Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

 

X

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

 

TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                        to                         

Commission file number 001-14905

 

A.

Full title of the plan and the address of the plan, if different from that of the issuer named below:

Clayton Homes, Inc. 401(k) Retirement Plan

5000 Clayton Road

Maryville, TN 37804

 

B.

Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

Berkshire Hathaway Inc.

3555 Farnam Street

Omaha, Nebraska 68131


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CLAYTON HOMES, INC.

401(K) RETIREMENT PLAN

FINANCIAL STATEMENTS

AND SUPPLEMENTAL SCHEDULE

December 31, 2019 and 2018


Table of Contents

FINANCIAL STATEMENTS

AND SUPPLEMENTAL SCHEDULE

December 31, 2019 and 2018

 

CONTENTS

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     1  

FINANCIAL STATEMENTS

  

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

     3  

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

     4  

NOTES TO FINANCIAL STATEMENTS

     5  

SUPPLEMENTAL SCHEDULE

  

SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

     10  


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Report of Independent Registered Public Accounting Firm

To the Retirement Plan Committee and Plan Participants of the

Clayton Homes, Inc. 401(k) Retirement Plan

Opinion on the Financial Statements

We have audited the accompanying statements of net assets available for benefits of the Clayton Homes, Inc. 401(k) Retirement Plan (the “Plan”) as of December 31, 2019 and 2018, the related statement of changes in net assets available for benefits for the year ended December 31, 2019, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2019 and 2018, and the changes in net assets available for benefits for the year ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. 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 perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that 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. We believe that our audits provide a reasonable basis for our opinion.

 

           
        
      1.


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Supplemental Information

The Schedule of Assets (Held at End of Year) as of December 31, 2019, has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.

/s/ LBMC, PC

We have served as the Plan’s auditor since 2018.

Brentwood, Tennessee

June 16, 2020

 

           
        
      2.


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STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

December 31, 2019 and 2018

 

 

 

     2019        2018  

Assets

       

Investments, at fair value

     $ 752,174,089            $  560,935,178    

Receivables

       

Notes receivable from participants

     31,804,389            29,016,846    
  

 

 

      

 

 

 

Net assets available for benefits

         $783,978,478                $  589,952,024    
  

 

 

      

 

 

 

 

           
   See accompanying notes to financial statements.   
      3.


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STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

For the year ended December 31, 2019

 

 

 

     2019  

Additions

  

Investment activity

  

Net appreciation in value of investments

       $  106,972,370    

Interest and dividends

     31,318,554    
  

 

 

 
     138,290,924    

Interest income on notes receivable from participants

     1,630,009    

Contributions

  

Employer

     30,054,330    

Participants

     55,355,759    

Rollovers

     21,996,455    
  

 

 

 
     107,406,544    
  

 

 

 

Net additions

     247,327,477    

Deductions

  

Benefits paid to participants

     (52,740,244)    

Administrative expenses

     (560,779)    
  

 

 

 

Total deductions

     (53,301,023)    
  

 

 

 

Net increase

     194,026,454    

Net assets available for benefits

  

Beginning of year

     589,952,024    
  

 

 

 

End of year

       $ 783,978,478    
  

 

 

 

 

           
   See accompanying notes to financial statements.   
      4.


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CLAYTON HOMES, INC. 401(K) RETIREMENT PLAN

NOTES TO FINANCIAL STATEMENTS

December 31, 2019 and 2018

 

 

NOTE 1 - DESCRIPTION OF PLAN

The following description of the Clayton Homes, Inc. 401(k) Retirement Plan (the “Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.

General: The Plan is a defined contribution plan covering substantially all full-time employees of Clayton Homes, Inc. and its subsidiaries (collectively the “Company” or the “Employer”) who have reached the age of eighteen years and provided 90 days of service. Employees may enter the Plan immediately following eligibility. Employees who have reached the age of eighteen years and provided one year of service are eligible to receive the Company matching contributions at the beginning of the quarter following one year of service. The Plan is subject to the Employee Retirement Income Security Act of 1974 (ERISA).

Contributions: Participants may voluntarily make qualified retirement contributions to the Plan which are deductible by the participants for federal income tax purposes under Section 401(k) of the Internal Revenue Code (“IRC”) or may be made after-tax in the form of a Roth 401(k) contribution. If a participant elects to contribute to the Plan, they may contribute from 1% up to 75% of their eligible wages. Participants who fail to make an affirmative election are automatically enrolled at a 2% deferral rate upon becoming eligible to participate in the Plan, increasing by 1% each year, up to 6%, and they may elect to change or discontinue deferrals at any time. Participants may elect to contribute up to a maximum of $19,000 and $18,500 per participant for 2019 and 2018, respectively, plus an additional $6,000 for participants age 50 or older for 2019 and 2018. The maximum contribution amount is adjusted annually for inflation, as announced by the United States Secretary of the Treasury. Participants’ contributions to the Plan are made by means of payroll deductions during each regular payroll period. Participants direct investments of their contributions into various investment options offered by the Plan. Employees may also choose to end their participation in the Plan at any time.

