1977 : Textile operations came in well below forecast, while the results of the Illinois National Bank as well as the operating earnings attributable to our equity interest in Blue Chip Stamps were about as anticipated. In 1977 our operating earnings on beginning equity capital amounted to 19%, slightly better than last year and above both our own long-term average and that of American industry in aggregate. Beginning equity capital is up 23% from a year ago, and we expect the trend of insurance underwriting profit margins to turn down well before the end of the year. Most of our large stock positions are going to be held for many years and the scorecard on our investment decisions will be provided by business results over that period, and not by prices on any given day. Since that time, no new capital has been contributed to the bank; on the contrary, since our purchase in 1969, dividends of $20 million have been paid.

1978 : Neither this 25% equity gain from all sources nor the 19.4% equity gain from operating earnings in 1978 is sustainable. It is not easy to buy a good insurance business, but our experience has been that it is easier to buy one than create one. Equity holdings of our insurance companies with a market value of over $8 million on December 31, 1978 were as follows: No. Ben was to continue running the business - and run it, he has. We are associated with some of the very best.

1979 : Because we have large unrealized gains in our insurance equity holdings, the result of this new policy is to increase substantially both the 1978 and 1979 yearend net worth, even after the appropriate liability is established for taxes on capital gains that would be payable should equities be sold at such market valuations. While we have a high degree of confidence that certain of our operations will do considerably better than average, it will be a challenge to us to operate below the industry figure. Inflation is man-made; perhaps it can be man-mastered. Banking This will be the last year that we can report on the Illinois National Bank and Trust Company as a subsidiary of Berkshire Hathaway. You would demand that in a private company; you should expect no less in a public company.

1980 : But, while our reported operating earnings reflect only the dividends received from such companies, our economic well-being is determined by their earnings, not their dividends. The large increase in such holdings, plus the growth of earnings experienced by those partially-owned companies, has produced an unusual result; the part of our earnings that these companies retained last year (the part not paid to us in dividends) exceeded the total reported annual operating earnings of Berkshire Hathaway. A thrifty wage earner, likewise, could achieve regular annual increases in his total income without ever getting a pay increase - if he were willing to take only half of his paycheck in cash (his wage dividend) and consistently add the other half (his retained earnings) to a savings account. We show below Berkshires proportional holdings in those non-controlled businesses for which only distributed earnings (dividends) are included in our own earnings. Thus, we have a much larger economic interest in the aluminum business than in practically any of the operating businesses we control and on which we report in more detail.

1981 : Non-Controlled Ownership Earnings In the 1980 annual report we discussed extensively the concept of non-controlled ownership earnings, i.e., Berkshires share of the undistributed earnings of companies we dont control or significantly influence but in which we, nevertheless, have important investments. If they dont, we have made mistakes as to either: (1) the management we have elected to join; (2) the future economics of the business; or (3) the price we have paid. But is it? And most American businesses are currently bad businesses economically - producing less for their individual investors after-tax than the tax-exempt passive rate of return on money. The ruling did not cover participation by shareholders whose stock was registered in the name of nominees, such as brokers, and additionally required that the owners of all designating shares make certain assurances to Berkshire.

1982 : However, GEICOs increase in market value during the past two years has been considerably greater than the gain in its intrinsic business value, impressive as the latter has been. We will not be distressed by such a shrinkage; if the businesses continue to look attractive and we have cash available, we simply will add to our holdings at even more favorable prices. If stock of the buyer is to be the currency, the sellers calculation is still relatively easy: just figure the market value in cash of what is to be received in stock. But when the buyer makes a partial sale of itself - and that is what the issuance of shares to make an acquisition amounts to - it can customarily get no higher value set on its shares than the market chooses to grant it. In a trade, what you are giving is just as important as what you are getting.

