1976-03-26 Warren Buffett's Letters to Berkshire Shareholders
To the Stockholders of Berkshire Hathaway Inc.:
致伯克希尔·哈撒韦公司全体股东：
Last year, when discussing the prospects for 1975, we stated “the outlook for 1975 is not encouraging.” This forecast proved to be distressingly accurate. Our operating earnings for 1975 were $6,713,592, or $6.85 per share, producing a return on beginning shareholder’s equity of 7.6%. This is the lowest return on equity experienced since 1967. Furthermore, as explained later in this letter, a large segment of these earnings resulted from Federal income tax refunds which will not be available to assist performance in 1976.
去年，在讨论 1975 年的前景时，我们曾表示：“1975 年的展望并不令人鼓舞。”这一预测后来被令人沮丧地证明是准确的。我们 1975 年的经营收益为 6,713,592 美元，即每股 6.85 美元，按年初股东权益计算的回报率为 7.6%。这是自 1967 年以来最低的净资产收益率。此外，正如下文所解释的，我们这部分收益中有很大一块来自联邦所得税退税，而这类因素在 1976 年将无法再为业绩提供帮助。
On balance, however, current trends indicate a somewhat brighter 1976. Operations and prospects will be discussed in greater detail below, under specific industry titles. Our expectation is that significantly better results in textiles, earnings added from recent acquisitions, an increase in equity in earnings of Blue Chip Stamps resulting from an enlarged ownership interest, and at least a moderate improvement in insurance underwriting results will more than offset other possible negatives to produce greater earnings in 1976. The major variable—and by far the most difficult to predict with any feeling of confidence—is the insurance underwriting result. Present very tentative indications are that underwriting improvement is in prospect. If such improvement is moderate, our overall gain in earnings in 1976 likewise will prove moderate. More significant underwriting improvement could give us a major gain in earnings.
不过，整体来看，当前趋势表明 1976 年会略微明朗一些。有关经营情况和前景，下面会在各个具体行业标题下作更详细的讨论。我们的预期是：纺织业务显著改善、近期收购带来的新增盈利、由于持股比例提高而增加的 Blue Chip Stamps 权益法收益，以及保险承保结果至少温和改善，这些因素加总起来，足以抵消其他可能的不利因素，从而带来 1976 年更高的盈利。最大的变量——而且是最难带着把握去预测的——是保险承保结果。当前非常初步的迹象显示，承保改善是有希望的。如果这种改善只是温和的，那么我们 1976 年整体盈利的增长也同样将只是温和的。若承保改善更为显著，则我们的盈利可能会出现较大的增长。
Textile Operations
纺织业务
During the first half of 1975 sales of textile products were extremely depressed, resulting in major production curtailments. Operations ran at a significant loss, with employment down as much as 53% from a year earlier.
1975 年上半年，纺织产品的销售极度低迷，导致产量大幅削减。纺织业务经营出现了重大亏损，就业人数较上年同期最多下降了 53%。
In contrast with previous cyclical slumps, however, most textile producers quickly reduced production to match incoming orders, thus preventing massive industry-wide accumulation of inventories. Such cutbacks caused quite prompt reflection at the mill operating level when demand revived at retail. As a result, beginning about midyear business rebounded at a fairly rapid rate. This “V” shaped textile depression, while one of the sharpest on record, also became one of the shortest ones in our experience. The fourth quarter produced an excellent profit for our textile division, bringing results for the year into the black.
不过，与以往周期性低迷不同的是，多数纺织生产商很快就把产量削减到与新增订单相匹配的水平，从而避免了全行业范围内库存的大量积压。因此，一旦零售端需求回升，这种减产就在工厂运营层面几乎立刻体现出来。结果，从大约年中开始，业务以相当快的速度反弹。这场“V”形的纺织业衰退虽然是有记录以来最剧烈的一次之一，但在我们的经验中也成为持续时间最短的一次之一。第四季度为我们的纺织部门带来了极为可观的利润，使得全年业绩重新转为盈利。
On April 28, 1975 we acquired Waumbec Mills Incorporated and Waumbec Dyeing and Finishing Co., Inc. located in Manchester, New Hampshire. These companies have long sold woven goods into the drapery and apparel trade. Such drapery materials complement and extend the line already marketed through the Home Fabrics Division of Berkshire Hathaway. In the period prior to our acquisition, the company had run at a very substantial loss, with only about 55% of looms in operation and the finishing plant operating at about 50% of capacity. Losses continued on a reduced basis for a few months after acquisition. Outstanding efforts by our manufacturing, administrative and sales people now have produced major improvements, which, coupled with the general revival in textiles, have moved Waumbec into a significant profit position.
1975 年 4 月 28 日，我们收购了位于新罕布什尔州 Manchester 的 Waumbec Mills Incorporated 和 Waumbec Dyeing and Finishing Co., Inc.。这些公司长期向窗帘和服装行业销售机织产品。这类窗帘面料与 Berkshire Hathaway 家居纺织品部门原有销售线形成互补并加以延伸。在我们收购之前，这家公司曾出现非常巨大的亏损，织机开工率只有大约 55%，整理工厂的产能利用率大约只有 50%。收购后的几个月里，亏损仍在持续，但幅度有所缩小。如今，在我们的制造、行政和销售人员的卓越努力下，情况已经有了重大改善，再加上纺织行业整体复苏，已使 Waumbec 转入了相当可观的盈利状态。
We expect a good level of profits from textiles in 1976. Continued progress is being made in the movement of Waumbec goods into areas of traditional marketing strength of Berkshire Hathaway, productivity should improve in both the weaving and finishing areas at Manchester, and textile demand continues to firm at decent prices.
我们预计 1976 年纺织业务将实现良好的利润水平。Waumbec 产品正持续进入 Berkshire Hathaway 传统营销优势区域；Manchester 的织造和后整理两个环节的生产率都应当有所提高；同时，纺织需求也继续以相当不错的价格趋于坚挺。
We have great confidence in the ability of Ken Chace and his team to maximize our strengths in textiles. Therefore, we continue to look for ways to increase further our scale of operations while avoiding major capital investment in new fixed assets which we consider unwise, considering the relatively low returns historically earned on large scale investment in new textile equipment.
