Warren Buffett's Letters
To Berkshire Shareholders 1986
巴菲特致股東函
1986年版
BERKSHIRE HATHAWAY INC.
Berkshire海瑟崴股份有限公司
To the Shareholders of Berkshire Hathaway Inc.:
致Berkshire公司全體股東:
Our gain in net worth during 1986 was $492.5 million, or 26.1%.
Over the last 22 years (that is, since present management took over), our
per-share book value has grown from $19.46 to $2,073.06, or 23.3%
compounded annually. Both the numerator and denominator are
important in the per-share book value calculation: during the 22-year
period our corporate net worth has increased 10,600% while shares
outstanding have increased less than 1%.
本公司去年(1986年)的帳面淨值增加了26.1%，大約是4億9,250萬美元，在過去
的22個年頭(也就是現有經營階層接掌本公司以來)，每股帳面淨值由19.46美元，
成長到2,073美元，年複合成長率為23.3%，在計算每股淨值時，分子與分母都同樣
重要，過去22年公司整體的淨值雖然增加106倍之多，但流通在外的股份卻增加不
到一個百分點。
In past reports I have noted that book value at most companies differs
widely from intrinsic business value - the number that really counts for
owners. In our own case, however, book value has served for more than a
decade as a reasonable if somewhat conservative proxy for business value.
That is, our business value has moderately exceeded our book value, with
the ratio between the two remaining fairly steady.
在過去的年報中我已不只一次地提醒大家，多數公司的帳面價值與其實際的內在價值
其實存在有極大的差異(後者才是股東真正該關心的)，不過以我們公司本身的狀況而
言，過去十多年來帳面價值在某種程度(從保守的角度)，卻頗能代表本公司實際的價
值。意思是說Berkshire企業的價值略微超越其帳面價值，兩者之間的比例一直維持
著穩定的差距。
The good news is that in 1986 our percentage gain in business value
probably exceeded the book value gain. I say "probably" because business
value is a soft number: in our own case, two equally well-informed
observers might make judgments more than 10% apart.
而現在跟各位報告的好消息是，1986年本公司企業價值增加的幅度應該是超過了帳
面價值增加的幅度，我說"應該是"是因為企業價值的判斷較為彈性，以我們本身的例
子來說，兩個同樣相當了解本公司的人所衡量出的價值，可以會差到10%以上。
A large measure of our improvement in business value relative to book
value reflects the outstanding performance of key managers at our major
operating businesses. These managers - the Blumkins, Mike Goldberg, the
Heldmans, Chuck Huggins, Stan Lipsey, and Ralph Schey - have over the
years improved the earnings of their businesses dramatically while, except
in the case of insurance, utilizing little additional capital. This
accomplishment builds economic value, or "Goodwill," that does not show
up in the net worth figure on our balance sheet, nor in our per-share book
value. In 1986 this unrecorded gain was substantial.
本公司去年企業價值大幅成長的原因，主要要歸功於旗下主要企業經理人傑出的表
現，包含the Blumkins, Mike Goldberg, the Heldmans, Chuck Huggins, Stan
Lipsey與 Ralph Schey等人，這些企業，除了保險業外，這幾年來在沒有動用額外
資金的前提之下，還能穩定地提高公司的獲利，這種成就塑造出我們所謂典型的經濟
價值或商譽，這種價值雖然無法在公司的資產負債表上反映出來，但我必須向各位報
告，在1986年這個數字相當可觀。
So much for the good news. The bad news is that my performance
did not match that of our managers. While they were doing a superb job in
running our businesses, I was unable to skillfully deploy much of the capital
they generated.
講完了好消息，接下來的壞消息是，本人的表現並不足以與這些優秀的經理人匹配，
當他們在各自的崗位上努力經營事業，可是我卻沒能好好有效地運用他們所產生的資
金。
Charlie Munger, our Vice Chairman, and I really have only two jobs.
One is to attract and keep outstanding managers to run our various
operations. This hasn’t been all that difficult. Usually the managers came
with the companies we bought, having demonstrated their talents
throughout careers that spanned a wide variety of business circumstances.
They were managerial stars long before they knew us, and our main
contribution has been to not get in their way. This approach seems
elementary: if my job were to manage a golf team - and if Jack Nicklaus or
Arnold Palmer were willing to play for me - neither would get a lot of
directives from me about how to swing.
查理跟我平時主要只有兩項工作，一個是吸引並維繫優秀的經理人來經營我們的各種
事業，這項工作並不太難，通常在我們買下一家企業時，其原來的經理人便早已在各
自產業展現他們的長才，我們只要確定沒有妨礙到他們即可，這點非常重要，如果我
的工作是組織一支職業高爾夫球隊，若尼克勞斯或阿諾帕瑪願意替我效力，我實在不
必太費心去教他們如何揮桿。
Some of our key managers are independently wealthy (we hope they all
become so), but that poses no threat to their continued interest: they work
because they love what they do and relish the thrill of outstanding
performance. They unfailingly think like owners (the highest compliment
we can pay a manager) and find all aspects of their business absorbing.
其實我們一些經理人自己本來就已經相當有錢，(當然我們希望所有的經理人都如此)
但這一點都不影響他們繼續為公司效力，他們之所以工作是因為樂在其中，無時無刻
不散發出幹勁，毫無疑問地他們皆站在老闆的角度看事情，這是我們對這些經理人最
高的恭維，而且你會為他們經營事業各方面成就所著迷。
(Our prototype for occupational fervor is the Catholic tailor who used
his small savings of many years to finance a pilgrimage to the Vatican.
When he returned, his parish held a special meeting to get his first-hand
account of the Pope. "Tell us," said the eager faithful, "just what sort of
fellow is he?" Our hero wasted no words: "He’s a forty-four, medium.")
這種職業病的典型，就像是一位天主教的裁縫省吃儉用了好幾年，好不容易存了一筆
錢到梵蒂岡去朝聖，當他回來後，教友們特地集會爭相想要了解他對教宗的第一手描
述，「趕快告訴我們，教宗到底是個怎麼樣的人」，只見這位裁逢師，淡淡地說︰「四
十四腰，中等身材。」
Charlie and I know that the right players will make almost any team
manager look good. We subscribe to the philosophy of Ogilvy & Mather’s
founding genius, David Ogilvy: "If each of us hires people who are smaller
than we are, we shall become a company of dwarfs. But, if each of us hires
people who are bigger than we are, we shall become a company of giants."
查理跟我都知道，只要找到好球員，任何球隊經理人都可以做的不錯，就像是奧美廣
告創辦人David Ogilvy曾說︰「若我們僱用比我們矮小的人，那麼我們會變成一群
株孺，相反地，若我們能找到一群比我們更高大的人，我們就是一群巨人。」
A by-product of our managerial style is the ability it gives us to easily
expand Berkshire’s activities. We’ve read management treatises that
specify exactly how many people should report to any one executive, but
they make little sense to us. When you have able managers of high
character running businesses about which they are passionate, you can
have a dozen or more reporting to you and still have time for an afternoon
nap. Conversely, if you have even one person reporting to you who is
deceitful, inept or uninterested, you will find yourself with more than you
can handle. Charlie and I could work with double the number of managers
we now have, so long as they had the rare qualities of the present ones.
此外這種企業文化也有另外一種好處，它使得查理跟我可以放手去擴展Berkshire的
事業版圖，我們看過許多企業規定一個主管只能管轄一定人數的人員，但這規定對我
們來說一點意義都沒有，當你手下有一群正直又能幹的人才，在幫你經營一項他們深
具感情的事業時，你大可以同時管理一打以上這樣的人，而且還行有餘力打個盹，相
反地，若他們存心要欺騙你、能力不夠或是沒有熱情時，只要一個就夠你操心的了，
只要找對人，查理與我甚至可以同時管理比現在多一倍的經理人都沒有問題。
We intend to continue our practice of working only with people whom
we like and admire. This policy not only maximizes our chances for good
results, it also ensures us an extraordinarily good time. On the other hand,
working with people who cause your stomach to churn seems much like
marrying for money - probably a bad idea under any circumstances, but
absolute madness if you are already rich.
我們將會繼續維持這種只與我們喜愛且崇敬的夥伴合作的原則，這種原則不但可以確
保經營的績效極大化，也可以讓我們享受愉快的時光。否則要是僅為了賺錢成天與一
些會令你反胃的傢伙為伍，這感覺就好像是當你已很有錢時，還為了錢跟不喜歡的人
結婚一樣。
The second job Charlie and I must handle is the allocation of capital,
which at Berkshire is a considerably more important challenge than at most
companies. Three factors make that so: we earn more money than average;
we retain all that we earn; and, we are fortunate to have operations that, for
the most part, require little incremental capital to remain competitive and
to grow. Obviously, the future results of a business earning 23% annually
and retaining it all are far more affected by today’s capital allocations than
are the results of a business earning 10% and distributing half of that to
shareholders. If our retained earnings - and those of our major investees,
GEICO and Capital Cities/ABC, Inc. - are employed in an unproductive
manner, the economics of Berkshire will deteriorate very quickly. In a
company adding only, say, 5% to net worth annually, capital-allocation
decisions, though still important, will change the company’s economics far
more slowly.
查理跟我必須處理的第二項工作是資金的分配，這在Berkshire尤其重要，其主要原
因有三，一是因為我們賺的錢比別人多，二是我們通常將所賺的錢保留下來，最後也
同時也是最重要的是因為我們旗下的企業可以不需要太多的資金便能維持競爭力以及
成長性。的確一家每年能賺23%且全數保留盈餘的公司，比起每年只賺10%，且只保
留半數盈餘的公司來說，前者資金分配的任務要繁重的多，所以將來若是我們運用盈
餘的方式不佳，或是旗下主要被投資公司，諸如GEICO、美國廣播公司等表現不好，
則Berkshire經營情況惡化的程度也會非常地快，假設公司淨值以後每年只有5%的成
長，則公司資金分配的工作雖然還是很重要，但體質改善的速度也會變慢許多。
Capital allocation at Berkshire was tough work in 1986. We did make
one business acquisition - The Fechheimer Bros. Company, which we will
discuss in a later section. Fechheimer is a company with excellent
economics, run by exactly the kind of people with whom we enjoy being
associated. But it is relatively small, utilizing only about 2% of Berkshire’s
net worth.
事實上在1986年Berkshire資金分配的工作並不好幹，我們確實是完成了一項購併
案-那就是買下費區-海默兄弟公司，後面我們還會有詳細的描述，這家公司極具競爭
力，而且是由那種我們喜歡打交道的人所經營，惟一的缺點就是小了點，大概只動用
Berkshire淨值不到百分之二的資金。
Meanwhile, we had no new ideas in the marketable equities field, an
area in which once, only a few years ago, we could readily employ large
sums in outstanding businesses at very reasonable prices. So our main
capital allocation moves in 1986 were to pay off debt and stockpile funds.
Neither is a fate worse than death, but they do not inspire us to do
handsprings either. If Charlie and I were to draw blanks for a few years in
our capital-allocation endeavors, Berkshire’s rate of growth would slow
significantly.
在此同時，我們從市場直接買進股票這方面也沒有太大的進展，相較幾年前我們可以
利用大筆資金以合理的價格買進許多不錯的股票，所以最後我們只好將資金用來償還
負債並囤積銀彈，雖然這比死掉還好一點，但卻沒有做到繁衍下一代的任務，若是查
理跟我在往後的幾年持續在資金分配這方面繳白券的話，Berkshire淨值的成長勢必
將會變緩許多。
We will continue to look for operating businesses that meet our tests
and, with luck, will acquire such a business every couple of years. But an
acquisition will have to be large if it is to help our performance materially.
Under current stock market conditions, we have little hope of finding
equities to buy for our insurance companies. Markets will change
significantly - you can be sure of that and some day we will again get our
turn at bat. However, we haven’t the faintest idea when that might
happen.
我們會持續在市場上尋找符合我們標準的企業，我想要是運氣好可能每幾年就能夠找
到一家，但若想要對公司淨值有明顯助益，則其規模就必須夠大，只是以目前的股票
市場狀況，我們實在很難為我們的保險公司找到合適的投資標的，當然市場終究會轉
變，總有一天會再度輪到我們站上打擊位置，只不過現在我們不清楚何時能夠換我們
上場。
It can’t be said too often (although I’m sure you feel I’ve tried) that,
even under favorable conditions, our returns are certain to drop
substantially because of our enlarged size. We have told you that we hope
to average a return of 15% on equity and we maintain that hope, despite
some negative tax law changes described in a later section of this report.
If we are to achieve this rate of return, our net worth must increase $7.2
billion in the next ten years. A gain of that magnitude will be possible only
if, before too long, we come up with a few very big (and good) ideas.
Charlie and I can’t promise results, but we do promise you that we will keep
our efforts focused on our goals.
雖然不常但我必須說(雖然各位或許覺得我常常在提)，即使在最理想的狀態下，隨著
規模的成長，Berkshire整體的平均報酬率將會大幅下滑，我跟各位報告過，我們希
望Berkshire的年平均報酬能維持在15%左右，雖然最近稅法上有些改變對我們並不
利，後面我還會再提，算起來如果未來十年內，淨值必須要增加72億美元，我們才
能維持這樣的報酬率，要達到這樣的目標，除非我們真的找到一項大型的投資案，當
然必須要非常成功才行，查理跟我無法保證一定做得到，但我們絕對可以向各位保證
的是，我們一定會朝這個目標盡力而為。
Sources of Reported Earnings
盈餘報告
The table on the next page shows the major sources of Berkshire’s
reported earnings. This table differs in several ways from the one
presented last year. We have added four new lines of business because of
the Scott Fetzer and Fechheimer acquisitions. In the case of Scott Fetzer,
the two major units acquired were World Book and Kirby, and each is
presented separately. Fourteen other businesses of Scott Fetzer are
aggregated in Scott Fetzer - Diversified Manufacturing. SF Financial Group,
a credit company holding both World Book and Kirby receivables, is
included in "Other." This year, because Berkshire is so much larger, we also
have eliminated separate reporting for several of our smaller businesses.
下表係Berkshire帳列盈餘的主要來源，今年的表與前幾年有幾點不太一樣的地方，
首先由於新購事業史考特-飛茲、費區-海默的加入，我們營業項目增加了史考特-飛
茲(包含該公司14項規模較小的業務)、寇比吸塵器、世界百科全書、費區-海默等四
欄，同時也由於Berkshire整體規模擴大了許多，我們也將幾個較小的部門合併列示。
In the table, amortization of Goodwill is not charged against the
specific businesses but, for reasons outlined in the Appendix to my letter in
the 1983 Annual Report, is aggregated as a separate item. (A Compendium
of earlier letters, including the Goodwill discussion, is available upon
request.) Both the Scott Fetzer and Fechheimer acquisitions created
accounting Goodwill, which is why the amortization charge for Goodwill
increased in 1986.
另外如同過去一樣，我們將個別企業購併的商譽攤銷單獨挑出，(原因請參閱1983年
的附錄)彙總後擺在最後一欄，由於史考特-飛茲、費區-海默兩件購併案使得1986
年的商譽攤銷較以往增加許多。
Additionally, the Scott Fetzer acquisition required other major
purchase-price accounting adjustments, as prescribed by generally
accepted accounting principles (GAAP). The GAAP figures, of course, are
the ones used in our consolidated financial statements. But, in our view,
the GAAP figures are not necessarily the most useful ones for investors or
managers. Therefore, the figures shown for specific operating units are
earnings before purchase-price adjustments are taken into account. In
effect, these are the earnings that would have been reported by the
businesses if we had not purchased them.
另外史考特-飛茲的購併案依一般公認會計原則須採購買法處理，所以在本表也配合
稍作調整，在合併財務報表上所顯示的數字係依照一般公認會計原則所編製，但就我
們本身的觀點，這個數字對於經理人與投資人來說，並不見得有意義，因此下表所顯
示的數字已扣除這些調整過的數字，事實上這才是，假設今天我們沒有買下他們時，
這家公司原本的盈餘狀況。
A discussion of our reasons for preferring this form of presentation is
in the Appendix to this letter. This Appendix will never substitute for a
steamy novel and definitely is not required reading. However, I know that
among our 6,000 shareholders there are those who are thrilled by my
essays on accounting - and I hope that both of you enjoy the Appendix.
詳細解釋請參閱附錄，不過若嫌內容不具吸引力，也可以跳過不看，當然我也知道在
所有6,000位股東當中，有許多對於我個人在會計方面的觀點感到折服，希望你們都
能好好地欣賞。
In the Business Segment Data on pages 41-43 and in the
Management’s Discussion section on pages 45-49, you will find much
additional information about our businesses. I urge you to read those
sections, as well as Charlie Munger’s letter to Wesco shareholders,
describing the various businesses of that subsidiary, which starts on page
50.
同時我也強力推薦各位看看查理每年寫給Wesco股東的年報，裡頭有該公司旗下事業
的詳細介紹。
As you can see, operating earnings substantially improved during
1986. Some of the improvement came from the insurance operation,
whose results I will discuss in a later section. Fechheimer also will be
discussed separately. Our other major businesses performed as follows:
如你所見營業淨利在1986年大幅改善，一方面是由於保險事業(這部份連同費區-海
默公司會在稍候詳細說明)，一方面則是其他事業群的優異表現：
o Operating results at The Buffalo News continue to reflect a truly
superb managerial job by Stan Lipsey. For the third year in a row,
man-hours worked fell significantly and other costs were closely controlled.
Consequently, our operating margins improved materially in 1986, even
though our advertising rate increases were well below those of most major
newspapers.
o水牛城報紙在Stan Lipsey的帶領下持續表現優異，連續第三年每人工作時數皆大
幅下絳，其他成本也控制得宜，即使該報的廣告版面增加率遠低於其他主要競爭對手，
但營業毛利仍然大幅增加。
Our cost-control efforts have in no way reduced our commitment to
news. We continue to deliver a 50% "news hole" (the portion of the total
space in the paper devoted to news), a higher percentage, we believe, than
exists at any dominant newspaper in this country of our size or larger.
控制成本不代表我們在新聞品質上將有所退讓，我們的新聞量(新聞版面佔整體版面的
比例)持續維持在50%以上，這是目前大型報紙中比例最高的。
The average news hole at papers comparable to the News is about 40%.
The difference between 40% and 50% is more important than it might first
seem: a paper with 30 pages of ads and a 40% news hole delivers 20 pages
of news a day, whereas our paper matches 30 pages of ads with 30 pages
of news. Therefore, given ad pages equal in number, we end up delivering
our readers no less than 50% more news.
反觀一般同業的水準約只有40%，各位可不要小看這10%的差距，同樣三十頁的廣
告，40%約有二十頁新聞，50%則代表會有三十頁的新聞，一比一的新聞與廣告量，
給予讀者豐富的新聞內容是我們堅持的原則。
We believe this heavy commitment to news is one of the reasons The
Buffalo News has the highest weekday penetration rate (the percentage of
households in the paper’s primary marketing area purchasing it each day)
among any of the top 50 papers in the country. Our Sunday penetration,
where we are also number one, is even more impressive. Ten years ago,
the only Sunday paper serving Buffalo (the Courier-Express) had circulation
of 271,000 and a penetration ratio of about 63%. The Courier-Express had
served the area for many decades and its penetration ratio - which was
similar to those existing in many metropolitan markets - was thought to be
a "natural" one, accurately reflecting the local citizenry’s appetite for a
Sunday product.
我們相信這也是為何水牛城報紙能在當地擁有全美前50大報紙平日最高滲透率的重
要原因(訂戶數佔當地家庭戶數的比率)，此外週日版的比率更令人印象深刻，十年前
水牛城當地最主要的週日版報紙-先鋒報發行量為27萬份，滲透率63%，這比率大概
與全美其它大城市相當，這在當時已被視為是很自然的上限。
Our Sunday paper was started in late 1977. It now has a penetration
ratio of 83% and sells about 100,000 copies more each Sunday than did the
Courier-Express ten years ago - even though population in our market area
has declined during the decade. In recent history, no other city that has
long had a local Sunday paper has experienced a penetration gain anywhere
close to Buffalo’s.
然而自從1977年水牛城報紙開始發行週日版以來，雖然該地區人口數不增反減，但
如今其滲透率已達83%，且發行量更比十年前的先鋒報多出10萬份，達到37萬份，
在，近年來還沒有任何一個地區性的週日報有像水牛城滲透率如此成長的。
Despite our exceptional market acceptance, our operating margins
almost certainly have peaked. A major newsprint price increase took effect
at the end of 1986, and our advertising rate increases in 1987 will again be
moderate compared to those of the industry. However, even if margins
should materially shrink, we would not reduce our news-hole ratio.
雖然擁有超高的市場接受度，但也代表營業利潤已達頂峰，雖然去年年底報紙價格調
漲開始生效，同時1987年的廣告比率增加量也比其他新聞同業來的少，但我們仍堅
持過半的新聞量，即便如此會使得我們的利潤下降也在所不惜。
As I write this, it has been exactly ten years since we purchased The
News. The financial rewards it has brought us have far exceeded our
expectations and so, too, have the non-financial rewards. Our respect for
the News - high when we bought it - has grown consistently ever since the
purchase, as has our respect and admiration for Murray Light, the editor
who turns out the product that receives such extraordinary community
acceptance. The efforts of Murray and Stan, which were crucial to the
News during its dark days of financial reversals and litigation, have not in
the least been lessened by prosperity. Charlie and I are grateful to them.
屈指一算，今年已是我們買下水牛城報紙的第十個年頭，它帶給我們的投資報酬遠遠
超過我們的預期，還有精神上的收獲也是如此，我們對於水牛城報紙及其經營者
Murray Light的敬仰從買下它開始後與日俱增，是他讓這份報紙擁有超高的社區認同
度，他們在水牛城報紙面臨困難與訴訟之時所展現的耐力，並未隨著日後公司邁入坦
途就鬆卸，查理與我在此對他們表示由衷的感謝。
o The amazing Blumkins continue to perform business miracles at
Nebraska Furniture Mart. Competitors come and go (mostly go), but Mrs. B.
and her progeny roll on. In 1986 net sales increased 10.2% to $132
million. Ten years ago sales were $44 million and, even then, NFM
appeared to be doing just about all of the business available in the Greater
Omaha Area. Given NFM’s remarkable dominance, Omaha’s slow growth in
population and the modest inflation rates that have applied to the goods
NFM sells, how can this operation continue to rack up such large sales
gains? The only logical explanation is that the marketing territory of NFM’s
one-and-only store continues to widen because of its ever-growing
reputation for rock-bottom everyday prices and the broadest of selections.
In preparation for further gains, NFM is expanding the capacity of its
warehouse, located a few hundred yards from the store, by about
one-third.
o內布拉斯加家俱店NFM的布魯金家族持續創造商業史上的奇蹟，競爭者來來去去(下
場通常很悲慘)，但B太太跟她的家族卻依然屹立不搖，去年該店業績成長10%達到
一億三千萬美金，是十年前的三倍，在當時該店便已稱霸整個奧瑪哈地區，若再考量
本地緩慢的人口成長率與溫和的通貨膨脹率，這種成績更是難能可貴，而惟一可以解
釋的理由就是隨著NFM價廉物美、樣式齊全的聲名遠播，其市場範圍持續擴大，而
為了應付日後的成長，該店已著手擴充倉庫，距離原本店面只有幾百公尺遠。
Mrs. B, Chairman of Nebraska Furniture Mart, continues at age 93 to
outsell and out-hustle any manager I’ve ever seen. She’s at the store
seven days a week, from opening to close. Competing with her represents
a triumph of courage over judgment.
高齡93歲的B太太技壓群雄，展現超高的銷售能力與耐力，一週工作七天，每天從
開店到打烊，想要跟她競爭需要無比的勇氣。
It’s easy to overlook what I consider to be the critical lesson of the Mrs.
B saga: at 93, Omaha based Board Chairmen have yet to reach their peak.
Please file this fact away to consult before you mark your ballot at the 2024
annual meeting of Berkshire.
大家可能很容易就忽略B太太傳奇，不過沒關係93歲的她，還未抵達巔峰，等到2024
年Berkshire股東會召開時，請大家拭目以待。
o At See’s, sales trends improved somewhat from those of recent years.
Total pounds sold rose about 2%. (For you chocaholics who like to fantasize,
one statistic: we sell over 12,000 tons annually.) Same-store sales,
measured in pounds, were virtually unchanged. In the previous six years,
same store poundage fell, and we gained or maintained poundage volume
only by adding stores. But a particularly strong Christmas season in 1986
stemmed the decline. By stabilizing same-store volume and making a
major effort to control costs, See’s was able to maintain its excellent profit
margin in 1986 though it put through only minimal price increases. We
have Chuck Huggins, our long-time manager at See’s, to thank for this
significant achievement.
o比起前幾年來說，喜斯糖果的銷售磅數增加約2%，銷售業績略有成長，(若你是巧
克力的愛好者，告訴你一個驚人的數字，我們一年的銷售量是一萬兩千公噸) ，只是
過去六年單店銷售量持續下滑，使得我們只有靠增加店面來維持銷售量不墜，但今年
這數字大致維持不變，主要是拜聖誕節銷售旺季特別旺所賜，而即便銷售業績遲滯不
前，該公司仍然靠著成本控制維持利潤空間，感謝Chuck Huggins在這方面為我們
所做的努力。
See’s has a one-of-a-kind product "personality" produced by a
combination of its candy’s delicious taste and moderate price, the
company’s total control of the distribution process, and the exceptional
service provided by store employees. Chuck rightfully measures his
success by the satisfaction of our customers, and his attitude permeates
the organization. Few major retailing companies have been able to sustain
such a customer-oriented spirit, and we owe Chuck a great deal for keeping
it alive and well at See’s.
喜斯糖果算是一種獨一無二的個性化商品，甜美的糖果加上公道的價格，且該公司完
全掌握銷售管道並由店員提供貼心的服務，Chuck的成就反應在客戶的滿意度之上，
並進而感染到整個公司，很少有零售商店能夠持續維持客戶導向的精神，這一切都要
歸功於他。
See’s profits should stay at about their present level. We will continue
to increase prices very modestly, merely matching prospective cost
increases.
展望未來喜斯的獲利應該可以維持在現有狀態，我們仍會持續調整價格，以反映增加
的成本。
o World Book is the largest of 17 Scott Fetzer operations that joined
Berkshire at the beginning of 1986. Last year I reported to you
enthusiastically about the businesses of Scott Fetzer and about Ralph Schey,
its manager. A year’s experience has added to my enthusiasm for both.
Ralph is a superb businessman and a straight shooter. He also brings
exceptional versatility and energy to his job: despite the wide array of
businesses that he manages, he is on top of the operations, opportunities
and problems of each. And, like our other managers, Ralph is a real
pleasure to work with. Our good fortune continues.
o世界百科全書是1986年加入我們的史考特-飛茲所屬十七個部門中最大的一個，去
年我很高興地跟各位介紹該公司的經營者與營運狀況，一年後我更加開心地向大家報
告，Ralph真是個優秀的經理人，圓滿地達成目標，雖然要管理各式各樣的產品，並
面對不同的機會問題與挑戰，Ralph卻能夠讓他的工作更加精彩更多元化，而且更重
要的是我們合作愉快，看來我們的好運將持續不斷。
World Book’s unit volume increased for the fourth consecutive year,
with encyclopedia sales up 7% over 1985 and 45% over 1982. Childcraft’s
unit sales also grew significantly.
世界百科全書的銷售量連續四年皆成長，兒童工藝套書也大幅成長。
World Book continues to dominate the U.S. direct-sales encyclopedia
market - and for good reasons. Extraordinarily well-edited and priced at
under 5 cents per page, these books are a bargain for youngster and adult
alike. You may find one editing technique interesting: World Book ranks
over 44,000 words by difficulty. Longer entries in the encyclopedia include
only the most easily comprehended words in the opening sections, with the
difficulty of the material gradually escalating as the exposition proceeds.
As a result, youngsters can easily and profitably read to the point at which
subject matter gets too difficult, instead of immediately having to deal with
a discussion that mixes up words requiring college-level comprehension
with others of fourth-grade level.
世界百科全書稱霸於直銷市場，不但編排精美，且平均每頁不到五毛錢，可謂老少咸
宜，有一數字相當有趣，那就是書中有高達四萬多個困難字，入門部份由簡單的生字
組成，慢慢地加入難度更高的單字，如此使得年輕的讀者能夠循序漸進，最後輕易的
便能運用大學程度以上的單字。
Selling World Book is a calling. Over one-half of our active
salespeople are teachers or former teachers, and another 5% have had
experience as librarians. They correctly think of themselves as educators,
and they do a terrific job. If you don’t have a World Book set in your house,
I recommend one.
推銷百科全書是項神聖的天職，我們超過半數以上的銷售人員是現職或是退休的老
師，有些則是圖書館員，他們將自己視為教育工作者，而且做的有聲有色，如果你家
中還沒有一套世界百科全書，那麼我建議你趕快去買一套放在家裏。
o Kirby likewise recorded its fourth straight year of unit volume gains.
Worldwide, unit sales grew 4% from 1985 and 33% from 1982. While the
Kirby product is more expensive than most cleaners, it performs in a
manner that leaves cheaper units far behind ("in the dust," so to speak).
Many 30- and 40-year-old Kirby cleaners are still in active duty. If you
want the best, you buy a Kirby.
o寇比吸塵器同樣維持連續四年的成長，全球的銷售數量共成長了33%，雖然其產品
價格要比同類型吸塵器貴許多，但它的性能卻將其他品牌遠遠拋在後面，有許多產品
經過了三、四十年還很耐用，想要最好的，就買寇比！
Some companies that historically have had great success in direct
sales have stumbled in recent years. Certainly the era of the working
woman has created new challenges for direct sales organizations. So far,
the record shows that both Kirby and World Book have responded most
successfully.
許多靠直銷銷售產品的公司，近年來紛紛倒閉，主要是由於上班族婦女越來越多所致，
不過到目前為止，寇比吸塵器與世界百科全書的表現算是可圈可點。
The businesses described above, along with the insurance operation
and Fechheimer, constitute our major business units. The brevity of our
descriptions is in no way meant to diminish the importance of these
businesses to us. All have been discussed in past annual reports and,
because of the tendency of Berkshire owners to stay in the fold (about 98%
of the stock at the end of each year is owned by people who were owners at
the start of the year), we want to avoid undue repetition of basic facts. You
can be sure that we will immediately report to you in detail if the underlying
economics or competitive position of any of these businesses should
materially change. In general, the businesses described in this section can
be characterized as having very strong market positions, very high returns
on capital employed, and the best of operating managements.