1983 : o You should be fully aware of one attitude Charlie and I share that hurts our financial performance: regardless of price, we have no interest at all in selling any good businesses that Berkshire owns, and are very reluctant to sell sub-par businesses as long as we expect them to generate at least some cash and as long as we feel good about their managers and labor relations. This excess belongs in our intrinsic business value, but is not included in the calculation of book value; (2) More important, we own several businesses that possess economic Goodwill (which is properly includable in intrinsic business value) far larger than the accounting Goodwill that is carried on our balance sheet and reflected in book value. In aggregate and over time we expect those undistributed earnings to be reflected in market prices and to increase our intrinsic business value on a dollar-for-dollar basis, just as if those earnings had been under our control and reported as part of our profits. A business like that, therefore, might well have sold for the value of its net tangible assets, or for $18 million. Sees, however, also earning $4 million, might be worth $50 million if valued (as it logically would be) on the same basis as it was at the time of our purchase.

1984 : As reported last year: (1) in mid-1983 GEICO made a tender offer to buy its own shares; (2) at the same time, we agreed by written contract to sell GEICO an amount of its shares that would be proportionately related to the aggregate number of shares GEICO repurchased via the tender from all other shareholders; (3) at completion of the tender, we delivered 350,000 shares to GEICO, received $21 million cash, and were left owning exactly the same percentage of GEICO that we owned before the tender; (4) GEICOs transaction with us amounted to a proportionate redemption, an opinion rendered us, without qualification, by a leading law firm; (5) the Tax Code logically regards such proportionate redemptions as substantially equivalent to dividends and, therefore, the $21 million we received was taxed at only the 6.9% inter-corporate dividend rate; (6) importantly, that $21 million was far less than the previously-undistributed earnings that had inured to our ownership in GEICO and, thus, from the standpoint of economic substance, was in our view equivalent to a dividend. (They are in good company.) Only a relatively few businesses earn the 16.3% after tax on unleveraged capital that our WPPSS investment does and those businesses, when available for purchase, sell at large premiums to that capital. Furthermore, the most that the business could be worth is about the $205 million face value of the bonds that we own, an amount only 48% higher than the price we paid. Because it is, we believe managers and owners should think hard about the circumstances under which earnings should be retained and under which they should be distributed.

1985 : During the 1964-85 period, the company made capital expenditures of about $3 billion, far more than any other U.S. textile company and more than $200-per-share on that $60 stock. As a result, these managers end up profiting much as they would have had they had an option on that savings account that was automatically building up in value. The rewards that go with this system can be large. We bought all of our WPC holdings in mid-1973 at a price of not more than one-fourth of the then per-share business value of the enterprise. If we had invested our $10.6 million in any of a half-dozen media companies that were investment favorites in mid-1973, the value of our holdings at yearend would have been in the area of $40 - $60 million.

1986 : In effect, these are the earnings that would have been reported by the businesses if we had not purchased them. Even if these securities were to appear significantly overpriced, we would not anticipate selling them, just as we would not sell Sees or Buffalo Evening News if someone were to offer us a price far above what we believe those businesses are worth. This change will have an important adverse effect on Berkshire because we expect much of our gain in business value in the future, as in the past, to arise from capital gains. In the past, the tax at the corporate level could be avoided, If Berkshire, for example, were to be liquidated - which it most certainly wont be - shareholders would, under the new law, receive far less from the sales of our properties than they would have if the properties had been sold in the past, assuming identical prices in each sale. In Scott Fetzer's case, we paid $315 million for net assets that were carried on its books at $172.4 million.

1987 : At some point, likely to be at least a few years away, we may see some major opportunities, for which we are now much better prepared than we were in 1985. Indeed, if you aren't certain that you understand and can value your business far better than Mr. Market, you don't belong in the game. We need to emphasize, however, that we do not sell holdings just because they have appreciated or because we have held them for a long time. However, Mr. Market will offer us opportunities - you can be sure of that - and, when he does, we will be willing and able to participate. It will be all of us as well.

1988 : We think they are about the best there is. In 1988, the Company earned a record 90% of its full-year profits in December: $29 million out of $32.5 million before tax. Our pre-tax profit was a better-than-expected $64 million. But this is not a form of investing that guarantees profits of 20% a year or, for that matter, profits of any kind. However, these managers also wish to remain significant owners who continue to run their companies just as they have in the past.

