<PAGE>   1


                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-K

(MARK ONE)

   [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
  
               FOR THE FISCAL YEAR ENDED December 31, 1995
                                       OR
   [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(b) OF THE
           SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

           FOR THE TRANSITION PERIOD FROM___________TO____________

                    COMMISSION FILE NUMBER 1-10125

                            BERKSHIRE HATHAWAY INC.
          -----------------------------------------------------------
             (Exact name of registrant as specified in its charter)

<TABLE>
        <S>                                                                             <C>
                       Delaware                                                              04 2254452        
----------------------------------------------------                           ---------------------------------
         State or other jurisdiction of                                                    (I.R.S. Employer
         incorporation or organization                                                  Identification number)
                                                                 
          1440 Kiewit Plaza, Omaha, Nebraska                                                 68131   
----------------------------------------------------                           ---------------------------------
        (Address of principal executive office)                                             (Zip Code)
</TABLE>

Registrant's telephone number, including area code     (402) 346-1400
                                                   ---------------------    

Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
                 Title of each class                                Name of each exchange on which registered
<S>                                                                 <C>
Common Stock, $5.00 Par Value                                       New York Stock Exchange                   
-----------------------------------------------------------         ------------------------------------------
</TABLE>

        Securities registered pursuant to Section 12(g) of the Act: NONE

         Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to the
filing requirements for the past 90 days.   Yes  X   No
                                                ---     ---

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [  ]

State the aggregate market value of the voting stock held by non-affiliates of
the Registrant - $21,750,705,600*

Indicate number of shares outstanding of each of the Registrant's classes of
common stock:

<TABLE>
<S>                                                         <C>
March 26, 1996 -- common stock, $5 par value  . . . . . .   1,193,512 shares
</TABLE>

                      DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>

                    Document                                Incorporated In
                    --------                                ---------------
<S>                                                          <C>
Proxy Statement for Registrant's Annual            
  Meeting to be held May 6, 1996                                Part III
</TABLE>

*        This aggregate value is computed at the last sale price of the common
stock on March 22, 1996.  It does not include the value of 550,000 shares held
by Directors and Executive Officers of the Registrant and members of their
immediate families, some of whom may not constitute "affiliates" for purpose of
the Securities Exchange Act of 1934.
<PAGE>   2

                                     Part I


ITEM 1.  BUSINESS

         Berkshire Hathaway Inc. ("Berkshire", "Company", or "Registrant") 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 nationwide on a primary or direct basis and worldwide on a
reinsurance basis through a number of subsidiaries collectively referred to in
this report as the Berkshire Hathaway Insurance Group.

         Additionally, Berkshire Hathaway Inc. publishes the Buffalo News, a
daily and Sunday newspaper in upstate 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) and manufacture, import and distribution of footwear (H. H. Brown Shoe
Company, Lowell Shoe, Inc. and Dexter Shoe Company). Berkshire also owns a
number of other businesses engaged in a variety of activities, as identified
herein.

         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.

PROPERTY AND CASUALTY INSURANCE AND REINSURANCE BUSINESS

         Berkshire's insurance and reinsurance business is conducted by 13
separate subsidiaries. The largest of which is National Indemnity Company
("National Indemnity") headquartered in Omaha, Nebraska.

         The Berkshire Hathaway Insurance Group maintains capital strength at
unparalleled high levels, significantly higher than normal in the industry.
This strength differentiates Group members from their competitors. For example,
in each of the past five years the Group's ratio of net premiums written to
year-end statutory surplus was 10% or less. The industry average net
premiums-to-surplus ratio from 1990 through 1994 ranged from 130% to 157%. The
obvious margins of safety thus provided to insureds of the Group are
particularly persuasive in marketing of individually negotiated insurance and
reinsurance contracts.

         On a primary or direct basis (policies issued in the name of, and to
the insured party) several of the subsidiary members underwrite multiple lines
of principally casualty coverages nationwide for primarily commercial accounts.
The primary or direct business is written through insurance agents and brokers.
The traditional business of National Indemnity has been largely in providing
liability coverages for commercial truck and bus operators and related
commercial transportation activities that require specialized underwriting
knowledge and techniques.  This business is referred to internally as the
National Indemnity Primary Group.  The Commercial Casualty Division and the
Professional Liability and Special Risk Division, each with offices in
Stamford, Connecticut, solicit and underwrite especially large or unusual
risks. Other member companies market various commercial coverages for standard
risks to insureds in an increasing number of selected states.  These operations
are referred to as the "homestate" operations.  Cypress Insurance Company
("Cypress"), a specialty carrier domiciled in California, provides workers'
compensation insurance to employers primarily in that state.

         All primary or direct insurance operations employ disciplined
underwriting practices that encourage rejection of underpriced risks.  Premium
rates for the businesses peaked in 1986 and have generally decreased
thereafter.  Because of the lower rates, members have written substantially
less of this business since 1986.  The amounts of primary or direct insurance
premiums written in recent years by these businesses have stabilized, although
currently at about 25% of the amount written in 1986.





                                       1
<PAGE>   3

ITEM 1.  BUSINESS (CONTINUED)

PROPERTY AND CASUALTY INSURANCE AND REINSURANCE BUSINESS (CONTINUED)

         Generally, no improvement in prices is foreseen for 1996.  Modest
increases in premium volume are expected from continuing expansion of homestate
operations into additional states and existing markets.  In 1993 and 1994,
premiums volume of Cypress increased from prior years due to increased
marketing efforts.  However, effective January 1, 1995, the regulations which
established the minimum premium rates insurers must charge for workers'
compensation coverage in California were eliminated.  As a result, the level of
business accepted in 1995 by Cypress declined.

         At the end of 1992, Berkshire acquired 82% of Central States Indemnity
Co. of Omaha ("CSI"). CSI offers credit card insurance from its offices located
in Omaha, Nebraska. CSI insures the credit card debt of policyholders if the
policyholders become disabled or unemployed. The credit insurance is marketed
to individuals through credit card issuers nationwide.

         The Reinsurance Division of National Indemnity in Stamford,
Connecticut provides excess of loss and quota-share reinsurance to other
property/casualty insurers and reinsurers.  Minimal organizational resources,
but huge financial resources, are currently devoted to this business.  Over the
past five years, premium volume generated from reinsurance activities has
totalled approximately 75% of aggregate premium volume produced by the
Insurance Group.

         During 1990, management perceived declines to be occurring in industry
capacity and competition for catastrophe excess-of-loss type reinsurance
coverages. Consequently, National Indemnity wrote coverages for a number of such
risks.  Management believes that in recent years the Berkshire Hathaway
Insurance Group has been the largest provider in the world of this type of
coverage.  These coverages may provide sizeable amounts (i.e., often in excess
of $10 million) of indemnification per contract and a single event may result in
payments under a number of contracts.  This business can produce extreme
volatility in reported periodic results.  Accounting consequences, however, do
not influence decisions of Berkshire's management with respect to this or any
other business, and this fact plus the Insurance Group's extraordinary financial
strength are believed to be the primary reasons why the Group has become a major
provider of these coverages.

         Since 1992, there has been a substantial increase in catastrophe
reinsurance capacity for the industry.  Most of the additional capacity has
arisen from equity capital raised by newly-formed entities.  Berkshire
management observed that, in some instances, catastrophe reinsurance prices had
fallen below the amounts considered adequate.  The result was a decrease in the
level of business accepted in 1995.  Management anticipates that a reduced
level of business may be accepted in 1996, and possibly, in subsequent years as
well.

         In recent years, non-traditional reinsurance products -- finite-risk
contracts -- have become significant in the property/casualty insurance
marketplace. Those terms refer to reinsurance agreements whose terms provide
essentially traditional coverages but also may contractually establish minimum
and maximum payouts by the reinsurer. Minimum payout requirements may originate
in commutation clauses that call for repayments to the reinsureds, on specified
dates, of sums not otherwise paid out by the reinsurer as losses. The amount of
risk transferred, while significant, is limited.  The concept of
time-value-of-money is an important element in the pricing and setting of terms
for these contracts as the expected claim payment period can be lengthy.
Transaction amounts and limits of indemnifications are likely to be large.  In
addition, a single contract may relate to loss occurrences in a number of lines
of business that span a number of years. Significant financial strength is a
need of any prospective provider of the non-traditional products and Berkshire
meets that need.  Since 1992, increased competition for such business and new
accounting standards for ceding companies have limited the number of
opportunities to write such business, particularly with respect to retroactive
reinsurance coverages of past loss events.  However, the occasional
acceptance of such business produced considerable premium volume in 1994
and 1995.





                                       2
<PAGE>   4

ITEM 1.  BUSINESS (CONTINUED)

PROPERTY AND CASUALTY INSURANCE AND REINSURANCE BUSINESS (CONTINUED)

         The increases in reinsurance assumed business in recent years have
produced an exceptional increase in the amount of "float", an approximation of
the net investable policyholder funds, held by the Insurance Group.  The term
denotes the sum of unpaid losses, unpaid loss adjustment expenses, unearned
premiums and other liabilities to policyholders, less the aggregate of premium
balances receivable, amounts recoverable as reinsurance on paid and unpaid
losses, deferred policy acquisition costs, deferred charges re reinsurance and
prepaid income taxes.  Given the length of the claims payment period -- or tail
-- that attaches to the reinsurance business, the increased float plus the
earnings it generates will result in meaningful increases for several years in
the level of the Insurance Group's investments and investment income, with some
part of such increases already evident.

         Investment portfolios of insurance subsidiaries include meaningful
equity ownership percentages of other publicly traded companies.  Such
investments at year end 1995 included approximately 51% of the outstanding
capital stock of GEICO Corporation (see discussion below for additional
information about GEICO), approximately 10% of the outstanding capital stock of
American Express Company, approximately 13% of the capital stock of Capital
Cities/ABC, Inc., approximately 7% of the capital stock of Federal Home Loan
Mortgage Corporation, approximately 11% of the common stock of The Gillette
Company, approximately 8% of the capital stock of The Coca-Cola Company,
approximately 16% of the capital stock of The Washington Post Company,
approximately 14% 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 that released from time to time by the
companies themselves.  See Item 8, Notes to Consolidated Financial Statements
for information regarding the GEICO merger and the merger between Capital
Cities/ABC, Inc. and The Walt Disney Company.

         On January 2, 1996, GEICO Corporation ("GEICO") became an indirect
wholly-owned subsidiary of Berkshire as a result of the merger of an indirect
wholly-owned Berkshire subsidiary with and into GEICO.  The acquisition was
pursuant to an Agreement and Plan of Merger dated August 25, 1995, wherein each
issued and outstanding share of GEICO, except treasury shares and shares
already held by Berkshire subsidiaries, was converted to the right to receive
$70 cash, or $2.3 billion in the aggregate.

         GEICO is a holding company, headquartered in Chevy Chase, Maryland,
whose subsidiaries are engaged primarily in the property and casualty insurance
business and, to a relatively minor degree, in other financial service
businesses.  GEICO's property and casualty insurance business, founded in 1936,
originally offered private passenger automobile insurance to preferred-risk
government employees.  Over the years, GEICO's insurance business has expanded
to include preferred-risk non-government employees, standard risk and
non-standard risk private passenger automobile insurance. To a lesser degree,
GEICO subsidiaries offer homeowners insurance, fire and boat insurance
(although, GEICO plans to have exited these lines of business within the next
three years), and personal umbrella liability insurance to qualified applicants.
GEICO offers property and casualty insurance coverages to individuals in 49
states and the District of Columbia by direct response methods, a major aspect
of GEICO's strategy to be a low-cost provider of such coverages.

         Other subsidiaries of GEICO include a life insurance company,
Criterion Life Insurance Company ("Criterion"); a commercial and consumer
finance company, Government Employees Financial Services Company ("GEFCO"); a
property/casualty reinsurance company, Resolute Reinsurance Company
("Resolute"); as well as several other subsidiaries involved in the sale of
insurance or insurance related products.  Criterion offers structured
settlement single premium annuities to claimants of GEICO's property/casualty
insurance affiliates.  GEFCO is in the process of winding down its operations.
Resolute suspended writing new and renewal reinsurance coverages in 1987 and is
in the process of running off its claim obligations.





                                       3
<PAGE>   5

ITEM 1.  BUSINESS (CONTINUED)

NON-INSURANCE BUSINESSES OF BERKSHIRE

         Registrant's seven non-insurance "reportable business segments" are
described below.

         CANDY -- See's produces boxed chocolates and other confectionery
products with an emphasis on quality in two large kitchens in California.
See's distributes its candies through its own retail stores - over 200 in
number - located in 12 western and midwestern states, including Hawaii - and by
mail order.  A meaningful volume of candy business is also  recorded for direct
shipments made nationwide from its California based quantity order distribution
centers.

         Seasonality in this business is extreme.  Nearly 50% of each year's
unit sales volume is generated during the last two months of the year, when
quantity sales at reduced prices to businesses and other organizations augment
the extremely high December shop and mail order volume.

         ENCYCLOPEDIAS, OTHER REFERENCE MATERIALS -- World Book publishes
educational products for homes, schools, and libraries.  Its chief products
include:  The World Book Encyclopedia, the largest-selling print encyclopedia
in the United States;  Childcraft, a resource library designed for pre school
and primary grade children; Early World of Learning, a readiness program for
preschoolers; and World Book Multimedia Encyclopedia, a CD-ROM version of the
encyclopedia with enhanced audio, video and animation.  These and other
educational materials are marketed in the United States by a large
direct-selling force.  A newly copyrighted edition of The World Book
Encyclopedia is published each year.  Annual products such as The World Book
Year Book, Science Year and The World Book Health & Medical Annual are updating
publications for owners of earlier encyclopedia editions and are sold by direct
mail.  An international group markets these and other specially created
educational products in Australia, the United Kingdom, Ireland and Canada with
a commissioned sales force, and in 81 other countries through 49 distributors.

         There is significant competition in the business of publishing and
marketing printed encyclopedias in North America, World Book's principal
geographic market.  World Book's selling prices are generally lower than those
of its principal competitor; World Book quality is thought to be superior to
any other.

         In recent years, the demand for printed encyclopedias has greatly
declined.  It is believed that a continuing increase in sales of home computers
equipped with CD-ROM drives has contributed to the decline.  Management is in
the process of developing a strategy to sell an expanded line of products
which better combine the advantages of print and electronic media.

         A large portion of encyclopedia sales is made on an installment basis.
Wholly-owned Berkshire subsidiaries offer financing of domestic and certain
foreign consumer receivables.

         HOME CLEANING SYSTEMS -- This segment of Berkshire's business is
principally represented by Kirby home cleaning systems and products, sold to
approximately 740 independent authorized factory distributors in the United
States and foreign countries.  These factory distributors sell to the consumer
or to independent authorized area distributors who sell to the consumer.  Sales
are made through in-the-home demonstrations by independent salespeople.
Substantially all of Kirby's sales to distributors are for cash.  A
wholly-owned Berkshire subsidiary offers financing to about 550 authorized
distributors in the United States. The distributors independently establish the
prices at which they offer Kirby products.  Kirby and its distributors believe
they offer a premium product, and it is believed that the prices are generally
higher than those of most of its major competitors.

         This segment also includes the Douglas Products business that
manufactures specialty vacuum cleaners such as electric hand held and cordless
vacuum cleaners.  Channels of distribution for these products include retail
discount stores, catalogue showrooms, hardware stores and department stores.
Additionally, Cleveland Wood Products, a manufacturer of vacuum cleaner
brushes, is included in this segment.

        HOME FURNISHINGS -- The Nebraska Furniture Mart ("NFM") operates a home
furnishing retail business from a very large - approximately 400,000 square feet
- retail complex and sizable warehouse facilities in Omaha, Nebraska.  Types of
merchandise offered by NFM include furniture, major appliances, electronics,
computers, floor coverings, and other home furnishings.  The business serves a
trade area with a radius around Omaha of approximately 300 miles.  An important
feature of the business is its ability to control its costs and to produce a
high business volume from offerings of significant value to its customers, while
realizing highly satisfactory earnings.





                                       4
<PAGE>   6

ITEM 1.  BUSINESS (CONTINUED)

NON-INSURANCE BUSINESSES OF BERKSHIRE (CONTINUED)

         The Home Furnishing segment increased significantly when in June,
1995, Berkshire acquired 100 percent of the stock of R.C. Willey Home
Furnishings ("R.C. Willey").  R.C. Willey, founded in 1932, is the dominant
home furnishings retailer in Utah.  R.C. Willey sells basically the same types
of products as NFM.  In addition, R.C. Willey provides significant levels of
customer financing which compliments its retail operations.

         Based in Salt Lake City, R.C. Willey operates five full retail stores
and multiple warehouse and clearance facilities.  These facilities -- which 
include over 475,000 square feet of retail space -- are strategically located 
within a 35 mile radius of Salt Lake City and serve customers in 
4 western states.

         NEWSPAPER -- The Buffalo News, a division of Berkshire, publishes a
Sunday edition and eight editions each weekday from its headquarters in
Buffalo, New York.  It is the only metropolitan newspaper published daily
within a ten county upstate New York distribution area that comprises one of
the 50 largest primary market areas in the United States.