以上企業再加上保險事業，便構成我們的主要事業領域，簡單地帶過並不意味著它們
對我們不具重要性，一方面是因為許多東西在過去的年報都已報告過，一方面是因為
公司的股東結構非常穩定(每年約有98%的股東會選擇繼續投資本公司)，所以我們不
必花太多時間重複贅述一些事情，當然若是有什麼重大的事件或任何影響公司營運的
情況，我們一定會立即向各位股東報告，總的來說，前面所提的公司都有非常穩固的
經營基礎，投資報酬率也很高，同時也擁有優秀的經營階層。
The Fechheimer Bros. Co.
費區-海默兄弟公司
Every year in Berkshire’s annual report I include a description of the
kind of business that we would like to buy. This "ad" paid off in 1986.
每一年我都會在公司年報上不厭其煩地，提及我們想要買下公司的條件，在今年終於
有了具體的回報。
On January 15th of last year I received a letter from Bob Heldman of
Cincinnati, a shareholder for many years and also Chairman of Fechheimer
Bros. Until I read the letter, however, I did not know of either Bob or
Fechheimer. Bob wrote that he ran a company that met our tests and
suggested that we get together, which we did in Omaha after their results
for 1985 were compiled.
去年的一月五日我收到一位資深股東Bob的來信，他是費區-海默公司的董事長，在
此之前我並不認識Bob或費區-海默公司，他在信中提到所經營的公司應該符合我們
的條件，並提議大家碰個面，於是等到該公司年度報告出爐後我們相約在奧馬哈。
He filled me in on a little history: Fechheimer, a uniform
manufacturing and distribution business, began operations in 1842.
Warren Heldman, Bob’s father, became involved in the business in 1941
and his sons, Bob and George (now President), along with their sons,
subsequently joined the company. Under the Heldmans’ management, the
business was highly successful.
他簡單介紹一下公司的歷史，這是一家專門製造與銷售制服的老牌公司，成立於1842
年，Bob的父親-Warren於1941年接手，跟著Bob與現在擔任總裁的弟弟George
也加入該公司，在該家族的帶領下，公司的業績蒸蒸日上。
In 1981 Fechheimer was sold to a group of venture capitalists in a
leveraged buy out (an LBO), with management retaining an equity interest.
The new company, as is the case with all LBOS, started with an
exceptionally high debt/equity ratio. After the buy out, however,
operations continued to be very successful. So by the start of last year
debt had been paid down substantially and the value of the equity had
increased dramatically. For a variety of reasons, the venture capitalists
wished to sell and Bob, having dutifully read Berkshire’s annual reports,
thought of us.
1981年該公司被一家專門從事融資購併(LBO)的投資集團買下，但現有經營階層仍保
有部份股權，只是這類型的公司在被購併後，通常一開始都須承擔極高的負債比率，
所幸由於公司營運穩健，等負債逐漸被清償完畢後，公司的價值便立即顯現出來，基
於某些原因，當初投資的LBO集團想要把股權賣掉，這時熟讀Berkshire年報的Bob
立刻就想到我們。
Fechheimer is exactly the sort of business we like to buy. Its
economic record is superb; its managers are talented, high-grade, and love
what they do; and the Heldman family wanted to continue its financial
interest in partnership with us. Therefore, we quickly purchased about
84% of the stock for a price that was based upon a $55 million valuation for
the entire business.
事實上費區-海默正是我們想要買的公司類型，它有悠久的歷史，有才能的管理人員，
品格高尚，樂在工作，且願意與我們一起分享公司經營所帶來的利益，所以我們很快
地就決定以4,600多萬美元買下該公司84%的股權。
The circumstances of this acquisition were similar to those prevailing
in our purchase of Nebraska Furniture Mart: most of the shares were held
by people who wished to employ funds elsewhere; family members who
enjoyed running their business wanted to continue both as owners and
managers; several generations of the family were active in the business,
providing management for as far as the eye can see; and the managing
family wanted a purchaser who would not re-sell, regardless of price, and
who would let the business be run in the future as it had been in the past.
Both Fechheimer and NFM were right for us, and we were right for them.
這與我們當初買下內布拉斯加傢具NFM的情況很類似，持有股權的大股東有資金上
的需求，原有經營家族有意願繼續經營公司並持有部份股權，且希望買下公司股權的
股東不要只為了價格便隨便將公司股權出讓，並確保股權交易完成後，公司的經營形
態不受干擾，這兩家公司真正是我門所想要投資的類型，而它們也確實適得其所。
You may be amused to know that neither Charlie nor I have been to
Cincinnati, headquarters for Fechheimer, to see their operation. (And,
incidentally, it works both ways: Chuck Huggins, who has been running
See’s for 15 years, has never been to Omaha.) If our success were to
depend upon insights we developed through plant inspections, Berkshire
would be in big trouble. Rather, in considering an acquisition, we attempt
to evaluate the economic characteristics of the business - its competitive
strengths and weaknesses - and the quality of the people we will be joining.
Fechheimer was a standout in both respects. In addition to Bob and
George Heldman, who are in their mid-60s - spring chickens by our
standards - there are three members of the next generation, Gary, Roger
and Fred, to insure continuity.
說來你可能不敢相信，事實上我與查理甚至根本就從未去過費區-海默位於辛辛那提
的企業總部，(另外還有像幫我們經營喜斯糖果十五年之久的Chuck，也從未來過奧
瑪哈Berkshire的企業總部) ，所以說若Berkshire的成功是建立在不斷地視察工廠
的話，現在我們可能早就要面臨一大堆問題了，因此在從事購併公司時，我們試著去
評估該公司的競爭能力，其優勢與缺點，以及經營階層的能力與水準，費區-海默在
各方面都很傑出，而Bob與George正值六十多歲的青壯期(以我們的標準而言)，且
後繼還有Gary等三位優秀的子弟繼承衣缽。
As a prototype for acquisitions, Fechheimer has only one drawback:
size. We hope our next acquisition is at least several times as large but a
carbon copy in all other respects. Our threshold for minimum annual
after-tax earnings of potential acquisitions has been moved up to $10
million from the $5 million level that prevailed when Bob wrote to me.
身為購併的最佳典型，該公司只有唯一一個小缺點，那就是它的規模不夠大，我們希
望下一次有機會能遇到各方面條件都與費區-海默一般，且規模至少要有它好幾倍大
的公司，目前我們對於購併對象年度稅後獲利的基本門檻已由每年500萬美元，提高
到1,000萬美元。
Flushed with success, we repeat our ad. If you have a business that
fits, call me or, preferably, write.
報告完畢後，最後還是重複一下我們的廣告，假若你有一家公司符合以下我們所列的
條件，請儘快與我們連絡。
Here’s what we’re looking for:
(1) large purchases (at least $10 million of after-tax
earnings),
(2) demonstrated consistent earning power (future
projections are of little interest to us, nor are
"turn-around" situations),
(3) businesses earning good returns on equity while
employing little or no debt.
(4) management in place (we can’t supply it),
(5) simple businesses (if there’s lots of technology, we
won’t understand it),
(6) an offering price (we don’t want to waste our time
or that of the seller by talking, even preliminarily,
about a transaction when price is unknown).
我們的標準如下：
(1)鉅額交易(每年稅後盈餘至少有1,000萬美元)
(2)持續穩定獲利(我們對有遠景或具轉機的公司沒興趣)
(3)高股東報酬率(並甚少舉債)
(4)具備管理階層(我們無法提供)
(5)簡單的企業(若牽涉到太多高科技，我們弄不懂)
(6)合理的價格(在價格不確定前，我們不希望浪費自己與對方太多時間)
We will not engage in unfriendly takeovers. We can promise complete
confidentiality and a very fast answer - customarily within five minutes - as
to whether we’re interested. We prefer to buy for cash, but will consider
issuing stock when we receive as much in intrinsic business value as we
give. Indeed, following recent advances in the price of Berkshire stock,
transactions involving stock issuance may be quite feasible. We invite
potential sellers to check us out by contacting people with whom we have
done business in the past. For the right business - and the right people -
we can provide a good home.
我們不會進行敵意購併，並承諾完全保密並儘快答覆我們是否感興趣(通常不超過五分
鐘) ，我們傾向採現金交易，除非我們所換得的企業內含價值跟我們付出的一樣多，
否則絕不考慮發行股份。我們歡迎可能的賣方向那些過去與我們合作過的夥伴打聽，
對於那些好的公司與好的經營階層，我們絕對可以提供一個好的歸屬。
On the other hand, we frequently get approached about acquisitions
that don’t come close to meeting our tests: new ventures, turnarounds,
auction-like sales, and the ever-popular (among brokers)
"I’m-sure-something-will-work-out-if-you-people-get-to-know-each
-other." None of these attracts us in the least.
當然我們也持續接到一些不符合我們條件的詢問電話，包括新事業、轉機股、拍賣案
以及最常見的仲介案(那些通常會說你們要是能過碰一下面，一定會感興趣之類的)
在此重申我們對這些類型案件一點興趣都沒有。
* * *
Besides being interested in the purchases of entire businesses as
described above, we are also interested in the negotiated purchase of large,
but not controlling, blocks of stock, as in our Cap Cities purchase. Such
purchases appeal to us only when we are very comfortable with both the
economics of the business and the ability and integrity of the people
running the operation. We prefer large transactions: in the unusual case
we might do something as small as $50 million (or even smaller), but our
preference is for commitments many times that size.
除了以上買下整家公司的購併案外，我們也會考慮買進一大部份不具控制權的股份，
就像我們在資本城這個Case一樣，當然這必須是我們對於該事業與經營階層都感到
認同時才有可能，而且是要夠大筆的交易，我想最少也要在5,000萬美金以上，當然
是越多越好。
Insurance Operations
保險事業營運
We present our usual table of industry figures, expanded this year to
include data about incurred losses and the GNP inflation index. The
contrast in 1986 between the growth in premiums and growth in incurred
losses will show you why underwriting results for the year improved
materially:
下表是我們固定提供給各位的保險業統計數字，今年起多加了發生損失與GNP通膨指
數兩項，保費成長與損失比率與1986年差異，可用來解釋為何整年度的承保表現能
夠大幅改善的原因：
The combined ratio represents total insurance costs (losses incurred
plus expenses) compared to revenue from premiums: a ratio below 100
indicates an underwriting profit, and one above 100 indicates a loss. When
the investment income that an insurer earns from holding on to
policyholders’ funds ("the float") is taken into account, a combined ratio in
the 107-112 range typically produces an overall break-even result,
exclusive of earnings on the funds provided by shareholders.
綜合比率代表保險總成本(發生損失加上費用)佔保費收入的比例 ，若比率低於一百，
表示核保有利益，反之則會有損失，若將保險公司從保戶那邊收到的保費，(又稱浮存
金)，運用在投資所賺取的利益列入考量後（扣除股東權益部份），比率在107-112
間會是損益兩平點。
The math of the insurance business, encapsulated by the table, is not
very complicated. In years when the industry’s annual gain in revenues
(premiums) pokes along at 4% or 5%, underwriting losses are sure to mount.
This is not because auto accidents, fires, windstorms and the like are
occurring more frequently, nor has it lately been the fault of general
inflation. Today, social and judicial inflation are the major culprits; the
cost of entering a courtroom has simply ballooned. Part of the jump in
cost arises from skyrocketing verdicts, and part from the tendency of
judges and juries to expand the coverage of insurance policies beyond that
contemplated by the insurer when the policies were written. Seeing no
let-up in either trend, we continue to believe that the industry’s revenues
must grow at close to 10% annually for it to just hold its own in terms of
profitability, even though general inflation may be running only 2% - 4%.
保險事業經營的邏輯，若用以下列簡表來說明，其實一點都不複雜，當保費收入年成
長率只能在4%到5%游移時，核保損失一定會增加，這不是因為意外、火災、暴風等
意外災害發生更頻繁，也不是因為通貨膨脹的關係，主要的禍首在於社會與司法成本
的膨脹，一方面是因為司法訴訟案件大幅增加，一方面是因為法官與陪審團傾向超越
原先保單上所訂的條款，擴大保險理賠的範圍，若這兩種情況在未來沒有好轉，則可
以預見的是，保費收入年成長必須達到10%以上才有可能損益兩平，即使目前一般通
貨膨脹的水準維持在2%到4%之間也一樣。
In 1986, as noted, the industry’s premium volume soared even faster
than loss costs. Consequently, the underwriting loss of the industry fell
dramatically. In last year’s report we predicted this sharp improvement but
also predicted that prosperity would be fleeting. Alas, this second
prediction is already proving accurate. The rate of gain in the industry’s
premium volume has slowed significantly (from an estimated 27.1% in
1986’s first quarter, to 23.5% in the second, to 21.8% in the third, to 18.7%
in the fourth), and we expect further slowing in 1987. Indeed, the rate of
gain may well fall below my 10% "equilibrium" figure by the third quarter.
如表上所示，保險業保費收入成長的速度甚至高於理賠損失增加的速度，因此核保損
失大幅下降，去年的年報我們就已預先報告過可能會有這種情形發生，同時還判斷這
樣的榮景只是短暫的，很不幸的再一次我們一語中的，今年保費成長的速度已大幅減
緩，從第一季的27.1%一路下滑到第四季的18.7%，而且我們預期還會進一步下滑，
最後很有可能會落到10%的損益兩平點之下。
Nevertheless, underwriting results in 1987, assuming they are not
dragged down by a major natural catastrophe, will again improve materially
because price increases are recognized in revenues on a lagged basis. In
effect, the good news in earnings follows the good news in prices by six to
twelve months. But the improving trend in earnings will probably end by
late 1988 or early 1989. Thereafter the industry is likely to head south in a
hurry.
但儘管如此，只要1987年沒有發生什麼重大的災難，由於保費調整的遞延性，核保
結果還是能夠改善，通常在保費調整的半年到一年後，效果會反應到公司的盈餘之上，
但好景通常不易維持，過不了多久一切又會回到原點。
Pricing behavior in the insurance industry continues to be exactly what
can be expected in a commodity-type business. Only under shortage
conditions are high profits achieved, and such conditions don’t last long.
When the profit sun begins to shine, long-established insurers shower
investors with new shares in order to build capital. In addition,
newly-formed insurers rush to sell shares at the advantageous prices
available in the new-issue market (prices advantageous, that is, to the
insiders promoting the company but rarely to the new shareholders).
These moves guarantee future trouble: capacity soars, competitive juices
flow, and prices fade.
保險商品的訂價行為與一般商品的訂價模式幾乎一模一樣，唯有在供給短缺時價格才
會上來，但偏偏這種光景維持不了多久，當獲利旭日東升時，馬上就有人會進來潑冷
水，大舉投入資金搶食大餅，結果當然會埋下不少後遺症，供給增加，代表價格下跌，
跟著獲利劇減。
It’s interesting to observe insurance leaders beseech their colleagues
to behave in a more "statesmanlike" manner when pricing policies. "Why,"
they ask, "can’t we learn from history, even out the peaks and valleys, and
consistently price to make reasonable profits?" What they wish, of course, is
pricing that resembles, say, that of The Wall Street journal, whose prices are
ample to start with and rise consistently each year.
當保險業龍頭在要求他們的同業在訂價時要維持同行之誼，我們可以觀察到一個有趣
的現象，他們會問為什麼我們不能從歷史經驗中學到教訓，不管景氣低潮或高峰，都
能夠合理的訂價以維持適當的獲利呢?? 他們當然希望保險費能夠像華爾街日報的售
價一樣，有一個好的開始，同時又能夠每年持續穩定的調漲價格。
Such calls for improved behavior have all of the efficacy of those made
by a Nebraska corn grower asking his fellow growers, worldwide, to market
their corn with more statesmanship. What’s needed is not more statesmen,
but less corn. By raising large amounts of capital in the last two years, the
insurance industry has, to continue our metaphor, vastly expanded its
plantings of corn. The resulting increase in "crop" - i.e., the proliferation
of insurance capacity - will have the same effect on prices and profits that
surplus crops have had since time immemorial.
但這種訴求得到的效果，就像內布拉斯加州種植玉米的農夫，要求全世界其他種植玉
米的農夫一起遵守道德規範一樣有限，事實上道德訴求的效果極其有限，重點是如何
讓玉米的產量變少，最近兩年來保險同業從資本市場上所募集的資金，就好像是新進
耕種的玉米田一樣，結果是更多更大的玉米產量，只會使市場價格進一步滑落。
Our own insurance operation did well in 1986 and is also likely to do
well in 1987. We have benefited significantly from industry conditions.
But much of our prosperity arises from the efforts and ability of Mike
Goldberg, manager of all insurance operations.
我們自己本身的保險事業在1986年的表現還算不錯，展望明年一樣樂觀，雖然市場
的狀況讓我們獲益不少，但真正要感謝的卻是旗下經理人優異的能力與表現。
Our combined ratio (on a statutory basis and excluding structured
settlements and financial reinsurance) fell from 111 in 1985 to 103 in 1986.
In addition, our premium growth has been exceptional: although final
figures aren’t available, I believe that over the past two years we were the
fastest growing company among the country’s top 100 insurers. Some of
our growth, it is true, came from our large quota-share contract with
Fireman’s Fund, described in last year’s report and updated in Charlie’s
letter on page 54. But even if the premiums from that contract are
excluded from the calculation, we probably still ranked first in growth.
我們的綜合比率從1985年的111減少到1986年的103，此外我們的保費成長率
更是傑出，雖然最後的數字現在還無從得知，但我確信我們是前一百大保險公司中成
長最快的，誠然有一部份的成長來自於我們與消防人員退休基金的合約，但即使在扣
除這部份之後，我們仍然維持第一。
Interestingly, we were the slowest-growing large insurer in the years
immediately preceding 1985. In fact, we shrank - and we will do so again
from nine to time in the future. Our large swings in volume do not mean
that we come and go from the insurance marketplace. Indeed, we are its
most steadfast participant, always standing ready, at prices we believe
adequate, to write a wide variety of high-limit coverages. The swings in
our volume arise instead from the here-today, gone-tomorrow behavior of
other insurers. When most insurers are "gone," because their capital is
inadequate or they have been frightened by losses, insureds rush to us and
find us ready to do business. But when hordes of insurers are "here," and
are slashing prices far below expectable costs, many customers naturally
leave us in order to take advantage of the bargains temporarily being
offered by our competition.
有趣的是，在1985年我們是所有保險業者中成長最慢的一家，事實上我們是不增反
減，而只要市場情況不佳時，我們仍會維持這樣的做法，我們保費收入忽上忽下並不
代表我們在這個市場來來去去，事實上我們是這個市場最穩定的參與者，隨時作好準
備，只要價格合理，我們願意不計上限簽下任何高額的保單，不像其他業者一下子進
入這個市場，一下子又退出，所以當其他同業因資金不足或懾於巨大的損失退出市場
時，保戶會大量湧向我們，且會發現我們早已作好準備，反之當所有業者搶進市場，
大幅殺價甚至低於合理成本時，客戶又會受到便宜的價格所吸引，離開我們投入競爭
對手的懷抱。
Our firmness on prices works no hardship on the consumer: he is
being bombarded by attractively priced insurance offers at those times
when we are doing little business. And it works no hardship on our
employees: we don’t engage in layoffs when we experience a cyclical
slowdown at one of our generally-profitable insurance operations. This
no-layoff practice is in our self-interest. Employees who fear that large
layoffs will accompany sizable reductions in premium volume will
understandably produce scads of business through thick and thin (mostly
thin).
我們對於價格的堅持，對客戶來說一點困擾也沒有，當他發現有更便宜的價格時，隨
時可以離去，同樣地對我們的員工也不會造成困擾，我們不會因為景氣循環一時的低
潮就大幅裁員，奉行的是不裁員政策，事實上這也是為了公司好，否則擔心業務量減
少而被裁員的員工可能會想盡辦法弄一些有的沒有的業務進來給公司。
The trends in National Indemnity’s traditional business - the writing of
commercial auto and general liability policies through general agents -
suggest how gun-shy other insurers became for a while and how brave they
are now getting. In the last quarter of 1984, NICO’s monthly volume
averaged $5 million, about what it had been running for several years. By
the first quarter of 1986, monthly volume had climbed to about $35 million.
In recent months, a sharp decline has set in. Monthly volume is currently
about $20 million and will continue to fall as new competitors surface and
prices are cut. Ironically, the managers of certain major new competitors
are the very same managers that just a few years ago bankrupted insurers
that were our old competitors. Through state-mandated guaranty funds,
we must pay some of the losses these managers left unpaid, and now we
find them writing the same sort of business under a new name. C’est la
guerre.
這在國家保險公司所從事的汽車保險與一般責任保險最可以看出，同業是如何一會兒
貪生怕死，一會兒又勇往前進，在1984年的最後一季，該公司平均月保費收入是500
萬美元，大約維持在正常的水準，但到了1986年的第一季，卻大幅攀升至3,500萬
美元，之後又很快地減少到每月2,000萬元的水準，相信只要競爭者持續加入市場，
並殺價競爭，該公司的業務量還會繼續減少，諷刺的是部份新加入保險公司的經理人，
就是幾年前讓原本幾家舊有保險公司破產倒閉的那批原班人馬，不可思議的是我們竟
然還要透過政府強制的保證基金機制，來分攤他們部份的損失。
The business we call "large risks" expanded significantly during 1986,
and will be important to us in the future. In this operation, we regularly
write policies with annual premiums of $1 - $3 million, or even higher.
This business will necessarily be highly volatile - both in volume and
profitability - but our premier capital position and willingness to write large
net lines make us a very strong force in the market when prices are right.
On the other hand, our structured settlement business has become
near-dormant because present prices make no sense to us.
這種我們稱之為高風險的險種在1986年大幅成長，且在未來也會扮演相當重要的角
色，通常一次所收取的保費就可能超過百萬美元，有的甚至還更高，當然核保最後的
結果可能會兩極化，不管是保費收入或是承保獲利，但我們雄厚的財務實力與高度的
承保意願(只要價格合理)使我們在市場上相當有競爭力，另一方面，我們在結構清償
業務則因為現在的價格不理想而接近停擺。
The 1986 loss reserve development of our insurance group is
chronicled on page 46. The figures show the amount of error in our
yearend 1985 liabilities that a year of settlements and further evaluation
has revealed. As you can see, what I told you last year about our loss
liabilities was far from true - and that makes three years in a row of error.
If the physiological rules that applied to Pinocchio were to apply to me, my
nose would now draw crowds.
1986年損失準備的變動詳附表，數字顯示我們在1985年底所犯的估計錯誤，在今
年已漸漸浮現，就像去年我提醒各位的，我們所提的負債準備與事實有很大的出入，
而造成連續三年一連串的錯誤，若照木偶奇遇記的標準，我的鼻子可能早已能夠吸引
眾人的目光。
When insurance executives belatedly establish proper reserves, they
often speak of "reserve strengthening," a term that has a rather noble ring
to it. They almost make it sound as if they are adding extra layers of
strength to an already-solid balance sheet. That’s not the case: instead
the term is a euphemism for what should more properly be called
"correction of previous untruths" (albeit non-intentional ones).
當保險公司主管事後補提適當的損失準備，他們通常會解釋成”加強”損失準備，以冠
上合理的說法，理直氣壯地好像的是真要在已經健全的財務報表上再多加一層保障，
事實上並非如此，這只是修正以前所犯錯誤的婉轉說法而已，(雖然可能是無心的)。
We made a special effort at the end of 1986 to reserve accurately.
However, we tried just as hard at the end of 1985. Only time will tell
whether we have finally succeeded in correctly estimating our insurance
liabilities.
在1986年我們特別花了一番功夫在這上面做調整，但只有時間能告訴我們先前所作
的損失準備預測是否正確。
Despite the difficulties we have had in reserving and the commodity
economics of the industry, we expect our insurance business to both grow
and make significant amounts of money - but progress will be distinctly
irregular and there will be major unpleasant surprises from time to time.
It’s a treacherous business and a wary attitude is essential. We must heed
Woody Allen: "While the lamb may lie down with the lion, the lamb
shouldn’t count on getting a whole lot of sleep."
而盡管在預測損失與產品行銷上我們遭遇極大的挑戰，我們仍樂觀地預期我們的業務
量能夠成長並獲取不少利潤，只是前進的步伐可能會不太規則，甚至有時還會出現令
人不太愉快的結果發生，這是一項變化多端的行業，所以必須更加小心謹慎，我們時
時謹記伍迪艾倫所講的，一隻羊大可以躺在獅子的旁邊，但你千萬不要妄想好好地睡
一覺。
In our insurance operations we have an advantage in attitude, we have
an advantage in capital, and we are developing an advantage in personnel.
Additionally, I like to think we have some long-term edge in investing the
float developed from policyholder funds. The nature of the business
suggests that we will need all of these advantages in order to prosper.
在保險業我們擁有的優勢是我們的心態與資本，同時在人員素質上也漸入佳境，此外，
利用收得保費加以好好運用，更是我們競爭的最大利基，在這個產業也唯有多方條件
配合，才有機會成功。
* * *
GEICO Corporation, 41% owned by Berkshire, had an outstanding year
in 1986. Industrywide, underwriting experience in personal lines did not
improve nearly as much as it did in commercial lines. But GEICO, writing
personal lines almost exclusively, improved its combined ratio to 96.9 and
recorded a 16% gain in premium volume. GEICO also continued to
repurchase its own shares and ended the year with 5.5% fewer shares
outstanding than it had at the start of the year. Our share of GEICO’s
premium volume is over $500 million, close to double that of only three
years ago. GEICO’s book of business is one of the best in the world of
insurance, far better indeed than Berkshire’s own book.
由Berkshire 持有41%股權的GEICO公司，在1986年表現相當突出，就整個產業
而言，個人險種的核保表現一般來說不如商業險種，但以個人險種為主要業務的
GEICO其綜合比率卻降低到96.9，同時保費收入亦成長了16%，另外該公司也持續
買回自家公司的股份，總計一年下來流通在外的股份減少了5.5%，我們依投資比例可
分得的保費收入已超過五億美元，大約較三年前增加一倍，GEICO的帳是全世界保險
公司中最好的，甚至比Berkshire本身都還要好。
The most important ingredient in GEICO’s success is rock-bottom
operating costs, which set the company apart from literally hundreds of
competitors that offer auto insurance. The total of GEICO’s underwriting
expense and loss adjustment expense in 1986 was only 23.5% of premiums.
Many major companies show percentages 15 points higher than that. Even
such huge direct writers as Allstate and State Farm incur appreciably higher
costs than does GEICO.
GEICO之所以能夠成功的重要因素，在於該公司從頭到腳徹底地精簡營運成本，使得
它把其他所有車險公司遠遠拋在腦後，該公司去年的費用損失佔保費收入的比例只有
23.5%，許多大公司的比例甚至比GEICO還要多出15%，即使是像Allstate 與 State
Farm等車險直銷業者成本也比GEICO高出許多
The difference between GEICO’s costs and those of its competitors is a
kind of moat that protects a valuable and much-sought-after business
castle. No one understands this moat-around-the-castle concept better
than Bill Snyder, Chairman of GEICO. He continually widens the moat by
driving down costs still more, thereby defending and strengthening the
economic franchise. Between 1985 and 1986, GEICO’s total expense ratio
dropped from 24.1% to the 23.5% mentioned earlier and, under Bill’s
leadership, the ratio is almost certain to drop further. If it does - and if
GEICO maintains its service and underwriting standards - the company’s
future will be brilliant indeed.
若說GEICO是一座價值不菲且眾所仰望的商業城堡，那麼其與同業間的成本與費用差
異就是它的護城河，沒有人比Bill，也就是GEICO的主席，更懂得如何去保護這座城
堡，靠著持續降低成本開支，他不斷地將這個護城河加大，使得這城堡更加穩固，過
去兩年間，GEICO創造了23.5%超低成本率，展望未來，這項比率仍將持續下降，若
能夠同時再兼顧產品品質與客戶服務的話，這家公司的前途將無可限量。
The second stage of the GEICO rocket is fueled by Lou Simpson, Vice
Chairman, who has run the company’s investments since late 1979.
Indeed, it’s a little embarrassing for me, the fellow responsible for
investments at Berkshire, to chronicle Lou’s performance at GEICO. Only
my ownership of a controlling block of Berkshire stock makes me secure
enough to give you the following figures, comparing the overall return of
the equity portfolio at GEICO to that of the Standard & Poor’s 500:
另外GEICO這一飛沖天的火箭，同時由負責投資部門的副主席Lou Simpson點燃第
二節燃料倉，比起Lou Simpson於1979年接掌該公司投資部門後的績效，身為母
公司Berkshire投資主管的我，實在覺得有點汗顏，而也因為我們擁有這家公司大部
分的股權，使我在向各位報告以下數字時，能夠稍微心安理得一些。
GEICO's Equities
S&P500
1980
23.7%
32.3%
1981
5.4%
-5.0%
1982
45.8%
21.4%
1983
36.0%
22.4%
1984
21.8%
6.2%
1985
45.8%
31.6%
1986
38.7%
18.6%
These are not only terrific figures but, fully as important, they have
been achieved in the right way. Lou has consistently invested in
undervalued common stocks that, individually, were unlikely to present him
with a permanent loss and that, collectively, were close to risk-free.
必須再次強調的是以上的數字不但是漂亮極了，更由於其穩定成長的態勢，Lou能夠
不斷地找到價值被低估的股票加以投資，所以風險相對很低，也很少會產生損失。
In sum, GEICO is an exceptional business run by exceptional managers.
We are fortunate to be associated with them.
總而言之GEICO是一家由好的經理人經營的好公司，我們很容幸能與他們一起共事。
Marketable Securities
有價證券
During 1986, our insurance companies purchased about $700 million
of tax-exempt bonds, most having a maturity of 8 to 12 years. You might
think that this commitment indicates a considerable enthusiasm for such
bonds. Unfortunately, that’s not so: at best, the bonds are mediocre
investments. They simply seemed the least objectionable alternative at the
time we bought them, and still seem so. (Currently liking neither stocks nor
bonds, I find myself the polar opposite of Mae West as she declared: "I like
only two kinds of men - foreign and domestic.")
去年(1986年)我們的保險公司總計買進了7億美元的免稅政府公債，到期日分別為
8-12年不等，或許你會覺得這樣的投入表示我們對於債券情有獨鍾，只可惜事實並
非如此，債券充其量只不過是個平庸的投資工具，他們不過是選擇投資標的時看起來
最不礙眼的投資替代品，雖然現在看起來也是，我突然發現我現在對於股票與債券都
提不起勁的態度，與Mae West的喜好完全相反，她曾說：「我只愛兩種男人，本國
人或是外國人」。
We must, of necessity, hold marketable securities in our insurance
companies and, as money comes in, we have only five directions to go: (1)
long-term common stock investments; (2) long-term fixed-income
securities; (3) medium-term fixed-income securities; (4) short-term cash
equivalents; and (5) short-term arbitrage commitments.
