1973年巴菲特致股东的信（中文版）
致伯克希尔·哈撒韦公司的全体股东：（注：自1971年起巴菲特的信不再是写给合伙人的，而是BRK股东）
我们1973的财务结果是令人满意的，营业利润达到11,930,592美元，股东权益回报率为17.4%。尽管每股营业利润从11.43美元提高到12.18美元，但是股东权益相比1972年下降19.8%，出现这种下降的原因是收入的增长与股东投资增加不相称，我们已经在去年的报告中预测了这种下降的可能性，不幸的是，我们的预测被证明是正确的。
我们的纺织，银行，和大部分的保险业务已经好多年了，但是某些环节的保险业务却很糟糕。总的来说，我们的保险业务依然是在资本运营中最有吸引力的地方。
管理的目标是实现长期平均资本收益率高于美国一般的产业水平，并且运用合理的会计和债务政策。我们在过去的几年中实现了这一目标，并正在采取这些步骤使我们在未来保持这种表现。对1974年的展望表明这在我们扩张的资本基础上的回报率将进一步下降。
纺织业务
整个1973年纺织业需求仍然非常强。我们的主要问题是操作复杂的纤维的短缺，其导致一些织机生产能力不能充分利用。一些纤维的价格在这一年里飙升，生活成本委员会法规阻碍了很多制成品的价格保持在与我们一些竞争对手同样的水平上。然而，和我们的投资相比利润是合理的，即使它显然要比如果我们按市场水平定价能够获得的成绩要低。纺织行业具有很强的周期性，而且价格管制可能削减掉超额利润，让我们的业绩处于不可避免的低谷。由于1973年原材料价格不同寻常的上涨，这表明1974年有持续的迹象，我们决定采用“后进先出”的存货计价方法。该方法更能匹配当前的成本和收入，并最大限度地减少包含在报告收益的存货“利润”。这种改变的详细信息在我们的财务报表附注中有披露。
保险业务
在1973年，Jack Ringwalt在取得了1940年公司创办以来绝对辉煌的战绩之后退休，不再担任国家赔偿公司总裁。Phil Liesche继任了他的位子，我们感到很幸运的是，他拥有与Jack相同的承保和管理的理念，并且表现的非常好。我们的传统业务——通过国家赔偿公司和美国国家火灾海上保险公司经营专门的汽车和一般责任险，在1973年有一个非常好的承保年度。我们再次经历了成交量的下降。竞争是激烈的，我们错过了机会，以匹配率削减了较为乐观的承销商。目前有微弱迹象表明，其中的一些竞争对手正认识到他们比率的不足(以及他们的损失准备金)，而这种比率随着时间的推移可能在缓解市场压力上派上用场。如果这样的话，我们可能又将经历大肆的扩张。
我们的再保险操作有个几分相似的年份——良好的承保经验，但在保持之前水平上有所不同。这项业务由George Young不懈努力的领导，自1969年成立以来一直是主要的利润来源。我们的“州籍”保险公司在内布拉斯加州和明尼苏达州取得了长足进步，同时保持较好的增长性和可接受的损失率。我们年底开始在爱荷华州经营。到今天为止，我们的大问题一直是得克萨斯州。在这个州，我们实际上不得不在1973年重新开始，因为我们最初选择的管理证明无法成功包销。德州经验是昂贵的，而且我们仍然有我们的工作在等着我们。
但总体而言，州籍业务表现出了将来的潜力。
我们专业的城市汽车业务——家庭和汽车保险股份有限公司1973年在芝加哥的承保业绩很差。这样看来，在初级市场中利率是不够的，虽然目前的能源形势使状况有些混乱。
现在的问题是事故发生率是否会更低，因为开车次数的减少将远远抵消持续上涨的医疗和维修成本，就像陪审团裁决一样。我们认为通胀会伤害我们多过减少的驾驶次数对我们的帮助，但我们的一些竞争对手似乎认为并非如此。年内州籍和汽车业务扩展到佛罗里达州和加利福尼亚州，但要证明这中变化是否会产生良好的结果还为时尚早。
1973年我们的州籍和汽车业务不令人满意的一个影响因素是会计制度不能及时为管理提供信息。在我们保险经营的投资方面，我们在1973年在普通股上做了大量额外工作。在我们的财务报表上显示，年末我们持有的普通股有值得注意的未实现的折旧，超过1200万美元。
然而，我们相信，我们的普通股投资组合按成本能很好的代表企业的内在价值。尽管年终没有大的亏损，我们希望投资组合能长期获得令人满意的结果。
银行业务
1973年伊利诺斯国家银行和信托公司罗克福德又有了一个创纪录的一年，平均存款大约是1.3亿美元，其中大约60%的定期存款。当年中政策上限提升时，在重要的消费者储蓄领域利率是相当重要的。尽管这主要是针对计息存款，但是我们的税后经营利润(包括一个新的伊利诺斯州所得税)再次超过了平均存款的2.1%。我们仍然是罗克福德最大的银行，我们继续保持非同寻常的流动性，不断满足客户不断增长的贷款需求。我们继续保持我们的非同寻常的盈利能力。这是Gene Abegg主席能力的直接证明，他自从1931开业就和和董事长Bob Kline一起经营这家银行了。
与多元零售公司合并
