it was earning about $2 million on $8 million of net tangible assets. Let us assume that our
hypothetical mundane business then had $2 million of earnings also, but needed $18 million in
net tangible assets for normal operations. Earning only 11% on required tangible assets, that
mundane business would possess little or no economic Goodwill.
A business like that, therefore, might well have sold for the value of its net tangible assets, or
for $18 million. In contrast, we paid $25 million for See’s, even though it had no more in
earnings and less than half as much in "honest-to-God" assets. Could less really have been
more, as our purchase price implied? The answer is "yes" ?even if both businesses were
expected to have flat unit volume ?as long as you anticipated, as we did in 1972, a world of
continuous inflation.
To understand why, imagine the effect that a doubling of the price level would subsequently
have on the two businesses. Both would need to double their nominal earnings to $4 million to
keep themselves even with inflation. This would seem to be no great trick: just sell the same
number of units at double earlier prices and, assuming profit margins remain unchanged, profits
also must double.
But, crucially, to bring that about, both businesses probably would have to double their nominal
investment in net tangible assets, since that is the kind of economic requirement that inflation
usually imposes on businesses, both good and bad. A doubling of dollar sales means
correspondingly more dollars must be employed immediately in receivables and inventories.
Dollars employed in fixed assets will respond more slowly to inflation, but probably just as
surely. And all of this inflation-required investment will produce no improvement in rate of
return. The motivation for this investment is the survival of the business, not the prosperity of
the owner.
Remember, however, that See’s had net tangible assets of only $8 million. So it would only
have had to commit an additional $8 million to finance the capital needs imposed by inflation.
The mundane business, meanwhile, had a burden over twice as large ?a need for $18 million of
additional capital.
After the dust had settled, the mundane business, now earning $4 million annually, might still be
worth the value of its tangible assets, or $36 million. That means its owners would have gained
only a dollar of nominal value for every new dollar invested. (This is the same dollar-for-dollar
result they would have achieved if they had added money to a savings account.)
See’s, however, also earning $4 million, might be worth $50 million if valued (as it logically
would be) on the same basis as it was at the time of our purchase. So it would have gained $25
million in nominal value while the owners were putting up only $8 million in additional capital ?
over $3 of nominal value gained for each $1 invested.
Remember, even so, that the owners of the See’s kind of business were forced by inflation to
ante up $8 million in additional capital just to stay even in real profits. Any unleveraged
business that requires some net tangible assets to operate (and almost all do) is hurt by
inflation. Businesses needing little in the way of tangible assets simply are hurt the least.
And that fact, of course, has been hard for many people to grasp. For years the traditional
wisdom ?long on tradition, short on wisdom ?held that inflation protection was best provided by
businesses laden with natural resources, plants and machinery, or other tangible assets ("In
Goods We Trust"). It doesn’t work that way. Asset-heavy businesses generally earn low rates
of return ?rates that often barely provide enough capital to fund the inflationary needs of the
existing business, with nothing left over for real growth, for distribution to owners, or for
acquisition of new businesses.
In contrast, a disproportionate number of the great business fortunes built up during the
inflationary years arose from ownership of operations that combined intangibles of lasting
value with relatively minor requirements for tangible assets. In such cases earnings have
bounded upward in nominal dollars, and these dollars have been largely available for the
acquisition of additional businesses. This phenomenon has been particularly evident in the
communications business. That business has required little in the way of tangible investment ?
yet its franchises have endured. During inflation, Goodwill is the gift that keeps giving.
But that statement applies, naturally, only to true economic Goodwill. Spurious accounting
Goodwill ?and there is plenty of it around ?is another matter. When an overexcited management
purchases a business at a silly price, the same accounting niceties described earlier are
observed. Because it can’t go anywhere else, the silliness ends up in the Goodwill account.
Considering the lack of managerial discipline that created the account, under such
circumstances it might better be labeled "No-Will". Whatever the term, the 40-year ritual
typically is observed and the adrenalin so capitalized remains on the books as an "asset" just as
if the acquisition had been a sensible one.
* * * * *
If you cling to any belief that accounting treatment of Goodwill is the best measure of economic
reality, I suggest one final item to ponder.
Assume a company with $20 per share of net worth, all tangible assets. Further assume the
company has internally developed some magnificent consumer franchise, or that it was
fortunate enough to obtain some important television stations by original FCC grant. Therefore,
it earns a great deal on tangible assets, say $5 per share, or 25%.