當然隨著保險公司資金持續地湧入，我們還是必須將有價證券列入投資組合，一般來
說我們只有五種選擇：(1)長期股權投資(2)長期固定收益債券(3)中期固定收益債券(4)
短期約當現金(5)短期套利交易。
Common stocks, of course, are the most fun. When conditions are
right that is, when companies with good economics and good management
sell well below intrinsic business value - stocks sometimes provide
grand-slam home runs. But we currently find no equities that come close
to meeting our tests. This statement in no way translates into a stock
market prediction: we have no idea - and never have had - whether the
market is going to go up, down, or sideways in the near- or intermediate
term future.
當然其中就屬股票最有樂趣，當狀況好時，我是說找到經營得當、業績蒸蒸日上但價
值被低估的公司，你很有機會可以揮出大滿貫的全壘打，不過可惜的是，目前我們根
本找不到類似這樣的標的，這不代表我們要預測股市未來的走勢，事實上我們從來就
不知道股市接下來到底是會漲還是會跌。
What we do know, however, is that occasional outbreaks of those two
super-contagious diseases, fear and greed, will forever occur in the
investment community. The timing of these epidemics will be
unpredictable. And the market aberrations produced by them will be
equally unpredictable, both as to duration and degree. Therefore, we
never try to anticipate the arrival or departure of either disease. Our goal
is more modest: we simply attempt to be fearful when others are greedy
and to be greedy only when others are fearful.
不過我們確知的是貪婪與恐懼這兩種傳染病在股市投資世界裡，會不斷地上演，雖然
發生的時點很難準確預測，而市場波動程度與狀況一樣不可捉摸，任何臆測終將徒勞
無功，所以我們要做的事很簡單，當眾人都很貪婪時，盡量試著讓自己覺得害怕；反
之當眾人感到害怕時，盡量讓自己貪心一點。
As this is written, little fear is visible in Wall Street. Instead, euphoria
prevails - and why not? What could be more exhilarating than to
participate in a bull market in which the rewards to owners of businesses
become gloriously uncoupled from the plodding performances of the
businesses themselves. Unfortunately, however, stocks can’t outperform
businesses indefinitely.
而當我在寫這段文章時，整個華爾街幾乎嗅不到一絲的恐懼，反而到處充滿了歡樂的
氣氛，沒有理由不這樣啊? 有什麼能夠比在牛市中，股東因股票大漲賺取比公司本身
獲利更多的報酬而感到更高興的事，只是我必須說，很不幸的是，股票的表現不可能
永遠超過公司本身的獲利。
Indeed, because of the heavy transaction and investment management
costs they bear, stockholders as a whole and over the long term must
inevitably underperform the companies they own. If American business, in
aggregate, earns about 12% on equity annually, investors must end up
earning significantly less. Bull markets can obscure mathematical laws,
but they cannot repeal them.
反倒是股票頻繁的交易成本與投資管理費用，將使得投資人所獲得的報酬無可避免地
遠低於其所投資公司的本身獲利，以美國企業來說，假設其平均股東權益報酬率為
12%，這表示其投資人平均所能獲得的報酬將低於此數，牛市或許可以暫時模糊數學
算術，但卻不可能推翻它。
The second category of investments open to our insurance companies
is long-term bonds. These are unlikely to be of interest to us except in
very special situations, such as the Washington Public Power Supply System
#1, #2 and #3 issues, discussed in our 1984 report. (At yearend, we owned
WPPSS issues having an amortized cost of $218 million and a market value
of $310 million, paying us $31.7 million in annual tax-exempt income.)
Our aversion to long-term bonds relates to our fear that we will see much
higher rates of inflation within the next decade. Over time, the behavior of
our currency will be determined by the behavior of our legislators. This
relationship poses a continuing threat to currency stability - and a
corresponding threat to the owners of long-term bonds.
第二種投資選擇是長期債券，除非在特殊情況下，就像是我們在1984年年報曾提到
的華盛頓公用電力系統所發行的公司債，(截至年底我們帳上擁有該公司債券的未攤銷
成本為二億一千萬美元，市價則為三億一千萬美元)，否則債券這種投資標的實在很難
引起我們的興趣，我們對於長期債券沒有興趣的原因在於對於未來十幾年通貨膨脹可
能再度肆虐的潛在恐懼，長期而言，匯率的走勢演變將取決於立法諸公的態度，這代
表匯率的穩定將受到威脅，進而影響到長期債券投資人的利益。
We continue to periodically employ money in the arbitrage field.
However, unlike most arbitrageurs, who purchase dozens of securities each
year, we purchase only a few. We restrict ourselves to large deals that have
been announced publicly and do not bet on the come. Therefore, our
potential profits are apt to be small; but, with luck, our disappointments
will also be few.
此外我們持續將資金運用在套利活動之上，然而不像其他套利客，每年從事幾十個案
子，我們只鎖定在少數幾個個案，我們限制自己只專注在幾個已經公佈消息的大案子，
避開尚未明朗化的，雖然這樣會讓我們的獲利空間減小，但相對的只要運氣不要太差，
我們預期落空的機率也會減少許多。
Our yearend portfolio shown below includes one arbitrage
commitment, Lear-Siegler. Our balance sheet also includes a receivable
for $145 million, representing the money owed us (and paid a few days
later) by Unilever, then in the process of purchasing Chesebrough-Ponds,
another of our arbitrage holdings. Arbitrage is an alternative to Treasury
Bills as a short-term parking place for money - a choice that combines
potentially higher returns with higher risks. To date, our returns from the
funds committed to arbitrage have been many times higher than they would
have been had we left those funds in Treasury Bills. Nonetheless, one bad
experience could change the scorecard markedly.
到年底為止，手上只有一個案子Lear-Siegler，另外還有一筆一億四千五百萬的應收
款項，這是聯合利華用來買下龐氏積欠我們的款項，套利是除了政府債券以外，短期
資金運用的替代品，但風險與報酬相對都比較高，到目前為止，這些套利投資的報酬
確實比政府債券要來的好的多，不過即便如此，一次慘痛的經驗將使總成績豬羊變色
We also, though it takes some straining, currently view medium-term
tax-exempt bonds as an alternative to short-term Treasury holdings.
Buying these bonds, we run a risk of significant loss if, as seems probable,
we sell many of them well before maturity. However, we believe this risk is
more than counter-balanced first, by the much higher after-tax returns
currently realizable from these securities as compared to Treasury Bills and
second, by the possibility that sales will produce an overall profit rather
than a loss. Our expectation of a higher total return, after allowing for the
possibility of loss and after taking into account all tax effects, is a relatively
close call and could well be wrong. Even if we sell our bonds at a fairly
large loss, however, we may end up reaping a higher after-tax return than
we would have realized by repeatedly rolling over Treasury Bills.
另外雖然有些不情願，我們也將目光擺在中期的免稅債券之上，買下這類債券我們將
承擔鉅額損失的風險，若可能的話我們在到期之前就會把它們賣掉，當然這樣的風險
也提供我們相對的報酬，到目前為止未實現的獲利還是比短期債券要來的好的多，不
過這種高報酬在扣除可能承擔損失的風險與額外的稅負，其實報酬好不了多少，更何
況還有可能估計錯誤，不過即便我們真的發生損失，其程度還是比我們不斷在短期債
券上打滾來的好。
In any event, you should know that our expectations for both the
stocks and bonds we now hold are exceptionally modest, given current
market levels. Probably the best thing that could happen to us is a market
in which we would choose to sell many of our bond holdings at a significant
loss in order to re-allocate funds to the far-better equity values then very
likely to exist. The bond losses I am talking about would occur if high
interest rates came along; the same rates would probably depress common
stocks considerably more than medium-term bonds.
不論如何，大家必須有個體認那就是以目前的市場狀況，我們在債券或股票的預期報
酬都不會太高，目前我們可以做的，頂多是認賠處分一些債券，然後重新將資金投入
到未來可能好一點的股票投資上，債券會發生損失的原因在於利率高漲，當然這同樣
也會壓縮股票的價格。
We show below our 1986 yearend net holdings in marketable equities.
All positions with a market value of over $25 million are listed, and the
interests attributable to minority shareholdings of Wesco Financial Corp.
and Nebraska Furniture Mart are excluded.
下表是我們截至1986年底金額超過2,500萬美元以上的股票投資組合，不包含
Wesco與NFM在內。
Company Name
Shares
Cost
Market
Unrealized
Affiliated Publications, Inc.
(a)
1,036,461
Aluminum Company of America
American Boradcasting Company
(a)
900,800
Arcata Corporation(Inc. Common Equi)
Beatrice Companies, Inc.
2,350,922
Capital Cities/ABC
515,775
801,694
285,919
Cleveland-Cliffs Iron Company
Crum & Forster
Exxon Corporation
GATX Corporation
General Foods, Inc
GEIGO Corporation
6,850,000
45,713
674,725
629,012
Handy & Harman
2,379,200
27,318
46,989
19,671
Interpublic Group of Companies, Inc
Kaiser Alumnium & Chemical Corp.
Lear Siegler
44,064
44,587
523
Media General
National Detroit Corporation
National Student Marketing
Northwest Industries
Ogilvy & Mather Int'l, Inc
Pinkerton, Inc.
R.J. Reynolds Industries
SAFECO Corporation
The Time Mirror Company
Time, Inc
(a)
847,788
The Washington Post Company
1,727,765
9,731
269,531
259,800
EW Woolworth Company
All Other Common Stock
12,763
36,507
23,744
Total Common Stock
655,364
1,874,033
1,218,669
Incremantal
295,458
We should note that we expect to keep permanently our three primary
holdings, Capital Cities/ABC, Inc., GEICO Corporation, and The Washington
Post. Even if these securities were to appear significantly overpriced, we
would not anticipate selling them, just as we would not sell See’s or Buffalo
Evening News if someone were to offer us a price far above what we believe
those businesses are worth.
大家要特別注意的是我們將把三項投資列為永久的投資組合，分別是資本城/ABC、
GEICO與華盛頓郵報，即便這些股票目前的價格看起來有些高估，我們也不打算把它
們賣掉，就像即使有人出再高的價格，我們也不打算賣喜斯糖果或水牛城報紙一樣。
This attitude may seem old-fashioned in a corporate world in which
activity has become the order of the day. The modern manager refers to
his "portfolio" of businesses - meaning that all of them are candidates for
"restructuring" whenever such a move is dictated by Wall Street preferences,
operating conditions or a new corporate "concept." (Restructuring is defined
narrowly, however: it extends only to dumping offending businesses, not to
dumping the officers and directors who bought the businesses in the first
place. "Hate the sin but love the sinner" is a theology as popular with the
Fortune 500 as it is with the Salvation Army.)
這種態度現今看起來有點老套過時，現在當紅的基金經理人所謂的企業組合，大多是
為了迎合華爾街的喜好，列出適合再造的對象，(奇怪的是企業再造的定義範圍卻只限
於拋棄被鎖定的企業，但卻不包含其經理人與負責人本身，憎恨罪惡卻深愛犯罪者，
這種理論在財富五百大企業流傳地跟救世軍一樣普遍。
Investment managers are even more hyperkinetic: their behavior
during trading hours makes whirling dervishes appear sedated by
comparison. Indeed, the term "institutional investor" is becoming one of
those self-contradictions called an oxymoron, comparable to "jumbo
shrimp," "lady mudwrestler" and "inexpensive lawyer."
基金經理人更是腎上腺素分泌過多，他們的行為在股票交易時間大聲叫囂讓不斷念經
的苦行僧看起來顯得安靜許多，事實上機構投資人這個名詞聽起來，跟超級大蝦米、
淑女泥巴摔角手、收費便宜的律師，同時並列自相矛盾的修飾名詞
Despite the enthusiasm for activity that has swept business and
financial America, we will stick with our ‘til-death-do-us-part policy. It’s
the only one with which Charlie and I are comfortable, it produces decent
results, and it lets our managers and those of our investees run their
businesses free of distractions.
盡管這種對於購併案的熱衷橫掃整個美國金融界與企業界，但我們還是堅持這種至死
不分離的政策，這是查理跟我唯一能夠感到自在的方式，事實證明這種方式長期下來
讓我們有不錯的獲利，也讓我們的經理人與被投資公司專注於本業之上而免於分心。
NHP, Inc.
NHP公司
Last year we paid $23.7 million for about 50% of NHP, Inc., a developer,
syndicator, owner and manager of multi-family rental housing. Should all
executive stock options that have been authorized be granted and
exercised, our equity interest will decline to slightly over 45%.
去年我們投資了2,300多萬在NHP50% 股權，這是一家房屋租賃發展與整合商，不
過若所有主管股票認股權都行使的話，我們的權益大概會降到45%左右。
NHP, Inc. has a most unusual genealogy. In 1967, President Johnson
appointed a commission of business and civic leaders, led by Edgar Kaiser,
to study ways to increase the supply of multifamily housing for low- and
moderate-income tenants. Certain members of the commission
subsequently formed and promoted two business entities to foster this goal.
Both are now owned by NHP, Inc. and one operates under unusual ground
rules: three of its directors must be appointed by the President, with the
advice and consent of the Senate, and it is also required by law to submit an
annual report to the President.
該公司有段非凡的歷史血統，1967年美國總統詹森指定Kaiser帶領一個由民間與企
業領袖所組成特別小組，研究如何滿足中低收入家庭市場的生活所需，最後有兩個小
組因此具體成形，而目前這兩者皆由NHP所擁有，在其中有一條特殊的規定，那就是
該公司有三席董事必須由總統指定，並經參議院同意，依法每年還須提供年度報告給
總統。
Over 260 major corporations, motivated more by the idea of public
service than profit, invested $42 million in the two original entities, which
promptly began, through partnerships, to develop government-subsidized
rental property. The typical partnership owned a single property and was
largely financed by a non-recourse mortgage. Most of the equity money
for each partnership was supplied by a group of limited partners who were
primarily attracted by the large tax deductions that went with the
investment. NHP acted as general partner and also purchased a small
portion of each partnership’s equity.
超過260個美國大企業，非以營利為出發點，集資4,200萬成立兩個合夥組織，透
過與房屋使用者合夥形式，由政府補助租賃房屋，典型的合夥是持有一個房地產單位，
附帶一個抵押貸款，大部分的資金來源係由一群有租稅減免需求的有限合夥人提供，
NHP擔任一般合夥人並買下所有合夥事業一小部份的出資權。
The Government’s housing policy has, of course, shifted and NHP has
necessarily broadened its activities to include non-subsidized apartments
commanding market-rate rents. In addition, a subsidiary of NHP builds
single-family homes in the Washington, D.C. area, realizing revenues of
about $50 million annually.
後來政府房屋計畫政策有所轉向，所以NHP必須轉型擴展在主流市場-即非補助房屋
租賃，此外NHP的一個子公司也在華盛頓特區建造了一個單親家庭之家，年營業收入
5,000萬美元。
NHP now oversees about 500 partnership properties that are located in
40 states, the District of Columbia and Puerto Rico, and that include about
80,000 housing units. The cost of these properties was more than $2.5
billion and they have been well maintained. NHP directly manages about
55,000 of the housing units and supervises the management of the rest.
The company’s revenues from management are about $16 million annually,
and growing.
NHP目前管理五百個合夥產業，遍佈全美四十個州、哥倫比亞特區與波多黎各等地，
總計有八萬個家庭戶數，這些產業的總值超過25億美元，同時管理相當良好，NHP
直接管理其中五萬五千戶，其餘透過監督方式進行，公司管理的收入每年約1,600萬
美元，而且還在持續成長中。
In addition to the equity interests it purchased upon the formation
ofeach partnership, NHP owns varying residual interests that come into
playwhen properties are disposed of and distributions are made to the
limitedpartners. The residuals on many of NHP’s "deep subsidy" properties
areunlikely to be of much value. But residuals on certain other
propertiescould prove quite valuable, particularly if inflation should heat
up.
除了公司所投資的部份合夥事業的權益，NHP在產業處分後也可分得部份利益，雖然
部份補助較多的產業無利可圖，但有些的利潤還不錯，尤其當通貨膨脹高張時。
The tax-oriented syndication of properties to individuals has been
halted by the Tax Reform Act of 1986. In the main, NHP is currently trying
to develop equity positions or significant residual interests in
non-subsidized rental properties of quality and size (typically 200 to 500
units). In projects of this kind, NHP usually works with one or more large
institutional investors or lenders. NHP will continue to seek ways to
develop low- and moderate-income apartment housing, but will not likely
meet success unless government policy changes.
1986年通過的租稅改革法案已使這些對於以租稅由導向的投資人受到阻斷，NHP目
前的大方向是好好運用這些合夥權益與非補助租賃產業，強化其質與量，在這類計畫
中，NHP通常與大型的投資法人合作，NHP會持續尋求各種方法來發展中低收入房屋
計畫，當然除非政府政策修改，否則以目前情況很難真正成功。
Besides ourselves, the large shareholders in NHP are Weyerhauser
(whose interest is about 25%) and a management group led by Rod Heller,
chief executive of NHP. About 60 major corporations also continue to hold
small interests, none larger than 2%.
除了我們以外，NHP的大股東還有Weyerhauser持有25%的股權，其餘則由經營團
隊與其他60多家大企業持有。
Taxation
稅負
The Tax Reform Act of 1986 affects our various businesses in
important and divergent ways. Although we find much to praise in the Act,
the net financial effect for Berkshire is negative: our rate of increase in
business value is likely to be at least moderately slower under the new law
than under the old. The net effect for our shareholders is even more
negative: every dollar of increase in per-share business value, assuming the
increase is accompanied by an equivalent dollar gain in the market value of
Berkshire stock, will produce 72 cents of after-tax gain for our
shareholders rather than the 80 cents produced under the old law. This
result, of course, reflects the rise in the maximum tax rate on personal
capital gains from 20% to 28%.
1986年通過的租稅改革法案對我們旗下許多事業影響的層面非常的廣，雖然整體而
言我們對於這項法案褒多於貶，但實際上對於Berkshire財務影響來說卻是負面的，
新制將使得我們企業價值未來的成長率減少幾個百分點，對於我們股東的負面影響更
大，Berkshire的價值每成長1美元，假設完全反應在公司的股票價格之上，股東在
扣除相關稅負後真正拿到手的，相較於舊制約有80美分，新制卻可能只剩下72美分，
主要是因為個人資本所得的上限稅率由20%調高到28%的緣故。
Here are the main tax changes that affect Berkshire:
茲將對Berkshire所有影響列示如下
o The tax rate on corporate ordinary income is scheduled to decrease
from 46% in 1986 to 34% in 1988. This change obviously affects us
positively - and it also has a significant positive effect on two of our three
major investees, Capital Cities/ABC and The Washington Post Company.
o企業一般收入的稅率由46%減少到34%，這個變化對我們的影響頗為正面，包含幾
個主要的被投資事業資本城/ABC與華盛頓郵報在內。
I say this knowing that over the years there has been a lot of fuzzy and
often partisan commentary about who really pays corporate taxes -
businesses or their customers. The argument, of course, has usually
turned around tax increases, not decreases. Those people resisting
increases in corporate rates frequently argue that corporations in reality pay
none of the taxes levied on them but, instead, act as a sort of economic
pipeline, passing all taxes through to consumers. According to these
advocates, any corporate-tax increase will simply lead to higher prices that,
for the corporation, offset the increase. Having taken this position,
proponents of the "pipeline" theory must also conclude that a tax decrease
for corporations will not help profits but will instead flow through, leading
to correspondingly lower prices for consumers.
會這樣說是基於多年來一直存在在不同政黨間，到底是企業或是消費者在支付所得稅
的爭論，這種爭論最後通常導致企業稅負增加而不是減少，反對調漲稅率的一派認為，
不管稅率有高，企業總是有辦法將稅負成本轉嫁到消費者身上，導致產品價格調高，
以彌補稅負上的支出，反之調降稅率並不會增加企業的獲利，而是會使產品價格下跌。
Conversely, others argue that corporations not only pay the taxes
levied upon them, but absorb them also. Consumers, this school says, will
be unaffected by changes in corporate rates.
另一派則認為企業不但要支付稅負，同時還會吸收調漲的稅負成本，所以對消費者來
說一點影響都沒有。
What really happens? When the corporate rate is cut, do Berkshire,
The Washington Post, Cap Cities, etc., themselves soak up the benefits, or
do these companies pass the benefits along to their customers in the form
of lower prices? This is an important question for investors and managers,
as well as for policymakers.
事實到底是怎樣呢? 當企業稅率減少，Berkshire、華盛頓郵報或是資本城公司他們自
己真的可能將所有獲利放到自己口袋，或是將利益透過降價與客戶一起分享呢? 這對
投資人、經理人或是政策制定者來說，都是一個很重要的問題。
Our conclusion is that in some cases the benefits of lower corporate
taxes fall exclusively, or almost exclusively, upon the corporation and its
shareholders, and that in other cases the benefits are entirely, or almost
entirely, passed through to the customer. What determines the outcome is
the strength of the corporation’s business franchise and whether the
profitability of that franchise is regulated.
最後我們自己得到的結論是部份企業會將減稅的利益全部或是大部交到企業與其股東
的手上，另一部份的企業則是將利益流到消費者或是客戶的身上，主要的關鍵還在於
企業本身的競爭優勢與其獲利能力是否受到政府管制等因素。
For example, when the franchise is strong and after-tax profits are
regulated in a relatively precise manner, as is the case with electric utilities,
changes in corporate tax rates are largely reflected in prices, not in profits.
When taxes are cut, prices will usually be reduced in short order. When
taxes are increased, prices will rise, though often not as promptly.
舉例來說，當強勢企業如電力事業，其獲利程度受到法規嚴格管制，稅率調降將直接
立即反應在電力價格而非電力公司獲利數字之上，反之亦然，當稅率調升，價格雖然
也會跟著調漲，但調漲的速度也較慢。
A similar result occurs in a second arena - in the price-competitive
industry, whose companies typically operate with very weak business
franchises. In such industries, the free market "regulates" after-tax profits
in a delayed and irregular, but generally effective, manner. The
marketplace, in effect, performs much the same function in dealing with the
price-competitive industry as the Public Utilities Commission does in
dealing with electric utilities. In these industries, therefore, tax changes
eventually affect prices more than profits.
另外像價格競爭激烈的產業也會有同樣的結果，這類型的企業通常競爭力薄弱，不得
不透過自由競爭市場慢慢地反應到產品價格之上，這種價格反應機制與前面所提的公
用電力事業相類似，稅負減少對價格的影響，遠大於對獲利的影響。
In the case of unregulated businesses blessed with strong franchises,
however, it’s a different story: the corporation and its shareholders are
then the major beneficiaries of tax cuts. These companies benefit from a
tax cut much as the electric company would if it lacked a regulator to force
down prices.
不過另外一方面，在強勢且較不受政府規範的企業，情況就完全相反了，企業與其背
後的股東將會是最大的受益者。
Many of our businesses, both those we own in whole and in part,
possess such franchises. Consequently, reductions in their taxes largely
end up in our pockets rather than the pockets of our customers. While this
may be impolitic to state, it is impossible to deny. If you are tempted to
believe otherwise, think for a moment of the most able brain surgeon or
lawyer in your area. Do you really expect the fees of this expert (the local
"franchise-holder" in his or her specialty) to be reduced now that the top
personal tax rate is being cut from 50% to 28%?
許多我們百分之百或部份持有的事業都屬於此一類型，所有降稅的好處最後都落到我
們而非消費者的口袋裡，雖然這樣講有點冒昧，卻很難加以否認，若你一時無法接受
這項事實，看看你周圍那些名醫或是名律師，難道你會認為這些專業人士(也算是強勢
的個人事業)會因為個人所得稅率減少而調降其收費標準嗎?
Your joy at our conclusion that lower rates benefit a number of our
operating businesses and investees should be severely tempered, however,
by another of our convictions: scheduled 1988 tax rates, both individual
and corporate, seem totally unrealistic to us. These rates will very likely
bestow a fiscal problem on Washington that will prove incompatible with
price stability. We believe, therefore, that ultimately - within, say, five
years - either higher tax rates or higher inflation rates are almost certain to
materialize. And it would not surprise us to see both.
不過大家不要高興的太早，因為預計在1988年實施的減稅方案對我們一點來說有點
不太切實際，可以預期的是這些減稅方案將會造成未來華府的財政困難，進而對物價
穩定有嚴重影響，所以在可預期的未來五年之內，高稅率或是高通膨將會再現，且很
有可能兩者都會同時發生。
o Corporate capital gains tax rates have been increased from 28% to 34%,
effective in 1987. This change will have an important adverse effect on
Berkshire because we expect much of our gain in business value in the
future, as in the past, to arise from capital gains. For example, our three
major investment holdings - Cap Cities, GEICO, and Washington Post - at
yearend had a market value of over $1.7 billion, close to 75% of the total
net worth of Berkshire, and yet they deliver us only about $9 million in
annual income. Instead, all three retain a very high percentage of their
earnings, which we expect to eventually deliver us capital gains.
o企業資本利得稅率從1987年起將從原來的28%調高到34%，這種改變對於
Berkshire來說將有重大影響，因為我們預期未來被投資企業的價值，如同過去一般
會反應在企業的資本利得之上，例如我們主要的三大投資資本城、GEICO與華盛頓郵
報，目前總市值已高達17億美元，約佔Berkshire淨值的七成五強，但每年反應在
公司帳上的收益卻只有900萬美元，其餘大部分的盈餘都保留在公司，繼續發揮其投
資效益，最終為我們帶來大量的資本利得。
The new law increases the rate for all gains realized in the future,
including the unrealized gains that existed before the law was enacted. At
yearend, we had $1.2 billion of such unrealized gains in our equity
investments. The effect of the new law on our balance sheet will be
delayed because a GAAP rule stipulates that the deferred tax liability
applicable to unrealized gains should be stated at last year’s 28% tax rate
rather than the current 34% rate. This rule is expected to change soon.
The moment it does, about $73 million will disappear from our GAAP net
worth and be added to the deferred tax account.
新法案增加所有未來實現的資本利得稅負，包含過去新法修正之前已存在的未實現利
益，到年底為止，我們帳上有高達12億未實現股票投資利得，原來以28%估算預計
應付所得稅，不久之後，若改成34%的稅率，將會使得公司淨值減少7,300萬美元，
直接加到應繳付給政府的所得稅之上。
o Dividend and interest income received by our insurance companies will
be taxed far more heavily under the new law. First, all corporations will be
taxed on 20% of the dividends they receive from other domestic
corporations, up from 15% under the old law. Second, there is a change
concerning the residual 80% that applies only to property/casualty
companies: 15% of that residual will be taxed if the stocks paying the
dividends were purchased after August 7, 1986. A third change, again
applying only to property/casualty companies, concerns tax-exempt bonds:
interest on bonds purchased by insurers after August 7, 1986 will only be
85% tax-exempt.
o另外保險事業收到的股利與利息收入的稅負也將比過去加重，首先企業從國內公司
收到的股利稅率將從15%增加到20%，第二是有關產物意外險業者剩下的80%的股
利，若股票是在1986年八月以後取得的，還要再加課15%的所得稅，第三也是與產
物意外險業者相關，也就是在1986年八月以後取得的免稅債券，將只有85%的比例
可以免稅。
The last two changes are very important. They mean that our income
from the investments we make in future years will be significantly lower
than would have been the case under the old law. My best guess is that
these changes alone will eventually reduce the earning power of our
insurance operation by at least 10% from what we could previously have
expected.
後面兩項的變動非常重要，代表我們在以後年度，投資所得將會比以前舊制來的少，
我個人估計影響獲利能力約有十個百分點。
o The new tax law also materially changes the timing of tax payments by
property/casualty insurance companies. One new rule requires us to
discount our loss reserves in our tax returns, a change that will decrease
deductions and increase taxable income. Another rule, to be phased in
over six years, requires us to include 20% of our unearned premium reserve
in taxable income.
o新稅法也會大幅影響產物意外險公司支付稅負的時點，新規定要求我們在報稅時將
所提列的損失準備打折，此舉將使得我們的課稅所得增加，另外在未來六年內，要求
我們將20%未賺取的保費列入課稅所得中。
Neither rule changes the amount of the annual tax accrual in our
reports to you, but each materially accelerates the schedule of payments.
That is, taxes formerly deferred will now be front-ended, a change that will
significantly cut the profitability of our business. An analogy will suggest
the toll: if, upon turning 21, you were required to immediately pay tax on
all income you were due to receive throughout your life, both your lifetime
wealth and your estate would be a small fraction of what they would be if all
taxes on your income were payable only when you died.
雖然兩者並不影響報表中應付所得稅的數字，但卻都會大幅加速我們支付稅金的時
點，意謂過去不必馬上支付的稅負，現在卻都有可能要面臨繳納，這對我們的獲利將
有相當大的影響，這好比當你21歲成年時，便被要求要對你一生所能賺得的收入預
先課稅，則你往後一輩子個人的財富與身家將會比等到你死時再課稅要來的少的許多。
Attentive readers may spot an inconsistency in what we say. Earlier,
discussing companies in price-competitive industries, we suggested that
tax increases or reductions affect these companies relatively little, but
instead are largely passed along to their customers. But now we are saying
that tax increases will affect profits of Berkshire’s property/casualty
companies even though they operate in an intensely price-competitive
industry.
細心的讀者可能會發現一項與我們先前所說不一致的地方，剛剛提到在價格競爭激烈
的產業，我們認為稅負的增減，只會將變化移轉到客戶的身上，對公司的獲利影響有
限，不過以目前正處在激烈競爭的產物意外險業來說，稅負的增加直接影響的卻是公
司的獲利能力。
The reason this industry is likely to be an exception to our general rule
is that not all major insurers will be working with identical tax equations.
Important differences will exist for several reasons: a new alternative
minimum tax will materially affect some companies but not others; certain
major insurers have huge loss carry-forwards that will largely shield their
income from significant taxes for at least a few years; and the results of
some large insurers will be folded into the consolidated returns of
companies with non-insurance businesses. These disparate conditions will
produce widely varying marginal tax rates in the property/casualty industry.
That will not be the case, however, in most other price-competitive
industries, such as aluminum, autos and department stores, in which the
major players will generally contend with similar tax equations.
主要原因在於並非所有的保險業者都適用同樣的稅法規定，由於一些公司先前帳上有
相當大的虧損可供往後年度的獲利扣抵，有一些則因為併進虧損的非保險部門享有租
稅上優惠，使得不同產險公司的實際稅率不一而足，這與其他價格競爭激烈的產業，
諸如汽車、鋁業、百貨業，主要競爭對手稅率差異不大的情況，完全不一樣。
The absence of a common tax calculus for property/casualty
companies means that the increased taxes falling on the industry will
probably not be passed along to customers to the degree that they would in
a typical price-competitive industry. Insurers, in other words, will
themselves bear much of the new tax burdens.