         Among newspapers published in those primary markets, The Buffalo News
claims the highest percentage of its area household coverage, 68% on weekdays
and 83% on Sundays.  Berkshire management believes the "newshole" percentage
(portion of the paper devoted to news) of The Buffalo News to be greater than
any other dominant newspaper of its size or larger.  During 1995 this
percentage was approximately 55%.

         SHOES --  This segment includes H. H. Brown Shoe Company ("H. H.
Brown") which was acquired in July 1991, Lowell Shoe, Inc. ("Lowell") acquired
at the end of 1992, and Dexter Shoe Company ("Dexter"), acquired in November
1993.  A description of each of these businesses follows.

         H. H. Brown manufactures, imports and markets work, safety, outdoor,
western work and casual footwear.  Approximately 70% of H. H. Brown's revenues
are derived from sales of a wide variety of work and safety shoes and boots.
They are manufactured under the H. H. Brown, Carolina, Double-H Boot and other
brand names as well as under private label.  H. H. Brown is the leading
domestic producer of steel toe safety work shoes. The company maintains a
significant share in many niche markets in which it competes by providing
functional footwear and emphasizing comfort.

         In addition to manufacturing its products at three facilities located
in the United States and a facility in Canada, the company sources shoes and
shoe components offshore.  The Company markets its products entirely within the
United States and Canada through a direct sales force of about 85 employees.
Its customer base is primarily composed of small independent retailers and
wholesalers who sell to workers in a variety of industries including steel,
construction, agriculture and heavy manufacturing.

         H. H. Brown's consumers are typically middle income workers who are 
required by OSHA to wear a specific type of footwear or desire a specific 
functional product.  The Company's competitors in this market are typically 
domestic work boot manufacturers.  Management believes that its products are 
competitive in terms of quality and pricing.

         Lowell manufactures and markets women's casual, service and nurses
footwear. These products are marketed under the brand names Soft Spots and
Nurse Mates.

         Dexter manufactures and markets men's and women's dress, casual 
and athletic footwear. All products are manufactured and sold under the
trademark Dexter.  The Company specializes in the construction of Handsewns,
Welts and Cements.  The leather is purchased from domestic tanneries, and many
of the other components used in the manufacturing process are made by Dexter.
        
         Dexter has four manufacturing facilities in Maine and two located in
Puerto Rico.  In addition to the manufacturing facilities, Dexter operates 76
factory outlet stores located in 11 states and Puerto Rico.

         The customer base is composed of independent retailers and department
stores throughout the United States.  Dexter's major customers are large
department stores, including J. C. Penney and Nordstroms, specialty retailers
such as Famous Footwear and military PX's.  Additionally, Dexter exports its
products to numerous foreign countries.  Dexter is recognized throughout the
United States for its footwear products and the customer is typically a 
middle income consumer.





                                       5
<PAGE>   7

ITEM 1.  BUSINESS (CONTINUED)

NON-INSURANCE BUSINESSES OF BERKSHIRE (CONTINUED)

         UNIFORMS -- The Fechheimer Brothers Company manufactures its products
at plants in Kentucky, Ohio and Texas, for marketing through about fifty
company-operated retail distribution centers and by independent distributors
and dealers who together serve more than 200 major metropolitan areas.

         OTHER NON-INSURANCE ACTIVITIES not identified with Berkshire business
segments include the more than one dozen diverse manufacturing businesses
acquired with the 1986 purchase of The Scott & Fetzer Company.  The largest
revenue producer of these businesses is Campbell Hausfeld/Scott Fetzer Company,
which manufactures and markets a variety of products including air compressors,
air tools, painting systems, pressure washers, welders and generators. At the
end of April, 1995, Berkshire acquired 100 percent of the stock of Helzberg's
Diamond Shops, Inc. ("Helzberg's").  Helzberg's -- based in North Kansas City,
Missouri -- operates a chain of 166 retail jewelry stores in twenty-five
states.  Most of Helzberg's stores are located in malls or power strip centers,
and operate under the names: Helzberg Diamonds and Jewelry 3. In addition, for
many years Berkshire has owned an 85% interest in a long established, high 
volume retailer of fine jewelry, Borsheim's, in Omaha, Nebraska.

         Berkshire Hathaway Inc. and subsidiaries employed approximately 24,000
persons on a full-time basis at December 31, 1995.  This amount excludes
approximately 7,600 full-time employees of GEICO Corporation, which was
acquired by Berkshire in January, 1996.

ADDITIONAL INFORMATION WITH RESPECT TO BERKSHIRE'S BUSINESSES

         The amounts of revenue, operating profit and identifiable assets
attributable to each of the eight aforementioned business segments are included
in Note 18 to Registrant's consolidated financial statements contained in Item
8, Financial Statements and Supplementary Data.  Additional information
regarding Registrant's investments in fixed maturity and marketable equity
securities is included in Notes 3 through 7 to Registrant's consolidated
financial statements.





                                       6
<PAGE>   8

ITEM 2.  PROPERTIES

         The physical properties used by Registrant's significant business
segments are summarized below:

<TABLE>
<CAPTION>
                                                                                                        Owned          Approx.
                                                                                                         or            Square
    Business                                  Location                      Type of Property           Leased         Footage
-----------------                     ------------------------           ---------------------         ------         -------
<S>                                   <C>                                 <C>                            <C>           <C>
Company
Headquarters                          Omaha, NE                           Offices                        Leased          4,000

Insurance                             Omaha, NE                           Offices                        Owned          73,000
                                      Omaha, NE & other locations
                                        in Arizona, California,
                                        Colorado, Kansas
                                        & Connecticut                     Offices                        Leased        111,000

Candy                                 Los Angeles, CA & South             Plants/Warehouses/
                                        San Francisco, CA                   Offices                      Owned         274,000
                                      California                          Warehouses/Offices             Leased        385,000
                                      California & other                  Retail outlets and             Leased        337,000
                                        locations principally               quantity order centers
                                        in western states                   (210 locations)

Newspaper                             Buffalo, NY                         Offices                        Owned         195,000
                                      Buffalo, NY                         Printing Plant                 Owned         150,000
                                      New York &
                                        Washington, D.C.                  Offices/Warehouses             Leased         69,000

Home                                  Omaha, NE                           Retail Store                   Owned         400,000
Furnishings                           Omaha, NE & Lincoln, NE             Warehouses/Offices             Owned         650,000
                                      Des Moines, IA                      Retail Store                   Leased          4,000
                                      Salt Lake City & other              Warehouses/Offices             Owned         445,000
                                        Utah locations                    Warehouses/Offices             Leased        146,000
                                      Salt Lake City & other              Retail Stores                  Owned         341,000
                                        Utah locations                    Retail Stores                  Leased        140,000

Encyclopedias,                        Elk Grove Village, IL &
Other Reference                         Addison, IL                       Offices/Warehouse              Owned         100,000
Material                              Chicago, IL & vicinity              Offices                        Leased         68,000
                                      Australia                           Offices/Warehouses             Leased          7,000
                                      United Kingdom                      Offices                        Leased         19,000

Home Cleaning                         Cleveland, OH,
Systems                                 Andrews, TX &                     Plants/Warehouses/             Owned         397,000
                                        Walnut Ridge, AR                    Offices
                                      Cleveland, OH                       Warehouse/Offices              Leased         23,000
                                      Canada & England                    Warehouses/Offices             Leased         31,000

Uniforms                              Cincinnati, OH &
                                        various other U.S.                Plants/Warehouses/
                                        locations                           Offices                      Owned         228,000
                                      Hodgenville, KY &                   Plants/Warehouses/
                                        various other U.S. locations        Offices                      Leased        239,000
                                      9 U.S. locations                    Retail Stores                  Owned          75,000
                                      44 U.S. locations                   Retail Stores                  Leased        387,000
</TABLE>





                                       7
<PAGE>   9

ITEM 2.  PROPERTIES (CONTINUED)


<TABLE>
<CAPTION>
                                                                                                        Owned          Approx.
                                                                                                         or            Square
    Business                                  Location                      Type of Property           Leased         Footage
-----------------                     ------------------------           ---------------------         ------         -------
<S>                                   <C>                                 <C>                            <C>         <C>
Shoes                                 Morganton, NC, Womelsdorf,
                                        PA, Martinsburg, PA,
                                        Hudson, NH, Dexter, ME &          Plants/Warehouses/
                                        Canada                              Offices                      Owned       1,687,000
                                      Greenwich, CT, Commerce, CA,
                                        Morganton, NC, Skowhegan,
                                        ME, Newton, MA, Canada,
                                        Puerto Rico &                     Plants/Warehouses/
                                        Dominican Republic                  Offices                      Leased        710,000
                                      46 U.S. locations                   Retail Stores                  Owned         316,000
                                      45 U.S. & Puerto Rico locations     Retail Stores                  Leased        322,000
</TABLE>

ITEM 3.  LEGAL PROCEEDINGS

         The Company is a defendant in litigation relating to the
transactions in which Salomon Inc ("Salomon") repurchased a significant block
of its common stock from a holder thereof and sold a new issue of preferred
stock to the Company.  Twenty-one derivative action lawsuits have been filed
against Salomon's directors challenging these transactions and seeking damages;
two of these lawsuits (Ruby Resnik v. Dwayne O. Andreas, et al., Delaware
Chancery No. 9300, filed September 30, 1987 and Rodney Shields v.  John H.
Gutfreund, et al., United States District Court for the Southern District of
New York, No. 88 Civ. 1058, filed February 12, 1988) named the Company as an
additional defendant.  The lawsuits allege that the Salomon directors breached
their fiduciary duties to Salomon and its shareholders in connection with these
transactions, and the two lawsuits naming the Company claim, in essence, that
the Company participated in such alleged breaches of duty.  The complaints in
these lawsuits seek damages in unspecified amounts, a declaration that the sale
of preferred stock to the company is illegal, null and void, an order requiring
that the preferred stock purchased by the Company be voted in the same manner
as the majority of Salomon's shares, and rescission of the transaction between
Salomon and the Company. Management does not expect the outcome of these
lawsuits to be materially adverse to the Company.  Other litigation pending
against the Company and its subsidiaries is not considered material or is
ordinary routine litigation incidental to the business.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None


EXECUTIVE OFFICERS OF THE REGISTRANT

         Following is a list of the Registrant's executive officers:

<TABLE>
<CAPTION>
        Name                                        Age             Position with Registrant                       Since   
--------------------                                ---           ----------------------------                  -----------
<S>                                                  <C>          <C>                                              <C>
Warren E. Buffett                                    65           Chairman of the Board                            1970
Marc D. Hamburg                                      46           Vice President                                   1992
Charles T. Munger                                    72           Vice Chairman of the Board                       1978
</TABLE>

         Each executive officer serves, in accordance with the by-laws of the
Registrant, until the first meeting of the Board of Directors following the
next annual meeting of shareholders and until his respective successor is
chosen and qualified or until he sooner dies, resigns, is removed or becomes
disqualified.  Mr. Buffett and Mr. Munger also serve as directors of the
Registrant.





                                       8
<PAGE>   10

                                    Part II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
         MATTERS

MARKET INFORMATION

         The Company's Common Stock is listed for trading on the
New York Stock Exchange, trading symbol: BRK. The following table sets forth
the high and low sales prices per share, as reported on the New York Stock
Exchange Composite List during the periods indicated:

<TABLE>
<CAPTION>
1995                                       High     Low        1994                                             High       Low  
                                         -------  -------                                                      -------   -------
<S>                                      <C>      <C>          <C>                                             <C>       <C>
First Quarter     . . . . . . . . . . .  $25,200  $20,250      First Quarter  . . . . . . . . . . . . . . .    $16,900   $15,150
Second Quarter    . . . . . . . . . . . . 24,450   21,500      Second Quarter   . . . . . . . . . . . . . .     16,700    15,400
Third Quarter     . . . . . . . . . . . . 30,600   23,400      Third Quarter  . . . . . . . . . . . . . . .     19,750    16,425
Fourth Quarter    . . . . . . . . . . . . 33,400   28,850      Fourth Quarter   . . . . . . . . . . . . . .     20,800    19,200
</TABLE>

SHAREHOLDERS

         The Company had approximately 9,000 record holders of its common stock
at March 8, 1996. Record owners included nominees holding at least 215,000
shares on behalf of beneficial-but-not-of-record owners. Management believes
that the Company has more than 20,000 beneficial owners.

DIVIDENDS

         Berkshire has not declared a cash dividend since 1967.

ITEM 6.  SELECTED FINANCIAL DATA

                SELECTED FINANCIAL DATA FOR THE PAST FIVE YEARS
                  (dollars in millions, except per share data)

<TABLE>
<CAPTION>
                                                                   1995          1994          1993          1992          1991   
                                                                 --------      --------      --------       --------      --------
<S>                                                              <C>           <C>           <C>            <C>           <C>
REVENUES:
         Sales and service revenues . . . . . . . . . . . . .    $2,755.9      $2,351.9     $1,962.9       $1,774.4      $1,651.1
         Insurance premiums earned  . . . . . . . . . . . . .       957.5         923.2        650.7          664.3         776.4
         Interest and dividend income . . . . . . . . . . . .       474.8         426.1        354.1          364.9         347.3
         Income from investment in Salomon Inc  . . . . . . .        78.8          30.1         63.0           63.0          63.0
         Income from finance businesses . . . . . . . . . . .        26.6          24.9         22.2           20.7          19.5
         Realized investment gain . . . . . . . . . . . . . .       194.1          91.3        546.4           89.9         192.5
                                                                 --------      --------     --------       --------      --------
         Total revenues . . . . . . . . . . . . . . . . . . .    $4,487.7      $3,847.5     $3,599.3       $2,977.2      $3,049.8
                                                                 ========      ========     ========       ========      ========

EARNINGS:
         Before realized investment gain and
                    cumulative effect of accounting change  .      $600.2        $433.7(1)    $402.4(2)      $347.7        $315.7
                                                                                                                                  
         Realized investment gain . . . . . . . . . . . . . .       125.0          61.1        356.7           59.6         124.2
         Cumulative effect of change in accounting
                    for income taxes  . . . . . . . . . . . .        --            --          (71.0)          --            --  
                                                                   ------        ------       ------         ------        ------ 
         Net earnings . . . . . . . . . . . . . . . . . . . .      $725.2        $494.8       $688.1         $407.3        $439.9
                                                                   ======        ======       ======         ======        ======

EARNINGS PER SHARE:
         Before realized investment gain and
                    cumulative effect of accounting change  .     $505.60       $368.21(1)   $348.03(2)     $303.29       $275.42
                                                                                                                                 
         Realized investment gain . . . . . . . . . . . . . .      105.30         51.91       308.50          51.95        108.30
         Cumulative effect of change in accounting
                    for income taxes  . . . . . . . . . . . .        --            --         (61.39)          --            --  
                                                                  -------       -------      -------        -------       -------
         Net earnings . . . . . . . . . . . . . . . . . . . .     $610.90       $420.12      $595.14        $355.24       $383.72
                                                                  =======       =======      =======        =======       =======

YEAR-END DATA:
         Total assets . . . . . . . . . . . . . . . . . . . .   $29,928.8     $21,338.2    $19,520.5      $17,132.0     $14,461.9
         Borrowings under investment agreements
                    and other debt (3)  . . . . . . . . . . .     1,061.7         810.7        972.4        1,154.7       1,100.5
         Shareholders' equity . . . . . . . . . . . . . . . .    17,217.1      11,875.0     10,428.5        8,896.4       7,379.9
         Common shares outstanding,                                                          
                    in thousands  . . . . . . . . . . . . . .       1,194         1,178        1,178          1,149         1,146
         Shareholders' equity per
           outstanding share  . . . . . . . . . . . . . . . .   $  14,426     $  10,083    $   8,854      $   7,745     $   6,437
                                                                =========     =========    =========      =========     =========
</TABLE>

         (1)        Includes a charge of $172.6 ($146.53/share) representing an
                    other-than-temporary decline in value of investment in
                    USAir Group, Inc. Preferred Stock.
         (2)        Includes a charge of $75.3 ($65.38/share) representing the
                    effect of the change in federal income tax rates on
                    deferred taxes applicable to unrealized appreciation.
         (3)        Excludes borrowings of finance businesses.





                                       9
<PAGE>   11
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

         Net earnings for each of the past three years are disaggregated in 
the table that follows. Amounts are after deducting minority interests and 
taxes.

