Annual Report - BERKSHIRE HATHAWAY INC.

1 REPORTB usiness ActivitiesBerkshire HATHAWAY a holding company owning subsidiaries that engage in a number of diversebusiness activities including property and casualty insurance and reinsurance, utilities and energy, finance,manufacturing, services and retailing. Included in the group of subsidiaries that underwrite property and casualtyinsurance and reinsurance is GEICO, the third largest auto insurer in the United States and two of the largestreinsurers in the world, General Re and the BERKSHIRE HATHAWAY Reinsurance Group. Other subsidiaries thatunderwrite property and casualty insurance include National Indemnity Company, Medical Protective Company,Applied Underwriters, Liability Insurance Company, Central States Indemnity Company, Kansas BankersSurety, Cypress Insurance Company, and several other subsidiaries referred to as the Homestate Companies.

2 MidAmerican Energy Holdings Company ( MidAmerican ) is an international energy holding companyowning a wide variety of operating companies engaged in the generation, transmission and distribution of MidAmerican s operating energy companies are Northern Electric and Yorkshire Electricity;MidAmerican Energy Company; Pacific Power and Rocky Mountain Power; and Kern River Gas TransmissionCompany and Northern Natural Gas. In addition, MidAmerican owns HomeServices of America, a real estatebrokerage firm. BERKSHIRE s finance and financial products businesses primarily engage in proprietary investingstrategies(BH Finance), commercial and consumer lending( BERKSHIRE HATHAWAY Credit CorporationandClayton Homes)and transportation equipment and furniture leasing(XTRAandCORT).

3 McLane Companyis awholesale distributor of groceries and nonfood items to convenience stores, wholesale clubs, massmerchandisers, quick service restaurants and Marmon Groupis an international association ofapproximately 130 manufacturing and service businesses that operate independently within diverse Industriesis the world s largest manufacturer of tufted broadloom business activities are conducted through BERKSHIRE s other manufacturing, services and Mooreis a formulator, manufacturer and retailer of architectural and industrial Manvilleis a leading manufacturer of insulation and building Building Brandsis amanufacturer of face brick and concrete masonry steel connector products andengineering software for the building components of the Loom, Russell, Vanity Fair, Garan,Fechheimer, Brown Shoe GroupandJustin Brandsmanufacture, license and distribute apparel andfootwear under a variety of brand Internationalprovides training to aircraft and fractional ownership programs for general aviation FurnitureMart.

4 Willey Home Furnishings, Star FurnitureandJordan s Furnitureare retailers of home , Helzberg Diamond ShopsandBen Bridge Jewelerare retailers of fine addition, other manufacturing, service and retail businesses include:Buffalo News, a publisher of a dailyand Sunday newspaper;See s Candies, a manufacturer and seller of boxed chocolates and other confectioneryproducts;Scott Fetzer, a diversified manufacturer and distributor of commercial and industrial products;Albecca,a designer, manufacturer and distributor of high-quality picture framing products;CTB International,amanufacturer of equipment for the livestock and agricultural industries;International Dairy Queen, a licensorand service provider to about 5,700 stores that offer prepared dairy treats and food;The Pampered Chef, thepremier direct seller of kitchen tools in the ;Forest River, a leading manufacturer of leisure vehicles in ;Business Wire, the leading global distributor of corporate news, multimedia and regulatory filings;IscarMetalworking Companies, an industry leader in the metal cutting tools business;TTI, Inc.

5 , a leading distributor ofelectronic components andRichline Group, a leading jewelry decisions for the various BERKSHIRE businesses are made by managers of the business decisions and all other capital allocation decisions are made for BERKSHIRE and its subsidiaries byWarren E. Buffett, in consultation with Charles T. Munger. Mr. Buffett is Chairman and Mr. Munger is ViceChairman of BERKSHIRE s Board of Directors.** BERKSHIRE HATHAWAY Annual REPORTTABLE OF CONTENTSB usiness Front CoverCorporate Performance vs. the S&P 2 Chairman s Letter*.. 3 Acquisition 24 Management s Report on Internal Control Over Financial 24 Report of Independent Registered Public Accounting 25 Selected Financial Data For The Past Five 26 Consolidated Financial 27 Management s 62 Owner s 89 Common Stock 95 Operating 96 Directors and Officers of the Back Cover*Copyright 2009 By Warren E.

6 BuffettAll Rights ReservedBerkshire s Corporate Performance vs. the S&P 500 Annual Percentage ChangeYearin Per-ShareBook Value ofBerkshire(1)in S&P 500with DividendsIncluded(2)RelativeResults(1)-( 2) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )( ) ( ) ( ) (.4) ( )( ) Annual Gain Gain ,319%4,276%Notes:Data are for calendar years with these exceptions: 1965 and 1966, year ended 9/30; 1967, 15 months ended12 in 1979, accounting rules required insurance companies to value the equity securities they hold at marketrather than at the lower of cost or market, which was previously the requirement.

7 In this table, BERKSHIRE s resultsthrough 1978 have been restated to conform to the changed rules. In all other respects, the results are calculated usingthe numbers originally S&P 500 numbers arepre-taxwhereas the BERKSHIRE numbers areafter-tax. If a corporation such as Berkshirewere simply to have owned the S&P 500 and accrued the appropriate taxes, its results would have lagged the S&P 500in years when that index showed a positive return, but would have exceeded the S&P 500 in years when the indexshowed a negative return. Over the years, the tax costs would have caused the aggregate lag to be HATHAWAY the Shareholders of BERKSHIRE HATHAWAY Inc.

8 :Ourdecreasein net worth during 2008 was $ billion, which reduced the per-share book value ofboth our Class A and Class B stock by Over the last 44 years (that is, since present management took over)book value has grown from $19 to $70,530, a rate of compounded annually.*The table on the preceding page, recording both the 44-year performance of BERKSHIRE s book valueand the S&P 500 index, shows that 2008 was the worst year for each. The period was devastating as well forcorporate and municipal bonds, real estate and commodities. By yearend, investors of all stripes were bloodiedand confused, much as if they were small birds that had strayed into a badminton the year progressed, a series of life-threatening problems within many of the world s great financialinstitutions was unveiled.

9 This led to a dysfunctional credit market that in important respects soon turnednon-functional. The watchword throughout the country became the creed I saw on restaurant walls when I wasyoung: In God we trust; all others pay cash. By the fourth quarter, the credit crisis, coupled with tumbling home and stock prices, had produced aparalyzing fear that engulfed the country. A freefall in business activity ensued, accelerating at a pace that I havenever before witnessed. The and much of the world became trapped in a vicious negative-feedbackcycle. Fear led to business contraction, and that in turn led to even greater debilitating spiral has spurred our government to take massive action.

10 In poker terms, the Treasuryand the Fed have gone all in. Economic medicine that was previously meted out by the cupful has recentlybeen dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcomeaftereffects. Their precise nature is anyone s guess, though one likely consequence is an onslaught of , major industries have become dependent on Federal assistance, and they will be followed by citiesand states bearing mind-boggling requests. Weaning these entities from the public teat will be a politicalchallenge. They won t leave the downsides may be, strong and immediate action by government was essential last year ifthe financial system was to avoid a total breakdown.