稅負成本基礎不一，導致差異無法完全反應到客戶的身上，保險公司本身必須吸收部
份的稅務負擔。
o A partial offset to these burdens is a "fresh start" adjustment that
occurred on January 1, 1987 when our December 31, 1986 loss reserve
figures were converted for tax purposes to the newly-required discounted
basis. (In our reports to you, however, reserves will remain on exactly the
same basis as in the past - undiscounted except in special cases such as
structured settlements.) The net effect of the "fresh start" is to give us a
double deduction: we will get a tax deduction in 1987 and future years for a
portion of our-incurred-but-unpaid insurance losses that have already
been fully deducted as costs in 1986 and earlier years.
o另外部份負擔可被"fresh start"調整規定所抵消，雖然當我們在1986年提列的損
失準備，依照新稅法規定，在1987年認列時將被打折，(當然在給各位的財務報告上
的數字仍維持不變) ，不過由於重複扣抵的結果，將會使得淨影響數較以前增加。
The increase in net worth that is produced by this change is not yet
reflected in our financial statements. Rather, under present GAAP rules
(which may be changed), the benefit will flow into the earnings statement
and, consequently, into net worth over the next few years by way of
reduced tax charges. We expect the total benefit from the fresh-start
adjustment to be in the $30 - $40 million range. It should be noted,
however, that this is a one-time benefit, whereas the negative impact of the
other insurance-related tax changes is not only ongoing but, in important
respects, will become more severe as time passes.
這項淨值增加的影響尚未反應在年度的資產負債表上，依照現行的一般公認會計原
則，這項影響數將會陸續反應在未來的損益表的減稅利益上，我們預期這項重新的調
整將會使得公司淨值增加三、四千萬美元，不過須特別注意的是，這種優惠只是一時
的，不過其他不利的稅負增加卻是永久的。
o The General Utilities Doctrine was repealed by the new tax law. This
means that in 1987 and thereafter there will be a double tax on corporate
liquidations, one at the corporate level and another at the shareholder level.
In the past, the tax at the corporate level could be avoided, If Berkshire, for
example, were to be liquidated - which it most certainly won’t be -
shareholders would, under the new law, receive far less from the sales of
our properties than they would have if the properties had been sold in the
past, assuming identical prices in each sale. Though this outcome is
theoretical in our case, the change in the law will very materially affect
many companies. Therefore, it also affects our evaluations of prospective
investments. Take, for example, producing oil and gas businesses,
selected media companies, real estate companies, etc. that might wish to
sell out. The values that their shareholders can realize are likely to be
significantly reduced simply because the General Utilities Doctrine has been
repealed - though the companies’ operating economics will not have
changed adversely at all. My impression is that this important change in
the law has not yet been fully comprehended by either investors or
managers.
o一般事業處理原則在新稅法實施後將被取消，意思是說在1987年以後，對於企業
的清算其稅負將加倍，一個是在企業階段，一則是在股東個人階段，在過去企業階段
的稅負可透過適當方法予以規避，舉例來說，假設今天我們把Berkshire清算，(當然
這是不可能的事) ，在新制之下，公司股東所能收到的清算收入，將比過去舊制時代
少了很多，雖然這只是假設，但事實上卻影響到許多準備清算的公司，同樣也會影響
我們對投資標的的評估，如石油業、媒體業、或不動產業等等，雖然公司實際經營狀
況並沒有多大改變，但其處分價值卻因稅法的修訂而有極大的變動。
This section of our report has been longer and more complicated than
I would have liked. But the changes in the law are many and important,
particularly for property/casualty insurers. As I have noted, the new law
will hurt Berkshire’s results, but the negative impact is impossible to
quantify with any precision.
個人認為一般投資人或基金經理人可能尚未完全了解其嚴重性，雖然我不愛提，但我
還是必須向各位報告以上複雜難解的內容，總之我只能說新法對Berkshire來說，絕
對會有不利的影響，至於詳細的數字是多少，以目前的情況實在很難詳細的估算。
Miscellaneous
其他事項
We bought a corporate jet last year. What you have heard about such
planes is true: they are very expensive and a luxury in situations like ours
where little travel to out-of-the-way places is required. And planes not
only cost a lot to operate, they cost a lot just to look at. Pre-tax, cost of
capital plus depreciation on a new $15 million plane probably runs $3
million annually. On our own plane, bought for $850,000 used, such costs
run close to $200,000 annually.
去年公司新添購了一架飛機，沒錯一架對很少到遠處旅行的我們來說，算是相當昂貴
且豪華的飛機，這架飛機不僅所費不貸，還要花許多錢在保養之上，一架1,500萬美
元的新飛機，每年光是帳上的資金成本與折舊提列就要300萬美金，相較之下先前那
架85萬美元二手飛機，每年只會產生50萬美元的費用。
Cognizant of such figures, your Chairman, unfortunately, has in the
past made a number of rather intemperate remarks about corporate jets.
Accordingly, prior to our purchase, I was forced into my Galileo mode. I
promptly experienced the necessary "counter-revelation" and travel is now
considerably easier - and considerably costlier - than in the past. Whether
Berkshire will get its money’s worth from the plane is an open question, but
I will work at achieving some business triumph that I can (no matter how
dubiously) attribute to it. I’m afraid Ben Franklin had my number. Said he:
"So convenient a thing it is to be a reasonable creature, since it enables one
to find or make a reason for everything one has a mind to do."
確實有極大的差別，雖然充分了解其中的差異，不幸地本人還是對於企業專用飛機發
表了許多不當的言論，因此在購買之前，我不得已暫時變身成為伽利略，突然間得到
一項反啟示，原來旅行可以比過去來的容易多了，只是也變得比過去更貴了，到底
Berkshire會不會因為這架飛機而受益，目前尚無定論，但我個人一定會將部份企業
的成功因素歸諸於它(不管別人如何地懷疑) ，我很害怕富蘭克林打電話告訴我說，沒
錯!人類身為一種有理性的動物實在是太方便了，只要他想要做的，隨時可以找一個理
由來解釋它。
About 97% of all eligible shares participated in Berkshire’s 1986
shareholder-designated contributions program. Contributions made
through the program were $4 million, and 1,934 charities were recipients.
大約有97%的股東參加了去年的股東指定捐贈計畫，透過這項計畫去年我們總共捐出
了400萬美元給1,934個不同的慈善團體機構，
We urge new shareholders to read the description of our
shareholder-designated contributions program that appears on pages 58
and 59. If you wish to participate in future programs, we strongly urge
that you immediately make sure your shares are registered in the name of
the actual owner, not in "street" name or nominee name. Shares not so
registered on September 30, 1987 will be ineligible for the 1987 program.
我們敦促新加入的股東，仔細閱讀年報上有關股東捐贈計畫的詳細內容，如果在未來
年度內，你想要參加這類的計畫，我們強烈建議你將股份登記在自己而不是受託人的
名下，必須在1987年9月30日之前完成登記，才有權利參與1987年的捐贈計畫。
* * *
Last year almost 450 people attended our shareholders’ meeting, up
from about 250 the year before (and from about a dozen ten years ago). I
hope you can join us on May 19th in Omaha. Charlie and I like to answer
owner-related questions and I can promise you that our shareholders will
pose many good ones. Finishing up the questions may take quite a while -
we had about 65 last year so you should feel free to leave once your own
have been answered.
* * *
去年總計有450位股東參加年度的股東會，(去年約有250位，十年前則只有十幾
位) ，我很期望各位在五月十九日都能到奧瑪哈來參加今年的股東會，查理與我會很
樂意為各位回答所有有關公司經營的問題，去年所有股東總共提了65個問題，其中
有許多相當好的意見。
Last year, after the meeting, one shareholder from New Jersey and
another from New York went to the Furniture Mart, where each purchased a
$5,000 Oriental rug from Mrs. B. (To be precise, they purchased rugs that
might cost $10,000 elsewhere for which they were charged about $5,000.)
Mrs. B was pleased - but not satisfied - and she will be looking for you at
the store after this year’s meeting. Unless our shareholders top last year’s
record, I’ll be in trouble. So do me (and yourself) a favor, and go see her.
去年股東會結束後，兩位分別來自紐澤西與紐約的股東到內布拉斯加傢具店花了
5,000元向B太太各買了一套市價一萬元的地毯，B太太相當高興但卻不甚滿意，所
以今年股東會後，B太太將在店內等待各位，希望各位能夠打敗去年的記錄，否則我
可能會有麻煩，所以各位請幫幫忙，不要忘了順道去看看她
Warren E. Buffett
February 27, 1987 Chairman of the Board
華倫．巴菲特
董事會主席
1987年2月27日
Appendix
附錄
Purchase-Price Accounting Adjustments and the "Cash Flow" Fallacy Purchase-Price Accounting Adjustments and the "Cash Flow" FallacyFirst a short quiz: below are abbreviated 1986 statements of earnings for
two companies. Which business is the more valuable?
購買法會計調整數與「現金流量」的謬誤
首先先來個小考：以下是兩家公司的財務報表，請問哪一家比較值錢??
Company O
Company N
(000s Omitted)
Revenues……………………….
$677,240
$677,240
Costs of Goods Sold:
Historical costs, excluding depreciation…………………….
$341,170
$341,170
Special non-cash inventory costs…………………………….
4,979
(1)
Depreciation of plant and equipment ……………………...
8,301
13,355
(2)
349,471
359,504
$327,769
$317,736
Gross Profit …………………….
Selling & Admin. Expense........
$260,286
$260,286
Amortization of Goodwill .........
______
____595
(3)
260,286
260,881
Operating Profit .....................…
$ 67,483
$ 56,855
Other Income, Net .................…
4,135
4,135
Pre-Tax Income ......................…
$ 71,618
$ 60,990
Applicable Income Tax:
Historical deferred and current tax ……………………………….
$ 31,387
$ 31,387
Non-Cash Inter-period Allocation Adjustment .............
______
_____998
(4)
31,387
32,385
Net Income ............ $40,231 $28,605
======= =======
(Numbers (1) through (4) designate items discussed later in this section.)
(1)-(4)在後面會詳加討論。
As you've probably guessed, Companies O and N are the same business -
Scott Fetzer. In the "O" (for "old") column we have shown what the
company's 1986 GAAP earnings would have been if we had not purchased it;
in the "N" (for "new") column we have shown Scott Fetzer's GAAP earnings
as actually reported by Berkshire.
大家或許都已經猜到了，公司O跟公司N指的都是同一家公司-史考特-飛茲，O公
司(指舊公司)係假設它1986年沒有被Berkshire買下時依照一般公認會計原則編製
的盈餘報表，至於N公司(指新公司)則是指1986年它被Berkshire買下後，依照一
般公認會計原則在Berkshire報表上顯示的相關數字。
It should be emphasized that the two columns depict identical economics -
i.e., the same sales, wages, taxes, etc. And both "companies" generate the
same amount of cash for owners. Only the accounting is different. So,
fellow philosophers, which column presents truth? Upon which set of
numbers should managers and investors focus?
必須強調的是，這兩家公司數字所敘述的是同一個經濟事實，也就是營收、薪資、稅
負都相同，而兩家公司貢獻給股東的現金流入也完全相同，唯一不同的就只有適用的
會計原則，所以說，各位偉大的思想家，到底哪一家呈現的才是事實?? 投資人與經理
人到底應該關心哪一份報表??
Before we tackle those questions, let's look at what produces the disparity
between O and N. We will simplify our discussion in some respects, but the
simplification should not produce any inaccuracies in analysis or
conclusions.
在處理這些問題以前，讓我們先看看到底這兩家公司有哪一些差異之處，我們會試著
將討論予以簡化，當然這不致產生錯誤的分析與結論。
The contrast between O and N comes about because we paid an amount for
Scott Fetzer that was different from its stated net worth. Under GAAP, such
differences - such premiums or discounts - must be accounted for by
"purchase-price adjustments." In Scott Fetzer's case, we paid $315 million
for net assets that were carried on its books at $172.4 million. So we paid a
premium of $142.6 million.
新公司(N)與舊公司(O)差異的起因源自於我們購買史考特-飛茲的價錢與其會計帳面
淨值有所不同，根據一般公認會計原則，這樣的差異-不論時溢價或是折價，都必須
計入「購買法差異調整」項下，就本例而言，我們支付了3.15億美元買下帳面價值
1.724億美元的資產，中間就產生了1.426億美元的溢價。
The first step in accounting for any premium paid is to adjust the carrying
value of current assets to current values. In practice, this requirement
usually does not affect receivables, which are routinely carried at current
value, but often affects inventories. Because of a $22.9 million LIFO reserve
and other accounting intricacies, Scott Fetzer's inventory account was
carried at a $37.3 million discount from current value. So, making our first
accounting move, we used $37.3 million of our $142.6 million premium to
increase the carrying value of the inventory.
會計原則規定處理購併溢價的第一步是將流動資產的帳列價值調整至目前的價值，實
務上，通常受影響的是存貨等資產，至於具立即變現性的應收帳款則不受影響，由於
史考特-飛茲的存貨計價方式採後進先出法，使得其帳列的存貨成本低於市價3,730
萬美元，所以第一個動作就是將1.426億美元溢價中的3,730萬美元用來調整存貨
價值。
Assuming any premium is left after current assets are adjusted, the next
step is to adjust fixed assets to current value. In our case, this adjustment
also required a few accounting acrobatics relating to deferred taxes. Since
this has been billed as a simplified discussion, I will skip the details and
give you the bottom line: $68.0 million was added to fixed assets and
$13.0 million was eliminated from deferred tax liabilities. After making this
$81.0 million adjustment, we were left with $24.3 million of premium to
allocate.
在流動資產調整完之後，第二步就是調整固定資產至現在的價值，再次地，我們必須
運用一些會計技巧來處理相關的遞延所得稅，由於之前我們強調是簡單的討論，所以
我決定略去部份細節，直接公佈結果，其中6,800萬加到固定資產，至於另外的1,300
萬則從遞延所得稅負債扣除，最後剩下2,430萬美元的溢價待處理。
Had our situation called for them two steps would next have been required:
the adjustment of intangible assets other than Goodwill to current fair
values, and the restatement of liabilities to current fair values, a
requirement that typically affects only long-term debt and unfunded
pension liabilities. In Scott Fetzer's case, however, neither of these steps
was necessary.
如果有必要，接下來還有兩個步驟要進行：一是調整無形資產(商譽除外)，一是調整
負債，通常包含長期負債以及未提撥退休金負債，然而就本例而言，這些步驟都不需
要。
The final accounting adjustment we needed to make, after recording fair
market values for all assets and liabilities, was the assignment of the
residual premium to Goodwill (technically known as "excess of cost over the
fair value of net assets acquired"). This residual amounted to $24.3 million.
Thus, the balance sheet of Scott Fetzer immediately before the acquisition,
which is summarized below in column O, was transformed by the purchase
into the balance sheet shown in column N. In real terms, both balance
sheets depict the same assets and liabilities - but, as you can see, certain
figures differ significantly.
最後我們必須進行的會計動作，就是將剩餘的溢價部份歸類到「商譽」這個科目(專業
的解釋是取得成本超越資產公平價值部份)，金額為2,430萬美元，就這樣舊公司也
就是史考特-飛茲在被購併的前一刻的資產負債表，被改成新公司在Berkshire帳上
所列的各項數字，現實的狀況是，兩者都是用來說明同一家公司所擁有的資產與負債，
但大家可以清楚地發現，兩者在某些科目卻有極大的不同。
Company O
Company N
(000s Omitted)
Assets
Cash and Cash Equivalents …………………………...
$ 3,593
$ 3,593
Receivables, net ………………………………………..
90,919
90,919
Inventories ……………………………………………
77,489
114,764
Other …………………………………………………….
5,954
5,954
Total Current Assets …………………………………..
177,955
215,230
Property, Plant, and Equipment, net ………………….
80,967
148,960
Investments in and Advances to Unconsolidated Subsidiaries and Joint Ventures ………………………
93,589
93,589
Other Assets, including Goodwill …………………….
9,836
34,210
$362,347
$491,989
Liabilities
Notes Payable and Current Portion of Long-term Debt ………………………………………………………
$ 4,650
$ 4,650
Accounts Payable ……………………………………...
39,003
39,003
Accrued Liabilities ……………………………………..
84,939
84,939
Total Current Liabilities ………………………………..
128,592
128,592
Long-term Debt and Capitalized Leases …………….
34,669
34,669
Deferred Income Taxes ………………………………..
17,052
4,075
Other Deferred Credits …………………………………
9,657
9,657
Total Liabilities …………………………………………
189,970
176,993
Shareholders' Equity …………………………………...
172,377
314,996
$362,347 $491,989
======== ========
The higher balance sheet figures shown in column N produce the lower
income figures shown in column N of the earnings statement presented
earlier. This is the result of the asset write-ups and of the fact that some of
the written-up assets must be depreciated or amortized. The higher the
asset figure, the higher the annual depreciation or amortization charge to
earnings must be. The charges that flowed to the earnings statement
because of the balance sheet write-ups were numbered in the statement of
earnings shown earlier:
新公司的盈餘數字比舊公司的來得低，這是由於其資產負債表中的某些資產必須沖銷
或是按期折舊攤銷所致，帳列資產金額越高，每年必須提列的折舊與攤銷也就越高，
就本例而言，可能影響損益的數字包括：
$4,979,000 for non-cash inventory costs resulting, primarily, from
reductions that Scott Fetzer made in its inventories during 1986;
charges of this kind are apt to be small or non-existent in future
years.
1. 以1986年史考特飛茲為主的497.9萬美元存貨跌價損失，這類的成本在
往後年度金額將會慢慢變小。
$5,054,000 for extra depreciation attributable to the write-up of
fixed assets; a charge approximating this amount will probably be
made annually for 12 more years.
2.額外的505.4萬美元固定資產折舊成本，往後12年的金額與此數目相當。
$595,000 for amortization of Goodwill; this charge will be made
annually for 39 more years in a slightly larger amount because our
purchase was made on January 6 and, therefore, the 1986 figure
applies to only 98% of the year.
3.59.5萬的商譽攤銷，這筆費用還要持續39年以上，以後年度的數字會略高，
因為由於購併是在1月6日發生，所以1986年只反應了98%的數字。
$998,000 for deferred-tax acrobatics that are beyond my ability to
explain briefly (or perhaps even non-briefly); a charge approximating
this amount will probably be made annually for 12 more years.
4.99.8萬的遞延所得稅攤銷，由於這部份相當複雜，所以我無法在短期間內向各
位說明清楚，這筆金額還會持續12年以上。
It is important to understand that none of these newly-created accounting
costs, totaling $11.6 million, are deductible for income tax purposes. The
"new" Scott Fetzer pays exactly the same tax as the "old" Scott Fetzer would
have, even though the GAAP earnings of the two entities differ greatly. And,
in respect to operating earnings, that would be true in the future also.
However, in the unlikely event that Scott Fetzer sells one of its businesses,
the tax consequences to the "old" and "new" company might differ widely.
有一點很重要，那就是這些新增的會計攤銷成本，金額約1,160萬美元是無法扣抵所
得稅的，所以新公司支付的所得稅與舊公司並無二致，雖然依照一般公認會計原則所
顯示的數字完全不同，而且往後年度的損益報表也有相同的情況，當然萬一史考特飛
茲出售部份的事業時，兩者的稅負影響就會有所不同。
By the end of 1986 the difference between the net worth of the "old" and
"new" Scott Fetzer had been reduced from $142.6 million to $131.0 million
by means of the extra $11.6 million that was charged to earnings of the
new entity. As the years go by, similar charges to earnings will cause most
of the premium to disappear, and the two balance sheets will converge.
However, the higher land values and most of the higher inventory values
that were established on the new balance sheet will remain unless land is
disposed of or inventory levels are further reduced.
1986年底兩家公司淨值上的不同，在扣除1,160萬美元的已攤銷成本後，將由原先
的1.426億美元減為1.31億美元，隨著時間過去，相似的攤銷將使得彼此的差異逐
漸縮小，然而土地或存貨的重估必須等到這些資產出售後才會消失。
* * *
What does all this mean for owners? Did the shareholders of Berkshire buy a
business that earned $40.2 million in 1986 or did they buy one earning
$28.6 million? Were those $11.6 million of new charges a real economic
cost to us? Should investors pay more for the stock of Company O than of
Company N? And, if a business is worth some given multiple of earnings,
was Scott Fetzer worth considerably more the day before we bought it than
it was worth the following day?
對於股東來說，到底有何差別? Berkshire的股東們在1986年買到的，到底是一家年
獲利4,020萬或是2,860萬美元的公司呢? 這筆1,160萬美元的新增成本對我們到
底有沒有實質的經濟影響呢? 投資人是否應該付出更多的代價來買舊公司呢? 而又若
是企業評價按本益比的角度來衡量的話，史考特飛茲在被我們買下之前是否是比較值
錢呢?
If we think through these questions, we can gain some insights about what
may be called "owner earnings." These represent (a) reported earnings plus
(b) depreciation, depletion, amortization, and certain other non-cash
charges such as Company N's items (1) and (4) less (c) the average annual
amount of capitalized expenditures for plant and equipment, etc. that the
business requires to fully maintain its long-term competitive position and
its unit volume. (If the business requires additional working capital to
maintain its competitive position and unit volume, the increment also
should be included in (c) . However, businesses following the LIFO inventory
method usually do not require additional working capital if unit volume
does not change.)
如果我們能夠想通這些問題，那麼我們就能體會所謂的「經營者的盈餘」，它代表(a)
帳列盈餘，加計(b)折舊、攤銷與其他成本，如新公司(1)到(4)項，扣除(c)年度平均的
資本支出等以維持公司長期競爭力。(如果企業需要額外的營運資金來維持既有的產能
與競爭力，那麼這部份的增加也必須納入(c)項，然而存貨計價方式採用後進先出法的
公司就比較沒有這方面的問題)。
Our owner-earnings equation does not yield the deceptively precise figures
provided by GAAP, since(c) must be a guess - and one sometimes very
difficult to make. Despite this problem, we consider the owner earnings
figure, not the GAAP figure, to be the relevant item for valuation purposes -
both for investors in buying stocks and for managers in buying entire
businesses. We agree with Keynes's observation: "I would rather be vaguely
right than precisely wrong."
我們的經營者盈餘公式與按照一般公認會計原則編製的數字並不會完全相同，因為(c)
項本身是個估計數，且有時還很難精確的估算，基於此，我們認為經營者盈餘在我們
進行購併或買進公司股票，而須評估企業價值時，較有意義，我們相當同意凱因斯的
看法：我寧願大致正確也不要完全錯誤。
The approach we have outlined produces "owner earnings" for Company O
and Company N that are identical, which means valuations are also identical,
just as common sense would tell you should be the case. This result is
reached because the sum of (a) and (b) is the same in both columns O and
N, and because(c) is necessarily the same in both cases.
用我們的方式評估新公司與舊公司所得的經營者盈餘完全相同，這代表兩者的評估價
值也一樣，事實上，按照一般的認知本該就如此，結果會相同是由於兩家公司(a)(b)
兩項的合計數一樣，至於(c)本來就都一樣。
And what do Charlie and I, as owners and managers, believe is the correct
figure for the owner earnings of Scott Fetzer? Under current circumstances,
we believe (c) is very close to the "old" company's (b) number of $8.3
million and much below the "new" company's (b) number of $19.9 million.
Therefore, we believe that owner earnings are far better depicted by the
reported earnings in the O column than by those in the N column. In other
words, we feel owner earnings of Scott Fetzer are considerably larger than
the GAAP figures that we report.
那麼查理跟我身公司公司的所有人與經營者，到底哪一個數字才真正屬於史考特飛茲
呢? 在目前的情況下，我們認為(c)項的數字相當接近舊公司(b)830萬美元，但遠低於
新公司(b)項1,990萬美元，因此我們認為舊公司財務報表上的數字比較接近經營者
的盈餘，換句話說，我們覺得史考特飛茲的經營者盈餘遠大於一般公認會計原則編製
的數字。
That is obviously a happy state of affairs. But calculations of this sort
usually do not provide such pleasant news. Most managers probably will
acknowledge that they need to spend something more than (b) on their
businesses over the longer term just to hold their ground in terms of both
unit volume and competitive position. When this imperative exists - that is,
when (c) exceeds (b) - GAAP earnings overstate owner earnings.
Frequently this overstatement is substantial. The oil industry has in recent
years provided a conspicuous example of this phenomenon. Had most
major oil companies spent only (b) each year, they would have guaranteed
their shrinkage in real terms.
這顯然是一個比較快樂的結果，但計算這種東西通常沒有那麼讓人感到樂觀，大部分
的經理人通常會認為應該花費比(b)項更多的資金以維持既有的產能與競爭力，當這種
觀念存在時，也就是當(c)項遠超過(b)項時，那麼也代表一般公認會計原則過分高估了
經營者的盈餘，而且通常這個數字會非常驚人，近年來的石油產業就為這種現象提供
了最明顯的例證，要是這些石油公司每年只投入(b)的資金的話，那麼它們的實際的產
能將大幅地縮水。
All of this points up the absurdity of the "cash flow" numbers that are often
set forth in Wall Street reports. These numbers routinely include (a) plus (b)
- but do not subtract (c) . Most sales brochures of investment bankers also
feature deceptive presentations of this kind. These imply that the business
being offered is the commercial counterpart of the Pyramids - forever
state-of-the-art, never needing to be replaced, improved or refurbished.
Indeed, if all U.S. corporations were to be offered simultaneously for sale
through our leading investment bankers - and if the sales brochures
describing them were to be believed - governmental projections of national
plant and equipment spending would have to be slashed by 90%.
以上這些論點充分解釋華爾街經營運用現金流量數字的荒謬性，這些數字通常只包含
(a)加(b)但卻未扣除(c)，大部分投資銀行所提供的介紹手冊也使用類似的欺騙手法，
這等於是在暗示，所介紹的企業就像是商業世界裡的萬年金字塔，永遠歷久彌新、不
會被取代、不用維修或更新，事實上，如果全美的企業真如這些投資銀行所形容的，
那麼政府每年編製的全美工廠及設備採購指數將大幅下滑90%以上。
"Cash Flow", true, may serve as a shorthand of some utility in descriptions
of certain real estate businesses or other enterprises that make huge initial
outlays and only tiny outlays thereafter. A company whose only holding is a
bridge or an extremely long-lived gas field would be an example. But "cash
flow" is meaningless in such businesses as manufacturing, retailing,
extractive companies, and utilities because, for them, (c) is always
significant. To be sure, businesses of this kind may in a given year be able
to defer capital spending. But over a five- or ten-year period, they must
make the investment - or the business decays.
「現金流量」的觀念，確實可以作為某些比如說不動產或是初期需要投入大量資本支
出而後僅需負擔少量維修的產業之上，具體的例子包含橋樑興建或是某些蘊藏豐富的
天然氣油田等，但另一方面，「現金流量」卻不能適用於某些零售、製造、採礦及公
用事業之上，因為其必須持續投入的(c)項金額相當巨大，確實這些產業有時可以稍微
忍住一兩年不做重大的投資，但就五到十年長期間來看，它們就不得不這樣做，否則
企業的根基就會被侵蝕。
Why, then, are "cash flow" numbers so popular today? In answer, we confess
our cynicism: we believe these numbers are frequently used by marketers of
businesses and securities in attempts to justify the unjustifiable (and
thereby to sell what should be the unsalable). When (a) - that is, GAAP
earnings - looks by itself inadequate to service debt of a junk bond or
justify a foolish stock price, how convenient it becomes for salesmen to
focus on (a) + (b). But you shouldn't add (b) without subtracting (c) :
though dentists correctly claim that if you ignore your teeth they'll go away,
the same is not true for (c) . The company or investor believing that the
debt-servicing ability or the equity valuation of an enterprise can be
measured by totaling (a) and (b) while ignoring (c) is headed for certain
trouble.
那麼為什麼現在「現金流量」會變得如此流行呢? 在回答前，我們必須承認我們存在
某些偏見，我們認為這些數字通常都是那些專門推銷股票及公司的人，企圖要將一些
爛公司粉飾包裝出售所用的手法，當(a)項也就是一般公認會計原則的盈餘看起來不足
以支應往後的債務所需或是過高的股票價格時，這些業務員自然就會將主意擺在
(a)+(b)這個比較好看的數字上頭，但如果你硬要加上(b)的話，就必須要扣除(c)，雖
然有些牙醫會告訴你，如果你能忘記牙痛的痛楚，那麼它們就等於不存在，如果投資
人或企業買家在考量償債能力或股票價值，只注意(a)+(b)，卻忽略了(c)時，將來肯定
會遇上大麻煩。
* * *
To sum up: in the case of both Scott Fetzer and our other businesses, we
feel that (b) on an historical-cost basis - i.e., with both amortization of
intangibles and other purchase-price adjustments excluded - is quite close
in amount to (c) . (The two items are not identical, of course. For example,
at See's we annually make capitalized expenditures that exceed
depreciation by $500,000 to $1 million, simply to hold our ground
competitively.) Our conviction about this point is the reason we show our
amortization and other purchase-price adjustment items separately in the
table on page 8 and is also our reason for viewing the earnings of the
individual businesses as reported there as much more closely
approximating owner earnings than the GAAP figures.
總而言之，在史考特飛茲以及其他類似個案中，我們認為(b)以歷史成本為基礎，有就
是說在扣除無形資產的攤銷以及其他購買法調整數後所得的金額，應該相當接近於
(c)(當然這兩個項目並不會完全相同，舉例來說，我們在喜斯糖果每年為維持既有的
競爭力所作的資本投入約大於折舊數50萬到100萬之間)，這也是為什麼我們在第8
頁的表特地將無形資產的攤銷以及其他購買法調整數分開列示，同時認為旗下個別事
業的盈餘數字以經營者盈餘而非依照一般公認會計原則的帳列數字為主要參考。
Questioning GAAP figures may seem impious to some. After all, what are
we paying the accountants for if it is not to deliver us the "truth" about our
business. But the accountants' job is to record, not to evaluate. The
evaluation job falls to investors and managers.
或許有人會覺得我們膽敢對一般公認會計原則的帳列盈餘數字提出質疑，但畢竟如果
會計師無法告訴我們真實的數字的話，我們還要它們做什麼用? 當然會計師主要的職
責是記錄而不是評估，評估的工作還是要靠投資人與經營者本身來執行。
Accounting numbers, of course, are the language of business and as such
are of enormous help to anyone evaluating the worth of a business and
tracking its progress. Charlie and I would be lost without these numbers:
they invariably are the starting point for us in evaluating our own
businesses and those of others. Managers and owners need to remember,
however, that accounting is but an aid to business thinking, never a
substitute for it.
當然會計數字是企業的語言，對於任何一個想要評估公司價值以及經營情況的人來
說，都相當有幫助，如果沒有這些數字，查理跟我將會迷失方向，對我們來說，這些
數字絕對是我們評估被投資事業的起始點，但經理人及所有人必須切記，會計只不過
投資人思考的輔助工具，而不是完全的替代品。
To Berkshire Shareholders 1986
巴菲特致股東函
1986年版
BERKSHIRE HATHAWAY INC.