<TABLE>
<CAPTION>
                                                                                                 (dollars in millions)           
                                                                                            --------------------------------
                                                                                             1995         1994         1993   
                                                                                            ------      -------       ------
<S>                                                                                         <C>          <C>          <C>
Property and Casualty Insurance Segment:
                 Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $ 10.4       $ 79.9       $ 19.2
                 Investment income  . . . . . . . . . . . . . . . . . . . . . . . . .        416.3        349.2        320.9
                 Realized investment gain . . . . . . . . . . . . . . . . . . . . . .        117.7         61.6        362.7
                                                                                            ------       ------       ------
                    Total - Property and Casualty Insurance Segment   . . . . . . . .        544.4        490.7        702.8
Non-Insurance business segments . . . . . . . . . . . . . . . . . . . . . . . . . . .        147.4        165.8        133.3
Other businesses            . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         44.0         36.4         33.2
Realized investment gain (loss) not included above  . . . . . . . . . . . . . . . . .          7.3         (0.5)        (6.0)
All other except interest expense . . . . . . . . . . . . . . . . . . . . . . . . . .         17.0         12.3          6.7
Interest expense            . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (34.9)       (37.3)       (35.6)
                                                                                            ------       ------       ------ 
                 Earnings before nonrecurring charges
                   and effect of accounting change  . . . . . . . . . . . . . . . . .        725.2        667.4        834.4
Nonrecurring charges and effect of accounting change  . . . . . . . . . . . . . . . .         --         (172.6)      (146.3)
                                                                                            ------       ------       ------ 
                    Net earnings  . . . . . . . . . . . . . . . . . . . . . . . . . .       $725.2       $494.8       $688.1
                                                                                            ======       ======       ======
</TABLE>

        The business segment data (Note 18 to the Consolidated Financial
Statements) should be read in conjunction with this discussion.

                 PROPERTY AND CASUALTY INSURANCE UNDERWRITING

        The after-tax figures shown above for Property and Casualty Insurance
underwriting derive from the following:

<TABLE>
<CAPTION>
                                                                                                 (dollars in millions)           
                                                                                            -------------------------------
                                                                                             1995         1994        1993   
                                                                                            ------       ------      ------
<S>                                                                                         <C>          <C>          <C>
Underwriting gain (loss):
                 Primary or direct insurance  . . . . . . . . . . . . . . . . . . . .       $ 40.6       $ 48.3       $12.7
                 Reinsurance assumed  . . . . . . . . . . . . . . . . . . . . . . . .        (21.0)        80.7        17.3
                                                                                            ------       ------       -----
                    Underwriting gain -- pre-tax  . . . . . . . . . . . . . . . . . .         19.6        129.0        30.0
                 Applicable income taxes  . . . . . . . . . . . . . . . . . . . . . .          7.2         48.3        10.2
                 Applicable minority interest . . . . . . . . . . . . . . . . . . . .          2.0          0.8         0.6
                                                                                            ------       ------       -----
After-tax underwriting gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $ 10.4       $ 79.9       $19.2
                                                                                            ======       ======       =====
</TABLE>

         The Berkshire Hathaway Insurance Group engages in both insurance and
reinsurance of property/casualty risks. In its insurance activities, as
distinguished from its reinsurance activities, its members assume risks of loss
from persons primarily and directly subject to the risks. In its reinsurance
activities, the members assume defined portions of similar or dissimilar risks
to which other insurers and reinsurers have subjected themselves in their own
insuring activities. Over the past three years, reinsurance assumed activities
have produced about 73% of the aggregate premiums earned by the property and
casualty insurance group.

         A significant marketing strategy followed by all Insurance Group
members is the maintenance of extraordinary capital strength. Statutory surplus
as regards policyholders of the Insurance Group increased to approximately
$19.5 billion at December 31, 1995. This superior capital strength creates
opportunities for Insurance Group members to negotiate and enter into contracts
of insurance specially designed to meet unique needs of sophisticated insurance
and reinsurance buyers.





                                       10
<PAGE>   12

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (Continued)

PROPERTY AND CASUALTY INSURANCE UNDERWRITING (continued)

         For purposes of this Discussion, premiums and losses and loss expenses
amounts are stated net of reinsurance ceded.

  Reinsurance Assumed

         Underwriting results, stated on the basis of generally accepted
accounting principles ("GAAP"), with respect to the reinsurance assumed
business for the past three years are summarized in the following table.


<TABLE>
<CAPTION>
                                                                             (dollars in millions)  
                                                                1995                 1994                  1993       
                                                          ---------------       ---------------       ---------------
                                                          Amount      %         Amount      %         Amount      %  
                                                          -------   -----       -------   -----       -------   -----
<S>                                                       <C>       <C>         <C>       <C>         <C>       <C>
Premiums written  . . . . . . . . . . . . . . . . . . .   $ 777.0               $ 689.8               $ 528.7
                                                          =======               =======               =======
Premiums earned . . . . . . . . . . . . . . . . . . . .   $ 717.6   100.0       $ 688.4   100.0       $ 442.4   100.0
                                                          -------   -----       -------   -----       -------   -----
Losses and loss expenses  . . . . . . . . . . . . . . .     522.0    72.7         476.9    69.3         350.9    79.3
Underwriting expenses . . . . . . . . . . . . . . . . .     216.6    30.2         130.8    19.0          74.2    16.8
                                                          -------   -----       -------   -----       -------   -----
Total losses and expenses . . . . . . . . . . . . . . .     738.6   102.9         607.7    88.3         425.1    96.1
                                                          -------   =====       -------   =====       -------   =====
Underwriting gain (loss) -- pre-tax . . . . . . . . . .   $ (21.0)              $  80.7               $  17.3
                                                          =======               =======               =======
</TABLE>

         Reinsurance assumed operations are conducted from National Indemnity
Company's offices in Stamford, Connecticut. The Insurance Group enters into a
variety of types of reinsurance contracts, including catastrophe and other
excess of loss contracts and quota share contracts. Excess of loss contracts
provide indemnification to ceding companies for all or part of covered losses
in excess of specified retentions. Such retentions may apply to either an
individual loss occurrence or an aggregation of occurrences.  Quota share
contracts provide indemnification to ceding companies in specified proportion
of the ceding companies' own losses. Most contracts specify a maximum aggregate
amount of indemnification.

         Reinsurance premiums earned from catastrophe excess of loss policies
totalled about $260 million in 1995, $447 million in 1994 and $152 million in
1993. Underwriting gains of approximately $152 million in 1995, $240 million in
1994 and $110 million in 1993, resulted from the Insurance Group's catastrophe
reinsurance business. The considerable amounts of premiums earned from this
business, coupled with the fact that only the 1994 Northridge earthquake
produced a significant catastrophe loss during the last three years,
contributed to the underwriting gains in each of these years.

         The magnitude of underwriting gains recorded over the last three years
from the catastrophe reinsurance business should not be considered predictive
of future results. The underwriting gains produced by this business in any
given year can be easily exceeded by losses in the next. Thus periodic
underwriting results were and are expected to be subject to substantial
volatility.  Berkshire's management, however, is willing to accept such
volatility, provided that there is a reasonable prospect of long term
profitability.

         The increased levels of capital devoted to the catastrophe reinsurance
market by the insurance industry in recent years has put pressure on
competitors to lower prices below the levels Berkshire management considered
adequate. The result was a decrease in acceptances and amounts of premiums
earned from catastrophe policies by the Group in 1995. Management anticipates
that the level of catastrophe business accepted in 1996 may again decline.

         Premiums earned from other property and casualty excess of loss and
quota-share coverages totalled about $451 million in 1995, $238 million in 1994
and $253 million in 1993. These coverages gave rise to underwriting losses of
$98 million in 1995, $82 million in 1994 and $28 million in 1993. The increase
in premiums earned in 1995 over amounts earned in 1994 and 1993 primarily
derived from a few sizable excess of loss treaties.

         In most non-catastrophe reinsurance contracts, the concept of the
time-value-of-money is an important consideration due to the anticipated
extended claim payment period -- or "tail". This is especially true with
respect to reinsurance of certain casualty or liability coverages, for which
the premiums are based in significant part on time discounting of expected
losses. Reserves for losses and loss expenses are established for these
contracts on an undiscounted basis, thus resulting in underwriting losses for
financial reporting purposes. This business is accepted, nonetheless, because
of the large amounts of investable policyholder funds (or "float") that it
produces.





                                       11
<PAGE>   13

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (Continued)

PROPERTY AND CASUALTY INSURANCE UNDERWRITING (continued)

  Reinsurance Assumed (continued)

         The underwriting results from the reinsurance businesses discussed
above reflect net charges of about $30 million in 1995 and $37 million in 1994
of adverse loss development of previous years loss occurrences. The nature of
estimating losses is inherently imprecise, particularly with respect to losses
which are reported and settled over lengthy periods of time. In the future,
additional information will be revealed, including reports of additional cases
of an unknown number and magnitude for pre- 1996 losses. Loss development
represents corrections of prior estimates and is credited or charged to
earnings in the year made. The estimated liability for unpaid losses and loss
expenses from reinsurance assumed businesses totalled about $3.1 billion at the
end of 1995. Subsequent loss development with respect to a liability of this
magnitude is another factor which may cause substantial volatility in future
periodic earnings.

         Prior to 1993, the Group entered into significant levels of
retroactive reinsurance -- excess of loss coverage of past events and
structured settlement reinsurance -- contracts providing periodic payments with
respect to settled claims. Opportunities to write retroactive coverages in
recent years have been minimal. Underwriting losses with respect to retroactive
and structured settlement coverages amounted to $75 million in 1995, $78
million in 1994 and $64 million in 1993, reflecting principally the
amortization of deferred charges re reinsurance assumed and accretion of
discounted structured settlement liabilities. See Notes 1(g) and 1(h) to the
Consolidated Financial Statements for information with respect to such charges
and liabilities. The amortization and accretion are reported as losses
incurred, and thus, because there is no related premium income, as underwriting
losses. Amortization and accretion charges of about $70 million are expected in
1996.

  Primary or Direct Insurance Underwriting

         A summary follows of the combined underwriting results, stated on a
GAAP basis, of the Berkshire Hathaway Insurance Group's primary or direct
insurance operations.

<TABLE>
<CAPTION>
                                                        
                                                                   (dollars are in millions)                       
                                                          1995                1994                 1993       
                                                   ----------------     ----------------      --------------
                                                   Amount       %        Amount      %        Amount     %  
                                                   ------     -----      ------    -----      ------   -----
<S>                                                <C>        <C>        <C>       <C>       <C>       <C>
Premiums written  . . . . . . . . . . . . .        $247.2                $225.7               $208.4
                                                   ======                ======               ======
Premiums earned . . . . . . . . . . . . . .        $239.9     100.0      $234.8    100.0      $208.3   100.0
                                                   ------     -----      ------    -----      ------   -----
Losses and loss expenses  . . . . . . . . .          90.0      37.5        88.4     37.6        99.8    47.9
Underwriting expenses . . . . . . . . . . .         109.3      45.6        98.1     41.8        95.8    46.0
                                                   ------     -----      ------    -----      ------   -----
Total losses and expenses . . . . . . . . .         199.3      83.1*      186.5     79.4*      195.6    93.9*
                                                   ------     ======     ========   ======    ======    ==== 
Underwriting gain -- pre-tax  . . . . . . .        $ 40.6                $ 48.3               $ 12.7
                                                   ======                ======               ======
</TABLE>

*        Includes favorable loss development credits: 1995 -- $49.3 million,
         1994 -- $54.1 million and 1993 -- $41.6 million.  Without such
         credits, total losses and expenses as a percentage of premiums earned
         were: 1995 -- 103.7%, 1994 -- 102.4% and 1993 -- 113.9%.

         Primary or direct insurance activities include the
"traditional" business, directed from National Indemnity Company's Omaha
offices. This business represents principally casualty coverages for commercial
accounts. The commercial casualty/professional liability/specialty risk
operations located in Stamford, Connecticut, enter into insurance contracts
with insureds presenting risks unusual in nature and/or especially large in
amount. The Homestate Group companies underwrite various commercial coverages
for risks in an increasing number of selected states. Cypress Insurance
Company, a specialty carrier, underwrites workers' compensation risks primarily
in California. Additionally, these activities include the credit card credit
insurance business written nationwide by Central States Indemnity Co. of Omaha
("CSI"). Group members follow disciplined underwriting approaches which
encourage rejection of underpriced risks without regard to volume
considerations.

         CSI's business differs substantially from the insurance business
underwritten by the other members of the Insurance Group.  CSI's premiums
derive from a high volume of small dollar premium transactions generated
through credit card issuers. CSI's underwriting costs, primarily commissions to
credit card issuers, are normally higher, but claim costs are normally lower
than for the other primary or direct underwriting units. Overall, periodic
underwriting results from this business are anticipated to be less volatile
than the other primary or direct insurance operations. CSI produced premiums
earned of $93 million, $72 million and $69 million for 1995, 1994 and 1993,
respectively. CSI's net underwriting gain was about $7 million for 1995, $4
million for 1994 and $5 million for 1993.
                                       12
<PAGE>   14

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (Continued)

PROPERTY AND CASUALTY INSURANCE UNDERWRITING (continued)

  Primary or Direct Insurance Underwriting (continued)

         Premiums earned by Berkshire's other primary or direct insurance
businesses totalled $147 million, $163 million and $140 million for 1995, 1994
and 1993, respectively. Higher amounts of premiums were earned by the Homestate
Group in 1995 as compared to 1994. This increase was more than offset by
decreased premiums earned in 1995 from each of the other primary or direct
insurance businesses. Each primary or direct insurance business operates in
highly competitive markets. Soft market conditions which have prevailed over
the past several years continued through 1995 with respect to most property and
casualty coverages. Management does not foresee any significant change in
market conditions which would soon reverse the trend of low premium volume.

         Other primary or direct businesses produced a net underwriting gain of
$33 million for 1995, $44 million for 1994 and $8 million for 1993. As noted in
the preceding table, favorable loss development credits were recorded in each
of the last three years.  The favorable development recorded in 1995 and 1994
related principally to the traditional commercial business and to the
commercial casualty/professional liability/specialty risks operations. In 1993,
the favorable development credits related primarily to the traditional
commercial business. While the trend of favorable development recognized in
recent years is encouraging, there is no certainty that it will continue into
future periods.

  INSURANCE SEGMENT INVESTMENT INCOME

         Following is a summary of Insurance Group net investment income for 
the past three years.

<TABLE>
<CAPTION>
                                                                                       (dollars in millions)             
                                                                                 1995          1994            1993   
                                                                                ------        ------          ------
                 <S>                                                            <C>           <C>             <C>
                 Investment income before taxes . . . . . . . . . . . . .       $500.2        $418.2          $375.4
                 Applicable income taxes  . . . . . . . . . . . . . . . .         78.9          64.3            51.2
                 Applicable minority interest . . . . . . . . . . . . . .          5.0           4.7             3.3
                                                                                ------        ------          ------
                 Investment income after taxes and minority interest  . .       $416.3        $349.2          $320.9
                                                                                ======        ======          ======
</TABLE>

         Invested assets increased in each of the past three years. In the
three year period, reinvested earnings of the Group and capital contributed by
Berkshire totalled approximately $2.1 billion. In addition, over the past three
year period, the amount of "float" from policyholder funds increased by
approximately $1.3 billion. That term denotes the sum of unpaid losses, unpaid
loss adjustment expenses, unearned premiums, and other liabilities to
policyholders less the aggregate of agents' balances receivable, amounts
recoverable as reinsurance on paid and unpaid losses, deferred policy
acquisition costs, deferred charges re reinsurance assumed and prepaid income
taxes. The net amount of float was approximately $3.8 billion at the end of
1995. The amount of pre-tax investment income shown above for 1995 and 1994
includes the equity in net earnings or losses with respect to the Group's
investment in common stock of Salomon Inc. For 1995, the Group's equity in net
earnings of Salomon was $17 million compared to a loss of $33 million for 1994.
See Note 7 to the Consolidated Financial Statements for additional information
regarding the investments in Salomon Inc.

  NON-INSURANCE BUSINESS SEGMENTS

         A summary follows of results to Berkshire from these identified
business segments for the past three years.

<TABLE>
<CAPTION>
                                                                          (dollars in millions)                               
                                                             1995                  1994                   1993       
                                                        ---------------       ---------------        --------------
                                                         Amount     %          Amount     %           Amount     %  
                                                        --------  -----       --------  -----        --------  -----
<S>                                                     <C>       <C>         <C>       <C>          <C>       <C>
Revenues  . . . . . . . . . . . . . . . . . . . . .     $1,918.9  100.0       $1,771.9  100.0        $1,440.2  100.0
Cost and expenses . . . . . . . . . . . . . . . . .      1,669.6   87.0        1,496.5   84.5         1,215.4   84.4
                                                        --------  -----       --------  -----        --------  -----
Operating profit  . . . . . . . . . . . . . . . . .        249.3   13.0          275.4   15.5           224.8   15.6
Income taxes  . . . . . . . . . . . . . . . . . . .         98.6    5.1          106.2    6.0            87.8    6.1
Minority Interest . . . . . . . . . . . . . . . . .          3.3    0.2            3.4    0.2             3.7    0.3
                                                        --------  -----       --------  -----        --------  -----
Contribution to net earnings  . . . . . . . . . . .     $  147.4    7.7       $  165.8    9.3        $  133.3    9.2
                                                        ========  =====       ========  =====        ========  =====
</TABLE>





                                       13
<PAGE>   15

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (Continued)


NON-INSURANCE BUSINESS SEGMENTS (continued)

         A comparison of revenues and operating profits between 1995, 1994 and
1993 for each of the seven identifiable non-insurance business segments
follows.

