggressive.
In the context of the Paris Agreement, the United States agreed to reduce greenhouse gas emissions 26% to 28% by 2025
from 2005 levels. The Paris Agreement formally entered into force November 4, 2016. On June 1, 2017, President Trump
announced the United States would begin the process of withdrawing from the Paris Agreement. Under the terms of the Paris
Agreement, withdrawal cannot occur until four years after entry into force, making the United States’ withdrawal effective in
November 2020.
On October 10, 2017, the EPA issued a proposal to repeal the Clean Power Plan, which was intended to achieve an
overall reduction in carbon dioxide emissions from existing fossil-fueled electric generating units of 32% below 2005 levels.
On June 19, 2019, the EPA repealed the Clean Power Plan and issued the Affordable Clean Energy rule, which fully replaced
the Clean Power Plan. In the Affordable Clean Energy rule, the EPA determined that the best system of emissions reduction
for existing coal fueled power plants is heat rate improvements and identified a set of candidate technologies and measuresthat could improve heat rates. Measures taken to meet the standards of performance must be achieved at the source itself. The
EPA’s repeal and replacement of the Clean Power Plan is not expected to have a material impact on BHE and its energy
subsidiaries. Increasingly, states are adopting legislation and regulations to reduce greenhouse gas emissions, and local
governments and consumers are seeking increasing amounts of clean and renewable energy.
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BHE and its energy subsidiaries continue to focus on delivering reliable, affordable, safe and clean energy to its
customers and on actions to mitigate greenhouse gas emissions. For example, through December 31, 2019, BHE’s cumulative
investment in wind, solar, geothermal and biomass generation is approximately $29 billion.
Non-Energy Businesses
HomeServices of America, Inc. (“HomeServices”) is the largest residential real estate brokerage firm in the UnitedStates. In addition to providing traditional residential real estate brokerage services, HomeServices offers other integrated realestate services, including mortgage originations and mortgage banking, title and closing services, property and casualty
insurance, home warranties, relocation services and other home-related services. It operates under 47 brand names with over
43,000 real estate agents in over 900 brokerage offices in 30 states and the District of Columbia.
In October 2012, HomeServices acquired a 66.7% interest in one of the largest residential real estate brokerage
franchise networks in the United States, which offers and sells independently owned and operated residential real estate
brokerage franchises. In April 2018, HomeServices acquired the remaining 33.3% interest. HomeServices’ franchise network
currently includes approximately 380 franchisees in over 1,600 brokerage offices throughout the United States and Europe
with nearly 53,000 real estate agents under two brand names. In exchange for certain fees, HomeServices provides the rightto use the Berkshire Hathaway HomeServices or Real Living brand names and other related service marks, as well as
providing orientation programs, training and consultation services, advertising programs and other services.
HomeServices’ principal sources of revenue are 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 general real estate market
conditions.
Manufacturing Businesses
Berkshire’s numerous and diverse manufacturing subsidiaries are grouped into three categories: (1) industrial products,(2) building products and (3) consumer products. Berkshire’s industrial products businesses manufacture specialty chemicals,
metal cutting tools, components for aerospace and power generation applications, and a variety of other products primarily
for industrial use. The building products group produces prefabricated and site-built residential homes, flooring products,
insulation, roofing and engineered products, building and engineered components, paint and coatings and bricks and masonry
products. The consumer products group manufactures recreational vehicles, alkaline batteries, various apparel products,
jewelry and custom picture framing products. Information concerning the major activities of these three groups follows.
Industrial products
Precision Castparts
Precision Castparts Corp. (“PCC”) manufactures complex metal components and products, provides high-quality
investment castings, forgings, fasteners/fastener systems and aerostructures for critical aerospace and power and energy
applications. PCC also manufactures seamless pipe for coal-fired, industrial gas turbine (“IGT”) and nuclear power plants;
downhole casing and tubing, fittings and various mill forms in a variety of nickel and steel alloys for severe-service oil andgas environments; investment castings and forgings for general industrial, armament, medical and other applications; nickel
and titanium alloys in all standard mill forms from large ingots and billets to plate, foil, sheet, strip, tubing, bar, rod, extruded
shapes, rod-in-coil, wire and welding consumables, as well as cobalt alloys, for the aerospace, chemical processing, oil andgas, pollution control and other industries; revert management solutions; fasteners for automotive and general industrial
markets; specialty alloys for the investment casting and forging industries; heat treating and destructive testing services forthe investment cast products and forging industries; grinder pumps and affiliated components for low-pressure sewer
systems; critical auxiliary equipment and gas monitoring systems for the power generation industry; and metalworking tools
for the fastener market and other applications.
Investment casting technology involves a multi-step process that uses ceramic molds in the manufacture of metalcomponents with more complex shapes, closer tolerances and finer surface finishes than parts manufactured using othermethods. PCC uses this process to manufacture products for aircraft engines, IGT’s and other aeroderivative engines,
airframes, medical implants, armament, unmanned aerial vehicles and other industrial applications. PCC also manufactureshigh temperature carbon and ceramic composite components, including ceramic matrix composites, for use in nextgeneration aerospace engines.
PCC uses forging processes to manufacture components for the aerospace and power generation markets, including
seamless pipe for coal-fired, industrial gas turbine and nuclear power plants, and downhole casings and tubing pipe for severe
service oil and gas markets. PCC manufactures high-performance, nickel-based alloys used to produce forged components
for aerospace and non-aerospace applications in such markets as oil and gas, chemical processing and pollution control.
These titanium products are used to manufacture components for the commercial and military aerospace, power generation,energy, and other industrial end markets.
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PCC is also a leading developer and manufacturer of highly engineered fasteners, fastener systems, aerostructures andprecision components, primarily for critical aerospace applications. These products are produced for the aerospace and powerand energy markets, as well as for construction, automotive, heavy truck, farm machinery, mining and construction
equipment, shipbuilding, machine tools, medical equipment, appliances and recreation markets.
The majority of PCC’s sales are from purchase orders or demand schedules pursuant to long-term agreements.
Contractual terms may provide for termination by the customer, subject to payment for work performed. PCC typically does
not experience significant order cancellations, although periodically it receives requests for delays in delivery schedules.
PCC is subject to substantial competition in all of its markets. Components and similar products may be produced bycompetitors, who use either the same types of manufacturing processes as PCC or other processes. Although PCC believes its
manufacturing processes, technology and experience provide advantages to its customers, such as high quality, competitive
prices and physical properties that often meet more stringent demands, alternative forms of manufacturing can be used to
produce many of the same components and products. Despite intense competition, PCC is a leading supplier in most of its
principal markets. Several factors, including long-standing customer relationships, technical expertise, state-of-the-art
facilities and dedicated employees, aid PCC in maintaining competitive advantages.
Several raw materials used in PCC products, including certain metals such as nickel, titanium, cobalt, tantalum andmolybdenum, are found in only a few parts of the world. These metals are required for the alloys used in manufactured
products. The availability and costs of these metals may be influenced by private or governmental cartels, changes in worldpolitics, labor relations between the metal producers and their work forces and inflation.
Lubrizol Corporation
The Lubrizol Corporation (“Lubrizol”) is a specialty chemical company that produces and supplies technologies for the
global transportation, industrial and consumer markets. Lubrizol currently operates in 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, skin care and life sciencesolutions.
Lubrizol Additives products are used in a broad range of applications including engine oils, transmission fluids, gearoils, specialty driveline lubricants, fuel additives, metalworking fluids, compressor lubricants and greases for transportationand industrial applications. Lubrizol’s Advanced Materials products are used in several different types of applications
including over-the-counter pharmaceutical products, performance coatings, personal care products, sporting goods andplumbing and fire sprinkler systems. Lubrizol is an industry leader in many of the markets in which it competes. Lubrizol’s
principal additives competitors are 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 3,800 patents, Lubrizol uses its technological leadership position in productdevelopment 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 are primarily feedstocks
derived from petroleum and petrochemicals and, generally, are 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 operates facilities in 27 countries (including production facilities in 17 countries and laboratories in 14 countries).
Lubrizol markets its products worldwide through a direct sales organization and sales agents and distributors.
Lubrizol’s customers principally consist of major global and regional oil companies and industrial and consumer products
companies that are located in more than 120 countries. Some of its largest customers also may be suppliers. In 2019, nosingle customer accounted for more than 10% of Lubrizol’s consolidated revenues. Lubrizol continues to implement a multiyear phased investment plan to upgrade operations, ensure compliance with health, safety and environmental requirements
and increase global manufacturing capacity.
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 the risk ofenvironmental damage and consequent financial liability. Nevertheless, the operation of manufacturing plants entails ongoingenvironmental risks, and significant costs or liabilities could be incurred in the future.
IMC International Metalworking Companies
IMC International Metalworking Companies (“IMC”) is one of the world’s three largest multinational manufacturers ofconsumable precision carbide metal cutting tools for applications in a broad range of industrial end markets. IMC’s principal
brand names include ISCAR®, TaeguTec®, Ingersoll®, Tungaloy®, Unitac®, UOP®, It.te.di®, Qutiltec®, Tool—Flo® and PCT®.
IMC’s primary manufacturing facilities are located in Israel, the United States, Germany, Italy, France, Switzerland, South
Korea, China, India, Japan and Brazil.
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IMC has five primary product lines: milling tools, gripping tools, turning/thread tools, drilling tools and tooling. The
main products are 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 are used by industrial manufacturers to
cut metals and are consumed during their use in cutting applications. IMC manufactures hundreds of types of highly
engineered inserts within each product line that are tailored to maximize productivity and meet the technical requirements ofcustomers. IMC’s staff of scientists and engineers continuously develop and innovate products that address end user needs
and requirements.
IMC’s global sales and marketing network operates in virtually every major manufacturing center around the world
staffed with highly skilled engineers and technical personnel. IMC’s customer base is very diverse, with its primarycustomers being large, multinational businesses in the automotive, aerospace, engineering and machinery industries. IMC
operates a regional central warehouse system with locations in Israel, the United States, Belgium, Korea, Japan and Brazil.
Additional small quantities of products are maintained at local IMC offices in order to provide on-time customer support andinventory management.
IMC 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 andmarkets to larger, global multinational businesses (such as Sandvik and Kennametal, Inc.) with a wide assortment of products
and extensive distribution networks. Other manufacturing companies such as Kyocera, Mitsubishi, Sumitomo, Ceratizit andKorloy also play a significant role in the cutting tool market.
Marmon Holdings
Marmon Holdings, Inc. (“Marmon”) is a global industrial organization comprising 11 diverse business sectors andmore than 100 autonomous manufacturing and service businesses. Marmon acquired the Colson Medical Companies as of
October 31, 2019, which comprise Marmon’s Medical sector. Marmon’s manufacturing and service operations employ over
22,000 employees at approximately 400 manufacturing, distribution, and service facilities located primarily in the UnitedStates, as well as 21 other countries worldwide. Marmon’s business sectors are described as follows.
Foodservice Technologies manufactures beverage dispensing and cooling equipment, hot and cold food preparationand holding equipment and related products for restaurants, global brand owners and other foodservice providers. Operations
are based in the U.S. with manufacturing in China, India, the U.K., Germany and Italy. Products are sold primarily
throughout the U.S., Europe and Asia.
Water Technologies manufactures water treatment equipment for residential, commercial, and industrial applications
worldwide. Operations are based primarily in the U.S., Canada, China, Singapore, India, and Mexico with business centers
located in Belgium, France, Poland, Germany, the U.K., Italy, Switzerland and U.A.E.
Transportation Products serves the automotive, heavy-duty highway transportation, and aerospace industries with
precision-molded plastic components; fastener thread solutions; metal tubing; auto aftermarket transmission and chassis
products; platform trailers; and truck and trailer components. Operations and business are conducted primarily in the U.S.,
Mexico, Canada, Europe and Asia.
Retail Solutions provides retail environment design services; in-store digital merchandising and display fixtures;shopping, material handling, and security carts; and consumer products, including air compressors and extension cords.
Operations and business are conducted in the U.S., the U.K., Czech Republic and China.
Metal Services provides specialty metal pipe, tubing, beams and related value-added services to customers across a
broad range of industries. Operations are based in the U.S., Canada, and Mexico and business is conducted primarily in thosecountries.
Electrical produces electrical wire for use in residential and commercial buildings; and specialty wire and cable for use
in energy, transit, aerospace, defense, communication and other industrial applications. Operations are based in the U.S.,
Canada, India and England. Business is conducted globally and primarily in the U.S., Canada, India, the U.K., U.A.E. andChina.
Plumbing & Refrigeration supplies copper, aluminum, and stainless steel tubing and fittings for the plumbing, HVAC
and refrigeration markets; custom coils for the HVAC market; and aluminum and brass forgings for many commercial andindustrial applications. Business and operations are conducted primarily in the U.S.
Industrial Products supplies construction fasteners; gloves and other protective wear; gear drives, gearboxes, fan drives
and pump drives for various markets; wind machines for agricultural use; and wheels, axles, and gears for rail, mining andother applications. Operations are primarily based in the U.S., Canada and China and business is conducted in thosecountries.

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Rail & Leasing manufactures, leases and maintains railcars; leases intermodal tank containers; manufactures mobile
railcar movers; provides in-plant rail switching and loading services; performs track construction and maintenance; andmanufactures steel tank heads and cylinders.
Union Tank Car Company (“UTLX”) is the largest component of Rail & Leasing and is a leading designer, builder andfull-service lessor of railroad tank cars and other specialized railcars. Together with its Canadian affiliate Procor, UTLX
owns a fleet of approximately 127,000 railcars for lease to customers in chemical, petrochemical, energy andagricultural/food industries. UTLX manufactures tank cars at two U.S. plants and performs railcar maintenance services atmore than 100 locations across North America.
UTLX has a diversified customer base, both geographically and across industries. UTLX, while subject to cyclicality
and significant competition in most of its markets, competes by offering a broad range of high-quality products and services
targeted at its niche markets. Railcars are typically leased for multiple-year terms and most of the leases are renewed upon
expiration. Due to selective ongoing capital investment, utilization rates (the number of railcars on lease to total available) of
the railcar fleet are generally high.
Intermodal tank containers are leased through EXSIF Worldwide. EXSIF is a leading international lessor of intermodaltank containers with a fleet of approximately 65,000 units, primarily serving chemical producers and logistics operators.
Crane Services is a provider of mobile cranes and operators in North America and Australia. Sterling Crane, Joyce
Crane, Freo Group, and WGC Cranes operate a combined fleet of approximately 1,200 cranes primarily serving the energy,
mining and petrochemical markets.
Medical develops, manufactures and distributes a wide range of innovative medical devices in the extremities, trauma
fixation, craniomaxillofacial, neurosurgery, biologics, aesthetics and powered instruments markets. The sector’s leading-edge
medical technology and products are used globally to help improve patient care and outcomes. Operations are based in the
U.S., Europe and China. Business is conducted primarily in North and South America, Europe, Asia and Australia.
Other industrial products
CTB International Corp. (“CTB”), headquartered in Milford, Indiana, is a leading global designer, manufacturer andmarketer of a wide range of agricultural systems and solutions for preserving grain, producing poultry, pigs and eggs, and forprocessing poultry, fish, vegetables and other foods. CTB operates from facilities located around the globe and supports
customers through a worldwide network of independent distributors and dealers.
CTB competes with a variety of manufacturers and suppliers, many of which offer only a limited number of the
products offered by CTB and two of which offer products across many of CTB’s product lines. Competition is based on theprice, value, reputation, quality and design of the products offered and the customer service provided by distributors, dealers
and manufacturers of the products. CTB’s leading brand names, distribution network, diversified product line, productsupport and high-quality products enable it to compete effectively. CTB manufactures its products primarily from galvanizedsteel, steel wire, stainless steel and polymer materials and supplies of these materials have been sufficient in recent years.
LiquidPower Specialty Products Inc. (“LSPI”), headquartered in Houston, Texas, is a global leader in the science ofdrag reduction application (“DRA’) technology by maximizing the flow potential of pipelines, increasing operational
flexibility and throughput capacity, and efficiencies for customers. LSPI develops innovative flow improver solutions withcustomers in over 40 countries on six continents, treating over 50 million barrels of hydrocarbon liquids per day. LSPI’s
DRA offering is part of a comprehensive, full-service solution that encompasses industry-leading technology, quality
manufacturing, technical support and consulting, a reliable supply chain, injection equipment and field service. The Scott
Fetzer companies are a group of businesses that manufacture, distribute, service and finance a wide variety of products forresidential, industrial and institutional use.
Berkshire’s industrial products manufacturers employ approximately 83,000 persons.
Building Products
Clayton Homes
Clayton Homes, Inc. (“Clayton”), headquartered near Knoxville, Tennessee, is a vertically integrated housing company
offering traditional site-built homes and off-site built housing – including modular homes, manufactured homes, CrossMod™
homes and tiny homes. In 2019, Clayton delivered 44,600 off-site built and 7,369 site-built homes. Clayton also offers homefinancing and insurance products and competes on price, service, location and delivery capabilities.

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All Clayton Built® off-site homes are designed, engineered and assembled in the United States. Clayton sells its homes
through independent dealers, company owned home centers, realtors and subdivision channels. Clayton considers its ability
to make financing available to retail purchasers a factor affecting the market acceptance of its off-site built homes. Clayton’s
financing programs utilize proprietary loan underwriting guidelines, which include ability to repay calculations, including
debt to income limits, consideration of residual income and credit score requirements, which are considered in evaluating
loan applicants.
Since 2015, Clayton’s site-built division, Clayton Properties Group, has grown through nine builder acquisitions across
14 states with a total of 311 subdivisions, supplementing the portfolio of housing products offered to customers. Our sitebuilders currently control approximately 59,000 lots, with a home order backlog of approximately $1.0 billion.
Shaw Industries
Shaw Industries Group, Inc. (“Shaw”), headquartered in Dalton, Georgia, is a leading carpet manufacturer based on
both revenue and volume of production. Shaw designs and manufactures over 3,700 styles of tufted carpet, wood andresilient flooring for residential and commercial use under about 30 brand and trade names and under certain private labels.
Shaw also provides project management and installation services. Shaw’s manufacturing operations are fully integrated fromthe processing of raw materials used to make fiber through the finishing of carpet. In 2018, Shaw acquired Sanquahar Tile
Services in Scotland, which manufactures and distributes carpet tile throughout Europe. Shaw also manufactures or
distributes a variety of hardwood, vinyl and laminate floor products (“hard surfaces”). In 2016, Shaw acquired USFloors,
Inc., which is a leading innovator and marketer of wood-plastic composite luxury vinyl tile flooring, as well as cork, bamboo
and hardwood products. Shaw’s carpet and hard surface products are sold in a broad range of patterns, colors and textures.
Shaw operates Shaw Sports Turf and Southwest Greens International, LLC, which provide synthetic sports turf, golf greensand landscape turf products.
Shaw products are sold wholesale to over 40,000 retailers, distributors and commercial users throughout the UnitedStates, Canada and Mexico and are also exported to various overseas markets. Shaw’s wholesale products are marketed
domestically by over 2,400 salaried and commissioned sales personnel directly to retailers and distributors and to large
national accounts. Shaw’s seven carpet, six hard surface, one sample full-service distribution facility and three sample
satellite locations and thirty redistribution centers, along with centralized management information systems, enable it toprovide prompt and efficient delivery of its products to both its retail customers and wholesale distributors.
Substantially all carpet manufactured by Shaw is tufted carpet made from nylon, polypropylene and polyester. In thetufting process, yarn 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 2019, Shaw processed approximately 95% of its requirements for
carpet yarn in its own yarn processing facilities. The availability of raw materials continues to be adequate but costs are
impacted by petro-chemical and natural gas price changes. Raw material cost changes are periodically factored into selling
prices to customers.
The floor covering industry is highly competitive with more than 100 companies engaged in the manufacture and saleof carpet in the United States and numerous manufacturers engaged in hard surface floor covering production and sales.
According to industry estimates, carpet accounts for approximately 45% of the total United States consumption of all flooringtypes. The principal competitive measures within the floor covering industry are quality, style, price and service.
Johns ManvilleJohns Manville (“JM”), headquartered in Denver, Colorado, is a leading manufacturer and marketer of premiumquality products for building insulation, mechanical and industrial insulation, commercial roofing and roof insulation, as wellas fibers and nonwovens for commercial, industrial and residential applications. JM serves markets that include aerospace,automotive and transportation, air handling, appliance, HVAC, pipe and equipment, filtration, waterproofing, building,flooring, interiors and wind energy. Fiberglass 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 does not consider any of its businesses to bematerially dependent on any single patent or license. JM operates over 40 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.
Fiberglass is made from earthen raw materials and recycled glass, together with proprietary agents to bind many of its
glass fibers. JM’s products also contain materials other than fiberglass, including various chemical and petro-chemical-basedmaterials used in roofing and other specialized products. JM uses recycled material when available and suitable to satisfy thebroader needs of its customers. The raw materials used in these various products are readily available in sufficient quantities
from various sources to maintain and expand its current production levels.
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JM’s operations are subject to a variety of federal, state and local environmental laws and regulations, which regulate
the discharge of materials into the air, land and water and govern the use and disposal of hazardous substances. The most
relevant of the federal laws are the Federal Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, theResource Conservation and Recovery Act and the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, which are administered by the EPA. Canadian, European and Asian regulatory authorities have also adopted theirown environmental laws and regulations. JM continually monitors new and pending regulations and assesses their potential
impact on the business.
JM sells its products through a wide variety of channels including contractors, distributors, retailers, manufacturers andfabricators. JM operates in highly competitive markets, with competitors comprised primarily of several large global andnational manufacturers and smaller regional manufacturers. JM holds leadership positions in the key markets that it serves.
JM’s products compete primarily on value, differentiation and customization, and breadth of product line. Sales of JM’s
products are moderately seasonal due to increases in construction activity that typically occur in the second and third quartersof the calendar year. JM sees a marketplace trend in customer purchasing decisions being influenced by the sustainable andenergy efficient attributes of its products, services and operations.
MiTek Industries, Inc.
MiTek Industries, Inc. (“MiTek”), based in Chesterfield, Missouri, operates in two separate markets: residential andcommercial. MiTek operates worldwide with sales in over 100 countries and with manufacturing facilities and/or
sales/engineering offices located in 21 countries.
In the residential segment, MiTek is a leading supplier of engineered connector products, construction hardware,engineering software and services and computer-driven manufacturing machinery to the truss component market of thebuilding components industry. MiTek’s primary customers are component manufacturers who manufacture prefabricatedroof and floor trusses and wall panels for the residential building market. MiTek also sells construction hardware tocommercial distributors and do-it-yourself retail stores.
MiTek’s commercial businesses provide products and services sold to the commercial construction industry.
Commercial products include curtain wall systems, masonry and stone anchoring systems, light gauge steel framing products,
engineering services for a proprietary high-performance steel frame connection and a comprehensive range of ductwork forthe ventilation market, customized air handling systems for commercial, institutional and industrial markets, design andsupply of Nuclear Safety Related HVAC systems and components, energy recovery and dehumidification systems forcommercial applications and pre-engineered and pre-fabricated custom structural mezzanines and platforms for distribution
and manufacturing facilities.
A significant raw material used by MiTek is hot dipped galvanized sheet steel. While supplies are presently adequate,
variations in supply have historically occurred, producing significant variations in cost and availability.
Benjamin Moore
Benjamin Moore & Co. (“Benjamin Moore”), headquartered in Montvale, New Jersey, is a leading formulator,
manufacturer and retailer of a broad range of architectural coatings, available principally in the United States and Canada.
Products include water-based and solvent-based general-purpose coatings (paints, stains and clear finishes) for use by
consumers, contractors and industrial and commercial users. Products are marketed under various registered brand names,
including, but not limited to: Aura®, Natura®, Regal® Select, Ultra Spec®, ben®, Eco Spec®, Coronado®, Corotech®, Insl-x®,
Lenmar®, Super Kote®, Arborcoat®, Super Hide®, Century®, SCUFF-X® and Notable®™.
Benjamin Moore paints are available from over 3,300 independent retailers representing more than 5,000 locallyowned and operated storefronts in the United States and Canada. The independent retailer channel offers a broad array of
products including Benjamin Moore®, Coronado® and Insl-x® brands and other competitor coatings, wall coverings, window
treatments and sundries.
Selected Benjamin Moore products are currently sold at approximately 1,000 Ace Hardware (“Ace”) stores. In July
2019, Ace and Benjamin Moore announced that Ace was expanding its relationship with Benjamin Moore, by naming
Benjamin Moore as the preferred paint supplier for approximately 3,300 Ace stores. Participating Ace stores will have theopportunity to carry a full line premium assortment of Benjamin Moore products or a streamlined offering of Regal® Selectand ben®, or ben® only branded products beginning in the Spring of 2020. As part of the expanded relationship, Benjamin
Moore will also assume responsibility for manufacturing Ace’s private label paint brands, Clark+Kensington® and Royal®.
Benjamin Moore also operates an on-line “pick up in store” program, which allows consumers to place orders via an ecommerce site, or for national accounts and government agencies via its customer information center, for pick-up at thecustomer’s nearest dealer.

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Benjamin Moore competes with numerous manufacturers, distributors and paint, coatings and related products
retailers. Product quality, product innovation, breadth of product line, technical expertise, service and price determine thecompetitive advantage. Competitors include other paint and decorating stores, mass merchandisers, home centers,
independent hardware stores, hardware chains and manufacturer-operated direct outlets, such as Sherwin-Williams Company,
PPG Industries, Inc., The Valspar Corporation, The Home Depot, Inc. and Lowe’s Companies, Inc.
The most significant raw materials in Benjamin Moore products are titanium dioxide, monomers, polymers andpigments. Historically, these materials have been generally available, with pricing and availability subject to fluctuation.
Acme Brick
Acme Brick Company and its subsidiaries (“Acme”), headquartered in Fort Worth, Texas, manufactures and distributes
clay bricks (Acme Brick®) and concrete block (Featherlite). In addition, Acme distributes a number of other building productsof other manufacturers, including floor and wall tile, wood flooring and other masonry products. Products are 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.
In 2018 and 2019, Acme commenced closing multiple underperforming manufacturing and sales facilities. Now
complete, Acme operates 12 clay brick manufacturing sites located in four states, three concrete block facilities and aquarrying operation 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.
The brick industry is subject to the Environmental Protection Agency (“EPA”) Maximum Achievable Control
Technology Standards (“MACT”). As required under the 1990 Clean Air Act, the EPA developed a list of source categories
that require the development of National Emission Standards for Hazardous Air Pollutants (“NESHAP”), which are also
referred to as MACT Standards (“Rule”). Key elements of the MACT Rule include emission limits established for certain
hazardous air pollutants and acidic gases. Acme’s brick plants are in compliance with the current Rule.
Berkshire’s building products manufacturers employ approximately 57,500 people.
Consumer Products
ApparelFruit of the Loom (“FOL”), headquartered in Bowling Green, Kentucky, is primarily a manufacturer and distributor ofbasic apparel, underwear, casualwear, athletic apparel and sports equipment. Products under the Fruit of the Loom® and
JERZEES® labels are primarily sold in the mass merchandise, mid-tier chains and wholesale markets. In the Vanity Fair
Brands product line, Vassarette®, Curvation® and Radiant® by Vanity Fair are sold in the mass merchandise market, while
Vanity Fair® and Lily of France® products are sold to mid-tier chains and department stores. FOL also markets and sells
apparel, sports equipment and balls to team dealers and athletic apparel, sports equipment and balls to sporting goods retailers
under the Russell Athletic® and Spalding® brands. Additionally, Spalding® markets and sells balls and sports equipment in themass merchandise market and dollar store channels. In 2019, approximately 54% of FOL’s sales were to five customers.
FOL generally performs its own knitting, cloth finishing, cutting, sewing and packaging for apparel. For the North
American market, which is FOL’s predominant sales region, the majority of FOL’s cloth manufacturing is performed in
Honduras. Labor-intensive cutting, sewing and packaging operations are located in Central America, the Caribbean and
Vietnam. For the European market, products are either sourced from third-party contractors in Europe or Asia or sewn in
Morocco from textiles internally produced in Morocco. Manufacturing of bras, athletic equipment, sporting goods and otherathletic apparel lines are 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 manufacturing of FOL’s apparel products
and are purchased from a limited number of third-party suppliers. In 2015, FOL entered into an eight-year agreement withone key supplier to provide the majority of FOL’s yarn. Management currently believes there are readily available alternative
sources of raw materials and yarn. 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 corresponding 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,either directly or through the yarn suppliers, to meet a large percentage of its production plans for 2020. FOL’s markets arehighly competitive, consisting of many domestic and foreign manufacturers and distributors. Competition is generally based
upon product features, quality, customer service and price.

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Garan, headquartered in New York, New York 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 conducts its business through operating subsidiaries located in the United States, Central America and Asia.
Garan’s products are sold through its distribution centers in the United States. Fechheimer Brothers manufactures, distributes
and sells uniforms, principally for the public service and safety markets, including police, fire, postal and military markets.
Fechheimer Brothers is based in Cincinnati, Ohio.
The BH Shoe Holdings Group, headquartered in Greenwich, Connecticut, manufactures and distributes work, rugged
outdoor and casual shoes and western-style footwear under a number of brand names, including Justin, Tony Lama®,
Chippewa®, BØRN®, B•Ø•C®, Carolina®, EuroSofft, Söfft, Double-H Boots®, Nursemates® and Comfortiva®. Brooks Sports,
headquartered in Seattle, Washington, markets and sells performance running footwear and apparel to specialty and national
retailers and directly to consumers under the Brooks® brand. A significant volume of the shoes sold by Berkshire’s shoebusinesses are manufactured or purchased from sources located 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 wellas through company-owned retail stores.
Other consumer products
Forest River, Inc. (“Forest River”) is a manufacturer of recreational vehicles (“RV”), utility cargo trailers, buses andpontoon boats, headquartered in Elkhart, Indiana with products sold in the United States and Canada through an independent
dealer network. Forest River has numerous manufacturing facilities located in six states. Forest River is a leading
manufacturer of RVs with numerous brand names, including Forest River, Coachmen RV and Prime Time. Utility cargo
trailers are sold under a variety of brand names. Buses are sold under several brand names, including Starcraft Bus. Pontoon
boats are sold under the Berkshire, South Bay and Trifecta brand names. The RV industry is very competitive. Competition isbased primarily on price, design, quality and service. The industry has consolidated over the past several years and iscurrently concentrated in a few companies, the largest of which had a market share of approximately 44% based on industry
data as of November 2019. Forest River held a market share of approximately 35% at that time.
The Duracell Company (“Duracell’), headquartered in Chicago, Illinois, is a leading manufacturer of high-performance
alkaline batteries. Duracell manufactures batteries in the U.S., Europe and China and provides a network of worldwide sales
and distribution centers. Costco and Walmart are significant customers, representing approximately 24% of Duracell’s annual
revenue. There are several competitors in the battery manufacturing market with Duracell holding an approximately 32%
market share of the global alkaline battery market. Management believes there are currently sufficient sources of raw
materials available, which are primarily steel, zinc and manganese.
Albecca Inc. (“Albecca”), headquartered in Norcross, Georgia, operates in the U.S., Canada and 12 other countries,
with products primarily under the Larson-Juhl® name. Albecca designs, manufactures and distributes a complete line of highquality, branded custom framing products, including wood and metal moulding, matboard, foamboard, glass and framing
supplies. Complementary to its framing products, Albecca offers art printing and fulfillment services.
Richline Group, Inc., headquartered in New York, New York, operates five strategic business units: Richline Jewelry,
Richline Digital, LeachGarner, Rio Grande and Inverness. Each business unit is a manufacturer and/or distributor of precious
metal and non-precious metal products to specific target markets including large jewelry chains, department stores, shopping
networks, mass merchandisers, e-commerce retailers and artisans plus worldwide manufacturers and wholesalers and the
medical, electronic and aerospace industries.
Berkshire’s consumer products manufacturers employ approximately 55,000 persons.
Service and Retailing Businesses
Service Businesses
Berkshire’s service businesses provide grocery and foodservice distribution, professional aviation training programs,
fractional aircraft ownership programs and distribution of electronic components. Other service businesses include
franchising and servicing of quick service restaurants, media businesses (newspaper, television and information distribution),
as well as logistics businesses. Berkshire’s service businesses employ approximately 52,000 people. Information concerningthese activities follows.

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McLane Company
McLane Company, Inc. (“McLane”) provides wholesale distribution services in all 50 states to customers that include
convenience stores, discount retailers, wholesale clubs, drug stores, military bases, quick service restaurants and casual
dining restaurants. McLane provides wholesale distribution services to Walmart, which accounted for approximately 20% of
McLane’s revenues in 2019. McLane’s other significant customers include 7-Eleven (approximately 12% of revenues) andYum! Brands, (approximately 11% of revenues). A curtailment of purchasing by Walmart or its other significant customers
could have a material adverse impact on McLane’s periodic revenues and earnings. McLane’s business model is based on ahigh volume of sales, rapid inventory turnover and stringent expense controls. Operations are currently divided into threebusiness units: grocery distribution, foodservice distribution and beverage distribution.
McLane’s grocery distribution unit, based in Temple, Texas, maintains a dominant market share within theconvenience store industry and serves most of the national convenience store chains and major oil company retail outlets.
Grocery operations provide products to approximately 50,250 retail locations nationwide, including Walmart. McLane’s
grocery distribution unit operates 25 distribution facilities in 20 states.
McLane’s foodservice distribution unit, based in Carrollton, Texas, focuses on serving the quick service and casual
dining restaurant industry with high quality, timely-delivered products. Operations are conducted through 46 facilities in 22
states. The foodservice distribution unit services approximately 35,350 restaurants nationwide.
Through its subsidiaries, McLane also operates wholesale distributors of distilled spirits, wine and beer. The beverage
unit operates as Empire Distributors and operations are conducted through 14 distribution centers in Georgia, North Carolina,
Tennessee and Colorado. Empire Distributors services approximately 26,400 retail locations in the Southeastern UnitedStates and Colorado.
FlightSafety International
FlightSafety International Inc. (“FlightSafety”), headquartered at New York’s LaGuardia Airport, is an industry
leading provider of professional aviation training services and flight simulation products. FlightSafety and FlightSafety
Textron Aviation Training, a joint venture with Textron which began operations in 2019, provide high technology training topilots, aircraft maintenance technicians, flight attendants and dispatchers who operate and support a wide variety of business,
commercial and military aircraft. The training is provided using a large fleet of advanced full flight simulators at learning
centers and training locations in the United States, Australia, Brazil, Canada, China, France, Hong Kong, India, Japan, theNetherlands, Norway, South Africa and the United Kingdom. The vast majority of the instructors, training programs andflight simulators are qualified by the United States Federal 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 otheradvanced technology training devices. This equipment is used to support FlightSafety training programs and is offered forsale 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 usingstate-of-the-art technology and invests in research and development as it builds new equipment and training programs.
NetJets
NetJets Inc. (“NetJets”) is the world’s leading provider of shared ownership programs for general aviation aircraft.
NetJets’ global headquarters is located in Columbus, Ohio, with most of its logistical and flight operations based at John
Glenn Columbus International Airport. NetJets’ European operations are based in Lisbon, Portugal. The shared ownershipconcept is designed to meet the travel needs of customers who require the scale, flexibility and access of a large fleet thatwhole aircraft ownership cannot deliver. In addition, shared ownership programs are available for corporate flightdepartments seeking to outsource their general aviation needs or add capacity for peak periods and for others that previously
chartered aircraft.
With a focus on safety and service, NetJets’ programs are designed to offer customers guaranteed availability ofaircraft, predictable operating costs and increased liquidity. NetJets’ shared aircraft ownership programs permit customers toacquire a specific percentage of a certain aircraft type and allows customers to utilize the aircraft for a specified number offlight hours annually. In addition, NetJets offers prepaid flight cards and other aviation solutions and services for aircraft
management, customized aircraft sales and acquisition, ground support and flight operation services under a number ofprograms including NetJets Shares™, NetJets Leases™ and the Marquis Jet Card®.
NetJets is subject to the rules and regulations of the United States Federal Aviation Administration, the Portuguese
Civil Aviation Authority and the European Aviation Safety Agency. Regulations address aircraft registration, maintenancerequirements, pilot qualifications and airport operations, including flight planning and scheduling as well as security issues
and other matters.
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TTI, Inc.
TTI, Inc. (“TTI”), headquartered in Fort Worth, Texas, is a global specialty distributor of passive, interconnect,
electromechanical, discrete, and semiconductor components used by customers in the manufacturing and assembling ofelectronic 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’s distributionagreements with the industry’s leading suppliers allow it to uniquely leverage its product cost and to expand its business byproviding 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.
TTI services a variety of industries including telecommunications, medical devices, computers and office equipment,
military/aerospace, automotive and industrial electronics. TTI’s core customers include businesses in the design throughproduction stages in the electronic component supply chain, which supports its high-volume business, and its Mouser
subsidiary, which supports a broader base of customers with lower volume purchases through internet based marketing.
Other services
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 84,000 units located at 48
facilities throughout the United States. The fleet includes over-the-road and storage trailers, chassis, temperature controlledvans 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 equipment. Therefore, as a provider of marginal capacity to its customers, XTRA’s utilization rates
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 to provide customers with a broad
selection of equipment and quick response times.
International Dairy Queen develops and services a worldwide system of over 7,000 franchised restaurants operating
primarily under the names DQ Grill and Chill®, Dairy Queen® and Orange Julius® that offer various dairy desserts,
beverages, prepared foods and blended fruit drinks. 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. Approximately 97% of Business Wire’s revenues derive from its core news distribution business. CORT Business
Services Corporation is a leading national provider of rental relocation services including rental furniture, accessories andrelated services in the “rent-to-rent” market of the furniture rental industry. The Buffalo News and BH Media Group, Inc. are
publishers of 31 daily and 43 weekly newspapers. WPLG, Inc. is an ABC affiliate broadcast station in Miami, Florida andCharter Brokerage is a leading non-asset based third party logistics provider to the petroleum and chemical industries.
Retailing Businesses
Berkshire’s retailing businesses include automotive, home furnishings and several other operations that sell various
consumer products to consumers. Information regarding each of these operations follows. Berkshire’s retailing businesses
employ approximately 29,000 people.
Berkshire Hathaway Automotive
The Berkshire Hathaway Automotive Group, Inc. (“BHA”) is one of the largest automotive retailers in the UnitedStates, currently operating 106 new vehicle franchises through 82 dealerships located primarily in major metropolitan
markets in the United States. The dealerships sell new and used vehicles, vehicle maintenance and repair services, extended
service contracts, vehicle protection products and other aftermarket products. BHA also arranges financing for its customers
through third-party lenders. BHA operates 29 collision centers directly connected to the dealerships’ operations and owns andoperates two auto auctions and a fluid maintenance products distribution company.
Dealership operations are highly concentrated in the Arizona and Texas markets, with approximately 70% of
dealership-related revenues derived from sales in these markets. BHA currently maintains franchise agreements with 27
different vehicle manufacturers, although it derives a significant portion of its revenue from the Toyota/Lexus, General
Motors, Ford/Lincoln, Nissan/Infiniti and Honda/Acura brands. Approximately 90% of BHA’s annual revenues are fromdealerships representing these manufacturers.
The retail automotive industry is highly competitive. BHA faces competition from other large public and private
dealership groups, as well as individual franchised dealerships and competition via the Internet. Given the pricing
transparency available via the Internet, and the fact that franchised dealers acquire vehicles from the manufacturers on thesame terms irrespective of volume, the location and quality of the dealership facility, customer service and transaction speed
are key differentiators in attracting customers.

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BHA’s overall relationships with the automobile manufacturers are governed by framework agreements. The
framework agreements contain provisions relating to the management, operation, acquisition and the ownership structure of
BHA’s dealerships. Failure to meet the terms of these agreements could adversely impact BHA’s ability to acquire additional
dealerships representing those manufacturers. Additionally, these agreements contain limitations on the number ofdealerships from a specific manufacturer that may be owned by BHA.
Individual dealerships operate under franchise agreements with the manufacturer, which grants the dealership entity anon-exclusive right to sell the manufacturer’s brand of vehicles and offer related parts and service within a specified market
area, as well as the right to use the manufacturer’s trademarks. The agreements contain various requirements and restrictions
related to the management and operation of the franchised dealership and provide for termination of the agreement by the
manufacturer or non-renewal for a variety of causes. The states generally have automotive dealership franchise laws thatprovide substantial protection to the franchisee, and it is difficult for a manufacturer to terminate or not renew a franchise
agreement outside of bankruptcy or with “good cause” under the applicable state franchise law.
BHA also develops, underwrites and administers various vehicle protection plans as well as life and accident andhealth insurance plans sold to consumers through BHA’s dealerships and third-party dealerships. BHA also develops
proprietary training programs and materials and provides ongoing monitoring and training of the dealership’s finance andinsurance personnel.
Home furnishings retailing
The home furnishings businesses consist of Nebraska Furniture Mart (“NFM”), R.C. Willey Home Furnishings (“R.C.
Willey”), Star Furniture Company (“Star”) and Jordan’s Furniture, Inc. (“Jordan’s”). These businesses offer a wide selectionof furniture, bedding and accessories. In addition, NFM and R.C. Willey sell a full line of major household appliances,electronics, computers and other home furnishings and offer 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 offeringsignificant value to their customers.
NFM operates its business from four retail complexes with almost 4.5 million square feet of retail, warehouse andadministrative facilities located in Omaha, Nebraska, Clive, Iowa, Kansas City, Kansas and The Colony, Texas. NFM also
owns Homemakers Furniture located in Clive, Iowa, which has approximately 600,000 square feet of retail, warehouse andadministrative space. NFM is the largest furniture retailer in each of these markets. R.C. Willey, based in Salt Lake City,
Utah, currently operates 12 full-line retail home furnishings stores and three distribution centers. These facilities include
approximately 1.5 million square feet of retail space with six stores located in Utah, one store in Meridian, Idaho, three storesin Nevada (Las Vegas and Reno) and two stores in the Sacramento, California area.
Jordan’s operates a retail furniture business from six locations with approximately 770,000 square feet of retail space instores located in Massachusetts, New Hampshire, Rhode Island and Connecticut. The retail stores are supported by an
800,000 square foot distribution center in Taunton, Massachusetts. Jordan’s is the largest furniture retailer, as measured bysales, in Massachusetts and New Hampshire. Jordan’s is well known in its markets for its unique store arrangements andadvertising campaigns. Star has operated home furnishings retail store business in Texas for many years. Star’s retailfacilities currently include about 700,000 square feet of retail space in 11 locations in Texas, including eight in Houston.
Other retailing
Borsheim Jewelry Company, Inc. (“Borsheims”) operates from a single store in Omaha, Nebraska. Borsheims is ahigh-volume retailer of fine jewelry, watches, crystal, china, stemware, flatware, gifts and collectibles. Helzberg’s Diamond
Shops, Inc. (“Helzberg”) is based in North Kansas City, Missouri, and operates a chain of 222 retail jewelry stores in 36
states, which includes approximately 500,000 square feet of retail space. Helzberg’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 90
retail jewelry stores located primarily in major shopping malls in 11 western states and in British Columbia, Canada. Fortysix of its retail locations are upscale jewelry stores selling loose diamonds, finished jewelry and high-end timepieces. Fortyfour of its retail locations are concept stores operating under a franchise agreement that sell only Pandora jewelry.
See’s Candies (“See’s”) produces boxed chocolates and other confectionery products with an emphasis on quality anddistinctiveness in two large kitchens in Los Angeles and San Francisco and one smaller facility in Burlingame, California.
See’s operates approximately 250 retail and quantity discount stores located mainly in California and other Western states, aswell as over 140 seasonal kiosk locations. See’s revenues are highly seasonal with nearly half of its annual revenues earnedin the fourth quarter.