Berkshire海瑟崴股份有限公司
To the Shareholders of Berkshire Hathaway Inc.:
致Berkshire公司全體股東:
Our gain in net worth during 1986 was $492.5 million, or 26.1%.
Over the last 22 years (that is, since present management took over), our
per-share book value has grown from $19.46 to $2,073.06, or 23.3%
compounded annually. Both the numerator and denominator are
important in the per-share book value calculation: during the 22-year
period our corporate net worth has increased 10,600% while shares
outstanding have increased less than 1%.
本公司去年(1986年)的帳面淨值增加了26.1%，大約是4億9,250萬美元，在過去
的22個年頭(也就是現有經營階層接掌本公司以來)，每股帳面淨值由19.46美元，
成長到2,073美元，年複合成長率為23.3%，在計算每股淨值時，分子與分母都同樣
重要，過去22年公司整體的淨值雖然增加106倍之多，但流通在外的股份卻增加不
到一個百分點。
In past reports I have noted that book value at most companies differs
widely from intrinsic business value - the number that really counts for
owners. In our own case, however, book value has served for more than a
decade as a reasonable if somewhat conservative proxy for business value.
That is, our business value has moderately exceeded our book value, with
the ratio between the two remaining fairly steady.
在過去的年報中我已不只一次地提醒大家，多數公司的帳面價值與其實際的內在價值
其實存在有極大的差異(後者才是股東真正該關心的)，不過以我們公司本身的狀況而
言，過去十多年來帳面價值在某種程度(從保守的角度)，卻頗能代表本公司實際的價
值。意思是說Berkshire企業的價值略微超越其帳面價值，兩者之間的比例一直維持
著穩定的差距。
The good news is that in 1986 our percentage gain in business value
probably exceeded the book value gain. I say "probably" because business
value is a soft number: in our own case, two equally well-informed
observers might make judgments more than 10% apart.
而現在跟各位報告的好消息是，1986年本公司企業價值增加的幅度應該是超過了帳
面價值增加的幅度，我說"應該是"是因為企業價值的判斷較為彈性，以我們本身的例
子來說，兩個同樣相當了解本公司的人所衡量出的價值，可以會差到10%以上。
A large measure of our improvement in business value relative to book
value reflects the outstanding performance of key managers at our major
operating businesses. These managers - the Blumkins, Mike Goldberg, the
Heldmans, Chuck Huggins, Stan Lipsey, and Ralph Schey - have over the
years improved the earnings of their businesses dramatically while, except
in the case of insurance, utilizing little additional capital. This
accomplishment builds economic value, or "Goodwill," that does not show
up in the net worth figure on our balance sheet, nor in our per-share book
value. In 1986 this unrecorded gain was substantial.
本公司去年企業價值大幅成長的原因，主要要歸功於旗下主要企業經理人傑出的表
現，包含the Blumkins, Mike Goldberg, the Heldmans, Chuck Huggins, Stan
Lipsey與 Ralph Schey等人，這些企業，除了保險業外，這幾年來在沒有動用額外
資金的前提之下，還能穩定地提高公司的獲利，這種成就塑造出我們所謂典型的經濟
價值或商譽，這種價值雖然無法在公司的資產負債表上反映出來，但我必須向各位報
告，在1986年這個數字相當可觀。
So much for the good news. The bad news is that my performance
did not match that of our managers. While they were doing a superb job in
running our businesses, I was unable to skillfully deploy much of the capital
they generated.
講完了好消息，接下來的壞消息是，本人的表現並不足以與這些優秀的經理人匹配，
當他們在各自的崗位上努力經營事業，可是我卻沒能好好有效地運用他們所產生的資
金。
Charlie Munger, our Vice Chairman, and I really have only two jobs.
One is to attract and keep outstanding managers to run our various
operations. This hasn’t been all that difficult. Usually the managers came
with the companies we bought, having demonstrated their talents
throughout careers that spanned a wide variety of business circumstances.
They were managerial stars long before they knew us, and our main
contribution has been to not get in their way. This approach seems
elementary: if my job were to manage a golf team - and if Jack Nicklaus or
Arnold Palmer were willing to play for me - neither would get a lot of
directives from me about how to swing.
查理跟我平時主要只有兩項工作，一個是吸引並維繫優秀的經理人來經營我們的各種
事業，這項工作並不太難，通常在我們買下一家企業時，其原來的經理人便早已在各
自產業展現他們的長才，我們只要確定沒有妨礙到他們即可，這點非常重要，如果我
的工作是組織一支職業高爾夫球隊，若尼克勞斯或阿諾帕瑪願意替我效力，我實在不
必太費心去教他們如何揮桿。
Some of our key managers are independently wealthy (we hope they all
become so), but that poses no threat to their continued interest: they work
because they love what they do and relish the thrill of outstanding
performance. They unfailingly think like owners (the highest compliment
we can pay a manager) and find all aspects of their business absorbing.
其實我們一些經理人自己本來就已經相當有錢，(當然我們希望所有的經理人都如此)
但這一點都不影響他們繼續為公司效力，他們之所以工作是因為樂在其中，無時無刻
不散發出幹勁，毫無疑問地他們皆站在老闆的角度看事情，這是我們對這些經理人最
高的恭維，而且你會為他們經營事業各方面成就所著迷。
(Our prototype for occupational fervor is the Catholic tailor who used
his small savings of many years to finance a pilgrimage to the Vatican.
When he returned, his parish held a special meeting to get his first-hand
account of the Pope. "Tell us," said the eager faithful, "just what sort of
fellow is he?" Our hero wasted no words: "He’s a forty-four, medium.")
這種職業病的典型，就像是一位天主教的裁縫省吃儉用了好幾年，好不容易存了一筆
錢到梵蒂岡去朝聖，當他回來後，教友們特地集會爭相想要了解他對教宗的第一手描
述，「趕快告訴我們，教宗到底是個怎麼樣的人」，只見這位裁逢師，淡淡地說︰「四
十四腰，中等身材。」
Charlie and I know that the right players will make almost any team
manager look good. We subscribe to the philosophy of Ogilvy & Mather’s
founding genius, David Ogilvy: "If each of us hires people who are smaller
than we are, we shall become a company of dwarfs. But, if each of us hires
people who are bigger than we are, we shall become a company of giants."
查理跟我都知道，只要找到好球員，任何球隊經理人都可以做的不錯，就像是奧美廣
告創辦人David Ogilvy曾說︰「若我們僱用比我們矮小的人，那麼我們會變成一群
株孺，相反地，若我們能找到一群比我們更高大的人，我們就是一群巨人。」
A by-product of our managerial style is the ability it gives us to easily
expand Berkshire’s activities. We’ve read management treatises that
specify exactly how many people should report to any one executive, but
they make little sense to us. When you have able managers of high
character running businesses about which they are passionate, you can
have a dozen or more reporting to you and still have time for an afternoon
nap. Conversely, if you have even one person reporting to you who is
deceitful, inept or uninterested, you will find yourself with more than you
can handle. Charlie and I could work with double the number of managers
we now have, so long as they had the rare qualities of the present ones.
此外這種企業文化也有另外一種好處，它使得查理跟我可以放手去擴展Berkshire的
事業版圖，我們看過許多企業規定一個主管只能管轄一定人數的人員，但這規定對我
們來說一點意義都沒有，當你手下有一群正直又能幹的人才，在幫你經營一項他們深
具感情的事業時，你大可以同時管理一打以上這樣的人，而且還行有餘力打個盹，相
反地，若他們存心要欺騙你、能力不夠或是沒有熱情時，只要一個就夠你操心的了，
只要找對人，查理與我甚至可以同時管理比現在多一倍的經理人都沒有問題。
We intend to continue our practice of working only with people whom
we like and admire. This policy not only maximizes our chances for good
results, it also ensures us an extraordinarily good time. On the other hand,
working with people who cause your stomach to churn seems much like
marrying for money - probably a bad idea under any circumstances, but
absolute madness if you are already rich.
我們將會繼續維持這種只與我們喜愛且崇敬的夥伴合作的原則，這種原則不但可以確
保經營的績效極大化，也可以讓我們享受愉快的時光。否則要是僅為了賺錢成天與一
些會令你反胃的傢伙為伍，這感覺就好像是當你已很有錢時，還為了錢跟不喜歡的人
結婚一樣。
The second job Charlie and I must handle is the allocation of capital,
which at Berkshire is a considerably more important challenge than at most
companies. Three factors make that so: we earn more money than average;
we retain all that we earn; and, we are fortunate to have operations that, for
the most part, require little incremental capital to remain competitive and
to grow. Obviously, the future results of a business earning 23% annually
and retaining it all are far more affected by today’s capital allocations than
are the results of a business earning 10% and distributing half of that to
shareholders. If our retained earnings - and those of our major investees,
GEICO and Capital Cities/ABC, Inc. - are employed in an unproductive
manner, the economics of Berkshire will deteriorate very quickly. In a
company adding only, say, 5% to net worth annually, capital-allocation
decisions, though still important, will change the company’s economics far
more slowly.
查理跟我必須處理的第二項工作是資金的分配，這在Berkshire尤其重要，其主要原
因有三，一是因為我們賺的錢比別人多，二是我們通常將所賺的錢保留下來，最後也
同時也是最重要的是因為我們旗下的企業可以不需要太多的資金便能維持競爭力以及
成長性。的確一家每年能賺23%且全數保留盈餘的公司，比起每年只賺10%，且只保
留半數盈餘的公司來說，前者資金分配的任務要繁重的多，所以將來若是我們運用盈
餘的方式不佳，或是旗下主要被投資公司，諸如GEICO、美國廣播公司等表現不好，
則Berkshire經營情況惡化的程度也會非常地快，假設公司淨值以後每年只有5%的成
長，則公司資金分配的工作雖然還是很重要，但體質改善的速度也會變慢許多。
Capital allocation at Berkshire was tough work in 1986. We did make
one business acquisition - The Fechheimer Bros. Company, which we will
discuss in a later section. Fechheimer is a company with excellent
economics, run by exactly the kind of people with whom we enjoy being
associated. But it is relatively small, utilizing only about 2% of Berkshire’s
net worth.
事實上在1986年Berkshire資金分配的工作並不好幹，我們確實是完成了一項購併
案-那就是買下費區-海默兄弟公司，後面我們還會有詳細的描述，這家公司極具競爭
力，而且是由那種我們喜歡打交道的人所經營，惟一的缺點就是小了點，大概只動用
Berkshire淨值不到百分之二的資金。
Meanwhile, we had no new ideas in the marketable equities field, an
area in which once, only a few years ago, we could readily employ large
sums in outstanding businesses at very reasonable prices. So our main
capital allocation moves in 1986 were to pay off debt and stockpile funds.
Neither is a fate worse than death, but they do not inspire us to do
handsprings either. If Charlie and I were to draw blanks for a few years in
our capital-allocation endeavors, Berkshire’s rate of growth would slow
significantly.
在此同時，我們從市場直接買進股票這方面也沒有太大的進展，相較幾年前我們可以
利用大筆資金以合理的價格買進許多不錯的股票，所以最後我們只好將資金用來償還
負債並囤積銀彈，雖然這比死掉還好一點，但卻沒有做到繁衍下一代的任務，若是查
理跟我在往後的幾年持續在資金分配這方面繳白券的話，Berkshire淨值的成長勢必
將會變緩許多。
We will continue to look for operating businesses that meet our tests
and, with luck, will acquire such a business every couple of years. But an
acquisition will have to be large if it is to help our performance materially.
Under current stock market conditions, we have little hope of finding
equities to buy for our insurance companies. Markets will change
significantly - you can be sure of that and some day we will again get our
turn at bat. However, we haven’t the faintest idea when that might
happen.
我們會持續在市場上尋找符合我們標準的企業，我想要是運氣好可能每幾年就能夠找
到一家，但若想要對公司淨值有明顯助益，則其規模就必須夠大，只是以目前的股票
市場狀況，我們實在很難為我們的保險公司找到合適的投資標的，當然市場終究會轉
變，總有一天會再度輪到我們站上打擊位置，只不過現在我們不清楚何時能夠換我們
上場。
It can’t be said too often (although I’m sure you feel I’ve tried) that,
even under favorable conditions, our returns are certain to drop
substantially because of our enlarged size. We have told you that we hope
to average a return of 15% on equity and we maintain that hope, despite
some negative tax law changes described in a later section of this report.
If we are to achieve this rate of return, our net worth must increase $7.2
billion in the next ten years. A gain of that magnitude will be possible only
if, before too long, we come up with a few very big (and good) ideas.
Charlie and I can’t promise results, but we do promise you that we will keep
our efforts focused on our goals.
雖然不常但我必須說(雖然各位或許覺得我常常在提)，即使在最理想的狀態下，隨著
規模的成長，Berkshire整體的平均報酬率將會大幅下滑，我跟各位報告過，我們希
望Berkshire的年平均報酬能維持在15%左右，雖然最近稅法上有些改變對我們並不
利，後面我還會再提，算起來如果未來十年內，淨值必須要增加72億美元，我們才
能維持這樣的報酬率，要達到這樣的目標，除非我們真的找到一項大型的投資案，當
然必須要非常成功才行，查理跟我無法保證一定做得到，但我們絕對可以向各位保證
的是，我們一定會朝這個目標盡力而為。
Sources of Reported Earnings
盈餘報告
The table on the next page shows the major sources of Berkshire’s
reported earnings. This table differs in several ways from the one
presented last year. We have added four new lines of business because of
the Scott Fetzer and Fechheimer acquisitions. In the case of Scott Fetzer,
the two major units acquired were World Book and Kirby, and each is
presented separately. Fourteen other businesses of Scott Fetzer are
aggregated in Scott Fetzer - Diversified Manufacturing. SF Financial Group,
a credit company holding both World Book and Kirby receivables, is
included in "Other." This year, because Berkshire is so much larger, we also
have eliminated separate reporting for several of our smaller businesses.
下表係Berkshire帳列盈餘的主要來源，今年的表與前幾年有幾點不太一樣的地方，
首先由於新購事業史考特-飛茲、費區-海默的加入，我們營業項目增加了史考特-飛
茲(包含該公司14項規模較小的業務)、寇比吸塵器、世界百科全書、費區-海默等四
欄，同時也由於Berkshire整體規模擴大了許多，我們也將幾個較小的部門合併列示。
In the table, amortization of Goodwill is not charged against the
specific businesses but, for reasons outlined in the Appendix to my letter in
the 1983 Annual Report, is aggregated as a separate item. (A Compendium
of earlier letters, including the Goodwill discussion, is available upon
request.) Both the Scott Fetzer and Fechheimer acquisitions created
accounting Goodwill, which is why the amortization charge for Goodwill
increased in 1986.
另外如同過去一樣，我們將個別企業購併的商譽攤銷單獨挑出，(原因請參閱1983年
的附錄)彙總後擺在最後一欄，由於史考特-飛茲、費區-海默兩件購併案使得1986
年的商譽攤銷較以往增加許多。
Additionally, the Scott Fetzer acquisition required other major
purchase-price accounting adjustments, as prescribed by generally
accepted accounting principles (GAAP). The GAAP figures, of course, are
the ones used in our consolidated financial statements. But, in our view,
the GAAP figures are not necessarily the most useful ones for investors or
managers. Therefore, the figures shown for specific operating units are
earnings before purchase-price adjustments are taken into account. In
effect, these are the earnings that would have been reported by the
businesses if we had not purchased them.
另外史考特-飛茲的購併案依一般公認會計原則須採購買法處理，所以在本表也配合
稍作調整，在合併財務報表上所顯示的數字係依照一般公認會計原則所編製，但就我
們本身的觀點，這個數字對於經理人與投資人來說，並不見得有意義，因此下表所顯
示的數字已扣除這些調整過的數字，事實上這才是，假設今天我們沒有買下他們時，
這家公司原本的盈餘狀況。
A discussion of our reasons for preferring this form of presentation is
in the Appendix to this letter. This Appendix will never substitute for a
steamy novel and definitely is not required reading. However, I know that
among our 6,000 shareholders there are those who are thrilled by my
essays on accounting - and I hope that both of you enjoy the Appendix.
詳細解釋請參閱附錄，不過若嫌內容不具吸引力，也可以跳過不看，當然我也知道在
所有6,000位股東當中，有許多對於我個人在會計方面的觀點感到折服，希望你們都
能好好地欣賞。
In the Business Segment Data on pages 41-43 and in the
Management’s Discussion section on pages 45-49, you will find much
additional information about our businesses. I urge you to read those
sections, as well as Charlie Munger’s letter to Wesco shareholders,
describing the various businesses of that subsidiary, which starts on page
50.
同時我也強力推薦各位看看查理每年寫給Wesco股東的年報，裡頭有該公司旗下事業
的詳細介紹。
As you can see, operating earnings substantially improved during
1986. Some of the improvement came from the insurance operation,
whose results I will discuss in a later section. Fechheimer also will be
discussed separately. Our other major businesses performed as follows:
如你所見營業淨利在1986年大幅改善，一方面是由於保險事業(這部份連同費區-海
默公司會在稍候詳細說明)，一方面則是其他事業群的優異表現：
o Operating results at The Buffalo News continue to reflect a truly
superb managerial job by Stan Lipsey. For the third year in a row,
man-hours worked fell significantly and other costs were closely controlled.
Consequently, our operating margins improved materially in 1986, even
though our advertising rate increases were well below those of most major
newspapers.
o水牛城報紙在Stan Lipsey的帶領下持續表現優異，連續第三年每人工作時數皆大
幅下絳，其他成本也控制得宜，即使該報的廣告版面增加率遠低於其他主要競爭對手，
但營業毛利仍然大幅增加。
Our cost-control efforts have in no way reduced our commitment to
news. We continue to deliver a 50% "news hole" (the portion of the total
space in the paper devoted to news), a higher percentage, we believe, than
exists at any dominant newspaper in this country of our size or larger.
控制成本不代表我們在新聞品質上將有所退讓，我們的新聞量(新聞版面佔整體版面的
比例)持續維持在50%以上，這是目前大型報紙中比例最高的。
The average news hole at papers comparable to the News is about 40%.
The difference between 40% and 50% is more important than it might first
seem: a paper with 30 pages of ads and a 40% news hole delivers 20 pages
of news a day, whereas our paper matches 30 pages of ads with 30 pages
of news. Therefore, given ad pages equal in number, we end up delivering
our readers no less than 50% more news.
反觀一般同業的水準約只有40%，各位可不要小看這10%的差距，同樣三十頁的廣
告，40%約有二十頁新聞，50%則代表會有三十頁的新聞，一比一的新聞與廣告量，
給予讀者豐富的新聞內容是我們堅持的原則。
We believe this heavy commitment to news is one of the reasons The
Buffalo News has the highest weekday penetration rate (the percentage of
households in the paper’s primary marketing area purchasing it each day)
among any of the top 50 papers in the country. Our Sunday penetration,
where we are also number one, is even more impressive. Ten years ago,
the only Sunday paper serving Buffalo (the Courier-Express) had circulation
of 271,000 and a penetration ratio of about 63%. The Courier-Express had
served the area for many decades and its penetration ratio - which was
similar to those existing in many metropolitan markets - was thought to be
a "natural" one, accurately reflecting the local citizenry’s appetite for a
Sunday product.
我們相信這也是為何水牛城報紙能在當地擁有全美前50大報紙平日最高滲透率的重
要原因(訂戶數佔當地家庭戶數的比率)，此外週日版的比率更令人印象深刻，十年前
水牛城當地最主要的週日版報紙-先鋒報發行量為27萬份，滲透率63%，這比率大概
與全美其它大城市相當，這在當時已被視為是很自然的上限。
Our Sunday paper was started in late 1977. It now has a penetration
ratio of 83% and sells about 100,000 copies more each Sunday than did the
Courier-Express ten years ago - even though population in our market area
has declined during the decade. In recent history, no other city that has
long had a local Sunday paper has experienced a penetration gain anywhere
close to Buffalo’s.
然而自從1977年水牛城報紙開始發行週日版以來，雖然該地區人口數不增反減，但
如今其滲透率已達83%，且發行量更比十年前的先鋒報多出10萬份，達到37萬份，
在，近年來還沒有任何一個地區性的週日報有像水牛城滲透率如此成長的。
Despite our exceptional market acceptance, our operating margins
almost certainly have peaked. A major newsprint price increase took effect
at the end of 1986, and our advertising rate increases in 1987 will again be
moderate compared to those of the industry. However, even if margins
should materially shrink, we would not reduce our news-hole ratio.
雖然擁有超高的市場接受度，但也代表營業利潤已達頂峰，雖然去年年底報紙價格調
漲開始生效，同時1987年的廣告比率增加量也比其他新聞同業來的少，但我們仍堅
持過半的新聞量，即便如此會使得我們的利潤下降也在所不惜。
As I write this, it has been exactly ten years since we purchased The
News. The financial rewards it has brought us have far exceeded our
expectations and so, too, have the non-financial rewards. Our respect for
the News - high when we bought it - has grown consistently ever since the
purchase, as has our respect and admiration for Murray Light, the editor
who turns out the product that receives such extraordinary community
acceptance. The efforts of Murray and Stan, which were crucial to the
News during its dark days of financial reversals and litigation, have not in
the least been lessened by prosperity. Charlie and I are grateful to them.
屈指一算，今年已是我們買下水牛城報紙的第十個年頭，它帶給我們的投資報酬遠遠
超過我們的預期，還有精神上的收獲也是如此，我們對於水牛城報紙及其經營者
Murray Light的敬仰從買下它開始後與日俱增，是他讓這份報紙擁有超高的社區認同
度，他們在水牛城報紙面臨困難與訴訟之時所展現的耐力，並未隨著日後公司邁入坦
途就鬆卸，查理與我在此對他們表示由衷的感謝。
o The amazing Blumkins continue to perform business miracles at
Nebraska Furniture Mart. Competitors come and go (mostly go), but Mrs. B.
and her progeny roll on. In 1986 net sales increased 10.2% to $132
million. Ten years ago sales were $44 million and, even then, NFM
appeared to be doing just about all of the business available in the Greater
Omaha Area. Given NFM’s remarkable dominance, Omaha’s slow growth in
population and the modest inflation rates that have applied to the goods
NFM sells, how can this operation continue to rack up such large sales
gains? The only logical explanation is that the marketing territory of NFM’s
one-and-only store continues to widen because of its ever-growing
reputation for rock-bottom everyday prices and the broadest of selections.
In preparation for further gains, NFM is expanding the capacity of its
warehouse, located a few hundred yards from the store, by about
one-third.
o內布拉斯加家俱店NFM的布魯金家族持續創造商業史上的奇蹟，競爭者來來去去(下
場通常很悲慘)，但B太太跟她的家族卻依然屹立不搖，去年該店業績成長10%達到
一億三千萬美金，是十年前的三倍，在當時該店便已稱霸整個奧瑪哈地區，若再考量
本地緩慢的人口成長率與溫和的通貨膨脹率，這種成績更是難能可貴，而惟一可以解
釋的理由就是隨著NFM價廉物美、樣式齊全的聲名遠播，其市場範圍持續擴大，而
為了應付日後的成長，該店已著手擴充倉庫，距離原本店面只有幾百公尺遠。
Mrs. B, Chairman of Nebraska Furniture Mart, continues at age 93 to
outsell and out-hustle any manager I’ve ever seen. She’s at the store
seven days a week, from opening to close. Competing with her represents
a triumph of courage over judgment.
高齡93歲的B太太技壓群雄，展現超高的銷售能力與耐力，一週工作七天，每天從
開店到打烊，想要跟她競爭需要無比的勇氣。
It’s easy to overlook what I consider to be the critical lesson of the Mrs.
B saga: at 93, Omaha based Board Chairmen have yet to reach their peak.
Please file this fact away to consult before you mark your ballot at the 2024
annual meeting of Berkshire.
大家可能很容易就忽略B太太傳奇，不過沒關係93歲的她，還未抵達巔峰，等到2024
年Berkshire股東會召開時，請大家拭目以待。
o At See’s, sales trends improved somewhat from those of recent years.
Total pounds sold rose about 2%. (For you chocaholics who like to fantasize,
one statistic: we sell over 12,000 tons annually.) Same-store sales,
measured in pounds, were virtually unchanged. In the previous six years,
same store poundage fell, and we gained or maintained poundage volume
only by adding stores. But a particularly strong Christmas season in 1986
stemmed the decline. By stabilizing same-store volume and making a
major effort to control costs, See’s was able to maintain its excellent profit
margin in 1986 though it put through only minimal price increases. We
have Chuck Huggins, our long-time manager at See’s, to thank for this
significant achievement.
o比起前幾年來說，喜斯糖果的銷售磅數增加約2%，銷售業績略有成長，(若你是巧
克力的愛好者，告訴你一個驚人的數字，我們一年的銷售量是一萬兩千公噸) ，只是
過去六年單店銷售量持續下滑，使得我們只有靠增加店面來維持銷售量不墜，但今年
這數字大致維持不變，主要是拜聖誕節銷售旺季特別旺所賜，而即便銷售業績遲滯不
前，該公司仍然靠著成本控制維持利潤空間，感謝Chuck Huggins在這方面為我們
所做的努力。
See’s has a one-of-a-kind product "personality" produced by a
combination of its candy’s delicious taste and moderate price, the
company’s total control of the distribution process, and the exceptional
service provided by store employees. Chuck rightfully measures his
success by the satisfaction of our customers, and his attitude permeates
the organization. Few major retailing companies have been able to sustain
such a customer-oriented spirit, and we owe Chuck a great deal for keeping
it alive and well at See’s.
喜斯糖果算是一種獨一無二的個性化商品，甜美的糖果加上公道的價格，且該公司完
全掌握銷售管道並由店員提供貼心的服務，Chuck的成就反應在客戶的滿意度之上，
並進而感染到整個公司，很少有零售商店能夠持續維持客戶導向的精神，這一切都要
歸功於他。
See’s profits should stay at about their present level. We will continue
to increase prices very modestly, merely matching prospective cost
increases.
展望未來喜斯的獲利應該可以維持在現有狀態，我們仍會持續調整價格，以反映增加
的成本。
o World Book is the largest of 17 Scott Fetzer operations that joined
Berkshire at the beginning of 1986. Last year I reported to you
enthusiastically about the businesses of Scott Fetzer and about Ralph Schey,
its manager. A year’s experience has added to my enthusiasm for both.
Ralph is a superb businessman and a straight shooter. He also brings
exceptional versatility and energy to his job: despite the wide array of
businesses that he manages, he is on top of the operations, opportunities
and problems of each. And, like our other managers, Ralph is a real
pleasure to work with. Our good fortune continues.
o世界百科全書是1986年加入我們的史考特-飛茲所屬十七個部門中最大的一個，去
年我很高興地跟各位介紹該公司的經營者與營運狀況，一年後我更加開心地向大家報
告，Ralph真是個優秀的經理人，圓滿地達成目標，雖然要管理各式各樣的產品，並
面對不同的機會問題與挑戰，Ralph卻能夠讓他的工作更加精彩更多元化，而且更重
要的是我們合作愉快，看來我們的好運將持續不斷。
World Book’s unit volume increased for the fourth consecutive year,
with encyclopedia sales up 7% over 1985 and 45% over 1982. Childcraft’s
unit sales also grew significantly.
世界百科全書的銷售量連續四年皆成長，兒童工藝套書也大幅成長。
World Book continues to dominate the U.S. direct-sales encyclopedia
market - and for good reasons. Extraordinarily well-edited and priced at
under 5 cents per page, these books are a bargain for youngster and adult
alike. You may find one editing technique interesting: World Book ranks
over 44,000 words by difficulty. Longer entries in the encyclopedia include
only the most easily comprehended words in the opening sections, with the
difficulty of the material gradually escalating as the exposition proceeds.
As a result, youngsters can easily and profitably read to the point at which
subject matter gets too difficult, instead of immediately having to deal with
a discussion that mixes up words requiring college-level comprehension
with others of fourth-grade level.
世界百科全書稱霸於直銷市場，不但編排精美，且平均每頁不到五毛錢，可謂老少咸
宜，有一數字相當有趣，那就是書中有高達四萬多個困難字，入門部份由簡單的生字
組成，慢慢地加入難度更高的單字，如此使得年輕的讀者能夠循序漸進，最後輕易的
便能運用大學程度以上的單字。
Selling World Book is a calling. Over one-half of our active
salespeople are teachers or former teachers, and another 5% have had
experience as librarians. They correctly think of themselves as educators,
and they do a terrific job. If you don’t have a World Book set in your house,
I recommend one.
推銷百科全書是項神聖的天職，我們超過半數以上的銷售人員是現職或是退休的老
師，有些則是圖書館員，他們將自己視為教育工作者，而且做的有聲有色，如果你家
中還沒有一套世界百科全書，那麼我建議你趕快去買一套放在家裏。
o Kirby likewise recorded its fourth straight year of unit volume gains.
Worldwide, unit sales grew 4% from 1985 and 33% from 1982. While the
Kirby product is more expensive than most cleaners, it performs in a
manner that leaves cheaper units far behind ("in the dust," so to speak).
Many 30- and 40-year-old Kirby cleaners are still in active duty. If you
want the best, you buy a Kirby.
o寇比吸塵器同樣維持連續四年的成長，全球的銷售數量共成長了33%，雖然其產品
價格要比同類型吸塵器貴許多，但它的性能卻將其他品牌遠遠拋在後面，有許多產品
經過了三、四十年還很耐用，想要最好的，就買寇比！
Some companies that historically have had great success in direct
sales have stumbled in recent years. Certainly the era of the working
woman has created new challenges for direct sales organizations. So far,
the record shows that both Kirby and World Book have responded most
successfully.
許多靠直銷銷售產品的公司，近年來紛紛倒閉，主要是由於上班族婦女越來越多所致，
不過到目前為止，寇比吸塵器與世界百科全書的表現算是可圈可點。
The businesses described above, along with the insurance operation
and Fechheimer, constitute our major business units. The brevity of our
descriptions is in no way meant to diminish the importance of these
businesses to us. All have been discussed in past annual reports and,
because of the tendency of Berkshire owners to stay in the fold (about 98%
of the stock at the end of each year is owned by people who were owners at
the start of the year), we want to avoid undue repetition of basic facts. You
can be sure that we will immediately report to you in detail if the underlying
economics or competitive position of any of these businesses should
materially change. In general, the businesses described in this section can
be characterized as having very strong market positions, very high returns
on capital employed, and the best of operating managements.