<TABLE>
<CAPTION>
                                                                    (dollars in millions)                      Operating Profit
                                                             Revenues              Operating Profits          as a % of Revenues
                                                  -----------------------------  ----------------------      ---------------------
Segment                                             1995       1994      1993     1995     1994   1993       1995     1994    1993  
-------                                           --------   --------  --------  ------- ------- -------     -----    ----    ----
<S>                                               <C>        <C>       <C>        <C>    <C>      <C>         <C>     <C>     <C>
Candy     . . . . . . . . . . . . . . . . . . . . $  233.6   $  216.1  $  201.0   $ 49.3 $  46.6  $ 40.3      21.1    21.6    20.0
Encyclopedias, other reference material . . . . .    157.9      191.3     198.8      7.4    24.4    19.4       4.7    12.8     9.8
Home cleaning systems . . . . . . . . . . . . . .    235.6      207.6     193.9     52.6    43.9    40.9      22.3    21.1    21.1
Home furnishings  . . . . . . . . . . . . . . . .    428.1      245.4     208.6     28.1    16.9    21.1       6.6     6.9    10.1
Newspaper . . . . . . . . . . . . . . . . . . . .    154.8      150.9     145.5     46.3    53.7    50.4      29.9    35.6    34.6
Shoes     . . . . . . . . . . . . . . . . . . . .    565.1      609.4     370.2     49.5    76.4    40.0       8.8    12.5    10.8
Uniforms  . . . . . . . . . . . . . . . . . . . .    143.8      151.2     122.2     16.1    13.5    12.7      11.2     8.9    10.4
                                                  --------   --------  --------   ------  ------  ------                          
                                                  $1,918.9   $1,771.9  $1,440.2   $249.3  $275.4  $224.8
                                                  ========   ========  ========   ======  ======  ======
</TABLE>

  1995 compared to 1994

         Revenues from the seven identifiable non-insurance business segments
of $1,918.9 million increased $147.0 million (8.3%) from the prior year. The
overall operating profit from these business segments of $249.3 million
decreased $26.1 million (9.5%). The following is a discussion of significant
matters impacting comparative results for each of the non-insurance business
segments.

         Candy

         Revenues of the candy segment increased $17.5 million (8.1%) over
comparable prior year amounts. The comparative increase in revenues is
primarily due to increased volume. Total pounds of candy sold increased about
7.1%. Most of the volume increase arose from See's quantity order and mail
order programs. Total pounds sold during 1995 from quantity order and mail
order programs increased about 15%.

         Operating profits increased $2.7 million (5.8%) over comparable prior
year amounts. Somewhat offsetting the favorable impact on profits of the
increased volume was increased advertising and payroll costs. Such increases
primarily related to See's continuing efforts to intensify the marketing of its
mail order and quantity order business.

         Encyclopedias, Other Reference Materials

         Revenues of this segment declined $33.4 million (17.5%) from 1994. The
decline continues the trend of reduced unit sales of printed encyclopedias
(World Book and Childcraft) which began in 1989 when revenues from this segment
were in excess of $300 million. Operating profits of this segment declined
$17.0 million (69.7%) from 1994. The comparative decline in operating profits
was primarily due to the decline in revenues. Also negatively impacting
comparative operating profits were increased paper costs and a higher ratio of
administrative, selling and editorial costs to revenues.

         The quantity of print products sold in the future will be influenced
by the capacity of the company to market and sell an expanded line of products
which better combine the advantages of print and electronic media. World Book
sold more than $4.0 million of multimedia encyclopedia products in 1995 and has
significantly expanded its efforts to increase the number of CD-ROM titles in
its library. Management believes the increased efforts in marketing and product
innovation will enhance the capacity of the company to compete in the home and
school markets for educational products.

         Management is concerned about the impact of the continued increase in
home computers equipped with CD-ROMs and the lower price of CD-ROM
encyclopedias in comparison to printed encyclopedias, World Book has stepped up
its efforts to market its CD-ROM product (World Book Multimedia Encyclopedia).
It is hoped that this product and other similar offerings will provide World
Book an opportunity to better compete in an industry which is beset by
increasingly tough competition from other CD-ROM and on-line offerings.





                                       14
<PAGE>   16

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (Continued)

NON-INSURANCE BUSINESS SEGMENTS (continued)

  1995 compared to 1994 (continued)

         Encyclopedias, Other Reference Materials (Continued)

         At the end of 1995, World Book began implementing various significant
cost cutting measures. These measures included significant reductions in
administrative costs and a major change in the way it distributes printed
encyclopedias. It will take time to evaluate the effects of the various
initiatives, but management is cautiously optimistic that such efforts will
improve the prospects of this business.

         Home Cleaning Systems

         Revenues of the home cleaning systems segment increased $28.0 million
(13.5%) and operating profits increased $8.7 million (19.8%) over prior year
amounts. Unit sales volume increased 8% domestically and 24% in international
markets. Foreign Kirby sales represent approximately 21% of total unit volume.
The favorable comparative results are attributed to an increase in the average
number of domestic distributors and improvements in the structure of the sales
force in international markets. The businesses comprising this segment were
acquired in connection with Berkshire's acquisition in 1986 of Scott Fetzer.
Since that time, operating profits generated from these businesses have more
than doubled and revenues have increased over 85%. Management anticipates
continued successful results from this segment.

         Home Furnishings

         Revenues from this segment increased in 1995 by $182.7 million (74.4%)
over the prior year. The major reason for the increase was an acquisition which
took place at mid-year. Effective June 29, 1995, Berkshire consummated a merger
with R.C. Willey Home Furnishings ("R.C. Willey") and acquired 100% of the
stock of the privately held corporation. R.C. Willey, through its seven retail
locations, is the dominant retailer of home furnishings in Utah. R.C. Willey
sells the same types of products as the Nebraska Furniture Mart (the business
formerly comprising this segment). Both businesses have about the same annual
sales volume. For the last half of 1995, R.C. Willey contributed about $150
million to the overall comparative revenue increase of this segment.

         Operating profits of $28.1 million were $11.2 million (66.3%) greater
than in 1994. R.C. Willey's inclusion in this segment's results for the second
half of the year more than accounts for the increase in comparative operating
profits. Nebraska Furniture Mart's ("NFM") comparative operating profits
declined about 10% in 1995 as compared to 1994. The reduction in NFM operating
profits resulted primarily from increased depreciation charges and payroll
costs related to the first full year of operation of its electronics superstore
more than offsetting the benefits of volume increases. The superstore known as
the "Mega Mart" opened in November 1994.

         Newspaper

         Operating profits during 1995 of $46.3 million declined $7.4 million
(13.8%) over the comparable 1994 amount. The decline in operating profits was
not unexpected and was predicted in Berkshire's 1994 management's discussion. A
major factor contributing to the decline in operating profits was a sharp
increase in newsprint costs. The costs per metric ton of newsprint increased
almost 40% in 1995 as compared to 1994. For several years prior to 1995,
newsprint costs had either been stable or had declined. While management
doesn't expect these costs to rise in 1996 at the same rate, it is still
possible that additional increases of 5% to 10% will occur.

         Two other factors contributed somewhat to lower comparative operating
profits. Special one-time charges were recorded to accrue the costs of buying
out the contracts of a number of composing room employees whose services are
not required under present production techniques but whose jobs were subject to
lifetime guarantees. Additionally, adjustments were made to the periods over
which certain data handling and electronic equipment were being depreciated.

         Over the last several years, the attractiveness of newspaper
businesses as strong economic franchises has been reduced.  While the industry
retains excellent economics, over time it can be expected that the competitive
strength of the newspaper business will gradually erode. However, management
expects that the newspaper business and the Buffalo News in particular will
remain a fine business for many years to come.





                                       15
<PAGE>   17

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (Continued)

NON-INSURANCE BUSINESS SEGMENTS (continued)

  1995 compared to 1994 (continued)

         Shoes

         This segment includes H. H. Brown Shoe Company, Inc. ("H. H. Brown"),
Lowell Shoe, Inc. ("Lowell") and Dexter Shoe Companies ("Dexter"). These
businesses were acquired by Berkshire during the period between June 1991 and
November 1993. H. H.  Brown, acquired in 1991, is a manufacturer and
distributor of work, safety and casual footwear. Lowell, acquired at the end of
1992, manufactures and markets women's casual, service and nurses' footwear.
The acquisition of Dexter occurred in late 1993. Dexter is a manufacturer of
men's and women's dress, casual and athletic footwear. Additionally, Dexter
operates 76 retail outlet stores and H.  H. Brown operates 15 retail shoe
stores.

         Revenues during 1995 of $565.1 million were lower than the prior year
by $44.3 million (7.3%). Operating profits of this segment declined $26.9
million (35.3%) in 1995 as compared to the prior year. All of the businesses
which comprise this segment experienced declines in revenues and profits.

         The footwear industry, with the exception of the athletic segment,
experienced depressed earnings during 1995 and many competitors earned only
marginal profits or incurred losses. Intense competition resulted in many
footwear manufacturers and importers selling their products at or below cost. A
flurry of retail consolidations and closings resulted in a surplus of close-out
merchandise and made sales of regular priced products extremely difficult.

         Management is optimistic that 1996 will be a better year for the
footwear industry. The three businesses that comprise this segment provide
functional footwear products to many niche markets. It is anticipated that
these businesses will be able to capitalize on opportunities resulting from a
reduction in competition. In order to maximize future opportunities, the
businesses intend to focus on lowering production and administrative costs.
Over time, it is expected that Berkshire's shoe businesses will return to
higher earnings levels more in line with 1994's results.

         Uniforms

         The uniform segment's revenues decreased $7.4 million (4.9%) in 1995
as compared to 1994. However, operating profits in 1995 increased $2.6 million
(19.3%) over the comparable prior year figure. The decline in comparative
revenues was attributable to a reduction in sales to New York City fire
fighters in connection with a special three year program which incepted in
1994. Somewhat offsetting the aforementioned revenue declines were increases in
revenues from the segment's core uniform manufacturing businesses.  Margins
related to the New York City Fire Department business are significantly less
than those of the core uniform manufacturing business. Thus, in spite of the
overall decline in revenues, comparative operating profits increased primarily
due to the sales mix change.

         1994 compared to 1993

         Revenues from the non-insurance business segments increased $331.7
million (23.0%) in 1994 as compared to 1993. The most significant revenue
increase arose in the "shoes" segment where revenues increased $239.2 million
(64.6%) over the comparable prior year figures. The acquisition of Dexter late
in 1993 accounts for a substantial portion of the comparative increase as 1994
results include Dexter's business for the full year as compared to  about two
months in 1993. With the exception of the "encyclopedias, other reference
material" segment, all other reportable non-insurance business segments
experienced increases in comparative revenues in 1994 vs. 1993. The decline in
the "encyclopedias, other reference material" segment was a result of the
continuation of a reduction which began in 1989 in printed encyclopedia sales.
(See preceding section regarding comparative 1995 vs. 1994 results for a
discussion regarding the decline in World Book unit sales.)

         Operating profits of $275.4 million during 1994 were $50.6 million
(22.5%) greater than in 1993. The "shoes" segment with a comparative increase
of $36.4 million (91.0%) was the major contributor to the comparative increase.
The Dexter acquisition accounts for substantially all the comparative increase
in operating profits for the "shoes" segment.





                                       16
<PAGE>   18

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (Continued)

NON-INSURANCE BUSINESS SEGMENTS (continued)

  BUSINESS OTHER THAN IDENTIFIED SEGMENTS


<TABLE>
<CAPTION>
                                                                                        (dollars in millions)       
                                                                                   -------------------------------- 
                                                                                    1995         1994         1993  
                                                                                   ------       ------       ------ 
<S>                                                                                <C>          <C>          <C>    
Revenues          . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $877.9       $607.3       $550.7
                                                                                   ======       ======       ======
Operating profit  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $ 77.7       $ 59.2       $ 55.2
  Income taxes    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        32.7         22.1         20.8
  Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         1.0          0.7          1.2
                                                                                   ------       ------       ------
Contribution to net earnings  . . . . . . . . . . . . . . . . . . . . . . . .      $ 44.0       $ 36.4       $ 33.2
                                                                                   ======       ======       ======
</TABLE>

         The above represent aggregate data for businesses that numbered 25 in
1995. Revenues from businesses not identified with specific business segments
increased by $270.6 million (44.6%) in 1995 as compared to the prior year.
Operating profits from this group of businesses increased by $18.5 million
(31.2%) in 1995 versus the prior year. Most of this increase in revenues during
1995 relates to the acquisition of Helzberg's Diamond Shops ("Helzberg's") on
April 30, 1995. Helzberg's consists of a chain of 166 retail jewelry stores
operating in 25 states. Operating profits generated by Helzberg's during the
last eight months of 1995 more than account for the increase in 1995 operating
profits as compared to the prior two years.

  INTEREST EXPENSE

         The decrease in interest expense in 1995 as compared to 1994 primarily
results from the fact that average outstanding borrowings under investment
agreements decreased by about $64 million during 1995 as compared to 1994.
Additionally, the average interest rate related to such borrowings decreased
from 6.6% in 1994 to 6.5% in 1995. The level of average borrowings under
investment agreements in 1994 was approximately $80 million greater than the
comparable 1993 amount and primarily accounts for the increase in 1994's
interest expense over the comparable 1993 amount.

  REALIZED INVESTMENT GAIN

         Realized investment gain has been a recurring element in Berkshire's
net earnings for many years. The amount -- recorded when appreciated securities
are sold -- tends to fluctuate significantly from period to period, with a
meaningful effect upon Berkshire's consolidated net earnings. But, the amount
of realized investment gain for any given period has no predictive value, and
variations in amount from period to period have no practical analytical value,
particularly in view of the unrealized price appreciation now existing in
Berkshire's consolidated investment portfolio.

         During the fourth quarter of 1993, an insurance subsidiary of
Berkshire sold ten million common shares of its investment in Capital
Cities/ABC, Inc. in connection with that Company's offer to buy from its
shareholders up to twenty million of its common shares. Berkshire's after-tax
gain from this transaction was $297.4 million.

   NONRECURRING CHARGES AND ACCOUNTING CHANGES

         As more fully described in Note 5 to the Consolidated Financial
Statements, during 1994 the Company recorded a pre-tax charge of $268.5 million
($172.6 million after-taxes and minority interests) as result of recognizing an
other than temporary decline in the value of its investment in USAir Group,
Inc. Preferred Stock.

                 Effective January 1, 1993, the Company adopted the provisions
of Statement of Financial Accounting Standards No.  109 "Accounting for Income
Taxes" ("SFAS 109"). The cumulative effect of adopting SFAS 109 on the
Company's 1993 results was to decrease net earnings by about $71 million.
Additionally, during 1993 a charge of $75.3 million was recorded as a result of
the increase in the Federal corporate income tax rate from 34% to 35%. For a
further description of the accounting change and the charge to earnings
resulting from the change in Federal income tax rates, see Notes 1(m) and 11 to
the Consolidated Financial Statements.





                                       17
<PAGE>   19

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (Continued)

LIQUIDITY AND CAPITAL RESOURCES

         Berkshire's Consolidated Balance Sheet as of December 31, 1995,
reflects continuing capital strength. In the past three years, Berkshire
shareholders' equity has increased from approximately $8.9 billion at December
31, 1992 to approximately $17.2 billion at December 31, 1995. In that
three-year period, realized and unrealized securities gains increased equity
capital by approximately $6.0 billion, and reinvested earnings, other than
realized securities gains, were about $1.4 billion.

         The following events occurred subsequent to December 31, 1995 and will
impact future operating results and liquidity.



  GEICO Acquisition

         As more fully described in Note 3 to the Consolidated Financial
Statements, on January 2, 1996 the Company consummated a merger with GEICO
Corporation ("GEICO"). The merger was pursuant to an agreement dated August 25,
1995, whereby the Company agreed to acquire for cash each issued and
outstanding common share of GEICO except shares already held by Berkshire. The
cost of acquiring such shares was approximately $2.3 billion. The Company
utilized cash and cash equivalents which were on hand at December 31, 1995 to
acquire the GEICO common shares.

         GEICO, through its subsidiaries, is a multiple line property/casualty
insurer, the principal business of which is writing private passenger
automobile insurance. Beginning in 1996, GEICO's results will be included in
the Company's consolidated financial statements. Inclusion of GEICO will have a
substantial effect on comparative period-to-period underwriting results and
investment income earned by the Insurance Group during 1996. GEICO's 1995
condensed financial statements are included in Note 3 to the Consolidated
Financial Statements.

  Capital Cities/ABC, Inc. acquisition by The Walt Disney Company

         On January 4, 1996, shareholders of Capital Cities/ABC, Inc. ("Capital
Cities") and The Walt Disney Company ("Disney") approved an agreement whereby
each Capital Cities common share will be converted at the election of the
holder, subject to certain limitations including proration, into the right to
receive for each share of Capital Cities stock either a) one share of Disney
stock and $65 in cash; or b) 2.048 shares of Disney stock; or c) $127 in cash.
At December 31, 1995, Berkshire held 20 million Capital Cities common shares.
The Company has elected the option of receiving 2.048 shares of Disney stock
for each of its shares of Capital Cities stock. However, the election is
subject to proration and the actual consideration to be received is not
currently known.

