1967 年伯克希尔完整年报

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CLEVELAND PUBLIC LIBRAR BUSINESS INF. BUR CORPORATION FILE BERKSHIRE HATHAWAY INC. REPORT TO THE STOCKHOLDERS FOR FIFTEEN MONTHS ENDED DECEMBER 30, 1967

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DIRECTORS *MALCOLM G. CHACE, JR., Chairman RICHARD BOWEN *WARREN E. BUFFETT *KENNETH V. CHACE DANIEL COWIN LINSLEY V. DODGE BRADFORD R. FROST ARTHUR INGRAHAM, JR. STANLEY RUBIN WILLIAM SCOTT *Member of Finance Committee OFFICERS KENNETH V. CHACe, President RICHARD BOWEN, Vice President JOHN E. HARTLEY, Vice President J. VERNE McKENZIE, Vice President and Treasurer RALPH RIGBY, Vice President STANLEY RUBIN, Vice President GENERAL COUNSEL RoPEs & GRAY, Boston, Massachusetts AUDITORS PEAT, MARWICK, MITCHELL & Co. TRANSFER AGENT OLD COLONY TRUST COMPANY, Boston, Massachusetts REGISTRAR THE FIRST NATIONAL BANK OF BostoN, Boston, Massachusetts

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BERKSHIRE HATHAWAY INc. March 8, 1968 TO THE STOCKHOLDERS OF BERKSHIRE HATHAWAY INC.: The Company has adopted a calendar year for accounting purposes. This new calendar year end substitutes for the previous September 30 year end. The change was effective December 30, 1967. This report covers the fifteen months ended December 30, 1967. TEXTILE OPERATIONS FISCAL YEAR ENDED SEPTEMBER 30, 1967 Total sales showed a decline from $49.4 million in fiscal 1966 to $39 million in fiscal 1967. The cause of the drop in dollar volume was a combination of a decrease in yardage demand in all divisions and a sharp drop in prices in all areas except the Home Fabrics Division. Although sales and profits of our Home Fabrics Division were down substantially, this area demonstrated the greatest resistance to the depressed conditions of the textile markets in which we operate. Berkshire Hathaway does not produce coarse goods such as heavy ducks, which is the segment of the textile business that was the strongest in 1967. During the year, we curtailed our production about 15 per cent in an attempt to avoid building inventories. We maintained satisfactory inventory levels but our curtailment resulted in the loss of certain categories of skilled help which will be required if we are to fully utilize our plant capacity. There- fore, abnormally high training costs will be incurred before we again run full. By the end of the fiscal year, there was some indication that the general textile market was improving with the exception of that for our fine combed lawns, which we manufacture at our King Philip D Division in Warren, Rhode Island. This fabric remained in poor demand, with depressed prices throughout the year. A market survey indicated that the demand for cotton lawn fabrics was gradually being displaced by a demand for polyester blend fabrics. On the positive side, we expanded our Home Fabrics products line into a wider variety of fabrics and also expanded our sales force in this area. In addition to this, we started an Apparel Fabrics Division, selling finished yarn-dyed box loom goods into the women's apparel market. Both of these moves were part of our general policy of attempting to establish product lines away from areas of direct competition with staple fabric producers. We intend to further implement this policy. Manufacturing Operation Because of reduced levels of production, smaller individual orders, and more frequent loom shifts, manufacturing costs were materially higher than in the last several years. A return to full operation should correct this situation to a great extent. Although product development and diversification of fabrics will result in higher manufacturing costs, these higher costs should be more than offset by higher prices for the fabrics and result in greater profits.