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The Pampered Chef, Ltd. (“Pampered Chef”) is a premier direct seller of distinctive high-quality kitchenware productswith sales and operations in the United States, Canada, Germany and Austria and operations in China. Pampered Chef’s
product portfolio consists of approximately 400 Pampered Chef® branded kitchenware items in categories ranging fromstoneware and cutlery to grilling and entertaining. Pampered Chef’s products are available through its sales force ofindependent cooking consultants and online.
Oriental Trading Company (“OTC”) is a leading multi-channel retailer and online destination for value-priced party
supplies, arts and crafts, toys and novelties, school supplies, educational games, patient giveaways and personalized products.
OTC, headquartered in Omaha, Nebraska, serves a broad base of nearly four million customers annually, including
consumers, schools, churches, non-profit organizations, medical and dental offices and other businesses. OTC offers a uniqueassortment of over 53,000 fun products on its websites, including its flagship orientaltrading.com site and utilizes
sophisticated digital and print marketing efforts to drive significant traffic and industry leading customer satisfaction.
Detlev Louis Motorrad (“Louis”), headquartered in Hamburg, Germany, is a leading retailer of motorcycle apparel andequipment in Europe. Louis carries over 32,000 different products from more than 600 manufacturers, primarily covering theclothing, technical equipment and leisure markets. Louis has over 80 stores in Germany, Austria, Switzerland and theNetherlands and also sells through catalogs and via the Internet throughout most of Europe.
Additional information with respect to Berkshire’s businesses
Revenue, earnings before taxes and identifiable assets attributable to Berkshire’s reportable business segments areincluded in Note 27 to Berkshire’s Consolidated Financial Statements contained in Item 8, Financial Statements andSupplementary Data. Additional information regarding Berkshire’s investments in fixed maturity and equity securities is
included in Notes 3 and 4, respectively, to Berkshire’s Consolidated Financial Statements.
Berkshire owns 26.6% of the outstanding common stock of The Kraft Heinz Company (“Kraft Heinz”). Kraft Heinz is
one of the largest food and beverage companies in the world, with sales in numerous countries within developed andemerging markets and territories. Kraft Heinz manufactures and markets food and beverage products, including condiments
and sauces, cheese and dairy meals, meats, refreshment beverages, coffee and other grocery products, throughout the world,
under a diverse mix of iconic and emerging brands. Berkshire subsidiaries also own a 50% joint venture interest in Berkadia
Commercial Mortgage LLC (“Berkadia”), a 38.6% interest in Pilot Travel Centers LLC (“Pilot”) and a 50% joint ventureinterest in Electric Transmission Texas, LLC (“ETT”). Information concerning these investments is included in Note 5 toBerkshire’s Consolidated Financial Statements.
Berkshire maintains a website (http://www.berkshirehathaway.com) where its annual reports, certain corporate
governance documents, press releases, interim shareholder reports and links to 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 from the SEC and through Berkshire. Electronic copies of these reports can beaccessed at the SEC’s website (http://www.sec.gov) and indirectly through Berkshire’s website(http://www.berkshirehathaway.com). Copies of these reports may also be obtained, free of charge, upon written request to:
Berkshire Hathaway Inc., 3555 Farnam Street, Omaha, NE 68131, Attn: Corporate Secretary.
Item 1A. Risk Factors
Berkshire and its subsidiaries (referred to herein as “we,” “us,” “our” or similar expressions) are subject to certain risks
and uncertainties in its business operations which are described below. The risks and uncertainties described below are notthe only risks we face. Additional risks and uncertainties that are presently unknown or are currently deemed immaterial may
also impair our business operations.
We are 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 of theBoard of Directors and Chief Executive Officer, age 89, in consultation with Charles T. Munger, Vice Chairman of the Boardof Directors, age 96. 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
current Berkshire managers who, in their judgment, are capable of succeeding Mr. Buffett and has agreed on a replacementfor 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 theoutstanding managers running our numerous and highly diversified operating units helps to mitigate this risk. In 2018,
Berkshire’s Board of Directors appointed Mr. Gregory Abel as Vice Chairman of Berkshire’s non-insurance operations and
Mr. Ajit Jain as Vice Chairman of Berkshire’s insurance operations. Mr. Abel and Mr. Jain each report directly to Mr. Buffett
and Mr. Buffett continues to be responsible for major capital allocation and investment decisions.

K-21

We 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 businessactivities of our operating subsidiaries and to manage changes in future business operations due to changing business orregulatory environments. Our operating subsidiaries also need qualified and competent personnel in executing their businessplans and serving their customers, suppliers and other stakeholders. Our inability to recruit and retain qualified andcompetent managers and personnel could negatively affect the operating results, financial condition and liquidity of our
subsidiaries and Berkshire as a whole.
Investments are unusually concentrated in equity securities and fair values are subject to loss in value.
We concentrate a high percentage of the investments of our insurance subsidiaries in a relatively small number of
equity securities 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 in equity securities may produce a material decline in our consolidated
shareholders’ equity and our consolidated earnings.
Since a large percentage of our equity securities are held by our insurance subsidiaries, significant decreases in the fairvalues of these investments will produce significant declines in their statutory surplus. Our large statutory surplus is acompetitive advantage, and a long-term material decline could have an adverse effect on our claims-paying ability ratings andour ability to write new insurance business thus potentially reducing our future underwriting profits.
Over ten years ago, we assumed the risk of potentially significant losses under a number of equity index put option
contracts, which contain equity price risks. Most of the contracts remaining at year end 2019 will expire by February 2023.
Risks of losses under these contracts are based on declines in equity prices of stocks comprising certain major U.S. andinternational stock indexes. We received considerable cash premiums as compensation for accepting these risks. Absent
major reductions in future equity securities prices, our ultimate payment obligations are not likely to be significant.
Nevertheless, there can be no assurance that equity securities prices will not decline significantly resulting in significant
settlement payments upon contract expirations.
Competition and technology may erode our business franchises and result in lower earnings.
Each of our operating businesses face intense competition within markets in which they operate. While we manage ourbusinesses with the objective of achieving long-term sustainable growth by developing and strengthening competitive
advantages, many factors, including technological changes, may erode or prevent the strengthening of competitive
advantages. Accordingly, our future operating results will depend to some degree on our operating units successfully
protecting and enhancing their competitive advantages. If our operating businesses are unsuccessful in these efforts, ourperiodic operating results in the future may decline.
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 are subject to normal economic cycles, which affect the general economy or the specificindustries in which they operate. Significant deteriorations of economic conditions over a prolonged period could produce amaterial adverse effect on one or more of our significant operations. In addition, our utilities and energy businesses and ourrailroad business regularly utilize debt as a component of their capital structures, and 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 costof funding increases, these operations could be adversely affected.
Terrorist acts could hurt our operating businesses.
A cyber, biological, nuclear or chemical attack could produce significant losses to our worldwide operations. Our
business operations could be adversely affected from such acts through the loss of human resources or destruction of
production facilities and information systems. We share the risk with all businesses.

K-22

Regulatory changes may adversely impact our future operating results.
Over time, in response to financial markets crises, global economic recessions, and social and environmental issues,
regulatory initiatives were adopted in the United States and elsewhere. Such initiatives addressed for example, the regulationof banks and other major financial institutions and environmental and global-warming matters. These initiatives impact all ofour businesses, albeit in varying ways. Increased regulatory compliance costs could have a significant negative impact on ouroperating businesses, as well as on the businesses in which we have a significant, but not controlling economic interests. We
cannot predict whether such initiatives will have a material adverse impact on our consolidated financial position, results ofoperations and/or cash flows.
Data privacy regulations have recently been enacted in various jurisdictions in the U.S. and throughout the world.
These regulations address numerous aspects related to the security of personal information that is stored in our information
systems, networks and facilities. Failure to comply with these regulations could result in reputational damage and significant
penalties.
Cyber security risks
We rely on technology in virtually all aspects of our business. Like those of many large businesses, certain of our
information systems have been subject to computer viruses, malicious codes, unauthorized access, phishing efforts, denial-ofservice attacks and other cyber-attacks and we expect to be subject to similar attacks in the future as such attacks become
more sophisticated and frequent. A significant disruption or failure of our technology systems could result in service
interruptions, safety failures, security events, regulatory compliance failures, an inability to protect information and assets
against unauthorized users and other operational difficulties. Attacks perpetrated against our systems could result in loss ofassets and critical information and expose us to remediation costs and reputational damage.
Although we have taken steps intended to mitigate these risks, including business continuity planning, disasterrecovery planning and business impact analysis, a significant disruption or cyber intrusion could adversely affect our resultsof operations, financial condition and liquidity. Additionally, if we are unable to acquire, develop, implement, adopt orprotect rights around new technology, we may suffer a competitive disadvantage, which could also have an adverse effect on
our results of operations, financial condition and/or liquidity.
Cyber-attacks could further adversely affect our ability to operate facilities, information technology and businesssystems, or compromise confidential customer and employee information. Political, economic, social or financial market
instability or damage to or interference with our operating assets, customers or suppliers from cyber-attacks may result inbusiness interruptions, lost revenues, higher commodity prices, disruption in fuel supplies, lower energy consumption,
unstable markets, increased security, repair or other costs, or may materially adversely affect us in ways that cannot be
predicted at this time. Any of these risks could materially affect our consolidated financial results. Furthermore, instability inthe financial markets resulting from terrorism, sustained or significant cyber-attacks, or war could also have a material
adverse effect on our ability to raise capital. We share these risks with all businesses.
Risks unique to our regulated businesses
Our tolerance for risk in our insurance businesses may result in significant underwriting losses.
When properly paid for the risk assumed, we have been and will continue to be willing to assume more risk from asingle event than any other insurer has knowingly assumed. Accordingly, we could incur a significant loss from a single
catastrophe event resulting from a natural disaster or man-made catastrophes such as terrorism or cyber-attacks. We employ
various disciplined underwriting practices intended to mitigate potential losses and attempt to take into account all possible
correlations and avoid writing groups of policies from which pre-tax losses from a single catastrophe event might aggregate
above $10 billion. Currently, we estimate that our aggregate exposure from a single event under outstanding policies issignificantly below $10 billion. However, despite our efforts, it is possible that losses could manifest in ways that we do not
anticipate and that our risk mitigation strategies are not designed to address. Additionally, various provisions of our policies,
such as limitations or exclusions from coverage, negotiated to limit our risks, may not be enforceable in the manner we
intend. Our tolerance for significant insurance losses may result in lower reported earnings in a future period.

K-23

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 andcasualty insurance policies, we receive premiums today and promise to pay covered losses in the future. However, it will takedecades before all claims that have occurred as of any given balance sheet date will be reported and settled. Although we
believe that liabilities for unpaid losses are adequate, we will not know whether these liabilities or the premiums charged forthe coverages provided were sufficient until well after the balance sheet date. Estimating insurance claim costs is inherently
imprecise. Our estimated unpaid losses arising under contracts covering property and casualty insurance risks are large($115.5 billion at December 31, 2019), and a small percentage increase to those liabilities can result in materially lower
reported earnings.
Changes in regulations and regulatory actions can adversely affect our operating results and our ability to allocate
capital.
Our insurance businesses are subject to regulation in the jurisdictions in which we operate. Such regulations may relate
to among other things, the types of business that can be written, the rates that can be charged for coverage, the level of capitalthat 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 to Berkshire by these businesses. U.S. state insurance regulators andinternational insurance regulators are also actively developing various regulatory mechanisms to address the regulation oflarge internationally active insurance groups, including regulations concerning group capital, liquidity, governance and risk
management. Accordingly, changes in regulations related to these or other matters or regulatory actions imposing restrictions
on our insurance businesses may adversely impact our results of operations and restrict our ability to allocate capital.
Our railroad business conducted through BNSF is also subject to a significant number of laws and regulations withrespect to rates and practices, taxes, railroad operations and a variety of health, safety, labor, environmental and othermatters. 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. For example, federal legislation, enacted in 2008
and amended in 2015, mandated the implementation of positive train control technology by December 31, 2020, on certain
mainline track where inter-city and commuter passenger railroads operate and where toxic-by-inhalation (“TIH”) hazardous
materials are transported. Complying with legislative and regulatory changes may pose significant operating andimplementation risks and require significant capital expenditures.
BNSF derives significant amounts of revenue from the transportation of energy-related commodities, particularly coal.
To the extent that changes in government 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, revenues and earnings could be
adversely affected. As a common carrier, BNSF is also required to transport TIH chemicals and other hazardous materials. A
release of hazardous materials could expose BNSF to significant claims, losses, penalties and environmental remediation
obligations. Changes in the regulation of the rail industry could negatively impact BNSF’s ability to determine prices for rail
services and to make capital improvements to its rail network, resulting in an adverse effect on our results of operations,financial condition and/or liquidity.
Our utilities and energy businesses operated under BHE are highly regulated by numerous federal, state, local andforeign governmental authorities in the jurisdictions in which they operate. These laws and regulations are complex, dynamic
and subject to new interpretations or change. Regulations affect almost every aspect of our utilities and energy businesses.
Regulations broadly apply and may limit management’s ability to independently make and implement decisions regarding
numerous matters including: acquiring businesses; constructing, acquiring or disposing of operating assets; operating andmaintaining generating facilities and transmission and distribution system assets; complying with pipeline safety and integrityand environmental requirements; setting rates charged to customers; establishing capital structures and issuing debt;
transacting between our domestic utilities and our other subsidiaries and affiliates; and paying dividends or similar
distributions. Failure to comply with or reinterpretations of existing regulations and new legislation or regulations, such as
those relating to air and water quality, renewable portfolio standards, emissions performance standards, climate change, coal
combustion byproduct disposal, hazardous and solid waste disposal, protected species and other environmental matters, orchanges in the nature of the regulatory process may have a significant adverse impact on our financial results.

K-24

Our railroad business requires significant ongoing capital investment to improve and maintain its railroad network sothat transportation services can be safely and reliably provided to customers on a timely basis. Our utilities and energy
businesses also require significant amounts of capital to construct, operate and maintain generation, transmission anddistribution systems to meet their customers’ needs and reliability criteria. Additionally, system assets may need to be
operational for long periods of time in order to justify the financial investment. The risk of operational or financial failure ofcapital projects is not necessarily recoverable through rates that are charged to customers. Further, a significant portion of
costs of capital improvements may be funded through debt issued by BNSF and BHE and their subsidiaries. Disruptions indebt capital markets that restrict access to funding when needed could adversely affect the results of operations, liquidity
and/or capital resources of these businesses.
Item 1B. Unresolved Staff Comments
None.
Item 2. Description of Properties
The properties used by Berkshire’s business segments are summarized in this section. Berkshire’s railroad and utilities
and energy businesses, in particular, utilize considerable physical assets in their businesses.
Railroad Business—Burlington Northern Santa Fe
Through BNSF Railway, BNSF operates approximately 32,500 route miles of track (excluding multiple main tracks,yard tracks and sidings) in 28 states, and also operates in three Canadian provinces. BNSF owns over 23,000 route miles,
including easements, and operates over 9,000 route miles of trackage rights that permit BNSF to operate its trains with its
crews over other railroads’ tracks. As of December 31, 2019, the total BNSF Railway system, including single and multiple
main tracks, yard tracks and sidings, consisted of over 50,000 operated miles of track.
BNSF operates various facilities and equipment to support its transportation system, including its infrastructure,
locomotives and freight cars. It also owns or leases other equipment to support rail operations, such as 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, regional dispatching centers, computers, telecommunications equipment, signal systems andother support systems. Transfer facilities are maintained for rail-to-rail as well as intermodal transfer of containers, trailers
and other freight traffic and include approximately 25 intermodal hubs located across the system. BNSF owns or holds under
non-cancelable leases exceeding one year approximately 8,000 locomotives and 70,000 freight cars, in addition tomaintenance of way and other equipment.
In the ordinary course of business, BNSF incurs significant costs in repairing and maintaining its properties. In 2019,
BNSF recorded approximately $2 billion in repairs and maintenance expense.

K-25

Utilities and Energy Businesses—Berkshire Hathaway Energy
BHE’s energy properties consist of the physical assets necessary to support its electricity and natural gas businesses.
Properties of BHE’s electricity businesses include electric generation, transmission and distribution facilities, as well as coalmining assets that support certain of BHE’s electric generating facilities. Properties of BHE’s natural gas businesses include
natural gas distribution facilities, interstate pipelines, storage facilities, compressor stations and meter stations. The
transmission and distribution assets are primarily within each of BHE’s utility service territories. In addition to these physicalassets, BHE has rights-of-way, mineral rights and water rights that enable BHE to utilize its facilities. Pursuant to separate
financing agreements, the majority of these properties are pledged or encumbered to support or otherwise provide the security
for the related subsidiary debt. BHE or its affiliates own or have interests in the following types of operating electric
generating facilities at December 31, 2019:

Energy Source

EntityLocation by SignificanceNatural gas

PacifiCorp, MEC, NV Energy
and BHE Renewables

Coal

PacifiCorp, MEC and
NV Energy
PacifiCorp, MEC andBHE Renewables

Nevada, Utah, Iowa, Illinois, Washington,
Oregon, Texas, New York, Arizona andWyoming
Wyoming, Iowa, Utah, Arizona,
Nevada, Colorado and Montana
Iowa, Wyoming, Texas, Nebraska,
Washington, California, Illinois,
Oregon and Kansas
California, Texas, Arizona,
Minnesota and Nevada
Washington, Oregon, The Philippines,
Idaho, California, Utah, Hawaii,Montana, Illinois and Wyoming
Illinois
California and Utah
Total

Wind

Solar
Hydroelectric

NuclearGeothermal(1)

BHE Renewables and
NV Energy
PacifiCorp, MEC andBHE Renewables
MEC
PacifiCorp and BHE Renewables

FacilityNet
Capacity(MW) (1)Net
Owned
Capacity(MW) (1)10,93810,65913,641

8,593

8,883

8,883

1,699

1,551

1,299
1,821
377
38,658

1,277
455
377
31,795

Facility Net Capacity in megawatts (MW) represents the lesser of nominal ratings or any limitations under applicableinterconnection, power purchase, or other agreements for intermittent resources and the total net dependable
capability available during summer conditions for all other units. An intermittent resource’s nominal rating is the
manufacturer’s contractually specified capability (in MW) under specified conditions. Net Owned Capacity indicates
BHE’s ownership of Facility Net Capacity.

As of December 31, 2019, BHE’s subsidiaries also have electric generating facilities that are under construction in
Iowa, Wyoming and Montana having total Facility Net Capacity and Net Owned Capacity of 1,816 MW.
PacifiCorp, MEC and NV Energy own electric transmission and distribution systems, including approximately 25,200
miles of transmission lines and approximately 1,690 substations, gas distribution facilities, including approximately 27,500
miles of gas mains and service lines.
The electricity distribution network of Northern Powergrid (Northeast) and Northern Powergrid (Yorkshire) includes
approximately 17,400 miles of overhead lines, approximately 42,300 miles of underground cables and approximately 770
major substations. AltaLink’s electricity transmission system includes approximately 8,200 miles of transmission lines andapproximately 310 substations.
Northern Natural’s pipeline system consists of approximately 14,600 miles of natural gas pipelines, including
approximately 6,100 miles of mainline transmission pipelines and approximately 8,500 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 are provided through 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.

K-26

Kern 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 theCentral Rocky Mountains into California.
Other Segments
Material physical properties used by Berkshire’s other significant business segments are summarized below:
Business

Insurance:
GEICO
BHRG
BH Primary

Manufacturing

Country

U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.

Property/Facility type

Locations in 18 countries
Locations in 7 countries

U.S.

Non-U.S.

Service

Locations

Locations in 64 countries

U.S.

Non-U.S.

Locations in 35 countries

Number of Properties
Owned
LeasedOffices and claims centers
Offices
Offices
Offices
Offices

10
1
1
7
—

117
29
33
48
12

Manufacturing facility
Offices/Warehouses
Retail/Showroom
Housing communities
Manufacturing facility
Offices/Warehouses
Retail/Showroom

499
200
228
311
233
71
—

114
403
225
—
138
468
10

Training facilities/Hangars
Offices/Distribution
Production facilities
Leasing/Showroom/Retail
Training facilities/Hangars
Offices/Distribution

20
55
23
28
17
1

139
178
3
59
14
33

McLane Company

U.S.

Distribution centers
Offices

57
4

28
2

Retailing

U.S.

Offices/Warehouses
Retail/Showroom
Offices/Warehouses
Retail/Offices

30
141
1
—

26
563
8
93

Non-U.S.

Locations in 6 countries

Item 3. Legal Proceedings
Berkshire and its subsidiaries are parties in a variety of legal actions that routinely arise out of the normal course ofbusiness, including legal actions seeking to establish liability directly through insurance contracts or indirectly throughreinsurance contracts issued by Berkshire subsidiaries. Plaintiffs occasionally seek punitive or exemplary damages. We do
not believe that such normal and routine litigation will have a material effect on our financial condition or results ofoperations. Berkshire and certain of its subsidiaries are 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 otherpending legal actions will not have a material effect on our consolidated 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 accordance with
Section 1503 (a) of the Dodd-Frank Reform Act is included in Exhibit 95 to this Form 10-K.

K-27

Executive Officers of the Registrant
Following is a list of the Registrant’s named executive officers:
Name

Age

Warren E. Buffett
Charles T. Munger
Gregory E. Abel
Ajit Jain
Marc D. Hamburg

89
96
57
68
70

Position with Registrant

Chairman and Chief Executive Officer
Vice Chairman
Vice Chairman – Non-Insurance Operations
Vice Chairman – Insurance Operations
Senior Vice-President – Chief Financial Officer

Since

1970
1978
2018
2018
1992

Each executive officer serves, in accordance with the by-laws of the Registrant, until the first meeting of the Board of
Directors following the next annual meeting of shareholders and until a successor is chosen and qualified or until suchexecutive officer sooner dies, resigns, is removed or becomes disqualified.
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 are “forwardlooking” statements within the meaning of the 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, arealso forward-looking statements as defined by the Act. Forward-looking statements are based on current expectations andprojections about future events and are 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 notguarantees of future performance 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 risk factors that could cause our actual performance and future events and actions todiffer materially from such forward-looking statements include, but are not limited to, changes in market prices of ourinvestments in fixed maturity and equity securities, losses realized from derivative contracts, the occurrence of one or morecatastrophic events, such as an earthquake, hurricane, act of terrorism or cyber attack that causes losses insured by our
insurance subsidiaries and/or losses to our business operations, 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.

K-28

Part II
Item 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 stock are listed for trading on the New York Stock Exchange, trading
symbols: BRK.A and BRK.B, respectively.
Shareholders
Berkshire had approximately 1,750 record holders of its Class A common stock and 19,200 record holders of its
Class B common stock at February 13, 2020. Record owners included nominees holding at least 411,000 shares of Class A
common stock and 1,405,000,000 shares of Class B common stock on behalf of beneficial-but-not-of-record owners.
Dividends
Berkshire has not declared a cash dividend since 1967.
Common Stock Repurchase Program
For several years, Berkshire had a common stock repurchase program, which permitted Berkshire to repurchase its
Class A and Class B shares at prices no higher than a 20% premium over the book value of the shares. In 2018, Berkshire’s
Board of Directors authorized an amendment to the program, permitting Berkshire to repurchase shares any time that Warren
Buffett, Berkshire’s Chairman of the Board and Chief Executive Officer, and Charles Munger, Vice Chairman of the Board,
believe that the repurchase price is below Berkshire’s intrinsic value, conservatively determined. Repurchases may be in the
open market or through privately negotiated transactions. Information with respect to Berkshire’s Class A and Class B
common stock repurchased during the fourth quarter of 2019 follows.

Total numberof shares
purchased

Average pricepaid per share

Total numberof shares
purchased
as part ofpublicly
announced
program

October 1 through October 9:Class A common stock
Class B common stock

688
1,497,623$ 306,086.60$
204.07688
1,497,623**

November 11 through November 29:
Class A common stock
Class B common stock

1,326
3,657,884$ 328,974.91$
218.62

1,326
3,657,884**

December 2 through December 31:
Class A common stock
Class B common stock674
953,070$ 333,298.06$
221.67674
953,070**

Period*Maximum
number or
value of sharesthat yet may
be repurchased
under theprogram

The program does not specify a maximum number of shares to be repurchased or obligate Berkshire to repurchase any
specific dollar amount or number of Class A or Class B shares and there is no expiration date to the repurchaseprogram. Berkshire will not repurchase its common stock if the repurchases reduce the total value of Berkshire’s
consolidated cash, cash equivalents and U.S. Treasury Bills holdings to less than $20 billion.

K-29

Market for Registrant’s Common Equity, Related Security Holder Matters and Issuer Purchases of Equity
Securities (Continued)
Stock Performance Graph
The following chart compares the subsequent value of $100 invested in Berkshire common stock on December 31,
2014 with a similar investment in the Standard & Poor’s 500 Stock Index and in the Standard & Poor’s Property – Casualty
Insurance Index.***

Cumulative return for the Standard & Poor’s indices based on reinvestment of dividends.

**

It would be difficult to develop a peer group of companies similar to Berkshire. The Corporation owns subsidiaries
engaged in a number of diverse business activities of which the most important is the property and casualty insurance
business and, accordingly, management has used the Standard & Poor’s Property—Casualty Insurance Index forcomparative purposes.

K-30

Item 6. Selected Financial Data
Selected Financial Data for the Past Five Years(dollars in millions except per-share data)
2019

Revenues:
Insurance premiums earned
Sales and service revenues
Leasing revenue
Railroad, utilities and energy revenues
Interest, dividend and other investment income
Total revenues
Investment and derivative gains/losses
Earnings:
Net earnings attributable to Berkshire Hathaway (1)Net earnings per share attributable to Berkshire
Hathaway shareholders (2)Year-end data:
Total assets
Notes payable and other borrowings:
Insurance and otherRailroad, utilities and energy
Berkshire Hathaway shareholders’ equity
Class A equivalent common shares outstanding, inthousands
Berkshire Hathaway shareholders’ equity per
outstanding Class A equivalent common share

$

2018

57,418133,336
5,732
43,6737,678$ 247,837

2017

61,078
134,989
5,856
43,4539,240$ 254,616$$

60,597130,243
2,552
40,0056,536$ 239,933$

72,607$ (22,455) $$81,417

$

4,021

$

49,828

$

2,446

2016

$

2015

45,881
123,053
2,553
37,4476,180$ 215,114$

41,294
110,811
1,546
39,9236,867$ 200,441

2,128

$

8,304

$

10,347$44,940$24,074$24,083$27,326$

14,645$

14,656$ 817,729$ 707,794$ 702,095$ 620,854$ 552,257

37,59065,77834,97562,51540,40962,17842,55959,08526,55057,739424,791

348,703348,296

282,070

254,619

1,625

1,641

1,645

1,644

1,643

$ 261,417$ 212,503$ 211,750$ 171,542$ 154,935(1)

Includes after-tax investment and derivative gains/losses of $57.4 billion in 2019, $(17.7) billion in 2018, $1.4 billion
in 2017, $6.5 billion in 2016 and $6.7 billion in 2015. Beginning in 2018, investment gains/losses include the changes
in fair values of equity securities during the period. Previously, investment gains/losses of equity securities wererecognized in earnings when securities were sold or were other-than-temporarily impaired. Net earnings in 2017
includes a one-time net benefit of $29.1 billion attributable to the enactment of the Tax Cuts and Jobs Act of 2017.

(2)

Represents net earnings per average equivalent Class A share outstanding. Net earnings per average equivalentClass B common share outstanding is equal to 1/1,500 of such amount.

K-31

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 are disaggregated in thetable that follows. Amounts are after deducting income taxes and exclude earnings attributable to noncontrolling interests (inmillions).
2019

Insurance – underwriting
Insurance – investment income
Railroad
Utilities and energy
Manufacturing, service and retailing
Investment and derivative gains/losses
Other
Tax Cuts and Jobs Act of 2017
Net earnings attributable to Berkshire Hathaway shareholders

$

$

325
5,530
5,481
2,840
9,372
57,445424—
81,4172018$$

1,566 $
4,554
5,219
2,621
9,364
(17,737)(1,566)—
4,021 $

2017

(2,219)
3,887
3,959
2,033
7,282
1,377
(485)
29,10644,940Through our subsidiaries, we engage in a number of diverse business activities. We manage our operating businesses
on an unusually decentralized basis. There are essentially no centralized or integrated business functions 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,investment activities and the selection of the Chief Executive to head each of the operating businesses. The business segment
data (Note 27 to the accompanying Consolidated Financial Statements) should be read in conjunction with this discussion.
Beginning in 2018, our periodic net earnings include changes in unrealized gains and losses on our investments inequity securities. These gains and losses have been very significant given the size of our holdings and the inherent volatility
in securities prices, producing extraordinary volatility in our reported net earnings for 2019 and 2018. Prior to 2018, thechanges in unrealized gains and losses pertaining to such investments were recorded in other comprehensive income. The
new accounting treatment has no effect on our consolidated shareholders’ equity.
Net earnings in 2017 included approximately $29.1 billion attributable to a one-time net benefit from the enactment of
the Tax Cuts and Jobs Act of 2017 (“TCJA”) on December 22, 2017. This benefit included approximately $29.6 billion
related to a one-time non-cash reduction of net deferred income tax liabilities from the reduction in the statutory U.S.
corporate income tax rate from 35% to 21%, and a net benefit of approximately $900 million primarily attributable to ourearnings from Kraft Heinz, partly offset by a one-time income tax expense of approximately $1.4 billion on the deemed
repatriation of certain accumulated undistributed earnings of foreign subsidiaries. Due to the significance, we presented these
one-time effects as a distinct item in the preceding table. Accordingly, the after-tax figures presented for 2017 in thediscussion of our various operating businesses and other activities exclude the one-time effects of the TCJA.
After-tax earnings of our business operations in 2019 and 2018 were favorably affected by lower U.S. income tax
expense compared to 2017, primarily attributable to a reduction in the statutory U.S. corporate income tax rate from 35% to21%. The effect of the lower U.S. statutory income tax rate on the comparative after-tax earnings of our various business
operations varied, reflecting the differences in the mix of earnings subject to income tax, income tax credits and the effects ofstate and local income taxes.
Our insurance businesses generated after-tax earnings from underwriting of $325 million in 2019 compared to earnings
of $1.6 billion in 2018 and after-tax losses of approximately $2.2 billion in 2017. Insurance underwriting results included
after-tax losses from significant catastrophe events of approximately $800 million in 2019, $1.3 billion in 2018 and $1.95
billion in 2017. Earnings from primary insurance operations were lower in 2019 and losses from reinsurance were higher
than in 2018. After-tax underwriting earnings in 2019 included lower earnings from reductions of estimated ultimate
liabilities for prior years’ property/casualty loss events as compared to 2018 and losses of $92 million from foreign currency
exchange rate changes on certain non-U.S. Dollar denominated liabilities of U.S. subsidiaries. Underwriting results included
after-tax foreign currency exchange rate gains of $207 million in 2018 and losses of $295 million in 2017.
After-tax earnings from insurance investment income in 2019 increased 21.4% over 2018, which increased 17.2% over2017. These increases reflected increases in interest and dividend income.

K-32

Management’s Discussion and Analysis (Continued)
Results of Operations (Continued)
After-tax earnings of our railroad business increased 5.0% in 2019 compared to 2018. Earnings in 2019 benefitted fromhigher rates per car/unit, a curtailment gain related to an amendment to defined benefit retirement plans and ongoing
operating cost control initiatives, partly offset by lower freight volumes and incremental costs associated with the persistentflooding conditions and severe winter weather in the first half of the year. All key routes impacted by flooding resumed
service by the third quarter. Our railroad business generated a 31.8% increase in after-tax earnings in 2018 compared to 2017,reflecting an increase in unit volume, higher average revenue per car/unit and a lower effective income tax rate, partly offset
by increased fuel and other operating costs.
After-tax earnings of our utilities and energy business increased 8.4% in 2019 compared to 2018 as all businesses
produced higher earnings in 2019 versus 2018. Our utilities and energy businesses produced higher after-tax earnings in 2018
compared to 2017, primarily due to the effects of losses incurred in 2017 in connection with the prepayment of certain longterm debt, increased earnings at the natural gas pipelines and other energy businesses and the TCJA income tax benefits
recognized in 2018.
Earnings from our manufacturing, service and retailing businesses were relatively unchanged from 2018. Operating
results of our manufacturing, service and retailing businesses in 2019 were mixed, with several of these businesses
experiencing lower earnings in 2019 from a variety of factors. Revenues and pre-tax earnings in 2019 of certain of thesebusinesses were negatively affected by the unfavorable effects of foreign currency translation attributable to a stronger U.S.
Dollar, international trade tensions and U.S. trade tariffs. After-tax earnings in 2018 of our manufacturing, service andretailing businesses increased 29% over 2017, due to lower effective income tax rates and a 13% increase in pre-tax earnings.
Investment and derivative gains/losses in 2019 and 2018 included significant unrealized gains and losses from market
price changes on our holdings of equity securities. After-tax unrealized gains on equity securities were approximately $53.7
billion in 2019 compared to after-tax losses of $20.6 billion in 2018. After-tax investment gains in 2019 also included aftertax realized gains on sales of equity and fixed maturity securities of $2.6 billion compared to $3.1 billion in 2018. We believethat investment and derivative gains/losses, whether realized from dispositions or unrealized from changes in market prices
of equity securities, are generally meaningless in understanding our reported results or evaluating the economic performanceof our businesses. These gains and losses have caused and will continue to cause significant volatility in our periodic
earnings.
After-tax other earnings included equity method investment earnings of $1.0 billion in 2019, losses of $1.4 billion in2018 and earnings of $1.1 billion in 2017. The losses in 2018 were attributable to Kraft Heinz, partly offset by earnings fromother equity method investments. Other earnings also included foreign currency exchange rate gains of $58 million in 2019,$289 million in 2018, and losses of $655 million in 2017 related to non-U.S. Dollar denominated debt issued by Berkshire
and its U.S. based financing subsidiary, Berkshire Hathaway Finance Corporation (“BHFC”).
Insurance—Underwriting
Our management views our insurance businesses as possessing two distinct activities – underwriting and investing.
Underwriting decisions are the responsibility of the unit managers, while investing decisions are the responsibility ofBerkshire’s Chairman and CEO, Warren E. Buffett and Berkshire’s corporate investment managers. Accordingly, weevaluate performance of underwriting operations without any allocation of investment income or investment gains/losses. We
consider investment income as a component of our aggregate insurance operating results. However, we consider investment
gains and losses, whether realized or unrealized as non-operating, based on our long-held strategy of acquiring securities andholding those securities for long periods. We believe that such gains and losses are not meaningful in understanding theoperating results of our insurance operations.
The timing and amount of catastrophe losses can produce significant volatility in our periodic underwriting results,
particularly with respect to our reinsurance businesses. Generally, we consider pre-tax catastrophe losses in excess of$100 million from a current year event as significant. We incurred estimated pre-tax losses of approximately $1.0 billion in
2019, $1.6 billion in 2018 and $3.0 billion in 2017 from significant catastrophe events.
Changes in estimates for unpaid losses and loss adjustment expenses, including amounts established for occurrences inprior years, can also significantly affect our periodic underwriting results. Unpaid loss estimates, including estimates underretroactive reinsurance contracts, were approximately $115.5 billion as of December 31, 2019. Our periodic underwriting
results may also include significant foreign currency transaction gains and losses arising from the changes in the valuation of
non-U.S. Dollar denominated reinsurance liabilities of our U.S. based insurance subsidiaries due to foreign currency
exchange rate fluctuations.

K-33

Management’s Discussion and Analysis (Continued)
Insurance—Underwriting (Continued)
We 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 havesubjected themselves to in their own insuring activities. Our insurance and reinsurance businesses are GEICO, Berkshire
Hathaway Primary Group and Berkshire Hathaway Reinsurance Group (“BHRG”).
Underwriting results of our insurance businesses are summarized below (dollars in millions).
2019

Underwriting gain (loss):
GEICO
Berkshire Hathaway Primary Group
Berkshire Hathaway Reinsurance Group
Pre-tax underwriting gain (loss)
Income taxes and noncontrolling interests
Net underwriting gain (loss)
Effective income tax rate

$

$

2018

1,506 $
383
(1,472)
417
92
325 $
24.2%

2017

2,449 $
670
(1,109)2,010
444
1,566 $
21.4%

(310)
719
(3,648)(3,239)(1,020)(2,219)
32.0%

GEICO
GEICO writes private passenger automobile insurance, offering coverages to insureds in all 50 states and the District ofColumbia. GEICO markets its policies mainly by direct response methods where most customers apply for coverage directly
to the company via the Internet or over the telephone. A summary of GEICO’s underwriting results follows (dollars inmillions).
2019
AmountPremiums written
Premiums earned
Losses and loss adjustment expenses
Underwriting expenses
Total losses and expenses
Pre-tax underwriting gain (loss)$ 36,016$ 35,572
28,9375,129
34,066$ 1,506

2018
%

100.0
81.3
14.5
95.8

Amount$ 34,123$ 33,363
26,278
4,636
30,914$ 2,449

2017
%

100.0
78.8
13.9
92.7

Amount$ 30,547$ 29,441
25,497
4,254
29,751
$
(310)

%

100.0
86.6
14.5
101.1

2019 versus 2018
Premiums written and earned in 2019 increased 5.5% and 6.6%, respectively, compared to 2018. These increases wereprimarily attributable to voluntary auto policies-in-force growth of 6.4% over the past twelve months, partially offset by adecrease in average premiums per auto policy due to coverage changes and changes in state and risk mix. The increase involuntary auto policies-in-force primarily resulted from an increase in new business sales of 10.9% and a decrease in thenumber of policies not renewed. Voluntary auto policies-in-force increased approximately 1,068,000 during 2019.
Losses and loss adjustment expenses in 2019 increased 10.1% to $28.9 billion. GEICO’s losses and loss adjustment
expenses ratio in 2019 was 81.3%, an increase of 2.5 percentage points over 2018. The loss ratio increase in 2019 reflected
continuing increases in loss severities, slightly offset by lower storm-related losses.
Claims frequencies in 2019 declined compared to 2018 for property damage and collision coverages (two to four
percent range) and personal injury protection coverage (one to two percent range) and were relatively unchanged for bodily
injury coverage. Average claims severities in 2019 were higher versus 2018 for property damage and collision coverages(four to six percent range) and bodily injury coverage (seven to nine percent range).
Losses and loss adjustment expenses regularly include changes in the ultimate claim loss estimates during the period
for prior years’ loss events, which produce pre-tax underwriting earnings or losses in the period of the change. GEICO
increased ultimate claim loss estimates for prior years’ loss events by $42 million in 2019 compared to a decrease of$222 million in 2018.

K-34

Management’s Discussion and Analysis (Continued)
Insurance—Underwriting (Continued)
GEICO (Continued)
Underwriting expenses in 2019 were $5.1 billion, an increase of $493 million (10.6%) over 2018. GEICO’s
underwriting expense ratio in 2019 was 14.5%, an increase of 0.6 percentage points compared to 2018. The underwriting
expense increase was primarily attributable to increases in advertising expenses and employee-related costs, which reflected
wage and staffing increases.
2018 versus 2017
Premiums written were $34.1 billion in 2018, an increase of 11.7% compared to 2017. The increase reflected voluntary
auto policies-in-force growth of 3.3% and increased premiums per auto policy of approximately 6.4%. The increase inpremiums per policy was attributable to rate increases, coverage changes and changes in state and risk mix. The rate increases
were in response to accelerating claim costs in previous years. Although policies-in-force increased 540,000 during 2018, therate of increase slowed, as voluntary auto new business sales decreased 4.7% compared to 2017.
Losses and loss adjustment expenses in 2018 were $26.3 billion, an increase of $781 million (3.1%) compared to 2017.
GEICO’s losses and loss adjustment expenses ratio for 2018 was 78.8%, a decline of 7.8 percentage points compared to2017. Losses from significant catastrophe events were $105 million in 2018 (Hurricanes Florence and Michael and thewildfires in California) and approximately $450 million in 2017 (Hurricanes Harvey and Irma). GEICO reduced ultimate
claim loss estimates for prior years’ loss events by $222 million in 2018 and increased estimated prior year ultimate liabilities
by $517 million in 2017.
Claims frequencies in 2018 for property damage, collision, and bodily and personal injury protection coverages
declined (two to four percent range) compared to 2017. Average claims severities in 2018 increased for property damage andcollision coverages (four to six percent range) and bodily injury coverage (five to seven percent range) versus 2017.
Underwriting expenses in 2018 were approximately $4.6 billion, an increase of $382 million (9.0%) over 2017.
GEICO’s underwriting expense ratio in 2018 was 13.9%, a decrease of 0.6 percentage points compared to 2017. The
underwriting expense increase was primarily attributable to increases in advertising expenses, insurance premium taxes andemployee-related costs, which reflected wage and staffing increases.
Berkshire Hathaway Primary Group
The Berkshire Hathaway Primary Group (“BH Primary”) provides a variety of commercial insurance solutions,
including healthcare malpractice, workers’ compensation, automobile, general liability, property and various specialty
coverages for small, medium and large clients. The largest of these insurers are Berkshire Hathaway Specialty Insurance(“BH Specialty”), Berkshire Hathaway Homestate Companies (“BHHC”), MedPro Group, Berkshire Hathaway GUARD
Insurance Companies (“GUARD”), and National Indemnity Company (“NICO Primary”). Other BH Primary insurers include
U.S. Liability Insurance Company, Applied Underwriters (sold in October 2019), Central States Indemnity Company and
MLMIC Insurance Company, acquired October 1, 2018. A summary of BH Primary underwriting results follows (dollars inmillions).
2019
AmountPremiums written
Premiums earned
Losses and loss adjustment expenses
Underwriting expenses
Total losses and expenses
Pre-tax underwriting gain

$
$

$

9,843
9,165
6,336
2,446
8,782
383

2018
%

100.0
69.1
26.7
95.8

Amount

$
$

$

8,561
8,111
5,261
2,180
7,441
670

2017
%

100.0
64.9
26.9
91.8

Amount

$
$

$

7,483
7,143
4,511
1,913
6,424
719

%

100.0
63.1
26.8
89.9

Premiums written in 2019 increased approximately $1.3 billion (15.0%) compared to 2018. The increase was primarily
attributable to volume increases from BH Specialty (30%), GUARD (28%) and MedPro Group (14%) and from the effects of
the MLMIC acquisition, partially offset by the effects of the divestiture of Applied Underwriters and lower volume at BHHC.
The increases in premiums earned in 2019 reflected the overall volume increase over the past year.