我们对 Ken Chace 及其团队最大化发挥我们在纺织业务中优势的能力充满信心。因此，我们仍在继续寻找进一步扩大经营规模的方法，同时避免在新增固定资产上进行大规模资本投入；考虑到历史上在大型新纺织设备投资上所获得的回报相对较低，我们认为那样的投入并不明智。
“忘记目标的加倍努力”和“不忘初心的加倍努力”是有区别的。
Insurance Underwriting
保险承保业务
The property and casualty insurance industry had its worst year in history during 1975. We did our share—unfortunately, even somewhat more. Really disastrous results were concentrated in auto and long-tail (contracts where settlement of loss usually occurs long after the loss event) lines.
1975 年，财产与意外伤害保险行业经历了其历史上最糟糕的一年。我们也“尽了一份力”——不幸的是，甚至还略多出一点。真正灾难性的结果主要集中在汽车保险和长尾险种（即损失通常在事故发生很久之后才进行赔付结算的合同）上。
Economic inflation, with the increase in cost of repairing humans and property far outstripping the general rate of inflation, produced ultimate loss costs which soared beyond premium levels established in a different cost environment. “Social” inflation caused the liability concept to be expanded continuously, far beyond limits contemplated when rates were established—in effect, adding coverage beyond what was paid for. Such social inflation increased significantly both the propensity to sue and the possibility of collecting mammoth jury awards for events not previously considered statistically significant in the establishment of rates. Furthermore, losses to policyholders which otherwise would result from mushrooming insolvencies of companies inadequately reacting to these problems are divided through Guaranty Funds among remaining solvent insurers. These trends will continue, and should moderate any optimism which otherwise might be justified by the sharply increased rates now taking effect.
经济通胀之下，人员伤害和财产损失修复成本的上升速度远远超过总体通胀率，导致最终赔付成本飙升，远远高于在另一种成本环境下制定的保费水平。“社会性”通胀则使责任概念不断扩张，远远超出费率制定时所预想的范围——实际上等于增加了投保人并未付费购买的保障。这种社会性通胀显著提高了提起诉讼的倾向，也提高了就那些在制定费率时此前并未被视作具有统计显著性的事件而获得巨额陪审团赔偿的可能性。此外，那些未能充分应对这些问题而走向大规模破产的保险公司，本来会给其保单持有人造成的损失，又会通过担保基金由其余仍具偿付能力的保险公司共同分担。这些趋势还会持续下去，并且会削弱原本可能因当前正在生效的大幅提价而显得有理由存在的乐观情绪。
Berkshire Hathaway’s insurance subsidiaries have a disproportionate concentration of business in precisely the lines which produced the worst underwriting results in 1975. Such lines produce unusually high investment income and, therefore, have been particularly attractive to us under previous underwriting conditions. However, our “mix” has been very disadvantageous during the past two years and it well may be that we will remain positioned in the more difficult part of the insurance spectrum during the inflationary years ahead.
Berkshire Hathaway 旗下保险子公司的业务，过度集中在那些恰恰于 1975 年产生最糟承保结果的险种上。这些险种通常能带来异常高的投资收益，因此在此前的承保环境下，对我们一直特别有吸引力。然而，在过去两年里，我们的这种业务“组合”极为不利；而且很可能在未来持续通胀的岁月里，我们仍会处在保险领域中更困难的那一部分。
The only segment to show improved results for us during 1975 was the “home state” operation, which has made continuous progress under the leadership of John Ringwalt. Although still operating at a significant underwriting loss, the combined ratio improved from 1974. Adjusted for excess costs attributable to operations still in the start-up phase, underwriting results are satisfactory. Texas United Insurance Company, a major problem a few years ago, has made outstanding progress since George Billing has assumed command. With an almost totally new agency force, Texas United was the winner of the “Chairman’s Cup” for achievement of the lowest loss ratio among the home state companies. Cornhusker Casualty Company, oldest and largest of the home state companies, continues its outstanding operation with major gains in premium volume and a combined ratio slightly under 100. Substantial premium growth is expected at the home state operation during 1976; the measurement of success, however, will continue to be the achievement of a low combined ratio.
1975 年我们唯一一个业绩有所改善的板块，是 “home state” 业务；在 John Ringwalt 的领导下，这项业务一直在持续进步。虽然其承保仍然处于显著亏损状态，但综合成本率较 1974 年已有改善。若扣除那些仍处于起步阶段业务所带来的额外成本，承保结果是令人满意的。几年前还属于重大问题的 Texas United Insurance Company，自 George Billing 接手以来已取得了显著进步。在几乎完全更新代理队伍之后，Texas United 赢得了“Chairman’s Cup”，因为它在 home state 各家公司中实现了最低的赔付率。作为 home state 公司中历史最久、规模最大的 Cornhusker Casualty Company，则继续保持出色经营，保费规模大幅增长，综合成本率略低于 100。我们预计 1976 年 home state 业务的保费将有可观增长；不过，衡量成功的标准仍将是实现较低的综合成本率。
Our traditional business at National Indemnity Company, representing well over half of our insurance volume, had an extraordinarily bad underwriting year in 1975. Although rates were increased frequently and significantly, they continually lagged loss experience throughout the year. Several special programs instituted in the early 1970s have caused significant losses, as well as a heavy drain on managerial time and energies. Present indications are that premium volume will show a major increase in 1976, and we hope that underwriting results will improve.
