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BERKSHIRE HATHAWAY INC.
波克夏海瑟崴股份有限公司
1997 Chairman's Letter
1997年董事長致股東信
To the Shareholders of Berkshire Hathaway Inc.:
致所有股東:
Our gain in net worth during 1997 was $8.0 billion, which
increased the per-share book value of both our Class A and Class B
stock by 34.1%. Over the last 33 years (that is, since present
management took over) per-share book value has grown from $19 to
$25,488, a rate of 24.1% compounded annually.(1)
1997年本公司的淨值增加了80億美元，每股帳面淨值不管是A級股或B級股
皆成長了34.1%，總計過去33年以來，也就是自從現有經營階層接手之後，每
股淨值由當初的19元成長到現在的25,488美元，年複合成長率約為24.1%*。
1. All figures used in this report apply to Berkshire's A shares,
the successor to the only stock that the company had outstanding
before 1996. The B shares have an economic interest equal to 1/30th
that of the A.
*1在年報中所謂的每股數字係以A級普通股約當數為基礎，這是本公司在1996年以前流通在
外唯一的一種股份，B級普通股擁有A級普通股三十分之一的權利。
Given our gain of 34.1%, it is tempting to declare victory and move
on. But last year's performance was no great triumph: Any investor can
chalk up large returns when stocks soar, as they did in 1997. In a bull
market, one must avoid the error of the preening duck that quacks
boastfully after a torrential rainstorm, thinking that its paddling skills
have caused it to rise in the world. A right-thinking duck would instead
compare its position after the downpour to that of the other ducks on
the pond.
看到我們高達34.1%的超高報酬率，大家可能忍不住要高呼勝利口號，並勇往
前進，不過若是考量去年股市的狀況，任何一個投資人都能靠著股票的飆漲而大
賺一票，面對多頭的行情，大家一定要避免成為一隻呱呱大叫的驕傲鴨子，以為
是自己高超的泳技讓他衝上了天，殊不知面對狂風巨浪，小心的鴨子反而會謹慎
地看看大浪過後，其他池塘裡的鴨子都到哪裡去了。
So what's our duck rating for 1997? The table on the facing page
shows that though we paddled furiously last year, passive ducks that
simply invested in the S&P Index rose almost as fast as we did. Our
appraisal of 1997's performance, then: Quack.
那麼我們這隻鴨子在1997年的表現又如何呢? 報表顯示雖然去年我們拼命的
向前划，不過到最後我們發現其他被動投資S&P 500指數的鴨子的表現一點也
不比我們差，所以總結我們在1997年的表現是︰呱呱!
When the market booms, we tend to suffer in comparison with the
S&P Index. The Index bears no tax costs, nor do mutual funds, since
they pass through all tax liabilities to their owners. Last year, on the
other hand, Berkshire paid or accrued $4.2 billion for federal income
tax, or about 18% of our beginning net worth.
當股市正熱時，相較於S&P 500指數，我們比較吃虧，因為指數或共同基金不
必負擔租稅成本，他們可以直接將稅負轉嫁到投資人的身上，相對地在另一方面
Berkshire光是去年就必須認為高達42億美元的聯邦所得稅，這相當於我們年
初淨值的18%。
Berkshire will always have corporate taxes to pay, which means it
needs to overcome their drag in order to justify its existence. Obviously,
Charlie Munger, Berkshire's Vice Chairman and my partner, and I won't
be able to lick that handicap every year. But we expect over time to
maintain a modest advantage over the Index, and that is the yardstick
against which you should measure us. We will not ask you to adopt the
philosophy of the Chicago Cubs fan who reacted to a string of lackluster
seasons by saying, "Why get upset? Everyone has a bad century now and
then."
由於Berkshire必須要負擔企業所得稅，所以為了要證明其存在的意義，它就一
定要能夠克服這先天的障礙，不過很顯然的Berkshire的主要合夥人查理曼格跟
我很難每年都打敗這樣的差桿，當然就長期而言，我們還是預期Berkshire能夠
打敗大盤指數，這也是大家可以評斷我們表現的最低標準，我想我們應該不會讓
大家像芝加哥小熊隊球迷在面對連續幾個戰績不佳球季時，自我調侃所說的︰有
什麼好沮喪的?? 誰都可能有不好過的一世紀。
Gains in book value are, of course, not the bottom line at Berkshire.
What truly counts are gains in per-share intrinsic business value.
Ordinarily, though, the two measures tend to move roughly in tandem,
and in 1997 that was the case: Led by a blow-out performance at GEICO,
Berkshire's intrinsic value (which far exceeds book value) grew at nearly
the same pace as book value.
帳面淨值的增加當然不是經營Berkshire的最終目標，因為真正重要的是每股實
質價值，雖然在Berkshire通常兩者會以相當接近的頻率波動，就像是1997年
便是如此，受惠於GEICO爆炸性的成長，Berkshire的實質價值(遠高於帳面價
值)以接近帳面價值成長的幅度增加。
For more explanation of the term, intrinsic value, you may wish to
refer to our Owner's Manual, reprinted on pages 62 to 71. This manual
sets forth our owner-related business principles, information that is
important to all of Berkshire's shareholders.
有關"實質價值"等名詞的解釋，請大家參閱股東手冊，手冊中揭示了本公司經營
的宗旨，也包含了許多對Berkshire股東相當重要的資訊。
In our last two annual reports, we furnished you a table that Charlie
and I believe is central to estimating Berkshire's intrinsic value. In the
updated version of that table, which follows, we trace our two key
components of value. The first column lists our per-share ownership of
investments (including cash and equivalents) and the second column
shows our per-share earnings from Berkshire's operating businesses
before taxes and purchase-accounting adjustments (discussed on
pages 69 and 70), but after all interest and corporate expenses. The
second column excludes all dividends, interest and capital gains that we
realized from the investments presented in the first column. In effect,
the columns show what Berkshire would look like were it split into two
parts, with one entity holding our investments and the other operating
all of our businesses and bearing all corporate costs.
在過去兩年的年報中，我們提供給各位一張查理跟我認為最能夠估計Berkshire
實質價值的表，在下面這張更新過數字的表中，主要有兩項跟價值息息相關的指
標，第一欄是我們平均每股持有的投資金額(包含現金與約當現金)，第二欄則是
每股在扣除利息與營業費用之後，來自本業的營業利益(但未扣除所得稅與購買
法會計調整數)，當然後者已經扣除了所有來自第一欄投資所貢獻的股利收入、
利息收入與資本利得，事實上，若是把Berkshire拆成兩部份的話，就等於是一
家持有我們投資部位的控股公司，以及另一家經營旗下所有事業負擔全部成本盈
虧的營利事業。
Pre-tax Earnings Per Share
Investments Excluding All Income from
Year Per Share Investments
1967 $ 41 $ 1.09
1977 372 12.44
1987 3,910 108.14
199738,043 717.82
Pundits who ignore what our 38,000 employees contribute to the
company, and instead simply view Berkshire as a de facto investment
company, should study the figures in the second column. We made our
first business acquisition in 1967, and since then our pre-tax operating
earnings have grown from $1 million to $888 million. Furthermore, as
noted, in this exercise we have assigned all of Berkshire's corporate
expenses -- overhead of $6.6 million, interest of $66.9 million and
shareholder contributions of $15.4 million -- to our business
operations, even though a portion of these could just as well have been
assigned to the investment side.
對於那些無視於我們38,000名辛勤奉獻員工的存在，而武斷地將Berkshire當
做是一家投資公司的鄉野匹夫，應該要請他們看看第二欄的數字，打從1967年
我們進行第一次的併購開始，本公司的稅前營業盈餘已從當時的100萬美元成
長到現在的8.88億美元，這還是吸收了Berkshire全部的開銷，包含660萬
美元的企業營運費用、6,690萬美元的利息支出與1,540萬美元的股東指定捐
贈款後的結餘，雖然這其中有一部份是與投資活動相關的支出。
Here are the growth rates of the two segments by decade:
下表是這兩個部門每十年的成長率︰
Pre-tax Earnings Per Share
Investments Excluding All Income from
Decade Ending Per Share Investments
1977 24.6% 27.6%
1987 26.5% 24.1%
1997 25.5% 20.8%
Annual Growth
Rate, 1967-1997 25.6% 24.2%
During 1997, both parts of our business grew at a satisfactory rate,
with investments increasing by $9,543 per share, or 33.5%, and
operating earnings growing by $296.43 per share, or 70.3%. One
important caveat: Because we were lucky in our super-cat insurance
business (to be discussed later) and because GEICO's underwriting gain
was well above what we can expect in most years, our 1997 operating
earnings were much better than we anticipated and also more than we
expect for 1998.
回顧1997年Berkshire兩個部份都繳出漂亮的成績單，每股投資金額增加了
9,543美元，約33.5%；而每股營業盈餘則增加了296.43美元，約70.3%，
當然其中有一個很重要的關鍵，那就是我們的霹靂貓保險業務(後面還會在詳加
說明)的運氣不錯，同時GEICO保險的表現甚至優於以往，這使得1997年的營
業表現超乎當初的預期，甚至超過未來1998年可能的表現。
Our rate of progress in both investments and operations is certain
to fall in the future. For anyone deploying capital, nothing recedes like
success. My own history makes the point: Back in 1951, when I was
attending Ben Graham's class at Columbia, an idea giving me a $10,000
gain improved my investment performance for the year by a full 100
percentage points. Today, an idea producing a $500 million pre-tax
profit for Berkshire adds one percentage point to our performance. It's
no wonder that my annual results in the 1950s were better by nearly
thirty percentage points than my annual gains in any subsequent
decade. Charlie's experience was similar. We weren't smarter then, just
smaller. At our present size, any performance superiority we achieve
will be minor.
我相信未來不管是投資或營業盈餘的成長速度一定會向下滑落，對於任何負責資
金運用的人而言，成功必然導致衰退，就拿我個人的投資歷史來說，回想當初我
在1951年進入哥倫大學拜在葛拉漢名下時，只要抓住能夠賺到1萬美元的投
資機會就能讓我的投資績效超過百分之百，不過時至今日，一筆能賺5億美元
的成功投資個案，也不過只能讓Berkshire增加區區一個百分點的投資績效，也
難怪個人在1950年代早期的投資績效會比接下來幾十年的年度績效差距達30
個百分點以上，而查理本身的經歷也很相似，不是我們變笨了，而是因為我們目
前的規模實在是太大了，現在任何一項重大進展都會因為規模龐大的關係而顯得
微不足道。
We will be helped, however, by the fact that the businesses to
which we have already allocated capital -- both operating subsidiaries
and companies in which we are passive investors -- have splendid
long-term prospects. We are also blessed with a managerial corps that
is unsurpassed in ability and focus. Most of these executives are wealthy
and do not need the pay they receive from Berkshire to maintain their
way of life. They are motivated by the joy of accomplishment, not by
fame or fortune.
當然只要我們投資的子公司以及股票具有遠景，我們絕對能夠因此受益，同時也
要感謝旗下這群卓越的能力與專注力的經營管理團隊，大家要知道這些經理人本
身大多都已經很有錢了，根本就不需要靠Berkshire這份薪水過活，他們不為
名，也不為利，純粹是衝著那份成就感。
Though we are delighted with what we own, we are not pleased
with our prospects for committing incoming funds. Prices are high for
both businesses and stocks. That does not mean that the prices of
either will fall -- we have absolutely no view on that matter -- but it
does mean that we get relatively little in prospective earnings when we
commit fresh money.
雖然對於現有的投資部位感到相當滿意，但是我們也對於陸續進來的資金找不到
理想的去路而感到憂心，目前不管是整家公司或是單一股票的市場價格都過高，
但我並不是要預言股價將會下跌，我們從來就不對股市發表任何看法，這樣說的
意思只是要提醒大家未來新投入資金的預期報酬將會大大減少。
Under these circumstances, we try to exert a Ted Williams kind of
discipline. In his book The Science of Hitting, Ted explains that he
carved the strike zone into 77 cells, each the size of a baseball.
Swinging only at balls in his "best" cell, he knew, would allow him to
bat .400; reaching for balls in his "worst" spot, the low outside corner of
the strike zone, would reduce him to .230. In other words, waiting for
the fat pitch would mean a trip to the Hall of Fame; swinging
indiscriminately would mean a ticket to the minors.
在這種情況下，我們試著學習職棒傳奇明星Ted Williams的作法，在他的"打擊
的科學"一書中解釋到，他把打擊區域劃分為77個框框，每個框框就約當一個
棒球的大小，只有當球進入最理想的框框時，他才揮棒打擊，因為他深深知道只
有這樣做，他才能維持四成的超高打擊率，反之要是勉強去揮擊較差的框框，將
會使得他的打擊率驟降到二成三以下，換句話說，只有耐心等待超甜的好球，才
是通往名人堂的大道，好壞球照單全收的人，遲早會面臨被降到小聯盟的命運。
If they are in the strike zone at all, the business "pitches" we now
see are just catching the lower outside corner. If we swing, we will be
locked into low returns. But if we let all of today's balls go by, there can
be no assurance that the next ones we see will be more to our liking.
Perhaps the attractive prices of the past were the aberrations, not the
full prices of today. Unlike Ted, we can't be called out if we resist three
pitches that are barely in the strike zone; nevertheless, just standing
there, day after day, with my bat on my shoulder is not my idea of fun.
目前迎面朝我們而來的"投"資機會大多只在好球帶邊緣，如果我們選擇揮棒，則
得到的成績可能會不太理想，但要是我們選擇放棄不打，則沒有人敢跟你保證下
一球會更好，或許過去那種吸引人的超低價格已不復存在，所幸我們不必像Ted
Williams一樣，可能因為連續三次不揮棒而遭三振出局，只是光是扛著棒子站
在那裡，日復一日，也不是一件令人感到愉快的事。
Unconventional Commitments
非常態性投資
When we can't find our favorite commitment -- a well-run and
sensibly-priced business with fine economics -- we usually opt to put
new money into very short-term instruments of the highest quality.
Sometimes, however, we venture elsewhere. Obviously we believe that
the alternative commitments we make are more likely to result in profit
than loss. But we also realize that they do not offer the certainty of profit
that exists in a wonderful business secured at an attractive price.
Finding that kind of opportunity, we know that we are going to make
money -- the only question being when. With alternative investments,
we think that we are going to make money. But we also recognize that
we will sometimes realize losses, occasionally of substantial size.
有時我們的資金不一定能夠找到最理想的去處-也就是經營良好、價碼合理的企
業，這時我們就會將資金投入到一些期間較短但品質不錯的投資工具上，雖然我
們很明白這樣的做法可能無法像我們買進好公司那樣穩健的獲利，甚至在少數的
狀況下有可能賠大錢，不過總得來說我們相信賺錢的機率還是遠高於賠錢，唯一
的關鍵在於其獲利何時能夠實現。
We had three non-traditional positions at yearend. The first was
derivative contracts for 14.0 million barrels of oil, that being what was
then left of a 45.7 million barrel position we established in 1994-95.
Contracts for 31.7 million barrels were settled in 1995-97, and these
supplied us with a pre-tax gain of about $61.9 million. Our remaining
contracts expire during 1998 and 1999. In these, we had an unrealized
gain of $11.6 million at yearend. Accounting rules require that
commodity positions be carried at market value. Therefore, both our
annual and quarterly financial statements reflect any unrealized gain or
loss in these contracts. When we established our contracts, oil for future
delivery seemed modestly underpriced. Today, though, we have no
opinion as to its attractiveness.
截至年底，我們總共有三項異於往常的投資，首先是1,400萬桶的原油期貨合
約，這是我們在1994-1995年間所建立4,570萬桶原油的剩餘部位，預計在
1998-1999年陸續到期，目前未實現獲利約有1,160萬美元，而已經結倉的
3,170萬桶原油合約總共貢獻我們6,190萬美元的獲利，會計原則規定期貨合
約必須依市場價格評價，因此這些合約所有未實現的損益皆已反應在我們年度或
每季的財務報表上，當初我們之所以會建立這些部位，主要考量當時的石油期貨
價位有些低估，至於現在的市場狀況我們則沒有任何意見。
Our second non-traditional commitment is in silver. Last year, we
purchased 111.2 million ounces. Marked to market, that position
produced a pre-tax gain of $97.4 million for us in 1997. In a way, this is
a return to the past for me: Thirty years ago, I bought silver because I
anticipated its demonetization by the U.S. Government. Ever since, I
have followed the metal's fundamentals but not owned it. In recent
years, bullion inventories have fallen materially, and last summer
Charlie and I concluded that a higher price would be needed to establish
equilibrium between supply and demand. Inflation expectations, it
should be noted, play no part in our calculation of silver's value.
至於第二項則是白銀，去年我們一口氣買進總共1.112億盎斯的白銀，以目前
的市價計算，總共貢獻1997年9,740萬美元的稅前利益，某個角度來說，這
彷彿又讓我回到過去，記得在三十年前，我因為預期美國政府貨幣將自由化而買
進白銀，自此之後，我便一直追蹤貴金屬的基本面，只是並沒有其他的買進動作，
直到最近這幾年，銀條的存貨突然大幅下滑，查理跟我得到一個結論，那就是白
銀的價格應該要稍微向上調整以維持供給與需求的平衡，至於一般人較注意的通
膨預期則不在我們計算價值的範圍之內。
Finally, our largest non-traditional position at yearend was $4.6
billion, at amortized cost, of long-term zero-coupon obligations of the
U.S. Treasury. These securities pay no interest. Instead, they provide
their holders a return by way of the discount at which they are
purchased, a characteristic that makes their market prices move rapidly
when interest rates change. If rates rise, you lose heavily with zeros, and
if rates fall, you make outsized gains. Since rates fell in 1997, we ended
the year with an unrealized pre-tax gain of $598.8 million in our zeros.
Because we carry the securities at market value, that gain is reflected in
yearend book value.
最後一項是46億美元以帳面攤銷長期的美國零息債券，這些債券不支付利息，
相反的是以透過折價發行的方式回饋給債券持有人，也因此這類債券的價格會因
市場利率變動而大幅波動，如果利率上升，持有零息債券的人可能損失慘重，反
之若利率下跌，投資人就可能因此大賺一筆，而因為1997年的利率大幅下滑，
所以光是1997年我們的未實現利益就高達5.98億美元，這些利益已全數反應
在公司年底的帳上。
In purchasing zeros, rather than staying with cash-equivalents, we
risk looking very foolish: A macro-based commitment such as this
never has anything close to a 100% probability of being successful.
However, you pay Charlie and me to use our best judgment -- not to
avoid embarrassment -- and we will occasionally make an
unconventional move when we believe the odds favor it. Try to think
kindly of us when we blow one. Along with President Clinton, we will be
feeling your pain: The Munger family has more than 90% of its net worth
in Berkshire and the Buffetts more than 99%.
當然不把現金好好的擺著而拿去投資零息債券不是沒有風險的，這種基於總體經
濟分析的投資絕對不敢保證百分之百能夠成功，不過查理跟我絕對會運用我們最
佳的判斷能力，大家可不是請我們來閒閒沒事幹，當我們認為勝算頗大時，我們
就會大膽地去做一些異於往常的舉動，當然萬一不小心突鎚時，還請大家多多包
含，就如同柯林頓總統一樣，我們絕對與各位感同身受，因為曼格家族有90%
的資產繫於Berkshire，而巴菲特家族更高達99%。
How We Think About Market Fluctuations
我們對於股市波動的看法
A short quiz: If you plan to eat hamburgers throughout your life
and are not a cattle producer, should you wish for higher or lower prices
for beef? Likewise, if you are going to buy a car from time to time but are
not an auto manufacturer, should you prefer higher or lower car prices?
These questions, of course, answer themselves.
一則小謎語︰如果你打算一輩子吃漢堡維生，自己又沒有養牛，那麼你是希望牛
肉價格上漲或是下跌呢? 同樣的要是你三不五時會換車，自己又不是賣車的，你
會希望車子的價格上漲或是下跌呢? 這些問題的答案很顯然顯而易見。
But now for the final exam: If you expect to be a net saver during
the next five years, should you hope for a higher or lower stock market
during that period? Many investors get this one wrong. Even though
they are going to be net buyers of stocks for many years to come, they
are elated when stock prices rise and depressed when they fall. In effect,
they rejoice because prices have risen for the "hamburgers" they will
soon be buying. This reaction makes no sense. Only those who will be
sellers of equities in the near future should be happy at seeing stocks
rise. Prospective purchasers should much prefer sinking prices.
最後我再問各位一個問題︰假設你預估未來五年內可以存一筆錢，那麼你希望這
期間的股票市場是漲還是跌? 這時許多投資人對於這個問題的答案就可能是錯
的，雖然他們在未來的期間內會陸續買進股票，不過當股價漲時他們會感到高
興，股價跌時反而覺得沮喪，這種感覺不等於是當你去買漢堡吃時，看到漢堡漲
價卻欣喜若狂，這樣的反應實在是沒有什麼道理，只有在短期間準備賣股票的人
才應該感到高興，準備買股票的人應該期待的是股價的下滑。
For shareholders of Berkshire who do not expect to sell, the choice
is even clearer. To begin with, our owners are automatically saving even
if they spend every dime they personally earn: Berkshire "saves" for
them by retaining all earnings, thereafter using these savings to
purchase businesses and securities. Clearly, the more cheaply we make
these buys, the more profitable our owners' indirect savings program
will be.
對於不準備賣股票的Berkshire股東來說，這樣的選擇再明顯也不過了，首先就
算他們將賺來的每一分錢都花掉，Berkshire也會自動幫他們存錢，因為
Berkshire會透過將所賺得的盈餘再投資其他事業與股票，所以只要我們買進這
些投資標的的成本越低，他們將來間接所獲得的報酬自然而然就越高。
Furthermore, through Berkshire you own major positions in
companies that consistently repurchase their shares. The benefits that
these programs supply us grow as prices fall: When stock prices are low,
the funds that an investee spends on repurchases increase our
ownership of that company by a greater amount than is the case when
prices are higher. For example, the repurchases that Coca-Cola, The
Washington Post and Wells Fargo made in past years at very low prices
benefitted Berkshire far more than do today's repurchases, made at
loftier prices.
此外，Berkshire許多重要的投資部位都持續不斷地買回自家公司的股份，在這
種情況下，股票價格越低對我們越有利，因為這代表同樣的一筆錢可以買進更多
的股份，從而間接提高我們持股的比例，舉例來說，過去幾年可口可樂、華盛頓
郵報與富國銀行皆以非常低的價格大量買回自家股票，其所帶來的效益要比在現
在的高價再進行要來得有利的多。
At the end of every year, about 97% of Berkshire's shares are held
by the same investors who owned them at the start of the year. That
makes them savers. They should therefore rejoice when markets decline
and allow both us and our investees to deploy funds more advantageously.
每年度結束，大約有97%的Berkshire股東會選擇繼續持有本公司的股份，這
些人都是儲蓄愛好者，所以每當股市下跌時，他們都會感到高興，因為這代表我
們以及被投資公司的資金可以作更好的運用。
So smile when you read a headline that says "Investors lose as
market falls." Edit it in your mind to "Disinvestors lose as market falls -
- but investors gain." Though writers often forget this truism, there is a
buyer for every seller and what hurts one necessarily helps the other.
(As they say in golf matches: "Every putt makes someone happy.")
所以下次當你看到"股市爆跌-投資人損失不貸"的新聞頭條時，就知道應該要改
成"股市爆跌-不投資的人損失不貸而投資的人賺翻了"，雖然記者常常忘記這樣
的真理，不過只要有賣方就代表會有買方，一方損失就代表有另一方會得利，就
像是高爾夫球場上常講的，每當一個柏忌出現時，就會有人在旁邊暗爽。
We gained enormously from the low prices placed on many equities
and businesses in the 1970s and 1980s. Markets that then were hostile
to investment transients were friendly to those taking up permanent
residence. In recent years, the actions we took in those decades have
been validated, but we have found few new opportunities. In its role as a
corporate "saver," Berkshire continually looks for ways to sensibly
deploy capital, but it may be some time before we find opportunities
that get us truly excited.
當初我們靠著在1970與1980年代股價低迷時所做的一些投資，確實讓我們賺
了不少，這是一個對股市短暫過客不利卻對股市長期住戶有利的市場，近幾年
來，我們在那個年代所做的一些投資決策陸續獲得了驗證，不過現在我們卻找不
到類似的機會，身為企業資金的積蓄者，Berkshire致力於尋找資金合理運用的
方法，不過以現在的狀況來看，我們可能還需要一段時間才能再找到真正讓我們
感到興奮的投資機會。
Insurance Operations -- Overview
保險事業營運-總檢討
What does excite us, however, is our insurance business. GEICO is
flying, and we expect that it will continue to do so. Before we expound
on that, though, let's discuss "float" and how to measure its cost. Unless
you understand this subject, it will be impossible for you to make an
informed judgment about Berkshire's intrinsic value.
真正令我們感到興奮的是保險事業的營運，GEICO正處於爆炸性的成長階段，
而且這種情況預期還會繼續維持下去，在進一步說明之前，讓我們先解釋一下何
謂浮存金，以及如何來衡量它的取得成本，因為除非你對於這個課題有所了解，
否則你根本就不可能有辦法對Berkshire實際的價值做合理的判斷。
To begin with, float is money we hold but don't own. In an
insurance operation, float arises because premiums are received before
losses are paid, an interval that sometimes extends over many years.
During that time, the insurer invests the money. Typically, this pleasant
activity carries with it a downside: The premiums that an insurer takes in
usually do not cover the losses and expenses it eventually must pay.
That leaves it running an "underwriting loss," which is the cost of float.
An insurance business has value if its cost of float over time is less than
the cost the company would otherwise incur to obtain funds. But the
business is a lemon if its cost of float is higher than market rates for
money.
首先浮存金是一項我們持有但不屬於我們的資金，在保險公司的營運中，浮存金
的產生原因在於保險公司在真正支付損失理賠之前，一般會先向保戶收取保費，
在這期間保險公司會將資金運用在其他投資之上，當然這樣的好處也必須要付出
代價，通常保險業者收取的保費並不足以因應最後支付出去的相關損失與費用，
於是保險公司便會發生承保損失，這就是浮存金的成本，而當一家公司取得浮存
金成本，就長期而言低於從其它管道取得資金的成本時，它就有存在的價值，否
則一旦保險事業取得浮存金的成本若遠高於貨幣市場利率時，它就像是一顆酸檸
檬。
A caution is appropriate here: Because loss costs must be
estimated, insurers have enormous latitude in figuring their
underwriting results, and that makes it very difficult for investors to
calculate a company's true cost of float. Estimating errors, usually
innocent but sometimes not, can be huge. The consequences of these
miscalculations flow directly into earnings. An experienced observer
can usually detect large-scale errors in reserving, but the general public
can typically do no more than accept what's presented, and at times I
have been amazed by the numbers that big-name auditors have
implicitly blessed. As for Berkshire, Charlie and I attempt to be
conservative in presenting its underwriting results to you, because we
have found that virtually all surprises in insurance are unpleasant ones.
有一點必須特別注意的是，因為損失成本必須仰賴估算，所以保險業者對於承保
結算的成績有相當大伸縮的空間，連帶使得投資人很難正確地衡量一家保險公司
真正的浮存金成本，估計錯誤，通常是無心，但有時卻是故意，與真實的結果往
往會有很大的差距，而這種結果直接反映在公司的損益表上，有經驗的行家通常
可以經由公司的準備提列情形發現重大的錯誤，但對於一般投資大眾來說，除了
被迫接受財務報表的數字之外，別無他法，而我個人常常被這些經過各大會計師
事務所背書的財務報告所嚇到，至於就Berkshire本身而言，查理跟我在編列財
務報表時，都盡量採取最保守的做法，因為就我們個人的經驗而言，保險業所發
生的意外，通常都不是什麼好消息。
As the numbers in the following table show, Berkshire's insurance
business has been a huge winner. For the table, we have calculated our
float -- which we generate in large amounts relative to our premium
volume -- by adding net loss reserves, loss adjustment reserves, funds
held under reinsurance assumed and unearned premium reserves, and
then subtracting agents' balances, prepaid acquisition costs, prepaid
taxes and deferred charges applicable to assumed reinsurance. Our cost
of float is determined by our underwriting loss or profit. In those years
when we have had an underwriting profit, such as the last five, our cost
of float has been negative. In effect, we have been paid for holding
money.
