BERKSHIRE HATHAWAY INC. TABLE OF …

1 BERKSHIRE HATHAWAY ANNUAL REPORTTABLE OF CONTENTSB usiness Front CoverCorporate Performance vs. the S&P 's Letter*..3 Selected Financial Data For ThePast Five Auditors' Financial 's 's Financial Statements Unaudited for BERKSHIRE Business Stock and Officers of the Back Cover*Copyright 2000 By Warren E. BuffettAll Rights ReservedBusiness ActivitiesBerkshire HATHAWAY Inc. is a holding company owning subsidiaries engaged ina number of diverse business activities. The most important of these is the propertyand casualty insurance business conducted on both a direct and reinsurance basisthrough a number of subsidiaries.

2 Included in this group of subsidiaries is GEICOC orporation, the sixth largest auto insurer in the United States and General ReCorporation, one of the four largest reinsurers in the portfolios of insurance subsidiaries include meaningful equityownership percentages of other publicly traded companies. Investments with a marketvalue in excess of $750 million at the end of 1999 include approximately 11% of theoutstanding capital stock of American Express Company, approximately 8% of thecapital stock of The Coca-Cola Company, approximately 8 % of the capital stock ofFederal Home Loan Mortgage Corporation ("Freddie Mac"), approximately 9% of thecapital stock of The Gillette Company, approximately 18% of the capital stock of TheWashington Post Company and approximately 3 % of the capital stock of WellsFargo and Company.

3 Much information about these publicly-owned companies isavailable, including information released from time to time by the business activities conducted by non-insurance subsidiaries includepublication of a daily and Sunday newspaper in Western New York (Buffalo News),manufacture and sale of boxed chocolates and other confectionery products (See'sCandies), diversified manufacturing and distribution (managed by Scott Fetzer andwhose principal products are sold under the Kirby and Campbell Hausfeld brandnames), retailing of home furnishings (Nebraska Furniture Mart, Willey HomeFurnishings, Star Furniture Company and Jordan s Furniture, Inc.)

4 , manufacture,import and distribution of footwear ( Brown Shoe Company, Lowell Shoe, Dexter Shoe Company), retailing of fine jewelry (Borsheim's and Helzberg'sDiamond Shops), training to operators of aircraft and ships throughout the world(FlightSafety International), providing fractional ownership programs for generalaviation aircraft (Executive Jet), and licensing and servicing a system of almost 6,000 Dairy Queen decisions for the various BERKSHIRE businesses are made by managers ofthe business units. Investment decisions and all other capital allocation decisions aremade for BERKSHIRE and its subsidiaries by Warren E.

5 Buffett, in consultation withCharles T. Munger. Mr. Buffett is Chairman and Mr. Munger is Vice Chairman ofBerkshire's Board of Directors.**2 BERKSHIRE s Corporate Performance vs. the S&P 500 Annual Percentage Change Year (1) (2) (1)-(2) in Per-Share in S&P 500 Book Value ofwith ( ) ( )1968 .. ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) .. ( )Notes:Data are for calendar years with these exceptions: 1965 and 1966, year ended 9/30; 1967, 15 months ended 12/31.

6 Starting in 1979, accounting rules required insurance companies to value the equity securities they hold at market ratherthan at the lower of cost or market, which was previously the requirement. In this TABLE , BERKSHIRE 's results through 1978have been restated to conform to the changed rules. In all other respects, the results are calculated using the numbersoriginally S&P 500 numbers are pre-tax whereas the BERKSHIRE numbers are after-tax. If a corporation such as BERKSHIRE weresimply to have owned the S&P 500 and accrued the appropriate taxes, its results would have lagged the S&P 500 in yearswhen that index showed a positive return, but would have exceeded the S&P in years when the index showed a negativereturn.

7 Over the years, the tax costs would have caused the aggregate lag to be substantial. *All figures used in this report apply to BERKSHIRE 's A shares, the successor to the only stock that the companyhad outstanding before 1996. The B shares have an economic interest equal to 1/30th that of the HATHAWAY the Shareholders of BERKSHIRE HATHAWAY Inc.:Our gain in net worth during 1999 was $358 million, which increased the per-share book value of both ourClass A and Class B stock by Over the last 35 years (that is, since present management took over) per-sharebook value has grown from $19 to $37,987, a rate of compounded annually.

8 *The numbers on the facing page show just how poor our 1999 record was. We had the worst absoluteperformance of my tenure and, compared to the S&P, the worst relative performance as well. Relative results are whatconcern us: Over time, bad relative numbers will produce unsatisfactory absolute Inspector Clouseau could find last year s guilty party: your Chairman. My performance reminds me ofthe quarterback whose report card showed four Fs and a D but who nonetheless had an understanding coach. Son, he drawled, I think you re spending too much time on that one subject.

9 My one subject is capital allocation, and my grade for 1999 most assuredly is a D. What most hurt us duringthe year was the inferior performance of BERKSHIRE s equity portfolio and responsibility for that portfolio, leavingaside the small piece of it run by Lou Simpson of GEICO, is entirely mine. Several of our largest investees badlylagged the market in 1999 because they ve had disappointing operating results. We still like these businesses and arecontent to have major investments in them. But their stumbles damaged our performance last year, and it s no surething that they will quickly regain their fallout from our weak results in 1999 was a more-than-commensurate drop in our stock price.

10 In 1998,to go back a bit, the stock outperformed the business. Last year the business did much better than the stock, adivergence that has continued to the date of this letter. Over time, of course, the performance of the stock must roughlymatch the performance of the our poor showing last year, Charlie Munger, BERKSHIRE s Vice Chairman and my partner, and I expectthat the gain in BERKSHIRE s intrinsic value over the next decade will modestly exceed the gain from owning the S& can t guarantee that, of course. But we are willing to back our conviction with our own money.