With such economics, it might sell for $100 per share or more, and it might well also bring that
price in a negotiated sale of the entire business.
Assume an investor buys the stock at $100 per share, paying in effect $80 per share for Goodwill
(just as would a corporate purchaser buying the whole company). Should the investor impute a
$2 per share amortization charge annually ($80 divided by 40 years) to calculate "true" earnings
per share? And, if so, should the new "true" earnings of $3 per share cause him to rethink his
purchase price?
* * * * *
We believe managers and investors alike should view intangible assets from two perspectives:
In analysis of operating results ?that is, in evaluating the underlying economics of a business
unit ?amortization charges should be ignored. What a business can be expected to earn on
unleveraged net tangible assets, excluding any charges against earnings for amortization of
Goodwill, is the best guide to the economic attractiveness of the operation. It is also the best
guide to the current value of the operation’s economic Goodwill.
In evaluating the wisdom of business acquisitions, amortization charges should be ignored also.
They should be deducted neither from earnings nor from the cost of the business. This means
forever viewing purchased Goodwill at its full cost, before any amortization. Furthermore, cost
should be defined as including the full intrinsic business value ?not just the recorded
accounting value ?of all consideration given, irrespective of market prices of the securities
involved at the time of merger and irrespective of whether pooling treatment was allowed. For
example, what we truly paid in the Blue Chip merger for 40% of the Goodwill of See’s and the
News was considerably more than the $51.7 million entered on our books. This disparity exists
because the market value of the Berkshire shares given up in the merger was less than their
intrinsic business value, which is the value that defines the true cost to us.
Operations that appear to be winners based upon perspective (1) may pale when viewed from
perspective (2). A good business is not always a good purchase ?although it’s a good place to
look for one.
We will try to acquire businesses that have excellent operating economics measured by (1) and
that provide reasonable returns measured by (2). Accounting consequences will be totally
ignored.
At yearend 1983, net Goodwill on our accounting books totaled $62 million, consisting of the
$79 million you see stated on the asset side of our balance sheet, and $17 million of negative
Goodwill that is offset against the carrying value of our interest in Mutual Savings and Loan.
