巴菲特致股東函 1985年版
BERKSHIRE HATHAWAY INC.
Berkshire海瑟崴股份有限公司
To the Shareholders of Berkshire Hathaway Inc.:
致Berkshire公司全體股東:
You may remember the wildly upbeat message of last year’s report:nothing much was in the works but our experience had been that something big popped up occasionally. This carefully-crafted corporate strategy paid off in 1985. Later sections of this report discuss (a) our purchase of a major position in Capital Cities/ABC, (b) our acquisition of Scott & Fetzer, (c) our entry into a large, extended term participation in the insurance business of Fireman’s Fund, and (d) our sale of our stock in General Foods.
各位可能還記得去年年報最後所提到的爆炸性消息，平時在表面上我們雖然沒有什麼動作，但經驗顯示偶爾也會有一些大卡司出現，這種低調的企業策略終於在1985年有了結果，在今年報告的後半部，我們將會討論到(a)在資本城/ABC的重大投資部位(b們對Scott & Fetzer公司的購併(c)與消防人員保險基金的合作計畫(d)我們出脫通用食品的持股部位。
Our gain in net worth during the year was $613.6 million, or 48.2%. It is fitting that the visit of Halley’s Comet coincided with this percentage gain:neither will be seen again in my lifetime. Our gain in per-share book value over the last twenty-one years (that is, since present management took
over) has been from $19.46 to $1643.71, or 23.2% compounded annually,another percentage that will not be repeated.
去年Berkshire的淨值增加了六億一千萬美金，約當增加48.2%，這比率就好比是哈雷慧星造訪一般，在我這輩子中大概再也看不到了，二十一年來我們每股淨值從19.46美元增加到1,643.71美元，約為23.2%年複合成長率，這又是一項不可能再重現的比率。
Two factors make anything approaching this rate of gain unachievable in the future. One factor probably transitory - is a stock market that offers very little opportunity compared to the markets that prevailed throughout much of the 1964-1984 period. Today we cannot find significantly-undervalued equities to purchase for our insurance company portfolios. The current situation is 180 degrees removed from that existing about a decade ago, when the only question was which bargain to
choose.
有兩個因素讓這種比率在未來難以持續，一種因素屬於暫時性-即與過去二十年相較，現在股市中缺乏合適的投資機會，如今我們已無法為我們的保險事業投資組合找到價值低估的股票，這種情況與十年前有180度的轉變，當時惟一的問題是該挑那一個便宜貨。
This change in the market also has negative implications for our present portfolio. In our 1974 annual report I could say: “We consider several of our major holdings to have great potential for significantly
increased values in future years.” I can’t say that now. It’s true that our insurance companies currently hold major positions in companies with exceptional underlying economics and outstanding managements, just as they did in 1974. But current market prices generously appraise these
attributes, whereas they were ignored in 1974. Today’s valuations mean that our insurance companies have no chance for future portfolio gains on the scale of those achieved in the past.
市場的轉變也對我們現有的投資組合產生不利的影響，在1974年的年報中，我可以說「我們認為在投資組合中有幾支重要個股具有大幅成長的潛力」，但現在這樣的話我們卻說不出口，雖然我們保險公司的主要投資組合中，有許多公司如同過去一樣擁有優秀經營團隊以及競爭優勢，但目前市場上的股價已充份反應這項特點，這代表今後我們保險公司的投資績效再也無法像過去那樣優異。
The second negative factor, far more telling, is our size. Our equity capital is more than twenty times what it was only ten years ago. And an iron law of business is that growth eventually dampens exceptional economics. just look at the records of high-return companies once they have amassed even $1 billion of equity capital. None that I know of has managed subsequently, over a ten-year period, to keep on earning 20% or more on equity while reinvesting all or substantially all of its earnings.Instead, to sustain their high returns, such companies have needed to shed a lot of capital by way of either dividends or repurchases of stock. Their shareholders would have been far better off if all earnings could have been reinvested at the fat returns earned by these exceptional businesses. But
the companies simply couldn’t turn up enough high-return opportunities to make that possible.
第二項負面因素更顯而易見，那就是我們的規模，目前我們在股市投入的資金是十年前的20倍，而市場的鐵則是成長終將拖累競爭的優勢，看看那些高報酬率的公司，一旦當他們掌控的資金超過十億美金，沒有一家在往後的十年能夠靠再投資維持20%以上的報酬率，頂多僅能依賴大量配息或買回自家股份來維持，理論上轉投資能為股東帶來更大的利益，但實際上公司就是很難找到理想的投資機會。
Their problem is our problem. Last year I told you that we needed profits of $3.9 billion over the ten years then coming up to earn 15% annually. The comparable figure for the ten years now ahead is $5.7 billion, a 48% increase that corresponds - as it must mathematically - to the growth in our capital base during 1985. (Here’s a little perspective:leaving aside oil companies, only about 15 U.S. businesses have managed to earn over $5.7 billion during the past ten years.)
而我們的問題就跟他們一樣，去年我告訴各位往後十年我們大約要賺到39億美金，才能有15%的年平均成長，今年同樣的門檻將提高到57億美金(根據統計:扣除石油公司不算，只有15家公司在過去十年能夠賺到57億)。
Charlie Munger, my partner in managing Berkshire, and I are reasonably optimistic about Berkshire’s ability to earn returns superior to those earned by corporate America generally, and you will benefit from the company’s retention of all earnings as long as those returns are forthcoming. We have several things going for us: (1) we don’t have to worry about quarterly or annual figures but, instead, can focus on whatever actions will maximize long-term value; (2) we can expand the business into
any areas that make sense - our scope is not circumscribed by history,structure, or concept; and (3) we love our work. All of these help. Even so,we will also need a full measure of good fortune to average our hoped-for 15% - far more good fortune than was required for our past 23.2%.
我跟Charlie-經營Berkshire事業的合夥人，對於Berkshire能夠保持比一般美國企業更佳的獲利能力持樂觀的態度，而只要獲利持續身為股東的你也能保證因此受惠，我們擁有幾項優勢，(1)我們不必去擔心每季或每年的帳面獲利數字，相反地只要將注意力集中在使長遠的價值極大化即可(2)我們可以將事業版圖擴大到任何有利可圖的產業之上，而且完全不受經驗、組織或觀念所限(3)我們熱愛我們的工作，這些都是關鍵因素，但即便如此我們仍必須要大賺一筆(比過去達到23.2%的那些投資還要更多)才有辦法使我們的平均報酬率維持在15%的水準。
We need to mention one further item in the investment equation that could affect recent purchasers of our stock. Historically, Berkshire shares have sold modestly below intrinsic business value. With the price there,purchasers could be certain (as long as they did not experience a widening of this discount) that their personal investment experience would at least equal the financial experience of the business. But recently the discount has disappeared, and occasionally a modest premium has prevailed.
另外我還必須特別提到一項投資項目，是與最近購買本公司股票的投資人有密切相關的，過去一直以來，Berkshire的股票的市價約略低於其實質價值，在這樣的水準下，投資人可以確定(只要折價的幅度不再繼續擴大)其個人的投資經驗與該公司本身的表現將維持一致，但到了最近，這種折價的狀況卻不再，有時甚至還發生溢價。
The elimination of the discount means that Berkshire’s market value increased even faster than business value (which, itself, grew at a pleasing pace). That was good news for any owner holding while that move took place, but it is bad news for the new or prospective owner. If the financial
experience of new owners of Berkshire is merely to match the future financial experience of the company, any premium of market value over intrinsic business value that they pay must be maintained.
折價情況的消失代表著Berkshire的市值增加的幅度高於其實質價值增長的速度(雖然後者的表現也不錯)，當然這對於在此現象發生前便持有股份的人算是好消息，但對於新進者，或即將加入者卻是不利的，而若想要使後者的投資經驗與公司的表現一致，則這種溢價現象就必須一直維持。
Management cannot determine market prices, although it can, by its disclosures and policies, encourage rational behavior by market participants.My own preference, as perhaps you’d guess, is for a market price that consistently approximates business value. Given that relationship, all owners prosper precisely as the business prospers during their period of ownership. Wild swings in market prices far above and below business value do not change the final gains for owners in aggregate; in the end,investor gains must equal business gains. But long periods of substantial undervaluation and/or overvaluation will cause the gains of the business to be inequitably distributed among various owners, with the investment result of any given owner largely depending upon how lucky, shrewd, or
foolish he happens to be.
然而管理當局卻無法控制股價，當然他可對外公佈公司政策與現況，促使市場參與者的行為理性一點，然而我個人偏好(可能你也猜得到)期望公司股價的表現儘量與其企業本身價值接近，惟有維持這種關係，所有公司的股東在其擁有所有權的期間皆能與公司共存共榮，股價劇幅的波動並無法使整體的股東受惠，到頭來所有股東的獲利總和必定與公司的獲利一致，但公司的股價長時間偏離實質價值(不管是高估或低估)都將使得企業的獲利不平均的分配到各個股東之間，而其結果好壞完全取決於每個股東本身的運氣與EQ。
Over the long term there has been a more consistent relationship between Berkshire’s market value and business value than has existed for any other publicly-traded equity with which I am familiar. This is a tribute to you. Because you have been rational, interested, and investment-oriented, the market price for Berkshire stock has almost always been sensible. This unusual result has been achieved by a shareholder group with unusual demographics: virtually all of our shareholders are individuals, not institutions. No other public company our size can claim the same.
長久以來，Berkshire本身的市場價值與實質價值一直存在著一種穩定的關係，這是在所有我熟悉的上市公司中少見的，我想這都要歸功於所有Berkshire的股東，因為大家都很理性、專注、以投資為導向，所以Berkshire的股價一直都很合理，這不凡的結果是靠一群不凡的股東來完成，幾乎我們所有的股東都是個人而非法人機構，沒有一家上市公司能夠像我們一樣。
You might think that institutions, with their large staffs of highly-paid and experienced investment professionals, would be a force for stability and reason in financial markets. They are not: stocks heavily owned and constantly monitored by institutions have often been among the most inappropriately valued.
或許你會認為法人機構，擁有高薪的職員與經驗豐富的專業人員會成為金融市場穩定與理性的力量，那你就大錯特錯了，那些法人持股比重較重且持續受關注的的股票，其股價通常都不合理。
Ben Graham told a story 40 years ago that illustrates why investment professionals behave as they do: An oil prospector, moving to his heavenly reward, was met by St. Peter with bad news. “You’re qualified for residence”, said St. Peter, “but, as you can see, the compound reserved for
oil men is packed. There’s no way to squeeze you in.” After thinking a moment, the prospector asked if he might say just four words to the present occupants. That seemed harmless to St. Peter, so the prospector cupped his hands and yelled, “Oil discovered in hell.” Immediately the gate to the compound opened and all of the oil men marched out to head for the nether regions. Impressed, St. Peter invited the prospector to move in and make himself comfortable. The prospector paused. “No,” he said, “I think I’ll go along with the rest of the boys. There might be some truth to that rumor after all.”
我的老師葛拉罕四十年前曾講過一個故事，說明為何專業的投資人員會是如此，一個老石油開發商蒙主寵召，在天堂的門口遇到了聖彼得，聖彼得告訴他一個好消息跟一個壞消息，好消息是他有資格進入天堂，但壞消息卻是天堂裏已沒有位置可以容納額外的石油開發商，老石油開發商想了一下，跟聖彼得說只要讓他跟現有住戶講一句話就好，聖彼得覺得沒什麼大礙就答應了，只見老石油開發商對內大喊:「地獄裏發現石油了」，不一會兒，只見天堂的門打開，所有的石油開發商爭先恐後地往地獄奔去，聖彼得大開眼界地對老開發商說:「厲害!厲害!現在你可以進去了」，但只見老開發商頓了一下後，說到:「不! 我還是跟他們一起去比較妥當，傳言有可能是真的。」
Sources of Reported Earnings
盈餘報告
The table on the next page shows the major sources of Berkshire’s reported earnings. These numbers, along with far more detailed sub-segment numbers, are the ones that Charlie and I focus upon. We do
not find consolidated figures an aid in either managing or evaluating Berkshire and, in fact, never prepare them for internal use.
下表顯示Berkshire帳列盈餘的主要來源，這些數字加上一些更詳細的各部門資訊是Charlie跟我注意的重點，反而我們不認為合併的總數對於管理與評量Berkshire有什麼幫助，事實上我們內部本身從來不會用到。
Segment information is equally essential for investors wanting to know what is going on in a multi-line business. Corporate managers always have insisted upon such information before making acquisition decisions but, until a few years ago, seldom made it available to investors faced with
acquisition and disposition decisions of their own. Instead, when owners wishing to understand the economic realities of their business asked for data, managers usually gave them a we-can’t-tell-you-what-is-going-on-because-it-would-hurt-the-company answer. Ultimately the SEC ordered disclosure of segment data and management began supplying real answers. The change in their behavior recalls an insight of Al Capone: “You can get much further with a kind word and a gun than you can with a kind word alone.”
部門資訊對於想要了解一家多角化公司的投資人來說相當重要，企業經理人在購併一家公司時通常也會堅持這一點，但最近這幾年對於要決定買進賣出股權的投資人而言，卻要不到類似的資訊，相反的當股東想要了解公司的經營情況而跟管理階層要這樣的資訊時，他們通常以可能危害公司利益來回應，直到最後證券主管機關下令公司須揭露時，大家才心甘情願一五一十的報告出來，這種態度的轉變讓我想起Al Capone的比喻:「拿著一隻槍好好的說」的效果，會比光是「好好的說」要來得好的多。
In the table, amortization of Goodwill is not charged against the specific businesses but, for reasons outlined in the Appendix to my letter in the 1983 annual report, is aggregated as a separate item. (A compendium of the 1977-1984 letters is available upon request.) In the Business Segment Data and Management’s Discussion sections on pages 39-41 and 49-55,much additional information regarding our businesses is provided,including Goodwill and Goodwill Amortization figures for each of the
segments. I urge you to read those sections as well as Charlie Munger’s letter to Wesco shareholders, which starts on page 56.
下表商譽的攤銷以單一欄位另行列示(理由詳我1983年的附錄)，同時我也強力推薦各位看看查理每年寫給Wesco股東的年報，裡頭有該公司旗下事業的詳細介紹。
(000s omitted)
-----------------------------------------
Berkshire's Share
of Net Earnings
(after taxes and
Pre-Tax Earnings minority interests)
------------------- -------------------
1985 1984 1985 1984
-------- -------- -------- --------
Operating Earnings:
Insurance Group:
Underwriting ................ $(44,230) $(48,060) $(23,569) $(25,955)
Net Investment Income ....... 95,217 68,903 79,716 62,059
Associated Retail Stores ...... 270 (1,072) 134 (579)
Blue Chip Stamps .............. 5,763 (1,843) 2,813 (899)
Buffalo News .................. 29,921 27,328 14,580 13,317
Mutual Savings and Loan ....... 2,622 1,456 4,016 3,151
Nebraska Furniture Mart ....... 12,686 14,511 5,181 5,917
Precision Steel ............... 3,896 4,092 1,477 1,696
See’s Candies ................. 28,989 26,644 14,558 13,380
Textiles ...................... (2,395) 418 (1,324) 226
Wesco Financial ............... 9,500 9,777 4,191 4,828
Amortization of Goodwill ...... (1,475) (1,434) (1,475) (1,434)
Interest on Debt .............. (14,415) (14,734) (7,288) (7,452)
Shareholder-Designated
Contributions .............. (4,006) (3,179) (2,164) (1,716)
Other ......................... 3,106 4,932 2,102 3,475
-------- -------- -------- --------
Operating Earnings .............. 125,449 87,739 92,948 70,014
Special General Foods Distribution 4,127 8,111 3,779 7,294
Special Washington Post
Distribution ................. 14,877 --- 13,851 ---
Sales of Securities ............. 468,903 104,699 325,237 71,587
-------- -------- -------- --------
Total Earnings - all entities ... $613,356 $200,549 $435,815 $148,895
======== ======== ======== ========
Our 1985 results include unusually large earnings from the sale of securities. This fact, in itself, does not mean that we had a particularly good year (though, of course, we did). Security profits in a given year bear similarities to a college graduation ceremony in which the knowledge gained over four years is recognized on a day when nothing further is learned. We may hold a stock for a decade or more, and during that period it may grow quite consistently in both business and market value. In the year in which we finally sell it there may be no increase in value, or there may even be a decrease. But all growth in value since purchase will be reflected in the accounting earnings of the year of sale. (If the stock owned is in our insurance subsidiaries, however, any gain or loss in market value
will be reflected in net worth annually.) Thus, reported capital gains or losses in any given year are meaningless as a measure of how well we have done in the current year.