1989 : Many years ago, that's exactly what Charlie and I did. We believe they are - and even think they may be more valuable. In other businesses, such as See's, we are buyers. I believe I had my first Coca-Cola in either 1935 or 1936. But I learned over time that isn't so.

1990 : I believe the best way to think about our earnings is in terms of "look-through" results, calculated as follows: Take $250 million, which is roughly our share of the 1990 operating earnings retained by our investees; subtract $30 million, for the incremental taxes we would have owed had that $250 million been paid to us in dividends; and add the remainder, $220 million, to our reported operating earnings of $371 million. Many do." Just as buying into the banking business is unusual for us, so is the purchase of below-investment-grade bonds. In most cases, the managers of important businesses we have owned for many years have not been to Omaha or even met each other. I would be extraordinarily proud to have Berkshire, along with the key members of your family, own _______; I believe we would do very well financially; and I believe you would have just as much fun running the business over the next 20 years as you have had during the past 20.

1991 : I've told you that over time look-through earnings must increase at about 15% annually if our intrinsic business value is to grow at that rate. Last year, however, our look-through earnings did not grow at all but rather declined by 14%. The after-tax earnings in 1990 from our preferred had been about $45 million, an amount somewhat higher than the combination in 1991 of three months of dividends on our preferred plus nine months of look-through earnings on the common. Berkshire's Share of Undistributed Berkshire's Approximate Operating Earnings Berkshire's Major Investees Ownership at Yearend (in millions) 1991 1990 1991 1990 Capital Cities/ABC Inc. 18.1% 17.9% $ 61 $ 85 The Coca-Cola Company 7.0% 7.0% 69 58 Federal Home Loan Mortgage Corp. 3.4%(1) 3.2%(1) 15 10 The Gillette Company 11.0% 23(2) GEICO Corp. 48.2% 46.1% 69 76 The Washington Post Company 14.6% 14.6% 10 18 Wells Fargo & Company 9.6% 9.7% (17) 19(3) Berkshire's share of undistributed earnings of major investees $230 $266 Hypothetical tax on these undistributed investee earnings (30) (35) Reported operating earnings of Berkshire 316 371 Total look-through earnings of Berkshire $516 $602 (1) Net of minority interest at Wesco (2) For the nine months after Berkshire converted its preferred on April 1 (3) Calculated on average ownership for the year We also believe that investors can benefit by focusing on their own look-through earnings. Moreover, profits at See's grew even faster than sales, from $4.2 million pre-tax in 1972 to $42.4 million last year.

1992 : (Aren't they all?) Our look-through earnings in 1992 were $604 million, and they will need to grow to more than $1.8 billion by the year 2000 if we are to meet that 15% goal. With no T.V. We expect the managers of our investees to work hard to increase the value of the businesses they run, and there are times when large owners should do their bit as well. So if you're a CEO and subscribe to this "no cash-no cost" theory of accounting, I'll make you an offer you can't refuse: Give us a call at Berkshire and we will happily sell you insurance in exchange for a bundle of longterm options on your company's stock.

1993 : At Dexter, we did. Last year, I explained that we had to increase these earnings to about $1.8 billion in the year 2000, were we to meet the 15% goal. Berkshire's Share of Undistributed Berkshire's Approximate Operating Earnings Berkshire's Major Investees Ownership at Yearend (in millions) 1993 1992 1993 1992 Capital Cities/ABC, Inc. 13.0% 18.2% $ 83(2) $ 70 The Coca-Cola Company 7.2% 7.1% 94 82 Federal Home Loan Mortgage Corp. 6.8%(1) 8.2%(1) 41(2) 29(2) GEICO Corp. 48.4% 48.1% 76(3) 34(3) General Dynamics Corp. 13.9% 14.1% 25 11(2) The Gillette Company 10.9% 10.9% 44 38 Guinness PLC 1.9% 2.0% 8 7 The Washington Post Company 14.8% 14.6% 15 11 Wells Fargo & Company 12.2% 11.5% 53(2) 16(2) Berkshire's share of undistributed earnings of major investees $439 $298 Hypothetical tax on these undistributed investee earnings(4) (61) (42) Reported operating earnings of Berkshire 478 348 Total look-through earnings of Berkshire $856 $604 (1) Does not include shares allocable to the minority interest at Wesco (2) Calculated on average ownership for the year (3) Excludes realized capital gains, which have been both recurring and significant (4) The tax rate used is 14%, which is the rate Berkshire pays on the dividends it receives We have told you that we expect the undistributed, hypothetically-taxed earnings of our investees to produce at least equivalent gains in Berkshire's intrinsic value. So far, we have been lucky in 1994. Susan will be joined at Borsheim's on Sunday by many of the managers of our other businesses, and Charlie and I will be there as well.

