ࡎᆴሧᆀ഼֥ࣜ Ϙ ٣ ห ᇁ ܢ ת ֥ ྐ č ୍؇Ď щၲğϘ٣หනམຩ Ϙ٣หනམຩ·ࡎᆴሧંฆ Research Center for Buffettism ৳༢ྐ༏ Contact information EmailğBuffettism@ MSNğBuffettism@ QQğ262532181
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēē Ϙ٣หනམຩࡥࢺ აఃӫϘ٣หູሧࡅđ۷҂ೂູනམࡅކൡbϘ٣หࡼ۳ഠ߶֥҂ࣇࣇ൞๙ݖሧࠒ֥తϤၡᆭऍ֥ҍڶđ֥නམčЇওሧaഅြၛࠣಸၞФದૌޭ֥֣֡֩؟۱ٚ૫Ď۷൞Ϙ٣หૌ۷ႋھٳཚބӵ֥ҍڶbູՎૌԷϷਔϘ٣หනམຩb൞ၛϘ٣หනམaႄਵࡎᆴሧູሷᆻ֥܄ၭྟຩᅟbຩᅟთᇏ֥BuffettismႮϘ٣ห֥ႇ໓Buffettࡆުሗ JTNܒӮđၩoູϘ٣หනམpđ൞ૌ֥൮༵Էᄯ֥၂۱Ս߸bႿϘ٣หؓದো෮ቓ֥ऍն܊ངđཌྷྐBuffettism҂ࣲ֥ࡼট߶Фႇ໓Սׅ൬bЧຩᅟ࣐ॖିಆ૫ֹ൬ࠢაϘ٣หႵܱ֥ሧਘ܂Ϙ٣หૌᄇބ࿐༝bଢభຩᅟၘଵওਔधն҆ٳຩഈିܔෆ෬֥֞Ϙ٣Ϙ٣หනམຩหཌྷܱଽಸčᄝՎؓჰԷᆀ֥܊ངіൕᆇӴ֥ۋ྆ĎđՎຓߎႵ၂ུЧᅟ൬֥ࠢ֞ࡅଽಸđೂϘ٣หؿіᄝૅݓᇶေҍࣜૂุഈ֥໓ᅣaဆࢃ֩bϘ٣หනམຩၘӮູēēēēēēēēēϘ٣หཌྷܱሧਘቋಆ֥ᇏ໓ຩᅟđ൞ეൗࢸ࿐༝ބࢌੀϘ٣หනམ֥ቋࡄb ēēēēēēēēēēēēēēēēēēēēēēēēēēēēēēēēēēēႮႿϘ٣หЧದߎીႵཿݖሱԮđૄ୍ཿ۳ܢת֥ྐ൞ଢభϘ٣หጫఃනམ֥ቋᇶေ౻č֡ਸ਼၂۱ᇶေ౻֡൞ૄ୍ѵक़༐غ܄ඳܢתն߶ഈϘ٣หބધ۬߭ճܢת֥ิ໙đ၂ٚ૫ѵक़༐غ܄ඳܢࡎӑݖ ຣჭđ҂൞ଢభ௴๙ᇏݓದॖၛෛьઙ֤ఏđਸ਼၂ٚ૫܄ඳჹᄝૅݓđؓᇏཬሧᆀটඪીႵหљ౦ঃҕࡆ֥ӮЧൌᄝۚĎbϘ٣หනམຩഈႵሱ ୍ၛট෮Ⴕ୍؇֥Ϙ٣หᇁܢת֥ྐčᇏ໓ϱĎđᆃུྐეࡥaྛ໓ੀӎطႻනམധख़đऽбરᄶת࿊ࠢbೂݔؓϘ٣หߎ҂൞หљਔࢳđପࣼՖᆃུྐषϔĠೂݔၘࣜؓϘ٣หႵ෮ਔࢳđϘ٣หᇁܢת֥ྐಯಖᆴ֤ϥᄝσđӈुӈྍb ؓϘ٣หනམຩ֥ޅࡹၰॖၛؿሰႯࡱᇁğBuffettism@ ֻ 2 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēBerkshire’s Corporate Performance vs. the S&P 500 ѵक़༐غაѓ௴ ི֥ࠛбࢠ Annual Percentage Change Relative Results୍Ϥٳбэ Year ؓбࢲݔ in Per-Share Book Value of in S&P 500 with ୍ٺ Berkshire Dividends Included čĖĎĒčėĎѵक़༐غ܄ඳૄܢᅬ૫ࡎᆴč1ĎЇওS&P 500ܢ༏č2Ď
Ϙ٣หනམຩ
ֻ 3 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēAnnual Percentage Change Relative Results୍Ϥٳбэ Year ؓбࢲݔ in Per-Share Book Value of in S&P 500 with ୍ٺ Berkshire Dividends Included čĖĎĒčėĎѵक़༐غ܄ඳૄܢᅬ૫ࡎᆴč1ĎЇওS&P 500ܢ༏č2Ď
Ċ 2008 č Ď č Ď 2009 č Ď Compounded Annual Gain % % ୍नگ০߭Б——1965-2009 Overall Gain Ϙ٣หනམຩ⚶ 1964-2009 434,057% 5,430% ࠹߭Бੱ Notes: Data are for calendar years with these exceptions: 1965 and 1966, year ended 9/30; 1967, 15 months ended 12/31. ᇿğԢਔ1965ࠣ1966୍൞ၛ9/30୍ູᇔĠ1967୍ᇀ12ᄅ31ರູ15۱ᄅ୍֥ᇔຓđఃჅࢥ୍ູb Starting in 1979, accounting rules required insurance companies to value the equity securities they hold at market rather than at the lower of cost or market, which was previously the requirement. In this table, Berkshirens results through 1978 have been restated to conform to the changed rules. In all other respects, the results are calculated using the numbers originally reported. ሱ1979୍ఏđ߶࠹مܿေЌག܄ඳၛӻႵܢಃᆣಊ֥൧ᆴູࡎࠎሙđط٤ݖಀܿק֥ӮЧა൧ࡎං֮ٚൔbЧіᇏѵक़༐غ܄ඳ1978୍భ֥ඔሳࢥࣜᇗྍ࠹ෘđၛၹႋྍ֥ܿקbطఃֹٚߎ൞ၛჰ༵֥ඔሳট࠹ෘb The S&P 500 numbers are pre-tax whereas the Berkshire numbers are after-tax. If a corporation such as Berkshire were simply to have owned the S&P 500 and accrued the appropriate taxes, its results would have lagged the S&P 500 in years when that index showed a positive return, but would have exceeded the S&P 500 in years when the index showed a negative return. Over the years, the tax costs would have caused the aggregate lag to be substantial. ѓሙ௴غ500ᆷඔ֥ၭ൞ၛඥభູࠎሙđಖطѵक़༐غ܄ඳᄵҐ౼ඥުٚൔbၹູཞѵक़༐غᆃো܄ඳđࠧᆺֆՂӻႵѓሙ௴غ500ᆷඔđࣼႵᆦڱཌྷܱඥڵ֥ၬༀbၹՎᄝᆷඔӯགྷᆞБԏൈđ܄ඳི֥ࠛ߶ઋުᆷඔđᄝᆷඔБԏੱູڵൈđᄵࡼӑᄀᆷඔіགྷbӉ௹টुđඥڵӮЧࡼིࠛઋުᆷඔ֥ॢࡗđэ֤ၛದޭ൪b ֻ 4 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēē To the Shareholders of Berkshire Hathaway Inc.: ᇁѵक़༐غ·ݗົ܄ඳܢתğ Our gain in net worth during 2009 was $ billion, which increased the per-share book value of bothour Class A and Class B stock by %. Over the last 45 years (that is, since present management took over)book value has grown from $19 to $84,487, a rate of % compounded annually.* 2009୍đѵक़༐غ·ݗົ֥࣪ᆴᄹӉਔ218ၡૅჭđՖطૌAܢބBܢ֥ᅬ૫ࡎᆴૄܢनഈᅨ%bᄝݖಀ45୍ࡗđࠧགྷܵҪࢤܵ܄ඳၛটđᅬ૫ࡎᆴՖ19ૅჭശᇀ84,487ૅჭđૄ୍֥گކᄹӉੱղ%*b(*ЧБۡᇏ෮ႵૄܢඔऌൡႨႿѵक़༐غ֥AܢđBܢඔऌູAܢ֥1/1500b) Berkshire’s recent acquisition of Burlington Northern Santa Fe (BNSF) has added at least 65,000 shareholders to the 500,000 or so already on our books. It’s important to Charlie Ϙ٣หනམຩMunger, my long-time partner, and me that all of our owners understand Berkshire’s operations, goals, limitations and culture. In each annual report, consequently, we restate the economic principles that guide us. This year these principles appear on pages89-94 and I urge all of you – but particularly our new shareholders – to read them. Berkshire has adhered to these principles for decades and will continue to do so long after I’m gone. ܄ඳቋ࣍൬ܓਔѵਲؘК഼ٚ٣ํਫ਼܄ඳ(BNSF)đᆃૌၘႵ֥ჿ50ຣܢתᇀഒᄹࡆਔຣbؓႿބ֥Ӊ௹ކቔࠄϴ——Ұ-ધ۬(Charlie Munger)طđ෮Ⴕ֥ܢתਔࢳ܄ඳ֥ြༀaଢѓaअཋྟބ໓߄ऎႵᇗေၩၬbၹՎđૌᄝૄՑ୍֥Бᇏ߶ᇗണᆷ֝ૌ֥ࣜ࠶ჰᄵbࣂ୍ᆃུჰᄵ़֨ᄝֻ89ᇀ94်đ఼ਛေૌ෮ႵದđႭః൞ྍܢתᄇᆃུჰᄵbѵक़༐غඔ୍টᄝࡔӻᆃུჰᄵđᄝ҂ᄝᆭު֥Ӊൈࡗଽ߶࿃ࡔӻb In this letter we will also review some of the basics of our business, hoping to provide both a freshman orientation session for our BNSF newcomers and a refresher course for Berkshire veterans. ૌߎ߶ᄝᆃٿྐᇏ߭ܤ၂ུြༀ֥ࠎЧ౦ঃđ༐ຬູྍࡆೆ֥BNSFܢתބܢתิ܂ྍದڣ֝ज़ބگ༝ज़b How We Measure Ourselves ૌೂޅޙਈሱ࠭ Our metrics for evaluating our managerial performance are displayed on the facing page. From the start, Charlie and I have believed in having a rational and unbending standard for ֻ 5 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēmeasuring what we have – or have not – accomplished. That keeps us from the temptation of seeing where the arrow of performance lands and then painting the bull’s eye around it. ૌܙܵҪြ֥ࠛѓሙ़֨ᄝ൮်bҰބ၂षࣼಪູđޙਈૌປӮބໃປӮ֥۽ቔေႵ၂۱ྟބࡔק֥ѓሙbᆃૌх૧൳֞ሢငြࠛѩၛՎູଢѓ֥Ⴚࠈb Selecting the S&P 500 as our bogey was an easy choice because our shareholders, at virtually no cost, can match its performance by holding an index fund. Why should they pay us for merely duplicating that result? ࡼѓሙ௴غ500ᆷඔቔູૌ֥ѓۆ൞၂۱ಸၞ֥࿊ᄴđၹູૌ֥ܢתӻႵଖ၂ᆷඔࠎࣁࠫެ҂ٮહսࡎࣼିۊഈ֥ြࠛbପહđૌႵહႮູૌࣇࣇԷᄯဢིࠛطภఫĤ A more difficult decision for us was how to measure the progress of Berkshire versus the Ϙ٣หනམຩS&P. There are good arguments for simply using the change in our stock price. Over an extended period of time, in fact, that is the best test. But year-to-year market prices can be extraordinarily erratic. Even evaluations covering as long as a decade can be greatly distorted by foolishly high or low prices at the beginning or end of the measurement period. Steve Ballmer, of Microsoft, and Jeff Immelt, of GE, can tell you about that problem, suffering as they do from the nosebleed prices at which their stocks traded when they were handed the managerial baton. ؓႿૌطđ؇۷ն֥थק൞ೂޅޙਈѵक़༐غཌྷбѓ௴500ᆷඔ֥ࣉ҄bᆺႨܢࡎэ߄টޙਈ္Ⴕޓݺ֥Ⴎbൌ࠽ഈđᄝ၂؍ࢠӉൈࡗଽܢࡎ൞ቋݺ֥ॉဒb҂ݖđૄ၂୍֥൧ӆࡎ۬ॖି߶ࠞః҂໗קđࠧݤۂൈࡗӉղ10୍֥ܙ္߶Фޙਈ௹֥൮ແൈࡗჃՃ֥ۚࠇ֮ࡎࠞն౷bັೈ֥ൎֺڏ-Дغଏ(Steve Ballmer)ބ๙Ⴈగ֥ࢭڏ-၈ଏغห(Jeff Immelt)ؓՎࣼႵุ߶đૌᄝᆳᅧᆃུఒြൈᄥმܢࡎэದа࿓ֹ֥҄b The ideal standard for measuring our yearly progress would be the change in Berkshire’s per-share intrinsic value. Alas, that value cannot be calculated with anything close to precision, so we instead use a crude proxy for it: per-share book value. Relying on this yardstick has its shortcomings, which we discuss on pages 92 and 93. Additionally, book value at most companies understates intrinsic value, and that is certainly the case at Berkshire. In aggregate, our businesses are worth considerably more than the values at which they are carried on our books. In our all-important insurance business, moreover, the difference is huge. Even so, Charlie and I believe that our book value – understated though it is – supplies the most useful tracking device for changes in intrinsic value. By this ֻ 6 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēmeasurement, as the opening paragraph of this letter states, our book value since the start of fiscal 1965 has grown at a rate of % compounded annually. ޙਈૌૄ୍ࣉ֥҄མѓሙࠇྸ൞ѵक़༐غܢௐૄܢଽᄝࡎᆴ֥эđޅᆃ၂ࡎᆴ֥࠹ෘٚمၛაࣚಒձшđ෮ၛૌᄎႨਔ၂۱ՙู֥սѓሙ——ૄܢ֥ᅬ૫ࡎᆴb၇ौᆃ၂ѓሙႵఃሱദ֥ಌׄđૌᄝ92ބ93်ؓՎࣉྛਔษંbՎຓđն؟ඔఒြܢௐ֥ᅬ૫ࡎᆴ֮ܙਔଽᄝࡎᆴđᄝѵक़༐غ֒ಖ္൞ೂՎbሹ֥ඪটđૌြༀ֥ࡎᆴေбఃᅬ૫ࡎᆴ֤ۚ؟đطᄝૌٳᇗေ֥ЌགြༀᇏҵحஔնbࠧೂՎđҰބಪູđૌ֥ᅬ૫ࡎᆴ(ෙಖФ֮ܙ)đ൞ሔሶଽᄝࡎᆴэ֥ቋ֤৯۽ऎbᄎႨᆃᇕޙਈѓሙđᆞೂЧٿྐष၂؍෮đሱ1965ҍ୍ၛটđѵक़༐غᅬ૫ࡎᆴૄ୍֥گކᄹӉੱղ%b We should note that had we instead chosen market prices as our yardstick, Berkshire’s results would look better, showing a gain since the start of fiscal 1965 of 22% compounded annually. Surprisingly, this modest difference in annual compounding rate leads to an Ϙ٣หනམຩ801,516% market-value gain for the entire 45-year period compared to the book-value gain of 434,057% (shown on page 2). Our market gain is better because in 1965 Berkshire shares sold at an appropriate discount to the book value of its underearning textile assets, whereas today Berkshire shares regularly sell at a premium to the accounting values of its first-class businesses. ૌႋھᇿၩ֞đೂݔ࿊Ⴈ൧ӆࡎ۬ቔູૌ֥ޙਈѓሙđѵक़༐غ֥ြࠛुఏট߶۷ݺđሱ1965ҍ୍୍Ԛၛট୍֥گކᄹӉੱղ֞22%bದ֥ࣙ൞đႮႿᆃ၂໑ބ୍֥گކᄹӉੱҵحđ45୍ၛটđ൧ӆࡎᆴ୍֥ᄹӉੱղ֞801516%đطᅬ૫ࡎᆴ֥ᄹӉੱູ434057%(ೂֻؽ်෮ൕ)bૌ֥൧ӆᄹӉੱ۷ۚđᆃ൞ၹູᄝ1965୍đѵक़༐غܢௐၛႏ൬҂ࡄ֥١ᆮሧӁᅬ૫ࡎᆴ၂۱ކൡ֥ᅼ२ԛ൲đطೂࣂѵक़༐غܢௐ၂Ϯၛః၂ੀြༀ֥ᅬ૫ࡎᆴၮࡎԛ൲b Summed up, the table on page 2 conveys three messages, two positive and one hugely negative. First, we have never had any five-year period beginning with 1965-69 and ending with 2005-09 – and there have been 41 of these – during which our gain in book value did not exceed the S&P’s gain. Second, though we have lagged the S&P in some years that were positive for the market, we have consistently done better than the S&P in the eleven years during which it delivered negative results. In other words, our defense has been better than our offense, and that’s likely to continue. ሹᆭđֻؽ်֥і۬Ԯղਔ۱ྐ༏đఃᇏਆ۱ູᆞ૫ྐ༏ބਸ਼၂۱ູࠞڵ૫b൮༵đᄝՖ1965ᇀ1969୍षaၛ2005ᇀ2009୍ࢲඏ୍֥၂۱ࢨ؍֥ൈ௹ଽđૌᅬ૫ࡎᆴ֥ᄹӑݖਔѓ௴500ᆷඔ֥ᄹĠఃՑđෙಖૌᄝ൧ӆཟݺ୍֥ࠫᇏઋުႿѓ௴500ᆷඔđૌᄝھᆷඔြࠛཨࠞൈ၂ᆰӑݖਔb္ࣼ൞ඪđૌ֥ٝ൯ֻ 7 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēݺႿࣉ۾đᆃ္ॖିӻ࿃༯ಀb The big minus is that our performance advantage has shrunk dramatically as our size has grown, an unpleasant trend that is certain to continue. To be sure, Berkshire has many outstanding businesses and a cadre of truly great managers, operating within an unusual corporate culture that lets them maximize their talents. Charlie and I believe these factors will continue to produce better-than-average results over time. But huge sums forge their own anchor and our future advantage, if any, will be a small fraction of our historical edge. ၂۱ն֥ڵ૫ၹ൞đෛሢ܄ඳܿଆ֥ᄹӉđૌ֥ြࠛႪ൝նږࡨഒđᆃ၂ದ҂ॹ֥൝൝с߶ӻ࿃༯ಀbॖၛड़ק֥൞đѵक़༐غႚႵྸ؟ԛᇙ֥ြༀބ၂ᆇᆞႪྮ֥ࣜದđѩၛ၂ᇕ҂࿙ӈ֥ఒြ໓߄ᄎႏđૌିܔቋնཋ؇ؿߨሱ֥࠭ҌۄbҰބཌྷྐđᆃུၹෛሢൈࡗ֥၍ࡼ࿃ԷᄯݺႿनඣ֥ြࠛb൞đऍնඔحၘࣜྙӮᄽ۴đطૌ֥ໃটႪ൝(ೂݔႵ֥߅)߶൞ૌ֥၂ཬ҆ٳԮႪ൝b Ϙ٣หනམຩ What We Don’t Do ૌႵ෮҂ູ Long ago, Charlie laid out his strongest ambition: “All I want to know is where I’m going to die, so I’ll never go there.” That bit of wisdom was inspired by Jacobi, the great Prussian mathematician, who counseled “Invert, always invert” as an aid to solving difficult problems. (I can report as well that this inversion approach works on a less lofty level: Sing a country song in reverse, and you will quickly recover your car, house and wife.) ޓࣲၛభđҰᇅרਔሱ࠭ቋჹն֥ྦྏğ“ᆺམᆩ֡ࡼೞളޅԩđପહࣼध҂߶ಀପ۱ֹٚb”ᆃུᇆ߰൳֞ਔն֥௴ਗ਼ൖඔ࿐ࡅ۲б(Jacobi)֥ఓؿđࡼ“ّཟđ၂ᆰّཟ”ቔູࢳथี֥Ϻᇹb(္ᆩ֡ᆃᇕّཟٚمᄝ၂۱҂ପહԌ֥ۚҪ૫ഈ္߶ఏቔႨ——֚ӏ၂൮པըۣ౷đ߶ᇗྍ֤ٜ֞ሰaӚሰބሰb) Here are a few examples of how we apply Charlie’s thinking at Berkshire: ၛ༯ᆃུ২ሰุགྷૌೂޅᄝѵक़༐غႋႨҰ֥නམğ z Charlie and I avoid businesses whose futures we can’t evaluate, no matter how exciting their products may be. In the past, it required no brilliance for people to foresee the fabulous growth that awaited such industries as autos (in 1910), aircraft (in 1930) and television sets (in 1950). But the future then also included competitive dynamics that would decimate almost all of the companies entering those industries. Even the survivors tended to come away bleeding. ֻ 8 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēz Ұބхषૌ҂ିܙఃໃট֥ြༀđંૌ֥Ӂॖି؟