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Labor Relations Labor relations remain satisfactory. Our labor contract will carry us through until April of 1969. A general wage rate increase is called for by this contract in April of 1968. The current labor market is a difficult one, as for most industries, with relatively fewer job applications being received from persons possessing the requisite training and skills. THREE MONTHS ENDED DECEMBER 30, 1967 This quarter showed a very definite increase in demand in all divisions except King Philip D. We operated at close to normal levels, with some equipment idle only because of our inability to quickly obtain and train sufficient people. Our new Apparel Fabrics Division was off to a good start and our Home Fabrics Division renewed its historical strong growth pattern. Based on current market conditions, we expect a significant improvement in textile operating profits during 1968. Our operating loss carry- forward has been fully utilized and any future net profit we realize will be subject to normal federal income taxes. The portion of our business which proved unsatisfactory was the cotton lawn business. As a result of a second market survey, it was decided to close the King Philip D Division in Warren, Rhode Island where these goods were manufactured. The plant was an efficient one for the manufacture of fine combed lawns, which, unfortunately, are no longer in any sort of demand. The equipment at this plant had little adaptability to other end products, thereby making a conversion attempt uneconomical. The decision to terminate operations was hastened by the very large increase in the cost of new crop cotton, which could not be reflected in increased finished product prices. Any loss from termination of operations at King Philip D will be reflected as incurred in 1968. At this point in time, we can only speculate as to the amount of this loss but we do not envision that it will exceed $1 million pre-tax. INSURANCE SUBSIDIARIES We are highly pleased with the results of our insurance subsidiaries since their acquisition in March 1967. These two companies, National Indemnity Company and National Fire and Marine Insurance Company, continue under the very able management of Mr. Jack Ringwalt who has guided them since inception. Gross premium volume increased only slightly during 1967, but termination of certain re-insurance arrangements resulted in a substantial gain in net premium volume. Underwriting was conducted at a good profit margin and investment income increased substantially, reflecting both a greater base of assets and the higher yields that prevailed throughout the year in the fixed income sector. All earnings of the insurance subsidiaries are being retained to build additional capital strength. Our investment in the insurance companies reflects a first major step in our efforts to achieve a more diversified base of earning power. The success of this effort is indicated by the attainment of earnings in the subsidiaries during 1967 which substantially exceeded the earnings attributable to a larger capital investment in the textile business. We expect that there will be years in the future when the order of relative profitability is reversed, reflecting different stages in both the insurance and textile cycles. How- ever, we believe it is an added factor of strength to have these two unrelated sources of earnings rather than to be solely exposed to the conditions of one industry, as heretofore. FUTURE OBJECTIVES Management continues to be alert to opportunities to expand our operations in either the textile business, the insurance business or unrelated areas. We feel it is essential that we not repeat the history 2

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of the 1956-1966 period, when over-all earnings on average invested capital of over $30 million were something less than zero. Our present liquid resources held in readily marketable common stocks are available for either acquisition of new businesses or for application toward greater profit opportunities in our present operations. In addition, we will not hesitate to borrow money to take advantage of attrac- tive opportunities. Our goal is to obtain a reasonably stable and substantial level of earning power commensurate with the capital employed in the business. MALCOLM G. CHACE, JR. Chairman of the Board KENNETH V. CHACE President

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BERKSHIRE CONSOLIDATED DECEMBE with comparative fig

• ASSETS -

Dee. 30, 1967 Oct. 1, 1966 CURRENT ASSETS: Cash $ 835,301 $ 628,721 Marketable securities, at cost (note 3) 3,825,077 5,445,795 Accounts receivable (less allowance for doubtful accounts- 1967 — $220,966; 1966 — $299,433) 7,571,694 8,114,240 Inventories (note 4) 11,585,598 12,239,261 Prepaid and deferred charges 223,554 161,635 TOTAL CURRENT ASSETS 24,041,224 26,589,652 PROPERTIES, PLANTS AND EQUIPMENT (note 10): Properties comprising land, buildings, machinery and equipment 24,878,601 24,426,192 Less accumulated depreciation and amortization 19,238,314 18,119,666 NET PROPERTIES, PLANTS AND EQUIPMENT 5,640,287 6,306,526 INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES (note 2) 10,259,079 $39,940,590 $32,896,178 See accompanying notes 4

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HATHAWAY INC. BALANCE SHEET R 30, 1967 ares at October 1, 1966 • LIABILITIES AND STOCKHOLDERS' EQUITY Dec. 30, 1967 Oct. 1, 1966 CURRENT LIABILITIES: Note payable — bank, unsecured 2,000,000 Accounts payable and accrued expenses 5,433,556 2,978,712 Accrued Federal, State, and local taxes (note 5) 322,799 422,546 TOTAL CURRENT LIABILITIES 7,756,355 3,401,258 LoNG-TERM DEBT: 72% subordinated debentures (note 6) 641,300 STOCKHOLDERS' EQUITY: Common stock, $5 par value. Authorized 1,722,983 shares; issued 1,017,547 shares 5,087,735 5,087,735 Retained earnings 27,032,370 24,407,185 32,120,105 29,494,920 Less common stock in treasury, at cost (note 7) 577,170 - TOTAL STOCKHOLDERS' EQUITY . 31,542,935 29,494,920 $39,940,590 $32,896,178 to financial statements. 5

