1977 年致股东信 · 官方原文 + 完整中文翻译 + 老董解读（初稿）

官方英文原文

To the Stockholders of Berkshire Hathaway Inc.:

     Operating earnings in 1977 of $21,904,000, or $22.54 per 
share, were moderately better than anticipated a year ago.  Of 
these earnings, $1.43 per share resulted from substantial 
realized capital gains by Blue Chip Stamps which, to the extent 
of our proportional interest in that company, are included in our 
operating earnings figure.  Capital gains or losses realized 
directly by Berkshire Hathaway Inc. or its insurance subsidiaries 
are not included in our calculation of operating earnings.  While 
too much attention should not be paid to the figure for any 
single year, over the longer term the record regarding aggregate 
capital gains or losses obviously is of significance.

     Textile operations came in well below forecast, while the 
results of the Illinois National Bank as well as the operating 
earnings attributable to our equity interest in Blue Chip Stamps 
were about as anticipated.  However, insurance operations, led 
again by the truly outstanding results of Phil Liesche’s 
managerial group at National Indemnity Company, were even better 
than our optimistic expectations.

     Most companies define “record” earnings as a new high in 
earnings per share.  Since businesses customarily add from year 
to year to their equity base, we find nothing particularly 
noteworthy in a management performance combining, say, a 10% 
increase in equity capital and a 5% increase in earnings per 
share.  After all, even a totally dormant savings account will 
produce steadily rising interest earnings each year because of 
compounding.

     Except for special cases (for example, companies with 
unusual debt-equity ratios or those with important assets carried 
at unrealistic balance sheet values), we believe a more 
appropriate measure of managerial economic performance to be 
return on equity capital.  In 1977 our operating earnings on 
beginning equity capital amounted to 19%, slightly better than 
last year and above both our own long-term average and that of 
American industry in aggregate.  But, while our operating 
earnings per share were up 37% from the year before, our 
beginning capital was up 24%, making the gain in earnings per 
share considerably less impressive than it might appear at first 
glance.

     We expect difficulty in matching our 1977 rate of return 
during the forthcoming year.  Beginning equity capital is up 23% 
from a year ago, and we expect the trend of insurance 
underwriting profit margins to turn down well before the end of 
the year.  Nevertheless, we expect a reasonably good year and our 
present estimate, subject to the usual caveats regarding the 
frailties of forecasts, is that operating earnings will improve 
somewhat on a per share basis during 1978.

Textile Operations

     The textile business again had a very poor year in 1977.  We 
have mistakenly predicted better results in each of the last two 
years.  This may say something about our forecasting abilities, 
the nature of the textile industry, or both.  Despite strenuous 
efforts, problems in marketing and manufacturing have persisted.  
Many difficulties experienced in the marketing area are due 
primarily to industry conditions, but some of the problems have 
been of our own making.

     A few shareholders have questioned the wisdom of remaining 
in the textile business which, over the longer term, is unlikely 
to produce returns on capital comparable to those available in 
many other businesses.  Our reasons are several: (1) Our mills in 
both New Bedford and Manchester are among the largest employers 
in each town, utilizing a labor force of high average age 
possessing relatively non-transferable skills.  Our workers and 
unions have exhibited unusual understanding and effort in 
cooperating with management to achieve a cost structure and 
product mix which might allow us to maintain a viable operation. 
(2) Management also has been energetic and straightforward in its 
approach to our textile problems.  In particular, Ken Chace’s 
efforts after the change in corporate control took place in 1965 
generated capital from the textile division needed to finance the 
acquisition and expansion of our profitable insurance operation.  
(3) With hard work and some imagination regarding manufacturing 
and marketing configurations, it seems reasonable that at least 
modest profits in the textile division can be achieved in the 
future.

Insurance Underwriting

     Our insurance operation continued to grow significantly in 
1977.  It was early in 1967 that we made our entry into this 
industry through the purchase of National Indemnity Company and 
National Fire and Marine Insurance Company (sister companies) for 
approximately $8.6 million.  In that year their premium volume 
amounted to $22 million.  In 1977 our aggregate insurance premium 
volume was $151 million.  No additional shares of Berkshire 
Hathaway stock have been issued to achieve any of this growth.

     Rather, this almost 600% increase has been achieved through 
large gains in National Indemnity’s traditional liability areas 
plus the starting of new companies (Cornhusker Casualty Company 
in 1970, Lakeland Fire and Casualty Company in 1971, Texas United 
Insurance Company in 1972, The Insurance Company of Iowa in 1973, 
and Kansas Fire and Casualty Company in late 1977), the purchase 
for cash of other insurance companies (Home and Automobile 
Insurance Company in 1971, Kerkling Reinsurance Corporation, now 
named Central Fire and Casualty Company, in 1976, and Cypress 
Insurance Company at yearend 1977), and finally through the 
marketing of additional products, most significantly reinsurance, 
within the National Indemnity Company corporate structure.