હࠗದྏbݖಀđࠧ൞௴๙ದ္ିყҩ֞చӚ(1910୍)a٦ࠏ(1930୍)ބ൪ࠏ(1950୍)ᆃུྛြ֥யѱؿᅚb҂ݖđໃটᄵ߶Їݣ߶ز೪෮Ⴕࣉफᆃུྛြ֥܄ඳ֥ࣩᆚ৯đࠧྜྷթᆀ္ӈӈ൞༷࿓ਥৗֹषb Just because Charlie and I can clearly see dramatic growth ahead for an industry does not mean we can judge what its profit margins and returns on capital will be as a host of competitors battle for supremacy. At Berkshire we will stick with businesses whose profit picture for decades to come seems reasonably predictable. Even then, we will make plenty of mistakes. ႮႿӮಕࣩᆚᆀᆚؠᇶ֝ಃđҰބିܔૼಒყଖ۱ྛြໃট߶఼࣑ᄹӉѩ҂ၩૌିܔ؎ః০ੱބሧЧ߭Б߶൞؟ഒbᄝѵक़༐غૌࡼࡔӻՖ൙ఃໃটඔ୍֥০భරެॖކყҩ֥ྛြbࠧೂՎđૌߎ൞߶ٕ༯ྸ؟հ༂b Ϙ٣หනམຩ z We will never become dependent on the kindness of strangers. Too-big-to-fail is not a fallback position at Berkshire. Instead, we will always arrange our affairs so that any requirements for cash we may conceivably have will be dwarfed by our own liquidity. Moreover, that liquidity will be constantly refreshed by a gusher of earnings from our many and diverse businesses. z ૌध҂߶၇ঠଓളದ֥ईb“ն֞҂ି֚”҂߶൞ѵक़༐غ֥ਫ਼bّᆭđૌॖၛམའ֥གྷࣁླაሱദ֥ੀྟཌྷбັ҂ቀ֡đᆃ൞ૌ֥൙ༀνஆٚൔbՎຓđૌਈ؟؟ဢ߄֥ြༀ֥൬ၭࡼ҂؎ᇿೆྍ֥ੀྟb When the financial system went into cardiac arrest in September 2008, Berkshire was a supplier of liquidity and capital to the system, not a supplicant. At the very peak of the crisis, we poured $ billion into a business world that could otherwise look only to the federal government for help. Of that, $9 billion went to bolster capital at three highly-regarded and previously-secure American businesses that needed – without delay – our tangible vote of confidence. The remaining $ billion satisfied our commitment to help fund the purchase of Wrigley, a deal that was completed without pause while, elsewhere, panic reigned. 2008୍9ᄅđ֒ࣁವุ༢ཊೆคߓᆭൈđѵक़༐غູھุ༢ิ܂ੀྟބሧЧđط҂൞ᇹᆀbᄝາࠏפڂൈ௹đૌཟఒြࢸೆ155ၡૅჭđᆃུఒြڎᄵॖିᆺିཟ৳Ϲᆟکᇹbఃᇏđ9ၡૅჭೆਔࡅП൳ቍࣣaၛభनνಆ֥ૅݓఒြၛิۚૌ֥ሧЧࣁđᆃུఒြख़҂ಸߏླေૌԛྙ֥ྐௐbఃჅ֥65ၡૅჭൌགྷਔૌູ൬ܓੳࡰิ܂ሧࣁ֥ӵ୶đᆃላࢌၞᄝఃֻ 9 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēࢌၞԉડॣߚൈඨӎປӮb We pay a steep price to maintain our premier financial strength. The $20 billion-plus of cashequivalent assets that we customarily hold is earning a pittance at present. But we sleep well. ૌູົӻሱ֥࠭၂ੀҍༀൌ৯ڱԛࠞۚսࡎbଢభૌᅶ২ӻႵ֥ཌྷ֒Ⴟ200؟ၡૅჭགྷࣁ֥ሧӁջট֥൬ၭޓഒb൞đૌඤ֤ν໗b z We tend to let our many subsidiaries operate on their own, without our supervising and monitoring them to any degree. That means we are sometimes late in spotting management problems and that both operating and capital decisions are occasionally made with which Charlie and I would have disagreed had we been consulted. Most of our managers, however, use the independence we grant them magnificently, rewarding our confidence by maintaining an owneroriented attitude that is invaluable Ϙ٣หනམຩand too seldom found in huge organizations. We would rather suffer the visible costs of a few bad decisions than incur the many invisible costs that come from decisions made too slowly – or not at all – because of a stifling bureaucracy. z ૌສສಞሱ֥࠭ᇙ؟ٳᆦሱᇶࣜႏđૌ҂߶ൌྛޅӱ؇֥ࡓބࡓ൪bᆃၩሢૌႵൈ߶ӾႿؿགྷܵҪ໙ีđغૌ֥ᄎႏބሧЧٚ૫֥थҦđೂݔေૌ۳Ⴭࡹၰॖି҂߶ၩbಖطđૌն؟ඔࣜದޓݺᄎႨਔૌ൱Ⴭ֥ሱᇶಃđЌӻሢ၂ᇕᄝնࠏܒ༷֥aၛܢתູ֝ཟ֥ᆅ؇bૌୡ჻ӵ൳၂ུᄦथҦᄯӮ֥Ⴕྙսࡎđ္҂჻ᄥ൳ႮႿࡺ߄֥ܲቔڄطथҦݖႿӾߏࠇᆀ۴ЧીႵथҦջট֥նਈྙսࡎb With our acquisition of BNSF, we now have about 257,000 employees and literally hundreds of different operating units. We hope to have many more of each. But we will never allow Berkshire to become some monolith that is overrun with committees, budget presentations and multiple layers of management. Instead, we plan to operate as a collection of separately-managed mediumsized and large businesses, most of whose decision-making occurs at the operating level. Charlie and I will limit ourselves to allocating capital, controlling enterprise risk, choosing managers and setting their compensation. ൬ܓBNSFᆭުđૌགྷᄝႚႵຣჴ۽ބඔϤࡅᄎႏٳᆦbૌ༐ຬᄹࡆᆃਆ֥ٚඔਈđध҂ᄍྸѵक़༐غӮູ၂۱ԉડ۲ᇕჴ߶aყෘБۡބ؟ࠩܵҪ֥ଖᇕऍbّطૌ࠹߃ၛ၂ֆ֥ܵᇏބնఒြ֥ٚൔᄎႏđᆃུఒြ֥ն؟ඔथҦᄝᄎႏҪቓԛbҰބࡼϜሱ֥࠭࢘ཋႿଟࠢሧЧa॥ᇅఒြڄགa็࿊ࣜದބᇅקૌ֥ྈԏb ֻ 10 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēē z We make no attempt to woo Wall Street. Investors who buy and sell based upon media or analyst commentary are not for us. Instead we want partners who join us at Berkshire because they wish to make a long-term investment in a business they themselves understand and because it’s one that follows policies with which they concur. If Charlie and I were to go into a small venture with a few partners, we would seek individuals in sync with us, knowing that common goals and a shared destiny make for a happy business “marriage” between owners and managers. Scaling up to giant size doesn’t change that truth. z ૌીႵӇ൫ಀษݺغࢧbࠎႿૂุࠇٳ༅ഽંࣉྛࢌၞ֥ሧᆀ҂൞ૌ༟ߋ֥োđّطૌ༐ຬކቔࠄϴ൞ၹູ༐ຬؓሱദࢳ֥ఒြࣉྛӉ௹ሧaѩಪᆃ۱ఒြ෮࿖֥ᆟҦطࡆೆѵक़༐غbࡌೂҰބေა၂ུކቔࠄϴࡆೆ၂ࡅཬఒြđૌ߶࿙ᅳაૌᆽ֡ކaਔࢳ܋ଢѓބ܋Ⴕଁᄎ߶՜ࣉܢתބࣜದᆭࡗྜྷڞ֥ఒြ“߾ၽ”֥ކቔᆀbఒြؿϘ٣หනམຩᅚ֞ऍնܿଆ္҂߶ڿэᆃ၂൙ൌb To build a compatible shareholder population, we try to communicate with our owners directly and informatively. Our goal is to tell you what we would like to know if our positions were reversed. Additionally, we try to post our quarterly and annual financial information on the Internet early on weekends, thereby giving you and other investors plenty of time during a non-trading period to digest just what has happened at our multi-faceted enterprise. (Occasionally, SEC deadlines force a non-Friday disclosure.) These matters simply can’t be adequately summarized in a few paragraphs, nor do they lend themselves to the kind of catchy headline that journalists sometimes seek. ູਔྙӮ၂۱ཌྷಸ֥ܢתದಕđૌ୭৯ა෮Ⴕᆀࣉྛᆰࢤބิ܂ႵႨྐ༏֥๙bૌ֥ଢѓ൞ۡᆩೂݔૌ֥ԩטߐđૌམေᆩ֡હbՎຓđૌ୭৯ᄝᇛଌ၂ᄪᄝຩഈ܄҃࠱؇ބ୍؇ҍༀྐ༏đၹՎ۳Ⴭބఃሧᆀ٤ࢌၞൈ؍֥նਈൈࡗটር༥ሞଈૌᆃ۱؟ဢ߄֥ఒြؿള֥൙౦b(ૅݓᆣಊჴ߶֥ቋު௹ཋغ௧ᄝ٤ᇛb)؋؋ඔ؍҂ିԉٳሹࢲᆃུ໙ีđ္҂ቀӮູྍ໔࠺ᆀ࿙֥ପᇕؠದင౯֥ྍ໔ѓีb Last year we saw, in one instance, how sound-bite reporting can go wrong. Among the 12,830 words in the annual letter was this sentence: “We are certain, for example, that the economy will be in shambles throughout 2009 – and probably well beyond – but that conclusion does not tell us whether the market will rise or fall.” Many news organizations reported – indeed, blared – the first part of the sentence while making ֻ 11 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēno mention whatsoever of its ending. I regard this as terrible journalism: Misinformed readers or viewers may well have thought that Charlie and I were forecasting bad things for the stock market, though we had not only in that sentence, but also elsewhere, made it clear we weren’t predicting the market at all. Any investors who were misled by the sensationalists paid a big price: The Dow closed the day of the letter at 7,063 and finished the year at 10,428. ૌᄝಀ୍၂۱൙ࡱᇏु֞ჰലᅋေБ္֝߶ԛ໙ีbᄝӉჿ12,830۱ሳ୍֥؇ྐᇏႵᆃહ၂ओ߅ğ“২ೂđૌಒקࣜ࠶ᄝᆜ۱2009୍ࠇᆀᆃ၂୍ᆭຓԩ࡛đ൞ᆃ၂ࢲંѩ҂ۡුૌ൧ӆ߶ഈᅨࠇ༯יb”ྸ؟ྍࡹࠏܒБ֡ਔ(ൌ࠽ഈ൞նබ࿆ဘ)ᆃओ߅ֻ֥၂҆ٳđطؓᆃओ߅֥ࢲແᆺሳ҂ิbಪູᆃ൞ॖஃ֥ྍ໔Б֡đ൳֞༂֥֝ᆀࠇܴᇙޓॖି߶ಪູҰބᄝყҩܢ൧߶ԛགྷᄦሑঃđෙಖૌ҂ࣇᄝᆃओ߅ᇏߎᄝԩૼಒіൕૌ۴Ч҂൞ᄝყҩܢ൧bޅ൳֞ᆃུᆀ༂֥֝ሧᆀڱԛਔऍնսࡎđ֡౪ථᆷඔᄝᆃٿྐ܄҃ᆭರၛ7,063ׄ൬đᄝ୍֒ၛ10,428ׄ൬ܱb Ϙ٣หනམຩ Given a few experiences we’ve had like that, you can understand why I prefer that our communications with you remain as direct and unabridged as possible. ॉ੮֞ૌ෮֥ࣜᆃো൙౦đ߶ૼϢ۷჻ၩૌაᆭࡗ֥๙࣐ॖିֹᆰࢤބປᆜb Let’s move to the specifics of Berkshire’s operations. We have four major operating sectors, each differing from the others in balance sheet and income account characteristics. Therefore, lumping them together, as is standard in financial statements, impedes analysis. So we’ll present them as four separate businesses, which is how Charlie and I view them. ಞૌሇ֞ѵक़༐غြༀ֥၂ུऎุ໙ีbૌႵඹնြༀ҆ٳđૄ၂֥҆ሧӁڵᅏіބႏ൬ᅫଢ۲ऎหbၹطđೂݔοᅶҍༀБۡѓሙቓمϜૌࠁᄖᄝ၂ఏ߶ٞθٳ༅bၹՎđૌ߶Ϝૌٳູඹ۱ֆြༀࣉྛᅚൕđᆃ္൞Ұބुրૌ֥ٚൔb Insurance Ќགြ Our property-casualty (P/C) insurance business has been the engine behind Berkshire’s growth and will continue to be. It has worked wonders for us. We carry our P/C companies on our books at $ billion more than their net tangible assets, an amount lodged in our “Goodwill” account. These companies, however, are worth far more than their carrying ֻ 12 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēvalue – and the following look at the economic model of the P/C industry will tell you why. ૌ֥ҍӁགြༀ၂ᆰ൞܄ඳؿᅚሐն֥ؿࠏđູૌ౼֤ਔࣙದ֥Ӯࠛđѩᄝໃট֥ൈࡗ࿃ԉ֒ᆃ၂࢘b֒భҍӁག܄ඳᅫ૫ሧӁӑݖఃႵྙሧӁ࣪ح155ၡૅჭb֒ಖđ๙ݖ༯૫ؓҍӁགਵთࣜ࠶ଆൔห֥ׄࢳॖၛਔࢳ֞đᆃུ܄ඳ֥ࡎᆴေჹჹӑݖఃᅫ૫ࡎᆴb Insurers receive premiums upfront and pay claims later. In extreme cases, such as those arising from certain workers’ compensation accidents, payments can stretch over decades. This collect-now, pay-later model leaves us holding large sums – money we call “float” – that will eventually go to others. Meanwhile, we get to invest this float for Berkshire’s benefit. Though individual policies and claims come and go, the amount of float we hold remains remarkably stable in relation to premium volume. Consequently, as our business grows, so does our float. Ќག܄ඳᄎႏଆൔ֥ԛหׄࠧყ༵൬౼ЌགٮႨطᇌުᆦڱग़෬ணbᄝ၂ུࠞ؊Ϙ٣หනམຩ౦ঃ༯đೂ၂ུఒြ۽ದ֥൙ܣணӊđᇌު௹മᇀିܔղ୍֞ࠫᆭࣲbᆃᇕ֒భԔࠢሧࣁطᇌުᆦڱ֥ଆൔ֤ૌିܔ֤ၛӻႵնਈሧࣁđૌӫᆭູ“ੀሧЧ”b࣐ܵᆃ҆ٳሧЧቋᇔࡼ߶ੀཟग़đൈđૌିܔ০Ⴈᆃ҆ٳሧЧࣉྛሧѩູѵक़༐غ·ݗົջট০b࣐ܵ҂؎ႵЌֆࠣ෬ணФࡹ৫đૌ෮ӻႵ֥ੀሧࣁ൳Ќགࢌၞਈ֥ЌᅰಯିࠎЧЌӻ໗קbၹՎđෛሢြༀᄹӉđૌ֥ੀሧࣁ္߶ᄀটᄀ؟b If premiums exceed the total of expenses and eventual losses, we register an underwriting profit that adds to the investment income produced from the float. This combination allows us to enjoy the use of free money – and, better yet, get paid for holding it. Alas, the hope of this happy result attracts intense competition, so vigorous in most years as to cause the P/C industry as a whole to operate at a significant underwriting loss. This loss, in effect, is what the industry pays to hold its float. Usually this cost is fairly low, but in some catastrophe-ridden years the cost from underwriting losses more than eats up the income derived from use of float. ೂݔ܄ඳ൬౼֥ЌགٮႨӑݖਔቋᇔணӊࠣᄎႏٮႨᆦԛሹحđପહૌԢੀሧࣁ֥ሧ൬ೆຓߎࠆ֤ਔӵЌ႔০൬ೆbᆃᇕቆކູૌิ܂ਔ૧ٮႨሧሧЧ֥ࠏ߶đ۷Ⴕ০֥൞đૌമᇀߎၹູӻႵᆃ҆ٳሧࣁطࠆ֤ਔٮႨb֒ಖđᆃ၂མࢲݔ္Ӂളਔ఼ਛ֥ࣩᆚđᆃᇕࣩᆚ୍֤࣍ࠫն҆ٳൈࡗҍӁགྛြᆜุᄝၛअ૫ᄎႏb൙ൌഈđᆃᇕ൞ᆜ۱ྛြູః෮ӻႵ֥ੀሧࣁᆦڱ֥ٮႨbѩđ๙ӈᆃ၂ӮЧѩ҂ۚb֒ಖđ҂ॖх૧ᄝଖུᄙ୍ᇏđЌགြാ֥ӮЧ߶ӑݖఃੀሧࣁջট֥൬ೆb ֻ 13 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēIn my perhaps biased view, Berkshire has the best large insurance operation in the world. And I will absolutely state that we have the best managers. Our float has grown from $16 million in 1967, when we entered the business, to $62 billion at the end of 2009. Moreover, we have now operated at an underwriting profit for seven consecutive years. I believe it likely that we will continue to underwrite profitably in most – though certainly not all – future years. If we do so, our float will be cost-free, much as if someone deposited $62 billion with us that we could invest for our own benefit without the payment of interest. ၛࠇྸթႵொ֥ܴׄটुđѵक़༐غ·ݗົႚႵಆ౯ቋݺ֥նЌགᄎႏࠏܒđѩၐૌ္ႚႵൗࢸഈቋݺ֥ࣜದbሱ1967୍ࣉೆЌགਵთᇀ2009୍ָđૌ֥ੀሧࣁՖ֒ൈ֥1600ຣૅჭഈശᇀ620ၡૅჭb۷ᇗေ֥൞đૌၘ৵࿃7୍ൌགྷਔӵЌ႔০ᄎႏbޓႵྐྏđᄝໃট֥ն҆ٳൈࡗđૌ္ࡼିЌӻӵЌ႔০֥ದअ૫bೂݔགྷൌؿᅚᆞೂ֥ყ࠹đପહૌ֥ੀሧЧࡼ൞૧ٮ֥b࣐ࠧܵӻႵ؟