01—Abstract
Summary
Summary of the 10-K filed February 25, 2019. Cited figures are marked; the original filing is the authoritative source.
Berkshire Hathaway Inc.'s 2018 10-K filing highlights a diversified conglomerate with significant operations across insurance, railroads, utilities, manufacturing, services, and retailing.
The company generated total revenues of $247.8 billiona for the year ended December 31, 2018, demonstrating the breadth of its business activities. Despite a significant investment loss of $17.7 billion after tax, largely driven by market fluctuations in equity securities under new accounting standards, Berkshire Hathaway reported net earnings attributable to shareholders of $4.0 billion. This performance reflects the company's resilient business model, which is managed on a decentralized basis, allowing individual operating units to focus on their specific markets while benefiting from Berkshire's capital allocation expertise.
02—Key points
Key Highlights
- Total revenues reached $247.8 billion, showcasing the vast scale and diversity of Berkshire Hathaway's operations.
- Net earnings attributable to Berkshire Hathaway shareholders were $4.0 billion, despite a challenging year for equity investments.
- The company experienced a significant after-tax investment loss of $17.7 billion, primarily due to new accounting standards for equity securities that recognize unrealized gains and losses in earnings.
- Insurance underwriting operations generated a net underwriting gain of $1.6 billion, demonstrating profitability in this core segment.
- The railroad business (BNSF) reported strong pre-tax earnings of $6.9 billion, driven by increased volumes and revenue per unit.
- Utilities and energy businesses contributed $2.6 billion in net earnings attributable to shareholders, supported by regulated operations.
- Berkshire Hathaway's stock repurchase program was amended in July 2018 to allow repurchases when intrinsic value is believed to be below market price, with approximately $1.3 billion repurchased in the latter half of 2018.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 25, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $247.84B$239.93B | +3.3% |
| Operating Expenses | $219.21B$221.24B | −0.9% |
| Interest Expense | $3.85B$4.39B | −12.2% |
| Net Income | $4.02B$44.94B | −91.1% |
05—Questions
Frequently Asked Questions
What was Berkshire Hathaway's overall financial performance in 2018?
Berkshire Hathaway reported total revenues of $247.8 billion and net earnings attributable to shareholders of $4.0 billion for the year ended December 31, 2018. This performance was impacted by a significant after-tax investment loss of $17.7 billion, largely due to market volatility and a change in accounting for equity securities, but underlying business operations remained robust.
How did the change in accounting for equity securities affect Berkshire's reported earnings?
Effective January 1, 2018, Berkshire adopted new accounting standards that require unrealized gains and losses on equity securities to be recognized in earnings. This change led to a $17.7 billion after-tax investment loss in 2018, primarily reflecting market declines in the fourth quarter, and significantly increased the volatility of reported net earnings.
What are the key business segments contributing to Berkshire Hathaway's revenue?
Berkshire Hathaway's revenue is generated across several major segments: Insurance (premiums earned and investment income), Railroad (BNSF), Utilities and Energy (Berkshire Hathaway Energy), Manufacturing (including industrial, building, and consumer products), Service and Retailing, and McLane Company (wholesale distribution).
What is the status of Berkshire Hathaway's stock repurchase program?
Berkshire's Board of Directors amended the stock repurchase program in July 2018 to allow repurchases when the Chairman and Vice Chairman believe the price is below intrinsic value. The company repurchased approximately $1.3 billion of its shares in the second half of 2018 and will not repurchase stock if consolidated cash, cash equivalents, and U.S. Treasury Bills fall below $20 billion.
06—Continue