雖然在1985年的盈餘中，出售證券收益的比例特別高，但事實上並不代表今年就是豐收的一年(雖然事實上的確是)，出售證券收益就好像大學生的畢業典禮一樣，四年來所學的知識在一朝正式被認可，而事實上在當天你可能一點長進都沒有，我們可能持有一支股票長達十年之久，而在這期間其價值與股價可能以穩定的步調增長，反而在我們真正出售的那一年其價值可能一點也沒變，或甚至是減少，不過所有的帳面利益卻全反應在出售的那一年，(但是如果這支股票是由我們的保險子公司持有，其市價的變動將會按期反應在帳面之上) ，總而言之，帳列出售損益是沒有什麼意義的，它根本無法反應我們在當年度的實際表現。
A large portion of the realized gain in 1985 ($338 million pre-tax out of a total of $488 million) came about through the sale of our General Foods shares. We held most of these shares since 1980, when we had purchased them at a price far below what we felt was their per/share business value. Year by year, the managerial efforts of Jim Ferguson and Phil Smith substantially increased General Foods’ business value and, last fall, Philip Morris made an offer for the company that reflected the increase.
We thus benefited from four factors: a bargain purchase price, a business with fine underlying economics, an able management concentrating on the interests of shareholders, and a buyer willing to pay full business value.While that last factor is the only one that produces reported earnings, we
consider identification of the first three to be the key to building value for Berkshire shareholders. In selecting common stocks, we devote our attention to attractive purchases, not to the possibility of attractive sales.
1985年出售證券收益的金額達到4.88億美元，其中大部份(約3.4億美金)是緣於我們出售通用食品的股票，我們從1980年開始便持有這些股份，當初以遠低於我們認為合理的每股企業價值價位買進，年復一年，Jim與Phil等管理階層的優異表現大幅提升該公司的價值，一直到去年秋天，Philip Morris對該公司提出購併的要求，使其價值一夕之間顯現出來，我們因四項因素而大大受惠(1)便宜的買進價格(2)一家優秀的公司(3)一群能幹且注重股東權益的管理階層(4)願意出高價的買主，雖然最後一項因素是這項獲利能夠一舉浮現的關鍵因素，但我們卻認為前三項才是能為Berkshire股東創造最大利益的根本原因。在選擇股票時，我們專注於如何漂亮的買進，而完全不考慮逢高出脫的可能性。
We have again reported substantial income from special distributions,this year from Washington Post and General Foods. (The General Foods transactions obviously took place well before the Philip Morris offer.) Distributions of this kind occur when we sell a portion of our shares in a company back to it simultaneously with its purchase of shares from other shareholders. The number of shares we sell is contractually set so as to leave our percentage ownership in the company precisely the same after the sale as before. Such a transaction is quite properly regarded by the IRS as substantially equivalent to a dividend since we, as a shareholder, receive cash while maintaining an unchanged ownership interest. This tax treatment benefits us because corporate taxpayers, unlike individual taxpayers, incur much lower taxes on dividend income than on income from long-term capital gains. (This difference will be widened further if the House-passed tax bill becomes law: under its provisions, capital gains
realized by corporations will be taxed at the same rate as ordinary income.) However, accounting rules are unclear as to proper treatment for shareholder reporting. To conform with last year’s treatment, we have shown these transactions as capital gains.
今年我們又再度從被投資公司收到特別的股利，這次是華盛頓郵報以及通用食品，(通用的這筆交易是發生在Philip Morris提出併購要求之前) ，這種特別股利的發生係由於公司在買回我們手中的股份的同時也從其他股東那裏買回等比例的股份，合約中並明訂我們在該公司所佔的股權比例在買賣交易的前後維持不變，這類交易被IRS認定為類似股利的發放，因為身為一位股東即使在收到現金之後，在該公司的股權比例仍維持不變。這對我們來說較為有利，因為美國稅法規定法人納稅義務人(不像個人) ，對於股利的所得稅遠低於長期投資的資本利得稅(若國會通過的法案正式成為法律，其中的差異將會再擴大，相關條款規定企業實現的資本利得所適用稅率與一般所得相同) ，然而會計原則對於這類交易在財務報表上應如何處理卻無統一看法，為與去年作法一致，在財務上我們仍將之視為資本利得。
Though we have not sought out such transactions, we have agreed to them on several occasions when managements initiated the idea. In each case we have felt that non-selling shareholders (all of whom had an opportunity to sell at the same price we received) benefited because the companies made their repurchases at prices below intrinsic business value.The tax advantages we receive and our wish to cooperate with managements that are increasing values for all shareholders have sometimes led us to sell - but only to the extent that our proportional share of the business was undiminished.
雖然我們不刻意促成這類交易案，但當管理當局主動提出這樣的想法時，我們通常站在支持的立場，雖然每次我們都覺得選擇不賣的股東(當然大家都有權利以我們收到的價格出售)將因公司以低於實質價值的價格買回而受惠，但稅負上的優惠以及我們寄望與增進所有股東權益的管理階層維持合作的態度，使得我們不得不接受股份賣回，但只有在我們的持股比例未減損的大前提之下進行。
At this point we usually turn to a discussion of some of our major business units. Before doing so, however, we should first look at a failure at one of our smaller businesses. Our Vice Chairman, Charlie Munger, has always emphasized the study of mistakes rather than successes, both in
business and other aspects of life. He does so in the spirit of the man who said: “All I want to know is where I’m going to die so I’ll never go there.” You’ll immediately see why we make a good team: Charlie likes to study errors and I have generated ample material for him, particularly in our
textile and insurance businesses.
通常到這裏接下來要談的是我們的主要事業經營概況，但在開始之前，先看看我們所屬事業的一項失敗，我們的副主席Charlie Munger，總是強調研究事業與人生各方面的失敗要比研究成功要重要的多，他這樣的精神正如有人說:「我總是想要知道以後我會怎麼死，然後儘量去避免這件事發生。」而你可能也看得出，我們兩個可說是合作無間，他喜歡研究錯誤，而我總是能夠確保他有足夠的題材去作研究，尤其是在紡織與保險事業方面。
Shutdown of Textile Business
關閉紡織事業
In July we decided to close our textile operation, and by yearend this unpleasant job was largely completed. The history of this business is instructive.
七月份我們決定關閉在紡織事業的營運，而到年底之前這項不太愉快的工作也大致告一段落，回顧紡織產業的歷史深具啟發性。
When Buffett Partnership, Ltd., an investment partnership of which I was general partner, bought control of Berkshire Hathaway 21 years ago, it had an accounting net worth of $22 million, all devoted to the textile business. The company’s intrinsic business value, however, was considerably less because the textile assets were unable to earn returns commensurate with their accounting value. Indeed, during the previous nine years (the period in which Berkshire and Hathaway operated as a
merged company) aggregate sales of $530 million had produced an aggregate loss of $10 million. Profits had been reported from time to time but the net effect was always one step forward, two steps back.
當巴菲特合夥事業(當時由我本人擔任該合夥事業的執行合夥人)在二十一年前買下Berkshire紡織公司的控制權時，公司的帳面價值約為二仟二百萬美元，全部集中在紡織事業，然而當時由於公司無法賺得與帳面價值相稱的報酬，其實質價值其實遠低於此數，事實上，在此之前九年，(即Berkshire與Hathaway兩家合併經營期間)合計總營收達五億多美元，但卻發生一仟萬美金的虧損，雖然時有獲利，但總是進一步、退兩步。
At the time we made our purchase, southern textile plants - largely non-union - were believed to have an important competitive advantage.Most northern textile operations had closed and many people thought we would liquidate our business as well.
在我們買下該公司的當時，南方的紡織工廠由於不具工會組織而被公認為較具競爭優勢，大部份北方的工廠皆已結束營運，而當時許多人認為我們也應該將該公司清算。
We felt, however, that the business would be run much better by a long-time employee whom. we immediately selected to be president, Ken Chace. In this respect we were 100% correct: Ken and his recent successor,Garry Morrison, have been excellent managers, every bit the equal of managers at our more profitable businesses.
然而我們覺得公司若能有一位長期穩定的管理者，營運或可改善，所以當時我們馬上選中Ken Chase接手，有關這點我們倒是作對了，Ken跟後來接替他的Garry作得非常好，一點也不輸給我們其他獲利更好的事業經營者。
In early 1967 cash generated by the textile operation was used to fund our entry into insurance via the purchase of National Indemnity Company.Some of the money came from earnings and some from reduced investment in textile inventories, receivables, and fixed assets. This pullback proved
wise: although much improved by Ken’s management, the textile business never became a good earner, not even in cyclical upturns.
在1967年初我們利用紡織事業產生的大量現金進軍保險事業買下National Indemnity，一部份資金來自於盈餘，一部份則來自於減少紡織事業的存貨、應收帳款與固定資產的投資，這次撤退的決策事後證明完全正確，即使由於Ken的管理營運大為改善，但紡織事業從未賺到什麼錢，即使是在景氣高峰的時候也一樣。
Further diversification for Berkshire followed, and gradually the textile operation’s depressing effect on our overall return diminished as the business became a progressively smaller portion of the corporation. We remained in the business for reasons that I stated in the 1978 annual report
(and summarized at other times also): “(1) our textile businesses are very important employers in their communities, (2) management has been straightforward in reporting on problems and energetic in attacking them,(3) labor has been cooperative and understanding in facing our common problems, and (4) the business should average modest cash returns relative to investment.” I further said, “As long as these conditions prevail - and we expect that they will - we intend to continue to support our textile business despite more attractive alternative uses for capital.”
Berkshire後來持續多角化，使得紡織業不佳的績效對於公司整體的影響越來越輕微，而我們之所以繼續留在紡織業的原因，我早在1978年便曾提過(後來也曾陸續提到)：(1)該公司為當地非常重要的雇主；(2)管理當局坦誠面對困境並努力解決問題；(3)勞工體認困境並極力配合；(4)尚能產生穩定現金收入。後來我還強調只要這些情況持續不變(我們也預期不會變)，即使有更多更好的投資機會，我們仍會支持紡織事業堅持下去。
It turned out that I was very wrong about (4). Though 1979 was moderately profitable, the business thereafter consumed major amounts of cash. By mid-1985 it became clear, even to me, that this condition was almost sure to continue. Could we have found a buyer who would continue
operations, I would have certainly preferred to sell the business rather than liquidate it, even if that meant somewhat lower proceeds for us. But the economics that were finally obvious to me were also obvious to others, and interest was nil.
但事實證明第四點是錯的，雖然隔年1979年紡織業的獲利狀況還不錯，但之後卻耗用大量的資金，直到1985年中情況變得再明顯不過，若我們能夠找到合適的買主，即使賤價出售我們也不願意看到該事業被清算，但我們清楚這點，表示別人更清楚，沒有人會有興趣。
I won’t close down businesses of sub-normal profitability merely to add a fraction of a point to our corporate rate of return. However, I also feel it inappropriate for even an exceptionally profitable company to fund an operation once it appears to have unending losses in prospect. Adam Smith would disagree with my first proposition, and Karl Marx would disagree with my second; the middle ground is the only position that leaves me comfortable.
我們不會因為想要將企業的獲利數字增加一個百分點，便結束比較不賺錢的事業，但同時我們也覺得只因公司非常賺錢便無條件去支持一項完全不具前景的投資的作法更不妥當，亞當史密斯一定不贊同我第一項的看法，然而卡爾馬克斯卻又會反對我第二項見解，採行中庸之道是惟一能讓我感到安心的作法。
I should reemphasize that Ken and Garry have been resourceful,energetic and imaginative in attempting to make our textile operation a success. Trying to achieve sustainable profitability, they reworked product lines, machinery configurations and distribution arrangements. We also
made a major acquisition, Waumbec Mills, with the expectation of important synergy (a term widely used in business to explain an acquisition that otherwise makes no sense). But in the end nothing worked and I should be faulted for not quitting sooner. A recent Business Week article stated that 250 textile mills have closed since 1980. Their owners were not privy to any information that was unknown to me; they simply processed it more objectively. I ignored Comte’s advice - “the intellect
should be the servant of the heart, but not its slave” - and believed what I preferred to believe.
我必須還要再強調一次，Ken與Garry兩個人都極具幹勁與創意，努力地想要使我們的紡織事業經營成功，為了使公司微持穩定獲利，他們重新規劃產品線、生產流程與通路商配置，同時也大手筆併購了同業Waumbec，期望能夠發揮合併綜效(這是一個企業合併廣泛應用的名詞，用來解釋一些想不出有其他任何意義的購併案) ，但結果到最後一點用也沒有，而這一切都因我沒有及早結束這項事業，最近商業週刊有一篇文章提到1980年以來一共有250家紡織業結束營運，這些工廠的老闆所收到的所有資訊我全都明瞭，只是他們能夠更客觀地看待事情，我忽略了Comte的建議:「智者應該是心靈的僕人，而非它的奴隸」，相信你所相信的。
The domestic textile industry operates in a commodity business,competing in a world market in which substantial excess capacity exists.Much of the trouble we experienced was attributable, both directly and indirectly, to competition from foreign countries whose workers are paid a small fraction of the U.S. minimum wage. But that in no way means that our labor force deserves any blame for our closing. In fact, in comparison with employees of American industry generally, our workers were poorly paid, as has been the case throughout the textile business. In contract negotiations, union leaders and members were sensitive to our disadvantageous cost position and did not push for unrealistic wage increases or unproductive work practices. To the contrary, they tried just as hard as we did to keep us competitive. Even during our liquidation period they performed superbly. (Ironically, we would have been better off financially if our union had behaved unreasonably some years ago; we then would have recognized the impossible future that we faced, promptly closed down, and avoided significant future losses.)
國內的紡織業所面臨的是全球產能過剩的商品化產品的激烈競爭，我們所面臨的問題主要歸因於直接或者是間接來自於國外低勞力成本的競爭。但關廠絕對不是本國勞工的錯，事實上比起美國其他產業的勞工來說，紡織業的員工薪資水準低得可憐，在勞資協議時，工會的幹部與成員充份體認到整個產業所面臨的困境，從未作出不合理的調薪要求或不符生產效益的訴求，相反地，大家都努力的想要維持競爭力，而即使到了公司最後清算的時刻，他們仍極力配合，而諷刺的是，要是工會表現的過份一點，使我們早一點體認到這行不具前景而立刻關廠，或許我們的損失可能會少一點。
Over the years, we had the option of making large capital expenditures in the textile operation that would have allowed us to somewhat reduce variable costs. Each proposal to do so looked like an immediate winner.Measured by standard return-on-investment tests, in fact, these proposals
usually promised greater economic benefits than would have resulted from comparable expenditures in our highly-profitable candy and newspaper businesses.
長久以來，我們一再面臨是否該投入大量的資本支出以降低變動成本的抉擇，每次提出的企劃案看起來都穩賺不賠，以標準的投資報酬率來看，甚至比起我們高獲利的糖果與新聞事業還好的許多。
But the promised benefits from these textile investments were illusory.Many of our competitors, both domestic and foreign, were stepping up to the same kind of expenditures and, once enough companies did so, their reduced costs became the baseline for reduced prices industrywide.
Viewed individually, each company’s capital investment decision appeared cost-effective and rational; viewed collectively, the decisions neutralized each other and were irrational (just as happens when each person watching a parade decides he can see a little better if he stands on tiptoes). After
each round of investment, all the players had more money in the game and returns remained anemic.
但這預期的報酬最後都證明只是一種幻象，因為我們許多競爭者，不論是國內或者是國外，全都勇於投入相同的資本支出，使得降低的成本被迫全數反應在售價之上，在個別公司看來，每家公司的資本支出計劃看起來都再合理不過，但若整體觀之，其效益卻完全被抵銷掉而變得很不合理，就好比每個去看遊行隊伍的觀眾，以為自己只要蹎一蹎腳就可以看得更清楚一樣，每多投入一回合，所有的競爭者投注的金額就越高，但投資報酬卻每況愈下。
Thus, we faced a miserable choice: huge capital investment would have helped to keep our textile business alive, but would have left us with terrible returns on ever-growing amounts of capital. After the investment,moreover, the foreign competition would still have retained a major,continuing advantage in labor costs. A refusal to invest, however, would make us increasingly non-competitive, even measured against domestic textile manufacturers. I always thought myself in the position described by Woody Allen in one of his movies: “More than any other time in history,mankind faces a crossroads. One path leads to despair and utter hopelessness, the other to total extinction. Let us pray we have the wisdom to choose correctly.”
最後的結果是我們面對一個悲慘的抉擇，大筆的資本支出雖然可以令我們的紡織事業得以存活，但其相對的投資報酬卻是少得可憐，每次投入一筆資金，依然還是要面對國外低成本的強力競爭，若不再繼續投資，將使我們更不具競爭力，即使是與國內同業相比，我總覺得自己就好像伍迪愛倫在他某一部電影中所形容的:「比起歷史上的任何一刻，此時人類面臨抉擇的路口，一條通往絕望的深淵，而另一條則通往毀滅，請大家一起祈禱讓我們有足夠的智慧去作正確的決定」。
For an understanding of how the to-invest-or-not-to-invest dilemma plays out in a commodity business, it is instructive to look at Burlington Industries, by far the largest U.S. textile company both 21 years ago and now. In 1964 Burlington had sales of $1.2 billion against our $50 million.It had strengths in both distribution and production that we could never hope to match and also, of course, had an earnings record far superior to ours. Its stock sold at 60 at the end of 1964; ours was 13.