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CONSOLIDATED STATEMENT OF EARNINGS Three months ended December 30, 1967 and twelve months ended September 30, 1967 with comparative figures for twelve months ended October 1, 1966 months Three months Twelve months Twelve Dec. 30, 1967 ended Sept. 30, ended 1967 Oct. 1, 1966 ended Net sales Cost of sales $11,599,890 10,353,859 $39,055,671 $49,372,328 36,669,665 42,195,572 Gross profit 1,246,031 2,386,006 2,328,142 7,176,756 Selling and administrative expenses 684,785 2,330,487 Operating income 561,246 55,519 4,848,614 Earnings before provision for income taxes, equity in earnings of uncon- Other income, net 46,901 163,055 155,900 solidated subsidiaries, and extraordinary items 218,574 Provision for Federal and Foreign income taxes (note 5) 215,127 608,147 3,200 5,004,514 2,242,000 Earnings before equity in earnings of unconsolidated subsidiaries, and extraordinary items Equity in earnings of unconsolidated subsidiaries (net of Federal income 393,020 215,374 2,762,514 taxes - ($29,000) and $345,000) 478,761 791,938 Earnings before extraordinary items 871,781 1,007,312 2,762,514 Extraordinary items: Reduction in Federal and Foreign income taxes (note 5) Realized investment gains

• unconsolidated subsidiaries (net of

210,150 2,212,292 Federal income taxes — $103,800 and $33,400) 311,453 100,147 521,603 100,147 2,212,292 Net earnings $ 1,393,384 $ 1,107,459 $ : 4,974,806 Depreciation and amortization deducted above 223,186 $ 979,016 $ 963,081 Per share of common stock: Earnings before extraordinary items $ .88 Extraordinary items, net of tax .53 $1.02 .10 $2.71 2.18 Net earnings $1.41 $1.12 $4.89 CONSOLIDATED STATEMENT OF RETAINED EARNINGS Retained earnings, beginning: As previously reported $25,638,986 $24,407,185 Adjustments (note 9) 226,097 $20,469,068 226,097 At restated Net earnings 25,638,986 1,393,384 24,633,282 1,107,459 20,695,165 4,974,806 Less: 27,032,370 25,740,741 25,669,971 Dividends paid — $.10 per share Retirement of treasury stock 101,755 1,036,689 Retained earnings, ending $27,032,370 $25,638,986 $24,633,282 See accompanying notes to financial statements. 6

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BERKSHIRE HATHAWAY INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 30, 1967 (1) Accounting Period taxes computed without regard to availability of operating Earnings have been reduced for Federal and Foreign income The Company, effective December 30, 1967, changed its ber 30 to one ending on fiscal vear from one ending on the Saturday nearest septem- loss carryovers. In order to conform to Opinion No. 9 of the Accordingly, the accompanying financial statements reflect Saturday nearest December 31, Accounting Principles Board of the American Institute of tax savings resulting from these carryovers as an extraor- Certified Public Accountants, the Company has classified financial position at the end of its newly established fiscal twelve months ended September 30, 1967 and the three year, December 30, 1967, and results of operations for the retained earnings. dinary item instead of, as in prior years, a direct credit to ment for 1966, this item has been accordingly reclassified. In the accompanying comparative state- months ended December 30, 1967. (2) Basis of Consolidation of income tax ellect upon the subsidiaries. Equity in earnings of insurance subsidiaries is reflected net accounts of Berkshire Hathaway Inc. with its wholly-owned The accompanying financial statements consolidate the noninsurance Canadian subsidiary. (6) 72% Subordinated Debentures standing stock of National Indemnity Company and 100% Company purchased for $8,577,000 over 99% of the out- Debentres bear inter, and the bede on August 1, all. Debentures bear interest at the rate of 72%. of the outstanding stock of National Fire & Marine Insurance vertible; they are subordinated to senior indebtedness which The debentures are not secured by any lien and are not con- Company, both headquartered in Omaha, Nebraska. accompanying financial statements reflect the Company's The The debentures may, at the Company's option, be redeemed includes indebtedness of the Company for money borrowed. equity in earnings since March 31, 1967 of these insurance subsidiaries, which derive over 80% of their premium volume indenture under which the debentures are issued requires the at 105% through July 31, 1973 and thereafter at 100%. functionally independent of the automobile lines of insurance. These companies are parent. The Company's equity in unconsolidated subsid- textile operations of the through a sinking fund, on August 1, in each of the years Company to provide for the retirement by redemption, mately $500,000 at December 30, 1967. iaries exceeded the cost plus equity in earnings by approxi- 1973 to and including 1986, of one-fifteenth of the total shall be at principal amount plus accrued (3) Marketable Securities ketable common stocks, was $7,422,000 at December 30, The market value of the securities portfolio, primarily mar- (7) Treasury Stock 1967. At October 1, 1966, market value approximated cost. The Company acquired, as of August 1, 1967, 32,065 shares of Tri debey strek in estant to for coming stock. ou bordi. (4) Inventories nated debentures in exchange for common stock. for terms of the debenture offering. Inventories are stated at the lower of cost or market. Costs purchase invoices for raw materials, and from current stand- are determined, generally, on an average basis from current (8) Pension Plan The Company has a noncontributory pension plan for ards for in-process inventories and cloth, with the exception ended September 30, 1967 was $80,000, and for the three salaried employees. The total pension expense for the year of cotton content of in-process inventory at King Philip D established in 1933 which is less than current cost or market. Division (see note 10), which is priced at a standard cost amounts include normal cost of the plan plus interest on months ended December 30, 1967 was $22,500, which A comparative summary follows: unfunded prior service costs. keep the plan substantially funded and to accrue any un- The Company's policy is to Raw materials and supplies $ 2,053,503 $ 2,596,100 Dec. 30, 1967 Oct. 1, 1966 benefits, funded pension cost. There is no unfunded amount of vested Stock in process. 3,074,160 6,457,935 6,953,713 2,689,448 (9) Prior Period Adjustment $11,585,598 812,239,261 The Company returned $226,000 to retained earnings during the year ended September 30, 1967, which amount represents (5) Taxes on Income excise taxes accrued in prior years and such taxes as were difference between Commonwealth of Massachusetts Hathaway Inc. for the year ended September 30, 1967 and For Federal income tax purposes, earnings of Berkshire obtained during the year. payable as determined by ruling from the Commonwealth for the three months ended December 30, 1967 have been prior years resulting from disposals of plant assets. It is not reduced by operating loss carryovers, (10) Plant Closing currently the intention of the Company to file a consolidated its King Philip D The Company announced in December 1967 plans to close Federal income tax return with its insurance subsidiaries, because of the declining market for cotton lawns woven at mill located in Warren, Rhode Island Inc. there were no Federal income taxes payable for the vear and, on an individual return basis, for Berkshire Hathaway this mill. The production from this mill represented less than ended September 30, (estimated at $1,000) is payable for earnings during the three 1967, and only a nominal liability anticipates the run-out loss, 10% of the sales of the Company during 1967. Management amount, although the length of time required for the run-out any, to be immaterial in the Company had months ended December 30, 1967. unused investment tax At December 30, 1967 forwards amounting to approximately $200,000. There was credit carry- may be realized. will be a determining factor. The amount of any such loss, and the time A loss on sale of the properties no remaining operating loss carryover. this time. at which it may be realized, cannot be readily estimated at 7