  Proposed Recapitalization

         On February 13, 1996, Berkshire announced that at its annual meeting
of shareholders to be held on May 6, 1996, shareholders will be asked to
approve a recapitalization of Berkshire, creating two classes of common stock.
If the recapitalization is approved, among other things, a new class of stock
to be designated Class B Common Stock will be authorized. Berkshire's existing
common stock will be redesignated as Class A Common Stock. Each share of Class
A Common Stock will be convertible at the option of the holder into thirty
shares of Class B Common Stock.

         For the purpose of creating an initial supply of Class B shares,
Berkshire intends to make a public offering of at least $100 million of new
Class B shares. Berkshire could, of course, issue more than $100 million of
Class B shares, and will do so if believed necessary to forestall any
speculative excesses in the market for its stock. Berkshire expects to find
constructive uses from the proceeds generated from the public offering.
However, at this time, the Company has no specific plans for utilizing the
proceeds. The offering will be made only by means of a prospectus and is
expected to occur, subject to shareholder approval of the recapitalization,
reasonably soon following the annual meeting.





                                       18
<PAGE>   20

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders
Berkshire Hathaway Inc.

         We have audited the accompanying consolidated balance
sheets of Berkshire Hathaway Inc. and subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of earnings, and cash flows for
each of the three years in the period ended December 31, 1995.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audits.

         We conducted our audits in accordance with generally
accepted auditing standards.  Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement.  An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

         In our opinion, such consolidated financial statements
present fairly, in all material respects, the financial position of Berkshire
Hathaway Inc. and subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995 in conformity with generally accepted
accounting principles.

         As discussed in Note 1 to the consolidated financial
statements, in 1993 the Company changed its method of accounting for income
taxes and investments to conform with recent pronouncements of the Financial
Accounting Standards Board.





DELOITTE & TOUCHE LLP
Omaha, Nebraska
March 8, 1996





                                       19
<PAGE>   21
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)



                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                 (dollars in millions except per share amounts)


<TABLE>
<CAPTION>
                                                                                                             DECEMBER 31,          
                                                                                                     -----------------------------
                                                                                                        1995               1994   
                                                                                                     ----------         ----------
<S>                                                                                                   <C>                <C>
                                   ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $ 2,703.8          $   273.9
Investments:
         Securities with fixed maturities . . . . . . . . . . . . . . . . . . . . . . . . . . .           835.2            1,820.7
         Marketable equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        22,000.3           15,236.5
         Salomon Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           822.7            1,023.4
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           718.9              580.6
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           601.1              425.4
Properties and equipment  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           333.3              275.7
Assets of finance businesses  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           756.7              717.1
Other assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         1,156.8              984.9
                                                                                                      ---------          ---------
                                                                                                      $29,928.8          $21,338.2
                                                                                                      =========          =========


            LIABILITIES AND SHAREHOLDERS' EQUITY

Property and casualty insurance policyholder liabilities  . . . . . . . . . . . . . . . . . . .       $ 4,629.7          $ 4,200.8
Accounts payable, accruals and other liabilities  . . . . . . . . . . . . . . . . . . . . . . .           482.1              397.4
Income taxes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         5,588.5            3,292.6
Borrowings under investment agreements and other debt . . . . . . . . . . . . . . . . . . . . .         1,061.7              810.7
Liabilities of finance businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           685.2              562.4
                                                                                                      ---------          ---------
                                                                                                       12,447.2            9,263.9
                                                                                                      ---------          ---------

Minority shareholders' interests  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           264.5              199.3
                                                                                                      ---------          ---------

Shareholders' equity:
         Common stock of $5 par value. Authorized 1,500,000 shares;
           Issued 1,381,308 shares  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             6.9                6.9
         Capital in excess of par value . . . . . . . . . . . . . . . . . . . . . . . . . . . .         1,001.7              656.1
         Unrealized appreciation of investments, net  . . . . . . . . . . . . . . . . . . . . .        10,632.8            6,364.4
         Retained earnings        . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         5,610.4            4,885.2
                                                                                                      ---------         ----------
                                                                                                       17,251.8           11,912.6
Less common stock in treasury, at cost
         (187,796 shares in 1995; 203,558 shares in 1994) . . . . . . . . . . . . . . . . . . .            34.7               37.6
                                                                                                      ---------         ----------
             Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . .        17,217.1           11,875.0
                                                                                                      ---------          ---------
                                                                                                      $29,928.8          $21,338.2
                                                                                                      =========          =========
</TABLE>



          See accompanying Notes to Consolidated Financial Statements





                                       20
<PAGE>   22

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)


                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF EARNINGS
                 (dollars in millions except per share amounts)

<TABLE>
<CAPTION>
                                                                                                  YEAR ENDED DECEMBER 31,          
                                                                                       -------------------------------------------
                                                                                           1995            1994           1993    
                                                                                       ------------    ------------   ------------
<S>                                                                                       <C>             <C>           <C>
REVENUES:
         Sales and service revenues . . . . . . . . . . . . . . . . . . . . . . .          $2,755.9        $2,351.9      $1,962.9
         Insurance premiums earned  . . . . . . . . . . . . . . . . . . . . . . .             957.5           923.2         650.7
         Interest and dividend income . . . . . . . . . . . . . . . . . . . . . .             474.8           426.1         354.1
         Income from investment in Salomon Inc  . . . . . . . . . . . . . . . . .              78.8            30.1          63.0
         Income from finance businesses . . . . . . . . . . . . . . . . . . . . .              26.6            24.9          22.2
         Realized investment gain   . . . . . . . . . . . . . . . . . . . . . . .             194.1            91.3         546.4
                                                                                           --------       ---------      --------
                                                                                            4,487.7         3,847.5       3,599.3
                                                                                           --------        --------      --------
COST AND EXPENSES:
         Cost of products and services sold . . . . . . . . . . . . . . . . . . .           1,706.7         1,450.0       1,180.6
         Insurance losses and loss adjustment expenses  . . . . . . . . . . . . .             612.0           565.3         450.7
         Insurance underwriting expenses  . . . . . . . . . . . . . . . . . . . .             325.0           228.0         169.1
         Selling, general and administrative expenses . . . . . . . . . . . . . .             775.9           613.4         552.6
         Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .              59.3            60.1          56.6
         Other-than-temporary decline in value of investment in
           USAir Group, Inc. Preferred Stock  . . . . . . . . . . . . . . . . . .             --              268.5         --   
                                                                                          ---------        --------     ---------
                                                                                            3,478.9         3,185.3       2,409.6
                                                                                           --------        --------      --------

EARNINGS BEFORE INCOME TAXES, MINORITY INTEREST AND
                    CUMULATIVE EFFECT OF ACCOUNTING CHANGE  . . . . . . . . . . .           1,008.8           662.2       1,189.7
         Income taxes -
                    Other than effect of change in income tax rate
                      on deferred taxes applicable to unrealized
                      appreciation  . . . . . . . . . . . . . . . . . . . . . . .             270.3           158.7         345.3
                    Effect of change in income tax rate on deferred
                      taxes applicable to unrealized appreciation . . . . . . . .              --             --             75.3
         Minority interest. . . . . . . . . . . . . . . . . . . . . . . . . . . .              13.3             8.7          10.0
                                                                                          ---------       ---------    ----------

EARNINGS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE  . . . . . . . . . . . . .             725.2           494.8         759.1
         Cumulative effect of change in accounting for income
                       taxes  . . . . . . . . . . . . . . . . . . . . . . . . . .             --              --            (71.0)
                                                                                          ---------       ---------     --------- 
NET EARNINGS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          $  725.2        $  494.8      $  688.1
                                                                                           ========        ========      ========


         Average shares outstanding . . . . . . . . . . . . . . . . . . . . . . .         1,187,102       1,177,750     1,156,243
                                                                                          =========       =========     =========

EARNINGS PER SHARE:
         Before cumulative effect of accounting change  . . . . . . . . . . . . .           $611            $420          $656
         Cumulative effect of change in accounting for income
                       taxes  . . . . . . . . . . . . . . . . . . . . . . . . . .            --              --            (61)
                                                                                           -----           -----          ---- 
         Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           $611            $420          $595
                                                                                            ====            ====          ====
</TABLE>




          See accompanying Notes to Consolidated Financial Statements





                                       21
<PAGE>   23

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)


                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in millions)
<TABLE>
<CAPTION>
                                                                                                  YEAR ENDED DECEMBER 31,         
                                                                                         -----------------------------------------
                                                                                            1995            1994           1993   
                                                                                         ----------      ----------     ----------
<S>                                                                                       <C>            <C>             <C>
Cash flows from operating activities:
         Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $  725.2       $   494.8       $  688.1
         Adjustments to reconcile net income to cash flows
         from operating activities:
                    Realized investment gain  . . . . . . . . . . . . . . . . . .           (194.1)          (91.3)        (546.4)
                    Other than temporary decline in value of investment
                          in USAir Group, Inc. Preferred Stock  . . . . . . . . .              --            268.5            --
                    Depreciation and amortization   . . . . . . . . . . . . . . .             75.7            62.5           50.2
                    Effect of change in income tax rate on deferred taxes . . . .              --              --            75.3
                    Cumulative effect of accounting change  . . . . . . . . . . .              --              --            71.0
                    Changes in assets and liabilities before effects from
                          business acquisitions:
                       Losses and loss adjustment expenses  . . . . . . . . . . .            268.6           274.1          (22.8)
                       Deferred charges re reinsurance assumed  . . . . . . . . .             51.0            25.3           16.2
                       Unearned premiums  . . . . . . . . . . . . . . . . . . . .             66.9            (8.5)          83.9
                       Receivables  . . . . . . . . . . . . . . . . . . . . . . .            (35.4)          (49.8)         134.1
                       Accounts payable, accruals and other liabilities . . . . .            228.2           210.5           35.0
                       Income taxes . . . . . . . . . . . . . . . . . . . . . . .            (35.8)         (257.1)         107.9
                    Other . . . . . . . . . . . . . . . . . . . . . . . . . . . .            (22.4)            0.1           33.7
                                                                                          --------       ---------       --------
                         Net cash flows from operating activities . . . . . . . .          1,127.9           929.1          726.2
                                                                                          --------       ---------       --------
Cash flows from investing activities:
         Purchases of fixed maturity investments  . . . . . . . . . . . . . . . .           (273.9)       (2,485.8)        (272.3)
         Purchases of marketable equity securities  . . . . . . . . . . . . . . .         (1,459.9)       (3,050.0)        (858.9)
         Proceeds from sales of fixed maturity investments  . . . . . . . . . . .            669.7         1,772.1            --
         Proceeds from redemptions and maturities of fixed
                    maturity investments  . . . . . . . . . . . . . . . . . . . .            954.6            85.9          318.9
         Proceeds from sales of marketable equity securities  . . . . . . . . . .          1,352.7         1,466.8        1,188.5
         Loans and investments originated in finance businesses . . . . . . . . .           (381.2)         (246.8)        (866.8)
         Principal collection on loans and investments
                    originated in finance businesses  . . . . . . . . . . . . . .            363.0           332.4          269.3
         Other  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            (11.4)          (23.2)          19.6
                                                                                          --------       ---------       --------
                         Net cash flows from investing activities . . . . . . . .          1,213.6        (2,148.6)        (201.7)
                                                                                          --------       ---------       --------
Cash flows from financing activities:
         Proceeds from borrowings of finance businesses . . . . . . . . . . . . .            265.7           208.6          591.9
         Proceeds from other borrowings . . . . . . . . . . . . . . . . . . . . .          1,232.7         1,225.3        1,265.0
         Repayments of borrowings of finance businesses . . . . . . . . . . . . .           (232.1)         (390.5)        (316.3)
         Repayments of other borrowings . . . . . . . . . . . . . . . . . . . . .         (1,151.7)       (1,387.7)      (1,399.9)
         Other  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             (1.5)           (0.9)          (2.9)
                                                                                          --------       ---------       --------
                         Net cash flows from financing activities . . . . . . . .            113.1          (345.2)         137.8
                                                                                          --------       ---------       --------
                         Increase (decrease) in cash and cash equivalents . . . .          2,454.6        (1,564.7)         662.3
Cash and cash equivalents at beginning of year  . . . . . . . . . . . . . . . . .            289.9         1,854.6        1,192.3
                                                                                          --------       ---------       --------
Cash and cash equivalents at end of year *  . . . . . . . . . . . . . . . . . . .         $2,744.5       $   289.9       $1,854.6
                                                                                          ========       =========       ========

*  Cash and cash equivalents at end of year are comprised of the following:
         Finance businesses  . . . . . . . . . . . . . . . . . . . . . . . . . . .        $   40.7       $    16.0       $   37.1
         Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         2,703.8           273.9        1,817.5
                                                                                          --------       ---------       --------
                                                                                          $2,744.5       $   289.9       $1,854.6
                                                                                          ========       =========       ========
</TABLE>




          See accompanying Notes to Consolidated Financial Statements





                                       22
<PAGE>   24

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               December 31, 1995

(1)     SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

        (a)  Nature of operations and basis of consolidation
             Berkshire Hathaway Inc. (the "Company" or "Berkshire") 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. Further information regarding
                this business and Berkshire's other reportable business
                segments is contained in Note 18.

             The accompanying consolidated financial statements include the 
                accounts of Berkshire consolidated with accounts of all its
                subsidiaries. Intercompany accounts and transactions have been
                eliminated.

        (b)  Use of estimates in preparation of financial statements
             The preparation of the consolidated financial statements in
                conformity with generally  accepted accounting principles
                requires management to make estimates and assumptions that
                affect the reported amount of assets and liabilities at the
                date of the financial statements and the reported amount of
                revenues and expenses during the period. Actual results may
                differ from the estimates and assumptions used in preparing
                the consolidated financial statements.

        (c)  Cash equivalents
             Cash equivalents consist of funds invested in money market
                accounts and in investments with a maturity of three months or
                less when purchased.

        (d)  Investments
             Management determines the appropriate classifications of
                investments in securities with fixed maturities and marketable
                equity securities at the time of purchase and reevaluates such
                designations as of each balance sheet date. Investments in
                securities with fixed maturities (except for such securities
                held by finance businesses) and marketable equity securities,
                are classified as available-for-sale. Securities with fixed
                maturities held by finance businesses are classified as
                held-to- maturity. Securities with fixed maturities are deemed
                to be held-to-maturity securities when the Company has the
                ability and positive intent to hold them to maturity.
                Held-to-maturity securities are carried at amortized cost.
                Available-for-sale securities are stated at fair value, with
                unrealized gains and losses, net of tax, reported in a separate
                component of shareholders' equity. Realized gains and losses
                on sales of investments, as determined on a specific
                identification basis, are included in the consolidated
                statements of earnings.

        (e)  Goodwill of acquired businesses
             The difference between purchase cost and the fair value of the
                net assets of acquired businesses is amortized on a straight
                line basis over forty years. The net unamortized balance is
                carried in other assets.

        (f)  Insurance premium acquisition costs
             For financial reporting purposes, certain costs of acquiring
                insurance premiums are deferred, subject to ultimate
                recoverability, and charged to income as the premiums are
                earned. Generally, the ultimate recoverability of premium
                acquisition costs is determined without regard to investment
                income.

        (g)  Deferred charges re reinsurance assumed
             The excess of estimated liabilities for claims and claim costs
                ultimately payable by the Insurance Group over consideration
                received with respect to retroactive property/casualty
                reinsurance contracts that provide for indemnification of
                insurance risk, other than structured settlements, is
                established as a deferred charge at inception of such
                contracts. The deferred charges are subsequently amortized
                using the interest method over the expected settlement periods
                of the claim liabilities. The unamortized balance of deferred
                charges is included in other assets.

        (h)  Property and casualty insurance policyholder liabilities
             Property and casualty insurance policyholder liabilities are
                comprised primarily of (i) unpaid losses and loss adjustment
                expenses, (ii) unearned premiums, and (iii) funds held under
                reinsurance assumed.





                                       23
<PAGE>   25

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                
(1)     SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (Continued)
                                          
        (h)  Property and casualty insurance policyholder liabilities 
             (Continued)
             Liability for unpaid losses and loss adjustment expenses
                represents the aggregate of such obligations of members of
                the Insurance Group with respect to: (i) prospective
                property/casualty insurance and reinsurance contracts, (ii)
                retroactive property/casualty reinsurance contracts that
                provide for indemnification of insurance risk, other than
                structured settlements, and (iii) reinsurance contracts
                providing for periodic payments with respect to settled claims
                ("structured settlements"). Except for structured settlement
                liabilities which are stated at discounted present values, the
                liability for unpaid losses and loss adjustment expenses is at
                the aggregate of estimated ultimate payment amounts.

             Ultimate payment amounts with respect to prospective contracts are
                determined from (i) individual case estimates, (ii) estimates
                of incurred but not reported losses, based on past experience,
                and (iii) reports of losses from ceding insurers.