我们在 National Indemnity Company 的传统业务——其保费规模占我们全部保险业务量的一半以上——在 1975 年经历了极其糟糕的承保年度。尽管费率被频繁且大幅上调，但在全年中仍持续落后于赔付损失的实际经验。1970 年代初推出的若干特别项目已造成了重大的亏损，同时也严重消耗了管理层的时间与精力。目前迹象显示，1976 年保费规模将出现大幅增长，我们也希望承保结果能够改善。
Reinsurance suffered the same problems as our direct business during 1975. The same remedial efforts were attempted. Because reinsurance contract settlements lag those of direct business, it well may be that any upturn in results from our direct insurance business will precede those of the reinsurance segment.
再保险业务在 1975 年遭遇了与我们直保业务相同的问题。我们也尝试采取了同样的补救措施。由于再保险合同的赔付结算滞后于直保业务，因此很可能我们直保业务结果的任何回升，都会先于再保险板块显现出来。
At our Home and Automobile Insurance Company subsidiary, now writing auto business only in the Cook County area of Illinois, experience continued very bad in 1975 resulting in a management change in October. John Seward was made President at that time, and has energetically and imaginatively implemented a completely revamped underwriting approach.
在我们的子公司 Home and Automobile Insurance Company——该公司目前只在 Illinois 州 Cook County 地区承保汽车保险——1975 年的经营表现仍然非常糟糕，因此在 10 月进行了管理层更换。John Seward 于当时被任命为总裁，并以充沛的干劲和富有创造性的方式，全面推行了一套彻底重构后的承保方法。
巴菲特显然想自己干，但是最终还是选择了直接买入GEICO。
1、1976–1980 年 共投入约 4,700 万美元，到 1980 年底持有 33.3%；
2、后来因为 GEICO 大量回购股份，伯克希尔持股自然升到大约 50%；
3、1995 年末提出收购剩余股份，并于 1996 年 1 月 2 日 完成，现金对价约 23 亿美元。
Overall, our insurance operation will produce a substantial gain in premium volume during 1976. Much of this will reflect increased rates rather than more policies. Under normal circumstances such a gain in volume would be welcome, but our emotions are mixed at present. Underwriting experience should improve—and we expect it to—but our confidence level is not high. While our efforts will be devoted to obtaining a combined ratio below 100, it is unlikely to be attained during 1976.
总体而言，我们的保险业务在 1976 年将实现保费规模的显著增长。其中很大一部分增长反映的是费率提高，而不是保单数量增加。按通常情况看，这样的业务量增长本应值得欢迎，但我们目前的心情是复杂的。承保经验应当会改善——而且我们也确实预期会改善——但我们的信心程度并不高。虽然我们的努力目标是将综合成本率压到 100 以下，但在 1976 年实现这一点的可能性并不大。
Insurance Investments
保险投资业务
Gains in investment income were moderate during 1975 because premium volume remained flat and underwriting losses reduced funds available for investment. Invested assets, measured at cost at yearend, were close to identical with the level at the beginning of the year.
1975 年投资收益的增长幅度较为温和，因为保费规模维持持平，而承保亏损又减少了可用于投资的资金。按年末成本计量，投资资产与年初水平几乎完全相同。
At the end of 1974 the net unrealized loss in the stock section of our portfolio amounted to about $17 million, but we expressed the opinion, nevertheless, that this portfolio overall represented good value at its carrying value of cost. During 1975 a net capital loss of $2,888,000 before tax credits was realized, but our present expectation is that 1976 will be a year of realized capital gain. On March 31, 1976 our net unrealized gains applicable to equities amounted to about $15 million. Our equity investments are heavily concentrated in a few companies which are selected based on favorable economic characteristics, competent and honest management, and a purchase price attractive when measured against the yardstick of value to a private owner.
1974 年末，我们投资组合中股票部分的未实现净亏损约为 1,700 万美元，但尽管如此，我们当时仍表示，这个投资组合整体按成本入账的账面价值来看，代表着良好的价值。1975 年，我们实现了税前资本净亏损 2,888,000 美元，但我们目前预期 1976 年将是一个实现资本收益的年份。截至 1976 年 3 月 31 日，我们股票投资对应的未实现净收益约为 1,500 万美元。我们的股票投资高度集中于少数几家公司，这些公司的选择标准是：良好的经济特性、能干而诚实的管理层，以及相对于私人所有者价值衡量下具有吸引力的买入价格。
When such criteria are maintained, our intention is to hold for a long time; indeed, our largest equity investment is 467,150 shares of Washington Post “B” stock with a cost of $10.6 million, which we expect to hold permanently.
只要这些标准仍然成立，我们的打算就是长期持有；事实上，我们最大的股票投资是 467,150 股 Washington Post 的 B 类股票，成本为 1,060 万美元，我们预计将永久持有。
With this approach, stock market fluctuations are of little importance to us—except as they may provide buying opportunities—but business performance is of major importance. On this score we have been delighted with progress made by practically all of the companies in which we now have significant investments.
在这种方法下，股票市场的波动对我们几乎不重要——除非它们提供了买入机会——而企业经营表现则至关重要。在这一点上，我们对目前持有较大投资的几乎所有公司的进展都感到非常满意。
We have continued to maintain a strong liquid position in our insurance companies. In last year’s annual report we explained how variations of 1/10 of 1% in interest rates result in million dollar swings in market value of our bonds. We consider such market fluctuation of minor importance as our liquidity and general financial strength make it highly improbable that bonds will have to be sold at times other than those of our choice.
我们继续在保险公司中维持了强劲的流动性头寸。我们在去年的年报中解释过，利率每变动 0.1 个百分点，我们债券的市场价值就会出现数百万美元的波动。我们认为这种市场波动并不重要，因为我们的流动性和整体财务实力都很强，极不可能被迫在非我们自主选择的时点出售债券。
Banking
银行业务
It is difficult to find adjectives to describe the performance of Eugene Abegg, Chief Executive of Illinois National Bank and Trust of Rockford, Illinois, our banking subsidiary.
