Berkshire Hathaway 2006 Annual Meeting Transcript

Transcript of the 2006 Berkshire Hathaway Annual Meeting held on May 6, 2006 on Omaha, Nebraska:

(Click here to skip to the Q&A section)

(To see the full transcripts of all Berkshire Hathaway Annual Meetings on record, click here)

Introduction and appreciation for everyone that organized the annual meeting

Warren Buffett:

Good morning. I’m Warren; he’s Charlie.

There’s one thing I should probably clear up first because I know it’s puzzling you. In the movie, he always gets the girl.

Now, that’s hard to figure out, isn’t it? But I’ve… Charlie… but I finally understand what the… what’s happening.

It’s something called the “Anna Nicole Smith Rule.” That’s when choosing between two old rich guys, pick the older one.

Now, in a few minutes we’re going to open this up to your questions. We have a number of zones, and we’ll just proceed around zone by zone.

But before we do that, there are a few people I would like to thank, and then there’s a couple of short announcements I’d like to make.

First of all, if can we get the spotlight up there on Andy Heyward, Andy does that cartoon for us every year. He travels around. He gets the voices in there. Andy, where are you?

He comes up with the ideas.

Andy is the… runs DiC Entertainment. DiC is the one I’ve told you about in the past that produced “Liberty’s Kids,” which I think is probably the best way not only for youngsters to learn American history, but for people my age as well.

I mean, it’s a terrific series of young kids… a couple of young ones in the time of the American Revolution. And I watched several of those episodes, and I’d forgotten a lot of American history since I was in school. It’s just a really… it’s a wonderful series.

It appeared on PBS over time. And if you’re looking to learn American history or have your children or grandchildren learn it, you couldn’t do better.

And in the months ahead, he’s working on the… what do we call it?… it’s the “Secret Millionaires Club.”

But it’s going to be a program that’s designed to teach young people some of the very basic lessons of… about money. How to avoid getting into trouble with it, how to use it effectively, and what your attitude should be toward it.

So, we’re looking forward to getting that out early next year. I’ll guarantee you that it will be a terrific program for teaching children and your grandchildren something about the subject of money.

I also want to thank Bob Iger. Bob is up there. Bob runs Disney. He’s doing a terrific job, and…

I thought we could originally entice the “Desperate Housewives” into appearing simply by the chance to appear with Charlie. But after we made that appeal, we then went to Bob Iger and said, “See what you can do for us, Bob.” So thank you, Bob.

Also in that section, I’d like to have a special introduction for the man that first taught Charlie and me something about the value of franchises and the advisability of buying great businesses instead of cheap businesses.

Prior to the purchase of See’s Candies in 1972, I intended to look primarily at financial measures in buying businesses and buying things that were cheap in relation to book value, and we always tried to get a lot of tangible assets in relation to our money.

But we found out that the intangible assets, if properly nourished and if properly identified, you can make a whole lot more money with than buying a lot of tangible assets cheap.

And in 1972… early in ’72, Charlie and I went to See’s Candy, which had been in the hands of the See family for many decades, and we bought it.

And, of course, Charlie and I didn’t know a thing about making candy… we were pretty good at eating it… and we needed someone to run the place.

We met a young fellow there. It was clear to both of us that he was the ideal person to run See’s Candy, and in just a few minutes we made a deal with him that’s lasted a lifetime.

And if Chuck Huggins and his wife, Donna, would stand up, I’d love to have you give them a real well-deserved round of applause.

As you notice, my daughter Susie produced that movie. She does every year.

She works hard on it, and we don’t pay her anything, although she does remind me occasionally when I’m out at Borsheims that she worked very hard on the movie… and I’ll see her there on Sunday.

And, Suz, if you would take a bow, please.

And the impresario of this event, I just turn it over to her every year and forget about it.

But she puts on this show. She brings all the exhibitors in. She arranges everything. She moves into the hotel across the street a few days ahead of time, or a week ahead of time, and makes sure everything hums.

And Charlie and I just come down on the day of the meeting and take a bow. And that’s Kelly Muchmore-Broz.

Kelly, are you here? Where’s Kelly? There she is. Give her a big hand.

We wouldn’t be having this without her.