不過如同下表中的數字所顯示的，Berkshire的保險事業可說是大獲全勝，表中
的浮存金，係將所有的損失準備、損失費用調整準備與未賺取保費加總後，再扣
除應付佣金、預付購併成本及相關再保遞延費用，相對於我們的保費收入總額，
我們的浮存金部位算是相當大的，至於浮存金的成本則決定於所發生的承保損失
或利益而定，在某些年度，就像是最近五年，由於我們有承保利益，所以換句話
說，我們的資金成本甚至是負的，光是持有這些資金我們就已經開始讓我們賺錢
了。
(1) (2) Yearend Yield
Underwriting Approximate on Long-Term
Loss Average Float Cost of Funds Govt. Bonds
(In $ Millions) (Ratio of 1 to 2)
1967 profit 17.3 less than zero 5.50%
1968 profit 19.9 less than zero 5.90%
1969 profit 23.4 less than zero 6.79%
1970 0.37 32.4 1.14% 6.25%
1971 profit 52.5 less than zero 5.81%
1972 profit 69.5 less than zero 5.82%
1973 profit 73.3 less than zero 7.27%
1974 7.36 79.1 9.30% 8.13%
1975 11.35 87.6 12.96% 8.03%
1976 profit 102.6 less than zero 7.30%
1977 profit 139.0 less than zero 7.97%
1978 profit 190.4 less than zero 8.93%
1979 profit 227.3 less than zero10.08%
1980 profit 237.0 less than zero11.94%
1981 profit 228.4 less than zero13.61%
1982 21.56 220.6 9.77%10.64%
1983 33.87 231.3 14.64%11.84%
1984 48.06 253.2 18.98%11.58%
1985 44.23 390.2 11.34% 9.34%
1986 55.84 797.5 7.00% 7.60%
1987 55.43 1,266.7 4.38% 8.95%
1988 11.08 1,497.7 0.74% 9.00%
1989 24.40 1,541.3 1.58% 7.97%
1990 26.65 1,637.3 1.63% 8.24%
1991 119.59 1,895.0 6.31% 7.40%
1992 108.96 2,290.4 4.76% 7.39%
1993 profit2,624.7 less than zero 6.35%
1994 profit3,056.6 less than zero 7.88%
1995 profit3,607.2 less than zero 5.95%
1996 profit6,702.0 less than zero 6.64%
1997 profit7,093.1 less than zero 5.92%
Since 1967, when we entered the insurance business, our float has
grown at an annual compounded rate of 21.7%. Better yet, it has cost us
nothing, and in fact has made us money. Therein lies an accounting
irony: Though our float is shown on our balance sheet as a liability, it
has had a value to Berkshire greater than an equal amount of net worth
would have had.
自從1967年我們進軍保險業以來，我們的浮存金每年就以21.7%複合成長率
增加，更棒的是，這些資金完全不用成本，事實上它還能幫我們賺錢，可惜諷刺
的是，就會計原則而言，浮存金在會計報表係屬於負債，但實際上，這些負債對
於Berkshire而言，其價值遠高於列在帳上的其他股東權益。
The expiration of several large contracts will cause our float to
decline during the first quarter of 1998, but we expect it to grow
substantially over the long term. We also believe that our cost of float
will continue to be highly favorable.
雖然在1998第一季幾項重大合約到期後，我們擁有的浮存金會略微減少，但就
長期而言，我們還是預期浮存金會大幅成長，同時我們也相信取得浮存金的成本
仍然會繼續維持這種令人滿意的態勢。
Super-Cat Insurance
巨災保險
Occasionally, however, the cost of our float will spike severely. That
will occur because of our heavy involvement in the super-cat business,
which by its nature is the most volatile of all insurance lines. In this
operation, we sell policies that insurance and reinsurance companies
purchase in order to limit their losses when mega-catastrophes strike.
Berkshire is the preferred market for sophisticated buyers: When the
"big one" hits, the financial strength of super-cat writers will be tested,
and Berkshire has no peer in this respect.
然而有時候我們浮存金的成本也會突然大幅上揚，主要的原因在於我們從事的巨
災保險業務，本身屬於保險業中變動最大的一種險種，從事這類業務，我們將保
單賣給其他保險公司與再保公司以分散其面臨超大型意外災害所可能承擔的風
險，事實上，Berkshire是有經驗的業者最喜愛往來的對象，因為他們深深知道
當有"大事"真正發生時，所有巨災保險的承保業者都會面臨財務實力的嚴峻挑
戰，而Berkshire無疑的是同業之最。
Since truly major catastrophes are rare occurrences, our super-cat
business can be expected to show large profits in most years -- and to
record a huge loss occasionally. In other words, the attractiveness of our
super-cat business will take a great many years to measure. What you
must understand, however, is that a truly terrible year in the super-cat
business is not a possibility -- it's a certainty. The only question is when
it will come.
而由於真正重大的災害並不是每年都發生，所以我們的巨災業務極有可能在連續
幾年賺大錢後，突然又發生重大的損失，換句話說，我們這項巨災保險業務到底
有多吸引人可能要花上好幾年才有辦法看得清，不過大家必須明瞭，所謂的重大
損失的年頭不是可能會發生，而是肯定會發生，唯一的問題是它什麼時候會降
臨。
Last year, we were very lucky in our super-cat operation. The world
suffered no catastrophes that caused huge amounts of insured damage,
so virtually all premiums that we received dropped to the bottom line.
This pleasant result has a dark side, however. Many investors who are
"innocents" -- meaning that they rely on representations of salespeople
rather than on underwriting knowledge of their own -- have come into
the reinsurance business by means of purchasing pieces of paper that
are called "catastrophe bonds." The second word in this term, though, is
an Orwellian misnomer: A true bond obliges the issuer to pay; these
bonds, in effect, are contracts that lay a provisional promise to pay on
the purchaser.
去年我們在巨災業務的表現還算不錯，全世界一整年到頭都沒有發生足以造成重
大損失的大型災害，也就是說基本上一整年收到的所有保費都自動落到我們的口
袋裡，只是事情並不如想像中完美，有許多不知情的投資人，並非基於本身對於
保險承保的認識而是在業務人員的慫恿推銷之下，進場買進一種叫做"巨災債券"
的有價證券，事實上這根本就是一個錯誤的名詞，真正的債券意指到期後發行人
有義務支付債款，然而這種債券，本質上其實是一種給予買方一種附條件承諾限
制的合約。
This convoluted arrangement came into being because the
promoters of the contracts wished to circumvent laws that prohibit the
writing of insurance by entities that haven't been licensed by the state. A
side benefit for the promoters is that calling the insurance contract a
"bond" may also cause unsophisticated buyers to assume that these
instruments involve far less risk than is actually the case.
這種拐彎抹角的做法主要是推銷業者為了要規避政府禁止非保險業從事相關業
務而衍生出來的商品，而業者之所以將它取名叫做債券的原因在於這樣的做法可
以吸引不知情的投資人，承擔遠比其表面上還高的許多的風險。
Truly outsized risks will exist in these contracts if they are not
properly priced. A pernicious aspect of catastrophe insurance, however,
makes it likely that mispricing, even of a severe variety, will not be
discovered for a very long time. Consider, for example, the odds of
throwing a 12 with a pair of dice -- 1 out of 36. Now assume that the
dice will be thrown once a year; that you, the "bond-buyer," agree to pay
$50 million if a 12 appears; and that for "insuring" this risk you take in
an annual "premium" of $1 million. That would mean you had
significantly underpriced the risk. Nevertheless, you could go along for
years thinking you were making money -- indeed, easy money. There is
actually a 75.4% probability that you would go for a decade without
paying out a dime. Eventually, however, you would go broke.
這些商品若未經過仔細的核算價格的話，很可能會形成極高的風險，更嚴重的是
災害保險通常還有一種特色，那就是問題要經過許久之後才會慢慢地浮現，舉個
例來說明，二顆骰子要擲出十二點的機率約為36分之一，現在假設我們一年只
擲一次，每次可以收取100萬的賭注，但一旦擲出十二點時莊家的你必須支付
五千萬美元，或許剛開始你會以為這100萬美元得來全不費工夫，甚至有75.4%
的機率保證你在前十年都不必付出一毛錢，但最後你會發現就長期而言，接受這
樣的賭注對莊家來說實際上是虧大了，甚至有可能讓你傾家蕩產。
In this dice example, the odds are easy to figure. Calculations
involving monster hurricanes and earthquakes are necessarily much
fuzzier, and the best we can do at Berkshire is to estimate a range of
probabilities for such events. The lack of precise data, coupled with the
rarity of such catastrophes, plays into the hands of promoters, who
typically employ an "expert" to advise the potential bond-buyer about
the probability of losses. The expert puts no money on the table.
Instead, he receives an up-front payment that is forever his no matter
how inaccurate his predictions. Surprise: When the stakes are high, an
expert can invariably be found who will affirm -- to return to our
example -- that the chance of rolling a 12 is not 1 in 36, but more like 1
in 100. (In fairness, we should add that the expert will probably believe
that his odds are correct, a fact that makes him less reprehensible --
but more dangerous.)
在玩這種骰子遊戲時，其機率還很容易計算，但是要說到估算大型颶風與地震的
發生機率的難度就高的多了，我們自認能做的最多只有大約估計一個範圍，然而
缺乏詳細的資訊，加上大型的災害本來就很少發生，正好讓一些有心人士有機可
乘，通常他們會雇用一些"專家"對有意投資這類債券的客戶解說發生損失的可能
性，而這些所謂的專家玩得根本就是一種無本生意，因為不論他估算的到底準不
準，事先都可以拿到一筆訂金，更令人訝異的是，回到前面的主題，你會發現無
論賭注有多高，專家永遠會告訴你擲出12點的機率不是36分之一，而是100
分之一，(平心而論，我們必須強調這些專家可能真的認為自己的看法是對的，
這雖然讓人不忍予以苛責但卻更加凸顯他們的危險性)。
The influx of "investor" money into catastrophe bonds -- which
may well live up to their name -- has caused super-cat prices to
deteriorate materially. Therefore, we will write less business in 1998. We
have some large multi-year contracts in force, however, that will
mitigate the drop. The largest of these are two policies that we
described in last year's report -- one covering hurricanes in Florida and
the other, signed with the California Earthquake Authority, covering
earthquakes in that state. Our "worst-case" loss remains about $600
million after-tax, the maximum we could lose under the CEA policy.
Though this loss potential may sound large, it is only about 1% of
Berkshire's market value. Indeed, if we could get appropriate prices, we
would be willing to significantly increase our "worst-case" exposure.
越來越多的資金湧入投資這類巨災債券，使得巨災的投保費率大幅下滑，其結果
可能真如其名，終將導致巨大的災害，為此我們大幅減少1998年在這方面的業
務量，還好我們先前已簽了好幾件長期的合約使得衝擊相對減小，其中最大的兩
件在去年的年報中已向各位報告過，一件是佛羅里達的颶風險，另一個是與加州
地震局CEA簽訂的加州地震險，在最壞的狀況下，我們必須承受的損失是稅後
六億美元，這也是CEA保單規定的上限，雖然這個數字看起來很大，但佔
Berkshire市值的比例也不過只有1%，當然我必須再強調的是，只要保費合理，
我們很願意大幅提高最壞狀況的風險上限。
Our super-cat business was developed from scratch by Ajit Jain,
who has contributed to Berkshire's success in a variety of other ways as
well. Ajit possesses both the discipline to walk away from business that
is inadequately priced and the imagination to then find other
opportunities. Quite simply, he is one of Berkshire's major assets. Ajit
would have been a star in whatever career he chose; fortunately for us,
he enjoys insurance.
Berkshire的巨災保險業務在Ajit Jain的努力下，從無到有，對Berkshire可謂
貢獻良多，Ajit一方面有拒絕訂價不合理保單的勇氣，一方面又發揮創造力，開
創新的業務，他可以稱得上是Berkshire最珍貴的資產之一，我覺得他不論從事
什麼行業都可以成為那一行的明星，還好他對於保險業還算是相當有興趣。
Insurance -- GEICO (1-800-555-2756) and Other Primary Operations
保險-蓋可及其他主要保險事業
Last year I wrote about GEICO's Tony Nicely and his terrific
management skills. If I had known then what he had in store for us in
1997, I would have searched for still greater superlatives. Tony, now 54,
has been with GEICO for 36 years and last year was his best. As CEO, he
has transmitted vision, energy and enthusiasm to all members of the
GEICO family -- raising their sights from what has been achieved to
what can be achieved.
去年我提到蓋可的Tony Nicely以及他優異的管理技能，不過我要是早知道他
在1997年的表現，我可能會試著去用更好的形容詞，現年54歲的Tony在蓋
可服務已有36年之久，在去年更達到個人事業的巔峰，身為公司的總裁，他的
識見、能量與熱情感染到公司上上下下的每一個人，激勵他們不斷地超越巔峰。
We measure GEICO's performance by first, the net increase in its
voluntary auto policies (that is, not including policies assigned us by the
state) and, second, the profitability of "seasoned" auto business,
meaning policies that have been with us for more than a year and are
thus past the period in which acquisition costs cause them to be
money-losers. In 1996, in-force business grew 10%, and I told you how
pleased I was, since that rate was well above anything we had seen in
two decades. Then, in 1997, growth jumped to 16%.
我們運用好幾種方法來衡量蓋可的表現，首先是自願加入汽車保單數量的淨增加
數(也就是不包含州政府分配給我們的保單數)，第二長期汽車保單業務的獲利狀
況，係指那些持續一年以上，已經過了初次取得成本而開始賺錢的保單，1996
年有效保單的數量成長了10%，當時我曾告訴大家這是相當令人興奮的一件事，
因為這是20年來的新高，不過到了1997年，保單數量的成長率又大幅躍升為
16%!
Below are the new business and in-force figures for the last five years:
下表是新加入自願保單以及有效保單數量的統計:
New Voluntary Voluntary Auto
Years Auto Policies Policies in Force
1993354,882 2,011,055
1994396,217 2,147,549
1995461,608 2,310,037
1996617,669 2,543,699
1997913,176 2,949,439
Of course, any insurer can grow rapidly if it gets careless about
underwriting. GEICO's underwriting profit for the year, though, was
8.1% of premiums, far above its average. Indeed, that percentage was
higher than we wish it to be: Our goal is to pass on most of the benefits
of our low-cost operation to our customers, holding ourselves to about
4% in underwriting profit. With that in mind, we reduced our average
rates a bit during 1997 and may well cut them again this year. Our rate
changes varied, of course, depending on the policyholder and where he
lives; we strive to charge a rate that properly reflects the loss
expectancy of each driver.
當然任何一家保險公司都可以不顧承保品質而快速的成長，然而蓋可本年度的承
保獲利卻是保費收入的8.1%，這數字遠優於一般同業水準，確實這數字也遠高
於我們本身的預期，我們原先的目標是將低成本營運所貢獻的獲利回饋給我們的
客戶，僅保留4%的獲利比例，基於這樣的信念，我們將1997年的保險費率再
度略微調降，同時在明年有可能也會採取相同的做法，當然最後的費率還須參酌
保戶本身狀況以及居住的地區，我們最終還是希望費率的改變可以合理地反映每
位駕駛人發生損失的預期機率。
GEICO is not the only auto insurer obtaining favorable results these
days. Last year, the industry recorded profits that were far better than it
anticipated or can sustain. Intensified competition will soon squeeze
margins very significantly. But this is a development we welcome: Long
term, a tough market helps the low-cost operator, which is what we are
and intend to remain.
蓋可並不是近年來唯一取得好成績汽車保險業者，去年整個產業獲得高於原先預
期的獲利成果，但這種好光景很難維持下去，因為來自同業激烈的競爭很快地就
會壓縮獲利的空間，然而面對可能的發展，我們胸有成竹，就長期而言，艱困的
市場環境有利於低成本營運的業者生存，這也是一直以來我們努力維持的競爭優
勢。
Last year I told you about the record 16.9% profit-sharing
contribution that GEICO's associates had earned and explained that two
simple variables set the amount: policy growth and profitability of
seasoned business. I further explained that 1996's performance was so
extraordinary that we had to enlarge the chart delineating the possible
payouts. The new configuration didn't make it through 1997: We
enlarged the chart's boundaries again and awarded our 10,500
associates a profit-sharing contribution amounting to 26.9% of their
base compensation, or $71 million. In addition, the same two variables
-- policy growth and profitability of seasoned business -- determined
the cash bonuses that we paid to dozens of top executives, starting with
Tony.
去年我也曾跟各位報告過蓋可員工為自己掙得高達16.9%的盈餘分紅比例，同
時也解釋只有兩項簡單的參數計算出這個比例，那就是保單的成長率與長期業務
的獲利狀況，我還說由於1996年的表現實在是超乎預期以致於原先預估支付獎
金的圖表，因不敷使用而必須加大，不過到了今年新的圖表竟然又不夠用，為此
我們再度提高上限，總計全公司上上下下的10,500名員工，一共可以領到相當
於底薪的26.9%，總金額高達7,100萬美元，當然這兩項參數，同時也適用於
包含Tony在內，數十位高階經理人的獎金紅利。
At GEICO, we are paying in a way that makes sense for both our
owners and our managers. We distribute merit badges, not lottery
tickets: In none of Berkshire's subsidiaries do we relate compensation to
our stock price, which our associates cannot affect in any meaningful
way. Instead, we tie bonuses to each unit's business performance, which
is the direct product of the unit's people. When that performance is
terrific -- as it has been at GEICO -- there is nothing Charlie and I enjoy
more than writing a big check.
在蓋可，我們支付薪資紅利的方式很能夠獲得勞資雙方的認同，我們頒發的是紅
利獎章而不是樂透彩券，Berkshire旗下的子公司員工的薪資報酬與母公司的股
價一點關係都沒有，因為前者並沒有能力直接影響後者，相反地，我們將子公司
的薪資與各單位的各自表現完全綁在一起，因為後者的成敗必須由前者負全部的
責任，當某事業單位的表現傑出時，就像蓋可去年的情況一樣，查理跟我樂於簽
發大筆大筆的支票。
GEICO's underwriting profitability will probably fall in 1998, but the
company's growth could accelerate. We're planning to step on the gas:
GEICO's marketing expenditures this year will top $100 million, up 50%
from 1997. Our market share today is only 3%, a level of penetration
that should increase dramatically in the next decade. The auto
insurance industry is huge -- it does about $115 billion of volume
annually -- and there are tens of millions of drivers who would save
substantial money by switching to us.
不過蓋可1998年的承保獲利很可能會下滑，但是保單數量應該還會繼續成長，
我們已準備好加緊油門，蓋可保險今年預計的行銷費用將突破一億美元的大關，
這數字比起1997年要增加50%以上，截至目前為止，我們的市場佔有率約為
3%，預計在未來的十年內還會大幅增加，整個汽車保險市場的大餅相當可觀，
每年約有1,150億美元的市場胃納量，預估將有上千萬的駕駛人因為將保單轉
移到我們這邊而節省相當可觀的保費。
* * * * * * * * * * * *
In the 1995 report, I described the enormous debt that you and I
owe to Lorimer Davidson. On a Saturday early in 1951, he patiently
explained the ins and outs of both GEICO and its industry to me -- a
20-year-old stranger who'd arrived at GEICO's headquarters uninvited
and unannounced. Davy later became the company's CEO and has
remained my friend and teacher for 47 years. The huge rewards that
GEICO has heaped on Berkshire would not have materialized had it not
been for his generosity and wisdom. Indeed, had I not met Davy, I might
never have grown to understand the whole field of insurance, which
over the years has played such a key part in Berkshire's success.
在1995年的年報中，我曾經提到我們欠Lorimer Davidson一個大人情，因為
要不是當年他很有耐心地跟一個素未謀面卻冒冒失失闖入GEICO公司總部的二
十歲小毛頭深入淺出地介紹GEICO以及其所屬產業種種的話，也不會有今天的
Berkshire跟我本人，Davy後來也成為該公司的總裁，並與我維持長達47年
亦師亦友的情誼，沒有他的寬容與智慧，Berkshire也沒有辦法靠著GEICO的
成功而發揚光大。
Davy turned 95 last year, and it's difficult for him to travel.
Nevertheless, Tony and I hope that we can persuade him to attend our
annual meeting, so that our shareholders can properly thank him for his
important contributions to Berkshire. Wish us luck.
Davy去年已高齡95歲，旅途奔波對他來說是一件很辛苦的事，不過Tony跟
我還是會盡量說服他參與今年的股東會，好讓大家能夠藉這個機會好好地感謝他
對Berkshire所做的貢獻，希望我們能夠如願。
* * * * * * * * * * * *
Though they are, of course, far smaller than GEICO, our other
primary insurance operations turned in results last year that, in
aggregate, were fully as stunning. National Indemnity's traditional
business had an underwriting profit of 32.9% and, as usual, developed a
large amount of float compared to premium volume. Over the last three
years, this segment of our business, run by Don Wurster, has had a
profit of 24.3%. Our homestate operation, managed by Rod Eldred,
recorded an underwriting profit of 14.1% even though it continued to
absorb the expenses of geographical expansion. Rod's three-year
record is an amazing 15.1%. Berkshire's workers' compensation
business, run out of California by Brad Kinstler, had a modest
underwriting loss in a difficult environment; its three-year underwriting
record is a positive 1.5%. John Kizer, at Central States Indemnity, set a
new volume record while generating good underwriting earnings. At
Kansas Bankers Surety, Don Towle more than lived up to the high
expectations we had when we purchased the company in 1996.
當然除了GEICO保險以外，我們其他主要的保險事業，雖然規模較小，但所繳
出來的成績單總的來說，同樣令人激賞，國家產險傳統業務的承保獲利率高達
32.9%，同時也貢獻出相較於保費收入高比例的浮存金，累計過去三年，這個由
Don Wurster領導的部門平均獲利率為24.3%，另外在由Rod Eldred 領導的
Homestate業務部份，在必須吸收地區業務擴展的費用下，仍然繳出14.1%的
承保獲利，累計最近三年的獲利率為15.1%，此外Berkshire的勞工退休金業
務部份，在加州的Brad Kinstler主持下，雖然面臨困難的環境，但產生承保損
失的程度相對輕微，平均三年的承保成績是正的1.5%，還有由John Kizer領導
的Central States保險在保費收入締造新高的同時，也貢獻相當不錯的承保獲
利，最後是我們在1996年買進的Kansas銀行家保險，Don Towle的表現甚
至超過我們當初設立的高標準。
In aggregate, these five operations recorded an underwriting profit
of 15.0%. The two Dons, along with Rod, Brad and John, have created
significant value for Berkshire, and we believe there is more to come.
總計下來，這五家保險子公司平均的承保獲利率是15.0%，兩位Dons加上
Rod、Brad及John，為Berkshire創造了可觀的利益，而且我們也相信後勢可
期。
Sources of Reported Earnings
帳列盈餘的來源
The table that follows shows the main sources of Berkshire's
reported earnings. In this presentation, purchase-accounting
adjustments are not assigned to the specific businesses to which they
apply, but are instead aggregated and shown separately. This procedure
lets you view the earnings of our businesses as they would have been
reported had we not purchased them. For the reasons discussed on
pages 69 and 70, this form of presentation seems to us to be more
useful to investors and managers than one utilizing generally-accepted
accounting principles (GAAP), which require purchase-premiums to be
charged off business-by-business. The total earnings we show in the
table are, of course, identical to the GAAP total in our audited financial
statements.
下表顯示Berkshire帳列盈餘的主要來源，在這張表中商譽的攤銷數與購買法會
計調整數會從個別被投資公司分離出來，單獨加總列示，之所以這樣做是為了讓
旗下各事業的盈餘狀況，不因我們的投資而有所影響，過去我一再地強調我們認
為這樣的表達方式，較之一般公認會計原則要求以個別企業基礎做調整，不管是
對投資者或是管理者來說，更有幫助，當然最後損益加總的數字仍然會與經會計
師查核的數字一致。
(in millions)
Berkshire's Share
of Net Earnings
(after taxes and
Pre-Tax Earnings minority interests)
1997 19961997 1996
Operating Earnings:
Insurance Group:
Underwriting -- Super-Cat. . . . . . . .$ 283.0 $ 167.0 $ 182.7 $ 107.4
Underwriting -- Other Reinsurance. . . . (155.2) (174.8) (100.1) (112.4)
Underwriting -- GEICO. . . . . . . . . . 280.7 171.4 181.1 110.2
Underwriting -- Other Primary. . . . . . 52.9 58.534.1 37.6
Net Investment Income. . . . . . . . . . 882.3 726.2 703.6 593.1
Buffalo News . . . . . . . . . . . . . . . 55.9 50.432.7 29.5
Finance Businesses . . . . . . . . . . . . 28.1 23.118.0 14.9
FlightSafety . . . . . . . . . . . . . . . 139.53.1(1) 84.41.9(1)
Home Furnishings . . . . . . . . . . . . . 56.8(2) 43.832.2(2) 24.8
Jewelry. . . . . . . . . . . . . . . . . . 31.6 27.818.3 16.1
Scott Fetzer(excluding finance operation). 118.9 121.777.3 81.6
See's Candies. . . . . . . . . . . . . . . 58.6 51.935.0 30.8
Shoe Group . . . . . . . . . . . . . . . . 48.8 61.632.2 41.0
Purchase-Accounting Adjustments. . . . . . (104.9) (75.7) (97.0) (70.5)
Interest Expense(3). . . . . . . . . . . . (106.6) (94.3) (67.1) (56.6)
Shareholder-Designated Contributions . . . (15.4) (13.3) (9.9) (8.5)
Other. . . . . . . . . . . . . . . . . . . 60.7 73.037.0 42.2
------- ------- ------- --------
Operating Earnings . . . . . . . . . . . . . 1,715.7 1,221.4 1,194.5 883.1
Capital Gains from Investments . . . . . . . 1,111.9 2,484.5 707.1 1,605.5
------ ------- ------- -------
Total Earnings - All Entities. . . . . . . .$2,827.6 $3,705.9 $1,901.6 $2,488.6
====== ====== ===== =====
(1) From date of acquisition, December 23, 1996.
From date of acquisition, December 23, 1996.
(2) Includes Star Furniture from July 1, 1997.
y 1, 1997.
(3) Excludes interest expense of Finance Businesses.
Overall, our operating businesses continue to perform
exceptionally well, far outdoing their industry norms. We are
particularly pleased that profits improved at Helzberg's after a
disappointing 1996. Jeff Comment, Helzberg's CEO, took decisive steps
early in 1997 that enabled the company to gain real momentum by the
crucial Christmas season. In the early part of this year, as well, sales
remained strong.
總的來說，我們旗下的營利事業的表現遠優於一般的同業，尤其是Helzberg鑽
石在渡過令人失望的1996年之後，獲利狀況大幅提升，Helzberg公司的總裁
Jeff Comment在1997年初斷然地採取各項措施，帶領整個公司在重要的聖誕
旺季大有斬獲，而截至今年上半年為止，銷售狀況依舊強勁。
Casual observers may not appreciate just how extraordinary the
performance of many of our businesses has been: If the earnings history
of, say, Buffalo News or Scott Fetzer is compared to the records of their
publicly-owned peers, their performance might seem to have been
unexceptional. But most public companies retain two-thirds or more of
their earnings to fund their corporate growth. In contrast, those
Berkshire subsidiaries have paid 100% of their earnings to us, their
parent company, to fund our growth.
一般的人可能無法體會，我們眾多旗下事業的表現到底有多傑出，雖然相較於其
他已上市的同業，水牛城新聞報或是史考特飛茲的獲利表現看起來並不突出，不
過大家要了解，大部分的上市公司通常會將三分之二以上的盈餘保留不分配以支
應內部的成長，但是Berkshire大部分的子公司卻將所賺取的盈餘分毫不差的繳
回母公司，是他們貢獻的資金促成母公司Berkshire進一步的成長。
In effect, the records of the public companies reflect the cumulative
benefits of the earnings they have retained, while the records of our
operating subsidiaries get no such boost. Over time, however, the
earnings these subsidiaries have distributed have created truly huge
amounts of earning power elsewhere in Berkshire. The News, See's and
Scott Fetzer have alone paid us $1.8 billion, which we have gainfully
employed elsewhere. We owe their managements our gratitude for
much more than the earnings that are detailed in the table.
事實上這些上市公司的盈餘對於其獲利表現有累積效果，相較之下，我們的子公
司卻沒有這方面的支助，然而就長期而言，這些子公司上繳的資金對於
Berkshire在其他地方的獲利能力卻有極大的貢獻，總計水牛城新聞、喜斯糖果
與史考特飛茲，這三家公司這幾年來貢獻的盈餘就高達18億美元，而我們也得
以好好地運用這些資金，所以我們對於這些經理人的感謝絕不僅止於帳面上所看
到的那些盈餘數字而已。
Additional information about our various businesses is given on
pages 36 - 50, where you will also find our segment earnings reported
on a GAAP basis. In addition, on pages 55 - 61, we have rearranged
Berkshire's financial data into four segments on a non-GAAP basis, a
presentation that corresponds to the way Charlie and I think about the
company. Our intent is to supply you with the financial information that
we would wish you to give us if our positions were reversed.
在年報中你可以找到依照一般公認會計原則編製，詳細的部門別資訊，另外你還
可以找到經過重編，依照Berkshire四大部門的資訊，這是查理跟我能夠完整呈
現Berkshire現況的模式，我們的目的是希望能夠換個角度設想，提供大家所有
必要的資訊。
Look-Through Earnings
完整透視盈餘
Reported earnings are a poor measure of economic progress at
Berkshire, in part because the numbers shown in the table presented
earlier include only the dividends we receive from investees -- though
these dividends typically represent only a small fraction of the earnings
attributable to our ownership. Not that we mind this division of money,
since on balance we regard the undistributed earnings of investees as
more valuable to us than the portion paid out. The reason is simple: Our
investees often have the opportunity to reinvest earnings at high rates
of return. So why should we want them paid out?