The Company provided a Safe Harbor match consisting of 4% match during 2019 and 2018. Under a Safe Harbor Plan, Safe Harbor 401(k) matching contributions are immediately 100% vested.

Rollover contributions from other qualified plans and individual retirement accounts are allowed by the Plan.

Participant Accounts: During the Plan year, participant’s accounts are increased by the participant’s elective deferrals, the Employer’s contributions, and any investment earnings and increases in the fair value of the fund during the year. Participants’ accounts are reduced by any payments made from such accounts and their respective proportionate shares of any decreases in the fair market value of the funds. Allocations are based on participants’ earnings or account balances, as defined by the Plan document. The benefit to which participants are entitled is the benefit that can be provided from the participant’s vested accounts.

Vesting: Participants are 100% vested in their voluntary contribution account and their Safe Harbor employer contribution account.

Payment of Benefits: Benefit distributions equal to participants’ vested account balances are payable to participants or their beneficiaries upon the earlier of retirement (age 59 1/2) or upon their death, disability or termination of employment. The method of distribution shall be determined by the Plan Administrator in accordance with the provisions of the Plan.

Administrative and Investment Management Expenses: Certain expenses of maintaining the Plan are paid directly by the Company and are excluded from these financial statements. Plan recordkeeping and trustee fees are paid by the Plan and are reflected in the financial statements as administrative expenses. Fees related to the administration of notes receivable from participants are charged directly to the participant’s account and are included in administrative expenses. Investment management fees are charged to the Plan as a reduction

of investment return and included in the investment income (loss) reported by the Plan.

 

 

           
        
      5.


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CLAYTON HOMES, INC. 401(K) RETIREMENT PLAN

NOTES TO FINANCIAL STATEMENTS

December 31, 2019 and 2018

 

 

 

NOTE 1 - DESCRIPTION OF PLAN (Continued)

 

Notes Receivable from Participants: Participants may borrow from their accounts a minimum of $1,000 up to a maximum of $50,000 or 50% of their account balance, whichever is less. The notes are secured by the balance in the participant’s account and bear interest at fixed rates that are commensurate with local prevailing rates as determined quarterly by the Plan Administrator. Principal and interest are paid through payroll deductions.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting: The financial statements of the Plan are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Plan Administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates.

Risks and Uncertainties: The Plan holds various investment securities. Investment securities are exposed to various risks such as interest rate, market, liquidity and credit risks. Due to the level of risk associated with certain investment securities and the sensitivity of certain fair value estimates to changes in valuation assumptions, it is at least reasonably possible that changes in the fair values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits.

Investment Valuation and Income Recognition: The Plan’s investments are reported at fair value. Fair value is the price that would be received by the Plan for an asset or paid by the Plan to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date in the Plan’s principal or most advantageous market for the asset or liability.

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation (depreciation) includes the Plan’s gains and losses on investments bought and sold as well as held during the year.

Fair value measurements are determined by maximizing the use of observable inputs and minimizing the use of unobservable inputs. The hierarchy places the highest priority on unadjusted quoted market prices in active markets for identical assets or liabilities (Level 1 measurements) and gives the lowest priority to unobservable inputs (Level 3 measurements). The three levels of inputs within the fair value hierarchy are defined as follows:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Plan has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect the Plan’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

 

           
      6.


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CLAYTON HOMES, INC. 401(K) RETIREMENT PLAN

NOTES TO FINANCIAL STATEMENTS

December 31, 2019 and 2018

 

 

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

In some cases, a valuation technique used to measure fair value may include inputs from multiple levels of the fair value hierarchy. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.

The following presents the valuation methods and assumptions used by the Plan to estimate the fair values of investments.

Mutual funds and common stock: The fair values of mutual fund and common stock investments are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs).

Stable value collective trust fund: The fair values of participation units in the stable value collective trust are based upon the net asset values per unit as reported by the fund manager. The fund invests 100% in Wells Fargo Stable Value Fund C. The fund’s objective is to protect principal while providing a higher rate of return than shorter maturity investments, such as money market funds or certificates of deposit. Wells Fargo Stable Value Fund C primarily invests in investment contracts, including traditional guaranteed investment contracts (GICs) and security-backed contracts issued by insurance companies and other financial institutions. Units of the fund are issued and redeemed at the latest net asset value which is determined daily. There are no advance notification requirements for this fund.