很难找到合适的形容词来描述我们银行子公司——Illinois 州 Rockford 的 Illinois National Bank and Trust 首席执行官 Eugene Abegg 的业绩表现。
In a year when many banking operations experienced major troubles, Illinois National continued its outstanding record. Against average loans of about $65 million, net loan losses were $24,000, or .04%. Unusually high liquidity is maintained with obligations of the U. S. Government and its agencies, all due within one year, at yearend amounting to about 75% of demand deposits. Maximum rates of interest are paid on all consumer savings instruments which make up more than half of the deposit base. Yet, despite the maintenance of premier liquidity and the avoidance of “stretching” for high yield loans, the Illinois National continues as about the most profitable bank of its size, or larger, in the country.
在许多银行业务遭遇重大麻烦的一年里，Illinois National 依然延续了其卓越的纪录。平均贷款规模约为 6,500 万美元，而净贷款损失仅为 24,000 美元，即 0.04%。该行维持了异常高的流动性：截至年末，持有的一年内到期的美国政府及其机构债务，占活期存款的大约 75%。对于构成其存款基础一半以上的全部个人储蓄工具，该行均支付最高利率。尽管如此，在维持一流流动性并避免为追求高收益贷款而“拉伸”风险的情况下，Illinois National 仍然是全国与其规模相当或更大的银行中利润最高的银行之一。
In 1975 the thirty largest banks in the United States earned an average of .5% on total assets. The Illinois National earned about four times that much. These same thirty largest banks carried down 7% of operating revenues to net income. Without counting any tax benefits from consolidation, Illinois National carried down 27%.
1975 年，美国最大的三十家银行在总资产上平均赚取 0.5% 的回报。Illinois National 的回报大约是其四倍。这三十家最大银行将营业收入中的 7% 转化为净利润；而不计入任何并表税收利益，Illinois National 的这一比例达到 27%。
Gene Abegg opened the doors of the Illinois National Bank in 1931 with paid-in capital of $250,000. In 1932, its first full year of operation, it earned $8,782. No additional capital has been paid in, and we recommend reading its financial statements on pages 28-34 to see what a truly outstanding manager has built in 44 years at the helm.
Gene Abegg 于 1931 年以 250,000 美元实缴资本开办 Illinois National Bank。1932 年，也就是它完整经营的第一年，该行赚取了 8,782 美元。此后再没有新增资本投入。我们建议各位阅读第 28 至 34 页的财务报表，看看一位真正杰出的管理者在掌舵 44 年之后打造出了怎样的一家银行。
Under the present interest rate structure, it is expected that earnings of the Bank will be off somewhat during 1976 but still will remain at a highly satisfactory level.
在当前的利率结构下，预计该行 1976 年的盈利将会较 1975 年略有下降，但仍将保持在一个相当令人满意的水平。
银行和保险有很相似的地方，这个事可以从投资的算账逻辑中展开，巴菲特的算账逻辑很简单：下行保护+可能的上行收益。
1、很多人为了赚更多的钱把注意力放在“可能的上行收益”，这种心理倾向跟有限的资本有关，也跟情绪结构的缺陷有关，有缺陷的情绪结构遭遇困难的处境更容易朝着负面的方向发展。
2、银行和保险都能够放大可用资本的规模，这时候的注意力可以盯着“下行保护”，而不是“可能的上行收益”，如果能避开时髦做法和坏贷款就是个不错的生意。
3、必须配合稳定的情绪结构，或者可以说，银行和保险可以给情绪稳定的管理者增添更大的杠杆，但如果不是，负面的影响也是放大的。
4、相比于保险公司，当时的银行更大，对于巴菲特来说有更多的选择，另一个优点是银行作为整体的盈利能力好于保险公司，保险的同质化更严重（保单和贷款合同相比较，保单的标准化程度更高），最终导致保险的整体收益低于美国企业的平均水平。
巴菲特在刚开始的时候选择了银行和保险，除了他对于自身心理结构的认识以外，还有一个潜在的因素：从非常长期的角度看，“管理者的心理结构”是最关键的因素，也就是“下行保护”和“上行收益”的追求中，追求“下行保护”的将战胜追求“上行收益”。巴菲特经常讲到BRK的所有者全美排名第1，他也会顺带着讲到排在第2名的是JPM。
Blue Chip Stamps
蓝筹印花公司
During 1975 our holdings of Blue Chip Stamps remained at 25½% of that company’s outstanding shares. However, early in 1976 our holdings were increased to 31½%. We expect some increase in our equity in Blue Chip’s earnings in 1976 because of this increased ownership.
在 1975 年期间，我们持有 Blue Chip Stamps 的股份始终占该公司流通股的 25.5%。不过，到了 1976 年初，我们的持股已增至 31.5%。由于持股比例提高，我们预计 1976 年按权益法确认的 Blue Chip 收益会有所增加。
The stamp business continues its precipitous decline with volume in the year ended February 28, 1976 amounting to only one-sixth that of the peak year ended February 28, 1970. Don Koeppel and Bill Ramsey have done an extraordinary job of cost-cutting, which has served to moderate operating problems resulting from this evaporation of business. In addition, the acquisition of See’s Candies in 1972 has proven a real winner. Chuck Huggins’s management has been outstanding, and profits have moved up dramatically during the past several years.
邮票业务仍在急剧下滑；截至 1976 年 2 月 28 日的这一财年，其业务量仅为截至 1970 年 2 月 28 日那个高峰年度的六分之一。Don Koeppel 和 Bill Ramsey 在削减成本方面做出了非凡的工作，这在一定程度上缓和了因业务蒸发而带来的经营问题。此外，1972 年收购 See’s Candies 已被证明是一笔真正的赢家投资。Chuck Huggins 的管理极其出色，在过去几年里，利润已大幅提升。
Shareholders of Berkshire Hathaway Inc. desiring the current annual report of Blue Chip Stamps should write Mr. Robert H. Bird, Secretary, Blue Chip Stamps, 5801 South Eastern Avenue, Los Angeles, California 90040.