K-35

Management’s Discussion and Analysis (Continued)
Insurance—Underwriting (Continued)
Berkshire Hathaway Primary Group (Continued)
BH Primary produced pre-tax underwriting earnings of $383 million in 2019 and $670 million in 2018. BH Primary’s
aggregate loss ratios were 69.1% in 2019 and 64.9% in 2018. Losses and loss adjustment expenses incurred included
reductions for prior years’ loss events of $499 million in 2019 and $715 million in 2018. The decrease in 2019 was primarily
attributable to lower than anticipated medical professional liability and workers’ compensation losses, partially offset byhigher commercial auto and other liability losses. There were no losses from significant catastrophe events in 2019 that
affected BH Primary. Underwriting results in 2018 included estimated losses from Hurricanes Florence and Michael and thewildfires in California of approximately $190 million.
Premiums written and earned in 2018 increased 14.4% and 13.6%, respectively, compared to 2017. The increases wereprimarily attributable to written premium growth at BH Specialty (33%), GUARD (19%), NICO Primary (14%) and BHHC(8%). BH Primary’s loss ratios were 64.9% in 2018 and 63.1% in 2017. Losses and loss adjustment expenses included losses
from significant catastrophe events of $190 million in 2018 from Hurricanes Florence and Michael and the wildfires in
California and $225 million in 2017 from Hurricanes Harvey, Irma and Maria. Losses and loss adjustment expenses also
included net gains from the reductions of estimated ultimate liabilities for prior years’ loss events of $715 million in 2018 and$766 million in 2017. The liability reductions in each year primarily related to healthcare malpractice and workers’
compensation business.
BH Primary insurers write significant levels of commercial and professional liability and workers’ compensation
insurance and the related claim costs may be subject to high severity and long claim-tails. Accordingly, we could experiencesignificant increases in claims liabilities in the future attributable to higher than expected claim settlements, adverse litigation
outcomes or judicial rulings and other factors not currently anticipated.
Berkshire Hathaway Reinsurance GroupWe offer excess-of-loss and quota-share reinsurance coverages on property and casualty risks and life and healthreinsurance to insurers and reinsurers worldwide through several subsidiaries, led by National Indemnity Company(“NICO”), Berkshire Hathaway Life Insurance Company of Nebraska (“BHLN”) and General Reinsurance Corporation,
General Reinsurance AG and General Re Life Corporation (“General Re”). We also periodically assume property andcasualty risks under retroactive reinsurance contracts written through NICO. In addition, we write periodic payment annuity
contracts predominantly through BHLN.
Generally, we strive to generate underwriting profits. However, time-value-of-money concepts are important elementsin establishing prices for retroactive reinsurance and periodic payment annuity businesses due to the expected long durationsof the liabilities. We expect to incur pre-tax underwriting losses from such businesses, primarily through deferred chargeamortization and discount accretion charges. We receive premiums at the inception of these contracts, which are thenavailable for investment. A summary of BHRG’s premiums and pre-tax underwriting results follows (dollars in millions).
2019

Property/casualty
Life/health
Retroactive reinsurance
Periodic payment annuity

Premiums written
2018
2017

2019

Premiums earned
2018
2017

Pre-tax underwriting gain (loss)
2019
2018
2017

$10,428 $ 9,413 $ 7,713 $ 9,911 $ 8,928 $ 7,552 $16 $ (207) $(1,595)
4,977
5,446
4,846
4,883
5,343
4,808
326
216
(52)
684
517
10,755684
517
10,755(1,265)(778) (1,330)
863
1,156
898
863
1,156
898
(549)
(340)
(671)
$16,952 $16,532 $24,212 $16,341 $15,944 $24,013 $ (1,472) $ (1,109) $(3,648)

K-36

Management’s Discussion and Analysis (Continued)
Insurance—Underwriting (Continued)
Property/casualty
A summary of property/casualty reinsurance underwriting results follows (dollars in millions).
2019
AmountPremiums written
Premiums earned
Losses and loss adjustment expenses
Underwriting expenses
Total losses and expenses
Pre-tax underwriting gain (loss)

2018%$ 10,428$ 9,911
7,313
2,582
9,895
$
16

100.0
73.8
26.0
99.8

Amount

$
$

$

2017
%

9,413
8,928
6,929
2,206
9,135
(207)

100.0
77.6
24.7
102.3

Amount

%

$
$

7,713
7,552
7,217
1,930
9,147
$ (1,595)

100.0
95.6
25.5
121.1

Property/casualty premiums written in 2019 of $10.4 billion represented an increase of 10.8% compared to 2018.
Premiums earned in 2019 increased $983 million (11.0%) versus 2018. The increase in premiums written reflected overall
growth in U.S. and international markets. The growth was primarily attributable to new business, net of non-renewals, andincreased participations for renewal business, partly offset by the unfavorable foreign currency translation effects of astronger U.S. Dollar. Property/casualty premiums written in 2018 were $9.4 billion, an increase of 22.0% over 2017. The
increase was primarily attributable to new business and increased participations for renewal business in both property andcasualty lines. Premiums earned included $1.7 billion in 2019 and $1.8 billion in both 2018 and 2017 from a 10-year, 20%
quota-share contract with Insurance Australia Group Limited, which expires in 2025.
Losses and loss adjustment expenses were $7.3 billion in 2019, $6.9 billion in 2018 and $7.2 billion in 2017 and losses
and loss adjustment expense ratios were 73.8% in 2019, 77.6% in 2018 and 95.6% in 2017. Losses and loss adjustment
expenses included incurred losses from significant catastrophe events occurring each year, including approximately $1.0
billion in 2019 ($700 million in the fourth quarter), $1.3 billion in 2018 ($1.1 billion in the fourth quarter) and $2.4 billion in2017. Losses in 2019 derived from Typhoons Faxia and Hagibis and wildfires in California and Australia. Losses in 2018
derived from Hurricanes Florence and Michael, Typhoon Jebi and wildfires in California. Losses in 2017 derived from
Hurricanes Harvey, Irma and Maria, an earthquake in Mexico, a cyclone in Australia and wildfires in California.
Before the effects of significant catastrophe events, losses and loss adjustment expense ratios were 64% in 2019, 63%
in 2018 and 64% in 2017. Losses and loss adjustment expenses also included gains from net decreases in estimated ultimate
claim liabilities attributable to prior years’ loss events of approximately $295 million in 2019, $469 million in 2018 and $295
million in 2017. Such decreases as percentages of the related net unpaid claim liabilities as of the beginning of the applicable
year were 1.0% in 2019, 1.7% in 2018 and 1.2% in 2017.
Life/health
A summary of our life/health reinsurance underwriting results follows (dollars in millions).
2019
AmountPremiums written
Premiums earned
Life and health insurance benefits
Underwriting expenses
Total benefits and expenses
Pre-tax underwriting gain (loss)

$
$

$

4,977
4,883
3,757
800
4,557
326

K-37

2018
%

100.0
76.9
16.4
93.3

Amount

$
$

$

5,446
5,343
4,226
901
5,127
216

2017
%

100.0
79.1
16.9
96.0

Amount

$
$

$

4,846
4,808
4,276
584
4,860
(52)

%

100.0
88.9
12.2
101.1

Management’s Discussion and Analysis (Continued)
Insurance—Underwriting (Continued)
Life/health (Continued)
Life/health premiums earned were $4.9 billion in 2019, a decrease of $460 million (8.6%) compared to 2018. In thefirst quarter of 2019, BHLN amended a yearly-renewable-term life reinsurance contract with a major reinsurer. The
amendment effectively eliminated BHLN’s future exposures under the contract. BHLN recorded a reduction in earned
premiums on this contract in 2019 of $49 million while premiums earned in 2018 related to this contract were $954 million.
Life/health premiums earned in 2019 also included $228 million from a single reinsurance contract covering health insurance
risks. We also experienced volume growth in several international life markets, partially offset by the unfavorable effects offoreign currency translation attributable to a stronger U.S. Dollar and lower U.S. life volumes.
The life/health business produced pre-tax underwriting earnings of $326 million in 2019. Underwriting results for 2019
included a one-time pre-tax gain of $163 million attributable to the yearly-renewable-term life reinsurance contract
amendment. Pre-tax underwriting earnings in 2019 also included losses from increased disability benefit liabilities inAustralia, attributable to higher claims experience and changes to various underlying assumptions, increased U.S. long-termcare liabilities due to discount rate reductions and changes in other actuarial assumptions, and an increase in life claims in
North America, partially offset by increased earnings from other international life business. Variable annuity guarantee
reinsurance contracts produced pre-tax earnings of $167 million in 2019. Underwriting results from this business reflectchanges in estimated liabilities for guaranteed benefits, which derive from changes in securities markets and interest rates andfrom the periodic amortization of expected profit margins.
Life/health premiums earned in 2018 were $5.3 billion, an increase of $535 million (11.1%) over 2017. The increase
was primarily attributable to growth in the North America, Asia and Australia life insurance markets. Our life/health businessproduced pre-tax underwriting earnings of $216 million in 2018 and losses of $52 million in 2017. The underwriting earnings
in 2018 reflected lower losses from the run-off of U.S. long-term care business, partially offset by lower earnings from therun-off of variable annuity guarantee contracts. In the fourth quarter of 2017, we recorded pre-tax losses of $450 million fromdiscount rate reductions and changes in other actuarial assumptions associated with long-term care liabilities. Pre-tax
earnings from variable annuity guarantee contracts were $34 million in 2018 and $256 million in 2017.
Retroactive reinsurance
Retroactive reinsurance premiums earned in 2019 and 2018 were $684 million and $517 million, respectively, andwere attributable to a limited number of contracts in each year. Premiums earned in 2017 included $10.2 billion from anaggregate excess-of-loss retroactive reinsurance agreement with various subsidiaries of American International Group, Inc.
(the “AIG Agreement”). At the inception of our retroactive reinsurance contracts, we record the estimated ultimate claim
liabilities, and we also record the excess of such claim liabilities over the premiums received as a deferred charge asset. Thus,
as of the inception dates of these contracts, there is no net underwriting gain or loss.
Pre-tax underwriting losses in each year derived from deferred charge amortization and changes in the estimated timing
and amount of future claim payments, as well as from foreign currency gains/losses arising from the periodic remeasurementof liabilities related to contracts written by our U.S. subsidiaries that are denominated in foreign currencies. Foreign currency
remeasurement produced pre-tax losses of $76 million in 2019, gains of $169 million in 2018 and losses of $264 million in2017.
Retroactive reinsurance contracts generated pre-tax underwriting losses before foreign currency gains/losses of $1,189
million in 2019, $947 million in 2018 and $1,066 million in 2017. Losses included deferred charge amortization of $646
million in 2019, $611 million in 2018 and $527 million in 2017 related to the AIG Agreement. In 2019, we increased
estimated ultimate liabilities for prior years’ retroactive reinsurance contracts by $378 million compared to a decrease of$341 million in 2018. After adjustments to the related unamortized deferred charges from changes in the estimated timing
and amount of the future claim payments, such changes produced pre-tax underwriting losses of approximately $125 million
in 2019 and earnings of $185 million in 2018.
Gross unpaid losses assumed under retroactive reinsurance contracts were $42.4 billion at December 31, 2019 and$41.8 billion at December 31, 2018. Unamortized deferred charge assets related to such reinsurance contracts were $13.7
billion at December 31, 2019 and $14.1 billion at December 31, 2018. Deferred charge assets will be charged to earnings
over the expected remaining claims settlement periods through periodic amortization.

K-38

Management’s Discussion and Analysis (Continued)
Insurance—Underwriting (Continued)
Periodic payment annuity
Periodic payment annuity premiums earned in 2019 were $863 million, a decrease of $293 million (25.3%) compared
to 2018, while premiums earned in 2018 increased $258 million (28.7%) compared to 2017. Periodic payment annuity
business is price sensitive. The volumes written can change rapidly due to changes in prices, which are affected by prevailinginterest rates, the perceived risks and durations associated with the expected annuity payments as well as the level ofcompetition.
Periodic payment annuity contracts normally produce pre-tax underwriting losses deriving from the recurring discountaccretion of annuity liabilities. Underwriting results also include the effects of mortality and interest rate changes andremeasurement gains and losses related to foreign currency denominated liabilities of certain contracts written by our U.S.
subsidiaries. Foreign currency remeasurement losses were $40 million in 2019 compared to gains of $93 million in 2018 andlosses of $190 million in 2017.
Excluding foreign currency remeasurement gains and losses, pre-tax underwriting losses from periodic payment
annuity contracts were $509 million in 2019 compared to $433 million in 2018 and $481 million in 2017. These losses
primarily derived from the recurring discount accretion of annuity liabilities, as well as the impact of mortality and interest
rate changes. Discounted annuity liabilities were $13.5 billion at December 31, 2019 and $12.5 billion at December 31, 2018
and at December 31, 2019, the weighted average discount rate was approximately 4.1%.
Insurance—Investment Income
A summary of net investment income attributable to our insurance operations follows (dollars in millions).
2019

Interest and other investment income
Dividend income
Investment income before income taxes and noncontrolling interests
Income taxes and noncontrolling interests
Net investment income
Effective income tax rate$$

2,075 $
4,525
6,600
1,070
5,530 $
16.1%

2018

1,851 $
3,652
5,503
949
4,554 $
17.2%

2017

1,263
3,592
4,855
968
3,887
19.9%

Interest and other investment income in 2019 increased $224 million (12.1%) compared to 2018. The increase wasprimarily due to higher interest rates on short-term investments and interest from a term loan with Seritage Growth
Properties, partially offset by lower income earned from fixed maturity securities and limited partnership investments.
Dividend income in 2019 increased $873 million (23.9%) compared to 2018. The increase in dividend income wasattributable to an overall increase in investment levels over the past year, including the investment in $10 billion liquidation
value of 8% Cumulative Preferred Stock of Occidental Petroleum Corporation on August 8, 2019, and higher dividend rates
on common stock investments. We continue to hold large balances of cash, cash equivalents and short-term U.S. Treasury
Bills. While short-term interest yields in the U.S. were higher in the first half of 2019 compared to 2018, interest rates
declined during the second half of the year. Accordingly, earnings from such balances will likely be lower in 2020 than in
2019. We believe that maintaining ample liquidity is paramount and we insist on safety over yield with respect to short-term
investments.
Pre-tax interest and other investment income in 2018 increased $588 million (46.6%) compared to 2017. The increasereflected the effect of higher short-term interest rates in 2018 and higher other investment income, partly offset by lower
interest income as a result of lower average investments in fixed maturity securities. Dividend income increased $60 million(1.7%) in 2018 as compared to 2017, reflecting the impact of increased investments in marketable equity securities andhigher dividend rates on common stock holdings, partially offset by Restaurant Brands International’s redemption of our$3 billion investment in 9% preferred stock in December 2017.
Invested assets of our insurance businesses derive from shareholder capital, including reinvested earnings, and from net
liabilities under insurance and reinsurance contracts or “float.” The major components of float are unpaid losses and loss
adjustment expenses, including liabilities under retroactive reinsurance contracts, life, annuity and health insurance benefit
liabilities, unearned premiums and other liabilities due to policyholders, less insurance premiums and reinsurance
receivables, deferred charges assumed under retroactive reinsurance contracts and deferred policy acquisition costs. Float
approximated $129 billion at December 31, 2019, $123 billion at December 31, 2018 and $114 billion at December 31, 2017.
Our combined insurance operations generated pre-tax underwriting earnings of approximately $417 million in 2019 and $2.0
billion in 2018, and consequently, the average cost of float for each of those periods was negative. Pre-tax underwriting
losses were approximately $3.2 billion in 2017 and our average cost of float in 2017 was approximately 3.0%.
K-39

Management’s Discussion and Analysis (Continued)
Insurance—Investment Income (Continued)
A summary of cash and investments held in our insurance businesses as of December 31, 2019 and 2018 follows (inmillions).
December 31,
2019

Cash, cash equivalents and U.S. Treasury Bills
Equity securities
Fixed maturity securities
Other

$

2018

64,908240,126
18,5372,481
326,052$$

64,548166,385
19,6902,288
252,911$

Fixed maturity investments as of December 31, 2019 were as follows (in millions).
Amortized
cost

U.S. Treasury, U.S. government corporations and agencies
Foreign governments
Corporate bonds, investment grade
Corporate bonds, non-investment grade
Other

$

$

3,047
8,582
5,408
396
492
17,925

Unrealized
gains/losses

$

35
54
441
14
68
612

$

Carrying
value

$

$

3,082
8,636
5,849
410
560
18,537

U.S. government obligations are rated AA+ or Aaa by the major rating agencies. Approximately 87% of all foreign
government obligations were rated AA or higher. Non-investment grade corporate securities represent securities rated below
BBB- or Baa3. Foreign government securities include obligations issued or unconditionally guaranteed by national orprovincial government entities.
Railroad (“Burlington Northern Santa Fe”)
Burlington Northern Santa Fe, LLC (“BNSF”) operates one of the largest railroad systems in North America, withapproximately 32,500 route miles of track in 28 states. BNSF also operates in three Canadian provinces. BNSF classifies its
major business groups by type of product shipped. These business groups include consumer products, coal, industrial
products and agricultural products. A summary of BNSF’s earnings follows (dollars in millions).
2019

Revenues
Operating expenses:
Compensation and benefits
Fuel
Purchased services
Depreciation and amortization
Equipment rents, materials and otherTotal operating expenses
Interest expense$

Pre-tax earnings
Income taxes
Net earnings
Effective income tax rate
2019 versus 2018$

23,515

2018

$

5,347
2,944
2,700
2,403
1,801
15,195
1,070
16,2657,250
1,769
5,481 $
24.4%

23,855

2017

$

5,394
3,346
2,870
2,317
2,024
15,951
1,041
16,992
6,863
1,644
5,219 $
24.0%

21,387
5,023
2,518
2,514
2,352
1,636
14,043
1,016
15,059
6,328
2,369
3,959
37.4%

BNSF’s revenues were $23.5 billion in 2019, a decrease of $340 million (1.4%) versus 2018. During 2019, BNSF’s
revenues reflected a 3.6% comparative increase in average revenue per car/unit and a 4.5% decrease in volume. Volume was
10.2 million cars/units compared to 10.7 million in 2018. The increase in average revenue per car/unit was attributable toincreased rates per car/unit and a favorable outcome of an arbitration hearing. Pre-tax earnings in 2019 were approximately$7.3 billion, an increase of 5.6% over 2018. BNSF experienced severe winter weather and flooding on parts of the network,
which negatively affected revenues, expenses and service levels. In addition to the impact of an increase in average revenue
per car/unit, BNSF's earnings in 2019 benefitted from a reduction in total operating expenses.

K-40

Management’s Discussion and Analysis (Continued)
Railroad (“Burlington Northern Santa Fe”) (Continued)
Revenues from consumer products were $7.9 billion in 2019, a decrease of 0.5% compared to 2018, reflecting higher
average revenue per car/unit and volume decreases of 4.6%. The volume decreases were driven by moderated demand andthe availability of truck capacity, as well as lower west coast imports.
Revenues from industrial products were $6.1 billion in 2019, an increase of 1.7% from 2018. The increase wasattributable to higher average revenue per car/unit, partially offset by a volume decrease of 3.0%. Volumes decreased
primarily due to overall softness in the industrial sector, lower sand volumes, and reduced car loadings due to the challenging
weather conditions in 2019. Strength in the energy sector, which drove higher demand for petroleum products and liquefied
petroleum gas, partially offset the decreases in volumes.
Revenues from agricultural products decreased 0.3% in 2019 to $4.7 billion compared to 2018. The decrease was due
to lower volumes of 5.1% and higher average revenue per car/unit. The volume decreases were attributable to export
competition from non-U.S. sources, the impacts of international trade policies, and the challenging weather conditions in
2019.
Revenues from coal decreased 7.4% in 2019 to $3.7 billion compared to 2018. This decrease reflected lower averagerevenue per car/unit and lower volumes of 5.3%. Volumes were negatively impacted by adverse weather conditions, as well
as from the effects of lower natural gas prices.
Operating expenses were $15.2 billion in 2019, a decrease of $756 million (4.7%) compared to 2018. Our ratio of
operating expenses to revenues decreased 2.3 percentage points to 64.6% in 2019 versus 2018. BNSF's expenses in 2019reflected lower volume-related costs, lower fuel prices, the effects of cost control initiatives, and a retirement plancurtailment gain, partially offset by the costs associated with the adverse weather conditions.
Fuel expenses decreased $402 million (12.0%) compared to 2018, primarily due to lower average fuel prices, lower
volumes, and improved fuel efficiency. Purchased services expense decreased $170 million (5.9%) compared to 2018. The
decrease was due to lower purchased transportation costs of our logistics services business, lower drayage, lower services
expense, and higher insurance recoveries. Equipment rents, materials and other expense decreased $223 million (11.0%)
compared to 2018. The decrease was primarily due to a $120 million curtailment gain from the amendment to the companysponsored defined benefit retirement plans, as well as from lower locomotive and various other costs associated with lower
volumes and cost controls.
BNSF’s effective income tax rate was 24.4% in 2019, 24.0% in 2018 and 37.4% in 2017. The rate in 2017 excluded theeffects of the TCJA, which reduced the U.S. statutory income tax rate.
2018 versus 2017
BNSF’s revenues were $23.9 billion in 2018, an increase of $2.5 billion (11.5%) over 2017. BNSF’s revenues in 2018reflected a 6.2% comparative increase in average revenue per car/unit and a 4.1% increase in volume. Combined volume was
10.7 million cars/units compared to 10.3 million in 2017. The increase in average revenue per car/unit was attributable toincreased rates per car/unit, higher fuel surcharge revenue driven by higher fuel prices, and business mix changes. Pre-tax
earnings were approximately $6.9 billion in 2018, an increase of 8.5% compared to 2017.
Revenues from consumer products were $7.9 billion in 2018, an increase of 11.1% compared to 2017, reflecting higher
average revenue per car/unit and volume increases of 2.9%. The volume increases were due to higher domestic intermodal
volumes, as well as growth in imports and containerized agricultural product exports, partially offset by a sizable contract
loss.
Revenues from industrial products were $6.0 billion in 2018, an increase of 16.2% from 2017. The increase wasattributable to volume increases of 9.8% as well as higher average revenue per car/unit. Volumes in 2018 increased for
petroleum products, building products, construction products, and plastics.
Revenues from agricultural products increased 8.8% in 2018 to $4.7 billion compared to 2017. The increase was due tohigher volumes of 9.0%, partially offset by slightly lower average revenue per car/unit. Volumes increased due to strong
export and domestic corn shipments, as well as higher fertilizer and other grain products volumes, partially offset by areduction in soybean and wheat exports.
Revenues from coal in 2018 increased 4.3% to $4.0 billion compared to 2017, attributable to higher average revenue
per car/unit, partially offset by lower volumes of 0.8%. The volume decrease in 2018 was due mainly to utility plant
retirements combined with competition from natural gas and renewables, mostly offset by market share gains and increased
export volumes.

K-41

Management’s Discussion and Analysis (Continued)
Railroad (“Burlington Northern Santa Fe”) (Continued)
Total operating expenses were $16.0 billion in 2018, an increase of $1.9 billion (13.6%) compared to 2017. Our ratioof operating expenses to revenues increased 1.2 percentage points to 66.9% in 2018 versus 2017. Compensation and benefits
expenses increased $371 million (7.4%) compared to 2017. The increase was primarily due to wage inflation and increased
headcount and associated training costs. Fuel expenses increased $828 million (32.9%) compared to 2017 primarily due tohigher average fuel prices and increased volumes. Purchased services expense increased $356 million (14.2%) compared to2017, due to higher purchased transportation costs of our logistics services business, as well as increased intermodal ramping,drayage, and other volume-related costs. Equipment rents, materials and other expense increased $388 million (23.7%)
compared to 2017, reflecting higher locomotive material expenses, personal injury expenses, derailment-related costs, andproperty taxes, as well as the impact of a benefit in 2017 from the enactment of the TCJA on an equity method investee.
Utilities and Energy (“Berkshire Hathaway Energy Company”)
We currently own 90.9% of the outstanding common stock of Berkshire Hathaway Energy Company (“BHE”), which
operates a global energy business. BHE’s domestic regulated utility interests are comprised of PacifiCorp, MidAmerican
Energy Company (“MEC”) and NV Energy. In Great Britain, BHE subsidiaries operate two regulated electricity distribution
businesses referred to as Northern Powergrid. BHE also owns two domestic regulated interstate natural gas pipelinecompanies. Other energy businesses include a regulated electricity transmission-only business in Alberta, Canada (“AltaLink,
L.P.”) and a diversified portfolio of mostly renewable independent power projects. BHE also operates the largest residential
real estate brokerage firm and one of the largest residential real estate brokerage franchise networks in the United States.
The rates our regulated businesses charge customers for energy and services are based in large part on the costs ofbusiness operations, including income taxes and a return on capital, and are subject to regulatory approval. To the extent
these regulated operations are not allowed to include such costs in the approved rates, operating results will be adversely
affected. The TCJA reduced the U.S. federal statutory income tax rate from 35% to 21%. In 2018, BHE’s regulated
subsidiaries began passing the benefits of lower income tax expense attributable to the TCJA to customers through various
regulatory mechanisms, including lower rates, higher depreciation and reductions to rate base. A summary of BHE’s net
earnings follows (dollars in millions).
2019

Revenues:
Energy operating revenue
Real estate operating revenue
Other income
Total revenue
Costs and expense:
Energy cost of sales
Energy operating expense
Real estate operating costs and expense
Interest expense
Total costs and expense
Pre-tax earnings
Income tax expense (benefit)*
Net earnings after income taxes
Noncontrolling interests
Net earnings attributable to Berkshire Hathaway Energy
Noncontrolling interests
Net earnings attributable to Berkshire Hathaway shareholders
Effective income tax rate*$$

15,371
4,473
270

2018

$

$

15,1713,443
240

20,114

19,987

18,854

4,586
6,824
4,251
1,835
17,496
2,618
(526)
3,144
18
3,126
286
2,840
$
(20.1)%

4,769
6,969
4,000
1,777
17,515
2,472
(452)
2,924
23
2,901
280
2,621
$
(18.3)%

4,518
6,354
3,229
2,254
16,355
2,499
148
2,351
40
2,311
278
2,033
5.9%

Includes significant production tax credits from wind-powered electricity generation.

K-42

15,573
4,214
200

2017

Management’s Discussion and Analysis (Continued)
Utilities and Energy (“Berkshire Hathaway Energy Company”) (Continued)
The discussion of BHE’s operating results that follows is based on after-tax earnings, reflecting how the energy
businesses are managed and evaluated. A summary of net earnings attributable to BHE follows (in millions).
2019

PacifiCorp
MidAmerican Energy Company
NV Energy
Northern Powergrid
Natural gas pipelines
Other energy businesses
Real estate brokerage
Corporate interest and other

2018

2017

$

773 $
781
365
256
422
608
160
(239)

739 $
669
317
239
387
489
145
(84)

763
597
365
251
270
404
118
(457)

$

3,126

2,901

2,311

$

$

PacifiCorp
PacifiCorp operates a regulated electric utility in portions of several Western states, including Utah, Oregon andWyoming. Net earnings after income taxes were $773 million in 2019, an increase of $34 million (4.6%) compared to 2018,reflecting slightly higher utility margin (operating revenue less cost of sales) and higher other income, partly offset by higher
depreciation expense from additional plant-in-service. Utility margin was $3.3 billion in 2019, an increase of $4 million
compared to 2018, as higher retail revenue from a 0.4% increase in retail customer volumes, in part due to the favorable
impact of weather, was largely offset by lower wholesale revenue mainly due to lower volumes.
Net earnings after income taxes decreased $24 million (3.1%) in 2018 as compared to 2017. The change in after-tax
earnings reflected the unfavorable utility margin and higher operating expenses, partly offset by higher other income. Utility
margin in 2018 was $3.3 billion, a decrease of $198 million (6%) versus 2017. The decrease was primarily due to a $197
million decline in retail revenues from the effects of lower average rates of $180 million (including the impact of the TCJA
of $152 million) and a reduction in volumes (0.2%), largely attributable to the impacts of weather.
MidAmerican Energy Company
MEC operates a regulated electric and natural gas utility primarily in Iowa and Illinois. Net earnings after income taxesof $781 million in 2019 increased $112 million (16.7%) as compared to 2018, primarily attributable to increases in electricutility margin, income tax benefits from higher production tax credits and the effects of ratemaking, and other income.
Electric utility margin in 2019 increased 2% to $1.8 billion, primarily due to higher wind generation and higher retailcustomer volumes of 1.4%, as an increase in industrial volumes of 4.0% was largely offset by lower residential volumes fromthe unfavorable impact of weather. These earnings increases were partially offset by increased depreciation expense fromadditional assets placed in-service (net of lower Iowa revenue sharing) and higher net interest expense.
Net earnings after income taxes were $669 million in 2018, an increase of $72 million (12.1%) compared to 2017,reflecting higher electric utility margin, higher depreciation and operating expenses and higher income tax benefits, partly
due to higher production tax credits. Electric utility margin was $1.8 billion in 2018, an increase of $122 million (7%)
compared to 2017, which was primarily due to higher retail revenues of $102 million, reflecting higher recoveries throughbill riders and volumes, partially offset by lower rates, predominantly from the impact of the TCJA. The increase indepreciation expense included $65 million from additional wind generation and other plant placed in-service and $44 million
from Iowa revenue sharing.
NV Energy
NV Energy operates regulated electric and natural gas utilities in Nevada. Net earnings after income taxes were $365
million in 2019, an increase of $48 million (15.1%) compared to 2018, as lower operating expenses were partly offset bylower electric utility margin. Electric utility margin in 2019 was $1.6 billion, representing a decrease of $58 million (3%)
versus 2018. The decrease was primarily due to a 1.4% decline in retail customer volumes, largely attributable to the impacts
of weather, and rate reductions from the impact of the TCJA, partially offset by retail customer growth.
Net earnings after income taxes decreased $48 million (13.2%) in 2018 as compared to 2017, reflecting lower electricutility margin and increased depreciation and operating expenses. Electric utility margin decreased $52 million in 2018 ascompared to 2017 due to the effects of the TCJA, partially offset by higher retail sales volumes.

K-43

Management’s Discussion and Analysis (Continued)
Utilities and Energy (“Berkshire Hathaway Energy Company”) (Continued)
Northern Powergrid
Net earnings after income taxes increased 7.1% in 2019 compared to 2018, reflecting higher distribution revenues andlower operating expenses, which were largely from lower pension settlement losses in 2019, partially offset by theunfavorable foreign currency translation effects of a strong average U.S. Dollar ($10 million). Distribution revenues
increased $18 million, attributable to higher tariff rates, partly offset by lower distributed units.
Net earnings after income taxes were $239 million in 2018, a decrease of $12 million (4.8%) compared to 2017,reflecting higher distribution revenues, increased depreciation and operating expenses, including higher pension settlement
losses, and a $9 million increase from the effects of a weaker U.S. Dollar.
Natural gas pipelines
Net earnings after income taxes increased $35 million (9.0%) in 2019 compared to 2018, primarily due to higher
transportation revenues from generally higher volumes and rates, favorable margins from system balancing activities and adecrease in operating expenses, partly offset by higher depreciation expense due to increased spending on capital projects.
Net earnings after income taxes were $387 million in 2018, a 43.3% increase ($117 million) compared to 2017,reflecting higher transportation revenues from higher volumes and rates due to unique market opportunities and colder
average temperatures, lower depreciation expense and a comparative increase in operating expenses.
Other energy businesses
Net earnings after income taxes in 2019 were $608 million, an increase of $119 million (24.3%) compared to 2018.
The increase was primarily due to improved earnings from renewable wind energy projects ($49 million from tax equity
investments and $25 million from new and existing projects and activities), higher after-tax income from geothermal andnatural gas units of $53 million, largely due to higher generation and favorable margins and lower operating expenses, partly
offset by lower earnings at a hydroelectric facility in the Philippines due to lower rainfall. The increase in earnings also
reflected the effects of favorable regulatory decisions received in 2019 and the unfavorable impacts of a regulatory rate order
received in 2018 at AltaLink L.P.
Net earnings after income taxes increased $85 million (21.0%) in 2018 compared to 2017, reflecting increased
revenues from existing renewable energy projects from overall higher generation and pricing, increased earnings from windtax equity investments of $34 million and earnings from additional wind and solar capacity placed in-service, partially offset
by higher operating expenses at existing projects.
Real estate brokerage
Net earnings after income taxes increased 10.3% in 2019 compared to 2018. The increase was primarily due to higher
after-tax earnings at existing mortgage businesses due to increased refinance activity and earnings attributable to recent
business acquisitions, partially offset by lower after-tax earnings at existing brokerage businesses, primarily from lower units
and margins.
Net earnings after income taxes were $145 million in 2018, an increase of $27 million (22.9%) compared to 2017. The
increase reflected earnings from acquired businesses, higher comparative operating expenses and lower margins at existing
businesses and lower income tax expense due to the impact of the TCJA.
Corporate interest and otherNet earnings after income taxes decreased $155 million in 2019 compared to 2018, primarily due to income tax
benefits recognized in 2018 related to the reduction of accrued repatriation taxes on undistributed foreign earnings inconnection with the TCJA, higher corporate interest and lower after-tax earnings from non-regulated energy services.
Net earnings after income taxes increased $373 million in 2018 compared to 2017, primarily due to an after-tax chargeof $246 million recognized in 2017 from a tender offer completed in December 2017 to redeem certain long-term debt of
BHE and the TCJA income tax benefits recognized in 2018.

K-44

Management’s Discussion and Analysis (Continued)
Manufacturing, Service and Retailing
A summary of revenues and earnings of our manufacturing, service and retailing businesses follows (dollars inmillions).
Revenues
2018

2019

Manufacturing
Service and retailing2017$ 62,730 $ 61,883 $ 57,645 $
79,94578,92676,994$ 142,675 $ 140,809 $ 134,639

Pre-tax earnings
Income taxes and noncontrolling interests

9,522
2,843

Earnings *
2018

$

9,366
2,942

2017

$

8,324
2,603

12,36512,308
10,927
2,993
2,944
3,645
$ 9,372 $ 9,364 $ 7,282
23.7%
23.4%
32.8%

Effective income tax rate*

2019

Excludes certain acquisition accounting expenses, which primarily related to the amortization of identified intangible
assets recorded in connection with our business acquisitions. The after-tax acquisition accounting expenses excluded
from earnings above were $788 million in 2019, $932 million in 2018 and $937 million in 2017. These expenses areincluded in “Other” in the summary of earnings on page K-32 and in the “Other” earnings section on page K-53.
Manufacturing

Our manufacturing group includes a variety of industrial, building and consumer products businesses. Industrial
products group includes specialty chemicals (The Lubrizol Corporation (“Lubrizol”)), complex metal products for aerospace,
power and general industrial markets (Precision Castparts Corp. (“PCC”)), metal cutting tools/systems (IMC International
Metalworking Companies (“IMC”)), equipment and systems for the livestock and agricultural industries (CTB International(“CTB”)), and a variety of industrial products for diverse markets (Marmon, Scott Fetzer and LiquidPower Specialty
Products (“LSPI”)). Marmon also provides various products and services (including equipment leasing) for the rail,intermodal container and mobile crane industries.
The building products group includes homebuilding and manufactured housing finance (Clayton Homes), flooring(Shaw), insulation, roofing and engineered products (Johns Manville), bricks and masonry products (Acme Building Brands),
paint and coatings (Benjamin Moore), and residential and commercial construction and engineering products and systems(MiTek). The consumer products group includes leisure vehicles (Forest River), several apparel and footwear operations(including Fruit of the Loom, Garan, H.H. Brown Shoe Group and Brooks Sports) and a manufacturer of high-performance
alkaline batteries (Duracell). This group also includes custom picture framing products (Larson Juhl) and jewelry products(Richline). A summary of revenues and pre-tax earnings of our manufacturing operations follows (dollars in millions).

Industrial products
Building products
Consumer products

2019

Revenues
2018

2017

$ 30,594
20,327
11,809$ 62,730$ 30,679
18,677
12,527$ 61,883$ 28,566
16,946
12,133$ 57,645

K-45

2019

$

$

5,635
2,636
1,251
9,522

Pre-tax earnings
2018

$

$

5,822
2,336
1,208
9,366

2017

$

$

5,065
2,147
1,112
8,324

Management’s Discussion and Analysis (Continued)
Manufacturing, Service and Retailing (Continued)
Industrial products
2019 versus 2018
Revenues of the industrial products group were $30.6 billion in 2019, a slight decrease from 2018. Pre-tax earnings ofthe group were $5.6 billion in 2019 compared to $5.8 billion in 2018. Pre-tax earnings as a percentage of revenues for thegroup were 18.4% in 2019 compared to 19.0% in 2018.
PCC’s revenues were $10.3 billion in 2019, an increase of $74 million (0.7%) compared to 2018. PCC experienced
increased sales in aerospace markets, which was partially offset by lower sales in the power markets compared to 2018. The
increase in aerospace sales was tempered due to significant efforts focused on the ramp-up requirements for certain newaerospace programs, such as LEAP, that created manufacturing inefficiencies and slowed production cycles contributing todelays in product deliveries and sales. While we expect that Boeing’s decision to suspend production of its 737 MAX aircraft
may reduce demand for certain of our aerospace products in 2020, we also anticipate a significant portion of this volume
reduction will be offset by incremental volume for other programs. We are also seeing stabilization in demand for ourindustrial gas turbine products within the power markets after two years of declines.
PCC’s pre-tax earnings increased 5.1% in 2019 compared to 2018. The earnings increase reflected increased sales ofaerospace products and higher earnings from various non-recurring items in 2019, which was partially offset by lower
earnings from the power markets due to the decrease in sales. Temporary unplanned shutdowns of certain metals facilities
and metal press outages also negatively impacted earnings in 2018. PCC continues to incur incremental costs to meetrequired deliveries to customers associated with the increased aerospace demand, which negatively affected margins andearnings. The production headwinds experienced were primarily attributable to shortages of qualified skilled labor and therapid increase in requirements for newer, complex aerospace products. PCC implemented certain measures and intends toimplement additional measures to address these issues and improve manufacturing efficiencies.
Lubrizol’s revenues were $6.5 billion in 2019, a decrease of $354 million (5.2%) compared to 2018. The declinereflected lower volumes and unfavorable foreign currency translation effects, partly offset by higher average selling prices
which were necessitated by raw material cost increases in 2018 and the first quarter of 2019. A fire at Lubrizol’s Rouen,
France manufacturing, blending and storage facility on September 26, 2019 resulted in the suspension of operations, which
contributed significantly to the decline in Additives volumes. Those operations partially restarted in December 2019.
Lubrizol’s consolidated volume in 2019 declined 4% from 2018, primarily due to volume decline of 6% in the Additives
product lines.
Lubrizol’s pre-tax earnings in 2019 for the fourth quarter and year decreased 50.5% and 14.6%, respectively, comparedto the same periods in 2018. Earnings in 2019 were significantly impacted by costs and lost business associated with the
Rouen fire. Lubrizol’s operating results in 2019 were also negatively affected by lower sales volumes, higher manufacturing
expenses and unfavorable foreign currency translation effects, partly offset by improved material margins.
Marmon’s revenues were $8.3 billion in 2019, an increase of $146 million (1.8%) compared to 2018. The revenue
increase reflected the effects of business acquisitions over the past year, higher volumes in several business sectors, whichwere largely offset by lower distribution volumes in the Metals Services sector, unfavorable foreign currency translation, andthe impact of lower metal prices in the Electrical and Plumbing & Refrigeration sectors. Marmon’s business acquisitions
included the acquisition of the Colson Medical companies on October 31, 2019, resulting in a new Medical sector. Marmon’s
Rail & Leasing and Crane Services sectors benefitted from higher railcar equipment sales, railcar fleet utilization, railcar
repair services, intermodal container leasing revenue and improved crane rental demand in the U.S. and Australia.
Marmon’s pre-tax earnings in 2019 increased $12 million (1.0%) as compared to 2018. The earnings increase reflected
the effects of business acquisitions, partly offset by lower gains from business divestitures. Earnings in 2019 also reflected
increased earnings in several sectors that experienced sales volume increases, which were substantially offset by lower
earnings in the Metal Services and certain other sectors, the unfavorable impacts of foreign currency translation and increased
interest and other expenses.
IMC’s revenues in 2019 declined 1.3% in 2019 as compared to 2018, reflecting unfavorable foreign currencytranslation effects of a stronger U.S. Dollar and lower sales in several regions, including Asia and Europe, mostly offset byincreased revenues from recent business acquisitions. IMC’s pre-tax earnings declined 12.8% in 2019 versus 2018,attributable to unfavorable foreign currency translation effects, changes in business mix to lower margin items and the effectsof the U.S./China trade disputes.