Investments measured at fair value on a recurring basis are summarized below:

 

                                                                                                                                       
     Fair Value Measurements  
     at December 31, 2019, Using  
     Total      Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
    

Significant

Other

Observable
Inputs

(Level 2)

     Significant
Unobservable
Inputs
(Level 3)
 

Berkshire Hathaway Class B common stock

         $ 37,623,356              $ 37,623,356          -          -    

Mutual funds

     667,827,733          667,827,733          -          -    

Collective trusts*

     46,723,000          -          -          -    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

       $  752,174,089            $  705,451,089          -          -    
  

 

 

    

 

 

    

 

 

    

 

 

 

 

           
      7.


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CLAYTON HOMES, INC. 401(K) RETIREMENT PLAN

NOTES TO FINANCIAL STATEMENTS

December 31, 2019 and 2018

 

 

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

                                                                                                                   
     Fair Value Measurements  
     at December 31, 2018, Using  
            Quoted Prices      Significant         
            in Active      Other      Significant  
            Markets for      Observable      Unobservable  
            Identical Assets      Inputs      Inputs  
    

Total

    

(Level 1)

    

(Level 2)

    

(Level 3)

 

Berkshire Hathaway Class B

           

Common stock

     $ 33,013,797          $ 33,013,797          -          -    

Mutual funds

     461,516,657          461,516,657          -          -    

Collective trusts*

     66,404,724          -          -          -    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

           $ 560,935,178                $ 494,530,454          -          -    
  

 

 

    

 

 

    

 

 

    

 

 

 

*Investments measured at fair value using net asset value per share (or its equivalent) have not been classified in the fair value hierarchy as a practical expedient under Accounting Standard Codification (ASC) 820. The fair value amounts presented in the hierarchy tables for such investments are intended to permit reconciliation of the fair value hierarchy to the investments at fair value line item presented in the statement of net assets available for benefits.

Notes Receivable from Participants: Notes receivable from participants are reported at their unpaid principal balance plus any accrued but unpaid interest, with no allowance for credit losses, as repayments of principal and interest are received through payroll deductions and the notes are collateralized by the participants’ account balances. Notes receivable from participants are $31,804,389 and $29,016,846 as of December 31, 2019 and 2018, respectively.

Payment of Benefits: Benefits are recorded when paid.

Events Occurring After Reporting Date: Plan management has evaluated events and transactions that occurred between December 31, 2019 and the issuance of the report for possible recognition or disclosure in the financial statements.

NOTE 3 – TAX STATUS OF PLAN

The Plan obtained a favorable determination letter on February 13, 2017, in which the Internal Revenue Service (“IRS”) stated that the Plan was in compliance with the applicable requirement of the IRC. The Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable provisions of the IRC.

Accounting principles generally accepted in the United States of America require plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS.

 

           
      8.


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CLAYTON HOMES, INC. 401(K) RETIREMENT PLAN

NOTES TO FINANCIAL STATEMENTS

December 31, 2019 and 2018

 

 

 

NOTE 3 – TAX STATUS OF PLAN (Continued)

 

The plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2019 and 2018, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.

NOTE 4 – PLAN TERMINATION

Although it has not expressed any intention to do so, the Company has the right to discontinue contributions at any time and to terminate the Plan subject to the related provisions of ERISA.

NOTE 5 – PARTY-IN-INTEREST TRANSACTIONS

Parties-in-interest are defined under Department of Labor regulations as any fiduciary of the Plan, any party rendering service to the Plan, the employer, and certain others. The Plan holds mutual funds managed by Fidelity Investments which qualify as party-in-interest investments. The Plan also holds notes receivable from participants that qualify as party-in-interest transactions. The Plan’s payments of administrative fees to Fidelity Investments of $560,779 in 2019 and payments of investment management fees also qualify as party-in-interest transactions.

The Plan also holds 166,108 shares and 161,690 shares at December 31, 2019 and 2018, respectively, of Berkshire Hathaway Class B Common Stock valued at $37,623,356 and $33,013,797 at December 31, 2019 and 2018, respectively. Realized gains and losses related to these shares of $1,079,739 at December 31, 2019 qualify as party-in-interest transactions. Berkshire Hathaway Inc. owns 100% of the Plan sponsor.

NOTE 6 – SUBSEQUENT EVENTS

The Plan has implemented certain provisions allowed by the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) and the Setting Every Community Up for Retirement Enhancement Act of 2019 (the SECURE Act), which change the Plan to, among others, allow certain eligible individuals to receive coronavirus-related distributions of up to $100,000, allow loan repayments be deferred up to one year, suspend required minimum distributions, and delay the commencement date for required minimum distributions. The optional features within these acts are currently being assessed but have not been implemented to date. Written amendments to the Plan to reflect these operational changes will be adopted at a later date in accordance with applicable law and IRS guidance.

 

           
      9.


