BERKSHIRE HATHAWAY INC. To the Shareholders of Berkshire Hathaway Ine.: of ch n our purch increased by 18.2%.Over the last 49 years (that is.since p sent management took over),book value has grown from $19 to $134,973,a rate of 19.7%compounded annually. On the facing The Berkshire's pe s the market .What cou share ntrinsic value.But that's a subjective figure,and book value is useful as a rough tracking indicator.(An mhen re be inesine Pp -108 we urge new and prospectve shar As I've long told you,Berkshire's intrinsic value far exceeds its book value.Moreover,the difference has years.Ihat's why our 2012 decision to at ize the repurchas of sha es at 1 oWe did n rchase sha because the stock price did not descend to the 12%level.If it does,we will be aggressive re e cha ian and my pa and I bel e both B KS book value and as we did in 2013 We have undernerfo ned in ten of our 4o years,with all but one of our shortfalls occurring when the &P gain exceeded 15%. etweenye and 2013 in wiloerome The Year at Berkshire On the Let me count the ay rating front,just about everything turned out well for us last year-in certain cases very well n to purchase all of NV Energy and a With the Heinz purchase,moreover,we created a partnership template that may be used by Berkshire in future acquisitions of size.Here,we teamed up with investors at 3G Capital,a firm eBERKSHIRE HATHAWAY INC. To the Shareholders of Berkshire Hathaway Inc.: Berkshire’s gain in net worth during 2013 was $34.2 billion. That gain was after our deducting $1.8 billion of charges – meaningless economically, as I will explain later – that arose from our purchase of the minority interests in Marmon and Iscar. After those charges, the per-share book value of both our Class A and Class B stock increased by 18.2%. Over the last 49 years (that is, since present management took over), book value has grown from $19 to $134,973, a rate of 19.7% compounded annually.* On the facing page, we show our long-standing performance measurement: The yearly change in Berkshire’s per-share book value versus the market performance of the S&P 500. What counts, of course, is per￾share intrinsic value. But that’s a subjective figure, and book value is useful as a rough tracking indicator. (An extended discussion of intrinsic value is included in our Owner-Related Business Principles on pages 103 - 108. Those principles have been included in our reports for 30 years, and we urge new and prospective shareholders to read them.) As I’ve long told you, Berkshire’s intrinsic value far exceeds its book value. Moreover, the difference has widened considerably in recent years. That’s why our 2012 decision to authorize the repurchase of shares at 120% of book value made sense. Purchases at that level benefit continuing shareholders because per-share intrinsic value exceeds that percentage of book value by a meaningful amount. We did not purchase shares during 2013, however, because the stock price did not descend to the 120% level. If it does, we will be aggressive. Charlie Munger, Berkshire’s vice chairman and my partner, and I believe both Berkshire’s book value and intrinsic value will outperform the S&P in years when the market is down or moderately up. We expect to fall short, though, in years when the market is strong – as we did in 2013. We have underperformed in ten of our 49 years, with all but one of our shortfalls occurring when the S&P gain exceeded 15%. Over the stock market cycle between yearends 2007 and 2013, we overperformed the S&P. Through full cycles in future years, we expect to do that again. If we fail to do so, we will not have earned our pay. After all, you could always own an index fund and be assured of S&P results. The Year at Berkshire On the operating front, just about everything turned out well for us last year – in certain cases very well. Let me count the ways: Š We completed two large acquisitions, spending almost $18 billion to purchase all of NV Energy and a major interest in H. J. Heinz. Both companies fit us well and will be prospering a century from now. With the Heinz purchase, moreover, we created a partnership template that may be used by Berkshire in future acquisitions of size. Here, we teamed up with investors at 3G Capital, a firm led by my friend, Jorge Paulo Lemann. His talented associates – Bernardo Hees, Heinz’s new CEO, and Alex Behring, its Chairman – are responsible for operations. * All per-share figures used in this report apply to Berkshire’s A shares. Figures for the B shares are 1/1500th of those shown for A. 3