Warren introduces Berkshire’s board of directors

Warren Buffett:

Now I’d like to introduce our directors. We’re going to get to the business meeting at 3:15. We do the Q&A first, and we get to that later on.

But for those of you who won’t be around… and a lot of people tend to leave at lunchtime… I’d like to introduce the various directors. You’ve met Charlie and myself.

If you’ll just stand individually, we can withhold the applause, if any, until the end.

That way that embarrassing applause meter that we had on the Omaha Idol Show will not cause anyone distress.

Howard Buffett… Howie… Malcolm Chace, Bill Gates, David Gottesman, Charlotte Guyman, Don Keough, Tom Murphy, Ron Olson, and Walter Scott, Jr. It’s a terrific group of directors.

I know of… I literally know of no directors of any large, publicly-owned companies that have, universally, as significant a percentage of their net worth in the company, purchased in the open market, as that group. Do you, Charlie?

Charlie Munger:

None.

Warren Buffett:

None. OK.

That may be all you hear from him, folks… so kind of savor a little bit.

Appreciation for Jamie Lee Curtis

Warren Buffett:

I also would particularly like to thank Jamie Lee Curtis, even though she came up with the wrong guy at the end.

Jamie cooperated on this. We’re going to have, as a thank you… Jamie is very interested in the Park Century School. One of her sons goes to that school. It’s for gifted, but learning-challenged students.

They’re having an auction tonight, but it will continue subsequently. And Bill Gates and I have autographed a Monopoly set, and we will personally inscribe it to whoever the winner of that auction is.

So if you want to go to eBay and check that out, we promise that we will not similarly autograph anything else. So I hope that Jamie Lee and the school have a big success on that.

First of two announcements – Berkshire’s first quarter earnings

Warren Buffett:

We have two announcements, one relatively unimportant but, nevertheless, pleasant, and that is that we released our earnings yesterday after the close.

And I think we can put those up on the screen. Having any luck on that? Did we withdraw those earnings, Marc? Oh, they still have another six hours of audit or so.

And, as you can see, we don’t pay any attention to realized gains or losses. We had some gains this year; we had some losses in the first quarter of last year.

So… but that’s meaningless in the short term. Over time, obviously, it makes a difference.

But the… you know, we do not pick anything to buy or sell in any given quarter or any given year in the way of securities based on the effect it will have on our income account for that period. It’s totally immaterial.

In fact, we’d rather sell things that we have a loss in, just from a tax standpoint.

If we have some high-tax cost stocks and some low-tax cost stock, we’ll sell the high one and record the loss because we would get a better tax result that way for the short term. So we ignore that.

But if you look at the operating earnings, you’ll see that in those main divisions that I take in the annual report… I show our four major businesses and then investment income is aside of it… things worked out pretty well in the first quarter for all of them.

I would caution you that, in our insurance underwriting, our worst quarter would normally be expected to be our third quarter.

You’re not going to have hurricanes in this hemisphere in the first quarter.

The real exposure… the worst exposure… is in the third quarter, and then there’s a lesser exposure in the fourth quarter.

We write a lot of catastrophe insurance business.

Earthquakes, as far as we know, don’t have any particular seasonal aspect to them, but hurricanes definitely do.

And the interesting thing is that under standard accounting, if we write a hurricane policy for the calendar year 2006 and we receive a million dollars of premium, we would earn a quarter of a million in the first quarter and a quarter of a million in the second quarter and so on.

We would earn a pro rata throughout the year. And that, in our view, actually is not proper accounting, but it’s required accounting.

The real exposure to loss is primarily in the third quarter.

So you can’t take our insurance underwriting results in any way for a rather benign quarter, like the first quarter, and extrapolate them for the year. But, nevertheless, it was a very good year… a very good quarter.

GEICO had excellent growth, I believe that our… well, I’m almost certain that our growth in the first quarter was better than any of our main competitors, and, actually, by… probably by some margin… the underwriting was very good. Our reinsurance underwriting was very good.

Gen Re had a good quarter. Our smaller companies had a good quarter.

So things, generally, have been working very well in all four sectors.

And that’s nice, but that’s not terribly important. I mean, five years from now, nobody will remember whether the first quarter or the second quarter was good at Berkshire Hathaway.

