Business Activities

        Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities. The most important of these is the property and casualty insurance business conducted on both a direct and reinsurance basis through a number of subsidiaries. Included in this group of subsidiaries is GEICO Corporation, the seventh largest auto insurer in the United States.

       Investment portfolios of insurance subsidiaries include meaningful equity ownership percentages of other publicly traded companies. Investments in excess of 5% of the investees outstanding capital stock at the end of 1997 include approximately 10.5% of the outstanding capital stock of American Express Company, approximately 8% of the capital stock of The Coca-Cola Company, approximately 9.5% of the capital stock of Federal Home Loan Mortgage Corporation ("Freddie Mac"), approximately 8.5% of the capital stock of The Gillette Company, approximately 16.5% of the capital stock of The Washington Post Company and approximately 8% of the capital stock of Wells Fargo & Company. Much information about these publicly-owned companies is available, including information released from time to time by the companies themselves.

       Additionally, Berkshire Hathaway Inc. publishes the Buffalo News, a daily and Sunday newspaper in Western New York. Other business activities conducted by non-insurance subsidiaries include manufacture and sale of boxed chocolates and other confectionery products (See's Candies), manufacture and marketing of home cleaning systems and related accessories (sold principally under the Kirby name), retailing of home furnishings (Nebraska Furniture Mart, R.C. Willey Home Furnishings and Star Furniture Company), manufacture, import and distribution of footwear (H.H. Brown Shoe Company, Lowell Shoe, Inc. and Dexter Shoe Company), retailing of fine jewelry (Borsheim's and Helzberg's Diamond Shops), and training to operators of aircraft and ships throughout the world (FlightSafety International). On January 7, 1998, Berkshire Hathaway completed its previously announced acquisition of International Dairy Queen (Dairy Queen). Dairy Queen licenses and services a system of approximately 5,800 Dairy Queen stores which feature hamburgers, hot dogs, various dairy deserts and beverages. Berkshire also owns a number of other businesses engaged in a variety of activities, as identified in this report.

       Operating decisions for the various Berkshire businesses are made by managers of the business units. Investment decisions and all other capital allocation decisions are made for Berkshire and its subsidiaries by Warren E. Buffett, in consultation with Charles T. Munger. Mr. Buffett is Chairman and Mr. Munger is Vice Chairman of Berkshire's Board of Directors.

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      The color of this year's cover is in honor of Tom Osborne and the 1997 Nebraska football team. After leading the Huskers to three national championships in the past four years, Tom elected to retire at the end of 1997. His record as the premier coach in the country is matched by his record in helping boys grow into men.

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