To the Shareholders of Berkshire Hathaway Inc.:
First, a few words about accounting. The merger with Diversified Retailing Company, Inc. at yearend adds two new complications in the presentation of our financial results. After the merger, our ownership of Blue Chip Stamps increased to approximately 58% and, therefore, the accounts of that company must be fully consolidated in the Balance Sheet and Statement of Earnings presentation of Berkshire. In previous reports, our share of the net earnings only of Blue Chip had been included as a single item on Berkshire’s Statement of Earnings, and there had been a similar one-line inclusion on our Balance Sheet of our share of their net assets.Net Earnings Earnings Before Income Taxes After Tax -------------------------------------- ------------------ Total Berkshire Share Berkshire Share ------------------ ------------------ ------------------ (in thousands of dollars) 1978 1977 1978 1977 1978 1977 -------- -------- -------- -------- -------- -------- Total - all entities ......... $66,180 $57,089 $54,350 $42,234 $39,242 $30,393 ======== ======== ======== ======== ======== ======== Earnings from operations: Insurance Group: Underwriting ............. $ 3,001 $ 5,802 $ 3,000 $ 5,802 $ 1,560 $ 3,017 Net investment income .... 19,705 12,804 19,691 12,804 16,400 11,360 Berkshire-Waumbec textiles 2,916 (620) 2,916 (620) 1,342 (322) Associated Retail Stores, Inc. ............ 2,757 2,775 2,757 2,775 1,176 1,429 See’s Candies .............. 12,482 12,840 7,013 6,598 3,049 2,974 Buffalo Evening News ....... (2,913) 751 (1,637) 389 (738) 158 Blue Chip Stamps - Parent .. 2,133 1,091 1,198 566 1,382 892 Illinois National Bank and Trust Company ....... 4,822 3,800 4,710 3,706 4,262 3,288 Wesco Financial Corporation - Parent .... 1,771 2,006 777 813 665 419 Mutual Savings and Loan Association ........ 10,556 6,779 4,638 2,747 3,042 1,946 Interest on Debt ........... (5,566) (5,302) (4,546) (4,255) (2,349) (2,129) Other ...................... 720 165 438 102 261 48 -------- -------- -------- -------- -------- -------- Total Earnings from Operations ............ $52,384 $42,891 $40,955 $31,427 $30,052 $23,080 Realized Securities Gain ..... 13,796 14,198 13,395 10,807 9,190 7,313 -------- -------- -------- -------- -------- -------- Total Earnings ........... $66,180 $57,089 $54,350 $42,234 $39,242 $30,393 ======== ======== ======== ======== ======== ======== March 26, 1979
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