Second announcement – acquisition of ISCAR

Warren Buffett:

But what did happen, and which we announced last night… which was very important… the acquisition of a large, extremely well-managed, profitable, really extraordinary company called ISCAR.

And up until October of last year, I knew nothing of ISCAR. I did not know about their extraordinary management.

But I got a letter, and I got a letter from Eitan Wertheimer, and… maybe a page and a half, page and a quarter… and he told me something about this business.

And sometimes character and talents sort of just jump off the page at me, and this was one of those letters, and it came from Israel. And I expressed an interest, after reading this letter, in getting together with Eitan.

And not long thereafter, I met not only Eitan, but his CEO and president, a remarkable man named Jacob Harpaz; Danny Goldman, the CFO. And we met in Omaha. They subsequently met Charlie.

And this all came to fruition yesterday when we signed a contract. Now we have… well, before I go on to this, maybe Charlie would like to say a word or two about ISCAR.

He’s the… hard as it is for you to believe, he is not only… he’s as enthusiastic about this as I am.

Now, have you ever seen that before, I’d ask you? Charlie likes this one extraordinarily well. Charlie?

Charlie Munger:

Well, this is a company that, from very modest beginnings, grows to be the best company in its field in the world. It’s not yet the biggest, but that leaves them something to do.

The average quality of the people in this company is not only extraordinary, it’s off the chart. And the beauty of this, as you look at the two of us, is they’re all young.

No, this is a real quality enterprise, and these people know how to do some things that we don’t know how to do. A lot.

So, of course we’re enthusiastic about the company. I’m always enthusiastic when I get to deal with some of the best people in the world.

I would like if we could get the spotlight down there. They’re right down here in front. I would like, individually, three managers to stand up.

And then Eitan is going to talk to us a bit, and then we have a… I think we’ve got it arranged so that we can have a short movie that will tell you something about ISCAR.

But, first of all, if Eitan Wertheimer would stand up and we can get the spotlight on him? Over there. OK.

Eitan, let me introduce the other two, and then can we have you speak to the group?

Jacob Harpaz is the president and the CEO.

Take a good look at these people because they’re going to make you… they’re going to do very, very well for you.

And Danny Goldman. Danny, would you stand up?

Thank you. And if you’ll give the microphone to Eitan, I think Eitan would like to talk to the group just a bit.

Eitan Wertheimer:

Good morning, everybody. It’s Omaha. It’s spring. The fields are green. The days get longer. And we bring a big family into a new home.

I’m standing here before you representing 5,869 people, not only the people, but the families, their past and their future.

It took us three years to look what to do next. We are successful. We still have a lot of mistakes ahead of us to do.

Until we found one day somebody came to us and asked, “Have you heard about Berkshire Hathaway and Mr. Buffett?” We said, “Yes, we heard, but we never thought about it.”

And when we started studying about the company, we understood that this is the right combination for us, a family company with a strong culture and a culture we’d love to keep, a young group of people that will love to work, maybe not for very long, but not less than 20, 25 years from today.

And we decided, let’s try it. And we had a very interesting lesson from Warren, we had a very interesting lesson from Charlie, and we survived both of them.

I’m very happy that I represent here, not only the people that make the products and go to the customers, I also in a way represent the big family of customers that make… manufacture things.

They make cars go faster and safer. They’ll make airplanes fly. They will make the mold to make the bottles for the Coca-Cola.

They’ll make a washing machine. They’ll make the tools to make a carpet.

They’ll make many things. And many times the people that manufacture are a little bit in the shade.

And I’m very proud to stand as a manufacturing guy, and say I’m standing for all of them, all our customers, which I must thank them every morning, not only for buying, but also for trying new ideas that we bring and working very hard to stay competitive.

Whoever will stay competitive will be there long-term. And this is also our goal.

Here is Mr. Harpaz, Jacob. In reality, my job is not to disturb. He, in a very gentle way, fired me ten years ago.

He performed and did better things than I could do, and it didn’t make sense that I’ll disturb him; so I went on to do other things.

We’ve been in the company only 34 years, and the real job is done by Jacob and many, many other people.

I’m sure that you have seen the film “In 80 Days Around the World.” And we prepared for you, “In 61 Companies Around the World.” And I hope you enjoy it.

