Berkshire's Performance vs. the S&P 500

Year	Annual Percentage Change
	in Per-Share Book Value of Berkshire	in Per-Share Market Value of Berkshire	in S&P 500 with Dividends Included
1965	23.8	49.5	10.0
1966	20.3	(3.4)	(11.7)
1967	11.0	13.3	30.9
1968	19.0	77.8	11.0
1969	16.2	19.4	(8.4)
1970	12.0	(4.6)	3.9
1971	16.4	80.5	14.6
1972	21.7	8.1	18.9
1973	4.7	(2.5)	(14.8)
1974	5.5	(48.7)	(26.4)
1975	21.9	2.5	37.2
1976	59.3	129.3	23.6
1977	31.9	46.8	(7.4)
1978	24.0	14.5	6.4
1979	35.7	102.5	18.2
1980	19.3	32.8	32.3
1981	31.4	31.8	(5.0)
1982	40.0	38.4	21.4
1983	32.3	69.0	22.4
1984	13.6	(2.7)	6.1
1985	48.2	93.7	31.6
1986	26.1	14.2	18.6
1987	19.5	4.6	5.1
1988	20.1	59.3	16.6
1989	44.4	84.6	31.7
1990	7.4	(23.1)	(3.1)
1991	39.6	35.6	30.5
1992	20.3	29.8	7.6
1993	14.3	38.9	10.1
1994	13.9	25.0	1.3
1995	43.1	57.4	37.6
1996	31.8	6.2	23.0
1997	34.1	34.9	33.4
1998	48.3	52.2	28.6
1999	0.5	(19.9)	21.0
2000	6.5	26.6	(9.1)
2001	(6.2)	6.5	(11.9)
2002	10.0	(3.8)	(22.1)
2003	21.0	15.8	28.7
2004	10.5	4.3	10.9
2005	6.4	0.8	4.9
2006	18.4	24.1	15.8
2007	11.0	28.7	5.5
2008	(9.6)	(31.8)	(37.0)
2009	19.8	2.7	26.5
2010	13.0	21.4	15.1
2011	4.6	(4.7)	2.1
2012	14.4	16.8	16.0
2013	18.2	32.7	32.4
2014	8.3	27.0	13.7
2015	6.4	(12.5)	1.4
Compounded Annual Gain – 1965-2015	19.2%	20.8%	9.7%
Overall Gain – 1964-2015	798,981%	1,598,284%	11,355%

Notes: Data are for calendar years with these exceptions: 1965 and 1966, year ended 9/30; 1967, 15 months ended 12/31. Starting in 1979, accounting rules required insurance companies to value the equity securities they hold at market rather than at the lower of cost or market, which was previously the requirement. In this table, Berkshire's results through 1978 have been restated to conform to the changed rules. In all other respects, the results are calculated using the numbers originally reported. The S&P 500 numbers are pre-tax whereas the Berkshire numbers are after-tax. If a corporation such as Berkshire were simply to have owned the S&P 500 and accrued the appropriate taxes, its results would have lagged the S&P 500 in years when that index showed a positive return, but would have exceeded the S&P 500 in years when the index showed a negative return. Over the years, the tax costs would have caused the aggregate lag to be substantial.

BERKSHIRE HATHAWAY INC.

To the Shareholders of Berkshire Hathaway Inc.:

Berkshire’s gain in net worth during 2015 was \$15.4 billion, which increased the per-share book value of both our Class A and Class B stock by 6.4%. Over the last 51 years (that is, since present management took over), per-share book value has grown from \$19 to \$155,501, a rate of 19.2% compounded annually.*

During the first half of those years, Berkshire's net worth was roughly equal to the number that really counts: the intrinsic value of the business. The similarity of the two figures existed then because most of our resources were deployed in marketable securities that were regularly revalued to their quoted prices (less the tax that would be incurred if they were to be sold). In Wall Street parlance, our balance sheet was then in very large part “marked to market.”

By the early 1990s, however, our focus had changed to the outright ownership of businesses, a shift that diminished the relevance of balance-sheet figures. That disconnect occurred because the accounting rules that apply to controlled companies are materially different from those used in valuing marketable securities. The carrying value of the “losers” we own is written down, but “winners” are never revalued upwards.

We've had experience with both outcomes: I've made some dumb purchases, and the amount I paid for the economic goodwill of those companies was later written off, a move that reduced Berkshire's book value. We've also had some winners – a few of them very big – but have not written those up by a penny.

Over time, this asymmetrical accounting treatment (with which we agree) necessarily widens the gap between intrinsic value and book value. Today, the large – and growing – unrecorded gains at our “winners” make it clear that Berkshire’s intrinsic value far exceeds its book value. That’s why we would be delighted to repurchase our shares should they sell as low as 120% of book value. At that level, purchases would instantly and meaningfully increase per-share intrinsic value for Berkshire’s continuing shareholders.

The unrecorded increase in the value of our owned businesses explains why Berkshire's aggregate market-value gain – tabulated on the facing page – materially exceeds our book-value gain. The two indicators vary erratically over short periods. Last year, for example, book-value performance was superior. Over time, however, market-value gains should continue their historical tendency to exceed gains in book value.

The Year at Berkshire

Charlie Munger, Berkshire Vice Chairman and my partner, and I expect Berkshire's normalized earning power to increase every year. (Actual year-to-year earnings, of course, will sometimes decline because of weakness in the U.S. economy or, possibly, because of insurance mega-catastrophes.) In some years the normalized gains will be small; at other times they will be material. Last year was a good one. Here are the highlights:

- The most important development at Berkshire during 2015 was not financial, though it led to better earnings. After a poor performance in 2014, our BNSF railroad dramatically improved its service to customers last year. To attain that result, we invested about \$5.8 billion during the year in capital expenditures, a sum far and away the record for any American railroad and nearly three times our annual depreciation charge. It was money well spent.

BNSF moves about $17\%$ of America's intercity freight (measured by revenue ton-miles), whether transported by rail, truck, air, water or pipeline. In that respect, we are a strong number one among the seven large American railroads (two of which are Canadian-based), carrying $45\%$ more ton-miles of freight than our closest competitor. Consequently, our maintaining first-class service is not only vital to our shippers' welfare but also important to the smooth functioning of the U.S. economy.

For most American railroads, 2015 was a disappointing year. Aggregate ton-miles fell, and earnings weakened as well. BNSF, however, maintained volume, and pre-tax income rose to a record \$6.8 billion* (a gain of \$606 million from 2014). Matt Rose and Carl Ice, the managers of BNSF, have my thanks and deserve yours.

- BNSF is the largest of our “Powerhouse Five,” a group that also includes Berkshire Hathaway Energy, Marmon, Lubrizol and IMC. Combined, these companies – our five most profitable non-insurance businesses – earned \$13.1 billion in 2015, an increase of \$650 million over 2014.

Of the five, only Berkshire Hathaway Energy, then earning \$393 million, was owned by us in 2003. Subsequently, we purchased three of the other four on an all-cash basis. In acquiring BNSF, however, we paid about 70% of the cost in cash and, for the remainder, issued Berkshire shares that increased the number outstanding by 6.1%. In other words, the \$12.7 billion gain in annual earnings delivered Berkshire by the five companies over the twelve-year span has been accompanied by only minor dilution. That satisfies our goal of not simply increasing earnings, but making sure we also increase per-share results.

- Next year, I will be discussing the “Powerhouse Six.” The newcomer will be Precision Castparts Corp. (“PCC”), a business that we purchased a month ago for more than \$32 billion of cash. PCC fits perfectly into the Berkshire model and will substantially increase our normalized per-share earning power.

Under CEO Mark Donegan, PCC has become the world's premier supplier of aerospace components (most of them destined to be original equipment, though spares are important to the company as well). Mark's accomplishments remind me of the magic regularly performed by Jacob Harpaz at IMC, our remarkable Israeli manufacturer of cutting tools. The two men transform very ordinary raw materials into extraordinary products that are used by major manufacturers worldwide. Each is the da Vinci of his craft.

PCC's products, often delivered under multi-year contracts, are key components in most large aircraft. Other industries are served as well by the company's 30,466 employees, who work out of 162 plants in 13 countries. In building his business, Mark has made many acquisitions and will make more. We look forward to having him deploy Berkshire's capital.

A personal thank-you: The PCC acquisition would not have happened without the input and assistance of our own Todd Combs, who brought the company to my attention a few years ago and went on to educate me about both the business and Mark. Though Todd and Ted Weschler are primarily investment managers – they each handle about \$9 billion for us – both of them cheerfully and ably add major value to Berkshire in other ways as well. Hiring these two was one of my best moves.

• With the PCC acquisition, Berkshire will own $10 \frac{1}{4}$ companies that would populate the Fortune 500 if they were stand-alone businesses. (Our $27\%$ holding of Kraft Heinz is the $\frac{1}{4}$ .) That leaves just under $98\%$ of America's business giants that have yet to call us. Operators are standing by.
• Our many dozens of smaller non-insurance businesses earned \$5.7 billion last year, up from \$5.1 billion in 2014. Within this group, we have one company that last year earned more than \$700 million, two that earned between \$400 million and \$700 million, seven that earned between \$250 million and \$400 million, six that earned between \$100 million and \$250 million, and eleven that earned between \$50 million and \$100 million. We love them all: This collection of businesses will expand both in number and earnings as the years go by.
• When you hear talk about America's crumbling infrastructure, rest assured that they're not talking about Berkshire. We invested \$16 billion in property, plant and equipment last year, a full 86% of it deployed in the United States.

I told you earlier about BNSF's record capital expenditures in 2015. At the end of every year, our railroad's physical facilities will be improved from those existing twelve months earlier.

Berkshire Hathaway Energy (“BHE”) is a similar story. That company has invested \$16 billion in renewables and now owns 7% of the country’s wind generation and 6% of its solar generation. Indeed, the 4,423 megawatts of wind generation owned and operated by our regulated utilities is six times the generation of the runner-up utility.

We're not done. Last year, BHE made major commitments to the future development of renewables in support of the Paris Climate Change Conference. Our fulfilling those promises will make great sense, both for the environment and for Berkshire's economics.

- Berkshire's huge and growing insurance operation again operated at an underwriting profit in 2015 – that makes 13 years in a row – and increased its float. During those years, our float – money that doesn't belong to us but that we can invest for Berkshire's benefit – grew from \$41 billion to \$88 billion. Though neither that gain nor the size of our float is reflected in Berkshire's earnings, float generates significant investment income because of the assets it allows us to hold.

Meanwhile, our underwriting profit totaled \$26 billion during the 13-year period, including \$1.8 billion earned in 2015. Without a doubt, Berkshire’s largest unrecorded wealth lies in its insurance business. We’ve spent 48 years building this multi-faceted operation, and it can’t be replicated.

- While Charlie and I search for new businesses to buy, our many subsidiaries are regularly making bolt-on acquisitions. Last year we contracted for 29 bolt-ons, scheduled to cost \$634 million in aggregate. The cost of these purchases ranged from \$300,000 to \$143 million.

Charlie and I encourage bolt-ons, if they are sensibly-priced. (Most deals offered us most definitely aren't.) These purchases deploy capital in operations that fit with our existing businesses and that will be managed by our corps of expert managers. That means no additional work for us, yet more earnings for Berkshire, a combination we find highly appealing. We will make many dozens of bolt-on deals in future years.

- Our Heinz partnership with Jorge Paulo Lemann, Alex Behring and Bernardo Hees more than doubled its size last year by merging with Kraft. Before this transaction, we owned about 53% of Heinz at a cost of \$4.25 billion. Now we own 325.4 million shares of Kraft Heinz (about 27%) that cost us \$9.8 billion. The new company has annual sales of \$27 billion and can supply you Heinz ketchup or mustard to go with your Oscar Mayer hot dogs that come from the Kraft side. Add a Coke, and you will be enjoying my favorite meal. (We will have the Oscar Mayer Wienermobile at the annual meeting – bring your kids.)

Though we sold no Kraft Heinz shares, “GAAP” (Generally Accepted Accounting Principles) required us to record a \$6.8 billion write-up of our investment upon completion of the merger. That leaves us with our Kraft Heinz holding carried on our balance sheet at a value many billions above our cost and many billions below its market value, an outcome only an accountant could love.

Berkshire also owns Kraft Heinz preferred shares that pay us \$720 million annually and are carried at \$7.7 billion on our balance sheet. That holding will almost certainly be redeemed for \$8.32 billion in June (the earliest date allowed under the preferred's terms). That will be good news for Kraft Heinz and bad news for Berkshire.

Jorge Paulo and his associates could not be better partners. We share with them a passion to buy, build and hold large businesses that satisfy basic needs and desires. We follow different paths, however, in pursuing this goal.

Their method, at which they have been extraordinarily successful, is to buy companies that offer an opportunity for eliminating many unnecessary costs and then – very promptly – to make the moves that will get the job done. Their actions significantly boost productivity, the all-important factor in America’s economic growth over the past 240 years. Without more output of desired goods and services per working hour – that’s the measure of productivity gains – an economy inevitably stagnates. At much of corporate America, truly major gains in productivity are possible, a fact offering opportunities to Jorge Paulo and his associates.

At Berkshire, we, too, crave efficiency and detest bureaucracy. To achieve our goals, however, we follow an approach emphasizing avoidance of bloat, buying businesses such as PCC that have long been run by cost-conscious and efficient managers. After the purchase, our role is simply to create an environment in which these CEOs – and their eventual successors, who typically are like-minded – can maximize both their managerial effectiveness and the pleasure they derive from their jobs. (With this hands-off style, I am heeding a well-known Mungerism: “If you want to guarantee yourself a lifetime of misery, be sure to marry someone with the intent of changing their behavior.”)

We will continue to operate with extreme – indeed, almost unheard of – decentralization at Berkshire. But we will also look for opportunities to partner with Jorge Paulo, either as a financing partner, as was the case when his group purchased Tim Horton's, or as a combined equity-and-financing partner, as at Heinz. We also may occasionally partner with others, as we have successfully done at Berkadia.

Berkshire, however, will join only with partners making friendly acquisitions. To be sure, certain hostile offers are justified: Some CEOs forget that it is shareholders for whom they should be working, while other managers are woefully inept. In either case, directors may be blind to the problem or simply reluctant to make the change required. That’s when new faces are needed. We, though, will leave these “opportunities” for others. At Berkshire, we go only where we are welcome.

- Berkshire increased its ownership interest last year in each of its “Big Four” investments – American Express, Coca-Cola, IBM and Wells Fargo. We purchased additional shares of IBM (increasing our ownership to 8.4% versus 7.8% at yearend 2014) and Wells Fargo (going to 9.8% from 9.4%). At the other two companies, Coca-Cola and American Express, stock repurchases raised our percentage ownership. Our equity in Coca-Cola grew from 9.2% to 9.3%, and our interest in American Express increased from 14.8% to 15.6%. In case you think these seemingly small changes aren’t important, consider this math: For the four companies in aggregate, each increase of one percentage point in our ownership raises Berkshire’s portion of their annual earnings by about \$500 million.

These four investees possess excellent businesses and are run by managers who are both talented and shareholder-oriented. Their returns on tangible equity range from excellent to staggering. At Berkshire, we much prefer owning a non-controlling but substantial portion of a wonderful company to owning 100% of a so-so business. It’s better to have a partial interest in the Hope Diamond than to own all of a rhinestone.

If Berkshire’s yearend holdings are used as the marker, our portion of the “Big Four’s” 2015 earnings amounted to \$4.7 billion. In the earnings we report to you, however, we include only the dividends they pay us – about \$1.8 billion last year. But make no mistake: The nearly \$3 billion of these companies’ earnings we don’t report are every bit as valuable to us as the portion Berkshire records.

The earnings our investees retain are often used for repurchases of their own stock – a move that increases Berkshire's share of future earnings without requiring us to lay out a dime. The retained earnings of these companies also fund business opportunities that usually turn out to be advantageous. All that leads us to expect that the per-share earnings of these four investees, in aggregate, will grow substantially over time. If gains do indeed materialize, dividends to Berkshire will increase and so, too, will our unrealized capital gains.

Our flexibility in capital allocation – our willingness to invest large sums passively in non-controlled businesses – gives us a significant edge over companies that limit themselves to acquisitions they will operate. Woody Allen once explained that the advantage of being bi-sexual is that it doubles your chance of finding a date on Saturday night. In like manner – well, not exactly like manner – our appetite for either operating businesses or passive investments doubles our chances of finding sensible uses for Berkshire’s endless gusher of cash. Beyond that, having a huge portfolio of marketable securities gives us a stockpile of funds that can be tapped when an elephant-sized acquisition is offered to us.

* * * * * * * * * * * *

It's an election year, and candidates can't stop speaking about our country's problems (which, of course, only they can solve). As a result of this negative drumbeat, many Americans now believe that their children will not live as well as they themselves do.

That view is dead wrong: The babies being born in America today are the luckiest crop in history.

American GDP per capita is now about \$56,000. As I mentioned last year that – in real terms – is a staggering six times the amount in 1930, the year I was born, a leap far beyond the wildest dreams of my parents or their contemporaries. U.S. citizens are not intrinsically more intelligent today, nor do they work harder than did Americans in 1930. Rather, they work far more efficiently and thereby produce far more. This all-powerful trend is certain to continue: America’s economic magic remains alive and well.

Some commentators bemoan our current $2\%$ per year growth in real GDP – and, yes, we would all like to see a higher rate. But let's do some simple math using the much-lamented $2\%$ figure. That rate, we will see, delivers astounding gains.

America's population is growing about .8% per year (.5% from births minus deaths and .3% from net migration). Thus 2% of overall growth produces about 1.2% of per capita growth. That may not sound impressive. But in a single generation of, say, 25 years, that rate of growth leads to a gain of 34.4% in real GDP per capita. (Compounding's effects produce the excess over the percentage that would result by simply multiplying 25 x 1.2%.) In turn, that 34.4% gain will produce a staggering \$19,000 increase in real GDP per capita for the next generation. Were that to be distributed equally, the gain would be \$76,000 annually for a family of four. Today's politicians need not shed tears for tomorrow's children.

Indeed, most of today's children are doing well. All families in my upper middle-class neighborhood regularly enjoy a living standard better than that achieved by John D. Rockefeller Sr. at the time of my birth. His unparalleled fortune couldn't buy what we now take for granted, whether the field is – to name just a few – transportation, entertainment, communication or medical services. Rockefeller certainly had power and fame; he could not, however, live as well as my neighbors now do.

Though the pie to be shared by the next generation will be far larger than today's, how it will be divided will remain fiercely contentious. Just as is now the case, there will be struggles for the increased output of goods and services between those people in their productive years and retirees, between the healthy and the infirm, between the inheritors and the Horatio Alger, between investors and workers and, in particular, between those with talents that are valued highly by the marketplace and the equally decent hard-working Americans who lack the skills the market prizes. Clashes of that sort have forever been with us – and will forever continue. Congress will be the battlefield; money and votes will be the weapons. Lobbying will remain a growth industry.

The good news, however, is that even members of the “losing” sides will almost certainly enjoy – as they should – far more goods and services in the future than they have in the past. The quality of their increased bounty will also dramatically improve. Nothing rivals the market system in producing what people want – nor, even more so, in delivering what people don’t yet know they want. My parents, when young, could not envision a television set, nor did I, in my 50s, think I needed a personal computer. Both products, once people saw what they could do, quickly revolutionized their lives. I now spend ten hours a week playing bridge online. And, as I write this letter, “search” is invaluable to me. (I’m not ready for Tinder, however.)

For 240 years it's been a terrible mistake to bet against America, and now is no time to start. America's golden goose of commerce and innovation will continue to lay more and larger eggs. America's social security promises will be honored and perhaps made more generous. And, yes, America's kids will live far better than their parents did.

* * * * * * * * * * * *

Considering this favorable tailwind, Berkshire (and, to be sure, a great many other businesses) will almost certainly prosper. The managers who succeed Charlie and me will build Berkshire's per-share intrinsic value by following our simple blueprint of: (1) constantly improving the basic earning power of our many subsidiaries; (2) further increasing their earnings through bolt-on acquisitions; (3) benefiting from the growth of our investees; (4) repurchasing Berkshire shares when they are available at a meaningful discount from intrinsic value; and (5) making an occasional large acquisition. Management will also try to maximize results for you by rarely, if ever, issuing Berkshire shares.

Intrinsic Business Value

As much as Charlie and I talk about intrinsic business value, we cannot tell you precisely what that number is for Berkshire shares (nor, in fact, for any other stock). It is possible, however, to make a sensible estimate. In our 2010 annual report we laid out the three elements – one of them qualitative – that we believe are the keys to an estimation of Berkshire’s intrinsic value. That discussion is reproduced in full on pages 113-114.

Here is an update of the two quantitative factors: In 2015 our per-share cash and investments increased 8.3% to \$159,794 (with our Kraft Heinz shares stated at market value), and earnings from our many businesses – including insurance underwriting income – increased 2.1% to \$12,304 per share. We exclude in the second factor the dividends and interest from the investments we hold because including them would produce a double-counting of value. In arriving at our earnings figure, we deduct all corporate overhead, interest, depreciation, amortization and minority interests. Income taxes, though, are not deducted. That is, the earnings are pre-tax.