ղ620ၡૅჭ֥թॻđૌಯॖၛᄝ҂сᆦڱ০༏֥౦ঃ༯đႨᆃ҆ٳሧࣁࣉྛሧູૌջট০b Ϙ٣หනམຩ Let me emphasize again that cost-free float is not a result to be expected for the P/C industry as a whole: In most years, premiums have been inadequate to cover claims plus expenses. Consequently, the industry’s overall return on tangible equity has for many decades fallen far short of that achieved by the S&P 500. Outstanding economics exist at Berkshire only because we have some outstanding managers running some unusual businesses. Our insurance CEOs deserve your thanks, having added many billions of dollars to Berkshire’s value. It’s a pleasure for me to tell you about these all-stars. ᄜՑ఼טđ૧ٮႨੀሧЧѩ҂൞ᆜ۱ҍӁགྛြ֥௴ђགྷའđᄝն҆ٳൈࡗđЌགٮѩ҂ቀၛᆦڱग़ေ֥෬ணࠣ܄ඳᄎႏٮႨbѵक़༐غ·ݗົ౼֤֥Ӯࠛࣇࣇ൞ၹູૌႚႵᇙ؟ԛ֥ࣜದປӮਔପུ٤б࿙ӈ֥ြༀbૌЌག܄ඳ֥ପུ൮༜ᆳྛܲૌᆴ֤ૌ෮Ⴕದಀۋ྆đ൞ૌ֤ѵक़༐غ·ݗົ֥ࡎᆴᄹࡆਔඔၡૅჭbᄝՎđޓྜྷֹࢺക၂༯ૌᆃུૼྒCEOૌğ * * * * * * * * Let’s start at GEICO, which is known to all of you because of its $800 million annual advertising budget (close to twice that of the runner-up advertiser in the auto insurance field). GEICO is managed by Tony Nicely, who joined the company at 18. Now 66, Tony still tap-dances to the office every day, just as I do at 79. We both feel lucky to work at a business we love. ൮༵ಞૌႿGEICO܄ඳbીհđࣼ൞ၹః8ၡૅჭ୍֥؇ܼ࿆ۡԮყෘطູܢת෮ᆩ֥GEICO܄ඳbCEICO൮༜ᆳྛܲກୄ-ථ০(Tony Nicely)18ෟࣉೆ܄ඳ۽ֻ 14 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēቔđགྷ୍ၘࣜ66ෟ֥ກୄಯಖૄ฿๋ሢาটഈϫđᆞೂᄝ79ෟൈ෮ቓ֥၂ဢbૌູՖ൙ሱ࠭ಣι֥൙ြطۋ֞ྜྷᄎb GEICO’s customers have warm feelings toward the company as well. Here’s proof: Since Berkshire acquired control of GEICO in 1996, its market share has increased from % to %, a gain reflecting the net addition of seven million policyholders. Perhaps they contacted us because they thought our gecko was cute, but they bought from us to save important money. (Maybe you can as well; call 1-800-847-7536 or go to .) And they’ve stayed with us because they like our service as well as our price. GEICOဢ္۳Ⴭਔग़ૌ໑୰֥ۋतbሱѵक़༐غ1996୍ࢤ൭GEICOၛটđః൧ӆᅝႵੱႮ%ഈശ֞ਔ%đࠧ࣪ᄹਔ700ຣЌದbᆃུЌದࠇྸ൞ၹູૌ֥уྙའॖιطაૌ౼֤৳༢đૌቋᇔ࿊ᄴਔՖૌᆃܓઙЌགӁԥթնгॻཛđѩၹູؓૌڛༀაࡎ֥۬ड़קطӮູਔૌ໗ק֥ग़b Ϙ٣หනམຩ Berkshire acquired GEICO in two stages. In 1976-80 we bought about one-third of the company’s stock for $47 million. Over the years, large repurchases by the company of its own shares caused our position to grow to about 50% without our having bought any more shares. Then, on January 2, 1996, we acquired the remaining 50% of GEICO for $ billion in cash, about 50 times the cost of our original purchase. ѵक़༐غ๙ݖਆ۱ࢨ؍ປӮਔؓGEICO֥൬ܓb1976୍ᇀ1980୍đૌԛሧ4700ຣૅჭܓઙਔGEICOჿٳᆭ၂֥ܢٺđ؟୍টđGEICO๙ݖЧദؿᅚປӮਔնਈ֥ᄜՑܓઙ֤ૌ෮ӻႵ֥ܢٳഈᅨᇀ50%ቐႷb1996୍1ᄅ2ರđૌᄜՑၛ23ၡૅჭགྷࣁ֥ྙൔܓઙਔGEICOഺჅ֥50%ܢٺđᆃ၂ࡎ۬նۀ൞ૌቋԚܓઙࡎ֥۬50Пb An old Wall Street joke gets close to our experience: غࢧੀྛ֥၂۱ཬཱ߅ޓݺֹጫਔૌᆃ؍ࣜğ Customer: Thanks for putting me in XYZ stock at 5. I hear it’s up to 18. ग़ğ“ޓۋ྆Ϻᇹၛ5ૅჭ֥ࡎ۬ઙࣉਔXYZܢௐđ๐ඪགྷᄝၘࣜᅨ֞18ૅჭਔb” Broker: Yes, and that’s just the beginning. In fact, the company is doing so well now, that it’s an even better buy at 18 than it was when you made your purchase. ࣜࡀದğ“൞֥đᆃҌېېषb൙ൌഈđႮႿھ܄ඳіགྷ఼࣑đཌྷб5ૅჭൈđᄝ18ૅჭઙࣉ߶മᇀሉ֤۷؟b” Customer: Damn, I knew I should have waited. ֻ 15 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēग़ğ“݆bࣼᆩ֡ႋھᄜ֥֩֩b” GEICO’s growth may slow in 2010. . vehicle registrations are actually down because of slumping auto sales. Moreover, high unemployment is causing a growing number of drivers to go uninsured. (That’s illegal almost everywhere, but if you’ve lost your job and still want to drive . . .) Our “low-cost producer” status, however, is sure to give us significant gains in the future. In 1995, GEICO was the country’s sixth largest auto insurer; now we are number three. The company’s float has grown from $ billion to $ billion. Equally important, GEICO has operated at an underwriting profit in 13 of the 14 years Berkshire has owned it. GEICO֥ᄹӉᄝ2010୍ॖି߶Ⴕ෮ࡨߏb࣐ܵૌ“֮ӮЧ”֥หׄၐ߶ᄝໃট۳ૌջটॖܴ֥ြༀđႮႿ൧ӆሹ֥చӚཧ൲ਈնږ༯יđૅݓӚਇ֨࠺ඔଢൌ࠽ഈ္ᄝ༯ࢆbՎຓđۚാြੱ֤ᄀটᄀ؟֥ඳࠏ٢ఙਔЌགb1995୍đGEICO൞ಆݓֻੂնచӚЌག܄ඳđطགྷᄝđૌ֥ஆၘࣜഈശᇀֻ໊bఒြ֥ੀሧЧϘ٣หනམຩ္Ⴎ27ၡૅჭഈᅨᇀ96ၡૅჭbဢᇗေ֥൞đGEICOᄝѵक़༐غ֥ܵ14୍đఃᇏ֥13୍नൌགྷਔӵЌ႔০b I became excited about GEICO in January 1951, when I first visited the company as a 20-year-old student. Thanks to Tony, I’m even more excited today. 1951୍1ᄅđ֒ᄝ20ෟၛ၂࿐ള֥ദٺҕܴGEICOൈࣼၹطࠗđۋ྆ກୄđၹູࣂ฿֥GEICO۷ࡆۋ֞༟ᄆb * * * * * * * * A hugely important event in Berkshire’s history occurred on a Saturday in 1985. Ajit Jain came into our office in Omaha – and I immediately knew we had found a superstar. (He had been discovered by Mike Goldberg, now elevated to St. Mike.) ѵक़༐غൎഈ֥၂ཛᇗն൙ࡱؿളᄝ1985୍֥၂۱ᇛੂbᄝέࠝห-ࡉၺ(Ajit Jain)ࣉೆϷ܄൩֥ପ၂ख़đ৫ࠧၩ്֞ૌᅳ֞ਔ၂۱ӑࠩૼྒb We immediately put Ajit in charge of National Indemnity’s small and struggling reinsurance the years, he has built this business into a one-of-a-kind giant in the insurance world. έࠝหФଁڵᄳཬݓࡅணӊބᄜЌြༀᄎႏb؟୍টđέࠝหࡼᆃ၂ြༀؿᅚӮູЌགਵთቋሜᄀ֥ြༀᆭ၂b Staffed today by only 30 people, Ajit’s operation has set records for transaction size in ֻ 16 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēseveral areas of insurance. Ajit writes billion-dollar limits – and then keeps every dime of the risk instead of laying it off with other insurers. Three years ago, he took over huge liabilities from Lloyds, allowing it to clean up its relationship with 27,972 participants (“names”) who had written problem-ridden policies that at one point threatened the survival of this 322-year-old institution. The premium for that single contract was $ billion. During 2009, he negotiated a life reinsurance contract that could produce $50 billion of premium for us over the next 50 or so years. ೂࣂđᄝࣇႚႵ30ჴ۽֥౦ঃ༯đέࠝหਵ֥֝ؒᄝྸ؟Ќགਵთ֥ࢌၞحԷ༯ਔൎྍۚb୍భđࢤ൭ਔসή֣֥ऍحᅏༀđࣇ၂ٺކ֥ࢌၞࣁحࣼղ֞ਔ71ၡૅჭb2009୍ᇏđซӮ֥၂ཛದ൰ЌགᄜЌކࡼᄝໃট50୍ቐႷ֥ൈࡗູૌջট500ၡૅჭ֥Ќགٮb Ajit’s business is just the opposite of GEICO’s. At that company, we have millions of small policies that largely renew year after year. Ajit writes relatively few policies, and the mix Ϙ٣หනམຩchanges significantly from year to year. Throughout the world, he is known as the man to call when something both very large and unusual needs to be insured. έࠝห֥ြༀหׄᆞݺაGEICOཌྷّbᄝGEICOđૌႚႵඔϤຣ֥ཬحЌֆ୍گ၂୍ֹФ۷ྍbಖطέࠝหదק֥Ќֆඔਈޓഒđః႕ཙޓնbᄝಆ౯ٓຶଽđέࠝห൞ದૌᄝ࿙ູऍնط٤࿙ӈ֥൙ܓઙЌགൈམֻ֥֞၂ದb If Charlie, I and Ajit are ever in a sinking boat – and you can only save one of us – swim to Ajit. ೂݔႵ၂฿đҰaέࠝหބ܋ᄝ၂่ᆞᄝ༯Ӧ֥ԯഈđطૌ֒ᇏᆺႵ၂ದିࠆ֥ࣷ߅đପહࣼࣷέࠝหϔb * * * * * * * * Our third insurance powerhouse is General Re. Some years back this operation was troubled; now it is a gleaming jewel in our insurance crown. ૌֻ֥նЌགြؿᅟࣼ൞General Reb୍ࠫభđᆃࡅఒြߎԩᄝᆭᇏđطೂࣂđಏ൞ૌЌགਵთ၂ॶؿܻ֥Џെb Under the leadership of Tad Montross, General Re had an outstanding underwriting year in 2009, while also delivering us unusually large amounts of float per dollar of premium volume. Alongside General Re’s P/C business, Tad and his associates have developed a major life reinsurance operation that has grown increasingly valuable. ֣-หઅථ(Tad Montross)ਵ֝༯֥General Reᄝ2009୍ປӮਔԛ֥ӵЌ႔০ြֻ 17 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēࠛđѩູૌิ܂ਔݨႵ֥նгੀሧࣁbԢਔҍӁགြༀđ֣ބ֥ࠄϴૌದ൰ག֥ᄜЌြༀ္֤֞ਔਅݺؿᅚb Last year General Re finally attained 100% ownership of Cologne Re, which since 1995 has been a key – though only partially-owned – part of our presence around the world. Tad and I will be visiting Cologne in September to thank its managers for their important contribution to Berkshire. ಀ୍đૌᇔႿႚႵਔGeneral Reಆ҆100%֥ܢٺb֣ބࣂ୍9ᄅࡼభສ॓ੈđಀཟପུࣜದູѵक़༐غ෮ቓԛ֥ԛ܊ངіൕۋ྆b Finally, we own a group of smaller companies, most of them specializing in odd corners of the insurance world. In aggregate, their results have consistently been profitable and, as the table below shows, the float they provide us is substantial. Charlie and I treasure these companies and their managers. Ϙ٣หනམຩԢഈඍն৯đૌߎႚႵ၂ུܿଆࢠཬ֥Ќག܄ඳđૌᇏ֥ն҆ٳህ۾Ќགြᇏଖ۱҂ӈ֥ห൹ਵთbሹ֥ඪটđૌ၂ᆰᄝਅݺᄎሇđՖ༯૫֥ඔऌᇏॖၛुԛđᆃུཬЌག܄ඳ၂ᆰູૌิ܂໗ק֥ੀሧЧbҰބٳᇗ൪ބۋ྆ᆃུఒြၛࠣૌႪྮ֥ࣜದb Here is the record of all four segments of our property-casualty and life insurance businesses: ༯૫൞ૌЌགြඹ۱ܒӮ҆ٳҍӁགބದ൰གြༀ࠺ğ ( IO NJMMJPOT ֆ໊ğϤຣૅჭ) 6OEFSXSJUJOH 1SPGJU :FBSFOE 'MPBU ӵЌ႔০ ڜթࣁ୍ଌჅح ఒြӫ 2009 2008 2009 2008 General Re$ 477 $ 342 $ 21,014 $ 21,074 BH Reinsurance 349 1,324 26,223 24,221 GEICO 649 916 9,613 8,454 Other Primary 84 210 5,061 4,739 ሹ࠹ $1,559 $2,792 $61,911 $58,488 * * * * * * * * And now a painful confession: Last year your chairman closed the book on a very expensive business fiasco entirely of his own making. ֻ 18 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēቋުđ൞֥၂ཛᙅ߯bಀ୍đ൙߶ࢲඏਔ၂ཛӮЧυӮࠛ҂ࡄ֥ြༀđఃҙϧປಆ൞ႮሱദᄯӮ֥b For many years I had struggled to think of side products that we could offer our millions of loyal GEICO customers. Unfortunately, I finally succeeded, coming up with a brilliant insight that we should market our own credit card. I reasoned that GEICO policyholders were likely to be good credit risks and, assuming we offered an attractive card, would likely favor us with their business. We got business all right – but of the wrong type. ؟୍টđ၂ᆰ୭৯නॉູඔϤຣᇑӴ֥GEICOग़ิ܂၂ུڸඋӁđ҂ྜྷ֥൞đᇔႿམ֞ਔbཟग़ཧૌሱ֥࠭ྐႨवᆃ၂མمགྷᄝ֥ଷݚᇏbҩGEICO֥ЌದࠞႵॖିႚႵਅݺ֥ྐუđࡌೂૌؿྛਔऎႵ་ႄ৯֥ྐႨवđૌॖି߶۷ౝᩥૌ֥ြༀb၌ݭ֥൞đૌ֥ြༀٚཟ൞ᆞಒ֥đಏҐ౼ਔհ༂֥ྙൔb Ϙ٣หනམຩ Our pre-tax losses from credit-card operations came to about $ million before I finally woke up. We then sold our $98 million portfolio of troubled receivables for 55¨ on the dollar, losing an additional $44 million. ᄝतྜభđૌᄝྐႨवᄎႏഈ֥ാၘղ֞ਔ630ຣૅჭđѩ๙ݖԛ൲ሧӁߎحຓാਔ4400ຣૅჭb GEICO’s managers, it should be emphasized, were never enthusiastic about my idea. They warned me that instead of getting the cream of GEICO’s customers we would get the – – – – – well, let’s call it the non-cream. I subtly indicated that I was older and wiser. I was just older. ᆴ఼֤ט֥൞đGEICO֥ࣜૌᇔીႵ֥ؓམمӁളྖ౿đૌᄻ۳Ⴭิྜđ҂֤҂ӵಪಒൌ୍ࡀնਔb Regulated Utility Business ܄Ⴈ൙ြ Berkshire has an % interest in MidAmerican Energy Holdings, which owns a wide variety of utility operations. The largest of these are (1) Yorkshire Electricity and Northern Electric, whose million end users make it the .’s third largest distributor of electricity; (2) MidAmerican Energy, which serves 725,000 electric customers, primarily in Iowa; (3) Pacific Power and Rocky Mountain Power, serving about million electric customers in six western states; and (4) Kern River and Northern Natural pipelines, which ֻ 19 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēcarry about 8% of the natural gas consumed in the . ѵक़༐غ܄ඳႚႵᇏૅିჷ॥ܢ܄ඳ%֥ܢٺđުᆀᄝ܄Ⴈ൙ြٚ૫ြༀܼٗđఃᇏᇶေЇওğ(1).Yorkshire Electricity and Northern ElectricđႚႵ380ຣᇔ؊Ⴈđ൞ႇݓֻն৯܄ඳĠ(2)bᇏૅିჷđڛༀሢຣ৯ႨđᇶေࠢᇏᄝιހĠ(3).Pacific Power and Rocky Mountain Powerđڛༀሢ༆҆ੂᇜ֥170ຣ৯ႨĠ(4).Kern River and Northern Natural pipelinesđ๙ݖᄎൻ֥฿ಖగᅝૅݓႨਈ֥6%b MidAmerican has two terrific managers, Dave Sokol and Greg Abel. In addition, my long-time friend, Walter Scott, along with his family, has a major ownership position in the company. Walter brings extraordinary business savvy to any operation. Ten years of working with Dave, Greg and Walter have reinforced my original belief: Berkshire couldn’t have better partners. They are truly a dream team. ᇏૅିჷ॥ܢႵਆ໊ਔ҂ఏ֥ܵᆀպڏ-෬॓غ(Dave Sokol)ބ۬ূ۬-ѵ(Greg Abel)bਸ਼ຓđ֥Ⴖຐغห-ථ॓ห(Walter Scott)ࠣఃࡅቂ္ӻႵھ܄ඳ҆ٳܢಃbϘ٣หනམຩպڏa۬ূ۬ބຐغห୍֥ކቔಞധྐđૌᄜᅳ҂֞бૌ۷ݺ֥ձ֖ਔđૌ൞ᆇᆞ֥ᆭؒb Somewhat incongruously, MidAmerican also owns the second largest real estate brokerage firm in the ., HomeServices of America. This company operates through 21 locally-branded firms that have 16,000 agents. Though last year was again a terrible year for home sales, HomeServices earned a modest sum. It also acquired a firm in Chicago and will add other quality brokerage operations when they are available at sensible prices. A decade from now, HomeServices is likely to be much larger. Ⴕུಞದೡྖ֥൞đᇏૅିჷߎႚႵಆૅֻؽնֹٜӁࣜࡀ܄ඳHomeServices of Americabᆃࡅ܄ඳႵ21۱ֹٚஇބຣ۱սഅb࣐ܵಀ୍ؓႿٜཧ൲طಯ൞ॣ҇ᆭ୍đHomeServices౼֤ਔߎෘ҂հ֥ြࠛbਸ਼ຓđھ܄ඳߎ൬ܓਔ၂ࡅᆤࡆۢࣜࡀ܄ඳđѩૌߎࡼᄝކࡎ۬ඣഈ࿙൬ܓఃۚᇉਈ֥ࣜࡀ܄ඳb Here are some key figures on MidAmerican’s operations: ᇏૅିჷ॥ܢ܄ඳᇶေᄎႏඔऌğ &BSOJOHT JO NJMMJPOT