想要對在商品化產業是否應繼續投資作決定，看看Burlington工業-20年來全美最大的紡織公司，1964年該公司的營業額約為12億美元(Berkshire則約5,000萬)，他們在行銷與生產上擁有我們無法比擬的優勢，當然盈餘數字也比我們要好看得多，當時它的股價為60塊(Berkshire則約13塊) 。
Burlington made a decision to stick to the textile business, and in 1985 had sales of about $2.8 billion. 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. A very large part of the expenditures, I am sure, was devoted to cost improvement and expansion. Given Burlington’s basic commitment to stay in textiles, I would also surmise that the company’s capital decisions were quite rational.
之後Burlington決定固守紡織本業，直到1985年營業額達28億美金，在此20年間該公司總計投入約30億美金的資本支出，這數字遠比其它同業高出許多，換算每股投入約200美元，而我相信大部份的花費都用於降低成本與擴張之上，就該公司決定固守本業的決定而言，這種投資決策絕對是合理的。
Nevertheless, Burlington has lost sales volume in real dollars and has far lower returns on sales and equity now than 20 years ago. Split 2-for-1 in 1965, the stock now sells at 34 -- on an adjusted basis, just a little over its $60 price in 1964. Meanwhile, the CPI has more than tripled.Therefore, each share commands about one-third the purchasing power it did at the end of 1964. Regular dividends have been paid but they, too,have shrunk significantly in purchasing power.
但儘管如此，比起20年前該公司現在的實際銷售數字與投資報酬卻是大不如前，該公司現在的股價是34元，若考慮1965年每二股配一股計算在內，大約略高於當年的60元，而在此同時，消費者物價指數卻早已增加三倍，因此每股大約僅剩下當初三分之一的購買力，雖然每年有固定的盈餘發放，但其購買力同樣受到嚴重的減損。
This devastating outcome for the shareholders indicates what can happen when much brain power and energy are applied to a faulty premise.The situation is suggestive of Samuel Johnson’s horse: “A horse that can count to ten is a remarkable horse - not a remarkable mathematician.” Likewise, a textile company that allocates capital brilliantly within its industry is a remarkable textile company - but not a remarkable business.
這個對股東來說最悲慘的結局，說明了花費大量人力物力在錯誤的產業所可能導致的後果，這種情況有如山謬傑克森的那匹馬，一隻能數到10的馬是隻了不起的馬，卻不是了不起的數學家，同樣的一家能夠合理運用資金的紡織公司是一家了不起的紡織公司，但卻不是什麼了不起的企業。
My conclusion from my own experiences and from much observation of other businesses is that a good managerial record (measured by economic returns) is far more a function of what business boat you get into than it is of how effectively you row (though intelligence and effort help considerably, of course, in any business, good or bad). Some years ago I wrote: “When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the
reputation of the business that remains intact.” Nothing has since changed my point of view on that matter. Should you find yourself in a chronically-leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.
從個人的經驗與觀察得到一個結論，那就是一項優異的記錄背後(從投資報酬率的角度來衡量)你划的是一條怎樣的船更勝於你怎樣去划(雖然不管一家公司好或壞，努力與才能同樣重要) ，幾年前我曾說當一個以管理著名的專家遇到一家不具前景的公司時，通常是後者會佔上風，如今我的看法一點也不變，當你遇到一艘總是會漏水的破船，與其不斷白費力氣去補破洞，還不如把精力放在如何換條好船之上。
* * *
There is an investment postscript in our textile saga. Some investors weight book value heavily in their stock-buying decisions (as I, in my early years, did myself). And some economists and academicians believe replacement values are of considerable importance in calculating an
appropriate price level for the stock market as a whole. Those of both persuasions would have received an education at the auction we held in early 1986 to dispose of our textile machinery.
有關我們在紡織業投資的”輝煌歷史” 還有一段後話，有些投資人在買賣股票時把帳面價值看得很重(就像早期我的作風一樣)，也有些經濟學者相信重置價值在計算一家公司的股價相當重要的參考依據，關於這兩種說法在經過拍賣紡織機器設備後，可讓我好好地上了一課。
The equipment sold (including some disposed of in the few months prior to the auction) took up about 750,000 square feet of factory space in New Bedford and was eminently usable. It originally cost us about $13 million, including $2 million spent in 1980-84, and had a current book value of $866,000 (after accelerated depreciation). Though no sane management would have made the investment, the equipment could have been replaced new for perhaps $30-$50 million.
賣掉的設備(包括部份先前已處分的)滿滿一工廠全為堪用品，原始成本為1,300萬美金(包括近幾年投入的二百萬) ，經過加速攤提折舊後，帳面價值86萬，雖然沒有人會笨到再繼續投資，但要買一套全新的設備也要花三、五千萬美金。
Gross proceeds from our sale of this equipment came to $163,122.Allowing for necessary pre- and post-sale costs, our net was less than zero.Relatively modern looms that we bought for $5,000 apiece in 1981 found no takers at $50. We finally sold them for scrap at $26 each, a sum less than removal costs.
但你知道嗎?整廠機器處分只收到16萬，扣除掉處份所耗費的成本，最後一毛也不剩，我們在幾年前買5,000塊一隻的紡紗開價50元都沒人要，最後以幾近下腳價格的26塊賣掉，連付搬運的工資都不夠。
Ponder this: the economic goodwill attributable to two paper routes in Buffalo - or a single See’s candy store - considerably exceeds the proceeds we received from this massive collection of tangible assets that not too many years ago, under different competitive conditions, was able to employ over 1,000 people.
想想看二家水牛城報攤或一家喜斯糖果店舖所能發揮的經濟價值還比它高，而這些有形資產在幾年之前，不同的經濟環境之下，卻能一口氣僱用上千個人。
Three Very Good Businesses (and a Few Thoughts About Incentive Compensation)
三家優良企業(以及我對獎勵報酬的一些看法)
When I was 12, I lived with my grandfather for about four months. A grocer by trade, he was also working on a book and each night he dictated a few pages to me. The title - brace yourself - was “How to Run a GroceryStore and a Few Things I Have Learned About Fishing”. My grandfather was sure that interest in these two subjects was universal and that the world awaited his views. You may conclude from this section’s title and contents that I was overexposed to Grandpa’s literary style (and personality).
記得12歲時我和爺爺一起住了大概有四個月，那時他開了一家雜貨店，且用心寫了一本書，每晚還指定幾頁要我讀，書名不蓋你，叫「如何經營一家雜貨店與我從釣魚上學到的一些事」，我爺爺以為所有人對於這兩件事一定都會感興趣，且全世界一定都會看重他的想法，看完下面這一段後，你一定會覺得我的寫作風格與內容(也包含個性)完全承襲了我爺爺。
I am merging the discussion of Nebraska Furniture Mart, See’s Candy Shops, and Buffalo Evening News here because the economic strengths,weaknesses, and prospects of these businesses have changed little since I reported to you a year ago. The shortness of this discussion, however, is
in no way meant to minimize the importance of these businesses to us: in 1985 they earned an aggregate of $72 million pre-tax. Fifteen years ago,before we had acquired any of them, their aggregate earnings were about $8 million pre-tax.
我把Nebraska家具店、喜斯糖果店與水牛城報紙擺在一起談是因為我認為這幾家企業的競爭優勢、弱點與產業前景跟我一年前報告的一樣，一點都沒有改變，簡短的敘述不代表它們佔我們公司的重要性有絲毫的減損，1985年合計稅前淨利為7,200萬美元，在十五年前還未買下它們之前，此數字為800萬美元。
While an increase in earnings from $8 million to $72 million sounds terrific - and usually is - you should not automatically assume that to be the case. You must first make sure that earnings were not severely depressed in the base year. If they were instead substantial in relation to capital employed, an even more important point must be examined: how much additional capital was required to produce the additional earnings?
從800萬到7,200萬，看起來好像很驚人(事實上也是) ，但你千萬不要以為本來就是這麼回事，首先你必須確定基期沒有被低估，還要考慮所投入的資金，以及增加盈餘所需再投入的資金，如果必須再投入，那麼你應該要更進一步搞清楚，到底需要再投入多少的資金。
In both respects, our group of three scores well. First, earnings 15 years ago were excellent compared to capital then employed in the businesses. Second, although annual earnings are now $64 million greater,the businesses require only about $40 million more in invested capital to operate than was the case then.
關於這幾點，這三家公司完全經得起考驗，首先，十五年前它們相對於其所耗用的資本，所產生的盈餘頗為可觀，其次，雖然每年增加了6,000多萬盈餘，但其額外投入的資本卻不過只有4,000萬美金而已。
The dramatic growth in earning power of these three businesses,accompanied by their need for only minor amounts of capital, illustrates very well the power of economic goodwill during an inflationary period (a phenomenon explained in detail in the 1983 annual report). The financial characteristics of these businesses have allowed us to use a very large portion of the earnings they generate elsewhere. Corporate America,however, has had a different experience: in order to increase earnings significantly, most companies have needed to increase capital significantly also.The average American business has required about $5 of additional capital to generate an additional $1 of annual pre-tax earnings. That business, therefore, would have required over $300 million in additional
capital from its owners in order to achieve an earnings performance equal to our group of three.
公司運用少數額外資金便能大幅提高獲利能力的原因在於高通膨時代品牌商譽所能發揮的魔力，(我們在1983年報中有詳細解釋) ，這些公司的特性使得我們可以將他們所賺到的盈餘用在別的用途之上，然而一般的美國企業就不是這麼一回事，想要大幅提高獲利相對地往往也要再投入大量的資金，平均要每投入五塊錢每年才能增加一塊錢的獲利，等於要額外投入三億美元，才能達到我們這三家公司的獲利水準。
There is an investment postscript in our textile saga. Some investors weight book value heavily in their stock-buying decisions (as I, in my early years, did myself). And some economists and academicians believe replacement values are of considerable importance in calculating an
appropriate price level for the stock market as a whole. Those of both persuasions would have received an education at the auction we held in early 1986 to dispose of our textile machinery.
有關我們在紡織業投資的”輝煌歷史” 還有一段後話，有些投資人在買賣股票時把帳面價值看得很重(就像早期我的作風一樣)，也有些經濟學者相信重置價值在計算一家公司的股價相當重要的參考依據，關於這兩種說法在經過拍賣紡織機器設備後，可讓我好好地上了一課。
The equipment sold (including some disposed of in the few months prior to the auction) took up about 750,000 square feet of factory space in New Bedford and was eminently usable. It originally cost us about $13 million, including $2 million spent in 1980-84, and had a current book value of $866,000 (after accelerated depreciation). Though no sane management would have made the investment, the equipment could have been replaced new for perhaps $30-$50 million.
賣掉的設備(包括部份先前已處分的)滿滿一工廠全為堪用品，原始成本為1,300萬美金(包括近幾年投入的二百萬) ，經過加速攤提折舊後，帳面價值86萬，雖然沒有人會笨到再繼續投資，但要買一套全新的設備也要花三、五千萬美金。
Gross proceeds from our sale of this equipment came to $163,122.Allowing for necessary pre- and post-sale costs, our net was less than zero.Relatively modern looms that we bought for $5,000 apiece in 1981 found no takers at $50. We finally sold them for scrap at $26 each, a sum less than removal costs.
但你知道嗎?整廠機器處分只收到16萬，扣除掉處份所耗費的成本，最後一毛也不剩，我們在幾年前買5,000塊一隻的紡紗開價50元都沒人要，最後以幾近下腳價格的26塊賣掉，連付搬運的工資都不夠。
Ponder this: the economic goodwill attributable to two paper routes in Buffalo - or a single See’s candy store - considerably exceeds the proceeds we received from this massive collection of tangible assets that not too many years ago, under different competitive conditions, was able to employ over 1,000 people.
想想看二家水牛城報攤或一家喜斯糖果店舖所能發揮的經濟價值還比它高，而這些有形資產在幾年之前，不同的經濟環境之下，卻能一口氣僱用上千個人。
Three Very Good Businesses (and a Few Thoughts About Incentive Compensation)
三家優良企業(以及我對獎勵報酬的一些看法)
When I was 12, I lived with my grandfather for about four months. A grocer by trade, he was also working on a book and each night he dictated a few pages to me. The title - brace yourself - was “How to Run a GroceryStore and a Few Things I Have Learned About Fishing”. My grandfather was sure that interest in these two subjects was universal and that the world awaited his views. You may conclude from this section’s title and contents that I was overexposed to Grandpa’s literary style (and personality).
記得12歲時我和爺爺一起住了大概有四個月，那時他開了一家雜貨店，且用心寫了一本書，每晚還指定幾頁要我讀，書名不蓋你，叫「如何經營一家雜貨店與我從釣魚上學到的一些事」，我爺爺以為所有人對於這兩件事一定都會感興趣，且全世界一定都會看重他的想法，看完下面這一段後，你一定會覺得我的寫作風格與內容(也包含個性)完全承襲了我爺爺。
I am merging the discussion of Nebraska Furniture Mart, See’s Candy Shops, and Buffalo Evening News here because the economic strengths,weaknesses, and prospects of these businesses have changed little since I reported to you a year ago. The shortness of this discussion, however, is
in no way meant to minimize the importance of these businesses to us: in 1985 they earned an aggregate of $72 million pre-tax. Fifteen years ago,before we had acquired any of them, their aggregate earnings were about $8 million pre-tax.
我把Nebraska家具店、喜斯糖果店與水牛城報紙擺在一起談是因為我認為這幾家企業的競爭優勢、弱點與產業前景跟我一年前報告的一樣，一點都沒有改變，簡短的敘述不代表它們佔我們公司的重要性有絲毫的減損，1985年合計稅前淨利為7,200萬美元，在十五年前還未買下它們之前，此數字為800萬美元。
While an increase in earnings from $8 million to $72 million sounds terrific - and usually is - you should not automatically assume that to be the case. You must first make sure that earnings were not severely depressed in the base year. If they were instead substantial in relation to capital employed, an even more important point must be examined: how much additional capital was required to produce the additional earnings?
從800萬到7,200萬，看起來好像很驚人(事實上也是) ，但你千萬不要以為本來就是這麼回事，首先你必須確定基期沒有被低估，還要考慮所投入的資金，以及增加盈餘所需再投入的資金，如果必須再投入，那麼你應該要更進一步搞清楚，到底需要再投入多少的資金。
In both respects, our group of three scores well. First, earnings 15 years ago were excellent compared to capital then employed in the businesses. Second, although annual earnings are now $64 million greater,the businesses require only about $40 million more in invested capital to operate than was the case then.
關於這幾點，這三家公司完全經得起考驗，首先，十五年前它們相對於其所耗用的資本，所產生的盈餘頗為可觀，其次，雖然每年增加了6,000多萬盈餘，但其額外投入的資本卻不過只有4,000萬美金而已。
The dramatic growth in earning power of these three businesses,accompanied by their need for only minor amounts of capital, illustrates very well the power of economic goodwill during an inflationary period (a phenomenon explained in detail in the 1983 annual report). The financial characteristics of these businesses have allowed us to use a very large portion of the earnings they generate elsewhere. Corporate America,however, has had a different experience: in order to increase earnings significantly, most companies have needed to increase capital significantly also.The average American business has required about $5 of additional capital to generate an additional $1 of annual pre-tax earnings. That business, therefore, would have required over $300 million in additional
capital from its owners in order to achieve an earnings performance equal to our group of three.
公司運用少數額外資金便能大幅提高獲利能力的原因在於高通膨時代品牌商譽所能發揮的魔力，(我們在1983年報中有詳細解釋) ，這些公司的特性使得我們可以將他們所賺到的盈餘用在別的用途之上，然而一般的美國企業就不是這麼一回事，想要大幅提高獲利相對地往往也要再投入大量的資金，平均要每投入五塊錢每年才能增加一塊錢的獲利，等於要額外投入三億美元，才能達到我們這三家公司的獲利水準。
When returns on capital are ordinary, an earn-more-by-putting-up-more record is no great managerial achievement.You can get the same result personally while operating from your rocking chair. just quadruple the capital you commit to a savings account and you will quadruple your earnings. You would hardly expect hosannas for that particular accomplishment. Yet, retirement announcements regularly sing the praises of CEOs who have, say, quadrupled earnings of their widget company during their reign - with no one examining whether this gain was attributable simply to many years of retained earnings and the workings of compound interest.