I used the italics in the paragraph above because we are for the first time including insurance underwriting income in business earnings. We did not do that when we initially introduced Berkshire's two quantitative pillars of valuation because our insurance results were then heavily influenced by catastrophe coverages. If the wind didn't blow and the earth didn't shake, we made large profits. But a mega-catastrophe would produce red ink. In order to be conservative then in stating our business earnings, we consistently assumed that underwriting would break even over time and ignored any of its gains or losses in our annual calculation of the second factor of value.

Today, our insurance results are likely to be more stable than was the case a decade or two ago because we have deemphasized catastrophe coverages and greatly expanded our bread-and-butter lines of business. Last year, our underwriting income contributed \$1,118 per share to the \$12,304 per share of earnings referenced in the second paragraph of this section. Over the past decade, annual underwriting income has averaged \$1,434 per share, and we anticipate being profitable in most years. You should recognize, however, that underwriting in any given year could well be unprofitable, perhaps substantially so.

Since 1970, our per-share investments have increased at a rate of 18.9% compounded annually, and our earnings (including the underwriting results in both the initial and terminal year) have grown at a 23.7% clip. It is no coincidence that the price of Berkshire stock over the ensuing 45 years has increased at a rate very similar to that of our two measures of value. Charlie and I like to see gains in both sectors, but our main goal is to build operating earnings.

* * * * * * * * * * * *

Now, let's examine the four major sectors of our operations. Each has vastly different balance sheet and income characteristics from the others. So we'll present them as four separate businesses, which is how Charlie and I view them (though there are important and enduring economic advantages to having them all under one roof). Our intent is to provide you with the information we would wish to have if our positions were reversed, with you being the reporting manager and we the absentee shareholders. (Don't get excited; this is not a switch we are considering.)

Insurance

Let's look first at insurance. The property-casualty (“P/C”) branch of that industry has been the engine that has propelled our expansion since 1967, when we acquired National Indemnity and its sister company, National Fire & Marine, for \$8.6 million. Today, National Indemnity is the largest property-casualty company in the world, as measured by net worth. Moreover, its intrinsic value is far in excess of the value at which it is carried on our books.

One reason we were attracted to the P/C business was its financial characteristics: P/C insurers receive premiums upfront and pay claims later. In extreme cases, such as those arising from certain workers' compensation accidents, payments can stretch over many decades. This collect-now, pay-later model leaves P/C companies holding large sums – money we call “float” – that will eventually go to others. Meanwhile, insurers get to invest this float for their own benefit. Though individual policies and claims come and go, the amount of float an insurer holds usually remains fairly stable in relation to premium volume. Consequently, as our business grows, so does our float. And how we have grown, as the following table shows:

Year	Float (in millions)
1970	$ 39
1980	237
1990	1,632
2000	27,871
2010	65,832
2015	87,722

Further gains in float will be tough to achieve. On the plus side, GEICO and several of our specialized operations are almost certain to grow at a good clip. National Indemnity's reinsurance division, however, is party to a number of run-off contracts whose float drifts downward. If we do in time experience a decline in float, it will be very gradual – at the outside no more than 3% in any year. The nature of our insurance contracts is such that we can never be subject to immediate or near-term demands for sums that are of significance to our cash resources. This structure is by design and is a key component in the strength of Berkshire's economic fortress. It will never be compromised.

If our premiums exceed the total of our expenses and eventual losses, we register an underwriting profit that adds to the investment income our float produces. When such a profit is earned, we enjoy the use of free money – and, better yet, get paid for holding it.

Unfortunately, the wish of all insurers to achieve this happy result creates intense competition, so vigorous indeed that it sometimes causes the P/C industry as a whole to operate at a significant underwriting loss. This loss, in effect, is what the industry pays to hold its float. Competitive dynamics almost guarantee that the insurance industry, despite the float income all its companies enjoy, will continue its dismal record of earning subnormal returns on tangible net worth as compared to other American businesses. The prolonged period of low interest rates the world is now dealing with also virtually guarantees that earnings on float will steadily decrease for many years to come, thereby exacerbating the profit problems of insurers. It’s a good bet that industry results over the next ten years will fall short of those recorded in the past decade, particularly for those companies that specialize in reinsurance.

As noted early in this report, Berkshire has now operated at an underwriting profit for 13 consecutive years, our pre-tax gain for the period having totaled \$26.2 billion. That's no accident: Disciplined risk evaluation is the daily focus of all of our insurance managers, who know that while float is valuable, its benefits can be drowned by poor underwriting results. All insurers give that message lip service. At Berkshire it is a religion, Old Testament style.

So how does our float affect intrinsic value? When Berkshire's book value is calculated, the full amount of our float is deducted as a liability, just as if we had to pay it out tomorrow and could not replenish it. But to think of float as strictly a liability is incorrect. It should instead be viewed as a revolving fund. Daily, we pay old claims and related expenses – a huge \$24.5 billion to more than six million claimants in 2015 – and that reduces float. Just as surely, we each day write new business that will soon generate its own claims, adding to float.

If our revolving float is both costless and long-enduring, which I believe it will be, the true value of this liability is dramatically less than the accounting liability. Owing \$1 that in effect will never leave the premises – because new business is almost certain to deliver a substitute – is worlds different from owing \$1 that will go out the door tomorrow and not be replaced. The two types of liabilities, however, are treated as equals under GAAP.

A partial offset to this overstated liability is a \$15.5 billion “goodwill” asset that we incurred in buying our insurance companies and that increases book value. In very large part, this goodwill represents the price we paid for the float-generating capabilities of our insurance operations. The cost of the goodwill, however, has no bearing on its true value. For example, if an insurance company sustains large and prolonged underwriting losses, any goodwill asset carried on the books should be deemed valueless, whatever its original cost.

Fortunately, that does not describe Berkshire. Charlie and I believe the true economic value of our insurance goodwill – what we would happily pay for float of similar quality were we to purchase an insurance operation possessing it – to be far in excess of its historic carrying value. Indeed, almost the entire \$15.5 billion we carry for goodwill in our insurance business was already on our books in 2000. Yet we subsequently tripled our float. Its value today is one reason – a huge reason – why we believe Berkshire’s intrinsic business value substantially exceeds its book value.

* * * * * * * * * * * *

Berkshire's attractive insurance economics exist only because we have some terrific managers running disciplined operations that possess hard-to-replicate business models. Let me tell you about the major units.

First by float size is the Berkshire Hathaway Reinsurance Group, managed by Ajit Jain. Ajit insures risks that no one else has the desire or the capital to take on. His operation combines capacity, speed, decisiveness and, most important, brains in a manner unique in the insurance business. Yet he never exposes Berkshire to risks that are inappropriate in relation to our resources.

Indeed, Berkshire is far more conservative in avoiding risk than most large insurers. For example, if the insurance industry should experience a \$250 billion loss from some mega-catastrophe – a loss about triple anything it has ever experienced – Berkshire as a whole would likely record a significant profit for the year because of its many streams of earnings. We would also remain awash in cash and be looking for large opportunities to write business in an insurance market that might well be in disarray. Meanwhile, other major insurers and reinsurers would be swimming in red ink, if not facing insolvency.

When Ajit entered Berkshire's office on a Saturday in 1986, he did not have a day's experience in the insurance business. Nevertheless, Mike Goldberg, then our manager of insurance, handed him the keys to our reinsurance business. With that move, Mike achieved sainthood: Since then, Ajit has created tens of billions of value for Berkshire shareholders.

* * * * * * * * * * * *

We have another reinsurance powerhouse in General Re, managed by Tad Montross.

At bottom, a sound insurance operation needs to adhere to four disciplines. It must (1) understand all exposures that might cause a policy to incur losses; (2) conservatively assess the likelihood of any exposure actually causing a loss and the probable cost if it does; (3) set a premium that, on average, will deliver a profit after both prospective loss costs and operating expenses are covered; and (4) be willing to walk away if the appropriate premium can't be obtained.

Many insurers pass the first three tests and flunk the fourth. They simply can't turn their back on business that is being eagerly written by their competitors. That old line, “The other guy is doing it, so we must as well,” spells trouble in any business, but in none more so than insurance.

Tad has observed all four of the insurance commandments, and it shows in his results. General Re's huge float has been considerably better than cost-free under his leadership, and we expect that, on average, to continue. We are particularly enthusiastic about General Re's international life reinsurance business, which has grown consistently and profitably since we acquired the company in 1998.

It can be remembered that soon after we purchased General Re, it was beset by problems that caused commentators – and me as well, briefly – to believe I had made a huge mistake. That day is long gone. General Re is now a gem.

* * * * * * * * * * * *

Finally, there is GEICO, the insurer on which I cut my teeth 65 years ago. GEICO is managed by Tony Nicely, who joined the company at 18 and completed 54 years of service in 2015. Tony became CEO in 1993, and since then the company has been flying. There is no better manager than Tony. In the 40 years that I’ve known him, his every action has made great sense.

When I was first introduced to GEICO in January 1951, I was blown away by the huge cost advantage the company enjoyed compared to the expenses borne by the giants of the industry. It was clear to me that GEICO would succeed because it deserved to succeed.

No one likes to buy auto insurance. Almost everyone, though, likes to drive. The insurance consequently needed is a major expenditure for most families. Savings matter to them – and only a low-cost operation can deliver these. Indeed, at least 40% of the people reading this letter can save money by insuring with GEICO. So stop reading – right now! – and go to geico.com or call 800-368-2734.

GEICO's cost advantage is the factor that has enabled the company to gobble up market share year after year. (We ended 2015 with $11.4\%$ of the market compared to $2.5\%$ in 1995, when Berkshire acquired control of GEICO.) The company's low costs create a moat – an enduring one – that competitors are unable to cross.

All the while, our gecko never tires of telling Americans how GEICO can save them important money. I love hearing the little guy deliver his message: “15 minutes could save you 15% or more on car insurance.” (Of course, there’s always a grouch in the crowd. One of my friends says he is glad that only a few animals can talk, since the ones that do speak seem unable to discuss any subject but insurance.)

* * * * * * * * * * * *

In addition to our three major insurance operations, we own a group of smaller companies that primarily write commercial coverages. In aggregate, these companies are a large, growing and valuable operation that consistently delivers an underwriting profit, usually much better than that reported by their competitors. Indeed, over the past 13 years, this group has earned \$4 billion from underwriting – about 13% of its premium volume – while increasing its float from \$943 million to \$9.9 billion.

Less than three years ago, we formed Berkshire Hathaway Specialty Insurance (“BHSI”), which we include in this group. Our first decision was to put Peter Eastwood in charge. That move was a home run: BHSI has already developed \$1 billion of annual premium volume and, under Peter’s direction, is destined to become one of the world’s leading P/C insurers.

Here's a recap of underwriting earnings and float by division:

	Underwriting Profit		Yearend Float
Insurance Operations	2015	(in millions)
		2014	2015	2014
BH Reinsurance	$ 421	$ 606	$ 44,108	$ 42,454
General Re	132	277	18,560	19,280
GEICO	460	1,159	15,148	13,569
Other Primary	824	626	9,906	8,618
	$ 1,837	$ 2,668	$ 87,722	$ 83,921

Berkshire's great managers, premier financial strength and a variety of business models protected by wide moats amount to something unique in the insurance world. This assemblage of strengths is a huge asset for Berkshire shareholders that will only get more valuable with time.

Regulated, Capital-Intensive Businesses

We have two major operations, BNSF and BHE, that share important characteristics distinguishing them from our other businesses. Consequently, we assign them their own section in this letter and split out their combined financial statistics in our GAAP balance sheet and income statement. Together, they last year accounted for $37\%$ of Berkshire's after-tax operating earnings.

A key characteristic of both companies is their huge investment in very long-lived, regulated assets, with these partially funded by large amounts of long-term debt that is not guaranteed by Berkshire. Our credit is in fact not needed because each company has earning power that even under terrible economic conditions would far exceed its interest requirements. Last year, for example, in a disappointing year for railroads, BNSF's interest coverage was more than 8:1. (Our definition of coverage is the ratio of earnings before interest and taxes to interest, not EBITDA/interest, a commonly used measure we view as seriously flawed.)

At BHE, meanwhile, two factors ensure the company's ability to service its debt under all circumstances. The first is common to all utilities: recession-resistant earnings, which result from these companies offering an essential service on an exclusive basis. The second is enjoyed by few other utilities: a great and ever-widening diversity of earnings streams, which shield BHE from being seriously harmed by any single regulatory body. These many sources of profit, supplemented by the inherent advantage of being owned by a strong parent, have allowed BHE and its utility subsidiaries to significantly lower their cost of debt. This economic fact benefits both us and our customers.

All told, BHE and BNSF invested \$11.6 billion in plant and equipment last year, a massive commitment to key components of America's infrastructure. We relish making such investments as long as they promise reasonable returns – and, on that front, we put a large amount of trust in future regulation.

Our confidence is justified both by our past experience and by the knowledge that society will forever need huge investments in both transportation and energy. It is in the self-interest of governments to treat capital providers in a manner that will ensure the continued flow of funds to essential projects. It is concomitantly in our self-interest to conduct our operations in a way that earns the approval of our regulators and the people they represent.

Low prices are a powerful way to keep these constituencies happy. In Iowa, BHE's average retail rate is 6.8¢ per KWH. Alliant, the other major electric utility in the state, averages 9.5¢. Here are the comparable industry figures for adjacent states: Nebraska 9.0¢, Missouri 9.3¢, Illinois 9.3¢, Minnesota 9.7¢. The national average is 10.4¢. Our rock-bottom prices add up to real money for paycheck-strapped customers.

At BNSF, price comparisons between major railroads are far more difficult to make because of significant differences in both their mix of cargo and the average distance it is carried. To supply a very crude measure, however, our revenue per ton-mile was just under 3¢ last year, while shipping costs for customers of the other four major U.S.-based railroads were at least 40% higher, ranging from 4.2¢ to 5.3¢.

Both BHE and BNSF have been leaders in pursuing planet-friendly technology. In wind generation, no state comes close to Iowa, where last year megawatt-hours we generated from wind equaled 47% of all megawatt-hours sold to our retail customers. (Additional wind projects to which we are committed will take that figure to 58% in 2017.)

BNSF, like other Class I railroads, uses only a single gallon of diesel fuel to move a ton of freight almost 500 miles. That makes the railroads four times as fuel-efficient as trucks! Furthermore, railroads alleviate highway congestion – and the taxpayer-funded maintenance expenditures that come with heavier traffic – in a major way.

Here are the key figures for BHE and BNSF:

Berkshire Hathaway Energy (89.9% owned)	Earnings (in millions)
	2015	2014	2013
U.K. utilities	$460	$527	$362
Iowa utility	314	298	230
Nevada utilities	586	549	(58)
PacifiCorp (primarily Oregon and Utah)	1,026	1,010	982
Gas pipelines (Northern Natural and Kern River)	401	379	385
Canadian transmission utility	170	16	—
Renewable projects	175	194	50
HomeServices	191	139	139
Other (net)	27	26	12
Operating earnings before corporate interest and taxes	3,350	3,138	2,102
Interest	499	427	296
Income taxes	481	616	170
Net earnings	$2,370	$2,095	$1,636
Earnings applicable to Berkshire	$2,132	$1,882	$1,470

BNSF	Earnings (in millions)
	2015	2014	2013
Revenues	$21,967	$23,239	$22,014
Operating expenses	14,264	16,237	15,357
Operating earnings before interest and taxes	7,703	7,002	6,657
Interest (net)	928	833	729
Income taxes	2,527	2,300	2,135
Net earnings	$4,248	$3,869	$3,793

I currently expect increased after-tax earnings at BHE in 2016, but lower earnings at BNSF.

Manufacturing, Service and Retailing Operations

Our activities in this part of Berkshire cover the waterfront. Let's look, though, at a summary balance sheet and earnings statement for the entire group.

Balance Sheet 12/31/15 (in millions)

Assets		Liabilities and Equity
Cash and equivalents	$6,807	Notes payable	$2,135
Accounts and notes receivable	8,886	Other current liabilities	10,565
Inventory	11,916	Total current liabilities	12,700
Other current assets	970
Total current assets	28,579
		Deferred taxes	3,649
Goodwill and other intangibles	30,289	Term debt and other liabilities	4,767
Fixed assets	15,161	Non-controlling interests	521
Other assets	4,445	Berkshire equity	56,837
	$78,474		$78,474

Earnings Statement (in millions)

	2015	2014	2013*
Revenues	$107,825	$97,689	$93,472
Operating expenses	100,607	90,788	87,208
Interest expense	103	109	104
Pre-tax earnings	7,115	6,792	6,160
Income taxes and non-controlling interests	2,432	2,324	2,283
Net earnings	$4,683	$4,468	$3,877

* Earnings for 2013 have been restated to exclude Marmon's leasing operations, which are now included in the Finance and Financial Products results.

Our income and expense data conforming to GAAP is on page 38. In contrast, the operating expense figures above are non-GAAP because they exclude some purchase-accounting items (primarily the amortization of certain intangible assets). We present the data in this manner because Charlie and I believe the adjusted numbers more accurately reflect the true economic expenses and profits of the businesses aggregated in the table than do GAAP figures.

I won't explain all of the adjustments – some are tiny and arcane – but serious investors should understand the disparate nature of intangible assets. Some truly deplete in value over time, while others in no way lose value. For software, as a big example, amortization charges are very real expenses. Conversely, the concept of recording charges against other intangibles, such as customer relationships, arises from purchase-accounting rules and clearly does not reflect economic reality. GAAP accounting draws no distinction between the two types of charges. Both, that is, are recorded as expenses when earnings are calculated – even though, from an investor's viewpoint, they could not differ more.

In the GAAP-compliant figures we show on page 38, amortization charges of \$1.1 billion have been deducted as expenses. We would call about 20% of these “real,” the rest not. The “non-real” charges, once non-existent at Berkshire, have become significant because of the many acquisitions we have made. Non-real amortization charges are likely to climb further as we acquire more companies.

The table on page 55 gives you the current status of our intangible assets as calculated by GAAP. We now have \$6.8 billion left of amortizable intangibles, of which \$4.1 billion will be expensed over the next five years. Eventually, of course, every dollar of these “assets” will be charged off. When that happens, reported earnings increase even if true earnings are flat. (My gift to my successor.)

I suggest that you ignore a portion of GAAP amortization costs. But it is with some trepidation that I do that, knowing that it has become common for managers to tell their owners to ignore certain expense items that are all too real. “Stock-based compensation” is the most egregious example. The very name says it all: “compensation.” If compensation isn’t an expense, what is it? And, if real and recurring expenses don’t belong in the calculation of earnings, where in the world do they belong?

Wall Street analysts often play their part in this charade, too, parroting the phony, compensation-ignoring “earnings” figures fed them by managements. Maybe the offending analysts don’t know any better. Or maybe they fear losing “access” to management. Or maybe they are cynical, telling themselves that since everyone else is playing the game, why shouldn’t they go along with it. Whatever their reasoning, these analysts are guilty of propagating misleading numbers that can deceive investors.

Depreciation charges are a more complicated subject but are almost always true costs. Certainly they are at Berkshire. I wish we could keep our businesses competitive while spending less than our depreciation charge, but in 51 years I’ve yet to figure out how to do so. Indeed, the depreciation charge we record in our railroad business falls far short of the capital outlays needed to merely keep the railroad running properly, a mismatch that leads to GAAP earnings that are higher than true economic earnings. (This overstatement of earnings exists at all railroads.) When CEOs or investment bankers tout pre-depreciation figures such as EBITDA as a valuation guide, watch their noses lengthen while they speak.

Our public reports of earnings will, of course, continue to conform to GAAP. To embrace reality, however, you should remember to add back most of the amortization charges we report. You should also subtract something to reflect BNSF's inadequate depreciation charge.

* * * * * * * * * * * *

Let's get back to our many manufacturing, service and retailing operations, which sell products ranging from lollipops to jet airplanes. Some of this sector's businesses, measured by earnings on unleveraged net tangible assets, enjoy terrific economics, producing profits that run from $25\%$ after-tax to far more than $100\%$ . Others generate good returns in the area of $12\%$ to $20\%$ .

A few, however – these are serious mistakes I made in my job of capital allocation – have very poor returns. In most of these cases, I was wrong in my evaluation of the economic dynamics of the company or the industry in which it operates, and we are now paying the price for my misjudgments. At other times, I stumbled in evaluating either the fidelity or the ability of incumbent managers or ones I later appointed. I will commit more errors; you can count on that. If we luck out, they will occur at our smaller operations.

Viewed as a single entity, the companies in this group are an excellent business. They employed an average of \$25.6 billion of net tangible assets during 2015 and, despite their holding large quantities of excess cash and using only token amounts of leverage, earned 18.4% after-tax on that capital.

Of course, a business with terrific economics can be a bad investment if it is bought at too high a price. We have paid substantial premiums to net tangible assets for most of our businesses, a cost that is reflected in the large figure we show for goodwill and other intangibles. Overall, however, we are getting a decent return on the capital we have deployed in this sector. Earnings from the group should grow substantially in 2016 as Duracell and Precision Castparts enter the fold.

* * * * * * * * * * * *

We have far too many companies in this group to comment on them individually. Moreover, their competitors – both current and potential – read this report. In a few of our businesses we might be disadvantaged if others knew our numbers. In some of our operations that are not of a size material to an evaluation of Berkshire, therefore, we only disclose what is required. You can nevertheless find a good bit of detail about many of our operations on pages 88-91.