൬ೆ(Ϥຣૅჭ) 2009 2008ႇݓ܄Ⴈ൙ြ 248339 ιހ܄Ⴈ൙ြ 285 425༆҆܄Ⴈ൙ြ 788703 ֻ 20 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēē &BSOJOHT JO NJMMJPOT
൬ೆ(Ϥຣૅჭ) 2009 2008ᄝࡹཛଢ 457595 ࡅ๖ڛༀ 43 (45)ః(࣪) 25186 ᄎႏ൬ೆ(ໃ२Ԣ܄ඳಃ1,846 2,203ၭބඥ൬) ۲ᇕିჷ* — 1,092 ܢಃ(٤ѵक़༐غ) (318)(332)ܢಃ(ѵक़༐غՑࠩᅏ) (58) (111) ෮֤ඥ (313)(1,002)࣪൬ၭ 1,157 1,850 Ϙ٣หනམຩѵक़༐غॖႨ൬ၭ** 1,0711,704ఴఃᅏༀ 19,579 19,145 ఴѵक़༐غᅏༀ 3531,087*Consists of a breakup fee of $175 million and a profit on our investment of $917 million. *Їওၡૅჭٳ൭ٮބၡૅჭሧ႔০ **Includes interest earned by Berkshire (net of related income taxes) of $38 in 2009 and $72 in 2008. **Їওѵक़༐غ09୍3800ຣૅჭބ08୍7200ຣૅჭ০༏(२Ԣཌྷܱ෮֤ඥđওݼᇏູڵᆴ) Our regulated electric utilities, offering monopoly service in most cases, operate in a symbiotic manner with the customers in their service areas, with those users depending on us to provide first-class service and invest for their future needs. Permitting and construction periods for generation and major transmission facilities stretch way out, so it is incumbent on us to be far-sighted. We, in turn, look to our utilities’ regulators (acting on behalf of our customers) to allow us an appropriate return on the huge amounts of capital we must deploy to meet future needs. We shouldn’t expect our regulators to live up to their end of the bargain unless we live up to ours. ૌ෮༪֥৯܄ඳᄝޓ؟ਵთิ܂؎ྟڛༀđაग़ᄝ؟ٚ૫ྙӮ܋ളܱ༢đग़၇ঠૌູఃิ܂၂ੀ֥ڛༀބໃট֥ሧbؿཛଢ֥ബބࡹഡđၛࠣᇶေ৯ഡീ֥ሇ၍۽ӱݽնđ෮ၛૌсྶӉჹॉ੮bೂݔૌ༐ຬᆃུ܄ඳ֥ܵᆀၛग़০ၭູᇗđູग़ሉ౼۷؟֥߭Бđૌࣼсྶູໃট֥ླ௫ਫ਼bૌсྶሱֻ 21 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēē৯۷ളđط٤࠷༐ຬႿૌ֥ܵᆀ۲ሱູᅞb Dave and Greg make sure we do just that. National research companies consistently rank our Iowa and Western utilities at or near the top of their industry. Similarly, among the 43 . pipelines ranked by a firm named Mastio, our Kern River and Northern Natural properties tied for second place. պڏބ۬ূ۬ಒЌૌᆞູՎط୭৯bݓࡅ࣮ࠏܒ၂ᇁಪູૌ֥Iowa and Western utilitiesᄝྛြᇏਙభમbဢđ۴ऌMastio܄ඳؓ43ࡅఒြ֥ஆđૌ֥Kern River and Northern Natural properties໊ਙՑ༜b Moreover, we continue to pour huge sums of money into our operations so as to not only prepare for the future but also make these operations more environmentally friendly. Since we purchased MidAmerican ten years ago, it has never paid a dividend. We have instead used earnings to improve and expand our properties in each of the territories we serve. As Ϙ٣หනམຩone dramatic example, in the last three years our Iowa and Western utilities have earned $ billion, while in this same period spending $3 billion on wind generation facilities. Վຓđૌ҂ሢငໃটđطԇऍሧႨႿߌЌ൙ြbሱՖૌ10୍భ൬ܓᇏૅିჷ܄ඳၛটđՖໃஊؿݖޣ০đط൞ࡼఃႨႿঔնᄜളӁਵთb၂۱ૼཁ֥২ሰ൞đૌ֥Iowa and Western utilities܄ඳᄝݖಀ3୍ᇏ႔০25ၡૅჭđ௹ႨႿڄିؿ֥ሧ൞30ၡૅჭb MidAmerican has consistently kept its end of the bargain with society and, to society’s credit, it has reciprocated: With few exceptions, our regulators have promptly allowed us to earn a fair return on the everincreasing sums of capital we must invest. Going forward, we will do whatever it takes to serve our territories in the manner they expect. We believe that, in turn, we will be allowed the return we deserve on the funds we invest. ᇏૅିჷ॥ܢ܄ඳၛഠ߶ᄳູᇗđᇿᇗഠ߶ྐუđѩၹՎ൳ၭğԢ۱љ౦ঃຓđૌ֥ሧࠫެ౼֤ਔࢠູކ֥߭Бđࣉطૌॖၛ࣐ਈડቀఒြ֥ളӁླေbૌཌྷྐđૌିܔՖૌ֥ሧᇏ൳ၭb In earlier days, Charlie and I shunned capital-intensive businesses such as public utilities. Indeed, the best businesses by far for owners continue to be those that have high returns on capital and that require little incremental investment to grow. We are fortunate to own a number of such businesses, and we would love to buy more. Anticipating, however, that Berkshire will generate ever-increasing amounts of cash, we are today quite willing to enter businesses that regularly require large capital expenditures. We expect only that these businesses have reasonable expectations of earning decent returns on the incremental sums ֻ 22 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēthey invest. If our expectations are met – and we believe that they will be – Berkshire’s ever-growing collection of good to great businesses should produce above-average, though certainly not spectacular, returns in the decades ahead. ᄪ௹đҰބᄻܿхሧЧࠢᇏ֥Ӂြđ২ೂ܄܋൙ြbࢩᇀଢభđቋݺ֥ሧ၇ಖ൞ପུೆഒđ߭Б֥ۚఒြbྜྷᄎ֥൞ૌႚႵ၂ᆃဢ֥ఒြđطߎམႚႵ۷؟b҂ݖđϴෛѵक़༐غರၭ఼նđૌଢభႵၩሧնሧЧᄎႏఒြbૌಪູđϴෛሧඔحᄹӉđᆃဢ֥ఒြ۷ಸၞ౼֤ކ֥߭Бbೂݔૌ֥ყ௹ᆞಒđૌཌྷྐѵक़༐غࡼೂเၴđᄝໃট୍ࠫᇏෙ҂ି౼֤ऍح൬ၭđ൞ႋھॖၛӑݖनඣb Our BNSF operation, it should be noted, has certain important economic characteristics that resemble those of our electric utilities. In both cases we provide fundamental services that are, and will remain, essential to the economic well-being of our customers, the communities we serve, and indeed the nation. Both will require heavy investment that Ϙ٣หනམຩgreatly exceeds depreciation allowances for decades to come. Both must also plan far ahead to satisfy demand that is expected to outstrip the needs of the past. Finally, both require wise regulators who will provide certainty about allowable returns so that we can confidently make the huge investments required to maintain, replace and expand the plant. ѵक़༐غ·ݗົ൬ܓѵਲؘК഼ٚ٣ํਫ਼܄ඳაૌ֥৯܄܋൙ြ܄ඳऎႵޓն֥ཌྷරᆭԩbਆᆀ൞ཟཨٮᆀaഠၛࠣᆜ۱ݓࡅ֥ࣜ࠶ؿᅚิ܂ࠎЧڛༀđਆᆀླေࣉྛնਈሧđсྶࣉྛభᅑྟܿ߃đቋުਆᆀླေૼᇆ֥ࡓܵᆀิ܂൬ၭ֥໗קྟđၛьૌॖၛડ߈ྐྏֹࣉྛሧb We see a “social compact” existing between the public and our railroad business, just as is the case with our utilities. If either side shirks its obligations, both sides will inevitably suffer. Therefore, both parties to the compact should – and we believe will – understand the benefit of behaving in a way that encourages good behavior by the other. It is inconceivable that our country will realize anything close to its full economic potential without its possessing first-class electricity and railroad systems. We will do our part to see that they exist. ૌؿགྷ܄ᇙაૌ֥ํਫ਼ఒြᆭࡗթᄝଖᇕ“ഠ߶ఔჿ”đᆃᇕܱ༢ა܄Ⴈ൙ြ٤ӈཌྷරbંଖ၂ཱྀٚᄳđචٚࡼ൳ݝb෮ၛđૌಪູචٚႋھཌྷڣཌྷӮbᆟکೂݔ҂ܙն৯ބํਫ਼༢đࣼࠫެمყҩఃమᄝࣜ࠶ൌ৯b In the future, BNSF results will be included in this “regulated utility” section. Aside from the two businesses having similar underlying economic characteristics, both are logical users of substantial amounts of debt that is not guaranteed by Berkshire. Both will retain ֻ 23 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēmost of their earnings. Both will earn and invest large sums in good times or bad, though the railroad will display the greater cyclicality. Overall, we expect this regulated sector to deliver significantly increased earnings over time, albeit at the cost of our investing many tens – yes, tens – of billions of dollars of incremental equity capital. ໃটđѵਲؘК഼ٚ٣ํਫ਼܄ඳ֥ြࠛॖିѩೆ܄Ⴈ൙ြ҆ٳđၹູؽᆀ҂ࣜ࠶หᆘোරđطૌ෮Ⴈվॻѩ٤ѵक़༐غքЌbϴෛ൧ӆఏڙđૌ֥൬ೆބሧܿଆऍնbሹᆭđ࣐ܵૌೆਔऍն֥ൈࡗބሧࣁӮЧđૌყ௹ᆃུྛြࡼᄝࣂުູૌջট۷؟֥൬ၭb Manufacturing, Service and Retailing Operations ᇅᄯြaڛༀြބਬ൲ြ Our activities in this part of Berkshire cover the waterfront. Let’s look, though, at a Ϙ٣หනམຩsummary balance sheet and earnings statement for the entire group. ѵक़༐غᄝᆃུྛြᇏြༀᇙ؟b൮༵ಞૌᛍফ၂༯ఃሧӁڵᅏіބၭіb Balance Sheet 12/31/09 (in millions) ሧӁڵᅏі 09/12/31 (ֆ໊ğϤຣૅჭ) ሧ Ӂ ڵᅏބܢתಃၭ གྷࣁࠣགྷࣁ֩ࡎ 3,018 ႋڱௐऌ 1,842 ႋ൬ᅬॻބௐऌ 5,066 ఃੀڵᅏ 7,414 թࠊ 6,147ሹੀڵᅏ 9,256 ఃੀሧӁ 625 ሹੀሧӁ14,856അუࠣఃྙሧӁ 16,499 ־ඥ 2,834 ܥקሧӁ 15,374Ⴕ௹ᅏཛ 6,240 ఃሧӁ2,070 ܢתಃၭ 30,469 ކ࠹ 48,799ކ࠹48,799 &BSOJOHT 4UBUFNFOU JO NJMMJPOT
ၭі(ֆ໊ğϤຣૅჭ) 2009 20082007 ൬ೆ61,66566,099 59,100ႏြᆦԛ(Їওᅼࣸ) 59,509 61,937 55,026 ֻ 24 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēᅼࣸ 1,422 1,280 955 ০༏ٮႨ98139127ඥభ൬ೆ 2,058* 4,023* 3,947* ෮֤ඥބഒඔܢתಃၭ 945 1,740 1,594 ࣪൬ೆ 1,1132,2832,353*Does not include purchase-accounting adjustments. *҂ЇওҐܓᅬטᆜ Almost all of the many and widely-diverse operations in this sector suffered to one degree or another from 2009’s severe recession. The major exception was McLane, our distributor of groceries, confections and non-food items to thousands of retail outlets, the largest by far Wal-Mart. 2009୍ಆ౯ࣜ࠶කૌఋ༯ࠫެ෮Ⴕ֥ᇅᄯaڛༀࠣਬ൲ఒြ൳֞ਔᇗ႕ཙđٳཧఒြચक़ঞض(McLane)ಏ൞۱২ຓbચक़ঞضᇶေ֥ြༀ൞ཟਬ൲അิ܂ರϘ٣หනམຩႨaൊࠣః٤ൊোࠊđఘࣂູᆸఃቋնग़൞ᇷਬ൲ఒြغઑb Grady Rosier led McLane to record pre-tax earnings of $344 million, which even so amounted to only slightly more than one cent per dollar on its huge sales of $ billion. McLane employs a vast array of physical assets – practically all of which it owns – including 3,242 trailers, 2,309 tractors and 55 distribution centers with million square feet of space. McLane’s prime asset, however, is Grady. ۬ূְ-અఊغ(Grady Rosier)ਵ֝༯֥ચक़ঞض2009୍Է༯ਔඥభၡૅჭ֥൬ၭࡀbચक़ঞضႚႵ၂༢ਙൌሧӁđЇও3242ਇӚa2309ਇఠႄࠏࠣሹ૫ࠒղ1520ຣٚႇԄ֥55۱ٳཧᇏྏb֒ಖđચक़ঞضቋᇗေ֥ሧӁ൞۬ূְ-અఊغb We had a number of companies at which profits improved even as sales contracted, always an exceptional managerial achievement. Here are the CEOs who made it happen: ૌ֥၂ུ܄ඳ࣐ܵཧ൲༯߁đ႔০ᄹӉđᆃᇶေ݂ۿႿఃਵ֝Ҍିđၛ༯൞Ӯࣼᆃ၂൙ൌ֥൮༜ᆳྛܲֆğ ܄ ඳ ൮༜ᆳྛܲ Benjamin Moore (߄ሎ) Denis AbramsBorsheims (ᇨЏਬ൲)SusanJacques H. H. Brown (ᇅᄯြބཷြਬ൲) Jim IsslerCTB (୪ြഡС) VicMancinelliDairy Queen John Gainor Nebraska Furniture Mart (ࡅऎਬ൲) Ron and Irv Blumkin ֻ 25 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēē܄ ඳ ൮༜ᆳྛܲ Pampered Chef (ԝٜႨऎᆰཧ) Marla GottschalkSee’s (ᇅᄯြބบݔਬ൲)BradKinstler Star Furniture (ࡅऎਬ൲) Bill Kimbrell Among the businesses we own that have major exposure to the depressed industrial sector, both Marmon and Iscar turned in relatively strong performances. Frank Ptak’s Marmon delivered a % pre-tax profit margin, a record high. Though the company’s sales were down 27%, Frank’s cost-conscious management mitigated the decline in earnings. ഈඍ۱љఒြ෮උྛြധ൳າࠏ႕ཙđMarmonބIscarಏିܔຂ႖طԛb࣐ܵཧ൲ࡨഒ27%đڠধक़-௴ෳक़(Frank Ptak)ਵ֥֝Marmon܄ඳԷᄯਔඥభ০ᄹӉ%֥ൎྍۚđڠধक़֥ӮЧܵҀਔ൬ၭ༯߁b Nothing stops Israel-based Iscar – not wars, recessions or competitors. The world’s two Ϙ٣หනམຩother leading suppliers of small cutting tools both had very difficult years, each operating at a loss throughout much of the year. Though Iscar’s results were down significantly from 2008, the company regularly reported profits, even while it was integrating and rationalizing Tungaloy, the large Japanese acquisition that we told you about last year. When manufacturing rebounds, Iscar will set new records. Its incredible managerial team of Eitan Wertheimer, Jacob Harpaz and Danny Goldman will see to that. ંᅞᆚaකߎ൞ࣩᆚمቅᆸ໊Ⴟၛਙ֥Iscar܄ඳభࣉ֥҄قbൗࢸఃਆࡅཬ్۩۽ऎ֥ᇶေ܂ႋഅ୍ଽն϶ൈࡗЧᄎႏb࣐ܵIscarြ္ࠛૼཁ༯߁đ൞၇ಖ႔০b၂֊ᇅᄯြگ්đIscarࡼᄜԷྍۚbႮEitan Wertheimer, Jacob Harpaz ބDanny GoldmanቆӮ֥ਵ֝ؒؓՎ൮ၛրb Every business we own that is connected to residential and commercial construction suffered severely in 2009. Combined pre-tax earnings of Shaw, Johns Manville, Acme Brick, and MiTek were $227 million, an % decline from $ billion in 2006, when construction activity was booming. These businesses continue to bump along the bottom, though their competitive positions remain undented. ՎຓđૌႚႵ֥აᇾᅍࠣഅြࡹᇽႵܱ֥ြༀᄝ2009୍ᄥ֞ਔᇗԊࠌbShaw, Johns Manville, Acme BrickބMiTek֥ඥభ൬ೆ൞ၡૅჭđࢠ2006୍ࡹᇽြۚӖ௹֥ၡૅჭࡨഒ%bഈඍఒြಯࡼٹ৯ᆖᄽđఃࣩᆚ৯၇ಖປݺb The major problem for Berkshire last year was NetJets, an aviation operation that offers fractional ownership of jets. Over the years, it has been enormously successful in establishing itself as the premier company in its industry, with the value of its fleet far ֻ 26 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēexceeding that of its three major competitors combined. Overall, our dominance in the field remains unchallenged. ѵक़༐غಀ୍ቋᇶေ֥໙ี൞ݴॢြༀ܄ඳNetJetsb؟