我們認為帳列盈餘很難表現Berkshire實際的營運狀況，部份原因在於列示在本
公司帳上的股利收入，事實上僅佔被投資公司收益的一小部份，其實我們並不要
求盈餘一定要分配，事實上對我們而言，我們更重視未分配的那一部份，因為他
們極可能為我們創造出更高的價值，原因很簡單，因為我們的被投資公司往往比
母公司更有機會把資金投入到高投資報酬的用途之上，既然如此又何必一定要強
迫他們把盈餘分配回來呢?
To depict something closer to economic reality at Berkshire than
reported earnings, though, we employ the concept of "look-through"
earnings. As we calculate these, they consist of: (1) the operating
earnings reported in the previous section, plus; (2) our share of the
retained operating earnings of major investees that, under GAAP
accounting, are not reflected in our profits, less; (3) an allowance for the
tax that would be paid by Berkshire if these retained earnings of
investees had instead been distributed to us. When tabulating
"operating earnings" here, we exclude purchase-accounting
adjustments as well as capital gains and other major non-recurring
items.
為了要更真實的反應Berkshire實際的經營狀況，於是乎我們運用了完整透視盈
餘的觀念，這個數字總共包含(1)前段所提到的帳列盈餘，加上(2)主要被投資公
司的保留盈餘，按一般公認會計原則未反應在我們公司帳上的盈餘，扣除(3)若
這些未反應的盈餘分配給我們時，估計可能要繳的所得稅。在這裡我們所謂的營
業盈餘係已扣除資本利得、特別會計調整與企業其他非常態的項目。
The following table sets forth our 1997 look-through earnings,
though I warn you that the figures can be no more than approximate,
since they are based on a number of judgment calls. (The dividends paid
to us by these investees have been included in the operating earnings
itemized on page 11, mostly under "Insurance Group: Net Investment
Income.")
各位可以從下表看出我們是如何計算出1997年透視盈餘的，不過我還是要提醒
各位這些數字只不過是估計數，很多都是基於簡單的判斷，(被投資公司所分配
的股利收入已經包含在保險事業的淨投資收益項下)。
Berkshire's Share
of Undistributed
Berkshire's Approximate Operating Earnings
Berkshire's Major Investees Ownership at Yearend(1) (in millions)(2)
American Express Compa 10.7% $161
The Coca-Cola Company8.1% 216
The Walt Disney Company 3.2% 65
Freddie Mac 8.6% 86
The Gillette Company 8.6% 82
The Washington Post Company16.5% 30
Wells Fargo & Company 7.8% 103
------
Berkshire's share of undistributed earnings of major investees 743
Hypothetical tax on these undistributed investee earnings(3) (105)
Reported operating earnings of Berkshire 1,292
------
Total look-through earnings of Berkshire $1,930
======
(1) Does not include shares allocable to minority interests
(2) Calculated on average ownership for the year
(3) The tax rate used is 14%, which is the rate Berkshire
pays on the dividends it receives
Acquisitions of 1997
1997年的購併活動
In 1997, we agreed to acquire Star Furniture and International Dairy
Queen (a deal that closed early in 1998). Both businesses fully meet our
criteria: They are understandable; possess excellent economics; and are
run by outstanding people.
1997年我們同意買下星辰傢具與國際乳品皇后(後者在1998年初正式敲定)，
兩家公司都完全符合我們的標準，產業性質單純、擁有絕佳的競爭優勢且由傑出
的人才所經營。
The Star transaction has an interesting history. Whenever we buy
into an industry whose leading participants aren't known to me, I always
ask our new partners, "Are there any more at home like you?" Upon our
purchase of Nebraska Furniture Mart in 1983, therefore, the Blumkin
family told me about three outstanding furniture retailers in other parts
of the country. At the time, however, none was for sale.
星辰傢具的交易有個相當有趣的故事，每當我們跨足一個原本我們不熟悉的產
業，我都會習慣性地問一問新加入的合作夥伴，"除了你們以外，還有沒有像你
們一樣的企業?"，早在1983年我們買下內布拉斯加傢具店時，我就問過B太太
家族這個問題，當時她告訴我全美其他地方還有三家不錯的傢具零售商可以考
慮，不過很可惜在當時沒有任何一家有出售的意願。
Many years later, Irv Blumkin learned that Bill Child, CEO of R.C.
Willey -- one of the recommended three -- might be interested in
merging, and we promptly made the deal described in the 1995 report.
We have been delighted with that association -- Bill is the perfect
partner. Furthermore, when we asked Bill about industry standouts, he
came up with the remaining two names given me by the Blumkins, one
of these being Star Furniture of Houston. But time went by without there
being any indication that either of the two was available.
多年後，B太太家族的Irv得知當初獲得推薦的三家公司之一-R.C. Willey傢具
總裁Bill Child有意與人合併，我們立刻把握良機促成交易，這項交易也在1995
年的年報向各位報告過，事後我們也很滿意這次的結合，Bill是再理想不過的合
作夥伴，當然我也不忘問問Bill相同的問題，請他推薦其他傑出的同業，結果得
到的答案與B太太所說的一致，其中一家就是位於修士頓的星辰傢具，只是隨著
時光的流逝沒有一家有意願出售。
On the Thursday before last year's annual meeting, however, Bob
Denham of Salomon told me that Melvyn Wolff, the long-time
controlling shareholder and CEO of Star, wanted to talk. At our
invitation, Melvyn came to the meeting and spent his time in Omaha
confirming his positive feelings about Berkshire. I, meanwhile, looked at
Star's financials, and liked what I saw.
而就在去年年度股東會的前一個星期四，所羅門公司的董事長丹漢告訴我星辰傢
具的大股東兼總裁-Melvyn Wolff，有意願跟我談談，於是在我們的邀約下，
Melvyn光臨奧瑪哈與我們會談，進一步確認對於Berkshire的正面觀感，而在
此同時我也看了星辰傢具的財務報表，一切正如我所預期。
A few days later, Melvyn and I met in New York and made a deal in
a single, two-hour session. As was the case with the Blumkins and Bill
Child, I had no need to check leases, work out employment contracts,
etc. I knew I was dealing with a man of integrity and that's what counted.
幾天後，Melvyn與我再度在紐約碰面，前後只花了兩個鐘頭的會談就把整個交
易敲定，而如同先前與B太太家族及Bill Child的經驗一樣，我不需要再去查核
租約、員工雇用合約等，我知道我正在和一位具有正直人格的人打交道，這樣就
足夠了。
Though the Wolff family's association with Star dates back to 1924,
the business struggled until Melvyn and his sister Shirley Toomin took
over in 1962. Today Star operates 12 stores -- ten in Houston and one
each in Austin and Bryan -- and will soon move into San Antonio as well.
We won't be surprised if Star is many times its present size a decade
from now.
雖然Wolff家族與星辰傢具的關係可以追溯到1924年以前，但是該公司直到
Melvyn跟他姐姐Shirly在1962年接手經營後才有起色，時至今日，星辰總共
有12家分店，其中十家在修士頓、另外兩家在奧斯丁與拜倫，還有一家新店即
將在聖安東尼奧開張，我想星辰要是在未來十年內以倍數的方式擴張，我一點都
不會感到意外。
Here's a story illustrating what Melvyn and Shirley are like: When
they told their associates of the sale, they also announced that Star
would make large, special payments to those who had helped them
succeed -- and then defined that group as everyone in the business.
Under the terms of our deal, it was Melvyn and Shirley's money, not
ours, that funded this distribution. Charlie and I love it when we become
partners with people who behave like that.
下面的一則故事充分說明Melvyn與Shirley是怎麼樣的人︰當星辰傢具正式宣
佈出售公司時，他們同時也公佈將支付一筆大額的紅利給所有幫助公司成功的人
士，範圍包含公司上上下下所有的員工，而根據交易的合約內容，這筆錢將由
Melvyn與Shirley自掏腰包，查理跟我相當讚賞即將與我們共事的合夥人能有
這樣的舉動。
The Star transaction closed on July 1. In the months since, we've
watched Star's already-excellent sales and earnings growth accelerate
further. Melvyn and Shirley will be at the annual meeting, and I hope you
get a chance to meet them.
星辰傢具的交易案在七月一日正式定案，而在之後的幾個月，星辰傢具本來已經
表現相當不錯的營收又繼續大幅成長，Melvyn與Shirley將會出席今年的股東
年會，屆時希望大家能夠前來與他們見見面。
Next acquisition: International Dairy Queen. There are 5,792 Dairy
Queen stores operating in 23 countries -- all but a handful run by
franchisees -- and in addition IDQ franchises 409 Orange Julius
operations and 43 Karmelkorn operations. In 190 locations, "treat
centers" provide some combination of the three products.
另一個購併案：國際乳品皇后，簡稱乳品皇后IDQ，總共有5,792個營業據點，
分布在全球的23個國家，除了少數係加盟店外，其餘皆為自營，此外還有409
家Orange Julius加盟店與43家Karmelkorn，其中有190個據點同時提供三
種選擇。
For many years IDQ had a bumpy history. Then, in 1970, a
Minneapolis group led by John Mooty and Rudy Luther took control. The
new managers inherited a jumble of different franchising agreements,
along with some unwise financing arrangements that had left the
company in a precarious condition. In the years that followed,
management rationalized the operation, extended food service to many
more locations, and, in general, built a strong organization.
早期乳品皇后的命運多舛，在1970年代當時，由來自明尼拿波里斯的John
Mooty與Rudy Luther接手經營，新的經營階層面對的是由前手遺留下來混亂
的加盟合約以及不合理的融資計畫所造成岌岌可危的窘況，所幸在接下來的幾年
內，新經營階層導正這種亂象，並且對外擴張新增了許多營業據點，讓公司經營
逐漸步入坦途。
Last summer Mr. Luther died, which meant his estate needed to sell
stock. A year earlier, Dick Kiphart of William Blair & Co., had introduced
me to John Mooty and Mike Sullivan, IDQ's CEO, and I had been
impressed with both men. So, when we got the chance to merge with
IDQ, we offered a proposition patterned on our FlightSafety acquisition,
extending selling shareholders the option of choosing either cash or
Berkshire shares having a slightly lower immediate value. By tilting the
consideration as we did, we encouraged holders to opt for cash, the
type of payment we by far prefer. Even then, only 45% of IDQ shares
elected cash.
去年夏天Luther先生過世，他的股份因而必須對外出售，而在這之前經由
William Blair公司的總裁Dick Kiphart的介紹，使我得以結識John Mooty與
乳品皇后的總裁Mike Sullivan，且這兩人讓我印象相當深刻，也因此Berkshire
可以趁此機會與乳品皇后合併，而我們也提出與之前購併國際飛安公司時相同的
條件，提供乳品皇后股東換成現金或股票兩種不同的選擇，其中換成Berkshire
股份的條件略低於現金，主要是因為大家盡量選擇換成現金，不過即便如此，總
共也只有45%的股東決定領取現金。
Charlie and I bring a modicum of product expertise to this
transaction: He has been patronizing the Dairy Queens in Cass Lake and
Bemidji, Minnesota, for decades, and I have been a regular in Omaha.
We have put our money where our mouth is.
在這次的交易中，查理跟我稍微發揮了一下對於產品的知識，查理他幾十年來固
定光顧位於明尼蘇達州凱斯湖與Bemidji的乳品皇后，而我則是奧瑪哈地區乳品
皇后的常客，我們等於是"把錢花在嘴巴上"。
A Confession
自我檢討
I've mentioned that we strongly prefer to use cash rather than
Berkshire stock in acquisitions. A study of the record will tell you why: If
you aggregate all of our stock-only mergers (excluding those we did
with two affiliated companies, Diversified Retailing and Blue Chip
Stamps), you will find that our shareholders are slightly worse off than
they would have been had I not done the transactions. Though it hurts
me to say it, when I've issued stock, I've cost you money.
我之所以會一再強調傾向利用現金而非Berkshire股票進行購併的原因在於，記
錄顯示我們所有利用股票併購的合併案(扣除早期的多元零售與藍籌郵票兩個案
子不算)，大家會發現所得的結果可能比不購併還差，雖然這樣子講對我很傷，
不過我還是必須承認，每當我發行股票，就等於是讓股東們虧錢。
Be clear about one thing: This cost has not occurred because we
were misled in any way by sellers or because they thereafter failed to
manage with diligence and skill. On the contrary, the sellers were
completely candid when we were negotiating our deals and have been
energetic and effective ever since.
不過有一點要澄清的是，之所以會如此絕對不是因為我們遭到賣方的誤導或是在
被買下後不用心經營，相反的，這些賣方在交易談判當時皆坦誠佈公，同時也很
努力經營事業。
Instead, our problem has been that we own a truly marvelous
collection of businesses, which means that trading away a portion of
them for something new almost never makes sense. When we issue
shares in a merger, we reduce your ownership in all of our businesses
-- partly-owned companies such as Coca-Cola, Gillette and American
Express, and all of our terrific operating companies as well. An example
from sports will illustrate the difficulty we face: For a baseball team,
acquiring a player who can be expected to bat .350 is almost always a
wonderful event -- except when the team must trade a .380 hitter to
make the deal.
主要的問題在於，我們原本就已經擁有的絕佳企業組合，因此不論拿什麼新的東
西來換都不划算，也就是說每當我們發行新股用來購併新的企業時，就等於是間
接減少我們原本擁有的絕佳企業的股權比例，不論是只有部份股權的可口可樂、
吉列刮鬍刀及美國運通，或者是旗下所有營利事業皆是如此，在運動場上有一個
例子可以充分說明我們所面臨的難題，對一隻棒球隊來說，挖到一位打擊率高達
三成五的選手肯定是件令人欣喜的事，除非是你必須被迫用一個打擊率高達三成
八的球員去交換。
Because our roster is filled with .380 hitters, we have tried to pay
cash for acquisitions, and here our record has been far better. Starting
with National Indemnity in 1967, and continuing with, among others,
See's, Buffalo News, Scott Fetzer and GEICO, we have acquired -- for
cash -- a number of large businesses that have performed incredibly
well since we bought them. These acquisitions have delivered Berkshire
tremendous value -- indeed, far more than I anticipated when we made
our purchases.
正因為目前我們的球員名單已佈滿了打擊率三成八的高手，所以我們總是希望盡
量用現金來進行購併，而事實證明我們的成績遠高於預期，從1967年的國家產
險開始，接著是喜斯糖果、水牛城新聞報、史考特飛茲以及蓋可保險等等，這些
企業在我們用現金買下之後的表現再再令人激賞，它們也為Berkshire增添了無
數的價值，這實在是遠高於我們當初的預期。
We believe that it is almost impossible for us to "trade up" from our
present businesses and managements. Our situation is the opposite of
Camelot's Mordred, of whom Guenevere commented, "The one thing I
can say for him is that he is bound to marry well. Everybody is above
him." Marrying well is extremely difficult for Berkshire.
我們相信實在是很難將我們現在擁有的事業與其經營階層交換出去，我們現在的
處境與Camelot Mordred剛好相反，Guenevere說他一定可以找到理想的伴
侶，因為世上所有人的條件都比他還要好，但是對Berkshire來說，要找到足以
匹配的伴侶實在是難上加難。
So you can be sure that Charlie and I will be very reluctant to issue
shares in the future. In those cases when we simply must do so -- when
certain shareholders of a desirable acquiree insist on getting stock --
we will include an attractive cash option in order to tempt as many of
the sellers to take cash as is possible.
所以大家可以預見的是在未來查理跟我將會越來越不願意以發行新股的方式進
行購併，要是遇到非如此不可的情況時，也就是被購併者堅持要拿股票的時候，
我們也會附帶提供一個比較優渥的現金價格，以促使更多的股東選擇領取現金。
Merging with public companies presents a special problem for us.
If we are to offer any premium to the acquiree, one of two conditions
must be present: Either our own stock must be overvalued relative to the
acquiree's, or the two companies together must be expected to earn
more than they would if operated separately. Historically, Berkshire has
seldom been overvalued. In this market, moreover, undervalued
acquirees are almost impossible to find. That other possibility --
synergy gains -- is usually unrealistic, since we expect acquirees to
operate after we've bought them just as they did before. Joining with
Berkshire does not normally raise their revenues nor cut their costs.
此外當我們購併已公開發行的公司還會遇到另一項問題，那就是如果我們提供被
購併者任何溢價的話，必須要能夠符合以下兩項條件其中之一，要嘛就是相對於
對方，Berkshire的股價被高估；要嘛就是兩家公司合併後所賺得的利益高於兩
家獨立營運時的利益。關於這個問題，就過去的經驗，Berkshire的股價很少被
高估，相對地以目前的市場狀況，實在很難再找到其他股價相對被低估的公司，
至於另外一個可能性，也就是所謂的合併綜效，通常都很不切實際，我們頂多能
期望被購併的事業在被買下之後的表現跟之前一樣好就不錯了，因為加入
Berkshire不代表營收就能夠自動增加或成本就能夠自動地減少。
Indeed, their reported costs (but not their true ones) will rise after
they are bought by Berkshire if the acquiree has been granting options
as part of its compensation packages. In these cases, "earnings" of the
acquiree have been overstated because they have followed the standard
-- but, in our view, dead wrong -- accounting practice of ignoring the
cost to a business of issuing options. When Berkshire acquires an
option-issuing company, we promptly substitute a cash compensation
plan having an economic value equivalent to that of the previous option
plan. The acquiree's true compensation cost is thereby brought out of
the closet and charged, as it should be, against earnings.
而其中還有一些以選擇權充當薪資酬勞配套措施的公司，在我們買下之後，其帳
列成本往往會暴增(但並不會影響實際真實的成本)，事實上應該說是這些公司過
去的獲利狀況被高估，因為他們所採取的是在我們看來典型的，完全忽略發行選
擇權潛藏企業成本的不當會計手法，也因此當Berkshire買下一家有發行選擇權
的公司時，我們會立刻將之更換成以現金報酬為主，但卻與原來認股權同樣優惠
的獎勵計畫，如此一來，被購併的這家公司其實際的薪資酬勞成本方能攤開在陽
光底下，具體反應公司的獲利狀況。
The reasoning that Berkshire applies to the merger of public
companies should be the calculus for all buyers. Paying a takeover
premium does not make sense for any acquirer unless a) its stock is
overvalued relative to the acquiree's or b) the two enterprises will earn
more combined than they would separately. Predictably, acquirers
normally hew to the second argument because very few are willing to
acknowledge that their stock is overvalued. However, voracious buyers
-- the ones that issue shares as fast as they can print them -- are tacitly
conceding that point. (Often, also, they are running Wall Street's version
of a chain-letter scheme.)
Berkshire在購併公開公司所採用的原則也是所有買家必修的學分，買方沒有理
由以溢價進行購併，除非在以下特殊的情況下，a)相對於被購併者，其股價被高
估，或者是b)兩家原本獨立的企業在合併之後所賺取的利潤高於原先的總和，
而顯而易見的買方通常會採取第一個理由，因為很少有公司會公開承認自己的股
價被高估，然而貪得無厭的買家，以比印鈔票還快的速度印股票的這群人，最後
卻不得不默認自己的股價確實被高估，通常他們玩的宛如華爾街版的連鎖信遊
戲。
In some mergers there truly are major synergies -- though
oftentimes the acquirer pays too much to obtain them -- but at other
times the cost and revenue benefits that are projected prove illusory. Of
one thing, however, be certain: If a CEO is enthused about a particularly
foolish acquisition, both his internal staff and his outside advisors will
come up with whatever projections are needed to justify his stance. Only
in fairy tales are emperors told that they are naked.
雖然有些合併案確實可以發揮綜合效益，但通常買家所付出的代價過高，且通常
成本節省與營收增加的預期效益最後都會成一場空，不過有一點可以確定的是，
不管這個購併案多麼的不合理，只要老闆有強烈的意願，其內部的同僚與外部的
專家顧問都能夠提出一份看似合理的評估報告來支持其立場，只要在童話中才有
人敢大膽地告訴國王他沒有穿衣服。
Common Stock Investments
股票投資
Below we present our common stock investments. Those with a
market value of more than $750 million are itemized.
下表是Berkshire市價超過七億五千萬美元以上的股票投資。
12/31/97
Shares Company Cost* Market
(dollars in millions)
49,456,900 American Express Company $1,392.7 $ 4,414.0
200,000,000 The Coca-Cola Company 1,298.9 13,337.5
21,563,414 The Walt Disney Company 381.2 2,134.8
63,977,600 Freddie Mac329.4 2,683.1
48,000,000 The Gillette Company 600.0 4,821.0
23,733,198 Travelers Group Inc. 604.4 1,278.6
1,727,765 The Washington Post Company 10.6 840.6
6,690,218 Wells Fargo & Company 412.6 2,270.9
Others 2,177.1 4,467.2
-------- ----------
Total Common Stocks $7,206.9 $ 36,247.7
======== ========
* Represents tax-basis cost which, in aggregate, is $1.8 billion less than GAAP cost.
*係以稅務為基礎的成本，比一般公認會計原則的帳面成本少18億美元。
We made net sales during the year that amounted to about 5% of
our beginning portfolio. In these, we significantly reduced a few of our
holdings that are below the $750 million threshold for itemization, and
we also modestly trimmed a few of the larger positions that we detail.
Some of the sales we made during 1997 were aimed at changing our
bond-stock ratio moderately in response to the relative values that we
saw in each market, a realignment we have continued in 1998.
今年我們大概處分了5%左右的投資部位，其中包含一些市價未達七億五千萬表
列門檻的股票被大幅地處分掉，此外也有一部份超過七億五千萬的股票被小幅的
調整，主要是為了調整債券與股票投資部位間的比例，以因應我們認為市場相對
價值的認知，這個動作一直到1998年仍在持續進行。
Our reported positions, we should add, sometimes reflect the
investment decisions of GEICO's Lou Simpson. Lou independently runs
an equity portfolio of nearly $2 billion that may at times overlap the
portfolio that I manage, and occasionally he makes moves that differ
from mine.
不過有一點必須強調的是，報表上顯示的投資部位，有時反應的是GEICO保險
公司Lou Simpson所做的決策，Lou獨自管理將近20億美元的股票投資組合，
當然其中有些部位與我重疊，但通常他的投資動作與我有別。
Though we don't attempt to predict the movements of the stock
market, we do try, in a very rough way, to value it. At the annual meeting
last year, with the Dow at 7,071 and long-term Treasury yields at 6.89%,
Charlie and I stated that we did not consider the market overvalued if 1)
interest rates remained where they were or fell, and 2) American
business continued to earn the remarkable returns on equity that it had
recently recorded. So far, interest rates have fallen -- that's one
requisite satisfied -- and returns on equity still remain exceptionally
high. If they stay there -- and if interest rates hold near recent levels -
- there is no reason to think of stocks as generally overvalued. On the
other hand, returns on equity are not a sure thing to remain at, or even
near, their present levels.
雖然我們從來不願嘗試去預測股市的動向，不過我們卻試著大約評估其合理價
位，記得在去年的股東會時，道瓊指數約為7,071點，長期公債的殖利率為
6.89%，查理跟我就曾公開表示，如果符合以下兩點條件，則股市並未高估，1)
利率維持不變或繼續下滑，以及2)美國企業繼續維持現有的高股東權益報酬率。
現在看起來，利率確實又繼續下滑，這一點算是符合條件，另一方面，股東權益
報酬率仍舊維持在高檔，換句話說，若這種情況繼續維持下去，同時利率也能夠
維持現狀，則一般來說沒有理由認為現在的股市過於高估，不過從保守角度來
看，股東權益報酬率實在很能永遠維持在現有的這種榮景。
In the summer of 1979, when equities looked cheap to me, I wrote
a Forbes article entitled "You pay a very high price in the stock market
for a cheery consensus." At that time skepticism and disappointment
prevailed, and my point was that investors should be glad of the fact,
since pessimism drives down prices to truly attractive levels. Now,
however, we have a very cheery consensus. That does not necessarily
mean this is the wrong time to buy stocks: Corporate America is now
earning far more money than it was just a few years ago, and in the
presence of lower interest rates, every dollar of earnings becomes more
valuable. Today's price levels, though, have materially eroded the
"margin of safety" that Ben Graham identified as the cornerstone of
intelligent investing.
記得1979年的夏天，在當時的股票市場當中，便宜的股票垂手可得，為此我特
地在富比士寫了一篇文章，名為"在股票市場中，想讓大家有樂觀的共識是要付
出相當大的代價的"，當時市場瀰漫著懷疑與悲觀的情緒，不過當時我力排眾議
認為對於這種現象投資人應該要感到高興，因為悲觀的情緒使得許多公司的股價
跌到相當吸引人的價位，不過現在看來我們似乎已經快要達到樂觀的共識了，當
然這不代表現在就不能買股票，近年來美國企業的獲利大增，搭配現在的利率水
準，企業賺取的每一塊盈餘比起過去來說要珍貴的許多，雖然以現在的股票價
位，已經嚴重地脫離的葛拉漢一再強調的安全邊際，這是智慧型投資哲學的基
石。
* * * * * * * * * * * *
In last year's annual report, I discussed Coca-Cola, our largest
holding. Coke continues to increase its market dominance throughout
the world, but, tragically, it has lost the leader responsible for its
outstanding performance. Roberto Goizueta, Coke's CEO since 1981,
died in October. After his death, I read every one of the more than 100
letters and notes he had written me during the past nine years. Those
messages could well serve as a guidebook for success in both business
and life.
去年年報我花了相當多的篇幅談到我們現有最大的投資部位-可口可樂，雖然目
前可口可樂仍然繼續擴大其在全世界飲料市場的霸主地位，不過很不幸的是，該
公司總裁Roberto Goizueta卻在去年十月過世，在他死後，我再一度閱讀過去
九年來，我與Goizueta超過上百篇的往來書信，這些訊息確實可以做為如何成
功經營企業與人生的最佳教材。
In these communications, Roberto displayed a brilliant and clear
strategic vision that was always aimed at advancing the well-being of
Coke shareholders. Roberto knew where he was leading the company,
how he was going to get there, and why this path made the most sense
for his owners -- and, equally important, he had a burning sense of
urgency about reaching his goals. An excerpt from one handwritten
note he sent to me illustrates his mind-set: "By the way, I have told
Olguita that what she refers to as an obsession, you call focus. I like
your term much better." Like all who knew Roberto, I will miss him
enormously.
在這些書信中，Roberto展現出高瞻遠矚的識見，總是將重點擺在如何增進可口
可樂股東的權益，Roberto很清楚他要將公司帶往何處，以及要如何才能到達目
的地，同時了解為何這樣的方法最適合所有的股東，當然更重要的是他對於達成
這樣目標抱持著強烈的渴望，有一張他手寫給我的字條最能充分說明當時他的心
境，"對了，我跟Olguita提到有關於她常常講的"著魔"，我個人比較喜歡巴菲
特的說法"專注"，就像是所有認識Roberto的人一樣，我會永遠懷念他!
Consistent with his concern for the company, Roberto prepared for
a seamless succession long before it seemed necessary. Roberto knew
that Doug Ivester was the right man to take over and worked with Doug
over the years to ensure that no momentum would be lost when the
time for change arrived. The Coca-Cola Company will be the same
steamroller under Doug as it was under Roberto.
一如他對於公司的關心，Roberto早就安排好接班的問題，他認為Doug Ivester
正是最佳的人選，與他共事多年的經驗足以確保在公司領導高層更迭的同時，公
司的運作不致受到任何的影響，相信在Doug的領導之下，可口可樂仍能一本初
衷勇往直前。
Convertible Preferreds
可轉換特別股
Two years ago, I gave you an update on the five convertible
preferreds that we purchased through private placements in the 1987-
1991 period. At the time of that earlier report, we had realized a small
profit on the sale of our Champion International holding. The four
remaining preferred commitments included two, Gillette and First
Empire State, that we had converted into common stock in which we had
large unrealized gains, and two others, USAir and Salomon, that had
been trouble-prone. At times, the last two had me mouthing a line from
a country song: "How can I miss you if you won't go away?"
兩年前，我曾經就1987到1991年間進行的五項可轉換特別股投資做了一番現
況報告，在報告出具的當時，我們出脫了冠軍國際部份的持股實現小部份的獲
利，剩下的四項投資中，吉列與第一帝國早已轉換成普通股，並享有高額的未實
現獲利，而美國航空與所羅門兄弟則發生嚴重的經營問題，這兩項投資讓我不得
不哼起一首鄉村歌曲的歌詞，"要是你不離開，我又怎麼會想念你呢?"
Since I delivered that report, all four holdings have grown
significantly in value. The common stocks of both Gillette and First
Empire have risen substantially, in line with the companies' excellent
performance. At yearend, the $600 million we put into Gillette in 1989
had appreciated to $4.8 billion, and the $40 million we committed to
First Empire in 1991 had risen to $236 million.