以上企業再加上保險事業，便構成我們的主要事業領域，簡單地帶過並不意味著它們
對我們不具重要性，一方面是因為許多東西在過去的年報都已報告過，一方面是因為
公司的股東結構非常穩定(每年約有98%的股東會選擇繼續投資本公司)，所以我們不
必花太多時間重複贅述一些事情，當然若是有什麼重大的事件或任何影響公司營運的
情況，我們一定會立即向各位股東報告，總的來說，前面所提的公司都有非常穩固的
經營基礎，投資報酬率也很高，同時也擁有優秀的經營階層。
The Fechheimer Bros. Co.
費區-海默兄弟公司
Every year in Berkshire’s annual report I include a description of the
kind of business that we would like to buy. This "ad" paid off in 1986.
每一年我都會在公司年報上不厭其煩地，提及我們想要買下公司的條件，在今年終於
有了具體的回報。
On January 15th of last year I received a letter from Bob Heldman of
Cincinnati, a shareholder for many years and also Chairman of Fechheimer
Bros. Until I read the letter, however, I did not know of either Bob or
Fechheimer. Bob wrote that he ran a company that met our tests and
suggested that we get together, which we did in Omaha after their results
for 1985 were compiled.
去年的一月五日我收到一位資深股東Bob的來信，他是費區-海默公司的董事長，在
此之前我並不認識Bob或費區-海默公司，他在信中提到所經營的公司應該符合我們
的條件，並提議大家碰個面，於是等到該公司年度報告出爐後我們相約在奧馬哈。
He filled me in on a little history: Fechheimer, a uniform
manufacturing and distribution business, began operations in 1842.
Warren Heldman, Bob’s father, became involved in the business in 1941
and his sons, Bob and George (now President), along with their sons,
subsequently joined the company. Under the Heldmans’ management, the
business was highly successful.
他簡單介紹一下公司的歷史，這是一家專門製造與銷售制服的老牌公司，成立於1842
年，Bob的父親-Warren於1941年接手，跟著Bob與現在擔任總裁的弟弟George
也加入該公司，在該家族的帶領下，公司的業績蒸蒸日上。
In 1981 Fechheimer was sold to a group of venture capitalists in a
leveraged buy out (an LBO), with management retaining an equity interest.
The new company, as is the case with all LBOS, started with an
exceptionally high debt/equity ratio. After the buy out, however,
operations continued to be very successful. So by the start of last year
debt had been paid down substantially and the value of the equity had
increased dramatically. For a variety of reasons, the venture capitalists
wished to sell and Bob, having dutifully read Berkshire’s annual reports,
thought of us.
1981年該公司被一家專門從事融資購併(LBO)的投資集團買下，但現有經營階層仍保
有部份股權，只是這類型的公司在被購併後，通常一開始都須承擔極高的負債比率，
所幸由於公司營運穩健，等負債逐漸被清償完畢後，公司的價值便立即顯現出來，基
於某些原因，當初投資的LBO集團想要把股權賣掉，這時熟讀Berkshire年報的Bob
立刻就想到我們。
Fechheimer is exactly the sort of business we like to buy. Its
economic record is superb; its managers are talented, high-grade, and love
what they do; and the Heldman family wanted to continue its financial
interest in partnership with us. Therefore, we quickly purchased about
84% of the stock for a price that was based upon a $55 million valuation for
the entire business.
事實上費區-海默正是我們想要買的公司類型，它有悠久的歷史，有才能的管理人員，
品格高尚，樂在工作，且願意與我們一起分享公司經營所帶來的利益，所以我們很快
地就決定以4,600多萬美元買下該公司84%的股權。
The circumstances of this acquisition were similar to those prevailing
in our purchase of Nebraska Furniture Mart: most of the shares were held
by people who wished to employ funds elsewhere; family members who
enjoyed running their business wanted to continue both as owners and
managers; several generations of the family were active in the business,
providing management for as far as the eye can see; and the managing
family wanted a purchaser who would not re-sell, regardless of price, and
who would let the business be run in the future as it had been in the past.
Both Fechheimer and NFM were right for us, and we were right for them.
這與我們當初買下內布拉斯加傢具NFM的情況很類似，持有股權的大股東有資金上
的需求，原有經營家族有意願繼續經營公司並持有部份股權，且希望買下公司股權的
股東不要只為了價格便隨便將公司股權出讓，並確保股權交易完成後，公司的經營形
態不受干擾，這兩家公司真正是我門所想要投資的類型，而它們也確實適得其所。
You may be amused to know that neither Charlie nor I have been to
Cincinnati, headquarters for Fechheimer, to see their operation. (And,
incidentally, it works both ways: Chuck Huggins, who has been running
See’s for 15 years, has never been to Omaha.) If our success were to
depend upon insights we developed through plant inspections, Berkshire
would be in big trouble. Rather, in considering an acquisition, we attempt
to evaluate the economic characteristics of the business - its competitive
strengths and weaknesses - and the quality of the people we will be joining.
Fechheimer was a standout in both respects. In addition to Bob and
George Heldman, who are in their mid-60s - spring chickens by our
standards - there are three members of the next generation, Gary, Roger
and Fred, to insure continuity.
說來你可能不敢相信，事實上我與查理甚至根本就從未去過費區-海默位於辛辛那提
的企業總部，(另外還有像幫我們經營喜斯糖果十五年之久的Chuck，也從未來過奧
瑪哈Berkshire的企業總部) ，所以說若Berkshire的成功是建立在不斷地視察工廠
的話，現在我們可能早就要面臨一大堆問題了，因此在從事購併公司時，我們試著去
評估該公司的競爭能力，其優勢與缺點，以及經營階層的能力與水準，費區-海默在
各方面都很傑出，而Bob與George正值六十多歲的青壯期(以我們的標準而言)，且
後繼還有Gary等三位優秀的子弟繼承衣缽。
As a prototype for acquisitions, Fechheimer has only one drawback:
size. We hope our next acquisition is at least several times as large but a
carbon copy in all other respects. Our threshold for minimum annual
after-tax earnings of potential acquisitions has been moved up to $10
million from the $5 million level that prevailed when Bob wrote to me.
身為購併的最佳典型，該公司只有唯一一個小缺點，那就是它的規模不夠大，我們希
望下一次有機會能遇到各方面條件都與費區-海默一般，且規模至少要有它好幾倍大
的公司，目前我們對於購併對象年度稅後獲利的基本門檻已由每年500萬美元，提高
到1,000萬美元。
Flushed with success, we repeat our ad. If you have a business that
fits, call me or, preferably, write.
報告完畢後，最後還是重複一下我們的廣告，假若你有一家公司符合以下我們所列的
條件，請儘快與我們連絡。
Here’s what we’re looking for:
(1) large purchases (at least $10 million of after-tax
earnings),
(2) demonstrated consistent earning power (future
projections are of little interest to us, nor are
"turn-around" situations),
(3) businesses earning good returns on equity while
employing little or no debt.
(4) management in place (we can’t supply it),
(5) simple businesses (if there’s lots of technology, we
won’t understand it),
(6) an offering price (we don’t want to waste our time
or that of the seller by talking, even preliminarily,
about a transaction when price is unknown).
我們的標準如下：
(1)鉅額交易(每年稅後盈餘至少有1,000萬美元)
(2)持續穩定獲利(我們對有遠景或具轉機的公司沒興趣)
(3)高股東報酬率(並甚少舉債)
(4)具備管理階層(我們無法提供)
(5)簡單的企業(若牽涉到太多高科技，我們弄不懂)
(6)合理的價格(在價格不確定前，我們不希望浪費自己與對方太多時間)
We will not engage in unfriendly takeovers. We can promise complete
confidentiality and a very fast answer - customarily within five minutes - as
to whether we’re interested. We prefer to buy for cash, but will consider
issuing stock when we receive as much in intrinsic business value as we
give. Indeed, following recent advances in the price of Berkshire stock,
transactions involving stock issuance may be quite feasible. We invite
potential sellers to check us out by contacting people with whom we have
done business in the past. For the right business - and the right people -
we can provide a good home.
我們不會進行敵意購併，並承諾完全保密並儘快答覆我們是否感興趣(通常不超過五分
鐘) ，我們傾向採現金交易，除非我們所換得的企業內含價值跟我們付出的一樣多，
否則絕不考慮發行股份。我們歡迎可能的賣方向那些過去與我們合作過的夥伴打聽，
對於那些好的公司與好的經營階層，我們絕對可以提供一個好的歸屬。
On the other hand, we frequently get approached about acquisitions
that don’t come close to meeting our tests: new ventures, turnarounds,
auction-like sales, and the ever-popular (among brokers)
"I’m-sure-something-will-work-out-if-you-people-get-to-know-each
-other." None of these attracts us in the least.
當然我們也持續接到一些不符合我們條件的詢問電話，包括新事業、轉機股、拍賣案
以及最常見的仲介案(那些通常會說你們要是能過碰一下面，一定會感興趣之類的)
在此重申我們對這些類型案件一點興趣都沒有。
* * *
Besides being interested in the purchases of entire businesses as
described above, we are also interested in the negotiated purchase of large,
but not controlling, blocks of stock, as in our Cap Cities purchase. Such
purchases appeal to us only when we are very comfortable with both the
economics of the business and the ability and integrity of the people
running the operation. We prefer large transactions: in the unusual case
we might do something as small as $50 million (or even smaller), but our
preference is for commitments many times that size.
除了以上買下整家公司的購併案外，我們也會考慮買進一大部份不具控制權的股份，
就像我們在資本城這個Case一樣，當然這必須是我們對於該事業與經營階層都感到
認同時才有可能，而且是要夠大筆的交易，我想最少也要在5,000萬美金以上，當然
是越多越好。
Insurance Operations
保險事業營運
We present our usual table of industry figures, expanded this year to
include data about incurred losses and the GNP inflation index. The
contrast in 1986 between the growth in premiums and growth in incurred
losses will show you why underwriting results for the year improved
materially:
下表是我們固定提供給各位的保險業統計數字，今年起多加了發生損失與GNP通膨指
數兩項，保費成長與損失比率與1986年差異，可用來解釋為何整年度的承保表現能
夠大幅改善的原因：
The combined ratio represents total insurance costs (losses incurred
plus expenses) compared to revenue from premiums: a ratio below 100
indicates an underwriting profit, and one above 100 indicates a loss. When
the investment income that an insurer earns from holding on to
policyholders’ funds ("the float") is taken into account, a combined ratio in
the 107-112 range typically produces an overall break-even result,
exclusive of earnings on the funds provided by shareholders.
綜合比率代表保險總成本(發生損失加上費用)佔保費收入的比例 ，若比率低於一百，
表示核保有利益，反之則會有損失，若將保險公司從保戶那邊收到的保費，(又稱浮存
金)，運用在投資所賺取的利益列入考量後（扣除股東權益部份），比率在107-112
間會是損益兩平點。
The math of the insurance business, encapsulated by the table, is not
very complicated. In years when the industry’s annual gain in revenues
(premiums) pokes along at 4% or 5%, underwriting losses are sure to mount.
This is not because auto accidents, fires, windstorms and the like are
occurring more frequently, nor has it lately been the fault of general
inflation. Today, social and judicial inflation are the major culprits; the
cost of entering a courtroom has simply ballooned. Part of the jump in
cost arises from skyrocketing verdicts, and part from the tendency of
judges and juries to expand the coverage of insurance policies beyond that
contemplated by the insurer when the policies were written. Seeing no
let-up in either trend, we continue to believe that the industry’s revenues
must grow at close to 10% annually for it to just hold its own in terms of
profitability, even though general inflation may be running only 2% - 4%.
保險事業經營的邏輯，若用以下列簡表來說明，其實一點都不複雜，當保費收入年成
長率只能在4%到5%游移時，核保損失一定會增加，這不是因為意外、火災、暴風等
意外災害發生更頻繁，也不是因為通貨膨脹的關係，主要的禍首在於社會與司法成本
的膨脹，一方面是因為司法訴訟案件大幅增加，一方面是因為法官與陪審團傾向超越
原先保單上所訂的條款，擴大保險理賠的範圍，若這兩種情況在未來沒有好轉，則可
以預見的是，保費收入年成長必須達到10%以上才有可能損益兩平，即使目前一般通
貨膨脹的水準維持在2%到4%之間也一樣。
In 1986, as noted, the industry’s premium volume soared even faster
than loss costs. Consequently, the underwriting loss of the industry fell
dramatically. In last year’s report we predicted this sharp improvement but
also predicted that prosperity would be fleeting. Alas, this second
prediction is already proving accurate. The rate of gain in the industry’s
premium volume has slowed significantly (from an estimated 27.1% in
1986’s first quarter, to 23.5% in the second, to 21.8% in the third, to 18.7%
in the fourth), and we expect further slowing in 1987. Indeed, the rate of
gain may well fall below my 10% "equilibrium" figure by the third quarter.
如表上所示，保險業保費收入成長的速度甚至高於理賠損失增加的速度，因此核保損
失大幅下降，去年的年報我們就已預先報告過可能會有這種情形發生，同時還判斷這
樣的榮景只是短暫的，很不幸的再一次我們一語中的，今年保費成長的速度已大幅減
緩，從第一季的27.1%一路下滑到第四季的18.7%，而且我們預期還會進一步下滑，
最後很有可能會落到10%的損益兩平點之下。
Nevertheless, underwriting results in 1987, assuming they are not
dragged down by a major natural catastrophe, will again improve materially
because price increases are recognized in revenues on a lagged basis. In
effect, the good news in earnings follows the good news in prices by six to
twelve months. But the improving trend in earnings will probably end by
late 1988 or early 1989. Thereafter the industry is likely to head south in a
hurry.
但儘管如此，只要1987年沒有發生什麼重大的災難，由於保費調整的遞延性，核保
結果還是能夠改善，通常在保費調整的半年到一年後，效果會反應到公司的盈餘之上，
但好景通常不易維持，過不了多久一切又會回到原點。
Pricing behavior in the insurance industry continues to be exactly what
can be expected in a commodity-type business. Only under shortage
conditions are high profits achieved, and such conditions don’t last long.
When the profit sun begins to shine, long-established insurers shower
investors with new shares in order to build capital. In addition,
newly-formed insurers rush to sell shares at the advantageous prices
available in the new-issue market (prices advantageous, that is, to the
insiders promoting the company but rarely to the new shareholders).
These moves guarantee future trouble: capacity soars, competitive juices
flow, and prices fade.
保險商品的訂價行為與一般商品的訂價模式幾乎一模一樣，唯有在供給短缺時價格才
會上來，但偏偏這種光景維持不了多久，當獲利旭日東升時，馬上就有人會進來潑冷
水，大舉投入資金搶食大餅，結果當然會埋下不少後遺症，供給增加，代表價格下跌，
跟著獲利劇減。
It’s interesting to observe insurance leaders beseech their colleagues
to behave in a more "statesmanlike" manner when pricing policies. "Why,"
they ask, "can’t we learn from history, even out the peaks and valleys, and
consistently price to make reasonable profits?" What they wish, of course, is
pricing that resembles, say, that of The Wall Street journal, whose prices are
ample to start with and rise consistently each year.
當保險業龍頭在要求他們的同業在訂價時要維持同行之誼，我們可以觀察到一個有趣
的現象，他們會問為什麼我們不能從歷史經驗中學到教訓，不管景氣低潮或高峰，都
能夠合理的訂價以維持適當的獲利呢?? 他們當然希望保險費能夠像華爾街日報的售
價一樣，有一個好的開始，同時又能夠每年持續穩定的調漲價格。
Such calls for improved behavior have all of the efficacy of those made
by a Nebraska corn grower asking his fellow growers, worldwide, to market
their corn with more statesmanship. What’s needed is not more statesmen,
but less corn. By raising large amounts of capital in the last two years, the
insurance industry has, to continue our metaphor, vastly expanded its
plantings of corn. The resulting increase in "crop" - i.e., the proliferation
of insurance capacity - will have the same effect on prices and profits that
surplus crops have had since time immemorial.
但這種訴求得到的效果，就像內布拉斯加州種植玉米的農夫，要求全世界其他種植玉
米的農夫一起遵守道德規範一樣有限，事實上道德訴求的效果極其有限，重點是如何
讓玉米的產量變少，最近兩年來保險同業從資本市場上所募集的資金，就好像是新進
耕種的玉米田一樣，結果是更多更大的玉米產量，只會使市場價格進一步滑落。
Our own insurance operation did well in 1986 and is also likely to do
well in 1987. We have benefited significantly from industry conditions.
But much of our prosperity arises from the efforts and ability of Mike
Goldberg, manager of all insurance operations.
我們自己本身的保險事業在1986年的表現還算不錯，展望明年一樣樂觀，雖然市場
的狀況讓我們獲益不少，但真正要感謝的卻是旗下經理人優異的能力與表現。
Our combined ratio (on a statutory basis and excluding structured
settlements and financial reinsurance) fell from 111 in 1985 to 103 in 1986.
In addition, our premium growth has been exceptional: although final
figures aren’t available, I believe that over the past two years we were the
fastest growing company among the country’s top 100 insurers. Some of
our growth, it is true, came from our large quota-share contract with
Fireman’s Fund, described in last year’s report and updated in Charlie’s
letter on page 54. But even if the premiums from that contract are
excluded from the calculation, we probably still ranked first in growth.
我們的綜合比率從1985年的111減少到1986年的103，此外我們的保費成長率
更是傑出，雖然最後的數字現在還無從得知，但我確信我們是前一百大保險公司中成
長最快的，誠然有一部份的成長來自於我們與消防人員退休基金的合約，但即使在扣
除這部份之後，我們仍然維持第一。
Interestingly, we were the slowest-growing large insurer in the years
immediately preceding 1985. In fact, we shrank - and we will do so again
from nine to time in the future. Our large swings in volume do not mean
that we come and go from the insurance marketplace. Indeed, we are its
most steadfast participant, always standing ready, at prices we believe
adequate, to write a wide variety of high-limit coverages. The swings in
our volume arise instead from the here-today, gone-tomorrow behavior of
other insurers. When most insurers are "gone," because their capital is
inadequate or they have been frightened by losses, insureds rush to us and
find us ready to do business. But when hordes of insurers are "here," and
are slashing prices far below expectable costs, many customers naturally
leave us in order to take advantage of the bargains temporarily being
offered by our competition.
有趣的是，在1985年我們是所有保險業者中成長最慢的一家，事實上我們是不增反
減，而只要市場情況不佳時，我們仍會維持這樣的做法，我們保費收入忽上忽下並不
代表我們在這個市場來來去去，事實上我們是這個市場最穩定的參與者，隨時作好準
備，只要價格合理，我們願意不計上限簽下任何高額的保單，不像其他業者一下子進
入這個市場，一下子又退出，所以當其他同業因資金不足或懾於巨大的損失退出市場
時，保戶會大量湧向我們，且會發現我們早已作好準備，反之當所有業者搶進市場，
大幅殺價甚至低於合理成本時，客戶又會受到便宜的價格所吸引，離開我們投入競爭
對手的懷抱。
Our firmness on prices works no hardship on the consumer: he is
being bombarded by attractively priced insurance offers at those times
when we are doing little business. And it works no hardship on our
employees: we don’t engage in layoffs when we experience a cyclical
slowdown at one of our generally-profitable insurance operations. This
no-layoff practice is in our self-interest. Employees who fear that large
layoffs will accompany sizable reductions in premium volume will
understandably produce scads of business through thick and thin (mostly
thin).
我們對於價格的堅持，對客戶來說一點困擾也沒有，當他發現有更便宜的價格時，隨
時可以離去，同樣地對我們的員工也不會造成困擾，我們不會因為景氣循環一時的低
潮就大幅裁員，奉行的是不裁員政策，事實上這也是為了公司好，否則擔心業務量減
少而被裁員的員工可能會想盡辦法弄一些有的沒有的業務進來給公司。
The trends in National Indemnity’s traditional business - the writing of
commercial auto and general liability policies through general agents -
suggest how gun-shy other insurers became for a while and how brave they
are now getting. In the last quarter of 1984, NICO’s monthly volume
averaged $5 million, about what it had been running for several years. By
the first quarter of 1986, monthly volume had climbed to about $35 million.
In recent months, a sharp decline has set in. Monthly volume is currently
about $20 million and will continue to fall as new competitors surface and
prices are cut. Ironically, the managers of certain major new competitors
are the very same managers that just a few years ago bankrupted insurers
that were our old competitors. Through state-mandated guaranty funds,
we must pay some of the losses these managers left unpaid, and now we
find them writing the same sort of business under a new name. C’est la
guerre.
這在國家保險公司所從事的汽車保險與一般責任保險最可以看出，同業是如何一會兒
貪生怕死，一會兒又勇往前進，在1984年的最後一季，該公司平均月保費收入是500
萬美元，大約維持在正常的水準，但到了1986年的第一季，卻大幅攀升至3,500萬
美元，之後又很快地減少到每月2,000萬元的水準，相信只要競爭者持續加入市場，
並殺價競爭，該公司的業務量還會繼續減少，諷刺的是部份新加入保險公司的經理人，
就是幾年前讓原本幾家舊有保險公司破產倒閉的那批原班人馬，不可思議的是我們竟
然還要透過政府強制的保證基金機制，來分攤他們部份的損失。
The business we call "large risks" expanded significantly during 1986,
and will be important to us in the future. In this operation, we regularly
write policies with annual premiums of $1 - $3 million, or even higher.
This business will necessarily be highly volatile - both in volume and
profitability - but our premier capital position and willingness to write large
net lines make us a very strong force in the market when prices are right.
On the other hand, our structured settlement business has become
near-dormant because present prices make no sense to us.
這種我們稱之為高風險的險種在1986年大幅成長，且在未來也會扮演相當重要的角
色，通常一次所收取的保費就可能超過百萬美元，有的甚至還更高，當然核保最後的
結果可能會兩極化，不管是保費收入或是承保獲利，但我們雄厚的財務實力與高度的
承保意願(只要價格合理)使我們在市場上相當有競爭力，另一方面，我們在結構清償
業務則因為現在的價格不理想而接近停擺。
The 1986 loss reserve development of our insurance group is
chronicled on page 46. The figures show the amount of error in our
yearend 1985 liabilities that a year of settlements and further evaluation
has revealed. As you can see, what I told you last year about our loss
liabilities was far from true - and that makes three years in a row of error.
If the physiological rules that applied to Pinocchio were to apply to me, my
nose would now draw crowds.
1986年損失準備的變動詳附表，數字顯示我們在1985年底所犯的估計錯誤，在今
年已漸漸浮現，就像去年我提醒各位的，我們所提的負債準備與事實有很大的出入，
而造成連續三年一連串的錯誤，若照木偶奇遇記的標準，我的鼻子可能早已能夠吸引
眾人的目光。
When insurance executives belatedly establish proper reserves, they
often speak of "reserve strengthening," a term that has a rather noble ring
to it. They almost make it sound as if they are adding extra layers of
strength to an already-solid balance sheet. That’s not the case: instead
the term is a euphemism for what should more properly be called
"correction of previous untruths" (albeit non-intentional ones).
當保險公司主管事後補提適當的損失準備，他們通常會解釋成”加強”損失準備，以冠
上合理的說法，理直氣壯地好像的是真要在已經健全的財務報表上再多加一層保障，
事實上並非如此，這只是修正以前所犯錯誤的婉轉說法而已，(雖然可能是無心的)。
We made a special effort at the end of 1986 to reserve accurately.
However, we tried just as hard at the end of 1985. Only time will tell
whether we have finally succeeded in correctly estimating our insurance
liabilities.
在1986年我們特別花了一番功夫在這上面做調整，但只有時間能告訴我們先前所作
的損失準備預測是否正確。
Despite the difficulties we have had in reserving and the commodity
economics of the industry, we expect our insurance business to both grow
and make significant amounts of money - but progress will be distinctly
irregular and there will be major unpleasant surprises from time to time.
It’s a treacherous business and a wary attitude is essential. We must heed
Woody Allen: "While the lamb may lie down with the lion, the lamb
shouldn’t count on getting a whole lot of sleep."
而盡管在預測損失與產品行銷上我們遭遇極大的挑戰，我們仍樂觀地預期我們的業務
量能夠成長並獲取不少利潤，只是前進的步伐可能會不太規則，甚至有時還會出現令
人不太愉快的結果發生，這是一項變化多端的行業，所以必須更加小心謹慎，我們時
時謹記伍迪艾倫所講的，一隻羊大可以躺在獅子的旁邊，但你千萬不要妄想好好地睡
一覺。
In our insurance operations we have an advantage in attitude, we have
an advantage in capital, and we are developing an advantage in personnel.
Additionally, I like to think we have some long-term edge in investing the
float developed from policyholder funds. The nature of the business
suggests that we will need all of these advantages in order to prosper.
在保險業我們擁有的優勢是我們的心態與資本，同時在人員素質上也漸入佳境，此外，
利用收得保費加以好好運用，更是我們競爭的最大利基，在這個產業也唯有多方條件
配合，才有機會成功。
* * *
GEICO Corporation, 41% owned by Berkshire, had an outstanding year
in 1986. Industrywide, underwriting experience in personal lines did not
improve nearly as much as it did in commercial lines. But GEICO, writing
personal lines almost exclusively, improved its combined ratio to 96.9 and
recorded a 16% gain in premium volume. GEICO also continued to
repurchase its own shares and ended the year with 5.5% fewer shares
outstanding than it had at the start of the year. Our share of GEICO’s
premium volume is over $500 million, close to double that of only three
years ago. GEICO’s book of business is one of the best in the world of
insurance, far better indeed than Berkshire’s own book.
由Berkshire 持有41%股權的GEICO公司，在1986年表現相當突出，就整個產業
而言，個人險種的核保表現一般來說不如商業險種，但以個人險種為主要業務的
GEICO其綜合比率卻降低到96.9，同時保費收入亦成長了16%，另外該公司也持續
買回自家公司的股份，總計一年下來流通在外的股份減少了5.5%，我們依投資比例可
分得的保費收入已超過五億美元，大約較三年前增加一倍，GEICO的帳是全世界保險
公司中最好的，甚至比Berkshire本身都還要好。
The most important ingredient in GEICO’s success is rock-bottom
operating costs, which set the company apart from literally hundreds of
competitors that offer auto insurance. The total of GEICO’s underwriting
expense and loss adjustment expense in 1986 was only 23.5% of premiums.
Many major companies show percentages 15 points higher than that. Even
such huge direct writers as Allstate and State Farm incur appreciably higher
costs than does GEICO.
GEICO之所以能夠成功的重要因素，在於該公司從頭到腳徹底地精簡營運成本，使得
它把其他所有車險公司遠遠拋在腦後，該公司去年的費用損失佔保費收入的比例只有
23.5%，許多大公司的比例甚至比GEICO還要多出15%，即使是像Allstate 與 State
Farm等車險直銷業者成本也比GEICO高出許多
The difference between GEICO’s costs and those of its competitors is a
kind of moat that protects a valuable and much-sought-after business
castle. No one understands this moat-around-the-castle concept better
than Bill Snyder, Chairman of GEICO. He continually widens the moat by
driving down costs still more, thereby defending and strengthening the
economic franchise. Between 1985 and 1986, GEICO’s total expense ratio
dropped from 24.1% to the 23.5% mentioned earlier and, under Bill’s
leadership, the ratio is almost certain to drop further. If it does - and if
GEICO maintains its service and underwriting standards - the company’s
future will be brilliant indeed.
若說GEICO是一座價值不菲且眾所仰望的商業城堡，那麼其與同業間的成本與費用差
異就是它的護城河，沒有人比Bill，也就是GEICO的主席，更懂得如何去保護這座城
堡，靠著持續降低成本開支，他不斷地將這個護城河加大，使得這城堡更加穩固，過
去兩年間，GEICO創造了23.5%超低成本率，展望未來，這項比率仍將持續下降，若
能夠同時再兼顧產品品質與客戶服務的話，這家公司的前途將無可限量。
The second stage of the GEICO rocket is fueled by Lou Simpson, Vice
Chairman, who has run the company’s investments since late 1979.
Indeed, it’s a little embarrassing for me, the fellow responsible for
investments at Berkshire, to chronicle Lou’s performance at GEICO. Only
my ownership of a controlling block of Berkshire stock makes me secure
enough to give you the following figures, comparing the overall return of
the equity portfolio at GEICO to that of the Standard & Poor’s 500:
另外GEICO這一飛沖天的火箭，同時由負責投資部門的副主席Lou Simpson點燃第
二節燃料倉，比起Lou Simpson於1979年接掌該公司投資部門後的績效，身為母
公司Berkshire投資主管的我，實在覺得有點汗顏，而也因為我們擁有這家公司大部
分的股權，使我在向各位報告以下數字時，能夠稍微心安理得一些。
GEICO's Equities
S&P500
1980
23.7%
32.3%
1981
5.4%
-5.0%
1982
45.8%
21.4%
1983
36.0%
22.4%
1984
21.8%
6.2%
1985
45.8%
31.6%
1986
38.7%
18.6%
These are not only terrific figures but, fully as important, they have
been achieved in the right way. Lou has consistently invested in
undervalued common stocks that, individually, were unlikely to present him
with a permanent loss and that, collectively, were close to risk-free.
必須再次強調的是以上的數字不但是漂亮極了，更由於其穩定成長的態勢，Lou能夠
不斷地找到價值被低估的股票加以投資，所以風險相對很低，也很少會產生損失。
In sum, GEICO is an exceptional business run by exceptional managers.
We are fortunate to be associated with them.
總而言之GEICO是一家由好的經理人經營的好公司，我們很容幸能與他們一起共事。
Marketable Securities
有價證券
During 1986, our insurance companies purchased about $700 million
of tax-exempt bonds, most having a maturity of 8 to 12 years. You might
think that this commitment indicates a considerable enthusiasm for such
bonds. Unfortunately, that’s not so: at best, the bonds are mediocre
investments. They simply seemed the least objectionable alternative at the
time we bought them, and still seem so. (Currently liking neither stocks nor
bonds, I find myself the polar opposite of Mae West as she declared: "I like
only two kinds of men - foreign and domestic.")
去年(1986年)我們的保險公司總計買進了7億美元的免稅政府公債，到期日分別為
8-12年不等，或許你會覺得這樣的投入表示我們對於債券情有獨鍾，只可惜事實並
非如此，債券充其量只不過是個平庸的投資工具，他們不過是選擇投資標的時看起來
最不礙眼的投資替代品，雖然現在看起來也是，我突然發現我現在對於股票與債券都
提不起勁的態度，與Mae West的喜好完全相反，她曾說：「我只愛兩種男人，本國
人或是外國人」。
We must, of necessity, hold marketable securities in our insurance
companies and, as money comes in, we have only five directions to go: (1)
long-term common stock investments; (2) long-term fixed-income
securities; (3) medium-term fixed-income securities; (4) short-term cash
equivalents; and (5) short-term arbitrage commitments.