୍টđNetJetsᄻࡼሱദؿᅚӮູھྛြቋԛ֥ఒြđႚႵ֥٦ࠏሹࡎᆴӑݖఃնࣩᆚؓ൭֥٦ࠏࡎᆴሹބb NetJets’ business operation, however, has been another story. In the eleven years that we have owned the company, it has recorded an aggregate pre-tax loss of $157 million. Moreover, the company’s debt has soared from $102 million at the time of purchase to $ billion in April of last year. Without Berkshire’s guarantee of this debt, NetJets would have been out of business. It’s clear that I failed you in letting NetJets descend into this condition. But, luckily, I have been bailed out. ሹุഈඪđNetJetsᄝھྛြᇏ֥ᆦֹ໊ಯ൞႞ᇂၐ֥đఃܵᄎႏഈթᄝ໙ีbᄝૌႚႵNetJets֥11୍ᇏđ܋ඥభሹ࠹ղ֞ਔၡૅჭbൈđࢩᇀಀ୍4ᄅđ܄ඳᅏༀႮቋԚ֥ၡૅჭ٦ᅨᇀ19ၡૅჭbೂݔ҂൞Ⴕѵक़༐غؓఃᅏϘ٣หනམຩༀิ܂քЌđॣஃNetJetsၘ֚ࣜоਔbཁಖؓႿNetJetsሼ֞ࣂ฿ᆃ۱ֹ҄Պఃࣻđྜྷᄎ֥൞ૌၘࣜࠆ֤ࣷჱb Dave Sokol, the enormously talented builder and operator of MidAmerican Energy, became CEO of NetJets in August. His leadership has been transforming: Debt has already been reduced to $ billion, and, after suffering a staggering loss of $711 million in 2009, the company is now solidly profitable. ᇏૅିჷ(MidAmerican Energy)܄ඳࢭԛ֥ࡹ৫ᆀࠣܵᆀն-෬॓غ(Dave Sokol)Ⴟಀ୍8ᄅӮູNetJets֥ྍCEObڿ۪ਔࣸႵ֥ਵ֝ٚൔđଢభ܄ඳᅏༀ༯ࢆᇀ14ၡૅჭđѩ2009୍ࣙದֹਔၡૅჭުđ܄ඳൌགྷਔ໗ק֥႓০ᄎႏb Most important, none of the changes wrought by Dave have in any way undercut the top-of-the-line standards for safety and service that Rich Santulli, NetJets’ previous CEO and the father of the fractionalownership industry, insisted upon. Dave and I have the strongest possible personal interest in maintaining these standards because we and our families use NetJets for almost all of our flying, as do many of our directors and managers. None of us are assigned special planes nor crews. We receive exactly the same treatment as any other owner, meaning we pay the same prices as everyone else does when we are using our personal contracts. In short, we eat our own cooking. In the aviation business, no other testimonial means more. ۷ູᇗေ֥൞đնҐ౼֥ծീපݸીႵݝNetJetsభ൮༜ᆳྛܲRich SantulliؓႿνಆބڛༀ֥۬ေbնބؓႿഈඍѓሙ٤ӈᄡആđૌࠣࡅದ֥ԛྛֻࠫ 27 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēެӰቕNetJets֥ݴϫđط܄ඳ֥ྸ؟ᇶܵބ္ࣜ൞ೂՎbૌՖ҂ᆷקห൹ݴϫބڛༀbૌაఃӰग़၂൪ಥđᆦڱဢ֥ࡎ۬đཚ൳ဢ֥ڛༀbࡥᆭđૌሱ۳ሱቀđᄝݴॢြٹ৯భྛb Finance and Financial Products ࣁವࠣࣁವӁ Our largest operation in this sector is Clayton Homes, the country’s leading producer of modular and manufactured homes. Clayton was not always number one: A decade ago the three leading manufacturers were Fleetwood, Champion and Oakwood, which together accounted for 44% of the output of the industry. All have since gone bankrupt. Total industry output, meanwhile, has fallen from 382,000 units in 1999 to 60,000 units in 2009. ᇾᅍࡹᇽ܄ඳClayton൞ૌᄝᆃ၂ਵთ֥ᇶေఒြb֒ಖđClaytonѩ٤၂ᆰᅝऌሢ൮ေ໊ᇂb10୍భđھਵთնᇅᄯఒြFleetwoodaChampion and OakwoodႚႵሢϘ٣หනམຩྛြ44%֥Ӂਈđ෮Ⴕᆃུ܄ඳགྷᄝၘࣜӁbൈđᆜ۱ྛြ֥Ӂਈ္Ֆ1999୍֥ຣส༯ࢆᇀ2009୍֥6ຣสb The industry is in shambles for two reasons, the first of which must be lived with if the . economy is to recover. This reason concerns . housing starts (including apartment units). In 2009, starts were 554,000, by far the lowest number in the 50 years for which we have data. Paradoxically, this is good news. ֒భđᆜ۱ྛြ֥ᄖअ૫ᇶေჷႿਆ۱ჰၹb൮༵đྛြؿᅚభࣟ౼थႿૅݓࣜ࠶ିڎൌགྷگ්đथקਔૅݓ෮ླ֥ᇾٜඔਈb2009୍đຣส֥൧ӆྍࡹٜԷ༯ਔ࣍50୍ট֥ቋ֮࠺bᆃරެ൞၂۱ݺཨ༏b People thought it was good news a few years back when housing starts – the supply side of the picture – were running about two million annually. But household formations – the demand side – only amounted to about million. After a few years of such imbalances, the country unsurprisingly ended up with far too many houses. ູહᆃહඪĤᄻࣜđᇾٜ൧ӆ୍܂ႋਈჿູ200ຣสđਸ਼၂ٚ૫đ൧ӆླਈૄ୍ࣇູ120ຣสđ෮ၛದૌಪູྍࡹᇾٜ༯ࢆ൞၂۱ݺགྷའb܂҂ޙ֥ሑӻ࿃୍ࠫުđݓࡅсಖေམϷمڿэᆃ၂౦ঃb There were three ways to cure this overhang: (1) blow up a lot of houses, a tactic similar to the destruction of autos that occurred with the “cash-for-clunkers” program; (2) speed up household formations by, say, encouraging teenagers to cohabitate, a program not likely to suffer from a lack of volunteers or; (3) reduce new housing starts to a number far below the ֻ 28 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēērate of household formations. ᆃ၂౦ঃ֥ڿэ๙ӈႵᇕࣥbֻ၂đა“చӚߐགྷࣁ”࠹߃ཌྷරđ߮וնਈ֥ٜĠֻؽđ๙ݖܝৣౝ୍ದंࡆದૌؓᇾٜ֥ླđᆃ၂ϷمᆺႵᄝ֒൙ದሱ჻֥౦ঃ༯Ҍି֤ၛྛĠֻđࡨഒྍࡹٜඔਈđఃᄹӉੱ֮Ⴟࡅ๖ቆࡹੱĠ Our country has wisely selected the third option, which means that within a year or so residential housing problems should largely be behind us, the exceptions being only high-value houses and those in certain localities where overbuilding was particularly egregious. Prices will remain far below “bubble” levels, of course, but for every seller (or lender) hurt by this there will be a buyer who benefits. Indeed, many families that couldn’t afford to buy an appropriate home a few years ago now find it well within their means because the bubble burst. ૌ֥ݓࡅᇆֹ࿊ᄴਔֻᇕࣥbᄝໃট၂؍ൈࡗđᇾٜࡎ۬ࡼ߶ჹჹ֮Ⴟஞଐൈ௹ඣđ֒ಖđᆃᄝ۳൲ٜᆀࠇྐվٚᄯӮാ֥ൈđିܔܓٜᆀՖᇏ൳ၭbϘ٣หනམຩ൙ൌഈđ୍ࠫభପུمӵքܓٜ৯֥ࡅ๖གྷᄝؿགྷႚႵ၂สᇾٜӮູਔૌ৯෮ି֥ࠣ൙đၹֹູٜӁ൧ӆஞଐၘࣜਚb The second reason that manufactured housing is troubled is specific to the industry: the punitive differential in mortgage rates between factory-built homes and site-built homes. Before you read further, let me underscore the obvious: Berkshire has a dog in this fight, and you should therefore assess the commentary that follows with special care. That warning made, however, let me explain why the rate differential causes problems for both large numbers of lower-income Americans and Clayton. ֻؽ۱ჰၹ൞ఒြࡹᄯ֥ٜၹఃᇾַվॻ߸ੱაᆟکࠏܒ෮ิ܂֥߸ੱᆭࡗթᄝሢӲـྟ֥ҵၳطᄝྛြࣩᆚᇏԩႿਜ൝b༯૫ࡼࢳ၂༯ູહ߸ੱ֥҂߶۳նਈ֮൬ೆૅݓᇙࠣClayton܄ඳචٚनᄯӮ႕ཙb The residential mortgage market is shaped by government rules that are expressed by FHA, Freddie Mac and Fannie Mae. Their lending standards are all-powerful because the mortgages they insure can typically be securitized and turned into what, in effect, is an obligation of the . government. Currently buyers of conventional site-built homes who qualify for these guarantees can obtain a 30-year loan at about 51⁄4%. In addition, these are mortgages that have recently been purchased in massive amounts by the Federal Reserve, an action that also helped to keep rates at bargain-basement levels. ᇾַٜվॻ൧ӆ൳ᆟک๙ݖֹٜૅٜࠣ০ૅіགྷԛট่֥২॥ᇅđఃྐվѓሙᅝႵध֥ؓႪ൝đၹູૌքЌַ֥վॻିܔൌགྷᆣಊ߄đѩൌ࠽ഈनࡼఃሇэӮ৳ϹᆟکၬༀbႚႵሧ۬ཚႵᆃᇕքЌ֥ٜܓઙᆀđॖၛࠆ֤০ੱࣇູ%֥30ֻ 29 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēē୍௹վॻbՎຓđቔູົӻӑ֮০ੱඣ֥ईծᆭ၂đଢభᆃᇕվॻၘնਈФૅ৳ԥܓઙb In contrast, very few factory-built homes qualify for agency-insured mortgages. Therefore, a meritorious buyer of a factory-built home must pay about 9% on his loan. For the all-cash buyer, Clayton’s homes offer terrific value. If the buyer needs mortgage financing, however – and, of course, most buyers do – the difference in financing costs too often negates the attractive price of a factory-built home. ཌྷбطđࠫެޓഒఒြࡹᄯٜ֥ܓٜᆀႵሧ۬ࠆ֤൳ՎքЌַ֥վॻđૌ෮ေڵք֥০ੱඣղ֞ਔ9%bؓႿପུҐ౼གྷࣁᆦڱٚൔ֥ܓٜᆀđClayton֥ᇾٜႚႵሢ֥ࠞۚܓઙࡎᆴđಖطđೂݔܓٜᆀླေണ౨ᇾַٜվॻđ൙ൌഈն҆ٳܓٜᆀඋႿުᆀđପહ০ੱഈ֥ҵएቀၛַཨఒြࡹᄯᇾٜᄝࡎ۬ഈ֥་ႄ৯b Ϙ٣หනམຩLast year I told you why our buyers – generally people with low incomes – performed so well as credit risks. Their attitude was all-important: They signed up to live in the home, not resell or refinance it. Consequently, our buyers usually took out loans with payments geared to their verified incomes (we weren’t making “liar’s loans”) and looked forward to the day they could burn their mortgage. If they lost their jobs, had health problems or got divorced, we could of course expect defaults. But they seldom walked away simply because house values had fallen. Even today, though job-loss troubles have grown, Clayton’s delinquencies and defaults remain reasonable and will not cause us significant problems. ಀ୍đᄻࢳਔູહૌ֥վॻᆀ൬ೆ҂ۚಏіགྷԛਔ۷ݺ֥ྐႨđၹູૌ֥؇थקਔ၂్bૌܓઙٜ൞ູਔंᇾఃᇏطѩ٤յෘՖሇ൲ᇏሉഈ၂гb๙ӈđૌ֥վॻᆀᄝ࿊ᄴվॻൈđ۷؟ֹ൞ॉ੮ሱദൌ࠽ӊߎି৯đѩ௹րሢଖ฿ૌିቋᇔߎౢվॻb֒ಖđೂݔૌാြa߾ࠇᆀᄥმਔᇗ֥ࡲू໙ีđૌ္Ⴕॖି૫ਢິჿ໙ี֥ؿളđૌѩ҂߶ၹູٜ֥ࡎᆴ༯ࢆط٢ఙӊߎվॻbࠧ֒భാြ৯खᄹđClayton֥ິჿྛູಯޓൡ؇ѩીႵૌᇅᄯԛᇗնઐِb We have tried to qualify more of our customers’ loans for treatment similar to those available on the site-built product. So far we have had only token success. Many families with modest incomes but responsible habits have therefore had to forego home ownership simply because the financing differential attached to the factory-built product makes monthly payments too expensive. If qualifications aren’t broadened, so as to open low-cost financing to all who meet down-payment and income standards, the manufactured-home industry seems destined to struggle and dwindle. ֻ 30 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēૌ္ᄻ୭৯ग़ିܔཚႵ۷؟֥Ⴊ߲đѩࢩᇀଢభ္౼֤ਔ၂ུའᆘྟӮۿbೂݔૌ֥ཋק่ࡱ҂Ф٢ॺđ҂ཟପུژކ൮ڱބ൬ೆѓሙ֥ܓٜᆀյष۷֮ӮЧ֥ሧࣁ่ࡱđఒြࡹٜ֥ؿᅚॢࡗᇿקࡼ߶ᄀটᄀཬb Even under these conditions, I believe Clayton will operate profitably in coming years, though well below its potential. We couldn’t have a better manager than CEO Kevin Clayton, who treats Berkshire’s interests as if they were his own. Our product is first-class, inexpensive and constantly being improved. Moreover, we will continue to use Berkshire’s credit to support Clayton’s mortgage program, convinced as we are of its soundness. Even so, Berkshire can’t borrow at a rate approaching that available to government agencies. This handicap will limit sales, hurting both Clayton and a multitude of worthy families who long for a low-cost home. ࣐ܵᄝᆃဢ֥౦ঃᆭ༯đಯཌྷྐClaytonᄝໃট֥ൈࡗିൌགྷ႔০ᄎႏbૌႚႵ၂໊ࡼѵक़༐غ֥০ၭ൪ູሱദ০ၭ֥ቋݺ֥CEOದ࿊ऺ໓-क़ঞؘ(Kevin Ϙ٣หනམຩClayton)đૌߎႚႵૅࡎ৷֥၂ੀӁބ҂؎ࣉ౼֥ྐđѩđѵक़༐غ္ࡼ߶࿃ၛఃྐუູClaytonַ֥վॻิ܂ᆦӻb֒ಖđૌൈ҂֤҂ӵಪđࠧᆃဢૌ္مࡼྐվ০ੱࢆ֮֞ᆟکࠏܒ෮ିิ܂֥ඣđᆃ၂ᅰθࡼ߶ཋᇅૌ֥ཧ൲đݝ֞Claytonބնਈ࿙֮ӮЧᇾٜ֥ૅݓࡅ๖֥܋০ၭb In the following table, Clayton’s earnings are net of the company’s payment to Berkshire for the use of its credit. Offsetting this cost to Clayton is an identical amount of income credited to Berkshire’s finance operation and included in “Other Income.” The cost and income amount was $116 million in 2009 and $92 million in 2008. The table also illustrates how severely our furniture (CORT) and trailer (XTRA) leasing operations have been hit by the recession. Though their competitive positions remain as strong as ever, we have yet to see any bounce in these businesses. ༯૫֥іඪૼਔಀ୍֥ࣜ࠶າࠏؓૌ֥ࡅऎބӚሿਧြༀᄯӮਔ؟હᇗ֥႕ཙb࣐ܵૌ֥ࣩᆚֹ໊ಯೂၛສ၂ဢহܥđૌߎીႵु֞ᆃٚ૫ြༀႵޅّࠖའğ 1SF 5BY &BSOJOHT JO NJMMJPOT