而就在報告發佈之後，所有四項投資的價值皆大幅增加，吉列與第一帝國的普通
股股價飆漲，與公司的經營基本面一致，截至年底，當初我們在1989年投入吉
列的6億美元已經增值為48億美元，而在1991年投入第一帝國的4,000萬
美元，則已增值至2.36億美元。
Our two laggards, meanwhile, have come to life in a very major
way. In a transaction that finally rewarded its long-suffering
shareholders, Salomon recently merged into Travelers Group. All of
Berkshire's shareholders -- including me, very personally -- owe a huge
debt to Deryck Maughan and Bob Denham for, first, playing key roles in
saving Salomon from extinction following its 1991 scandal and, second,
restoring the vitality of the company to a level that made it an attractive
acquisition for Travelers. I have often said that I wish to work with
executives that I like, trust and admire. No two fit that description better
than Deryck and Bob.
在此同時另外兩個後段班，也已起死回生，其中所羅門最近決定併入旅行家集團
的舉動，終於讓長久以來飽受苦難的股東獲得的回報，Berkshire所有的股東，
包含我個人在內，實在是虧欠Deryck Maughan跟Bob Denham太多了，首
先要感謝他們在1991年所羅門爆發醜聞時，拯救公司免於倒閉，之後更讓公司
恢復以往的活力，使得公司得以風光地嫁給旅行家集團，我常常說，我渴望與我
喜愛、信任與崇拜的經理人共事，Deryck與Bob正是這樣絕佳的組合。
Berkshire's final results from its Salomon investment won't be
tallied for some time, but it is safe to say that they will be far better than
I anticipated two years ago. Looking back, I think of my Salomon
experience as having been both fascinating and instructional, though
for a time in 1991-92 I felt like the drama critic who wrote: "I would
have enjoyed the play except that I had an unfortunate seat. It faced the
stage."
雖然Berkshire投資所羅門的最終成果到目前仍未定案，所幸目前的情況要比我
兩年前預期要好得多，回顧過去，我覺得投資所羅門的經驗令人感到刺激有趣同
時又具教化意義，雖然我在1991到1992年間的感覺就好像是一個戲迷曾這樣
寫到"要是因為坐到一個不幸的位子，我可能就能夠好好地欣賞表演，因為它正
對著台上"。
The resuscitation of US Airways borders on the miraculous. Those
who have watched my moves in this investment know that I have
compiled a record that is unblemished by success. I was wrong in
originally purchasing the stock, and I was wrong later, in repeatedly
trying to unload our holdings at 50 cents on the dollar.
另一方面美國航空的重生過程近乎奇蹟，熟悉整個投資過程的朋友都知道，個人
在這項投資上獲得了前所未有的勝利，一開始買進這家公司的股票就是一項錯
誤，後來又反悔打算以半價出售再度犯了第二次的錯誤。
Two changes at the company coincided with its remarkable
rebound: 1) Charlie and I left the board of directors and 2) Stephen Wolf
became CEO. Fortunately for our egos, the second event was the key:
Stephen Wolf's accomplishments at the airline have been phenomenal.
兩項改變促使該公司得以東山再起，1)查理跟我辭去該公司董事的職位，2)
Stephen Wolf接任成為該公司總裁，還好後者才是公司真正能夠重生的主因，
否則我們的臉可就丟大了，Stephen Wolf的表現對整個航空業而言，可說是意
義非凡。
There still is much to do at US Airways, but survival is no longer an
issue. Consequently, the company made up the dividend arrearages on
our preferred during 1997, adding extra payments to compensate us
for the delay we suffered. The company's common stock, furthermore,
has risen from a low of $4 to a recent high of $73.
當然美國航空還有很長的一段路要走，不過存活下來應該不是問題，也因此該公
司在1997年順利地償還積欠我們的特別股股息，還包含延遲支付的賠償損失，
該公司的普通股股價更從原來的4塊錢，一舉漲到目前73塊錢的新高。
Our preferred has been called for redemption on March 15. But the
rise in the company's stock has given our conversion rights, which we
thought worthless not long ago, great value. It is now almost certain
that our US Airways shares will produce a decent profit -- that is, if my
cost for Maalox is excluded -- and the gain could even prove indecent.
我們持有的特別股已在三月15日被贖回，不過受惠於該公司股價大漲，原本一
文不值的轉換權現在卻變得價值不菲，可以肯定的是我們現在持有的美國航空普
通股將為我們創造極高的獲利，當然還要先把我買胃藥的錢給算進去。
Next time I make a big, dumb decision, Berkshire shareholders will
know what to do: Phone Mr. Wolf.
我想哪天要是我再度幹下什麼愚蠢的投資決策，Berkshire的股東肯定知道該怎
麼做了，沒錯，記得打電話給Wolf先生。
* * * * * * * * * * * *
In addition to the convertible preferreds, we purchased one other
private placement in 1991, $300 million of American Express Percs.
This security was essentially a common stock that featured a tradeoff in
its first three years: We received extra dividend payments during that
period, but we were also capped in the price appreciation we could
realize. Despite the cap, this holding has proved extraordinarily
profitable thanks to a move by your Chairman that combined luck and
skill -- 110% luck, the balance skill.
除了可轉換特別股，我們在1991年還透過私募的方式投資了三億美元的美國運
通俗稱"Percs"的股票，這種證券基本上算是一種普通股，只不過在投資的前三
年我們可以領取一筆特別的股利，條件是在同時間我們因為股價上漲所帶來的資
本利得將受到限制，然而即便如此，這筆投資還是因為本人的英明決策而獲利不
菲，當然其中也包含一些運氣的成份，比例約是110%(剩下的才是本人的能力)。
Our Percs were due to convert into common stock in August 1994,
and in the month before I was mulling whether to sell upon conversion.
One reason to hold was Amex's outstanding CEO, Harvey Golub, who
seemed likely to maximize whatever potential the company had (a
supposition that has since been proved -- in spades). But the size of
that potential was in question: Amex faced relentless competition from
a multitude of card-issuers, led by Visa. Weighing the arguments, I
leaned toward sale.
根據約定我們的Percs必須在1994年八月以前轉換成普通股，而就在前一個月
我還一直在考慮是否應該在轉換期限到期以前把這項投資給處分掉，當時考量的
是雖然美國運通總裁Harvey Golub表現相當優異，他總是有辦法將公司的潛力
發揮到極致(這點從一開始便不斷地獲得證明)，只是這種潛能還是面臨嚴重的挑
戰，那就是美國運通來自於以Visa為首的其他發卡單位激烈的競爭，在衡量各
種利弊得失之後，我還是傾向於把這筆投資提前給處分掉。
Here's where I got lucky. During that month of decision, I played
golf at Prouts Neck, Maine with Frank Olson, CEO of Hertz. Frank is a
brilliant manager, with intimate knowledge of the card business. So
from the first tee on I was quizzing him about the industry. By the time
we reached the second green, Frank had convinced me that Amex's
corporate card was a terrific franchise, and I had decided not to sell. On
the back nine I turned buyer, and in a few months Berkshire owned 10%
of the company.
還好我走狗運，就在要做決定的那個月，我正好到緬因州和Hertz租車公司總
裁Frank Olson一起打高爾夫球，Frank是一位相當優秀的經理人，因為業務
的關係相當熟悉信用卡的行業，所以打從第一洞開始我就一直追問他有關這行業
的種種問題，到了第二洞的果嶺時，Frank已經讓我完全相信美國運通的企業卡
是一項絕佳的生意，所以當下我就決定不賣了，等到後九洞時，我更決定加碼投
資，於是在回來的幾個月後，Berkshire已經擁有該公司10%的股權。
We now have a $3 billion gain in our Amex shares, and I naturally
feel very grateful to Frank. But George Gillespie, our mutual friend, says
that I am confused about where my gratitude should go. After all, he
points out, it was he who arranged the game and assigned me to Frank's
foursome.
現在我們光是在美國運通的投資潛在利益就有30億美元，當然這一切都要感謝
Frank，不過我們倆人共同的好友-George Gillspie卻直說我搞錯應該要感恩的
對象了，他強調要不是因為他安排這次的球會，並且把我跟Frank擺在同一組
的話，也不會有今天這樣的成果。
Quarterly Reports to Shareholders
給股東的季報
In last year's letter, I described the growing costs we incur in
mailing quarterly reports and the problems we have encountered in
delivering them to "street-name" shareholders. I asked for your opinion
about the desirability of our continuing to print reports, given that we
now publish our quarterly and annual communications on the Internet,
at our site, www.berkshirehathaway.com. Relatively few shareholders
responded, but it is clear that at least a small number who want the
quarterly information have no interest in getting it off the Internet.
Being a life-long sufferer from technophobia, I can empathize with this
group.
在去年的年報中，我曾經向各位透露由於郵寄季報的費用大幅增加，同時要將季
報寄給那些不是用本名登記的股東有其困難性，所以徵詢大家是否可以接受直接
將季報與年報公佈在公司網站上，取代原先印製與郵寄報告的做法，雖然只有少
數的股東回應，但長期以來具有科技恐懼症的我很明白還是有少數想要年報資訊
的股東，不習慣透過網路取得相關的資訊，我完全能夠體會他們的想法。
The cost of publishing quarterlies, however, continues to balloon,
and we have therefore decided to send printed versions only to
shareholders who request them. If you wish the quarterlies, please
complete the reply card that is bound into this report. In the meantime,
be assured that all shareholders will continue to receive the annual
report in printed form.
惟考量大幅增加的印刷費用，最後我們還是決定除非股東有特別要求，我們才郵
寄印好的季報，所以若你也有意要一份書面的季報，請填妥年報上所附的申請表
格，同時在此也提醒所有的股東，我們還是會繼續郵寄年報給所有的股東。
Those of you who enjoy the computer should check out our home
page. It contains a large amount of current information about Berkshire
and also all of our annual letters since 1977. In addition, our website
includes links to the home pages of many Berkshire subsidiaries. On
these sites you can learn more about our subsidiaries' products and --
yes -- even place orders for them.
至於喜歡利用電腦上網的股東們，一定要到我們公司網站的首頁看看，裡面包含
大量有關Berkshire現況的資訊，同時還有1977年到現在為止的公司年報，此
外網站上還有對旗下其他子公司的網站連結，經由這些網站大家可以更了解子公
司的產品資訊，有的甚至可以透過網路直接下單購買。
We are required to file our quarterly information with the SEC no
later than 45 days after the end of each quarter. One of our goals in
posting communications on the Internet is to make this material
information -- in full detail and in a form unfiltered by the media --
simultaneously available to all interested parties at a time when markets
are closed. Accordingly, we plan to send our 1998 quarterly information
to the SEC on three Fridays, May 15, August 14, and November 13, and
on those nights to post the same information on the Internet. This
procedure will put all of our shareholders, whether they be direct or
"street-name," on an equal footing. Similarly, we will post our 1998
annual report on the Internet on Saturday, March 13, 1999, and mail it
at about the same time.
根據證管會法令的規定，我們必須在每季結束後45天內申報季報，而透過網路
公開資訊的主要原因之一是我們希望如此重大的訊息可以以完整而不經過媒體
消化過濾的方式，在股市收盤後即時地傳達給所有關心本公司狀況的人士，因此
我們決定在往後每季的最後一個星期五，今年分別是5/15、8/14及11/13將
季報對證管會做申報的動作，並在當天晚上將相同的資訊同步公佈在公司的網站
上，此舉將能夠使得Berkshire所有股東，不管是以本人或掛名的方式持有，皆
站在同等的地位之上，另外，我們也預計在1999年3月13日星期六將年報公
佈在網站上，並在同一時間將年報郵寄出去給所有的股東。
Shareholder-Designated Contributions
股東指定捐贈計劃
About 97.7% of all eligible shares participated in Berkshire's 1997
shareholder-designated contributions program. Contributions made
were $15.4 million, and 3,830 charities were recipients. A full
description of the program appears on pages 52 - 53.
大約有97.7%的有效股權參與1997年的股東指定捐贈計劃，總計約1,540萬
美元捐出的款項分配給3,830家慈善機構，詳細的名單參閱附錄。
Cumulatively, over the 17 years of the program, Berkshire has
made contributions of $113.1 million pursuant to the instructions of
our shareholders. The rest of Berkshire's giving is done by our
subsidiaries, which stick to the philanthropic patterns that prevailed
before they were acquired (except that their former owners themselves
take on the responsibility for their personal charities). In aggregate, our
subsidiaries made contributions of $8.1 million in 1997, including in-
kind donations of $4.4 million.
累計過去17年以來，Berkshire總計已按照股東意願捐贈高達1.131億美元的
款項，除了之外，Berkshire還透過旗下的子公司進行捐贈，而這些慈善活動都
是早在他們被我們購併以前就行之有年的(除了先前的老闆自行本身負責的個人
捐贈計畫之外)，總的來說，我們旗下的關係企業在1997年總計捐出810萬美
元，其中包含440萬美元等值的物品。
Every year a few shareholders miss out on our contributions
program because they don't have their shares registered in their own
names on the prescribed record date or because they fail to get the
designation form back to us within the 60-day period allowed. Charlie
and I regret this. But if replies are received late, we have to reject them
because we can't make exceptions for some shareholders while refusing
to make them for others.
每年都有一小部份的股東由於沒有將股份登記在本人的名下，或是沒能在60天
的期限內，將指定捐贈的表格送回給我們，而沒辦法參加我們的指定捐贈計畫，
對此查理跟我感到相當頭痛，不過我們必須忍痛將這些指定捐贈剔除，因為我不
可能在拒絕其他不符合規定股東的同時，還破例讓這些人參與。
To participate in future programs, you must own Class A shares
that are registered in the name of the actual owner, not the nominee
name of a broker, bank or depository. Shares not so registered on
August 31, 1998, will be ineligible for the 1998 program. When you get
the contributions form from us, return it promptly so that it does not
get put aside or forgotten.
想要參加這項計畫者，必須擁有A級普通股，同時確定您的股份是登記在自己
而非股票經紀人或保管銀行的名下，同時必須在1998年8月31日之前完成登
記，才有權利參與1998年的捐贈計畫，當你收到表格後，請立即填寫後寄回，
以免被丟在一旁給忘記了。
The Annual Meeting
年度股東會
Woodstock Weekend at Berkshire will be May 2-4 this year. The
finale will be the annual meeting, which will begin at 9:30 a.m. on
Monday, May 4. Last year we met at Aksarben Coliseum, and both our
staff and the crowd were delighted with the venue. There was only one
crisis: The night before the meeting, I lost my voice, thereby fulfilling
Charlie's wildest fantasy. He was crushed when I showed up the next
morning with my speech restored.
今年Berkshire的伍斯達克將在五月2號到4號舉行，整個大會將在五月4號
星期一的年度會議召開後落幕，去年的年會在Aksarben體育館召開，所有的工
作人員及參與的來賓對於當天的會場都相當滿意，唯一美中不足的是，在年會的
前一天，我的嗓子沙啞了，當時幾乎要如了查理的願，只不過隔天當我恢復原本
的聲音時，在一旁的查理幾乎要崩潰。
Last year about 7,500 attended the meeting. They represented all
50 states, as well as 16 countries, including Australia, Brazil, Israel,
Saudi Arabia, Singapore and Greece. Taking into account several
overflow rooms, we believe that we can handle more than 11,000
people, and that should put us in good shape this year even though our
shareholder count has risen significantly. Parking is ample at Aksarben;
acoustics are excellent; and seats are comfortable.
去年的股東會總共有7,500位股東出席，分別來自全美50州以及包含澳洲、巴
西、以色列、沙烏地阿拉伯、新加坡與希臘等在內的16個國家，我想即使今年
我們的股東人數又大幅增加，加上其他幾個備用的房間，應該可以容納超過
11,000名以上的人員參加，會場備有足夠的停車位，音效也不錯，就連座椅坐
起來也很舒服。
The doors will open at 7 a.m. on Monday and at 8:30 we will again
feature the world premiere of a movie epic produced by Marc Hamburg,
our CFO. The meeting will last until 3:30, with a short break at noon.
This interval will permit the exhausted to leave unnoticed and allow time
for the hardcore to lunch at Aksarben's concession stands. Charlie and I
enjoy questions from owners, so bring up whatever is on your mind.
大門會在星期一早上七點開放，同時照例在八點半會播放由我們財務長Marc
Hamburg精心製作具世界級水準的Berkshire電影短片供大家欣賞，扣除中午
短暫的休息時間，讓精疲力盡的人可以偷偷離開到阿肯薩本中心的小吃攤吃點東
西，整個會議將一直進行到下午三點半，查理跟我很喜歡老闆們提出的各種問
題，所以記得準備好你要問什麼。
Berkshire products will again be for sale in the halls outside the
meeting room. Last year -- not that I pay attention to this sort of thing
-- we again set sales records, moving 2,500 pounds of See's candy,
1,350 pairs of Dexter shoes, $75,000 of World Books and related
publications, and 888 sets of Quikut knives. We also took orders for a
new line of apparel, featuring our Berkshire logo, and sold about 1,000
polo, sweat, and T-shirts. At this year's meeting, we will unveil our 1998
collection.
再一次我們在會場外大廳備有Berkshire各式各樣的產品供大家選購，雖然我不
是特別的用心，去年我們再度打破記錄，總共搬走了2,500磅的糖果、1,350
雙的鞋子以及價值超過75,000美元的世界百科全書與相關出版品，外加888
組由旗下子公司Quikut所生產的小刀，同時我們也接受預訂一種新款的服裝，
上面印有Berkshire的Logo，結果總計賣出1,000件各式polo衫、毛衣與T
恤，在今年的股東會，我們還將推出1998年全新系列產品。
GEICO will again be on hand with a booth staffed by star associates
from its regional offices. Find out whether you can save money by
shifting your auto insurance to GEICO. About 40% of those who check us
out learn that savings are possible. The proportion is not 100% because
insurers differ in their underwriting judgments, with some favoring
drivers who live in certain geographical areas and work at certain
occupations more than we do. We believe, however, that we more
frequently offer the low price than does any other national carrier
selling insurance to all comers. In the GEICO informational material that
accompanies this report, you will see that in 38 states we now offer a
special discount of as much as 8% to our shareholders. We also have
applications pending that would extend this discount to drivers in other
states.
GEICO公司再度會派出地區最優秀的業務員，在會場設立攤位，接受股東詢問
有關汽車保險的資訊，記得去看看你是否能在汽車保險費上省一筆錢，我們估計
至少有40%的股東可以因此而節省不少保費(我只所以沒說100%的原因在於，
每家保險業者對於風險的估計都不同，有些保險公司對於居住於某些特定地區的
居民與從事某些特定職業的客戶有偏好，不過我仍然堅信我們提供給一般民眾的
費率通常都低於其他全國性的業者，在隨年報附贈的GEICO資料中，大家將可
以看到我們提供給來自全美38州股東最高8%的折扣費率，至於其他州的股東
也接受開放申請取得不等的折扣。
An attachment to the proxy material that is enclosed with this
report explains how you can obtain the card you will need for admission
to the meeting. We expect a large crowd, so get plane, hotel and car
reservations promptly. American Express (800-799-6634) will be
happy to help you with arrangements. As usual, we will have buses at
the larger hotels that will take you to and from the meeting and also
deliver you to Nebraska Furniture Mart, Borsheim's and the airport after
its conclusion. You are likely, however, to find a car handy.
後面附有股東會開會投票的相關資料，跟各位解釋如何拿到入場所許的識別證，
由於預期會有相當多的人與會，我們建議大家最好先預訂機位與住宿，美國運通
(電話800-799-6634)將會很高興為您提供相關安排服務，如同以往，我們會
安排巴士接送大家往返各大旅館與會場之間，並在會後接送大家到內布拉斯加傢
具店與波仙珠寶店或是到飯店與機場，當然你可能會覺得如何有一輛車就更方便
了。
NFM's main store, located on a 75-acre site about a mile from
Aksarben, is open from 10 a.m. to 9 p.m. on weekdays, 10 a.m. to
6 p.m. on Saturdays, and noon to 6 p.m. on Sundays. During the period
from May 1 to May 5, shareholders who present NFM with the coupon
that will accompany their meeting ticket will be entitled to a discount
that is otherwise restricted to its employees.
佔地75英畝的NFM主館距離會場約1英哩遠，營業時間平日從早上10點到
下午9點，星期六從早上10點到下午6點，星期日則從中午開到下午6點，
在五月1日到5日期間，股東持隨股東開會通知單附贈的點券到NFM購買各類
商品，將可獲得員工價的優惠。
Borsheim's normally is closed on Sunday but will be open for
shareholders from 10 a.m. to 6 p.m. on May 3rd. Last year was our
second-best shareholder's day, exceeded only by 1996's. I regard this
slippage as an anomaly and hope that you will prove me right this year.
Charlie will be available for autographs. He smiles, however, only if the
paper he signs is a Borsheim's sales ticket. Shareholders who wish to
visit on Saturday (10 a.m. to 5:30 p.m.) or on Monday (10 a.m.-8 p.m.)
should be sure to identify themselves as Berkshire owners so that Susan
Jacques, Borsheim's CEO, can make you especially welcome. Susan, I
should add, had a fabulous year in 1997. As a manager, she is
everything that an owner hopes for.
平時禮拜天不營業的波仙珠寶，特地在五月三日股東會當天會為股東與來賓開
放，從中午開到下午6點，去年在星期六股東會前一天，我們締造了歷史次佳
的記錄，僅次於1996年，我認為去年的下滑有點反常，所以希望大家都能前來
共襄盛舉，證明我的看法的對的，查理會在現場接受大家的簽名，當然大家如果
拿波仙的發票給他簽，他會更高興，另外選擇在前一天或後一天前往參觀的人，
記得表明Berkshire股東的身分，相信波仙的總裁-Susan Jacques會給各位最
熱情的接待，有一點我必須特別說明的是，Susan在1997年表現相當優異，
她實在是所有老闆心目中最理想的專業經理人。
On Sunday afternoon we will also have a special treat for bridge
players in the mall outside of Borsheim's. There, Bob Hamman -- a
legend of the game for more than three decades -- will take on all
comers. Join in and dazzle Bob with your skill.
另外在星期天下午我們也會在波仙珠寶店外面的大廳舉辦一場橋牌大賽，現場
Bob Hamman 橋牌界的傳奇性人物也將出席，接受各路英雄好漢的挑戰，記得
來參加，秀秀你的牌技給Bob看看。
My favorite steakhouse, Gorat's, opens one Sunday a year -- for
Berkshire shareholders on the night before the annual meeting. Last
year the restaurant started serving at 4 p.m. and finished about 1:30
a.m, an endurance trial that was the result of taking 1,100 reservations
vs. a seating capacity of 235. If you make a reservation and then can't
attend, be sure to let Gorat's know promptly, since it goes to great effort
to help us and we want to reciprocate. You can make reservations
beginning on April 1st (but not before) by calling 402-551-3733. Last
year I had to leave Gorat's a little early because of my voice problem, but
this year I plan to leisurely savor every bite of my rare T-bone and
double order of hash browns.
我個人最愛的牛排館-Gorat's為了Berkshire股東年會破例在星期天開門營
業，去年為了消化1,100位預訂的席次，只有235個座位的Gorat's牛排館從
下午四點開始營業，一直到半夜一點半，所以已經預訂座位的人，要是臨時無法
光臨，請記得一定要打電話取消訂位，因為Gorat's如此盡心盡力的為我們服
務，這是我們可以給他們最起碼的回報，今年該餐廳從四月一號開始接受預訂(電
話402-551-3733)，去年由於我的喉嚨有問題，所以必須提早離開，但今年我
一定會到Gorat's好好享用我最喜愛的丁骨\牛排加上雙份的牛肉丸。
After this warmup, Charlie and I will head for the Dairy Queen on
114th, just south of Dodge. There are 12 great Dairy Queens in
metropolitan Omaha, but the 114th Street location is the best suited to
handle the large crowd that we expect. South of the property, there are
hundreds of parking spaces on both sides of the street. Also, this Dairy
Queen will extend its Sunday hours to 11 p.m. in order to accommodate
our shareholders.
吃完牛排後，查理跟我還會趕到位於道奇街114號的乳品皇后冰淇淋攤，在整
個奧瑪哈地區總計有12家乳品皇后，但是114街卻是最適合接待大量群眾的
地點，在店的兩旁有好幾百個停車場供大家使用，同時該店也會延長假日營業時
間到晚上11點，以接待所有前往光顧的Berkshire股東。
The 114th Street operation is now run by two sisters, Coni Birge
and Deb Novotny, whose grandfather put up the building in 1962 at
what was then the outer edge of the city. Their mother, Jan Noble, took
over in 1972, and Coni and Deb continue as third generation owner-
managers. Jan, Coni and Deb will all be on hand Sunday evening, and I
hope that you meet them. Enjoy one of their hamburgers if you can't get
into Gorat's. And then, around eight o'clock, join me in having a Dusty
Sundae for dessert. This item is a personal specialty -- the Dairy Queen
will furnish you a copy of my recipe -- and will be offered only on
Shareholder Sunday.
114街的分店目前由Coni Birge與Deb Novotny兩姊妹所經營，係由她們的
祖父於1962年在當時還是市中心外圍的現址創立，在1972年由她們的母親接
手經營，Coni與Deb則是第三代的經營者，Jan、Coni及Deb在星期天晚上
將會在現場為大家服務，希望大家可以去和她們見見面，若是大家擠不進Gorat's
的話，也可以嚐嚐兩姊妹親手做的漢堡，八點整我將會出現享用我的喜歡的冰風
暴聖代，這是個人特調的祕方，當然你也可以要求乳品皇后照我的配方給你來一
份，這可是只有在股東會當天才對外提供獨家祕方。
The Omaha Royals and Albuquerque Dukes will play baseball on
Saturday evening, May 2nd, at Rosenblatt Stadium. As usual, your
Chairman, shamelessly exploiting his 25% ownership of the team, will
take the mound. But this year you will see something new.
在前一天5月2日，星期六晚上，Rosenblatt體育館將會有一場奧瑪哈皇家隊
對Albuquerque Dukes隊的比賽，一如往年厚顏無恥的我會利用擁有該球隊
25%的特權，站上投手丘擔任先發，不過今年我保證各位一定會有新的感受。
In past games, much to the bafflement of the crowd, I have shaken
off the catcher's first call. He has consistently asked for my sweeping
curve, and I have just as regularly resisted. Instead, I have served up a
pathetic fast ball, which on my best day was clocked at eight miles per
hour (with a following wind).
過去幾年，可能是受到現場觀眾喧鬧聲所影響，我總是不顧捕手對我所做出的暗
號，雖然他一直要求我投出拿手的變化曲球，但我總是極力反抗，結果總是投出
軟趴趴的快速球，最快的球速也不過是每小時8英哩(這還是在順風的情況下)。
There's a story behind my unwillingness to throw the curve ball. As
some of you may know, Candy Cummings invented the curve in 1867
and used it to great effect in the National Association, where he never
won less than 28 games in a season. The pitch, however, drew
immediate criticism from the very highest of authorities, namely Charles
Elliott, then president of Harvard University, who declared, "I have heard
that this year we at Harvard won the baseball championship because we
have a pitcher who has a fine curve ball. I am further instructed that the
purpose of the curve ball is to deliberately deceive the batter. Harvard is
not in the business of teaching deception." (I'm not making this up.)
其實我之所以不願意投曲球背後有極大的隱情，大家或許知道，Candy
Cummings在1867年發明曲球的時候，曾在國家聯盟引起極大的效應，這種
球路使得他每個球季至少可以贏得28場勝投，但是這樣的投球方式也立刻引起
最高當局的嚴厲批評，當時的哈佛校長Charles Elliott對外宣稱，我聽說今年
哈佛棒球隊靠著一位專門投曲球的投手贏得冠軍，有人還告訴我，這種曲球基本
上是一種欺騙打者的行為，我必須說的是，哈佛從來不教人這種騙人的勾當。
Ever since I learned of President Elliott's moral teachings on this
subject, I have scrupulously refrained from using my curve, however
devastating its effect might have been on hapless batters. Now,
however, it is time for my karma to run over Elliott's dogma and for me
to quit holding back. Visit the park on Saturday night and marvel at the
majestic arc of my breaking ball.
而自從我知道Elliott校長的教誨之後，我就一直小心翼翼地避免使用到我這種
殺人無數拿手的曲球，不過現在已經到了忍無可忍的地步了，我決定再度使出我
的殺手戩，星期六晚上大家記得光臨球場，讓你們見識一下我這魔球的威力。
Our proxy statement includes information about obtaining tickets
to the game. We will also provide an information packet describing the
local hot spots, including, of course, those 12 Dairy Queens.
股東會資料將告訴大家如何取得球賽入場的門票，裡面同時包含一本旅行小手
冊，介紹本地熱門的旅遊景點，當然也包括12家乳品皇后在內。
Come to Omaha -- the cradle of capitalism -- in May and enjoy
yourself.
