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 collectively referred to in this report as the Berkshire Hathaway Insurance Group. 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. Such investments at the end of 1996 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 3.5% of the capital stock of The Walt Disney Company, approximately 9% 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% of the capital stock of The Washington Post Company, approximately 8% of the common stock of Wells Fargo & Company, and common and convertible preferred stock of Salomon Inc having approximately 18% of the total voting power of that 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 publication and distribution of encyclopedias and related educational and instructional material (World Book and Childcraft products), manufacture and marketing of home cleaning systems and related accessories (sold principally under the Kirby name), manufacture and sale of boxed chocolates and other confectionery products (See's Candies), retailing of home furnishings (Nebraska Furniture Mart and R.C. Willey Home Furnishings), manufacture and distribution of uniforms (Fechheimer Brothers 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 manufacture and distribution of air compressors, air tools and painting systems (Campbell Hausfeld products). On December 23, 1996, Berkshire Hathaway completed its previously announced acquisition of FlightSafety International, Inc. (FlightSafety). FlightSafety provides high-technology training to operators of aircraft and ships throughout the world. 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.