當然隨著保險公司資金持續地湧入，我們還是必須將有價證券列入投資組合，一般來
說我們只有五種選擇：(1)長期股權投資(2)長期固定收益債券(3)中期固定收益債券(4)
短期約當現金(5)短期套利交易。
Common stocks, of course, are the most fun. When conditions are
right that is, when companies with good economics and good management
sell well below intrinsic business value - stocks sometimes provide
grand-slam home runs. But we currently find no equities that come close
to meeting our tests. This statement in no way translates into a stock
market prediction: we have no idea - and never have had - whether the
market is going to go up, down, or sideways in the near- or intermediate
term future.
當然其中就屬股票最有樂趣，當狀況好時，我是說找到經營得當、業績蒸蒸日上但價
值被低估的公司，你很有機會可以揮出大滿貫的全壘打，不過可惜的是，目前我們根
本找不到類似這樣的標的，這不代表我們要預測股市未來的走勢，事實上我們從來就
不知道股市接下來到底是會漲還是會跌。
What we do know, however, is that occasional outbreaks of those two
super-contagious diseases, fear and greed, will forever occur in the
investment community. The timing of these epidemics will be
unpredictable. And the market aberrations produced by them will be
equally unpredictable, both as to duration and degree. Therefore, we
never try to anticipate the arrival or departure of either disease. Our goal
is more modest: we simply attempt to be fearful when others are greedy
and to be greedy only when others are fearful.
不過我們確知的是貪婪與恐懼這兩種傳染病在股市投資世界裡，會不斷地上演，雖然
發生的時點很難準確預測，而市場波動程度與狀況一樣不可捉摸，任何臆測終將徒勞
無功，所以我們要做的事很簡單，當眾人都很貪婪時，盡量試著讓自己覺得害怕；反
之當眾人感到害怕時，盡量讓自己貪心一點。
As this is written, little fear is visible in Wall Street. Instead, euphoria
prevails - and why not? What could be more exhilarating than to
participate in a bull market in which the rewards to owners of businesses
become gloriously uncoupled from the plodding performances of the
businesses themselves. Unfortunately, however, stocks can’t outperform
businesses indefinitely.
而當我在寫這段文章時，整個華爾街幾乎嗅不到一絲的恐懼，反而到處充滿了歡樂的
氣氛，沒有理由不這樣啊? 有什麼能夠比在牛市中，股東因股票大漲賺取比公司本身
獲利更多的報酬而感到更高興的事，只是我必須說，很不幸的是，股票的表現不可能
永遠超過公司本身的獲利。
Indeed, because of the heavy transaction and investment management
costs they bear, stockholders as a whole and over the long term must
inevitably underperform the companies they own. If American business, in
aggregate, earns about 12% on equity annually, investors must end up
earning significantly less. Bull markets can obscure mathematical laws,
but they cannot repeal them.
反倒是股票頻繁的交易成本與投資管理費用，將使得投資人所獲得的報酬無可避免地
遠低於其所投資公司的本身獲利，以美國企業來說，假設其平均股東權益報酬率為
12%，這表示其投資人平均所能獲得的報酬將低於此數，牛市或許可以暫時模糊數學
算術，但卻不可能推翻它。
The second category of investments open to our insurance companies
is long-term bonds. These are unlikely to be of interest to us except in
very special situations, such as the Washington Public Power Supply System
#1, #2 and #3 issues, discussed in our 1984 report. (At yearend, we owned
WPPSS issues having an amortized cost of $218 million and a market value
of $310 million, paying us $31.7 million in annual tax-exempt income.)
Our aversion to long-term bonds relates to our fear that we will see much
higher rates of inflation within the next decade. Over time, the behavior of
our currency will be determined by the behavior of our legislators. This
relationship poses a continuing threat to currency stability - and a
corresponding threat to the owners of long-term bonds.
第二種投資選擇是長期債券，除非在特殊情況下，就像是我們在1984年年報曾提到
的華盛頓公用電力系統所發行的公司債，(截至年底我們帳上擁有該公司債券的未攤銷
成本為二億一千萬美元，市價則為三億一千萬美元)，否則債券這種投資標的實在很難
引起我們的興趣，我們對於長期債券沒有興趣的原因在於對於未來十幾年通貨膨脹可
能再度肆虐的潛在恐懼，長期而言，匯率的走勢演變將取決於立法諸公的態度，這代
表匯率的穩定將受到威脅，進而影響到長期債券投資人的利益。
We continue to periodically employ money in the arbitrage field.
However, unlike most arbitrageurs, who purchase dozens of securities each
year, we purchase only a few. We restrict ourselves to large deals that have
been announced publicly and do not bet on the come. Therefore, our
potential profits are apt to be small; but, with luck, our disappointments
will also be few.
此外我們持續將資金運用在套利活動之上，然而不像其他套利客，每年從事幾十個案
子，我們只鎖定在少數幾個個案，我們限制自己只專注在幾個已經公佈消息的大案子，
避開尚未明朗化的，雖然這樣會讓我們的獲利空間減小，但相對的只要運氣不要太差，
我們預期落空的機率也會減少許多。
Our yearend portfolio shown below includes one arbitrage
commitment, Lear-Siegler. Our balance sheet also includes a receivable
for $145 million, representing the money owed us (and paid a few days
later) by Unilever, then in the process of purchasing Chesebrough-Ponds,
another of our arbitrage holdings. Arbitrage is an alternative to Treasury
Bills as a short-term parking place for money - a choice that combines
potentially higher returns with higher risks. To date, our returns from the
funds committed to arbitrage have been many times higher than they would
have been had we left those funds in Treasury Bills. Nonetheless, one bad
experience could change the scorecard markedly.
到年底為止，手上只有一個案子Lear-Siegler，另外還有一筆一億四千五百萬的應收
款項，這是聯合利華用來買下龐氏積欠我們的款項，套利是除了政府債券以外，短期
資金運用的替代品，但風險與報酬相對都比較高，到目前為止，這些套利投資的報酬
確實比政府債券要來的好的多，不過即便如此，一次慘痛的經驗將使總成績豬羊變色
We also, though it takes some straining, currently view medium-term
tax-exempt bonds as an alternative to short-term Treasury holdings.
Buying these bonds, we run a risk of significant loss if, as seems probable,
we sell many of them well before maturity. However, we believe this risk is
more than counter-balanced first, by the much higher after-tax returns
currently realizable from these securities as compared to Treasury Bills and
second, by the possibility that sales will produce an overall profit rather
than a loss. Our expectation of a higher total return, after allowing for the
possibility of loss and after taking into account all tax effects, is a relatively
close call and could well be wrong. Even if we sell our bonds at a fairly
large loss, however, we may end up reaping a higher after-tax return than
we would have realized by repeatedly rolling over Treasury Bills.
另外雖然有些不情願，我們也將目光擺在中期的免稅債券之上，買下這類債券我們將
承擔鉅額損失的風險，若可能的話我們在到期之前就會把它們賣掉，當然這樣的風險
也提供我們相對的報酬，到目前為止未實現的獲利還是比短期債券要來的好的多，不
過這種高報酬在扣除可能承擔損失的風險與額外的稅負，其實報酬好不了多少，更何
況還有可能估計錯誤，不過即便我們真的發生損失，其程度還是比我們不斷在短期債
券上打滾來的好。
In any event, you should know that our expectations for both the
stocks and bonds we now hold are exceptionally modest, given current
market levels. Probably the best thing that could happen to us is a market
in which we would choose to sell many of our bond holdings at a significant
loss in order to re-allocate funds to the far-better equity values then very
likely to exist. The bond losses I am talking about would occur if high
interest rates came along; the same rates would probably depress common
stocks considerably more than medium-term bonds.
不論如何，大家必須有個體認那就是以目前的市場狀況，我們在債券或股票的預期報
酬都不會太高，目前我們可以做的，頂多是認賠處分一些債券，然後重新將資金投入
到未來可能好一點的股票投資上，債券會發生損失的原因在於利率高漲，當然這同樣
也會壓縮股票的價格。
We show below our 1986 yearend net holdings in marketable equities.
All positions with a market value of over $25 million are listed, and the
interests attributable to minority shareholdings of Wesco Financial Corp.
and Nebraska Furniture Mart are excluded.
下表是我們截至1986年底金額超過2,500萬美元以上的股票投資組合，不包含
Wesco與NFM在內。
Company Name
Shares
Cost
Market
Unrealized
Affiliated Publications, Inc.
(a)
1,036,461
Aluminum Company of America
American Boradcasting Company
(a)
900,800
Arcata Corporation(Inc. Common Equi)
Beatrice Companies, Inc.
2,350,922
Capital Cities/ABC
515,775
801,694
285,919
Cleveland-Cliffs Iron Company
Crum & Forster
Exxon Corporation
GATX Corporation
General Foods, Inc
GEIGO Corporation
6,850,000
45,713
674,725
629,012
Handy & Harman
2,379,200
27,318
46,989
19,671
Interpublic Group of Companies, Inc
Kaiser Alumnium & Chemical Corp.
Lear Siegler
44,064
44,587
523
Media General
National Detroit Corporation
National Student Marketing
Northwest Industries
Ogilvy & Mather Int'l, Inc
Pinkerton, Inc.
R.J. Reynolds Industries
SAFECO Corporation
The Time Mirror Company
Time, Inc
(a)
847,788
The Washington Post Company
1,727,765
9,731
269,531
259,800
EW Woolworth Company
All Other Common Stock
12,763
36,507
23,744
Total Common Stock
655,364
1,874,033
1,218,669
Incremantal
295,458
We should note that we expect to keep permanently our three primary
holdings, Capital Cities/ABC, Inc., GEICO Corporation, and The Washington
Post. Even if these securities were to appear significantly overpriced, we
would not anticipate selling them, just as we would not sell See’s or Buffalo
Evening News if someone were to offer us a price far above what we believe
those businesses are worth.
大家要特別注意的是我們將把三項投資列為永久的投資組合，分別是資本城/ABC、
GEICO與華盛頓郵報，即便這些股票目前的價格看起來有些高估，我們也不打算把它
們賣掉，就像即使有人出再高的價格，我們也不打算賣喜斯糖果或水牛城報紙一樣。
This attitude may seem old-fashioned in a corporate world in which
activity has become the order of the day. The modern manager refers to
his "portfolio" of businesses - meaning that all of them are candidates for
"restructuring" whenever such a move is dictated by Wall Street preferences,
operating conditions or a new corporate "concept." (Restructuring is defined
narrowly, however: it extends only to dumping offending businesses, not to
dumping the officers and directors who bought the businesses in the first
place. "Hate the sin but love the sinner" is a theology as popular with the
Fortune 500 as it is with the Salvation Army.)
這種態度現今看起來有點老套過時，現在當紅的基金經理人所謂的企業組合，大多是
為了迎合華爾街的喜好，列出適合再造的對象，(奇怪的是企業再造的定義範圍卻只限
於拋棄被鎖定的企業，但卻不包含其經理人與負責人本身，憎恨罪惡卻深愛犯罪者，
這種理論在財富五百大企業流傳地跟救世軍一樣普遍。
Investment managers are even more hyperkinetic: their behavior
during trading hours makes whirling dervishes appear sedated by
comparison. Indeed, the term "institutional investor" is becoming one of
those self-contradictions called an oxymoron, comparable to "jumbo
shrimp," "lady mudwrestler" and "inexpensive lawyer."
基金經理人更是腎上腺素分泌過多，他們的行為在股票交易時間大聲叫囂讓不斷念經
的苦行僧看起來顯得安靜許多，事實上機構投資人這個名詞聽起來，跟超級大蝦米、
淑女泥巴摔角手、收費便宜的律師，同時並列自相矛盾的修飾名詞
Despite the enthusiasm for activity that has swept business and
financial America, we will stick with our ‘til-death-do-us-part policy. It’s
the only one with which Charlie and I are comfortable, it produces decent
results, and it lets our managers and those of our investees run their
businesses free of distractions.
盡管這種對於購併案的熱衷橫掃整個美國金融界與企業界，但我們還是堅持這種至死
不分離的政策，這是查理跟我唯一能夠感到自在的方式，事實證明這種方式長期下來
讓我們有不錯的獲利，也讓我們的經理人與被投資公司專注於本業之上而免於分心。
NHP, Inc.
NHP公司
Last year we paid $23.7 million for about 50% of NHP, Inc., a developer,
syndicator, owner and manager of multi-family rental housing. Should all
executive stock options that have been authorized be granted and
exercised, our equity interest will decline to slightly over 45%.
去年我們投資了2,300多萬在NHP50% 股權，這是一家房屋租賃發展與整合商，不
過若所有主管股票認股權都行使的話，我們的權益大概會降到45%左右。
NHP, Inc. has a most unusual genealogy. In 1967, President Johnson
appointed a commission of business and civic leaders, led by Edgar Kaiser,
to study ways to increase the supply of multifamily housing for low- and
moderate-income tenants. Certain members of the commission
subsequently formed and promoted two business entities to foster this goal.
Both are now owned by NHP, Inc. and one operates under unusual ground
rules: three of its directors must be appointed by the President, with the
advice and consent of the Senate, and it is also required by law to submit an
annual report to the President.
該公司有段非凡的歷史血統，1967年美國總統詹森指定Kaiser帶領一個由民間與企
業領袖所組成特別小組，研究如何滿足中低收入家庭市場的生活所需，最後有兩個小
組因此具體成形，而目前這兩者皆由NHP所擁有，在其中有一條特殊的規定，那就是
該公司有三席董事必須由總統指定，並經參議院同意，依法每年還須提供年度報告給
總統。
Over 260 major corporations, motivated more by the idea of public
service than profit, invested $42 million in the two original entities, which
promptly began, through partnerships, to develop government-subsidized
rental property. The typical partnership owned a single property and was
largely financed by a non-recourse mortgage. Most of the equity money
for each partnership was supplied by a group of limited partners who were
primarily attracted by the large tax deductions that went with the
investment. NHP acted as general partner and also purchased a small
portion of each partnership’s equity.
超過260個美國大企業，非以營利為出發點，集資4,200萬成立兩個合夥組織，透
過與房屋使用者合夥形式，由政府補助租賃房屋，典型的合夥是持有一個房地產單位，
附帶一個抵押貸款，大部分的資金來源係由一群有租稅減免需求的有限合夥人提供，
NHP擔任一般合夥人並買下所有合夥事業一小部份的出資權。
The Government’s housing policy has, of course, shifted and NHP has
necessarily broadened its activities to include non-subsidized apartments
commanding market-rate rents. In addition, a subsidiary of NHP builds
single-family homes in the Washington, D.C. area, realizing revenues of
about $50 million annually.
後來政府房屋計畫政策有所轉向，所以NHP必須轉型擴展在主流市場-即非補助房屋
租賃，此外NHP的一個子公司也在華盛頓特區建造了一個單親家庭之家，年營業收入
5,000萬美元。
NHP now oversees about 500 partnership properties that are located in
40 states, the District of Columbia and Puerto Rico, and that include about
80,000 housing units. The cost of these properties was more than $2.5
billion and they have been well maintained. NHP directly manages about
55,000 of the housing units and supervises the management of the rest.
The company’s revenues from management are about $16 million annually,
and growing.
NHP目前管理五百個合夥產業，遍佈全美四十個州、哥倫比亞特區與波多黎各等地，
總計有八萬個家庭戶數，這些產業的總值超過25億美元，同時管理相當良好，NHP
直接管理其中五萬五千戶，其餘透過監督方式進行，公司管理的收入每年約1,600萬
美元，而且還在持續成長中。
In addition to the equity interests it purchased upon the formation
ofeach partnership, NHP owns varying residual interests that come into
playwhen properties are disposed of and distributions are made to the
limitedpartners. The residuals on many of NHP’s "deep subsidy" properties
areunlikely to be of much value. But residuals on certain other
propertiescould prove quite valuable, particularly if inflation should heat
up.
除了公司所投資的部份合夥事業的權益，NHP在產業處分後也可分得部份利益，雖然
部份補助較多的產業無利可圖，但有些的利潤還不錯，尤其當通貨膨脹高張時。
The tax-oriented syndication of properties to individuals has been
halted by the Tax Reform Act of 1986. In the main, NHP is currently trying
to develop equity positions or significant residual interests in
non-subsidized rental properties of quality and size (typically 200 to 500
units). In projects of this kind, NHP usually works with one or more large
institutional investors or lenders. NHP will continue to seek ways to
develop low- and moderate-income apartment housing, but will not likely
meet success unless government policy changes.
1986年通過的租稅改革法案已使這些對於以租稅由導向的投資人受到阻斷，NHP目
前的大方向是好好運用這些合夥權益與非補助租賃產業，強化其質與量，在這類計畫
中，NHP通常與大型的投資法人合作，NHP會持續尋求各種方法來發展中低收入房屋
計畫，當然除非政府政策修改，否則以目前情況很難真正成功。
Besides ourselves, the large shareholders in NHP are Weyerhauser
(whose interest is about 25%) and a management group led by Rod Heller,
chief executive of NHP. About 60 major corporations also continue to hold
small interests, none larger than 2%.
除了我們以外，NHP的大股東還有Weyerhauser持有25%的股權，其餘則由經營團
隊與其他60多家大企業持有。
Taxation
稅負
The Tax Reform Act of 1986 affects our various businesses in
important and divergent ways. Although we find much to praise in the Act,
the net financial effect for Berkshire is negative: our rate of increase in
business value is likely to be at least moderately slower under the new law
than under the old. The net effect for our shareholders is even more
negative: every dollar of increase in per-share business value, assuming the
increase is accompanied by an equivalent dollar gain in the market value of
Berkshire stock, will produce 72 cents of after-tax gain for our
shareholders rather than the 80 cents produced under the old law. This
result, of course, reflects the rise in the maximum tax rate on personal
capital gains from 20% to 28%.
1986年通過的租稅改革法案對我們旗下許多事業影響的層面非常的廣，雖然整體而
言我們對於這項法案褒多於貶，但實際上對於Berkshire財務影響來說卻是負面的，
新制將使得我們企業價值未來的成長率減少幾個百分點，對於我們股東的負面影響更
大，Berkshire的價值每成長1美元，假設完全反應在公司的股票價格之上，股東在
扣除相關稅負後真正拿到手的，相較於舊制約有80美分，新制卻可能只剩下72美分，
主要是因為個人資本所得的上限稅率由20%調高到28%的緣故。
Here are the main tax changes that affect Berkshire:
茲將對Berkshire所有影響列示如下
o The tax rate on corporate ordinary income is scheduled to decrease
from 46% in 1986 to 34% in 1988. This change obviously affects us
positively - and it also has a significant positive effect on two of our three
major investees, Capital Cities/ABC and The Washington Post Company.
o企業一般收入的稅率由46%減少到34%，這個變化對我們的影響頗為正面，包含幾
個主要的被投資事業資本城/ABC與華盛頓郵報在內。
I say this knowing that over the years there has been a lot of fuzzy and
often partisan commentary about who really pays corporate taxes -
businesses or their customers. The argument, of course, has usually
turned around tax increases, not decreases. Those people resisting
increases in corporate rates frequently argue that corporations in reality pay
none of the taxes levied on them but, instead, act as a sort of economic
pipeline, passing all taxes through to consumers. According to these
advocates, any corporate-tax increase will simply lead to higher prices that,
for the corporation, offset the increase. Having taken this position,
proponents of the "pipeline" theory must also conclude that a tax decrease
for corporations will not help profits but will instead flow through, leading
to correspondingly lower prices for consumers.
會這樣說是基於多年來一直存在在不同政黨間，到底是企業或是消費者在支付所得稅
的爭論，這種爭論最後通常導致企業稅負增加而不是減少，反對調漲稅率的一派認為，
不管稅率有高，企業總是有辦法將稅負成本轉嫁到消費者身上，導致產品價格調高，
以彌補稅負上的支出，反之調降稅率並不會增加企業的獲利，而是會使產品價格下跌。
Conversely, others argue that corporations not only pay the taxes
levied upon them, but absorb them also. Consumers, this school says, will
be unaffected by changes in corporate rates.
另一派則認為企業不但要支付稅負，同時還會吸收調漲的稅負成本，所以對消費者來
說一點影響都沒有。
What really happens? When the corporate rate is cut, do Berkshire,
The Washington Post, Cap Cities, etc., themselves soak up the benefits, or
do these companies pass the benefits along to their customers in the form
of lower prices? This is an important question for investors and managers,
as well as for policymakers.
事實到底是怎樣呢? 當企業稅率減少，Berkshire、華盛頓郵報或是資本城公司他們自
己真的可能將所有獲利放到自己口袋，或是將利益透過降價與客戶一起分享呢? 這對
投資人、經理人或是政策制定者來說，都是一個很重要的問題。
Our conclusion is that in some cases the benefits of lower corporate
taxes fall exclusively, or almost exclusively, upon the corporation and its
shareholders, and that in other cases the benefits are entirely, or almost
entirely, passed through to the customer. What determines the outcome is
the strength of the corporation’s business franchise and whether the
profitability of that franchise is regulated.
最後我們自己得到的結論是部份企業會將減稅的利益全部或是大部交到企業與其股東
的手上，另一部份的企業則是將利益流到消費者或是客戶的身上，主要的關鍵還在於
企業本身的競爭優勢與其獲利能力是否受到政府管制等因素。
For example, when the franchise is strong and after-tax profits are
regulated in a relatively precise manner, as is the case with electric utilities,
changes in corporate tax rates are largely reflected in prices, not in profits.
When taxes are cut, prices will usually be reduced in short order. When
taxes are increased, prices will rise, though often not as promptly.
舉例來說，當強勢企業如電力事業，其獲利程度受到法規嚴格管制，稅率調降將直接
立即反應在電力價格而非電力公司獲利數字之上，反之亦然，當稅率調升，價格雖然
也會跟著調漲，但調漲的速度也較慢。
A similar result occurs in a second arena - in the price-competitive
industry, whose companies typically operate with very weak business
franchises. In such industries, the free market "regulates" after-tax profits
in a delayed and irregular, but generally effective, manner. The
marketplace, in effect, performs much the same function in dealing with the
price-competitive industry as the Public Utilities Commission does in
dealing with electric utilities. In these industries, therefore, tax changes
eventually affect prices more than profits.
另外像價格競爭激烈的產業也會有同樣的結果，這類型的企業通常競爭力薄弱，不得
不透過自由競爭市場慢慢地反應到產品價格之上，這種價格反應機制與前面所提的公
用電力事業相類似，稅負減少對價格的影響，遠大於對獲利的影響。
In the case of unregulated businesses blessed with strong franchises,
however, it’s a different story: the corporation and its shareholders are
then the major beneficiaries of tax cuts. These companies benefit from a
tax cut much as the electric company would if it lacked a regulator to force
down prices.
不過另外一方面，在強勢且較不受政府規範的企業，情況就完全相反了，企業與其背
後的股東將會是最大的受益者。
Many of our businesses, both those we own in whole and in part,
possess such franchises. Consequently, reductions in their taxes largely
end up in our pockets rather than the pockets of our customers. While this
may be impolitic to state, it is impossible to deny. If you are tempted to
believe otherwise, think for a moment of the most able brain surgeon or
lawyer in your area. Do you really expect the fees of this expert (the local
"franchise-holder" in his or her specialty) to be reduced now that the top
personal tax rate is being cut from 50% to 28%?
許多我們百分之百或部份持有的事業都屬於此一類型，所有降稅的好處最後都落到我
們而非消費者的口袋裡，雖然這樣講有點冒昧，卻很難加以否認，若你一時無法接受
這項事實，看看你周圍那些名醫或是名律師，難道你會認為這些專業人士(也算是強勢
的個人事業)會因為個人所得稅率減少而調降其收費標準嗎?
Your joy at our conclusion that lower rates benefit a number of our
operating businesses and investees should be severely tempered, however,
by another of our convictions: scheduled 1988 tax rates, both individual
and corporate, seem totally unrealistic to us. These rates will very likely
bestow a fiscal problem on Washington that will prove incompatible with
price stability. We believe, therefore, that ultimately - within, say, five
years - either higher tax rates or higher inflation rates are almost certain to
materialize. And it would not surprise us to see both.
不過大家不要高興的太早，因為預計在1988年實施的減稅方案對我們一點來說有點
不太切實際，可以預期的是這些減稅方案將會造成未來華府的財政困難，進而對物價
穩定有嚴重影響，所以在可預期的未來五年之內，高稅率或是高通膨將會再現，且很
有可能兩者都會同時發生。
o Corporate capital gains tax rates have been increased from 28% to 34%,
effective in 1987. This change will have an important adverse effect on
Berkshire because we expect much of our gain in business value in the
future, as in the past, to arise from capital gains. For example, our three
major investment holdings - Cap Cities, GEICO, and Washington Post - at
yearend had a market value of over $1.7 billion, close to 75% of the total
net worth of Berkshire, and yet they deliver us only about $9 million in
annual income. Instead, all three retain a very high percentage of their
earnings, which we expect to eventually deliver us capital gains.
o企業資本利得稅率從1987年起將從原來的28%調高到34%，這種改變對於
Berkshire來說將有重大影響，因為我們預期未來被投資企業的價值，如同過去一般
會反應在企業的資本利得之上，例如我們主要的三大投資資本城、GEICO與華盛頓郵
報，目前總市值已高達17億美元，約佔Berkshire淨值的七成五強，但每年反應在
公司帳上的收益卻只有900萬美元，其餘大部分的盈餘都保留在公司，繼續發揮其投
資效益，最終為我們帶來大量的資本利得。
The new law increases the rate for all gains realized in the future,
including the unrealized gains that existed before the law was enacted. At
yearend, we had $1.2 billion of such unrealized gains in our equity
investments. The effect of the new law on our balance sheet will be
delayed because a GAAP rule stipulates that the deferred tax liability
applicable to unrealized gains should be stated at last year’s 28% tax rate
rather than the current 34% rate. This rule is expected to change soon.
The moment it does, about $73 million will disappear from our GAAP net
worth and be added to the deferred tax account.
新法案增加所有未來實現的資本利得稅負，包含過去新法修正之前已存在的未實現利
益，到年底為止，我們帳上有高達12億未實現股票投資利得，原來以28%估算預計
應付所得稅，不久之後，若改成34%的稅率，將會使得公司淨值減少7,300萬美元，
直接加到應繳付給政府的所得稅之上。
o Dividend and interest income received by our insurance companies will
be taxed far more heavily under the new law. First, all corporations will be
taxed on 20% of the dividends they receive from other domestic
corporations, up from 15% under the old law. Second, there is a change
concerning the residual 80% that applies only to property/casualty
companies: 15% of that residual will be taxed if the stocks paying the
dividends were purchased after August 7, 1986. A third change, again
applying only to property/casualty companies, concerns tax-exempt bonds:
interest on bonds purchased by insurers after August 7, 1986 will only be
85% tax-exempt.
o另外保險事業收到的股利與利息收入的稅負也將比過去加重，首先企業從國內公司
收到的股利稅率將從15%增加到20%，第二是有關產物意外險業者剩下的80%的股
利，若股票是在1986年八月以後取得的，還要再加課15%的所得稅，第三也是與產
物意外險業者相關，也就是在1986年八月以後取得的免稅債券，將只有85%的比例
可以免稅。
The last two changes are very important. They mean that our income
from the investments we make in future years will be significantly lower
than would have been the case under the old law. My best guess is that
these changes alone will eventually reduce the earning power of our
insurance operation by at least 10% from what we could previously have
expected.
後面兩項的變動非常重要，代表我們在以後年度，投資所得將會比以前舊制來的少，
我個人估計影響獲利能力約有十個百分點。
o The new tax law also materially changes the timing of tax payments by
property/casualty insurance companies. One new rule requires us to
discount our loss reserves in our tax returns, a change that will decrease
deductions and increase taxable income. Another rule, to be phased in
over six years, requires us to include 20% of our unearned premium reserve
in taxable income.
o新稅法也會大幅影響產物意外險公司支付稅負的時點，新規定要求我們在報稅時將
所提列的損失準備打折，此舉將使得我們的課稅所得增加，另外在未來六年內，要求
我們將20%未賺取的保費列入課稅所得中。
Neither rule changes the amount of the annual tax accrual in our
reports to you, but each materially accelerates the schedule of payments.
That is, taxes formerly deferred will now be front-ended, a change that will
significantly cut the profitability of our business. An analogy will suggest
the toll: if, upon turning 21, you were required to immediately pay tax on
all income you were due to receive throughout your life, both your lifetime
wealth and your estate would be a small fraction of what they would be if all
taxes on your income were payable only when you died.
雖然兩者並不影響報表中應付所得稅的數字，但卻都會大幅加速我們支付稅金的時
點，意謂過去不必馬上支付的稅負，現在卻都有可能要面臨繳納，這對我們的獲利將
有相當大的影響，這好比當你21歲成年時，便被要求要對你一生所能賺得的收入預
先課稅，則你往後一輩子個人的財富與身家將會比等到你死時再課稅要來的少的許多。
Attentive readers may spot an inconsistency in what we say. Earlier,
discussing companies in price-competitive industries, we suggested that
tax increases or reductions affect these companies relatively little, but
instead are largely passed along to their customers. But now we are saying
that tax increases will affect profits of Berkshire’s property/casualty
companies even though they operate in an intensely price-competitive
industry.
細心的讀者可能會發現一項與我們先前所說不一致的地方，剛剛提到在價格競爭激烈
的產業，我們認為稅負的增減，只會將變化移轉到客戶的身上，對公司的獲利影響有
限，不過以目前正處在激烈競爭的產物意外險業來說，稅負的增加直接影響的卻是公
司的獲利能力。
The reason this industry is likely to be an exception to our general rule
is that not all major insurers will be working with identical tax equations.
Important differences will exist for several reasons: a new alternative
minimum tax will materially affect some companies but not others; certain
major insurers have huge loss carry-forwards that will largely shield their
income from significant taxes for at least a few years; and the results of
some large insurers will be folded into the consolidated returns of
companies with non-insurance businesses. These disparate conditions will
produce widely varying marginal tax rates in the property/casualty industry.
That will not be the case, however, in most other price-competitive
industries, such as aluminum, autos and department stores, in which the
major players will generally contend with similar tax equations.
主要原因在於並非所有的保險業者都適用同樣的稅法規定，由於一些公司先前帳上有
相當大的虧損可供往後年度的獲利扣抵，有一些則因為併進虧損的非保險部門享有租
稅上優惠，使得不同產險公司的實際稅率不一而足，這與其他價格競爭激烈的產業，
諸如汽車、鋁業、百貨業，主要競爭對手稅率差異不大的情況，完全不一樣。
The absence of a common tax calculus for property/casualty
companies means that the increased taxes falling on the industry will
probably not be passed along to customers to the degree that they would in
a typical price-competitive industry. Insurers, in other words, will
themselves bear much of the new tax burdens.