歡迎大家在五月蒞臨奧瑪哈-資本主義的搖籃，也預祝大家玩得愉快。
Warren E. Buffett
February 27, 1998 Chairman of the Board
華倫．巴菲特
董事會主席
1998年2月27日
波克夏海瑟崴股份有限公司
1997 Chairman's Letter
1997年董事長致股東信
To the Shareholders of Berkshire Hathaway Inc.:
致所有股東:
Our gain in net worth during 1997 was $8.0 billion, which
increased the per-share book value of both our Class A and Class B
stock by 34.1%. Over the last 33 years (that is, since present
management took over) per-share book value has grown from $19 to
$25,488, a rate of 24.1% compounded annually.(1)
1997年本公司的淨值增加了80億美元，每股帳面淨值不管是A級股或B級股
皆成長了34.1%，總計過去33年以來，也就是自從現有經營階層接手之後，每
股淨值由當初的19元成長到現在的25,488美元，年複合成長率約為24.1%*。
1. All figures used in this report apply to Berkshire's A shares,
the successor to the only stock that the company had outstanding
before 1996. The B shares have an economic interest equal to 1/30th
that of the A.
*1在年報中所謂的每股數字係以A級普通股約當數為基礎，這是本公司在1996年以前流通在
外唯一的一種股份，B級普通股擁有A級普通股三十分之一的權利。
Given our gain of 34.1%, it is tempting to declare victory and move
on. But last year's performance was no great triumph: Any investor can
chalk up large returns when stocks soar, as they did in 1997. In a bull
market, one must avoid the error of the preening duck that quacks
boastfully after a torrential rainstorm, thinking that its paddling skills
have caused it to rise in the world. A right-thinking duck would instead
compare its position after the downpour to that of the other ducks on
the pond.
看到我們高達34.1%的超高報酬率，大家可能忍不住要高呼勝利口號，並勇往
前進，不過若是考量去年股市的狀況，任何一個投資人都能靠著股票的飆漲而大
賺一票，面對多頭的行情，大家一定要避免成為一隻呱呱大叫的驕傲鴨子，以為
是自己高超的泳技讓他衝上了天，殊不知面對狂風巨浪，小心的鴨子反而會謹慎
地看看大浪過後，其他池塘裡的鴨子都到哪裡去了。
So what's our duck rating for 1997? The table on the facing page
shows that though we paddled furiously last year, passive ducks that
simply invested in the S&P Index rose almost as fast as we did. Our
appraisal of 1997's performance, then: Quack.
那麼我們這隻鴨子在1997年的表現又如何呢? 報表顯示雖然去年我們拼命的
向前划，不過到最後我們發現其他被動投資S&P 500指數的鴨子的表現一點也
不比我們差，所以總結我們在1997年的表現是︰呱呱!
When the market booms, we tend to suffer in comparison with the
S&P Index. The Index bears no tax costs, nor do mutual funds, since
they pass through all tax liabilities to their owners. Last year, on the
other hand, Berkshire paid or accrued $4.2 billion for federal income
tax, or about 18% of our beginning net worth.
當股市正熱時，相較於S&P 500指數，我們比較吃虧，因為指數或共同基金不
必負擔租稅成本，他們可以直接將稅負轉嫁到投資人的身上，相對地在另一方面
Berkshire光是去年就必須認為高達42億美元的聯邦所得稅，這相當於我們年
初淨值的18%。
Berkshire will always have corporate taxes to pay, which means it
needs to overcome their drag in order to justify its existence. Obviously,
Charlie Munger, Berkshire's Vice Chairman and my partner, and I won't
be able to lick that handicap every year. But we expect over time to
maintain a modest advantage over the Index, and that is the yardstick
against which you should measure us. We will not ask you to adopt the
philosophy of the Chicago Cubs fan who reacted to a string of lackluster
seasons by saying, "Why get upset? Everyone has a bad century now and
then."
由於Berkshire必須要負擔企業所得稅，所以為了要證明其存在的意義，它就一
定要能夠克服這先天的障礙，不過很顯然的Berkshire的主要合夥人查理曼格跟
我很難每年都打敗這樣的差桿，當然就長期而言，我們還是預期Berkshire能夠
打敗大盤指數，這也是大家可以評斷我們表現的最低標準，我想我們應該不會讓
大家像芝加哥小熊隊球迷在面對連續幾個戰績不佳球季時，自我調侃所說的︰有
什麼好沮喪的?? 誰都可能有不好過的一世紀。
Gains in book value are, of course, not the bottom line at Berkshire.
What truly counts are gains in per-share intrinsic business value.
Ordinarily, though, the two measures tend to move roughly in tandem,
and in 1997 that was the case: Led by a blow-out performance at GEICO,
Berkshire's intrinsic value (which far exceeds book value) grew at nearly
the same pace as book value.
帳面淨值的增加當然不是經營Berkshire的最終目標，因為真正重要的是每股實
質價值，雖然在Berkshire通常兩者會以相當接近的頻率波動，就像是1997年
便是如此，受惠於GEICO爆炸性的成長，Berkshire的實質價值(遠高於帳面價
值)以接近帳面價值成長的幅度增加。
For more explanation of the term, intrinsic value, you may wish to
refer to our Owner's Manual, reprinted on pages 62 to 71. This manual
sets forth our owner-related business principles, information that is
important to all of Berkshire's shareholders.
有關"實質價值"等名詞的解釋，請大家參閱股東手冊，手冊中揭示了本公司經營
的宗旨，也包含了許多對Berkshire股東相當重要的資訊。
In our last two annual reports, we furnished you a table that Charlie
and I believe is central to estimating Berkshire's intrinsic value. In the
updated version of that table, which follows, we trace our two key
components of value. The first column lists our per-share ownership of
investments (including cash and equivalents) and the second column
shows our per-share earnings from Berkshire's operating businesses
before taxes and purchase-accounting adjustments (discussed on
pages 69 and 70), but after all interest and corporate expenses. The
second column excludes all dividends, interest and capital gains that we
realized from the investments presented in the first column. In effect,
the columns show what Berkshire would look like were it split into two
parts, with one entity holding our investments and the other operating
all of our businesses and bearing all corporate costs.
在過去兩年的年報中，我們提供給各位一張查理跟我認為最能夠估計Berkshire
實質價值的表，在下面這張更新過數字的表中，主要有兩項跟價值息息相關的指
標，第一欄是我們平均每股持有的投資金額(包含現金與約當現金)，第二欄則是
每股在扣除利息與營業費用之後，來自本業的營業利益(但未扣除所得稅與購買
法會計調整數)，當然後者已經扣除了所有來自第一欄投資所貢獻的股利收入、
利息收入與資本利得，事實上，若是把Berkshire拆成兩部份的話，就等於是一
家持有我們投資部位的控股公司，以及另一家經營旗下所有事業負擔全部成本盈
虧的營利事業。
Pre-tax Earnings Per Share
Investments Excluding All Income from
Year Per Share Investments
1967 $ 41 $ 1.09
1977 372 12.44
1987 3,910 108.14
199738,043 717.82
Pundits who ignore what our 38,000 employees contribute to the
company, and instead simply view Berkshire as a de facto investment
company, should study the figures in the second column. We made our
first business acquisition in 1967, and since then our pre-tax operating
earnings have grown from $1 million to $888 million. Furthermore, as
noted, in this exercise we have assigned all of Berkshire's corporate
expenses -- overhead of $6.6 million, interest of $66.9 million and
shareholder contributions of $15.4 million -- to our business
operations, even though a portion of these could just as well have been
assigned to the investment side.
對於那些無視於我們38,000名辛勤奉獻員工的存在，而武斷地將Berkshire當
做是一家投資公司的鄉野匹夫，應該要請他們看看第二欄的數字，打從1967年
我們進行第一次的併購開始，本公司的稅前營業盈餘已從當時的100萬美元成
長到現在的8.88億美元，這還是吸收了Berkshire全部的開銷，包含660萬
美元的企業營運費用、6,690萬美元的利息支出與1,540萬美元的股東指定捐
贈款後的結餘，雖然這其中有一部份是與投資活動相關的支出。
Here are the growth rates of the two segments by decade:
下表是這兩個部門每十年的成長率︰
Pre-tax Earnings Per Share
Investments Excluding All Income from
Decade Ending Per Share Investments
1977 24.6% 27.6%
1987 26.5% 24.1%
1997 25.5% 20.8%
Annual Growth
Rate, 1967-1997 25.6% 24.2%
During 1997, both parts of our business grew at a satisfactory rate,
with investments increasing by $9,543 per share, or 33.5%, and
operating earnings growing by $296.43 per share, or 70.3%. One
important caveat: Because we were lucky in our super-cat insurance
business (to be discussed later) and because GEICO's underwriting gain
was well above what we can expect in most years, our 1997 operating
earnings were much better than we anticipated and also more than we
expect for 1998.
回顧1997年Berkshire兩個部份都繳出漂亮的成績單，每股投資金額增加了
9,543美元，約33.5%；而每股營業盈餘則增加了296.43美元，約70.3%，
當然其中有一個很重要的關鍵，那就是我們的霹靂貓保險業務(後面還會在詳加
說明)的運氣不錯，同時GEICO保險的表現甚至優於以往，這使得1997年的營
業表現超乎當初的預期，甚至超過未來1998年可能的表現。
Our rate of progress in both investments and operations is certain
to fall in the future. For anyone deploying capital, nothing recedes like
success. My own history makes the point: Back in 1951, when I was
attending Ben Graham's class at Columbia, an idea giving me a $10,000
gain improved my investment performance for the year by a full 100
percentage points. Today, an idea producing a $500 million pre-tax
profit for Berkshire adds one percentage point to our performance. It's
no wonder that my annual results in the 1950s were better by nearly
thirty percentage points than my annual gains in any subsequent
decade. Charlie's experience was similar. We weren't smarter then, just
smaller. At our present size, any performance superiority we achieve
will be minor.
我相信未來不管是投資或營業盈餘的成長速度一定會向下滑落，對於任何負責資
金運用的人而言，成功必然導致衰退，就拿我個人的投資歷史來說，回想當初我
在1951年進入哥倫大學拜在葛拉漢名下時，只要抓住能夠賺到1萬美元的投
資機會就能讓我的投資績效超過百分之百，不過時至今日，一筆能賺5億美元
的成功投資個案，也不過只能讓Berkshire增加區區一個百分點的投資績效，也
難怪個人在1950年代早期的投資績效會比接下來幾十年的年度績效差距達30
個百分點以上，而查理本身的經歷也很相似，不是我們變笨了，而是因為我們目
前的規模實在是太大了，現在任何一項重大進展都會因為規模龐大的關係而顯得
微不足道。
We will be helped, however, by the fact that the businesses to
which we have already allocated capital -- both operating subsidiaries
and companies in which we are passive investors -- have splendid
long-term prospects. We are also blessed with a managerial corps that
is unsurpassed in ability and focus. Most of these executives are wealthy
and do not need the pay they receive from Berkshire to maintain their
way of life. They are motivated by the joy of accomplishment, not by
fame or fortune.
當然只要我們投資的子公司以及股票具有遠景，我們絕對能夠因此受益，同時也
要感謝旗下這群卓越的能力與專注力的經營管理團隊，大家要知道這些經理人本
身大多都已經很有錢了，根本就不需要靠Berkshire這份薪水過活，他們不為
名，也不為利，純粹是衝著那份成就感。
Though we are delighted with what we own, we are not pleased
with our prospects for committing incoming funds. Prices are high for
both businesses and stocks. That does not mean that the prices of
either will fall -- we have absolutely no view on that matter -- but it
does mean that we get relatively little in prospective earnings when we
commit fresh money.
雖然對於現有的投資部位感到相當滿意，但是我們也對於陸續進來的資金找不到
理想的去路而感到憂心，目前不管是整家公司或是單一股票的市場價格都過高，
但我並不是要預言股價將會下跌，我們從來就不對股市發表任何看法，這樣說的
意思只是要提醒大家未來新投入資金的預期報酬將會大大減少。
Under these circumstances, we try to exert a Ted Williams kind of
discipline. In his book The Science of Hitting, Ted explains that he
carved the strike zone into 77 cells, each the size of a baseball.
Swinging only at balls in his "best" cell, he knew, would allow him to
bat .400; reaching for balls in his "worst" spot, the low outside corner of
the strike zone, would reduce him to .230. In other words, waiting for
the fat pitch would mean a trip to the Hall of Fame; swinging
indiscriminately would mean a ticket to the minors.
在這種情況下，我們試著學習職棒傳奇明星Ted Williams的作法，在他的"打擊
的科學"一書中解釋到，他把打擊區域劃分為77個框框，每個框框就約當一個
棒球的大小，只有當球進入最理想的框框時，他才揮棒打擊，因為他深深知道只
有這樣做，他才能維持四成的超高打擊率，反之要是勉強去揮擊較差的框框，將
會使得他的打擊率驟降到二成三以下，換句話說，只有耐心等待超甜的好球，才
是通往名人堂的大道，好壞球照單全收的人，遲早會面臨被降到小聯盟的命運。
If they are in the strike zone at all, the business "pitches" we now
see are just catching the lower outside corner. If we swing, we will be
locked into low returns. But if we let all of today's balls go by, there can
be no assurance that the next ones we see will be more to our liking.
Perhaps the attractive prices of the past were the aberrations, not the
full prices of today. Unlike Ted, we can't be called out if we resist three
pitches that are barely in the strike zone; nevertheless, just standing
there, day after day, with my bat on my shoulder is not my idea of fun.
目前迎面朝我們而來的"投"資機會大多只在好球帶邊緣，如果我們選擇揮棒，則
得到的成績可能會不太理想，但要是我們選擇放棄不打，則沒有人敢跟你保證下
一球會更好，或許過去那種吸引人的超低價格已不復存在，所幸我們不必像Ted
Williams一樣，可能因為連續三次不揮棒而遭三振出局，只是光是扛著棒子站
在那裡，日復一日，也不是一件令人感到愉快的事。
Unconventional Commitments
非常態性投資
When we can't find our favorite commitment -- a well-run and
sensibly-priced business with fine economics -- we usually opt to put
new money into very short-term instruments of the highest quality.
Sometimes, however, we venture elsewhere. Obviously we believe that
the alternative commitments we make are more likely to result in profit
than loss. But we also realize that they do not offer the certainty of profit
that exists in a wonderful business secured at an attractive price.
Finding that kind of opportunity, we know that we are going to make
money -- the only question being when. With alternative investments,
we think that we are going to make money. But we also recognize that
we will sometimes realize losses, occasionally of substantial size.
有時我們的資金不一定能夠找到最理想的去處-也就是經營良好、價碼合理的企
業，這時我們就會將資金投入到一些期間較短但品質不錯的投資工具上，雖然我
們很明白這樣的做法可能無法像我們買進好公司那樣穩健的獲利，甚至在少數的
狀況下有可能賠大錢，不過總得來說我們相信賺錢的機率還是遠高於賠錢，唯一
的關鍵在於其獲利何時能夠實現。
We had three non-traditional positions at yearend. The first was
derivative contracts for 14.0 million barrels of oil, that being what was
then left of a 45.7 million barrel position we established in 1994-95.
Contracts for 31.7 million barrels were settled in 1995-97, and these
supplied us with a pre-tax gain of about $61.9 million. Our remaining
contracts expire during 1998 and 1999. In these, we had an unrealized
gain of $11.6 million at yearend. Accounting rules require that
commodity positions be carried at market value. Therefore, both our
annual and quarterly financial statements reflect any unrealized gain or
loss in these contracts. When we established our contracts, oil for future
delivery seemed modestly underpriced. Today, though, we have no
opinion as to its attractiveness.
截至年底，我們總共有三項異於往常的投資，首先是1,400萬桶的原油期貨合
約，這是我們在1994-1995年間所建立4,570萬桶原油的剩餘部位，預計在
1998-1999年陸續到期，目前未實現獲利約有1,160萬美元，而已經結倉的
3,170萬桶原油合約總共貢獻我們6,190萬美元的獲利，會計原則規定期貨合
約必須依市場價格評價，因此這些合約所有未實現的損益皆已反應在我們年度或
每季的財務報表上，當初我們之所以會建立這些部位，主要考量當時的石油期貨
價位有些低估，至於現在的市場狀況我們則沒有任何意見。
Our second non-traditional commitment is in silver. Last year, we
purchased 111.2 million ounces. Marked to market, that position
produced a pre-tax gain of $97.4 million for us in 1997. In a way, this is
a return to the past for me: Thirty years ago, I bought silver because I
anticipated its demonetization by the U.S. Government. Ever since, I
have followed the metal's fundamentals but not owned it. In recent
years, bullion inventories have fallen materially, and last summer
Charlie and I concluded that a higher price would be needed to establish
equilibrium between supply and demand. Inflation expectations, it
should be noted, play no part in our calculation of silver's value.
至於第二項則是白銀，去年我們一口氣買進總共1.112億盎斯的白銀，以目前
的市價計算，總共貢獻1997年9,740萬美元的稅前利益，某個角度來說，這
彷彿又讓我回到過去，記得在三十年前，我因為預期美國政府貨幣將自由化而買
進白銀，自此之後，我便一直追蹤貴金屬的基本面，只是並沒有其他的買進動作，
直到最近這幾年，銀條的存貨突然大幅下滑，查理跟我得到一個結論，那就是白
銀的價格應該要稍微向上調整以維持供給與需求的平衡，至於一般人較注意的通
膨預期則不在我們計算價值的範圍之內。
Finally, our largest non-traditional position at yearend was $4.6
billion, at amortized cost, of long-term zero-coupon obligations of the
U.S. Treasury. These securities pay no interest. Instead, they provide
their holders a return by way of the discount at which they are
purchased, a characteristic that makes their market prices move rapidly
when interest rates change. If rates rise, you lose heavily with zeros, and
if rates fall, you make outsized gains. Since rates fell in 1997, we ended
the year with an unrealized pre-tax gain of $598.8 million in our zeros.
Because we carry the securities at market value, that gain is reflected in
yearend book value.
最後一項是46億美元以帳面攤銷長期的美國零息債券，這些債券不支付利息，
相反的是以透過折價發行的方式回饋給債券持有人，也因此這類債券的價格會因
市場利率變動而大幅波動，如果利率上升，持有零息債券的人可能損失慘重，反
之若利率下跌，投資人就可能因此大賺一筆，而因為1997年的利率大幅下滑，
所以光是1997年我們的未實現利益就高達5.98億美元，這些利益已全數反應
在公司年底的帳上。
In purchasing zeros, rather than staying with cash-equivalents, we
risk looking very foolish: A macro-based commitment such as this
never has anything close to a 100% probability of being successful.
However, you pay Charlie and me to use our best judgment -- not to
avoid embarrassment -- and we will occasionally make an
unconventional move when we believe the odds favor it. Try to think
kindly of us when we blow one. Along with President Clinton, we will be
feeling your pain: The Munger family has more than 90% of its net worth
in Berkshire and the Buffetts more than 99%.
當然不把現金好好的擺著而拿去投資零息債券不是沒有風險的，這種基於總體經
濟分析的投資絕對不敢保證百分之百能夠成功，不過查理跟我絕對會運用我們最
佳的判斷能力，大家可不是請我們來閒閒沒事幹，當我們認為勝算頗大時，我們
就會大膽地去做一些異於往常的舉動，當然萬一不小心突鎚時，還請大家多多包
含，就如同柯林頓總統一樣，我們絕對與各位感同身受，因為曼格家族有90%
的資產繫於Berkshire，而巴菲特家族更高達99%。
How We Think About Market Fluctuations
我們對於股市波動的看法
A short quiz: If you plan to eat hamburgers throughout your life
and are not a cattle producer, should you wish for higher or lower prices
for beef? Likewise, if you are going to buy a car from time to time but are
not an auto manufacturer, should you prefer higher or lower car prices?
These questions, of course, answer themselves.
一則小謎語︰如果你打算一輩子吃漢堡維生，自己又沒有養牛，那麼你是希望牛
肉價格上漲或是下跌呢? 同樣的要是你三不五時會換車，自己又不是賣車的，你
會希望車子的價格上漲或是下跌呢? 這些問題的答案很顯然顯而易見。
But now for the final exam: If you expect to be a net saver during
the next five years, should you hope for a higher or lower stock market
during that period? Many investors get this one wrong. Even though
they are going to be net buyers of stocks for many years to come, they
are elated when stock prices rise and depressed when they fall. In effect,
they rejoice because prices have risen for the "hamburgers" they will
soon be buying. This reaction makes no sense. Only those who will be
sellers of equities in the near future should be happy at seeing stocks
rise. Prospective purchasers should much prefer sinking prices.
最後我再問各位一個問題︰假設你預估未來五年內可以存一筆錢，那麼你希望這
期間的股票市場是漲還是跌? 這時許多投資人對於這個問題的答案就可能是錯
的，雖然他們在未來的期間內會陸續買進股票，不過當股價漲時他們會感到高
興，股價跌時反而覺得沮喪，這種感覺不等於是當你去買漢堡吃時，看到漢堡漲
價卻欣喜若狂，這樣的反應實在是沒有什麼道理，只有在短期間準備賣股票的人
才應該感到高興，準備買股票的人應該期待的是股價的下滑。
For shareholders of Berkshire who do not expect to sell, the choice
is even clearer. To begin with, our owners are automatically saving even
if they spend every dime they personally earn: Berkshire "saves" for
them by retaining all earnings, thereafter using these savings to
purchase businesses and securities. Clearly, the more cheaply we make
these buys, the more profitable our owners' indirect savings program
will be.
對於不準備賣股票的Berkshire股東來說，這樣的選擇再明顯也不過了，首先就
算他們將賺來的每一分錢都花掉，Berkshire也會自動幫他們存錢，因為
Berkshire會透過將所賺得的盈餘再投資其他事業與股票，所以只要我們買進這
些投資標的的成本越低，他們將來間接所獲得的報酬自然而然就越高。
Furthermore, through Berkshire you own major positions in
companies that consistently repurchase their shares. The benefits that
these programs supply us grow as prices fall: When stock prices are low,
the funds that an investee spends on repurchases increase our
ownership of that company by a greater amount than is the case when
prices are higher. For example, the repurchases that Coca-Cola, The
Washington Post and Wells Fargo made in past years at very low prices
benefitted Berkshire far more than do today's repurchases, made at
loftier prices.
此外，Berkshire許多重要的投資部位都持續不斷地買回自家公司的股份，在這
種情況下，股票價格越低對我們越有利，因為這代表同樣的一筆錢可以買進更多
的股份，從而間接提高我們持股的比例，舉例來說，過去幾年可口可樂、華盛頓
郵報與富國銀行皆以非常低的價格大量買回自家股票，其所帶來的效益要比在現
在的高價再進行要來得有利的多。
At the end of every year, about 97% of Berkshire's shares are held
by the same investors who owned them at the start of the year. That
makes them savers. They should therefore rejoice when markets decline
and allow both us and our investees to deploy funds more advantageously.
每年度結束，大約有97%的Berkshire股東會選擇繼續持有本公司的股份，這
些人都是儲蓄愛好者，所以每當股市下跌時，他們都會感到高興，因為這代表我
們以及被投資公司的資金可以作更好的運用。
So smile when you read a headline that says "Investors lose as
market falls." Edit it in your mind to "Disinvestors lose as market falls -
- but investors gain." Though writers often forget this truism, there is a
buyer for every seller and what hurts one necessarily helps the other.
(As they say in golf matches: "Every putt makes someone happy.")
所以下次當你看到"股市爆跌-投資人損失不貸"的新聞頭條時，就知道應該要改
成"股市爆跌-不投資的人損失不貸而投資的人賺翻了"，雖然記者常常忘記這樣
的真理，不過只要有賣方就代表會有買方，一方損失就代表有另一方會得利，就
像是高爾夫球場上常講的，每當一個柏忌出現時，就會有人在旁邊暗爽。
We gained enormously from the low prices placed on many equities
and businesses in the 1970s and 1980s. Markets that then were hostile
to investment transients were friendly to those taking up permanent
residence. In recent years, the actions we took in those decades have
been validated, but we have found few new opportunities. In its role as a
corporate "saver," Berkshire continually looks for ways to sensibly
deploy capital, but it may be some time before we find opportunities
that get us truly excited.
當初我們靠著在1970與1980年代股價低迷時所做的一些投資，確實讓我們賺
了不少，這是一個對股市短暫過客不利卻對股市長期住戶有利的市場，近幾年
來，我們在那個年代所做的一些投資決策陸續獲得了驗證，不過現在我們卻找不
到類似的機會，身為企業資金的積蓄者，Berkshire致力於尋找資金合理運用的
方法，不過以現在的狀況來看，我們可能還需要一段時間才能再找到真正讓我們
感到興奮的投資機會。
Insurance Operations -- Overview
保險事業營運-總檢討
What does excite us, however, is our insurance business. GEICO is
flying, and we expect that it will continue to do so. Before we expound
on that, though, let's discuss "float" and how to measure its cost. Unless
you understand this subject, it will be impossible for you to make an
informed judgment about Berkshire's intrinsic value.
真正令我們感到興奮的是保險事業的營運，GEICO正處於爆炸性的成長階段，
而且這種情況預期還會繼續維持下去，在進一步說明之前，讓我們先解釋一下何
謂浮存金，以及如何來衡量它的取得成本，因為除非你對於這個課題有所了解，
否則你根本就不可能有辦法對Berkshire實際的價值做合理的判斷。
To begin with, float is money we hold but don't own. In an
insurance operation, float arises because premiums are received before
losses are paid, an interval that sometimes extends over many years.
During that time, the insurer invests the money. Typically, this pleasant
activity carries with it a downside: The premiums that an insurer takes in
usually do not cover the losses and expenses it eventually must pay.
That leaves it running an "underwriting loss," which is the cost of float.
An insurance business has value if its cost of float over time is less than
the cost the company would otherwise incur to obtain funds. But the
business is a lemon if its cost of float is higher than market rates for
money.
首先浮存金是一項我們持有但不屬於我們的資金，在保險公司的營運中，浮存金
的產生原因在於保險公司在真正支付損失理賠之前，一般會先向保戶收取保費，
在這期間保險公司會將資金運用在其他投資之上，當然這樣的好處也必須要付出
代價，通常保險業者收取的保費並不足以因應最後支付出去的相關損失與費用，
於是保險公司便會發生承保損失，這就是浮存金的成本，而當一家公司取得浮存
金成本，就長期而言低於從其它管道取得資金的成本時，它就有存在的價值，否
則一旦保險事業取得浮存金的成本若遠高於貨幣市場利率時，它就像是一顆酸檸
檬。
A caution is appropriate here: Because loss costs must be
estimated, insurers have enormous latitude in figuring their
underwriting results, and that makes it very difficult for investors to
calculate a company's true cost of float. Estimating errors, usually
innocent but sometimes not, can be huge. The consequences of these
miscalculations flow directly into earnings. An experienced observer
can usually detect large-scale errors in reserving, but the general public
can typically do no more than accept what's presented, and at times I
have been amazed by the numbers that big-name auditors have
implicitly blessed. As for Berkshire, Charlie and I attempt to be
conservative in presenting its underwriting results to you, because we
have found that virtually all surprises in insurance are unpleasant ones.
有一點必須特別注意的是，因為損失成本必須仰賴估算，所以保險業者對於承保
結算的成績有相當大伸縮的空間，連帶使得投資人很難正確地衡量一家保險公司
真正的浮存金成本，估計錯誤，通常是無心，但有時卻是故意，與真實的結果往
往會有很大的差距，而這種結果直接反映在公司的損益表上，有經驗的行家通常
可以經由公司的準備提列情形發現重大的錯誤，但對於一般投資大眾來說，除了
被迫接受財務報表的數字之外，別無他法，而我個人常常被這些經過各大會計師
事務所背書的財務報告所嚇到，至於就Berkshire本身而言，查理跟我在編列財
務報表時，都盡量採取最保守的做法，因為就我們個人的經驗而言，保險業所發
生的意外，通常都不是什麼好消息。
As the numbers in the following table show, Berkshire's insurance
business has been a huge winner. For the table, we have calculated our
float -- which we generate in large amounts relative to our premium
volume -- by adding net loss reserves, loss adjustment reserves, funds
held under reinsurance assumed and unearned premium reserves, and
then subtracting agents' balances, prepaid acquisition costs, prepaid
taxes and deferred charges applicable to assumed reinsurance. Our cost
of float is determined by our underwriting loss or profit. In those years
when we have had an underwriting profit, such as the last five, our cost
of float has been negative. In effect, we have been paid for holding
money.