當資本報酬率平平，這種大堆頭式的賺錢方式根本就沒什麼了不起，換成你坐在搖椅上也能輕鬆達到這樣的成績，好比只要把你存在銀行戶頭裏的錢加倍，一樣可以賺到加倍的利息，沒有人會對這樣的成果報以掌聲，但通常我們在某位資深主管的退休儀式上歌頌他在任內將公司的盈餘數字提高數倍，卻一點也不會去看看這些事實上是因為公司每年所累積盈餘與複利所產生的效果。
If the widget company consistently earned a superior return on capital throughout the period, or if capital employed only doubled during the CEO’s reign, the praise for him may be well deserved. But if return on capital was lackluster and capital employed increased in pace with earnings,applause should be withheld. A savings account in which interest was reinvested would achieve the same year-by-year increase in earnings - and,at only 8% interest, would quadruple its annual earnings in 18 years.
當然若那家公司在此期間以有限的資金賺取極高的報酬或是只增加一點資金便創造更多的盈餘，則他所得到的掌聲是名符其實，但若報酬率平平或只是用更多的資金堆積出來的結果，那麼就應該把掌聲收回，因為只要把存在銀行所賺的8%利息再繼續存著，18年後你的利息收入自動加倍。
The power of this simple math is often ignored by companies to the detriment of their shareholders. Many corporate compensation plans reward managers handsomely for earnings increases produced solely, or in large part, by retained earnings - i.e., earnings withheld from owners. For example, ten-year, fixed-price stock options are granted routinely, often by companies whose dividends are only a small percentage of earnings.
這種簡單的算術問題常常被公司所忽略而損及股東的權益，因為許多公司的獎勵計劃隨隨便便大方的犒賞公司主管，事實上公司的盈餘增加有許多只是單純地因為盈餘累積所產生的效果，例如給予十年固定價格的認股權，將使得公司分配盈餘的能力大大縮減。
An example will illustrate the inequities possible under such circumstances. Let’s suppose that you had a $100,000 savings account earning 8% interest and “managed” by a trustee who could decide each year what portion of the interest you were to be paid in cash. Interest not paid out would be “retained earnings” added to the savings account to compound. And let’s suppose that your trustee, in his superior wisdom,set the “pay-out ratio” at one-quarter of the annual earnings.
有一個例子可以用來說明這其間的不合理性，假設你在銀行有年利率8%定存十萬元交由一位信託人士來保管，由他來決定你每年實際要領多少利息出來，未領出的利息則繼續存在銀行利滾利，再假設我們偉大的信託人將實領利息的比例定為四分之一。
Under these assumptions, your account would be worth $179,084 at the end of ten years. Additionally, your annual earnings would have increased about 70% from $8,000 to $13,515 under this inspired management. And, finally, your “dividends” would have increased commensurately, rising regularly from $2,000 in the first year to $3,378 in the tenth year. Each year, when your manager’s public relations firm prepared his annual report to you, all of the charts would have had lines marching skyward.
最後讓我來看看十年之後你會得到什麼，十年後你的戶頭會有179,084，此外在信託人的精心安排下，你每年所賺的利息會從8,000增加到13,515，實領的利息也從2,000增加到3,378，而最重要的是當每年你的信託人送交的你的年度報告時，你會發現圖表中每一項數字都是一飛沖天。
Now, just for fun, let’s push our scenario one notch further and give your trustee-manager a ten-year fixed-price option on part of your “business” (i.e., your savings account) based on its fair value in the first year.With such an option, your manager would reap a substantial profit at your expense - just from having held on to most of your earnings. If he were both Machiavellian and a bit of a mathematician, your manager might also have cut the pay-out ratio once he was firmly entrenched.
現在讓我們再作進一步假設，你與信託人簽訂的信託合約中有一項附予受託人以目前淨值為基準，十年固定價格的認股權約定，到最後發現你的信託人會從你的口袋中大撈一筆，而且你會發現一旦取得你的信任，詭計多端的他就會大幅降低利息付現的比例。
This scenario is not as farfetched as you might think. Many stock options in the corporate world have worked in exactly that fashion: they have gained in value simply because management retained earnings, not because it did well with the capital in its hands.
而你不要以為這跟你一點關係都沒有，在現實社會中這樣的情況比比皆是，這些公司主管只因公司盈餘累積而非將公司資金管理得當便大撈一票。
Managers actually apply a double standard to options. Leaving aside warrants (which deliver the issuing corporation immediate and substantial compensation), I believe it is fair to say that nowhere in the business world are ten-year fixed-price options on all or a portion of a business granted to
outsiders. Ten months, in fact, would be regarded as extreme. It would be particularly unthinkable for managers to grant a long-term option on a business that was regularly adding to its capital. Any outsider wanting to secure such an option would be required to pay fully for capital added during the option period.
而事實上，公司主管對於選擇權(扣除附認股權可讓公司立即取得對價)這檔子事具有雙重標準，假設是對外發行這樣的認股權，根本就不會有十年期固定價格的選擇權出現，(頂多十個月就很了不起了)，就算有其價格一定會高得驚人，所以實在是很難想像公司經理人竟然會發放長期認股權，要是外面的人想拿到這種認股權，公司肯定會將資本累積的因素考量進去。
The unwillingness of managers to do-unto-outsiders, however, is not matched by an unwillingness to do-unto-themselves. (Negotiating with one’s self seldom produces a barroom brawl.) Managers regularly engineer ten-year, fixed-price options for themselves and associates that, first,totally ignore the fact that retained earnings automatically build value and,second, ignore the carrying cost of capital. 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.
雖然經理人吝於對外發行認股權，但他們對自己卻頗為慷慨，(自己人關起門來一切都好談)，經理人通常會為自己設計一種期間長達十年，認股價格固定的選擇權，同時還附帶完全忽略盈餘累積本身自動會產生的價值以及資金的時間成本，到頭來這些經理人將因此而大大受惠，就像是擁有自動會累積利益的定存選擇權一樣。
Of course, stock options often go to talented, value-adding managers and sometimes deliver them rewards that are perfectly appropriate. (Indeed,managers who are really exceptional almost always get far less than they should.) But when the result is equitable, it is accidental. Once granted,
the option is blind to individual performance. Because it is irrevocable and unconditional (so long as a manager stays in the company), the sluggard receives rewards from his options precisely as does the star. A managerial Rip Van Winkle, ready to doze for ten years, could not wish for a better “incentive” system.
當然這種獎勵方法有時也會用到那些有才能、對公司真正有貢獻的人身上，(事實上，一家公司真正給有傑出表現的人往往都不夠多) ，不過通常這只是碰巧，而這種選擇權一旦給了，便很難收回，無論這個人之後表現如何都不能取消(只要他老兄繼續留在公司)，一個庸才從選擇權賺到的跟真正的人才一樣多，這實在是管理界李伯大夢最好的去處了，不費吹灰之力，一覺醒來就坐享其成。
(I can’t resist commenting on one long-term option given an “outsider”: that granted the U.S. Government on Chrysler shares as partial consideration for the government’s guarantee of some lifesaving loans.When these options worked out well for the government, Chrysler sought to
modify the payoff, arguing that the rewards to the government were both far greater than intended and outsize in relation to its contribution to Chrysler’s recovery. The company’s anguish over what it saw as an imbalance between payoff and performance made national news. That anguish may well be unique: to my knowledge, no managers - anywhere - have been similarly offended by unwarranted payoffs arising from options granted to themselves or their colleagues.)
我忍不住要再提一下，之前克來斯勒曾經發給美國政府外部選擇權作為部份報酬以請求為其借款擔保的案例，當後來這些選擇權變得價值不菲時，克來斯勒竭便儘所能想要修改條件，聲稱這比真正應該給政府協助該公司東山再起的報酬多出太多，該公司認為政府所獲得與付出不成正比的不滿，最後甚至演變成全國性的新聞，這種不平之鳴顯得有點突兀，因為就我所知，沒有一家公司的經理人會對本身在選擇權的不勞而獲表示過任何異議。
Ironically, the rhetoric about options frequently describes them as desirable because they put managers and owners in the same financial boat.In reality, the boats are far different. No owner has ever escaped the burden of capital costs, whereas a holder of a fixed-price option bears no
capital costs at all. An owner must weigh upside potential against downside risk; an option holder has no downside. In fact, the business project in which you would wish to have an option frequently is a project in which you would reject ownership. (I’ll be happy to accept a lottery ticket as a gift - but I’ll never buy one.)
諷刺的是，當大家一再發表「選擇權的實施有其必要，因為如此一來經理人與股東便能同舟一濟」的論調時，事實上我要說，兩者的船是完全不同的，因為所有股東皆必須負擔資金成本，而經理人持有的固定價格選擇權卻什麼也不必承擔，股東在期盼公司發達的同時還必須承受公司可能失敗的風險，事實上一個你希望能享有認股權的投資計劃往往是你不會想要投資的計劃，(若有人要免費送我樂透彩券，我一定欣然接受，但若要我買一張則完全免談)。
In dividend policy also, the option holders’ interests are best served by a policy that may ill serve the owner. Think back to the savings account example. The trustee, holding his option, would benefit from a no-dividend policy. Conversely, the owner of the account should lean to a total payout so that he can prevent the option-holding manager from sharing in the account’s retained earnings.
在股利政策方面亦然，凡事對持有選擇權的經理人最有利的，對股東一定最不利，回到之前的銀行存款上頭，不領利息對於持有選擇權的受託人最有利，相反地，身為委託人應該要傾向把利息全領出來，免得讓經理人利用利滾利佔你便宜。
Despite their shortcomings, options can be appropriate under some circumstances. My criticism relates to their indiscriminate use and, in that connection, I would like to emphasize three points:
雖然有那麼多缺點，選擇權在某些時候還是很好用，我批評的重點主要是它們被無限制地遭到濫用，這裏我有三點要說明:
First, stock options are inevitably tied to the overall performance of a corporation. Logically, therefore, they should be awarded only to those managers with overall responsibility. Managers with limited areas of responsibility should have incentives that pay off in relation to results under their control. The .350 hitter expects, and also deserves, a big payoff for his performance - even if he plays for a cellar-dwelling team.And the .150 hitter should get no reward - even if he plays for a pennant
winner. Only those with overall responsibility for the team should have their rewards tied to its results.
首先、由於選擇權與公司整體的表現惜惜相關，所以理論上它們應該用在負責公司全局的高階主管身上，部門的主管則應視其負責部份的表現給予獎勵，對於打擊率高達三成五的球員來說，應該給予大幅的調薪，即使他待的是一支大爛隊，相反地，對於打擊率一成五的球員，就算他們那一隊最後得到冠軍也應該請他走路，只有負責全局的人，如總教練才應與球隊整體戰績綁在一起
Second, options should be structured carefully. Absent special factors, they should have built into them a retained-earnings or carrying-cost factor. Equally important, they should be priced realistically.When managers are faced with offers for their companies, they unfailingly point out how unrealistic market prices can be as an index of real value.But why, then, should these same depressed prices be the valuations at which managers sell portions of their businesses to themselves? (They may
go further: officers and directors sometimes consult the Tax Code to determine the lowest prices at which they can, in effect, sell part of the business to insiders. While they’re at it, they often elect plans that produce the worst tax result for the company.) Except in highly unusual cases, owners are not well served by the sale of part of their business at a bargain price - whether the sale is to outsiders or to insiders. The obvious conclusion: options should be priced at true business value.
第二、選擇權規劃應當要非常慎重，除非有特殊原因，應該要把資金成本與保留盈餘的影響列入考量，價格也要合理的訂定，當公司面臨外部購併時，他們一定馬上指出市價是如何地不合理無法反應公司實際的價值，但是為何公司要以更低的價格賤賣給部份股權給經理人呢? (他們甚至還會說，會儘量以最低的價格將股權賣給內部人，不管公司要負擔多少稅負)除非在非常特殊的情況，公司不管是將部份股權廉價賣給內部人或外部人，原來的股東權益一定受到損害，最後的結論是選擇權的認購價一定要與真實價值相當。
Third, I want to emphasize that some managers whom I admire enormously - and whose operating records are far better than mine - disagree with me regarding fixed-price options. They have built corporate cultures that work, and fixed-price options have been a tool that helped them. By their leadership and example, and by the use of options as incentives, these managers have taught their colleagues to think like owners. Such a Culture is rare and when it exists should perhaps be left
intact - despite inefficiencies and inequities that may infest the option program. “If it ain’t broke, don’t fix it” is preferable to “purity at any price”.
第三、我必須強調有一些我非常欣賞且經營績效更甚於我的經理人，不認同我在固定價格選擇權的看法，他們建立了一套具個人管理風格的企業文化，而其中固定價格認股權是他們認為非常有用的一項工具，以他們個人的領導風範，並用認股權作為誘因，他們成功地引導部屬以股東的心態來想事情，這種風格不多見，但若有我們也必須小心的加以維護，即使這樣的作法會破壞公平性與效率，孰諺有云:「東西若沒壞，就不必修理」，這總比無可救藥的完美主義好得多。
At Berkshire, however, we use an incentive@compensation system that rewards key managers for meeting targets in their own bailiwicks. If See’s does well, that does not produce incentive compensation at the News - nor vice versa. Neither do we look at the price of Berkshire stock when we write bonus checks. We believe good unit performance should be rewarded whether Berkshire stock rises, falls, or stays even. Similarly, we think average performance should earn no special rewards even if our stock should soar. “Performance”, furthermore, is defined in different ways
depending upon the underlying economics of the business: in some our managers enjoy tailwinds not of their own making, in others they fight unavoidable headwinds.
然而在Berkshire我們採用的獎勵計劃係依每個人在其職權範圍內的目標達成狀況做為獎賞的依據，若喜斯糖果表現的好，則這與新聞事業部門一點關係都沒有，反之亦然，而我們在發放獎金時與公司本身股價高低沒有任何關連，我們認為表現好的單位，不管Berkshire的股價是漲是跌，都應該獎勵，同樣的即使Berkshire的股價飆漲，若員工表現平平也不應該大發獎金，而表現係依據各個公司本身競爭條件與環境列入考量，有時只是運氣好搭上順風車一切平順，有時只是運氣差遇到逆境特別倒霉。
The rewards that go with this system can be large. At our various business units, top managers sometimes receive incentive bonuses of five times their base salary, or more, and it would appear possible that one manager’s bonus could top $2 million in 1986. (I hope so.) We do not put a
cap on bonuses, and the potential for rewards is not hierarchical. The manager of a relatively small unit can earn far more than the manager of a larger unit if results indicate he should. We believe, further, that such factors as seniority and age should not affect incentive compensation (though they sometimes influence basic compensation). A 20-year-old who can hit .300 is as valuable to us as a 40-year-old performing as well.
即使是在這樣的制度下，有時獎勵也相當可觀，在各個部門中，視狀況有人可以領到底薪五倍以上的獎金，以今年為例就有人會領到200萬以上的獎金，而事實上金額並沒有上限，與階級與年資也沒有太大關連，若表現得好一個小單位的主管可能比一個大單位的主管領得多的多，只要打擊率能超過三成，不管你是二十歲的菜鳥或是四十歲的老將，我們都一樣重視。
Obviously, all Berkshire managers can use their bonus money (or other funds, including borrowed money) to buy our stock in the market. Many have done just that - and some now have large holdings. By accepting both the risks and the carrying costs that go with outright purchases, these
managers truly walk in the shoes of owners.
而很顯然的，Berkshire各事業的經理人可以利用他們所領到的獎金(或甚至去借錢) 到股票市場上買進公司本身的股票，而事實上有許多人確實如此，而且持股比例甚高，與其他股東一樣承擔風險與資金成本，這些經理人確實與公司站在同一條陣線之上。
Now let’s get back - at long last - to our three businesses:
最後讓我們回到主要的三項事業
At Nebraska Furniture Mart our basic strength is an exceptionally low-cost operation that allows the business to regularly offer customers the best values available in home furnishings. NFM is the largest store of its kind in the country. Although the already-depressed farm economy worsened considerably in 1985, the store easily set a new sales record. Ialso am happy to report that NFM’s Chairman, Rose Blumkin (the legendary “Mrs. B”), continues at age 92 to set a pace at the store that none of us can keep up with. She’s there wheeling and dealing seven days a week,and I hope that any of you who visit Omaha will go out to the Mart and see her in action. It will inspire you, as it does me.
在Nebraska家具店，我們最具優勢的競爭力在於低成本的營運，並提供客戶最有質感的家具，身為全國同類型中規模最大的一家店，即使小鎮的經濟明顯衰退，營收仍創新高，我也很高興跟各位報告，家具店的負責人B太太雖然高齡92，每天仍以年輕人跟不上的步伐在店裏忙碌著，坐在輪椅上，她一個禮拜工作七天，我希望當大家造訪Omaha時，能到店裏看看她，相信你會與我一樣精神一振。
At See’s we continue to get store volumes that are far beyond those achieved by any competitor we know of. Despite the unmatched consumer acceptance we enjoy, industry trends are not good, and we continue to experience slippage in poundage sales on a same-store basis. This puts pressure on per-pound costs. We now are willing to increase prices only modestly and, unless we can stabilize per-shop poundage, profit margins will narrow.