ඥభ൬ၭ (ֆ໊ğϤຣૅჭ) 20092008࣪ሧ൬ೆ $278$330ದ൰ࠣအࣁြༀ116 23 ሿਧြༀ1487ֻ 31 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēClayton 187 206 ః൬ೆ*186141҂࠹ሧࠣࣁವစള႔֥ሹ൬ೆ $781 $787 *Includes $116 million in 2009 and $92 million in 2008 of fees that Berkshire charges Clayton for the use of Berkshire’s credit. *ഈіࣁحЇওѵक़༐غႿ2009ބ2008ਆ୍ٳљཟClayton൬౼֥ၡૅჭࠣ9200ຣૅჭ֥քЌٮႨĠ) * * * * * * * * * * * * At the end of 2009, we became a 50% owner of Berkadia Commercial Mortgage (formerly known as Capmark), the country’s third-largest servicer of commercial mortgages. In addition to servicing a $235 billion portfolio, the company is an important originator of Ϙ٣หනམຩmortgages, having 25 offices spread around the country. Though commercial real estate will face major problems in the next few years, long-term opportunities for Berkadia are significant. 2009୍ָđૌၘႚႵಆݓֻնഅြַվॻڛༀഅBerkadia܄ඳ50%֥ܢٺbԢਔႚႵ2350ၡૅჭ֥ሧܵሧӁຓđBerkadia൞ቋԚԛགྷᇾַٜվॻൈ֥ᇗေҠቔᆀđᄝಆݓႚႵ25ࡗϷ܄ӆ෮b࣐ܵᄝࢤ༯ট୍֥ࠫഅြֹٜӁࡼ૫ਢऍն֥็ᅞđӉჹֹुđBerkadiaࡼႚႵॖܴ֥ؿᅚࠏ߶b Our partner in this operation is Leucadia, run by Joe Steinberg and Ian Cumming, with whom we had a terrific experience some years back when Berkshire joined with them to purchase Finova, a troubled finance business. In resolving that situation, Joe and Ian did far more than their share of the work, an arrangement I always encourage. Naturally, I was delighted when they called me to partner again in the Capmark purchase. ૌᄝBerkadia֥ކቔࠄϴ൞ౄ-ථฌѵ۬(Joe Steinberg)ބ၈ض-वૼ(Ian Cumming)ᄎႏ֥Leucadiab୍ࠫభđ֒ѵक़༐غ൬ܓཊೆ֥FinovaൈđૌࣼᄻႵݖॹ֥ކቔࣜb֒ൈđౄބ၈ض෮ቓ֥୭৯ჹჹӑԛਔఃٺଽ۽ቔđ෮ၛ֒ૌა৳༢܋ܓઙBerkadiaൈۋ֞ޓۚྖb Our first venture was also christened Berkadia. So let’s call this one Son of Berkadia. Someday I’ll be writing you about Grandson of Berkadia. ૌ္ࡼֻ၂Ց֥વགࣜଁູBerkadiađ෮ၛಞૌࡼᆃՑӫູBerkadia֥ظሰđໃট֥ଖ฿đࡼ߶ᄝཿ۳ܢת֥ྐᇏซંBerkadia֥ሰb ֻ 32 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēInvestments ሧ Below we show our common stock investments that at yearend had a market value of more than $1 billion. ༯૫൞୍ଌ൧ӆࡎᆴӑݖ10ၡૅჭ֥௴๙ܢௐሧ (ӮЧބ൧ᆴֆ໊ğϤຣૅჭ) ࢩᇀ09୍12ᄅ31ರ ӻܢඔਈ ӻܢ܄ඳ ӻܢб২(ֆ໊ğ%)ӮЧ* ൧ᆴ 151,610,700ૅݓᄎ๙܄ඳ $1,287$6,143225,000,000бְϘ٣หනམຩ 1,986 200,000,000ॖ१ॖু 1,29911,40037,711,330 ू٣െႲ܄ඳ ,741 1,926 28,530,467 ఼ള܄ඳ 1,724 1,838 130,272,500वڏൊ܄ඳ ,3303,5413,947,554 ݢݓ௵ཛᇅํ 768 2,092 83,128,411 Џࢱ܄ඳ ,04025,108,967 ୶٣Ēνຣห 2,027 1,979 234,247,373ႇݓหၞܓ 1,367 1,620 76,633,426 ૅݓކᇙၿྛ ,3711,72539,037,142 غઑ 1,893 2,087 334,235,585ڶݓၿྛ ,3949,021ః 6,680 8,636 ӻႵ௴๙ੀ๙ܢሹح $34,646$59,034 *This is our actual purchase price and also our tax basis; GAAP “cost” differs in a few cases because of write-ups or write-downs that have been required. *ᆃ൞ૌ֥ൌ࠽Ӯࢌࡎ۬đൈ္൞ૌ֥ඥࠎđGAAP“ӮЧ”ᄝࠫ۱۱σᇏ҂đᆃ൞ႮႿิۚᅬ૫ࡎᆴࠇࡨ࠺ᅫ૫ࡎᆴ֥҂ေb ֻ 33 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēIn addition, we own positions in non-traded securities of Dow Chemical, General Electric, Goldman Sachs, Swiss Re and Wrigley with an aggregate cost of $ billion and a carrying value of $ billion. We purchased these five positions in the last 18 months. Setting aside the significant equity potential they provide us, these holdings deliver us an aggregate of $ billion annually in dividends and interest. Finally, we owned 76,777,029 shares (%) of BNSF at yearend, which we then carried at $ per share, but which have subsequently been melded into our purchase of the entire company. ҂ࣇೂՎđૌᄝ֡൦߄࿐a๙ႨగaۚഹaೋൖᄜЌགބࡰஇ֥҂ॖࢌၞᅏಊᇏӻҝđሹӮЧ൞211ၡૅჭđᅬ૫གྷྛࡎᆴ൞260ၡૅჭbૌᄝݖಀϖ۱ᄅ൬ܓਔ۱ҝ໊bԢਔૌ۳ૌิ܂֥ऍն֥ሧӁమ৯ᆭຓđᆃུӻႵ۳ૌջটਔሹ࠹21ၡૅჭ୍֥؇ٳޣބ০༏bቋުđૌႚႵ76đ777đ029ܢ(%)֥BNSFํਫ਼đᆭުᅬ૫ࡎᆴղ֞ૅჭૄܢđ൞ෛުѩೆਔૌؓᆜ۱܄ඳ֥൬ܓb In 2009, our largest sales were in ConocoPhillips, Moody’s, Procter & Gamble and Ϙ٣หනམຩJohnson & Johnson (sales of the latter occurring after we had built our position earlier in the year). Charlie and I believe that all of these stocks will likely trade higher in the future. We made some sales early in 2009 to raise cash for our Dow and Swiss Re purchases and late in the year made other sales in anticipation of our BNSF purchase. 2009୍đૌቋն֥છԛ൞ू٣െႲ(ConocoPhillips)đଥְ(Moody's)aЏࢱ(Procter & Gamble)đၛ఼ࠣള(Johnson & Johnson)(ުᆀ֥છԛᄝૌࣂ୍ᄪ௹ӻҝުؿള)bބҰཌྷྐ෮Ⴕᆃུܢௐޓॖିᄝࡼটၛ۷֥ۚࡎ۬Ӯࢌbૌᄝ2009୍Ԛછԛਔ၂ུđູ֡൦ބೋൖᄝЌགԔࠢሧࣁđಖުࣂ୍છԛ၂ུটԔСBNSF֥൬ܓb We told you last year that very unusual conditions then existed in the corporate and municipal bond markets and that these securities were ridiculously cheap relative to . Treasuries. We backed this view with some purchases, but I should have done far more. Big opportunities come infrequently. When it’s raining gold, reach for a bucket, not a thimble. ૌಀ୍ᄻۡුđ܄ඳބ൧ᆟ܄ᅏ൧ӆթᄝ٤ӈݨ֥౦ঃđᆃུᆣಊაૅݓҍᆟ֥҆ཌྷб٤ӈьၒđૌ๙ݖࠫཛҐܓᆦӻਔᆃ۱ܴׄb൞ႋھቓ֥۷؟bᆃဢն֥ࠏ߶٤ӈݨb֒฿ഈוࣁሰ֥ൈީđႋھଦಀࢤđط҂൞ܵሰb We entered 2008 with $ billion of cash-equivalents, and we have since retained operating earnings of $17 billion. Nevertheless, at yearend 2009, our cash was down to $ billion (with $8 billion earmarked for the BNSF acquisition). We’ve put a lot of money to work during the chaos of the last two years. It’s been an ideal period for investors: A climate of fear is their best friend. Those who invest only when commentators are upbeat ֻ 34 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēend up paying a heavy price for meaningless reassurance. In the end, what counts in investing is what you pay for a business – through the purchase of a small piece of it in the stock market – and what that business earns in the succeeding decade or two. 2008୍ԚđૌႚႵ443ၡૅჭ֥གྷࣁሧӁđᆭުૌࠆ֤ਔ170ૅჭ֥ࣜႏ൬ၭbಖطđᄝ2009୍đૌ֥གྷࣁࡨഒ֞ਔ306ၡૅჭ(ఃᇏ80ၡႨႿBNSFҐܓ)đૌᄝݖಀਆ୍ၘࣜႨਔޓ؟ఫbପ൞၂۱ሧ֥མൈ௹ğӈϴෛॣߚ֥ٲຶbପུሧᆀູਔݸၩၬ֥Ќᆣطڱਔ۷֥ۚࡎ۬bቋުđᄝሧᇏఏቔႨ֥൞ؓ෮֥ӮЧၛࠣᆃ۱ြༀᄝෛު୍֥ࠇؽ୍֥႔০đ࣐ܵᆺ൞ᄝܢ൧ഈઙೆ၂ཬ҆ٳb * * * * * * * * * * * * Last year I wrote extensively about our derivatives contracts, which were then the subject of both controversy and misunderstanding. For that discussion, please go to . Ϙ٣หනམຩಀ୍བྷ༥֥ࢺകਔૌ֥စളކჿđႄఏਔᆚၰބ༂ࢳbܱႿᆃ۱໙ีđ౨֨ຩᅟ We have since changed only a few of our positions. Some credit contracts have run off. The terms of about 10% of our equity put contracts have also changed: Maturities have been shortened and strike prices materially reduced. In these modifications, no money changed hands. ᆭުૌڿэਔࠫ۱ҝ໊b၂ུྐႨކჿ֞௹ਔb10%֥ܢௐᆷඔކჿ္ڿэਔğ௹ཋ෪؋đӮࢌࡎࡨഒbᆃུڿэᇏીႵࣁఫၞ൭b A few points from last year’s discussion are worth repeating: ಀ୍ᇏิ֥֞ࠫׄགྷᄝླေᇗണ၂༯ğ (1) Though it’s no sure thing, I expect our contracts in aggregate to deliver us a profit over their lifetime, even when investment income on the huge amount of float they provide us is excluded in the calculation. Our derivatives float – which is not included in the $62 billion of insurance float I described earlier – was about $ billion at yearend. (1)࣐ܵ҂ିಒЌđಪູૌ֥ކሹᆴࡼӻ࿃۳ૌջট০đࠧϜሧ൬ೆնږѯॉ੮ᄝຓb ૌ֥စളڜթࣁ——ѩ҂Їওᄝᆭభิ֥֞620ၡૅჭЌགڜթࣁᇏđࠫެղ֞63ၡૅჭb (2) Only a handful of our contracts require us to post collateral under any circumstances. At last year’s low point in the stock and credit markets, our posting requirement was $ ֻ 35 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēbillion, a small fraction of the derivatives-related float we held. When we do post collateral, let me add, the securities we put up continue to earn money for our account. (2)ᆺႵഒඔކေૌંೂޅࢌڱַЌᆣࣁbಀ୍đܢ൧ބྐႨ൧ӆࡎ໊ሼ֮đૌ֥ᆦڱေ൞17ၡૅჭđᆺ൞ૌႚႵ֥စളཌྷܱڜթࣁ֥၂ཬ҆ٳb֒ૌᆦڱַЌᆣࣁ֥ൈީđૌ෮ᆦڱַ֥ಯಖᄝ۳ૌሉఫb (3) Finally, you should expect large swings in the carrying value of these contracts, items that can affect our reported quarterly earnings in a huge way but that do not affect our cash or investment holdings. That thought certainly fit 2009’s circumstances. Here are the pre-tax quarterly gains and losses from derivatives valuations that were part of our reported earnings last year: (3)ቋުđᆃུކ֥ᅫ૫ࡎᆴ߶Ⴕն֥ѯđᆃ߶ޓնӱ؇ഈ႕ཙૌ֥࠱؇Бۡ႔০đ൞҂߶႕ཙૌ֥གྷࣁࠇሧӻႵbᆃ۱མمޓൡކ2009୍֥ߌbᆃႵಀ୍Ֆစളܢᆴᇏջট֥ඥభ࠱؇൬ၭğ Ϙ٣หනམຩ Quarter $ Gain (Loss) in Billions ࠱؇ ൬ၭ(ാ) (ֆ໊ğၡૅჭ) 1() 2 4 As we’ve explained, these wild swings neither cheer nor bother Charlie and me. When we report to you, we will continue to separate out these figures (as we do realized investment gains and losses) so that you can more clearly view the earnings of our operating businesses. We are delighted that we hold the derivatives contracts that we do. To date we have significantly profited from the float they provide. We expect also to earn further investment income over the life of our contracts. ᆞೂૌ෮ࢳ֥đᆃུնږᆑ֕҂߶ބҰۚྖࠇᆀِସb֒ૌБۡ۳֥ൈީđಯࡼٳᆃུඔሳ(ࣼཞૌಒൌൌགྷਔ൬ၭࠇാ၂ဢ)đᆃဢࣼॖၛ۷ౢԣֹु֞ૌ෮ࣜႏြༀ֥႔০౦ঃbૌޓۚྖૌӻႵᆃུစളކbᇀࣂૌၘࣜՖૌ෮ิ܂֥ڜᇏࠆ০پbૌ༐ຬ࿃๙ݖᆃུކሉ౼۷؟֥ሧ൬ၭb We have long invested in derivatives contracts that Charlie and I think are mispriced, just as we try to invest in mispriced stocks and bonds. Indeed, we first reported to you that we held such contracts in early 1998. The dangers that derivatives pose for both participants ֻ 36 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēand society – dangers of which we’ve long warned, and that can be dynamite – arise when these contracts lead to leverage and/or counterparty risk that is extreme. At Berkshire nothing like that has occurred – nor will it. ૌӉ௹ၛট၂ᆰሧބҰಪູհ༂קࡎਔ֥စളކđᆞೂૌӇ൫հ༂קࡎ֥ܢௐބᅏಊ၂ဢb൙ൌഈđૌᄝ1998୍ֻ၂ՑБۡૌႚႵᆃུކbૌ၂ᆰᄝࣞۡစള۳ഠ߶ބཌྷܱದൖջট֥າགđᆃॖି൞߮ྟ֥đ֒ᆃུކ֝ᇁࢌၞؓ൭ڄགބ/ࠇईᅏࣜႏڄག֥ൈީڄགղ֞פׄbᄝѵक़༐غđᆃՖটીႵؿളݖđࡼট္҂߶b It’s my job to keep Berkshire far away from such problems. Charlie and I believe that a CEO must not delegate risk control. It’s simply too important. At Berkshire, I both initiate and monitor every derivatives contract on our books, with the exception of operations-related contracts at a few of our subsidiaries, such as MidAmerican, and the minor runoff contracts at General Re. If Berkshire ever gets in trouble, it will be my fault. It Ϙ٣หනམຩwill not be because of misjudgments made by a Risk Committee or Chief Risk Officer. ಞѵक़༐غჹᆃུڄག൞֥ᆯᄳ෮ᄝbބҰཌྷྐ၂໊CEO၂ק҂ିޭ൪ڄག॥ᇅbᆃᇗေਔbᄝѵक़༐غđؿఏѩࡓ॥ૄ၂ཛစളކđԢਔᄝഒඔࠫࡅ֥ٳ܄ඳᄎႏཌྷܱ֥ކđ২ೂᇏૅିჷ॥ܢ܄ඳ(MidAmerican)ބGeneral ReᄜЌག܄ඳbೂݔѵक़༐غԛགྷ໙ีđପࣼ൞֥໙ีđथ҂߶൞ڄགჴ߶ࠇᆀ൮༜ڄགϷ܄൩֥ᄳb * * * * * * * * * * * * In my view a board of directors of a huge financial institution is derelict if it does not insist that its CEO bear full responsibility for risk control. If he’s incapable of handling that job, he should look for other employment. And if he fails at it – with the government thereupon required to step in with funds or guarantees – the financial consequences for him and his board should be severe. ಪູđ၂۱նࣁವࠏܒ֥ᇶܵჴೂݔીႵࡹၰCEOູڄགӵքಆ҆ᄳđପહૌࣼ൞҂ڵᄳ֥bೂݔCEO҂ି഻ᆃཛༀđପહႋھքః֥۽ቔbೂݔمቓ֞đطᆟکླေೆሧࣁ֥߅đބ֥ჴ߶ႋھӵքޓնᄳb It has not been shareholders who have botched the operations of some of our country’s largest financial institutions. Yet they have borne the burden, with 90% or more of the value of their holdings wiped out in most cases of failure. Collectively, they have lost more than $500 billion in just the four largest financial fiascos of the last two years. To say these owners have been “bailed-out” is to make a mockery of the term. ֻ 37 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēē۞ᄦࠫࡅಆݓቋնࣁವࠏܒ֥ᄎႏ֥҂൞ܢתbಖطૌࡆᇗਔڵքđૌᄝാϧ֥ൈީוਔӻႵࡎᆴ֥90%ࠇ۷؟bሹᆭđૌᄝݖಀ֥ਆ୍ᇏ֥ඹՑቋն֥ࣁವᦹڄᇏၘࣜാਔӑݖ5000ၡૅჭbೂݔඪᆃུӻႵᆀ൞“๋ੌ(Bailed-out)”đପહࡥᆰ൞ؓ“๋ੌ”ᆃ۱Ս֥ӕڊb The CEOs and directors of the failed companies, however, have largely gone unscathed. Their fortunes may have been diminished by the disasters they oversaw, but they still live in grand style. It is the behavior of these CEOs and directors that needs to be changed: If their institutions and the country are harmed by their recklessness, they should pay a heavy price – one not reimbursable by the companies they’ve damaged nor by insurance. CEOs and, in many cases, directors have long benefitted from oversized financial carrots; some meaningful sticks now need to be part of their employment picture as well. ࣐ܵೂՎđ၂۱ാϧ܄ඳ֥CEOૌބᇶܵૌݸؿഄđطߎࠃ֥ޓݺbᆞ൞ᆃུCEOބᇶܵૌ֥ྛູႋھڿэğೂݔૌ֥܄ඳބݓࡅФૌ֥҂ڵᄳഄݝਔđϘ٣หනམຩૌႋھڱԛսࡎđط҂ႋھႮ܄ඳࠇᆀЌགটઙֆbᄝޓ؟