K-46

Management’s Discussion and Analysis (Continued)
Manufacturing, Service and Retailing (Continued)
Industrial products (Continued)
CTB’s revenues decreased 1.5% in 2019 versus 2018. The comparative decline was primarily due to unfavorable
foreign currency translation effects of a stronger U.S. Dollar and lower revenues from grain and protein equipment, partly
offset by higher revenues from processing systems. CTB’s pre-tax earnings increased 11.7% in 2019 as compared to 2018.
Earnings in 2019 benefitted from a combination of favorable changes in business mix, the moderation of cost increases ofcertain raw materials and better pricing efficiency.
2018 versus 2017
Revenues from industrial products businesses were approximately $30.7 billion in 2018, an increase of approximately$2.1 billion (7.4%) compared to 2017. Pre-tax earnings of the industrial products group were approximately $5.8 billion in
2018, an increase of $757 million (14.9%) compared to 2017. Pre-tax earnings as a percentage of revenues were 19.0% in2018 and 17.7% in 2017. The comparative earnings increase was partially attributable to certain one-time charges at PCC and
Lubrizol in 2017.
PCC’s revenues in 2018 were $10.2 billion, an increase of 7.2% compared to 2017, which reflected increased demandin aerospace markets in connection with new aircraft programs, partly offset by lower demand for industrial gas turbine
products. In addition, PCC experienced lower sales of certain pipe products in 2018, primarily attributable to the U.S tariffs.
PCC’s pre-tax earnings increased 16.0% in 2018 compared to 2017. PCC’s earnings in 2017 included certain one-timeinventory and impairment charges of $272 million. Results in 2018 were negatively affected by costs associated with thetemporary unplanned shut-down of certain metals facilities, metal press outages and lower earnings from the industrial gas
turbine business. The facilities that were shut-down gradually resumed production and were approximately 80% operationalat the end of 2018. In addition, the new aircraft programs involve relatively complex manufacturing processes, negatively
affecting earnings.
Lubrizol’s revenues in 2018 were $6.8 billion, an increase of 5.9% compared to 2017 due to higher average sales
prices, favorable changes in product mix and foreign currency translation effects, and a 2% increase in aggregate unit
volumes. Lubrizol experienced significant increases in average material unit costs during 2018 and 2017, necessitating
increases in sales prices. Lubrizol’s consolidated volume included increases in the Advanced Materials (5%) and the
Additives (1%) product lines.
Lubrizol’s pre-tax earnings in 2018 increased 43.5% compared to 2017, which included pre-tax losses ofapproximately $190 million related to Lubrizol’s disposition of an underperforming bolt-on business and related intangible
asset impairments and restructuring charges. Before such charges, Lubrizol’s earnings increased 17%, reflecting thepreviously mentioned increases in sales volumes and selling prices, as well as lower other restructuring charges, lower net
interest expense, and the favorable effects of foreign currency translation and ongoing expense control efforts, partly offset
by higher raw material costs.
Marmon’s revenues in 2018 were $8.2 billion, an increase of 5.5% as compared to 2017. The revenue increase wasprimarily attributable to volume increases in the Transportation Products sector, higher average metals prices, and the effectsof business acquisitions. These increases were partially offset by revenue decreases in the Beverage Technologies and Rail
Products and Services sectors. Rail Products and Services sector revenues also decreased due to lower railcar lease revenues,
partly offset by increased railcar equipment sales and repair services. Throughout 2018, the railcar leasing businessexperienced the negative effects of lower lease renewal rates for railcars versus the rates on expiring leases.
Marmon’s pre-tax earnings in 2018 decreased 5.6% compared to 2017. The decrease was primarily due to lower pretax earnings from the Rail Products and Services sector ($126 million) and the Foodservice Technologies and Retail
Solutions sectors ($33 million), partially offset by increased earnings from the Transportation Products sector and a gain in2018 from the sale of certain assets of the Beverage Technologies sector of $44 million. The Rail Products and Services
earnings decline was attributable to lower railcar leasing revenues and higher lease fleet repair costs.
IMC’s revenues increased 16.1% in 2018 compared to 2017, due to a combination of factors, including higher unit
sales, the effects of business acquisitions, and foreign currency translation effects from a weaker average U.S. Dollar in thefirst half of 2018. IMC’s pre-tax earnings increased significantly in 2018 compared to 2017, reflecting a combination ofhigher sales, increased manufacturing efficiencies, the effects of business acquisitions and ongoing expense control efforts,
partly offset by higher raw material costs.
CTB’s revenues increased 4.0% in 2018 versus 2017, due to favorable foreign currency translation effects and modest
sales growth in protein production and processing systems. CTB’s pre-tax earnings in 2018 were lower than 2017, primarily
due to lower gross sales margins attributable to raw material cost increases and higher other operating expenses.

K-47

Management’s Discussion and Analysis (Continued)
Manufacturing, Service and Retailing (Continued)
Building products
2019 versus 2018
Revenues of the building products group were $20.3 billion in 2019, an increase of $1.65 billion (8.8%) compared to
2018. Pre-tax earnings of the group were $2.6 billion in 2019, an increase of 12.8% over 2018. Pre-tax earnings aspercentages of revenues were 13.0% and 12.5% in 2019 and 2018, respectively.
Clayton Homes’ revenues were approximately $7.3 billion in 2019, an increase of $1.3 billion (21.5%) over 2018. The
comparative increase was primarily due to increases in home sales of $1.16 billion (26%), reflecting a net increase in units
sold and changes in sales mix. Unit sales of site-built homes increased 84% in 2019 over 2018, primarily due to businessacquisitions, while average prices declined 5%. Manufactured home unit sales increased 5% and wholesale sales were 9%
lower in 2019. Interest income from lending activities in 2019 increased 6.7% compared to 2018, attributable to increased
originations and average outstanding loan balances. Aggregate loan balances outstanding were approximately $15.9 billion at
December 31, 2019 compared to $14.7 billion as of December 31, 2018.
Pre-tax earnings of Clayton Homes were $1.1 billion in 2019, an increase of $182 million (20.0%) compared to 2018.
The earnings increase in 2019 was attributable to home building activities, which reflected the increases in home sales, andmanufactured housing lending activities. Pre-tax earnings from lending and finance activities in 2019 increased 12%,
primarily due to an increase in interest income attributable to higher average loan balances, increased other financial services
earnings and lower credit losses, partially offset by higher interest expense, attributable to higher average borrowings andinterest rates, and by higher other operating costs.
Aggregate revenues of our other building products businesses were $13.0 billion in 2019, an increase of 2.8% versus
2018. Revenues increased for paint and coatings, hard surface flooring and roofing products, attributable to a combination ofincreased volumes, product mix changes and increased average selling prices, while sales of brick products declined,primarily attributable to lower volumes.
Pre-tax earnings of the other building products businesses were $1.5 billion in 2019, an increase of 8.2% over 2018.
Earnings in 2019 benefitted from a combination of increases in selling prices in certain product categories, declining raw
material costs for certain commodities and operating cost control initiatives, which were partly offset by the effects ofincreased facilities closure costs.
2018 versus 2017
Revenues of the building products group in 2018 were approximately $18.7 billion, an increase of 10.2% compared to2017. Pre-tax earnings of the building products group were approximately $2.3 billion in 2018, an increase of 8.8% versus
2017. Overall, pre-tax earnings as a percentage of revenues were 12.5% in 2018 and 12.7% in 2017.
Clayton Homes’ revenues were $6.0 billion in 2018, an increase of 20.7% over 2017. The increase was driven by anincrease in revenues from home sales of $971 million (28.2%), primarily due to a 105% increase in unit sales of site-built
homes attributable to businesses acquired over the last two years. Unit sales of manufactured homes in 2018 also increased
4.9% compared to 2017. Average unit prices of site-built homes are considerably higher than traditional manufactured
homes. In addition, interest income from lending activities increased 4% in 2018 compared to 2017, primarily due toincreased average outstanding loan balances.
Clayton Homes’ pre-tax earnings were $911 million in 2018, an increase of $145 million (19.0%) compared to 2017.
The increase was primarily attributable to a significant increase in earnings from home building (manufactured housing andsite-built homes) activities, which reflected the impact of increased home sales and margins. Pre-tax earnings from lending
activities in 2018 declined 2% compared to 2017, as increased interest expense, attributable to higher average debt balances
and interest rates, and higher operating costs more than offset the increase in interest income. At December 31, 2018 and2017, aggregate loan balances outstanding were approximately $14.7 billion and $13.7 billion, respectively.
Revenues of our other building products businesses increased 5.8% in 2018 to approximately $12.6 billion compared to2017. In 2018, Shaw’s sales increased 7.9% and Johns Manville’s sales increased 7.2% as compared to 2017. The increases
reflected higher average selling prices, product mix changes and overall unit volume increases.

K-48

Management’s Discussion and Analysis (Continued)
Manufacturing, Service and Retailing (Continued)
Building products (Continued)
Raw material and production costs in 2018 of our building products businesses were generally higher than in 2017. For
instance, steel, titanium dioxide and petrochemicals costs were substantially higher in 2018 than in 2017, as were productdelivery costs, due in part to the shortage of truck drivers in the U.S. These cost increases precipitated sales price increases,
although such increases lagged the increases in raw materials costs.
Consumer products
2019 versus 2018
Consumer products revenues were $11.8 billion in 2019, a decrease of $718 million (5.7%) versus 2018. Revenues ofForest River declined 12.9% versus 2018, primarily due to lower unit sales. Revenues of Duracell increased 1.3% and appareland footwear revenues declined 1.1% compared to 2018. Despite a comparative revenue increase of 3.5% in 2019, Brooks
Sports operating results were negatively affected by lost sales associated with problems encountered at a distribution center
that opened in the second quarter. In addition, our other apparel and other footwear businesses continue to experience lower
sales volumes for certain products, reflecting the shift by major retailers towards private label products.
Consumer products pre-tax earnings were $1.25 billion in 2019, an increase of 3.6% compared to 2018. Pre-tax
earnings as a percentage of revenues were 10.6% in 2019 and 9.6% in 2018. The increase in pre-tax earnings was primarily
attributable to continuing cost containment efforts across several of the businesses and the effects of a new Duracell productlaunch, partially offset by the impact of lower recreational vehicle sales at Forest River.
2018 versus 2017
Consumer products revenues were approximately $12.5 billion in 2018, an increase of 3.2% compared to 2017, which
was primarily due to revenue increases at Forest River and at our apparel and footwear businesses. Forest River’s revenues
increased 2.6% in 2018, reflecting relatively unchanged unit sales versus 2017. However, over the second half of the year,
comparative sales at Forest River declined 5%, reflecting a 7% decline in units sold. Apparel and footwear revenues
increased 4.6% to approximately $4.3 billion, primarily due to increased sales volume at Brooks Sports and Garan.
Pre-tax earnings were $1.2 billion in 2018, an increase of 8.6% compared to 2017. Pre-tax earnings as a percentage ofrevenues were 9.6% in 2018 and 9.2% in 2017. The increase in earnings reflected increases from Duracell and the appareland footwear businesses, partly offset by lower earnings from Forest River and Larson Juhl.
Forest River’s pre-tax earnings declined 9.0% compared to 2017. Operating results were adversely affected over thesecond half of 2018, and in the fourth quarter in particular, by higher material costs, which, together with the effects of lower
sales volumes, contributed to a 28% reduction in fourth quarter pre-tax earnings.
Pre-tax earnings of the apparel and footwear businesses increased 6.4% in 2018 compared to 2017, primarily
attributable to the overall increase in revenues and sales mix changes. Duracell’s pre-tax earnings increased in 2018
compared to 2017, reflecting the favorable effects of ongoing operational improvement efforts and a comparative decline in
restructuring charges.
Service and retailing
A summary of revenues and pre-tax earnings of our service and retailing businesses follows (dollars in millions).

Service
Retailing
McLane Company

2019

Revenues
2018

2017

$ 13,496
15,99150,458$ 79,945$ 13,333
15,60649,987$ 78,926$ 12,155
15,064
49,775$ 76,994

K-49

2019

$

$

1,681
874
288
2,843

Pre-tax earnings
2018

$

$

1,836
860
246
2,942

2017

$

$

1,519
785
299
2,603

Management’s Discussion and Analysis (Continued)
Manufacturing, Service and Retailing (Continued)
ServiceOur service business group offers fractional ownership programs for general aviation aircraft (NetJets) and hightechnology training products and services to operators of aircraft (FlightSafety). We also distribute electronic components(TTI) and franchise and service a network of quick service restaurants (Dairy Queen). Other service businesses include
transportation equipment leasing (XTRA) and furniture leasing (CORT), electronic news distribution, multimedia andregulatory filings (Business Wire), publication of newspapers and other publications (Buffalo News and the BH MediaGroup) and operation of a television station in Miami, Florida (WPLG). We also offer third party logistics services thatprimarily serve the petroleum and chemical industries (Charter Brokerage).
2019 versus 2018
Service group revenues were $13.5 billion in 2019, an increase of 1.2% compared to 2018. Sales of TTI increased 2%
in 2019 compared to the exceptionally high sales levels in 2018. Excluding the effects of acquisitions and foreign currency,
TTI’s sales in 2019 were relatively unchanged from 2018. TTI’s sales began to slow in the fourth quarter of 2018 andcontinued to slow throughout 2019, attributable to softening customer demand, lower sales prices and the effects of U.S.
trade tariffs.
Service group revenues in 2019 also reflected increases in aviation-related services (NetJets and to a lesser extent
FlightSafety) and the leasing businesses, and decreases from the media businesses and Charter Brokerage, which divested ahigh revenue, low margin business in mid-2019. The increase in NetJets revenues in 2019 reflected increased lease revenue,
primarily attributable to an increase in aircraft on lease and increased flight hours, partly offset by lower revenue fromprepaid flight cards.
Pre-tax earnings of the service group were $1.7 billion in 2019, a decrease of $155 million (8.4%) compared to 2018.
Pre-tax earnings of the group as a percentage of revenues were 12.5% in 2019 compared to 13.8% in 2018. The comparative
declines in earnings in 2019 were primarily due to lower earnings from TTI and FlightSafety, partly offset by higher earnings
from NetJets. TTI’s earnings decline was attributable to lower gross margin, unfavorable foreign currency translation effects
and higher operating expenses, partly offset by earnings from businesses acquired. FlightSafety’s earnings decline wasattributable to significant losses related to an existing government contract that were recorded in the fourth quarter, partly
offset by lower training equipment impairment charges. Earnings from NetJets increased in 2019, primarily attributable toincreased revenues and improved fleet and operating efficiencies, which improved operating margins.
2018 versus 2017
Revenues of the service group were approximately $13.3 billion in 2018, an increase of approximately 9.7% compared
to 2017. TTI’s revenues increased approximately 33.7% compared to 2017, reflecting industry-wide increases in demand forelectronic components in many geographic markets around the world, the effects of recent business acquisitions andfavorable foreign currency translation effects. While TTI’s revenue increase in 2018 was significant, revenue growth began
to moderate in the fourth quarter, in part attributable to the impact of U.S. trade tariffs. WPLG generated a revenue increaseof 20.8% in 2018 over 2017, primarily due to increased political advertising revenue. Revenues of Charter Brokerageincreased 53.3%, reflecting increased fees earned and product mix changes. Revenues of the CORT and XTRA leasing
businesses increased 8.4% in 2018 compared to 2017 due to increased over-the road trailer units on lease and increased
furniture rental income.
Pre-tax earnings of the service group in 2018 were approximately $1.8 billion, an increase of 20.9% compared to 2017.
The comparative earnings increase was primarily due to TTI, which accounted for almost 84% of the increase. The earnings
increase of TTI was primarily due to the effects of the sales volume increases. In addition, XTRA, Charter Brokerage andNetJets each generated increased earnings in 2018 compared to 2017. The increases in earnings of these businesses werepartly offset by lower earnings at FlightSafety, primarily due to reduced margins from sales of flight simulators and training
equipment impairment charges.
Retailing
Our retailers include Berkshire Hathaway Automotive (“BHA”). BHA includes over 80 auto dealerships that sell new
and pre-owned automobiles and offer repair services and related products. BHA also operates two insurance businesses, two
auto auctions and an automotive fluid maintenance products distributor. Our retailing businesses also include four homefurnishings retailing businesses (Nebraska Furniture Mart, R.C. Willey, Star Furniture and Jordan’s), which sell furniture,appliances, flooring and electronics.

K-50

Management’s Discussion and Analysis (Continued)
Manufacturing, Service and Retailing (Continued)
Retailing (Continued)
Other retailing businesses include three jewelry retailing businesses (Borsheims, Helzberg and Ben Bridge), See’s
Candies (confectionary products), Pampered Chef (high quality kitchen tools), Oriental Trading Company (party supplies,
school supplies and toys and novelties) and Detlev Louis Motorrad (“Louis”), a Germany-based retailer of motorcycle
accessories.
2019 versus 2018
Retailing group revenues were $16.0 billion in 2019, an increase of 2.5% compared to 2018. BHA’s revenues in 2019,
which represented approximately 64% of our retailing revenues, increased 4.1% over 2018. BHA’s revenue increase reflected
an 11.5% increase in pre-owned vehicle sales, vehicle pricing increases, improvement in vehicle finance and service contract
activities and vehicle repair work as compared to 2018. New vehicle sales in 2019 were relatively unchanged from 2018.
Home furnishings group revenues, which represented about 20% of the aggregate retailing group revenues, declined
1.3% in 2019 compared to 2018. Sales in 2019 were relatively unchanged or lower in each of our home furnishings
operations.
Retail group pre-tax earnings were $874 million in 2019, an increase of 1.6% over 2018. BHA’s pre-tax earnings
increased 22.7%, primarily due to the increases in earnings from finance and service contract activities, partly offset byhigher floorplan interest expense. Home furnishings group pre-tax earnings declined 14.7% versus 2018, reflecting thedecline in revenues and generally higher operating expenses. Aggregate pre-tax earnings for the remainder of our retailinggroup declined 7.9% compared to 2018.
2018 versus 2017
Revenues of the retailing group were approximately $15.6 billion in 2018, an increase of 3.6% compared to 2017.
BHA’s revenues, which represented approximately 63% of the aggregate retailing revenues, increased 4.0% as compared to2017. The increase derived primarily from increased pre-owned vehicle sales and service contract revenues. Revenues fromnew vehicle sales were relatively unchanged. Louis revenues increased 7.8% in 2018 versus 2017, primarily due to thetranslation effects of a weaker average U.S. Dollar. Home furnishings revenues increased 4.7% in 2018 over 2017, reflecting
increased sales in certain geographic markets and the effect of a new store.
Pre-tax earnings of the retailing group were $860 million in 2018, an increase of 9.6% over 2017. The earnings
increase included higher earnings from BHA and Louis, partly offset by lower earnings from the home furnishings retailers.
The earnings increase of BHA was primarily from finance and service contract activities, partly offset by higher floorplan
interest expense. The earnings increase at Louis reflected the revenue increase and an increase in its operating margin rate.
Earnings of the home furnishings businesses declined 2.4% in 2018 compared to 2017, partly due to increased inventory
liquidation, delivery and occupancy costs at Star Furniture.
McLane Company
McLane operates a wholesale distribution business that provides grocery and non-food consumer products to retailers
and convenience stores (“grocery”) and to restaurants (“foodservice”). McLane also operates businesses that are wholesale
distributors of distilled spirits, wine and beer (“beverage”). The grocery and foodservice businesses generate high sales andvery low profit margins. These businesses have several significant customers, including Walmart, 7-Eleven, Yum! Brands
and others. Grocery sales comprised approximately 66% of McLane’s consolidated sales in 2019 with food service
comprising most of the remainder. A curtailment of purchasing by any of its significant customers could have an adverse
impact on periodic revenues and earnings.
Revenues were $50.5 billion in 2019, an increase of 0.9% compared to 2018. McLane operates on 52/53-week fiscal
year and 2019 included an extra week compared to 2018. Otherwise, revenues in 2019 decreased roughly 3% in the grocery
business and increased 3% in the foodservice business as compared to 2018. Pre-tax earnings increased $42 million (17.1%)
as compared to 2018. The earnings increase in 2019 reflected an increase in average gross margin rates and changes inbusiness mix, partly offset by increased operating expenses, the largest portion of which were employee costs. McLane
continues to operate in an intensely competitive business environment, which is negatively affecting its current operating
results. We expect these operating conditions will continue.

K-51

Management’s Discussion and Analysis (Continued)
Manufacturing, Service and Retailing (Continued)
McLane Company (Continued)
Revenues were approximately $50.0 billion in 2018, slightly higher than 2017, reflecting a slight increase in grocery
sales (1%) and a slight decrease in foodservice sales (1%). The decline in foodservice revenues was primarily due to a net
loss of customers. Pre-tax earnings were $246 million, a decline of 17.7%, compared to 2017. McLane’s grocery andfoodservice businesses continue to operate in a highly competitive business environment, which negatively affected operating
results. While gross margin rates increased slightly over 2018, increases in fuel, depreciation and certain other operating
expenses more than offset the increase, producing a decline in pre-tax earnings compared to 2017.
Investment and Derivative Gains (Losses)
A summary of investment and derivative gains and losses follows (dollars in millions).
2019

Investment gains (losses)
Derivative gains (losses)
Gains (losses) before income taxes and noncontrolling interests
Income taxes and noncontrolling interests
Net gains (losses)
Effective income tax rate$$

71,123 $1,484
72,607
15,16257,445 $
20.9%

2018

(22,155) $(300)(22,455)(4,718)(17,737) $
20.8%

2017

1,410
718
2,128
751
1,377
34.9%

Investment gains (losses)
Due to a new accounting pronouncement adopted as of January 1, 2018, pre-tax investment gains/losses reported inearnings include unrealized gains and losses arising from changes in market prices on investments in equity securities. Prior
to 2018, investment gains/losses related to equity securities were generally recorded as the securities were sold, redeemed or
exchanged based on the cost of the disposed securities and the unrealized gains and losses were recorded in othercomprehensive income. While the new accounting pronouncement does not affect our consolidated shareholders’ equity or
total comprehensive income, it has significantly increased the volatility of our periodic net earnings due to the magnitude of
our equity securities portfolio and the inherent volatility of equity securities prices. Investment gains and losses from periodic
changes in securities prices will continue to cause significant volatility in our consolidated earnings.
Pre-tax investment gains included net unrealized gains of approximately $69.6 billion in 2019 attributable to equity
securities we held at December 31, 2019. By comparison, we recorded pre-tax investment losses of approximately $22.7
billion in 2018 attributable to unrealized losses with respect to the equity securities we held at December 31, 2018. Pre-tax
net unrealized gains on equity securities of approximately $29 billion in 2017 was recorded in other comprehensive income.
Prior to 2018, investment gains/losses on equity securities were recorded when securities were sold based on the costof the disposed securities. Taxable investment gains on equity securities sold during the year, which is the difference between
sales proceeds and the original cost basis of the securities sold, were $3.2 billion in 2019 and $3.3 billion in 2018.
We believe that investment gains/losses, whether realized from sales or unrealized from changes in market prices, areoften meaningless in terms of understanding our reported consolidated earnings or evaluating our periodic economic
performance. We continue to believe the investment gains/losses recorded in earnings, including the changes in market prices
for equity securities, in any given period has little analytical or predictive value.
Derivative gains (losses)
Derivative contract gains/losses include the changes in fair value of our equity index put option contract liabilities,
which relate to contracts that were originated prior to March 2008. Substantially all remaining contracts will expire by
February 2023. The periodic changes in the fair values of these liabilities are recorded in earnings and can be significant,primarily due to the volatility of underlying equity markets.
As of December 31, 2019, the intrinsic value of our equity index put option contracts was $397 million and ourrecorded liability at fair value was $968 million. Our ultimate payment obligations, if any, under our contracts will be
determined as of the contract expiration dates based on the intrinsic value as defined under the contracts. Contracts with anaggregate notional value of $12.3 billion expired in 2019.

K-52

Management’s Discussion and Analysis (Continued)
Investment and Derivative Gains (Losses) (Continued)
Derivative gains (losses) (Continued)
Pre-tax gains from equity index put option contracts were $1.5 billion in 2019 compared to pre-tax losses of $300
million in 2018 and gains of $718 million in 2017. The gains in 2019 and 2017 reflected increases in the equity index values
and shorter remaining contract durations while the losses in 2018 were primarily due to lower equity index values.
Other
A summary of after-tax other earnings (losses) follows (in millions).
2019

Equity method earnings (losses)
Acquisition accounting expenses
Corporate interest expense, before foreign currency effects
Foreign currency exchange rate gains (losses) on Berkshire
and BHFC non-U.S. Dollar senior notes
Income tax expense adjustment
Other, principally corporate investment income
Net earnings (losses) attributable to Berkshire Hathaway shareholders

$

$

2018

2017

1,023 $
(884)
(280)

(1,419) $(1,111)
(311)

1,111
(936)
(266)

58
(377)
884
424 $

289
—
986
(1,566) $

(655)
—
261
(485)

After-tax equity method earnings include Berkshire’s share of earnings attributable to Kraft Heinz, Pilot, Berkadia andElectric Transmission of Texas. After-tax equity method earnings related to our Kraft Heinz investment were earnings of$488 million in 2019, losses of $1,859 million in 2018 and earnings of $972 million in 2017. The after-tax equity method
losses in 2018 included approximately $2.7 billion for our share of intangible asset impairment charges recorded by Kraft
Heinz.
After-tax acquisition accounting expenses include charges arising from the application of the acquisition method in
connection with certain of Berkshire’s past business acquisitions. Such charges arise primarily from the amortization or
impairment of intangible assets recorded in connection with those business acquisitions.
Foreign currency exchange rate gains and losses pertain to Berkshire’s outstanding Euro denominated debt(€6.85 billion par) and Japanese Yen denominated debt (¥430 billion par), issued in September 2019, and BHFC’s GreatBritain Pound denominated debt (£1.75 billion par), issued in June 2019. Changes in foreign currency exchange rates
produced non-cash unrealized gains and losses from the periodic revaluation of these liabilities into U.S. Dollars. The gains
and losses recorded in any given period can be significant due the magnitude of the borrowings and the inherent volatility inforeign currency exchange rates.
The income tax expense adjustment relates to investments that were made between 2015 and 2018 in certain tax equity
investment funds. Our investments in these funds aggregated approximately $340 million. In December 2018 and during thefirst quarter of 2019, we learned of allegations by federal authorities of fraudulent conduct by the sponsor of these funds andin January 2020 the principals involved in creating the investment funds plead guilty to criminal charges related to the sale ofthe investments. As a result, we now believe that it is more likely than not that the income tax benefits that we recognized inprior years are not valid.
Financial Condition
Our consolidated balance sheet continues to reflect significant liquidity and a strong capital base. Consolidated
shareholders’ equity at December 31, 2019 was $424.8 billion, an increase of $76.1 billion since December 31, 2018. Net
earnings attributable to Berkshire shareholders in 2019 were $81.4 billion and included after-tax gains on our investments ofapproximately $56.3 billion, which were primarily from increases in market prices of the equity securities we owned at
December 31, 2019.
At December 31, 2019, our insurance and other businesses held cash, cash equivalents and U.S. Treasury Bills of$125.0 billion, which included $101 billion in U.S. Treasury Bills. Investments in equity and fixed maturity securities(excluding our investment in Kraft Heinz) were $266.7 billion. In August 2019, we paid $10 billion to acquire preferred stock
and warrants of Occidental Petroleum Corporation, as discussed in Note 4 to the accompanying Consolidated Financial
Statements.

K-53

Management’s Discussion and Analysis (Continued)
Financial Condition (Continued)
Berkshire parent company debt outstanding at December 31, 2019 was $19.9 billion, an increase of $3.0 billion since
December 31, 2018. In 2019, Berkshire repaid maturing senior notes of $750 million and issued ¥430 billion of senior notes(approximately $4.0 billion), which has a weighted average interest rate of 0.49% and maturity dates ranging from 2024 to
2049. In March 2020, Berkshire Euro debt of €1.0 billion will mature.
Berkshire’s insurance and other subsidiary outstanding borrowings were $17.7 billion at December 31, 2019, which
included senior note borrowings of BHFC, a wholly-owned financing subsidiary, of approximately $11.0 billion. BHFC’sborrowings are used to fund a portion of loans originated and acquired by Clayton Homes and equipment held for lease by
our UTLX railcar leasing business. In 2019, BHFC repaid $3.95 billion of maturing senior notes and issued $2.0 billion of
4.25% senior notes due in 2049, £1.0 billion of 2.375% senior notes due in 2039 and £750 million of 2.625% senior notes
due in 2059. Berkshire guarantees the full and timely payment of principal and interest with respect to BHFC’s senior notes.
In 2020, BHFC debt of $900 million matures, including $350 million that matured in January.
Our railroad, utilities and energy businesses (conducted by BNSF and BHE) maintain very large investments in capital
assets (property, plant and equipment) and will regularly make significant capital expenditures in the normal course ofbusiness. Capital expenditures of these two operations in 2019 were $11.0 billion and we forecast additional capital
expenditures of approximately $10.6 billion in 2020.
BNSF’s outstanding debt was $23.2 billion as of December 31, 2019, relatively unchanged since December 31, 2018.
In 2019, BNSF issued $825 million of 3.55% senior unsecured debentures due in 2050 and repaid $750 million of maturing
debentures. Outstanding borrowings of BHE and its subsidiaries were $42.6 billion at December 31, 2019, an increase of$3.3 billion since December 31, 2018. In 2019, BHE and its subsidiaries issued debt aggregating $4.6 billion with maturity
dates ranging from 2029 to 2059 and repaid approximately $1.8 billion of maturing term debt. The proceeds from thesefinancings were used to repay borrowings, fund capital expenditures and for other general corporate purposes. In January
2020, a BHE subsidiary issued $725 million of term debt consisting of $425 million of 2.4% notes due in 2030 and $300
million of 3.125% notes due in 2050. Berkshire does not guarantee the repayment of debt issued by BNSF, BHE or any of
their subsidiaries and is not committed to provide capital to support BNSF, BHE or any of their subsidiaries.
Berkshire’s common stock repurchase program was amended on July 17, 2018, permitting Berkshire to repurchase its
Class A and Class B shares at prices below Berkshire’s intrinsic value, as conservatively determined by Warren Buffett,
Berkshire’s Chairman of the Board and Chief Executive Officer, and Charlie Munger, Vice Chairman of the Board. The
program allows share repurchases in the open market or through privately negotiated transactions and does not specify amaximum number of shares to be repurchased. The program is expected to continue indefinitely. We will not repurchase ourstock if it reduces the total amount of Berkshire’s consolidated cash, cash equivalents and U.S. Treasury Bill holdings below$20 billion. Financial strength and redundant liquidity will always be of paramount importance at Berkshire. In 2019,
Berkshire repurchased shares of Class A and B common stock for an aggregate cost of $5.0 billion.
Contractual Obligations
We are party to contracts associated with ongoing business and financing activities, which will result in cash payments
to counterparties in future periods. Certain obligations are included in our Consolidated Balance Sheets, such as notes
payable, which require future payments on contractually specified dates and in fixed and determinable amounts. Other
obligations pertaining to the acquisition of goods or services in the future, such as certain purchase obligations, are notcurrently reflected in the financial statements, will be recognized in future periods as the goods are delivered or services areprovided. Beginning in 2019, operating lease obligations are included in the Consolidated Balance Sheet as a result of the
adoption of a new accounting pronouncement. The timing and amount of the payments under certain contracts, such as
insurance and reinsurance contracts, are contingent upon the outcome of future events. Actual payments will likely vary,perhaps materially, from the estimated liabilities currently recorded in our Consolidated Balance Sheet.

K-54

Management’s Discussion and Analysis (Continued)
Contractual Obligations (Continued)
A summary of our contractual obligations as of December 31, 2019 follows (in millions). Actual payments will likely
vary, perhaps significantly, from estimates reflected in the table.
Total

Notes payable and other borrowings, including interest
Operating leases
Purchase obligations (1)Unpaid losses and loss adjustment expenses (2)Life, annuity and health insurance benefits (3)
Other
Total

$ 164,116
6,879
50,092
115,460
35,891
23,285$ 395,723$$

Estimated payments due by period
20202021-2022
2023-2024

After 2024

14,174
1,374
15,66926,381
1,903
2,034
61,535$ 111,982
1,988
19,70346,01533,482
11,626$ 224,796$$

17,3582,133
9,290
27,818114
3,159
59,872$$

20,602
1,384
5,430
15,246392
6,466
49,520(1)

Primarily related to fuel, capacity, transmission and maintenance contracts and capital expenditure commitments of
BHE and BNSF and aircraft purchase commitments of NetJets.

(2)

Includes unpaid losses and loss adjustment expenses under retroactive reinsurance contracts.

(3)

Amounts represent estimated undiscounted benefits, net of estimated future premiums, as applicable.

Critical Accounting Policies
Certain accounting policies require us to make estimates and judgments in determining the amounts reflected in theConsolidated Financial Statements. Such estimates and judgments necessarily involve varying, and possibly significant,degrees of uncertainty. Accordingly, certain amounts currently recorded in the financial statements will likely be adjusted in
the future based on new available information and changes in other facts and circumstances. A discussion of our principal
accounting policies that required the application of significant judgments as of December 31, 2019 follows.
Property and casualty losses
We record liabilities for unpaid losses and loss adjustment expenses (also referred to as “gross unpaid losses” or “claim
liabilities”) based upon estimates of the ultimate amounts payable for losses occurring on or before the balance sheet date.
The timing and amount of ultimate loss payments are contingent upon, among other things, the timing of claim reportingfrom insureds and ceding companies and the final determination of the loss amount through the loss adjustment process. We
use a variety of techniques in establishing claim liabilities and all techniques require significant judgments and assumptions.
As of the balance sheet date, recorded claim liabilities include provisions for reported claims, as well as claims not yetreported and the development of reported claims. The period between the loss occurrence date and loss settlement date is the“claim-tail.” Property claims usually have relatively short claim-tails, absent litigation. Casualty claims usually have longer
claim-tails, occasionally extending for decades. Casualty claims may be more susceptible to litigation and the impact ofchanging contract interpretations. The legal environment and judicial process further contribute to extending claim-tails.
Our consolidated claim liabilities as of December 31, 2019 were approximately $115.5 billion (including liabilities
from retroactive reinsurance), of which 84% related to GEICO and the Berkshire Hathaway Reinsurance Group. Additional
information regarding significant uncertainties inherent in the processes and techniques of these businesses follows.
GEICO
GEICO predominantly writes private passenger auto insurance. As of December 31, 2019, GEICO’s gross unpaid
losses were $22.0 billion. Claim liabilities, net of reinsurance recoverable were $20.9 billion.
GEICO’s claim reserving methodologies produce liability estimates based upon the individual claims. The key
assumptions affecting our liability estimates include projections of ultimate claim counts (“frequency”) and average loss per
claim (“severity”). We utilize a combination of several actuarial estimation methods, including Bornhuetter-Ferguson andchain-ladder methodologies.
Claim liability estimates for automobile liability coverages (such as bodily injury (“BI”), uninsured motorists, andpersonal injury protection) are more uncertain due to the longer claim-tails, so we establish additional case development
estimates. As of December 31, 2019, case development liabilities averaged approximately 30% of the case reserves. We
select case development factors through analysis of the overall adequacy of historical case liabilities.

K-55

Management’s Discussion and Analysis (Continued)
Property and casualty losses (Continued)
GEICO (Continued)
Incurred-but-not-reported (“IBNR”) claims liabilities are based on projections of the ultimate number of claims
expected (reported and unreported) for each significant coverage. We use historical claim count data to develop age-to-age
projections of the ultimate counts by quarterly accident period, from which we deduct reported claims to produce the numberof unreported claims. We estimate the average costs per unreported claim and apply such estimates to the unreported claim
counts, producing an IBNR liability estimate. We may record additional IBNR estimates when actuarial techniques are
difficult to apply.
We test the adequacy of the aggregate claim liabilities using one or more actuarial projections based on claim closure
models and paid and incurred loss triangles. Each type of projection analyzes loss occurrence data for claims occurring in agiven period and projects the ultimate cost.
Our claim liability estimates recorded at the end of 2018 increased $42 million during 2019, which produced acorresponding decrease to pre-tax earnings. The assumptions used to estimate liabilities at December 31, 2019 reflect themost recent frequency and severity results. Future development of recorded liabilities will depend on whether actual
frequency and severity are more or less than anticipated.
With respect to liabilities for BI claims, we believe it is reasonably possible that average severities will change by atleast one percentage point from the severities used in establishing the recorded liabilities at December 31, 2019. We estimatethat a one percentage point increase or decrease in BI severities would produce a $295 million increase or decrease inrecorded liabilities, with a corresponding decrease or increase in pre-tax earnings. Many of the economic forces that would
likely cause BI severity to differ from expectations would likely also cause severities for other injury coverages to differ inthe same direction.
Berkshire Hathaway Reinsurance Group
BHRG’s liabilities for unpaid losses and loss adjustment expenses derive primarily from reinsurance contracts issued
through NICO and General Re. A summary of BHRG’s property and casualty unpaid losses and loss adjustment expenses,
other than retroactive reinsurance losses and loss adjustment expenses, as of December 31, 2019 follows (in millions).
Property

Reported case liabilities
IBNR liabilities
Gross unpaid losses and loss adjustment expenses
Reinsurance recoverable
Net unpaid losses and loss adjustment expenses

$

$

5,063
4,631
9,694
268
9,426

Casualty

$

$

9,665
12,82522,490852
21,638

Total

$

$

14,72817,45632,184
1,120
31,064Gross unpaid losses and loss adjustment expenses in the table above consist primarily of traditional property andcasualty coverages written primarily under excess-of-loss and quota-share treaties. Under certain contracts, coverage canapply to multiple lines of business written and the ceding company may not report loss data by such lines consistently, if at
all. In those instances, we allocated losses to property and casualty coverages based on internal estimates.
In connection with reinsurance contracts, the nature, extent, timing and perceived reliability of premium and loss
information received from ceding companies varies widely depending on the type of coverage and the contractual reporting
terms. Contract terms, conditions and coverages also tend to lack standardization and may evolve more rapidly than primary
insurance policies.
The nature and extent of loss information provided under many facultative (individual risk) or per occurrence excess
contracts may not differ significantly from the information received under a primary insurance contract. However, loss
information is often less detailed with respect to aggregate excess-of-loss and quota-share contracts. Additionally, loss
information we receive through periodic reports is often in a summary format rather than on an individual claim basis. Lossdata includes recoverable paid losses, as well as case loss estimates. Ceding companies infrequently provide reliable IBNR
estimates to reinsurers.

K-56

Management’s Discussion and Analysis (Continued)
Property and casualty losses (Continued)
Berkshire Hathaway Reinsurance Group (Continued)
Loss reporting to reinsurers is typically slower in comparison to primary insurers. In the U.S., such reporting is
generally required at quarterly intervals ranging from 30 to 90 days after the end of the quarterly period, while outside of the
U.S., reinsurance reporting practices may vary further. In certain countries, clients report annually from 90 to 180 days after
the end of the annual period. Reinsurers may assume and cede underlying risks from other reinsurers, which may further
delay the reporting of claims. The relative impact of reporting delays on the reinsurer may vary depending on the type ofcoverage, contractual reporting terms, the magnitude of the claim relative to the attachment point of the reinsurance coverage,
and for other reasons.
As reinsurers, the premium and loss data we receive is at least one level removed from the underlying claimant, so
there is a risk that the loss data reported is incomplete, inaccurate or the claim is outside the coverage terms. We maintaincertain internal procedures in order to determine that the information is complete and in compliance with the contract terms.
Generally, our reinsurance contracts permit us to access the ceding company’s books and records with respect to the subject
business, thus providing the ability to audit the reported information. In the normal course of business, disputes occasionallyarise concerning whether claims are covered by our reinsurance policies. We resolve most coverage disputes throughnegotiation with the client. If disputes cannot be resolved, our contracts generally provide arbitration or alternative dispute
resolution processes. There are 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.
Establishing claim liability estimates for reinsurance requires evaluation of loss information received from our clients.
We generally rely on the ceding companies reported case loss estimates. We independently evaluate certain reported caselosses and if appropriate, we use our own case liability estimate. For instance, as of December 31, 2019, our case loss
estimates exceeded ceding company estimates by approximately $2.0 billion for certain legacy workers’ compensation claims
occurring over 10 years ago. We also periodically conduct detailed reviews of individual client claims, which may cause us toadjust our case estimates.
Although liabilities for losses are initially determined based on pricing and underwriting analysis, BHRG uses a varietyof actuarial methodologies that place reliance on the extrapolation of actual historical data, loss development patterns,
industry data, and other benchmarks as appropriate. The estimate of the required IBNR liabilities also requires judgment by
actuaries and management to reflect the impact of additional factors like change in business mix, volume, claim reporting andhandling practices, inflation, social and legal environment and the terms and conditions of the contracts. The methodologies
generally fall into one of the following categories or are hybrids of one or more of the following categories:
Paid and incurred loss development methods – these methods consider expected case loss emergence and development
patterns, together with expected loss ratios by year. Factors affecting our loss development analysis include, but are notlimited to, changes in the following: client claims reporting and settlement practices; the frequency of client company claim
reviews; policy terms and coverage (such as loss retention levels and occurrence and aggregate policy limits); loss trends; andlegal trends that result in unanticipated losses. Collectively, these factors influence our selections of expected case loss
emergence patterns.
Incurred and paid loss Bornhuetter-Ferguson methods – these methods consider actual paid and incurred losses andexpected patterns of paid and incurred losses, taking the initial expected ultimate losses into account to determine an estimateof the expected unpaid or unreported losses.
Frequency and severity methods – these methods commonly focus on a review of the number of anticipated claims andthe anticipated claims severity and may also rely on development patterns to derive such estimates. However, our processes
and techniques for estimating liabilities in such analyses generally rely more on a per-policy assessment of the ultimate costassociated with the individual loss rather than with an analysis of historical development patterns of past losses.
Additional Analysis – in some cases we have established reinsurance claim liabilities on a contract-by-contract basis,
determined from case loss estimates reported by the ceding company and IBNR liabilities that are primarily a function of an
anticipated loss ratio for the contract and the reported case loss estimate. Liabilities are adjusted upward or downward overtime to reflect case losses reported versus expected case losses, which we use to form revised judgement on the adequacy ofthe expected loss ratio and the level of IBNR liabilities required for unreported claims. Anticipated loss ratios are also revised
to include estimates of known major catastrophe events.

K-57

Management’s Discussion and Analysis (Continued)
Property and casualty losses (Continued)
Berkshire Hathaway Reinsurance Group (Continued)
Our claim liability estimation process for short-tail lines, primarily property exposures, utilizes a combination of thepaid and incurred loss development methods and the incurred and paid loss Bornhuetter-Ferguson methods. Certain
catastrophe, individual risk and aviation excess-of-loss contracts tend to generate low frequency/high severity losses. Our
processes and techniques for estimating liabilities under such contracts generally rely more on a per contract assessment of
the ultimate cost associated with the individual loss event rather than with an analysis of the historical development patternsof past losses.
For our long-tail lines, primarily casualty exposures, we may rely on different methods depending on the maturity ofthe business, with estimates for the most recent years being based on priced loss expectations and more mature years
reflecting the paid or incurred development pattern indications.
In 2019, certain workers’ compensation claims reported losses were less than expected. As a result, we reduced
estimated ultimate losses for prior years’ loss events by $150 million. We estimate that increases of ten percent in the tail ofthe expected loss emergence pattern and in the expected loss ratios would produce a net increase of approximately $1.1
billion in IBNR liabilities, producing a corresponding decrease in pre-tax earnings. We believe it is reasonably possible forthese assumptions to increase at these rates.
We also reduced estimated ultimate losses for prior years’ events for other casualty losses, excluding asbestos,
environmental, and other latent injury claims, by $23 million, reflecting lower than expected reported losses. For certain
significant casualty and general liability portfolios, we estimate that increases of five percent in the claim-tails of the
expected loss emergence patterns and in the expected loss ratios would produce a net increase in our nominal IBNR liabilities
and a corresponding reduction in pre-tax earnings of approximately $850 million, although outcomes of less than $850
million are quite possible given the diversification in worldwide business.
Estimated ultimate liabilities for asbestos, environmental and other latent injury claims were increased approximately$150 million in 2019, which produced a corresponding reduction in pre-tax earnings. Net liabilities for such claims,
excluding amounts assumed under retroactive reinsurance contracts, were approximately $1.7 billion at December 31, 2019.
Loss estimations for these exposures are difficult to determine due to the changing legal environment and increases may berequired in the future if new exposures or claimants are identified, new claims are reported or new theories of liability
emerge.
Retroactive reinsurance
Our retroactive reinsurance contracts cover loss events occurring before the contract inception dates. Claim liabilities
relating to our retroactive reinsurance contracts are predominately related to casualty or liability exposures. We expect theclaim-tails to be very long. Our gross unpaid losses, deferred charge assets, and net liabilities at December 31, 2019 were as
follows (in millions).
Gross unpaid
losses$42,441 $Deferredcharges(13,747) $Liabilities, net ofdeferred charges

28,694

Our contracts are generally subject to maximum limits of indemnifications and, as such, we currently expect thatmaximum remaining gross losses payable under our retroactive policies will not exceed $56 billion. Absent significant
judicial or legislative changes affecting asbestos, environmental or latent injury exposures, we also currently believe it
unlikely that losses will develop upward to the maximum losses payable or downward by more than 15% of our $42.4 billion
estimated liability.
We establish liability estimates by individual contract, considering exposure and development trends. In establishing
our liability estimates, we often analyze historical aggregate loss payment patterns and project expected ultimate losses undervarious scenarios. We assign judgmental probability factors to these scenarios and an expected outcome is determined. Wethen monitor subsequent loss payment activity and review ceding company reports and other available information
concerning the underlying losses. We re-estimate the expected ultimate losses when significant events or significant
deviations from expected results are revealed.