希望获得 Blue Chip Stamps 当前年度报告的 Berkshire Hathaway Inc. 股东，可写信给：Blue Chip Stamps 公司秘书 Robert H. Bird 先生，地址为 5801 South Eastern Avenue, Los Angeles, California 90040。
Federal Income Tax Implications
联邦所得税的影响
In reading our earnings statement you will notice a significant amount of Federal income taxes paid in earlier years are now recoverable because of the net operating loss, as computed for tax purposes, sustained in 1975. Such loss results from the exclusion from income of 100% of interest from state and local issues, and 85% of dividends from domestic corporations. We have exhausted our reservoir of available tax recoveries and, therefore, a repeat of our overall operating performance in 1976 would produce much smaller net earnings. While we do not expect this result, it is important that you are aware of the absence of this cushion in the event that operating losses, as calculated for Federal tax purposes, should continue.
在阅读我们的收益表时，你会注意到：由于 1975 年按税法计算出现了净经营亏损，因而以往年度已缴纳的一大笔联邦所得税现在可以收回。该亏损之所以产生，是因为州及地方债券利息的 100% 免计入收入，而来自美国国内公司的股息有 85% 不计入收入。我们已经耗尽了可用于税款追溯收回的“储备池”；因此，如果 1976 年整体经营表现只是重复 1975 年的水平，那么净利润将会小得多。虽然我们并不预期会出现这种结果，但重要的是你们要明白：如果按联邦税法计算的经营亏损继续存在，那么这种缓冲垫已经不复存在。
Acquisition of K & W Products
收购 K & W 产品公司
In addition to the 1975 Waumbec acquisition, we acquired for cash and notes on January 6, 1978, 100% of the assets of K & W Products, including its insurance subsidiaries. The insurance operations are minor in scope, representing business already associated with National Indemnity Company. K & W Products manufactures specialty automotive chemicals for use in automobile maintenance, such as radiator and block sealants, gasket compounds and fuel and oil additives. The company has extensive trademark or trade name protection for its products, which it manufactures at plants in California and Indiana. Although relatively small, with sales of a little over $2 million, it consistently has generated favorable earnings. Positioned as we now are with respect to income taxes, the addition of a solid source of taxable income is particularly welcome.
除了 1975 年收购 Waumbec 之外，我们还于 1978 年 1 月 6 日以现金和票据收购了 K & W Products 的全部资产，其中包括其保险子公司。其保险业务规模很小，基本上属于原本就与 National Indemnity Company 相关的业务。K & W Products 生产用于汽车保养的特种汽车化学品，例如散热器和缸体密封剂、垫片化合物以及燃油和机油添加剂。公司在 California 和 Indiana 设有工厂生产这些产品，并对其产品拥有广泛的商标或商品名称保护。尽管公司规模相对较小，销售额略高于 200 万美元，但它一贯能够创造可观的盈利。考虑到我们当前所处的所得税状况，新增一个稳健的应税收入来源尤其令人欢迎。
General Review
十年回顾
Your present management assumed responsibility at Berkshire Hathaway in May, 1965. At the end of the prior fiscal year (September, 1964) the net worth of the Company was $22.1 million, and 1,137,778 common shares were outstanding, with a resulting book value of $19.46 per share. Ten years earlier, Berkshire Hathaway’s net worth had been $53.4 million. Dividends and stock repurchases accounted for over $21 million of the decline in company net worth, but aggregate net losses of $9.8 million had been incurred on sales of $595 million during the decade.
现任管理层于 1965 年 5 月开始接管 Berkshire Hathaway。上一财年末（1964 年 9 月末），公司净资产为 2,210 万美元，流通普通股为 1,137,778 股，因此每股账面价值为 19.46 美元。再往前十年，Berkshire Hathaway 的净资产曾为 5,340 万美元。股息支付和股票回购合计解释了公司净资产下降中的 2,100 多万美元，但在那十年间，公司在 5.95 亿美元销售额上累计发生了 980 万美元净亏损。
In 1965, two New England textile mills were the company’s only sources of earning power and, before Ken Chace assumed responsibility for the operation, textile earnings had been erratic and, cumulatively, something less than zero subsequent to the merger of Berkshire Fine Spinning and Hathaway Manufacturing. Since 1964, net worth has been built to $92.9 million, or $94.92 per share. We have acquired total, or virtually total ownership of six businesses through negotiated purchases for cash (or cash and notes) from private owners, started four others, purchased a 31.5% interest in a large affiliate enterprise and reduced the number of outstanding shares of Berkshire Hathaway to 979,569. Overall, equity per share has compounded at an annual rate of slightly over 15%.
1965 年时，新英格兰的两家纺织厂是公司唯一的盈利来源；而在 Ken Chace 接手运营之前，自 Berkshire Fine Spinning 与 Hathaway Manufacturing 合并以来，纺织业务的盈利一直波动很大，累计下来甚至还略低于零。自 1964 年以来，公司净资产已增长至 9,290 万美元，即每股 94.92 美元。我们通过与私人所有者协商，以现金（或现金加票据）收购的方式，取得了六家企业的全部或几乎全部所有权；又新创办了另外四家企业；买入了一家大型联营企业 31.5% 的股权；并将 Berkshire Hathaway 的流通股数减少至 979,569 股。总体来看，每股股东权益以略高于 15% 的年复合速度增长。
Right People推翻Right Business的罕见个例，巴菲特的情况跟乔布斯不一样，乔布斯并不知道iPhone能取得巨大的、足以根本上改变Apple的成功，但是巴菲特在控制BRK时已经具备必然成功的想法。
While 1975 was a major disappointment, efforts will continue to develop growing and diversified sources of earnings. Our objective is a conservatively financed and highly liquid business—possessing extra margins of balance sheet strength consistent with the fiduciary obligations inherent in the banking and insurance industries—which will produce a long term rate of return on equity capital exceeding that of American industry as a whole.