We definitely have to fulfill a lot of expectations. We definitely have to work very hard to make everybody very proud that we joined the family, also our people and for sure everybody in this room.

So let’s hope we’ll all be successful, and let’s look into the future. And I’m looking forward to come every spring, to Omaha, where the fields are green and the days get longer. Thank you.

Video about ISCAR

(The transcript below is from the video about ISCAR shown at this point in the annual meeting)

Announcer:

IMC presents “Better Solutions for a Better World.”

In 1889, the appearance of the first automobiles brought with it the need for sophisticated solutions in metal processing. Such were the beginnings of a new company, launched by engineers in the U.S.: Ingersoll.

In the decades to follow, another plant was set up in Germany. Since its creation, Ingersoll has established strong ties with industry, which has placed it firmly in a leadership position.

For over a century, time after time, Ingersoll has proved that the best solutions begin with the best engineers.

In 1999, Ingersoll joined the IMC Group and discovered that the sky is not the limit but only the starting point.

Meantime, at the turn of the 20th century, another metal processing plant was established on the other side of the world in South Korea: TaeguTec. In joining the IMC Group in 1997, TaeguTec reinforced its position as the main supplier of cutting tools for industry in the Far East.

Today TaeguTec has achieved unparalleled success, penetrating new markets, streamlining production process, and showing that precise global thinking can cancel distances.

In the middle of the 20th century, in the north of Israel, Stef Wertheimer had predicted, from his little shack in Nahariya, the global need for more advanced cutting tools. “The new world demands better solutions,” said Wertheimer, and established ISCAR.

In a relatively short time, ISCAR has become the second largest cutting tool manufacturer in the world, a leader in the area of metal removal.

ISCAR has revolutionized every aspect of machining. Its mission: to apply innovation, quality, and automation on the highest technological level.

Among ISCAR’s groundbreaking achievements are the revolution in cutoff applications; development of SELF-GRIP in the ’70s; the pioneering triumphs in milling; the HELIMILL in the ‘80s; the CHAMDRILL; the revolution in drilling in the ’90s and tangential positive milling; the innovative TANGMILL.

These innovations and more have reinforced ISCAR’s position as the world’s leader in development of cutting tools.

The combination of Ingersoll, TaeguTec, and ISCAR has given rise to the IMC Group, taking the best of all worlds and creating the world’s best tools.

Today’s rapidly advancing world demands that we constantly elevate standards, apply ourselves more and more to provide ever-smarter and precise solutions, pushes us to advance to improve ourselves, to lead.

Eitan Wertheimer:

You have to be a full line supplier. To be a global company means to be local in many countries, in many places around the world.”

Announcer:

Other IMC Group companies:

IT.TE.DI Italy, designers and manufacturers of PCD diamond tools for high-precision aluminum machining in the automotive and aerospace industry;

UOP Italy, producers of high-quality solid carbide and high-speed steel standard tools and special tailor-made designs for applications in the aerospace and dye and mold industries;

Outiltec France, expert creative solutions in extra-long gun drills for deep drilling and applications that require unique geometries;

Unitac Japan, deep-drilling BTA-style tools with brazed and indexable heads;

And Wertec Italy, design and manufacturer of unique counterboring tools for deep and complicated boring applications.

Jacob Harpaz:

If you look outside and you see some cars over there, be aware that in each car at least one part is manufactured by one of the IMC companies, for sure.

Announcer:

Automotive.

Eitan Wertheimer:

Before you have a product line, the geography spread, the people that understand the language, you cannot start thinking, “May I try or may I not try to become automotive supplier?”

Announcer:

We at IMC have made the automotive industry the foremost objective for all the factories of the group. All the Ingersoll vessels connect to contribute massively to the work of the automotive industry in North America.

At the same time, on the other side of the globe, TaeguTec cutting tools joins the momentum of the rapidly-developing Japanese and Korean automotive industries.

The alliance between ISCAR’s developments and the IMC Group has led to comprehensive solutions, which contribute to the efficiency of global automotive production and pave the way for production cost savings.

Jacob Harpaz:

We’re not only selling tools, we are selling technology. We are selling the customer a better way to make profit. And we believe, by giving a solution, it can increase its productivity. And the bottom line for the productivity, making more profit for his company.

