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  
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