稅負成本基礎不一，導致差異無法完全反應到客戶的身上，保險公司本身必須吸收部
份的稅務負擔。
o A partial offset to these burdens is a "fresh start" adjustment that
occurred on January 1, 1987 when our December 31, 1986 loss reserve
figures were converted for tax purposes to the newly-required discounted
basis. (In our reports to you, however, reserves will remain on exactly the
same basis as in the past - undiscounted except in special cases such as
structured settlements.) The net effect of the "fresh start" is to give us a
double deduction: we will get a tax deduction in 1987 and future years for a
portion of our-incurred-but-unpaid insurance losses that have already
been fully deducted as costs in 1986 and earlier years.
o另外部份負擔可被"fresh start"調整規定所抵消，雖然當我們在1986年提列的損
失準備，依照新稅法規定，在1987年認列時將被打折，(當然在給各位的財務報告上
的數字仍維持不變) ，不過由於重複扣抵的結果，將會使得淨影響數較以前增加。
The increase in net worth that is produced by this change is not yet
reflected in our financial statements. Rather, under present GAAP rules
(which may be changed), the benefit will flow into the earnings statement
and, consequently, into net worth over the next few years by way of
reduced tax charges. We expect the total benefit from the fresh-start
adjustment to be in the $30 - $40 million range. It should be noted,
however, that this is a one-time benefit, whereas the negative impact of the
other insurance-related tax changes is not only ongoing but, in important
respects, will become more severe as time passes.
這項淨值增加的影響尚未反應在年度的資產負債表上，依照現行的一般公認會計原
則，這項影響數將會陸續反應在未來的損益表的減稅利益上，我們預期這項重新的調
整將會使得公司淨值增加三、四千萬美元，不過須特別注意的是，這種優惠只是一時
的，不過其他不利的稅負增加卻是永久的。
o The General Utilities Doctrine was repealed by the new tax law. This
means that in 1987 and thereafter there will be a double tax on corporate
liquidations, one at the corporate level and another at the shareholder level.
In the past, the tax at the corporate level could be avoided, If Berkshire, for
example, were to be liquidated - which it most certainly won’t be -
shareholders would, under the new law, receive far less from the sales of
our properties than they would have if the properties had been sold in the
past, assuming identical prices in each sale. Though this outcome is
theoretical in our case, the change in the law will very materially affect
many companies. Therefore, it also affects our evaluations of prospective
investments. Take, for example, producing oil and gas businesses,
selected media companies, real estate companies, etc. that might wish to
sell out. The values that their shareholders can realize are likely to be
significantly reduced simply because the General Utilities Doctrine has been
repealed - though the companies’ operating economics will not have
changed adversely at all. My impression is that this important change in
the law has not yet been fully comprehended by either investors or
managers.
o一般事業處理原則在新稅法實施後將被取消，意思是說在1987年以後，對於企業
的清算其稅負將加倍，一個是在企業階段，一則是在股東個人階段，在過去企業階段
的稅負可透過適當方法予以規避，舉例來說，假設今天我們把Berkshire清算，(當然
這是不可能的事) ，在新制之下，公司股東所能收到的清算收入，將比過去舊制時代
少了很多，雖然這只是假設，但事實上卻影響到許多準備清算的公司，同樣也會影響
我們對投資標的的評估，如石油業、媒體業、或不動產業等等，雖然公司實際經營狀
況並沒有多大改變，但其處分價值卻因稅法的修訂而有極大的變動。
This section of our report has been longer and more complicated than
I would have liked. But the changes in the law are many and important,
particularly for property/casualty insurers. As I have noted, the new law
will hurt Berkshire’s results, but the negative impact is impossible to
quantify with any precision.
個人認為一般投資人或基金經理人可能尚未完全了解其嚴重性，雖然我不愛提，但我
還是必須向各位報告以上複雜難解的內容，總之我只能說新法對Berkshire來說，絕
對會有不利的影響，至於詳細的數字是多少，以目前的情況實在很難詳細的估算。
Miscellaneous
其他事項
We bought a corporate jet last year. What you have heard about such
planes is true: they are very expensive and a luxury in situations like ours
where little travel to out-of-the-way places is required. And planes not
only cost a lot to operate, they cost a lot just to look at. Pre-tax, cost of
capital plus depreciation on a new $15 million plane probably runs $3
million annually. On our own plane, bought for $850,000 used, such costs
run close to $200,000 annually.
去年公司新添購了一架飛機，沒錯一架對很少到遠處旅行的我們來說，算是相當昂貴
且豪華的飛機，這架飛機不僅所費不貸，還要花許多錢在保養之上，一架1,500萬美
元的新飛機，每年光是帳上的資金成本與折舊提列就要300萬美金，相較之下先前那
架85萬美元二手飛機，每年只會產生50萬美元的費用。
Cognizant of such figures, your Chairman, unfortunately, has in the
past made a number of rather intemperate remarks about corporate jets.
Accordingly, prior to our purchase, I was forced into my Galileo mode. I
promptly experienced the necessary "counter-revelation" and travel is now
considerably easier - and considerably costlier - than in the past. Whether
Berkshire will get its money’s worth from the plane is an open question, but
I will work at achieving some business triumph that I can (no matter how
dubiously) attribute to it. I’m afraid Ben Franklin had my number. Said he:
"So convenient a thing it is to be a reasonable creature, since it enables one
to find or make a reason for everything one has a mind to do."
確實有極大的差別，雖然充分了解其中的差異，不幸地本人還是對於企業專用飛機發
表了許多不當的言論，因此在購買之前，我不得已暫時變身成為伽利略，突然間得到
一項反啟示，原來旅行可以比過去來的容易多了，只是也變得比過去更貴了，到底
Berkshire會不會因為這架飛機而受益，目前尚無定論，但我個人一定會將部份企業
的成功因素歸諸於它(不管別人如何地懷疑) ，我很害怕富蘭克林打電話告訴我說，沒
錯!人類身為一種有理性的動物實在是太方便了，只要他想要做的，隨時可以找一個理
由來解釋它。
About 97% of all eligible shares participated in Berkshire’s 1986
shareholder-designated contributions program. Contributions made
through the program were $4 million, and 1,934 charities were recipients.
大約有97%的股東參加了去年的股東指定捐贈計畫，透過這項計畫去年我們總共捐出
了400萬美元給1,934個不同的慈善團體機構，
We urge new shareholders to read the description of our
shareholder-designated contributions program that appears on pages 58
and 59. If you wish to participate in future programs, we strongly urge
that you immediately make sure your shares are registered in the name of
the actual owner, not in "street" name or nominee name. Shares not so
registered on September 30, 1987 will be ineligible for the 1987 program.
我們敦促新加入的股東，仔細閱讀年報上有關股東捐贈計畫的詳細內容，如果在未來
年度內，你想要參加這類的計畫，我們強烈建議你將股份登記在自己而不是受託人的
名下，必須在1987年9月30日之前完成登記，才有權利參與1987年的捐贈計畫。
* * *
Last year almost 450 people attended our shareholders’ meeting, up
from about 250 the year before (and from about a dozen ten years ago). I
hope you can join us on May 19th in Omaha. Charlie and I like to answer
owner-related questions and I can promise you that our shareholders will
pose many good ones. Finishing up the questions may take quite a while -
we had about 65 last year so you should feel free to leave once your own
have been answered.
* * *
去年總計有450位股東參加年度的股東會，(去年約有250位，十年前則只有十幾
位) ，我很期望各位在五月十九日都能到奧瑪哈來參加今年的股東會，查理與我會很
樂意為各位回答所有有關公司經營的問題，去年所有股東總共提了65個問題，其中
有許多相當好的意見。
Last year, after the meeting, one shareholder from New Jersey and
another from New York went to the Furniture Mart, where each purchased a
$5,000 Oriental rug from Mrs. B. (To be precise, they purchased rugs that
might cost $10,000 elsewhere for which they were charged about $5,000.)
Mrs. B was pleased - but not satisfied - and she will be looking for you at
the store after this year’s meeting. Unless our shareholders top last year’s
record, I’ll be in trouble. So do me (and yourself) a favor, and go see her.
去年股東會結束後，兩位分別來自紐澤西與紐約的股東到內布拉斯加傢具店花了
5,000元向B太太各買了一套市價一萬元的地毯，B太太相當高興但卻不甚滿意，所
以今年股東會後，B太太將在店內等待各位，希望各位能夠打敗去年的記錄，否則我
可能會有麻煩，所以各位請幫幫忙，不要忘了順道去看看她
Warren E. Buffett
February 27, 1987 Chairman of the Board
華倫．巴菲特
董事會主席
1987年2月27日
Appendix
附錄
Purchase-Price Accounting Adjustments and the "Cash Flow" Fallacy Purchase-Price Accounting Adjustments and the "Cash Flow" FallacyFirst a short quiz: below are abbreviated 1986 statements of earnings for
two companies. Which business is the more valuable?
購買法會計調整數與「現金流量」的謬誤
首先先來個小考：以下是兩家公司的財務報表，請問哪一家比較值錢??
Company O
Company N
(000s Omitted)
Revenues……………………….
$677,240
$677,240
Costs of Goods Sold:
Historical costs, excluding depreciation…………………….
$341,170
$341,170
Special non-cash inventory costs…………………………….
4,979
(1)
Depreciation of plant and equipment ……………………...
8,301
13,355
(2)
349,471
359,504
$327,769
$317,736
Gross Profit …………………….
Selling & Admin. Expense........
$260,286
$260,286
Amortization of Goodwill .........
______
____595
(3)
260,286
260,881
Operating Profit .....................…
$ 67,483
$ 56,855
Other Income, Net .................…
4,135
4,135
Pre-Tax Income ......................…
$ 71,618
$ 60,990
Applicable Income Tax:
Historical deferred and current tax ……………………………….
$ 31,387
$ 31,387
Non-Cash Inter-period Allocation Adjustment .............
______
_____998
(4)
31,387
32,385
Net Income ............ $40,231 $28,605
======= =======
(Numbers (1) through (4) designate items discussed later in this section.)
(1)-(4)在後面會詳加討論。
As you've probably guessed, Companies O and N are the same business -
Scott Fetzer. In the "O" (for "old") column we have shown what the
company's 1986 GAAP earnings would have been if we had not purchased it;
in the "N" (for "new") column we have shown Scott Fetzer's GAAP earnings
as actually reported by Berkshire.
大家或許都已經猜到了，公司O跟公司N指的都是同一家公司-史考特-飛茲，O公
司(指舊公司)係假設它1986年沒有被Berkshire買下時依照一般公認會計原則編製
的盈餘報表，至於N公司(指新公司)則是指1986年它被Berkshire買下後，依照一
般公認會計原則在Berkshire報表上顯示的相關數字。
It should be emphasized that the two columns depict identical economics -
i.e., the same sales, wages, taxes, etc. And both "companies" generate the
same amount of cash for owners. Only the accounting is different. So,
fellow philosophers, which column presents truth? Upon which set of
numbers should managers and investors focus?
必須強調的是，這兩家公司數字所敘述的是同一個經濟事實，也就是營收、薪資、稅
負都相同，而兩家公司貢獻給股東的現金流入也完全相同，唯一不同的就只有適用的
會計原則，所以說，各位偉大的思想家，到底哪一家呈現的才是事實?? 投資人與經理
人到底應該關心哪一份報表??
Before we tackle those questions, let's look at what produces the disparity
between O and N. We will simplify our discussion in some respects, but the
simplification should not produce any inaccuracies in analysis or
conclusions.
在處理這些問題以前，讓我們先看看到底這兩家公司有哪一些差異之處，我們會試著
將討論予以簡化，當然這不致產生錯誤的分析與結論。
The contrast between O and N comes about because we paid an amount for
Scott Fetzer that was different from its stated net worth. Under GAAP, such
differences - such premiums or discounts - must be accounted for by
"purchase-price adjustments." In Scott Fetzer's case, we paid $315 million
for net assets that were carried on its books at $172.4 million. So we paid a
premium of $142.6 million.
新公司(N)與舊公司(O)差異的起因源自於我們購買史考特-飛茲的價錢與其會計帳面
淨值有所不同，根據一般公認會計原則，這樣的差異-不論時溢價或是折價，都必須
計入「購買法差異調整」項下，就本例而言，我們支付了3.15億美元買下帳面價值
1.724億美元的資產，中間就產生了1.426億美元的溢價。
The first step in accounting for any premium paid is to adjust the carrying
value of current assets to current values. In practice, this requirement
usually does not affect receivables, which are routinely carried at current
value, but often affects inventories. Because of a $22.9 million LIFO reserve
and other accounting intricacies, Scott Fetzer's inventory account was
carried at a $37.3 million discount from current value. So, making our first
accounting move, we used $37.3 million of our $142.6 million premium to
increase the carrying value of the inventory.
會計原則規定處理購併溢價的第一步是將流動資產的帳列價值調整至目前的價值，實
務上，通常受影響的是存貨等資產，至於具立即變現性的應收帳款則不受影響，由於
史考特-飛茲的存貨計價方式採後進先出法，使得其帳列的存貨成本低於市價3,730
萬美元，所以第一個動作就是將1.426億美元溢價中的3,730萬美元用來調整存貨
價值。
Assuming any premium is left after current assets are adjusted, the next
step is to adjust fixed assets to current value. In our case, this adjustment
also required a few accounting acrobatics relating to deferred taxes. Since
this has been billed as a simplified discussion, I will skip the details and
give you the bottom line: $68.0 million was added to fixed assets and
$13.0 million was eliminated from deferred tax liabilities. After making this
$81.0 million adjustment, we were left with $24.3 million of premium to
allocate.
在流動資產調整完之後，第二步就是調整固定資產至現在的價值，再次地，我們必須
運用一些會計技巧來處理相關的遞延所得稅，由於之前我們強調是簡單的討論，所以
我決定略去部份細節，直接公佈結果，其中6,800萬加到固定資產，至於另外的1,300
萬則從遞延所得稅負債扣除，最後剩下2,430萬美元的溢價待處理。
Had our situation called for them two steps would next have been required:
the adjustment of intangible assets other than Goodwill to current fair
values, and the restatement of liabilities to current fair values, a
requirement that typically affects only long-term debt and unfunded
pension liabilities. In Scott Fetzer's case, however, neither of these steps
was necessary.
如果有必要，接下來還有兩個步驟要進行：一是調整無形資產(商譽除外)，一是調整
負債，通常包含長期負債以及未提撥退休金負債，然而就本例而言，這些步驟都不需
要。
The final accounting adjustment we needed to make, after recording fair
market values for all assets and liabilities, was the assignment of the
residual premium to Goodwill (technically known as "excess of cost over the
fair value of net assets acquired"). This residual amounted to $24.3 million.
Thus, the balance sheet of Scott Fetzer immediately before the acquisition,
which is summarized below in column O, was transformed by the purchase
into the balance sheet shown in column N. In real terms, both balance
sheets depict the same assets and liabilities - but, as you can see, certain
figures differ significantly.
最後我們必須進行的會計動作，就是將剩餘的溢價部份歸類到「商譽」這個科目(專業
的解釋是取得成本超越資產公平價值部份)，金額為2,430萬美元，就這樣舊公司也
就是史考特-飛茲在被購併的前一刻的資產負債表，被改成新公司在Berkshire帳上
所列的各項數字，現實的狀況是，兩者都是用來說明同一家公司所擁有的資產與負債，
但大家可以清楚地發現，兩者在某些科目卻有極大的不同。
Company O
Company N
(000s Omitted)
Assets
Cash and Cash Equivalents …………………………...
$ 3,593
$ 3,593
Receivables, net ………………………………………..
90,919
90,919
Inventories ……………………………………………
77,489
114,764
Other …………………………………………………….
5,954
5,954
Total Current Assets …………………………………..
177,955
215,230
Property, Plant, and Equipment, net ………………….
80,967
148,960
Investments in and Advances to Unconsolidated Subsidiaries and Joint Ventures ………………………
93,589
93,589
Other Assets, including Goodwill …………………….
9,836
34,210
$362,347
$491,989
Liabilities
Notes Payable and Current Portion of Long-term Debt ………………………………………………………
$ 4,650
$ 4,650
Accounts Payable ……………………………………...
39,003
39,003
Accrued Liabilities ……………………………………..
84,939
84,939
Total Current Liabilities ………………………………..
128,592
128,592
Long-term Debt and Capitalized Leases …………….
34,669
34,669
Deferred Income Taxes ………………………………..
17,052
4,075
Other Deferred Credits …………………………………
9,657
9,657
Total Liabilities …………………………………………
189,970
176,993
Shareholders' Equity …………………………………...
172,377
314,996
$362,347 $491,989
======== ========
The higher balance sheet figures shown in column N produce the lower
income figures shown in column N of the earnings statement presented
earlier. This is the result of the asset write-ups and of the fact that some of
the written-up assets must be depreciated or amortized. The higher the
asset figure, the higher the annual depreciation or amortization charge to
earnings must be. The charges that flowed to the earnings statement
because of the balance sheet write-ups were numbered in the statement of
earnings shown earlier:
新公司的盈餘數字比舊公司的來得低，這是由於其資產負債表中的某些資產必須沖銷
或是按期折舊攤銷所致，帳列資產金額越高，每年必須提列的折舊與攤銷也就越高，
就本例而言，可能影響損益的數字包括：
$4,979,000 for non-cash inventory costs resulting, primarily, from
reductions that Scott Fetzer made in its inventories during 1986;
charges of this kind are apt to be small or non-existent in future
years.
1. 以1986年史考特飛茲為主的497.9萬美元存貨跌價損失，這類的成本在
往後年度金額將會慢慢變小。
$5,054,000 for extra depreciation attributable to the write-up of
fixed assets; a charge approximating this amount will probably be
made annually for 12 more years.
2.額外的505.4萬美元固定資產折舊成本，往後12年的金額與此數目相當。
$595,000 for amortization of Goodwill; this charge will be made
annually for 39 more years in a slightly larger amount because our
purchase was made on January 6 and, therefore, the 1986 figure
applies to only 98% of the year.
3.59.5萬的商譽攤銷，這筆費用還要持續39年以上，以後年度的數字會略高，
因為由於購併是在1月6日發生，所以1986年只反應了98%的數字。
$998,000 for deferred-tax acrobatics that are beyond my ability to
explain briefly (or perhaps even non-briefly); a charge approximating
this amount will probably be made annually for 12 more years.
4.99.8萬的遞延所得稅攤銷，由於這部份相當複雜，所以我無法在短期間內向各
位說明清楚，這筆金額還會持續12年以上。
It is important to understand that none of these newly-created accounting
costs, totaling $11.6 million, are deductible for income tax purposes. The
"new" Scott Fetzer pays exactly the same tax as the "old" Scott Fetzer would
have, even though the GAAP earnings of the two entities differ greatly. And,
in respect to operating earnings, that would be true in the future also.
However, in the unlikely event that Scott Fetzer sells one of its businesses,
the tax consequences to the "old" and "new" company might differ widely.
有一點很重要，那就是這些新增的會計攤銷成本，金額約1,160萬美元是無法扣抵所
得稅的，所以新公司支付的所得稅與舊公司並無二致，雖然依照一般公認會計原則所
顯示的數字完全不同，而且往後年度的損益報表也有相同的情況，當然萬一史考特飛
茲出售部份的事業時，兩者的稅負影響就會有所不同。
By the end of 1986 the difference between the net worth of the "old" and
"new" Scott Fetzer had been reduced from $142.6 million to $131.0 million
by means of the extra $11.6 million that was charged to earnings of the
new entity. As the years go by, similar charges to earnings will cause most
of the premium to disappear, and the two balance sheets will converge.
However, the higher land values and most of the higher inventory values
that were established on the new balance sheet will remain unless land is
disposed of or inventory levels are further reduced.
1986年底兩家公司淨值上的不同，在扣除1,160萬美元的已攤銷成本後，將由原先
的1.426億美元減為1.31億美元，隨著時間過去，相似的攤銷將使得彼此的差異逐
漸縮小，然而土地或存貨的重估必須等到這些資產出售後才會消失。
* * *
What does all this mean for owners? Did the shareholders of Berkshire buy a
business that earned $40.2 million in 1986 or did they buy one earning
$28.6 million? Were those $11.6 million of new charges a real economic
cost to us? Should investors pay more for the stock of Company O than of
Company N? And, if a business is worth some given multiple of earnings,
was Scott Fetzer worth considerably more the day before we bought it than
it was worth the following day?
對於股東來說，到底有何差別? Berkshire的股東們在1986年買到的，到底是一家年
獲利4,020萬或是2,860萬美元的公司呢? 這筆1,160萬美元的新增成本對我們到
底有沒有實質的經濟影響呢? 投資人是否應該付出更多的代價來買舊公司呢? 而又若
是企業評價按本益比的角度來衡量的話，史考特飛茲在被我們買下之前是否是比較值
錢呢?
If we think through these questions, we can gain some insights about what
may be called "owner earnings." These represent (a) reported earnings plus
(b) depreciation, depletion, amortization, and certain other non-cash
charges such as Company N's items (1) and (4) less (c) the average annual
amount of capitalized expenditures for plant and equipment, etc. that the
business requires to fully maintain its long-term competitive position and
its unit volume. (If the business requires additional working capital to
maintain its competitive position and unit volume, the increment also
should be included in (c) . However, businesses following the LIFO inventory
method usually do not require additional working capital if unit volume
does not change.)
如果我們能夠想通這些問題，那麼我們就能體會所謂的「經營者的盈餘」，它代表(a)
帳列盈餘，加計(b)折舊、攤銷與其他成本，如新公司(1)到(4)項，扣除(c)年度平均的
資本支出等以維持公司長期競爭力。(如果企業需要額外的營運資金來維持既有的產能
與競爭力，那麼這部份的增加也必須納入(c)項，然而存貨計價方式採用後進先出法的
公司就比較沒有這方面的問題)。
Our owner-earnings equation does not yield the deceptively precise figures
provided by GAAP, since(c) must be a guess - and one sometimes very
difficult to make. Despite this problem, we consider the owner earnings
figure, not the GAAP figure, to be the relevant item for valuation purposes -
both for investors in buying stocks and for managers in buying entire
businesses. We agree with Keynes's observation: "I would rather be vaguely
right than precisely wrong."
我們的經營者盈餘公式與按照一般公認會計原則編製的數字並不會完全相同，因為(c)
項本身是個估計數，且有時還很難精確的估算，基於此，我們認為經營者盈餘在我們
進行購併或買進公司股票，而須評估企業價值時，較有意義，我們相當同意凱因斯的
看法：我寧願大致正確也不要完全錯誤。
The approach we have outlined produces "owner earnings" for Company O
and Company N that are identical, which means valuations are also identical,
just as common sense would tell you should be the case. This result is
reached because the sum of (a) and (b) is the same in both columns O and
N, and because(c) is necessarily the same in both cases.
用我們的方式評估新公司與舊公司所得的經營者盈餘完全相同，這代表兩者的評估價
值也一樣，事實上，按照一般的認知本該就如此，結果會相同是由於兩家公司(a)(b)
兩項的合計數一樣，至於(c)本來就都一樣。
And what do Charlie and I, as owners and managers, believe is the correct
figure for the owner earnings of Scott Fetzer? Under current circumstances,
we believe (c) is very close to the "old" company's (b) number of $8.3
million and much below the "new" company's (b) number of $19.9 million.
Therefore, we believe that owner earnings are far better depicted by the
reported earnings in the O column than by those in the N column. In other
words, we feel owner earnings of Scott Fetzer are considerably larger than
the GAAP figures that we report.
那麼查理跟我身公司公司的所有人與經營者，到底哪一個數字才真正屬於史考特飛茲
呢? 在目前的情況下，我們認為(c)項的數字相當接近舊公司(b)830萬美元，但遠低於
新公司(b)項1,990萬美元，因此我們認為舊公司財務報表上的數字比較接近經營者
的盈餘，換句話說，我們覺得史考特飛茲的經營者盈餘遠大於一般公認會計原則編製
的數字。
That is obviously a happy state of affairs. But calculations of this sort
usually do not provide such pleasant news. Most managers probably will
acknowledge that they need to spend something more than (b) on their
businesses over the longer term just to hold their ground in terms of both
unit volume and competitive position. When this imperative exists - that is,
when (c) exceeds (b) - GAAP earnings overstate owner earnings.
Frequently this overstatement is substantial. The oil industry has in recent
years provided a conspicuous example of this phenomenon. Had most
major oil companies spent only (b) each year, they would have guaranteed
their shrinkage in real terms.
這顯然是一個比較快樂的結果，但計算這種東西通常沒有那麼讓人感到樂觀，大部分
的經理人通常會認為應該花費比(b)項更多的資金以維持既有的產能與競爭力，當這種
觀念存在時，也就是當(c)項遠超過(b)項時，那麼也代表一般公認會計原則過分高估了
經營者的盈餘，而且通常這個數字會非常驚人，近年來的石油產業就為這種現象提供
了最明顯的例證，要是這些石油公司每年只投入(b)的資金的話，那麼它們的實際的產
能將大幅地縮水。
All of this points up the absurdity of the "cash flow" numbers that are often
set forth in Wall Street reports. These numbers routinely include (a) plus (b)
- but do not subtract (c) . Most sales brochures of investment bankers also
feature deceptive presentations of this kind. These imply that the business
being offered is the commercial counterpart of the Pyramids - forever
state-of-the-art, never needing to be replaced, improved or refurbished.
Indeed, if all U.S. corporations were to be offered simultaneously for sale
through our leading investment bankers - and if the sales brochures
describing them were to be believed - governmental projections of national
plant and equipment spending would have to be slashed by 90%.
以上這些論點充分解釋華爾街經營運用現金流量數字的荒謬性，這些數字通常只包含
(a)加(b)但卻未扣除(c)，大部分投資銀行所提供的介紹手冊也使用類似的欺騙手法，
這等於是在暗示，所介紹的企業就像是商業世界裡的萬年金字塔，永遠歷久彌新、不
會被取代、不用維修或更新，事實上，如果全美的企業真如這些投資銀行所形容的，
那麼政府每年編製的全美工廠及設備採購指數將大幅下滑90%以上。
"Cash Flow", true, may serve as a shorthand of some utility in descriptions
of certain real estate businesses or other enterprises that make huge initial
outlays and only tiny outlays thereafter. A company whose only holding is a
bridge or an extremely long-lived gas field would be an example. But "cash
flow" is meaningless in such businesses as manufacturing, retailing,
extractive companies, and utilities because, for them, (c) is always
significant. To be sure, businesses of this kind may in a given year be able
to defer capital spending. But over a five- or ten-year period, they must
make the investment - or the business decays.
「現金流量」的觀念，確實可以作為某些比如說不動產或是初期需要投入大量資本支
出而後僅需負擔少量維修的產業之上，具體的例子包含橋樑興建或是某些蘊藏豐富的
天然氣油田等，但另一方面，「現金流量」卻不能適用於某些零售、製造、採礦及公
用事業之上，因為其必須持續投入的(c)項金額相當巨大，確實這些產業有時可以稍微
忍住一兩年不做重大的投資，但就五到十年長期間來看，它們就不得不這樣做，否則
企業的根基就會被侵蝕。
Why, then, are "cash flow" numbers so popular today? In answer, we confess
our cynicism: we believe these numbers are frequently used by marketers of
businesses and securities in attempts to justify the unjustifiable (and
thereby to sell what should be the unsalable). When (a) - that is, GAAP
earnings - looks by itself inadequate to service debt of a junk bond or
justify a foolish stock price, how convenient it becomes for salesmen to
focus on (a) + (b). But you shouldn't add (b) without subtracting (c) :
though dentists correctly claim that if you ignore your teeth they'll go away,
the same is not true for (c) . The company or investor believing that the
debt-servicing ability or the equity valuation of an enterprise can be
measured by totaling (a) and (b) while ignoring (c) is headed for certain
trouble.
那麼為什麼現在「現金流量」會變得如此流行呢? 在回答前，我們必須承認我們存在
某些偏見，我們認為這些數字通常都是那些專門推銷股票及公司的人，企圖要將一些
爛公司粉飾包裝出售所用的手法，當(a)項也就是一般公認會計原則的盈餘看起來不足
以支應往後的債務所需或是過高的股票價格時，這些業務員自然就會將主意擺在
(a)+(b)這個比較好看的數字上頭，但如果你硬要加上(b)的話，就必須要扣除(c)，雖
然有些牙醫會告訴你，如果你能忘記牙痛的痛楚，那麼它們就等於不存在，如果投資
人或企業買家在考量償債能力或股票價值，只注意(a)+(b)，卻忽略了(c)時，將來肯定
會遇上大麻煩。
* * *
To sum up: in the case of both Scott Fetzer and our other businesses, we
feel that (b) on an historical-cost basis - i.e., with both amortization of
intangibles and other purchase-price adjustments excluded - is quite close
in amount to (c) . (The two items are not identical, of course. For example,
at See's we annually make capitalized expenditures that exceed
depreciation by $500,000 to $1 million, simply to hold our ground
competitively.) Our conviction about this point is the reason we show our
amortization and other purchase-price adjustment items separately in the
table on page 8 and is also our reason for viewing the earnings of the
individual businesses as reported there as much more closely
approximating owner earnings than the GAAP figures.
總而言之，在史考特飛茲以及其他類似個案中，我們認為(b)以歷史成本為基礎，有就
是說在扣除無形資產的攤銷以及其他購買法調整數後所得的金額，應該相當接近於
(c)(當然這兩個項目並不會完全相同，舉例來說，我們在喜斯糖果每年為維持既有的
競爭力所作的資本投入約大於折舊數50萬到100萬之間)，這也是為什麼我們在第8
頁的表特地將無形資產的攤銷以及其他購買法調整數分開列示，同時認為旗下個別事
業的盈餘數字以經營者盈餘而非依照一般公認會計原則的帳列數字為主要參考。
Questioning GAAP figures may seem impious to some. After all, what are
we paying the accountants for if it is not to deliver us the "truth" about our
business. But the accountants' job is to record, not to evaluate. The
evaluation job falls to investors and managers.
或許有人會覺得我們膽敢對一般公認會計原則的帳列盈餘數字提出質疑，但畢竟如果
會計師無法告訴我們真實的數字的話，我們還要它們做什麼用? 當然會計師主要的職
責是記錄而不是評估，評估的工作還是要靠投資人與經營者本身來執行。
Accounting numbers, of course, are the language of business and as such
are of enormous help to anyone evaluating the worth of a business and
tracking its progress. Charlie and I would be lost without these numbers:
they invariably are the starting point for us in evaluating our own
businesses and those of others. Managers and owners need to remember,
however, that accounting is but an aid to business thinking, never a
substitute for it.
當然會計數字是企業的語言，對於任何一個想要評估公司價值以及經營情況的人來
說，都相當有幫助，如果沒有這些數字，查理跟我將會迷失方向，對我們來說，這些
數字絕對是我們評估被投資事業的起始點，但經理人及所有人必須切記，會計只不過
投資人思考的輔助工具，而不是完全的替代品。
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