[February 23, 2019] |
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Berkshire Hathaway Inc. News Release
Berkshire Hathaway Inc. (BRK.A; BRK.B) -
Berkshire's operating results for the fourth quarter and full year of
2018 and 2017 are summarized in the following paragraphs. However, we
urge investors and reporters to read our 2018 Annual Report, which has
been posted at www.berkshirehathaway.com.
The limited information that follows in this press release is not
adequate for making an informed investment judgment.
Earnings of Berkshire Hathaway Inc. and its consolidated subsidiaries
for the fourth quarter and full year of 2018 and 2017 are summarized
below. Earnings are stated on an after-tax basis. (Dollar amounts are in
millions, except for per share amounts).
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Fourth Quarter
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Full Year
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2018
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2017
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2018
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2017
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Net earnings (loss) attributable to Berkshire shareholders
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$(25,392)
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$32,551
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$ 4,021
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$44,940
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Net earnings (loss) includes:
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Investment and derivative gains (losses) -
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Investments (1)
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$(27,613)
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$ 97
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$(17,500)
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$ 910
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Derivatives
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(476)
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10
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(237)
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467
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Impairment of intangible assets (2)
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(3,023)
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-
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(3,023)
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-
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Earnings impact from the enactment of the 2017 Tax Act (3)
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-
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29,106
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-
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29,106
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Operating earnings
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5,720
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3,338
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24,781
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14,457
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Net earnings (loss) attributable to Berkshire shareholders
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$(25,392)
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$32,551
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$ 4,021
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$44,940
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Net earnings per average equivalent Class A Share
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$(15,467)
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$19,790
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$ 2,446
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$27,326
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Net earnings per average equivalent Class B Share
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$ (10.31)
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$ 13.19
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$ 1.63
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$ 18.22
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Average equivalent Class A shares outstanding
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1,641,648
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1,644,796
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1,643,795
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1,644,615
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Average equivalent Class B shares outstanding
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2,462,471,575
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2,467,194,503
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2,465,692,368
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2,466,923,163
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(1) In 2018, due to a change in Generally
Accepted Accounting Principles ("GAAP"), we are now required to
include the changes in unrealized gains/losses of our equity
security investments as a component of investment gains/losses in
our earnings statements. In the table above, investment
gains (losses) in 2018 include losses of approximately $28.5
billion in the fourth quarter and approximately $20.6 billion for
the full year of 2018 from a reduction in the amount of unrealized
gains that existed in our equity security investment holdings and
are net of taxable gains on sales of investments of approximately
$460 million in the fourth quarter and approximately $2.8 billion
for the full year. In 2017 and in prior years, while
changes in unrealized gains/losses were reflected in our
shareholders' equity, they were not included in our earnings
statements. Accordingly, the following statement, which has
been included in each of Berkshire's earnings releases for many
years, along with an additional comment (additional comment
underlined) is even more important when analyzing Berkshire's
periodic results. The amount of investment gains/losses in any
given quarter is usually meaningless and
delivers figures for net earnings per share that can be misleading
to investors who have little or no knowledge of accounting rules.
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(2) Attributable primarily to Berkshire's
equity interest in Kraft Heinz.
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(3) Attributable to a one-time net benefit
from the enactment of the Tax Cuts and Jobs Act on December 22,
2017. The benefit primarily derives from a reduction of net
deferred income tax liabilities that arose as a result of the
reduction in the U.S. corporate income tax rate from 35% to 21%.
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An analysis of Berkshire's operating earnings follows (dollar
amounts are in millions).
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Fourth Quarter
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Full Year
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2018
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2017
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2018
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2017
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Insurance-underwriting
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$ (225)
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$ (491)
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$ 1,566
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$ (2,219)
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Insurance-investment income
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1,161
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970
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4,554
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3,887
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Railroad, utilities and energy
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1,736
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1,213
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7,840
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5,992
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Other businesses
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2,339
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1,821
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9,364
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7,282
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Other
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709
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(175)
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1,457
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(485)
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Operating earnings
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$5,720
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$3,338
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$24,781
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$14,457
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At December 31, 2018, our book value per Class A equivalent share was
$212,503. Insurance float (the net liabilities we assume under insurance
contracts) was approximately $123 billion at December 31, 2018, an
increase of $8 billion since yearend 2017.
Use of Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures. The
reconciliations of such measures to the most comparable GAAP figures in
accordance with Regulation G are included herein.
Berkshire presents its results in the way it believes will be most
meaningful and useful, as well as most transparent, to the investing
public and others who use Berkshire's financial information. That
presentation includes the use of certain non-GAAP financial measures. In
addition to the GAAP presentations of net earnings, Berkshire shows
operating earnings defined as net earnings exclusive of investment and
derivative gains/losses.
Although the investment of insurance and reinsurance premiums to
generate investment income and investment gains or losses is an integral
part of Berkshire's operations, the generation of investment gains or
losses is independent of the insurance underwriting process. Moreover,
as previously described, under applicable GAAP accounting requirements,
we are now required to include the changes in unrealized gains/losses of
our equity security investments as a component of investment
gains/losses in our periodic earnings statements. In sum, investment
gains/losses for any particular period are not indicative of quarterly
business performance.
About Berkshire
Berkshire Hathaway and its subsidiaries engage in diverse business
activities including insurance and reinsurance, utilities and energy,
freight rail transportation, manufacturing, retailing and services.
Common stock of the company is listed on the New York Stock Exchange,
trading symbols BRK.A and BRK.B.
Cautionary Statement
Certain statements contained in this press release are "forward looking"
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are not guaranties of future
performance and actual results may differ materially from those
forecasted.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190223005004/en/
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