Finance and Financial Products

Our three leasing and rental operations are conducted by CORT (furniture), XTRA (semi-trailers), and Marmon (primarily tank cars but also freight cars, intermodal tank containers and cranes). These companies are industry leaders and have substantially increased their earnings as the American economy has gained strength. At each of the three, we have invested more money in new equipment than have many of our competitors, and that's paid off. Dealing from strength is one of Berkshire's enduring advantages.

Kevin Clayton has again delivered an industry-leading performance at Clayton Homes, the second-largest home builder in America. Last year, the company sold 34,397 homes, about 45% of the manufactured homes bought by Americans. In contrast, the company was number three in the field, with a 14% share, when Berkshire purchased it in 2003.

Manufactured homes allow the American dream of home ownership to be achieved by lower-income citizens: Around 70% of new homes costing \$150,000 or less come from our industry. About 46% of Clayton's homes are sold through the 331 stores we ourselves own and operate. Most of Clayton's remaining sales are made to 1,395 independent retailers.

Key to Clayton's operation is its \$12.8 billion mortgage portfolio. We originate about 35% of all mortgages on manufactured homes. About 37% of our mortgage portfolio emanates from our retail operation, with the balance primarily originated by independent retailers, some of which sell our homes while others market only the homes of our competitors.

Lenders other than Clayton have come and gone. With Berkshire's backing, however, Clayton steadfastly financed home buyers throughout the panic days of 2008-2009. Indeed, during that period, Clayton used precious capital to finance dealers who did not sell our homes. The funds we supplied to Goldman Sachs and General Electric at that time produced headlines; the funds Berkshire quietly delivered to Clayton both made home ownership possible for thousands of families and kept many non-Clayton dealers alive.

Our retail outlets, employing simple language and large type, consistently inform home buyers of alternative sources for financing – most of it coming from local banks – and always secure acknowledgments from customers that this information has been received and read. (The form we use is reproduced in its actual size on page 119.)

Mortgage-origination practices are of great importance to both the borrower and to society. There is no question that reckless practices in home lending played a major role in bringing on the financial panic of 2008, which in turn led to the Great Recession. In the years preceding the meltdown, a destructive and often corrupt pattern of mortgage creation flourished whereby (1) an originator in, say, California would make loans and (2) promptly sell them to an investment or commercial bank in, say, New York, which would package many mortgages to serve as collateral for a dizzyingly complicated array of mortgage-backed securities to be (3) sold to unwitting institutions around the world.

As if these sins weren't sufficient to create an unholy mess, imaginative investment bankers sometimes concocted a second layer of sliced-up financing whose value depended on the junkier portions of primary offerings. (When Wall Street gets “innovative,” watch out!) While that was going on, I described this “doubling-up” practice as requiring an investor to read tens of thousands of pages of mind-numbing prose to evaluate a single security being offered.

Both the originator and the packager of these financings had no skin in the game and were driven by volume and mark-ups. Many housing borrowers joined the party as well, blatantly lying on their loan applications while mortgage originators looked the other way. Naturally, the gamiest credits generated the most profits. Smooth Wall Street salesmen garnered millions annually by manufacturing products that their customers were unable to understand. (It’s also questionable as to whether the major rating agencies were capable of evaluating the more complex structures. But rate them they did.)

Barney Frank, perhaps the most financially-savvy member of Congress during the panic, recently assessed the 2010 Dodd-Frank Act, saying, “The one major weakness that I’ve seen in the implementation was this decision by the regulators not to impose risk retention on all residential mortgages.” Today, some legislators and commentators continue to advocate a 1%-to-5% retention by the originator as a way to align its interests with that of the ultimate lender or mortgage guarantor.

At Clayton, our risk retention was, and is, 100%. When we originate a mortgage we keep it (leaving aside the few that qualify for a government guarantee). When we make mistakes in granting credit, we therefore pay a price – a hefty price that dwarfs any profit we realized upon the original sale of the home. Last year we had to foreclose on 8,444 manufactured-housing mortgages at a cost to us of \$157 million.

The average loan we made in 2015 was only \$59,942, small potatoes for traditional mortgage lenders, but a daunting commitment for our many lower-income borrowers. Our buyer acquires a decent home – take a look at the home we will have on display at our annual meeting – requiring monthly principal-and-interest payments that average \$522.

Some borrowers, of course, will lose their jobs, and there will be divorces and deaths. Others will get over-extended on credit cards and mishandle their finances. We will lose money then, and our borrower will lose his down payment (though his mortgage payments during his time of occupancy may have been well under rental rates for comparable quarters). Nevertheless, despite the low FICO scores and income of our borrowers, their payment behavior during the Great Recession was far better than that prevailing in many mortgage pools populated by people earning multiples of our typical borrower's income.

The strong desire of our borrowers to have a home of their own is one reason we've done well with our mortgage portfolio. Equally important, we have financed much of the portfolio with floating-rate debt or with short-term fixed-rate debt. Consequently, the incredibly low short-term rates of recent years have provided us a constantly-widening spread between our interest costs and the income we derive from our mortgage portfolio, which bears fixed rates. (Incidentally, we would have enjoyed similar margins had we simply bought long-term bonds and financed the position in some short-term manner.)

Normally, it is risky business to lend long at fixed rates and borrow short as we have been doing at Clayton. Over the years, some important financial institutions have gone broke doing that. At Berkshire, however, we possess a natural offset in that our businesses always maintain at least \$20 billion in cash-equivalents that earn short-term rates. More often, our short-term investments are in the \$40 billion to \$60 billion range. If we have, say, \$60 billion invested at 1/4% or less, a sharp move to higher short-term rates would bring benefits to us far exceeding the higher financing costs we would incur in funding Clayton's \$13 billion mortgage portfolio. In banking terms, Berkshire is – and always will be – heavily asset-sensitive and will consequently benefit from rising interest rates.

Let me talk about one subject of which I am particularly proud, that having to do with regulation. The Great Recession caused mortgage originators, servicers and packagers to come under intense scrutiny and to be assessed many billions of dollars in fines and penalties.

The scrutiny has certainly extended to Clayton, whose mortgage practices have been continuously reviewed and examined in respect to such items as originations, servicing, collections, advertising, compliance, and internal controls. At the federal level, we answer to the Federal Trade Commission, the Department of Housing and Urban Development and the Consumer Financial Protection Bureau. Dozens of states regulate us as well. During the past two years, indeed, various federal and state authorities (from 25 states) examined and reviewed Clayton and its mortgages on 65 occasions. The result? Our total fines during this period were \$38,200 and our refunds to customers \$704,678. Furthermore, though we had to foreclose on 2.64% of our manufactured-home mortgages last year, 95.4% of our borrowers were current on their payments at yearend, as they moved toward owning a debt-free home.

* * * * * * * * * * * *

Marmon's rail fleet expanded to 133,220 units by yearend, a number significantly increased by the company's purchase of 25,085 cars from General Electric on September 30. If our fleet was connected to form a single train, the engine would be in Omaha and the caboose in Portland, Maine.

At yearend, 97% of our railcars were leased, with about 15-17% of the fleet coming up for renewal each year. Though “tank cars” sound like vessels carrying crude oil, only about 7% of our fleet carries that product; chemicals and refined petroleum products are the lead items we transport. When trains roll by, look for the UTLX or Procor markings that identify our tank cars. When you spot the brand, puff out your chest; you own a portion of that car.

Here's the earnings recap for this sector:

	2015	2014	2013
	(in millions)
Berkadia (our 50% share)	$74	$122	$80
Clayton	706	558	416
CORT	55	49	42
Marmon – Containers and Cranes	192	238	226
Marmon – Railcars	546	442	353
XTRA	172	147	125
Net financial income*	341	283	322
	$2,086	$1,839	$1,564

* Excludes capital gains or losses

Investments

Below we list our fifteen common stock investments that at yearend had the largest market value. We exclude our Kraft Heinz holding because we are part of a control group and account for it on the “equity” method.

Shares**	Company	Percentage of Company Owned	12/31/15
			Cost*	Market
			(in millions)
151,610,700	American Express Company	15.6	$ 1,287	$ 10,545
46,577,138	AT&T	0.8	1,283	1,603
7,463,157	Charter Communications, Inc.	6.6	1,202	1,367
400,000,000	The Coca-Cola Company	9.3	1,299	17,184
18,513,482	DaVita HealthCare Partners Inc.	8.8	843	1,291
22,164,450	Deere & Company	7.0	1,773	1,690
11,390,582	The Goldman Sachs Group, Inc.	2.7	654	2,053
81,033,450	International Business Machines Corp.	8.4	13,791	11,152
24,669,778	Moody’s Corporation	12.6	248	2,475
55,384,926	Phillips 66	10.5	4,357	4,530
52,477,678	The Procter & Gamble Company	1.9	336	4,683 ***
22,169,930	Sanofi	1.7	1,701	1,896
101,859,335	U.S. Bancorp	5.8	3,239	4,346
63,507,544	Wal-Mart Stores, Inc.	2.0	3,593	3,893
500,000,000	Wells Fargo & Company	9.8	12,730	27,180
	Others		10,276	16,450
	Total Common Stocks Carried at Market		$ 58,612	$ 112,338

* This is our actual purchase price and also our tax basis; GAAP “cost” differs in a few cases because of write-ups or write-downs that have been required under GAAP rules.
** Excludes shares held by pension funds of Berkshire subsidiaries.
*** Held under contract of sale for this amount.

Berkshire has one major equity position that is not included in the table: We can buy 700 million shares of Bank of America at any time prior to September 2021 for \$5 billion. At yearend these shares were worth \$11.8 billion. We are likely to purchase them just before expiration of our option and, if we wish, we can use our \$5 billion of Bank of America 6% preferred to fund the purchase. In the meantime, it is important for you to realize that Bank of America is, in effect, our fourth largest equity investment – and one we value highly.

Productivity and Prosperity

Earlier, I told you how our partners at Kraft Heinz root out inefficiencies, thereby increasing output per hour of employment. That kind of improvement has been the secret sauce of America's remarkable gains in living standards since the nation's founding in 1776. Unfortunately, the label of “secret” is appropriate: Too few Americans fully grasp the linkage between productivity and prosperity. To see that connection, let's look first at the country's most dramatic example – farming – and later examine three Berkshire-specific areas.

In 1900, America's civilian work force numbered 28 million. Of these, 11 million, a staggering $40\%$ of the total, worked in farming. The leading crop then, as now, was corn. About 90 million acres were devoted to its production and the yield per acre was 30 bushels, for a total output of 2.7 billion bushels annually.

Then came the tractor and one innovation after another that revolutionized such keys to farm productivity as planting, harvesting, irrigation, fertilization and seed quality. Today, we devote about 85 million acres to corn. Productivity, however, has improved yields to more than 150 bushels per acre, for an annual output of 13-14 billion bushels. Farmers have made similar gains with other products.

Increased yields, though, are only half the story: The huge increases in physical output have been accompanied by a dramatic reduction in the number of farm laborers (“human input”). Today about three million people work on farms, a tiny 2% of our 158-million-person work force. Thus, improved farming methods have allowed tens of millions of present-day workers to utilize their time and talents in other endeavors, a reallocation of human resources that enables Americans of today to enjoy huge quantities of non-farm goods and services they would otherwise lack.

It's easy to look back over the 115-year span and realize how extraordinarily beneficial agricultural innovations have been – not just for farmers but, more broadly, for our entire society. We would not have anything close to the America we now know had we stifled those improvements in productivity. (It was fortunate that horses couldn't vote.) On a day-to-day basis, however, talk of the “greater good” must have rung hollow to farm hands who lost their jobs to machines that performed routine tasks far more efficiently than humans ever could. We will examine this flip-side to productivity gains later in this section.

For the moment, however, let's move on to three stories of efficiencies that have had major consequences for Berkshire subsidiaries. Similar transformations have been commonplace throughout American business.

- In 1947, shortly after the end of World War II, the American workforce totaled 44 million. About 1.35 million workers were employed in the railroad industry. The revenue ton-miles of freight moved by Class I railroads that year totaled 655 billion.

By 2014, Class I railroads carried 1.85 trillion ton-miles, an increase of 182%, while employing only 187,000 workers, a reduction of 86% since 1947. (Some of this change involved passenger-related employees, but most of the workforce reduction came on the freight side.) As a result of this staggering improvement in productivity, the inflation-adjusted price for moving a ton-mile of freight has fallen by 55% since 1947, a drop saving shippers about \$90 billion annually in current dollars.

Another startling statistic: If it took as many people now to move freight as it did in 1947, we would need well over three million railroad workers to handle present volumes. (Of course, that level of employment would raise freight charges by a lot; consequently, nothing close to today's volume would actually move.)

Our own BNSF was formed in 1995 by a merger between Burlington Northern and Santa Fe. In 1996, the merged company's first full year of operation, 411 million ton-miles of freight were transported by 45,000 employees. Last year the comparable figures were 702 million ton-miles (plus $71\%$ ) and 47,000 employees (plus only $4\%$ ). That dramatic gain in productivity benefits both owners and shippers. Safety at BNSF has improved as well: Reportable injuries were 2.04 per 200,000 man-hours in 1996 and have since fallen more than $50\%$ to 0.95.

- A bit more than a century ago, the auto was invented, and around it formed an industry that insures cars and their drivers. Initially, this business was written through traditional insurance agencies – the kind dealing in fire insurance. This agency-centric approach included high commissions and other underwriting expenses that consumed about 40¢ of the premium dollar. Strong local agencies were then in the driver's seat because they represented multiple insurers and could play one company off against another when commissions were being negotiated. Cartel-like pricing prevailed, and all involved were doing fine – except for the consumer.

And then some American ingenuity came into play: G. J. Mecherle, a farmer from Merna, Illinois, came up with the idea of a captive sales force that would sell the insurance products of only a single company. His baby was christened State Farm Mutual. The company cut commissions and expenses – moves that permitted lower prices – and soon became a powerhouse. For many decades, State Farm has been the runaway volume leader in both auto and homeowner's insurance. Allstate, which also operated with a direct distribution model, was long the runner-up. Both State Farm and Allstate have had underwriting expenses of about 25%.

In the early 1930s, another contender, United Services Auto Association (“USAA”), a mutual-like company, was writing auto insurance for military officers on a direct-to-the-customer basis. This marketing innovation rose from a need that military personnel had to buy insurance that would stay with them as they moved from base to base. That was business of little interest to local insurance agencies, which wanted the steady renewals that came from permanent residents.

The direct distribution method of USAA, as it happened, incurred lower costs than those enjoyed by State Farm and Allstate and therefore delivered an even greater bargain to customers. That made Leo and Lillian Goodwin, employees of USAA, dream of broadening the target market for its direct distribution model beyond military officers. In 1936, starting with \$100,000 of capital, they incorporated Government Employees Insurance Co. (later compressing this mouthful to GEICO).

Their fledgling did \$238,000 of auto insurance business in 1937, its first full year. Last year GEICO did \$22.6 billion, more than double the volume of USAA. (Though the early bird gets the worm, the second mouse gets the cheese.) GEICO's underwriting expenses in 2015 were 14.7% of premiums, with USAA being the only large company to achieve a lower percentage. (GEICO is fully as efficient as USAA but spends considerably more on advertising aimed at promoting growth.)

With the price advantage GEICO's low costs allow, it's not surprising that several years ago the company seized the number two spot in auto insurance from Allstate. GEICO is also gaining ground on State Farm, though it is still far ahead of us in volume. On August 30, 2030 – my $100^{\text{th}}$ birthday – I plan to announce that GEICO has taken over the top spot. Mark your calendar.

GEICO employs about 34,000 people to serve its 14 million policyholders. I can only guess at the workforce it would require to serve a similar number of policyholders under the agency system. I believe, however, that the number would be at least 60,000, a combination of what the insurer would need in direct employment and the personnel required at supporting agencies.

- In its electric utility business, our Berkshire Hathaway Energy (“BHE”) operates within a changing economic model. Historically, the survival of a local electric company did not depend on its efficiency. In fact, a “sloppy” operation could do just fine financially.

That's because utilities were usually the sole supplier of a needed product and were allowed to price at a level that gave them a prescribed return upon the capital they employed. The joke in the industry was that a utility was the only business that would automatically earn more money by redecorating the boss's office. And some CEOs ran things accordingly.

That's all changing. Today, society has decided that federally-subsidized wind and solar generation is in our country's long-term interest. Federal tax credits are used to implement this policy, support that makes renewables price-competitive in certain geographies. Those tax credits, or other government-mandated help for renewables, may eventually erode the economics of the incumbent utility, particularly if it is a high-cost operator. BHE's long-established emphasis on efficiency – even when the company didn't need it to attain authorized earnings – leaves us particularly competitive in today's market (and, more important, in tomorrow's as well).

BHE acquired its Iowa utility in 1999. In the year before, that utility employed 3,700 people and produced 19 million megawatt-hours of electricity. Now we employ 3,500 people and produce 29 million megawatt-hours. That major increase in efficiency allowed us to operate without a rate increase for 16 years, a period during which industry rates increased 44%.

The safety record of our Iowa utility is also outstanding. It had .79 injuries per 100 employees in 2015 compared to the rate of 7.0 experienced by the previous owner in the year before we bought the operation.

In 2006 BHE purchased PacifiCorp, which operated primarily in Oregon and Utah. The year before our purchase PacifiCorp employed 6,750 people and produced 52.6 million megawatt-hours. Last year the numbers were 5,700 employees and 56.3 million megawatt-hours. Here, too, safety improved dramatically, with the accident-rate-per-100-employees falling from 3.4 in 2005 to .85 in 2015. In safety, BHE now ranks in the industry's top decile.

Those outstanding performances explain why BHE is welcomed by regulators when it proposes to buy a utility in their jurisdiction. The regulators know the company will run an efficient, safe and reliable operation and also arrive with unlimited capital to fund whatever projects make sense. (BHE has never paid a dividend to Berkshire since we assumed ownership. No investor-owned utility in America comes close to matching BHE's enthusiasm for reinvestment.)

* * * * * * * * * * * *

The productivity gains that I’ve just spelled out – and countless others that have been achieved in America – have delivered awesome benefits to society. That’s the reason our citizens, as a whole, have enjoyed – and will continue to enjoy – major gains in the goods and services they receive.

To this thought there are offsets. First, the productivity gains achieved in recent years have largely benefitted the wealthy. Second, productivity gains frequently cause upheaval: Both capital and labor can pay a terrible price when innovation or new efficiencies upend their worlds.

We need shed no tears for the capitalists (whether they be private owners or an army of public shareholders). It's their job to take care of themselves. When large rewards can flow to investors from good decisions, these parties should not be spared the losses produced by wrong choices. Moreover, investors who diversify widely and simply sit tight with their holdings are certain to prosper: In America, gains from winning investments have always far more than offset the losses from clunkers. (During the $20^{\text{th}}$ Century, the Dow Jones Industrial Average – an index fund of sorts – soared from 66 to 11,497, with its component companies all the while paying ever-increasing dividends.)

A long-employed worker faces a different equation. When innovation and the market system interact to produce efficiencies, many workers may be rendered unnecessary, their talents obsolete. Some can find decent employment elsewhere; for others, that is not an option.

When low-cost competition drove shoe production to Asia, our once-prosperous Dexter operation folded, putting 1,600 employees in a small Maine town out of work. Many were past the point in life at which they could learn another trade. We lost our entire investment, which we could afford, but many workers lost a livelihood they could not replace. The same scenario unfolded in slow-motion at our original New England textile operation, which struggled for 20 years before expiring. Many older workers at our New Bedford plant, as a poignant example, spoke Portuguese and knew little, if any, English. They had no Plan B.

The answer in such disruptions is not the restraining or outlawing of actions that increase productivity. Americans would not be living nearly as well as we do if we had mandated that 11 million people should forever be employed in farming.

The solution, rather, is a variety of safety nets aimed at providing a decent life for those who are willing to work but find their specific talents judged of small value because of market forces. (I personally favor a reformed and expanded Earned Income Tax Credit that would try to make sure America works for those willing to work.) The price of achieving ever-increasing prosperity for the great majority of Americans should not be penury for the unfortunate.

Important Risks

We, like all public companies, are required by the SEC to annually catalog “risk factors” in our 10-K. I can’t remember, however, an instance when reading a 10-K’s “risk” section has helped me in evaluating a business. That’s not because the identified risks aren’t real. The truly important risks, however, are usually well known. Beyond that, a 10-K’s catalog of risks is seldom of aid in assessing: (1) the probability of the threatening event actually occurring; (2) the range of costs if it does occur; and (3) the timing of the possible loss. A threat that will only surface 50 years from now may be a problem for society, but it is not a financial problem for today’s investor.

Berkshire operates in more industries than any company I know of. Each of our pursuits has its own array of possible problems and opportunities. Those are easy to list but hard to evaluate: Charlie, I and our various CEOs often differ in a very major way in our calculation of the likelihood, the timing and the cost (or benefit) that may result from these possibilities.

Let me mention just a few examples. To begin with an obvious threat, BNSF, along with other railroads, is certain to lose significant coal volume over the next decade. At some point in the future – though not, in my view, for a long time – GEICO’s premium volume may shrink because of driverless cars. This development could hurt our auto dealerships as well. Circulation of our print newspapers will continue to fall, a certainty we allowed for when purchasing them. To date, renewables have helped our utility operation but that could change, particularly if storage capabilities for electricity materially improve. Online retailing threatens the business model of our retailers and certain of our consumer brands. These potentialities are just a few of the negative possibilities facing us – but even the most casual follower of business news has long been aware of them.