     In aggregate, the insurance business has worked out very 
well.  But it hasn’t been a one-way street.  Some major mistakes 
have been made during the decade, both in products and personnel.  
We experienced significant problems from (1) a surety operation 
initiated in 1969, (2) the 1973 expansion of Home and 
Automobile’s urban auto marketing into the Miami, Florida area, 
(3) a still unresolved aviation “fronting” arrangement, and (4) 
our Worker’s Compensation operation in California, which we 
believe retains an interesting potential upon completion of a 
reorganization now in progress.  It is comforting to be in a 
business where some mistakes can be made and yet a quite 
satisfactory overall performance can be achieved.  In a sense, 
this is the opposite case from our textile business where even 
very good management probably can average only modest results.  
One of the lessons your management has learned - and, 
unfortunately, sometimes re-learned - is the importance of being 
in businesses where tailwinds prevail rather than headwinds.

     In 1977 the winds in insurance underwriting were squarely 
behind us.  Very large rate increases were effected throughout 
the industry in 1976 to offset the disastrous underwriting 
results of 1974 and 1975.  But, because insurance policies 
typically are written for one-year periods, with pricing mistakes 
capable of correction only upon renewal, it was 1977 before the 
full impact was felt upon earnings of those earlier rate 
increases.

     The pendulum now is beginning to swing the other way.  We 
estimate that costs involved in the insurance areas in which we 
operate rise at close to 1% per month.  This is due to continuous 
monetary inflation affecting the cost of repairing humans and 
property, as well as “social inflation”, a broadening definition 
by society and juries of what is covered by insurance policies.  
Unless rates rise at a comparable 1% per month, underwriting 
profits must shrink.  Recently the pace of rate increases has 
slowed dramatically, and it is our expectation that underwriting 
margins generally will be declining by the second half of the 
year.

     We must again give credit to Phil Liesche, greatly assisted 
by Roland Miller in Underwriting and Bill Lyons in Claims, for an 
extraordinary underwriting achievement in National Indemnity’s 
traditional auto and general liability business during 1977.  
Large volume gains have been accompanied by excellent 
underwriting margins following contraction or withdrawal by many 
competitors in the wake of the 1974-75 crisis period.  These 
conditions will reverse before long.  In the meantime, National 
Indemnity’s underwriting profitability has increased dramatically 
and, in addition, large sums have been made available for 
investment.  As markets loosen and rates become inadequate, we 
again will face the challenge of philosophically accepting 
reduced volume.  Unusual managerial discipline will be required, 
as it runs counter to normal institutional behavior to let the 
other fellow take away business - even at foolish prices.

     Our reinsurance department, managed by George Young, 
improved its underwriting performance during 1977.  Although the 
combined ratio (see definition on page 12) of 107.1 was 
unsatisfactory, its trend was downward throughout the year.  In 
addition, reinsurance generates unusually high funds for 
investment as a percentage of premium volume.

     At Home and Auto, John Seward continued to make progress on 
all fronts.  John was a battlefield promotion several years ago 
when Home and Auto’s underwriting was awash in red ink and the 
company faced possible extinction.  Under his management it 
currently is sound, profitable, and growing.

     John Ringwalt’s homestate operation now consists of five 
companies, with Kansas Fire and Casualty Company becoming 
operational late in 1977 under the direction of Floyd Taylor.  
The homestate companies had net premium volume of $23 million, up 
from $5.5 million just three years ago.  All four companies that 
operated throughout the year achieved combined ratios below 100, 
with Cornhusker Casualty Company, at 93.8, the leader.  In 
addition to actively supervising the other four homestate 
operations, John Ringwalt manages the operations of Cornhusker 
which has recorded combined ratios below 100 in six of its seven 
full years of existence and, from a standing start in 1970, has 
grown to be one of the leading insurance companies operating in 
Nebraska utilizing the conventional independent agency system.  
Lakeland Fire and Casualty Company, managed by Jim Stodolka, was 
the winner of the Chairman’s Cup in 1977 for achieving the lowest 
loss ratio among the homestate companies.  All in all, the 
homestate operation continues to make excellent progress.

     The newest addition to our insurance group is Cypress 
Insurance Company of South Pasadena, California.  This Worker’s 
Compensation insurer was purchased for cash in the final days of 
1977 and, therefore, its approximate $12.5 million of volume for 
that year was not included in our results.  Cypress and National 
Indemnity’s present California Worker’s Compensation operation 
will not be combined, but will operate independently utilizing 
somewhat different marketing strategies.  Milt Thornton, 
President of Cypress since 1968, runs a first-class operation for 
policyholders, agents, employees and owners alike.  We look 
forward to working with him.