K-58

Management’s Discussion and Analysis (Continued)
Property and casualty losses (Continued)
Retroactive reinsurance (Continued)
Certain of our retroactive reinsurance contracts include asbestos, environmental and other latent injury claims. Ourestimated liabilities for such claims were approximately $12.9 billion at December 31, 2019. We do not consistently receive
reliable detailed data regarding asbestos, environmental and latent injury claims from all ceding companies, particularly withrespect to multi-line or aggregate excess-of-loss policies. When possible, we conduct a detailed analysis of the underlying
loss data to make an estimate of ultimate reinsured losses. When detailed loss information is unavailable, we develop
estimates by applying recent industry trends and projections to aggregate client data. Judgments in these areas necessarily
consider the stability of the legal and regulatory environment under which we expect these claims will be adjudicated. Legal
reform and legislation could also have a significant impact on our ultimate liabilities.
We increased estimated ultimate liabilities for prior years’ retroactive reinsurance contracts by $378 million in 2019,
which after the changes in related deferred charge assets, resulted in pre-tax losses of $125 million. In 2019, we paid losses
and loss adjustment expenses of $909 million with respect to these contracts.
In connection with our retroactive reinsurance contracts, we also record deferred charge assets, which at contract
inception represents the excess, if any, of the estimated ultimate liability for unpaid losses over premiums. We amortize
deferred charge assets, which produces charges to pre-tax earnings in future periods based on the expected timing and amountof loss payments. We also adjust deferred charge balances due to changes in the expected timing and ultimate amount ofclaim payments. Significant changes in such estimates may have a significant effect on unamortized deferred charge balances
and the amount of periodic amortization. Based on the contracts in effect as of December 31, 2019, we currently estimate thatamortization expense in 2020 will approximate $1.2 billion.
Other Critical Accounting Policies
Our Consolidated Balance Sheet at December 31, 2019 included goodwill of acquired businesses of $81.9 billion andother indefinite-lived intangible assets of $19.0 billion. We evaluate these assets for impairment at least annually and we
conducted our most recent annual review during the fourth quarter of 2019. Our review of goodwill includes determining theestimated fair values of our reporting units. Our review of other indefinite-lived intangible assets includes determining an
estimated fair value of the asset.
We primarily use discounted projected future earnings or cash flow methods in determining fair values. The key
assumptions and inputs used in such methods may include forecasting revenues and expenses, cash flows and capital
expenditures, as well as an appropriate discount rate and other inputs. A significant amount of judgment is required inestimating 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 theforecasts. If the carrying value of the indefinite-lived intangible asset exceeds fair value, the excess is charged to earnings as
an impairment loss. If the carrying value of a reporting unit exceeds the estimated fair value of the reporting unit, then, as
required by GAAP, the excess, limited to the carrying amount of goodwill, will be charged to earnings as an impairment loss.
Market Risk Disclosures
Our Consolidated Balance Sheets include substantial amounts of assets and liabilities whose fair values are subject tomarket risks. Our significant market risks are primarily associated with equity prices, interest rates, 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 ourbusiness activities.

K-59

Management’s Discussion and Analysis (Continued)
Equity Price Risk
Equity securities represent a significant portion of our investment portfolio. Strategically, we strive to invest in
businesses that possess excellent economics and able and honest management, and we prefer to invest a meaningful amountin each investee. Consequently, equity investments are concentrated in relatively few issuers. At December 31, 2019,
approximately 67% of the total fair value of equity securities was concentrated in five issuers.
We often hold our equity investments for long periods and short-term price volatility has occurred in the past and will
occur in the future. We also strive to maintain significant levels of shareholder capital and ample liquidity to provide amargin of safety against short-term price volatility.
We are also subject to equity price risk with respect to our equity index put option contracts. While our ultimate
liability 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 of the contracts.
The following table summarizes our equity securities and derivative contract liabilities with significant equity pricerisk as of December 31, 2019 and 2018 and the estimated effects of a hypothetical 30% increase and a 30% decrease inmarket prices as of those dates. The selected 30% hypothetical increase and decrease does not reflect the best or worst casescenario. Indeed, results from declines could be far worse due both to the nature of equity markets and the aforementioned
concentrations existing in our equity investment portfolio. Dollar amounts are in millions.

Fair Value

December 31, 2019
Investments in equity securities$

248,027 30% increase $30% decrease
968 30% increase
30% decrease

319,445
176,749
267
2,776

13.3%
(13.3)
0.1
(0.3)

$

172,757 30% increase $30% decrease
2,452 30% increase
30% decrease

224,584
120,930
1,131
5,362

11.7%
(11.7)
0.3(0.7)

Equity index put option contract liabilities
December 31, 2018
Investments in equity securities
Equity index put option contract liabilities(1)

Hypothetical
Estimated
Percentage
Fair Value after Increase (Decrease)in Shareholders’
Hypothetical
Hypothetical
Equity (1)Price Change Change in Prices

The hypothetical percentage increase (decrease) is after income taxes at the statutory rate in effect as of the balance
sheet date.
Interest Rate Risk

We may also invest in bonds, loans or other interest rate sensitive instruments. Our strategy is to acquire or originate
such instruments at prices considered appropriate relative to the perceived credit risk. We also issue debt in the ordinary
course of business to fund business operations, business acquisitions and for other general purposes. We attempt to maintainhigh credit ratings, in order to minimize the cost of our debt. We infrequently utilize derivative products, such as interest rate
swaps, to manage interest rate risks.
The fair values of our fixed maturity investments, loans and finance receivables, and notes payable and otherborrowings 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 contracts.
Increases and decreases in interest rates generally translate into decreases and increases in fair values of these instruments.
Additionally, fair values of interest rate sensitive instruments may be affected by the creditworthiness of the issuer,
prepayment options, relative values of alternative investments, the liquidity of the instrument and other general market
conditions.

K-60

Management’s Discussion and Analysis (Continued)
Interest Rate Risk (Continued)
The following table summarizes the estimated effects of hypothetical changes in interest rates on our significant assets
and liabilities that are subject to significant interest rate risk at December 31, 2019 and 2018. We assumed that the interest
rate changes occur immediately and uniformly to each category of instrument and that there were no significant changes toother factors used to determine the value of the instrument. The hypothetical changes in interest rates do not reflect the best
or worst case scenarios. Actual results may differ from those reflected in the table. Dollars are in millions.
Estimated Fair Value after Hypothetical Change inInterest Rates(bp=basis points)
100 bp100 bp200 bp300 bpdecreaseincreaseincreaseincrease

Fair
Value

December 31, 2019
Assets:Investments in fixed maturity securities
Investments in equity securities*
Loans and finance receivables
Liabilities:
Notes payable and other borrowings:
Insurance and otherRailroad, utilities and energy
Equity index put option contracts$

18,685
10,314
17,861$

40,58976,237968

December 31, 2018
Assets:Investments in fixed maturity securities$ 19,898 $Loans and finance receivables
16,377
Liabilities:
Notes payable and other borrowings:
Insurance and other
35,361
Railroad, utilities and energy
66,422Equity index put option contracts
2,452
(*)
Occidental Petroleum Cumulative Perpetual Preferred Stock

19,00811,016
18,527$44,33484,758
1,065

20,26017,006

18,375
9,671
17,240$37,454
69,160877$

37,55973,063
2,669

19,54915,84433,38060,8402,249

18,075
9,081
16,660$34,79963,218792$

19,214
15,31831,691
56,107
2,057

17,787
8,539
16,11632,53458,193713$

18,891
14,82330,20852,063
1,877

Foreign Currency Risk
Certain of our subsidiaries operate in foreign jurisdictions and we transact business in foreign currencies. In addition,
we hold investments in common stocks of major multinational companies, such as The Coca-Cola Company, who havesignificant foreign business and foreign currency risk of their own. We generally do not attempt to match assets and liabilities
by currency and do not use derivative contracts to manage foreign currency risks in any meaningful way.
Our net assets subject to financial statement translation into U.S. Dollars are primarily in our insurance, utilities andenergy and certain manufacturing and services subsidiaries. A portion of our financial statement translation-related impact
from changes in foreign currency rates is recorded in other comprehensive income. In addition, we include gains or losses in
net earnings related to certain liabilities of Berkshire and U.S. insurance subsidiaries that are denominated in foreign
currencies, due to changes in exchange rates. A summary of these gains (losses), after-tax, for each of the years ending
December 31, 2019 and 2018 follows (in millions).
2019

Non-U.S. denominated debt included in net earnings
Net liabilities under certain reinsurance contracts included in net earnings
Foreign currency translation included in other comprehensive income

K-61

$

2018

58 $
(92)
257

289
207
(1,424)

Management’s Discussion and Analysis (Continued)
Commodity Price Risk
Our subsidiaries use commodities in various ways in manufacturing and providing services. As such, we are subject toprice risks related to various commodities. In most instances, we attempt to manage these risks through the pricing of our
products and services to customers. To the extent that we are unable to sustain price increases in response to commodity priceincreases, our operating results will likely be adversely affected. We do not utilize derivative contracts to manage commodity
price risks to any significant degree.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
See “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 overfinancial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a-15(f). Under the supervision andwith the participation of our management, including our principal executive officer and principal financial officer, we
conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31,
2019 as required by the Securities Exchange Act of 1934 Rule 13a-15(c). In making this assessment, we used the criteria set
forth in the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control—Integrated
Framework (2013), our management concluded that our internal control over financial reporting was effective as ofDecember 31, 2019.
The effectiveness of our internal control over financial reporting as of December 31, 2019 has been audited by
Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which appears on page K63.
Berkshire Hathaway Inc.
February 22, 2020

K-62

Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors ofBerkshire Hathaway Inc.
Omaha, Nebraska
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Berkshire Hathaway Inc. and subsidiaries (the“Company”) as of December 31, 2019 and 2018, the related consolidated statements of earnings, comprehensive income,changes in shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2019, and therelated notes (collectively referred to as the “financial statements”). We also have audited the Company’s internal control
over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of theCompany as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States ofAmerica. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued
by COSO.
Change in Accounting Principle
As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for investments inequity 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.”
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control overfinancial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in theaccompanying 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 are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)(PCAOB) and are required to be independent with respect to the Company in accordance with the US federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and performthe audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of thefinancial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. 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 testingand 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. We believe that our audits provide a
reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and proceduresthat (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts andexpenditures of the company are being made only in accordance with authorizations of management and directors of thecompany; 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.

K-63

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Continued)
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statementsthat were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosuresthat are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as awhole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
Unpaid Losses and Loss Adjustment Expenses— Refer to Notes 1 and 15 to the financial statements
Critical Audit Matter Description
The Company’s unpaid losses and loss adjustment expenses (“claim liabilities”) under short duration property and casualty
insurance and reinsurance contracts are $73,019 million as of December 31, 2019. The key assumptions affecting certain
claim liabilities include expected loss and expense (“loss”) ratios, expected claim count emergence patterns, expected loss
payment emergence patterns and expected loss reporting emergence patterns.
Given the subjectivity of estimating these key assumptions, performing audit procedures to evaluate whether claim liabilities
were appropriately recorded as of December 31, 2019, required a high degree of auditor judgment and an increased extent ofeffort, including the need to involve our actuarial specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the key assumptions affecting certain claim liabilities included the following, among others:• We tested the operating effectiveness of controls over claim liabilities, including those over the key assumptions.
• We evaluated the methods and assumptions used by management to estimate the claim liabilities by:• Testing the underlying data that served as the basis for the actuarial analysis, such as historical claims and earned
premium, to test that the inputs to the actuarial estimate were reasonable.
• Comparing management’s prior-year claim liabilities to actual development during the current year to identify
potential bias in the determination of the claim liabilities.
• With the assistance of our actuarial specialists:• We developed independent estimates of the claim liabilities, including loss data and industry claim development
factors as needed, and compared our estimates to management’s estimates.
• We compared management’s change in ultimate loss and loss adjustment expense to prior year estimates to test thereasonableness of the prior year estimates and assessed unexpected development.
Unpaid Losses and Loss Adjustment Expenses Under Retroactive Reinsurance Contracts — Refer to Notes 1 and 16 to thefinancial statements
Critical Audit Matter Description
The Company’s unpaid losses and loss adjustment expenses (“claim liabilities”) for property and casualty retroactive
reinsurance contracts are $42,441 million as of December 31, 2019. The key assumptions affecting certain claim liabilities
and related deferred charge reinsurance assumed assets (“related assets”), include expected loss expense (“loss”) ratios,
expected loss payment emergence patterns and expected loss reporting emergence.
Given the subjectivity of estimating these key assumptions, performing audit procedures to evaluate whether claim liabilities
were appropriately recorded as of December 31, 2019, required a high degree of auditor judgment and an increased extent ofeffort, including the need to involve our actuarial specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the key assumptions affecting claim liabilities and related assets included the following,among others:• We tested the operating effectiveness of controls over claim liabilities and related assets, including those over the key
assumptions.

K-64

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Continued)••

We evaluated the methods and assumptions used by management to estimate the claim liabilities and related assets by:• Testing the underlying data that served as the basis for the actuarial analysis, including historical claims, to test thatthe inputs to the actuarial estimate were reasonable.
• Comparing management’s prior-year claim liabilities to actual development during the current year to identify
potential bias in the determination of the claim liabilities and related assets.
With the assistance of our actuarial specialists:• We developed independent claim liability estimates for certain retroactive reinsurance contracts and compared ourestimates to management’s estimates. For other retroactive reinsurance contracts and related assets, we evaluated theprocess used by management to develop the estimated claim liabilities and related assets.
• We compared management’s change in ultimate loss and loss adjustment expense to prior year estimates, assessed
unexpected development and assessed internal rates of return.

Goodwill and Indefinite-Lived Intangible Assets — Refer to Notes 1, 13, and 27 to the financial statements
Critical Audit Matter Description
The Company’s evaluation of goodwill and indefinite-lived intangible assets for impairment involves the comparison of thefair value of each reporting unit or asset to its carrying value. The Company evaluates goodwill and indefinite-lived
intangible assets for impairment at least annually. When evaluating goodwill and indefinite-lived intangible assets for
impairment, the fair value of each reporting unit or asset is estimated. Significant judgment is required in estimating fairvalues and performing impairment tests. The Company primarily uses discounted projected future earnings or cash flow
methods to estimate fair value, which requires management to make significant estimates and assumptions related toforecasts of future revenue, earnings before interest and taxes (“EBIT”), and discount rate. Changes in these assumptions
could have a significant impact on the fair value of reporting units and indefinite-lived intangible assets.
A reporting unit within the Manufacturing reportable segment, which had goodwill at acquisition date of $16,011 million,
was an acquisition made by the Company in 2016. This subsidiary also has certain customer relationships that are intangible
assets with indefinite lives. These customer relationships are a significant portion of the $18,965 million of indefinite-lived
intangible assets the Company reported as of December 31, 2019. The fair values of the reporting unit and customer
relationships exceeded their carrying values as of the annual evaluation date; therefore, no impairments were recognized.
Given the significant judgments made by management to estimate the fair value of this reporting unit and the customer
relationships and the difference between their fair values and carrying values, performing audit procedures to evaluate thereasonableness of management’s estimates and assumptions related to forecasts of future revenue and EBIT and the selectionof the discount rates required a high degree of auditor judgment and an increased extent of effort, including the need to
involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to forecasts of future revenue and EBIT and selection of the discount rates for the reporting unit
and customer relationships included the following, among others:• We tested the effectiveness of controls over goodwill and indefinite-lived intangible assets, including those over theforecasts of future revenue and EBIT.
• We evaluated management’s ability to accurately forecast future revenue and EBIT by comparing prior year
forecasts to actual results in the respective years.
• We evaluated the reasonableness of management’s current revenue and EBIT forecasts by comparing the forecasts
to historical results and forecasted information included in analyst and industry reports and certain peer companies’
disclosures.
• With the assistance of our fair value specialists, we evaluated the valuation methodologies, the long-term growth
rates and discount rates, including testing the underlying source information and the mathematical accuracy of thecalculations, and developed a range of independent estimates and compared those to the long-term growth rates anddiscount rates selected by management.
/s/ Deloitte & Touche LLP
Omaha, Nebraska
February 22, 2020
We have served as the Company’s auditor since 1985.

K-65

BERKSHIRE HATHAWAY INC.
and Subsidiaries
CONSOLIDATED BALANCE SHEETS(dollars in millions)
December 31,
2019

ASSETS
Insurance and Other:
Cash and cash equivalents*
Short-term investments in U.S. Treasury Bills
Investments in fixed maturity securities
Investments in equity securities
Equity method investments
Loans and finance receivables
Other receivables
Inventories
Property, plant and equipment
Equipment held for lease
Goodwill
Other intangible assets
Deferred charges under retroactive reinsurance contracts
Other

$

Railroad, Utilities and Energy:
Cash and cash equivalents*
Receivables
Property, plant and equipment
Goodwill
Regulatory assets
Other
$
*

61,151
63,822
18,685
248,027
17,505
17,52732,41819,852
21,43815,06557,052
31,051
13,747
13,232
630,572
3,024
3,417
137,838
24,8302,881
15,167
187,157
817,729

2018

$

$

27,74981,506
19,898
172,757
17,325
16,28031,56419,06920,62814,29856,32331,49914,104
9,307
532,307
2,612
3,666
131,780
24,702
3,067
9,660
175,487
707,794

Cash and cash equivalents includes U.S. Treasury Bills with maturities of three months or less when purchased of$37.1 billion at December 31, 2019 and $3.9 billion at December 31, 2018.
See accompanying Notes to Consolidated Financial Statements

K-66

BERKSHIRE HATHAWAY INC.
and Subsidiaries
CONSOLIDATED BALANCE SHEETS(dollars in millions)
December 31,
2019

LIABILITIES AND SHAREHOLDERS’ EQUITY
Insurance and Other:
Unpaid losses and loss adjustment expenses
Unpaid losses and loss adjustment expenses under retroactive reinsurance contracts
Unearned premiums
Life, annuity and health insurance benefits
Other policyholder liabilities
Accounts payable, accruals and other liabilities
Derivative contract liabilities
Aircraft repurchase liabilities and unearned lease revenues
Notes payable and other borrowings$

Railroad, Utilities and Energy:
Accounts payable, accruals and other liabilities
Regulatory liabilities
Notes payable and other borrowings
Income taxes, principally deferred
Total liabilities
Shareholders’ equity:
Common stock
Capital in excess of par value
Accumulated other comprehensive income
Retained earnings
Treasury stock, at cost
Berkshire Hathaway shareholders’ equity
Noncontrolling interests
Total shareholders’ equity$
See accompanying Notes to Consolidated Financial Statements

K-67

73,01942,441
19,782
20,155
7,723
27,611
968
5,281
37,590234,570

2018$

68,45841,83418,093
18,632
7,675
25,776
2,452
4,593
34,975
222,488

14,708
7,311
65,77887,797
66,799389,166

11,4107,506
62,51581,431
51,375355,2948
35,658(5,243)
402,493(8,125)424,791
3,772
428,563
817,729 $8
35,707(5,015)321,112(3,109)348,703
3,797
352,500
707,794BERKSHIRE HATHAWAY INC.
and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS(dollars in millions except per share amounts)
2019

Revenues:
Insurance and Other:
Insurance premiums earned
Sales and service revenues
Leasing revenues
Interest, dividend and other investment income$

Railroad, Utilities and Energy:
Freight rail transportation revenues
Energy operating revenues
Service revenues and other income
Total revenues
Investment and derivative contract gains (losses):
Investment gains (losses)
Derivative contract gains (losses)
Costs and expenses:
Insurance and Other:
Insurance losses and loss adjustment expenses
Life, annuity and health insurance benefits
Insurance underwriting expenses
Cost of sales and services
Cost of leasing
Selling, general and administrative expenses
Interest expense
Railroad, Utilities and Energy:
Freight rail transportation expenses
Utilities and energy cost of sales and other expenses
Other expenses
Interest expense
Total costs and expenses
Earnings before income taxes and equity method earnings (losses)
Equity method earnings (losses)
Earnings before income taxes
Income tax expense (benefit)
Net earnings
Earnings attributable to noncontrolling interests
Net earnings attributable to Berkshire Hathaway shareholders
Net earnings per average equivalent Class A share
Net earnings per average equivalent Class B share*
Average equivalent Class A shares outstanding
Average equivalent Class B shares outstanding*

Year Ended December 31,
2018

61,078
134,989
5,856
9,240
211,163$

57,418133,336
5,732
7,678
204,164$

2017

60,597130,3432,452
6,536
199,928

23,357
15,353
4,743
43,453
254,616

23,703
15,555
4,415
43,673247,837

21,08015,1553,770
40,005239,933

71,123
1,484
72,607(22,155)(300)(22,455)

1,410
718
2,128

44,456
4,986
11,200107,041
4,003
19,322
1,056
192,064

39,906
5,699
9,793
106,083
4,061
18,238
1,035
184,815

48,891
5,618
9,321
104,343
1,455
19,1891,132
189,949

16,045
11,641
3,895
2,818
34,399219,214
6,168(2,167)
4,001
(321)
4,322
301
4,021 $

14,031
10,772
3,231
3,254
31,288221,237
20,824
3,014
23,838(21,515)
45,353413
44,94015,436
11,296
4,002
2,905
33,639225,703
101,520
1,176
102,696
20,904
81,792375$
81,417$
49,828$33.22
1,633,946
2,450,919,020

$
$
$

2,446
1.63
1,643,795
2,465,692,368$$

27,32618.22
1,644,615
2,466,923,163

Class B shares are economically equivalent to one-fifteen-hundredth of a Class A share. Accordingly, net earnings per
average equivalent Class B share outstanding is equal to one-fifteen-hundredth of the equivalent Class A amount. See
Note 21.
See accompanying Notes to Consolidated Financial Statements
K-68

BERKSHIRE HATHAWAY INC.
and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(dollars in millions)
2019

Net earnings$
Other comprehensive income:Net change in unrealized appreciation of investments
Applicable income taxes
Reclassification of investment appreciation in net earnings
Applicable income taxes
Foreign currency translation
Applicable income taxes
Prior service cost and actuarial gains/losses of defined benefit pension plans
Applicable income taxes
Other, net
Other comprehensive income, net
Comprehensive income
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Berkshire Hathaway shareholders$

Year Ended December 31,
2018

81,792

$

204
(44)
(62)
13
323
(28)
(711)
155
(48)
(198)
81,594405
81,189 $

4,322

2017

$

45,353

(185)
31
(253)
53
(1,531)
62
(571)
143
(12)
(2,263)2,059
249
1,810 $

30,450(10,566)(1,399)
490
2,364
(95)
225
(45)
(9)
21,41566,768555
66,213

BERKSHIRE HATHAWAY INC.
and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY(dollars in millions)
Berkshire Hathaway shareholders’ equity
Commonstock andAccumulated
othercapital inexcess of comprehensive
Retained
Treasury
par value
incomeearnings
stock

Balance December 31, 2016
Net earnings
Other comprehensive income, net
Issuance of common stock
Transactions with noncontrolling interests
Balance December 31, 2017
Adoption of new accounting pronouncements
Net earnings
Other comprehensive income, net
Issuance (acquisition) of common stock
Transactions with noncontrolling interests
Balance December 31, 2018
Net earnings
Other comprehensive income, net
Issuance (acquisition) of common stock
Transactions with noncontrolling interests
Balance December 31, 2019

$ 35,689 $
—
—
76
(63)
35,702
—
—
—
59
(46)
35,71521(70)$ 35,666 $

37,298 $210,846 $ (1,763) $—44,940—21,273
—
—
—
—
—
—
—
—
58,571 255,786(1,763)(61,375) 61,305
—
—
4,021
—
(2,211)————(1,346)———(5,015) 321,112(3,109)81,417(228)(5,016)(36)(5,243) $402,493 $ (8,125) $See accompanying Notes to Consolidated Financial Statements

K-69

Noncontrollinginterests

Total

3,358 $285,428
413
45,353
142
21,415
—
76
(255)
(318)
3,658 351,954
—
(70)
301
4,322
(52)
(2,263)—(1,287)(110)(156)
3,797 352,500
375
81,79230(198)(4,995)(430)(536)
3,772 $428,563

BERKSHIRE HATHAWAY INC.
and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS(dollars in millions)
2019

Cash flows from operating activities:
Net earnings
Adjustments to reconcile net earnings to operating cash flows:
Investment gains/losses
Depreciation and amortization
Other
Changes in operating assets and liabilities:
Losses and loss adjustment expenses
Deferred charges reinsurance assumed
Unearned premiums
Receivables and originated loans
Other assets
Other liabilities
Income taxes
Net cash flows from operating activities
Cash flows from investing activities:
Purchases of equity securities
Sales and redemptions of equity securities
Purchases of U.S. Treasury Bills and fixed maturity securities
Sales of U.S. Treasury Bills and fixed maturity securities
Redemptions and maturities of U.S. Treasury Bills and fixed maturity securities
Purchases of loans and finance receivables
Collections of loans and finance receivables
Acquisitions of businesses, net of cash acquired
Purchases of property, plant and equipment and equipment held for lease
Other
Net cash flows from investing activities
Cash flows from financing activities:
Proceeds from borrowings of insurance and other businesses
Repayments of borrowings of insurance and other businesses
Proceeds from borrowings of railroad, utilities and energy businesses
Repayments of borrowings of railroad, utilities and energy businesses
Changes in short term borrowings, net
Acquisition of treasury stock
Other
Net cash flows from financing activities
Effects of foreign currency exchange rate changes
Increase (decrease) in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash at beginning of year
Cash and cash equivalents and restricted cash at end of year ** Cash and cash equivalents and restricted cash at end of year are comprised of
the following:
Insurance and Other
Railroad, Utilities and Energy
Restricted cash, included in other assets

$

$

$

$

Year Ended December 31,
2018
2017

81,792

4,322$

45,353(71,123)
10,064(1,254)

22,155
9,779
2,957(1,410)
9,188
458

6,087
357
1,707
(2,303)(2,011)
190
15,181
38,687

3,449
1,174
1,794
(3,443)(1,832)
2,002(4,957)37,40025,027(7,231)
1,761(1,990)(1,665)
1,194(24,957)
45,728(18,642)
14,336(136,123)
15,929137,767(75)
345(1,683)(15,979)(1,496)(5,621)(43,210)
18,783(141,844)
39,693113,045(1,771)342(3,279)(14,537)(71)(32,849)(20,326)
19,512(158,492)
49,32786,727(1,435)
1,702(2,708)(11,708)(3,608)(41,009)

8,144(5,095)5,400(2,638)266(4,850)
(497)
730
25
33,82130,81164,632 $2,409(7,395)
7,019(4,213)(1,943)(1,346)(343)(5,812)(140)(1,401)
32,21230,811 $

2,645(5,465)
3,013(3,549)
2,079
—
(121)
(1,398)248
3,569
28,64332,212

61,151
3,024
457
64,632

27,7492,612
450
30,811

28,6732,910
629
32,212

See accompanying Notes to Consolidated Financial Statements

K-70

$

$

$

$

$

BERKSHIRE HATHAWAY INC.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019
(1)

Significant accounting 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 ofdiverse business activities, including insurance and reinsurance, freight rail transportation, utilities and energy,
manufacturing, service and retailing. In these notes the terms “us,” “we,” or “our” refer to Berkshire and its
consolidated subsidiaries. Further information regarding our reportable business segments is contained in Note 27.
Information concerning business acquisitions completed over the past three years appears in Note 2. We believe thatreporting the Railroad, Utilities and Energy subsidiaries separately is appropriate given the relative significance of theirlong-lived assets, capital expenditures and debt, which is not guaranteed by Berkshire.
The accompanying Consolidated Financial Statements include the accounts of Berkshire consolidated with theaccounts of all subsidiaries and affiliates in which we hold a controlling financial interest as of the financial statement
date. Normally a controlling financial interest reflects ownership of a majority of the voting interests. We consolidate
variable interest entities (“VIE”) when we possess both the power to direct the activities of the VIE that mostsignificantly affect its economic performance, and we (a) are obligated to absorb the losses that could be significant to
the VIE or (b) hold the right to receive benefits from the VIE that could be significant to the VIE. Intercompany
accounts and transactions have been eliminated.
(b)

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 balance sheet date and the reported amounts of revenues and expenses during theperiod. In particular, estimates of unpaid losses and loss adjustment expenses are subject to considerable estimation
error due to the inherent uncertainty in projecting ultimate claim costs. In addition, estimates and assumptions
associated with the amortization of deferred charges on retroactive reinsurance contracts, determinations of fair valuesof certain financial instruments and evaluations of goodwill and identifiable intangible assets for impairment requireconsiderable judgment. Actual results may differ from the estimates used in preparing our Consolidated Financial
Statements.
(c)Cash and cash equivalents and short-term investments in U.S. Treasury Bills

Cash equivalents consist of demand deposit and money market accounts and investments (including U.S.
Treasury Bills) with maturities of three months or less when purchased. Short-term investments in U.S. Treasury Billsconsist of U.S. Treasury Bills with maturities exceeding three months at the time of purchase and are stated atamortized cost, which approximates fair value.
(d)Investments in fixed maturity securities

We classify investments in fixed maturity securities at the acquisition date and re-evaluate the classification ateach balance sheet date. Securities classified as held-to-maturity are carried at amortized cost, reflecting the ability andintent to hold the securities to maturity. Securities classified as trading are acquired with the intent to sell in the nearterm and are carried at fair value with changes in fair value reported in earnings. All other securities are classified asavailable-for-sale and are carried at fair value with net unrealized gains or losses reported in accumulated othercomprehensive income. As of December 31, 2019, substantially all of our investments in fixed maturity securities wereclassified as available-for-sale. We amortize the difference between the original cost and maturity value of a fixedmaturity security to earnings using the interest method.
Investment gains and losses for available-for-sale fixed maturity securities are recorded when the securities are
sold, as determined on a specific identification basis. If the fair value of a fixed maturity security is less than cost, weevaluate the security for other-than-temporary impairment. We recognize an other-than-temporary impairment if we(a) intend to sell or expect to be required to sell the security before its amortized cost is recovered or (b) do not expect
to ultimately recover the amortized cost basis even if we do not intend to sell the security. Under scenario (a), we
recognize the loss in earnings and under scenario (b), we recognize the credit loss component in earnings and theremainder in other comprehensive income.

K-71

Notes to Consolidated Financial Statements (Continued)(1)

Significant accounting policies and practices (Continued)(e)Investments in equity securities

We carry substantially all of our investments in equity securities at fair value and record the subsequent changes
in fair values in the Consolidated Statement of Earnings as a component of investment gains/losses. Prior to January 1,
2018, substantially all of our equity security investments were classified as available-for-sale and were also carried atfair value. However, we recorded the periodic changes in fair value of these securities as components of othercomprehensive income. In addition, we recorded gains and losses in the Consolidated Statements of Earnings whenequity securities were sold (on a specific identification basis) or were other-than-temporarily impaired.
(f)

Investments under the equity method

We utilize the equity method to account for investments when we possess the 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 the investor possesses more than 20% of the voting interests of the investee. This
presumption may be overcome based on specific facts and circumstances that demonstrate that the ability to exercise
significant influence is restricted. We apply the equity method to investments in common stock and to otherinvestments when such other investments possess substantially identical subordinated interests to common stock.
In applying the equity method, we record the investment at cost and subsequently increase or decrease thecarrying amount of the investment by our proportionate share of the net earnings or losses and other comprehensive
income of the investee. We record dividends or other equity distributions as reductions in the carrying value of theinvestment. In the event that net losses of the investee reduce the carrying amount to zero, additional net losses may berecorded 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, are based upon the change in our claim on the investee’sbook value.
(g)Receivables

Receivables primarily consist of balances due from customers, insurance premiums receivable and reinsurance
losses recoverable. Receivables are stated net of estimated allowances for uncollectible balances. Allowances foruncollectible balances are provided when it is probable counterparties or customers will be unable to pay all amounts
due based on the contractual terms. We charge-off receivables against the allowances after all reasonable collection
efforts are exhausted.
(h)Loans and finance receivables

Loans and finance receivables are predominantly manufactured housing installment loans. We carry these loans
at amortized cost, net of allowances for uncollectible accounts, based on our ability and intent to hold such loans tomaturity. Acquisition costs and loan origination and commitment costs paid or fees received along with acquisition
premiums or discounts are amortized as yield adjustments over the lives of the loans. Substantially all of our loans andfinance receivables are secured by real or personal property or by other assets of the borrower.
Allowances for credit losses on loans include estimates of losses on loans currently in foreclosure and losses onloans not currently in foreclosure. We estimate losses on loans in foreclosure based on historical experience andcollateral recovery rates. Estimates of losses on loans not currently in foreclosure consider historical default rates,
collateral recovery rates and prevailing economic conditions. Allowances for credit losses also incorporate thehistorical average time elapsed from the last payment until foreclosure.
Loans are considered delinquent when payments are more than 30 days past due. We place loans over 90 days
past due on nonaccrual status and accrued but uncollected interest is reversed. Subsequent collections on the loans are
first applied to the principal and interest owed for the most delinquent amount. We resume interest income accrual
once a loan is less than 90 days delinquent.
Loans in the foreclosure process are 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. Foreclosed loans are charged off when the collateral is sold. Loans
not in foreclosure are evaluated for charge-off based on individual circumstances concerning the future collectability of
the loan and the condition of the collateral securing the loan.

K-72Notes to Consolidated Financial Statements (Continued)(1)

Significant accounting policies and practices (Continued)(i)

Derivatives

We carry derivative contracts in our Consolidated Balance Sheets at fair value, net of reductions permitted undermaster netting agreements with counterparties. We record the changes in fair value of derivative contracts that do not
qualify as hedging instruments for financial reporting purposes in earnings or, if such contracts involve our regulated
utilities subsidiaries, as regulatory assets or liabilities when inclusion in regulated rates is probable.
(j)Fair value measurements

As defined under GAAP, fair value is the price that would be received to sell an asset or paid to transfer aliability 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 todetermine the value that would be received to sell an asset or paid to transfer a liability in an orderly transaction.
Market participants are assumed to be independent, knowledgeable, able and willing to transact an exchange and not
acting under duress. Our 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 are not necessarily indicative of the amounts that could be
realized in a current or future market exchange.
(k)Inventories

Inventories consist of manufactured goods, goods acquired for resale, homes constructed for sale, and materials
consumed in business operations. Manufactured inventory costs include materials, direct and indirect labor and factory
overhead. At December 31, 2019, we used the last-in-first-out (“LIFO”) method to value approximately 37% ofconsolidated inventories with the remainder primarily determined under first-in-first-out and average cost methods.
Non-LIFO inventories are stated at the lower of cost or net realizable value. The excess of current or replacement costs
over costs determined under LIFO was approximately $950 million as of December 31, 2019 and $1.0 billion as ofDecember 31, 2018.
(l)

Property, plant and equipment

We record additions to property, plant and equipment used in operations at cost, which includes asset additions,improvements and betterments. With respect to constructed assets, all materials, direct labor and contract services aswell as certain indirect costs are capitalized. Indirect costs include interest over the construction period. With respect toconstructed assets of our utility and energy subsidiaries that are subject to authoritative guidance for regulated
operations, capitalized costs also include an allowance for funds used during construction, which represents the cost ofequity funds used to finance the construction of the regulated facilities. Normal repairs and maintenance and othercosts that do not improve the property, extend the useful life or otherwise do not meet capitalization criteria arecharged to expense as incurred.
Depreciation of assets of our regulated utilities and railroad is generally determined using group depreciation
methods where rates are based on periodic depreciation studies approved by the applicable regulator. Under groupdepreciation, a composite rate is applied to the gross investment in a particular class of property, despite differences inthe service life or salvage value of individual property units within the same class. When such assets are retired or sold,no gain or loss is recognized. Gains or losses on disposals of all other assets are recorded through earnings.
We depreciate property, plant and equipment used by our other businesses to estimated salvage value primarily
using the straight-line method over estimated useful lives. Ranges of estimated useful lives of depreciable assets usedin our other businesses are as follows: buildings and improvements – 5 to 50 years, machinery and equipment – 3 to 25
years and furniture, fixtures and other – 3 to 15 years. Ranges of estimated useful lives of depreciable assets unique toour railroad business are as follows: track structure and other roadway – 10 to 100 years and locomotives, freight carsand other equipment – 6 to 41 years. Ranges of estimated useful lives of assets unique to our regulated utilities andenergy businesses are as follows: utility generation, transmission and distribution systems – 5 to 80 years, interstate
natural gas pipeline assets – 3 to 80 years and independent power plants and other assets – 3 to 30 years.

K-73

Notes to Consolidated Financial Statements (Continued)(1)

Significant accounting policies and practices (Continued)(l)Property, plant and equipment (Continued)

We evaluate property, plant and equipment for impairment when events or changes in circumstances indicatethat the carrying value of such assets may not be recoverable or when the assets are held for sale. Upon the occurrenceof a triggering event, we assess whether the estimated undiscounted cash flows expected from the use of the asset andthe residual value from the ultimate disposal of the asset exceeds the carrying value. If the carrying value exceeds theestimated recoverable amounts, we reduce the carrying value to fair value and record an impairment loss in earnings,
except with respect to impairment of assets of our regulated utility and energy subsidiaries where the impacts ofregulation are considered in evaluating the carrying value.
(m)

LeasesWe are party to contracts where we lease property to others (“lessor” contracts) and where we lease property
from others (“lessee” contracts). We record additions to equipment that we lease to others at cost. We depreciateequipment held for lease to estimated salvage value primarily using the straight-line method over estimated useful lives
ranging from 5 to 35 years. We use declining balance deprecation methods for assets when the revenue-earning powerof the asset is relatively greater during the earlier years of its life and maintenance and repair costs increase during thelater years. We also evaluate equipment held for lease for impairment consistent with policies for property, plant andequipment.
When we lease assets from others, we record right-of-use assets and lease liabilities. Right-of-use assets
represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to makelease payments arising from the lease. In this regard, lease payments include fixed payments and variable paymentsthat depend on an index or rate. The lease term is generally the non-cancellable lease period. Certain lease contracts
contain renewal options or other terms that provide for variable payments based on performance or usage. Options are
not included in determining right-of-use assets or lease liabilities unless it is reasonably certain that options will be
exercised. Generally, incremental borrowing rates are used in measuring lease liabilities. Right-of-use assets are
subject to review for impairment.
(n)Goodwill and other intangible assets

Goodwill represents the excess of the acquisition price of a business over the fair value of identified net assets ofthat business. We evaluate goodwill for impairment at least annually. When evaluating goodwill for impairment, weestimate the fair value of the reporting unit. Several methods 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 future 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 theidentifiable assets and liabilities of the reporting unit are estimated at fair value as of the current testing date. The
excess of the estimated fair value of the reporting unit over the current estimated fair value of net assets establishes theimplied value of goodwill. The excess of the recorded goodwill over the implied goodwill value is charged to earnings
as an impairment loss.
Intangible assets with indefinite lives are also tested for impairment at least annually and when events or changes
in circumstances indicate that, more-likely-than-not, the asset is impaired. Significant judgment is required inestimating fair values and performing goodwill and indefinite-life intangible asset impairment tests. We amortize
intangible assets with finite lives in a pattern that reflects the expected consumption of related economic benefits or ona straight-line basis over the estimated economic useful lives. Intangible assets with finite lives are reviewed for
impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.

K-74

Notes to Consolidated Financial Statements (Continued)(1)

Significant accounting policies and practices (Continued)(o)Revenue recognition

We earn insurance premiums on prospective property/casualty insurance and reinsurance contracts over the loss
exposure or coverage period in proportion to the level of protection provided. In most cases, such premiums are earned
ratably over the term of the contract with unearned premiums computed on a monthly or daily pro-rata basis. Premiums
on retroactive property/casualty reinsurance contracts are earned at the inception of the contracts, as all of theunderlying loss events covered by the policies occurred prior to contract inception. Premiums for life reinsurance andannuity contracts are earned when due. Premiums earned are stated net of amounts ceded to reinsurers. Premiums
earned on contracts with experience-rating provisions reflect estimated loss experience under such contracts.
On January 1, 2018, we adopted Accounting Standards Codification (“ASC”) 606 “Revenues from Contracts
with Customers.” Except as described in Note 1(x), our revenue recognition practices for contracts with customers
under ASC 606 do not differ significantly from prior practices. Under ASC 606, revenues are recognized when a goodor service is transferred to a customer. A good or service is transferred when (or as) the customer obtains control of that
good or service. Revenues are based on the consideration we expect to receive in connection with our promises todeliver goods and services to our customers.
We manufacture and/or distribute a wide variety of industrial, building and consumer products. Our sales
contracts provide customers with these products through wholesale and retail channels in exchange for consideration
specified under the contracts. Contracts generally represent customer orders for individual products at stated prices.
Sales contracts may contain either single or multiple performance obligations. In instances where contracts containmultiple performance obligations, we allocate the revenue to each obligation based on the relative stand-alone selling
prices of each product or service.
Sales revenue reflects reductions for returns, allowances, volume discounts and other incentives, some of which
may be contingent on future events. In certain customer contracts, sales revenue includes certain state and local excise
taxes billed to customers on specified products when those taxes are levied directly upon us by the taxing authorities.
Sales revenue excludes sales taxes and value-added taxes collected on behalf of taxing authorities. Sales revenue
includes consideration for shipping and other fulfillment activities performed prior to the customer obtaining control of
the goods. We also elect to treat consideration for such services performed after control has passed to the customer assales revenue.
Our product sales revenues are generally recognized at a point in time when control of the product transfers to
the customer, which coincides with customer pickup or product delivery or acceptance, depending on terms of thearrangement. We recognize sales revenues and related costs with respect to certain contracts over time, primarily fromcertain castings, forgings and aerostructures contracts. Control of the product units under these contracts transfers
continuously to the customer as the product is manufactured. These products generally have no alternative use and thecontract requires the customer to provide reasonable compensation if terminated for reasons other than breach ofcontract.
Our energy revenue derives primarily from tariff based sales arrangements approved by various regulatorycommissions. These tariff based revenues are mainly comprised of energy, transmission, distribution and natural gas
and have performance obligations to deliver energy products and services to customers which are satisfied over time asenergy is delivered or services are provided. Our nonregulated energy revenue primarily relates to our renewableenergy business. Energy revenues are equivalent to the amounts we have the right to invoice and correspond directlywith the value to the customer of the performance to date and include billed and unbilled amounts. Payments from
customers are generally due from the customer within 30 days of billing. Rates charged for energy products andservices are established by regulators or contractual arrangements that establish the transaction price, as well as the
allocation of price among the separate performance obligations. When preliminary regulated rates are permitted to bebilled prior to final approval by the applicable regulator, certain revenue collected may be subject to refund and aliability for estimated refunds is accrued.