౦ঃ༯đᇶܵՖݖ؟֥ࣁವޱઃѾᇏࠆ০đႋھᄝૌ֥ᆯြളᇏࡆೆ၂ུնϿਔb An Inconvenient Truth (Boardroom Overheating) ၂۱҂ॹ֥൙ൌ Our subsidiaries made a few small “bolt-on” acquisitions last year for cash, but our blockbuster deal with BNSF required us to issue about 95,000 Berkshire shares that amounted to % of those previously outstanding. Charlie and I enjoy issuing Berkshire stock about as much as we relish prepping for a colonoscopy. ૌఋ༯֥ሰ܄ඳಀ୍ູਔགྷࣁቓਔࠫཛཬѩܓσđ൞ૌؓBNSFํਫ਼֥ն൬ܓေૌؿྛ95000ܢѵक़༐غܢٺđᆃࢤ࣍ၘ܄षؿྛ֥%bބҰؓؿྛѵक़༐غܢௐ֥༟ιđᆞೂૌཚ൳ࢲӋࣤҰభ֥ሙС۽ቔ၂ဢb The reason for our distaste is simple. If we wouldn’t dream of selling Berkshire in its entirety at the current market price, why in the world should we “sell” a significant part of the company at that same inadequate price by issuing our stock in a merger? ૌ҂༟ߋؿྛܢௐ֥ჰၹޓࡥֆbೂݔ҂൞ቓၛགྷᄝ֥൧ࡎછוಆ҆ѵक़༐غܢௐ֥߅đູહေၛࠫެဢ֥֮ؿྛࡎછו܄ඳೂՎն֥၂҆ٳĤ In evaluating a stock-for-stock offer, shareholders of the target company quite understandably focus on the market price of the acquirer’s shares that are to be given them. But they also expect the transaction to deliver them the intrinsic value of their own shares – ֻ 38 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēthe ones they are giving up. If shares of a prospective acquirer are selling below their intrinsic value, it’s impossible for that buyer to make a sensible deal in an all-stock deal. You simply can’t exchange an undervalued stock for a fully-valued one without hurting your shareholders. ܙߐܢѩܓൈđଢѓ܄ඳ֥ܢת҂ࣇᇿᇗಪܓ܄ඳܢٺ֥൧ӆࡎđဢ္༐ຬࢌၞିܔ۳ૌջট෮٢ఙ֥ପུሱ࠭ܢٺ֥ଽᄝࡎᆴbೂݔ֮Ⴟఃଽᄝࡎᆴđᄝࣇࢌߐܢௐ֥౦ঃ༯đ၂Ϯ҂ॖିӮࢌbૌ҂ିႨ၂۱Ф֮ܙ֥ܢௐಀࢌߐ၂۱Фປಆّႋࡎᆴ֥ܢௐđᆃ߶ݝܢת০ၭb Imagine, if you will, Company A and Company B, of equal size and both with businesses intrinsically worth $100 per share. Both of their stocks, however, sell for $80 per share. The CEO of A, long on confidence and short on smarts, offers 11⁄4 shares of A for each share of B, correctly telling his directors that B is worth $100 per share. He will neglect to explain, though, that what he is giving will cost his shareholders $125 in intrinsic value. If Ϙ٣หනམຩthe directors are mathematically challenged as well, and a deal is therefore completed, the shareholders of B will end up owning % of A & B’s combined assets and A’s shareholders will own %. Not everyone at A, it should be noted, is a loser from this nonsensical transaction. Its CEO now runs a company twice as large as his original domain, in a world where size tends to correlate with both prestige and compensation. յ۱бٚđ܄ඳAބ܄ඳBܿଆཌྷđૄܢ൞100ૅჭbૌ֥ܢௐ൧૫ഈછ80ૅჭૄܢbA܄ඳ֥CEO٤ӈሱྐ҂ܔࣚૼđႨܢಀߐB܄ඳ֥1ܢđѩۡුᇶܵૌB܄ඳૄܢ100ૅჭbಖطીႵಪ്֞đࡼಞ֥ܢתૌູB܄ඳ֥ૄܢᆦڱ125ૅჭ֥ଽᄝࡎᆴbೂݔᇶܵૌીႵၳၰđପહࢌၞࣼӮࢌਔbB܄ඳ֥ܢתࡼႚႵA܄ඳބB܄ඳ৳ކሧӁ֥%đطA܄ඳ֥ܢתᆺႚႵ%bѩ҂൞A܄ඳ֥ૄ۱ದ൞ᆃՑ҂ૼᇆࢌၞ֥൳ݝᆀb֥CEOࡼࣜႏ၂۱ਆПն֥܄ඳđջট۷؟֥უބ০ၭb If an acquirer’s stock is overvalued, it’s a different story: Using it as a currency works to the acquirer’s advantage. That’s why bubbles in various areas of the stock market have invariably led to serial issuances of stock by sly promoters. Going by the market value of their stock, they can afford to overpay because they are, in effect, using counterfeit money. Periodically, many air-for-assets acquisitions have taken place, the late 1960s having been a particularly obscene period for such chicanery. Indeed, certain large companies were built in this way. (No one involved, of course, ever publicly acknowledges the reality of what is going on, though there is plenty of private snickering.) ೂݔ൞ಪܓ܄ඳ֥ܢௐФۚܙđ౦ঃࣼ҂ਔğᆃ߶ؓಪܓᆀႵ০bᆃࣼ൞ູહܢ൧֞ԩթᄝ֥ஞଐࡼ҂ॖх૧ջট၂༢ਙؿྛbೂݔοᅶૌܢࡎ֥൧ӆࡎᆴđૌֻ 39 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēॖၛ؟ڱॻđၹູ൙ൌഈૌᄝႨເлbᆃᇕಪܓᇛ௹ྟؿളbᄝؽൗࡀੂ୍սଌ֥ห൹ൈ௹đᆃᇕಁสޓ؟b൙ൌഈđଖུն܄ඳࣼ൞๙ݖᆃᇕٚൔࡹ৫ఏট֥(֒ಖીႵ֒൙ದ܄षӵಪଽଞđ൞ָ༯Ⴕྸ؟ཨ༏Ԯԛট)b In our BNSF acquisition, the selling shareholders quite properly evaluated our offer at $100 per share. The cost to us, however, was somewhat higher since 40% of the $100 was delivered in our shares, which Charlie and I believed to be worth more than their market value. Fortunately, we had long owned a substantial amount of BNSF stock that we purchased in the market for cash. All told, therefore, only about 30% of our cost overall was paid with Berkshire shares. ᄝBNSFํਫ਼֥ಪܓᇏđԛ൲֥ٚܢתఞֹ֒ܙਔૌ෮ิԛ֥100ૅჭૄܢ֥Бࡎbಖطૌ֥ӮЧಏۚႿՎđၹູᆃ100ૅჭ൞ၛܢௐྙൔbބҰཌྷྐܢௐ֥ࡎᆴӑݖᆃ۱൧ӆࡎbྜྷᄎ֥൞đૌᄝ൧ӆഈགྷࣁܓઙਔBNSF֥၂ն҆ٳđၹՎૌ֥ӮЧᇏᆺႵ30%൞Ⴈѵक़༐غܢௐܓઙ֥b Ϙ٣หනམຩ In the end, Charlie and I decided that the disadvantage of paying 30% of the price through stock was offset by the opportunity the acquisition gave us to deploy $22 billion of cash in a business we understood and liked for the long term. It has the additional virtue of being run by Matt Rose, whom we trust and admire. We also like the prospect of investing additional billions over the years at reasonable rates of return. But the final decision was a close one. If we had needed to use more stock to make the acquisition, it would in fact have made no sense. We would have then been giving up more than we were getting. ቋުđބҰಪູđෙಖေႨܢௐᆦڱ30%֥ࡎ۬đ൞ᆃ൞ૌ၂ᆰၛট෮ඃ༑ބ༟ߋ֥ြༀđѩିܔ۳ૌջট220ၡૅჭॖᆦ֥གྷࣁbحຓ֥ݺԩ൞đࡼႮજห-અථ(Matt Rose)ࣜႏ܄ඳđૌؓޓྐbૌဢ჻ၩᄝ୍ࠫଽᄜሧࠫၡૅჭđೂݔି֤֞ކ֥߭Бb൞ᆃߎ҂၂קbೂݔૌླေႨ۷؟֥ܢௐটಪܓđପࣼીႵၩၬਔbૌ߶֤҂ӊാb * * * * * * * * * * * * I have been in dozens of board meetings in which acquisitions have been deliberated, often with the directors being instructed by high-priced investment bankers (are there any other kind?). Invariably, the bankers give the board a detailed assessment of the value of the company being purchased, with emphasis on why it is worth far more than its market price. In more than fifty years of board memberships, however, never have I heard the investment bankers (or management!) discuss the true value of what is being given. When a deal involved the issuance of the acquirer’s stock, they simply used market value to measure the ֻ 40 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēcost. They did this even though they would have argued that the acquirer’s stock price was woefully inadequate – absolutely no indicator of its real value – had a takeover bid for the acquirer instead been the subject up for discussion. ᄻҕࡆݖࠫՑܢת߶đษંಪܓσđ๙ӈđ၂ུࡎ۬ۚυ֥ሧၿྛ۳ᇶܵૌิ܂ሦ࿘b҂ॖх૧֥đၿྛࡅཟ۳ܢת߶֥བྷ༥ܙਔФ൬ܓ܄ඳ֥ࡎᆴđ఼טఃࡎᆴჹჹб൧ӆࡎᆴbᄝӉղ୍֥ܢתളᇏđՖી๐֞ޅሧၿྛ(ࠇܵҪĆ)ษં܄ඳ෮֤֥֞ᆇൌࡎᆴb֒ࢌၞടࠣಪܓٚܢௐ֥ؿྛൈđૌᆺႨ൧ӆࡎᆴđമᇀᄝᆩ֡ಪܓٚܢௐФᇗ֮ܙൈಯಖᆃહቓb When stock is the currency being contemplated in an acquisition and when directors are hearing from an advisor, it appears to me that there is only one way to get a rational and balanced discussion. Directors should hire a second advisor to make the case against the proposed acquisition, with its fee contingent on the deal not going through. Absent this drastic remedy, our recommendation in respect to the use of advisors remains: “Don’t ask Ϙ٣หනམຩthe barber whether you need a haircut.” ֒ܢௐФ֮ܙൈđطᇶܵՖܤ໙ࠆ֤ྟၩ֥ٚمुఏটᆺႵ၂ᇕਔđܦႛֻؽܤ໙đটّؓิၰ֥ಪܓσđࢌၞ҂Ӯࢌᄵ֤֞ԏসbીႵᆃ۱đૌ֤֥֞ࡹၰႥჹ൞đ“҂ေ໙ؿഽ൞҂൞ھؿਔb” * * * * * * * * * * * * I can’t resist telling you a true story from long ago. We owned stock in a large well-run bank that for decades had been statutorily prevented from acquisitions. Eventually, the law was changed and our bank immediately began looking for possible purchases. Its managers – fine people and able bankers – not unexpectedly began to behave like teenage boys who had just discovered girls. ಧ҂ᇾေۡුޓࣲၛభ֥၂۱ᆇൌܣ൙bପൈૌᄝ၂۱ܵਅݺ֥նၿྛႚႵ၂ུܢௐđ୍ࠫটمੰ҂ᄍྸಪܓbᆭުمੰᄍྸಪܓđૌ֥ၿྛ৫ࠧष࿙ᅳॖି֥ࢌၞbၿྛࣜૌЧট൞ޓႵି৯֥ၿྛࡅđᆃൈಏཞીݖ୯ݙ֥ଳݙሰb They soon focused on a much smaller bank, also well-run and having similar financial characteristics in such areas as return on equity, interest margin, loan quality, etc. Our bank sold at a modest price (that’s why we had bought into it), hovering near book value and possessing a very low price/earnings ratio. Alongside, though, the small-bank owner was being wooed by other large banks in the state and was holding out for a price close to three times book value. Moreover, he wanted stock, not cash. ֻ 41 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēૌޓॹסഈਔ၂ࡅࢠཬܿଆ֥ၿྛđࣜႏ္ޓݺđิ܂ဢ֥ࣁವڛༀbૌ֥ၿྛၛࢠ֥֮ࡎ۬൲ԛđࠫެࢤ࣍ᅬ૫ࡎᆴđطࡎ۬/൬ၭбޓ֮bಖطđପࡅཬၿྛФૅݓఃնၿྛޜđఃࡎᆴࠫެղ֞ᅬ૫ࡎᆴ֥Пb҂ࣇೂՎđૌေ֥൞ܢௐđط҂൞གྷࣁb Naturally, our fellows caved in and agreed to this value-destroying deal. “We need to show that we are in the hunt. Besides, it’s only a small deal,” they said, as if only major harm to shareholders would have been a legitimate reason for holding back. Charlie’s reaction at the time: “Are we supposed to applaud because the dog that fouls our lawn is a Chihuahua rather than a Saint Bernard?” ሱಖđૌ֥൙ճႋਔb“ૌླေཁൕૌषಪܓਔbطᆃᆺ൞ޓཬ֥ࢌၞb”ૌᆃહඪࣼݺཞᆺႵؓܢתᄯӮޓնഄݝҌିӮູቅᆸૌ֥Ⴎ၂ဢbҰّ֥ႋ൞đ“ૌ൞ڎႋھ౩ྜྷᄝҤഈ୕֥൞ࠝຏຏđط҂൞഼ѵବb” Ϙ٣หනམຩThe seller of the smaller bank – no fool – then delivered one final demand in his negotiations. “After the merger,” he in effect said, perhaps using words that were phrased more diplomatically than these, “I’m going to be a large shareholder of your bank, and it will represent a huge portion of my net worth. You have to promise me, therefore, that you’ll never again do a deal this dumb.” ᆃࡅཬၿྛ֥ϰॖ҂൞೮ܨđิԛਔซᇏ֥ቋު၂۱ေb֒ൈ֥ծՊॖିбࢠݣྐྵđ“ᄝކѩުđࡼӮູ֥ၿྛ֥նܢתđᆃ൞࣪ሧӁᇏޓն၂҆ٳbૌсྶЌᆣđૌᄜ္҂ቓᆃહՃ֥ࢌၞਔb” Yes, the merger went through. The owner of the small bank became richer, we became poorer, and the managers of the big bank – newly bigger – lived happily ever after. ൞֥đᆃ۱ކѩσ๙ݖਔbཬၿྛ֥ϰሉਔఫđૌᄵணਔఫbնၿྛ——གྷᄝܿଆ۷նਔ——֥ࣜૌಏࠃ֤۷ሩਔb The Annual Meeting ୍ ߶ Our best guess is that 35,000 people attended the annual meeting last year (up from 12 – no zeros omitted – in 1981). With our shareholder population much expanded, we expect even more this year. Therefore, we will have to make a few changes in the usual routine. There will be no change, however, in our enthusiasm for having you attend. Charlie and I like to meet you, answer your questions and – best of all – have you buy lots of goods from our businesses. ֻ 42 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēಀ୍Ⴕնჿ35000ದҕࡆਔ୍߶(1981୍ࣇ12)bෛሢܢתದඔ֥ᄹࡆđࣂ୍ॖିႵ۷؟ದҕ߶bၹՎđૌࡼܸؓ২ቓ၂ུڿэb࣐ܵೂՎđૌؓնࡅ֥ಣ౦ߋ႒҂ࡨbބҰࡼაնࡅ૫đ߭ճ໙ีđቋݺߎିಞૌܓઙ۷؟