     Insurance companies offer standardized policies which can be 
copied by anyone.  Their only products are promises.  It is not 
difficult to be licensed, and rates are an open book.  There are 
no important advantages from trademarks, patents, location, 
corporate longevity, raw material sources, etc., and very little 
consumer differentiation to produce insulation from competition.  
It is commonplace, in corporate annual reports, to stress the 
difference that people make.  Sometimes this is true and 
sometimes it isn’t.  But there is no question that the nature of 
the insurance business magnifies the effect which individual 
managers have on company performance.  We are very fortunate to 
have the group of managers that are associated with us.

Insurance Investments

     During the past two years insurance investments at cost 
(excluding the investment in our affiliate, Blue Chip Stamps) 
have grown from $134.6 million to $252.8 million.  Growth in 
insurance reserves, produced by our large gain in premium volume, 
plus retained earnings, have accounted for this increase in 
marketable securities.  In turn, net investment income of the 
Insurance Group has improved from $8.4 million pre-tax in 1975 to 
$12.3 million pre-tax in 1977.

     In addition to this income from dividends and interest, we 
realized capital gains of $6.9 million before tax, about one-
quarter from bonds and the balance from stocks.  Our unrealized 
gain in stocks at yearend 1977 was approximately $74 million but 
this figure, like any other figure of a single date (we had an 
unrealized loss of $17 million at the end of 1974), should not be 
taken too seriously.  Most of our large stock positions are going 
to be held for many years and the scorecard on our investment 
decisions will be provided by business results over that period, 
and not by prices on any given day.  Just as it would be foolish 
to focus unduly on short-term prospects when acquiring an entire 
company, we think it equally unsound to become mesmerized by 
prospective near term earnings or recent trends in earnings when 
purchasing small pieces of a company; i.e., marketable common 
stocks.

     A little digression illustrating this point may be 
interesting.  Berkshire Fine Spinning Associates and Hathaway 
Manufacturing were merged in 1955 to form Berkshire Hathaway Inc.  
In 1948, on a pro forma combined basis, they had earnings after 
tax of almost $18 million and employed 10,000 people at a dozen 
large mills throughout New England.  In the business world of 
that period they were an economic powerhouse.  For example, in 
that same year earnings of IBM were $28 million (now $2.7 
billion), Safeway Stores, $10 million, Minnesota Mining, $13 
million, and Time, Inc., $9 million.  But, in the decade 
following the 1955 merger aggregate sales of $595 million 
produced an aggregate loss for Berkshire Hathaway of $10 million.  
By 1964 the operation had been reduced to two mills and net worth 
had shrunk to $22 million, from $53 million at the time of the 
merger.  So much for single year snapshots as adequate portrayals 
of a business.

     Equity holdings of our insurance companies with a market 
value of over $5 million on December 31, 1977 were as follows:

No. of Shares  Company                                     Cost      Market
-------------  -------                                   --------   --------
                                                           (000’s omitted)
    220,000    Capital Cities Communications, Inc. ..... $ 10,909   $ 13,228  
  1,986,953    Government Employees Insurance 
                  Company Convertible Preferred ........   19,417     33,033  
  1,294,308    Government Employees Insurance 
                  Company Common Stock .................    4,116     10,516
    592,650    The Interpublic Group of Companies, Inc.     4,531     17,187  
    324,580    Kaiser Aluminum& Chemical Corporation ...   11,218      9,981
  1,305,800    Kaiser Industries, Inc. .................      778      6,039
    226,900    Knight-Ridder Newspapers, Inc. ..........    7,534      8,736
    170,800    Ogilvy & Mather International, Inc. .....    2,762      6,960
    934,300    The Washington Post Company Class B .....   10,628     33,401
                                                         --------   --------
               Total ................................... $ 71,893   $139,081
               All Other Holdings ......................   34,996     41,992
                                                         --------   --------
               Total Equities .......................... $106,889   $181,073
                                                         ========   ========

     We select our marketable equity securities in much the same 
way we would evaluate a business for acquisition in its entirety.  
We want the business to be (1) one that we can understand, (2) 
with favorable long-term prospects, (3) operated by honest and 
competent people, and (4) available at a very attractive price.  
We ordinarily make no attempt to buy equities for anticipated 
favorable stock price behavior in the short term.  In fact, if 
their business experience continues to satisfy us, we welcome 
lower market prices of stocks we own as an opportunity to acquire 
even more of a good thing at a better price.