None of these problems, however, is crucial to Berkshire's long-term well-being. When we took over the company in 1965, its risks could have been encapsulated in a single sentence: “The northern textile business in which all of our capital resides is destined for recurring losses and will eventually disappear.” That development, however, was no death knell. We simply adapted. And we will continue to do so.

Every day Berkshire managers are thinking about how they can better compete in an always-changing world. Just as vigorously, Charlie and I focus on where a steady stream of funds should be deployed. In that respect, we possess a major advantage over one-industry companies, whose options are far more limited. I firmly believe that Berkshire has the money, talent and culture to plow through the sort of adversities I’ve itemized above – and many more – and to emerge with ever-greater earning power.

There is, however, one clear, present and enduring danger to Berkshire against which Charlie and I are powerless. That threat to Berkshire is also the major threat our citizenry faces: a “successful” (as defined by the aggressor) cyber, biological, nuclear or chemical attack on the United States. That is a risk Berkshire shares with all of American business.

The probability of such mass destruction in any given year is likely very small. It’s been more than 70 years since I delivered a Washington Post newspaper headlining the fact that the United States had dropped the first atomic bomb. Subsequently, we’ve had a few close calls but avoided catastrophic destruction. We can thank our government – and luck! – for this result.

Nevertheless, what's a small probability in a short period approaches certainty in the longer run. (If there is only one chance in thirty of an event occurring in a given year, the likelihood of it occurring at least once in a century is $96.6\%$ .) The added bad news is that there will forever be people and organizations and perhaps even nations that would like to inflict maximum damage on our country. Their means of doing so have increased exponentially during my lifetime. "Innovation" has its dark side.

There is no way for American corporations or their investors to shed this risk. If an event occurs in the U.S. that leads to mass devastation, the value of all equity investments will almost certainly be decimated.

No one knows what “the day after” will look like. I think, however, that Einstein’s 1949 appraisal remains apt: “I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones.”

* * * * * * * * * * * *

I am writing this section because we have a proxy proposal regarding climate change to consider at this year's annual meeting. The sponsor would like us to provide a report on the dangers that this change might present to our insurance operation and explain how we are responding to these threats.

It seems highly likely to me that climate change poses a major problem for the planet. I say “highly likely” rather than “certain” because I have no scientific aptitude and remember well the dire predictions of most “experts” about Y2K. It would be foolish, however, for me or anyone to demand 100% proof of huge forthcoming damage to the world if that outcome seemed at all possible and if prompt action had even a small chance of thwarting the danger.

This issue bears a similarity to Pascal's Wager on the Existence of God. Pascal, it may be recalled, argued that if there were only a tiny probability that God truly existed, it made sense to behave as if He did because the rewards could be infinite whereas the lack of belief risked eternal misery. Likewise, if there is only a $1\%$ chance the planet is heading toward a truly major disaster and delay means passing a point of no return, inaction now is foolhardy. Call this Noah's Law: If an ark may be essential for survival, begin building it today, no matter how cloudless the skies appear.

It’s understandable that the sponsor of the proxy proposal believes Berkshire is especially threatened by climate change because we are a huge insurer, covering all sorts of risks. The sponsor may worry that property losses will skyrocket because of weather changes. And such worries might, in fact, be warranted if we wrote ten- or twenty-year policies at fixed prices. But insurance policies are customarily written for one year and repriced annually to reflect changing exposures. Increased possibilities of loss translate promptly into increased premiums.

Think back to 1951 when I first became enthused about GEICO. The company's average loss-per-policy was then about \$30 annually. Imagine your reaction if I had predicted then that in 2015 the loss costs would increase to about \$1,000 per policy. Wouldn't such skyrocketing losses prove disastrous, you might ask? Well, no.

Over the years, inflation has caused a huge increase in the cost of repairing both the cars and the humans involved in accidents. But these increased costs have been promptly matched by increased premiums. So, paradoxically, the upward march in loss costs has made insurance companies far more valuable. If costs had remained unchanged, Berkshire would now own an auto insurer doing \$600 million of business annually rather than one doing \$23 billion.

Up to now, climate change has not produced more frequent nor more costly hurricanes nor other weather-related events covered by insurance. As a consequence, U.S. super-cat rates have fallen steadily in recent years, which is why we have backed away from that business. If super-cats become costlier and more frequent, the likely – though far from certain – effect on Berkshire’s insurance business would be to make it larger and more profitable.

As a citizen, you may understandably find climate change keeping you up nights. As a homeowner in a low-lying area, you may wish to consider moving. But when you are thinking only as a shareholder of a major insurer, climate change should not be on your list of worries.

The Annual Meeting

Charlie and I have finally decided to enter the 21 $^{st}$ Century. Our annual meeting this year will be webcast worldwide in its entirety. To view the meeting, simply go to https://finance.yahoo.com/brklivestream at 9 a.m. Central Daylight Time on Saturday, April 30 $^{th}$ . The Yahoo! webcast will begin with a half hour of interviews with managers, directors and shareholders. Then, at 9:30, Charlie and I will commence answering questions.

This new arrangement will serve two purposes. First, it may level off or modestly decrease attendance at the meeting. Last year's record of more than 40,000 attendees strained our capacity. In addition to quickly filling the CenturyLink Center's main arena, we packed its overflow rooms and then spilled into two large meeting rooms at the adjoining Omaha Hilton. All major hotels were sold out notwithstanding Airbnb's stepped-up presence. Airbnb was especially helpful for those visitors on limited budgets.

Our second reason for initiating a webcast is more important. Charlie is 92, and I am 85. If we were partners with you in a small business, and were charged with running the place, you would want to look in occasionally to make sure we hadn't drifted off into la-la land. Shareholders, in contrast, should not need to come to Omaha to monitor how we look and sound. (In making your evaluation, be kind: Allow for the fact that we didn't look that impressive when we were at our best.)

Viewers can also observe our life-prolonging diet. During the meeting, Charlie and I will each consume enough Coke, See's fudge and See's peanut brittle to satisfy the weekly caloric needs of an NFL lineman. Long ago we discovered a fundamental truth: There's nothing like eating carrots and broccoli when you're really hungry – and want to stay that way.

Shareholders planning to attend the meeting should come at 7 a.m. when the doors open at CenturyLink Center and start shopping. Carrie Sova will again be in charge of the festivities. She had her second child late last month, but that did not slow her down. Carrie is unflappable, ingenious and expert at bringing out the best in those who work with her. She is aided by hundreds of Berkshire employees from around the country and by our entire home office crew as well, all of them pitching in to make the weekend fun and informative for our owners.

Last year we increased the number of hours available for shopping at the CenturyLink. Sales skyrocketed – so, naturally, we will stay with the new schedule. On Friday, April 29 $^{th}$ you can shop between noon and 5 p.m., and on Saturday exhibits and stores will be open from 7 a.m. until 4:30 p.m.

On Saturday morning, we will have our fifth International Newspaper Tossing Challenge. Our target will again be a Clayton Home porch, located precisely 35 feet from the throwing line. When I was a teenager – in my one brief flirtation with honest labor – I delivered about 500,000 papers. So I think I'm pretty good at this game. Challenge me! Humiliate me! Knock me down a peg! The papers will run 36 to 42 pages, and you must fold them yourself (no rubber bands allowed).

The competition begins at 7:15, when contestants will make preliminary tosses. The eight throws judged most accurate – four made by contestants 12 or under, and four made by the older set – will compete against me at 7:45. The young challengers will each receive a prize. But the older ones will have to beat me to take anything home.

And be sure to check out the Clayton home itself. It can be purchased for \$78,900, fully installed on land you provide. In past years, we’ve made many sales on the meeting day. Kevin Clayton will be on hand with his order book.

At 8:30 a.m., a new Berkshire movie will be shown. An hour later, we will start the question-and-answer period, which (including a break for lunch at CenturyLink's stands) will last until 3:30 p.m. After a short recess, Charlie and I will convene the annual meeting at 3:45 p.m. This business session typically lasts only a half hour or so and can safely be skipped by those craving a little last-minute shopping.

Your venue for shopping will be the 194,300-square-foot hall that adjoins the meeting and in which products from dozens of Berkshire subsidiaries will be for sale. Say hello to the many Berkshire managers who will be captaining their exhibits. And be sure to view the terrific BNSF railroad layout that salutes all of our subsidiaries. Your children (and you!) will be enchanted with it.

We will have a new and very special exhibit in the hall this year: a full-size model of the world's largest aircraft engine, for which Precision Castparts makes many key components. The real engines weigh about 20,000 pounds and are ten feet in diameter and 22 feet in length. The bisected model at the meeting will give you a good look at many PCC components that help power your flights.

Brooks, our running-shoe company, will again have a special commemorative shoe to offer at the meeting. After you purchase a pair, wear them on Sunday at our fourth annual “Berkshire 5K,” an 8 a.m. race starting at the CenturyLink. Full details for participating will be included in the Visitor’s Guide that will be sent to you with your meeting credentials. Entrants in the race will find themselves running alongside many of Berkshire’s managers, directors and associates. (Charlie and I, however, will sleep in; the fudge and peanut brittle take their toll.) Participation in the 5K grows every year. Help us set another record.

A GEICO booth in the shopping area will be staffed by a number of the company's top counselors from around the country. Stop by for a quote. In most cases, GEICO will be able to give you a shareholder discount (usually $8\%$ ). This special offer is permitted by 44 of the 51 jurisdictions in which we operate. (One supplemental point: The discount is not additive if you qualify for another discount, such as that available to certain groups.) Bring the details of your existing insurance and check out our price. We can save many of you real money. Spend the savings on our other products.

Be sure to visit the Bookworm. It will carry about 35 books and DVDs, among them a couple of new titles. Andy Kilpatrick will introduce (and be glad to sign) the latest edition of his all-encompassing coverage of Berkshire. It’s 1,304 pages and weighs 9.8 pounds. (My blurb for the book: “Ridiculously skimpy.”) Check out Peter Bevelin’s new book as well. Peter has long been a keen observer of Berkshire.

We will also have a new, 20-page-longer edition of Berkshire's 50-year commemorative book that at last year's meeting sold 12,000 copies. Since then, Carrie and I have uncovered additional material that we find fascinating, such as some very personal letters sent by Grover Cleveland to Edward Butler, his friend and the then-publisher of The Buffalo News. Nothing from the original edition has been changed or eliminated, and the price remains \$20. Charlie and I will jointly sign 100 copies that will be randomly placed among the 5,000 available for sale at the meeting.

My friend, Phil Beuth, has written Limping on Water, an autobiography that chronicles his life at Capital Cities Communications and tells you a lot about its leaders, Tom Murphy and Dan Burke. These two were the best managerial duo – both in what they accomplished and how they did it – that Charlie and I ever witnessed. Much of what you become in life depends on whom you choose to admire and copy. Start with Tom Murphy, and you’ll never need a second exemplar.

Finally, Jeremy Miller has written Warren Buffett's Ground Rules, a book that will debut at the annual meeting. Mr. Miller has done a superb job of researching and dissecting the operation of Buffett Partnership Ltd. and of explaining how Berkshire's culture has evolved from its BPL origin. If you are fascinated by investment theory and practice, you will enjoy this book.

An attachment to the proxy material that is enclosed with this report explains how you can obtain the credential you will need for admission to both the meeting and other events. Airlines have sometimes jacked up prices for the Berkshire weekend. If you are coming from far away, compare the cost of flying to Kansas City vs. Omaha. The drive between the two cities is about 2½ hours, and it may be that Kansas City can save you significant money, particularly if you had planned to rent a car in Omaha. The savings for a couple could run to \$1,000 or more. Spend that money with us.

At Nebraska Furniture Mart, located on a 77-acre site on $72^{\text{nd}}$ Street between Dodge and Pacific, we will again be having “Berkshire Weekend” discount pricing. Last year in the week encompassing the meeting, the store did a record \$44,239,493 of business. If you repeat that figure to a retailer, he is not going to believe you. (An average week for NFM’s Omaha store – the highest-volume home furnishings store in the United States except for our new Dallas store – is about \$9 million.)

To obtain the Berkshire discount at NFM, you must make your purchases between Tuesday, April 26 $^{th}$ and Monday, May 2 $^{nd}$ inclusive, and also present your meeting credential. The period's special pricing will even apply to the products of several prestigious manufacturers that normally have ironclad rules against discounting but which, in the spirit of our shareholder weekend, have made an exception for you. We appreciate their cooperation. During “Berkshire Weekend” NFM will be open from 10 a.m. to 9 p.m. Monday through Friday, 10 a.m. to 9:30 p.m. on Saturday and 10 a.m. to 8 p.m. on Sunday. From 5:30 p.m. to 8 p.m. on Saturday, NFM is hosting a picnic to which you are all invited.

At Borsheims, we will again have two shareholder-only events. The first will be a cocktail reception from 6 p.m. to 9 p.m. on Friday, April $29^{\text{th}}$ . The second, the main gala, will be held on Sunday, May $1^{\text{st}}$ , from 9 a.m. to 4 p.m. On Saturday, we will remain open until 6 p.m. During last year's Friday-Sunday stretch, the store wrote a sales ticket every 15 seconds that it was open.

We will have huge crowds at Borsheims throughout the weekend. For your convenience, therefore, shareholder prices will be available from Monday, April 25 $^{th}$ through Saturday, May 7 $^{th}$ . During that period, please identify yourself as a shareholder either by presenting your meeting credential or a brokerage statement showing you own our stock.

On Sunday, in the mall outside of Borsheims, Norman Beck, a remarkable magician from Dallas, will bewilder onlookers. On the upper level, we will have Bob Hamman and Sharon Osberg, two of the world's top bridge experts, available to play bridge with our shareholders on Sunday afternoon. I will join them and hope to have Ajit and Charlie there also.

My friend, Ariel Hsing, will be in the mall as well on Sunday, taking on challengers at table tennis. I met Ariel when she was nine and even then I was unable to score a point against her. Now, she's a junior at Princeton, having already represented the United States in the 2012 Olympics. If you don't mind embarrassing yourself, test your skills against her, beginning at 1 p.m. Bill Gates and I will lead off and try to soften her up.

Gorat's will again be open exclusively for Berkshire shareholders on Sunday, May $1^{\text{st}}$ , serving from 1 p.m. until 10 p.m. To make a reservation at Gorat's, call 402-551-3733 on April $1^{\text{st}}$ (but not before). As for my other favorite restaurant, Piccolo's, I'm sad to report it closed.

We will again have the same three financial journalists lead the question-and-answer period at the meeting, asking Charlie and me questions that shareholders have submitted to them by e-mail. The journalists and their e-mail addresses are: Carol Loomis, the preeminent business journalist of her time, who may be e-mailed at loomisbrk@gmail.com; Becky Quick, of CNBC, at BerkshireQuestions@cnbc.com; and Andrew Ross Sorkin, of The New York Times, at arsorkin@nytimes.com.

From the questions submitted, each journalist will choose the six he or she decides are the most interesting and important. The journalists have told me your question has the best chance of being selected if you keep it concise, avoid sending it in at the last moment, make it Berkshire-related and include no more than two questions in any e-mail you send them. (In your e-mail, let the journalist know if you would like your name mentioned if your question is asked.)

An accompanying set of questions will be asked by three analysts who follow Berkshire. This year the insurance specialist will be Cliff Gallant of Nomura Securities. Questions that deal with our non-insurance operations will come from Jonathan Brandt of Ruane, Cunniff & Goldfarb and Gregg Warren of Morningstar. Our hope is that the analysts and journalists will ask questions that add to our owners' understanding and knowledge of their investment.

Neither Charlie nor I will get so much as a clue about the questions headed our way. Some will be tough, for sure, and that's the way we like it. Multi-part questions aren't allowed; we want to give as many questioners as possible a shot at us.

All told we expect at least 54 questions, which will allow for six from each analyst and journalist and for 18 from the audience. (Last year we had 64 in total.) The questioners from the audience will be chosen by means of 11 drawings that will take place at 8:15 a.m. on the morning of the annual meeting. Each of the 11 microphones installed in the arena and main overflow room will host, so to speak, a drawing.

While I'm on the subject of our owners' gaining knowledge, let me remind you that Charlie and I believe all shareholders should simultaneously have access to new information that Berkshire releases and, if possible, should also have adequate time to digest and analyze it before any trading takes place. That's why we try to issue financial data late on Fridays or early on Saturdays and why our annual meeting is always held on a Saturday. We do not follow the common practice of talking one-on-one with large institutional investors or analysts, treating them instead as we do all other shareholders. There is no one more important to us than the shareholder of limited means who trusts us with a substantial portion of his savings.

* * * * * * * * * * * *

For good reason, I regularly extol the accomplishments of our operating managers. They are truly All-Stars who run their businesses as if they were the only asset owned by their families. I also believe the mindset of our managers to be as shareholder-oriented as can be found in the universe of large publicly-owned companies. Most of our managers have no financial need to work. The joy of hitting business “home runs” means as much to them as their paycheck.

Equally important, however, are the 24 men and women who work with me at our corporate office. This group efficiently deals with a multitude of SEC and other regulatory requirements, files a 30,400-page Federal income tax return – that’s up 6,000 pages from the prior year! – oversees the filing of 3,530 state tax returns, responds to countless shareholder and media inquiries, gets out the annual report, prepares for the country’s largest annual meeting, coordinates the Board’s activities, fact-checks this letter – and the list goes on and on.

They handle all of these business tasks cheerfully and with unbelievable efficiency, making my life easy and pleasant. Their efforts go beyond activities strictly related to Berkshire: Last year, for example, they dealt with the 40 universities (selected from 200 applicants) who sent students to Omaha for a Q&A day with me. They also handle all kinds of requests that I receive, arrange my travel, and even get me hamburgers and french fries (smothered in Heinz ketchup, of course) for lunch. No CEO has it better; I truly do feel like tap dancing to work every day. In fact, my job becomes more fun every year.

In 2015, Berkshire’s revenues increased by \$16 billion. Look carefully, however, at the two pictures on the facing page. The top one is from last year’s report and shows the entire Berkshire home-office crew at our Christmas lunch. Below that photo is this year’s Christmas photo portraying the same 25 people identically positioned. In 2015, no one joined us, no one left. And the odds are good that you will see a photo of the same 25 next year.

Can you imagine another very large company – we employ 361,270 people worldwide – enjoying that kind of employment stability at headquarters? At Berkshire we have hired some wonderful people – and they have stayed with us. Moreover, no one is hired unless he or she is truly needed. That’s why you’ve never read about “restructuring” charges at Berkshire.

On April 30 $^{th}$ , come to Omaha – the cradle of capitalism – and meet my gang. They are the best.