             Ultimate payment amounts with respect to retroactive reinsurance
                contracts that provide for indemnification of insurance risk,
                other than structured settlements, are established for
                financial reporting purposes at maximum limits of
                indemnification under the contracts. (See also 1(g) above
                related to deferred charges re reinsurance assumed.)

             Liabilities under structured settlement contracts are established
                when the contracts are entered into, at the then present value
                of the actuarially determined ultimate payment amount
                discounted at the prevailing market interest rate. Annual
                accretions to the liabilities are charged to losses incurred.
                (This accounting policy also applies to annuity reserves which
                are included in the liabilities of finance businesses).

             Funds held under reinsurance assumed treaties include deposit
                balances refundable to insureds under contracts which, at
                inception, the Company believed did not meet the risk transfer
                requirements established by Statement of Financial Accounting
                Standards No. 113, "Accounting and Reporting for Reinsurance
                of Short-Duration and Long-Duration Contracts."

        (j)  Insurance premiums
             Insurance premiums for prospective insurance and non-property
                catastrophe reinsurance policies are recognized as revenues
                ratably over their terms with unearned premiums computed on a
                monthly or daily pro rata basis. Premiums for catastrophe
                excess of loss reinsurance coverages are deferred until the
                earlier of a loss occurrence or policy expiration.
                Consideration received for indemnification of risk under
                retroactive reinsurance contracts and structured settlements
                is accounted for as premiums earned at the inception of the
                contracts. Premiums earned are stated net of amounts ceded
                to reinsurers.

        (k)  Reinsurance
             Provisions for losses and loss adjustment expenses are reported
                in the accompanying consolidated statements of earnings after
                deducting estimates of recoveries under reinsurance contracts.
                Such recoveries totalled $14 million, $61 million, and $34
                million for 1995, 1994 and 1993, respectively. Reinsurance
                contracts do not relieve the Insurance Group Members of their
                obligations to indemnify policyholders with respect to the
                underlying insurance and reinsurance contracts. Estimates of
                losses and loss adjustment expenses recoverable under
                reinsurance contracts are included in receivables.

        (m)  Accounting changes
             Effective January 1, 1993, the Company adopted the provisions
                of Statement of Financial Accounting Standards No. 109,
                "Accounting for Income Taxes" ("SFAS 109"). The adoption of
                SFAS 109 changed the Company's method of accounting for income
                taxes from the "deferred method" to the "asset and liability
                method." Under the asset and liability method of SFAS 109,
                deferred tax assets and liabilities are recognized for future
                tax consequences attributable to differences between financial
                statement carrying amounts of existing assets and liabilities
                and their respective tax bases. The provisions of SFAS 109
                require that the effect on deferred taxes of a change in tax
                rates be recognized in income in the period that includes       
                the enactment date.

             In May 1993, the Financial Accounting Standards Board issued
                Statement of Financial Accounting Standards No. 115,
                "Accounting for Certain Investments in Debt and Equity
                Securities" ("SFAS 115"). As permitted under the statement,
                the Company elected to adopt the statement's provisions as of
                December 31, 1993. Among its provisions, the statement requires
                a change in the accounting for marketable equity securities
                held by non-insurance entities. Prior to the adoption of SFAS
                115, such securities were carried at the lower of aggregate
                cost or market. Under the provisions of SFAS 115, these
                securities are now carried at market and accounted for in the
                same manner as marketable equity securities held by the
                Company's insurance subsidiaries.





                                       24
<PAGE>   26
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2)  BUSINESS ACQUISITIONS

           During 1995, the Company consummated mergers with Helzberg's Diamond
Shops, Inc. ("Helzberg's") and R.C. Willey Home Furnishings ("R.C. Willey") by
reissuing 15,762 shares of its common stock held in treasury in exchange for
100% of the common stock of each of these companies.  Helzberg's consists of a
chain of 166 jewelry stores operating in 25 states and R.C. Willey, through its
seven locations, is the dominant retailer of home furnishings in Utah.

           In 1993, the Company consummated a merger with the privately held
Dexter Shoe Companies ("Dexter") by reissuing 25,203 shares of its common stock
held in treasury in exchange for 100% of the outstanding common stock of
Dexter. Dexter manufactures and distributes men's and women's dress, casual and
athletic shoes.

           Each of these mergers was accounted for by the purchase method and,
accordingly, the operating results of these businesses are included in the
Company's consolidated results of operations from the effective dates of the
mergers (Dexter -- November 7, 1993; Helzberg's -- April 30, 1995; R.C. Willey
-- June 29, 1995). Had the results of these businesses been included commencing
with operations at the beginning of the year of their respective acquisition by
Berkshire, the reported results would not have been materially affected.

(3)  MERGER WITH GEICO CORPORATION

           On January 2, 1996, GEICO Corporation ("GEICO") became an indirect
wholly-owned subsidiary of Berkshire as a result of the merger of an indirect
wholly-owned subsidiary of Berkshire with and into GEICO.  (The date of January
2, 1996 is hereafter referred to as the "Merger Date".)  The merger was
consummated pursuant to an Agreement and Plan of Merger (the "Agreement") dated
August 25, 1995.  Pursuant to the Agreement, each issued and outstanding common
share of GEICO on the Merger Date, except shares held by Berkshire's
subsidiaries and GEICO, was converted into the right to receive $70 per share,
or an aggregate amount of $2.3 billion (the "Merger Consideration").  The
amount of the Merger Consideration was determined based upon 33,284,733
outstanding common shares held by the public on the Merger Date.

           As of the Merger Date, subsidiaries of Berkshire owned 34,250,000
common shares of GEICO which were acquired in 1980 and earlier years for an
aggregate cost of $45.7 million.  Up to the Merger Date, neither Berkshire nor
its subsidiaries had acquired any shares of GEICO's common stock since 1980.
However, Berkshire's ownership percentage, due to intervening stock repurchases
by GEICO,  gradually increased from about 33% in 1980 to almost 51% immediately
prior to the Merger Date.

           GEICO, through its subsidiaries, is a multiple line property
casualty insurer, the principal business of which is writing private passenger
automobile insurance. The condensed financial statements which follow are
derived from GEICO's audited consolidated financial statements as of December
31, 1995 and for the year then ended.


                               GEICO CORPORATION
                             (dollars in millions)

<TABLE>
<CAPTION>
                       CONDENSED BALANCE SHEET                                  CONDENSED STATEMENT OF EARNINGS         
                       AS OF DECEMBER 31, 1995                                FOR THE YEAR ENDED DECEMBER 31, 1995      
                                                                                                                        
        ASSETS                                                       REVENUES                                           
        <S>                                       <C>                <C>                                        <C>     
        Cash and cash equivalents . . . . . . . . $  391.6           Premiums  . . . . . . . . . . . . . . . . .$2,787.0
        Investments:                                                 Net investment income . . . . . . . . . . .   226.8
          Securities with fixed maturities  . . .  3,680.8           Realized investment gain  . . . . . . . . .    21.6
          Equity securities . . . . . . . . . . .    971.1           Other . . . . . . . . . . . . . . . . . . .    18.6
        Other . . . . . . . . . . . . . . . . . .    752.0                                                      --------
                                                  --------                                                       3,054.0
                                                  $5,795.5                                                      --------
                                                  ========           COST AND EXPENSES                                  
        LIABILITIES AND SHAREHOLDERS' EQUITY                         Insurance losses and expenses . . . . . . . 2,711.3
        Property and casualty insurance                              Interest on debt  . . . . . . . . . . . . .    34.4
           policyholder liabilities . . . . . . . $3,025.8                                                      --------
        Debt  . . . . . . . . . . . . . . . . . .    434.4                                                       2,745.7
        Other . . . . . . . . . . . . . . . . . .    466.9                                                      --------
                                                  --------                                                              
                                                   3,927.1                                                              
        Shareholders' equity  . . . . . . . . . .  1,868.4           Earnings before income taxes  . . . . . . .   308.3
                                                  --------           Income taxes  . . . . . . . . . . . . . . .    60.7
                                                  $5,795.5                                                      --------
                                                  ========           Net earnings  . . . . . . . . . . . . . . .$  247.6
                                                                                                                ========
</TABLE>





                                       25
<PAGE>   27
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

                            BERKSHIRE HATHAWAY INC.
                               AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(3)      MERGER WITH GEICO CORPORATION (Continued)

         The merger will be accounted for by the purchase method and,
therefore, assets and liabilities of GEICO will be recorded in Berkshire's
consolidated financial statements at fair value. The excess of the purchase
cost over the fair value of net assets acquired at the Merger Date will be
recorded as goodwill and subsequently amortized over 40 years.  The following
unaudited pro forma combined condensed balance sheet results from combining
GEICO's condensed consolidated balance sheet with Berkshire's consolidated
balance sheet as of December 31, 1995 to give effect to the merger as if it had
occurred on such date.

                   PRO FORMA COMBINED CONDENSED BALANCE SHEET
                            AS OF DECEMBER 31, 1995
                             (dollars in millions)

<TABLE>
<CAPTION>
ASSETS                                                                   LIABILITIES AND SHAREHOLDERS' EQUITY              
<S>                                                    <C>               <C>                                        <C>      
Cash and cash equivalents . . . . . . . . . . . .      $    758.3        Property and casualty insurance                     
Investments:                                                                policyholder liabilities  . . . . . .   $ 7,655.5
         Securities with fixed maturities . . . .         5,104.0        Income taxes, principally deferred . . .     4,873.6
         Marketable equity securities . . . . . .        20,812.9        Borrowings under investment agreements              
         Receivables . . . . . . . . . . . . .  .         1,213.9           and other debt  . . . . . . . . . . .     1,475.5
         Goodwill. . . . . . . . . . . . . . .  .         2,293.7        Other liabilities  . . . . . . . . . . .     1,607.8
         Other assets. . . . . . . . . . . . .  .         2,432.9                                                   ---------
                                                        ---------                                                    15,612.4 
                                                        $32,615.7                                                   --------- 
                                                        =========        Minority shareholders' interest  . . . .       264.5
                                                                                                                    ---------
                                                                         Total shareholders' equity . . . . . . .    16,738.8
                                                                                                                    ---------
                                                                                                                    $32,615.7
                                                                                                                    =========
</TABLE>

         The preceding pro forma balance sheet reflects purchase accounting
adjustments which result in the consolidation of Berkshire's previously owned
investments in GEICO on a "step-by-step" basis, in accordance with the
provisions of Accounting Research Bulletin 51, "Consolidated Financial
Statements" ("ARB 51").  Prior to the Merger Date the investment in GEICO
common stock was classified as an available-for-sale security and carried at
market value in accordance with the provisions of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" (See Note 6).  The change in accounting will result in a
decrease in shareholders' equity of about $478 million from the amount
reflected on Berkshire's Consolidated Balance Sheet at December 31, 1995.

         During the fourth quarter of 1995, the Financial Accounting Standards
Board ("FASB") issued a proposed statement of financial accounting standards
entitled "Consolidated Financial Statements: Policy and Procedures" ("Exposure
Draft") which would supersede ARB 51. The provisions of the Exposure Draft would
require that Berkshire recognize, in earnings, the unrealized gains of such
earlier GEICO investments. Therefore, if the purchase accounting adjustments had
been recorded on the basis of the provisions of the Exposure Draft,
shareholders' equity would not have decreased. It is not currently known whether
or not the Exposure Draft, in its present form, will be adopted by the FASB.

(4)      REALIZED INVESTMENT GAINS (LOSSES)
         Realized gains (losses) from sales and redemptions of investments are
summarized below (in millions):

<TABLE>
<CAPTION>
                                                                                              1995           1994          1993   
                                                                                             ------         ------        ------ 
                    <S>                                                                      <C>            <C>           <C>
                    Marketable equity securities --
                      Gross realized gains  . . . . . . . . . . . . . . . . . . . . .        $109.9         $185.7        $518.4 *
                      Gross realized losses . . . . . . . . . . . . . . . . . . . . .         (14.2)         (96.9)        (11.9)
                    Securities with fixed maturities --
                      Gross realized gains  . . . . . . . . . . . . . . . . . . . . .         100.8            6.8          40.1
                      Gross realized losses . . . . . . . . . . . . . . . . . . . . .          (2.4)          (4.3)         (0.2)
                                                                                             ------         ------        ------ 
                                                                                             $194.1         $ 91.3        $546.4
                                                                                             ======         ======        ======
</TABLE>

*        During the fourth quarter of 1993, a subsidiary of Berkshire sold
         10,000,000 common shares of its investment in Capital Cities/ABC, Inc.
         in connection with that company's offer to buy from its shareholders
         up to 20,000,000 of its common shares.  Berkshire's gross realized
         gain from this transaction was $457.5.





                                       26
<PAGE>   28
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(5)      INVESTMENTS IN SECURITIES WITH FIXED MATURITIES

         The amortized cost and estimated fair values as of December 31, 1995
and 1994, of investments in securities with fixed maturities are as follows (in
millions):
<TABLE>
<CAPTION>
                                      December 31, 1995                                Gross          Gross     Estimated
                                                                        Amortized    Unrealized    Unrealized     Fair
                                                                          Cost          Gains         Losses      Value
                                                                        ---------    ----------    ----------   ---------
         <S>                                                              <C>          <C>           <C>         <C>
         Bonds:
           U.S. Treasury securities and obligations of
             U.S. government corporations and agencies  . . . . . .       $ 80.9       $  2.2        $  --       $ 83.1
           Obligations of states, municipalities
             and political subdivisions . . . . . . . . . . . . . .        346.4         17.2          (0.5)      363.1
         Redeemable preferred stocks  . . . . . . . . . . . . . . .        122.5        125.4          (2.9)      245.0
         Mortgage-backed securities . . . . . . . . . . . . . . . .        138.3          5.9          (0.2)      144.0
                                                                          ------       ------        ------      ------
                                                                          $688.1       $150.7        $ (3.6)     $835.2
                                                                          ======       ======        ======      ======
</TABLE>

<TABLE>
<CAPTION>
                                   December 31, 1994                                  Gross         Gross      Estimated
                                                                        Amortized   Unrealized    Unrealized     Fair
                                                                          Cost        Gains         Losses       Value
                                                                        ---------   ----------    ----------   ---------
         <S>                                                            <C>           <C>          <C>         <C>
         Bonds:
           U.S. Treasury securities and obligations of
             U.S. government corporations and agencies  . . . . . .     $  733.5      $ --         $ (16.7)    $  716.8
           Obligations of states, municipalities
             and political subdivisions . . . . . . . . . . . . . .        601.0        22.3          (3.5)       619.8
           Corporate bonds        . . . . . . . . . . . . . . . . .          8.0         2.5           --          10.5
         Redeemable preferred stocks  . . . . . . . . . . . . . . .        423.0        15.0          (3.0)       435.0
         Mortgage-backed securities . . . . . . . . . . . . . . . .         40.0        --            (1.4)        38.6
                                                                        --------      ------       -------     --------
                                                                        $1,805.5      $ 39.8       $ (24.6)    $1,820.7
                                                                        ========      ======       =======     ========
</TABLE>

         Amounts above exclude securities with fixed maturities held by finance
businesses. See note 8.

         Investments in securities with fixed maturities include 358,000 shares
of USAir Group, Inc. Series A Cumulative Convertible Preferred Stock ("USAir
Preferred Shares"). The USAir Preferred Shares were acquired in 1989 for $358
million. If not called or converted prior to August 7, 1999, the USAir
Preferred Shares are mandatorily redeemable by USAir Group, Inc. ("USAir") at
$1,000 per share ($358 million in the aggregate), plus accrued dividends.

         On September 29, 1994, USAir announced that it was deferring the
regular quarterly dividend payments on the USAir Preferred Shares.  Since that
date, USAir has not paid any dividends on the USAir Preferred Shares.  For
several years prior to 1995, USAir incurred very significant losses.
Consequently, during 1994, Berkshire management concluded that an
other-than-temporary decline in the value of USAir Preferred Shares had arisen.
The 1994 consolidated statement of earnings includes a pre-tax charge of $268.5
million to reflect the decline.

         During 1995, USAir returned to profitability, but continued the
deferral of dividends on the USAir Preferred Shares.  Berkshire management has
estimated the fair value of the USAir Preferred Shares to be $214.8 million at
December 31, 1995.  The increase of $125.3 million in the estimated fair value
over the amount recorded at December 31, 1994, is included as a component of
the increase during 1995 in unrealized appreciation of investments.