虽然 1975 年令人非常失望，但我们仍将继续努力，培育不断增长且更加多元化的盈利来源。我们的目标是建立一家财务结构保守、流动性高度充裕的企业——其资产负债表具备额外的安全边际，以符合银行和保险行业所固有的受托责任要求——并且在长期内实现高于美国整体工业水平的股东权益回报率。
BRK刚出发的时候有两个方向：银行和保险。
1、立法的影响
1970 年末通过了新的银行控股公司立法，因为这个立法放弃了银行。巴菲特在2001年的股东大会有过一段相关的评论，他的意思是保险监管主要落在保险子公司层面，向上延伸到控股公司的监管相对很少，因此没有拖慢 Berkshire 的收购；而在银行业务中，监管在某种程度上会关注控股公司层面。
2、银行的盈利能力更好
巴菲特在2023年的股东大会有一段评论，他认为银行的商业模式比保险更好，保险业的商品化属性更严重，收益低于美国企业的平均水平，而银行如果能避开时髦做法和坏贷款是个不错的生意，比如，信用卡就是一个非常好的生意。
3、管理者的心理结构
银行和保险业的经管很需要情绪自律，并且是个关键变量，巴菲特认为自己有这方面的优势。
Warren E. Buffett,
Chairman
Appendix.The Illinois National Bank & Trust Co.
Berkshire Hathaway Inc.
BANK SUBSIDIARY
The Illinois National Bank & Trust Co. of Rockford
AND SUBSIDIARY
| CONSOLIDATED BALANCE SHEETS | ||
|---|---|---|
| December 31, | ||
| ASSETS | 1975 | 1974 |
Cash and due from banks | $ 18,797,271 | $ 21,543,577 |
Investment securities (note 2): | ||
United States Government obligations | 24,180,903 | 565,107 |
United States Government agencies | 15,576,778 | 10,050,113 |
Obligations of states and political subdivisions | 46,769,523 | 45,857,638 |
Other securities | 4,327,888 | 3,845,970 |
Federal funds sold | — | 5,000,000 |
Loans (notes 3 and 6) | 58,081,252 | 70,133,624 |
Bank premises and equipment (note 4) | 966,626 | 1,008,749 |
Accrued interest receivable | 2,040,487 | 1,812,021 |
Other assets | 514,603 | 1,044,645 |
| $171,255,331 | $160,861,444 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
| Liabilities: | ||
Demand deposits | $ 53,477,577 | $ 53,177,813 |
Time deposits | 93,501,325 | 85,519,225 |
Total deposits | 146,978,902 | 138,697,038 |
Federal funds purchased | 1,000,000 | — |
Accrued taxes and other liabilities (notes 5 and 6) | 1,303,422 | 1,222,737 |
Total liabilities | 149,282,324 | 139,919,775 |
| Stockholders’ equity: | ||
Common stock of $20 par value. Authorized and issued 250,000 shares | 5,000,000 | 5,000,000 |
Surplus | 5,000,000 | 5,000,000 |
Undivided profits (note 6) | 10,972,007 | 9,940,669 |
Reserve for contingencies | 1,001,000 | 1,001,000 |
Total stockholders’ equity | 21,973,007 | 20,941,669 |
| $171,255,331 | $160,861,444 | |
See accompanying notes to consolidated financial statements of bank subsidiary.
| CONSOLIDATED STATEMENTS OF EARNINGS | ||
|---|---|---|
| Years ended December 31, | ||
| 1975 | 1974 | |
| Operating income: | ||
Interest and fees on loans | $ 5,711,826 | $ 6,607,862 |
Income on Federal funds sold | 213,649 | 361,452 |
Interest and dividends on: | ||
United States Government obligations | 700,630 | 42,986 |
United States Government agencies | 913,779 | 898,579 |
Obligations of states and political subdivisions | 2,796,479 | 2,797,632 |
Other securities and time deposits | 460,635 | 284,283 |
Total interest income | 10,796,998 | 10,992,794 |
Trust fees | 503,178 | 434,201 |
Service charges on deposit accounts | 133,645 | 139,060 |
Other | 583,229 | 559,578 |
Total operating income | 12,017,050 | 12,125,633 |
| Operating expenses: | ||
Interest on deposits | 5,190,802 | 4,954,302 |
Interest on borrowed money | 3,795 | 14,106 |
Total interest | 5,194,597 | 4,968,408 |
Salaries | 1,642,956 | 1,551,511 |
Employee benefits (note 7) | 292,981 | 246,573 |
Occupancy, net (note 4) | 246,770 | 257,229 |
Furniture and equipment (note 4) | 246,233 | 248,078 |
Provision for loan losses (note 6) | 11,900 | 19,300 |
Other | 766,203 | 592,443 |
Total operating expenses | 8,401,640 | 7,883,542 |
Earnings before income taxes and securities gains | 3,615,410 | 4,242,091 |
Applicable income taxes, net (note 5) | 136,502 | 220,256 |
Earnings before securities gains | 3,478,908 | 4,021,835 |
Securities gains, net of related taxes of $2,185 in 1975 and $7,001 in 1974 (note 5) | 52,430 | 168,022 |
Net earnings | $ 3,531,338 | $ 4,189,857 |
| Earnings per share: | ||
Earnings before securities gains | $13.92 | $16.09 |
Securities gains | .21 | .67 |
Net earnings | $14.13 | $16.76 |
See accompanying notes to consolidated financial statements of bank subsidiary.
| CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY | ||||
|---|---|---|---|---|
| Common stock | Surplus | Undivided profits (note 6) | Reserve for contingencies | |
Balance, December 31, 1973 | $5,000,000 | $5,000,000 | $ 8,500,812 | $1,001,000 |
Net earnings | — | — | 4,189,857 | — |
Cash dividends — $11 per share | — | — | (2,750,000) | — |
Balance, December 31, 1974 | 5,000,000 | 5,000,000 | 9,940,669 | 1,001,000 |
Net earnings | — | — | 3,531,338 | — |
Cash dividends — $10 per share | — | — | (2,500,000) | — |
Balance, December 31, 1975 | $5,000,000 | $5,000,000 | $10,972,007 | $1,001,000 |
| See accompanying notes to consolidated financial statements of bank subsidiary. | ||||
| CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION | ||
|---|---|---|
| Years ended December 31, | ||
| 1975 | 1974 | |
| Funds provided: | ||
| From operations: | ||
Net earnings | $ 3,531,338 | $ 4,189,857 |
Depreciation (including direct leased equipment) | 210,303 | 240,711 |
Provision for loan losses | 11,900 | 19,300 |
Deferred income taxes | 53,633 | 236,917 |
Provided from operations | 3,807,174 | 4,686,785 |
| Increase in: | ||
Deposits | 8,281,864 | 1,530,545 |
Federal funds purchased | 1,000,000 | — |
| Decrease in: | ||
Loans | 12,040,472 | — |
Federal funds sold | 5,000,000 | — |
Investment securities | — | 2,106,915 |
Cash and due from banks | 2,746,306 | 5,140,076 |
Other, net | 283,376 | — |
Total funds provided | $33,159,192 | $13,464,321 |
| Funds used: | ||
| Increase in earning assets: | ||
Loans | — | 4,865,062 |
Federal funds sold | — | 5,000,000 |
Investment securities | 30,536,264 | — |
Additions to bank premises and equipment, net | 79,428 | 44,891 |
Increase in direct leased equipment | 43,500 | — |
Cash dividends | 2,500,000 | 2,750,000 |
Other, net | — | 804,368 |
Total funds used | $33,159,192 | $13,464,321 |
| See accompanying notes to consolidated financial statements of bank subsidiary. | ||
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1975 and 1974
(1) Significant Accounting Policies
重要会计政策
The accounting policies of The Illinois National Bank & Trust Co. of Rockford (a 97.7% owned subsidiary of Berkshire Hathaway Inc.) and its wholly-owned subsidiary, Brown Building Corporation, conform to generally accepted accounting principles and to general practice within the banking industry. The following is a description of the more significant accounting policies:
The Illinois National Bank & Trust Co. of Rockford（Berkshire Hathaway Inc. 持股 97.7% 的子公司）及其全资子公司 Brown Building Corporation 所采用的会计政策，符合公认会计原则，也符合银行业的一般惯例。以下是对其中较为重要的会计政策的说明：
Consolidation
合并报表
The consolidated financial statements include those of the Bank and its wholly-owned subsidiary. All significant intercompany transactions are eliminated in consolidation.
合并财务报表包括该银行及其全资子公司的财务报表。所有重大的公司间交易在合并时均予以抵销。
Investment Securities
证券投资
Investment securities are stated at cost, adjusted for amortization of premium. Accretion of discount is not reflected in the accompanying statements and would not be material. Gains or losses on sales of investment securities are recognized only upon realization and are shown separately in the statements of earnings.
投资证券按成本列示，并就溢价摊销作出调整。折价的增值在随附报表中未予反映，因为其影响并不重大。投资证券出售产生的收益或损失，仅在实现时确认，并在收益表中单独列示。
Consumer Credit Loans
消费信贷贷款
Consumer credit loans are generally made on a discount basis. Unearned discount is taken into earnings over the terms of the respective loans using a method that approximates straight-line.
消费信贷贷款通常以贴现方式发放。未赚取的贴现收入在各笔贷款期限内采用一种近似直线法的方法计入收益。
Bank Premises and Equipment
银行房产及设备
Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed on the straight-line method for building and automobiles, and on an accelerated method for improvements and other equipment. Rates of depreciation are based on the following: buildings, 40 years; improvements and other equipment, 3-8 years.
银行房产及设备按成本减累计折旧列示。建筑物和汽车采用直线法计提折旧；改良支出及其他设备采用加速折旧法。折旧年限如下：建筑物 40 年；改良支出及其他设备 3 至 8 年。
Costs of major additions and improvements are capitalized. Expenditures for maintenance and repairs are charged against operations as incurred.
重大新增和改良支出予以资本化。维护和修理支出在发生时计入当期经营费用。
Income Taxes
所得税
The Bank utilizes the accrual method of accounting for financial reporting purposes, but determines current taxable income on a cash basis. Investment tax credits are treated as a reduction of the provision for Federal income taxes in the year realized.
该银行在财务报告中采用权责发生制会计，但在确定当期应税所得时采用收付实现制。投资税收抵免在实现当年作为联邦所得税计提的减少额处理。
Provision for and Reserve for Loan Losses
贷款损失准备与损失储备
The provision for loan losses is based on past loan loss experience, management’s evaluation of the loan portfolio under current economic conditions, and such other factors as in management’s best judgment, deserve current recognition in estimating loan losses.
贷款损失准备基于以往贷款损失经验、管理层在当前经济条件下对贷款组合的评估，以及管理层依其最佳判断认为在估计贷款损失时应当予以当前确认的其他因素。
(2) Investment Securities
证券投资
A summary of investments by major classifications is as follows:
按主要类别划分的投资情况摘要如下：
Dec. 31, 1975 (In thousands) | Dec. 31, 1974 (In thousands) | |||||
|---|---|---|---|---|---|---|
| Par value | Book value | Market value | Par value | Book value | Market value | |
U. S. Government—direct | $24,565 | $24,181 | $24,456 | $ 565 | $ 565 | $ 567 |
U. S. Government—agencies | 15,550 | 15,577 | 15,605 | 10,050 | 10,050 | 10,066 |
State and local municipalities | 47,680 | 46,769 | 44,474 | 46,474 | 45,858 | 43,778 |
Other | 5,029 | 4,327 | 4,252 | 4,312 | 3,846 | 3,550 |
| $92,824 | $90,854 | $88,787 | $61,401 | $60,319 | $57,961 | |
The market value decline in investment securities is considered to be a temporary condition, in view of the fact that management presently intends to hold the securities to maturity or until any loss recognized would not materially affect the results of operations.