在喜斯糖果我們與同業競爭對手相比，其單店銷售量仍大幅領先，雖然我們廣為消費大眾所接受認同，整個產業表現並不好，單店糖果銷售磅數持續下滑，這使得單位成本提高，而我們卻只能稍微調漲價格，如此一來我們的毛利勢必受到影響。
At the News volume gains are also difficult to achieve. Though linage increased during 1985, the gain was more than accounted for by preprints.ROP linage (advertising printed on our own pages) declined. Preprints are far less profitable than ROP ads, and also more vulnerable to competition.
In 1985, the News again controlled costs well and our household penetration continues to be exceptional.
在新聞事業方面一樣很難增加發行量，雖然廣告量略增，但主要來自於夾報部份，ROP 廣告(報紙版面上的廣告)卻減少，前者的利潤遠比後者低，且競爭較激烈，所幸去年成本控制得宜而家庭訂戶數表現頗佳。
One problem these three operations do not have is management. At See’s we have Chuck Huggins, the man we put in charge the day we bought the business. Selecting him remains one of our best business decisions.At the News we have Stan Lipsey, a manager of equal caliber. Stan has been with us 17 years, and his unusual business talents have become more evident with every additional level of responsibility he has tackled. And, at the Mart, we have the amazing Blumkins - Mrs. B, Louie, Ron, Irv, and Steve - a three-generation miracle of management.
我們較不擔心的是這三家都有優秀的管理階層，在接手喜斯後，我們便一直有Chuck掌控大局，選上他是我們作得最對的決策之一，在新聞事業我們也有同樣是狠角色的Stan Lipsey，他跟我們在一起十七年了，每當我們賦予他更多責任時，他的才能表現便更上一層樓，在家具店不用說我們則有B太太家族，三代同堂可謂一門豪傑。
I consider myself extraordinarily lucky to be able to work with managers such as these. I like them personally as much as I admire them professionally.
能夠跟這一群優秀的專業經理人一起共事，我實在感到非常幸運，在專業上我佩服之至，在私人方面則是我的好朋友。
Insurance Operations
保險事業營運
Shown below is an updated version of our usual table, listing two key figures for the insurance industry:
下表是年報中常見表格的更新，列示保險事業的主要兩項數字:
Yearly Change Combined Ratio
in Premiums after Policyholder
Written (%) Dividends
------------- ------------------
1972 ............... 10.2 96.2
1973 ............... 8.0 99.2
1974 ............... 6.2 105.4
1975 ............... 11.0 107.9
1976 ............... 21.9 102.4
1977 ............... 19.8 97.2
1978 ............... 12.8 97.5
1979 ............... 10.3 100.6
1980 ............... 6.0 103.1
1981 ............... 3.9 106.0
1982 ............... 4.4 109.7
1983 ............... 4.5 111.9
1984 (Revised) ..... 9.2 117.9
1985 (Estimated) ... 20.9 118.0
Source: Best’s Aggregates and Averages
The combined ratio represents total insurance costs (losses incurred plus expenses) compared to revenue from premiums: a ratio below 100 indicates an underwriting profit, and one above 100 indicates a loss.
綜合比率Combined Ratio代表所有的保險成本(損失加上費用)佔保費收入的比率，100以下表示有承保利益，反之100以上則表示有承保損失。
The industry’s 1985 results were highly unusual. The revenue gain was exceptional, and had insured losses grown at their normal rate of most recent years - that is, a few points above the inflation rate - a significant drop in the combined ratio would have occurred. But losses in 1985 didn’t cooperate, as they did not in 1984. Though inflation slowed considerably in these years, insured losses perversely accelerated, growing by 16% in 1984 and by an even more startling 17% in 1985. The year’s growth in losses therefore exceeds the inflation rate by over 13 percentage points, a modern record.
1985年產業整體的數字有點不尋常，保費收入大幅成長，而如果投保損失則與前幾年一樣以固定比率成長(約比通貨膨脹率高幾個百分點) ，則兩項因素加起來將使得Combined Ratio下降，只可惜損失不大配合，雖然通膨有趨緩的現象，但理賠損失卻成長驚人，相較於去年的16%，今年創新高的17%更顯得驚人，足足比通貨膨脹率高出13個百分點。
Catastrophes were not the culprit in this explosion of loss cost. True,there were an unusual number of hurricanes in 1985, but the aggregate damage caused by all catastrophes in 1984 and 1985 was about 2% of premium volume, a not unusual proportion. Nor was there any burst in the number of insured autos, houses, employers, or other kinds of “exposure units”.
意外並不是理賠損失大幅增加的主因，雖然1985年確實有幾次相當大的颶風發生，但所造成的損失僅佔保費收入的2%，這比例不算異常，此外也不是投保汽車、房屋、員工或其他投保標的出險的爆增。
A partial explanation for the surge in the loss figures is all the additions to reserves that the industry made in 1985. As results for the year were reported, the scene resembled a revival meeting: shouting “I’ve sinned, I’ve sinned”, insurance managers rushed forward to confess they had under reserved in earlier years. Their corrections significantly affected 1985 loss numbers.
可能可以解釋的原因是去年業界大幅提撥損失準備，就像報告所顯示的，這場景有點像檢討會議，保險事業經理人大家一窩蜂地承認前幾年損失準備確實提撥不足，而結果修正後的數字嚴重影響今年的損益。
A more disturbing ingredient in the loss surge is the acceleration in “social” or “judicial” inflation. The insurer’s ability to pay has assumed overwhelming importance with juries and judges in the assessment of both liability and damages. More and more, “the deep pocket” is being sought
and found, no matter what the policy wording, the facts, or the precedents.
另外一項更令人困擾的因素是社會或司法通膨成本的增加，保險業者的賠償能力已成為陪審團判決責任與損害成立與否的重要因素，越來越多人覬諛深口袋，不管保單上是怎麼寫、不管事實真相為何，也不管以前的判例。
This judicial inflation represents a wild card in the industry’s future,and makes forecasting difficult. Nevertheless, the short-term outlook is good. Premium growth improved as 1985 went along (quarterly gains were an estimated 15%, 19%, 24%, and 22%) and, barring a supercatastrophe, the industry’s combined ratio should fall sharply in 1986.
這成為保險業預測未來最不確定的因素，儘管如此，短期間的影響尚屬有限，只要保費成長的速度持續，(單季成長率預估分別為15%、19%、24%及22%)，不要發生什麼特別大的災難，明年產業整體的Combined Ratio可望大幅下降。
The profit improvement, however, is likely to be of short duration.Two economic principles will see to that. First, commodity businesses achieve good levels of profitability only when prices are fixed in some manner or when capacity is short. Second, managers quickly add to capacity when prospects start to improve and capital is available.
不過獲利改善的情況無法持續太久，主要有兩個原因，一是商品化企業只有在價格穩定或供給短缺的情況下才能維持高獲利，一是公司必須在景氣轉佳之前先擴充產能並準備好資金。
In my 1982 report to you, I discussed the commodity nature of the insurance industry extensively. The typical policyholder does not differentiate between products but concentrates instead on price. For many decades a cartel-like procedure kept prices up, but this arrangement has disappeared for good. The insurance product now is priced as any other commodity for which a free market exists: when capacity is tight,prices will be set remuneratively; otherwise, they will not be.
如同我在1982年年報跟各位報告過的，曾廣泛地討論商品化企業的特點，一般的投保人不太在乎產品的差異而只注意價格，幾十年來公會的壟斷使得價格居高不下，但這種情況如今已不復見，在自由市場中，保單與其他商品一樣地被自由訂價，當供給吃緊，價格自然上升，反之就不會。
Capacity currently is tight in many lines of insurance - though in this industry, unlike most, capacity is an attitudinal concept, not a physical fact.Insurance managers can write whatever amount of business they feel comfortable writing, subject only to pressures applied by regulators and
Best’s, the industry’s authoritative rating service. The comfort level of both managers and regulators is tied to capital. More capital means more comfort, which in turn means more capacity. In the typical commodity business, furthermore, such as aluminum or steel, a long gestation precedes the birth of additional capacity. In the insurance industry, capital can be secured instantly. Thus, any capacity shortage can be eliminated in short order.
雖然在供給方面，目前在許多險種有些吃緊，但保險業不像大部份的行業，所謂的產能只是心態上而非實質的，只要他認為適當，保險業者可以接下無限量的保單，這其間只受到主管當局與公會評比的壓力，公司與主管當局在乎的是資本的適足性，越多的資本當然是越好，也代表可以簽下更多的保單，就算是標準的商品化企業，如鋼鐵或鋁業，要增加產能還要一定的前置期間，而在保險業，資金卻是可以隨時取得，因此供給不足的情況可能馬上就會消失。
That’s exactly what’s going on right now. In 1985, about 15 insurers raised well over $3 billion, piling up capital so that they can write all the business possible at the better prices now available. The capital-raising trend has accelerated dramatically so far in 1986.
這就是目前實際發生的狀況，在去年總計有十五家業者大約募集了三十億的資金，使得他們可以吃下所有可能的生意，而且資金募集的速度越來越快。
If capacity additions continue at this rate, it won’t be long before serious price-cutting appears and next a fall in profitability. When the fall comes, it will be the fault of the capital-raisers of 1985 and 1986, not the price-cutters of 198X. (Critics should be understanding, however: as was the case in our textile example, the dynamics of capitalism cause each insurer to make decisions that for itself appear sensible, but that collectively slash profitability.)
照這樣下去，不用多久馬上的會面臨到殺價競爭的情況，然後獲利也會跟著受影響。而這一切都要歸疚那些大幅增資的業者(有人一定會批評，就像我們在紡織業一樣，資本社會的動態變化，使得所有業者做出那種個別看似合理，但就產業整體而言，弊多於利的結果。)
In past reports, I have told you that Berkshire’s strong capital position - the best in the industry - should one day allow us to claim a distinct competitive advantage in the insurance market. With the tightening of the market, that day arrived. Our premium volume more than tripled last year,following a long period of stagnation. Berkshire’s financial strength (and our record of maintaining unusual strength through thick and thin) is now a major asset for us in securing good business.
以往年報我曾告訴過大家，Berkshire雄厚的資本結構(堪稱業界之最)，總有一天能讓我們在保險業擁有獨一無二的競爭力，隨著市場的緊縮，這一天已到來，去年我們的保費收入在經過許多年的停滯之後，增加三倍以上，Berkshire的財務實力(以及過去優異的記錄)是我們爭取業務最有用的利器。
We correctly foresaw a flight to quality by many large buyers of insurance and reinsurance who belatedly recognized that a policy is only an IOU - and who, in 1985, could not collect on many of their IOUs. These buyers today are attracted to Berkshire because of its strong capital position. But, in a development we did not foresee, we also are finding buyers drawn to us because our ability to insure substantial risks sets us apart from the crowd.
我們正確地預期到大客戶對於品質的要求，在他們了解到保單也不過是一張借據，而許多借條在去年皆無法兌現。這些客戶最後都被Berkshire健全的資本結構吸引上門，而另外有一點是我們沒有預期到的發展，那就是還有許多客戶是因為我們能夠承擔鉅額的風險而覺得我們與眾不同。
To understand this point, you need a few background facts about large risks. Traditionally, many insurers have wanted to write this kind of business. However, their willingness to do so has been almost always based upon reinsurance arrangements that allow the insurer to keep just a small portion of the risk itself while passing on (“laying off”) most of the risk to its reinsurers. Imagine, for example, a directors and officers (“D & O”) liability policy providing $25 million of coverage. By various “excess-of-loss” reinsurance contracts, the company issuing that policy might keep the liability for only the first $1 million of any loss that occurs.The liability for any loss above that amount up to $24 million would be borne by the reinsurers of the issuing insurer. In trade parlance, a
company that issues large policies but retains relatively little of the risk for its own account writes a large gross line but a small net line.
關於這點，你必須對鉅額風險有一些認識，在以往有許多業者都很願意接下這種保單，但是他們會這樣做的原因是因為透過再保險的安排，業者只要保留一小部份的風險，其餘大部份的風險則移轉給再保業者，想想看例如董監事經理人投保二千五百萬的責任險，透過與再保公司簽約，保單發行公司可以只留下頭一個一百萬損失，超過的部份最高到二千四百萬則由再保公司負責，照業界的說法，其保險毛額很高，但淨額卻很少。
In any reinsurance arrangement, a key question is how the premiums paid for the policy should be divided among the various “layers” of risk. In our D & O policy, for example. what part of the premium received should be kept by the issuing company to compensate it fairly for taking the first $1 million of risk and how much should be passed on to the reinsurers to compensate them fairly for taking the risk between $1 million and $25 million?
在任何的再保安排中，最重要的問題是保費收入要如何來分配，以我們的經理人責任保險為例，保險人必需要有足夠的保費來彌補其承擔第一個一百萬損失的風險，而再保人必需要有足夠的保費來彌補其承擔一百萬到二千五百萬損失的風險。
One way to solve this problem might be deemed the Patrick Henry approach: “I have but one lamp by which my feet are guided, and that is the lamp of experience.” In other words, how much of the total premium would reinsurers have needed in the past to compensate them fairly for the losses they actually had to bear?
一種解決這種難題的方法叫做派翠克-亨利法則:係完全依照過去的經驗，換句話說過去再保業者需要多少保費來彌補其所承擔的損失，來訂定未來的保費。
Unfortunately, the lamp of experience has always provided imperfect illumination for reinsurers because so much of their business is “long-tail”,meaning it takes many years before they know what their losses are.Lately, however, the light has not only been dim but also grossly misleading in the images it has revealed. That is, the courts’ tendency to grant awards that are both huge and lacking in precedent makes reinsurers’ usual extrapolations or inferences from past data a formula for disaster. Out with Patrick Henry and in with Pogo: “The future ain’t what it used to be.”
但不幸的是過去的經驗因為投保期間過長往往無法完全反映實際的情況，亦即要在許多年之後才能真正知道會發生多少損失，而且最近產業能見度不但越來越差，有時甚至還會誤導，亦即法院不管以前判例，傾向於給予鉅額的賠償，使得再保業者過去推估的公式與結果相差太遠而變成一場大災難。派翠克-亨利不管用，換成Pogo所說: 「未來與過去絕對不同。」
The burgeoning uncertainties of the business, coupled with the entry into reinsurance of many unsophisticated participants, worked in recent years in favor of issuing companies writing a small net line: they were able to keep a far greater percentage of the premiums than the risk. By doing so, the issuing companies sometimes made money on business that was distinctly unprofitable for the issuing and reinsuring companies combined.(This result was not necessarily by intent: issuing companies generally knew no more than reinsurers did about the ultimate costs that would be experienced at higher layers of risk.) Inequities of this sort have been particularly pronounced in lines of insurance in which much change was occurring and losses were soaring; e.g., professional malpractice, D & 0,
products liability, etc. Given these circumstances, it is not surprising that issuing companies remained enthusiastic about writing business long after premiums became woefully inadequate on a gross basis.
產業的不確定性加上許多經驗不足的新進者，使得這幾年保險業者偏好維持低水準的保單淨額，他們能夠吃下比其所能承擔的風險要大得多的保單量，這樣的作法有時在保險與再保公司整體虧錢的情況下，本身甚至還能獲利，(這種結局並不是刻意的，通常保單發行公司對於較高階的風險所生最後成本的了解的不一定比再保公司多) ，這種不合理的情況尤其會發生在環境變化快且成本高漲的時代，如執行業務不當、經理人與產品責任險等，在這些情況下，也難怪保險公司還會積極簽發保單，即使保費毛額已相當不合理之時。
An example of just how disparate results have been for issuing companies versus their reinsurers is provided by the 1984 financials of one of the leaders in large and unusual risks. In that year the company wrote about $6 billion of business and kept around $2 1/2 billion of the premiums, or about 40%. It gave the remaining $3 1/2 billion to reinsurers.On the part of the business kept, the company’s underwriting loss was less than $200 million - an excellent result in that year. Meanwhile, the part laid off produced a loss of over $1.5 billion for the reinsurers. Thus, the issuing company wrote at a combined ratio of well under 110 while its reinsurers, participating in precisely the same policies, came in considerably over 140. This result was not attributable to natural catastrophes; it came from run-of-the-mill insurance losses (occurring,however, in surprising frequency and size). The issuing company’s 1985 report is not yet available, but I would predict it will show that dramatically unbalanced results continued.
最明顯的例子是在1984年有一家大型的同業，在那一年那家公司一共簽下六十億元的保單，在保留其中的40%約二十五億後，將剩下的三十五億轉給再保公司，結果保留部份理賠的損失最後只有不到二億元(算是不錯的成績) ，但是分保出去的部份卻使再保業者蒙受了十五億元的損失，此舉使得保險公司的Combined Ratio不到110，但再保公司卻高達140，而這與天然災害一點關係都沒有(但發生的頻率卻相當高)，完全是業者之間的分配問題，雖然我尚未看到該公司今年的年報，但可想而知這種不平衡的情況一定還繼續維持著。
A few years such as this, and even slow-witted reinsurers can lose interest, particularly in explosive lines where the proper split in premium between issuer and reinsurer remains impossible to even roughly estimate.The behavior of reinsurers finally becomes like that of Mark Twain’s cat:having once sat on a hot stove, it never did so again - but it never again sat on a cold stove, either. Reinsurers have had so many unpleasant surprises in long-tail casualty lines that many have decided (probably correctly) to give up the game entirely, regardless of price inducements. Consequently,there has been a dramatic pull-back of reinsurance capacity in certain important lines.