不過如同下表中的數字所顯示的，Berkshire的保險事業可說是大獲全勝，表中
的浮存金，係將所有的損失準備、損失費用調整準備與未賺取保費加總後，再扣
除應付佣金、預付購併成本及相關再保遞延費用，相對於我們的保費收入總額，
我們的浮存金部位算是相當大的，至於浮存金的成本則決定於所發生的承保損失
或利益而定，在某些年度，就像是最近五年，由於我們有承保利益，所以換句話
說，我們的資金成本甚至是負的，光是持有這些資金我們就已經開始讓我們賺錢
了。
(1) (2) Yearend Yield
Underwriting Approximate on Long-Term
Loss Average Float Cost of Funds Govt. Bonds
(In $ Millions) (Ratio of 1 to 2)
1967 profit 17.3 less than zero 5.50%
1968 profit 19.9 less than zero 5.90%
1969 profit 23.4 less than zero 6.79%
1970 0.37 32.4 1.14% 6.25%
1971 profit 52.5 less than zero 5.81%
1972 profit 69.5 less than zero 5.82%
1973 profit 73.3 less than zero 7.27%
1974 7.36 79.1 9.30% 8.13%
1975 11.35 87.6 12.96% 8.03%
1976 profit 102.6 less than zero 7.30%
1977 profit 139.0 less than zero 7.97%
1978 profit 190.4 less than zero 8.93%
1979 profit 227.3 less than zero10.08%
1980 profit 237.0 less than zero11.94%
1981 profit 228.4 less than zero13.61%
1982 21.56 220.6 9.77%10.64%
1983 33.87 231.3 14.64%11.84%
1984 48.06 253.2 18.98%11.58%
1985 44.23 390.2 11.34% 9.34%
1986 55.84 797.5 7.00% 7.60%
1987 55.43 1,266.7 4.38% 8.95%
1988 11.08 1,497.7 0.74% 9.00%
1989 24.40 1,541.3 1.58% 7.97%
1990 26.65 1,637.3 1.63% 8.24%
1991 119.59 1,895.0 6.31% 7.40%
1992 108.96 2,290.4 4.76% 7.39%
1993 profit2,624.7 less than zero 6.35%
1994 profit3,056.6 less than zero 7.88%
1995 profit3,607.2 less than zero 5.95%
1996 profit6,702.0 less than zero 6.64%
1997 profit7,093.1 less than zero 5.92%
Since 1967, when we entered the insurance business, our float has
grown at an annual compounded rate of 21.7%. Better yet, it has cost us
nothing, and in fact has made us money. Therein lies an accounting
irony: Though our float is shown on our balance sheet as a liability, it
has had a value to Berkshire greater than an equal amount of net worth
would have had.
自從1967年我們進軍保險業以來，我們的浮存金每年就以21.7%複合成長率
增加，更棒的是，這些資金完全不用成本，事實上它還能幫我們賺錢，可惜諷刺
的是，就會計原則而言，浮存金在會計報表係屬於負債，但實際上，這些負債對
於Berkshire而言，其價值遠高於列在帳上的其他股東權益。
The expiration of several large contracts will cause our float to
decline during the first quarter of 1998, but we expect it to grow
substantially over the long term. We also believe that our cost of float
will continue to be highly favorable.
雖然在1998第一季幾項重大合約到期後，我們擁有的浮存金會略微減少，但就
長期而言，我們還是預期浮存金會大幅成長，同時我們也相信取得浮存金的成本
仍然會繼續維持這種令人滿意的態勢。
Super-Cat Insurance
巨災保險
Occasionally, however, the cost of our float will spike severely. That
will occur because of our heavy involvement in the super-cat business,
which by its nature is the most volatile of all insurance lines. In this
operation, we sell policies that insurance and reinsurance companies
purchase in order to limit their losses when mega-catastrophes strike.
Berkshire is the preferred market for sophisticated buyers: When the
"big one" hits, the financial strength of super-cat writers will be tested,
and Berkshire has no peer in this respect.
然而有時候我們浮存金的成本也會突然大幅上揚，主要的原因在於我們從事的巨
災保險業務，本身屬於保險業中變動最大的一種險種，從事這類業務，我們將保
單賣給其他保險公司與再保公司以分散其面臨超大型意外災害所可能承擔的風
險，事實上，Berkshire是有經驗的業者最喜愛往來的對象，因為他們深深知道
當有"大事"真正發生時，所有巨災保險的承保業者都會面臨財務實力的嚴峻挑
戰，而Berkshire無疑的是同業之最。
Since truly major catastrophes are rare occurrences, our super-cat
business can be expected to show large profits in most years -- and to
record a huge loss occasionally. In other words, the attractiveness of our
super-cat business will take a great many years to measure. What you
must understand, however, is that a truly terrible year in the super-cat
business is not a possibility -- it's a certainty. The only question is when
it will come.
而由於真正重大的災害並不是每年都發生，所以我們的巨災業務極有可能在連續
幾年賺大錢後，突然又發生重大的損失，換句話說，我們這項巨災保險業務到底
有多吸引人可能要花上好幾年才有辦法看得清，不過大家必須明瞭，所謂的重大
損失的年頭不是可能會發生，而是肯定會發生，唯一的問題是它什麼時候會降
臨。
Last year, we were very lucky in our super-cat operation. The world
suffered no catastrophes that caused huge amounts of insured damage,
so virtually all premiums that we received dropped to the bottom line.
This pleasant result has a dark side, however. Many investors who are
"innocents" -- meaning that they rely on representations of salespeople
rather than on underwriting knowledge of their own -- have come into
the reinsurance business by means of purchasing pieces of paper that
are called "catastrophe bonds." The second word in this term, though, is
an Orwellian misnomer: A true bond obliges the issuer to pay; these
bonds, in effect, are contracts that lay a provisional promise to pay on
the purchaser.
去年我們在巨災業務的表現還算不錯，全世界一整年到頭都沒有發生足以造成重
大損失的大型災害，也就是說基本上一整年收到的所有保費都自動落到我們的口
袋裡，只是事情並不如想像中完美，有許多不知情的投資人，並非基於本身對於
保險承保的認識而是在業務人員的慫恿推銷之下，進場買進一種叫做"巨災債券"
的有價證券，事實上這根本就是一個錯誤的名詞，真正的債券意指到期後發行人
有義務支付債款，然而這種債券，本質上其實是一種給予買方一種附條件承諾限
制的合約。
This convoluted arrangement came into being because the
promoters of the contracts wished to circumvent laws that prohibit the
writing of insurance by entities that haven't been licensed by the state. A
side benefit for the promoters is that calling the insurance contract a
"bond" may also cause unsophisticated buyers to assume that these
instruments involve far less risk than is actually the case.
這種拐彎抹角的做法主要是推銷業者為了要規避政府禁止非保險業從事相關業
務而衍生出來的商品，而業者之所以將它取名叫做債券的原因在於這樣的做法可
以吸引不知情的投資人，承擔遠比其表面上還高的許多的風險。
Truly outsized risks will exist in these contracts if they are not
properly priced. A pernicious aspect of catastrophe insurance, however,
makes it likely that mispricing, even of a severe variety, will not be
discovered for a very long time. Consider, for example, the odds of
throwing a 12 with a pair of dice -- 1 out of 36. Now assume that the
dice will be thrown once a year; that you, the "bond-buyer," agree to pay
$50 million if a 12 appears; and that for "insuring" this risk you take in
an annual "premium" of $1 million. That would mean you had
significantly underpriced the risk. Nevertheless, you could go along for
years thinking you were making money -- indeed, easy money. There is
actually a 75.4% probability that you would go for a decade without
paying out a dime. Eventually, however, you would go broke.
這些商品若未經過仔細的核算價格的話，很可能會形成極高的風險，更嚴重的是
災害保險通常還有一種特色，那就是問題要經過許久之後才會慢慢地浮現，舉個
例來說明，二顆骰子要擲出十二點的機率約為36分之一，現在假設我們一年只
擲一次，每次可以收取100萬的賭注，但一旦擲出十二點時莊家的你必須支付
五千萬美元，或許剛開始你會以為這100萬美元得來全不費工夫，甚至有75.4%
的機率保證你在前十年都不必付出一毛錢，但最後你會發現就長期而言，接受這
樣的賭注對莊家來說實際上是虧大了，甚至有可能讓你傾家蕩產。
In this dice example, the odds are easy to figure. Calculations
involving monster hurricanes and earthquakes are necessarily much
fuzzier, and the best we can do at Berkshire is to estimate a range of
probabilities for such events. The lack of precise data, coupled with the
rarity of such catastrophes, plays into the hands of promoters, who
typically employ an "expert" to advise the potential bond-buyer about
the probability of losses. The expert puts no money on the table.
Instead, he receives an up-front payment that is forever his no matter
how inaccurate his predictions. Surprise: When the stakes are high, an
expert can invariably be found who will affirm -- to return to our
example -- that the chance of rolling a 12 is not 1 in 36, but more like 1
in 100. (In fairness, we should add that the expert will probably believe
that his odds are correct, a fact that makes him less reprehensible --
but more dangerous.)
在玩這種骰子遊戲時，其機率還很容易計算，但是要說到估算大型颶風與地震的
發生機率的難度就高的多了，我們自認能做的最多只有大約估計一個範圍，然而
缺乏詳細的資訊，加上大型的災害本來就很少發生，正好讓一些有心人士有機可
乘，通常他們會雇用一些"專家"對有意投資這類債券的客戶解說發生損失的可能
性，而這些所謂的專家玩得根本就是一種無本生意，因為不論他估算的到底準不
準，事先都可以拿到一筆訂金，更令人訝異的是，回到前面的主題，你會發現無
論賭注有多高，專家永遠會告訴你擲出12點的機率不是36分之一，而是100
分之一，(平心而論，我們必須強調這些專家可能真的認為自己的看法是對的，
這雖然讓人不忍予以苛責但卻更加凸顯他們的危險性)。
The influx of "investor" money into catastrophe bonds -- which
may well live up to their name -- has caused super-cat prices to
deteriorate materially. Therefore, we will write less business in 1998. We
have some large multi-year contracts in force, however, that will
mitigate the drop. The largest of these are two policies that we
described in last year's report -- one covering hurricanes in Florida and
the other, signed with the California Earthquake Authority, covering
earthquakes in that state. Our "worst-case" loss remains about $600
million after-tax, the maximum we could lose under the CEA policy.
Though this loss potential may sound large, it is only about 1% of
Berkshire's market value. Indeed, if we could get appropriate prices, we
would be willing to significantly increase our "worst-case" exposure.
越來越多的資金湧入投資這類巨災債券，使得巨災的投保費率大幅下滑，其結果
可能真如其名，終將導致巨大的災害，為此我們大幅減少1998年在這方面的業
務量，還好我們先前已簽了好幾件長期的合約使得衝擊相對減小，其中最大的兩
件在去年的年報中已向各位報告過，一件是佛羅里達的颶風險，另一個是與加州
地震局CEA簽訂的加州地震險，在最壞的狀況下，我們必須承受的損失是稅後
六億美元，這也是CEA保單規定的上限，雖然這個數字看起來很大，但佔
Berkshire市值的比例也不過只有1%，當然我必須再強調的是，只要保費合理，
我們很願意大幅提高最壞狀況的風險上限。
Our super-cat business was developed from scratch by Ajit Jain,
who has contributed to Berkshire's success in a variety of other ways as
well. Ajit possesses both the discipline to walk away from business that
is inadequately priced and the imagination to then find other
opportunities. Quite simply, he is one of Berkshire's major assets. Ajit
would have been a star in whatever career he chose; fortunately for us,
he enjoys insurance.
Berkshire的巨災保險業務在Ajit Jain的努力下，從無到有，對Berkshire可謂
貢獻良多，Ajit一方面有拒絕訂價不合理保單的勇氣，一方面又發揮創造力，開
創新的業務，他可以稱得上是Berkshire最珍貴的資產之一，我覺得他不論從事
什麼行業都可以成為那一行的明星，還好他對於保險業還算是相當有興趣。
Insurance -- GEICO (1-800-555-2756) and Other Primary Operations
保險-蓋可及其他主要保險事業
Last year I wrote about GEICO's Tony Nicely and his terrific
management skills. If I had known then what he had in store for us in
1997, I would have searched for still greater superlatives. Tony, now 54,
has been with GEICO for 36 years and last year was his best. As CEO, he
has transmitted vision, energy and enthusiasm to all members of the
GEICO family -- raising their sights from what has been achieved to
what can be achieved.
去年我提到蓋可的Tony Nicely以及他優異的管理技能，不過我要是早知道他
在1997年的表現，我可能會試著去用更好的形容詞，現年54歲的Tony在蓋
可服務已有36年之久，在去年更達到個人事業的巔峰，身為公司的總裁，他的
識見、能量與熱情感染到公司上上下下的每一個人，激勵他們不斷地超越巔峰。
We measure GEICO's performance by first, the net increase in its
voluntary auto policies (that is, not including policies assigned us by the
state) and, second, the profitability of "seasoned" auto business,
meaning policies that have been with us for more than a year and are
thus past the period in which acquisition costs cause them to be
money-losers. In 1996, in-force business grew 10%, and I told you how
pleased I was, since that rate was well above anything we had seen in
two decades. Then, in 1997, growth jumped to 16%.
我們運用好幾種方法來衡量蓋可的表現，首先是自願加入汽車保單數量的淨增加
數(也就是不包含州政府分配給我們的保單數)，第二長期汽車保單業務的獲利狀
況，係指那些持續一年以上，已經過了初次取得成本而開始賺錢的保單，1996
年有效保單的數量成長了10%，當時我曾告訴大家這是相當令人興奮的一件事，
因為這是20年來的新高，不過到了1997年，保單數量的成長率又大幅躍升為
16%!
Below are the new business and in-force figures for the last five years:
下表是新加入自願保單以及有效保單數量的統計:
New Voluntary Voluntary Auto
Years Auto Policies Policies in Force
1993354,882 2,011,055
1994396,217 2,147,549
1995461,608 2,310,037
1996617,669 2,543,699
1997913,176 2,949,439
Of course, any insurer can grow rapidly if it gets careless about
underwriting. GEICO's underwriting profit for the year, though, was
8.1% of premiums, far above its average. Indeed, that percentage was
higher than we wish it to be: Our goal is to pass on most of the benefits
of our low-cost operation to our customers, holding ourselves to about
4% in underwriting profit. With that in mind, we reduced our average
rates a bit during 1997 and may well cut them again this year. Our rate
changes varied, of course, depending on the policyholder and where he
lives; we strive to charge a rate that properly reflects the loss
expectancy of each driver.
當然任何一家保險公司都可以不顧承保品質而快速的成長，然而蓋可本年度的承
保獲利卻是保費收入的8.1%，這數字遠優於一般同業水準，確實這數字也遠高
於我們本身的預期，我們原先的目標是將低成本營運所貢獻的獲利回饋給我們的
客戶，僅保留4%的獲利比例，基於這樣的信念，我們將1997年的保險費率再
度略微調降，同時在明年有可能也會採取相同的做法，當然最後的費率還須參酌
保戶本身狀況以及居住的地區，我們最終還是希望費率的改變可以合理地反映每
位駕駛人發生損失的預期機率。
GEICO is not the only auto insurer obtaining favorable results these
days. Last year, the industry recorded profits that were far better than it
anticipated or can sustain. Intensified competition will soon squeeze
margins very significantly. But this is a development we welcome: Long
term, a tough market helps the low-cost operator, which is what we are
and intend to remain.
蓋可並不是近年來唯一取得好成績汽車保險業者，去年整個產業獲得高於原先預
期的獲利成果，但這種好光景很難維持下去，因為來自同業激烈的競爭很快地就
會壓縮獲利的空間，然而面對可能的發展，我們胸有成竹，就長期而言，艱困的
市場環境有利於低成本營運的業者生存，這也是一直以來我們努力維持的競爭優
勢。
Last year I told you about the record 16.9% profit-sharing
contribution that GEICO's associates had earned and explained that two
simple variables set the amount: policy growth and profitability of
seasoned business. I further explained that 1996's performance was so
extraordinary that we had to enlarge the chart delineating the possible
payouts. The new configuration didn't make it through 1997: We
enlarged the chart's boundaries again and awarded our 10,500
associates a profit-sharing contribution amounting to 26.9% of their
base compensation, or $71 million. In addition, the same two variables
-- policy growth and profitability of seasoned business -- determined
the cash bonuses that we paid to dozens of top executives, starting with
Tony.
去年我也曾跟各位報告過蓋可員工為自己掙得高達16.9%的盈餘分紅比例，同
時也解釋只有兩項簡單的參數計算出這個比例，那就是保單的成長率與長期業務
的獲利狀況，我還說由於1996年的表現實在是超乎預期以致於原先預估支付獎
金的圖表，因不敷使用而必須加大，不過到了今年新的圖表竟然又不夠用，為此
我們再度提高上限，總計全公司上上下下的10,500名員工，一共可以領到相當
於底薪的26.9%，總金額高達7,100萬美元，當然這兩項參數，同時也適用於
包含Tony在內，數十位高階經理人的獎金紅利。
At GEICO, we are paying in a way that makes sense for both our
owners and our managers. We distribute merit badges, not lottery
tickets: In none of Berkshire's subsidiaries do we relate compensation to
our stock price, which our associates cannot affect in any meaningful
way. Instead, we tie bonuses to each unit's business performance, which
is the direct product of the unit's people. When that performance is
terrific -- as it has been at GEICO -- there is nothing Charlie and I enjoy
more than writing a big check.
在蓋可，我們支付薪資紅利的方式很能夠獲得勞資雙方的認同，我們頒發的是紅
利獎章而不是樂透彩券，Berkshire旗下的子公司員工的薪資報酬與母公司的股
價一點關係都沒有，因為前者並沒有能力直接影響後者，相反地，我們將子公司
的薪資與各單位的各自表現完全綁在一起，因為後者的成敗必須由前者負全部的
責任，當某事業單位的表現傑出時，就像蓋可去年的情況一樣，查理跟我樂於簽
發大筆大筆的支票。
GEICO's underwriting profitability will probably fall in 1998, but the
company's growth could accelerate. We're planning to step on the gas:
GEICO's marketing expenditures this year will top $100 million, up 50%
from 1997. Our market share today is only 3%, a level of penetration
that should increase dramatically in the next decade. The auto
insurance industry is huge -- it does about $115 billion of volume
annually -- and there are tens of millions of drivers who would save
substantial money by switching to us.
不過蓋可1998年的承保獲利很可能會下滑，但是保單數量應該還會繼續成長，
我們已準備好加緊油門，蓋可保險今年預計的行銷費用將突破一億美元的大關，
這數字比起1997年要增加50%以上，截至目前為止，我們的市場佔有率約為
3%，預計在未來的十年內還會大幅增加，整個汽車保險市場的大餅相當可觀，
每年約有1,150億美元的市場胃納量，預估將有上千萬的駕駛人因為將保單轉
移到我們這邊而節省相當可觀的保費。
* * * * * * * * * * * *
In the 1995 report, I described the enormous debt that you and I
owe to Lorimer Davidson. On a Saturday early in 1951, he patiently
explained the ins and outs of both GEICO and its industry to me -- a
20-year-old stranger who'd arrived at GEICO's headquarters uninvited
and unannounced. Davy later became the company's CEO and has
remained my friend and teacher for 47 years. The huge rewards that
GEICO has heaped on Berkshire would not have materialized had it not
been for his generosity and wisdom. Indeed, had I not met Davy, I might
never have grown to understand the whole field of insurance, which
over the years has played such a key part in Berkshire's success.
在1995年的年報中，我曾經提到我們欠Lorimer Davidson一個大人情，因為
要不是當年他很有耐心地跟一個素未謀面卻冒冒失失闖入GEICO公司總部的二
十歲小毛頭深入淺出地介紹GEICO以及其所屬產業種種的話，也不會有今天的
Berkshire跟我本人，Davy後來也成為該公司的總裁，並與我維持長達47年
亦師亦友的情誼，沒有他的寬容與智慧，Berkshire也沒有辦法靠著GEICO的
成功而發揚光大。
Davy turned 95 last year, and it's difficult for him to travel.
Nevertheless, Tony and I hope that we can persuade him to attend our
annual meeting, so that our shareholders can properly thank him for his
important contributions to Berkshire. Wish us luck.
Davy去年已高齡95歲，旅途奔波對他來說是一件很辛苦的事，不過Tony跟
我還是會盡量說服他參與今年的股東會，好讓大家能夠藉這個機會好好地感謝他
對Berkshire所做的貢獻，希望我們能夠如願。
* * * * * * * * * * * *
Though they are, of course, far smaller than GEICO, our other
primary insurance operations turned in results last year that, in
aggregate, were fully as stunning. National Indemnity's traditional
business had an underwriting profit of 32.9% and, as usual, developed a
large amount of float compared to premium volume. Over the last three
years, this segment of our business, run by Don Wurster, has had a
profit of 24.3%. Our homestate operation, managed by Rod Eldred,
recorded an underwriting profit of 14.1% even though it continued to
absorb the expenses of geographical expansion. Rod's three-year
record is an amazing 15.1%. Berkshire's workers' compensation
business, run out of California by Brad Kinstler, had a modest
underwriting loss in a difficult environment; its three-year underwriting
record is a positive 1.5%. John Kizer, at Central States Indemnity, set a
new volume record while generating good underwriting earnings. At
Kansas Bankers Surety, Don Towle more than lived up to the high
expectations we had when we purchased the company in 1996.
當然除了GEICO保險以外，我們其他主要的保險事業，雖然規模較小，但所繳
出來的成績單總的來說，同樣令人激賞，國家產險傳統業務的承保獲利率高達
32.9%，同時也貢獻出相較於保費收入高比例的浮存金，累計過去三年，這個由
Don Wurster領導的部門平均獲利率為24.3%，另外在由Rod Eldred 領導的
Homestate業務部份，在必須吸收地區業務擴展的費用下，仍然繳出14.1%的
承保獲利，累計最近三年的獲利率為15.1%，此外Berkshire的勞工退休金業
務部份，在加州的Brad Kinstler主持下，雖然面臨困難的環境，但產生承保損
失的程度相對輕微，平均三年的承保成績是正的1.5%，還有由John Kizer領導
的Central States保險在保費收入締造新高的同時，也貢獻相當不錯的承保獲
利，最後是我們在1996年買進的Kansas銀行家保險，Don Towle的表現甚
至超過我們當初設立的高標準。
In aggregate, these five operations recorded an underwriting profit
of 15.0%. The two Dons, along with Rod, Brad and John, have created
significant value for Berkshire, and we believe there is more to come.
總計下來，這五家保險子公司平均的承保獲利率是15.0%，兩位Dons加上
Rod、Brad及John，為Berkshire創造了可觀的利益，而且我們也相信後勢可
期。
Sources of Reported Earnings
帳列盈餘的來源
The table that follows shows the main sources of Berkshire's
reported earnings. In this presentation, purchase-accounting
adjustments are not assigned to the specific businesses to which they
apply, but are instead aggregated and shown separately. This procedure
lets you view the earnings of our businesses as they would have been
reported had we not purchased them. For the reasons discussed on
pages 69 and 70, this form of presentation seems to us to be more
useful to investors and managers than one utilizing generally-accepted
accounting principles (GAAP), which require purchase-premiums to be
charged off business-by-business. The total earnings we show in the
table are, of course, identical to the GAAP total in our audited financial
statements.
下表顯示Berkshire帳列盈餘的主要來源，在這張表中商譽的攤銷數與購買法會
計調整數會從個別被投資公司分離出來，單獨加總列示，之所以這樣做是為了讓
旗下各事業的盈餘狀況，不因我們的投資而有所影響，過去我一再地強調我們認
為這樣的表達方式，較之一般公認會計原則要求以個別企業基礎做調整，不管是
對投資者或是管理者來說，更有幫助，當然最後損益加總的數字仍然會與經會計
師查核的數字一致。
(in millions)
Berkshire's Share
of Net Earnings
(after taxes and
Pre-Tax Earnings minority interests)
1997 19961997 1996
Operating Earnings:
Insurance Group:
Underwriting -- Super-Cat. . . . . . . .$ 283.0 $ 167.0 $ 182.7 $ 107.4
Underwriting -- Other Reinsurance. . . . (155.2) (174.8) (100.1) (112.4)
Underwriting -- GEICO. . . . . . . . . . 280.7 171.4 181.1 110.2
Underwriting -- Other Primary. . . . . . 52.9 58.534.1 37.6
Net Investment Income. . . . . . . . . . 882.3 726.2 703.6 593.1
Buffalo News . . . . . . . . . . . . . . . 55.9 50.432.7 29.5
Finance Businesses . . . . . . . . . . . . 28.1 23.118.0 14.9
FlightSafety . . . . . . . . . . . . . . . 139.53.1(1) 84.41.9(1)
Home Furnishings . . . . . . . . . . . . . 56.8(2) 43.832.2(2) 24.8
Jewelry. . . . . . . . . . . . . . . . . . 31.6 27.818.3 16.1
Scott Fetzer(excluding finance operation). 118.9 121.777.3 81.6
See's Candies. . . . . . . . . . . . . . . 58.6 51.935.0 30.8
Shoe Group . . . . . . . . . . . . . . . . 48.8 61.632.2 41.0
Purchase-Accounting Adjustments. . . . . . (104.9) (75.7) (97.0) (70.5)
Interest Expense(3). . . . . . . . . . . . (106.6) (94.3) (67.1) (56.6)
Shareholder-Designated Contributions . . . (15.4) (13.3) (9.9) (8.5)
Other. . . . . . . . . . . . . . . . . . . 60.7 73.037.0 42.2
------- ------- ------- --------
Operating Earnings . . . . . . . . . . . . . 1,715.7 1,221.4 1,194.5 883.1
Capital Gains from Investments . . . . . . . 1,111.9 2,484.5 707.1 1,605.5
------ ------- ------- -------
Total Earnings - All Entities. . . . . . . .$2,827.6 $3,705.9 $1,901.6 $2,488.6
====== ====== ===== =====
(1) From date of acquisition, December 23, 1996.
From date of acquisition, December 23, 1996.
(2) Includes Star Furniture from July 1, 1997.
y 1, 1997.
(3) Excludes interest expense of Finance Businesses.
Overall, our operating businesses continue to perform
exceptionally well, far outdoing their industry norms. We are
particularly pleased that profits improved at Helzberg's after a
disappointing 1996. Jeff Comment, Helzberg's CEO, took decisive steps
early in 1997 that enabled the company to gain real momentum by the
crucial Christmas season. In the early part of this year, as well, sales
remained strong.
總的來說，我們旗下的營利事業的表現遠優於一般的同業，尤其是Helzberg鑽
石在渡過令人失望的1996年之後，獲利狀況大幅提升，Helzberg公司的總裁
Jeff Comment在1997年初斷然地採取各項措施，帶領整個公司在重要的聖誕
旺季大有斬獲，而截至今年上半年為止，銷售狀況依舊強勁。
Casual observers may not appreciate just how extraordinary the
performance of many of our businesses has been: If the earnings history
of, say, Buffalo News or Scott Fetzer is compared to the records of their
publicly-owned peers, their performance might seem to have been
unexceptional. But most public companies retain two-thirds or more of
their earnings to fund their corporate growth. In contrast, those
Berkshire subsidiaries have paid 100% of their earnings to us, their
parent company, to fund our growth.
一般的人可能無法體會，我們眾多旗下事業的表現到底有多傑出，雖然相較於其
他已上市的同業，水牛城新聞報或是史考特飛茲的獲利表現看起來並不突出，不
過大家要了解，大部分的上市公司通常會將三分之二以上的盈餘保留不分配以支
應內部的成長，但是Berkshire大部分的子公司卻將所賺取的盈餘分毫不差的繳
回母公司，是他們貢獻的資金促成母公司Berkshire進一步的成長。
In effect, the records of the public companies reflect the cumulative
benefits of the earnings they have retained, while the records of our
operating subsidiaries get no such boost. Over time, however, the
earnings these subsidiaries have distributed have created truly huge
amounts of earning power elsewhere in Berkshire. The News, See's and
Scott Fetzer have alone paid us $1.8 billion, which we have gainfully
employed elsewhere. We owe their managements our gratitude for
much more than the earnings that are detailed in the table.
事實上這些上市公司的盈餘對於其獲利表現有累積效果，相較之下，我們的子公
司卻沒有這方面的支助，然而就長期而言，這些子公司上繳的資金對於
Berkshire在其他地方的獲利能力卻有極大的貢獻，總計水牛城新聞、喜斯糖果
與史考特飛茲，這三家公司這幾年來貢獻的盈餘就高達18億美元，而我們也得
以好好地運用這些資金，所以我們對於這些經理人的感謝絕不僅止於帳面上所看
到的那些盈餘數字而已。
Additional information about our various businesses is given on
pages 36 - 50, where you will also find our segment earnings reported
on a GAAP basis. In addition, on pages 55 - 61, we have rearranged
Berkshire's financial data into four segments on a non-GAAP basis, a
presentation that corresponds to the way Charlie and I think about the
company. Our intent is to supply you with the financial information that
we would wish you to give us if our positions were reversed.
在年報中你可以找到依照一般公認會計原則編製，詳細的部門別資訊，另外你還
可以找到經過重編，依照Berkshire四大部門的資訊，這是查理跟我能夠完整呈
現Berkshire現況的模式，我們的目的是希望能夠換個角度設想，提供大家所有
必要的資訊。
Look-Through Earnings
完整透視盈餘
Reported earnings are a poor measure of economic progress at
Berkshire, in part because the numbers shown in the table presented
earlier include only the dividends we receive from investees -- though
these dividends typically represent only a small fraction of the earnings
attributable to our ownership. Not that we mind this division of money,
since on balance we regard the undistributed earnings of investees as
more valuable to us than the portion paid out. The reason is simple: Our
investees often have the opportunity to reinvest earnings at high rates
of return. So why should we want them paid out?