We believe net economic Goodwill far exceeds the $62 million accounting number.
● 一九八四年
1984年波克夏的净值约增加了一亿五千万美金，每股约等于133美金，这个数字看起来似乎还不
错，不过若考虑所投入的资金，事实上只能算普通，二十年来我们的净值约以22.1%年复合成长率
增加(从1965年的19.46到1984年的1,108.77) ，去年则只有13.6%。
如同我们去年曾提过的，真正重要的是每股内含价值的成长率，不过由于其涉及太多主观的意见而
难以计算，所以以我们的情况，通常用帐面价值当作代替(虽然通常是有点低估) ，我个人认为在
1984年内含价值与帐面价值增加的程度可谓相当。
过去个人以学术角度曾跟各为提到暴增的资本将会托累资本报酬率，不幸的是今年我们以报导新闻
的方式跟各位报告，过去动辄22%的成长率已成历史，在往后十年我们大约要赚到39亿美金，每年
才能以15%成长(假设我们仍维持目前的股利政策，后面我会详加讨论)，想要顺利达成目标，必需
要有一些极棒的点子，我跟我的执行合伙人Charlie Munger目前并无任何够棒点子，不过我们的经
验是有时它会突然冒出来。
● 下表显示波克夏帐列盈余的来源，由于年中与Blue Chips合并致使我们在一些长期投资的股
权发生变动，
而各个公司资本利得损失并不包含在内而是汇总于下表最后「已实现出售证券利得」一栏
(我们认为单一年度的出售证券利得并无太大意义，但每年加总累计的数字却相当重要)，至
于商誉的摊销则以单一字段另行列示，虽然本表列示的方式与一般公认会计原则不尽相同但
最后的损益数字却是一致的:
1984 Unit:
US'000
Earnings Before Income Tax After
Income
Tax
Percent Total Berkshire Share Berkshire
Share
Earnings from Operation
Insurance Group
100.0% (48,060) (48,060) (25,955)
100.0% 68,903 68,903 62,059
Berkshire-Waumbec Textiles 100.0% 418 418 226
Associated Retail Stores 100.0% (1,072) (1,072) (579)
Nebraska Furniture Mart 80.0% 14,511 11,609 5,917
See's Candies 100.0% 26,644 26,644 13,380
Buffalio Evening News 100.0% 27,328 27,328 13,317
Blue Chip Stamps-Parent 100.0% (1,843) (1,843) (899)
Wesco Financial Corporation-Parent 80.1% 9,777 7,831 4,828
Mutual Savings and Loan 80.1% 1,456 1,166 3,151
Presion Steel 80.1% 4,092 3,278 1,696
Amortization of Goodwill (1,434) (1,434) (1,434)
Interest on Debt (14,734) (14,097) (7,452)
Shareholder's Contribution (3,179) (3,179) (1,716)
Other 4,932 4,529 3,476
87,739 82,021 70,015
Realized Securities Gain 112,810 109,272 78,881
Total Earnings-all entities 200,549 191,293 148,896
● 比较细心的股东可能会发现GEICO特别股利的金额与其分类的位置有变动，虽然损益数字
些微受到影响，但实质上并无太大差别，但背后的故事却相当有趣。
如同去年我报告过的，(1)1983年中GEICO 宣布实施库藏股买回自家股票(2)同时我们签署协
议同意GEICO 自我们手中买回等比例的股份(3)总结最后我们卖还给GEICO 35万股，并收到
2,100万现金，而我们在GEICO的持股比例则维持不变(4)我们著名的律师事务所认可这整件
交易为减资(5)依税法我们只要缴交6.9%的集团企业间股利税(6)最重要的是这2,100万现金比
我们未认列的未分配盈余少得多，故经济实质面而言，我们将之视为股利的分配。
但由于这种情况并不常见且金额又不小，所以在去年季报与年报中我们特别加以分别列示，
并且经我们的本地签证会计师认可同意。
而1984年General Foods也发生同样的状况，只是后者是直接自公开市场中买回，所以我们
每天卖出一点股份以使我们在该公司的持股比例维持不变，同样的双方在交易之前已签订好
协议，且我们收到的现金比我们在该公司未认列的未分配盈余少得多，总计我们收到2,100
万现金，而持股比例则维持在8.75%不变。
但这时签证会计师的纽约总部却跳出来讲话，否决的其分所的结论，认定我们与GEICO 与
General Foods之间的交易属于股权买卖而非股利分配，在这种情况下，我们所收到的现金
被认定为出售股票收入，在扣除当初的原始投资成本后，应列示为资本利得，当然这只是会
计上的处理与税务无关。
虽然我们并不认同纽约方面的看法，但为免会计师出具保留意见，我们仍勉强接收，并重编
1983年的报表，尽管如此，公司实质上未受任何影响，我们在这两家公司的权益、帐上的现
金、所得税与持有股权的市值皆维持不变。
而今年我们又与General Foods签订类似的协议，为了确保在税法上得以认定为股利分配，
我们仍将在该公司维持持有的股权比例不变，当然若后续还有类似的情况我们一定会跟所有
的股东报告。而在参与过这么多次类似的交易后，我们觉得这种作法对不卖出股份的股东同
样有利，当一家经营绩效良好且财务基础健全的公司发现自家的股价远低于其内含价值时，
买回自家股票是保障股东权益最好的方法了。