投资证券市值的下跌被认为只是暂时性的情况，鉴于管理层目前打算将这些证券持有至到期，或者至少持有到任何已确认的损失不会对经营结果产生重大影响的时候再处理。
Investment securities with a book value of 7,552,917and 7,575,779 at December 31, 1975 and 1974, respectively, were pledged to secure public deposits and for other purposes.
截至 1975 年 12 月 31 日和 1974 年 12 月 31 日，账面价值分别为 7,552,917 和 7,575,779 的投资证券已被质押，用于担保公共存款以及其他用途。
(3) Loans
贷款
A summary of the major classifications of loans at December 31, 1975 and 1974 is as follows:
截至 1975 年 12 月 31 日和 1974 年 12 月 31 日，各主要贷款类别的摘要如下：
| 1975 | 1974 | |
|---|---|---|
Commercial loans | $27,331,810 | $35,706,525 |
Consumer credit loans (less unearned discount of $2,286,776 in 1975 and $2,722,089 in 1974) | 12,179,579 | 15,042,339 |
Floor plan loans | 5,701,588 | 6,211,502 |
Real estate loans | 13,576,010 | 13,893,176 |
| 58,788,987 | 70,853,542 | |
Less allowance for loan losses | 707,735 | 719,918 |
| $58,081,252 | $70,133,624 |
(4) Bank Premises and Equipment
银行房产及设备
Bank premises and equipment are recorded at cost less accumulated depreciation of 1,995,311 and 1,919,822 at December 31, 1975 and 1974, respectively. Depreciation expense totaled $109,324 for 1975 and $146,576 for 1974.
银行房产及设备按成本减累计折旧列示；截至 1975 年 12 月 31 日和 1974 年 12 月 31 日，累计折旧分别为 1,995,311 和 1,919,822。1975 年折旧费用合计为 109,324，1974 年为 146,576。
(5) Income Taxes
所得税
Accrued taxes and other liabilities in the accompanying balance sheets include deferred taxes of 596,502 and 542,869 at December 31, 1975 and 1974, respectively. Such deferred taxes result from timing differences arising from reporting taxable income on the cash basis. The Bank and its subsidiary join in the filing of a consolidated Federal income tax return with the parent company, Berkshire Hathaway Inc. The tax benefit of deductions by the parent has been passed to the Bank, as shown in the following schedules.
随附资产负债表中的应计税款及其他负债，包括截至 1975 年 12 月 31 日和 1974 年 12 月 31 日的递延税款，金额分别为 596,502 和 542,869。这些递延税款源于按收付实现制申报应税所得所产生的时间性差异。该银行及其子公司与母公司 Berkshire Hathaway Inc. 一并提交合并联邦所得税申报表。母公司扣除项目所带来的税收利益已转移给该银行，如下列附表所示。
两家公司，一家亏损100，另一家赢利100，合并了不需要缴税，不合并赢利的需要当年缴，现金流在当年支出，主要的好处是延迟，因为亏损100在后续的年度通常是可以抵扣的。
Taxes applicable to net earnings were as follows:
适用于净利润的所得税如下：
| 1975 | 1974 | |
|---|---|---|
| Taxes applicable to net earnings were as follows: | ||
Tax provision applicable to earnings before securities gains | $431,667 | $759,929 |
Tax provision applicable to securities gains | 25,867 | 88,380 |
| Less tax benefit from parent corporation applicable to: | 457,534 | 848,309 |
Earnings before securities gains | 295,165 | 539,673 |
Securities gains | 23,682 | 81,379 |
Applicable income taxes, net | $138,687 | $227,257 |
| The components of consolidated income tax expense are as follows: | ||
| Current income taxes: | ||
Federal | $314,523 | $486,701 |
| Less tax benefit from parent applicable to: | ||
Taxes currently payable | 314,523 | 486,701 |
Recovery of prior taxes paid through net operating loss carryback | 4,324 | 134,351 |
Total benefit from parent | 318,847 | 621,052 |
State | 89,378 | 124,691 |
Total current income taxes | 85,054 | (9,660) |
| Deferred income taxes: | ||
Federal | 60,517 | 222,635 |
State | (6,884) | 14,282 |
Total deferred income taxes | 53,633 | 236,917 |
Applicable income taxes, net | $138,687 | $227,257 |
The sources of timing differences resulting in deferred income taxes and the tax effect of each were as follows:
导致递延所得税的时间性差异的来源及其各自的税务影响如下：
| 1975 | 1974 | |
|---|---|---|
Accrued earnings and expense not reported for income tax purposes until collected or paid, net | $ 59,593 | $185,795 |
Loan loss deductions for tax purposes in excess of (less than) that provided for financial reporting purposes | (5,960) | 51,122 |
| $ 53,633 | $236,917 |
The total income tax expense for 1975 amounted to $138,687, an effective rate of 3.8% ($227,257 and 5.1% in 1974). The
reasons for the difference between the effective tax rate and the corporate Federal income tax rate o f 48% are as follows:
1975 年的所得税费用总额为 138,687，实际税率为 3.8%（1974 年分别为 227,257 和 5.1%）。实际税率与 48% 的联邦公司所得税税率之间存在差异，其原因如下：
| 1975 | 1974 | |||
|---|---|---|---|---|
| Amount | Percent of pretax earnings | Amount | Percent of pretax earnings | |
Tax expense at statutory rate | $1,761,612 | 48.0% | $2,120,215 | 48.0% |
| Increase (reduction) in taxes resulting from: | ||||
Tax-exempt interest | (1,342,310) | (36.6) | (1,342,863) | (30.4) |
State income taxes, net of Federal income tax benefits | 42,896 | 1.2 | 72,266 | 1.6 |
Tax benefit from parent | (318,847) | (8.7) | (621,052) | (14.1) |
Other—net | (4,664) | (.1) | (1,309) | — |
Actual tax expense | $ 138,687 | 3.8% | $ 227,257 | 5.1% |
It is not expected that the cash outlay for income taxes for any year through 1978 will exceed the income tax expense for such year.
预计1978年及之前的任何一年，所得税现金支出都不会超过该年度的所得税费用。
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