我們認為帳列盈餘很難表現Berkshire實際的營運狀況，部份原因在於列示在本
公司帳上的股利收入，事實上僅佔被投資公司收益的一小部份，其實我們並不要
求盈餘一定要分配，事實上對我們而言，我們更重視未分配的那一部份，因為他
們極可能為我們創造出更高的價值，原因很簡單，因為我們的被投資公司往往比
母公司更有機會把資金投入到高投資報酬的用途之上，既然如此又何必一定要強
迫他們把盈餘分配回來呢?
To depict something closer to economic reality at Berkshire than
reported earnings, though, we employ the concept of "look-through"
earnings. As we calculate these, they consist of: (1) the operating
earnings reported in the previous section, plus; (2) our share of the
retained operating earnings of major investees that, under GAAP
accounting, are not reflected in our profits, less; (3) an allowance for the
tax that would be paid by Berkshire if these retained earnings of
investees had instead been distributed to us. When tabulating
"operating earnings" here, we exclude purchase-accounting
adjustments as well as capital gains and other major non-recurring
items.
為了要更真實的反應Berkshire實際的經營狀況，於是乎我們運用了完整透視盈
餘的觀念，這個數字總共包含(1)前段所提到的帳列盈餘，加上(2)主要被投資公
司的保留盈餘，按一般公認會計原則未反應在我們公司帳上的盈餘，扣除(3)若
這些未反應的盈餘分配給我們時，估計可能要繳的所得稅。在這裡我們所謂的營
業盈餘係已扣除資本利得、特別會計調整與企業其他非常態的項目。
The following table sets forth our 1997 look-through earnings,
though I warn you that the figures can be no more than approximate,
since they are based on a number of judgment calls. (The dividends paid
to us by these investees have been included in the operating earnings
itemized on page 11, mostly under "Insurance Group: Net Investment
Income.")
各位可以從下表看出我們是如何計算出1997年透視盈餘的，不過我還是要提醒
各位這些數字只不過是估計數，很多都是基於簡單的判斷，(被投資公司所分配
的股利收入已經包含在保險事業的淨投資收益項下)。
Berkshire's Share
of Undistributed
Berkshire's Approximate Operating Earnings
Berkshire's Major Investees Ownership at Yearend(1) (in millions)(2)
American Express Compa 10.7% $161
The Coca-Cola Company8.1% 216
The Walt Disney Company 3.2% 65
Freddie Mac 8.6% 86
The Gillette Company 8.6% 82
The Washington Post Company16.5% 30
Wells Fargo & Company 7.8% 103
------
Berkshire's share of undistributed earnings of major investees 743
Hypothetical tax on these undistributed investee earnings(3) (105)
Reported operating earnings of Berkshire 1,292
------
Total look-through earnings of Berkshire $1,930
======
(1) Does not include shares allocable to minority interests
(2) Calculated on average ownership for the year
(3) The tax rate used is 14%, which is the rate Berkshire
pays on the dividends it receives
Acquisitions of 1997
1997年的購併活動
In 1997, we agreed to acquire Star Furniture and International Dairy
Queen (a deal that closed early in 1998). Both businesses fully meet our
criteria: They are understandable; possess excellent economics; and are
run by outstanding people.
1997年我們同意買下星辰傢具與國際乳品皇后(後者在1998年初正式敲定)，
兩家公司都完全符合我們的標準，產業性質單純、擁有絕佳的競爭優勢且由傑出
的人才所經營。
The Star transaction has an interesting history. Whenever we buy
into an industry whose leading participants aren't known to me, I always
ask our new partners, "Are there any more at home like you?" Upon our
purchase of Nebraska Furniture Mart in 1983, therefore, the Blumkin
family told me about three outstanding furniture retailers in other parts
of the country. At the time, however, none was for sale.
星辰傢具的交易有個相當有趣的故事，每當我們跨足一個原本我們不熟悉的產
業，我都會習慣性地問一問新加入的合作夥伴，"除了你們以外，還有沒有像你
們一樣的企業?"，早在1983年我們買下內布拉斯加傢具店時，我就問過B太太
家族這個問題，當時她告訴我全美其他地方還有三家不錯的傢具零售商可以考
慮，不過很可惜在當時沒有任何一家有出售的意願。
Many years later, Irv Blumkin learned that Bill Child, CEO of R.C.
Willey -- one of the recommended three -- might be interested in
merging, and we promptly made the deal described in the 1995 report.
We have been delighted with that association -- Bill is the perfect
partner. Furthermore, when we asked Bill about industry standouts, he
came up with the remaining two names given me by the Blumkins, one
of these being Star Furniture of Houston. But time went by without there
being any indication that either of the two was available.
多年後，B太太家族的Irv得知當初獲得推薦的三家公司之一-R.C. Willey傢具
總裁Bill Child有意與人合併，我們立刻把握良機促成交易，這項交易也在1995
年的年報向各位報告過，事後我們也很滿意這次的結合，Bill是再理想不過的合
作夥伴，當然我也不忘問問Bill相同的問題，請他推薦其他傑出的同業，結果得
到的答案與B太太所說的一致，其中一家就是位於修士頓的星辰傢具，只是隨著
時光的流逝沒有一家有意願出售。
On the Thursday before last year's annual meeting, however, Bob
Denham of Salomon told me that Melvyn Wolff, the long-time
controlling shareholder and CEO of Star, wanted to talk. At our
invitation, Melvyn came to the meeting and spent his time in Omaha
confirming his positive feelings about Berkshire. I, meanwhile, looked at
Star's financials, and liked what I saw.
而就在去年年度股東會的前一個星期四，所羅門公司的董事長丹漢告訴我星辰傢
具的大股東兼總裁-Melvyn Wolff，有意願跟我談談，於是在我們的邀約下，
Melvyn光臨奧瑪哈與我們會談，進一步確認對於Berkshire的正面觀感，而在
此同時我也看了星辰傢具的財務報表，一切正如我所預期。
A few days later, Melvyn and I met in New York and made a deal in
a single, two-hour session. As was the case with the Blumkins and Bill
Child, I had no need to check leases, work out employment contracts,
etc. I knew I was dealing with a man of integrity and that's what counted.
幾天後，Melvyn與我再度在紐約碰面，前後只花了兩個鐘頭的會談就把整個交
易敲定，而如同先前與B太太家族及Bill Child的經驗一樣，我不需要再去查核
租約、員工雇用合約等，我知道我正在和一位具有正直人格的人打交道，這樣就
足夠了。
Though the Wolff family's association with Star dates back to 1924,
the business struggled until Melvyn and his sister Shirley Toomin took
over in 1962. Today Star operates 12 stores -- ten in Houston and one
each in Austin and Bryan -- and will soon move into San Antonio as well.
We won't be surprised if Star is many times its present size a decade
from now.
雖然Wolff家族與星辰傢具的關係可以追溯到1924年以前，但是該公司直到
Melvyn跟他姐姐Shirly在1962年接手經營後才有起色，時至今日，星辰總共
有12家分店，其中十家在修士頓、另外兩家在奧斯丁與拜倫，還有一家新店即
將在聖安東尼奧開張，我想星辰要是在未來十年內以倍數的方式擴張，我一點都
不會感到意外。
Here's a story illustrating what Melvyn and Shirley are like: When
they told their associates of the sale, they also announced that Star
would make large, special payments to those who had helped them
succeed -- and then defined that group as everyone in the business.
Under the terms of our deal, it was Melvyn and Shirley's money, not
ours, that funded this distribution. Charlie and I love it when we become
partners with people who behave like that.
下面的一則故事充分說明Melvyn與Shirley是怎麼樣的人︰當星辰傢具正式宣
佈出售公司時，他們同時也公佈將支付一筆大額的紅利給所有幫助公司成功的人
士，範圍包含公司上上下下所有的員工，而根據交易的合約內容，這筆錢將由
Melvyn與Shirley自掏腰包，查理跟我相當讚賞即將與我們共事的合夥人能有
這樣的舉動。
The Star transaction closed on July 1. In the months since, we've
watched Star's already-excellent sales and earnings growth accelerate
further. Melvyn and Shirley will be at the annual meeting, and I hope you
get a chance to meet them.
星辰傢具的交易案在七月一日正式定案，而在之後的幾個月，星辰傢具本來已經
表現相當不錯的營收又繼續大幅成長，Melvyn與Shirley將會出席今年的股東
年會，屆時希望大家能夠前來與他們見見面。
Next acquisition: International Dairy Queen. There are 5,792 Dairy
Queen stores operating in 23 countries -- all but a handful run by
franchisees -- and in addition IDQ franchises 409 Orange Julius
operations and 43 Karmelkorn operations. In 190 locations, "treat
centers" provide some combination of the three products.
另一個購併案：國際乳品皇后，簡稱乳品皇后IDQ，總共有5,792個營業據點，
分布在全球的23個國家，除了少數係加盟店外，其餘皆為自營，此外還有409
家Orange Julius加盟店與43家Karmelkorn，其中有190個據點同時提供三
種選擇。
For many years IDQ had a bumpy history. Then, in 1970, a
Minneapolis group led by John Mooty and Rudy Luther took control. The
new managers inherited a jumble of different franchising agreements,
along with some unwise financing arrangements that had left the
company in a precarious condition. In the years that followed,
management rationalized the operation, extended food service to many
more locations, and, in general, built a strong organization.
早期乳品皇后的命運多舛，在1970年代當時，由來自明尼拿波里斯的John
Mooty與Rudy Luther接手經營，新的經營階層面對的是由前手遺留下來混亂
的加盟合約以及不合理的融資計畫所造成岌岌可危的窘況，所幸在接下來的幾年
內，新經營階層導正這種亂象，並且對外擴張新增了許多營業據點，讓公司經營
逐漸步入坦途。
Last summer Mr. Luther died, which meant his estate needed to sell
stock. A year earlier, Dick Kiphart of William Blair & Co., had introduced
me to John Mooty and Mike Sullivan, IDQ's CEO, and I had been
impressed with both men. So, when we got the chance to merge with
IDQ, we offered a proposition patterned on our FlightSafety acquisition,
extending selling shareholders the option of choosing either cash or
Berkshire shares having a slightly lower immediate value. By tilting the
consideration as we did, we encouraged holders to opt for cash, the
type of payment we by far prefer. Even then, only 45% of IDQ shares
elected cash.
去年夏天Luther先生過世，他的股份因而必須對外出售，而在這之前經由
William Blair公司的總裁Dick Kiphart的介紹，使我得以結識John Mooty與
乳品皇后的總裁Mike Sullivan，且這兩人讓我印象相當深刻，也因此Berkshire
可以趁此機會與乳品皇后合併，而我們也提出與之前購併國際飛安公司時相同的
條件，提供乳品皇后股東換成現金或股票兩種不同的選擇，其中換成Berkshire
股份的條件略低於現金，主要是因為大家盡量選擇換成現金，不過即便如此，總
共也只有45%的股東決定領取現金。
Charlie and I bring a modicum of product expertise to this
transaction: He has been patronizing the Dairy Queens in Cass Lake and
Bemidji, Minnesota, for decades, and I have been a regular in Omaha.
We have put our money where our mouth is.
在這次的交易中，查理跟我稍微發揮了一下對於產品的知識，查理他幾十年來固
定光顧位於明尼蘇達州凱斯湖與Bemidji的乳品皇后，而我則是奧瑪哈地區乳品
皇后的常客，我們等於是"把錢花在嘴巴上"。
A Confession
自我檢討
I've mentioned that we strongly prefer to use cash rather than
Berkshire stock in acquisitions. A study of the record will tell you why: If
you aggregate all of our stock-only mergers (excluding those we did
with two affiliated companies, Diversified Retailing and Blue Chip
Stamps), you will find that our shareholders are slightly worse off than
they would have been had I not done the transactions. Though it hurts
me to say it, when I've issued stock, I've cost you money.
我之所以會一再強調傾向利用現金而非Berkshire股票進行購併的原因在於，記
錄顯示我們所有利用股票併購的合併案(扣除早期的多元零售與藍籌郵票兩個案
子不算)，大家會發現所得的結果可能比不購併還差，雖然這樣子講對我很傷，
不過我還是必須承認，每當我發行股票，就等於是讓股東們虧錢。
Be clear about one thing: This cost has not occurred because we
were misled in any way by sellers or because they thereafter failed to
manage with diligence and skill. On the contrary, the sellers were
completely candid when we were negotiating our deals and have been
energetic and effective ever since.
不過有一點要澄清的是，之所以會如此絕對不是因為我們遭到賣方的誤導或是在
被買下後不用心經營，相反的，這些賣方在交易談判當時皆坦誠佈公，同時也很
努力經營事業。
Instead, our problem has been that we own a truly marvelous
collection of businesses, which means that trading away a portion of
them for something new almost never makes sense. When we issue
shares in a merger, we reduce your ownership in all of our businesses
-- partly-owned companies such as Coca-Cola, Gillette and American
Express, and all of our terrific operating companies as well. An example
from sports will illustrate the difficulty we face: For a baseball team,
acquiring a player who can be expected to bat .350 is almost always a
wonderful event -- except when the team must trade a .380 hitter to
make the deal.
主要的問題在於，我們原本就已經擁有的絕佳企業組合，因此不論拿什麼新的東
西來換都不划算，也就是說每當我們發行新股用來購併新的企業時，就等於是間
接減少我們原本擁有的絕佳企業的股權比例，不論是只有部份股權的可口可樂、
吉列刮鬍刀及美國運通，或者是旗下所有營利事業皆是如此，在運動場上有一個
例子可以充分說明我們所面臨的難題，對一隻棒球隊來說，挖到一位打擊率高達
三成五的選手肯定是件令人欣喜的事，除非是你必須被迫用一個打擊率高達三成
八的球員去交換。
Because our roster is filled with .380 hitters, we have tried to pay
cash for acquisitions, and here our record has been far better. Starting
with National Indemnity in 1967, and continuing with, among others,
See's, Buffalo News, Scott Fetzer and GEICO, we have acquired -- for
cash -- a number of large businesses that have performed incredibly
well since we bought them. These acquisitions have delivered Berkshire
tremendous value -- indeed, far more than I anticipated when we made
our purchases.
正因為目前我們的球員名單已佈滿了打擊率三成八的高手，所以我們總是希望盡
量用現金來進行購併，而事實證明我們的成績遠高於預期，從1967年的國家產
險開始，接著是喜斯糖果、水牛城新聞報、史考特飛茲以及蓋可保險等等，這些
企業在我們用現金買下之後的表現再再令人激賞，它們也為Berkshire增添了無
數的價值，這實在是遠高於我們當初的預期。
We believe that it is almost impossible for us to "trade up" from our
present businesses and managements. Our situation is the opposite of
Camelot's Mordred, of whom Guenevere commented, "The one thing I
can say for him is that he is bound to marry well. Everybody is above
him." Marrying well is extremely difficult for Berkshire.
我們相信實在是很難將我們現在擁有的事業與其經營階層交換出去，我們現在的
處境與Camelot Mordred剛好相反，Guenevere說他一定可以找到理想的伴
侶，因為世上所有人的條件都比他還要好，但是對Berkshire來說，要找到足以
匹配的伴侶實在是難上加難。
So you can be sure that Charlie and I will be very reluctant to issue
shares in the future. In those cases when we simply must do so -- when
certain shareholders of a desirable acquiree insist on getting stock --
we will include an attractive cash option in order to tempt as many of
the sellers to take cash as is possible.
所以大家可以預見的是在未來查理跟我將會越來越不願意以發行新股的方式進
行購併，要是遇到非如此不可的情況時，也就是被購併者堅持要拿股票的時候，
我們也會附帶提供一個比較優渥的現金價格，以促使更多的股東選擇領取現金。
Merging with public companies presents a special problem for us.
If we are to offer any premium to the acquiree, one of two conditions
must be present: Either our own stock must be overvalued relative to the
acquiree's, or the two companies together must be expected to earn
more than they would if operated separately. Historically, Berkshire has
seldom been overvalued. In this market, moreover, undervalued
acquirees are almost impossible to find. That other possibility --
synergy gains -- is usually unrealistic, since we expect acquirees to
operate after we've bought them just as they did before. Joining with
Berkshire does not normally raise their revenues nor cut their costs.
此外當我們購併已公開發行的公司還會遇到另一項問題，那就是如果我們提供被
購併者任何溢價的話，必須要能夠符合以下兩項條件其中之一，要嘛就是相對於
對方，Berkshire的股價被高估；要嘛就是兩家公司合併後所賺得的利益高於兩
家獨立營運時的利益。關於這個問題，就過去的經驗，Berkshire的股價很少被
高估，相對地以目前的市場狀況，實在很難再找到其他股價相對被低估的公司，
至於另外一個可能性，也就是所謂的合併綜效，通常都很不切實際，我們頂多能
期望被購併的事業在被買下之後的表現跟之前一樣好就不錯了，因為加入
Berkshire不代表營收就能夠自動增加或成本就能夠自動地減少。
Indeed, their reported costs (but not their true ones) will rise after
they are bought by Berkshire if the acquiree has been granting options
as part of its compensation packages. In these cases, "earnings" of the
acquiree have been overstated because they have followed the standard
-- but, in our view, dead wrong -- accounting practice of ignoring the
cost to a business of issuing options. When Berkshire acquires an
option-issuing company, we promptly substitute a cash compensation
plan having an economic value equivalent to that of the previous option
plan. The acquiree's true compensation cost is thereby brought out of
the closet and charged, as it should be, against earnings.
而其中還有一些以選擇權充當薪資酬勞配套措施的公司，在我們買下之後，其帳
列成本往往會暴增(但並不會影響實際真實的成本)，事實上應該說是這些公司過
去的獲利狀況被高估，因為他們所採取的是在我們看來典型的，完全忽略發行選
擇權潛藏企業成本的不當會計手法，也因此當Berkshire買下一家有發行選擇權
的公司時，我們會立刻將之更換成以現金報酬為主，但卻與原來認股權同樣優惠
的獎勵計畫，如此一來，被購併的這家公司其實際的薪資酬勞成本方能攤開在陽
光底下，具體反應公司的獲利狀況。
The reasoning that Berkshire applies to the merger of public
companies should be the calculus for all buyers. Paying a takeover
premium does not make sense for any acquirer unless a) its stock is
overvalued relative to the acquiree's or b) the two enterprises will earn
more combined than they would separately. Predictably, acquirers
normally hew to the second argument because very few are willing to
acknowledge that their stock is overvalued. However, voracious buyers
-- the ones that issue shares as fast as they can print them -- are tacitly
conceding that point. (Often, also, they are running Wall Street's version
of a chain-letter scheme.)
Berkshire在購併公開公司所採用的原則也是所有買家必修的學分，買方沒有理
由以溢價進行購併，除非在以下特殊的情況下，a)相對於被購併者，其股價被高
估，或者是b)兩家原本獨立的企業在合併之後所賺取的利潤高於原先的總和，
而顯而易見的買方通常會採取第一個理由，因為很少有公司會公開承認自己的股
價被高估，然而貪得無厭的買家，以比印鈔票還快的速度印股票的這群人，最後
卻不得不默認自己的股價確實被高估，通常他們玩的宛如華爾街版的連鎖信遊
戲。
In some mergers there truly are major synergies -- though
oftentimes the acquirer pays too much to obtain them -- but at other
times the cost and revenue benefits that are projected prove illusory. Of
one thing, however, be certain: If a CEO is enthused about a particularly
foolish acquisition, both his internal staff and his outside advisors will
come up with whatever projections are needed to justify his stance. Only
in fairy tales are emperors told that they are naked.
雖然有些合併案確實可以發揮綜合效益，但通常買家所付出的代價過高，且通常
成本節省與營收增加的預期效益最後都會成一場空，不過有一點可以確定的是，
不管這個購併案多麼的不合理，只要老闆有強烈的意願，其內部的同僚與外部的
專家顧問都能夠提出一份看似合理的評估報告來支持其立場，只要在童話中才有
人敢大膽地告訴國王他沒有穿衣服。
Common Stock Investments
股票投資
Below we present our common stock investments. Those with a
market value of more than $750 million are itemized.
下表是Berkshire市價超過七億五千萬美元以上的股票投資。
12/31/97
Shares Company Cost* Market
(dollars in millions)
49,456,900 American Express Company $1,392.7 $ 4,414.0
200,000,000 The Coca-Cola Company 1,298.9 13,337.5
21,563,414 The Walt Disney Company 381.2 2,134.8
63,977,600 Freddie Mac329.4 2,683.1
48,000,000 The Gillette Company 600.0 4,821.0
23,733,198 Travelers Group Inc. 604.4 1,278.6
1,727,765 The Washington Post Company 10.6 840.6
6,690,218 Wells Fargo & Company 412.6 2,270.9
Others 2,177.1 4,467.2
-------- ----------
Total Common Stocks $7,206.9 $ 36,247.7
======== ========
* Represents tax-basis cost which, in aggregate, is $1.8 billion less than GAAP cost.
*係以稅務為基礎的成本，比一般公認會計原則的帳面成本少18億美元。
We made net sales during the year that amounted to about 5% of
our beginning portfolio. In these, we significantly reduced a few of our
holdings that are below the $750 million threshold for itemization, and
we also modestly trimmed a few of the larger positions that we detail.
Some of the sales we made during 1997 were aimed at changing our
bond-stock ratio moderately in response to the relative values that we
saw in each market, a realignment we have continued in 1998.
今年我們大概處分了5%左右的投資部位，其中包含一些市價未達七億五千萬表
列門檻的股票被大幅地處分掉，此外也有一部份超過七億五千萬的股票被小幅的
調整，主要是為了調整債券與股票投資部位間的比例，以因應我們認為市場相對
價值的認知，這個動作一直到1998年仍在持續進行。
Our reported positions, we should add, sometimes reflect the
investment decisions of GEICO's Lou Simpson. Lou independently runs
an equity portfolio of nearly $2 billion that may at times overlap the
portfolio that I manage, and occasionally he makes moves that differ
from mine.
不過有一點必須強調的是，報表上顯示的投資部位，有時反應的是GEICO保險
公司Lou Simpson所做的決策，Lou獨自管理將近20億美元的股票投資組合，
當然其中有些部位與我重疊，但通常他的投資動作與我有別。
Though we don't attempt to predict the movements of the stock
market, we do try, in a very rough way, to value it. At the annual meeting
last year, with the Dow at 7,071 and long-term Treasury yields at 6.89%,
Charlie and I stated that we did not consider the market overvalued if 1)
interest rates remained where they were or fell, and 2) American
business continued to earn the remarkable returns on equity that it had
recently recorded. So far, interest rates have fallen -- that's one
requisite satisfied -- and returns on equity still remain exceptionally
high. If they stay there -- and if interest rates hold near recent levels -
- there is no reason to think of stocks as generally overvalued. On the
other hand, returns on equity are not a sure thing to remain at, or even
near, their present levels.
雖然我們從來不願嘗試去預測股市的動向，不過我們卻試著大約評估其合理價
位，記得在去年的股東會時，道瓊指數約為7,071點，長期公債的殖利率為
6.89%，查理跟我就曾公開表示，如果符合以下兩點條件，則股市並未高估，1)
利率維持不變或繼續下滑，以及2)美國企業繼續維持現有的高股東權益報酬率。
現在看起來，利率確實又繼續下滑，這一點算是符合條件，另一方面，股東權益
報酬率仍舊維持在高檔，換句話說，若這種情況繼續維持下去，同時利率也能夠
維持現狀，則一般來說沒有理由認為現在的股市過於高估，不過從保守角度來
看，股東權益報酬率實在很能永遠維持在現有的這種榮景。
In the summer of 1979, when equities looked cheap to me, I wrote
a Forbes article entitled "You pay a very high price in the stock market
for a cheery consensus." At that time skepticism and disappointment
prevailed, and my point was that investors should be glad of the fact,
since pessimism drives down prices to truly attractive levels. Now,
however, we have a very cheery consensus. That does not necessarily
mean this is the wrong time to buy stocks: Corporate America is now
earning far more money than it was just a few years ago, and in the
presence of lower interest rates, every dollar of earnings becomes more
valuable. Today's price levels, though, have materially eroded the
"margin of safety" that Ben Graham identified as the cornerstone of
intelligent investing.
記得1979年的夏天，在當時的股票市場當中，便宜的股票垂手可得，為此我特
地在富比士寫了一篇文章，名為"在股票市場中，想讓大家有樂觀的共識是要付
出相當大的代價的"，當時市場瀰漫著懷疑與悲觀的情緒，不過當時我力排眾議
認為對於這種現象投資人應該要感到高興，因為悲觀的情緒使得許多公司的股價
跌到相當吸引人的價位，不過現在看來我們似乎已經快要達到樂觀的共識了，當
然這不代表現在就不能買股票，近年來美國企業的獲利大增，搭配現在的利率水
準，企業賺取的每一塊盈餘比起過去來說要珍貴的許多，雖然以現在的股票價
位，已經嚴重地脫離的葛拉漢一再強調的安全邊際，這是智慧型投資哲學的基
石。
* * * * * * * * * * * *
In last year's annual report, I discussed Coca-Cola, our largest
holding. Coke continues to increase its market dominance throughout
the world, but, tragically, it has lost the leader responsible for its
outstanding performance. Roberto Goizueta, Coke's CEO since 1981,
died in October. After his death, I read every one of the more than 100
letters and notes he had written me during the past nine years. Those
messages could well serve as a guidebook for success in both business
and life.
去年年報我花了相當多的篇幅談到我們現有最大的投資部位-可口可樂，雖然目
前可口可樂仍然繼續擴大其在全世界飲料市場的霸主地位，不過很不幸的是，該
公司總裁Roberto Goizueta卻在去年十月過世，在他死後，我再一度閱讀過去
九年來，我與Goizueta超過上百篇的往來書信，這些訊息確實可以做為如何成
功經營企業與人生的最佳教材。
In these communications, Roberto displayed a brilliant and clear
strategic vision that was always aimed at advancing the well-being of
Coke shareholders. Roberto knew where he was leading the company,
how he was going to get there, and why this path made the most sense
for his owners -- and, equally important, he had a burning sense of
urgency about reaching his goals. An excerpt from one handwritten
note he sent to me illustrates his mind-set: "By the way, I have told
Olguita that what she refers to as an obsession, you call focus. I like
your term much better." Like all who knew Roberto, I will miss him
enormously.
在這些書信中，Roberto展現出高瞻遠矚的識見，總是將重點擺在如何增進可口
可樂股東的權益，Roberto很清楚他要將公司帶往何處，以及要如何才能到達目
的地，同時了解為何這樣的方法最適合所有的股東，當然更重要的是他對於達成
這樣目標抱持著強烈的渴望，有一張他手寫給我的字條最能充分說明當時他的心
境，"對了，我跟Olguita提到有關於她常常講的"著魔"，我個人比較喜歡巴菲
特的說法"專注"，就像是所有認識Roberto的人一樣，我會永遠懷念他!
Consistent with his concern for the company, Roberto prepared for
a seamless succession long before it seemed necessary. Roberto knew
that Doug Ivester was the right man to take over and worked with Doug
over the years to ensure that no momentum would be lost when the
time for change arrived. The Coca-Cola Company will be the same
steamroller under Doug as it was under Roberto.
一如他對於公司的關心，Roberto早就安排好接班的問題，他認為Doug Ivester
正是最佳的人選，與他共事多年的經驗足以確保在公司領導高層更迭的同時，公
司的運作不致受到任何的影響，相信在Doug的領導之下，可口可樂仍能一本初
衷勇往直前。
Convertible Preferreds
可轉換特別股
Two years ago, I gave you an update on the five convertible
preferreds that we purchased through private placements in the 1987-
1991 period. At the time of that earlier report, we had realized a small
profit on the sale of our Champion International holding. The four
remaining preferred commitments included two, Gillette and First
Empire State, that we had converted into common stock in which we had
large unrealized gains, and two others, USAir and Salomon, that had
been trouble-prone. At times, the last two had me mouthing a line from
a country song: "How can I miss you if you won't go away?"
兩年前，我曾經就1987到1991年間進行的五項可轉換特別股投資做了一番現
況報告，在報告出具的當時，我們出脫了冠軍國際部份的持股實現小部份的獲
利，剩下的四項投資中，吉列與第一帝國早已轉換成普通股，並享有高額的未實
現獲利，而美國航空與所羅門兄弟則發生嚴重的經營問題，這兩項投資讓我不得
不哼起一首鄉村歌曲的歌詞，"要是你不離開，我又怎麼會想念你呢?"
Since I delivered that report, all four holdings have grown
significantly in value. The common stocks of both Gillette and First
Empire have risen substantially, in line with the companies' excellent
performance. At yearend, the $600 million we put into Gillette in 1989
had appreciated to $4.8 billion, and the $40 million we committed to
First Empire in 1991 had risen to $236 million.