     Our experience has been that pro-rata portions of truly 
outstanding businesses sometimes sell in the securities markets 
at very large discounts from the prices they would command in 
negotiated transactions involving entire companies.  
Consequently, bargains in business ownership, which simply are 
not available directly through corporate acquisition, can be 
obtained indirectly through stock ownership.  When prices are 
appropriate, we are willing to take very large positions in 
selected companies, not with any intention of taking control and 
not foreseeing sell-out or merger, but with the expectation that 
excellent business results by corporations will translate over 
the long term into correspondingly excellent market value and 
dividend results for owners, minority as well as majority.

     Such investments initially may have negligible impact on our 
operating earnings.  For example, we invested $10.9 million in 
Capital Cities Communications during 1977.  Earnings attributable 
to the shares we purchased totaled about $1.3 million last year.  
But only the cash dividend, which currently provides $40,000 
annually, is reflected in our operating earnings figure.

     Capital Cities possesses both extraordinary properties and 
extraordinary management.  And these management skills extend 
equally to operations and employment of corporate capital.  To 
purchase, directly, properties such as Capital Cities owns would 
cost in the area of twice our cost of purchase via the stock 
market, and direct ownership would offer no important advantages 
to us.  While control would give us the opportunity - and the 
responsibility - to manage operations and corporate resources, we 
would not be able to provide management in either of those 
respects equal to that now in place.  In effect, we can obtain a 
better management result through non-control than control.  This 
is an unorthodox view, but one we believe to be sound.

Banking

     In 1977 the Illinois National Bank continued to achieve a 
rate of earnings on assets about three times that of most large 
banks.  As usual, this record was achieved while the bank paid 
maximum rates to savers and maintained an asset position 
combining low risk and exceptional liquidity.  Gene Abegg formed 
the bank in 1931 with $250,000.  In its first full year of 
operation, earnings amounted to $8,782.  Since that time, no new 
capital has been contributed to the bank; on the contrary, since 
our purchase in 1969, dividends of $20 million have been paid.  
Earnings in 1977 amounted to $3.6 million, more than achieved by 
many banks two or three times its size.

     Late last year Gene, now 80 and still running a banking 
operation without peer, asked that a successor be brought in.  
Accordingly, Peter Jeffrey, formerly President and Chief 
Executive Officer of American National Bank of Omaha, has joined 
the Illinois National Bank effective March 1st as President and 
Chief Executive Officer.

     Gene continues in good health as Chairman.  We expect a 
continued successful operation at Rockford’s leading bank.

Blue Chip Stamps

     We again increased our equity interest in Blue Chip Stamps, 
and owned approximately 36 1/2% at the end of 1977.  Blue Chip 
had a fine year, earning approximately $12.9 million from 
operations and, in addition, had realized securities gains of 
$4.1 million.

     Both Wesco Financial Corp., an 80% owned subsidiary of Blue 
Chip Stamps, managed by Louis Vincenti, and See’s Candies, a 99% 
owned subsidiary, managed by Chuck Huggins, made good progress in 
1977.  Since See’s was purchased by Blue Chip Stamps at the 
beginning of 1972, pre-tax operating earnings have grown from 
$4.2 million to $12.6 million with little additional capital 
investment.  See’s achieved this record while operating in an 
industry experiencing practically no unit growth.  Shareholders 
of Berkshire Hathaway Inc. may obtain the annual report of Blue 
Chip Stamps by requesting it from Mr. Robert H. Bird, Blue Chip 
Stamps, 5801 South Eastern Avenue, Los Angeles, California 90040.


                                    Warren E. Buffett, Chairman

March 14,1978

完整中文翻译

下列翻译按官方原文的 40 个有序段落逐段核对，所有数字与官方原文完全对应。翻译为编辑方工作成果，仅供参考。

股数（No. of Shares）  公司                                        成本       市值
-------------  -------                                   --------   --------
                                                     （单位：千美元，000's omitted）
220,000    Capital Cities Communications, Inc. ..... $ 10,909   $ 13,228
1,986,953    Government Employees Insurance
             Company Convertible Preferred ........   19,417     33,033
1,294,308    Government Employees Insurance
             Company Common Stock .................    4,116     10,516
592,650    The Interpublic Group of Companies, Inc.     4,531     17,187
324,580    Kaiser Aluminum & Chemical Corporation ...   11,218      9,981
1,305,800    Kaiser Industries, Inc. .................      778      6,039
226,900    Knight-Ridder Newspapers, Inc. ..........    7,534      8,736
170,800    Ogilvy & Mather International, Inc. .....    2,762      6,960
934,300    The Washington Post Company Class B .....   10,628     33,401
                                                    --------   --------
          合计 Total ................................... $ 71,893   $139,081
          其他全部持仓 All Other Holdings ..............   34,996     41,992
                                                    --------   --------
          权益合计 Total Equities .......................... $106,889   $181,073
                                                    ========   ========