         Shown below are the amortized cost and estimated fair values of the
above securities at December 31, 1995, by contractual maturity dates. Actual
maturities will differ from contractual maturities because issuers of certain
of the securities retain early call or prepayment rights. Amounts are in
millions.
<TABLE>
<CAPTION>
                                                                                                       Estimated
                                                                                      Amortized          Fair
                                                                                        Cost             Value 
                                                                                      ---------        ---------
         <S>                                                                           <C>              <C>
         Due in one year or less  . . . . . . . . . . . . . . . . . . . . . .          $235.6           $241.0
         Due after one year through five years  . . . . . . . . . . . . . . .           279.6            409.3
         Due after five years through ten years   . . . . . . . . . . . . . .            31.1             37.1
         Due after ten years      . . . . . . . . . . . . . . . . . . . . . .             3.5              3.8
                                                                                       ------           ------
                                                                                        549.8            691.2
         Mortgage-backed securities . . . . . . . . . . . . . . . . . . . . .           138.3            144.0
                                                                                       ------           ------
                                                                                       $688.1           $835.2
                                                                                       ======           ======
</TABLE>





                                       27
<PAGE>   29

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)
                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(6)      INVESTMENTS IN MARKETABLE EQUITY SECURITIES

         Aggregate data with respect to the consolidated investment in
marketable equity securities are shown below (in millions):

<TABLE>
<CAPTION>
                    December 31, 1995
                                                                                                       Unrealized
                                                                                             Cost         Gains           Market   
                                                                                           --------    ----------       ---------
                       <S>                                                                 <C>          <C>             <C>
                       Common stock of:
                            American Express Company (a)  . . . . . . . . . . . . .        $1,392.7     $   653.6       $ 2,046.3
                            Capital Cities/ABC, Inc. (b)  . . . . . . . . . . . . .           345.0       2,122.5         2,467.5
                            The Coca-Cola Company   . . . . . . . . . . . . . . . .         1,298.9       6,126.1         7,425.0
                            Federal Home Loan Mortgage Corporation  . . . . . . . .           260.1         783.9         1,044.0
                            GEICO Corporation (c)   . . . . . . . . . . . . . . . .            45.7       2,347.5         2,393.2
                            The Gillette Company    . . . . . . . . . . . . . . . .           600.0       1,902.0         2,502.0
                            Wells Fargo & Company (d)   . . . . . . . . . . . . . .           423.7       1,043.2         1,466.9
                       All other marketable equity securities . . . . . . . . . . .         1,379.0       1,276.4*        2,655.4
                                                                                           --------     ---------       ---------
                                                                                           $5,745.1     $16,255.2       $22,000.3
                                                                                           ========     =========       =========
</TABLE>

<TABLE>
<CAPTION>
                    December 31, 1994
                                                                                                       Unrealized
                                                                                             Cost         Gains         Market   
                                                                                           --------    ----------     ---------
                       <S>                                                                <C>           <C>           <C>
                       Common stock of:
                            American Express Company (a)  . . . . . . . . . . . . .       $   723.9     $    95.0      $    818.9
                            Capital Cities/ABC, Inc. (b)  . . . . . . . . . . . . .           345.0       1,360.0         1,705.0
                            The Coca-Cola Company   . . . . . . . . . . . . . . . .         1,298.9       3,851.1         5,150.0
                            Federal Home Loan Mortgage Corporation  . . . . . . . .           270.5         373.9           644.4
                            GEICO Corporation (c)   . . . . . . . . . . . . . . . .            45.7       1,632.6         1,678.3
                            The Gillette Company    . . . . . . . . . . . . . . . .           600.0       1,197.0         1,797.0
                            Wells Fargo & Company (d)   . . . . . . . . . . . . . .           423.7         561.0           984.7
                       All other marketable equity securities . . . . . . . . . . .         1,875.4         582.8**       2,458.2
                                                                                           --------     ---------       ---------
                                                                                           $5,583.1      $9,653.4       $15,236.5
                                                                                           ========      ========       =========
</TABLE>

 *   Represents gross unrealized gains $1,302.1 less gross unrealized losses 
     $25.7.

**   Represents gross unrealized gains $719.0 less gross unrealized losses 
     $136.2.
(a)        American Express Company

              Common shares of American Express Company ("AXP") owned by 
              Berkshire and its subsidiaries possessed approximately 10% of
              the voting rights of all AXP shares outstanding at December 31,
              1995.  The shares are held subject to various agreements with the
              Federal Reserve Board, Federal Deposit Insurance Corporation and
              certain state insurance and banking regulators which, among other
              things, prohibit Berkshire from i) seeking representation on the
              Board of Directors of AXP (Berkshire may agree, if it so desires,
              at the request of management or the Board of Directors of AXP to
              have no more than one representative stand for election to the
              Board of Directors of AXP) and (ii) acquiring or retaining shares
              that would cause its ownership of AXP voting securities to equal
              or exceed 17% of the amount outstanding (should Berkshire have a
              representative on the board of directors, such amount is limited
              to 15%). In connection therewith, Berkshire has entered into an
              agreement with AXP which became effective when Berkshire's
              ownership interest in AXP voting securities reached 10% and will
              remain effective so long as Berkshire owns 5% or more of AXP's
              voting securities.  The agreement, among other things, obligates
              Berkshire, so long as Harvey Golub is chief executive officer of
              AXP, to vote its shares in accordance with the recommendations of
              AXP's Board of Directors.  Additionally, subject to certain
              exceptions, Berkshire has agreed not to sell AXP common shares to
              any person who owns 5% or more of AXP voting securities or seeks
              to control AXP, without the consent of AXP.

(b)        Capital Cities/ABC, Inc.

           Common shares of Capital Cities/ABC, Inc. ("Capital Cities") owned 
              by Berkshire subsidiaries possessed approximately 13%
              (consisting of 20,000,000 Capital Cities common shares) of the
              voting rights of all Capital Cities shares outstanding at December
              31, 1995.  On January 4, 1996, shareholders of Capital Cities and
              The Walt Disney Company ("Disney") approved an agreement by and
              between Disney and Capital Cities whereby each Capital Cities
              common share will be converted at the election of the holder,
              subject to certain limitations including proration, into the right
              to receive for each share of Capital Cities stock either a) one
              share of Disney common stock and $65 in cash; or b) 2.048 shares
              of Disney stock; or c) $127 in cash. Berkshire has elected to
              receive 2.048 shares of Disney stock for each of its shares of
              Capital Cities stock.  However, the election is subject to
              proration and the actual consideration to be received is not
              currently known. It is expected that Berkshire will receive its
              share of the consideration on or about March 14, 1996.





                                       28
<PAGE>   30

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(6)      INVESTMENTS IN MARKETABLE EQUITY SECURITIES (Continued)

         (c)        GEICO Corporation 
                    Subsidiaries of Berkshire owned shares of common stock of 
                               GEICO Corporation that possessed approximately
                               51% of the voting rights of all GEICO shares
                               outstanding at December 31, 1995. Prior to
                               January 2, 1996, Berkshire maintained an
                               independent proxy arrangement for voting of the
                               shares as required by Order of GEICO's
                               domiciliary insurance supervisory authority. The
                               Order, dating from Berkshire subsidiaries' major
                               purchase of the shares in 1976, prohibited
                               Berkshire from seeking or causing to change the
                               independent proxy. Also, under the Order, no
                               officer or director of Berkshire or of any
                               affiliate or subsidiary of Berkshire was
                               permitted to serve as a director of GEICO.
                               Because the Order divested Berkshire of its
                               voting rights with respect to the shares,
                               Berkshire has not consolidated the accounts of
                               GEICO in its financial statements.  On January 2,
                               1996, Berkshire acquired the remaining 49% of
                               GEICO's common shares not previously owned for
                               $70 per share or approximately $2.3 billion. The
                               acquisition of such shares was pursuant to an
                               Agreement and Plan of Merger dated August 25,
                               1995, between Berkshire and GEICO.  In connection
                               therewith, the independent proxy arrangement was
                               vacated effective January 2, 1996.  Accordingly,
                               beginning in 1996, GEICO's accounts will be
                               included in Berkshire's consolidated financial
                               statements. See Note 3 for additional
                               information.

         (d)        Wells Fargo & Company
                    Subsidiaries of Berkshire owned common shares of Wells 
                               Fargo & Company ("Wells Fargo") that possessed
                               approximately 14% of the voting rights of all
                               Wells Fargo shares outstanding at December 31,
                               1995. The shares are held subject to a Passivity
                               Agreement, the terms of which among other things
                               prohibit Berkshire, without prior approval from
                               the Federal Reserve Board of San Francisco, from
                               seeking representation on the Board of Directors
                               of Wells Fargo and from disposing of more than 5%
                               of the Wells Fargo securities in any single
                               transaction. In connection therewith, Berkshire
                               has granted a proxy to the Secretary of Wells
                               Fargo, with respect to all Wells Fargo stock
                               presently owned and with respect to such
                               additional shares of Wells Fargo stock as
                               Berkshire may purchase and hold in the future.

(7)      INVESTMENT IN SALOMON INC

         The Company's investment in Salomon Inc consists of the
         following (in millions):
<TABLE>
<CAPTION>
                                                                         December 31, 1995              December 31, 1994      
                                                                     --------------------------     ---------------------------
                                                                               Fair    Carrying                 Fair   Carrying
                                                                      Cost     Value     Value        Cost      Value    Value 
                                                                     -------  -------   -------     --------   -------  -------
               <S>                                                    <C>               <C>         <C>        <C>
               Cumulative Convertible Preferred Stock   . . . . .     $560.0  $588.0    $588.0      $  700.0   $735.0   $  735.0
               Common Stock   . . . . . . . . . . . . . . . . . .      324.4   234.7     234.7         324.4    248.8      288.4
                                                                      ------  ------    ------      --------   ------   --------
                                                                      $884.4  $822.7    $822.7      $1,024.4   $983.8   $1,023.4
                                                                      ======  ======    ======      ========   ======   ========
</TABLE>

         At December 31, 1995, Berkshire subsidiaries owned 560,000 shares of
Cumulative Convertible Preferred Stock ("Preferred Shares"). The Preferred
Shares have a redemption value of $1,000 per share and are entitled to receive
quarterly dividends at the annual rate of $90 per share. The Preferred Shares
can be converted into shares of Salomon Inc common stock at $38 per share and
are entitled to one vote per share of common stock into which such shares are
convertible (14,736,842 at December 31, 1995). Annually on each October 31,
Salomon Inc will redeem, at cost, 140,000 of the Preferred Shares or such fewer
number as are then outstanding.

         As of December 31, 1995, Berkshire subsidiaries possessed
approximately 18% of the total voting rights in Salomon. (Such rights
consisting of rights attaching to the aforementioned Preferred Shares plus
6,633,600 common shares held at December 31, 1995.)  Prior to October 31, 1995
and since April 1, 1994, Berkshire subsidiaries possessed approximately 20% of
total voting rights and Berkshire was therefore following the equity method of
accounting with respect to its investment in Salomon Inc common stock.  The
reduction in total voting rights as of December 31, 1995, resulted from the
redemption by Salomon Inc of 140,000 preferred shares on October 31, 1995.
Accordingly, Berkshire discontinued the use of the equity method effective
October 31, 1995.

         Income from the investment in Salomon Inc consists of the following
         (in millions):

<TABLE>
<CAPTION>
                                                                             1995           1994            1993    
                                                                             -----          -----           -----
         <S>                                                                 <C>            <C>             <C>
         Dividends          . . . . . . . . . . . . . . . . . . . . . . . .  $61.9          $63.0           $63.0
         Equity in net income (loss) of Salomon attributable to
                    common stock holdings * . . . . . . . . . . . . . . . .   16.9          (32.9)            -- 
                                                                             -----          -----           -----
                                                                             $78.8          $30.1           $63.0
                                                                             =====          =====           =====
</TABLE>

*   After giving effect to amortization, over forty years, of the excess
    of the cost of Salomon common stock over its related fair value.





                                       29
<PAGE>   31

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(8)      FINANCE BUSINESSES

         Berkshire's finance businesses are comprised of commercial and
consumer finance companies and an annuity business. Assets and liabilities of
Berkshire's finance businesses are summarized below (in millions):

<TABLE>
<CAPTION>
                                                                                             Dec. 31,           Dec. 31,
                                                                                               1995               1994    
                                                                                           ------------       ------------
              <S>                                                                              <C>               <C>
              ASSETS                                                                                      
              Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . .          $ 40.7             $ 16.0
              Installment loans and other receivables . . . . . . . . . . . . . . . .           185.9              158.0
              Fixed maturity investments (a)  . . . . . . . . . . . . . . . . . . . .           529.4              538.9
              Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             0.7                4.2
                                                                                               ------             ------
                                                                                               $756.7             $717.1
                                                                                               ======             ======
              LIABILITIES                                                                                 
              8.125% Notes, payable in 1996 . . . . . . . . . . . . . . . . . . . . .          $120.0             $120.0
              Borrowings under investment agreements (b)  . . . . . . . . . . . . . .           403.6              370.0
              Annuity reserves  . . . . . . . . . . . . . . . . . . . . . . . . . . .           116.7               41.0
              Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            44.9               31.4
                                                                                               ------             ------
                                                                                               $685.2             $562.4
                                                                                               ======             ======
</TABLE>

         (a)     At December 31, 1995 and 1994, mortgage-backed securities of
                 $336.0 and $396.0 respectively were included in this caption.
                 Estimated fair values and gross unrealized gains and losses as
                 of December 31, 1995 and 1994, are as follows (in millions):

<TABLE>
<CAPTION>
                                                                   Gross          Gross           Estimated  
                                                                 Unrealized     Unrealized          Fair     
                                              Amortized Cost        Gains          Losses           Value    
                                              --------------     ----------     ----------     --------------
                 <S>                              <C>              <C>            <C>              <C>       
                 1995   . . . . . . . . . .       $529.4           $ 29.0         $ (1.0)          $557.4    
                 1994   . . . . . . . . . .        538.9              0.6          (21.1)           518.4    
</TABLE>

         (b)     Borrowings under investment agreements are made pursuant to
                 contracts with terms generally ranging from six months to
                 thirty years and at fixed interest rates ranging from 4% to
                 7%. Payments of amounts outstanding at December 31, 1995, are
                 expected to be required no earlier than as follows (in
                 millions):

<TABLE>
                 <S>                                                         <C>
                 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . .  $303.3
                 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . .    26.5
                 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . .     0.3
                 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . .     1.9
                 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . .     -0-
                 After 2000 . . . . . . . . . . . . . . . . . . . . . . . .    71.6
</TABLE>

                 Income from finance businesses for each of the past
         three years is summarized below (in millions):
<TABLE>
<CAPTION>
                                                                                  1995            1994           1993    
                                                                              ------------     -----------    -----------
                    <S>                                                         <C>               <C>            <C>
                    REVENUES                                               
                    Interest on loans . . . . . . . . . . . . . . . . . . .      $ 38.4           $ 37.4         $ 42.7
                    Interest and dividend income  . . . . . . . . . . . . .        39.2             34.8           20.1
                    Annuity premiums earned . . . . . . . . . . . . . . . .        75.2             36.0            5.6
                                                                                 ------           ------         ------
                                                                                  152.8            108.2           68.4
                                                                                 ------           ------         ------
                    COST AND EXPENSES                                      
                    Interest expense  . . . . . . . . . . . . . . . . . . .        28.9             31.7           24.2
                    Annuity benefits and underwriting expenses  . . . . . .        80.8             37.6            5.7
                    General and administrative expenses . . . . . . . . . .        16.5             14.0           16.3
                                                                                 ------           ------         ------
                                                                                  126.2             83.3           46.2
                                                                                 ------           ------         ------
                                                                                  $26.6            $24.9          $22.2*
                                                                                 ======           ======         ====== 
</TABLE>

         *   Until October 1993, a savings and loan business was also     
             included in this group of businesses. Income from finance    
             businesses includes earnings of $5.9 in 1993 from this       
             business.                                                    





                                       30
<PAGE>   32

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(8)      FINANCE BUSINESSES (Continued)

         The preceding summarized financial data includes the commercial and
consumer finance activities conducted by the Scott Fetzer Financial Group and
its subsidiaries.  Assets and liabilities of these businesses are summarized
below (in millions).


<TABLE>
<CAPTION>
                                                                                             Dec. 31,           Dec. 31,
                                                                                               1995               1994    
                                                                                             --------           --------
              <S>                                                                              <C>               <C>
              ASSETS                                                                                      
              Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . .          $ 40.5             $ 15.6
              Installment loans and other receivables** . . . . . . . . . . . . . . .           334.9              176.7
              Mortgage-backed securities, at cost
                (Fair value: 1995 -- $211.6; 1994 -- $344.7) . . . . . . . . . . . .            211.7              357.0
              Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             0.7                2.6
                                                                                               ------             ------
                                                                                               $587.8             $551.9
                                                                                               ======             ======
              LIABILITIES                                                                                 
              8.125% Notes, payable in 1996 . . . . . . . . . . . . . . . . . . . . .          $120.0             $120.0
              Borrowings under investment agreements  . . . . . . . . . . . . . . . .           403.6              370.0
              Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            32.8               31.0
                                                                                               ------             ------
                                                                                               $556.4             $521.0
                                                                                               ======             ======
</TABLE>

         **   Includes receivables from affiliated companies of $182.8 and 
              $18.7 at December 31, 1995 and 1994, respectively.



         Net income from Scott Fetzer Financial Group businesses for each of
the past three years is summarized below (in millions). 


