巴菲特1991年致股东的信（英文版）

In 1991, Berkshire's net worth increased by $2.1 billion, or 39.6%. Over the last 27 years, the period since present management took over, book value has grown from $19 to $6,437 per share, a rate of 23.7% compounded annually.

We can no longer expect to grow at the rates we have achieved in the past. Our capital base is now $7.4 billion, and as Berkshire grows, opportunities that can significantly affect our performance become scarcer. Charlie Munger, Berkshire's vice - chairman, and I have set a goal of 15% annual growth in the company's intrinsic value. To achieve this over the next ten years, our book value would have to increase by at least $2.2 billion. Wish us luck; we'll need it.

The extraordinary growth in our book value in 1991 is unlikely to be repeated. The sharp increase in the price - earnings ratios of Coca - Cola and Gillette contributed $1.6 billion to our $2.1 billion increase in net worth last year. Three years ago, when we made our large investment in Coca - Cola, Berkshire's net worth was about $3.4 billion. Now, the market value of our Coca - Cola holdings alone exceeds that amount.

Coca - Cola and Gillette are two of the best companies in the world. We expect their earnings to grow at an impressive rate in the coming years, and correspondingly, the value of our holdings will increase proportionally. However, last year the increase in the stock prices of these two companies far exceeded the growth in their earnings. So, we had a double - benefit last year: from the excellent earnings of the companies and the market's re - evaluation of their stocks. We believe this adjustment is justifiable, but it's unlikely to happen every year. In the future, we'll probably have to rely mainly on the former for gains.

In 1989, as a consumer who drank five cherry Cokes a day, I announced our $1 - billion investment in Coca - Cola, describing it as the ultimate example of putting our money where our mouth is. Then, on August 18, 1991, when I was elected interim chairman of Salomon Inc., it was a different story. This time, I was putting my mouth where our money was.

I'm sure you've all read about my appointment as interim chairman of Salomon's board in the newspapers. My willingness to accept this position has a profound and important meaning: Berkshire has a significant investment in Salomon, and when problems arose, I felt it was my responsibility to step in and help. The situation at Salomon was complex and challenging, involving issues such as violations of Treasury bond auction rules. My role was to work with the board and management to address these problems, restore the company's reputation, and protect the interests of our shareholders.

During my tenure at Salomon, I learned a great deal about the firm and the financial industry. I also came to appreciate the importance of corporate culture and the role it plays in shaping a company's behavior. At Salomon, there were some aspects of the culture that needed to be changed to ensure the company's long - term success. We focused on promoting a more ethical and responsible approach to business, emphasizing the importance of honesty and integrity in all dealings.

In addition to the Salomon situation, we had other important developments in 1991. We made a sizable acquisition in 1991 - the H. H. Brown Company, the leading North American manufacturer of work shoes and boots. Despite the fact that the shoe business is a tough one - about 85% of the billion pairs of shoes purchased in the United States each year are imported - H. H. Brown has a history of earning unusually fine margins on sales and assets.

A distinguishing characteristic of H. H. Brown is one of the most unusual compensation systems I've encountered. A number of key managers are paid an annual salary of $7,800, to which is added a designated percentage of the profits of the company after these are reduced by a charge for capital employed. These managers therefore truly stand in the shoes of owners. In contrast, most managers talk the talk but don't walk the walk, choosing instead to employ compensation systems that are long on carrots but short on sticks (and that almost invariably treat equity capital as if it were cost - free). The arrangement at Brown, in any case, has served both the company and its managers exceptionally well, which should be no surprise: managers eager to bet heavily on their abilities usually have plenty of ability to bet on.

We also continued to focus on the performance of our various subsidiaries and investments. Our insurance business remained strong, with GEICO and our other insurance operations performing well. The concept of "float" in the insurance industry is an important one, and we strive to manage our float effectively to generate a positive return. In addition to our insurance business, our non - insurance subsidiaries, such as the Nebraska Furniture Mart and Borsheim's Jewelry, continued to thrive, providing excellent returns and customer service.

