Wesco金融董事长信函，1984财年（查理·芒格）

WESCO FINANCIAL CORPORATION LETTER TO SHAREHOLDERS To Our Shareholders: Consolidated "normal" operating Income (i.e., before all unusual operating income and all net gains from sales of securities) for the calendar year 1984 increased to $10,060,000 ($1.42 j'er share) from $8,507,000 ($1.20 per share) in the previous year. Consolidated net income (i.e., after unusual uperating income and all net gains from sales of securities), increased to $23,656,000 ($3.32 per share) from $10,553,000 ($1.48 per share) in the previous year. which had occurred in earlier years. income and the cashing in of some unrealized appreciation in marketable securities Wesco has two major subsidiaries, Mutual Savings, in Pasadena, and Precision Steel, headquartered in Chicago and engaged in the steel warehousing and specialty metal products businesses. Consolidated net income for the two years just ended breaks down as follows (in 000s except for per-share amounts)": Nel Operating "Normal" Income of Catter Utan lied Mutual Precision All Other Steel "Normal" Net Forward Commitment December 31, 1984. $3,476 Rusinesses Income (2) Operating, al Mutual Savings to Buy GAMA Riel Gaine Certificates on Sales of covericated December 31, 1983 Per Wesco share.. • 3,046 .49 $2,034 .29 $4,550 3,839 .64 $758 Securlties 3) Net Income ,06 $13,138 $23,656 Per Wesco share ,43 1,622 .54 →,.. 2,046 1.84 10,553 3.32 .23 28 1.48 (1) All figures are net of income laxes. 2 tie telecio, primeet and the serene expenses hearn dil fram inebip ta equali and mad eatin securities owned ourside the savings and loan subsidiary. 13 ince come cateory and charm, raked by 51. 65,00 15. 25 per share Se Unusuat hame and Ceram counting Quirks in 1984 Reporting" below The foregoing breakdown (of the same aggregate earnings) differs somewhat from that used in audited financiai statements, which follow standard accounting conventior breakdown of earnings is furnished because it is considered useful to shareholders. umbers. The repetition of wording occurs because it is believed (1) that the duplicate Auch of this letter is a word-for-word repeat of last year's letter with upcate material remains correct and is worth repeating, and (2) that in Wesco's case any time and money required to change wording would be better spent elsewhere. 1

Parsimony, however, does not wholly predominatt. So much kidding occurred concerning ihe 1960s automobiles in the old photograph of the Mutual Savings' build. ing, which was used in last year's annual report to avoid incurring the cost of a new photograph, that the purse has been opened a little. Shareholders comparing the new photograph (on the inside front cover of this report) with the old will note that the trees have grown a lot in the intervening years. Fortunately, so has the value of the building. See the last section of this letter. The building, which works very well and attracts high quality tenants regarded as friends, is a constant reminder of the good sense of Louis R. Vincenti and Richard D. Aston, the Wesco executives responsible for its creation. Mutual Savings Mutual Savings' "normal" net operating income of $3,476,000 in 1984, represented "normal" net operating income, while economically real and probably of at least an increase of 14.1% from the $3,046,000 figure the previous year. In both years such average quality as reported savings and loan industry incomes go, was below the top obtained through inclusion of Mutual Savings in the consolidated income tax return of a quality possible because such earnings came entirely or partly from income tax savings parent corporation. Earnings so derived from income tax savings are not of the top quality possible because they can be impaired by future changes in tax laws and have ess cushion in reserve against future adversity than earnings from ordinary operating income on which income taxes have been paid in full in cash at the highest corporate rate and are recoverable from the i.R.S. in the event of future operating losses. Separate balance sheets of Mutual Savings at yearend 1983 and 1984 are set forth at the end of this annual report. They show (1) total savings accounts rising to $228 million from $203 million the year before, (2) a very high ratio of shareholders' equity to savings account liabilities (probably the highest for any mature U.S. savings and loan associa- tion), (3) a substantial portion of savings account liabilities offset by cash equivalents and marketable securities, and (4) a loan portfolio (mostly real estate mortgages) of about $95 million at the end of 1984, down 11% from the $107 million at the end of 1983. The loan portfolio at the end of 1984 bore a fixed average interest rate of only 7.63%, probably the lowest for any U,S. savings and loan association and far below the average interest rate which now must be paid to hold savings accounts. came from (1) success many years ago as a construction lender at above-average interest The capital-rich, mortgage-loan-interest-rate-poor position of Mutual Savings rates, plus (2) sale in 1980 by Mutual Savings of all branch offices (except for one satellite office in a major shopping center across the street from the Pasadena headquarters) underers a rosly craine by Mula bains of mom age ending followers the sale of its branch offices, plus (4) profits in every recent year, no matter how high interest rates went. Mutual