Announcer:

Heavy industry.

The power of IMC comes clearly to the fore in heavy industry. The unique combination of the three main manufacturing plants creates new opportunities.

The geographic location of Ingersoll and TaeguTec has led the companies to develop specific heavy industry specialization. The innovative geometries developed by ISCAR, together with the design and production of tools made to conform to the special requirements of this industry, places IMC at the forefront of this important industry.

Aerospace.

The blend and precision and inventiveness ought to go far.

If you want to reach far and high, you must be on top of the game in technology, in understanding materials, (this part of the audio is inaudible).

The aerospace industry demands machining solutions for exotic and difficult-to-process materials, proficiency in lightweight materials, such as aluminum, and the ability to machine parts that require massive processing capabilities.

The grouping of the three plants and the profound understanding of cutting materials and complex cutting geometries, along with the expertise and building large-size tools, make IMC the strategic partner for the aerospace industry.

General engineering.

All this vast engineering experience accumulated in every field, in every industry, and in every corner of the world, has paved the way for the development of new, groundbreaking tools, which streamline production processes, shorten machining time, and reduce costs for every customer in the world of general engineering.

Jacob Harpaz:

After releasing the product into the market, we put another team… our own team… and they’ll now compete against the release of the product.

Eitan Wertheimer:

In exhibitions, we are recognized as a very, very innovative company. Many times the sentence is, “Let’s go there because they must have something new. They always have something new.” That’s a big compliment, and innovation will make the difference.

Stef Wertheimer:

I believe that, in a way, industry is an art in itself. It’s art. It’s creation. You create something.

Announcer:

You can see it immediately upon entering an IMC branch or factory. The house of IMC is, first and foremost, a home for employees and customers as one. Years of experience have taught us that this is a vital element for success.

Eitan Wertheimer:

Many companies have buildings and machines and a lot of real estate, but it’s only people that have a chance to make any difference.

Jacob Harpaz:

I believe with the ambition of the people, with the hard work of the people, we are going to reach the position of being number 1.

Announcer:

The world demands better solutions. That is why we’re here. IMC.

ISCAR is the first business Berkshire purchased that is based outside the United States

Warren Buffett:

This is an important acquisition, as we paid $4 billion for 80 percent of the company. The family remains in partnership with us. They retained 20 percent.

It’s the first business we’ve purchased that is based outside the United States. We have others that have operations there.

I think you’ll look back on this in five or ten years as being a very significant event in Berkshire’s history.

And it’s interesting. In this world, in which many businesses get auctioned off, figures get dressed up before they sell them and leveraged up and so on, we continue to hear from people periodically who consider their business as too important to auction.

And we’ve never really bought one at auction… have we, Charlie… that I can remember?

Charlie Munger:

I can’t remember one either.

Warren Buffett:

Yeah. So there’s a benefit in that.

Because, in effect, the people that pass through that filter of caring enough about their business that they don’t simply put it up like a piece of meat at an auction are also the people, in our view, that make the best managers and make the best partners over time.

There is something going on in their brain that says this business is so important, and the people that are here are so important, and the customers we take care of are so important, that we actually care about the home in which these businesses reside.

And I think that filter works very much to our benefit. We’ve bought a number of businesses in the last 15 or 18 months where people have felt that way, and I think the crowning one here is ISCAR.

So, I welcome our new friends from Israel. I’m going to go over there and visit in September to see if there are any more girls out there like you, see if we can drum up a little more business.

Q&A guidelines

Warren Buffett:

And with that, let’s go on to the question period.

And we will do this until noon, at which time we’ll break for 45 minutes or so and come back, and then we’ll continue until about 3 o’clock.

Then we’ll break for about 15 minutes, have the formal business meeting from 3:15 to 3:16.

And then at 4 o’clock, Charlie and I are meeting with all of the people who came from outside of North America.

This year we had about 550 requests for tickets from countries outside of North America, as opposed to about 380 last year. So we’re looking forward to meeting all of you that have come a long way to attend this meeting.