February 27, 2016

Warren E. Buffett

Chairman of the Board

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Front Row – Becki Amick, Sharon Heck, Melissa Hawk, Jalayna Busse, Warren Buffett, Angie Wells, Alisa Krueger, Deb Ray, Carrie Sova, Ellen Schmidt Back Row – Tracy Britt Cool, Jennifer Tselentis, Ted Weschler, Joanne Manhart, Bob Reeson, Todd Combs, Dan Jaksich, Debbie Bosanek, Mark Sisley, Marc Hamburg, Kerby Ham, Mark Millard, Allyson Ballard, Stacy Gottschalk, Tiffany Vokt

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伯克希尔业绩 vs. 标普500

年份	年度百分比变化
	伯克希尔每股账面价值	伯克希尔每股市场价值	标普500（含股息）
1965	23.8	49.5	10.0
1966	20.3	(3.4)	(11.7)
1967	11.0	13.3	30.9
1968	19.0	77.8	11.0
1969	16.2	19.4	(8.4)
1970	12.0	(4.6)	3.9
1971	16.4	80.5	14.6
1972	21.7	8.1	18.9
1973	4.7	(2.5)	(14.8)
1974	5.5	(48.7)	(26.4)
1975	21.9	2.5	37.2
1976	59.3	129.3	23.6
1977	31.9	46.8	(7.4)
1978	24.0	14.5	6.4
1979	35.7	102.5	18.2
1980	19.3	32.8	32.3
1981	31.4	31.8	(5.0)
1982	40.0	38.4	21.4
1983	32.3	69.0	22.4
1984	13.6	(2.7)	6.1
1985	48.2	93.7	31.6
1986	26.1	14.2	18.6
1987	19.5	4.6	5.1
1988	20.1	59.3	16.6
1989	44.4	84.6	31.7
1990	7.4	(23.1)	(3.1)
1991	39.6	35.6	30.5
1992	20.3	29.8	7.6
1993	14.3	38.9	10.1
1994	13.9	25.0	1.3
1995	43.1	57.4	37.6
1996	31.8	6.2	23.0
1997	34.1	34.9	33.4
1998	48.3	52.2	28.6
1999	0.5	(19.9)	21.0
2000	6.5	26.6	(9.1)
2001	(6.2)	6.5	(11.9)
2002	10.0	(3.8)	(22.1)
2003	21.0	15.8	28.7
2004	10.5	4.3	10.9
2005	6.4	0.8	4.9
2006	18.4	24.1	15.8
2007	11.0	28.7	5.5
2008	(9.6)	(31.8)	(37.0)
2009	19.8	2.7	26.5
2010	13.0	21.4	15.1
2011	4.6	(4.7)	2.1
2012	14.4	16.8	16.0
2013	18.2	32.7	32.4
2014	8.3	27.0	13.7
2015	6.4	(12.5)	1.4
复合年增长率 – 1965-2015	19.2%	20.8%	9.7%
整体增长率 – 1964-2015	798,981%	1,598,284%	11,355%

注释：数据按日历年度统计，但以下年份例外：1965年和1966年，截至9月30日；1967年，截至12月31日（15个月）。自1979年起，会计准则要求保险公司按市价而非成本与市价孰低法（此前的要求）计量其所持权益证券。在本表中，伯克希尔1978年之前的业绩已根据新规则重新列报。除此以外，所有业绩均按最初报告的数字计算。标普500的数据为税前，而伯克希尔的数据为税后。如果一家像伯克希尔这样的公司只是持有标普500并计提相应税款，那么当该指数正回报时，其业绩将落后于标普500，而当该指数负回报时，其业绩将超出标普500。多年来，税收成本将导致累计差距相当大。

BERKSHIRE HATHAWAY INC.（伯克希尔·哈撒韦公司）

致伯克希尔·哈撒韦公司的股东：

伯克希尔2015年的净资产增加了154亿美元，这使得我们A类股和B类股每股账面价值均增长了6.4%。在过去的51年里（即自现任管理层接手以来），每股账面价值从19美元增至155,501美元，年复合增长率为19.2%。*

在那些年份的前半段，伯克希尔的净资产与真正重要的数字——企业的内在价值——大致相当。当时这两个数字之所以相似，是因为我们的大部分资源都配置在定期按报价重估（扣除出售时可能产生的税款）的有价证券上。用华尔街的行话来说，我们的资产负债表当时在很大程度上是“按市价计价”的。

然而，到了20世纪90年代初，我们的重点转向了企业的完全所有权，这一转变削弱了资产负债表数字的相关性。这种脱节之所以发生，是因为适用于控股公司的会计准则与用于估值有价证券的准则存在重大差异。我们持有的“输家”的账面价值会被减记，但“赢家”的价值却从未向上重估。

这两种结果我们都经历过：我做过一些愚蠢的收购，为那些公司的经济商誉支付的价格后来被冲销，这一举动减少了伯克希尔的账面价值。我们也拥有一些赢家——其中几个非常巨大——但并没有因此将价值上调一分钱。

随着时间的推移，这种（我们赞同的）不对称会计处理必然扩大内在价值与账面价值之间的差距。如今，我们“赢家”那里大量且不断增长的未记录收益清楚地表明，伯克希尔的内在价值远超其账面价值。这就是为什么如果我们的股价跌至账面价值的120%，我们会非常乐意回购股份。在那个水平上，回购将立即且有意义地增加伯克希尔持续股东的人均内在价值。

我们所拥有的企业价值中未记录的增长，解释了为什么伯克希尔的总市值增长——见对开页表格——实质性超过账面价值增长。这两个指标在短期内变幻莫测。例如去年，账面价值表现更为优异。但随着时间的推移，市值增长应继续保持其历史上优于账面价值增长的趋势。

伯克希尔这一年

查理·芒格（Charlie Munger），伯克希尔副董事长兼我的合伙人，和我预计伯克希尔的正常化盈利能力每年都会增加。（当然，实际逐年的盈利有时会因美国经济疲软或因保险超级巨灾而下降。）在有些年份，正常化收益很小；其他时候则会很可观。去年是个好年头。以下是一些亮点：
- 2015年伯克希尔最重要的进展并非财务层面，尽管它带来了更好的盈利。在2014年表现不佳后，我们的BNSF铁路去年大幅改善了对客户的服务。为实现这一结果，我们在当年投入了约58亿美元的资本支出，这一金额远远超过美国任何铁路公司的纪录，也几乎是年折旧额的三倍。这笔钱花得值。

BNSF运输了美国城际货运量的大约17%（按收入吨英里计算），无论是通过铁路、卡车、航空、水运还是管道。在这方面，我们在美国七大铁路公司（其中两家总部在加拿大）中稳居第一，货运吨英里数比最接近的竞争对手高出45%。因此，我们保持一流服务不仅关乎托运人的利益，也对美国经济的平稳运行至关重要。

对于大多数美国铁路公司来说，2015年是令人失望的一年。总吨英里下降，盈利也走弱。然而，BNSF维持了货运量，税前利润升至创纪录的68亿美元*（比2014年增加6.06亿美元）。BNSF的经理人Matt Rose和Carl Ice，我向他们表示感谢，你们也应感谢他们。

• BNSF是我们“五大金刚”中最大的一家，这一群体还包括Berkshire Hathaway Energy（伯克希尔·哈撒韦能源）、Marmon（马蒙集团）、Lubrizol（路博润）和IMC（伊斯卡金属切削集团）。合计来看，这些公司——我们盈利最多的五家非保险业务——2015年赚取了131亿美元，比2014年增加6.5亿美元。

在这五家中，只有Berkshire Hathaway Energy（当时盈利3.93亿美元）在2003年就为我们所有。随后，我们以全现金方式收购了其余四家中的三家。然而，在收购BNSF时，我们支付了约70%的现金，其余部分发行了伯克希尔股票，导致流通股增加6.1%。换句话说，这五家公司在十二年期间为伯克希尔带来的127亿美元年收益增长，仅伴随着轻微的稀释。这符合我们的目标：不仅增加盈利，还要确保每股结果也增加。

• 明年，我将讨论“六大金刚”。新成员将是Precision Castparts Corp.（简称PCC），这是一家我们一个月前以超过320亿美元现金收购的企业。PCC完美契合伯克希尔的模式，并将大幅提升我们的常态化每股盈利能力。

在首席执行官Mark Donegan的领导下，PCC已成为全球航空航天部件的一流供应商（大多数部件作为原装设备，尽管备件对公司也很重要）。马克的成就让我想起IMC的Jacob Harpaz经常施展的魔法，IMC是我们卓越的以色列刀具制造商。这两人将非常普通的原材料转化为非凡的产品，被全球主要制造商使用。两人都是各自领域中的达·芬奇。

PCC的产品通常根据多年期合同交付，是大多数大型飞机的关键部件。该公司30,466名员工也为其他行业服务，他们在13个国家的162家工厂工作。在打造他的业务过程中，马克已经进行了多次收购，并将继续收购。我们期待他部署伯克希尔的资本。

个人致谢：如果没有我们的Todd Combs的贡献和协助，PCC的收购就不会发生。他在几年前引起了我的注意，并继续向我介绍这家企业和马克。尽管Todd和Ted Weschler主要是投资经理——他们每人管理着约90亿美元——但两人都愉快且出色地在其他方面为伯克希尔增加重大价值。聘用这两人是我最明智的举措之一。
- 通过收购PCC，伯克希尔将拥有10¼家公司，如果它们独立运营，足以跻身《财富》500强。（我们的¼就是持有卡夫亨氏27%的股份。）这意味着还有将近98%的美国商业巨头尚未联系我们。接线员正在待命。
- 我们旗下几十家非保险小企业去年盈利57亿美元，高于2014年的51亿美元。在这个群体中，有一家公司去年盈利超过7亿美元，两家在4亿至7亿美元之间，七家在2.5亿至4亿美元之间，六家在1亿至2.5亿美元之间，还有十一家在5000万至1亿美元之间。我们爱它们每一个：随着时间的推移，这个企业群体在数量和盈利上都将扩大。
- 当你听到美国基础设施破败的议论时，请放心，他们说的不是伯克希尔。我们去年在不动产、厂房和设备上投资了160亿美元，其中整整86%投在美国。

我早些时候告诉过你们BNSF在2015年创纪录的资本支出。每年年底，我们铁路公司的实体设施都会比12个月前有所改善。

伯克希尔·哈撒韦能源公司（“BHE”）情况类似。该公司已在可再生能源领域投资160亿美元，目前拥有全美7%的风力发电和6%的太阳能发电。事实上，我们的受监管公用事业公司拥有并运营的4,423兆瓦风力发电量，是排名第二的公用事业公司的六倍。

我们还没完。去年，BHE为支持巴黎气候变化大会，对未来可再生能源的发展做出了重大承诺。履行这些承诺无论对环境还是对伯克希尔的经济利益都意义重大。

• 伯克希尔庞大且不断增长的保险业务在2015年再次实现承保盈利——这已是连续第13年——并且浮存金继续增加。在这些年里，我们的浮存金——不属于我们但我们可以为伯克希尔利益进行投资的资金——从410亿美元增长到880亿美元。尽管这一增长以及浮存金的规模均未反映在伯克希尔的盈利中，但浮存金因让我们得以持有资产而产生了可观的投资收益。

与此同时，在这13年间，我们的承保利润总计260亿美元，其中包括2015年赚取的18亿美元。毫无疑问，伯克希尔最大的未记录财富在于其保险业务。我们花了48年时间建立这个多元化的业务，它无法被复制。

• 尽管查理和我在寻找新的企业收购，我们的许多子公司也在定期进行补强型收购。去年我们签订了29项补强型收购协议，总金额预计为6.34亿美元。这些收购的价格从30万美元到1.43亿美元不等。

查理和我鼓励补强型收购，只要定价合理。（向我们提出的交易绝大多数显然不合理。）这些收购将资本部署到与我们现有业务契合、并由我们的专家经理团队管理的业务中。这意味着我们无需额外工作，而伯克希尔却能获得更多收益，我们觉得这个组合极具吸引力。未来几年我们将进行几十项这样的补强交易。

• 我们与Jorge Paulo Lemann、Alex Behring和Bernardo Hees合作的亨氏业务，去年通过与卡夫合并，规模扩大了一倍以上。在此交易之前，我们以42.5亿美元的成本持有亨氏约53%的股份。现在我们持有3.254亿股卡夫亨氏股票（约27%），成本为98亿美元。新公司年销售额达270亿美元，可以为你提供亨氏番茄酱或芥末酱，搭配来自卡夫方的Oscar Mayer热狗。再加一杯可乐，你就吃到了我最喜欢的一餐。（年度股东大会现场会有Oscar Mayer热狗车——带上你的孩子吧。）
  虽然我们没有卖出任何卡夫亨氏的股票，但根据美国通用会计准则，在并购完成后，我们必须将这笔投资增记68亿美元。这使得我们资产负债表上持有的卡夫亨氏股票价值，比我们的成本高出数十亿美元，同时又比其市场价值低数十亿美元——这种结果只有会计师才会喜欢。

伯克希尔还持有卡夫亨氏的优先股，每年可获7.2亿美元股息，账面价值为77亿美元。这笔优先股几乎肯定会在6月份（优先股条款允许的最早日期）以83.2亿美元被赎回。这对卡夫亨氏是好事，对伯克希尔则是坏消息。

豪尔赫·保罗和他的伙伴们是最好的合作伙伴。我们与他们一样，都热衷于购买、打造并持有那些满足基本需求和欲望的大型企业。不过，在追求这一目标时，我们遵循不同的路径。

他们的方法——他们已凭借此方法取得了非凡成功——是收购那些有机会消除大量不必要成本的公司，然后——非常迅速——采取行动完成任务。他们的行动显著提升了生产率，而生产率正是美国过去240年经济增长中至关重要的因素。如果每个工作小时产出的理想商品和服务没有增加——这就是衡量生产率提升的标准——经济必然会停滞不前。在美国许多企业，生产率确实存在大幅提升的可能，这为豪尔赫·保罗和他的伙伴们提供了机会。

在伯克希尔，我们也渴望效率，厌恶官僚主义。然而，为了实现目标，我们采取的方法是强调避免臃肿，收购那些长期由注重成本、高效管理者运营的企业，比如PCC。收购之后，我们的角色只是创造一个环境，让这些CEO——以及他们未来的继任者（通常志同道合）——既能最大化管理效能，又能从工作中获得乐趣。（在这种放手式的管理风格下，我遵循着芒格的一句名言：“如果你想确保自己一生痛苦，那就一定要娶一个试图改变你行为的人。”）

我们将继续在伯克希尔实行极端——甚至可以说是闻所未闻的——分权管理。但同时，我们也会寻找与豪尔赫·保罗合作的机会，无论是作为融资合伙人（就像他的集团收购蒂姆·霍顿时那样），还是作为股权加融资的联合合伙人（就像亨氏那样）。偶尔，我们也会与其他伙伴合作，就像我们在Berkadia成功做到的那样。

不过，伯克希尔只参与友好收购的合作伙伴。诚然，某些敌意收购是有理由的：有些CEO忘记了他们应该为股东工作，而另一些管理者则极不称职。在这两种情况下，董事们要么对问题视而不见，要么就是不愿做出必要的改变。这时就需要新面孔登场。然而，我们把这些“机会”留给别人。在伯克希尔，我们只去欢迎我们的地方。

——去年，伯克希尔在其“四大”投资——美国运通、可口可乐、IBM和富国银行——中的持股比例均有所增加。我们增持了IBM的股票（持股比例从2014年底的7.8%增至8.4%），以及富国银行的股票（从9.4%增至9.8%）。在另外两家公司——可口可乐和美国运通——股票回购提高了我们的持股比例。我们在可口可乐的股权从9.2%增至9.3%，在美国运通的持股从14.8%增至15.6%。如果你认为这些看似微小的变化无关紧要，不妨算笔账：对于这四家公司总体而言，我们的持股比例每增加一个百分点，伯克希尔分得的年收益就会增加约5亿美元。
这四家被投资公司拥有卓越的业务，并由才华横溢且以股东为导向的经理人管理。它们的有形净资产收益率从优秀到惊人不等。在伯克希尔，我们更倾向于持有一家优秀公司的非控股权但可观份额，而不是完全拥有一家平庸的公司。拥有希望钻石的部分权益，好过拥有一整颗人造钻石。

如果以伯克希尔年末持股为基准，我们在“四大”2015年盈利中所占份额为47亿美元。然而，在我们向您报告的盈利中，我们只包含它们支付给我们的股息——去年大约18亿美元。但别搞错：这些公司未报告的近30亿美元盈利，与我们伯克希尔记录的份额具有完全相同的价值。

被投资公司留存的收益通常用于回购自身股票——这一举措增加了伯克希尔在未来盈利中的份额，而无需我们花费一分钱。这些公司留存的收益也资助了通常结果有利的商业机会。所有这些使我们预期，这四家被投资公司的每股收益合计将随时间大幅增长。如果收益确实实现，伯克希尔的股息将会增加，我们的未实现资本利得也将增加。

我们在资本配置上的灵活性——即愿意以被动方式大规模投资于非控股企业——使我们相对于那些只限于经营型收购的公司具有显著优势。伍迪·艾伦曾解释过，双性恋的好处是在周六晚上找到约会对象的机会翻倍。类似地——嗯，不完全是类似——我们对经营业务或被动投资的胃口，使伯克希尔源源不断的现金找到明智用处的机会翻倍。除此之外，拥有大量可流通证券的投资组合，给了我们一个资金储备，当出现大象级的收购机会时，可以随时调用。

* * * * * * * * * * * *

今年是选举年，候选人们不停谈论我们国家的问题（当然，只有他们才能解决）。由于这种负面鼓噪，许多美国人现在相信他们的孩子将过得不如他们自己。

这种观点大错特错：如今在美国出生的婴儿是历史上最幸运的一代。

美国人均GDP现在约为56,000美元。正如我去年提到的——按实际值计算——是1930年（我出生那年）的惊人的六倍，这一飞跃远超我父母及其同时代人最狂野的梦想。如今的美国公民并非天生更聪明，也不比1930年的美国人工作更努力。相反，他们工作高效得多，从而产出多得多。这一强大的趋势必将持续：美国的经济魔法依然鲜活有力。

一些评论人士对我们当前2%的实际GDP年增长率表示惋惜——是的，我们都希望看到更高的增长率。但让我们用这备受哀叹的2%数字做一些简单计算。我们会看到，这个增长率带来了惊人的收益。

美国人口每年增长约0.8%（0.5%来自出生减去死亡，0.3%来自净移民）。因此，2%的整体增长产生了约1.2%的人均增长。这听起来可能不令人印象深刻。但在一代人的时间里，比如25年，这一增长率导致实际人均GDP增长34.4%。（复利效应产生了超出简单用25乘以1.2%的百分比。）反过来，这34.4%的增长将为下一代带来惊人的19,000美元实际人均GDP增长。如果平均分配，一个四口之家每年将增加76,000美元。今天的政客们不必为明天的孩子们流泪。
确实，如今大多数孩子都过得很不错。我所在的上中产社区，所有家庭日常享有的生活水准，都已超过我出生时老约翰·D·洛克菲勒所能达到的水平。他那无与伦比的财富，也买不回我们今天习以为常的东西——随便举几个领域：交通、娱乐、通讯或医疗服务。洛克菲勒当然拥有权势和声望；但论生活品质，他赶不上我现在的邻居。

尽管下一代分享的蛋糕将比今天大得多，但如何分配仍然会充满激烈争论。就像现在一样，在劳动力人口与退休人员之间、健康者与病弱者之间、继承人与白手起家者之间、投资者与劳动者之间，尤其是那些被市场高度认可的人才与同样正直勤奋但缺乏市场所需技能的美国人之间，将围绕商品和服务的增量产出一番争斗。这类冲突历来如此——也将永远持续。国会将是战场；金钱和选票是武器。游说将继续成为一个朝阳产业。

不过，好消息是，即便是"输家"阵营的成员，也几乎肯定会享受到——理应如此——比过去多得多的商品和服务。他们获得的那份增量财富，质量也将大幅提升。在创造人们想要的东西方面，没有什么能比得上市场体系——更不用说，它还能创造出人们自己都还不知道想要的东西。我父母年轻时，无法想象电视机；我五十多岁时，也不觉得自己需要个人电脑。可一旦人们看到这两样产品能做什么，它们很快就彻底改变了人们的生活。现在我每周花十小时在网上打桥牌。写这封信时，"搜索"功能对我不可或缺。（不过，我还没准备好用 Tinder。）

240年来，做空美国都是个糟糕透顶的错误，现在也绝不是从头开始的时候。美国商业与创新的金鹅将继续下更多更大的蛋。美国的社会保障承诺将得到兑现，甚至可能更加慷慨。没错，美国的孩子将比他们父母过得要好得多。

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考虑到这股顺风，伯克希尔（当然，还有众多其他企业）几乎必然会繁荣发展。接替我和查理的管理层，将遵循我们简单的蓝图来提升伯克希尔的每股内在价值：(1) 持续提升我们众多子公司的基本盈利能力；(2) 通过补强型收购进一步增强其收益；(3) 受益于被投资企业的增长；(4) 在伯克希尔股价较内在价值有显著折价时进行股份回购；(5) 偶尔进行一次大规模收购。管理层还将通过尽可能少发行伯克希尔股票（几乎不发行）来为您创造最大回报。

内在商业价值

尽管我和查理经常谈论内在商业价值，但我们无法精确告诉您伯克希尔股票（实际上，任何其他股票也一样）的这个数字是多少。不过，做出一个合理的估算是可能的。在2010年的年报中，我们阐述了三个要素——其中一个是定性要素——我们认为这是估算伯克希尔内在价值的关键。那部分讨论全文转载于第113-114页。
以下是这两项量化指标的更新：2015年，我们的每股现金和投资增长了8.3%，达到159,794美元（其中卡夫亨氏股份按市值计算）；我们众多企业（包括保险承销收益）的每股盈利增长了2.1%，达到12,304美元。在第二项指标中，我们排除了所持投资的分红和利息，因为纳入这些会导致价值的重复计算。在得出盈利数字时，我们扣除了所有公司管理费用、利息、折旧、摊销和少数股东权益。但所得税不予扣除。也就是说，盈利为税前。

我在上段用斜体表示，是因为我们首次将保险承销收益纳入企业盈利。当初推出伯克希尔的这两项量化估值支柱时，我们并未这么做，因为当时我们的保险业绩受巨灾保障影响很大。只要没有风灾和地震，我们就赚大钱。但一场超级巨灾就会带来亏损。为了在说明企业盈利时保持保守，我们一直假设承销长期持平，在每年计算第二项价值指标时忽略其任何损益。

如今，我们的保险业绩可能比一二十年前更稳定，因为我们淡化了巨灾保障，并大幅扩展了核心业务。去年，承销收益为每股12,304美元的盈利贡献了每股1,118美元（见本节第二段）。过去十年，年均承销收益为每股1,434美元，我们预计大部分年份都能盈利。但你也应认识到，任何一年的承销都可能亏损，甚至可能大幅亏损。

自1970年以来，我们的每股投资以18.9%的年复合增长率增长；而每股盈利（包括起始年份和终止年份的承销业绩）则以23.7%的增速增长。在随后的45年中，伯克希尔股票价格的上涨速度与这两项价值指标的增速非常相似，这绝非巧合。Charlie和我乐于看到两个领域都增长，但我们的主要目标是提升经营盈利。

* * * * * * * * * * * *

现在，让我们审视我们业务的四个主要板块。每个板块的资产负债表和盈利特性都截然不同。因此，我们将它们视为四个独立的企业来呈现——这也是Charlie和我看待它们的方式（尽管将它们置于同一屋檐下具有重要且持久的经济优势）。我们的意图是提供我们期望获得的信息——如果换位思考，你们是汇报经理，而我们是不在场的股东。（别激动；我们可不是在考虑换角色。）