Savings has remained profitable because the adverse effects from its old low yielding, fixed-rate mortgage loan portfolio are more than offset by favorable effects from its large shareholders' equity and a tax-equivalent yield on its marketable securities (utility preferred stocks, lax-exempt bonds and common stocks) considerably higher than that prevailing on the mortgage loan portfolio of a typical savings and loan association. The old low-yielding, fixed-rate mortgage loan portfolio has shrunk from pay-bicks at 9.8% per year over the last three years, and the shrinkage is expected to 2 continue at about the same rate. With portfolio shrinkage, loan credit quality problems have been reduced to a meaningless trace, because the old mortgages have large real hand (mostly 22 vacant, largely oceanfront, aires in Santa Barbara) over a long holdins State equites supporting secured credit extended. And the foreclosed property or period has plainly become worth considerably more than its $2 million balance sheet carrying cost. It should be noted, however, that Mutual Savings' total mortgage loan portfolio did not, in substance as distinguished from accounting form, decrease in 1984 by the 11% mentioned above, determined by comparing audited year end balance sheet totals for loans. Mutual Savings has agreed to buy in 1986 U.S. Government guaranteed mortgage equivalents (GNMA certificates) at a price of about $19 million and has pre-funded this forward commitment by buying U.S. Treasury Notes maturing near the time the certifi- cates will be purchased. After taking into account this forward commitment to purchase GNMA certificates, Mutual Savings' total mortgage loan portfolio has, in substance, increased by about 7%o in 1984. The 1984 increase in substance of mortgages owned reflects Mutual Savings' intention to keep at least 60% of assets in mortgages or mortgage equivalents, exactly as the Federal Home Loan Bank Board wisely exhorts the savings and loan industry to do if it expects to remain under a regulatory system separate from that of banks. And as a result of anticipated steady shrinkage through repayment of remaining old 7.63% the average rate of interest on the entire mortgage loan portfolio, thus improving certificates purchased for 1986 delivery at a price of about $19 million are expected to yield about 15% on such price, getting under way the process of "blending" the mortgage loan portfolio yield to a higher average level. Mutual Savings has adapted in its own way to the dramatic changes which have occurred in recent years in interest rates and the regulatory structure of the banking and industry, the standard practice used to be to borrow short from savers while lending long savings and loan industries. At Muttial Savings, as well as the rest of the savings and loan on fixed-rate mortgages, to have high financiai leverage for shareholders' equity and to grant mortgagors easy prepayment terms. The practice was profitable for decades but always involved something like a "hurricane risk," and the equivalent of a hurricane losses. Results were good for shareholders before 1981-82 only because interest rates came in 1981-82 as interest rates rose to unprecedented levels and caused widespread under a regulatory structure which both fostered veder a regulatory structure morich bol fostered orsteadind protectly expanded Although interest rates have subsided from the 1981-82 peak, the low and slowly changing interest rates of former years are plainly gone with the wind, as are the former Comment file Continues to nur sing count ine mine: ang ban 3 industry, just as it did before. The result may well be bolder and bolder conduct by many good") may take effect for fully competitive but deposit-insured institutions, through savings and loan associations. A sort of Gresham's law (bad loan practice drives out increased copying by cautious institutions of whaiever apparent-high-yield loan and investment strategies seem to allow competitors to bid away their savings accounts and yet report substantial earnings. I' so, if "bold conduct drives out conservative condu-t," there eventually could be wint ipread insolvencies caused by bold credit extensions come to grief. And if serious credit-quality troubles come to the savings and loan industry, they will merely add to troutles from the borrowed-short, lent-long-at-fixed-rates problem, which is far from completely removed, and which destroys shareholder wealth at mortgagors or other borrowers is excellent. startling speed whenever interest rates are rising rapidly, even when the credit quality of The Federal Home Loan Bank Board, under its current Chairman Edwin R. Gray, boning" to limit follies to come from (1) sharing the U.S. Government's credit with shares wescos concers. Wesco approves its attempts by regulation and by "jaw- optimistic new entrants to the savings and loan business, often coming from the real estate development and stock brokerage businesses, given ample scope to venture savings and loan industry, cumbined with continuing maturity misnatch of fixed rate under widened investment authority, and (2) high financial leverage throughout the assets and liabilities. Logic and history would suggest that Mr. Gray is right to pull on the reins, but this is an unpopular task since many powerful activity-cravers feel the bit and create political heat in opposition to even limited (and almost