Q&A – Morning Session

(Click on a link below to skip to a particular topic)

1. Warren and Charlie share their views on social security.
2. How to design a compensation package to best reward management performance.
3. How Warren trains his potential successors.
4. Historically, close end funds have “overwhelmingly” gone to discounts.
5. The upsides and downsides of majority voting in the board room. 
6. Warren still thinks technology is outside his “sphere of competence”.
7. Disparity in income in the United States has widened significantly and the wealthy has too many tax breaks.
8. The economics of ethanol.
9. Warren and Charlie shares their thoughts on whether there is a commodity bubble.
10. Warren would consider investing in Brazil if an opportunity presents itself.
11. The demand and outlook of the manufactured homes industry.
12. Warren is not so keen to invest in Russia.
13. Warren and Charlie share their thoughts about the residential real estate market in the United States.
14. Holding a lot of cash is better than doing dumb deals.
15. Coca-Cola is still a fabulous company.
16. Warren shares the then current reinsurance rates.
17. How to value NetJets and Berkshire’s reinsurance businesses.
18. Why Warren invested in, and then sold, Berkshire’s holdings in silver.
19. Berkshire doesn’t invest based on trends like demographic trends or “anything of that sort”.
20. The ultimate problem of mankind.
21. Warren and Charlie would prefer not to make money off of buying Berkshire shares from shareholders at a depressed price. 
22. In aggregate, the investment profession does not have value added to them above what the laymen can accomplish themselves.

End of Morning Q&A Session

Warren Buffett:

Well, we wanted to leave you in a good mood for lunch. So… we will break now, and we’ll come back in about 45 minutes or so.

And those of you who are in the other rooms, by then the crowd thins, for some explainable reason, and you can all join us here in the main room. And we’ll be back in about 45 minutes.

Q&A – Afternoon Session

(Click on a link below to skip to a particular topic)

1. How illegal immigration reform would affect Berkshire and its subsidiaries.
2. Teaching in finance departments has improved “quite a bit over 20 years ago”.
3. What Warren’s successor can expect to experience in the first few years after taking over.
4. How to pick effective charities.
5. Warren likes the regulated utilities business just the way it is.
6. Any time you get more and more people competing in any given area, the economics will generally deteriorate.
7. On the United States continuing to run large current account deficits.
8. The CPI (consumer price index) is not a good and accurate measure of inflation. To learn more about CPI, click here.
9. Why Warren doesn’t like dealing with investment bankers.
10. Warren and Charlie recounted how a potential “absolute chaos”, should Salomon enter bankruptcy, was averted in 1991.
11. Newspaper companies are facing the prospect of eroding earnings.
12. If you learn the lessons of certain investors in the past, you don’t need to worry about not having a contemporary example.
13. What Warren and Charlie would do if they have to start all over again with 1 million dollars to invest.
14. Prof. Jeremy Siegel’s book had no effect on Warren and Charlie’s investment strategy.
15. You’re neither right nor wrong because people agree with you or disagree with you.
16. How to analyze Berkshire using the annual report.
17. It will be very hard to increase Berkshire’s float of 48, 49 billion at a big clip in the future.
18. Healthcare is not part of Warren and Charlie’s expertise.
19. Anytime there’s something big and complicated, there’s certainly a good chance of mispricing.
20. The future of P&G and Gillette would be better as a combined enterprise.
21. Warren has no interest in being a “strategic buyer” of any business.
22. Is the US trade imbalance not as bad as it seems to be?
23. The main difference between insurance and gambling.
24. Short selling is a “very, very tough way to make a living”.

End of Q&A

Warren Buffett:

Well, we’ve hit 3 o’clock. We’re going to adjourn until 3:15. We will then have the business meeting of Berkshire. And you’re all welcome to stay, you’re all welcome to shop, you’re all welcome to enjoy Omaha, and thanks for coming.

Start of formal business meeting

Warren Buffett:

OK. We’ll now convene the business part of the meeting. I introduced the directors to you before.

Also with us today are partners in the firm of Deloitte & Touche, our auditors. They’re available to respond to appropriate questions you may have concerning the firm… their firm’s… audit of the accounts of Berkshire.

Mr. Forrest Krutter, the secretary of Berkshire, will make a written record of the proceedings. Miss Becki Amick has been appointed inspector of elections at this meeting. She will certify to the count of votes cast in the election for directors.

The named proxy holders for this meeting are Walter Scott and Marc Hamburg.