1994 : We paid $315.2 million for Scott Fetzer, which at the time had $172.6 million of book value. In the table below we trace the book value of Scott Fetzer, as well as its earnings and dividends, since our purchase. Intrinsic Value and Capital Allocation Understanding intrinsic value is as important for managers as it is for investors. We can conclude this section as we did last year: All in all, we have a first-class insurance business. $ 723,919 $ 818,918 20,000,000 Capital Cities/ABC, Inc. 345,000 1,705,000 100,000,000 The Coca-Cola Company.

1995 : In fact, we would not have bought the business if Jeff had not been there to run it. This means no second-guessing by Charlie and me. That's one I would like to have back. I can't be sure about this, but it's likely that Gillette's management would have been just as happy to have Berkshire opt for common. As I write this - with Berkshire stock at $36,000 - Charlie and I do not believe it undervalued.

1996 : As a result, we now carry our original 51% of GEICO at a value that is both lower than its market value at the time we purchased the remaining 49% of the company and lower than the value at which we carry that 49% itself. There is an offset, however, to the reduction in book value I have just described: Twice during 1996 we issued Berkshire shares at a premium to book value, first in May when we sold the B shares for cash and again in December when we used both A and B shares as part-payment for FlightSafety. We are here to make money with you, not off you. Large as these coverages are, Berkshire's after-tax "worst-case" loss from a true mega-catastrophe is probably no more than $600 million, which is less than 3% of our book value and 1.5% of our market value. It is also why I felt Berkshire should pay $2.3 billion last year for the 49% of the company that we didn't then own.

1997 : We made our first business acquisition in 1967, and since then our pre-tax operating earnings have grown from $1 million to $888 million. One important caveat: Because we were lucky in our super-cat insurance business (to be discussed later) and because GEICO's underwriting gain was well above what we can expect in most years, our 1997 operating earnings were much better than we anticipated and also more than we expect for 1998. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In those years when we have had an underwriting profit, such as the last five, our cost of float has been negative. Tony, now 54, has been with GEICO for 36 years and last year was his best.

1998 : Berkshire as a corporation, and we as individuals, have prospered in America as we would have in no other country. So give us a call and check us out. Second, we give each a simple mission: Just run your business as if: 1) you own 100% of it; 2) it is the only asset in the world that you and your family have or will ever have; and 3) you cant sell or merge it for at least a century. The earning revisions that Charlie and I have made for options in recent years have frequently cut the reported per-share figures by 5%, with 10% not all that uncommon. Rationalizing this behavior, these managers often say that their shareholders will be hurt if their currency for doing deals that is, their stock is not fully-priced, and they also argue that in using accounting shenanigans to get the figures they want, they are only doing what everybody else does.

1999 : Though we cant give you a precise figure for Berkshires intrinsic value, or even an approximation, Charlie and I can assure you that it far exceeds our $57.8 billion book value. We simply ask our managers to run their companies as if these are the sole asset of their families and will remain so for the next century. By the end of my talk, it all had come back to me: Opening a store in Boise had been my idea. We told you last year that underwriting margins for both GEICO and the industry would fall in 1999, and they did. This procedure lets you view the earnings of our businesses as they would have been reported had we not purchased them.