董事会已经批准并购多元零售公司，为支付多元零售100万股流通股，涉及伯克希尔·哈撒韦公司19.5万股的股票发行条款。因为多元零售及其子公司拥有109551股伯克希尔股票，所以对交易产生影响的伯克希尔流通股净增长将不超过85449。在并购能实施之前必须得到各监管机构的批准，代理材料今年晚些时候将给你们，这样你们就可以投票了。多元零售公司通过子公司连锁经营一个连锁流行女装店，同时也经营再保险业务。在管理层看来，其最重要的资产是16%的蓝筹印花公司的股票。
蓝筹印花公司
到年底，我们持有的蓝筹印花公司股票将占到公司已发行股份的大约19%。今年以来，我们增加了持股，现在大约是22.5%：同多元零售公司的合并案的实施，将这个数字提高到约38.5%。
我们的蓝筹印花股票收益在1973年第一次变得那么重要，由此产生一个会计问题——按照财务报表适用原则，这个区间的收入应该在伯克希尔·哈撒韦公司本年报财务报表中得到确认。蓝筹印花公司的财政年在接近二月二十八日的星期六结束，即伯克希尔哈撒韦公司的财政年度的两个月后，或者说他们的财政年度比伯克希尔哈撒韦提前了10个月。对我们来说，一个可接受的会计选择——这个选择不需要审计员对范围进行免责声明——是在1973年收入中的蓝筹印花股票收益项，基于1973年3月3日的蓝筹印花公司会计年度结束日，确认63.2万美元股权，其中考虑到我们早期拥有的更少的蓝筹印花公司股票。但是这种方法似乎与现实不符，因为这就意味着在未来每年将有10个月的滞后期。因此，我们选择在截至11月蓝筹印花公司公开披露的未经审计的临时收入和我们1973年期间持股的基础上，将蓝筹印花收益中的100.8万美元股权反映为1973年的收入上。
因为我们选择了未经审计的当前数据，而非经过审计的但远非当前的数据，Peat, Marwick, Mitchell & Co.无法表达我们1973蓝筹印花公司收益的意见。蓝筹公司的年度报告——其中将包含1974年3月2日结束的经普华永道公司审计的年度财务报表——将于5月初发布。任何想要蓝筹邮票公司年度报告的伯克希尔哈撒韦公司股东，都可以在那时写信获得，地址是秘书Robert H. Bird先生，蓝筹印花公司，东南大道5801，洛杉矶，加利福尼亚，90040。蓝筹印花公司的交易印花业务在去年大幅度下降，但在其子公司喜事糖果以及控股54%并从事储蓄和贷款业务的韦斯科金融公司中有重要的盈利来源。我们期待蓝筹邮票在未来几年获得令人满意的资本收益，尽管肯定会比当交易印花业务一直保持在之前的水平上能获得的要少得多。
你们的董事长在蓝筹印花公司和韦斯科金融公司的董事会，而且是喜事糖果商店公司的董事会主席，三家公司的经营管理掌握在一流的、有能力的、经验丰富的管理人员手中。
太阳报公司
1969年度报告中我们谈到了购买太阳报——一组在奥马哈市区发行的周报。自那时以来，在我们的年度报告我们没有评论他们的的经营，而且自从合并以来，因为投资很少、财务影响微不足道，我们也没有合并他们的财务结果。”在1973很明显的，虽然它影响很小，但这并没有影响到出版质量。5月7日，太阳纸业由于1972年3月30日关于儿童城的特殊区域的地方调查报告被授予普利策奖(在周报赢得这一领域奖项尚属历史上第一次)。我们报告了越来越少的服务和自从父亲弗拉纳根1948年去世已经越来越多的财富的鲜明对比。
除了普利策奖之外，这份报告还获得了∑-Δ卡的公共服务奖、国家专业记者协会，以及七个其他国家奖。
我要祝贺编辑Paul Williams，和出版商Stan Lipsey，以及太阳报纸的全体编辑人员所取得的成就，这生动地说明需求的大小不能等同于出版的重要性。
沃伦·巴菲特
董事长
1974年3月29日
1973年巴菲特致股东的信（英文版）
Our financial results for 1973 were satisfactory, with operating earnings of $11,930,592, producing a return of 17.4% on beginning stockholders’ equity. Although operating earnings improved from $11.43 to $12.18 per share, earnings on equity decreased from the 19.8% of 1972. This decline occurred because the gain in earnings was not commensurate with the increase in shareholders’ investment. We had forecast in last year’s report that such a decline was likely. Unfortunately, our forecast proved to be correct.