surely inadequate) financial discipline which would protect the federal deposit-insurance system by demanding a significant margin-of-safety factor in financial institutions, just as in bridges. Wesco is not optimistic either that the present rules of the savings and loan future trouble comes, sooner or later. game will stand the test of time or that drastic changes in the rules will occur until huge Developing a short-term operating plan for Mutual Savings which would sharply increase its reported earnings next year would be a near-absolute cinch. for instance, savings accounts could be expanded greatly by paying a high rate of interest on "jumbo" deposits in $100,000 multiples, and proceeds plus cash equivalents on hand could be placed in long-term mortgages at a substantial current interest spread while, in addition, some origination fees could be "front-ended" into income. However, taking long-term risks into account, it is much harder to find a sound operating plan. Money is the ultimate fungible commodity. In the new order of things, an association is not only in a primarily by short-term effects, it is quite naturally difficult to earn over a long period an attractive return on shareholders' equity. How could it be otherwise? A lew years ago, about the time Mutual Savings reacted to new conditions by curtaing lending and financial leverage, most other associations decided inslaad to portion (but far from all) ofthe interest-rate-fluctuation risk is shifted to the homeowner. keep lending aggressively but under new adjustable-rate mortgages under shich some

Despite widespread use of these new adjustable-rate mortgages, savings and loan industry earnings remain dependent to a material extent, as they always were, on an interest rate spread attributable to: (1) borrowing short while lending long, and/or (2) involve a very material credit risk, compared to the risk of owning government-backed making loans which can be priced high enough to provide a profit only because they securities of comparable maturity. Under present conditions of strong competition from bold competitors accom- panied by high interest-rate-fluctuation risk, the resuit tenás to be that each year of reported attractive earnings in the savings and loan industry occurs only in the absence of two now much more likely events: (1) sharply rising interest rates, and (2) widespread credit losses. Thus, each good year reported is a lot like the year when a Texas hurricane insurer reports satisfactory earnings because there have been no hurricanes. Mutual Savings has a considerable share of this uncomfortable position and will continue to have it. It has not yet developed a long-term operating strategy with which it is satisfied, and it continues to seek one. Just as Mutual Savings has been idiosyncratic in the past as it sold branch offices in 1980 (a practice since adopted to some extent by other savings and loan associations and major banks), it will probably be idiosyncratic in the future. It will seek some non-standard way of rendering socially constructive service while operating with acceptable profits accompanied by an acceptable level of risk for shareholders' capital, likely gains considered. Eventually, by maintaining unusual capital strength and liquidity, and by having a parent corporation which does likewise, Mutual Savings hopes to stand in particular favor with federal and state regulatory authorities and be in a position soundly to expand again, perhaps dramatically, and perhaps involving additional shareholder investment in Mutual Savings by the parent corporation. Recent growth in savings accounts, considered on an incremental-effects basis, constitutes loss business, because Mutual Savings has incurred in interest and other expense more than it has received from employing proceeds in short-term interest.. bearing investments far above regulatory requirements for liquidity. Moreover, some of the attendant expense may not have hit the books. In due course (starting in 1985) Mutual Savings, which with its large ratio of shareholders' equity to total liabilities imposes a virtually zero risk on FSLIC (the U.S. agency wnich insures safety of accounts in savings and loan associations), will be required to pay lo FSLIC extra insurance premiums, based on Mutual Savings' gross size, to help fund FSLIC's protection of this process Mutual Savings, in effect, will retroactively pay extra interest-equivalent account holders in other savings and Inan associations finally recognized as insolvent, In ixpense by reason of having attracted new savings. Mutual Savings' position at the disadvantaged by his limited activit haden lated by his imited arind aforced to paye dralized, standardzed rsar ance premiums so long as he lives based on inclusion in a liability insurance pool (1) which is composed almost entirely of much worse risks, (2) which contains a considera- ble number of traveling salesmen previously convicted of drunk driving, and (3) which discovers liabilities, partly through institutional design, long after their occurrence. perhaps Micawberish, that Mutual Savings will eventually have better ideas and oppor. Deliberate growth in savings, under such conditions, reflects considerable optimism, tunities and that its officers (including the Chairman) will make fewer of the sort of mistakes in which they participated in the past, leading to difficulties now decried.