保险

首先来看保险。该行业的财产-意外险分支自1967年以来一直是我们扩张的引擎——当年我们以860万美元收购了国民赔偿公司及其姊妹公司国家火险与海运公司。如今，按净值衡量，国民赔偿公司是全球最大的财产-意外险公司。此外，其内在价值远高于我们在账面上列示的价值。
我们之所以被财产/意外险（P/C）业务吸引，其中一个原因是它的财务特性：财产/意外险公司先收保费，后赔款。在极端情况下，比如某些工伤事故的赔偿，支付期限可能长达几十年。这种“先收后付”的模式让财产/意外险公司手握大笔资金——我们称之为“浮存金”——这些钱最终要赔付给他人。与此同时，保险公司可以拿这笔浮存金自行投资。虽然单个保单和理赔来来去去，但保险公司持有的浮存金总额通常随保费规模保持相对稳定。因此，随着业务增长，我们的浮存金也在增长。我们的增长情况如下表所示：

年份	浮存金（百万美元）
1970	$ 39
1980	237
1990	1,632
2000	27,871
2010	65,832
2015	87,722

未来浮存金进一步增长将相当困难。好的一面是，GEICO 和我们的几家专业运营机构几乎肯定会以不错的速度增长。但 National Indemnity 的再保险部门参与了一些已停止承保的合同，这部分浮存金在逐步下降。如果未来真的出现浮存金减少，那也会非常缓慢——最多每年不超过3%。我们的保险合同性质决定了，我们永远不会面临对我们现金资源构成重大威胁的立即或近期付款需求。这种结构是刻意设计的，也是伯克希尔经济堡垒强大实力的关键组成部分，永远不会动摇。

如果我们的保费超过费用和最终损失的总和，我们就实现了承销利润，这会在浮存金产生的投资收益之上再添一笔。当赚到这种利润时，我们就相当于在使用免费的资金——而且，更好的是，别人还付钱让我们持有它。

不幸的是，所有保险公司都渴望实现这种美妙的结果，这带来了激烈的竞争，以至于有时整个财产/意外险行业都会出现严重的承销亏损。这种亏损，实际上就是整个行业为持有浮存金付出的代价。竞争态势几乎可以保证，尽管全行业的所有公司都能赚取浮存金收入，但相较于美国其他行业，保险业在有形净资产上仍将继续维持回报率偏低的惨淡纪录。目前全球正在经历的长期低利率环境，也几乎保证了未来多年浮存金的投资收益将稳步下降，从而加剧保险公司的利润问题。十有八九，未来十年保险行业的业绩将不如过去十年，特别是那些专攻再保险的公司。

如本报告开头所述，伯克希尔已经连续13年实现承销盈利，这段时期我们税前利润总计262亿美元。这绝非偶然：严格的风险评估是我们所有保险经理人每天的工作重心，他们知道，虽然浮存金很有价值，但其好处可能被糟糕的承销结果所淹没。所有保险公司嘴上都会这么说。但在伯克希尔，这是信仰，旧约式的信仰。

那么，浮存金如何影响内在价值呢？在计算伯克希尔账面价值时，浮存金的全额被作为负债扣除，就好像我们明天就得全部赔出去且无法补充一样。但把浮存金严格视为负债并不正确。它更应该被看作一个循环基金。每天，我们都在支付旧赔款及相关费用——2015年向超过600万索赔人支付了高达245亿美元——这减少了浮存金。同样肯定的是，我们每天也在承揽新业务，这些业务很快会产生自己的索赔，从而增加浮存金。
如果我们的循环浮存金像我相信的那样既零成本又长期持续，那么这笔负债的真实价值就远低于其会计价值。欠着1美元实际上永远不会离开——因为新业务几乎肯定会带来替代品——与欠着1美元明天就要出去且不会被替换，这两者天差地别。然而在美国通用会计准则下，这两种负债被等同对待。

对这种虚增负债的部分抵消，是我们收购保险公司时产生的155亿美元“商誉”资产，它增加了账面价值。在很大程度上，这笔商誉代表了我们为保险公司产生浮存金的能力所支付的价格。然而，商誉的成本与其真实价值毫无关系。例如，如果一家保险公司遭受巨大且持久的承保亏损，那么无论其原始成本是多少，账面上任何商誉资产都应被视为毫无价值。

幸运的是，伯克希尔并非如此。Charlie和我认为，我们保险商誉的真实经济价值——即如果我们收购一家拥有类似质量浮存金的保险业务，我们乐意为此支付的价格——远超其历史账面值。事实上，我们在保险业务中计提的几乎全部155亿美元商誉，早在2000年就已体现在账面上。但随后我们的浮存金增长了两倍。其今日的价值是——一个巨大的原因——我们相信伯克希尔的内在商业价值大幅超过其账面价值的原因之一。

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伯克希尔吸引人的保险经济学之所以存在，只是因为我们拥有一些出色的管理者，他们运营着纪律严明、拥有难以复制业务模式的业务。让我介绍主要的业务单位。

按浮存金规模排首位的是Berkshire Hathaway Reinsurance Group（伯克希尔·哈撒韦再保险集团），由Ajit Jain管理。Ajit承保其他人既没有意愿也没有资本承担的风险。他的运营以保险业独特的方式结合了能力、速度、决断力，以及最重要的——智慧。然而，他从未让伯克希尔暴露在与我们资源不相称的风险中。

事实上，伯克希尔在规避风险方面比大多数大型保险公司保守得多。例如，如果保险业因某次超级巨灾遭受2500亿美元的损失——损失规模约是历史最大值的3倍——伯克希尔整体很可能因多源收入而录得可观盈利。我们还将现金充裕，并在可能一片混乱的保险市场中寻找大额承保机会。与此同时，其他大型保险公司和再保险公司即使不面临破产，也将深陷亏损。

当Ajit在1986年的一个星期六走进伯克希尔的办公室时，他在保险业一天经验也没有。尽管如此，当时我们的保险业务经理Mike Goldberg还是把再保险业务的钥匙交给了他。凭借这一举动，Mike成了圣徒：自那以后，Ajit为伯克希尔股东创造了数百亿美元的价值。

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我们还有另一家再保险巨头——General Re（通用再保险），由Tad Montross管理。

归根结底，一个稳健的保险业务需要遵守四个原则。它必须（1）了解所有可能导致保单产生损失的风险敞口；（2）保守评估任何风险敞口实际造成损失的可能性以及如果发生损失的潜在成本；（3）设定一个保费，使得在覆盖预期损失成本和运营费用后，平均而言能带来利润；（4）如果无法获得合适的保费，愿意放弃。
许多保险公司通过了前三项测试，却在第四项上栽了跟头。它们就是无法拒绝竞争对手正在积极承揽的业务。那句老话——“别人都在做，所以我们也得做”——在任何行业都会招来麻烦，但保险业尤甚。

泰德（Tad）严格遵守了保险业的四条戒律，他的业绩就是明证。在他领导下，通用再保险（General Re）的巨额浮存金远不止是零成本，我们预计，平均而言，这种局面将继续下去。我们尤其看好通用再保险的国际寿险再保险业务，自1998年收购该公司以来，该业务一直持续增长且盈利丰厚。

回想一下，我们收购通用再保险后不久，它便麻烦缠身，一度让评论人士——甚至包括我本人——认为我犯下了一个巨大错误。那段日子早已一去不复返。通用再保险如今已是一块瑰宝。

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最后是GEICO，一家我65年前入行时就在其中历练的保险公司。GEICO由托尼·奈斯利（Tony Nicely）管理，他18岁加入公司，到2015年已服务满54年。托尼自1993年起担任CEO，自那以后公司便一飞冲天。没有比托尼更出色的经理人了。在我认识他的40年里，他的每一个决定都极具远见。

1951年1月，当我第一次接触GEICO时，该公司相比行业巨头所拥有的巨大成本优势就让我震惊不已。我清楚地意识到GEICO会成功，因为它理应成功。

没人喜欢购买车险。但几乎人人都喜欢开车。因此，对大多数家庭来说，车险是一笔不小的开支。节省开支对他们很重要——而只有低成本运营才能做到这一点。事实上，阅读这封信的人中至少有40%可以通过投保GEICO省钱。所以，别读了——立刻！——去geico.com或拨打800-368-2734。

GEICO的成本优势是它年复一年吞噬市场份额的利器。（2015年底，我们占有11.4%的市场份额，而1995年伯克希尔取得GEICO控股权时仅为2.5%。）低成本的运营构筑了一道竞争对手无法逾越的护城河——一道持久的护城河。

与此同时，我们的小壁虎从不厌倦地告诉美国人GEICO能帮他们省下大笔钱。我喜欢听这个小家伙传达它的信息：“15分钟能帮你省下车险15%或更多的钱。”（当然，人群中总会有个牢骚鬼。我的一位朋友说，他很庆幸只有少数动物会说话，因为那些会说话的动物似乎除了保险什么都聊不了。）

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除了我们的三大保险业务，我们还拥有一批主要承保商业险的小公司。总体来看，这些公司规模庞大、不断增长且价值可观，持续创造承保利润，通常远优于竞争对手。事实上，过去13年里，该集团从承保中赚取了40亿美元——约占其保费收入的13%——同时浮存金从9.43亿美元增至99亿美元。

不到三年前，我们成立了伯克希尔·哈撒韦专业保险（Berkshire Hathaway Specialty Insurance，简称“BHSI”），并将其归入该集团。我们的第一个决定是让彼得·伊斯特伍德（Peter Eastwood）负责。这一步是本垒打：BHSI的年保费收入已增至10亿美元，在彼得的领导下，它注定会成为全球领先的财产/意外险公司之一。

以下是各分部的承保利润和浮存金汇总：

	承销利润		年末浮存金
保险业务	2015	（单位：百万美元）
		2014	2015	2014
伯克希尔·哈撒韦再保险	$ 421	$ 606	$ 44,108	$ 42,454
通用再保险	$ 132	$ 277	$ 18,560	$ 19,280
盖可保险	$ 460	$ 1,159	$ 15,148	$ 13,569
其他一级保险	$ 824	$ 626	$ 9,906	$ 8,618
	$ 1,837	$ 2,668	$ 87,722	$ 83,921

伯克希尔出色的经理人、顶尖的财务实力，以及由宽阔护城河保护的多重业务模式，共同构成了保险界独一无二的组合。这些优势的集合对伯克希尔股东而言是一笔巨大的财富，而且会随时间推移不断增值。

受监管的资本密集型业务

我们有两项主要业务——BNSF（伯灵顿北圣塔菲铁路公司）和BHE（伯克希尔·哈撒韦能源公司），它们共有的重要特征使其区别于其他业务。因此，我们在本信中为其单独设立一节，并在按美国通用会计准则编制的资产负债表和利润表中将其合并财务数据单独列示。去年，这两项业务合计贡献了伯克希尔税后经营利润的37%。

这两家公司的关键特征在于：它们对寿命极长的受监管资产进行了巨额投资，而部分资金来源于大额长期债务，但这些债务并非由伯克希尔担保。事实上，我们无需提供担保，因为每家公司的盈利能力即使在极端恶劣的经济条件下也远超其利息支出。例如，去年对铁路行业而言是令人失望的一年，但BNSF的利息保障倍数仍超过8倍。（我们对保障倍数的定义是息税前利润与利息之比，而非EBITDA/利息——后者虽被广泛使用，但我们认为存在严重缺陷。）

至于BHE，有两个因素确保其在任何情况下都有能力偿还债务。第一个因素对公用事业公司而言是共通的：抗衰退的盈利能力——源于这些公司提供独家基本服务。第二个因素则少有其他公用事业公司具备：盈利来源广泛且日益多元化，这使得任何单一监管机构都难以对BHE造成严重冲击。这些多元化的利润来源，再加上背靠强大母公司带来的固有优势，使BHE及其公用事业子公司得以显著降低债务成本。这一经济事实惠及我们和我们的客户。

总体而言，BHE和BNSF去年在厂房和设备上投资了116亿美元，这是对美国基础设施关键组成部分的巨额投入。只要这些投资能带来合理回报，我们就乐此不疲——而在这一点上，我们对未来的监管抱有充分的信任。

我们的信心既源于过去的经验，也源于一个事实：社会永远需要交通和能源领域的巨额投资。政府出于自身利益，会以确保持续向关键项目提供资金的方式对待资本提供者。相应地，我们也要以赢得监管机构及其所代表的人民认可的方式开展业务，这同样符合我们的自身利益。

低价是让这些利益相关方满意的一种有力方式。在爱荷华州，BHE的平均零售电价为每千瓦时6.8美分。该州另一家主要电力公司Alliant的平均电价为9.5美分。以下是相邻各州的行业可比数据：内布拉斯加州9.0美分，密苏里州9.3美分，伊利诺伊州9.3美分，明尼苏达州9.7美分。全美平均水平为10.4美分。我们低廉的电价对收入拮据的客户来说，是一笔实实在在的真金白银。
在北伯林顿铁路公司（BNSF），因各大铁路公司货运种类和平均运距差异显著，其运价很难直接比较。但提供一个粗略衡量：去年我们每吨英里收入不到3美分，而美国其他四大铁路公司客户的运费则至少高出40%，在4.2美分到5.3美分之间。

伯克希尔哈撒韦能源公司（BHE）和BNSF在环保技术方面一直走在前列。在风力发电领域，没有哪个州能比得上爱荷华州——去年我们风电场发出的兆瓦时电量，占零售客户总售电量的47%。（我们已承诺的额外风电项目将在2017年把这数字提升到58%。）

与其它一级铁路公司一样，BNSF只需1加仑柴油就能将一吨货物运送近500英里。这使铁路的燃油效率是卡车的四倍！此外，铁路还大大缓解了高速公路拥堵——以及随之而来的、由纳税人承担的公路维护开支。

以下是BHE和BNSF的关键数据：

伯克希尔哈撒韦能源（持股89.9%）	利润（单位：百万美元）
	2015年	2014年	2013年
英国公用事业	460	527	362
爱荷华州公用事业	314	298	230
内华达州公用事业	586	549	(58)
太平洋电力（PacifiCorp，主要在俄勒冈州和犹他州）	1,026	1,010	982
天然气管道（Northern Natural和Kern River）	401	379	385
加拿大输电公用事业	170	16	—
可再生能源项目	175	194	50
家服务公司（HomeServices）	191	139	139
其他（净额）	27	26	12
公司利息和税前经营利润	3,350	3,138	2,102
利息	499	427	296
所得税	481	616	170
净利润	2,370	2,095	1,636
归属伯克希尔利润	2,132	1,882	1,470

北伯林顿铁路公司（BNSF）	利润（单位：百万美元）
	2015年	2014年	2013年
营业收入	21,967	23,239	22,014
营业费用	14,264	16,237	15,357
利息及税前经营利润	7,703	7,002	6,657
利息（净额）	928	833	729
所得税	2,527	2,300	2,135
净利润	4,248	3,869	3,793

我目前预期2016年BHE的税后利润将增长，而BNSF的利润将下降。

制造、服务和零售业务

伯克希尔的这一板块包罗万象。下面我们来看整个集团的总括资产负债表和利润表。

资产负债表 2015年12月31日（单位：百万美元）

资产		负债与权益
现金及现金等价物	$6,807	应付票据	$2,135
应收账项与应收票据	8,886	其他流动负债	10,565
存货	11,916	流动负债合计	12,700
其他流动资产	970
流动资产合计	28,579
		递延所得税	3,649
商誉及其他无形资产	30,289	定期债务及其他负债	4,767
固定资产	15,161	非控制性权益	521
其他资产	4,445	伯克希尔权益	56,837
	$78,474		$78,474

利润表（单位：百万美元）

	2015	2014	2013*
收入	$107,825	$97,689	$93,472
经营费用	100,607	90,788	87,208
利息费用	103	109	104
税前利润	7,115	6,792	6,160
所得税及非控制性权益	2,432	2,324	2,283
净利润	$4,683	$4,468	$3,877

* 2013年利润已追溯调整，剔除了Marmon的租赁业务，该业务现已归入金融及金融产品板块中。

我们符合美国通用会计准则的收入和费用数据列于第38页。与此相反，上述经营费用数据属于非美国通用会计准则，因为它们剔除了一些购买会计项目（主要是某些无形资产的摊销）。我们之所以这样呈现数据，是因为查理和我觉得，与GAAP数据相比，调整后的数字更能准确反映上表中各业务板块的真实经济费用和利润。

我不会解释所有调整项——有些微不足道且晦涩难懂——但严肃的投资者应该理解无形资产的非同质特性。有的无形资产确实随时间贬值，而另一些则丝毫不贬值。举个例子，对于软件，摊销费用是非常真实的支出。相反，对客户关系等其他无形资产计提费用的做法，源自购买会计规则，显然不能反映经济现实。GAAP会计对这两类费用不加区分。也就是说，在计算利润时两者都被记为费用——尽管从投资者角度看，它们有天壤之别。

在第38页我们展示的GAAP合规数据中，已扣除了11亿美元的摊销费用作为开支。我们会说其中大约20%是“真实的”，其余则不是。这些“非真实”费用在伯克希尔本不存在，但由于我们做了大量收购，如今已举足轻重。随着我们继续收购更多公司，非真实摊销费用可能还会进一步攀升。

第55页的表格向你展示了GAAP计算下我们无形资产的当前状况。我们目前还有68亿美元的可摊销无形资产，其中41亿美元将在未来五年内摊销完毕。当然，最终这些“资产”的每一分钱都会被冲销。那时，即使真实利润原地踏步，报告利润也会增加。（这是我给接班人的礼物。）
我建议你忽略美国通用会计准则中的部分摊销费用。但我这么做时有些忐忑，因为我知道经理人让所有者忽略某些非常真实的费用项目已经司空见惯。“股权激励”就是最恶劣的例子。这个词本身说明了一切：“激励”。如果激励不是费用，那它是什么？而且，如果真实且经常性的费用不属于利润计算的一部分，那它们究竟该属于哪里？

华尔街分析师也常在这场闹剧中扮演角色，鹦鹉学舌般地重复管理层塞给他们的那些虚假的、忽略激励费用的“利润”数字。也许这些讨人嫌的分析师根本搞不清楚。或者他们害怕失去与管理层的“接触”。又或者他们玩世不恭，告诉自己反正大家都在玩这个游戏，他们何不随波逐流。无论他们有什么理由，这些分析师都有罪——他们在传播可能误导投资者的数据。

折旧费用是一个更复杂的话题，但几乎总是真实的成本。至少在伯克希尔是如此。我希望我们能在支出少于折旧费用的情况下保持企业的竞争力，但51年来我还没想出怎么做到。事实上，我们在铁路业务中记录的折旧费用远远低于仅仅让铁路正常运营所需的资本支出，这种不匹配导致美国通用会计准则利润高于真实经济利润。（所有铁路公司都存在这种利润高估。）当CEO或投资银行家吹嘘EBITDA等折旧前数字作为估值指引时，看着他们的鼻子在说话时变长吧。

当然，我们公开的利润报告将继续符合美国通用会计准则。但为了拥抱现实，你应该记得将我们报告的大部分摊销费用加回。同时，你还应该减去一些数字以反映BNSF（伯灵顿北方圣塔菲铁路公司）折旧费用不足的影响。

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让我们回到我们的众多制造、服务和零售业务，这些业务销售从棒棒糖到喷气式飞机的产品。这个板块中的一些企业，以无杠杆净有形资产收益来衡量，拥有极好的经济特性，产生的税后利润从25%到远超100%不等。其他一些企业则创造了12%到20%左右的良好回报。

然而，有几个——这是我在资本配置工作中犯的严重错误——回报非常差。在大多数情况下，我错误评估了公司或其所处行业经济动态，现在我们正在为我的误判付出代价。另一些时候，我在评估现任经理人或后来任命经理人的忠诚或能力方面犯了错误。我还会犯更多错误，这点你大可放心。如果我们运气好，这些错误将发生在规模较小的业务上。

作为一个整体来看，这个板块内的公司是一项出色的业务。它们在2015年平均使用了256亿美元的净有形资产，尽管持有大量超额现金且仅使用了象征性的杠杆，仍然在这些资本上获得了18.4%的税后收益。

当然，经济特性极好的企业如果买入价格过高，也可能是一笔糟糕的投资。我们为大多数企业支付了相当高的净有形资产溢价，这一成本反映在我们商誉和其他无形资产的大额数字中。不过，总体而言，我们在这个板块部署的资本获得了不错的回报。随着Duracell（金霸王）和Precision Castparts（精密铸件公司）加入大家庭，该板块的利润在2016年应有大幅增长。
我们旗下的公司太多，无法一一点评。更何况，它们的竞争对手——无论是现有的还是潜在的——都会读这份报告。在我们的一些业务中，如果别人知道了我们的数据，我们可能会处于劣势。因此，在那些规模不足以影响伯克希尔整体评估的运营中，我们只披露必要的信息。不过，你仍然可以在第88-91页找到我们许多业务的详细情况。

金融与金融产品

我们的三家租赁和运营公司分别是CORT（家具）、XTRA（半挂车）和Marmon（主要是罐车，也包括货运车厢、多式联运罐式集装箱和起重机）。这些公司都是行业领导者，随着美国经济走强，它们的盈利大幅增长。在这三家公司，我们投入新设备的资金都比许多竞争对手多，而这也得到了回报。以强者的姿态出手，是伯克希尔持久的优势之一。

