Berkshire Hathaway Letter 1966
1966 annual report on textile market challenges and financial restoration
Berkshire Hathaway Letter 1966
Author: Malcolm G. Chace, Jr. & Kenneth V. Chace Date: December 2, 1966
Overview
The 1966 letter details a challenging year for Berkshire Hathaway's textile operations due to market depression, foreign imports, and pricing pressures. The letter also reviews the company's financial restoration over the six-year period 1961-1966.
Key Points
Market Challenges
- Box Loom Division suffered from heavy imports and style changes
- Polyester/cotton blend prices depressed by overproduction and imports
- Production curtailments necessary to avoid inventory buildup
Six-Year Financial Review (1961-1966)
| Item | Amount |
|---|---|
| Net Worth (Oct 1, 1960) | $37,981,820 |
| Net Earnings 1961-1966 | $40,476 |
| Less Dividends Paid | $1,366,273 |
| Stock Repurchases | $7,161,103 |
| Net Worth (Oct 1, 1966) | $29,494,920 |
The 22% decrease in net worth was primarily due to stock repurchases (37% reduction in shares outstanding).
Share Repurchase Program
"The benefit to present stockholders of this program of share repurchases is indicated... net worth per share... was $28.99, compared with $23.37 six years previously."
Investment of Excess Capital
The company began investing excess working capital ($5.4 million in marketable securities) in common stocks, departing from pure textile focus.
Dividend
A dividend of 10 cents per share was declared.
Source
Malcolm G. Chace, Jr. & Kenneth V. Chace, December 2, 1966.