hoiders as it appears to Wess o management, should not be taken as criticism of FSLIC The foregoing commerts, designed to communicate reality for Wesco share. management. In recent years FSLIC management has bordered on heroic, considering economic and legal changes, political pressures, extraordinary work burden, novel problems and limited resources. Precision Steel Wesco's Precision Steel subsiciary, located in the outskirts of Chicago at Franklin Park, Illinois, was acquired for approximately $15 million on february 28, 1979. The price was roughly book value for a company which carried its inventories on a con- servative LIFO accounting basis and which contained significant cash balances. More important, it had reached its position from a modest beginning through maintenance o ound, customer-oriented business values inculcated over a long time by a gifter founder and his successors. Precision Steel owns a well-established steel service center business and a subsidiary engaged in the manufacture and distribution of tool room supplies and other specialty metal products. Precision Steel's businesses contributed $2,034,000 to "normal" net operating income in 1984, up 25% compared with $1,622,000 in 1983. Such a sharp increase in 1984 profit was not anticipated and was largely attributable to (1) increased sales (up 20% to $55,098,000) a.ld (2) some favorable quantity-order prices on steel purchased. Under the leadership of David Hillstrom, Precision Steel's businesses are now quite satistactory, taking into account the financial leverage put into Wesco's consolidated picture incident to their acquisition. The 1984 year could be a hard act to follow. Shortly after Wesco's purchase of Frecision Steel, a substantial physical expansion of steel warehousing facilities was authorized, involving a new building in Charlotte, North Caolina. The new building and the whole North Carolina operation are now very successful, contributing $8,589,000 to sales in 1984 at a profit percentage higher than has prevailed in the long-established Chicago headquarters' facility. advanced on the quality scale from mere commodity type businesses. Many customers Precision Steel's businesses, despite their mundane nomenclature, are steps of Precision Steel, needing dependable supply on short notice of specialized grades of high-quality, cold-rolled strip steel, reasonable prices, technical excellence in cutting to order, and remembrance when supplies are short, rightly believe that they have no fully comparable alternative in Precision Steel's market area, Indeed, many customers at locations remole from Chicago and Charlotte: (for instance, Los Angeles) seek out Pi. sion Steel's service. liquid assets available, Wesco remains interested in logical expansion of Precision Steel's businesses, using All Other "Normal" Net Operating Income All other "normal" net operating incorne, net cf interest paid and general corporate expenses, rose to $4,550,000 in 1984 from $3,839,000 in 1983. Sources were (1) rents ($2,078,000 gross, excluding rent from Mutual Savings) from Wesco's Pasadena office building block (predominantly leased to outsiders although Mutual Savings Is the ! ground flour tenant) and (2) interest and dividends from cash equivaients and 6 i marketable securities held by Precision Steel and its subsidiaries and at the parent company level. Net Gains on Sales of Securities Wesso's aggregate net gains on sales of securities, combined, after income taxes, had been used, would have been both: (1) shifted to a different income category and (2 $ $1,080,000 portion of 1984 securities gains, if a different accounting treatmen increased by $1,765,000. See next section. Unusual Income and Certain Accounting Quirks in 1984 Reporting Wesco's consolidated audited figures for net earnings contained in this Annual Report are lower by $1,328,000 in aggregate ($.19 per share) with respect to the nine months ended September 30, 1984, than the figures contained in Wesco's previously. issued quarterly reports covering such nine months. The downward restatement of earlier reported earnings occurred because, after the close of the year, Wesco's outside auditor made an unanticipated interpretation of generally accepted accounting principles applicable to an unusual business transaction. General Foods' stock from Wesco to General Foods under a written arrangement with The unusual business transaction was cash paid by General Foods for transfer of General Foods, specifying intention to create an exact dividend-equivalent, which kept Wesco's percentage ownership of General Foods the same at all times. Under such circumstances, income tax law quite naturally treats all proceeds of the in-form "sale" of General Foods stock as a dividend. which is the I. R.S. view as well as Wesco's view of the underlying economic substance. Last year, in a virtually identical case, Wesco's outside statements including accounting treatment in conformity with in-subslance dividend auditor approved, for the consolidated group of which Wesco is a part, financial reporting to the I.R.S, and Wesco's 1984 quarterly reports of earnings followed this early in 1985 came down in favor of treating the 1984 transactions with General Foods as precedent with no objection. But, after much deliberation, the outside auditor's opinion sales instead of dividend-equivalents, except that income tax provision continued to be computed on the in-substance dividend basis. From the Wesco shareholders' vantage point the result from the outside auditing Wesco-auditor disagreement is now on the side of underreporting income. Wesco's decision made is that the error, if any, existing in the audited accounts by reason of the audited net income for the full year 1984 is now lower by $1,765,000 ($.25 per share) General Foods had been reported as unusual dividends or dividend-equivalents, fo!