Table of Contents

 

 

 

SUPPLEMENTAL SCHEDULE

 

 

 

 


Table of Contents

CLAYTON HOMES, INC. 401(K) RETIREMENT PLAN

SCHEDULE H, LINE 4i – SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2019

 

 

Name of plan sponsor: Clayton Homes, Inc.

Employer Identification Number: 62-1671360

Plan Number: 002

 

a)   

b) Identity of Issuer,

Borrower, Lessor, or

Similar Party

  

c) Description of Investment
Including Maturity Date,
Rate of Interest,
Collateral, Par or Maturity Value

  

d) Cost

 

e) Current
Value

 

*

   Berkshire Hathaway    Common Stock - Class B    **   $ 37,623,356  

*

   Fidelity Investments    Fidelity 500 Index    **     42,189,957  

*

   Fidelity Investments    Fidelity Extended Market Index    **     4,722,986  

*

   Fidelity Investments    Fidelity Freedom 2005 K6    **     1,671,813  

*

   Fidelity Investments    Fidelity Freedom 2010 K6    **     3,365,102  

*

   Fidelity Investments    Fidelity Freedom 2015 K6    **     9,951,692  

*

   Fidelity Investments    Fidelity Freedom 2020 K6    **     24,405,832  

*

   Fidelity Investments    Fidelity Freedom 2025 K6    **     33,688,943  

*

   Fidelity Investments    Fidelity Freedom 2030 K6    **     54,680,633  

*

   Fidelity Investments    Fidelity Freedom 2035 K6    **     38,370,149  

*

   Fidelity Investments    Fidelity Freedom 2040 K6    **     48,899,587  

*

   Fidelity Investments    Fidelity Freedom 2045 K6    **     26,633,061  

*

   Fidelity Investments    Fidelity Freedom 2050 K6    **     33,491,031  

*

   Fidelity Investments    Fidelity Freedom 2055 K6    **     22,069,884  

*

   Fidelity Investments    Fidelity Freedom 2060 K6    **     10,541,920  

*

   Fidelity Investments    Fidelity Freedom 2065 K6    **     212,775  

*

   Fidelity Investments    Fidelity Freedom Income K6    **     3,685,149  

*

   Fidelity Investments    Fidelity Government Market    **     104,267  

*

   Fidelity Investments    Fidelity Growth K6    **     104,731,192  

*

   Fidelity Investments    Fidelity Low-Priced Stock K    **     23,914,554  

*

   Fidelity Investments    Fidelity Total International    **     4,288,602  

*

   Fidelity Investments    Fidelity U.S. Bond Index    **     5,391,342  
   American Beacon    ABF Large Cap Val R6    **     38,923,611  
   American Funds    AF EuroPacific Growth    **     24,854,183  
   Carillon Eagle    Carillion Eagle Mid Cap Growth R6    **     41,410,161  
   Dimensional Fund Advisors    DFA Emerging Markets Core Equity    **     4,517,318  
   Goldman Sachs    GS Small Cap Value R6    **     6,263,577  
   JPMorgan    JPMorgan Mid Cap Value R5    **     6,735,194  
   Metropolitan West    MetWest Total Return Bond P    **     31,542,325  
   T. Rowe Price    TRP QM U.S. Small Cap Growth Equity    **     4,149,921  
   Vanguard    Vanguard Strategic Small Cap Equity    **     12,420,972  
          

 

 

 
      Total mutual funds and common stock             705,451,089  
          

 

 

 

 

           
        
      10.


Table of Contents

CLAYTON HOMES, INC. 401(K) RETIREMENT PLAN

SCHEDULE H, LINE 4i – SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2019

 

 

 

 

 

a)   

b) Identity of Issuer,

Borrower, Lessor, or

Similar Party

  

c) Description of Investment
Including Maturity Date,
Rate of Interest,
Collateral, Par or Maturity Value

  

d) Cost

   

e) Current
Value

 
   Wells Fargo Bank N.A.    WF Stable Value Fund C      *     46,723,000  
          

 

 

 
     

Total collective trusts

       46,723,000  

*

   Notes receivable    Interest Rate 4.25%-6.5%      *     31,804,389  
          

 

 

 
     

Total

     $  783,978,478  
          

 

 

 

* - Party-in-interest

** - No cost information is provided since all investments are participant directed.

 

           
        
      11.


Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Employee Benefits Administrative Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    Clayton Homes, Inc. 401(k) Retirement Plan
Date: June 16, 2020     By:   /s/ Amber Krupacs                                                     
      Amber Krupacs, Chief Financial Officer - Clayton Homes, Inc.

 

 

           
        
      12.


Table of Contents

EXHIBIT INDEX

 

Exhibit
Number
  Description
23.1   Consent of Independent Registered Public Accounting Firm

 

           
        
      13.
Berkshire Hathaway (NYSE:BRK.B)
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