Does the secretary have a report of the number of Berkshire shares outstanding, entitled to vote, and represented at this meeting?

Forrest Krutter:

Yes, I do. As indicated in the proxy statement that accompanied the notice of this meeting that was sent to all shareholders of record on March 8, 2006… being the record date for this meeting… there were 1,260,704 shares of Class A Berkshire Hathaway common stock outstanding, with each share entitled to one vote on motions considered at the meeting, and 8,407,392 shares of Class B Berkshire Hathaway stock outstanding, with each share entitled to 1/200th of one vote on motions considered at the meeting.

Of that number, 1,096,383 are represented at this meeting by proxies returned through Thursday evening, May 4.

Warren Buffett:

Thank you. That number represents a quorum, and we will therefore directly proceed with the meeting.

First order of the meeting will be a reading of the minutes of the last meeting of shareholders. I recognize Mr. Walter Scott, who will place a motion before the meeting.

Walter Scott:

I move that the reading of the minutes of the last meeting of shareholders be dispensed with and the minutes be approved.

Warren Buffett:

Do I hear a second?

Voice from Audience:

I second the motion.

Warren Buffett:

Motion has been moved and seconded. Are there any comments and questions?

We will vote on this motion by voice vote. All those in favor, say “aye.”

Voice from Audience:

Aye.

Warren Buffett:

Opposed? Motion is carried.

Election of Berkshire’s board of directors

Warren Buffett:

The only item of business before this meeting is to elect directors.

If a shareholder is present who wishes to withdraw a proxy previously sent in and vote in person on the election of directors, he or she may do so.

Also, if any shareholder that is present has not turned in a proxy and desires a ballot in order to vote in person, you may do so. If you wish to do this, please identify yourself to meeting officials in the aisle, who will furnish a ballot to you.

Those persons desiring ballots, please identify themselves so that we may distribute them.

I now recognize Mr. Walter Scott to place a motion before the meeting with respect to election of directors.

Walter Scott:

I move that Warren Buffett, Charles Munger, Howard Buffett, Malcolm Chace, William Gates, David Gottesman, Charlotte Guyman, Don Keough, Thomas Murphy, Ron Olson, and Walter Scott be elected as directors.

Voice from Audience:

Second the motion.

Warren Buffett:

It’s been moved and seconded that Warren Buffett, Charles Munger, Howard Buffett, Malcolm Chace, William Gates, David Gottesman, Charlotte Guyman, Donald Keough, Thomas Murphy, Ronald Olson, and Walter Scott be elected as directors.

Are there any other nomination? Is there any discussion?

Nominations are ready to be acted upon. If there are any shareholders voting in person, they should now mark their ballots on the election of directors and allow the ballots to be delivered to the inspector of elections.

Would the proxy holders please also submit to the inspector of elections the ballot on the election of directors voting and the proxies in accordance with the instructions they have received.

Miss Amick, when you are ready, you may give your report.

Becki Amick:

My report is ready. The ballots of the proxy holders in response to proxies that were received through last Thursday evening cast not less than 1,125,034 votes for each nominee.

That number far exceeds the majority of the number of the total votes related to all Class A and Class B shares outstanding.

The certification required by Delaware law of the precise count of the votes, including the additional votes to be cast by the proxy holders in response to proxies delivered at this meeting, as well as any cast in person at this meeting, will be given to the secretary to be placed with the minutes of this meeting.

Warren Buffett:

Thank you, Miss Amick.

Warren Buffett, Charles Munger, Howard Buffett, Malcolm Chace, William Gates, David Gottesman, Charlotte Guyman, Donald Keough, Thomas Murphy, Ronald Olson, and Walter Scott have been elected as directors.

End of formal business meeting

Warren Buffett:

Does anyone have any further business to come before this meeting before we adjourn? If not, I recognize Mr. Scott to place a motion before the meeting.

Walter Scott:

I move that this meeting be adjourned.

Voice from Audience:

Second.

Warren Buffett:

Motion to adjourn has been made and seconded. We will vote by voice. Is there any discussion? If not, all in favor say “aye.”

Voice from Audience:

Aye.

Warren Buffett:

All opposed say “no.” The meeting is adjourned. Thank you.

Click here to see the full transcripts of all Berkshire Hathaway Annual Meetings on record.

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