K-75

Notes to Consolidated Financial Statements (Continued)(1)

Significant accounting policies and practices (Continued)(o)Revenue recognition (Continued)

The primary performance obligation under our freight rail transportation service contracts is to move freightfrom a point of origin to a point of destination. The performance obligations are represented by bills of lading which
create a series of distinct services that have a similar pattern of transfer to the customer. The revenues for eachperformance obligation are based on various factors including the product being shipped, the origin and destination
pair, and contract incentives which are outlined in various private rate agreements, common carrier public tariffs,
interline foreign road agreements and pricing quotes. The transaction price is generally a per car amount to transport
railcars from a specified origin to a specified destination. Freight revenues are recognized over time as the service isperformed because the customer simultaneously receives and consumes the benefits of the service. Revenues
recognized represent the proportion of the service completed as of the balance sheet date. Invoices for freighttransportation services are generally issued to customers and paid within 30 days or less. Customer incentives, which
are primarily provided for shipping a specified cumulative volume or shipping to/from specific locations, are recorded
as a reduction to revenue on a pro-rata basis based on actual or projected future customer shipments.
Other service revenues derive from contracts with customers in which performance obligations are satisfied overtime, where customers receive and consume benefits as we perform the services, or at a point in time when the services
are provided. Other service revenues primarily derive from real estate brokerage, automotive repair, aircraft
management, aviation training, franchising and news distribution services.
Leasing revenue is generally recognized ratably over the term of the lease or based on usage, if applicable under
the terms of the contract. A substantial portion of our leases are classified as operating leases. Prior to January 1, 2018,
we recognized revenues from the sales of fractional ownership interests in aircraft over the term of the related
management services agreements, as the transfers of the ownership interests were inseparable from the management
services agreements. These agreements also include provisions that require us to repurchase the fractional interest at
fair market value at contract termination or upon the customer’s request following the end of a minimum commitment
period. ASC 606 provides that such contracts are subject to accounting guidance for lease contracts and not ASC 606.
The re-characterization of these fractional ownership interests as operating leases did not have a significant effect on
our consolidated revenues or earnings.
(p)Losses and loss adjustment expenses

We record liabilities for unpaid losses and loss adjustment expenses assumed under property/casualty insurance
and reinsurance contracts for loss events that have occurred on or before the balance sheet date. Such liabilities
represent the estimated ultimate payment amounts without discounting for time value.
We base liability estimates on (1) reports of losses from policyholders, (2) individual case estimates and(3) estimates of incurred but not reported losses. Losses and loss adjustment expenses in the Consolidated Statementsof Earnings include paid claims, claim settlement costs and changes in estimated claim liabilities. Losses and loss
adjustment expenses charged to earnings are net of amounts recovered and estimates of amounts recoverable underceded reinsurance contracts. Reinsurance contracts do not relieve the ceding company of its obligations to indemnify
policyholders with respect to the underlying insurance and reinsurance contracts.
(q)

Retroactive reinsurance contracts

We record liabilities for unpaid losses and loss adjustment expenses assumed under retroactive reinsurance ofshort duration contracts consistent with other short duration property/casualty insurance and reinsurance contracts
discussed in Note 1(p). With respect to retroactive reinsurance contracts, we also record deferred charge assets at the
inception of the contracts, representing the excess, if any, of the estimated ultimate claim liabilities over the premiums
earned. We subsequently amortize the deferred charge assets over the expected claim settlement periods using theinterest method. Changes to the estimated timing or amount of future loss payments also produce changes in deferredcharge balances. We apply changes in such estimates retrospectively and the resulting changes in deferred chargebalances, together with periodic amortization, are included in insurance losses and loss adjustment expenses in theConsolidated Statements of Earnings.

K-76

Notes to Consolidated Financial Statements (Continued)(1)

Significant accounting policies and practices (Continued)(r)Insurance policy acquisition costs

We capitalize the incremental costs that directly relate to the successful sale of insurance contracts, subject toultimate recoverability, and we subsequently amortize such costs to underwriting expenses as the related premiums areearned. Direct incremental acquisition costs include commissions, premium taxes and certain other costs associatedwith successful efforts. We expense all other underwriting costs as incurred. The recoverability of capitalized insurance
policy acquisition costs generally reflects anticipation of investment income. The unamortized balances are included inother assets and were $2,937 million and $2,658 million at December 31, 2019 and 2018, respectively.
(s)Life and annuity insurance benefits

We compute our liabilities for insurance benefits under life contracts based upon estimated future investment
yields, expected mortality, morbidity, and lapse or withdrawal rates as well as estimates of premiums we expect toreceive and expenses we expect to incur in the future. These assumptions, as applicable, also include a margin foradverse deviation and may vary with the characteristics of the contract’s date of issuance, policy duration and countryof risk. The interest rate assumptions used may vary by contract or jurisdiction. We discount periodic payment annuity
liabilities based on the implicit rate as of the inception of the contracts such that the present value of the liabilities
equals the premiums. Discount rates generally range from 3% to 7.5%.
(t)Regulated utilities and energy businesses

Certain energy subsidiaries prepare their financial statements in accordance with authoritative guidance forregulated 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 future through the regulated rate-setting process.
Accordingly, certain costs are deferred as regulatory assets and certain income is accrued as regulatory liabilities.
Regulatory assets and liabilities will be amortized into operating expenses and revenues over various future periods.
Regulatory assets and liabilities are continually assessed for probable future inclusion in regulatory rates byconsidering factors such as applicable regulatory or legislative changes and recent rate orders received by otherregulated entities. If future inclusion in regulatory rates ceases to be probable, the amount no longer probable ofinclusion in regulatory rates is charged or credited to earnings (or other comprehensive income, if applicable) or
returned to customers.
(u)Foreign currency

The accounts of our non-U.S. based subsidiaries are measured, in most instances, using functional currencies
other than the U.S. Dollar. Revenues and expenses of these subsidiaries are translated into U.S. Dollars at the averageexchange rate for the period and assets and liabilities are translated at the exchange rate as of the end of the reporting
period. Gains or losses from translating the financial statements of these subsidiaries are included in shareholders’equity as a component of accumulated other comprehensive income. Gains and losses arising from transactions
denominated in a currency other than the functional currency of the reporting entity, including gains and losses fromthe remeasurement of assets and liabilities due to changes in currency exchange rates, are included in earnings.
(v)

Income taxes

Berkshire files a consolidated federal income tax return in the United States, which includes eligible subsidiaries.
In addition, we file income tax returns in state, local and foreign jurisdictions as applicable. Provisions for current
income tax liabilities are 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 tax assets and liabilities are computed on differences between the financial statement bases andtax bases of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities
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 are included as a component of income tax
expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged
or credited to income tax expense in the period of enactment. Valuation allowances are established for certain deferred
tax assets when realization is not likely.

K-77

Notes to Consolidated Financial Statements (Continued)(1)

Significant accounting policies and practices (Continued)(v)

Income taxes (Continued)

Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income
tax returns when such positions, in our judgment, do not meet a more-likely-than-not threshold based on the technicalmerits of the positions. Estimated interest and penalties related to uncertain tax positions are included as a componentof income tax expense.
(w)

New accounting pronouncements adopted in 2019

Berkshire adopted ASC 842 “Leases” on January 1, 2019. Most significantly, ASC 842 requires a lessee torecognize a liability to make operating lease payments and an asset with respect to its right to use the underlying asset
for the lease term. In adopting and applying ASC 842, we elected to use practical expedients, including but not limited
to, not reassessing past lease and easement accounting, not separating lease components from non-lease components byclass of asset and not recording assets or liabilities for leases with terms of one year or less. We adopted ASC 842 as ofJanuary 1, 2019 with regard to contracts in effect as of that date and elected to not restate prior period financial
statements.
Upon the adoption of ASC 842, we recognized operating lease right-of-use assets of approximately $6.2 billion
and lease liabilities of $5.9 billion. We also reduced other assets by approximately $300 million. Consequently, ourconsolidated assets and liabilities increased by approximately $5.9 billion. ASC 842 did not have a material effect on
our accounting for our lessor contracts or for lessee contracts classified as financing leases.
(x)

New accounting pronouncements adopted in 2018

On January 1, 2018, we adopted Accounting Standards Update (“ASU”) 2016-01 “Financial Instruments—
Recognition and Measurement of Financial Assets and Financial Liabilities,” ASU 2018-02 “Reclassification of
Certain Tax Effects from Accumulated Other Comprehensive Income” and ASC 606 “Revenues from Contracts with
Customers.” Prior year financial statements were not restated. A summary of the effects of the initial adoption of ASU
2016-01, ASU 2018-02 and ASC 606 on our shareholders’ equity follows (in millions).
ASU 2016-01

Increase (decrease):
Accumulated other comprehensive income
Retained earnings
Shareholders’ equity$

ASU 2018-02(61,459) $61,459
—

84 $
(84)
—

ASC 606

— $
(70)
(70)

Total

(61,375)
61,305(70)

With respect to ASU 2016-01, beginning in 2018, unrealized gains and losses from the changes in the fair valuesof our equity securities during the period are included within investment gains/losses in the Consolidated Statements ofEarnings. As of January 1, 2018, we reclassified net after-tax unrealized gains on equity securities from accumulated
other comprehensive income to retained earnings. In adopting ASU 2018-02, we reclassified the stranded deferredincome tax effects arising from the reduction in the U.S. statutory income tax rate under the Tax Cuts and Jobs Act of2017 that were included in accumulated other comprehensive income as of January 1, 2018 to retained earnings.
In adopting ASC 606, we recorded increases to certain assets and other liabilities, with the cumulative net effectrecorded to retained earnings. Prior to January 1, 2018, we recognized revenues from the sales of fractional ownershipinterests in aircraft over the term of the related management services agreements. As discussed in Note 1(o), ASC 606
provides that such contracts are subject to accounting guidance for lease contracts. The principal effects of this recharacterization were to increase equipment held for lease and aircraft repurchase liabilities and unearned lease
revenues by approximately $3.5 billion.

K-78

Notes to Consolidated Financial Statements (Continued)(1)

Significant accounting policies and practices (Continued)(y)

New accounting pronouncements to be adopted subsequent to December 31, 2019

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, which together withsubsequent FASB amendments, were codified in ASC 326 “Financial Instruments—Credit Losses.” ASC 326 provides
for the recognition and measurement at the reporting date of expected credit losses for financial assets held at
amortized cost. ASC 326 also modifies impairment loss recognition measurement for available-for-sale debt securities.
Under existing accounting principles, credit losses are recognized and measured when such losses become probablebased on the prevailing facts and circumstances. ASC 326 is effective for reporting periods beginning after
December 15, 2019. We are adopting ASC 326 as of January 1, 2020 and do not expect its adoption will have amaterial effect on our Consolidated Financial Statements.
In January 2017, the FASB issued ASU 2017-04 “Simplifying the Test for Goodwill Impairment.” ASU 2017-04
eliminates the requirement to determine the implied value of goodwill in measuring an impairment loss. Upon adoptionof ASU 2017-04, the measurement of a goodwill impairment will represent the excess of the reporting unit’s carrying
value over its fair value and will be limited to the carrying value of goodwill. ASU 2017-04 is effective for goodwill
impairment tests in fiscal years beginning after December 15, 2019, and we are adopting ASU 2017-14 as of January 1,
2020.
In August 2018, the FASB issued ASU 2018-12 “Targeted Improvements to the Accounting for Long-Duration
Contracts.” ASU 2018-12 requires periodic reassessment of actuarial and discount rate assumptions used to value
policyholder liabilities and deferred acquisition costs arising from the issuance of long-duration insurance andreinsurance contracts, with the effects of changes in cash flow assumptions reflected in earnings and the effects ofchanges in discount rate assumptions reflected in other comprehensive income. Currently, the actuarial and discountrate assumptions are set at the contract inception date and not subsequently changed, except under limited
circumstances. ASU 2018-12 requires new disclosures and is effective for fiscal years beginning after December 15,
2021, with early adoption permitted. We are evaluating the effect this standard will have on our Consolidated Financial
Statements.
(2)

Business acquisitions

Our long-held acquisition strategy is to acquire businesses that have consistent earning power, good returns on equity
and able and honest management. Financial results attributable to business acquisitions are included in our Consolidated
Financial Statements beginning on their respective acquisition dates.
On October 1, 2018, we acquired Medical Liability Mutual Insurance Company (“Medical Liability Mutual”), a writerof medical professional liability insurance domiciled in New York. At that time, Medical Liability Mutual’s name waschanged to MLMIC Insurance Company (“MLMIC”). The acquisition price was approximately $2.5 billion. As of theacquisition date, the fair value of MLMIC’s assets was approximately $6.1 billion, including cash ($230 million) andinvestments ($5.2 billion), and the fair value of its liabilities was approximately $3.6 billion, consisting primarily of unpaid
losses and loss adjustment expenses ($3.2 billion).
In each of the past three years, we also completed several smaller-sized business acquisitions, which we consider as“bolt-ons” to several of our existing business operations. Aggregate consideration paid for bolt-on acquisitions, net of cash
acquired was approximately $1.7 billion in 2019, $1.0 billion in 2018 and $2.7 billion in 2017. We do not believe that theseacquisitions are material, individually or in the aggregate to our Consolidated Financial Statements.

K-79

Notes to Consolidated Financial Statements (Continued)(3)

Investments in fixed maturity securities

Investments in fixed maturity securities as of December 31, 2019 and 2018 are summarized by type below (inmillions).
Amortized
Cost

December 31, 2019
U.S. Treasury, U.S. government corporations and agencies $Foreign governments
Corporate bonds
Other$
December 31, 2018
U.S. Treasury, U.S. government corporations and agencies $Foreign governments
Corporate bonds
Other$

Unrealized
Gains

3,054
8,584
5,896
539
18,073

$

4,223
7,480
7,055
669
19,427$$$

Unrealized
Losses

37
63
459
67
626

$

22
50
408
66
546

$

$

$

Fair
Value

(1) $
(9)
(3)
(1)
(14) $

3,090
8,638
6,352
605
18,685(22) $
(28)
(23)
(2)
(75) $

4,223
7,502
7,440
733
19,898Investments in foreign governments include securities issued by national and provincial government entities as well as
instruments that are unconditionally guaranteed by such entities. As of December 31, 2019, approximately 87% of ourforeign government holdings were rated AA or higher by at least one of the major rating agencies.
The amortized cost and estimated fair value of fixed maturity securities at December 31, 2019 are summarized below
by contractual maturity dates. Amounts are in millions. Actual maturities may differ from contractual maturities due to earlycall or prepayment rights held by issuers.

Amortized cost
Fair value

Due in one
year or lessDue after one
year throughfive years

Due after five
years throughten years

Due after
ten years

Mortgage-backed
securities

$

$

$

$

$

6,732
6,761

10,203
10,321

K-80

311
355

428
789

399
459

Total

$18,073
18,685

Notes to Consolidated Financial Statements (Continued)(4)

Investments in equity securities

Investments in equity securities as of December 31, 2019 and 2018 are summarized based on the primary industry of
the investee in the table below (in millions).
Net
Unrealized
Gains

Cost
Basis

December 31, 2019 *Banks, insurance and financeConsumer products
Commercial, industrial and other$$*

40,41938,88731,034
110,340

$

$

$

$

102,395
99,63445,998248,027

Approximately 67% of the aggregate fair value was concentrated in five companies (American Express Company –$18.9 billion; Apple Inc. – $73.7 billion; Bank of America Corporation – $33.4 billion; The Coca-Cola Company –$22.1 billion and Wells Fargo & Company – $18.6 billion).
Net
Unrealized
Gains

Cost
Basis

December 31, 2018 *Banks, insurance and financeConsumer products
Commercial, industrial and other$$*

61,97660,747
14,964
137,687

Fair
Value

44,33238,78319,752
102,867$$

38,26022,838
8,792
69,890

Fair
Value

$

$

82,592
61,621
28,544
172,757

Approximately 68% of the aggregate fair value was concentrated in five companies (American Express Company –$14.5 billion; Apple Inc. – $40.3 billion; Bank of America Corporation – $22.6 billion; The Coca-Cola Company –$18.9 billion and Wells Fargo & Company – $20.7 billion).

On April 30, 2019, Berkshire committed to invest a total of $10 billion in connection with Occidental Petroleum
Corporation’s (“Occidental”) proposal to acquire Anadarko Petroleum Corporation (“Anadarko”). The Anadarko
shareholders approved the acquisition by Occidental on August 8, 2019 and the acquisition and our investment in Occidental
closed on August 8, 2019. Our investments in Occidental are included in the commercial, industrial and other category in thepreceding table.
Berkshire’s investments in Occidental include newly issued Occidental Cumulative Perpetual Preferred Stock with anaggregate liquidation value of $10 billion, together with warrants to purchase up to 80 million shares of Occidental common
stock at an exercise price of $62.50 per share. The preferred stock accrues dividends at 8% per annum and is redeemable atthe option of Occidental commencing on the tenth anniversary of issuance at a redemption price equal to 105% of theliquidation preference plus any accumulated and unpaid dividends, or mandatorily under certain specified capital return
events. Dividends on the preferred stock may be paid in cash or, at Occidental’s option, in shares of Occidental common
stock. The warrants are exercisable in whole or in part until one year after the redemption of the preferred stock.
(5)

Equity method investments

Berkshire and its subsidiaries hold investments in certain businesses that are accounted for pursuant to the equity
method. Currently, the most significant of these is our investment in the common stock of The Kraft Heinz Company (“Kraft
Heinz”). Kraft Heinz is one of the world’s largest manufacturers and marketers of food and beverage products, including
condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee and other grocery products. Berkshire
currently owns 325,442,152 shares of Kraft Heinz common stock representing 26.6% of the outstanding shares.

K-81

Notes to Consolidated Financial Statements (Continued)(5)

Equity method investments (Continued)

Shares of Kraft Heinz common stock are publicly-traded and the fair value of our investment at December 31, 2019and 2018 was approximately $10.5 billion and $14.0 billion, respectively. The carrying value of our investment at both
December 31, 2019 and 2018 was approximately $13.8 billion. We recorded equity method earnings of $493 million in 2019,
losses of approximately $2.7 billion in 2018, and earnings of approximately $2.9 billion in 2017. In 2019 and 2018, ourequity method earnings/losses included our share of the after-tax intangible asset impairment losses recorded by Kraft Heinz.
Kraft Heinz recorded pre-tax impairment losses of approximately $1.9 billion in 2019 and $15.9 billion in 2018. In 2017, ourequity method earnings included our share of certain one-time effects of the Tax Cuts and Jobs Act of 2017 on Kraft Heinz’s
net earnings. We received dividends on the common stock of $521 million in 2019, $814 million in 2018 and $797 million in2017, which we recorded as reductions in our carrying value.
As of December 31, 2019, the carrying value of our investment in Kraft Heinz exceeded the fair value based on thequoted market price by $3.3 billion (24%). In light of that fact, we evaluated our investment in Kraft Heinz for impairment.
We utilize no bright-line tests in such evaluations. Based on the available facts and information regarding the operating
results of Kraft Heinz, our ability and intent to hold the investment until recovery, the relative amount of the decline, and thelength of time that fair value was less than carrying value, we concluded that recognition of an impairment loss in earnings
was not required. However, we will continue to monitor this investment and it is possible that an impairment loss will berecorded in earnings in a future period based on changes in facts and circumstances or intentions.
Summarized financial information of Kraft Heinz follows (in millions).
December 28,
2019

AssetsLiabilities$

101,450
49,701

Year ending
December 28,
2019

Sales
Net earnings (losses) attributable to Kraft Heinz common shareholders$$

24,977
1,935

December 29,
2018$

Year ending
December 29,
2018

$
$

26,268 $(10,192) $103,461
51,683
Year ending
December 30,
2017

26,076
10,941Other investments accounted for pursuant to the equity method include our investments in Berkadia Commercial
Mortgage LLC (“Berkadia”), Pilot Travel Centers LLC (“Pilot”) and Electric Transmission Texas, LLC (“ETT”). The
carrying value of our investments in these entities was approximately $3.7 billion as of December 31, 2019 and $3.5 billion
as of December 31, 2018. Our equity method earnings in these entities were $683 million in 2019, $563 million in 2018 and$76 million in 2017. Additional information concerning these investments follows.
We own a 50% interest in Berkadia, with Jefferies Financial Group Inc. (“Jefferies”) owning the other 50% interest.
Berkadia is a servicer of commercial real 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 andother financial institutions. A source of funding for Berkadia’s operations is through its issuance of commercial paper, which
is currently limited to $1.5 billion. On December 31, 2019, Berkadia’s commercial paper outstanding was $1.47 billion. The
commercial paper is supported by a surety policy issued by a Berkshire insurance subsidiary. Jefferies is obligated toindemnify us for one-half of any losses incurred under the policy. In addition, a Berkshire Hathaway Energy Company
subsidiary owns a 50% interest in ETT, an owner and operator of electric transmission assets in the Electric Reliability
Council of Texas footprint. American Electric Power owns the other 50% interest.
On October 3, 2017, we entered into an investment agreement and an equity purchase agreement whereby we acquired
a 38.6% interest in Pilot, headquartered in Knoxville, Tennessee. Pilot is one of the largest operators of travel centers inNorth America, with more than 28,000 team members, 750 locations across the U.S. and Canada, and more than $30 billion
in annual revenues. The Haslam family currently owns a 50.1% interest in Pilot and a third party owns the remaining 11.3%
interest. We also entered into an agreement to acquire in 2023 an additional 41.4% interest in Pilot with the Haslam family
retaining a 20% interest. As a result, Berkshire will become the majority owner of Pilot in 2023.

K-82

Notes to Consolidated Financial Statements (Continued)(6)

Investment gains/losses
Investment gains/losses for each of the three years ending December 31, 2019 are summarized below (in millions).
2019

Equity securities:
Unrealized investment gains/losses on securities held at the end of
the period
Investment gains/losses during the year on securities sold
Gross realized gains
Gross realized losses$

Fixed maturity securities:
Gross realized gains
Gross realized losses
Other
$

2018

69,581
1,585——
71,166

2017$(22,729) $291——(22,438)

—
—
2,237
(919)
1,318

87
(25)
(105)
71,123 $

480
(227)
30
(22,155) $

103
(22)
11
1,410

Prior to 2018, we recognized investment gains and losses in earnings when we sold or otherwise disposed of equity
securities based on the difference between the proceeds from the sale and the cost of the securities and also when we
recognized other-than-temporary impairment losses. Beginning in 2018, investment gains and losses included in earnings
also include unrealized gains and losses from changes in fair values during the period on equity securities we still own. Prior
to 2018, we recorded the changes in unrealized gains and losses on our investments in equity securities in othercomprehensive income.
As reflected in the Consolidated Statements of Cash Flows, we received proceeds of approximately $14.3 billion in2019 and $18.8 billion in 2018 from sales of equity securities. In the preceding table, investment gains/losses on equity
securities sold during 2019 and 2018 reflect the difference between proceeds from sales and the fair value of the equity
security sold at the beginning of the period or the purchase date, if later. Our taxable gains on equity securities sold during theyear, which are generally the difference between the proceeds from sales and our original cost, were $3.2 billion in 2019 and$3.3 billion in 2018.
(7)Loans and finance receivables
Loans and finance receivables are summarized as follows (in millions).
December 31,
2019

Loans and finance receivables before allowances and discounts
Allowances for uncollectible loans
Unamortized acquisition discounts and points$$

18,199 $
(167)
(505)
17,527 $2018

16,962(177)(505)
16,280Loans and finance receivables are predominantly installment loans originated or acquired by our manufactured housingbusiness. Provisions for loan losses for 2019 and 2018 were $125 million and $141 million, respectively. Loan charge-offs,
net of recoveries, were $135 million in 2019 and $144 million in 2018. At December 31, 2019, approximately 98% of the
manufactured housing loan balances were evaluated collectively for impairment, with the remainder evaluated individually.
As part of the evaluation process, credit quality indicators are reviewed and loans are designated as performing or nonperforming. At December 31, 2019, we considered approximately 99% of the loan balances to be performing andapproximately 96% of the loan balances to be current as to payment status.
Additionally, in 2018, we entered into an agreement with Seritage Growth Properties to provide a $2.0 billion termloan facility, which matures on July 31, 2023. As of December 31, 2019, the outstanding loans under the facility wereapproximately $1.6 billion.

K-83

Notes to Consolidated Financial Statements (Continued)(8)

Other receivables
Other receivables of insurance and other businesses are comprised of the following (in millions).
December 31,
2019

Insurance premiums receivable
Reinsurance recoverable on unpaid losses
Trade receivables
Other
Allowances for uncollectible accounts

$

$

2018

13,379 $2,855
12,2754,327(418)
32,418 $

12,452
3,060
12,617
3,823(388)
31,564

Receivables of our railroad and our utilities and energy businesses are comprised of the following (in millions).
December 31,
2019

Trade receivables
Other
Allowances for uncollectible accounts

$

2018

3,120 $
388
(91)
3,417 $

$

3,433
362
(129)
3,666

Trade receivables include unbilled revenue of $638 million and $554 million as of December 31, 2019 and 2018,
respectively, attributable to the regulated utility businesses.
(9)

Inventories
Inventories are comprised of the following (in millions).
December 31,
2019

Raw materials
Work in process and otherFinished manufactured goods
Goods acquired for resale

$

$

2018

4,492
2,700
4,821
7,839
19,852

$

$

4,182
2,625
4,541
7,721
19,069(10) Property, plant and equipment
A summary of property, plant and equipment of our insurance and other businesses follows (in millions).
December 31,
2019

Land
Buildings and improvements
Machinery and equipment
Furniture, fixtures and other$Accumulated depreciation$

K-84

2,540 $
10,71924,285
4,666
42,210(20,772)
21,438 $

2018

2,536
9,959
22,574
4,758
39,827(19,199)
20,628

Notes to Consolidated Financial Statements (Continued)(10) Property, plant and equipment (Continued)
A summary of property, plant and equipment of our railroad and our utilities and energy businesses follows (inmillions). The utility generation, transmission and distribution systems and interstate natural gas pipeline assets are owned byregulated public utility and natural gas pipeline subsidiaries.
December 31,
2019

Railroad:
Land, track structure and other roadway
Locomotives, freight cars and other equipment
Construction in progress$

Accumulated depreciation
Utilities and energy:
Utility generation, transmission and distribution systems
Interstate natural gas pipeline assets
Independent power plants and other assets
Construction in progress
Accumulated depreciation$2018

62,404 $13,482
748
76,634(12,101)
64,53359,50913,016664
73,189(10,004)
63,185

81,127
8,165
8,817
3,732
101,841(28,536)
73,305
137,838 $

77,288
7,524
8,324
3,110
96,246(27,651)
68,595
131,780

Depreciation expense for each of the three years ending December 31, 2019 is summarized below (in millions).
2019

Insurance and otherRailroad, utilities and energy

$
$

2018

2,269
5,297
7,566

$

2,186
5,098
7,284

$

2017

$

2,116
4,852
6,968

$

(11) Equipment held for lease
Equipment held for lease includes railcars, aircraft, over-the-road trailers, intermodal tank containers, cranes, storage
units and furniture. Equipment held for lease is summarized below (in millions).
December 31,
2019

Railcars
Aircraft
Other$

Accumulated depreciation$

9,260 $
8,093
4,862
22,215(7,150)15,065 $

2018

8,862
7,376
4,379
20,617(6,319)14,298Depreciation expense for equipment held for lease was $1,181 million in 2019, $1,102 million in 2018 and$751 million in 2017. Operating lease revenues in 2019 were $5,856 million consisting of $4,415 million of fixed lease
revenue and $1,441 million of variable lease revenue.

K-85

Notes to Consolidated Financial Statements (Continued)(11) Equipment held for lease (Continued)
Operating lease revenues were $5,732 million in 2018 and $2,452 million in 2017. In 2018, due to the adoption of ASC
606, $3,280 million was recorded as operating lease revenues that in previous years would have been recorded as sales andservice revenues.
A summary of our remaining operating lease receipts as of December 31, 2019 follows (in millions).
2020

$

2021

2,623

$

2022

1,914

$

2023

1,367

2024

$

889

$

Thereafter

468

$

Total

439

$

7,700

(12) Leases
We are party to contracts where we lease property from others. As a lessee, we primarily lease office and operating
facilities, locomotives, freight cars, energy generation facilities and transmission assets. Operating lease right-of-use assets
were $5,941 million and lease liabilities were $5,882 million at December 31, 2019. Such amounts were included in otherassets and accounts payable, accruals and other liabilities in our Consolidated Balance Sheet. The weighted average term of
these leases was approximately 7.7 years and the weighted average discount rate used to measure lease liabilities wasapproximately 3.8%. A summary of our remaining operating lease payments as of December 31, 2019 and December 31,
2018 follows (in millions).

Year 1

December 31:
2019
2018

$

Year 2

1,374
1,310

$

1,183
1,268

Year 3

$

950
1,048

Year 4$764
820

Year 5$620
658

Thereafter

Total
lease
payments

Amountrepresenting
interest

$

$

$

1,988
2,079

6,879
7,183

Lease
liabilities(997) $

5,882

Components of operating lease costs in 2019 by type were as follows (in millions).
Operatinglease cost

$

1,459

Short-termlease cost$

178

Variablelease cost$

Subleaseincome

276

$

Total
lease cost(24) $

1,889

Operating lease expense was $1,649 million in 2018 and $1,579 million in 2017.
(13) Goodwill and other intangible assets
Reconciliations of the changes in the carrying value of goodwill during 2019 and 2018 follows (in millions).
December 31,
2019

Balance at beginning of year
Acquisitions of businesses
Other, including foreign currency translation
Balance at end of year

$

$

K-86

81,025 $890(33)
81,882 $2018

81,258376(609)
81,025

Notes to Consolidated Financial Statements (Continued)(13) Goodwill and other intangible assets (Continued)
Our other intangible assets and related accumulated amortization are summarized as follows (in millions).
December 31, 2019
Gross
Accumulated
carrying
amortization
amountInsurance and other:
Trademarks and trade names
Patents and technology
Customer relationships
Other

$

$
Railroad, utilities and energy:
Trademarks and trade names
Customer relationships
Other

$

$

5,286
4,560
27,943
3,364
41,153

$

212
678
113
1,003

$

$

December 31, 2018
Gross
Accumulated
carrying
amortization
amount

759
3,032
5,025
1,286
10,102

$

26
324
58
408

$

$

$

$

5,152
4,446
27,697
3,198
40,493

$

216
678
117
1,011

$

$

727
2,790
4,287
1,190
8,994

23
286
53
362

$

Intangible asset amortization expense was $1,317 million in 2019, $1,393 million in 2018 and $1,469 million in 2017.
Estimated amortization expense over the next five years is as follows (in millions): 2020 – $1,275; 2021 – $1,144; 2022 –$1,082; 2023 – $993 and 2024 – $913. Intangible assets with indefinite lives were $19.0 billion as of December 31, 2019 and$18.9 billion as of December 31, 2018 and primarily related to certain customer relationships and trademarks and trade
names.
(14) Derivative contracts
We are party to derivative contracts through certain of our subsidiaries. Currently, the most significant derivative
contracts consist of equity index put option contracts. The liabilities and related notional values of these contracts follows (inmillions).
Notional
Value

Liabilities

December 31, 2019
December 31, 2018

$

968
2,452

$

14,38526,759

Notional value represents the aggregate undiscounted amounts payable assuming that the value of each index is zero ateach contract’s expiration date. Certain of these contracts are denominated in foreign currencies. Notional amounts are basedon the foreign currency exchange rates as of each balance sheet date.
We recorded derivative contract gains of $1,484 million in 2019, losses of $300 million in 2018 and gains of $718
million in 2017, with respect to our equity index put option contracts. The gains in 2019 were primarily due to increases inequity index values.
The equity index put option contracts are European style options written prior to March 2008 on four major equity
indexes. During 2019, contracts with notional values of approximately $12.3 billion expired and substantially all of theremaining contracts will expire by February 2023. At December 31, 2019, the remaining weighted average life of allcontracts was approximately 1.8 years. We received aggregate premiums of $2.5 billion on the remaining contracts at thecontract inception dates and we have no counterparty credit risk. Future payments, if any, under any given contract will be
required if the prevailing index value is below the contract strike price at the expiration date. The aggregate intrinsic value(the undiscounted liability assuming the contracts are settled based on the index values and foreign currency exchange rates
as of the balance sheet date) was $397 million at December 31, 2019 and $1,653 million at December 31, 2018. These
contracts may not be unilaterally terminated or fully settled before the expiration dates and the ultimate amount of cash basis
gains or losses on these contracts will not be determined until the contract expiration dates.

K-87

Notes to Consolidated Financial Statements (Continued)(14) Derivative contracts (Continued)
Our regulated utility subsidiaries may use forward purchases and sales, futures, swaps and options to manage a portionof their commodity price risks. Most of these net derivative contract assets or liabilities of our regulated utilities are probableof recovery through rates and are offset by regulatory liabilities or assets. Derivative contract assets were $145 million and$172 million at December 31, 2019 and 2018, respectively. Derivative contract liabilities were $76 million and $111 million
at December 31, 2019 and 2018, respectively.
(15) Unpaid losses and loss adjustment expenses
Our liabilities for unpaid losses and loss adjustment expenses (also referred to as “claim liabilities”) under property andcasualty insurance and reinsurance contracts are based upon estimates of the ultimate claim costs associated with claim
occurrences as of the balance sheet date and include estimates for incurred-but-not-reported (“IBNR”) claims. A
reconciliation of the changes in claim liabilities, excluding liabilities under retroactive reinsurance contracts (see Note 16),for each of the three years ending December 31, 2019 is as follows (in millions).
2019

Balances – beginning of year:
Gross liabilities
Reinsurance recoverable on unpaid losses
Net liabilities
Incurred losses and loss adjustment expenses:
Current accident year events
Prior accident years’ events
Total incurred losses and loss adjustment expenses
Paid losses and loss adjustment expenses:
Current accident year events
Prior accident years’ events
Total payments
Foreign currency translation adjustment
Business acquisition (disposition)
Balances – end of year:
Net liabilities
Reinsurance recoverable on unpaid losses
Gross liabilities

$

$

2018

2017

68,458 $(3,060)65,39861,122 $(3,201)
57,92153,379(3,338)50,041

43,335(752)
42,58339,876(1,406)38,47037,702(544)
37,158(19,482)(17,642)(37,124)
(23)
(670)

(18,391)(15,452)(33,843)
(331)
3,181

(17,425)(12,507)(29,932)
654—

70,164
2,855
73,01965,3983,060
68,45857,9213,201
61,122$$

Incurred losses and loss adjustment expenses in the preceding table were recorded in earnings in each period andrelated to insured events occurring in the current year (“current accident year”) and events occurring in all prior years (“prioraccident years”). Current accident year losses included approximately $1.0 billion in 2019, $1.6 billion in 2018 and $3.0
billion in 2017 from significant catastrophe events occurring in each year. The effects of businesses acquired (or disposed)
are included (or excluded) on a retrospective basis for all years presented in the disaggregated accident year incurred and paid
loss and allocated loss adjustment expenses data shown in this Note.
We recorded net reductions of estimated ultimate liabilities for prior accident years of $752 million in 2019,$1,406 million in 2018 and $544 million in 2017, which produced corresponding reductions in incurred losses and loss
adjustment expenses. These reductions, as percentages of the net liabilities at the beginning of each year, were 1.1% in 2019,2.4% in 2018 and 1.1% in 2017.
Estimated ultimate liabilities for prior years’ loss events related to primary insurance were reduced by $457 million in
2019, $937 million in 2018 and $249 million in 2017. The decrease in 2019 was primarily attributable to lower than
anticipated medical professional liability and workers’ compensation losses, partially offset by higher commercial auto andother liability losses. The decreases in 2018 and 2017 were primarily related to workers’ compensation and medical
professional liability claims. Liabilities for prior years’ private passenger auto claims were reduced in 2018 and increased in2017. Estimated ultimate liabilities for prior years’ loss events related to property and casualty reinsurance were reduced$295 million in 2019, $469 million in 2018 and $295 million in 2017.

K-88

Notes to Consolidated Financial Statements (Continued)(15) Unpaid losses and loss adjustment expenses (Continued)
Estimated claim liabilities include amounts for environmental, asbestos and other latent injury exposures, net ofreinsurance recoverable, of approximately $1.7 billion at December 31, 2019 and 2018. These liabilities are subject to change
due to changes in the legal and regulatory environment. We are unable to reliably estimate additional losses or a range oflosses that are reasonably possible for these claims.
A reconciliation of the disaggregated net unpaid losses and allocated loss adjustment expenses (the latter referred to as“ALAE”) of GEICO, Berkshire Hathaway Primary Group (“BH Primary”) and Berkshire Hathaway Reinsurance Group(“BHRG”) to our consolidated unpaid losses and loss adjustment expenses as of December 31, 2019 follows (in millions).

GEICO
PhysicalDamageUnpaid losses and ALAE, net
Reinsurance recoverable
Unpaid unallocated loss
adjustment expenses
Other unpaid losses and loss
adjustment expenses
Unpaid losses and loss adjustment
expenses

$

GEICO
Auto
Liability

BH
Primary
MedicalProfessional
Liability

321 $ 18,475 $—1,014

BH Primary
Workers’Compensation
and Other
Casualty

7,479 $54

BHRG
Property

9,568 $597

BHRG
Casualty

Total

9,382 $ 21,304 $ 66,529
268
852
2,785
2,367
1,338
$ 73,019

GEICO
GEICO’s claim liabilities predominantly relate to various types of private passenger auto liability and physical damage
claims. For such claims, we establish and evaluate unpaid claim liabilities using standard actuarial loss development methods
and techniques. The actuarial methods utilize historical claims data, adjusted when deemed appropriate to reflect perceived
changes in loss patterns. Claim liabilities include average, case, case development and IBNR estimates.
We establish average liabilities based on expected severities for newly reported physical damage and liability claims
prior to establishing an individual case reserve when we have insufficient time or information to make specific claim
estimates and for a large number of minor physical damage claims that once reported are quickly settled. We establish
liability case loss estimates, which include loss adjustment expenses, once the facts and merits of the claim are evaluated.
Estimates for liability coverages are more uncertain than for physical damage coverages primarily due to the longer
claim-tails, the greater chance of protracted litigation and the incompleteness of facts at the time the case estimate is firstestablished. The “claim-tail” is the time period between the claim occurrence date and settlement date. Consequently, weestablish additional case development liabilities, which are usually percentages of the case liabilities. For unreported claims,
IBNR liabilities are estimated by projecting the ultimate number of claims expected (reported and unreported) for eachsignificant coverage and deducting reported claims to produce estimated unreported claims. The product of the average cost
per unreported claim and the number of unreported claims produces the IBNR liability estimate. We may record
supplemental IBNR liabilities in certain situations when actuarial techniques are difficult to apply.