而就在報告發佈之後，所有四項投資的價值皆大幅增加，吉列與第一帝國的普通
股股價飆漲，與公司的經營基本面一致，截至年底，當初我們在1989年投入吉
列的6億美元已經增值為48億美元，而在1991年投入第一帝國的4,000萬
美元，則已增值至2.36億美元。
Our two laggards, meanwhile, have come to life in a very major
way. In a transaction that finally rewarded its long-suffering
shareholders, Salomon recently merged into Travelers Group. All of
Berkshire's shareholders -- including me, very personally -- owe a huge
debt to Deryck Maughan and Bob Denham for, first, playing key roles in
saving Salomon from extinction following its 1991 scandal and, second,
restoring the vitality of the company to a level that made it an attractive
acquisition for Travelers. I have often said that I wish to work with
executives that I like, trust and admire. No two fit that description better
than Deryck and Bob.
在此同時另外兩個後段班，也已起死回生，其中所羅門最近決定併入旅行家集團
的舉動，終於讓長久以來飽受苦難的股東獲得的回報，Berkshire所有的股東，
包含我個人在內，實在是虧欠Deryck Maughan跟Bob Denham太多了，首
先要感謝他們在1991年所羅門爆發醜聞時，拯救公司免於倒閉，之後更讓公司
恢復以往的活力，使得公司得以風光地嫁給旅行家集團，我常常說，我渴望與我
喜愛、信任與崇拜的經理人共事，Deryck與Bob正是這樣絕佳的組合。
Berkshire's final results from its Salomon investment won't be
tallied for some time, but it is safe to say that they will be far better than
I anticipated two years ago. Looking back, I think of my Salomon
experience as having been both fascinating and instructional, though
for a time in 1991-92 I felt like the drama critic who wrote: "I would
have enjoyed the play except that I had an unfortunate seat. It faced the
stage."
雖然Berkshire投資所羅門的最終成果到目前仍未定案，所幸目前的情況要比我
兩年前預期要好得多，回顧過去，我覺得投資所羅門的經驗令人感到刺激有趣同
時又具教化意義，雖然我在1991到1992年間的感覺就好像是一個戲迷曾這樣
寫到"要是因為坐到一個不幸的位子，我可能就能夠好好地欣賞表演，因為它正
對著台上"。
The resuscitation of US Airways borders on the miraculous. Those
who have watched my moves in this investment know that I have
compiled a record that is unblemished by success. I was wrong in
originally purchasing the stock, and I was wrong later, in repeatedly
trying to unload our holdings at 50 cents on the dollar.
另一方面美國航空的重生過程近乎奇蹟，熟悉整個投資過程的朋友都知道，個人
在這項投資上獲得了前所未有的勝利，一開始買進這家公司的股票就是一項錯
誤，後來又反悔打算以半價出售再度犯了第二次的錯誤。
Two changes at the company coincided with its remarkable
rebound: 1) Charlie and I left the board of directors and 2) Stephen Wolf
became CEO. Fortunately for our egos, the second event was the key:
Stephen Wolf's accomplishments at the airline have been phenomenal.
兩項改變促使該公司得以東山再起，1)查理跟我辭去該公司董事的職位，2)
Stephen Wolf接任成為該公司總裁，還好後者才是公司真正能夠重生的主因，
否則我們的臉可就丟大了，Stephen Wolf的表現對整個航空業而言，可說是意
義非凡。
There still is much to do at US Airways, but survival is no longer an
issue. Consequently, the company made up the dividend arrearages on
our preferred during 1997, adding extra payments to compensate us
for the delay we suffered. The company's common stock, furthermore,
has risen from a low of $4 to a recent high of $73.
當然美國航空還有很長的一段路要走，不過存活下來應該不是問題，也因此該公
司在1997年順利地償還積欠我們的特別股股息，還包含延遲支付的賠償損失，
該公司的普通股股價更從原來的4塊錢，一舉漲到目前73塊錢的新高。
Our preferred has been called for redemption on March 15. But the
rise in the company's stock has given our conversion rights, which we
thought worthless not long ago, great value. It is now almost certain
that our US Airways shares will produce a decent profit -- that is, if my
cost for Maalox is excluded -- and the gain could even prove indecent.
我們持有的特別股已在三月15日被贖回，不過受惠於該公司股價大漲，原本一
文不值的轉換權現在卻變得價值不菲，可以肯定的是我們現在持有的美國航空普
通股將為我們創造極高的獲利，當然還要先把我買胃藥的錢給算進去。
Next time I make a big, dumb decision, Berkshire shareholders will
know what to do: Phone Mr. Wolf.
我想哪天要是我再度幹下什麼愚蠢的投資決策，Berkshire的股東肯定知道該怎
麼做了，沒錯，記得打電話給Wolf先生。
* * * * * * * * * * * *
In addition to the convertible preferreds, we purchased one other
private placement in 1991, $300 million of American Express Percs.
This security was essentially a common stock that featured a tradeoff in
its first three years: We received extra dividend payments during that
period, but we were also capped in the price appreciation we could
realize. Despite the cap, this holding has proved extraordinarily
profitable thanks to a move by your Chairman that combined luck and
skill -- 110% luck, the balance skill.
除了可轉換特別股，我們在1991年還透過私募的方式投資了三億美元的美國運
通俗稱"Percs"的股票，這種證券基本上算是一種普通股，只不過在投資的前三
年我們可以領取一筆特別的股利，條件是在同時間我們因為股價上漲所帶來的資
本利得將受到限制，然而即便如此，這筆投資還是因為本人的英明決策而獲利不
菲，當然其中也包含一些運氣的成份，比例約是110%(剩下的才是本人的能力)。
Our Percs were due to convert into common stock in August 1994,
and in the month before I was mulling whether to sell upon conversion.
One reason to hold was Amex's outstanding CEO, Harvey Golub, who
seemed likely to maximize whatever potential the company had (a
supposition that has since been proved -- in spades). But the size of
that potential was in question: Amex faced relentless competition from
a multitude of card-issuers, led by Visa. Weighing the arguments, I
leaned toward sale.
根據約定我們的Percs必須在1994年八月以前轉換成普通股，而就在前一個月
我還一直在考慮是否應該在轉換期限到期以前把這項投資給處分掉，當時考量的
是雖然美國運通總裁Harvey Golub表現相當優異，他總是有辦法將公司的潛力
發揮到極致(這點從一開始便不斷地獲得證明)，只是這種潛能還是面臨嚴重的挑
戰，那就是美國運通來自於以Visa為首的其他發卡單位激烈的競爭，在衡量各
種利弊得失之後，我還是傾向於把這筆投資提前給處分掉。
Here's where I got lucky. During that month of decision, I played
golf at Prouts Neck, Maine with Frank Olson, CEO of Hertz. Frank is a
brilliant manager, with intimate knowledge of the card business. So
from the first tee on I was quizzing him about the industry. By the time
we reached the second green, Frank had convinced me that Amex's
corporate card was a terrific franchise, and I had decided not to sell. On
the back nine I turned buyer, and in a few months Berkshire owned 10%
of the company.
還好我走狗運，就在要做決定的那個月，我正好到緬因州和Hertz租車公司總
裁Frank Olson一起打高爾夫球，Frank是一位相當優秀的經理人，因為業務
的關係相當熟悉信用卡的行業，所以打從第一洞開始我就一直追問他有關這行業
的種種問題，到了第二洞的果嶺時，Frank已經讓我完全相信美國運通的企業卡
是一項絕佳的生意，所以當下我就決定不賣了，等到後九洞時，我更決定加碼投
資，於是在回來的幾個月後，Berkshire已經擁有該公司10%的股權。
We now have a $3 billion gain in our Amex shares, and I naturally
feel very grateful to Frank. But George Gillespie, our mutual friend, says
that I am confused about where my gratitude should go. After all, he
points out, it was he who arranged the game and assigned me to Frank's
foursome.
現在我們光是在美國運通的投資潛在利益就有30億美元，當然這一切都要感謝
Frank，不過我們倆人共同的好友-George Gillspie卻直說我搞錯應該要感恩的
對象了，他強調要不是因為他安排這次的球會，並且把我跟Frank擺在同一組
的話，也不會有今天這樣的成果。
Quarterly Reports to Shareholders
給股東的季報
In last year's letter, I described the growing costs we incur in
mailing quarterly reports and the problems we have encountered in
delivering them to "street-name" shareholders. I asked for your opinion
about the desirability of our continuing to print reports, given that we
now publish our quarterly and annual communications on the Internet,
at our site, www.berkshirehathaway.com. Relatively few shareholders
responded, but it is clear that at least a small number who want the
quarterly information have no interest in getting it off the Internet.
Being a life-long sufferer from technophobia, I can empathize with this
group.
在去年的年報中，我曾經向各位透露由於郵寄季報的費用大幅增加，同時要將季
報寄給那些不是用本名登記的股東有其困難性，所以徵詢大家是否可以接受直接
將季報與年報公佈在公司網站上，取代原先印製與郵寄報告的做法，雖然只有少
數的股東回應，但長期以來具有科技恐懼症的我很明白還是有少數想要年報資訊
的股東，不習慣透過網路取得相關的資訊，我完全能夠體會他們的想法。
The cost of publishing quarterlies, however, continues to balloon,
and we have therefore decided to send printed versions only to
shareholders who request them. If you wish the quarterlies, please
complete the reply card that is bound into this report. In the meantime,
be assured that all shareholders will continue to receive the annual
report in printed form.
惟考量大幅增加的印刷費用，最後我們還是決定除非股東有特別要求，我們才郵
寄印好的季報，所以若你也有意要一份書面的季報，請填妥年報上所附的申請表
格，同時在此也提醒所有的股東，我們還是會繼續郵寄年報給所有的股東。
Those of you who enjoy the computer should check out our home
page. It contains a large amount of current information about Berkshire
and also all of our annual letters since 1977. In addition, our website
includes links to the home pages of many Berkshire subsidiaries. On
these sites you can learn more about our subsidiaries' products and --
yes -- even place orders for them.
至於喜歡利用電腦上網的股東們，一定要到我們公司網站的首頁看看，裡面包含
大量有關Berkshire現況的資訊，同時還有1977年到現在為止的公司年報，此
外網站上還有對旗下其他子公司的網站連結，經由這些網站大家可以更了解子公
司的產品資訊，有的甚至可以透過網路直接下單購買。
We are required to file our quarterly information with the SEC no
later than 45 days after the end of each quarter. One of our goals in
posting communications on the Internet is to make this material
information -- in full detail and in a form unfiltered by the media --
simultaneously available to all interested parties at a time when markets
are closed. Accordingly, we plan to send our 1998 quarterly information
to the SEC on three Fridays, May 15, August 14, and November 13, and
on those nights to post the same information on the Internet. This
procedure will put all of our shareholders, whether they be direct or
"street-name," on an equal footing. Similarly, we will post our 1998
annual report on the Internet on Saturday, March 13, 1999, and mail it
at about the same time.
根據證管會法令的規定，我們必須在每季結束後45天內申報季報，而透過網路
公開資訊的主要原因之一是我們希望如此重大的訊息可以以完整而不經過媒體
消化過濾的方式，在股市收盤後即時地傳達給所有關心本公司狀況的人士，因此
我們決定在往後每季的最後一個星期五，今年分別是5/15、8/14及11/13將
季報對證管會做申報的動作，並在當天晚上將相同的資訊同步公佈在公司的網站
上，此舉將能夠使得Berkshire所有股東，不管是以本人或掛名的方式持有，皆
站在同等的地位之上，另外，我們也預計在1999年3月13日星期六將年報公
佈在網站上，並在同一時間將年報郵寄出去給所有的股東。
Shareholder-Designated Contributions
股東指定捐贈計劃
About 97.7% of all eligible shares participated in Berkshire's 1997
shareholder-designated contributions program. Contributions made
were $15.4 million, and 3,830 charities were recipients. A full
description of the program appears on pages 52 - 53.
大約有97.7%的有效股權參與1997年的股東指定捐贈計劃，總計約1,540萬
美元捐出的款項分配給3,830家慈善機構，詳細的名單參閱附錄。
Cumulatively, over the 17 years of the program, Berkshire has
made contributions of $113.1 million pursuant to the instructions of
our shareholders. The rest of Berkshire's giving is done by our
subsidiaries, which stick to the philanthropic patterns that prevailed
before they were acquired (except that their former owners themselves
take on the responsibility for their personal charities). In aggregate, our
subsidiaries made contributions of $8.1 million in 1997, including in-
kind donations of $4.4 million.
累計過去17年以來，Berkshire總計已按照股東意願捐贈高達1.131億美元的
款項，除了之外，Berkshire還透過旗下的子公司進行捐贈，而這些慈善活動都
是早在他們被我們購併以前就行之有年的(除了先前的老闆自行本身負責的個人
捐贈計畫之外)，總的來說，我們旗下的關係企業在1997年總計捐出810萬美
元，其中包含440萬美元等值的物品。
Every year a few shareholders miss out on our contributions
program because they don't have their shares registered in their own
names on the prescribed record date or because they fail to get the
designation form back to us within the 60-day period allowed. Charlie
and I regret this. But if replies are received late, we have to reject them
because we can't make exceptions for some shareholders while refusing
to make them for others.
每年都有一小部份的股東由於沒有將股份登記在本人的名下，或是沒能在60天
的期限內，將指定捐贈的表格送回給我們，而沒辦法參加我們的指定捐贈計畫，
對此查理跟我感到相當頭痛，不過我們必須忍痛將這些指定捐贈剔除，因為我不
可能在拒絕其他不符合規定股東的同時，還破例讓這些人參與。
To participate in future programs, you must own Class A shares
that are registered in the name of the actual owner, not the nominee
name of a broker, bank or depository. Shares not so registered on
August 31, 1998, will be ineligible for the 1998 program. When you get
the contributions form from us, return it promptly so that it does not
get put aside or forgotten.
想要參加這項計畫者，必須擁有A級普通股，同時確定您的股份是登記在自己
而非股票經紀人或保管銀行的名下，同時必須在1998年8月31日之前完成登
記，才有權利參與1998年的捐贈計畫，當你收到表格後，請立即填寫後寄回，
以免被丟在一旁給忘記了。
The Annual Meeting
年度股東會
Woodstock Weekend at Berkshire will be May 2-4 this year. The
finale will be the annual meeting, which will begin at 9:30 a.m. on
Monday, May 4. Last year we met at Aksarben Coliseum, and both our
staff and the crowd were delighted with the venue. There was only one
crisis: The night before the meeting, I lost my voice, thereby fulfilling
Charlie's wildest fantasy. He was crushed when I showed up the next
morning with my speech restored.
今年Berkshire的伍斯達克將在五月2號到4號舉行，整個大會將在五月4號
星期一的年度會議召開後落幕，去年的年會在Aksarben體育館召開，所有的工
作人員及參與的來賓對於當天的會場都相當滿意，唯一美中不足的是，在年會的
前一天，我的嗓子沙啞了，當時幾乎要如了查理的願，只不過隔天當我恢復原本
的聲音時，在一旁的查理幾乎要崩潰。
Last year about 7,500 attended the meeting. They represented all
50 states, as well as 16 countries, including Australia, Brazil, Israel,
Saudi Arabia, Singapore and Greece. Taking into account several
overflow rooms, we believe that we can handle more than 11,000
people, and that should put us in good shape this year even though our
shareholder count has risen significantly. Parking is ample at Aksarben;
acoustics are excellent; and seats are comfortable.
去年的股東會總共有7,500位股東出席，分別來自全美50州以及包含澳洲、巴
西、以色列、沙烏地阿拉伯、新加坡與希臘等在內的16個國家，我想即使今年
我們的股東人數又大幅增加，加上其他幾個備用的房間，應該可以容納超過
11,000名以上的人員參加，會場備有足夠的停車位，音效也不錯，就連座椅坐
起來也很舒服。
The doors will open at 7 a.m. on Monday and at 8:30 we will again
feature the world premiere of a movie epic produced by Marc Hamburg,
our CFO. The meeting will last until 3:30, with a short break at noon.
This interval will permit the exhausted to leave unnoticed and allow time
for the hardcore to lunch at Aksarben's concession stands. Charlie and I
enjoy questions from owners, so bring up whatever is on your mind.
大門會在星期一早上七點開放，同時照例在八點半會播放由我們財務長Marc
Hamburg精心製作具世界級水準的Berkshire電影短片供大家欣賞，扣除中午
短暫的休息時間，讓精疲力盡的人可以偷偷離開到阿肯薩本中心的小吃攤吃點東
西，整個會議將一直進行到下午三點半，查理跟我很喜歡老闆們提出的各種問
題，所以記得準備好你要問什麼。
Berkshire products will again be for sale in the halls outside the
meeting room. Last year -- not that I pay attention to this sort of thing
-- we again set sales records, moving 2,500 pounds of See's candy,
1,350 pairs of Dexter shoes, $75,000 of World Books and related
publications, and 888 sets of Quikut knives. We also took orders for a
new line of apparel, featuring our Berkshire logo, and sold about 1,000
polo, sweat, and T-shirts. At this year's meeting, we will unveil our 1998
collection.
再一次我們在會場外大廳備有Berkshire各式各樣的產品供大家選購，雖然我不
是特別的用心，去年我們再度打破記錄，總共搬走了2,500磅的糖果、1,350
雙的鞋子以及價值超過75,000美元的世界百科全書與相關出版品，外加888
組由旗下子公司Quikut所生產的小刀，同時我們也接受預訂一種新款的服裝，
上面印有Berkshire的Logo，結果總計賣出1,000件各式polo衫、毛衣與T
恤，在今年的股東會，我們還將推出1998年全新系列產品。
GEICO will again be on hand with a booth staffed by star associates
from its regional offices. Find out whether you can save money by
shifting your auto insurance to GEICO. About 40% of those who check us
out learn that savings are possible. The proportion is not 100% because
insurers differ in their underwriting judgments, with some favoring
drivers who live in certain geographical areas and work at certain
occupations more than we do. We believe, however, that we more
frequently offer the low price than does any other national carrier
selling insurance to all comers. In the GEICO informational material that
accompanies this report, you will see that in 38 states we now offer a
special discount of as much as 8% to our shareholders. We also have
applications pending that would extend this discount to drivers in other
states.
GEICO公司再度會派出地區最優秀的業務員，在會場設立攤位，接受股東詢問
有關汽車保險的資訊，記得去看看你是否能在汽車保險費上省一筆錢，我們估計
至少有40%的股東可以因此而節省不少保費(我只所以沒說100%的原因在於，
每家保險業者對於風險的估計都不同，有些保險公司對於居住於某些特定地區的
居民與從事某些特定職業的客戶有偏好，不過我仍然堅信我們提供給一般民眾的
費率通常都低於其他全國性的業者，在隨年報附贈的GEICO資料中，大家將可
以看到我們提供給來自全美38州股東最高8%的折扣費率，至於其他州的股東
也接受開放申請取得不等的折扣。
An attachment to the proxy material that is enclosed with this
report explains how you can obtain the card you will need for admission
to the meeting. We expect a large crowd, so get plane, hotel and car
reservations promptly. American Express (800-799-6634) will be
happy to help you with arrangements. As usual, we will have buses at
the larger hotels that will take you to and from the meeting and also
deliver you to Nebraska Furniture Mart, Borsheim's and the airport after
its conclusion. You are likely, however, to find a car handy.
後面附有股東會開會投票的相關資料，跟各位解釋如何拿到入場所許的識別證，
由於預期會有相當多的人與會，我們建議大家最好先預訂機位與住宿，美國運通
(電話800-799-6634)將會很高興為您提供相關安排服務，如同以往，我們會
安排巴士接送大家往返各大旅館與會場之間，並在會後接送大家到內布拉斯加傢
具店與波仙珠寶店或是到飯店與機場，當然你可能會覺得如何有一輛車就更方便
了。
NFM's main store, located on a 75-acre site about a mile from
Aksarben, is open from 10 a.m. to 9 p.m. on weekdays, 10 a.m. to
6 p.m. on Saturdays, and noon to 6 p.m. on Sundays. During the period
from May 1 to May 5, shareholders who present NFM with the coupon
that will accompany their meeting ticket will be entitled to a discount
that is otherwise restricted to its employees.
佔地75英畝的NFM主館距離會場約1英哩遠，營業時間平日從早上10點到
下午9點，星期六從早上10點到下午6點，星期日則從中午開到下午6點，
在五月1日到5日期間，股東持隨股東開會通知單附贈的點券到NFM購買各類
商品，將可獲得員工價的優惠。
Borsheim's normally is closed on Sunday but will be open for
shareholders from 10 a.m. to 6 p.m. on May 3rd. Last year was our
second-best shareholder's day, exceeded only by 1996's. I regard this
slippage as an anomaly and hope that you will prove me right this year.
Charlie will be available for autographs. He smiles, however, only if the
paper he signs is a Borsheim's sales ticket. Shareholders who wish to
visit on Saturday (10 a.m. to 5:30 p.m.) or on Monday (10 a.m.-8 p.m.)
should be sure to identify themselves as Berkshire owners so that Susan
Jacques, Borsheim's CEO, can make you especially welcome. Susan, I
should add, had a fabulous year in 1997. As a manager, she is
everything that an owner hopes for.
平時禮拜天不營業的波仙珠寶，特地在五月三日股東會當天會為股東與來賓開
放，從中午開到下午6點，去年在星期六股東會前一天，我們締造了歷史次佳
的記錄，僅次於1996年，我認為去年的下滑有點反常，所以希望大家都能前來
共襄盛舉，證明我的看法的對的，查理會在現場接受大家的簽名，當然大家如果
拿波仙的發票給他簽，他會更高興，另外選擇在前一天或後一天前往參觀的人，
記得表明Berkshire股東的身分，相信波仙的總裁-Susan Jacques會給各位最
熱情的接待，有一點我必須特別說明的是，Susan在1997年表現相當優異，
她實在是所有老闆心目中最理想的專業經理人。
On Sunday afternoon we will also have a special treat for bridge
players in the mall outside of Borsheim's. There, Bob Hamman -- a
legend of the game for more than three decades -- will take on all
comers. Join in and dazzle Bob with your skill.
另外在星期天下午我們也會在波仙珠寶店外面的大廳舉辦一場橋牌大賽，現場
Bob Hamman 橋牌界的傳奇性人物也將出席，接受各路英雄好漢的挑戰，記得
來參加，秀秀你的牌技給Bob看看。
My favorite steakhouse, Gorat's, opens one Sunday a year -- for
Berkshire shareholders on the night before the annual meeting. Last
year the restaurant started serving at 4 p.m. and finished about 1:30
a.m, an endurance trial that was the result of taking 1,100 reservations
vs. a seating capacity of 235. If you make a reservation and then can't
attend, be sure to let Gorat's know promptly, since it goes to great effort
to help us and we want to reciprocate. You can make reservations
beginning on April 1st (but not before) by calling 402-551-3733. Last
year I had to leave Gorat's a little early because of my voice problem, but
this year I plan to leisurely savor every bite of my rare T-bone and
double order of hash browns.
我個人最愛的牛排館-Gorat's為了Berkshire股東年會破例在星期天開門營
業，去年為了消化1,100位預訂的席次，只有235個座位的Gorat's牛排館從
下午四點開始營業，一直到半夜一點半，所以已經預訂座位的人，要是臨時無法
光臨，請記得一定要打電話取消訂位，因為Gorat's如此盡心盡力的為我們服
務，這是我們可以給他們最起碼的回報，今年該餐廳從四月一號開始接受預訂(電
話402-551-3733)，去年由於我的喉嚨有問題，所以必須提早離開，但今年我
一定會到Gorat's好好享用我最喜愛的丁骨\牛排加上雙份的牛肉丸。
After this warmup, Charlie and I will head for the Dairy Queen on
114th, just south of Dodge. There are 12 great Dairy Queens in
metropolitan Omaha, but the 114th Street location is the best suited to
handle the large crowd that we expect. South of the property, there are
hundreds of parking spaces on both sides of the street. Also, this Dairy
Queen will extend its Sunday hours to 11 p.m. in order to accommodate
our shareholders.
吃完牛排後，查理跟我還會趕到位於道奇街114號的乳品皇后冰淇淋攤，在整
個奧瑪哈地區總計有12家乳品皇后，但是114街卻是最適合接待大量群眾的
地點，在店的兩旁有好幾百個停車場供大家使用，同時該店也會延長假日營業時
間到晚上11點，以接待所有前往光顧的Berkshire股東。
The 114th Street operation is now run by two sisters, Coni Birge
and Deb Novotny, whose grandfather put up the building in 1962 at
what was then the outer edge of the city. Their mother, Jan Noble, took
over in 1972, and Coni and Deb continue as third generation owner-
managers. Jan, Coni and Deb will all be on hand Sunday evening, and I
hope that you meet them. Enjoy one of their hamburgers if you can't get
into Gorat's. And then, around eight o'clock, join me in having a Dusty
Sundae for dessert. This item is a personal specialty -- the Dairy Queen
will furnish you a copy of my recipe -- and will be offered only on
Shareholder Sunday.
114街的分店目前由Coni Birge與Deb Novotny兩姊妹所經營，係由她們的
祖父於1962年在當時還是市中心外圍的現址創立，在1972年由她們的母親接
手經營，Coni與Deb則是第三代的經營者，Jan、Coni及Deb在星期天晚上
將會在現場為大家服務，希望大家可以去和她們見見面，若是大家擠不進Gorat's
的話，也可以嚐嚐兩姊妹親手做的漢堡，八點整我將會出現享用我的喜歡的冰風
暴聖代，這是個人特調的祕方，當然你也可以要求乳品皇后照我的配方給你來一
份，這可是只有在股東會當天才對外提供獨家祕方。
The Omaha Royals and Albuquerque Dukes will play baseball on
Saturday evening, May 2nd, at Rosenblatt Stadium. As usual, your
Chairman, shamelessly exploiting his 25% ownership of the team, will
take the mound. But this year you will see something new.
在前一天5月2日，星期六晚上，Rosenblatt體育館將會有一場奧瑪哈皇家隊
對Albuquerque Dukes隊的比賽，一如往年厚顏無恥的我會利用擁有該球隊
25%的特權，站上投手丘擔任先發，不過今年我保證各位一定會有新的感受。
In past games, much to the bafflement of the crowd, I have shaken
off the catcher's first call. He has consistently asked for my sweeping
curve, and I have just as regularly resisted. Instead, I have served up a
pathetic fast ball, which on my best day was clocked at eight miles per
hour (with a following wind).
過去幾年，可能是受到現場觀眾喧鬧聲所影響，我總是不顧捕手對我所做出的暗
號，雖然他一直要求我投出拿手的變化曲球，但我總是極力反抗，結果總是投出
軟趴趴的快速球，最快的球速也不過是每小時8英哩(這還是在順風的情況下)。
There's a story behind my unwillingness to throw the curve ball. As
some of you may know, Candy Cummings invented the curve in 1867
and used it to great effect in the National Association, where he never
won less than 28 games in a season. The pitch, however, drew
immediate criticism from the very highest of authorities, namely Charles
Elliott, then president of Harvard University, who declared, "I have heard
that this year we at Harvard won the baseball championship because we
have a pitcher who has a fine curve ball. I am further instructed that the
purpose of the curve ball is to deliberately deceive the batter. Harvard is
not in the business of teaching deception." (I'm not making this up.)
其實我之所以不願意投曲球背後有極大的隱情，大家或許知道，Candy
Cummings在1867年發明曲球的時候，曾在國家聯盟引起極大的效應，這種
球路使得他每個球季至少可以贏得28場勝投，但是這樣的投球方式也立刻引起
最高當局的嚴厲批評，當時的哈佛校長Charles Elliott對外宣稱，我聽說今年
哈佛棒球隊靠著一位專門投曲球的投手贏得冠軍，有人還告訴我，這種曲球基本
上是一種欺騙打者的行為，我必須說的是，哈佛從來不教人這種騙人的勾當。
Ever since I learned of President Elliott's moral teachings on this
subject, I have scrupulously refrained from using my curve, however
devastating its effect might have been on hapless batters. Now,
however, it is time for my karma to run over Elliott's dogma and for me
to quit holding back. Visit the park on Saturday night and marvel at the
majestic arc of my breaking ball.
而自從我知道Elliott校長的教誨之後，我就一直小心翼翼地避免使用到我這種
殺人無數拿手的曲球，不過現在已經到了忍無可忍的地步了，我決定再度使出我
的殺手戩，星期六晚上大家記得光臨球場，讓你們見識一下我這魔球的威力。
Our proxy statement includes information about obtaining tickets
to the game. We will also provide an information packet describing the
local hot spots, including, of course, those 12 Dairy Queens.
股東會資料將告訴大家如何取得球賽入場的門票，裡面同時包含一本旅行小手
冊，介紹本地熱門的旅遊景點，當然也包括12家乳品皇后在內。
Come to Omaha -- the cradle of capitalism -- in May and enjoy
yourself.
歡迎大家在五月蒞臨奧瑪哈-資本主義的搖籃，也預祝大家玩得愉快。
Warren E. Buffett
February 27, 1998 Chairman of the Board
華倫．巴菲特
董事會主席
1998年2月27日
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