已有好幾年一些反應較慢的再保業者由於無法對保費作合理的分配，甚至是估算，使得權益因而受損，到最後再保業者的行為有點像馬克吐溫的貓一樣，「一旦被熱爐子燙過一次，便不會再去碰任何爐子，即使是冷的爐子也一樣」，再保業者在長期的意外險方面有太多不愉快的經驗，以至於到最後乾脆放棄(有可能是正確地)該項業務，不管投保價格如何誘人，結果使得某些業務的供給量嚴重短缺。
This development has left many issuing companies under pressure.They can no longer commit their reinsurers, time after time, for tens of millions per policy as they so easily could do only a year or two ago, and they do not have the capital and/or appetite to take on large risks for their own account. For many issuing companies, gross capacity has shrunk much closer to net capacity - and that is often small, indeed.
如此一來許多再保客戶便著急了，他們不能夠再像以前一樣，動不動就將上千萬的保單轉給再保業者，進而也沒有能力與財力自行吃下大額的保單，有的業者的承保毛額萎縮到與承保淨額相當。
At Berkshire we have never played the lay-it-off-at-a-profit game and,until recently, that put us at a severe disadvantage in certain lines. Now the tables are turned: we have the underwriting capability whereas others do not. If we believe the price to be right, we are willing to write a net line larger than that of any but the largest insurers. For instance, we are perfectly willing to risk losing $10 million of our own money on a single event, as long as we believe that the price is right and that the risk of loss is not significantly correlated with other risks we are insuring. Very few insurers are willing to risk half that much on single events - although, just a short while ago, many were willing to lose five or ten times that amount as long as virtually all of the loss was for the account of their reinsurers.
在Berkshire我們從來不玩這類的遊戲，雖然這樣的作法使我們在某些業務處於不利的競爭地位，不過現在整個局勢已改變，我們擁有同業比不上的承保實力，只要我們認為價格合理，我們願意簽下其他大型業者吃不下的保單，例如我們願意承擔一次可能損失1,000萬美元的風險，只要價格合理且其風險與我們已承保的風險無太大的相關。同業間連願意承擔前述一半的都不多見，儘管在不久之前，有再保業者當靠山，許多業者甚至願意吃下十倍以上的保單。
In mid-1985 our largest insurance company, National Indemnity Company, broadcast its willingness to underwrite large risks by running an ad in three issues of an insurance weekly. The ad solicited policies of only large size: those with a minimum premium of $1 million. This ad drew a remarkable 600 replies and ultimately produced premiums totaling about $50 million. (Hold the applause: it’s all long-tail business and it will be at least five years before we know whether this marketing success was also an underwriting success.) Today, our insurance subsidiaries continue to be sought out by brokers searching for large net capacity.
1985年我們旗下保險公司National Indemnity在保險雜誌大幅刊登廣告對外宣傳願意吃下超過百萬美金的大額保單，結果總計收到高達六百封的回函，最後約有五千萬美金的生意成交(先不要高興太早，由於屬於長期保單，至少要經過五年以上才能確定這次成功的行銷也是成功的承保)，現在一般的保險經紀人要接高額的保單第一個一定會想到我們的保險子公司。
As I have said, this period of tightness will pass; insurers and reinsurers will return to underpricing. But for a year or two we should do well in several segments of our insurance business. Mike Goldberg has made many important improvements in the operation (prior mismanagement by your Chairman having provided him ample opportunity to do so). He has been particularly successful recently in hiring young managers with excellent potential. They will have a chance to show their
stuff in 1986.
不過就像我說過的，供給吃緊的狀況不會維持太久，大家最後還是會回到低價競爭的老路，不過一兩年內，我們在幾項業務方面還是有很好的發揮空間，Mike Goldberg 在營運上作了許多的改進(本人先前的管理不當，提供他不少發揮的空間) ，尤其是最近幾年他找了許多深具潛力的優秀人才進來，明年他們將更有機會一顯長才。
Our combined ratio has improved - from 134 in 1984 to 111 in 1985 - but continues to reflect past misdeeds. Last year I told you of the major mistakes I had made in loss-reserving, and promised I would update you annually on loss-development figures. Naturally, I made this promise thinking my future record would be much improved. So far this has not been the case. Details on last year’s loss development are on pages 50-52.They reveal significant underreserving at the end of 1984, as they did in the several years preceding.
Combined Ratio方面也由去年的134進步到今年的111，只不過過去不良的影響還在，去年我曾告訴各位由於本人在損失準備的提列不當，我曾保證會定期跟各位報告，本來我是想說以後的記錄應該會漸漸改善，不過到目前為止，好像並非如此，細節詳後述，去年的損失準備提列與前幾年一樣還是明顯不足。
The only bright spot in this picture is that virtually all of the underreserving revealed in 1984 occurred in the reinsurance area - and there, in very large part, in a few contracts that were discontinued several years ago. This explanation, however, recalls all too well a story told me
many years ago by the then Chairman of General Reinsurance Company.He said that every year his managers told him that “except for the Florida hurricane” or “except for Midwestern tornadoes”, they would have had a terrific year. Finally he called the group together and suggested that they form a new operation - the Except-For Insurance Company - in which they would henceforth place all of the business that they later wouldn’t want to count.
所幸不足的部份主要發生在再保部份，而許多保單已陸續到期，這種解釋使我想起許多年前，通用再保的董事長告訴我的一個小故事，他說每年公司的經理人都告訴他「除了佛羅里達的颶風豁中西部的龍捲風的話，今年的成績一定很好」，到最後實在忍不住他召集所有幹部開會並建議他們乾脆另外成立一個新的部門，叫作「除了」部門專門把他們後來不計入的業務塞在那裏算了。
In any business, insurance or otherwise, “except for” should be excised from the lexicon. If you are going to play the game, you must count the runs scored against you in all nine innings. Any manager who consistently says “except for” and then reports on the lessons he has learned from his mistakes may be missing the only important lesson - namely, that the real mistake is not the act, but the actor.
不管是在保險或其他行業也好，應該把「除了」這個字眼從辭典裏刪除，如果你要參加比賽，就應該把對手所有的得分全部計入，任何一直把「除了」掛在嘴上的經理人，之後只會說又上了一課的人，真正應該上的課，如何換掉演員而不是劇本。
Inevitably, of course, business errors will occur and the wise manager will try to find the proper lessons in them. But the trick is to learn most lessons from the experiences of others. Managers who have learned much from personal experience in the past usually are destined to learn much from personal experience in the future.
當然不可避免的作生意往往會出些差錯，而聰明的經理人一定能從中記取教訓，但這教訓最好是從別人身上學來的，若過去習慣犯錯表示未來還是會繼續犯錯。
GEICO, 38%-owned by Berkshire, reported an excellent year in 1985 in premium growth and investment results, but a poor year - by its lofty standards - in underwriting. Private passenger auto and homeowners insurance were the only important lines in the industry whose results deteriorated significantly during the year. GEICO did not escape the trend,although its record was far better than that of virtually all its major competitors.
Berkshire持有38%股權的GEICO公司，在保費收入成長與投資收益方面皆表現突出，但在核保績效與其過去高標準相較卻表現平平，私家小客車與住宅房屋險是去年度惡化最厲害的險種，GEICO也難逃一劫，雖然它的成績比起其他主要的競爭對手要好得多。
Jack Byrne left GEICO at mid-year to head Fireman’s Fund, leaving behind Bill Snyder as Chairman and Lou Simpson as Vice Chairman. Jack’s performance in reviving GEICO from near-bankruptcy was truly extraordinary, and his work resulted in enormous gains for Berkshire. We owe him a great deal for that.
Jack在年中離開GEICO去主持消防人員基金，留下Bill與Lou擔任正副董事長，Jack之前挽救GEICO免於破產的表現卓著，他的努力使得Berkshire獲益良多，我們欠他的實在是數不清。
We are equally indebted to Jack for an achievement that eludes most outstanding leaders: he found managers to succeed him who have talents as valuable as his own. By his skill in identifying,attracting and developing
Bill and Lou, Jack extended the benefits of his managerial stewardship well beyond his tenure.
其中還包括吸引許多優秀的人才，他找到具有跟他一樣特質的經營階層來繼承他，使得他對公司的貢獻與影響力超過他實際的任期。
Fireman’s Fund Quota-Share Contract
與消防人員基金代操合約
Never one to let go of a meal ticket, we have followed Jack Byrne to Fireman’s Fund (“FFIC”) where he is Chairman and CEO of the holding company.
絕對不要輕易放棄任何一張飯票，結果我們跟著Jack 加入由他擔任控股公司董事長兼總經理的消防人員基金FFIC。
On September 1, 1985 we became a 7% participant in all of the business in force of the FFIC group, with the exception of reinsurance they write for unaffiliated companies. Our contract runs for four years, and provides that our losses and costs will be proportionate to theirs throughout the contract period. If there is no extension, we will thereafter have no participation in any ongoing business. However, for a great many years in the future, we will be reimbursing FFIC for our 7% of the losses that occurred in the September 1, 1985 - August 31, 1989 period.
1985年九月一日我們成為FFIC集團7%的參與者(不包括他們為不相關的公司所接的再保險保單) ，合約為期四年，明訂期間的損失與成本依比例分攤，除非到期前予以展期，否則我們將不再繼續參與，不過在可預見的未來我們仍須分攤FFIC在四年間發生的損失中的7%。
Under the contract FFIC remits premiums to us promptly and we reimburse FFIC promptly for expenses and losses it has paid. Thus, funds generated by our share of the business are held by us for investment. As part of the deal, I’m available to FFIC for consultation about general investment strategy. I’m not involved, however, in specific investment decisions of FFIC, nor is Berkshire involved in any aspect of the company’s underwriting activities.
合約簽訂後FFIC須立即將7%的保費匯給我們，而我們也必須立即開始支付其所發生的任何損失，預收的資金則用在投資之上，合約附帶條件是本人必須隨時提供一般投資諮詢服務給FFIC，但我並不介入特定投資決策，而Berkshire也不參與該公司任何的保險業務。
Currently FFIC is doing about $3 billion of business, and it will probably do more as rates rise. The company’s September 1, 1985 unearned premium reserve was $1.324 billion, and it therefore transferred 7% of this, or $92.7 million, to us at initiation of the contract. We concurrently paid them $29.4 million representing the underwriting expenses that they had incurred on the transferred premium. All of the FFIC business is written by National Indemnity Company, but two-sevenths
of it is passed along to Wesco-Financial Insurance Company (“Wes-FIC”), a new company organized by our 80%-owned subsidiary, Wesco Financial Corporation. Charlie Munger has some interesting comments about Wes-FIC and the reinsurance business on pages 60-62.
目前FFIC 的業務量約達三十億美元，且當費率調漲後規模有可能再增加，該公司在1985年九月的未到期保費準備達十三億美元，所以FFIC匯了其中的7%，相當於九千多萬美金給我們，同時我們也支付了三千萬美金給他們代表他們已預付的理賠費用，這部份的業務完全由National Indemnity承作，之後再將其中的七分之二轉給Wesco的子公司Wes-FIC。在年報後段附有查理對Wes-FIC及其再保險業務的有趣評論。
To the Insurance Segment tables on page 41, we have added a new line, labeled Major Quota Share Contracts. The 1985 results of the FFIC contract are reported there, though the newness of the arrangement makes these results only very rough approximations.
在保險部門我們特別新增一項主要分配合約，不過由於屬於新業務，所有數字只能算是大概的估計。
After the end of the year, we secured another quota-share contract, whose 1986 volume should be over $50 million. We hope to develop more of this business, and industry conditions suggest that we could: a significant number of companies are generating more business than they themselves can prudently handle. Our financial strength makes us an attractive partner for such companies.
到了年底我們又取得一件新合約，明年度的金額大約為五千萬元，我們希望能夠多多擴展這項業務，如果產業環境不錯的話，許多公司產生超過其本身處理能力的業務，而我們堅強的財務實力正是他們希望合作的最好對象。
Marketable Securities
有價證券投資
We show below our 1985 yearend net holdings in marketable equities. All positions with a market value over $25 million are listed, and the interests attributable to minority shareholders of Wesco and Nebraska Furniture Mart are excluded.
下表是1985年底我們帳上持有的有價證券投資，市值超過2,500萬美元的部份，不包含。扣除子公司Wesco及NFM的少數股權。
No. of Shares Cost Market
------------- ---------- ----------
(000s omitted)
1,036,461 Affiliated Publications, Inc. ....... $ 3,516 $ 55,710
900,800 American Broadcasting Companies, Inc. 54,435 108,997
2,350,922 Beatrice Companies, Inc. ............ 106,811 108,142
6,850,000 GEICO Corporation ................... 45,713 595,950
2,379,200 Handy & Harman ...................... 27,318 43,718
847,788 Time, Inc. .......................... 20,385 52,669
1,727,765 The Washington Post Company ......... 9,731 205,172
---------- ----------
267,909 1,170,358
All Other Common Stockholdings ...... 7,201 27,963
---------- ----------
Total Common Stocks $275,110 $1,198,321
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We mentioned earlier that in the past decade the investment environment has changed from one in which great businesses were totally unappreciated to one in which they are appropriately recognized. The Washington Post Company (“WPC”) provides an excellent example.我們之前曾提到過去十年來投資環境已由過去完全不看重大企業的情況轉變成適度的認同，華盛頓郵報就是一個最好的例子。
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.Calculating the price/value ratio required no unusual insights. Most security analysts, media brokers, and media executives would have estimated WPC’s intrinsic business value at $400 to $500 million just as we did. And its $100 million stock market valuation was published daily for all to see. Our advantage, rather, was attitude: we had learned from Ben Graham that the key to successful investing was the purchase of shares in good businesses when market prices were at a large discount from underlying business values.
我們在1973年中以不到當時實質價值四分之一的價位買進股權，計算價格/價值比並不需要有獨到的眼光，大部份的證券分析師、經紀人與媒體經營者跟我們一樣估計該公司的價值約在四億到五億美元之間，但當時其僅一億的股票市值卻是眾人皆知，只是我們具有的優勢是積極的態度，我們從葛拉罕那裏學到成功投資的關鍵是在買進好的公司股票在其股價相對於代表的實際價值被低估的時候。
Most institutional investors in the early 1970s, on the other hand,regarded business value as of only minor relevance when they were deciding the prices at which they would buy or sell. This now seems hard to believe. However, these institutions were then under the spell of academics at prestigious business schools who were preaching a newly-fashioned theory: the stoc market was totally efficient, and therefore calculations of business value - and even thought, itself - were of no importance in investment activities. (We are enormously indebted to those academics: what could be more advantageous in an intellectual contest - whether it be bridge, chess, or stock selection than to have
opponents who have been taught that thinking is a waste of energy?)
在1970年代早期大部份的機構投資人卻認為企業價值與他們考量買進賣出的價格並無太大關聯，現在看來當然令人難以置信，然而當時他們受到知名的商學院所提出的新理論所惑，「股票市場具有完全的效率，因此計算企業的價值對於投資活動一點也不重要」，事後想想我們實在虧欠這些學者太多了，在不管是橋牌、西洋棋或是選股等鬥智的競賽中，還有什麼能讓我們更有利的，當對手被告知思考是白費力氣的一件事。
Through 1973 and 1974, WPC continued to do fine as a business, and intrinsic value grew. Nevertheless, by yearend 1974 our WPC holding showed a loss of about 25%, with market value at $8 million against our cost of $10.6 million. What we had thought ridiculously cheap a year
earlier had become a good bit cheaper as the market, in its infinite wisdom,marked WPC stock down to well below 20 cents on the dollar of intrinsic value.
1973到1974年間華盛頓郵報表現依舊良好使得實質價值持續增加，儘管如此我們在該公司的持股市值卻由原始成本的一仟多萬減少25%變成八百萬美元，本來我們覺得已經夠便宜的東西，沒想到在一年之後具有無比大智慧的市場又將它的標價又向下調整到至少比其實際價值少兩成的地步。
You know the happy outcome. Kay Graham, CEO of WPC, had the brains and courage to repurchase large quantities of stock for the company at those bargain prices, as well as the managerial skills necessary to dramatically increase business values. Meanwhile, investors began to recognize the exceptional economics of the business and the stock price moved closer to underlying value. Thus, we experienced a triple dip: the company’s business value soared upward, per-share business value
increased considerably faster because of stock repurchases and, with a narrowing of the discount, the stock price outpaced the gain in per-share business value.