K-89

Notes to Consolidated Financial Statements (Continued)(15) Unpaid losses and loss adjustment expenses (Continued)
GEICO’s incurred and paid losses and ALAE, net of reinsurance, are summarized by accident year below for physicaldamage and auto liability claims. IBNR and case development liabilities are as of December 31, 2019. Claim counts are
established when accidents that may result in a liability are reported and are based on policy coverage. Each claim event may
generate claims under multiple coverages, and thus may result in multiple counts. The “Cumulative Number of Reported
Claims” includes the combined number of reported claims for all policy coverages and excludes projected IBNR claims.
Dollars are in millions.
Physical Damage
Incurred Losses and ALAE through December 31,
Accident
Year

2018*

2018
2019

$

IBNR and Case
Development
Liabilities

2019

8,345

$

Incurred losses and ALAE

$

8,274
9,020
17,294$

Cumulative
Number ofReported
Claims(in thousands)

34
334

8,612
8,772

IBNR and Case
Development
Liabilities

Cumulative
Number ofReported
Claims(in thousands)

Cumulative Paid Losses and ALAE through December 31,
Accident
Year

2018*

2018
2019

$

2019

8,078

$

Paid losses and ALAE
Net unpaid losses and ALAE for 2018 – 2019
Net unpaid losses and ALAE for accident years before 2018
Net unpaid losses and ALAE

$

8,301
8,678
16,979315
6321

Auto Liability
Incurred Losses and ALAE through December 31,
Accident
Year

2015
2016
2017
2018
2019

2015*

$

2016*

10,590$

10,666
11,8002017*$

10,785
12,184
14,095

2018*

$

2019

10,824
12,14913,864
15,383$

Incurred losses and ALAE$

10,853
12,17813,88815,226
16,901
69,046

Cumulative Paid Losses and ALAE through December 31,
Accident
Year

2015
2016
2017
2018
2019

2015*

$

4,579

2016*

$

7,694
5,069

2017*

$

9,133
8,716
5,806

2018*

$

10,007
10,3309,944
6,218

Paid losses and ALAE
Net unpaid losses and ALAE for 2015 – 2019 accident years
Net unpaid losses and ALAE for accident years before 2015
Net unpaid losses and ALAE*

Unaudited required supplemental information

K-90

2019

$

$

10,472
11,294
11,79910,772
6,742
51,07917,967508
18,475

$

156
356
983
2,425
4,694

2,338
2,445
2,628
2,674
2,577

Notes to Consolidated Financial Statements (Continued)(15) Unpaid losses and loss adjustment expenses (Continued)
BH Primary
BH Primary’s liabilities for unpaid losses and loss adjustment expenses primarily derive from medical professional
liability and workers’ compensation and other casualty insurance, including commercial auto and general liability insurance.
Incurred and paid losses and ALAE are summarized by accident year in the following tables, disaggregated by medical
professional liability coverages and workers’ compensation and other casualty coverages. IBNR and case development
liabilities are as of December 31, 2019. The cumulative number of reported claims reflects the number of individual
claimants and includes claims that ultimately resulted in no liability or payment. Dollars are in millions.
BH Primary Medical Professional Liability
We estimate the ultimate expected incurred losses and loss adjustment expenses for medical professional claim
liabilities using commonly accepted actuarial methodologies such as the paid and incurred development method,
Bornhuetter-Ferguson based methods, hindsight outstanding severity method, trended severity method and trended purepremium method. These methodologies produce loss estimates from which we determine our best estimate. Periodically, we
study developments in older accident years and adjust initial loss estimates to reflect recent development based upon claim
age, coverage and litigation experience.
Incurred Losses and ALAE through December 31,
Accident
Year

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019

2010*

2011*

2012*

2013*

2014*

2015*

2016*

2017*

2018*

2019

$1,399 $1,346 $1,348 $1,329 $1,234 $1,140 $1,085 $1,031 $1,006 $ 991 $
1,346 1,334 1,321 1,262 1,173 1,115 1,050 1,004
968
1,336 1,306 1,277 1,223 1,168 1,078 1,035
998
1,328 1,296 1,261 1,195 1,127 1,086
1,019
1,370 1,375 1,305 1,246 1,218
1,127
1,374 1,342 1,269 1,290
1,218
1,392 1,416 1,414
1,394
1,466 1,499
1,495
1,602
1,650
1,670
Incurred losses and ALAE $12,530
Cumulative Paid Losses and ALAE through December 31,

Accident
Year

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019

2010*

$

2011*

15 $

2012*

2013*

2014*

2015*

2016*

2017*

2018*

2019

95 $ 224 $ 377 $ 526 $ 654 $ 745 $ 810 $ 853 $
16
82
200
356
517
632
711
767
15
93
218
377
522
642
725
15
90
219
368
518
635
21
106
238
396
540
23
108
218
382
22
115
274
27
128
35
Paid losses and ALAE
Net unpaid losses and ALAE for 2010 – 2019 accident years
Net unpaid losses and ALAE for accident years before 2010
Net unpaid losses and ALAE*

Cumulative
Number of
IBNR and Case
Reported
Development
ClaimsLiabilities(in thousands)

Unaudited required supplemental information

K-91

888
822
789
743
671
543
461
300
166
39
$ 5,4227,108371$ 7,479

29
38
64
93
184
301
412
685
1,088
1,369

12

11
11
11
11
12
14
18
18
12

Notes to Consolidated Financial Statements (Continued)(15) Unpaid losses and loss adjustment expenses (Continued)
BH Primary Workers’ Compensation and Other Casualty
We periodically evaluate ultimate loss and loss adjustment expense estimates for the workers’ compensation and othercasualty claims using a combination of commonly accepted actuarial methodologies such as the Bornhuetter-Ferguson andchain-ladder approaches using paid and incurred loss data. Paid and incurred loss data is segregated and analyzed by state dueto the different state regulatory frameworks that may impact certain factors including the duration and amount of loss
payments. We also separately study the various components of liabilities, such as employee lost wages, medical expenses andthe costs of claims investigations and administration. We establish case liabilities for reported claims based upon the facts
and circumstances of the claim. The excess of the ultimate projected losses, including the expected development of caseestimates, and the case-basis liabilities is included in IBNR liabilities.
Incurred Losses and ALAE through December 31,
Accident
Year

2010*

2011*

2012*

2013*

2014*

2015*

2016*

2017*

2018*

2019

Cumulative
Number of
IBNR and Case
Reported
Development
ClaimsLiabilities(in thousands)

2010 $ 662 $ 638 $ 612 $ 577 $ 560 $ 556 $ 548 $ 539 $ 531 $ 528 $
2011
738
675
675
624
621
618
607
596
591
2012
873
850
837
791
780
762
750
736
2013
1,258 1,228 1,178 1,127 1,096 1,072
1,050
2014
1,743 1,638 1,614 1,548 1,482
1,497
2015
2,169 2,127 2,042 2,014
2,025
2016
2,511 2,422 2,359
2,325
2017
3,044 2,907
2,842
2018
3,544
3,412
2019
4,074
Incurred losses and ALAE $19,080

36
56
76
149
220
336
533
855
1,445
2,577

41

46
53
67
90
110
114
135
151
147

Cumulative Paid Losses and ALAE through December 31,
Accident
Year

2010*

2011*

2012*

2013*

2010 $ 102 $ 236 $ 314 $
2011
109
220
2012
116
2013
2014
2015
2016
2017
2018
2019

2014*

2015*

417 $
403
414
422
239

2016*

2017*

2018*

2019

459 $ 466 $ 472 $ 480
481
496
505
512
560
592
611
626
725
793
835
858
800 1,007 1,111
1,176
700 1,017 1,289
1,488
329
775 1,148
1,461
441 1,003
1,434
538
1,198
682
Paid losses and ALAE
9,915
Net unpaid losses and ALAE for 2010 – 2019 accident years
9,165
Net unpaid losses and ALAE for accident years before 2010403
Net unpaid losses and ALAE $ 9,568

*

374 $
333
299
177

445 $
453
501
609
557
289

Unaudited required supplemental information

BHRG
We use a variety of methodologies to establish BHRG’s estimates for property and casualty claims liabilities. We use
certain methodologies, such as paid and incurred loss development techniques, incurred and paid loss Bornhuetter-Ferguson
techniques and frequency and severity techniques, as well as ground-up techniques when appropriate.
Our claims liabilities are principally a function of reported losses from ceding companies, case development and IBNR
liability estimates. Case loss estimates are reported under our contracts either individually or in bulk as provided under theterms of the contracts. We may independently evaluate case losses reported by the ceding company, and if deemed
appropriate, we may establish case liabilities based on our estimates.
K-92

Notes to Consolidated Financial Statements (Continued)(15) Unpaid losses and loss adjustment expenses (Continued)
Estimated IBNR liabilities are affected by expected case loss emergence patterns and expected loss ratios, which areevaluated as groups of contracts with similar exposures or on a contract-by-contract basis. Case and IBNR liability estimatesfor major catastrophe events are generally based on a per-contract assessment of the ultimate cost associated with theindividual loss event. Claim count data is not provided consistently by ceding companies under our contracts or is otherwise
considered unreliable.
Incurred and paid losses and ALAE of BHRG are disaggregated based on losses that are expected to have shorter
claim-tails (property) and losses expected to have longer claim-tails (casualty). Under certain contracts, the coverage canapply to multiple lines of business written by the ceding company, whether property, casualty or combined, and the cedingcompany may not report loss data by such lines consistently, if at all. In those instances, we allocated losses to property andcasualty coverages based on internal estimates. BHRG’s disaggregated incurred and paid losses and ALAE are summarized
by accident year, net of reinsurance. IBNR and case development liabilities are as of December 31, 2019. Dollars are in
millions.
BHRG Property
Incurred Losses and ALAE through December 31,
Accident
Year

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019

2010*

2011*

2012*

2013*

2014*

2015*

2016*

2017*

2018*

2019

$ 2,516 $ 2,475 $ 2,354 $ 2,226 $ 2,138 $ 2,103 $ 2,085 $ 2,064 $ 2,074 $ 2,062 $
4,197
4,138
3,851
3,754
3,753
3,723
3,700
3,686
3,674
3,132
2,828
2,624
2,384
2,331
2,328
2,311
2,295
3,181
3,022
2,679
2,589
2,569
2,510
2,459
2,615
2,417
2,306
2,162
2,107
2,035
3,243
3,084
2,528
2,935
2,932
3,266
3,892
3,617
3,594
5,258
4,959
4,807
4,366
4,468
4,100
Incurred losses and ALAE $32,426
Cumulative Paid Losses and ALAE through December 31,

Accident
Year

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019

*

IBNR and Case
Development
Liabilities

2010*

$

2011*

2012*

2013*

2014*

2015*

2016*

2017*

2018*

2019

335 $ 1,059 $ 1,485 $ 1,742 $ 1,905 $ 1,954 $ 2,000 $ 2,024 $ 2,031 $ 2,043
664
2,305
2,957
3,219
3,336
3,426
3,467
3,512
3,530
260
1,219
1,797
1,935
2,023
2,099
2,118
2,163
513
1,416
1,854
2,050
2,170
2,251
2,290
464
1,235
1,561
1,699
1,764
1,814
574
1,591
1,940
2,134
2,239
705
1,790
2,181
2,641
1,027
2,716
3,638
907
2,309
747
Paid losses and ALAE 23,414
Net unpaid losses and ALAE for 2010 – 2019 accident years
9,012
Net unpaid losses and ALAE for accident years before 2010370
Net unpaid losses and ALAE $ 9,382

Unaudited required supplemental information

K-93

23
41
47
61
77
208
281
478
1,025
1,977

Notes to Consolidated Financial Statements (Continued)(15) Unpaid losses and loss adjustment expenses (Continued)
BHRG Casualty
Incurred Losses and ALAE through December 31,
Accident
Year

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019

2010*

2011*

2012*

2013*

2014*

2015*

2016*

2017*

2018*

2019

$ 2,296 $ 2,383 $ 2,316 $ 2,253 $ 2,135 $ 2,085 $ 2,040 $ 1,878 $ 1,958 $ 1,913 $
2,602
2,690
2,560
2,500
2,411
2,320
2,313
2,274
2,240
2,784
2,962
2,797
2,861
2,790
2,678
2,611
2,554
2,124
2,257
2,287
2,131
2,077
2,023
1,928
1,863
2,058
2,027
1,990
1,904
1,942
1,870
2,071
2,098
1,999
1,872
1,900
2,106
2,014
1,971
2,186
2,674
2,552
2,914
3,544
3,405
Incurred losses and ALAE $23,921
Cumulative Paid Losses and ALAE through December 31,

Accident
Year

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019

*

IBNR and Case
Development
Liabilities

2010*

$

117 $

2011*

542 $
289

2012*

2013*

2014*

2015*

2016*

2017*

2018*

2019

834 $ 1,022 $ 1,274 $ 1,369 $ 1,433 $ 1,478 $ 1,526 $ 1,552
812
1,155
1,395
1,483
1,575
1,653
1,693
1,727
307
745
1,136
1,365
1,522
1,646
1,746
1,805
290
517
802
930
1,034
1,135
1,195
149
474
639
748
871
955
195
487
710
830
921
252
553
730
860
230
562
816
264
865
351
Paid losses and ALAE 11,047
Net unpaid losses and ALAE for 2010 – 2019 accident years 12,874
Net unpaid losses and ALAE for accident years before 2010
8,430
Net unpaid losses and ALAE $21,304

Unaudited required supplemental information

K-94

203
299
318
411
574
534
680
941
1,511
2,348

Notes to Consolidated Financial Statements (Continued)(15) Unpaid losses and loss adjustment expenses (Continued)
Required supplemental unaudited average historical claims duration information based on the net losses and ALAE
incurred and paid accident year data in the preceding tables follows. The percentages show the average portions of net losses
and ALAE paid by each succeeding year, with year 1 representing the current accident year.
In YearAverage Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance
1
2
3
4
5
6

GEICO Physical Damage
GEICO Auto Liability
BH Primary Medical Professional Liability
BH Primary Workers’ Compensation and Other Casualty
BHRG Property
BHRG Casualty

98%
42%
2%
16%
19%
10%

2%
29%
7%
21%
36%
17%

13% 8% 4%
12% 15% 15% 12%
16% 12% 8% 5%
17% 9% 4% 3%
13% 8% 7% 5%

7

8

9

10

9%
3%
1%
4%

6%
2%
1%
2%

5%
1%
0%
2%

4%
2%
1%
1%

(16) Retroactive reinsurance contracts
Retroactive reinsurance policies provide indemnification of losses and loss adjustment expenses of short-duration
insurance contracts with respect to underlying loss events that occurred prior to the contract inception date. Claims payments
may commence immediately after the contract date or, when applicable, once a contractual retention amount has beenreached. Reconciliations of the changes in estimated liabilities for retroactive reinsurance unpaid losses and loss adjustment
expenses (“claim liabilities”) and related deferred charge reinsurance assumed assets for each of the three years ended
December 31, 2019 follows (in millions).
2019
2018
2017
Unpaid losses Deferred Unpaid losses Deferred Unpaid losses Deferredand losschargesand losschargesand losschargesadjustment reinsurance adjustment reinsurance adjustment reinsurance
expensesassumedexpensesassumedexpensesassumedBalances – beginning of year$
Incurred losses and loss adjustment expenses
Current year contracts
Prior years’ contracts
Total
Paid losses and loss adjustment expenses
Balances – end of year$
Incurred losses and loss adjustment expenses, netof deferred charges$

41,834 $ (14,104) $42,937 $ (15,278) $24,972 $

1,138
(453)
378
810
1,516
357
(909)
—
42,441 $ (13,747) $

603
(86)
(341)
1,260
262
1,174
(1,365)—41,834 $ (14,104) $19,005(7,730)(41)
499
18,964(7,231)(999)—
42,937 $ (15,278)

1,873

1,436

11,733$$(8,047)In the preceding table, classifications of incurred losses and loss adjustment expenses are based on the inception datesof the contracts. We do not believe that analysis of losses incurred and paid by accident year of the underlying event isrelevant or meaningful given that our exposure to losses incepts when the contract incepts. Further, we believe theclassifications of reported claims and case development liabilities has little or no practical analytical value.
In the first quarter of 2017, we entered into an agreement with various subsidiaries of American International Group,
Inc. (collectively, “AIG”) to indemnify AIG for 80% of up to $25 billion of losses and allocated loss adjustment expenses inexcess of $25 billion retained by AIG, with respect to certain commercial insurance loss events occurring prior to 2016. At
the inception of the contract, we recorded premiums earned of $10.2 billion, and we also recorded a liability for unpaid losses
and loss adjustment expenses of $16.4 billion and a deferred charge reinsurance assumed asset of $6.2 billion.
In the fourth quarter of 2017, we increased our estimated ultimate claim liabilities under the aforementioned AIG
contract by approximately $1.8 billion based on higher than expected loss payments reported by AIG under the contractual
retention. We also increased the related deferred charge asset by $1.7 billion based on our re-estimation of the amounts andtiming of future claim payments. The estimated ultimate claim liabilities with respect to the AIG contract were approximately$18.2 billion at both December 31, 2019 and 2018 and the related deferred charge assets were approximately $6.3 billion at
December 31, 2019 and $6.9 billion at December 31, 2018.

K-95

Notes to Consolidated Financial Statements (Continued)(16) Retroactive reinsurance contracts (Continued)
Incurred losses and loss adjustment expenses related to contracts written in prior years were $1,188 million in 2019,$919 million in 2018 and $458 million in 2017, which included recurring amortization of deferred charges and the effect ofchanges in the timing and amount of expected future loss payments.
In establishing retroactive reinsurance claim liabilities, we analyze historical aggregate loss payment patterns andproject losses into the future under various probability-weighted scenarios. We expect the claim-tail to be very long for many
contracts, with some lasting several decades. We monitor claim payment activity and review ceding company reports andother information concerning the underlying losses. We reassess and revise the expected timing and amounts of ultimate
losses periodically or when significant events are revealed through our monitoring and review processes.
Our retroactive reinsurance claim liabilities include estimated liabilities for environmental, asbestos and other latent
injury exposures of approximately $12.9 billion at December 31, 2019 and $13.1 billion at December 31, 2018. Retroactive
reinsurance contracts are generally subject to aggregate policy limits and thus, our exposure to such claims under thesecontracts is likewise limited. We monitor evolving case law and its effect on environmental and other latent injury claims.
Changing laws or government regulations, newly identified toxins, newly reported claims, new theories of liability, newcontract interpretations and other factors could result in increases in these liabilities, which could be material to our results ofoperations. We are unable to reliably estimate the amount of additional net loss or the range of net loss that is reasonably
possible.
(17) Notes payable and other borrowings
Notes payable and other borrowings are summarized below (in millions). The weighted average interest rates andmaturity date ranges shown in the following tables are based on borrowings as of December 31, 2019.
Weighted
Average
Interest Rate

Insurance and other:Berkshire Hathaway Inc. (“Berkshire”):
U.S. Dollar denominated due 2020-2047
Euro denominated due 2020-2035
Japanese Yen denominated due 2024-2049
Berkshire Hathaway Finance Corporation (“BHFC”):
U.S. Dollar denominated due 2020-2049
Great Britain Pound denominated due 2039-2059
Other subsidiary borrowings due 2020-2045
Short-term subsidiary borrowings

December 31,
2019

2018

3.2% $
1.1%
0.5%

8,324
7,641
3,938

4.1%
2.5%
4.0%
3.9%

8,679
2,274
5,262
1,472
37,590

$

$

$

9,065
7,806
—
10,650
—
5,597
1,857
34,975In September 2019, Berkshire issued ¥430.0 billion of senior notes consisting of ¥108.5 billion of 0.17% senior notes
due in 2024, ¥61.0 billion of 0.27% senior notes due in 2026, ¥146.5 billion of 0.44% senior notes due in 2029, ¥19.0 billionof 0.787% senior notes due in 2034, ¥59.0 billion of 0.965% senior notes due in 2039 and ¥36.0 billion of 1.108% seniornotes due in 2049.
Borrowings of BHFC, a wholly-owned finance subsidiary of Berkshire, consist of senior unsecured notes used to fundmanufactured housing loans originated or acquired and equipment held for lease of certain subsidiaries. During 2019, BHFC
repaid $3.95 billion of maturing senior notes. In 2019, BHFC issued $2.0 billion of 4.25% senior notes due in 2049 and £1.75
billion of senior notes consisting of £1.0 billion of 2.375% senior notes due in 2039 and £750 million of 2.625% senior notes
due in 2059. Such borrowings are fully and unconditionally guaranteed by Berkshire.
The carrying values of our non-U.S. Dollar denominated senior notes (€6.85 billion, £1.75 billion and ¥430 billion par)reflect the applicable exchange rates as of the balance sheet dates. The effects of changes in foreign currency exchange rates
during the period are recorded in earnings as a component of selling, general and administrative expenses. Changes in theexchange rates resulted in pre-tax gains of $192 million in 2019 and $366 million in 2018 and losses of $990 million in 2017.

K-96

Notes to Consolidated Financial Statements (Continued)(17) Notes payable and other borrowings (Continued)
In addition to BHFC borrowings, at December 31, 2019, Berkshire has guaranteed approximately $1.2 billion of othersubsidiary borrowings. Generally, Berkshire’s guarantee of a subsidiary’s debt obligation is an absolute, unconditional andirrevocable guarantee for the full and prompt payment when due of all payment obligations.
Weighted
Average
Interest Rate

Railroad, utilities and energy:
Berkshire Hathaway Energy Company (“BHE”) and subsidiaries:
BHE senior unsecured debt due 2020-2049
Subsidiary and other debt due 2020-2064
Short-term debt
Burlington Northern Santa Fe and subsidiaries due 2020-2097

December 31,
2019

4.6% $
4.5%
2.5%
4.6%
$

2018

8,581
30,772
3,214
23,211
65,778$

8,577
28,196
2,516
23,22662,515$

BHE subsidiary debt represents amounts issued pursuant to separate financing agreements. Substantially all of theassets of certain BHE subsidiaries are, or may be, pledged or encumbered to support or otherwise secure debt. Theseborrowing arrangements generally contain various covenants, including covenants which pertain to leverage ratios, interest
coverage ratios and/or debt service coverage ratios. During 2019, BHE and its subsidiaries issued approximately $4.6 billion
of long-term debt, with maturity dates ranging from 2029 to 2059 and with a weighted average interest rate of 3.6%. In
January 2020, a BHE subsidiary issued $725 million of term debt consisting of $425 million of 2.4% notes due in 2030 and$300 million of 3.125% notes due in 2050.
BNSF’s borrowings are primarily senior unsecured debentures. In July 2019, BNSF issued $825 million of 3.55%
senior unsecured debentures due in 2050. As of December 31, 2019, BNSF, BHE and their subsidiaries were in compliancewith all applicable debt covenants. Berkshire does not guarantee any debt, borrowings or lines of credit of BNSF, BHE or
their subsidiaries.
As of December 31, 2019, our subsidiaries had unused lines of credit and commercial paper capacity aggregating
approximately $7.1 billion to support short-term borrowing programs and provide additional liquidity. Such unused lines ofcredit included approximately $5.6 billion related to BHE and its subsidiaries.
Debt principal repayments expected during each of the next five years are as follows (in millions).
2020

Insurance and otherRailroad, utilities and energy

$
$

2021

4,097
6,323
10,420

$
$

3,246
2,225
5,471

2022

$
$

1,609
3,349
4,958

2023

$

2024

5,341
4,061
9,402

$

$

2,190
2,890
5,080

$

(18) Income taxes
The liabilities for income taxes reflected in our Consolidated Balance Sheets are as follows (in millions).
December 31,
2019

Currently payable
Deferred
Other

$

$

K-97

24
65,823952
66,799

2018

$

$

323
50,503549
51,375

Notes to Consolidated Financial Statements (Continued)(18) Income taxes (Continued)
On December 22, 2017, President Trump signed into law legislation known as the Tax Cuts and Jobs Act of 2017(“TCJA”). Among its provisions, the TCJA reduced the statutory U.S. Corporate income tax rate from 35% to 21% effective
January 1, 2018. The TCJA also provided for a one-time tax on certain accumulated undistributed post-1986 earnings offoreign subsidiaries. Further, the TCJA includes provisions that, in certain instances, impose U.S. income tax liabilities on
earnings of foreign subsidiaries and limit the deductibility of interest expenses. The TCJA also provides for accelerated
deductions of certain capital expenditures made after September 27, 2017 through bonus depreciation.
In 2017, upon the enactment of the TCJA, we recorded a reduction in our deferred income tax liabilities ofapproximately $35.6 billion for the effect of the reduction in the U.S. statutory income tax rate. As a result, we recorded anincome tax benefit of approximately $29.6 billion and we increased regulatory liabilities of our regulated utility subsidiaries
by approximately $6.0 billion for the portion of the deferred income tax liability reduction that we will be required to,effectively, refund to customers in the rate setting process. We also recognized an income tax charge of approximately$1.4 billion with respect to the deemed repatriation of the accumulated undistributed post-1986 earnings of our foreignsubsidiaries. Thus, upon the enactment of the TCJA, we included a net income tax benefit in our 2017 earnings ofapproximately $28.2 billion. In 2018, we reduced our estimate of the income taxes on the deemed repatriation of earnings offoreign subsidiaries and recognized additional deferred income tax rate change effects.
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax
liabilities are shown below (in millions).
December 31,
2019

Deferred tax liabilities:
Investments – unrealized appreciation and cost basis differences
Deferred charges reinsurance assumed
Property, plant and equipment and equipment held for lease
Goodwill and other intangible assets
Other

$

2018

32,1342,890
29,3887,293
3,144
74,849$17,7652,970
28,2797,199
3,187
59,400(1,086)(853)(1,981)(1,610)(3,496)(9,026)65,823 $(1,238)(767)(1,956)(1,673)(3,263)(8,897)50,503

Deferred tax assets:
Unpaid losses and loss adjustment expenses
Unearned premiums
Accrued liabilities
Regulatory liabilities
Other
Net deferred tax liability$

We have not established deferred income taxes on accumulated undistributed earnings of certain foreign subsidiaries,
which are expected to be reinvested indefinitely. Repatriation of all accumulated earnings of foreign subsidiaries would be
impracticable to the extent that such earnings represent capital to support normal business operations. Generally, no U.S.
federal income taxes will be imposed on future distributions of foreign earnings under current law. However, distributions to
the U.S. or other foreign jurisdictions could be subject to withholding and other local taxes.
Income tax expense reflected in our Consolidated Statements of Earnings for each of the three years ending
December 31, 2019 is as follows (in millions).
2019

FederalState
Foreign$$
Current
Deferred

$
$

K-98

2018

19,069625
1,210
20,904$

5,818
15,086
20,904

$

$

$

2017

(1,613) $175
1,117(321) $

(23,427)
894
1,018(21,515)

5,176 $
(5,497)(321) $

3,299
(24,814)(21,515)

Notes to Consolidated Financial Statements (Continued)(18) Income taxes (Continued)
Income tax expense is reconciled to hypothetical amounts computed at the U.S. federal statutory rate for each of thethree years ending December 31, 2019 in the table below (in millions).
2019

2018

Earnings before income taxes$

102,696

Hypothetical income tax expense computed at the U.S. federal statutory rate
Dividends received deduction and tax-exempt interest
State income taxes, less U.S. federal income tax benefit
Foreign tax rate differences
U.S. income tax credits
Net benefit from the enactment of the TCJA
Other differences, net$

21,566 $
(433)
494
(6)
(942)
—
225
20,904 $

$

$

4,001

2017

$

23,838

840 $
(393)
138
271
(711)
(302)
(164)
(321) $

8,343
(905)
465
(339)
(636)
(28,200)(243)(21,515)

We file income tax returns in the United States and in state, local and foreign jurisdictions. We have settled income tax
liabilities with the U.S. federal taxing authority (“IRS”) for tax years through 2011. The IRS is auditing Berkshire’s
consolidated U.S. federal income tax returns for the 2012 through 2016 tax years. We are 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 these income tax
examinations will be settled in 2020. We currently do not believe that the outcome of unresolved issues or claims will bematerial to our Consolidated Financial Statements.
At December 31, 2019 and 2018, net unrecognized tax benefits were $952 million and $549 million, respectively.
Included in the balance at December 31, 2019, were $795 million of tax positions that, if recognized, would impact theeffective tax rate. The remaining balance in net unrecognized tax benefits principally relates to tax positions where theultimate recognition is highly certain but there is uncertainty about the timing of recognition. Because of the impact ofdeferred income tax accounting, these positions, when recognized, would not affect the annual effective income tax rate. In
2019, we recorded income tax expense of $377 million for uncertain tax positions related to investments by a subsidiary incertain tax equity investment funds that generated income tax benefits from 2015 through 2018. We now believe that it ismore likely than not those income tax benefits are not valid. As of December 31, 2019, we do not expect any material
increases to the estimated amount of unrecognized tax benefits in the next twelve months.
(19) Dividend restrictions – Insurance subsidiaries
Payments of dividends by our insurance subsidiaries are restricted by insurance statutes and regulations. Without priorregulatory approval, our principal insurance subsidiaries may declare up to approximately $21 billion as ordinary dividends
during 2020.
Combined shareholders’ equity of U.S. based insurance subsidiaries determined pursuant to statutory accounting rules(Surplus as Regards Policyholders) was approximately $216 billion at December 31, 2019 and $162 billion at December 31,
2018. Statutory surplus differs from the corresponding amount based on GAAP due to differences in accounting for certain
assets and liabilities. For instance, deferred charges reinsurance assumed, deferred policy acquisition costs, unrealized gains
on certain investments and related deferred income taxes are recognized for GAAP but not for statutory reporting purposes.
In addition, the carrying values of certain assets, such as goodwill and the carrying values of non-insurance entities owned by
our insurance subsidiaries, are not fully recognized for statutory reporting purposes.

K-99

Notes to Consolidated Financial Statements (Continued)(20) Fair value measurements
Our financial assets and liabilities are summarized below as of December 31, 2019 and December 31, 2018, with fairvalues shown according to the fair value hierarchy (in millions). The carrying values of cash and cash equivalents, U.S.
Treasury Bills, receivables and accounts payable, accruals and other liabilities are considered to be reasonable estimates of
their fair values.

Carrying
Value

December 31, 2019
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations andagencies
Foreign governments
Corporate bonds
Other
Investments in equity securities
Investment in Kraft Heinz common stock
Loans and finance receivables
Derivative contract assets (1)Derivative contract liabilities:
Railroad, utilities and energy (1)Equity index put options
Notes payable and other borrowings:
Insurance and otherRailroad, utilities and energy
December 31, 2018
Investments in fixed maturity securities:
U.S. Treasury, U.S. government corporations andagencies
Foreign governments
Corporate bonds
Other
Investments in equity securities
Investment in Kraft Heinz common stock
Loans and finance receivables
Derivative contract assets (1)Derivative contract liabilities:
Railroad, utilities and energy (1)Equity index put options
Notes payable and other borrowings:
Insurance and otherRailroad, utilities and energy
(1)

$

$

3,090
8,638
6,352
605
248,027
13,757
17,527
145

QuotedPrices(Level 1)

Fair Value

$

3,090
8,638
6,352
605
248,027
10,456
17,861
145

$

3,046
5,437
—
—
237,271
10,456——Significant
Other
Observable
Inputs(Level 2)

Significant
Unobservable
Inputs(Level 3)

$

$

44
3,201
6,350
605
46
—
1,809
23

—
—
2
—
10,710—16,052
122

76
968

76
968

6
—

59
—

11
968

37,59065,77840,58976,237——40,56976,237

20
—

4,223
7,502
7,440
733
172,757
13,813
16,280
172

$

4,223
7,502
7,440
733
172,757
14,007
16,377
172

$

2,933
5,417
—
—
172,253
14,007
—
2

$

1,290
2,085
7,434
733
203
—
1,531
52

$

—
—
6
—
301
—
14,846
118

111
2,452

111
2,452

1
—

101
—

9
2,452

34,97562,51535,361
66,422——35,33566,42226—

Assets are included in other assets and liabilities are included in accounts payable, accruals and other liabilities.

K-100

Notes to Consolidated Financial Statements (Continued)(20) Fair value measurements (Continued)
The fair values of substantially all of our financial instruments were measured using market or income approaches. The
hierarchy for measuring fair value consists of Levels 1 through 3, which are described below.
Level 1 – Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.
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 of the assets or
liabilities, such as interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default
rates; and inputs that are derived principally from or corroborated by observable market data by correlation or othermeans. 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 of
the issuer or entities in the same industry sector.
Level 3 – Inputs include unobservable inputs used in the measurement of assets and liabilities. Management isrequired to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in theassets or liabilities and it 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 valuing assets or liabilities.
Reconciliations of assets and liabilities measured and carried at fair value on a recurring basis with the use ofsignificant unobservable inputs (Level 3) for each of the three years ending December 31, 2019 follow (in millions).
Investmentsin equity and
fixed maturity
securities

Balance December 31, 2016
Gains (losses) included in:
Earnings
Other comprehensive income
Regulatory assets and liabilities
Dispositions and settlements
Transfers into/out of Level 3
Balance December 31, 2017
Gains (losses) included in:
Earnings
Other comprehensive income
Regulatory assets and liabilities
Acquisitions
Dispositions and settlements
Balance December 31, 2018
Gains (losses) included in:
Earnings
Other comprehensive income
Regulatory assets and liabilities
Acquisitions
Dispositions and settlements
Balance December 31, 2019

$

$

K-101

Net
derivative
contract
liabilities

17,321$(2,824)

—
1,157
—
(59)
(18,413)
6

888
(3)
(1)
(129)
—
(2,069)

—
—
—
2
(1)
7

(118)
2
3
3
(164)
(2,343)404——
10,000(4)
10,407 $

1,972
(1)
(26)
6
(465)
(857)

Notes to Consolidated Financial Statements (Continued)(20) Fair value measurements (Continued)
We acquired investments in Occidental Cumulative Perpetual Preferred Stock (“Occidental Preferred”) and Occidental
common stock warrants in August 2019 at an aggregate cost of $10 billion. We currently consider the fair value
measurements to contain Level 3 inputs. See Note 4. We acquired preferred stock and common stock warrants of Bank ofAmerica Corporation (“BAC”) in 2011. We exercised the BAC warrants to acquire BAC common stock in August 2017. As
payment of the cost to acquire the BAC common stock, we surrendered substantially all of the BAC preferred stock.
Additionally, in December 2017, Restaurant Brands International Inc. (“RBI”) redeemed a $3 billion private placement
security that we acquired in 2014. During 2017, we concluded the Level 3 inputs used in the previous fair value
determinations of the BAC warrants, BAC preferred stock and RBI investments were not significant and we transferred thesemeasurements from Level 3 to Level 2.
Quantitative information as of December 31, 2019, with respect to assets and liabilities measured and carried at fairvalue on a recurring basis with the use of significant unobservable inputs (Level 3) follows (in millions).
Fair
Value

Principal
Valuation
Techniques$ 10,314

Discounted cash flow

Expected duration
Discount for transferability
restrictions and subordination

10 years
375 basis
pointsCommon stock warrants

90

Warrant pricing model

Expected duration
Volatility

10 years
26%

Derivative contract liabilities

968

Option pricing model

Volatility

16%

Investments in equity securities:
Preferred stock

Unobservable
Inputs

Weighted
Average

Investments in equity securities at December 31, 2019 included the Occidental Preferred and common stock warrants.
These investments are subject to contractual restrictions on transferability and contain provisions that currently prevent us
from economically hedging our investments. In applying discounted cash flow techniques in valuing the Occidental
Preferred, we made assumptions regarding the expected duration of the investment. The Occidental Preferred is redeemableat Occidental’s option beginning in 2029. We also made estimates regarding the impact of subordination, as the Occidental
Preferred has a lower priority in liquidation than debt instruments. In valuing the Occidental common stock warrants, weused a warrant valuation model. While most of the inputs to the model are observable, we made assumptions regarding the
expected duration and volatility of the warrants. The Occidental common stock warrants expire on the one-year anniversary
on which no Occidental Preferred remains outstanding.
Our equity index put option contracts are illiquid and contain contract terms that are not standard in derivatives
markets. For example, we are not required to post collateral under most of our contracts. We determine the fair value of theequity index put option contract liabilities based on the Black-Scholes option valuation model. Given the current index
values, remaining contract durations and applicable strike prices for these contracts, we believe the only significant model
input after December 31, 2019 is the prevailing index price, which is observable.

K-102

Notes to Consolidated Financial Statements (Continued)(21) Common stock
Changes in Berkshire’s issued, treasury and outstanding common stock during the three years ending December 31,
2019 are shown in the table below. In addition to our common stock, 1,000,000 shares of preferred stock are authorized, but
none are issued.
Class A, $5 Par Value(1,650,000 shares authorized)
IssuedTreasury Outstanding

Balance December 31, 2016
Conversions of Class A common stock toClass B common stock and exercises of
replacement stock options
Balance December 31, 2017
Conversions of Class A common stock toClass B common stock and exercises of
replacement stock options
Treasury stock acquired
Balance December 31, 2018
Conversions of Class A common stock toClass B common stock and exercises of
replacement stock options
Treasury stock acquired
Balance December 31, 2019

Class B, $0.0033 Par Value(3,225,000,000 shares authorized)
IssuedTreasury
Outstanding

788,058(11,680)

776,378 1,303,323,927(1,409,762) 1,301,914,165(25,303)762,755—(11,680)(25,303)38,742,822
751,075 1,342,066,749—
38,742,822(1,409,762) 1,340,656,987(20,542)—742,213—(1,217)(12,897)(20,542)
31,492,234(1,217)—729,316 1,373,558,983—
31,492,234(4,729,147)(4,729,147)(6,138,909) 1,367,420,074(22,906)—
719,307—(4,440)(17,337)(22,906)
34,624,869—
34,624,869(4,440)— (17,563,410) (17,563,410)
701,970 1,408,183,852 (23,702,319) 1,384,481,533

Each Class A common share is entitled to one vote per share. Class B common stock possesses dividend anddistribution rights equal to one-fifteen-hundredth (1/1,500) of such rights of Class A common stock. Each Class B commonshare possesses voting rights equivalent to one-ten-thousandth (1/10,000) of the voting rights of a Class A share. Unlessotherwise 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 shares of Class B common stock.
Class B common stock is not convertible into Class A common stock. On an equivalent Class A common stock basis, there
were 1,624,958 shares outstanding as of December 31, 2019 and 1,640,929 shares outstanding as of December 31, 2018.
Since we have two classes of common stock, we provide earnings per share data on the Consolidated Statements ofEarnings for average equivalent Class A shares outstanding and average equivalent Class B shares outstanding. Class B
shares are economically equivalent to one-fifteen-hundredth (1/1,500) of a Class A share. Average equivalent Class A shares
outstanding represents average Class A shares outstanding plus one-fifteen-hundredth (1/1,500) of the average Class B shares
outstanding. Average equivalent Class B shares outstanding represents average Class B shares outstanding plus 1,500 times
average Class A shares outstanding.
For several years, Berkshire had a common stock repurchase program, which permitted Berkshire to repurchase its
Class A and Class B shares at prices no higher than a 20% premium over the book value of the shares. In 2018, Berkshire’s
Board of Directors authorized an amendment to the program, permitting Berkshire to repurchase shares any time that Warren
Buffett, Berkshire’s Chairman of the Board and Chief Executive Officer, and Charlie Munger, Vice Chairman of the Board,
believe that the repurchase price is below Berkshire’s intrinsic value, conservatively determined. The program continues toallow share repurchases in the open market or through privately negotiated transactions and does not specify a maximum
number of shares to be repurchased. However, repurchases will not be made if they would reduce the total value ofBerkshire’s consolidated cash, cash equivalents and U.S. Treasury Bill holdings below $20 billion. The repurchase program
does not obligate Berkshire to repurchase any specific dollar amount or number of Class A or Class B shares and there is no
expiration date to the program.

K-103

Notes to Consolidated Financial Statements (Continued)(22) Accumulated other comprehensive income
A summary of the net changes in after-tax accumulated other comprehensive income attributable to Berkshire
Hathaway shareholders and amounts reclassified out of accumulated other comprehensive income for each of the three years
ending December 31, 2019 follows (in millions).
Unrealized
appreciationofinvestments,
net

Balance December 31, 2016
Other comprehensive income, net before reclassifications
Reclassifications into net earnings:
Reclassifications before income taxes
Applicable income taxes
Balance December 31, 2017
Reclassifications to retained earnings upon
adoption of new accounting standards
Other comprehensive income, net before reclassifications
Reclassifications into net earnings:
Reclassifications before income taxes
Applicable income taxes
Balance December 31, 2018
Other comprehensive income, net before reclassifications
Reclassifications into net earnings:
Reclassifications before income taxes
Applicable income taxes
Balance December 31, 2019$

Definedbenefitpensionplans

Foreigncurrencytranslation

Accumulated
othercomprehensive
incomeOther

43,176 $ (5,268) $19,8262,151(593) $
65(17) $
16

37,29822,058(1,399)490
62,0933—(3,114)

155
(47)
(420)

19
(6)
12

(1,222)437
58,571(61,340)
(183)

(65)
(1,424)

36
(513)

(6)
25

(61,375)(2,095)

(253)
53
370
160

—
—
(4,603)
257

116
(35)
(816)
(644)

5
(2)
34
(48)

(132)
16
(5,015)
(275)

9
(4)
(9) $

42
5
(5,243)

$

(62)
—
95
13
—
(4)
481 $ (4,346) $ (1,369) $(23) Supplemental cash flow information
A summary of supplemental cash flow information for each of the three years ending December 31, 2019 is presented
in the following table (in millions).
2019

Cash paid during the period for:
Income taxes
Interest:
Insurance and otherRailroad, utilities and energy
Non-cash investing and financing activities:
Liabilities assumed in connection with business acquisitions
Right-of-use assets obtained in exchange for new operating lease liabilities
Equity securities surrendered in connection with warrant exercise

K-104

$

5,415

2018

$

4,354

2017

$

3,286

1,011
2,879

1,111
2,867

1,260
2,828

766
782
—

3,735
—
—

747
—
4,965

Notes to Consolidated Financial Statements (Continued)(24) Revenues from contracts with customers
On January 1, 2018, we adopted ASC 606 “Revenues from Contracts with Customers.” Under ASC 606, revenues arerecognized when a good or service is transferred to a customer. A good or service is transferred when or as the customer
obtains control of that good or service. Revenues are based on the consideration we expect to receive in connection with our
promises to deliver goods and services to our customers.
The following tables summarize customer contract revenues disaggregated by reportable segment and the source of therevenue for the years ended December 31, 2019 and 2018 (in millions). Other revenues included in consolidated revenues
were primarily insurance premiums earned, interest, dividend and other investment income and leasing revenues which are
not within the scope of ASC 606.

2019

Manufactured products:
Industrial and commercial products
Building products
Consumer products
Grocery and convenience store distribution
Food and beverage distribution
Auto sales
Other retail and wholesale distribution
ServiceElectricity and natural gas
Total
Other revenue

McLane Service andRetailManufacturing Company

$

$

2018

Manufactured products:
Industrial and commercial products
Building products
Consumer products
Grocery and convenience store distribution
Food and beverage distribution
Auto sales
Other retail and wholesale distribution
ServiceElectricity and natural gas
Total
Other revenue

$

BNSF

Total

25,311 $
— $
184 $
— $
— $
— $ 25,495
15,620—————15,62014,120—————14,120— 33,057————
33,057— 16,767————
16,767
—
—
8,481
—
—
—
8,481
2,299
—
12,213———
14,512
1,642
539
4,062 23,302
4,096—
33,641————
14,819—14,81958,992 50,363
24,940 23,302
18,915— 176,512
3,632
95
4,459
55
1,181
68,682
78,10462,624 $ 50,458 $ 29,399 $ 23,357 $ 20,096 $ 68,682 $254,616

Manufacturing$

Berkshire Insurance,
Hathaway Corporate
Energyand other

McLaneCompany

Serviceand Retail

Berkshire Insurance,
Hathaway Corporate
Energyand other

BNSF

Total

25,707 $
— $
204 $
— $
— $
— $ 25,911
14,323—————
14,323
14,790—————14,790—33,518————33,518—16,309————16,309
—
—
8,181
—
—
—
8,181
2,091
—
12,067———
14,158
1,519
84
4,100
23,652
3,949—
33,304————
14,951—
14,95158,43049,911
24,552
23,652
18,900— 175,445
3,340
76
4,297
51
1,070
63,55872,392
61,770 $ 49,987 $ 28,849 $ 23,703 $ 19,970 $ 63,558 $247,837

A summary of the transaction price allocated to the significant unsatisfied remaining performance obligations relating
to contracts with expected durations in excess of one year as of December 31, 2019 follows (in millions).
Performance obligations
expected to be satisfied:Less thanGreater than
12 months
12 months

Electricity and natural gas
Other sales and service contracts

$

K-105

871
1,158

$

5,136
2,562

Total

$

6,007
3,720

Notes to Consolidated Financial Statements (Continued)(25) Pension plans
Several of our subsidiaries 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 are based on years of service
and fixed benefit rates. Our subsidiaries may make contributions to the plans to meet regulatory requirements and may also
make discretionary contributions. The components of our net periodic pension expense for each of the three years ending
December 31, 2019 were as follows (in millions).
2019

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial losses and other
Net periodic pension expense

$

2018

224 $
618
(936)
26
(68) $

$

2017

271 $
593
(988)
188
64 $

273
635
(939)
157
126

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 service and compensation prior to the valuation date and, if applicable, includes assumptions regarding futurecompensation levels. Benefit obligations under qualified U.S. defined benefit pension plans are funded through assets held in
trusts. Pension obligations under certain non-U.S. plans and non-qualified U.S. plans are unfunded and the aggregate PBOs
of such plans were approximately $1.3 billion and $1.2 billion as of December 31, 2019 and 2018, respectively.
Reconciliations of the changes in plan assets and PBOs related to BHE’s pension plans and all other pension plans foreach of the two years ending December 31, 2019 are in the following tables (in millions). The costs of pension plans covering
employees of certain regulated subsidiaries of BHE are generally recoverable through the regulated rate making process.
2019
All other

BHE

Consolidated

Benefit obligations
Accumulated benefit obligation end of year $4,653

PBO beginning of year
Service cost
Interest cost
Benefits paid
Settlements
Actuarial (gains) or losses and other
PBO end of year

4,551 $
32
161
(257)
(121)
532
4,898 $

12,371 $
192
457
(776)
(46)
1,610
13,808 $16,922 $224
618(1,033)(167)
2,142
18,706 $$4,385 $
68
(257)
650
(121)
83
4,808 $

10,574 $
131
(776)
1,764
(46)
41
11,688 $

$

90

2,120

Plan assets
Plan assets beginning of year
Employer contributions
Benefits paid
Actual return on plan assets
Settlements
Other
Plan assets end of year
Funded status – net liability

$

$

$

$

$

12,889$$17,5422018
All other

BHE

$

$

15,886

5,207 $
40
161
(208)
(301)
(348)
4,551 $

13,617 $
231
432
(633)
(133)
(1,143)
12,371 $18,824
271
593
(841)
(434)
(1,491)
16,922

14,959 $199(1,033)
2,414
(167)
124
16,496 $

5,129 $
98
(208)
(191)
(324)
(119)
4,385 $

11,885 $
495
(633)
(949)
(132)
(92)
10,574 $17,014593(841)(1,140)(456)(211)
14,959

2,210

166

1,797

1,963

$

4,346

$

$

11,540Consolidated$

The funded status of our defined benefit pension plans at December 31, 2019 reflected in assets was $857 million andin liabilities was $3,067 million. At December 31, 2018, the funded status included in assets was $510 million and in
liabilities was $2,473 million.