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BERKSHIRE HATHAWAY INC. ACC OUNTANTS' REPORT PEAT, MARWICK, MITCHELL & Co. (COMBINING COMERY, DAVISON & COMPANY) CERTIFIED PUBLIC ACCOUNTANTS 10 DORRANCE STREET PROVIDENCE, RHODE ISLAND 02903 The Board of Directors and Stockholders Berkshire Hathaway Inc.: We have examined the consolidated balance sheet of Berkshire Hathaway Inc. and its subsidiary as of December 30, 1967 and the related statements of earnings and retained earnings for the twelve months ended September 30, 1967 accordance with generally accepted auditing standards, and accordingly included Our examination was made in such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. Your attention is directed to Note 10 to the financial statements is discussed. wherein the closing of the Company's cotton lawn mill at Warren, Rhode Island, Because the amount and timing of loss, if any, which may result able, no provision for such loss is provided for in the accompanying financial from the closing of the mill is, in management's opinion, currently indetermin- statements. loss from the closed mill as discussed in the preceding paragraph, the In our opinion, subject to the possible necessity for a provision for accompanying consolidated financial statements present fairly the financial position of Berkshire Hathaway Inc. and its subsidiary at December 30, 1967 and the results of its operations for the twelve months ended September 30, 1967 но вор ано- 30. and the three months ended December 30, 1967, in conformity with generally accepted accounting principles applied on a basis consistent with that of the Accounting Principles Board of the American Institute of Certified Public Ac- year ended October 1, 1966, restated to conform to Opinion No. 9 of the countants, as explained in Note 5 of Notes to Consolidated Financial Statements. February 23, 1968 Don Merwick mitchello. 8

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ANNUAL MEETING of Berkshire Hathaway Inc. will be held at the The next annual meeting of the shareholders principal office of the Company at 97 Cove 10:00 a.m. on Tuesday, April 23, 1968. Street, New Bedford, Massachusetts, at

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BERKSHIRE HATHAWAY INC. Executive Offices - 97 Cove Street, New Bedford, Massachusetts 02744 Sales Offices- 261 Fifth Avenue, New York, New York 10016 1040 Avenue of the Americas, New York, New York 10019