֥Ӂb The meeting this year will be held on Saturday, May 1st. As always, the doors will open at the Qwest Center at 7 ., and a new Berkshire movie will be shown at 8:30. At 9:30 we will go directly to the question-and-answer period, which (with a break for lunch at the Qwest’s stands) will last until 3:30. After a short recess, Charlie and I will convene the annual meeting at 3:45. If you decide to leave during the day’s question periods, please do so while Charlie is talking. (Act fast; he can be terse.) ࣂ୍୍֥߶ࡼᄝᄅ၂ರᇛੂᅺषbສӈ၂ဢđݗউථหᇏྏ֥ն߶ᄝᄪഈׄሙൈӍषbϖׄ϶٢႘၂҆ྍ֥ѵक़༐غ႕ோbࣴׄ϶ᆰࢤࣉೆ໙ճߌࢫѩӻ࿃֞༯ׄ϶ (ᇏࡗᄝݗউථหႨҔ)bᄝ၂۱؋ᄠ֥ྨ༏ުđބҰࡼᄝׄඹٳቓ߶ၰሹࢲbೂݔथקᄝ໙ճߌࢫषđ౨ᄝҰࢃ߅֥ൈީሼ(ေॹđࢃϘ٣หනམຩ߅ޓࡥ؋)b The best reason to exit, of course, is to shop. We will help you do that by filling the 194,300-squarefoot hall that adjoins the meeting area with products from dozens of Berkshire subsidiaries. Last year, you did your part, and most locations racked up record sales. But you can do better. (A friendly warning: If I find sales are lagging, I get testy and lock the exits.) ष߶ၰಀቓ֥ቋࡄࠃ֒ಖ൞ܓbૌࡼᄝ19ຣ֥ཌྷਣն๏ϥડ۲ᇕѵक़༐غഅbಀ୍նࡅઙת༆ޓ୭৯đཧ൲حਔࡀbࣂ୍նࡅߎॖၛቓ֥۷ݺb(Ⴖ౦ิൕđೂݔؿགྷཧਈഈ҂ಀࡼ߶ޓളగđѩϜԛ१෭ഈ)b GEICO will have a booth staffed by a number of its top counselors from around the country, all of them ready to supply you with auto insurance quotes. In most cases, GEICO will be able to give you a shareholder discount (usually 8%). This special offer is permitted by 44 of the 51 jurisdictions in which we operate. (One supplemental point: The discount is not additive if you qualify for another, such as that given certain groups.) Bring the details of your existing insurance and check out whether we can save you money. For at least 50% of you, I believe we can. ᆟکܦჴЌག܄ඳ(GEICO)ࡼഡ၂۱ᅚđႵটሱಆݓ֥Ⴊྮܤ໙ູଢ଼ڛༀđࢰӴູଢ଼ิ܂చӚЌགࡹၰbGEICOࡼ۳ଢ଼၂۱ܢתᅼ२(๙ӈ൞8%)bૌषᅚြༀ֥51۱თᇏ֥44۱ᄍྸਔᆃ۱หљႪ߲b(حຓิൕğᆃ۱ᅼ२ॖၛࠒᄝఃႪ߲ഈ)Ϝགྷᄝ֥Ќགଦটđुुିڎᄜസׄఫbཌྷྐૌᇏᇀഒ50%ॖၛb ֻ 43 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēBe sure to visit the Bookworm. Among the more than 30 books and DVDs it will offer are two new books by my sons: Howard’s Fragile, a volume filled with photos and commentary about lives of struggle around the globe and Peter’s Life Is What You Make It. Completing the family trilogy will be the debut of my sister Doris’s biography, a story focusing on her remarkable philanthropic activities. Also available will be Poor Charlie’s Almanack, the story of my partner. This book is something of a publishing miracle – never advertised, yet year after year selling many thousands of copies from its Internet site. (Should you need to ship your book purchases, a nearby shipping service will be available.) ၂קေܻܤԋϔbิ܂30ჅᇕބDVDđఃᇏႵਆЧظሰྍԛ֥ğuݗڍෞோ(Howard’s Fragile)vđఃᇏႵҐሱಆ౯֥ᅶோބંđਸ਼၂Ч൞ğд֤֥ളࠃႮᄯࣼ(Peter’s Life Is What You Make Itb)bປӮࡅ๖҆౷֥൞ૈૈ֥ԩ୯ቔuลೋථሱԮ(Doris’s biography)vđᆃЧࢃඍਔෲᇷ֥ՋࠃbߎႵuॖ৸Ұщ୍ൎ(Charlie’s Almanac)vđᆃ൞ކࠄದ֥ܣ൙b൞ԛϱࢽ֥అࠖ——Ֆ҂յޅܼۡđಖުૄ୍ᄝຩഈ൲ԛഈతЧbೂݔଢ଼ླေࡼઙ֥Ⴏ࠷߭ಀ֥߅đகшࣼႵϘ٣หනམຩႯ־ڛༀb If you are a big spender – or, for that matter, merely a gawker – visit Elliott Aviation on the east side of the Omaha airport between noon and 5:00 . on Saturday. There we will have a fleet of NetJets aircraft that will get your pulse racing. ೂݔଢ଼൞၂໊ܠߧࠩܓॾ——ࠇᆀᆺ൞༟ߋ֞ԩुुđॖၛᄝᄝᇛੂᇏ֞༯ܻׄܤύઑݗࠏӆתҧ֥၈ห٦ࠏ(Elliott Aviation)bNetJet܄ඳ֥٦ࠏࡳؒࡼಞଢ଼ྏ๋ࡆb An attachment to the proxy material that is enclosed with this report explains how you can obtain the credential you will need for admission to the meeting and other events. As for plane, hotel and car reservations, we have again signed up American Express (800-799-6634) to give you special help. Carol Pedersen, who handles these matters, does a terrific job for us each year, and I thank her for it. Hotel rooms can be hard to find, but work with Carol and you will get one. Ⴕ၂۱ෛྐڸࡱۡුଢ଼ೂޅࠆ౼ҕ߶ᆣđটҕࡆ߶ၰބఃࠃbᇀႿݴϫaࣵބచӚሿਧđૌಯࡼაૅݓᄎ๙(800-799-6634)ކቔđູଢ଼ิ܂ህ֥ڛༀbवઌغ-д֤೦(Carol Pedersen)ࡼ၂ೂ࠻ສູૌԩཌྷܱ൙ༀđᆩ֡ᆃޓَᄖđᄝՎؓෲіൕۋ྆bٜࣵࡗॖିޓᅳđ൞๙ݖवઌغႋھିר֞b At Nebraska Furniture Mart, located on a 77-acre site on 72nd Street between Dodge and Pacific, we will again be having “Berkshire Weekend” discount pricing. To obtain the Berkshire discount, you must make your purchases between Thursday, April 29th and Monday, May 3rd inclusive, and also present your meeting credential. The period’s special ֻ 44 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēpricing will even apply to the products of several prestigious manufacturers that normally have ironclad rules against discounting but which, in the spirit of our shareholder weekend, have made an exception for you. We appreciate their cooperation. NFM is open from 10 . to 9 . Monday through Saturday, and 10 . to 6 . on Sunday. On Saturday this year, from 5:30 . to 8 ., NFM is having a Berkyville BBQ to which you are all invited. ଽ҃ঘථࡆࡅऎഅӆ(NFM)໊Ⴟ72ࢧഈ֡అބလ(,,%)ᆭࡗđᅝֹ77ႇଙđᄝᆃૌࡼᅺष“ѵक़༐غᇛଌ”หࡎ՜ཧbေ֤֞ѵक़༐غᅼ२đсྶᄝඹᄅؽࣴರᇛඹ֞ᄅರᇛ၂ᆭࡗܻਢѩԛൕҕ߶ᆣbЧ࠱หࡎЇওਔࠫ۱նஇӁđᆃࠫ۱இሰ๙ӈ൞ીႵޅᅼ२֥đႮႿ൞ܢתᇛଌđ෮ၛႵ২ຓbૌۋ྆ૌ֥ᆦӻbNFMᄝᇛ၂ᇀᇛੂᄪׄ֞ພࣴׄष٢đᇛರ൞ᄪഈׄ֞ພഈੂׄbᇛੂ༯ׄ϶֞ພϖׄđNFMईྛഎोພ߶đဤ౨෮Ⴕა߶ᆀb At Borsheims, we will again have two shareholder-only events. The first will be a cocktail Ϙ٣หනམຩreception from 6 . to 10 . on Friday, April 30th. The second, the main gala, will be held on Sunday, May 2nd, from 9 . to 4 . On Saturday, we will be open until 6 . ᄝѰ༐ଚᇨЏ(Borsheim's)đૌࡼᄜՑᅺषਆӆܢתህӆࠃb൮༵ࡼ൞၂۱࠙ແࣵᅱր߶đᄝඹᄅರᇛ༯6ׄ֞ພഈ10ׄb We will have huge crowds at Borsheims throughout the weekend. For your convenience, therefore, shareholder prices will be available from Monday, April 26th through Saturday, May 8th. During that period, please identify yourself as a shareholder by presenting your meeting credentials or a brokerage statement that shows you are a Berkshire holder. Enter with rhinestones; leave with diamonds. My daughter tells me that the more you buy, the more you save (kids say the darnedest things). ಖު൞၂۱նऊ߶đᄝᄅؽರᇛರᄪഈࣴׄ֞༯ඹׄbᇛੂđૌࡼष٢֞༯ੂׄbૌࡼᄝѰ༐ଚᇛଌ႒টնܤग़bູਔଢ଼֥ٚьđܢתႪ߲ࡼՖඹᄅؽੂರᇛ၂ӻ࿃֞ᄅϖರᇛੂbᄝՎ௹ࡗđ౨ԛൕଢ଼֥ҕ߶वࠇᆀܢתᆣૼটཚ൳Ⴊ߲bषύຉটđջХԀሼb֥୯ظۡුઙ֥ᄀ؟đസ֤ᄀ؟b On Sunday, in the mall outside of Borsheims, a blindfolded Patrick Wolff, twice . chess champion, will take on all comers – who will have their eyes wide open – in groups of six. Nearby, Norman Beck, a remarkable magician from Dallas, will bewilder onlookers. ᇛರđᄝѰ༐ଚຓ૫֥ն๏đਆࢽૅݓݓ࠽འఄܳफஂหक़-ڏ(Patrick Wolff)ࡼၛ၂ֱੂđఄႋᅞ็ᅞᆀbᇷ֥ղঘථଊඌഽНक़(Norman Beck)ࡼࣉྛࣚґіဆb Our special treat for shareholders this year will be the return of my friend, Ariel Hsing, the ֻ 45 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēcountry’s top-ranked junior table tennis player (and a good bet to win at the Olympics some day). Now 14, Ariel came to the annual meeting four years ago and demolished all comers, including me. (You can witness my humiliating defeat on YouTube; just type in Ariel Hsing Berkshire.) ࣂ୍֥หљࠃିܔ൞၂໊ழႶ֥ᄜՑܻਢđෲࣼ൞ྚ(Ariel Hsing)đಆݓפࠩஓ౯ᄎჴ(ࡼটޓႵॖିࠆ֤ύᄎ߶ࢂஇ)bࣂ୍14ෟ֥ྚඹ୍భҕࡆݖ୍߶đյϧਔ෮Ⴕ็ᅞᆀđЇওb(ॖၛᄝYouTubeഈҕܴФյϧ֥ݖӱđᆺေൻೆAriel Hsing Berkshireࠧॖ)b Naturally, I’ve been plotting a comeback and will take her on outside of Borsheims at 1:00 . on Sunday. It will be a three-point match, and after I soften her up, all shareholders are invited to try their luck at similar three-point contests. Winners will be given a box of See’s candy. We will have equipment available, but bring your own paddle if you think it will help. (It won’t.) Ϙ٣หනམຩ֒ಖđ၂ᆰᄝҦ߃ෲ֥ᄜՑܻਢđෲࡼᄝᇛರ༯၂ׄԛགྷb෮Ⴕ֥ܢתॖၛ൫൫ᄎగbࠆࢂᆀࡼࠆ֤၂থSee'sบݔbૌࡼሙСགྷӮ֥౯அđ္ॖၛջഈሱ֥࠭౯அđೂݔत֤Ⴕ෮Ϻᇹ֥߅(ఃൌ҂߶Ⴕҵљ)b Gorat’s will again be open exclusively for Berkshire shareholders on Sunday, May 2nd, and will be serving from 1 . until 10 . Last year, though, it was overwhelmed by demand. With many more diners expected this year, I’ve asked my friend, Donna Sheehan, at Piccolo’s – another favorite restaurant of mine – to serve shareholders on Sunday as well. (Piccolo’s giant root beer float is mandatory for any fan of fine dining.) I plan to eat at both restaurants: All of the weekend action makes me really hungry, and I have favorite dishes at each spot. Remember: To make a reservation at Gorat’s, call 402-551-3733 on April 1st (but not before) and at Piccolo’s call 402-342-9038. ۥೋҔܶ(Gorat's)ࡼᄝᄅؽರᇛರष٢ѵक़༐غܢתህӆđՖ༯၂ׄᇀພഈׄbಀ୍ࡥᆰದડູߑbࣂ୍ၘࣜಞ֥ழႶđ॓ઌ(Piccolo’s)Ҕ֥ܶนବ-༐ض(Donna Sheehan)đ֥ਸ਼၂ࡅቋι֥Ҕܶđູܢתᄝᇛರิ܂ႨҔڛༀb࠹߃ਆ۱Ҕ๏ಀđᇛರ֥ࠃࡼಞ१նषđᄝਆࡅႵቋι֥Ғbေᄝ۫ೋרҔđ౨ᄝඹᄅ၂ರѭյ߅402-551-3733(҂ေิభ)đ॓ઌ߅൞402-342-9038b Regrettably, we will not be able to have a reception for international visitors this year. Our count grew to about 800 last year, and my simply signing one item per person took about 21⁄2 hours. Since we expect even more international visitors this year, Charlie and I decided we must drop this function. But be assured, we welcome every international visitor who comes. ֻ 46 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēē၌ݭ֥൞đࣂ୍ૌࡼ҂ିູຓݓग़ದิ܂หљࢤրbૌݓ࠽ग़ಀ୍ᄹࡆਔ800۱b࠻ಖࣂ୍ေᄹࡆ۷؟֥ݓ࠽ग़ದđބҰथק౼ཨห൹ࢤրb൞ૌಯಖ၂ೂ࠻ສֹߋ႒ა߶֥ݓ࠽ग़ದb Last year we changed our method of determining what questions would be asked at the meeting and received many dozens of letters applauding the new arrangement. We will therefore again have the same three financial journalists lead the question-and-answer period, asking Charlie and me questions that shareholders have submitted to them by e-mail. ಀ୍ૌڿэਔ໙ճߌࢫ็࿊໙ี֥ٚمđ߶ުޓ؟ದіൕ༟ߋᆃဢ֥νஆb෮ၛࣂ୍ૌࡼဢႮᆃ໊ҍࣜ࠺ᆀᇶӻ໙ճߌࢫđૌࡼ๙ݖሰႯࡱ൬ࠢܢת֥໙ีđѩؓބҰࣉྛิ໙b The journalists and their e-mail addresses are: Carol Loomis, of Fortune, who may be Ϙ٣หනམຩe-mailed at cloomis@; Becky Quick, of CNBC, at BerkshireQuestions@, and Andrew Ross Sorkin, of The New York Times, at arsorkin@. From the questions submitted, each journalist will choose the dozen or so he or she decides are the most interesting and important. The journalists have told me your question has the best chance of being selected if you keep it concise and include no more than two questions in any e-mail you send them. (In your e-mail, let the journalist know if you would like your name mentioned if your question is selected.) ᆃ໊࠺ᆀބૌ֥ሰႯࡱٳљ൞ğҍڶᄖᆽ࠺ᆀवઅغ-ථ(Carol Loomis)ğcloomis@ĠCNBC࠺ᆀНࠎ-উक़(Becky Quick)ğBerkshireQuestions@Ġ୧ჿൈБ࠺ᆀν֣ਗ਼-અථ-෬ࣁ(Andrew Ross Sorkin)ğ arsorkin@Ֆิࢌ֥໙ีᇏđૄ໊࠺ᆀࡼ࿊ᄴࠫ۱ಪູቋႵ౿ቋᇗေ֥໙ีb༐ຬૌ֥Ⴏࡱ࣐ਈࡥࢱૼਔđѩ҂ӑݖਆ۱໙ีb(ѩᇿૼ൞ڎࢺၩྠb) Neither Charlie nor I will get so much as a clue about the questions to be asked. We know the journalists will pick some tough ones and that’s the way we like it. ބҰ൙༵҂ᆩ֡໙ีb࠺ᆀૌ߶็࿊၂ུႵ็ᅞྟ֥đᆃᆞ൞ૌ෮༟ߋ֥b We will again have a drawing at 8:15 on Saturday at each of 13 microphones for those shareholders wishing to ask questions themselves. At the meeting, I will alternate the questions asked by the journalists with those from the winning shareholders. We’ve added 30 minutes to the question time and will probably have time for about 30 questions from each group. ֻ 47 ်
ԮѬϘ٣หනམ ႄਵࡎᆴሧ ēēēēēēēēēēēēēૌࡼᄝᇛੂϖׄٳ๙ݖ൭ࠏԎద࿊ԛ໙ีbᄝ߶ၰഈđࡼੀ߭ճ࠺ᆀิ֥໙ีބԎᇏ֥໙ีbૌၘࣜࡼิ໙ൈࡗӉਔٳᇒđ෮ၛૄቆնۀିႵ۱໙ีb * * * * * * * * * * * At 86 and 79, Charlie and I remain lucky beyond our dreams. We were born in America; had terrific parents who saw that we got good educations; have enjoyed wonderful families and great health; and came equipped with a “business” gene that allows us to prosper in a manner hugely disproportionate to that experienced by many people who contribute as much or more to our society’s well-being. Moreover, we have long had jobs that we love, in which we are helped in countless ways by talented and cheerful associates. Indeed, over the years, our work has become ever more fascinating; no wonder we tap-dance to work. If pushed, we would gladly pay substantial sums to have our jobs (but don’t tell the Comp Ϙ٣หනམຩCommittee). Ұࣂ୍86ෟđ79ෟđૌಯಖۋ֞ޓྜྷᄎbૌᄝૅݓԛളđૌ֥ڳଛಞૌࢤ൳ਔਅݺ֥࢝ტđૌႵૅݺ֥ࡅ๖ބਅݺ֥ࡲूđૌႚႵ֥അြ฿ڮ۳ૌջটਔҍڶđбପུ۵ૌ၂ဢູഠ߶ቓԛ܊ང֥ದࠆ֤֥ေ؟b҂ࣇೂՎđૌ၂ᆰၛটಣιૌ֥۽ቔđૌ๙ݖ۽ቔϺᇹਔඔ֥ႵҌ֥ކࠄದđ൙ൌഈᆃ୍ུটđૌ֥۽ቔэ֤ᄀটᄀႄದೆ഻đࡥᆰॖၛ๋ሢาಀഈϫbೂݔླေ֥߅đૌࡥᆰ჻ၩఫটЌૌ֥۽ቔ(౨҂ေۡු܄ඳჴ߶)b Nothing, however, is more fun for us than getting together with our shareholder-partners at Berkshire’s annual meeting. So join us on May 1st at the Qwest for our annual Woodstock for Capitalists. We’ll see you there. ֒ಖđીႵહбૌ֥ܢתކࠄದཌྷऊ۷ࡆಞದषྏ֥ਔb෮ၛđࡆೆૌᄅ၂ರᄝݗউථหᅺष୍֥؇֣ථກक़ၻুࢫϔbૌᄝପb ·E·Ϙ٣ห ൙߶ᇶ༜ 2010୍2ᄅ26ರ ิൕğປު၂קۋत൬ࠆ҂ഒĆљອਔࡼՎྐሇؿ۳ؓॖିۋྖ౿֥ழႶđཌྷྐᆃٿྐૌ߶Ⴕ෮ఓؿބϺᇹb ֻ 48 ်