美好的結局可以預知，Kay Graham-華盛頓郵報的總裁具有無比的智慧與勇氣，除了擁有極佳的管理長才將公司的內在價值進一步提昇之外，更大手筆地以便宜的價格大量買回公司的股份，在此同時投資人開始體認到公司特殊的競爭優勢而使得公司股價回昇到合理的價位。所以我們經歷了三重享受，一來公司本身的價值提昇，二來每股所代表的價值因公司實施庫藏股又增加，三來隨著折價幅度逐漸縮小，股價的表現超越公司價值實際增加。
We hold all of the WPC shares we bought in 1973, except for those sold back to the company in 1985’s proportionate redemption. Proceeds from the redemption plus yearend market value of our holdings total $221 million.
除了1985年依持股比例賣回給公司的股份外，其他的持股皆未變動，年底持股的市值加上賣回股份所得的收入合計為二億二仟萬美元。
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. Our gain would have far exceeded the gain in the general market, an outcome reflecting the exceptional economics of the media business. The extra $160 million or so we gained through ownership of WPC came, in very large part, from the superior nature of the managerial decisions made by Kay as compared to those made by managers of most media companies. Her stunning business success has in large part gone unreported but among Berkshire shareholders it should not go unappreciated.
假若在當初1973年中我們將一仟萬隨便投資一家當時最熱門的媒體事業，則到今年年底我們持股的市值大約會在四到六仟萬元之間，這結果顯然比一般市場的平均表現高出許多，其原因在於媒體的特殊競爭力，至於再多出來的一億六仟萬部份是因為華盛頓郵報的總裁Kay作出的決策優於其他媒體事業的經營者，雖然她驚人的事業成就並未有人大幅報導，但Berkshire的所有股東卻不能不加以珍惜。
Our Capital Cities purchase, described in the next section, required me to leave the WPC Board early in 1986. But we intend to hold indefinitely whatever WPC stock FCC rules allow us to. We expect WPC’s business values to grow at a reasonable rate, and we know that management is both able and shareholder-oriented. However, the market now values the company at over $1.8 billion, and there is no way that the value can progress from that level at a rate anywhere close to the rate possible when the company’s valuation was only $100 million. Because market prices have also been bid up for our other holdings, we face the same vastly-reduced potential throughout our portfolio.
由於我們買下資本城股份(後面會詳描述)使得我必須在1986年被迫離開華盛頓郵報的董事會，但只要法令許可我們將無限期的持有華盛頓郵報的股份，我們期待該公司的價值持續穩定成長，我們也知道公司的管理階層有才能且完全以股東的利益為導向，不過該公司的市值目前已增加為十八億美元，公司的價值很難再以當初市值僅一億美元時的速度成長，也由於我們其他主要的持股股價大多已反映，所以我們的投資組合很難再像過去一般具成長潛力。
You will notice that we had a significant holding in Beatrice Companies at yearend. This is a short-term arbitrage holding - in effect, a parking place for money (though not a totally safe one, since deals sometimes fall through and create substantial losses). We sometimes enter the arbitrage field when we have more money than ideas, but only to participate in announced mergers and sales. We would be a lot happier if the funds currently employed on this short-term basis found a long-term home. At the moment, however, prospects are bleak.
或許你會發現年底我們有一大筆Beatrice公司的持股，這是屬於短期的套利動作，算是閒置資金暫時的去處(雖然不是百分之百安全，因為交易有時也會發生問題導致重大的損失)，當資金過多時，我們偶爾也會參與套利活動，但大多只限於已宣布的購併案，當然若能為這些資金找到更長期可靠的去處我們會更高興，但現階段卻找不到任何合適的對象。
At yearend our insurance subsidiaries had about $400 million in tax-exempt bonds, of which $194 million at amortized cost were issues of Washington Public Power Supply System (“WPPSS”) Projects 1, 2, and 3. 1 discussed this position fully last year, and explained why we would not
disclose further purchases or sales until well after the fact (adhering to the policy we follow on stocks). Our unrealized gain on the WPPSS bonds at yearend was $62 million, perhaps one-third arising from the upward movement of bonds generally, and the remainder from a more positive
investor view toward WPPSS 1, 2, and 3s. Annual tax-exempt income from our WPPSS issues is about $30 million.
到年底為止，我們旗下保險子公司大約持有四億美元的免稅債券，其中大約有一半是WPPSS華盛頓公用電力供應系統發行的債券(該公司我已於去年詳儘的說明，同時也解釋在事情塵埃落定之前我們為何不願進一步說明公司的進出動作，就像我們投資股票時一樣，到年底我們在該債券的未實現投資利益為6,200萬美元，三分之一的原因是由於債券價格普遍上漲，其餘則是投資人對於WPPSS一、二、三期計劃有較正面的看法，我們每年從該投資所獲得的免稅利益大約為3,000萬美元。
Capital Cities/ABC, Inc.
資本城/ABC
Right after yearend, Berkshire purchased 3 million shares of Capital Cities/ABC, Inc. (“Cap Cities”) at $172.50 per share, the market price of such shares at the time the commitment was made early in March, 1985.I’ve been on record for many years about the management of Cap Cities: I think it is the best of any publicly-owned company in the country. And Tom Murphy and Dan Burke are not only great managers, they are precisely the sort of fellows that you would want your daughter to marry. It is a privilege to be associated with them - and also a lot of fun, as any of you who know them will understand.
大約在年後，Berkshire買進約300萬股的資本城/ABC股票，(每股價格172.5美元，這約當於1985年三月洽談時的市價)，我追蹤該公司的管理績效已有許多年，我認為他們是上市公司當中最優秀的，湯姆墨菲與丹柏克不但是最優秀的管理階層，也是那種你會想把自己的女兒嫁給他的那一種人，跟他們一起合作實在是我的榮幸，也相當愉快，若相信各位若認識他們應該也會有這種感覺。
Our purchase of stock helped Cap Cities finance the $3.5 billion acquisition of American Broadcasting Companies. For Cap Cities, ABC is a major undertaking whose economics are likely to be unexciting over the next few years. This bothers us not an iota; we can be very patient. (No
matter how great the talent or effort, some things just take time: you can’t produce a baby in one month by getting nine women pregnant.)
我們的股權投資將使得資本城因此取得35億美元的資金用來購併美國廣播公司ABC，雖然對資本城來說，或許ABC的效益無法在短暫幾年內就立竿見影，但我們很有耐心一點也不心急，畢竟就算是才華與努力俱備，還是需要時間來發酵，就算你讓九個女人同時懷孕，也不可能讓小孩一個月就生出來。
As evidence of our confidence, we have executed an unusual agreement: for an extended period Tom, as CEO (or Dan, should he be CEO)votes our stock. This arrangement was initiated by Charlie and me, not by Tom. We also have restricted ourselves in various ways regarding sale of our shares. The object of these restrictions is to make sure that our block does not get sold to anyone who is a large holder (or intends to become a large holder) without the approval of management, an arrangement similar to ones we initiated some years ago at GEICO and Washington Post.
為了展現我們的信心，我們特別與管理階層簽訂了一項特別協議，那就是在一定的期間內，我們的投票權將交給擔任CEO的湯姆墨菲(或是接任的丹柏克)來處理。事實上這項提案是由我與查理主動提出，同時我們還自我限制了一些賣出股份的條件，這個動作主要是為了確保我們出售的股份不會落到未經現有管理階層同意的人士身上，有點類似幾年前我們與吉列刮鬍刀與華盛頓郵報簽訂的協議。
Since large blocks frequently command premium prices, some might think we have injured Berkshire financially by creating such restrictions.Our view is just the opposite. We feel the long-term economic prospects for these businesses - and, thus, for ourselves as owners - are enhanced by the arrangements. With them in place, the first-class managers with whom we have aligned ourselves can focus their efforts entirely upon running the businesses and maximizing long-term values for owners. Certainly this is much better than having those managers distracted by “revolving-door capitalists” hoping to put the company “in play”. (Of course, some managers place their own interests above those of the company and its owners and deserve to be shaken up - but, in making investments, we try to steer clear of this type.)
由於有時鉅額的股票交易往往必須溢價取得，有些人可能認為這樣的限制可能會損及Berkshire股東的權益，不過我們的看法正好完全相反，身為公司的所有權人，我們認定這些企業的長期經濟利益將因為這些限制而更加鞏固，因為如此一來專業經理人便能全心全意的為公司打拼，進而為全體股東創造最大的利益，很顯然的這比讓一些經理人整天為了換不同的老闆而分心，(當然有些經理人會把自己的利益擺在公司的利益之前，所以我們在投資時會儘量避開這類的經營階層)
Today, corporate instability is an inevitable consequence of widely-diffused ownership of voting stock. At any time a major holder can surface, usually mouthing reassuring rhetoric but frequently harboring uncivil intentions. By circumscribing our blocks of stock as we often do,we intend to promote stability where it otherwise might be lacking. That kind of certainty, combined with a good manager and a good business,provides excellent soil for a rich financial harvest. That’s the economic
case for our arrangements.
今天企業的不穩定性是股權分散的必然結果，一家公司隨時都會有大股東浮上檯面，滿口仁義道德但實際上卻包藏禍心，我們常藉由鎖住自身持有的股權來宣示對公司穩定的支持，這種安定感加上好的經營階層與企業型態，是讓企業獲利豐收的沃土，這就是我們會這樣安排的用意所在。
The human side is just as important. We don’t want managers we like and admire - and who have welcomed a major financial commitment by us - to ever lose any sleep wondering whether surprises might occur because of our large ownership. I have told them there will be no surprises, and these agreements put Berkshire’s signature where my mouth is. That signature also means the managers have a corporate commitment and therefore need not worry if my personal participation in Berkshire’s affairs ends prematurely (a term I define as any age short of three digits).
當然人性面也很重要，我們不希望我們欣賞與推崇的經理人，在歡迎我們的加入後，會擔心一覺醒來，因為我們持有重要股權，所有事情一夕生變。我告訴他們絕對放心，我們一定說話算話，而且也包括Berkshire公司的承諾，萬一我個人發生了什麼不幸(意思是指我本人活不到一百歲就掛了)。
Our Cap Cities purchase was made at a full price, reflecting the very considerable enthusiasm for both media stocks and media properties that has developed in recent years (and that, in the case of some property purchases, has approached a mania). it’s no field for bargains. However,our Cap Cities investment allies us with an exceptional combination of properties and people - and we like the opportunity to participate in size.
當然我們投資資本城的這次交易並未佔到什麼便宜，這反應出近年來媒體事業的蓬勃發展(當然還比不上某些購併案的瘋狂)，事實上也沒有多少討價還價的餘地，但重點是這項投資讓我們能與這傑出的人才與事業結合在一起，而且是相當龐大的規模。
Of course, some of you probably wonder why we are now buying Cap Cities at $172.50 per share given that your Chairman, in a characteristic burst of brilliance, sold Berkshire’s holdings in the same company at $43 per share in 1978-80. Anticipating your question, I spent much of 1985 working on a snappy answer that would reconcile these acts.
至於有人可能會覺得很奇怪，為何同樣一家公司，你們的董事長在五、六年前以43塊的價錢賣掉，而現在卻以172.5塊的高價買回，有關這個問題，容我在多花一點時間，想一個漂亮一點的答案給各位。
A little more time, please.
拜託!再給我多一點的時間。
Acquisition of Scott & Fetzer
史考特飛茲購併案
Right after yearend we acquired The Scott & Fetzer Company (“Scott Fetzer”) of Cleveland for about $320 million. (In addition, about $90 million of pre-existing Scott Fetzer debt remains in place.) In the next section of this report I describe the sort of businesses that we wish to buy for Berkshire. Scott Fetzer is a prototype - understandable, large, well-managed, a good earner.
同一期間我們還花斥資三億二千萬美金購併了位於克里夫蘭的史考特飛茲，(此外該公司原本的9,000萬債務將繼續存在)，下一個段落我將會說明Berkshire意欲購併公司的一些標準，史考特飛茲就是個典型的例子-易懂、夠大、管理佳、很會賺錢。
The company has sales of about $700 million derived from 17 businesses, many leaders in their fields. Return on invested capital is good to excellent for most of these businesses. Some well-known products are Kirby home-care systems, Campbell Hausfeld air compressors, and Wayne burners and water pumps.
該公司有17項事業，年營業額約七億美金，很多都是該行的領導者，投資報酬率相當高，擁有許多知名品牌，如寇比家護系統、空氣壓縮機、瓦斯爐、打水pump等。
World Book, Inc. - accounting for about 40% of Scott Fetzer’s sales and a bit more of its income - is by far the company’s largest operation. It also is by far the leader in its industry, selling more than twice as many encyclopedia sets annually as its nearest competitor. In fact, it sells more sets in the U.S. than its four biggest competitors combined.
另外著名的世界百科全書約佔該公司銷售額的四成，是主要的營業項目之一，其銷售量比起其他四家同業的量還多。
Charlie and I have a particular interest in the World Book operation because we regard its encyclopedia as something special. I’ve been a fan (and user) for 25 years, and now have grandchildren consulting the sets just as my children did. World Book is regularly rated the most useful encyclopedia by teachers, librarians and consumer buying guides. Yet it sells for less than any of its major competitors. Childcraft, another World Book, Inc. product, offers similar value. This combination of exceptional products and modest prices at World Book, Inc. helped make us willing to pay the price demanded for Scott Fetzer, despite declining results for many companies in the direct-selling industry.
我和查理對世界百科全書特別感興趣，事實上我讀他們的書已有25年的歷史，現在連我自己的孫子都有一套，它被所有的老師、圖書館與讀者評選為最有用的百科全書，而且它的售價比起同類型的書還便宜，這種價美物廉產品的結合使得我們願意以該公司提出的價格進行投資，儘管直銷業近幾年來表現並不出色。
An equal attraction at Scott Fetzer is Ralph Schey, its CEO for nine years. When Ralph took charge, the company had 31 businesses, the result of an acquisition spree in the 1960s. He disposed of many that did not fit or had limited profit potential, but his focus on rationalizing the original potpourri was not so intense that he passed by World Book when it became available for purchase in 1978. Ralph’s operating and capital-allocation record is superb, and we are delighted to be associated with him.
另外值得注意的是擔任該公司總裁已九年的Ralph Schey，由於1960年代的購併風潮，當他上任時，該公司共有多達31項的事業，他大刀闊斧將不合適或不賺錢的事業處置掉，他在資本分配上的功力相當傑出，我們很高興能與他一起共事。
The history of the Scott Fetzer acquisition is interesting, marked by some zigs and zags before we became involved. The company had been an announced candidate for purchase since early 1984. A major investment banking firm spent many months canvassing scores of prospects, evoking interest from several. Finally, in mid-1985 a plan of sale, featuring heavy participation by an ESOP (Employee Stock Ownership Plan), was approved by shareholders. However, as difficulty in closing
followed, the plan was scuttled.
事實上購併史考特飛茲的過程相當有趣，在我們介入之前還有段小插曲，早在1984年便傳出該公司有意要出售，一家投資銀行顧問花了好幾個月編織了許多美麗的遠景，以吸引一些買主上門，最後在1985年中一項具有員工認股計劃特色的出售案為股東大會所通過，然而到了最後節骨眼卻由於特定因素被擱置。
I had followed this corporate odyssey through the newspapers. On October 10, well after the ESOP deal had fallen through, I wrote a short letter to Ralph, whom I did not know. I said we admired the company’s record and asked if he might like to talk. Charlie and I met Ralph for dinner in Chicago on October 22 and signed an acquisition contract the following week.
我在報上看到這項消息，立刻寫了一封簡短的信給Ralph Schey，雖然當時我並不認識他本人，我說我們很欣賞公司過去的表現，不知道他有沒有興趣與我們談一談，不久我與查理便在芝加哥與Ralph碰面共進晚餐，並在隔週正式簽定購併合約。
The Scott Fetzer acquisition, plus major growth in our insurance business, should push revenues above $2 billion in 1986, more than double those of 1985.
由於這項購併案與原本保險事業的大幅成長，將使明年公司的營收超越二十億美元，大概是今年的兩倍。
Miscellaneous
其他事項
The Scott Fetzer purchase illustrates our somewhat haphazard approach to acquisitions. We have no master strategy, no corporate planners delivering us insights about socioeconomic trends, and no staff to investigate a multitude of ideas presented by promoters and intermediaries.Instead, we simply hope that something sensible comes along - and, when it does, we act.
史考特飛茲購併案充份說明了我們對於購併採取隨性的態度，我們並沒有任何特定的策略與計劃，也沒有專人來研究一些仲介者提供的企劃案，反而我們傾向一切順其自然，反正時候到了，我們就會有所行動。
To give fate a helping hand, we again repeat our regular “business wanted” ad. The only change from last year’s copy is in (1): because we continue to want any acquisition we make to have a measurable impact on Berkshire’s financial results, we have raised our minimum profit requirement.