Kevin Clayton再次让Clayton Homes（克莱顿房屋）交出了行业领先的成绩单。Clayton Homes是美国第二大住宅建筑商。去年，该公司售出了34,397套房屋，约占美国人购买的活动房屋的45%。相比之下，当伯克希尔在2003年收购它时，它在该领域排名第三，市场份额仅为14%。

活动房屋让低收入公民也能实现拥有住房的美国梦：售价在15万美元或以下的新房中，约有70%来自我们这个行业。Clayton大约46%的房屋通过我们自营的331家门店销售。Clayton其余的大部分销售则面向1,395家独立零售商。

Clayton运营的关键是其128亿美元的抵押贷款组合。我们发放了约35%的活动房屋抵押贷款。我们的抵押贷款组合中，约37%来自我们的零售业务，其余主要由独立零售商发放，其中一些既销售我们的房屋，另一些则只销售竞争对手的房屋。

除了Clayton之外，其他贷款机构来来去去。然而，有伯克希尔作为后盾，Clayton在2008-2009年的恐慌时期始终坚定地为购房者提供融资。事实上，在那段时期，Clayton还动用了宝贵的资本，为那些不销售我们房屋的经销商提供融资。当时，我们向高盛和通用电气提供的资金上了新闻头条；而伯克希尔悄悄输送给Clayton的资金，既让成千上万的家庭实现了购房梦，也让许多非Clayton的经销商活了下来。

我们的零售门店，用简洁的语言和大号字体，持续告知购房者其他融资渠道——其中大部分来自当地银行——并且始终确保客户确认已收到并阅读了这些信息。（我们在第119页按实际尺寸复制了所使用的表格。）

抵押贷款发放的惯例对借款人和整个社会都至关重要。毫无疑问，住房贷款中的鲁莽行为是引发2008年金融危机的主要推手，而这场危机又导致了经济大衰退。在危机爆发前的几年里，一种具有破坏性且往往腐败的抵押贷款创造模式盛行：即（1）例如在加州的放贷机构发放贷款，然后（2）迅速将其出售给例如纽约的投资银行或商业银行，后者将许多抵押贷款打包，作为一系列令人眼花缭乱的复杂抵押贷款支持证券的抵押品，再（3）出售给世界各地不明就里的机构。
这些罪过已经足以制造一场大乱，然而富有想象力的投行家们有时还会变本加厉，在首轮分拆融资中那些垃圾级部分的基础上，再叠加一层分拆融资。（当华尔街开始"创新"时，你就得留神！）在那期间，我把这种"叠罗汉"的做法描述为：投资者为了评估一只被推销的证券，需要阅读成千上万页令人昏昏欲睡的文件。

这些融资产品的发起人和打包商都没有利益绑定，他们只被交易量和价差驱动。许多房屋借款人也在加入这场派对，明目张胆地在贷款申请上造假，而按揭贷款发放机构则视而不见。当然，风险最高的信贷产生的利润最大。巧舌如簧的华尔街销售员通过制造客户自己都搞不懂的产品，年入百万。（至于主要评级机构是否有能力评估那些更复杂的结构，也值得怀疑。但它们还是给出了评级。）

巴尼·弗兰克（Barney Frank）或许是金融恐慌期间国会中最懂财务的议员，他最近评价2010年的《多德-弗兰克法案》时说："我在实施过程中看到的一个主要缺陷是，监管机构决定不对所有住宅抵押贷款实施风险留存。"如今，一些立法者和评论员继续主张由贷款发起人留存1%至5%的风险，以此将其利益与最终贷款人或按揭担保人的利益绑定。

在Clayton（克莱顿），我们的风险留存过去是、现在仍然是100%。当我们发放一笔抵押贷款时，我们会持有它（少数符合政府担保条件的贷款除外）。因此，当我们在授信上犯错时，我们会付出代价——一笔沉重的代价，远超我们当初出售房屋时实现的任何利润。去年，我们不得不止赎8,444笔预制房屋抵押贷款，为此付出了1.57亿美元的代价。

我们在2015年发放的平均贷款仅有59,942美元，这不过是传统按揭贷款者眼中的"小土豆"，但对于我们许多低收入借款人来说，却是一份沉重的承诺。我们的买家购买了一栋体面的住宅——看看我们将在年会上展示的那栋房子——其月度本金加利息的平均支付额为522美元。

当然，有些借款人会失业，会有离婚和死亡。其他人则会在信用卡上过度透支，理财不当。那时我们会赔钱，借款人会损失他的首付（尽管他在居住期间的月供可能远低于同等面积的租金）。然而，尽管我们的借款人FICO评分和收入都很低，他们在"大衰退"期间的还款行为，远好于许多由收入数倍于我们典型借款人的群体组成的按揭贷款池。

我们的借款人拥有自己住房的强烈愿望，是我们按揭贷款组合表现良好的原因之一。同样重要的是，我们用浮动利率债务或短期固定利率债务为大部分组合提供了融资。因此，近年来极低的短期利率让我们在利息成本和按揭贷款组合所得收入（该组合为固定利率）之间，获得了持续扩大的利差。（顺便说一句，如果我们只是买入长期债券并用某种短期方式为其融资，我们也能获得类似的利差。）
通常，长期以固定利率放贷、短期借款是很危险的做法——正如克莱顿（Clayton）一直以来的做法。多年来，一些重要的金融机构因此破产。然而在伯克希尔，我们拥有一种天然的对冲手段：我们的企业始终持有至少200亿美元的现金等价物，赚取短期利率。更多时候，我们的短期投资在400亿至600亿美元之间。假如我们有600亿美元投资于0.25%或更低收益率的资产，那么短期利率大幅上升将给我们带来远超为克莱顿130亿美元抵押贷款组合融资所增加的借贷成本的收益。用银行业的术语来说，伯克希尔一直且将永远对资产高度敏感，因此会从利率上升中受益。

我想谈谈一个我特别引以为豪的话题，即监管。大衰退导致抵押贷款发起人、服务商和打包商受到严密审查，并被处以数十亿美元的罚款和罚金。

这种审查当然也延伸到了克莱顿。在发起、服务、收款、广告、合规和内部控制等方面，克莱顿的抵押贷款业务一直受到持续审查和检查。在联邦层面，我们向联邦贸易委员会、住房和城市发展部以及消费者金融保护局负责。此外，还有数十个州对我们进行监管。事实上，过去两年中，各种联邦和州当局（来自25个州）对克莱顿及其抵押贷款进行了65次审查和检查。结果如何？在此期间，我们的总罚款为38,200美元，向客户退款704,678美元。此外，虽然去年我们不得不对2.64%的活动房屋抵押贷款进行止赎，但到年底，95.4%的借款人按时还款，正朝着拥有无债务房屋的目标迈进。

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马蒙（Marmon）的铁路车皮车队到年底已扩展到133,220辆，这一数字因公司于9月30日从通用电气购买了25,085节车厢而大幅增加。如果我们的车队连成一列火车，车头在奥马哈，车尾在缅因州的波特兰。

年底时，我们97%的铁路车皮已出租，每年约有15-17%的车队需要续租。虽然“罐车”听起来像是运载原油的车辆，但我们车队中只有约7%运送该产品；化学品和精炼石油产品是我们运输的主要物品。当火车驶过时，注意寻找标有UTLX或Procor标记的罐车。当你看到这个品牌时，挺起胸膛；你也拥有那节车厢的一部分。

以下是该板块的收益汇总：

	2015	2014	2013
	（单位：百万美元）
伯卡迪亚（Berkadia）（我们的50%份额）	74	122	80
克莱顿	706	558	416
科特（CORT）	55	49	42
马蒙——集装箱与起重机	192	238	226
马蒙——铁路车皮	546	442	353
艾克斯特拉（XTRA）	172	147	125
净财务收入*	341	283	322
	2,086	1,839	1,564

*不含资本利得或损失

投资

以下列出我们年底市值最大的十五只普通股投资。我们未将卡夫亨氏（Kraft Heinz）的持股列入，因为我们是控制集团的一员，并按“权益”法核算。

股数**	公司	持股比例	2015年12月31日
			成本*	市值
			（单位：百万美元）
151,610,700	American Express Company（美国运通公司）	15.6	$ 1,287	$ 10,545
46,577,138	AT&T	0.8	1,283	1,603
7,463,157	Charter Communications, Inc.（Charter通信公司）	6.6	1,202	1,367
400,000,000	The Coca-Cola Company（可口可乐公司）	9.3	1,299	17,184
18,513,482	DaVita HealthCare Partners Inc.（DaVita医疗合作伙伴公司）	8.8	843	1,291
22,164,450	Deere & Company（迪尔公司）	7.0	1,773	1,690
11,390,582	The Goldman Sachs Group, Inc.（高盛集团）	2.7	654	2,053
81,033,450	International Business Machines Corp.（国际商业机器公司，IBM）	8.4	13,791	11,152
24,669,778	Moody’s Corporation（穆迪公司）	12.6	248	2,475
55,384,926	Phillips 66（菲利普斯66）	10.5	4,357	4,530
52,477,678	The Procter & Gamble Company（宝洁公司）	1.9	336	4,683 ***
22,169,930	Sanofi（赛诺菲）	1.7	1,701	1,896
101,859,335	U.S. Bancorp（美国合众银行）	5.8	3,239	4,346
63,507,544	Wal-Mart Stores, Inc.（沃尔玛公司）	2.0	3,593	3,893
500,000,000	Wells Fargo & Company（富国银行）	9.8	12,730	27,180
	其他		10,276	16,450
	按市值计价的普通股合计		$ 58,612	$ 112,338

• 这是我们实际购买价格，也是我们的计税基础；由于GAAP规则要求在某些情况下进行增值或减记，GAAP“成本”在少数情况下有所不同。
  不包括伯克希尔子公司养老基金持有的股份。
  * 根据销售合约按此金额持有。

伯克希尔有一项主要股权未包含在表格中：我们可以在2021年9月之前的任何时间以50亿美元购买7亿股美国银行（Bank of America）股票。年末这些股票价值118亿美元。我们很可能会在期权到期前买入，而且如果愿意，我们可以用我们持有的50亿美元美国银行6%优先股来支付这笔收购。与此同时，你需要了解，美国银行实际上是我们第四大股权投资——也是我们非常看重的一笔。

生产力与繁荣

前面我提到过，我们在卡夫亨氏（Kraft Heinz）的合作伙伴如何根除低效，从而提高每小时劳动产出。自1776年美国建国以来，这种改善一直是美国生活水平显著提升的秘诀。不幸的是，“秘诀”这个标签用得很恰当：很少有美国人充分理解生产力与繁荣之间的联系。要看清这种关系，我们先来看看美国最典型的例子——农业——然后再审视三个与伯克希尔相关的领域。

1900年，美国民用劳动力为2800万人。其中，1100万人从事农业，占总数的40%（令人震惊）。当时的主要作物和现在一样，是玉米。大约9000万英亩土地用于玉米生产，每英亩产量为30蒲式耳，年总产量为27亿蒲式耳。
拖拉机的出现以及随后一项又一项的创新，彻底改变了种植、收割、灌溉、施肥和种子质量等农业生产力的关键领域。如今，我们把约8500万英亩土地用于种植玉米。然而，生产力的提高让每英亩产量超过了150蒲式耳，年产量达到130-140亿蒲式耳。农民在其他农产品上也取得了类似的进展。

不过，产量的增长只是故事的一半：物质产出的大幅增加伴随着农业劳动力（“人力投入”）的急剧减少。如今，约有300万人在农场工作，仅占美国1.58亿劳动力人口的2%。因此，改良的耕作方式让数千万当代劳动者得以将时间和才能投入到其他事业中——这种人力资源的重新分配，使今天的美国人能够享受大量本应缺失的非农产品和服务。

回顾这115年的历程，我们很容易意识到农业创新所带来的非凡益处——不仅对农民而言，更广泛地说，对整个社会都是如此。倘若我们扼杀了生产力的进步，就不可能有今天我们所知道的美国。（幸运的是，马不会投票。）然而，从日常角度来看，当农场工人因为机器能以远超人类的高效完成日常任务而失业时，“更大利益”的论调在他们听来必定空洞无物。我们将在本节稍后探讨生产力提高的这一反面。

但此刻，我们先来看三个效率提升的故事，它们对伯克希尔的子公司产生了重大影响。类似的变革在美国商业中已司空见惯。

• 1947年，二战结束后不久，美国劳动力总数为4400万。铁路行业雇佣了约135万名工人。当年一级铁路运输的货运收入吨英里总计6550亿。

到2014年，一级铁路运输了1.85万亿吨英里的货物，增长了182%，而雇佣的工人仅18.7万，比1947年减少了86%。（其中部分变化涉及客运相关员工，但裁员大头在货运方面。）得益于这种惊人的生产力提升，经通胀调整后每吨英里的货运价格自1947年以来下降了55%，按现值计算每年为托运人节省约900亿美元。

另一个令人震惊的数据：如果现在搬运货物所需的人数与1947年一样多，那么处理当前运量将需要超过300万铁路工人。（当然，那样的就业水平会大幅提高运费；因此，实际运量也远不可能达到今天的水平。）

我们自己的BNSF（伯灵顿北方圣太菲铁路公司）成立于1995年，由伯灵顿北方铁路与圣太菲铁路合并而成。1996年，合并后的公司第一个完整运营年度，45000名员工运输了4.11亿吨英里的货物。去年，可比数据为7.02亿吨英里（增长71%）和47000名员工（仅增长4%）。这种巨大的生产力提升使所有者和托运人同时受益。BNSF的安全状况也有所改善：每20万工时的可报告工伤从1996年的2.04起降至后来的0.95起，下降了50%以上。
- 大约一个多世纪前，汽车被发明出来，围绕它形成了一个为汽车和驾驶者提供保险的行业。起初，这类业务是通过传统的保险代理机构承保的——就是那种做火险的代理。这种以代理为中心的模式包含了高额佣金和其他承销费用，消耗了每1美元保费的约40美分。当时，实力雄厚的地方代理占据主导地位，因为他们代理多家保险公司，在谈判佣金时能让一家公司跟另一家相互竞价。那时候盛行的是一种卡特尔式的定价，所有参与者都过得不错——除了消费者。

后来，美国的创新精神开始发挥作用：来自伊利诺伊州默纳的农夫 G. J. Mecherle 想出了一个点子，组建一支专属销售队伍，只销售一家公司的保险产品。他创立的公司被命名为 State Farm Mutual（州立农业互助保险公司）。这家公司削减了佣金和费用——从而得以降低价格——很快成为了一股强大的力量。几十年来，State Farm 在汽车保险和房屋保险的承保量上一直遥遥领先。同样采用直销模式的 Allstate（好事达）则长期位居第二。State Farm 和 Allstate 的承销费用都在25%左右。

20世纪30年代初，另一家竞争者——United Services Auto Association（联合服务汽车协会，简称USAA），一家类似互助公司的机构——开始以直接面向客户的方式为军官提供汽车保险。这种营销创新源于军人需要购买一种保险，可以随着他们从一个基地调往另一个基地而继续有效。地方保险代理对这种业务兴趣不大，因为他们想要的是常住居民带来的稳定续保。

USAA 的直销模式实际上产生的成本低于 State Farm 和 Allstate 的水平，因此为顾客提供了更大的实惠。这促使 USAA 的员工 Leo 和 Lillian Goodwin 梦想将其直销模式的目标市场扩大到军官之外。1936年，他们用10万美元的资本成立了 Government Employees Insurance Co.（政府雇员保险公司，后来把这个拗口的名字简化为GEICO）。

这家新公司在第一个完整年度——1937年——做了23.8万美元的汽车保险业务。去年，GEICO 做了226亿美元的业务，是 USAA 的两倍多。（虽然早起的鸟儿有虫吃，但第二只老鼠有奶酪吃。）2015年，GEICO 的承销费用占保费的14.7%，只有 USAA 一家大公司的比例更低。（GEICO 的效率与 USAA 完全相当，但在促进增长的广告上花费要多得多。）

凭借低成本带来的价格优势，GEICO 在几年前从 Allstate 手中夺走汽车保险行业第二的位置就不足为奇了。GEICO 也在追赶 State Farm，尽管 State Farm 在承保量上仍遥遥领先。2030年8月30日——我100岁生日那天——我计划宣布 GEICO 已经登顶了。在你的日历上做个记号吧。

GEICO 雇佣了大约34,000名员工来服务其1,400万保单持有人。我只能猜测，如果采用代理体系，要服务同样数量的保单持有人需要多少员工。但我相信，这个数字至少是60,000，包括保险公司直接雇佣的人员和支持代理机构所需的人员。

• 在其电力业务中，我们的 Berkshire Hathaway Energy（伯克希尔·哈撒韦能源，简称BHE）在一个不断变化的经济模式下运营。历史上，一家地方电力公司的生存并不取决于其效率。事实上，一家“马虎”的公司也能在财务上过得不错。
  这是因为公用事业公司通常是某种必需品的独家供应商，而且监管允许它们以能获得规定资本回报率的水平定价。行业里有个笑话：公用事业公司是唯一一家通过重新装修老板办公室就能自动赚更多钱的企业。而有些CEO也确实这么干了。

现在一切都变了。今天，社会认定联邦补贴的风能和太阳能发电符合国家的长期利益。联邦税收抵免被用于实施这一政策，这种支持使可再生能源在某些地区具备价格竞争力。这些税收抵免，或其他政府强制对可再生能源的扶持，可能会逐渐侵蚀现有公用事业公司的盈利能力，尤其是那些高成本运营商。BHE（伯克希尔·哈撒韦能源公司）长期以来对效率的重视——即便在不需要它来达到核定收益时也是如此——让我们在当今市场（更重要的是，在未来的市场）中具有特别的竞争力。

BHE在1999年收购了其爱荷华州的公用事业公司。收购前一年，那家公用事业公司雇有3,700名员工，生产了1,900万兆瓦时的电力。现在我们雇有3,500名员工，生产了2,900万兆瓦时的电力。这种大幅度的效率提升让我们能够在16年内不涨电价，而同期行业电价上涨了44%。

我们爱荷华州公用事业公司的安全记录也非常出色。2015年每100名员工发生0.79起工伤，而我们在收购前，前业主运营的那一年该比率为7.0。

2006年，BHE收购了PacifiCorp（太平洋电力公司），该公司主要在俄勒冈州和犹他州运营。收购前一年，PacifiCorp雇有6,750名员工，生产了5,260万兆瓦时的电力。去年，该公司的员工数为5,700人，生产了5,630万兆瓦时的电力。这里的安全记录也大幅改善，每100名员工的工伤事故率从2005年的3.4降至2015年的0.85。在安全性方面，BHE现在位列行业前十分之一。

这些出色的表现解释了为什么当BHE提议收购其管辖范围内的公用事业公司时，监管机构会表示欢迎。监管机构知道这家公司会高效、安全、可靠地运营，而且还能带来无限的资本来资助任何有意义的项目。（自我们拥有BHE以来，它从未向伯克希尔支付过股息。美国没有哪家投资者所有的公用事业公司能在再投资热情上与BHE相提并论。）

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我刚才阐述的生产力提升——以及美国已经实现的无数其他提升——为社会带来了巨大的利益。这正是我们全体公民已经享受到、并将继续享受他们所获得的商品和服务大幅改善的原因。

对这一观点也有抵消因素。首先，近年实现的生产力提升主要惠及了富人。其次，生产力提升常常引发剧变：当创新或新的效率颠覆了资本和劳动力的世界时，两者都可能付出惨痛代价。

我们无需为资本家（无论是私人业主还是庞大的公众股东群体）流眼泪。照顾好自己是他们的事。当好的决策能为投资者带来丰厚回报时，这些参与者也不应因错误选择造成的损失而幸免。此外，广泛分散投资并只是安心持有的投资者必然会成功：在美国，成功投资带来的收益远远超过烂投资造成的损失。（在20世纪，道琼斯工业平均指数——一种指数基金——从66点飙升至11,497点，其成分公司在此期间一直不断增加股息。）
一位长期受雇的劳动者面临的情况则不同。当创新与市场体系相互作用以提升效率时，许多工人可能会变得多余，他们的技能也将被淘汰。有些人能在别处找到体面的工作；但对另一些人而言，这并非可行选项。

当低成本竞争将制鞋业推向亚洲时，我们曾经繁荣的 Dexter 鞋业公司倒闭了，导致缅因州一个小镇上 1,600 名员工失业。其中许多人已过了能学习另一门手艺的人生阶段。我们亏掉了全部投资——这笔损失我们承受得起——但许多工人失去的却是一份无法替代的生计。同样的情景也在我们最初的新英格兰纺织业务上慢速上演，它苦苦挣扎了 20 年后才彻底消亡。举一个令人心酸的例子：我们在新贝德福德工厂的许多老工人只讲葡萄牙语，几乎不懂英语。他们没有备用计划（Plan B）。

面对这类颠覆，答案不是限制或禁止那些提升生产力的行为。如果我们强制要求 1,100 万人永远从事耕作，美国人的生活水准绝不会像今天这么好。

相反，解决方案是一系列安全网，旨在为那些愿意工作、但因市场力量而被认为特定技能价值不高的人提供体面的生活。（我个人支持改革和扩大劳动所得税抵免，努力确保美国能为愿意工作的人服务。）为绝大多数美国人实现日益增长的繁荣，其代价不应是让不幸者陷入贫困。