- than would have been reported if all proceeds of the 1984 business transaction with Iowing Wesco's view of substance. Either way, any income from the Wesco-General "oods business transaction is reported as "unusual" or from an irregular source (securities gains), and securities grinn and, either way ie 19ie ar-ad balance sheet is cryint the would with the $1,765,000 increase augmenting book net worth of Wesco. have been $1,765,000 higher f « an identic al number of General Foods' shares owned,

While Wesco disagrees with its outside auditor on the accounting issue, Wesco can find something to applaud in (1) a de-emphasis of year-to-year consistency in search for where it has any doubt, which may err on the side of under-reporting income, ‹ onsider. an answer best in the auditor's latest view and (2) an auditor's favoring of a decision, inga common tendency of corporate clients to favor decisions in the opposite direction. Were Wesco running a national accounting partnership it would want a system where a high-ranked partner, free of business-retaining pressure, could revers: account- ing decisions urged by field partners, so Wesco can hardly complain about the inconsis- tent messages from an audit-management system which forced Wesco in 1984 to change at year end quarterly income figures earlier reported. However, in this murky case, where we happen to know that one of the country's most eminent accountants agrees with the Wesco view, we must admit to minor irritation with the fates. Wesco makes special effort aimed at high-quality reporting to shareholders. (For instance, only ble securities, does Wesco consciously keep communication with shareholders to the with respect to competitively proprietary information, such as transactions in marketa. legal minimum.) Thus when the audit quality-control system of its outside (.F.A. firm selects Wesco for forced restatement of numbers previously given shareholders, we feel much as if we were a duty-obsessed engineering student al Brigham Young University. accidentally fear-gassed by the national guard in a necessary program to control campus The subject of this restatement of a small part of Wesco's earnings is covered at length here only because, much more often than not, it is a bad sign for shareholders repurts. A full explanation is therefore appropriate. when a full year-end audit decreases in come reported as earned in previous quarterly The inconsistency between quarterly and final income figures is not the only lighted above in the unconventional breakdown of earnings, that unrealized apprecia. dans qui aescos audited 1984 finar: cial statements, It seems odd, as high- tion of $458,000 in a forward commitment to buy mortgage rquivalents was taken into Mutual Savings' income in 1984, which happened becose the commitment was made in futures market on a commodities exchange. Atorward commitment to buy the same mortgage equivalents, made in some other manner, for instance by simple cuntract, would not, under the applicable accounting rules, result in the same unrealized appre- cation's being reported es income. And, even though the unrealized appreciation is « footnote to the audited 1984 financial statements to find the only reference to the recognized as incone in the 1984 carnings statement, shareholders must look deep into mortgage equivalents which producer the appreciation. The balaner sheet standing proceeds of which will be usee in 1986 te: close the forward commitment to buy the alone discloses only short-term investments (U.5. Treasury Notes in this instance) the mortkage equivalents, It also seems odd, in view of the abstantial additional costs FSLIC membership will in the near tuture impose on Mutual Savinks, that prepaid FSLIC premiums amounting to anticipated men dest of sharing F$LIC liabilities. We do not object to the accounting $3, 460X0 are included in the audited consolidated balance sheet, without offset for convention at work. All complexities and interests considered, the accounting profes. asset in the savings and loan industry, with its mutualized nature of no practical adverse sion is doing all right by the civilization; the FSLIC relationship has long been a valuable consequence: and both accounting and public-policy considerations disfavor quick juture increases in burden from FSLIC membership by mason of facts already known. invention of new ace cunting convention to anticipate in current financial statements