K-106

Notes to Consolidated Financial Statements (Continued)(25) Pension plans (Continued)
Weighted average assumptions used in determining PBOs and net periodic pension expense were as follows.
2019

Discount rate applicable to pension benefit obligations
Expected long-term rate of return on plan assets
Rate of compensation increase
Discount rate applicable to net periodic pension expense

2018

3.1%
6.4
2.5
4.0

2017

3.9%
6.4
2.6
3.4

3.3%
6.4
2.8
3.9

Benefit payments expected over the next ten years are as follows (in millions): 2020 – $1,059; 2021 – $997; 2022 –$1,003; 2023 – $1,009; 2024 – $1,017; and 2025 to 2029 – $5,035. Sponsoring subsidiaries expect to contribute $191 million
to defined benefit pension plans in 2020.
Fair value measurements of plan assets as of December 31, 2019 and 2018 follow (in millions).
Investment
funds andpartnerships
at net asset
value

Fair Value
Total

December 31, 2019
Cash and cash equivalents
Equity securities
Government obligations
Other fixed maturity securities
Investment funds and other$$December 31, 2018
Cash and cash equivalents
Equity securities
Government obligations
Other fixed maturity securities
Investment funds and other$$

Level 1

412
11,105
1,537
791
2,651
16,496

$

1,328
7,671
1,727
836
3,397
14,959$$$Level 2

309
9,860
1,433
160
143
11,905

$

1,197
7,499
1,654
172
170
10,692$$$

Level 3

103
836
104
600
358
2,001

$

131
22
73
631
1,042
1,899

$

$

$

—
409
—
31
40
480

$

—
150
—
33
273
456

$

$

$

—
—
—
—
2,110
2,110
—
—
—
—
1,912
1,912

Refer to Note 20 for a discussion of the three levels in the hierarchy of fair values. Plan assets are generally invested
with the long-term objective of producing earnings to adequately 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 rates of return on plan assets reflect subjective assessments of expected invested asset returns over a period ofseveral years. Generally, past investment returns are not given significant consideration when establishing assumptions for
expected long-term rates of return on plan assets. Actual experience will differ from the assumed rates.
A reconciliation of the pre-tax accumulated other comprehensive income (loss) related to defined benefit pension plansfor each of the two years ending December 31, 2019 follows (in millions).
2019

Balance beginning of year
Amount included in net periodic pension expense
Actuarial gains (losses) and other
Balance end of year$$

(1,184)94(806)(1,896)

2018

$

$

(614)
116
(686)
(1,184)

Several of our subsidiaries also sponsor defined contribution retirement plans, such as 401(k) or profit-sharing plans.
Employee contributions are subject to regulatory limitations and the specific plan provisions. Several plans provide for
employer matching contributions up to levels specified in the plans and provide for additional discretionary contributions as
determined by management. Employer contributions expensed with respect to our defined contribution plans were$1,233 million in 2019, $1,009 million in 2018 and $1,001 million in 2017.

K-107

Notes to Consolidated Financial Statements (Continued)(26) Contingencies and Commitments
We are parties in a variety of legal actions that routinely arise out of the normal course of business, including legal
actions seeking to establish liability directly through insurance contracts or indirectly through reinsurance contracts issued byBerkshire subsidiaries. Plaintiffs occasionally seek punitive or exemplary damages. We do not believe that such normal androutine litigation will have a material effect on our financial condition or results of operations. Berkshire and certain of its
subsidiaries are 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 amaterial effect on our consolidated financial condition or results of operations.
Our subsidiaries regularly make commitments in the ordinary course of business to purchase goods and services usedin their businesses. As of December 31, 2019, estimated future payments under such arrangements were as follows:$15.7 billion in 2020, $5.6 billion in 2021, $3.7 billion in 2022, $2.8 billion in 2023, $2.6 billion in 2024 and $19.7 billion
after 2024. The most significant of these relate to our railroad, utilities and energy businesses and our fractional aircraft
ownership business.
Pursuant to the terms of agreements with noncontrolling shareholders in our less than wholly-owned subsidiaries, wemay be obligated to acquire their equity interests. If we had acquired all outstanding noncontrolling interests as ofDecember 31, 2019, we estimate the cost would have been approximately $5.4 billion. However, the timing and the amountof any such future payments that might be required are contingent on future actions of the noncontrolling owners.
(27) Business segment data
Our operating businesses include a large and diverse group of insurance, manufacturing, service and retailingbusinesses. We organize our reportable business segments in a manner that reflects how management views those businessactivities. Certain businesses are grouped together for segment reporting based upon similar products 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 from segment results when management
considers those transactions in assessing the results of the respective segments. Furthermore, our management does notconsider investment and derivative gains/losses, amortization of certain business acquisition accounting adjustments related
to Berkshire’s business acquisitions or certain other corporate income and expense items in assessing the financial
performance of operating units. Collectively, these items are included in reconciliations of segment amounts to consolidated
amounts.
Business Identity

Business Activity

Insurance:
GEICO

Underwriting private passenger automobile insurance mainly by direct
response methods

Berkshire Hathaway Primary Group

Underwriting multiple lines of property and casualty insurance policies
for primarily commercial accounts

Berkshire Hathaway Reinsurance Group

Underwriting excess-of-loss, quota-share and facultative reinsurance
worldwide

BNSF

Operation of one of the largest railroad systems in North America

Berkshire Hathaway Energy

Regulated electric and gas utility, including power generation anddistribution activities and real estate brokerage activities

Manufacturing

Manufacturers of numerous products including industrial, consumer andbuilding products, including manufactured housing and related
consumer financing

McLane Company

Wholesale distribution of groceries and non-food items

Service and retailing

Providers of numerous services including fractional aircraft ownershipprograms, aviation pilot training, electronic components distribution,
various retailing businesses, including automobile dealerships, andtrailer and furniture leasing

K-108

Notes to Consolidated Financial Statements (Continued)(27) Business segment data (Continued)
A disaggregation of our consolidated data for each of the three most recent years is presented as follows (in millions).
Revenues
2018

2019

Operating Businesses:
Insurance:
Underwriting:
GEICO$
Berkshire Hathaway Primary Group
Berkshire Hathaway Reinsurance Group
Insurance underwriting
Investment income
Total insurance
BNSF
Berkshire Hathaway Energy
Manufacturing
McLane Company
Service and retailing
Reconciliation to consolidated amount:
Investment and derivative gains/losses
Interest expense, not allocated to segments
Equity method investments
Corporate, eliminations and other

Operating Businesses:
Insurance
BNSF
Berkshire Hathaway Energy
Manufacturing
McLane Company
Service and retailing

35,572
9,165
16,341
61,078
6,615
67,693$33,363
8,111
15,94457,418
5,518
62,936

23,515
20,11462,73050,45829,487
253,997

23,85519,98761,88349,98728,939247,587———619$ 254,616

—
—
—
250
$ 247,837

2019Interest expense
2018$

Reconciliation to consolidated amount:
Investment and derivative gains/losses
Interest expense, not allocated to segments
Equity method investments
Income tax net benefit – Tax Cuts andJobs Act of 2017
Corporate, eliminations and other
$

—
1,070
1,835
752
—
86
3,743

$

—
1,041
1,777
690
15
91
3,614

Earnings before income taxes
2019
2018
2017

2017

$

29,441
7,143
24,01360,597
4,865
65,462$

21,387
18,85457,64549,77527,219240,342

1,506 $
383
(1,472)
417
6,600
7,017

2,449 $
670
(1,109)
2,010
5,503
7,513

(310)
719
(3,648)(3,239)
4,855
1,616

7,250
2,618
9,522
288
2,555
29,250

6,863
2,472
9,366
246
2,696
29,156

6,328
2,499
8,324
299
2,304
21,370—72,607(22,455)
—
(416)
(458)
—
1,176
(2,167)
(409)
79
(75)
$ 239,933 $ 102,696 $
4,001 $
2017

$

—
1,016
2,254
679
19
67
4,035

2019

$

Income tax expense
2018

2017

1,166 $
1,769
(526)
2,253
71
603
5,336

1,374 $
1,644
(452)
2,188
59
634
5,447

(71)
2,369
148
2,678
94
812
6,030

(4,673)
(96)
(753)

742
(170)
910

—
416
—

—
458
—

—
486
—

15,159
(88)
148

—
(198)
3,961 $—
(219)
3,853 $—
(135)
4,386 $—
349
20,904

K-109

2,128
(486)
3,014
(2,188)23,838$—(28,200)
(246)
(827)
(321) $ (21,515)

Notes to Consolidated Financial Statements (Continued)(27) Business segment data (Continued)
2019

Operating Businesses:
Insurance
BNSF
Berkshire Hathaway Energy
Manufacturing
McLane Company
Service and retailing

$

108
3,608
7,364
2,981
158
1,760
$ 15,979
2019

Operating Businesses:
Insurance
BNSF
Berkshire Hathaway Energy
Manufacturing
McLane Company
Service and retailing

Capital expenditures
2018
2017

$

130
3,187
6,241
3,116
276
1,587
$ 14,537

$

170
3,256
4,571
2,490
289
932
$ 11,708

Depreciation of tangible assets
2019
2018
2017

$

$

Goodwill at year-end
2018
2017

$ 15,289
14,851
9,979
34,800734
6,229$ 81,882$ 15,289
14,851
9,851
34,019734
6,281$ 81,025$ 15,499
14,845
9,935
33,967734
6,278$ 81,258

Reconciliation to consolidated amount:
Corporate and other
Goodwill

82
2,350
2,947
1,951
225
1,192
8,747

$

$

79
2,268
2,830
1,890
204
1,115
8,386

$

$

84
2,304
2,548
1,839
193
751
7,719

Identifiable assets at year-end
2019
2018
2017

$ 364,550
73,69988,651
104,437
6,872
26,494
664,703$ 289,746
70,24280,543
99,912
6,243
24,724571,410$ 294,418
69,43877,71097,753
6,090
20,014565,423

71,14481,882$ 817,729

55,35981,025$ 707,794

55,414
81,258$ 702,095

Property/casualty and life/health insurance premiums written and earned are summarized below (in millions).
2019

Premiums Written:
DirectAssumed
Ceded
Premiums Earned:
DirectAssumed
Ceded

Property/Casualty
2018

2017

2019

Life/Health
2018

2017

$ 47,578 $ 44,513 $ 39,377 $
10,2148,970
17,815
(821)
(869)
(694)
$ 56,971 $ 52,614 $ 56,498 $

839 $
5,046
(45)
5,840 $

1,111 $
5,540
(49)
6,602 $

866
4,925
(47)
5,744

$ 46,540 $ 43,095 $ 37,755 $
9,643
8,649
17,813
(851)
(825)
(677)
$ 55,332 $ 50,919 $ 54,891 $

839 $
4,952
(45)
5,746 $

1,111 $
5,438
(50)
6,499 $

866
4,866
(26)
5,706

Insurance premiums written by geographic region (based upon the domicile of the insured or reinsured) aresummarized below (in millions).
2019

United States
Asia PacificWestern Europe
All other

Property/Casualty
2018$ 50,529
3,114
2,535
793
$ 56,971$ 46,146
3,726
2,157
585
$ 52,614

K-110

2017

$ 50,604
3,307
1,516
1,071
$ 56,498

2019

$

$

2,553
1,582
908
797
5,840

Life/Health
2018

$

$

3,598
1,361
939
704
6,602

2017

$

$

3,320
879
909
636
5,744

Notes to Consolidated Financial Statements (Continued)(27) Business segment data (Continued)
Consolidated sales, service and leasing revenues were $140.8 billion in 2019, $139.1 billion in 2018 and $132.8 billion
in 2017. In 2019, 85% of such revenues were attributable to the United States compared to 84% in 2018 and 85% in 2017.
The remainder of sales, service and leasing revenues were primarily in Europe, Canada and the Asia Pacific. In 2019 and2018, approximately 96% of our revenues from railroad, utilities and energy businesses were in the United States comparedto 95% in 2017. At December 31, 2019, approximately 89% of our consolidated net property, plant and equipment andequipment held for lease was located in the United States with the remainder primarily in Canada and Europe.
(28) Quarterly data
A summary of revenues and net earnings by quarter for each of the last two years follows. This information is
unaudited. Amounts are in millions, except per share amounts.
1stQuarter

2019
Revenues
Net earnings (loss) attributable to Berkshire shareholders *Net earnings (loss) attributable to Berkshire shareholders perequivalent Class A common share
2018
Revenues
Net earnings (loss) attributable to Berkshire shareholders *Net earnings (loss) attributable to Berkshire shareholders perequivalent Class A common share∗$$

60,67821,661

2nd
Quarter$

63,59814,073

13,2098,608

58,473 $(1,138)62,20012,011

(692)

7,301

3rd
Quarter$

64,972
16,5244th
Quarter$

10,119$63,45018,54065,36829,15917,909$11,28063,714(25,392)(15,467)

Includes after-tax investment and derivative gains/losses as follows:
1st
Quarter

2019
2018

$

K-111

16,106 $(6,426)

2nd
Quarter

7,934
5,118

3rd
Quarter$

8,666
11,660

4th
Quarter$

24,739(28,089)

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 of the design and operation of the
Corporation’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, theChairman (Chief Executive Officer) and the Senior Vice President (Chief Financial Officer) concluded that the Corporation’s
disclosure controls and procedures are 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 K-62 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 K-63 of
this report. There has been no change in the Corporation’s internal control over financial reporting during the quarter ended
December 31, 2019 that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control
over financial reporting.
Item 9B. Other Information
None
Part III
Except for the information set forth under the caption “Executive Officers of the Registrant” in Part I hereof,
information required by this Part (Items 10, 11, 12, 13 and 14) is incorporated by reference from the Registrant’s definitive
proxy statement, filed pursuant to Regulation 14A, for the Annual Meeting of Shareholders of the Registrant to be held on
May 2, 2020, which meeting will involve the election of directors.
Part IV
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:
PAGE

Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets—
December 31, 2019 and December 31, 2018
Consolidated Statements of Earnings—
Years Ended December 31, 2019, December 31, 2018, and December 31, 2017
Consolidated Statements of Comprehensive Income—Years Ended December 31, 2019, December 31, 2018, and December 31, 2017
Consolidated Statements of Changes in Shareholders’ Equity—
Years Ended December 31, 2019, December 31, 2018, and December 31, 2017
Consolidated Statements of Cash Flows—
Years Ended December 31, 2019, December 31, 2018, and December 31, 2017
Notes to Consolidated Financial Statements
2. Financial Statement Schedule
Report of Independent Registered Public Accounting Firm
Schedule I—Parent Company Condensed Financial Information
Balance Sheets as of December 31, 2019 and 2018, Statements of Earnings and Comprehensive Income
and Cash Flows for the years ended December 31, 2019, December 31, 2018 and December 31, 2017
and Note to Condensed Financial Information
Other schedules are omitted because they are not required, information therein is not applicable, or is reflected in
the Consolidated Financial Statements or notes thereto.
(b) Exhibits
See the “Exhibit Index” at page K-116.
K-112

K-63
K-66
K-68
K-69
K-69
K-70
K-71

K-113

K-114

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors ofBerkshire 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 ofDecember 31, 2019 and 2018, and for each of the three years in the period ended December 31, 2019, and the Company’s
internal control over financial reporting as of December 31, 2019, and have issued our report thereon dated February 22,
2020; 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 thefinancial 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 forinvestments 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 22, 2020

K-113

BERKSHIRE HATHAWAY INC. (Parent Company)
Condensed Financial Information(Dollars in millions)
Schedule I
Balance Sheets
December 31,
2019

Assets:Cash and cash equivalents
Short-term investments in U.S. Treasury Bills
Investments in and advances to/from consolidated subsidiaries
Investment in The Kraft Heinz Company
Other assets$$
Liabilities and Shareholders’ Equity:
Accounts payable, accrued interest and other liabilities
Income taxes, principally deferred
Notes payable and other borrowings$

Berkshire Hathaway shareholders’ equity$

2018

15,00425,514392,162
13,757
131446,568

$

320
1,554
19,903
21,777424,791
446,568

$

$

$

3,437
22,957
328,898
13,81380
369,185
1,507
2,104
16,871
20,482
348,703369,185

Statements of Earnings and Comprehensive Income
2019

Income items:
From consolidated subsidiaries:
Dividends and distributions
Undistributed earnings (losses)$

Investment gains (losses)
Equity in net earnings (losses) of The Kraft Heinz Company
Other income
Cost and expense items:
General and administrative
Interest expense
Foreign exchange (gains) losses on non-U.S. Dollar denominated debt
Income tax expense (benefit)
Net earnings attributable to Berkshire Hathaway shareholders
Other comprehensive income attributable to Berkshire Hathaway shareholders
Comprehensive income attributable to Berkshire Hathaway shareholders$

See Note to Condensed Financial Information

K-114

Year ended December 31,
2018

2017

15,603 $65,23780,840
(125)
493
780
81,9889,658 $
(3,952)5,706(4)(2,730)
649
3,621

5,367
37,832
43,199
(1)
2,938
350
46,486

122
591
(193)
51
571
81,417(228)
81,189 $

216
601
(366)
(851)
(400)
4,021
(2,211)
1,810 $

159
522
1,008
(143)
1,546
44,94021,273
66,213

BERKSHIRE HATHAWAY INC. (Parent Company)
Condensed Financial Information(Dollars in millions)
Schedule I (continued)
Statements of Cash Flows
2019

Year ended December 31,
2018
2017

Cash flows from operating activities:
Net earnings attributable to Berkshire Hathaway shareholders$ 81,417 $
4,021 $ 44,940
Adjustments to reconcile net earnings to cash flows from operating activities:
Investment gains/losses
125
41
Undistributed earnings of consolidated subsidiaries(65,237)
3,952(37,832)
Income taxes payable
(56)
(972)
(135)
Other
(693)
3,062
(1,234)
Net cash flows from operating activities
15,556
10,067
5,740
Cash flows from investing activities:
Investments in and advances to/from consolidated subsidiaries, net
60
460
(239)
Purchases of U.S. Treasury Bills(40,107)(29,740)(19,663)
Sales and maturities of U.S. Treasury Bills
36,943
21,442
14,847
Other
737
—
—
Net cash flows from investing activities(2,367)(7,838)(5,055)
Cash flows from financing activities:
Proceeds from borrowings
3,967
17
1,201
Repayments of borrowings(758)(1,563)(1,145)Acquisition of treasury stock(4,850)(1,346)
—
Other
19
61
77
Net cash flows from financing activities(1,622)(2,831)
133
Increase (decrease) in cash and cash equivalents
11,567(602)
818
Cash and cash equivalents at beginning of year
3,437
4,039
3,221
Cash and cash equivalents at end of year
$ 15,004 $3,437 $
4,039
Other cash flow information:
Income taxes paid$
3,531 $
2,790 $
2,076
Interest paid
364
388
386
Note to Condensed Financial Information
Berkshire acquired 50% of the outstanding common stock of Heinz Holding Company in 2013. After a series oftransactions in 2015, that interest represented 26.8% of the outstanding common stock of The Kraft Heinz Company (“Kraft
Heinz”). Berkshire currently owns 26.6% of the outstanding shares of Kraft Heinz common stock. Reference is made to Note
5 to the accompanying Consolidated Financial Statements for additional information.
In 2019, the Parent Company issued ¥430.0 billion of senior notes with various maturities and interest rates. See Note
17 to the accompanying Consolidated Financial Statements for additional information. For each of the three years ending
December 31, 2019, Parent Company borrowings also included €6.85 billion senior notes. The gains and losses from theperiodic remeasurement of these non-U.S. Dollar denominated notes due to changes in foreign currency exchange rates areincluded in earnings.
Parent Company debt maturities over the next five years are as follows: 2020—$1,122 million; 2021—$2,117 million;
2022—$613 million; 2023—$3,958 million and 2024—$2,120 million. At December 31, 2019, Parent Company guarantees
of debt obligations of certain of its subsidiaries were approximately $12.2 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. Parent Company has also provided 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, iscontingent 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 foreignsubsidiaries. The effects of the TCJA on income tax expense of consolidated subsidiaries is included in undistributed
earnings in consolidated subsidiaries.
K-115

EXHIBIT INDEXExhibit 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. andPrecision 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. 333112486

4.2

Indenture, dated as of February 1, 2010, among Berkshire Hathaway Inc., Berkshire Hathaway FinanceCorporation 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. 333164611

4.3

Indenture, dated as of January 26, 2016, by and among Berkshire Hathaway Inc., Berkshire Hathaway FinanceCorporation 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. 333209122

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 notexceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis as ofDecember 31, 2019. 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 atwww.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
K-116

Exhibit No.

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, 2019, formatted in iXBRL (Inline Extensible Business Reporting Language) includes: (i)the Cover Page (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Earnings, (iv) the
Consolidated Statements of Comprehensive Income, (v) the Consolidated Statements of Changes inShareholders’ Equity, (vi) the Consolidated Statements of Cash Flows, and (vii) the Notes to Consolidated
Financial Statements and Schedule I, tagged in summary and detail.

104

Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)

K-117

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 22, 2020

/S/

MARC D. HAMBURG
Marc D. Hamburg
Senior Vice President andPrincipal Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by thefollowing persons on behalf of the Registrant and in the capacities and on the dates indicated.
/S/ WARREN E. BUFFETT
Warren E. Buffett/S/ GREGORY E. ABEL

Chairman of the Board of
Directors—Chief Executive Officer

February 22, 2020
Date

Director—Vice Chairman—Non Insurance Operations

February 22, 2020
Date

Director

February 22, 2020
Date

Director

February 22, 2020
Date

Director

February 22, 2020
Date

Director

February 22, 2020
Date

Director

February 22, 2020
Date

Director

February 22, 2020
Date

Director—Vice Chairman—Insurance Operations

February 22, 2020
Date

Director—Vice Chairman

February 22, 2020
Date

Director

February 22, 2020
Date

Director

February 22, 2020
Date

Director

February 22, 2020
Date

Director

February 22, 2020
Date

Senior Vice President—Principal Financial Officer

February 22, 2020
Date

Vice President—Principal Accounting Officer

February 22, 2020
Date

Gregory E. Abel

/S/ HOWARD G. BUFFETT
Howard G. Buffett/S/ STEPHEN B. BURKE
Stephen B. Burke/S/ SUSAN L. DECKER
Susan L. Decker/S/ WILLIAM H. GATES III
William H. Gates III/S/ DAVID S. GOTTESMANDavid S. Gottesman/S/ CHARLOTTE GUYMAN
Charlotte Guyman/S/ AJIT JAIN
Ajit Jain/S/ CHARLES T. MUNGERCharles T. Munger/S/ THOMAS S. MURPHY
Thomas S. Murphy/S/ RONALD L. OLSON
Ronald L. Olson/S/ WALTER SCOTT, JR.
Walter Scott, Jr.

/S/ MERYL B. WITMER
Meryl B. Witmer/S/ MARC D. HAMBURG
Marc D. Hamburg/S/ DANIEL J. JAKSICH
Daniel J. Jaksich

K-118

Reg. S-K
Item 601
Exhibit 21
BERKSHIRE HATHAWAY INC.
Subsidiaries of Registrant (1)December 31, 2019
Company Name

Acme Brick Company
Acme Building Brands, Inc.
Albecca Inc.
AltaLink Holdings, L.P.
AltaLink Investments, L.P.
AltaLink, L.P.
Ben Bridge Corporation
Ben Bridge Jeweler, Inc.
Benjamin Moore & Co.
Benjamin Moore & Co., Limited
Benson Industries, Inc.
Berkshire Hathaway Assurance Corporation
Berkshire Hathaway Automotive Inc.
Berkshire Hathaway Credit Corporation
Berkshire Hathaway Energy Company
Berkshire Hathaway Finance Corporation
Berkshire Hathaway Homestate Insurance Company
Berkshire Hathaway International Insurance Limited
Berkshire Hathaway Life Insurance Company of Nebraska
Berkshire Hathaway Specialty Insurance Company
BH Finance LLC
BH Media Group, Inc.
BH Shoe Holdings, Inc.
BHE AltaLink Ltd.
BHE Canada Holdings Corporation
BHE Canada, LLC
BHE Renewables, LLC
BHE U.S. Transmission, LLC
BHE Wind, LLC
BHSF, Inc.
BNSF Railway Company
Boat America Corporation
Borsheim Jewelry Company, Inc.
Brooks Sports, Inc.
Burlington Northern Santa Fe, LLC
Business Wire, Inc.
Campbell Hausfeld, LLC
Cannon-Muskegon Corporation
Carlton Forge Works
Central States Indemnity Co. of Omaha
Central States of Omaha Companies, Inc.
Cerro Flow Products LLC
Cerro Wire LLC
Charter Brokerage Holdings Corp.
Charter Brokerage Holdings, LLC
Charter Brokerage LLC
Chemtool Incorporated
Clayton Homes, Inc.

Domicile or State of Incorporation

Delaware
DelawareGeorgia
CanadaCanadaCanadaWashington
Washington
New Jersey
CanadaOregon
New York
DelawareNebraska
Iowa
DelawareNebraska
United Kingdom
Nebraska
Nebraska
Nebraska
Delaware
DelawareCanadaCanadaDelaware
Delaware
Delaware
Delaware
Delaware
Delaware
Virginia
Nebraska
Washington
Delaware
Delaware
Delaware
MichiganCalifornia
Nebraska
Nebraska
Delaware
Delaware
Delaware
Delaware
New York
Delaware
DelawareReg. S-K
Item 601
Exhibit 21
BERKSHIRE HATHAWAY INC.
Subsidiaries of Registrant (1)December 31, 2019
Company Name

Clayton Properties Group II, Inc.
Clayton Properties Group, Inc.
CMH Capital, Inc.
CMH Homes, Inc.
CMH Manufacturing, Inc.
Colson Medical, LLC
Columbia Insurance Company
Cornelius, Inc.
CORT Business Services Corporation
CTB International Corp.
Cubic Designs, Inc.
Cypress Insurance Company
Designed Metal Connections, Inc.
Detlev Louis Motorrad-Vertriebsgesellschaft GmbH
Duracell (China) Limited
Duracell Batteries BVBA
Duracell International Operations Sàrl
Duracell Manufacturing LLC
Duracell U.S. Holding LLC
Duracell U.S. Operations, Inc.
Ecowater Systems LLC
Empire Distributors of North Carolina, Inc.
Empire Distributors, Inc.
EXSIF Worldwide, Inc.
Faraday Underwriting Limited
FlightSafety International Inc.
FlightSafety Services Corporation
Forest River Manufacturing, LLC
Forest River, Inc.
Freedom Warehouse Corp.
Freo Group Pty Ltd
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
Gen Re Intermediaries Corporation
General Re Corporation
General Re Life Corporation
General Reinsurance Africa Ltd.
General Reinsurance AG
General Reinsurance Australia Ltd
General Reinsurance Corporation
General Reinsurance Life Australia Ltd.
General Star Indemnity Company
General Star National Insurance Company

Domicile or State of Incorporation

Colorado
Tennessee
DelawareTennessee
Tennessee
DelawareNebraska
Minnesota
DelawareIndiana
Wisconsin
California
DelawareGermany
China
Belgium
Switzerland
Delaware
Delaware
Delaware
DelawareGeorgia
Georgia
Delaware
United Kingdom
New York
DelawareIndiana
Indiana
NevadaAustralia
Delaware
DelawareNebraska
MarylandNebraska
DelawareMaryland
MarylandNebraska
New York
DelawareConnecticut
South Africa
Germany
Australia
Delaware
Australia
Delaware
DelawareReg. S-K
Item 601
Exhibit 21
BERKSHIRE HATHAWAY INC.
Subsidiaries of Registrant (1)December 31, 2019
Company Name

Genesis Insurance Company
Global Cranes Pty Ltd
Government Employees Insurance Company
GRD Holdings Corporation
H. H. Brown Shoe Company, Inc.
Helzberg’s Diamond Shops, Inc.
Henley Holdings, LLC
Homemakers Plaza, Inc.
HomeServices of America, Inc.
Huntington Alloys Corporation
IMC (Germany) Holdings GmbHIMC International Metalworking Companies B.V.
Ingersoll Cutting Tool Company
Ingersoll Werkzeuge GmbHInternational Dairy Queen, Inc.
Iscar Ltd.
Johns ManvilleJohns Manville Corporation
Johns Manville Europe GmbH
Johns Manville GmbH
Johns Manville Slovakia, a.s.
Jordan’s Furniture, Inc.
Justin Brands, Inc.
Kahn Ventures, Inc.
Kern River Gas Transmission Company
KR Holding, LLC
L. A. Darling Company LLC
Larson-Juhl US LLC
Lipotec, S.A.
LiquidPower Specialty Products Inc.
Lubrizol (Gibraltar) Limited Luxembourg SCS
Lubrizol Additive (Zhuhai) Co., Ltd.
Lubrizol Advanced Materials Europe BVBA
Lubrizol Advanced Materials International, LLC
Lubrizol Advanced Materials, Inc.
Lubrizol France SAS
Lubrizol Holdings France SAS
Lubrizol Holdings Netherlands B.V.
Lubrizol International, Inc.
Lubrizol Luxembourg S.a.r.l.
Lubrizol Overseas Trading Corporation
Lubrizol Southeast Asia (Pte.) Ltd.
M&M Manufacturing, Inc.
Marmon Beverage Technologies, Inc.
Marmon Crane Services, Inc.
Marmon Distribution Services, Inc.
Marmon Energy Services Company
Marmon Engineered Components Company
Marmon Food, Beverage & Water Technologies Company LLC
Marmon Highway Technologies LLC

Domicile or State of Incorporation

Delaware
Australia
Maryland
Delaware
Delaware
Missouri
Delaware
Iowa
Delaware
DelawareGermany
Netherlands
DelawareGermany
Delaware
IsraelDelaware
DelawareGermany
Germany
Slovakia
Massachusetts
DelawareGeorgia
Delaware
Delaware
DelawareGeorgia
Spain
Delaware
Luxembourg
China
Belgium
Delaware
Delaware
FranceFranceNetherlands
Delaware
Luxembourg
DelawareSingapore
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
DelawareReg. S-K
Item 601
Exhibit 21
BERKSHIRE HATHAWAY INC.
Subsidiaries of Registrant (1)December 31, 2019
Company Name

Marmon Holdings, Inc.
Marmon Retail & Highway Technologies Company LLC
Marmon Retail Technologies Company
Marmon Transportation Services LLC
Marmon Tubing, Fittings & Wire Products, Inc.
Marmon Water, Inc.
Marmon Wire & Cable, Inc.
Marmon/Keystone LLC
Marquis Jet Holdings, Inc.
Marquis Jet Partners, Inc.
McLane Company, Inc.
McLane Foodservice, Inc.
MedPro Group Inc
Meyn Food Processing Technology B.V.
Meyn Holding B.V.
MHC Inc.
MidAmerican Energy Company
MidAmerican Funding, LLC
MiTek Industries, Inc.
MLMIC Insurance Company
Mount Vernon Fire Insurance Company
Mouser Electronics, Inc.
National Fire & Marine Insurance Company
National Indemnity Company
National Indemnity Company of Mid-America
National Indemnity Company of the South
National Liability & Fire Insurance Company
Nebraska Furniture Mart, Inc.
Nederlandse Reassurantie Groep N.V.
NetJets Aviation, Inc.
NetJets Inc.
NetJets Sales, Inc.
Nevada Power Company
NFM of Kansas, Inc.
NNGC Acquisition, LLC
Northern Electric plc.
Northern Natural Gas Company
Northern Powergrid (Northeast) Limited
Northern Powergrid (Yorkshire) plc.
Northern Powergrid Holdings Company
Northern Powergrid Limited
Northern Powergrid UK Holdings
NV Energy, Inc.
NVE Holdings, LLC
Oak River Insurance Company
Old United Casualty Company
Old United Life Insurance Company
Oriental Trading Company, Inc.
OTC Brands, Inc.
OTC Worldwide Holdings, Inc.

Domicile or State of Incorporation

Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Texas
Texas
Indiana
Netherlands
Netherlands
Iowa
Iowa
Iowa
Delaware
New York
Pennsylvania
DelawareNebraska
Nebraska
Iowa
Iowa
Connecticut
Nebraska
Netherlands
Delaware
Delaware
DelawareNevadaKansasDelaware
United Kingdom
Delaware
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
NevadaDelawareNebraska
KansasArizona
Delaware
Delaware
DelawareReg. S-K
Item 601
Exhibit 21
BERKSHIRE HATHAWAY INC.
Subsidiaries of Registrant (1)December 31, 2019
Company Name

PacifiCorp
PCC Airfoils LLC
PCC Structurals, Inc.
PLICO, Inc.
PPW Holdings LLC
Precision Castparts Corp.
Precision Steel Warehouse, Inc.
Primus International Inc.
Princeton Insurance Company
Procor Limited
Procrane Holdings, Inc.
Procrane Inc.
R. C. Willey Home Furnishings
Railsplitter Holdings Corporation
Redwood Fire and Casualty Insurance Company
Richline Group, Inc.
RSCC Wire & Cable LLC
Russell Brands, LLC
Sager Electrical Supply Co. Inc
Schuller GmbH
Scott Fetzer Company
Scott Fetzer Financial Group, Inc.
See’s Candies, Inc.
See’s Candy Shops, Inc.
Shaw Contract Flooring Services, Inc.
Shaw Industries Group, Inc.
Shaw Industries, Inc.
Sierra Pacific Power Company
Söfft Shoe Company, LLC
Special Metals Corporation
SPS Technologies, LLC
Star Furniture Company
Sterling Crane LLC
TaeguTec Ltd.
The Duracell Company
The Fechheimer Brothers Company
The Lubrizol Corporation
The Marmon Group of Canada Ltd.
The Medical Protective Company
The Pampered Chef, Ltd.
Titanium Metals Corporation
TTI, Inc.
Tungaloy Corporation
U.S. Investment Corporation
U.S. Underwriters Insurance Company
Union Tank Car Company
Union Underwear Company, Inc.
United States Liability Insurance Company
UTLX Company
Vanderbilt Mortgage and Finance, Inc.

Domicile or State of Incorporation

OregonOhio
OregonOklahoma
DelawareOregonIllinois
Washington
New Jersey
CanadaDelawareCanadaUtah
DelawareNebraska
Delaware
Delaware
Delaware
Massachusetts
Germany
Delaware
Delaware
California
California
Georgia
Georgia
Georgia
NevadaDelaware
DelawarePennsylvania
Texas
DelawareKorea
Delaware
Delaware
Ohio
CanadaIndiana
Illinois
Delaware
DelawareJapan
Pennsylvania
North Dakota
Delaware
DelawarePennsylvania
DelawareTennessee

BERKSHIRE HATHAWAY INC.
Subsidiaries of Registrant (1)December 31, 2019
Company Name

Vanity Fair Brands, LP
Warwick International Group Limited
Webb Wheel Products, Inc.
Wells Lamont LLC
WestGUARD Insurance Company
World Book/Scott Fetzer Company, Inc.
Worldwide Containers, Inc.
WPLG, Inc.
Wyman-Gordon Company
Wyman-Gordon Forgings, Inc.
XTRA Companies, Inc.
XTRA Corporation
XTRA Finance Corporation
XTRA Lease LLC
XTRA LLC
Yorkshire Electricity Group plc.
Yorkshire Power Group Limited
21st Mortgage Corporation

Reg. S-K
Item 601
Exhibit 21

Domicile or State of Incorporation

Delaware
United Kingdom
Delaware
DelawarePennsylvania
Nebraska
Delaware
Delaware
Massachusetts
Delaware
Delaware
Delaware
Delaware
Delaware
Maine
United Kingdom
United Kingdom
Delaware(1) Each of the named subsidiaries is not necessarily a “significant subsidiary” as defined in Rule 1-02(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.

Reg. S-K
Item 601
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-229396 on Form S-3 andRegistration Statement Nos. 333-225027, 333-224221, 333-215556, 333-53046, 333-64284, 333-70609, 33374312, 333-75612, 333-101662, 333-164961, 333-164959, 333-164958, 333-111614, 333-179855, 333-194948,
333-203130, and 333-232424 on Form S-8 of our reports dated February 22, 2020, relating to the consolidated
financial statements and financial statement schedule of Berkshire Hathaway Inc., and the effectiveness ofBerkshire Hathaway Inc.’s internal control over financial reporting (which reports express an unqualified opinion
and include an explanatory paragraph relating to the Company’s change in its method of accounting forinvestments in equity securities (excluding equity method investments) in 2018 due to the adoption of ASU 201601 “Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities”),
appearing in the Annual Report on Form 10-K of Berkshire Hathaway Inc. for the year ended December 31, 2019.
/s/ Deloitte & Touche LLP
Omaha, Nebraska
February 22, 2020

EXHIBIT 31.1
FORM 10-K
Year ended December 31, 2019
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 statea material fact necessary to make the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered 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 of theregistrant 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(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:

5.

a)

Designed such disclosure controls and procedures, or caused such disclosure controls 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;b)

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 thereliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented inthis report our conclusions about the effectiveness of the disclosure controls and procedures, as of theend of the period covered by this report based on such evaluation; andd)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 thecase of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; andThe registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the registrant’s auditors and the audit committee of theregistrant’s board of directors (or persons performing the equivalent functions):a)

All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; andb)

Any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal control over financial reporting.

Date: February 22, 2020/s/

WARREN E. BUFFETT

Chairman—Principal Executive Officer

EXHIBIT 31.2
FORM 10-K
Year ended December 31, 2019
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-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 statea material fact necessary to make the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered 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 of theregistrant 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(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:

5.

a)

Designed such disclosure controls and procedures, or caused such disclosure controls 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;b)

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 thereliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented inthis report our conclusions about the effectiveness of the disclosure controls and procedures, as of theend of the period covered by this report based on such evaluation; andd)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 thecase of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; andThe registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the registrant’s auditors and the audit committee of theregistrant’s board of directors (or persons performing the equivalent functions):a)

All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; andb)

Any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal control over financial reporting.

Date: February 22, 2020/s/

MARC D. HAMBURG

Senior Vice President—Principal Financial Officer

EXHIBIT 32.1
FORM 10-K
Section 1350 Certifications
Year ended December 31, 2019
I, Warren E. Buffett, Chairman and Chief Executive Officer of Berkshire Hathaway Inc. (the “Company”),
certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of
my knowledge:(1)

the Annual Report on Form 10-K of the Company for the period ended December 31, 2019 (the “Report”)
fully complies with the requirements of Section 13(a) or 15(d) of the 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 andresults of operations of the Company.

Dated: February 22, 2020/s/

WARREN E. BUFFETT

Warren E. Buffett
Chairman and Chief Executive Officer

EXHIBIT 32.2
FORM 10-K
Section 1350 Certifications
Year ended December 31, 2019
I, Marc D. Hamburg, Senior Vice President and Chief Financial Officer of Berkshire Hathaway Inc. (the“Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that tothe best of my knowledge:(1)

the Annual Report on Form 10-K of the Company for the period ended December 31, 2019 (the “Report”)
fully complies with the requirements of Section 13(a) or 15(d) of the 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 andresults of operations of the Company.

Dated: February 22, 2020/s/

MARC D. HAMBURG

Marc D. Hamburg
Senior Vice President and Chief Financial Officer

EXHIBIT 95
MINE SAFETY VIOLATIONS AND OTHER LEGAL MATTER DISCLOSURESPURSUANT TO SECTION 1503(a) OF THE DODD-FRANK WALL STREETREFORM 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 are regulated by the Federal Mine Safety
and Health Administration (“MSHA”) under 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 Safety Act citations, orders, assessments andlegal actions for the year ended December 31, 2019 are summarized in the table below and are subject to contest and appeal.
The severity and assessment of penalties may be reduced or, 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. Mines that are closed
or idled are not included in the information below if no reportable events occurred at those locations during the year ended
December 31, 2019. PacifiCorp and Acme have not received any notice of a pattern, or notice of the potential to have a pattern,of violations of mandatory health or safety standards that are of such nature as could have significantly and substantiallycontributed to the cause and effect of coal or other mine health or safety hazards under Section 104(e) of the Mine Safety Act
during the year ended December 31, 2019.

Mining Facilities

Coal:
Bridger (surface)
Bridger (underground)
Wyodak Coal Crushing
Facility
Clay, shale and limestone:
Malvern
Wheeler
Oklahoma City
Tulsa
Bennett
DentonElgin
Sealy
Texas Clay
Leeds
Montgomery
Cordova
(1)
(2)
(3)
(4)
(5)
(6)
(a)

Mine Safety Act
Total
Legal Actions
Section 104
SectionValue of
Total
Significant
Section107(a)
Proposed Number of PendingandSection104(d)
Section Imminent
MSHA
Mining as of Last Instituted Resolved
Substantial 104(b) Citations/ 110(b)(2)Danger Assessments Related
Day ofDuring During
(1)
(2)
(3)
(4)
(5)
Citations Orders Orders Violations Orders (in thousands) Fatalities Period (6) Period
Period

—
5

—
—

—
2

—
—

—$
—

—
43

—
—

—
1

—
3

—
4

—

—

—

—

—

—

—

—

—

—

—
—
2
—
—
1
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—

—
—
(a)
—
—
(a)
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—

Citations for alleged violations of mandatory health and safety standards that could significantly or substantially contribute to the cause and effect of a safety or
health hazard under Section 104 of the Mine Safety Act.
For alleged failure to totally abate the subject matter of a Mine Safety Act Section 104(a) citation within the period specified in the citation.
For alleged unwarrantable failure (i.e., aggravated conduct constituting more than ordinary negligence) to comply with a mandatory health or safety standard.
Subsequently, MSHA modified the Section 104(d)(1) citation to a Section 104(a) citation and also vacated the Section 104(d)(1) order.
For alleged flagrant violations (i.e., reckless or repeated failure to make reasonable efforts to eliminate a known violation of a mandatory health or safety standard
that substantially and proximately caused, or reasonably could have been expected to cause, death or serious bodily injury).
For the existence of any condition or practice in a coal or other mine which could reasonably be expected to cause death or serious physical harm before suchcondition or practice can be abated.
Amounts include one contest of proposed penalties under Subpart C of the Federal Mine Safety and Health Review Commission’s procedural rules. The pending
legal actions are not exclusive to citations, notices, orders and penalties assessed by MSHA during the reporting period.
Assessment was less than $1,000.