重要风险

与所有上市公司一样，美国证券交易委员会要求我们在 10-K 报告中每年列出“风险因素”。然而，我不记得读过哪份 10-K 的“风险”章节对我评估一家业务有过帮助。这并不是说列出的风险不真实。实际上，真正重要的风险通常是众所周知的。此外，10-K 的风险清单很少有助于评估：（1）威胁性事件实际发生的概率；（2）如果发生，其成本范围；以及（3）潜在损失的时间点。一个 50 年后才会显现的威胁，对社会来说可能是个问题，但对今天的投资者而言并非财务问题。

伯克希尔涉足的行业比我所知的任何公司都多。我们的每一项业务都有其自身的一系列潜在问题和机遇。这些问题容易列举，但难以评估：查理、我和我们的各位 CEO 在计算这些可能性可能导致的概率、时间点和成本（或收益）时，常常存在显著分歧。

让我仅举几个例子。首先是一个明显的威胁：BNSF 铁路公司与其他铁路公司一样，未来十年煤炭运量必然会大幅下降。在未来的某个时间点——尽管在我看来不是近期——GEICO 的保费收入可能会因无人驾驶汽车而萎缩。这一发展也可能损害我们的汽车经销商业务。我们的印刷报纸发行量将继续下降，这是我们在收购时已经考虑到的确定性。迄今为止，可再生能源有助于我们的公用事业运营，但这种情况可能会改变，尤其是在电力存储能力大幅提升的情况下。在线零售威胁着我们零售商和某些消费品牌的商业模式。这些可能性只是我们面临的少数负面因素——但即使是偶尔关注商业新闻的人，也早已意识到它们的存在。

然而，这些问题中没有一个是伯克希尔长期健康的关键。1965 年我们接管这家公司时，其风险可以用一句话概括：“我们所有资本所在的北方纺织业务注定会持续亏损，并最终消失。”但那一发展并非丧钟。我们只是适应了。我们将继续这样做。

每一天，伯克希尔的经理们都在思考，在一个日新月异的世界里，如何更好地竞争。同样全力以赴地，查理和我则专注于将源源不断的资金部署到哪里。在这方面，我们相比那些局限于单一行业的公司拥有巨大优势——它们的选项要有限得多。我坚信，伯克希尔拥有足够的资金、人才和文化，能够穿越我上面列举的那类乃至更多困境，并以更强大的盈利能力走出来。

然而，有一项明确、当下且持续存在的危险，对伯克希尔构成了威胁，而查理和我对此无能为力。这项对伯克希尔的威胁，也正是我们全体国民面临的主要威胁：对美国发起的“成功”（按攻击者的定义）的网络攻击、生物攻击、核攻击或化学攻击。这是伯克希尔与美国所有企业共同承担的风险。

在任何给定的年份里，发生这种大规模毁灭的概率可能非常小。自从我递送《华盛顿邮报》头条新闻——报道美国投下了第一颗原子弹——至今已超过70年。此后，我们有过几次擦肩而过，但都避免了灾难性的毁灭。对此，我们要感谢我们的政府——还有运气！

尽管如此，短期内的低概率，在较长的时间跨度里几乎成了必然。（如果某事件在给定年份发生的概率是三十分之一，那么它在百年内至少发生一次的概率是 (96.6\%) 。）更糟的消息是，总会有一些人、组织和国家，渴望对我们的国家造成最大伤害。在我的一生中，他们实施这种伤害的能力呈指数级增长。“创新”也有其阴暗面。

美国公司或其投资者无法摆脱这一风险。如果美国境内发生导致大规模毁灭的事件，那么所有股权投资的价值几乎肯定会归零。

没有人知道“事后”会是什么样子。但我认为，爱因斯坦1949年的判断仍然恰当：“我不知道第三次世界大战将用什么武器来打，但第四次世界大战将用棍棒和石头来打。”

* * * * * * * * * * * *

我之所以写这一节，是因为我们今年的年会上有一项关于气候变化的股东委托书提案。提案方希望我们提交一份报告，说明气候变化可能对我们的保险业务构成哪些危险，并解释我们如何应对这些威胁。

在我看来，气候变化极有可能给地球带来大麻烦。我说“极有可能”而非“确定”，是因为我没有任何科学才能，并且清楚地记得大多数“专家”关于Y2K（千年虫）的可怕预测是如何落空的。然而，如果世界的巨大损害看起来有哪怕一丁点可能性，而迅速行动又有哪怕微小的机会阻止这种危险，那么我或任何人坚持要求100%的证据，将是愚蠢的。

这个问题与帕斯卡关于上帝存在的赌注有相似之处。或许有人记得，帕斯卡的论点：如果上帝真实存在的概率微乎其微，那么表现得好像他存在是合理的，因为回报可能是无限的，而不相信则要冒永恒痛苦的风险。同样，如果地球走向真正重大灾难的可能性只有 (1\%) ，而拖延意味着越过不可挽回的节点，那么现在不行动就是鲁莽的。这可以称为诺亚法则：如果方舟可能是生存的关键，那么无论天空多么晴朗，今天就开始建造它。
股东委托书提案的发起人认为伯克希尔特别容易受到气候变化的威胁，这可以理解——因为我们是一家承保各类风险的巨大保险公司。发起人可能担心财产损失会因天气变化而飙升。事实上，如果我们签订的是十年或二十年期的固定价格保单，这种担忧或许成立。但保险单通常一年一签，每年根据风险变化重新定价。损失可能性增加，会迅速转化为保费上涨。

回想1951年，那时我刚对GEICO燃起热情。该公司每份保单的平均损失成本每年大约30美元。想象一下，如果我当时预测到2015年每份保单的损失成本会增加到约1000美元，你会作何反应？你可能会问：这种飙升的损失难道不是灾难性的吗？嗯，并非如此。

多年来，通货膨胀导致车祸中车辆和人员维修成本大幅上升。但这些增加的成本迅速被保费上涨所抵消。所以，矛盾的是，损失成本的上升反而让保险公司更有价值。如果成本保持不变，伯克希尔现在拥有的汽车保险公司年保费收入将是6亿美元，而不是230亿美元。

到目前为止，气候变化并未导致飓风或其他承保范围内的与天气相关的灾害变得更频繁或更昂贵。因此，美国超级巨灾保险费率近年来持续下降，这也是我们退出该业务的原因。如果超级巨灾变得成本更高、更频繁，对伯克希尔保险业务可能——尽管远非确定——产生的影响是使其规模更大、利润更高。

作为公民，你完全有理由因气候变化而夜不能寐。作为低洼地区的房主，你或许会考虑搬家。但当你仅仅作为一家大型保险公司的股东来思考时，气候变化不应成为你担忧清单上的项目。

年会

查理和我终于决定进入21世纪。我们今年的年会将全程向全球网络直播。观看会议直播，请于美国中部夏令时4月30日星期六上午9点（北京时间4月30日晚上10点）访问 https://finance.yahoo.com/brklivestream 。雅虎直播将在9点开始半小时的经理、董事和股东访谈。然后9点半，查理和我将开始回答问题。

这一新安排有两个目的。首先，它可能会使年会出席人数趋于平稳或略有下降。去年超过4万名参会者的纪录让我们接待能力吃紧。CenturyLink Center主会场迅速爆满，我们不得不启用备用房间，连相邻的奥马哈希尔顿酒店的两个大会议室也被挤满。所有主要酒店都一房难求，尽管Airbnb也增加了房源。对于那些预算有限的参会者来说，Airbnb尤其有帮助。

我们启动直播的第二个原因更重要。查理92岁，我85岁。如果我们和你是小生意的合伙人，并被委以经营之责，你总得偶尔来看看我们是否已神志不清。相比之下，股东并不需要特意来奥马哈观察我们的状态。（在评估时请友善些：要考虑到即便在我们最佳状态时，看起来也不那么令人印象深刻。）

观众还可以观察我们的延年益寿饮食。会议期间，查理和我每人摄入的可口可乐、See's软糖和See's花生脆片，足以满足一位NFL前锋一周的热量需求。很久以前我们发现了一个基本真理：当你真的饿了——而且想继续保持饥饿状态时——没有什么比吃胡萝卜和西兰花更好的了。
计划参会的股东请在早上7点开门时来到CenturyLink Center（世纪互联中心），开始购物。Carrie Sova将再次负责庆典活动。她上个月底生了二胎，但这并未放慢她的脚步。Carrie沉着冷静、足智多谋，善于激发同事的最佳表现。她得到了全国各地数百名伯克希尔员工以及我们整个总部团队的协助，大家齐心协力，让股东们度过一个既有趣味又有收获的周末。

去年，我们延长了世纪互联的购物时间。销售额飙升——所以我们自然要沿用新的时间表。4月29日周五，您可在中午至下午5点购物；周六，展馆和商店将于早上7点至下午4:30开放。

周六早上，我们将举办第五届国际投报纸挑战赛。目标仍是克莱顿之家（Clayton Home）的门廊，距离投掷线正好35英尺。我十几岁的时候——在我短暂从事过的一份正经工作中——投递过大约50万份报纸。所以我自认为相当擅长这项游戏。来挑战我吧！羞辱我吧！让我跌下神坛！报纸将有36到42页，你必须自己折叠（不允许用橡皮筋）。

比赛早上7:15开始，届时选手进行预投。八次被认为最精准的投掷——四名由12岁及以下选手完成，四名由年长组完成——将在7:45与我竞争。年轻挑战者每人将获得一份奖品。但年长组必须击败我才能带走任何东西。

另外，一定要看看克莱顿之家本身。它的售价是78,900美元，完全安装在您提供的土地上。过去几年，我们在会议当天卖出了很多套。Kevin Clayton（凯文·克莱顿）将带着他的订单簿亲临现场。

早上8:30，将放映一部新的伯克希尔电影。一小时后，我们将开始问答环节，一直持续到下午3:30（中间会在世纪互联摊位安排午餐休息）。短暂休息后，查理和我在下午3:45召开年度会议。这个商务会议通常只持续半小时左右，那些想赶最后一刻购物的人完全可以跳过。

您的购物场地是与会议厅相连的194,300平方英尺的大厅，那里将出售数十家伯克希尔子公司的产品。向众多担任展位负责人的伯克希尔经理们打个招呼吧。一定要看看那条精彩的BNSF铁路模型，它向我们所有的子公司致敬。您的孩子（还有您！）一定会对它着迷。

今年，我们将在大厅内新增一个非常特别的展品：世界上最大的飞机引擎的全尺寸模型，精密铸件公司（Precision Castparts）为其制造了许多关键部件。真实的引擎重约20,000磅，直径10英尺，长度22英尺。展会上这个半剖模型将让您清楚地看到PCC的许多部件，正是它们为您的飞行提供动力。

Brooks（布鲁克斯），我们的跑鞋公司，将再次在大会上提供一款特别纪念鞋。您购买一双后，可以在周日参加我们的第四届“伯克希尔5公里”晨跑时穿着，比赛早上8点从世纪互联出发。参与详情将随会议证件一同寄给您的《访客指南》中。参赛者将发现自己与许多伯克希尔的经理、董事和同事并肩跑步。（不过查理和我要睡懒觉；软糖和花生脆饼太缠人了。）5公里跑参与人数每年都在增长。帮我们破个纪录吧。
在购物区的盖可保险展位，将有来自全国各地的多位公司顶级顾问为您服务。欢迎前来询价。在大多数情况下，盖可能为您提供股东折扣（通常为 $8\%$）。我们运营的51个司法管辖区中有44个允许此项优惠。（补充一点：如果您已符合其他折扣条件，例如某些团体享有的折扣，则此项优惠不可叠加。）请携带您现有保险的详细信息，来比比我们的价格。我们能为许多人省下真金白银。省下的钱可以拿来买我们的其他产品。

一定要去逛一逛“书虫”摊位。那里将展出约35种图书和DVD，其中包括几本新书。Andy Kilpatrick 将介绍他全面覆盖伯克希尔的最新版著作（并且很乐意亲笔签名）。这本书厚达1,304页，重9.8磅。（我对此书的评语是：“严重缩水”。）也请看看 Peter Bevelin 的新书。Peter 长期是伯克希尔的敏锐观察者。

我们还会推出伯克希尔50周年纪念册的新版，比原版多了20页。去年股东大会卖出了12,000本。自那以后，Carrie 和我又发现了一些我们觉得非常有趣的新材料，例如 Grover Cleveland 写给他的朋友、当时《布法罗新闻报》出版商 Edward Butler 的几封私人信件。原版内容没有任何改动或删除，价格仍是20美元。查理和我会共同签售100本，这些书将随机混在会场出售的5,000本之中。

我的朋友 Phil Beuth 写了《在水上跛行》（Limping on Water），这本自传记录了他本人在资本城通信（Capital Cities Communications）的生涯，并向你透露了很多关于其领导者 Tom Murphy 和 Dan Burke 的故事。这两位是查理和我见过的最优秀的管理搭档——无论从成就还是方式来看。你一生能成为什么样的人，很大程度上取决于你选择钦佩和模仿谁。从 Tom Murphy 开始，你就不需要第二个榜样了。

最后，Jeremy Miller 写了《巴菲特的投资法则》（Warren Buffett's Ground Rules），这本书将在年度股东大会首次亮相。Miller 先生在研究和剖析巴菲特合伙有限公司（Buffett Partnership Ltd.）的运作，以及解释伯克希尔文化如何从BPL起源演变而来方面，做得极为出色。如果你对投资理论与实践着迷，你会喜欢这本书。

随附在本报告中的股东委托材料里有一份附件，说明了如何获取参加股东大会及其他活动所需的凭证。航空公司有时会在伯克希尔周末大幅提价。如果你从远方来，不妨比较一下飞往堪萨斯城与奥马哈的机票成本。两城之间车程约2.5小时，也许堪萨斯城能为你省下一大笔钱，尤其是如果你原本打算在奥马哈租车的话。一对夫妇可能因此省下1000美元甚至更多。把这笔钱花在我们这儿吧。

在内布拉斯加家具城——位于 Dodge 街与 Pacific 街之间的第72街上，占地77英亩——我们将再次推出“伯克希尔周末”折扣价。去年在股东大会所在的那一周，该店创下了44,239,493美元的历史最高营业额。如果你把这个数字告诉任何零售商，他绝对难以置信。（NFM奥马哈店——除我们新开的达拉斯店外，全美单店销售额最高的家居用品店——平均每周营业额约为900万美元。）
要在NFM享受伯克希尔折扣，您必须在4月26日（星期二）至5月2日（星期一）期间购物（含首尾两天），并出示参会凭证。这一时段的特价活动甚至适用于几家知名制造商的产品——它们通常有铁打不动的禁止打折政策，但为了配合我们的股东周末，破例为您提供了优惠。我们感谢它们的配合。"伯克希尔周末"期间，NFM营业时间为：周一至周五上午10点至晚上9点，周六上午10点至晚上9:30，周日上午10点至晚上8点。周六下午5:30至8点，NFM将举办野餐会，欢迎各位参加。

在博希姆珠宝店，我们将再次举办两场仅限股东参加的活动。第一场是4月29日（星期五）下午6点至9点的鸡尾酒招待会。第二场重头戏是5月1日（星期日）上午9点至下午4点的主庆典。星期六我们将营业至下午6点。去年从周五到周日的三天里，门店营业期间平均每15秒就开出一张销售单。

整个周末博希姆将人头攒动。因此，为了方便您，股东优惠价将从4月25日（星期一）持续到5月7日（星期六）。在此期间，请出示参会凭证或持股证明（券商对账单）以表明股东身份。

周日，在博希姆门外的商场里，来自达拉斯的杰出魔术师Norman Beck将为观众带来惊奇表演。楼上则有世界顶级桥牌大师Bob Hamman和Sharon Osberg，周日下午他们可与股东切磋牌技。我会加入他们，希望Ajit和Charlie也能到场。

我的朋友Ariel Hsing周日也会在商场里，接受乒乓球挑战。我认识Ariel时她才九岁，当时我就一分都赢不了她。如今她是普林斯顿大学三年级学生，曾代表美国参加2012年奥运会。如果你不怕丢脸，下午1点起可以跟她过过招。比尔·盖茨和我会先上阵，试着消耗她的体力。

高乐餐厅（Gorat's）将在5月1日（星期日）再次专门为伯克希尔股东开放，营业时间为下午1点至晚上10点。预订请于4月1日拨打402-551-3733（请勿提前）。至于我另一家喜欢的餐厅Piccolo's，遗憾地告诉大家，它已经关门了。

今年股东大会的问答环节仍将由三位财经记者主持，他们将从股东提交的邮件中选取问题向查理和我提问。这三位记者及其邮箱地址是：Carol Loomis（她同时代最杰出的商业记者之一，邮箱：loomisbrk@gmail.com）；CNBC的Becky Quick（邮箱：BerkshireQuestions@cnbc.com）；《纽约时报》的Andrew Ross Sorkin（邮箱：arsorkin@nytimes.com）。

每位记者将从提交的问题中选出各自认为最有趣、最重要的六个问题。记者们告诉我，如果您的问题简洁、避免最后一刻才提交、与伯克希尔相关，且每封邮件不超过两个问题，被选中的机会最大。（在邮件中，如果您希望在被提问时提及您的名字，请告知记者。）

另外还有三位跟踪伯克希尔的分析师将带来一组问题。今年的保险业专家是野村证券的Cliff Gallant。涉及非保险业务的问题将由Ruane, Cunniff & Goldfarb的Jonathan Brandt和晨星（Morningstar）的Gregg Warren提出。我们希望分析师和记者提出的问题能够增进各位所有者对自己投资的理解和认知。
我和Charlie都对将要到来的问题毫无头绪。有些问题肯定会很棘手，而这正是我们喜欢的。不允许提复合型问题；我们希望尽可能让更多的提问者有机会提问。

总共，我们预计至少会有54个问题，这样每位分析师和记者可以提6个，听众可以提18个。（去年我们总共64个。）听众的提问者将通过11轮抽签选出，抽签将在年会当天上午8:15进行。可以说，安装在主会场和主要转播厅的11个话筒各负责一轮抽签。

在我谈及股东获取知识的话题时，请允许我提醒您，Charlie和我认为，所有股东都应该同时获取Berkshire（伯克希尔）发布的新信息，并且如果可能的话，在任何交易发生之前，应该有充足的时间消化和分析这些信息。这就是为什么我们试图在周五晚些时候或周六早些时候发布财务数据，以及为什么我们的年会总是在周六举行。我们不遵循与大机构投资者或分析师一对一交谈的常见做法，而是像对待所有其他股东一样对待他们。对我们来说，没有谁比那些将大部分积蓄托付给我们的中小股东更重要。

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有充分的理由，我经常称赞我们运营经理的成就。他们确实是全明星，经营自己的业务如同这是他们家庭拥有的唯一资产。我也认为，我们的经理人拥有在大型上市公司中能找到的最股东导向的心态。我们大多数经理人没有经济上的工作需求。打出商业“本垒打”的喜悦对他们而言与薪水同样重要。

然而，同样重要的是与我一同在公司办公室工作的24位男士和女士。这个团队高效地处理着大量的SEC和其他监管要求，提交一份30,400页的联邦所得税申报表——这比上一年增加了6,000页！——监督提交3,530份州税申报表，回应无数的股东和媒体询问，准备年度报告，筹备美国最大的年会，协调董事会活动，核实这封信函的事实——而且清单还在不断加长。

他们愉快且以令人难以置信的效率处理所有这些业务任务，让我的生活轻松愉快。他们的努力超越了严格与伯克希尔相关的活动：例如，去年他们处理了40所大学（从200名申请者中选出）派学生来奥马哈与我进行问答日活动。他们还处理我收到的各种请求，安排我的旅行，甚至为我买汉堡和薯条（当然要蘸亨氏番茄酱）当午餐。没有哪位CEO比我更好；我真的觉得每天都像是跳着踢踏舞去上班。事实上，我的工作每年都变得更有趣。

2015年，伯克希尔的收入增加了160亿美元。然而，请仔细看对面页的两张照片。上面一张是去年年报中的，显示了伯克希尔整个总部员工在圣诞午餐时的合影。下面那张是今年圣诞节的合影，同样25人，位置完全相同。2015年，没有人加入，也没有人离开。而且你明年很可能会看到同样25人的照片。

你能想象另一家非常大的公司——我们在全球雇佣了361,270名员工——在总部拥有如此稳定的人员吗？在伯克希尔，我们聘用了一些优秀的人——他们一直留在我们身边。此外，除非确实需要，否则不会聘用任何人。这就是为什么你从未在伯克希尔听说过“重组”费用。

4月30日，来奥马哈——资本主义的摇篮——见见我的团队。他们是最棒的。

2016年2月27日
沃伦·E·巴菲特

董事会主席

自然图片

一群身穿正装的人员在室内合影，无可见文字或符号

前排 – Becki Amick, Sharon Heck, Melissa Hawk, Jalayna Busse, Warren Buffett, Angie Wells, Alisa Krueger, Deb Ray, Carrie Sova, Ellen Schmidt
后排 – Tracy Britt Cool, Jennifer Tselentis, Ted Weschler, Joanne Manhart, Bob Reeson, Todd Combs, Dan Jaksich, Debbie Bosanek, Mark Sisley, Marc Hamburg, Kerby Ham, Mark Millard, Allyson Ballard, Stacy Gottschalk, Tiffany Vokt

自然图片

一群身穿正装的人员在室内合影，无可见文字或符号