為了主動向命運招手，我們依慣例還是列出徵求被購併企業的小廣告，今年惟一的小變動是第一項獲利的標準略微提高，主要是因為我們期望購併能為Berkshire帶來明顯的改變:
Here’s what we’re looking for:
(1) large purchases (at least $10 million of after-tax earnings),
(2) demonstrated consistent earning power (future projections are of little interest to us, nor are “turn-around” situations),
(3) businesses earning good returns on equity while employing little or no debt,
(4) management in place (we can’t supply it),
(5) simple businesses (if there’s lots of technology, we won’t understand it),
(6) an offering price (we don’t want to waste our time or that of the seller by talking, even preliminarily,about a transaction when price is unknown).
我們希望的企業是
(1)鉅額交易(每年稅後盈餘至少有一千萬美元)
(2)持續穩定獲利(我們對有遠景或具轉機的公司沒興趣)
(3)高股東報酬率(並甚少舉債)
(4)具備管理階層(我們無法提供)
(5)簡單的企業(若牽涉到太多高科技，我們弄不懂)
(6)合理的價格(在價格不確定前，我們不希望浪費自己與對方太多時間)
We will not engage in unfriendly takeovers. We can promise complete confidentiality and a very fast answer - customarily within five minutes - as to whether we’re interested. We prefer to buy for cash, but will consider issuance of stock when we receive as much in intrinsic business value as we
give. Indeed, following recent advances in the price of Berkshire stock,transactions involving stock issuance may be quite feasible. We invite potential sellers to check us out by contacting people with whom we have done business in the past. For the right business - and the right people - we can provide a good home.
我們不會進行敵意購併，並承諾完全保密並儘快答覆是否感興趣(通常不超過五分鐘) ，我們傾向採現金交易，除非我們所換得的實質價值跟我們付出的一樣多，否則不考慮發行股份，當然由於最近Berkshire股價大幅上漲，發行新股也是可考慮的方案。我們歡迎可能的賣方與那些過去與我們合作過的對象打聽，對於那些好的公司與好的經營階層，我們可以提供一個好的歸屬。
On the other hand, we frequently get approached about acquisitions that don’t come close to meeting our tests: new ventures, turnarounds,auction-like sales, and the ever-popular (among brokers) “I’m-sure-something-will-work-out-if-you-people-get-to-know-each-other”. None of these attracts us in the least.
另一方面我們也持續接到一些不符合我們條件的詢問，包括新事業、轉機股、拍賣案以及最常見的仲介案(那些說你們要是能過碰一下面，一定會感興趣之類的) 。在此重申我們對這些一點興趣都沒有。
* * *
Besides being interested in the purchases of entire businesses as described above, we are also interested in the negotiated purchase of large,but not controlling, blocks of stock, as in our Cap Cities purchase. Such purchases appeal to us only when we are very comfortable with both the economics of the business and the ability and integrity of the people running the operation. We prefer large transactions: in the unusual case we might do something as small as $50 million (or even smaller), but our preference is for commitments many times that size.
除了以上買下整家公司的購併案外，我們也會考慮買進一大部份不具控制權的股份，就像我們在資本城這個Case一樣，當然這要是我們對於該事業與經營階層都感到認同時才有可能，而且是要大筆的交易，最少也要5,000萬美金以上，當然是越多越好。
* * *
About 96.8% of all eligible shares participated in Berkshire’s 1985 shareholder-designated contributions program. Total contributions made through the program were $4 million, and 1,724 charities were recipients.We conducted a plebiscite last year in order to get your views about this
program, as well as about our dividend policy. (Recognizing that it’s possible to influence the answers to a question by the framing of it, we attempted to make the wording of ours as neutral as possible.) We present the ballot and the results in the Appendix on page 69. I think it’s fair to
summarize your response as highly supportive of present policies and your group preference - allowing for the tendency of people to vote for the status quo - to be for increasing the annual charitable commitment as our asset values build.
今年破記錄的有96.8%的有效股權參與1985年的股東指定捐贈計劃，總計約四百多萬美元捐出的款項分配給1,724家慈善機構，同時去年我們針對股東對於這項計劃與股利政策的看法，進行全面性的公民投票，包含一個可以讓你表達對這項計劃的意見(例如應否繼續、每一股應捐贈多少等等)你可能會有興趣知道事實上在此之前從未有一家公司是以股東的立場來決定公司捐款的去向(為免劃地自限，我們儘量將問題的措辭保持彈性) ，在股東會的資料中有相關的選票與結果，我們各位的回應對於本公司現行政策的執行具有重要的參考價值。
We urge new shareholders to read the description of our shareholder-designated contributions program that appears on pages 66 and 67. If you wish to participate in future programs, we strongly urge that you immediately make sure that your shares are registered in the name of the actual owner, not in “street” name or nominee name. Shares not so registered on September 30, 1986 will be ineligible for the 1986 program.
我們也建議新股東趕快閱讀相關資訊，若你也想參加的話，我們強烈建議你趕快把股份從經紀人那兒改登記於自己的名下。各位必須在1986年9月30日之前完成登記，才有權利參與1986年的捐贈計畫。
* * *
Five years ago we were required by the Bank Holding Company Act of 1969 to dispose of our holdings in The Illinois National Bank and Trust Company of Rockford, Illinois. Our method of doing so was unusual: we announced an exchange ratio between stock of Rockford Bancorp Inc. (the
Illinois National’s holding company) and stock of Berkshire, and then let each of our shareholders - except me - make the decision as to whether to exchange all, part, or none of his Berkshire shares for Rockford shares. I took the Rockford stock that was left over and thus my own holding in Rockford was determined by your decisions. At the time I said, “This technique embodies the world’s oldest and most elementary system of fairly dividing an object. Just as when you were a child and one person cut the cake and the other got first choice, I have tried to cut the company fairly,but you get first choice as to which piece you want.”
五年前由於銀行控股公司法的通過，使得我們必須將旗下所有伊利諾銀行的股權處份掉，當時我們的作法是相當特別的，我們宣佈Berkshire與洛克福銀行集團(伊利諾銀行的母公司)的換股比率，讓除了我本人以外的所有股東自行決定是否將其所有或部份Berkshire的股份轉獨立的洛克福銀行集團股份，剩下的部份由我本人全數吸收，當時我曾說，這種分法是最古老且最有效分配一件東西的方法，就像是小時候大人會叫一個小孩切蛋糕，然後叫另一個小孩先選一塊一樣，由我先將公司切成兩半，在讓所有股東自由選擇。
Last fall Illinois National was sold. When Rockford’s liquidation is completed, its shareholders will have received per-share proceeds about equal to Berkshire’s per-share intrinsic value at the time of the bank’s sale.I’m pleased that this five-year result indicates that the division of the cake was reasonably equitable.
去年伊利諾銀行正式出售，當洛克福銀行集團清算結束，所有股東所收到的售股收入與每股Berkshire的價值相當，我很高興五年後看來當時那塊蛋糕切的相當公平。
Last year I put in a plug for our annual meeting, and you took me up on the invitation. Over 250 of our more than 3,000 registered shareholders showed up. Those attending behaved just as those present in previous years, asking the sort of questions you would expect from intelligent and interested owners. You can attend a great many annual meetings without running into a crowd like ours. (Lester Maddox, when Governor of Georgia, was criticized regarding the state’s abysmal prison
system. “The solution”, he said, “is simple. All we need is a better class of prisoners.” Upgrading annual meetings works the same way.)
去年超過3,000名的股東中大約有250名出席股東會，與會者的水準與去年相當，問的問題顯示大家都相當有智慧且真正關心公司的股東，這在其他上市公司的股東會是很少見到的，Lester Maddox-在擔任喬治亞州州長時曾批評當時糟糕透頂的獄政制度:「解決的方法其實很簡單，我們要做的就是提昇人犯的素質水準」，我想要提昇股東會的水準也是一樣的道理。
I hope you come to this year’s meeting, which will be held on May 20 in Omaha. There will be only one change: after 48 years of allegiance to another soft drink, your Chairman, in an unprecedented display of behavioral flexibility, has converted to the new Cherry Coke. Henceforth, it will be the Official Drink of the Berkshire Hathaway Annual Meeting.
Berkshire的股東年會預計於1986年五月二十在奧瑪哈舉行，我希望各位屆時都能參加，今年將會有一項改變，那就是經過48年的堅持，本人將進行一項前所未有的習慣改變，將平常喝的飲料改成新的櫻桃可口可樂，而它也將是本次Berkshire股東大會的指定飲料。
And bring money: Mrs. B promises to have bargains galore if you will pay her a visit at The Nebraska Furniture Mart after the meeting.
最後記得帶錢來，B太太已經答應若股東在會議期間造訪她的家具店將會有意想不到的折扣優惠!!
Warren E. Buffett
Chairman of the Board
March 4, 1986
華倫．巴菲特
董事會主席
1986年3月4日
(6) an offering price (we don’t want to waste our time or that of the seller by talking, even preliminarily,about a transaction when price is unknown).
我們希望的企業是
(1)鉅額交易(每年稅後盈餘至少有一千萬美元)
(2)持續穩定獲利(我們對有遠景或具轉機的公司沒興趣)
(3)高股東報酬率(並甚少舉債)
(4)具備管理階層(我們無法提供)
(5)簡單的企業(若牽涉到太多高科技，我們弄不懂)
(6)合理的價格(在價格不確定前，我們不希望浪費自己與對方太多時間)
We will not engage in unfriendly takeovers. We can promise complete confidentiality and a very fast answer - customarily within five minutes - as to whether we’re interested. We prefer to buy for cash, but will consider issuance of stock when we receive as much in intrinsic business value as we
give. Indeed, following recent advances in the price of Berkshire stock,transactions involving stock issuance may be quite feasible. We invite potential sellers to check us out by contacting people with whom we have done business in the past. For the right business - and the right people - we can provide a good home.
我們不會進行敵意購併，並承諾完全保密並儘快答覆是否感興趣(通常不超過五分鐘) ，我們傾向採現金交易，除非我們所換得的實質價值跟我們付出的一樣多，否則不考慮發行股份，當然由於最近Berkshire股價大幅上漲，發行新股也是可考慮的方案。我們歡迎可能的賣方與那些過去與我們合作過的對象打聽，對於那些好的公司與好的經營階層，我們可以提供一個好的歸屬。
On the other hand, we frequently get approached about acquisitions that don’t come close to meeting our tests: new ventures, turnarounds,auction-like sales, and the ever-popular (among brokers) “I’m-sure-something-will-work-out-if-you-people-get-to-know-each-other”. None of these attracts us in the least.
另一方面我們也持續接到一些不符合我們條件的詢問，包括新事業、轉機股、拍賣案以及最常見的仲介案(那些說你們要是能過碰一下面，一定會感興趣之類的) 。在此重申我們對這些一點興趣都沒有。
* * *
Besides being interested in the purchases of entire businesses as described above, we are also interested in the negotiated purchase of large,but not controlling, blocks of stock, as in our Cap Cities purchase. Such purchases appeal to us only when we are very comfortable with both the economics of the business and the ability and integrity of the people running the operation. We prefer large transactions: in the unusual case we might do something as small as $50 million (or even smaller), but our preference is for commitments many times that size.
除了以上買下整家公司的購併案外，我們也會考慮買進一大部份不具控制權的股份，就像我們在資本城這個Case一樣，當然這要是我們對於該事業與經營階層都感到認同時才有可能，而且是要大筆的交易，最少也要5,000萬美金以上，當然是越多越好。
* * *
About 96.8% of all eligible shares participated in Berkshire’s 1985 shareholder-designated contributions program. Total contributions made through the program were $4 million, and 1,724 charities were recipients.We conducted a plebiscite last year in order to get your views about this
program, as well as about our dividend policy. (Recognizing that it’s possible to influence the answers to a question by the framing of it, we attempted to make the wording of ours as neutral as possible.) We present the ballot and the results in the Appendix on page 69. I think it’s fair to
summarize your response as highly supportive of present policies and your group preference - allowing for the tendency of people to vote for the status quo - to be for increasing the annual charitable commitment as our asset values build.
今年破記錄的有96.8%的有效股權參與1985年的股東指定捐贈計劃，總計約四百多萬美元捐出的款項分配給1,724家慈善機構，同時去年我們針對股東對於這項計劃與股利政策的看法，進行全面性的公民投票，包含一個可以讓你表達對這項計劃的意見(例如應否繼續、每一股應捐贈多少等等)你可能會有興趣知道事實上在此之前從未有一家公司是以股東的立場來決定公司捐款的去向(為免劃地自限，我們儘量將問題的措辭保持彈性) ，在股東會的資料中有相關的選票與結果，我們各位的回應對於本公司現行政策的執行具有重要的參考價值。
We urge new shareholders to read the description of our shareholder-designated contributions program that appears on pages 66 and 67. If you wish to participate in future programs, we strongly urge that you immediately make sure that your shares are registered in the name of the actual owner, not in “street” name or nominee name. Shares not so registered on September 30, 1986 will be ineligible for the 1986 program.
我們也建議新股東趕快閱讀相關資訊，若你也想參加的話，我們強烈建議你趕快把股份從經紀人那兒改登記於自己的名下。各位必須在1986年9月30日之前完成登記，才有權利參與1986年的捐贈計畫。
* * *
Five years ago we were required by the Bank Holding Company Act of 1969 to dispose of our holdings in The Illinois National Bank and Trust Company of Rockford, Illinois. Our method of doing so was unusual: we announced an exchange ratio between stock of Rockford Bancorp Inc. (the
Illinois National’s holding company) and stock of Berkshire, and then let each of our shareholders - except me - make the decision as to whether to exchange all, part, or none of his Berkshire shares for Rockford shares. I took the Rockford stock that was left over and thus my own holding in Rockford was determined by your decisions. At the time I said, “This technique embodies the world’s oldest and most elementary system of fairly dividing an object. Just as when you were a child and one person cut the cake and the other got first choice, I have tried to cut the company fairly,but you get first choice as to which piece you want.”
五年前由於銀行控股公司法的通過，使得我們必須將旗下所有伊利諾銀行的股權處份掉，當時我們的作法是相當特別的，我們宣佈Berkshire與洛克福銀行集團(伊利諾銀行的母公司)的換股比率，讓除了我本人以外的所有股東自行決定是否將其所有或部份Berkshire的股份轉獨立的洛克福銀行集團股份，剩下的部份由我本人全數吸收，當時我曾說，這種分法是最古老且最有效分配一件東西的方法，就像是小時候大人會叫一個小孩切蛋糕，然後叫另一個小孩先選一塊一樣，由我先將公司切成兩半，在讓所有股東自由選擇。
Last fall Illinois National was sold. When Rockford’s liquidation is completed, its shareholders will have received per-share proceeds about equal to Berkshire’s per-share intrinsic value at the time of the bank’s sale.I’m pleased that this five-year result indicates that the division of the cake was reasonably equitable.
去年伊利諾銀行正式出售，當洛克福銀行集團清算結束，所有股東所收到的售股收入與每股Berkshire的價值相當，我很高興五年後看來當時那塊蛋糕切的相當公平。
Last year I put in a plug for our annual meeting, and you took me up on the invitation. Over 250 of our more than 3,000 registered shareholders showed up. Those attending behaved just as those present in previous years, asking the sort of questions you would expect from intelligent and interested owners. You can attend a great many annual meetings without running into a crowd like ours. (Lester Maddox, when Governor of Georgia, was criticized regarding the state’s abysmal prison
system. “The solution”, he said, “is simple. All we need is a better class of prisoners.” Upgrading annual meetings works the same way.)
去年超過3,000名的股東中大約有250名出席股東會，與會者的水準與去年相當，問的問題顯示大家都相當有智慧且真正關心公司的股東，這在其他上市公司的股東會是很少見到的，Lester Maddox-在擔任喬治亞州州長時曾批評當時糟糕透頂的獄政制度:「解決的方法其實很簡單，我們要做的就是提昇人犯的素質水準」，我想要提昇股東會的水準也是一樣的道理。
I hope you come to this year’s meeting, which will be held on May 20 in Omaha. There will be only one change: after 48 years of allegiance to another soft drink, your Chairman, in an unprecedented display of behavioral flexibility, has converted to the new Cherry Coke. Henceforth, it will be the Official Drink of the Berkshire Hathaway Annual Meeting.
Berkshire的股東年會預計於1986年五月二十在奧瑪哈舉行，我希望各位屆時都能參加，今年將會有一項改變，那就是經過48年的堅持，本人將進行一項前所未有的習慣改變，將平常喝的飲料改成新的櫻桃可口可樂，而它也將是本次Berkshire股東大會的指定飲料。
And bring money: Mrs. B promises to have bargains galore if you will pay her a visit at The Nebraska Furniture Mart after the meeting.
最後記得帶錢來，B太太已經答應若股東在會議期間造訪她的家具店將會有意想不到的折扣優惠!!
Warren E. Buffett
Chairman of the Board
March 4, 1986
華倫．巴菲特
董事會主席
1986年3月4日