Our textile, banking, and most insurance operations had good years, but certain segments of the insurance business turned in poor results. Overall, our insurance business continues to be a most attractive area in which to employ capital.
Management’s objective is to achieve a return on capital over the long term which averages somewhat higher than that of American industry generally—while utilizing sound accounting and debt policies. We have achieved this goal in the last few years, and are trying to take those steps which will enable us to maintain this performance in the future. Prospects for 1974 indicate some further decline in rate of return on our enlarged capital base.
Textile Operations
Textile demand remained unusually strong throughout 1973. Our main problems revolved around shortages of fiber, which complicated operations and resulted in something less than full utilization of loom capacity. Prices of some fibers skyrocketed during the year.
Cost of Living Council regulations prevented the pricing of many finished products at levels of some of our competitors. However, profits were reasonably commensurate with our capital investment, although below those that apparently might have been achieved had we been able to price at market levels. The textile business has been highly cyclical and price controls may have served to cut down some of the hills while still leaving us with the inevitable valleys.
Because of the extraordinary price rises in raw materials during 1973, which show signs of continuing in 1974, we have elected to adopt the “lifo” method of inventory pricing. This
method more nearly matches current costs against current revenues, and minimizes inventory “profits” included in reported earnings. Further information on this change is included in the footnotes to our financial statements.
Insurance Operations
During 1973, Jack Ringwalt retired as President of National Indemnity Company after an absolutely brilliant record since founding the business in 1940. He was succeeded by Phil Liesche who, fortunately for us, possesses the same underwriting and managerial philosophy that worked so well for Jack.
Our traditional business, specialized auto and general liability lines conducted through National Indemnity Company and National Fire and Marine Insurance Company, had an exceptionally fine underwriting year during 1973. We again experienced a decline in volume. Competition was intense, and we passed up the chance to match rate‐cutting by more optimistic underwriters. There currently are faint indications that some of these competitors are learning of the inadequacy of their rates (and also of their loss reserves) which may result in easing of market pressures as the year develops. If so, we may again experience volume increases.
Our reinsurance operation had a somewhat similar year—good underwriting experience, but difficulty in maintaining previous volume levels. This operation, guided by the tireless and well‐ directed efforts of George Young, has been a major profit producer since its inception in 1969. Our “home state” insurance companies made excellent progress in Nebraska and Minnesota, with both good growth in volume and acceptable loss ratios. We began operations late in the year in Iowa. To date, our big problem has been Texas. In that state we virtually had to start over during 1973 as the initial management we selected proved incapable of underwriting successfully. The Texas experience has been expensive, and we still have our work cut out for us. Overall, however, the home state operation appears to have a promising potential.
Our specialized urban auto operation, Home and Automobile Insurance Company, experienced very poor underwriting in Chicago during 1973. It would appear that rates are inadequate in our primary Cook County marketing area, although the current energy situation confuses the picture. The question is whether possible lowered accident frequency because of reduced driving will more than offset continuing inflation in medical and repair costs, as well as jury
awards. We believe that inflation will hurt us more than reduced driving will help us, but some of our competitors appear to believe otherwise.
Home and Auto expanded into Florida and California during the year, but it is too early to know how these moves will prove out financially.
A contributing factor in our unsatisfactory earnings at Home and Auto during 1973 was an accounting system which was not bringing information to management on a sufficiently timely basis.
On the investment side of our insurance operation, we made substantial additional commitments in common stocks during 1973. We had significant unrealized depreciation—over
$12 million—in our common stock holdings at year‐end, as indicated in our financial statements. Nevertheless, we believe that our common stock portfolio at cost represents good value in terms of intrinsic business worth. In spite of the large unrealized loss at year‐end, we would expect satisfactory results from the portfolio over the longer term.
Banking Operations
The Illinois National Bank & Trust Co. of Rockford again had a record year in 1973. Average deposits were approximately $130 million, of which approximately 60% were time deposits.
Interest rates were increased substantially in the important consumer savings area when regulatory maximums were raised at mid‐year.
Despite this mix heavily weighted toward interest bearing deposits, our operating earnings after taxes (including a new Illinois state income tax) were again over 2.1% of average deposits. We continue to be the largest bank in Rockford. We continue to maintain unusual liquidity. We continue to meet the increasing loan demands of our customers. And we continue to maintain our unusual profitability. This is a direct tribute to the abilities of Gene Abegg, Chairman, who has been running the Bank since it opened its doors in 1931, and Bob Kline, our President.