2000 : All told, these purchases have cost us about $8 billion, with 97% of that amount paid in cash and 3% in stock. The net of all this is that a) I expect our cost of float to be very attractive in the future but b) rarely to return to a no-cost mode because of the annual charge that retroactive reinsurance will lay on us. How certain are you that there are indeed birds in the bush? When will they emerge and how many will there be? In 2000 the growth was 49%.

2001 : As they would not be if they had options, all of these managers are true owners. An insurance business has value if its cost of float over time is less than the cost the company would otherwise incur to obtain funds. Over the last few years, however, our cost has been too high, and in 2001 it was terrible. Charlie and I believe this will continue to be the case. It would not only be wrong to do so, it would be idiotic.

2002 : A decade ago Berkshires annual pre-tax earnings from our non-insurance businesses was $272 million. Yearend Float (in $ millions) Other Other Year GEICO General Re Reinsurance Primary Total 1967 20 20 1977 40 131 171 1987 701 807 1,508 1997 2,917 4,014 455 7,386 1998 3,125 14,909 4,305 415 22,754 1999 3,444 15,166 6,285 403 25,298 2000 3,943 15,525 7,805 598 27,871 2001 4,251 19,310 11,262 685 35,508 2002 4,678 22,207 13,396 943 41,224 Last year our cost of float was 1%. Nevertheless, at Berkshire, we have generally been successful in our reserving, and we are determined to be at General Re as well. There, we have work to do. Any change we make in the composition of our board will not alter the way Charlie and I run Berkshire.

2003 : The shareholders of these funds have benefited, and their managers have earned their pay. But in 18 of the 37 years Berkshire has been in the insurance business, we have operated at an underwriting profit, meaning we were actually paid for holding money. The size of this debt (which is not now, nor will it be, an obligation of Berkshire) is entirely appropriate. Both R.C. We were the only major public company that offered such a program to shareholders, and Charlie and I were proud of it.

2004 : When an underwriting profit is achieved as has been the case at Berkshire in about half of the 38 years we have been in the insurance business float is better than free. First, many claims are received after the end of the year, and we must estimate how many of these there will be and what they will cost. And thats just what we do at GEICO. Last year we had $1.15 trillion of such honest-to-God trade and the more of this, the better. First, does the company have the right CEO?

2005 : Last year we were up to $502 million. Both Charlie and I knew at the time of the Gen Re purchase that it was a problem and told its management that we wanted to exit the business. We always, of course, hope to earn more money in the short-term. What would you like to do? Last year, our shareholder-period business increased 9% from 2004, which came on top of a 73% gain the year before.

2006 : And so are Charlie and I. We will make many more. Our U.S. operation also had a good year in 2006, which led to worldwide pre-tax earnings of $143 million at NetJets last year. Now we have 197. Last year, we told you that our expectation was that these companies, in aggregate, would increase their earnings by 6% to 8% annually, a rate that would double their earnings every ten years or so.

2007 : Last year Sees sales were $383 million, and pre-tax profits were $82 million. Typically, companies that increase their earnings from $5 million to $82 million require, say, $400 million or so of capital investment to finance their growth. Pre-tax operating earnings in 2007 were $270 million, a gain of $159 million since 1996. In his two years, profits at Sees have increased more than 50%. In 2005 and 2006 some of our bonds were called and we received $253 million for them.

2008 : Last year its pre-tax earnings were $89 million. Just as important is what our borrowers did not do. I made some other already-recognizable errors as well. When I read the pages of disclosure in 10-Ks of companies that are entangled with these instruments, all I end up knowing is that I dont know what is going on in their portfolios (and then I reach for some aspirin). At yearend, however, mark-to-market accounting required us to record a loss of $631 million on these derivatives contracts.

2009 : Our float has grown from $16 million in 1967, when we entered the business, to $62 billion at the end of 2009. 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. 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. The meeting this year will be held on Saturday, May 1st. But you can do better.

2010 : As long as Charlie and I treat your money as if it were our own, Berkshires managers are likely to be careful with it as well. GEICO Now let me tell you a story that will help you understand how the intrinsic value of a business can far exceed its book value. What is sure is that we will have the use of our remaining float of $4.2 billion for an average of about 10 more years. But you can do better. No CEO has it better.