When evaluating our investments and businesses, we use the concept of "look - through earnings." Briefly stated, the look - through earnings of a company consist of: (1) the reported operating earnings, plus; (2) the retained operating earnings of major investees that, under GAAP accounting, are not reflected in the profits, minus; (3) an allowance for the tax that would be paid if these retained earnings of investees had instead been distributed8. Investors can also benefit by focusing on their own look - through earnings. This can be calculated by looking at the total underlying earnings attributable to the shares that you hold in your portfolio. Your role should then be to create a portfolio (or "company") that will produce the highest look - through earnings a long time from now. Using this approach will force you to look at the long - term business prospects rather than the short - term market movements. Future earnings will, at the end of the day, influence the prices.

In addition to the convertible preferreds we had invested in previously, we purchased one other private placement in 1991, $300 million of American Express Percs. This security was essentially a common stock that featured a trade - off 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.

Charlie and I have always enjoyed the annual shareholder meeting, and we hope you will come and join us. The quality of our shareholders is evident from the questions you ask. We have attended many shareholder meetings, but no other company has shareholders like those of Berkshire, a combination of high - intelligence individuals who share the fortunes of the managers.

As in previous years, after the meeting, we will have buses to take you to the Nebraska Furniture Mart and Borsheim's Jewelry, or to the hotel and airport. I hope you will have more time to explore the wonders of these two stores. Of course, shareholders who come a few days earlier can also visit the furniture store on weekends. It is open from 10 am to 5:30 pm on Saturdays and from noon to 5:30 pm on Sundays. When you go there, remember to visit the See's Candies booth and find out why Americans can swallow 26 million pounds of See's Candies each year.

Borsheim's is usually closed on Sundays, but it will be open especially for shareholders and guests during the shareholder meeting. It will be open from noon to 6 pm on Sunday, April 26. There will also be a special party for all shareholders the night before (but you must register with Ms. Gladys Kaiser in our office to get an invitation). That night, there will be a retrospective of Patek Philippe's works over the past 150 years, including watches owned by historical figures such as Queen Victoria of England, Pope Pius IV, and Albert Einstein. In addition, the highlight of the venue will be a watch designed and crafted by Patek Philippe artisans, which took a year to make and is worth $5 million. If there are no accidents, it will be on display with other items, unless Charlie can't resist the temptation and buys it first.

Last year at the shareholder meeting, Nicholas Kenner challenged me again. He said, "I stated in last year's 1990 annual report that he was ten years old on May 11, 1990, but in fact, he was only nine years old." He then said in a sarcastic tone, "If you can't even get this right, how can I believe the other numbers in your report are correct?" I'm still thinking about how to give a strong answer. Nicholas will be present this year. He refused my invitation to go to Disneyland that day, so please continue to enjoy this one - sided battle of wits.

We are also constantly reminded of the importance of having a set of clear acquisition criteria. We are looking for large purchases (at least $10 million of after - tax earnings), businesses with demonstrated consistent earning power (future projections are of little interest to us, nor are "turnaround" situations), businesses earning good returns on equity while employing little or no debt, and an offering price (we don't want to waste our time or that of the seller by talking, even preliminarily, about a transaction when price is unknown). We will not engage in unfriendly takeovers and prefer to buy for cash, but will consider issuing stock when Berkshire receives as much in intrinsic business value as it gives. We also want to make it clear that we are not interested in receiving suggestions about purchases we might make in the general stock market. We do our own homework and make our own decisions based on our own analysis and understanding of the businesses and industries.

In conclusion, 1991 was a year of both challenges and opportunities for Berkshire. We faced difficulties at Salomon, but also made important acquisitions and saw the continued success of our existing businesses. Looking ahead, we will continue to focus on finding high - quality businesses, managing our investments carefully, and maintaining the unique culture and values that have made Berkshire what it is today. We appreciate the support and trust of our shareholders and look forward to another year of working together to achieve our goals.

Warren E. Buffett

Chairman of the Board

February 28, 1992