Merger With Diversified Retailing Company, Inc.
Your Directors have approved the merger of Diversified Retailing Company, Inc. into Berkshire Hathaway Inc. on terms involving issuance of 195,000 shares of Berkshire stock for the 1,000,000 shares of Diversified stock outstanding. Because Diversified and its subsidiaries own 109,551 shares of Berkshire, the net increase in the number of shares of Berkshire outstanding
after giving effect to this transaction will not exceed 85,449. Various regulatory approvals must be obtained before this merger can be completed, and proxy material will be submitted to you later this year so that you may vote upon it.
Diversified Retailing Company, Inc., though subsidiaries, operates a chain of popular‐priced women’s apparel stores and also conducts a reinsurance business. In the opinion of management, its most important asset is 16% of the stock of Blue Chip Stamps.
Blue Chip Stamps
Our holdings of stock in Blue Chip Stamps at year‐end amounted to approximately 19% of that company’s outstanding shares. Since year‐end, we have increased our holdings so that they now represent approximately 22.5%: implementation of the proposed merger with Diversified Retailing Company, Inc. would increase this figure to about 38.5%.
Our equity in earnings of Blue Chip Stamps became significant for the first time in 1973, and posed an accounting question as to just what period’s earnings should be recognized by Berkshire Hathaway Inc. as applicable to the financial statements covered by this annual report. Blue Chip’s fiscal year ends on the Saturday closest to February 28, or two months after the fiscal year‐end of Berkshire Hathaway Inc. Or, viewed alternatively, their year ends ten months prior to Berkshire Hathaway’s. An acceptable accounting choice for us, and one which, if made, would not have required an auditor’s disclaimer as to scope, was to recognize in our 1973 income an equity of $632,000 in Blue Chip’s earnings for their year ended March 3, 1973 with regard to the fewer shares of Blue Chip we owned during this earlier period. But such an approach seemed at odds with reality, and would have meant a ten month lag each year in the future. Therefore, we chose to reflect as 1973 income our equity of $1,008,000 in Blue Chip’s earnings based upon unaudited interim earnings through November as publicly reported by Blue Chip Stamps and with regard to our shareholdings during 1973. Because we made this choice of unaudited but current figures, as opposed to the alternative of audited but far from current figures, Peat, Marwick, Mitchell & Co. were unable to express an opinion on our 1973 earnings attributable to Blue Chip Stamps.
The annual report of Blue Chip Stamps, which will contain financial statements for the year ending March 2, 1974 audited by Price, Waterhouse and Company, will be available in early
May. Any shareholder of Berkshire Hathaway Inc. who desires an annual report of Blue Chip Stamps may obtain it at that time by writing Mr. Robert H. Bird, Secretary, Blue Chip Stamps, 5801 South Eastern Avenue, Los Angeles, California 90040.
Blue Chip’s trading stamp business has declined drastically over the past year or so, but it has important sources of earning power in its See’s Candy Shops subsidiary as well as Wesco Financial Corporation, a 54% owned subsidiary engaged in the savings and loan business. We expect Blue Chip Stamps to achieve satisfactory earnings in future years related to capital employed, although certainly at a much lower level than would have been achieved if the trading stamp business had been maintained at anything close to former levels.
Your Chairman is on the Board of Directors of Blue Chip Stamps, as well as Wesco Financial Corporation, and is Chairman of the Board of See’s Candy Shops Incorporated. Operating management of all three entities is in the hands of first‐class, able, experienced executives.
Sun Newspapers, Inc.
In the 1969 annual report we commented on the purchase of Sun Newspapers Inc., a group of weekly papers published in the metropolitan Omaha area. Since that time we have not commented on their operations in the text of our annual reports, nor have we consolidated their financial results since the operation, because of the small investment involved, has been “financially insignificant.”
During 1973 it was made quite apparent that such insignificance did not extend to publishing quality. On May 7th Sun Newspapers was awarded a Pulitzer Prize for local investigative reporting (the first time in history that a weekly had won in this category) for its special section of March 30,1972 relating to Boys Town. We reported the extraordinary contrast between decreasing services and mounting wealth that had taken place since Father Flanagan’s death in 1948.
In addition to the Pulitzer Prize, the reporting job also won the Public Service Award of Sigma Delta Chi, the national society of professional journalists, as well as seven other national awards.
Our congratulations go to Paul Williams, Editor, and Stan Lipsey, Publisher, as well as the entire editorial staff of Sun Newspapers for their achievement, which vividly illustrated that size need not be equated with significance in publishing.
Warren E. Buffett Chairman of the Board March 29, 1974