Investments in The Kraft Heinz Company

3 Months Ended

Mar. 31, 2017

Equity Method Investments and Joint Ventures [Abstract]

Note 7. Investments in The Kraft Heinz Company

In June 2013, Berkshire invested $12.25 billion in a newly-formed company, H.J. Heinz Holding Corporation (“Heinz Holding”), consisting of 425 million shares of common stock, warrants to acquire approximately 46 million additional shares of common stock at $0.01 per share and cumulative compounding preferred stock (“Preferred Stock”) with a liquidation preference of $8 billion. An affiliate of the global investment firm 3G Capital (such affiliate, “3G”) also acquired 425 million shares of Heinz Holding common stock for $4.25 billion. At that time, Berkshire and 3G each owned a 50% share of Heinz Holding common stock. Heinz Holding then acquired H.J. Heinz Company.

In March 2015, Heinz Holding entered into an agreement to acquire all of the outstanding common stock of Kraft Foods Group, Inc. (“Kraft”). In June 2015, Berkshire exercised the aforementioned common stock warrants. On July 1, 2015, Berkshire and 3G also acquired new shares of Heinz Holding common stock for $5.26 billion and $4.74 billion, respectively. After these transactions, Berkshire owned approximately 52.5% of the outstanding shares of Heinz Holding. On July 2, 2015, Heinz Holding completed its acquisition of Kraft, at which time Heinz Holding was renamed The Kraft Heinz Company (“Kraft Heinz”). In connection with its acquisition of Kraft, Kraft Heinz issued one new share of Kraft Heinz common stock for each share of Kraft common stock, which reduced Berkshire’s and 3G’s ownership of outstanding shares of Kraft Heinz common stock to 26.8% and 24.2%, respectively.

Berkshire currently owns 26.7% of the outstanding shares of Kraft Heinz common stock. We account for our investment in Kraft Heinz common stock pursuant to the equity method. The carrying value of this investment was approximately $15.4 billion at March 31, 2017 and $15.3 billion at December 31, 2016. Our earnings determined under the equity method for the first quarter were $239 million in 2017 and $240 million in 2016. We received dividends on the common stock of $195 million in the first quarter of 2017 and $187 million in the first quarter of 2016, which were recorded as reductions of our investment. On June 7, 2016, Kraft Heinz redeemed our Preferred Stock investment for cash of $8.32 billion.

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. Summarized consolidated financial information of Kraft Heinz follows (in millions).


	April 1, 2017			December 31, 2016
Assets			$120,802			$120,480
Liabilities			62,858			62,906
	First Quarter
	2017				2016
Sales		$ 6,364				$ 6,570

Net earnings attributable to Kraft Heinz common shareholders		$ 893				$ 896