2011 : Insurance has been good to us. As was the case with Coca-Cola in 1988 and the railroads in 2006, I was late to the IBM party. That was no surprise to me. Two non-experts Charlie and I will also be at the tables. No CEO has it better.

2012 : Intrinsic Business Value As much as Charlie and I talk about intrinsic business value, we cannot tell you precisely what that number is for Berkshire shares (or, for that matter, any other stock). Our balance-sheet carrying value for the 90%, however, is $8 billion. Therefore, the value of what we each own is now $1.25 million. You would like to have the two of us shareholders receive one-third of our companys annual earnings and have two-thirds be reinvested. But you can do better.

2013 : With Heinz, Berkshire now owns 812 companies that, were they stand-alone businesses, would be in the Fortune 500. MidAmerican is one of our Powerhouse Five a collection of large non-insurance businesses that, in aggregate, had a record $10.8 billion of pre-tax earnings in 2013, up $758 million from 2012. In the earnings we report to you, however, we include only the dividends we receive about $1.4 billion last year. And thats true at almost all other companies as well. The when is also important.

2014 : And many do. (Buy both!) I was then 28 and he was 35. In some years the gains will be substantial, and at other times they will be minor. No company will be more shareholder-minded than Berkshire.

2015 : Last year was a good one. That is, the earnings are pre-tax. Insurance Lets look first at insurance. Well, no. They are truly All-Stars who run their businesses as if they were the only asset owned by their families.

2016 : To the Shareholders of Berkshire Hathaway Inc.: Berkshires gain in net worth during 2016 was $27.5 billion, which increased the per-share book value of both our Class A and Class B stock by 10.7%. Charlie and I believe the true economic value of our insurance goodwill what we would happily pay for float of similar quality were we to purchase an insurance operation possessing it to be far in excess of its historic carrying value. Investors, on average and over time, will do better with a low-cost index fund than with a group of funds of funds. Our goal is for you to leave the meeting knowing more about Berkshire than when you came and for you to have a good time while in Omaha. They are truly All-Stars who run their businesses as if they were the only asset owned by their families.

2017 : Despite our recent drought of acquisitions, Charlie and I believe that from time to time Berkshire will have opportunities to make very large purchases. For that to happen, we will need to make one or more huge acquisitions. These businesses would use their retained earnings to expand their operations and, frequently, to repurchase their shares as well. Our goal is for you to leave the meeting knowing more about Berkshire than when you came and for you to have a good time while in Omaha. If managers (or directors) own Berkshire shares and many do its from open-market purchases they have made or because they received shares when they sold their businesses to us.

2018 : The components of that figure are $24.8 billion in operating earnings, a $3.0 billion non-cash loss from an impairment of intangible assets (arising almost entirely from our equity interest in Kraft Heinz), $2.8 billion in realized capital gains from the sale of investment securities and a $20.6 billion loss from a reduction in the amount of unrealized capital gains that existed in our investment holdings. Last year, Berkshires portion of the $6.9 billion earned by American Express was $1.2 billion, about 96% of the $1.3 billion we paid for our stake in the company. Late in 1995, after Tony had re-energized GEICO, Berkshire made an offer to buy the remaining 50% of the company for $2.3 billion, about 50 times what we had paid for the first half (and people say I never pay up!). Underwriting profits have totaled $15.5 billion (pre-tax) since our purchase, and float available for investment has grown from $2.5 billion to $22.1 billion. So it has been with America.

2019 : In 2018, a down year for the stock market, our net unrealized gains decreased by $20.6 billion, and we therefore reported GAAP earnings of only $4 billion. What you see is what you get. For the P/C industry as a whole, the financial value of float is now far less than it was for many years. As I have repeatedly done in the past, I will emphasize now that happy outcomes in insurance are far from a sure thing: We will most certainly not have an underwriting profit in 16 of the next 17 years. They, like Charlie and me, will not have even a hint of what the questions will be.