But quirks (at least as diagnosed by Wesco) required (probably wisely, on balance) by accounting convention, do contribute to causing Wesco to break down and discuss its earnings unconventionally in its management letter and also to rall shareholders' attention to audit foolnotes. The use of both footnotes and letter is needed for a best- feasible understanding of economic reality as it appears to Wesco management. It is recognized, of course, by most certified public accountants as well as by Wesco view of economic reality where inconsistent with the image created by accounting that audited statements alone, unless accompanied by a letter giving managements convention, is an improperly incomplete form of annual communication with corporate owners. There is a limit to the communication which properly standardized at counting can create, and Wesco's outside auditors (and its parent companies' auditors) over the years have been quite supportive of Wesco's approach to expanding numerale com- munication in the management letter, even thoush outside auditing jurisdiction. Written arrangements creating the issue of unusual dividend-equivalent inconie, of the type which caused reporting quirks in 1984 as a result of transactions with General Foods, can hardly be expected lo be made year after year. However, Wesco does anticipate, based on an agreement already signed, that in 1985 more of the same sort of amount than in 1984. transactions will occur with General Foods, probably somewhat smaller in aggregate Consnlidaled Balance Sheet and Relaled Discussion Wisco's consolidated balance sheet (1) retains a strength befitting a company whose consolidated net worth supports large outstanding promises to others and (2) reflects a continuing failure to acquire additional businesses because none are found available, despite constant search, at prices deemed rational when the interest of Wesco shareholders is taken into account. As indicated in Note 2 to the accompanying financial statements, the aggregate rost at December 11, 1984 by about $13 million, down sharply from about $29 million market value of Wesco's marketable equity securities was higher than their aggregate one' year earlier. square feet including Mutual Savings' space) has a market value substantialiy in excess of Wesco's Pasadlena office building black (containing about 165,000 net rentable this real property now exceeding its depreciated carrying value ($3,069,000) in Wesco's carrying value, demonstrated by (1) mortgage debt ($5,182,000 at 9.25% fixed) against balance sheet at December 31, 1984, and (2) substantial current net cash flow to Wesco after debt service on the mortgage. holder'equity and total liquid assets. Wesco's practice has been to do a certain amount Wisco remains in a prudent position when total debt is compared to total share. oflong term borrowing in alvance of specific need, in order to have maximum financial flexibility to lad both hazards and opportunities. It is expected thai the balance sheet strength of thit consolidated enterprise will in due course be used in one or more business extensions. The extension activity, however, requires some patience, as suitable opportunities are not always present.

stock investments, both those in the savings and loan subsidiary and those heli As indicated in Schedule i accompanying Wesco's financial statements, commor temporarily elsewhere pending sale to fund business extension, tend to be concen- trated in a very few companies. Through this concentration practice better understand- ing is sought with respect to the few decisions made. The ratio of Wesco's annual reported consolidated net income to reported consoli- dated shareholders' equity, about 13% in 1982-84, (1) was dependent to a considerable extent on securities gains, irregular by nature, and (2) nonetheiess leaves something to be desired from the Wesco shareholders' point of view. Wesco began life as a savings and loan holding company in what became a very tough industry in which the real value, as distinguished from the reported book value, of most shareholders' equity became impaired, particularly ir, 1981-82. Damaged along with the rest of its industry, Wescn has been proceeding slowly under shortened sail, while it assesses damage and repairs the ship, instead of trying to make fast time by getting all canvas aloft. However, progress ultimately helpful to shareholders has not been restricted to what has shown up neatly in the income account covering this period. Increases over recent years in both (1) aggregate reported shareholders' equity and (2) the percentage of such equity outside Wesco's savings and loan segment are expected to be useful in the future. This annual report contains Form 10-K, a report filed with the Securities and Exchange Commission, and includes detailed information about Wesco and its subsidi- aries as well as audited financial statements bearing extensive footnotes. As usual, your careful atrention is sought with respect to these items. Charles T manger Chairman of the Board Charles T. Munger February 12, 1985