但我必须说明我是指那些基于本益比角度的买回，并不包括那种不道德的green-mail(在这类
交易中，甲乙双方为自身私利协议剥削不知情的丙方，甲方-是指职业股东在刚买下股票
后，便对公司经营阶层发出要钱或是要命的勒索，而乙方-是指息事宁人的公司经营阶层，
愿意用高价买回，只要这个钱不要是他出的就好，丙方-就这样被牺牲，别人花钱他来买
单，结果公司经营阶层还信势旦旦的说要维持公司利益，而不知情的股东只能呆呆的被宰还
不自知。
去年我们几个投资部位较大的被投资公司只要其价格与价值差异颇大时，都努力买回自家股
份，而对于身为股东的我们而言，有两点好处
第一点很明显，是一个简单的数学问题，透过买回公司的股票，等于只要花一块钱的代价便
能够获得两块钱的价值的，所以每股的内含价值可大大的提高，这比花大钱去购并别人的公
司的效果要好得多。
第二点较不明显，且没有什么人知道，实际上也很难去衡量，但时间一长其效果越明显，那
就是管理当局可透过买回自家的股票来对外宣示其重视股东权益的心而非一昧的要扩张个人
经营事业的版图，因为后者往往不但对股东没有帮助，甚至反而有害股东的利益。如此一
来，原有的股东与有兴趣的投资人将会对公司的前景更具信心，而股价便会向上反应而与其
本身的价值更为接近。
相对地那一些成天把维护股东权益的口号挂在嘴边，却对买回自家股票的建议置之不理的
人，很难说服大家他不是口是心非，久而久之，他便会被市场投资人所离弃。
最近我们靠前三大持股-GEICO、General Foods与华盛顿邮报大量买回自家股票(艾克森-我
们的第四大持股也积极买回股票，只是因为我们是最近才建立部位，所以影响不大)，而大
发利市，我们对于投资这种具竞争优势同时又真正注重股东权益的管理阶层感到相当安心。
● 下表显示我们在1984年底，主要的投资部位(所有数字已扣除Wesco等公司的少数股权)
Company Name Shares Cost Market Unrealized
Affiliated Publications, Inc. (a) 690,975 3,516 32,908 29,392
American Boradcasting Company (a) 740,400 44,416 46,738 2,322
Exxon Corporation (a) 3,895,710 173,401 175,307 1,906
General Foods, Inc (b) 4,047,191 149,870 226,137 76,267
GEIGO Corporation (a) 6,850,000 45,713 397,300 351,587
Handy & Harman (a) 2,379,200 27,318 38,662 11,344
Interpublic Group of Companies, Inc (a) 818,872 2,570 28,149 25,579
Media General
Northwest Industries (a) 555,949 26,581 27,242 661
Ogilvy & Mather Int'l, Inc
R.J. Reynolds Industries
Time, Inc (a) 2,553,488 89,327 109,162 19,835
The Washington Post Company (a) 1,868,600 10,628 149,955 139,327
All Other Common Stock 11,634 37,326 25,692
Total Common Stock 584,974 1,268,886 683,912
(55,653)
● 最近十年来实在很难找得到同时能够符合我们质与量(价格与价值的差距)标准的投资标的，
我们尽量避免降格以求，但你知道什么事都不做才是最困难的一件事(有一位英国政治家将
该国十九世纪的伟大归功于统治者的无为而治，但历史学家可以随随便便就提议，不过后继
统治者却很难真得做得到)
除了先前曾提到的数字，有关Wesco的经营理念在Charlie Munger写的报告中会详加描述。
此外我们实际掌控的企业，如Nebraska家具店、喜斯糖果、水牛城日报与保险事业集团的经
营，将在稍后加以说明
Nebraska家具店
去年我曾介绍过B太太跟她的家族的优异表现，不过事实上我还低估他们的管理才能与人格
特质，B太太身为公司的负责人，现年九十一岁，当地的报纸曾形容她每天工作完便回家吃
饭睡觉，每晚等不到天亮便急着要回店里头上班，每天从早到晚，每周工作七天，她一天所
决定的事情可能比一家大公司总裁一年内决定的事还多（当然是指好的决策）
今年五月B太太荣获纽约大学颁赠荣誉博士学位，（她是个跳级生，在她获得这个学位之
前，从来没有到学校上过一天课），在她之前获颁这项殊荣的包有括艾克森石油总裁、花旗
银行总裁、IBM总裁与通用汽车总裁等杰出企业人士。
而B家族有其母必有其子，由他们的表现可以得知，Louie B太太的儿子跟他三个小孩，皆
遗传到B太太的个性，去年NFM单店的营业额增加一千多万美金，成为一亿一千多万，是全
美单店业绩最高的一家家具量贩店，事实上它的成功不是没有道理的，以下数字说明一切
根据去年财报，全国最大的家具零售商－Levitz 自夸其所卖价格要比当地所有传统家具店要
便宜许多，而该公司的毛利率却高达44.4%(亦即消费者每付100元所买的货品，公司的成本
只要55.6元)而NFM的毛利却只有前者的一半，其所凭借的便是优异的效率（包含薪资、租
金与广告费等成本只占营业额的16.5%），我们不是要批评Levitz，事实上该公司经营亦颇
出色，只是NFM的表现实在是太好了，（记着这一切的一切都是从B太太1937年的五百块本
钱开始），靠着精打细算与大量采购的成本优势，NFM在供献股东盈余的同时，也替顾客
节省了可观的采购预算，这一点也使得该公司的客户分布越来越广。
人们常常问我，B太太到底有什么经营诀窍，而其实说穿了也不是什么深奥的道理，他们整
个家族（1）对事业怀抱的热情与冲劲会让富兰克林与Horatio Alger看起来像辍学生（2）脚
踏实地的去落实并果断的决定要作的事情（3）不受外在对于公司竞争力没有帮助的诱惑