<TABLE>
<CAPTION>
                                                                                  1995             1994           1993    
                                                                                 ------           ------         ------
                    <S>                                                           <C>              <C>            <C>
                    REVENUES                                               
                    Interest on installment loans and other receivables***. .     $43.4            $41.4          $38.9
                    Other interest  . . . . . . . . . . . . . . . . . . . . .      15.0             21.3            7.8
                                                                                  -----            -----          -----
                                                                                   58.4             62.7           46.7
                                                                                  -----            -----          -----
                    COST AND EXPENSES                                      
                    Interest expense  . . . . . . . . . . . . . . . . . . . .      28.9             31.7           17.3
                    General and administrative expenses . . . . . . . . . . .      16.2             13.2           12.9
                                                                                  -----            -----          -----
                                                                                   45.1             44.9           30.2
                                                                                  -----            -----          -----

                    Income before taxes . . . . . . . . . . . . . . . . . . .      13.3             17.8           16.5
                    Income taxes  . . . . . . . . . . . . . . . . . . . . . .       4.6              6.3            7.2
                                                                                  -----            -----          -----
                    Net income  . . . . . . . . . . . . . . . . . . . . . . .     $ 8.7            $11.5          $ 9.3
                                                                                  =====            =====          =====

</TABLE>

        ***   Includes interest on loans and receivables from affiliated 
              companies of $5.0, $4.0 and $0.9 in 1995, 1994 and 1993, 
              respectively.



                                       31
<PAGE>   33

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(9)      OTHER ASSETS

                   Other assets are summarized below (in millions):

<TABLE>
<CAPTION>
                                                                                                   Dec. 31,       Dec. 31,
                                                                                                     1995           1994    
                                                                                                ------------   ------------
                            <S>                                                                   <C>              <C>
                            Goodwill  . . . . . . . . . . . . . . . . . . . . . . . . . . .       $  672.0         $454.6
                            Deferred charges re reinsurance assumed   . . . . . . . . . . .          389.7          440.7
                            Other   . . . . . . . . . . . . . . . . . . . . . . . . . . . .           95.1           89.6
                                                                                                    ------         ------
                                                                                                  $1,156.8         $984.9
                                                                                                  ========         ======
</TABLE>

(10)     PROPERTY AND CASUALTY INSURANCE POLICYHOLDER LIABILITIES

                    Property and casualty insurance policyholder liabilities
         are summarized below (in millions):

<TABLE>
<CAPTION>
                                                                                                  Dec. 31,       Dec. 31,
                                                                                                    1995          1994     
                                                                                               -------------  -------------
                            <S>                                                                   <C>            <C>
                            Unpaid losses and loss adjustment expenses*   . . . . . . . . .       $3,698.6       $3,430.0
                            Unearned premiums   . . . . . . . . . . . . . . . . . . . . . .          374.1          307.2
                            Funds held under reinsurance assumed  . . . . . . . . . . . . .          379.0          307.3
                            Other   . . . . . . . . . . . . . . . . . . . . . . . . . . . .          178.0          156.3
                                                                                                  --------       --------
                                                                                                  $4,629.7       $4,200.8
                                                                                                  ========       ========
</TABLE>

         *  Unpaid losses and loss adjustment expenses include liabilities
            established with respect to retroactive reinsurance contracts
            that provide for indemnification of insurance risk. These
            liabilities aggregated $1,283.5 and $1,296.0 at December 31,
            1995 and 1994, respectively. Related deferred charges were
            established with respect to these contracts and are reported
            as other assets. Also included in unpaid losses and loss
            adjustment expenses are discounted structured settlement
            reinsurance liabilities, which totalled $221.7 and $231.3 at
            December 31, 1995 and 1994, respectively.
            
                 Supplemental data with respect to unpaid losses and loss
adjustment expenses of property/casualty insurance subsidiaries (in millions):

<TABLE>
<CAPTION>
                                                                                    1995            1994            1993    
                                                                                ------------     -----------     -----------
               <S>                                                                 <C>             <C>             <C>
                      Unpaid losses and loss adjustment expenses:
                        Balance at beginning of year  . . . . . . . . . . . .      $3,430.0        $3,155.9        $3,219.4
                        Less ceded liabilities and deferred charges . . . . .         573.9           597.9           655.3
                                                                                   --------        --------        --------
                       Net balance  . . . . . . . . . . . . . . . . . . . . .       2,856.1         2,558.0         2,564.1
                                                                                   --------        --------        --------
                      Incurred losses recorded:
                       Current accident year  . . . . . . . . . . . . . . . .         556.5           505.1           439.4
                       All prior accident years . . . . . . . . . . . . . . .          55.5            60.2            11.3
                                                                                   --------        --------       ---------
                       Total incurred losses  . . . . . . . . . . . . . . . .         612.0           565.3           450.7
                                                                                   --------        --------       ---------
                      Payments with respect to:
                       Current accident year  . . . . . . . . . . . . . . . .          43.6            50.9            47.1
                       All prior accident years . . . . . . . . . . . . . . .         246.2           216.3           409.7
                                                                                   --------        --------       ---------
                       Total payments . . . . . . . . . . . . . . . . . . . .         289.8           267.2           456.8
                                                                                   --------        --------       ---------
                      Unpaid losses and loss adjustment expenses:
                       Net balance at end of year . . . . . . . . . . . . . .       3,178.3         2,856.1         2,558.0
                       Plus ceded liabilities and deferred charges  . . . . .         520.3           573.9           597.9
                                                                                   --------        --------        --------
                      Balance at end of year  . . . . . . . . . . . . . . . .      $3,698.6        $3,430.0        $3,155.9
                                                                                   ========        ========        ========
</TABLE>

         Incurred losses "all prior accident years" reflects the amount of
estimation error charged or credited to earnings in each year.  In addition,
this amount includes amortization of deferred charges re reinsurance assumed
and accretion of discounted structured settlement liabilities. The use of
estimates is inherent in the process of establishing unpaid losses and loss
expenses.  Additional information will be revealed over time and those
estimates and assumptions will be revised resulting in gains or losses in the
period made.





                                       32
<PAGE>   34

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(11)     INCOME TAXES

         The liability for income taxes as reflected in the accompanying
Consolidated Balance Sheets represent estimates of liabilities as follows (in
millions):

<TABLE>
<CAPTION>
                                                                            Dec. 31,        Dec. 31,
                                                                              1995            1994
                                                                         -------------   ------------
                    <S>                                                    <C>             <C>
                    Payable currently   . . . . . . . . . . . . . . .      $   86.8        $   62.4
                    Deferred  . . . . . . . . . . . . . . . . . . . .       5,501.7         3,230.2
                                                                           --------        --------
                                                                           $5,588.5        $3,292.6
                                                                           ========        ========
</TABLE>

         As discussed in Note 1(m), the Company adopted SFAS 109 as of January
1, 1993. The cumulative effect of adopting SFAS 109 on the Company's financial
statements was to decrease 1993 net income by about $71 million. It primarily
represents the impact of adjusting deferred taxes related to unrealized
appreciation of marketable equity securities which arose prior to 1987 to
reflect the then current capital gain tax rate of 34% as opposed to the 28%
rate which was in effect when the deferred taxes originated.

         During 1993, the federal corporate income and capital gain tax rate
was increased from 34% to 35% retroactive to January 1, 1993. Accordingly, as
required under SFAS 109, the Company recorded a charge to 1993 earnings of
approximately $75 million. Most of this charge relates to the impact of
adjusting deferred taxes applicable to unrealized appreciation of marketable
equity securities.

         The Consolidated Statements of Earnings reflect charges for income
taxes as shown below (in millions):

<TABLE>
<CAPTION>
                                                                             1995            1994          1993    
                                                                         -----------     -----------   -----------
                    <S>                                                     <C>             <C>            <C>
                    Federal . . . . . . . . . . . . . . . . . . . .         $246.4          $133.5         $320.4
                    State . . . . . . . . . . . . . . . . . . . . .           22.6            22.1           20.9
                    Foreign . . . . . . . . . . . . . . . . . . . .            1.3             3.1            4.0
                                                                            ------          ------         ------
                                                                            $270.3          $158.7         $345.3*
                                                                            ======          ======         ======  
                    Current . . . . . . . . . . . . . . . . . . . .         $331.0          $188.5         $400.8
                    Deferred  . . . . . . . . . . . . . . . . . . .          (60.7)          (29.8)         (55.5)
                                                                            ------          ------         ------ 
                                                                            $270.3          $158.7         $345.3*
                                                                            ======          ======         ====== 
</TABLE>
         The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities at December 31,
1995 and 1994, are shown below (in millions):

<TABLE>
<CAPTION>
                                                                                         1995            1994    
                                                                                    --------------  --------------
                    <S>                                                                <C>             <C>       
                    Deferred tax liabilities:                                                                    
                       Relating to unrealized appreciation of investments . . . .      $5,717.1        $3,381.3  
                       Other  . . . . . . . . . . . . . . . . . . . . . . . . . .          87.4            71.9  
                                                                                       --------        --------  
                                                                                        5,804.5         3,453.2  
                    Deferred tax assets . . . . . . . . . . . . . . . . . . . . .        (302.8)         (223.0) 
                                                                                       --------        --------  
                    Net deferred tax liability  . . . . . . . . . . . . . . . . .      $5,501.7        $3,230.2  
                                                                                       ========        ========  
</TABLE>

         Charges for income taxes are reconciled to hypothetical amounts
computed at the federal statutory rate in the table shown below (in millions):
<TABLE>
<CAPTION>
                                                                                        1995            1994           1993    
                                                                                    ------------     -----------    -----------
                    <S>                                                                <C>            <C>             <C>
                    Net earnings before income taxes  . . . . . . . . . . . . .        $1,008.8       $   662.2       $1,189.7
                                                                                       ========       =========       ========
                    Hypothetical amounts applicable to above                    
                    computed at the federal statutory rate  . . . . . . . . . .        $  353.1       $   231.8       $  416.4
                    Decreases, resulting from:                                  
                       Tax-exempt interest income . . . . . . . . . . . . . . .           (10.6)          (14.6)         (15.0)
                       Dividends received deduction . . . . . . . . . . . . . .           (86.3)          (81.2)         (68.3)
                    State income taxes, less federal income tax benefit . . . .            14.7            14.4           13.5
                    Other differences, net  . . . . . . . . . . . . . . . . . .            (0.6)            8.3           (1.3)
                                                                                       --------       ---------       -------- 
                    Total income taxes  . . . . . . . . . . . . . . . . . . . .        $  270.3       $   158.7       $  345.3*
                                                                                       ========       =========       ======== 
</TABLE>

         *   Excludes the cumulative effect of change in accounting for
             income taxes and the effect of the change in federal income
             tax rate on deferred taxes applicable to unrealized
             appreciation of marketable equity securities.





                                       33
<PAGE>   35

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(12)     BORROWINGS UNDER INVESTMENT AGREEMENTS AND OTHER DEBT

         Liabilities reflected for this balance sheet caption are as follows 
(in millions):

<TABLE>
<CAPTION>
                                                                                                     Dec. 31,           Dec. 31,
                                                                                                       1995               1994    
                                                                                                  -------------      -------------
                    <S>                                                                              <C>                 <C>
                    Borrowings under investment agreements  . . . . . . . . . . . . . . . . .        $  878.9            $  754.1
                    Other debt  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           182.8                56.6
                                                                                                     --------            --------
                                                                                                     $1,061.7            $  810.7
                                                                                                     ========            ========
</TABLE>

         Borrowings under investment agreements are made pursuant to contracts
with terms generally ranging from three months to forty years and calling for
interest payable, normally semiannually, at fixed rates ranging from 3% to 9%
per annum. The borrowings are senior unsecured debt obligations of the Company.
No materially restrictive covenants are included in any of the various debt
agreements.

         Payments of amounts outstanding at December 31, 1995, are expected to
be required no earlier than as follows (in millions):

<TABLE>
<CAPTION>
                                   1996           1997           1998           1999          2000        After 2000
                                 --------       --------       --------       --------      --------      ----------
                                  <S>             <C>           <C>            <C>           <C>            <C>
                                  $159.5          $59.2         $107.3         $44.6         $13.7          $677.4
</TABLE>

(13)     SHAREHOLDERS' EQUITY ACCOUNTS

         Changes in Shareholders' Equity accounts during the most recent three
years were as follows (dollars in millions except per share amounts):

<TABLE>
<CAPTION>
                                                                   Common         Capital
                                                                 Stock of $5     in excess    Net Unrealized   Retained  Treasury
                                                                  Par Value    of par value    Appreciation    Earnings    Stock
                                                                 -----------   ------------   -------------    --------    -----
        <S>                                                          <C>           <C>          <C>            <C>         <C>
        Balance December 31, 1992 . . . . . . . . . . . . . . . .    $6.9          $182.3        $5,047.2      $3,702.3    $42.3
        Common stock (3,944 shares) issued upon conversion                                   
           of Zero Coupon Convertible Subordinated Notes  . . . .                    45.5    
        Common stock (25,203 shares) issued in connection                                    
           with acquisition of Dexter Shoe Companies. . . . . . .                   428.3                                   (4.7)
        Increase during 1993 in unrealized appreciation                                      
           included in carrying value of marketable equity                                   
           securities . . . . . . . . . . . . . . . . . . . . . .                                   316.0
        Change during 1993 in deemed applicable income                                       
           taxes      . . . . . . . . . . . . . . . . . . . . . .                                  (119.8)
        Increase in minority shareholders' interest in                                       
           unrealized appreciation  . . . . . . . . . . . . . . .                                    (2.5)
        Net earnings 1993 . . . . . . . . . . . . . . . . . . . .                                                 688.1
        Cumulative effect of adoption on December 31, 1993,                                  
          of SFAS 115 (See note 1[m]) . . . . . . . . . . . . . .                                   171.8                      
                                                                     ----        --------      ----------     ---------    -----
        Balance December 31, 1993 . . . . . . . . . . . . . . . .     6.9           656.1         5,412.7       4,390.4     37.6
        Increase during 1994 in unrealized appreciation                                      
           included in carrying value of investments. . . . . . .                                 1,481.1
        Change during 1994 in deemed applicable income                                       
           taxes      . . . . . . . . . . . . . . . . . . . . . .                                  (519.5)
        Increase in minority shareholders' interest in                                       
           unrealized appreciation  . . . . . . . . . . . . . . .                                    (9.9)
        Net earnings 1994 . . . . . . . . . . . . . . . . . . . .                                                 494.8           
                                                                     ----        --------      ----------      --------    -----
        Balance December 31, 1994 . . . . . . . . . . . . . . . .     6.9           656.1         6,364.4       4,885.2     37.6
        Common stock (15,762 shares) issued in connection                                    
           with acquisitions of Helzberg's Diamond Shops                                     
           and R.C. Willey Home Furnishings . . . . . . . . . . .                   345.6                                   (2.9)
        Increase during 1995 in unrealized appreciation                         
           included in carrying value of investments  . . . . . .                                 6,660.3
        Change during 1995 in deemed applicable income                    
           taxes  . . . . . . . . . . . . . . . . . . . . . . .                                  (2,334.8)
        Increase in minority shareholders' interest in                    
           unrealized appreciation  . . . . . . . . . . . . . .                                     (57.1)
        Net earnings 1995 . . . . . . . . . . . . . . . . . . .                                                   725.2          
                                                                     ----        --------       ---------      --------    -----
        Balance December 31, 1995 . . . . . . . . . . . . .  .       $6.9        $1,001.7       $10,632.8      $5,610.4    $34.7
                                                                     ====        ========       =========      ========    =====
</TABLE>





                                       34
<PAGE>   36

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(14)     DIVIDEND RESTRICTIONS - INSURANCE SUBSIDIARIES

         Payments of dividends by Insurance Group members are restricted by
insurance statutes and regulations. Without prior regulatory approval in 1996,
Berkshire can receive up to approximately $787 million as dividends from
insurance subsidiaries.

         Combined shareholders' equity of insurance subsidiaries determined
pursuant to statutory accounting rules (Statutory Surplus as Regards
Policyholders) was approximately $19.5 billion at December 31, 1995. This
amount exceeded by approximately $3.2 billion the corresponding amount
determined on the basis of generally accepted accounting principles; the
difference principally represents deferred income tax assets and liabilities
and deferred charges re reinsurance assumed recognized for financial reporting
purposes but not for statutory reporting purposes.

(15)     FAIR VALUES OF FINANCIAL INSTRUMENTS

         Statement of Financial Accounting Standards No. 107, "Disclosures
about Fair Value of Financial Instruments" ("SFAS 107"), requires certain fair
value disclosures. Fair value disclosures are required for most investment
securities as well as other contractual assets and liabilities. Certain
financial instruments, including insurance contracts, were excluded from SFAS
107 disclosure requirements due to perceived difficulties in measuring fair
value. Accordingly, an estimation of fair value was not made with respect to
unpaid losses and loss adjustment expenses.

         In determining fair value, the Company used quoted market prices when
available. For instruments where quoted market prices were not available, the
Company used independent pricing services or appraisals by the Company's
management. Those services and appraisals reflected the estimated present
values utilizing current risk adjusted market rates of similar instruments.

         Considerable judgement is necessarily required in interpreting market
data to develop the estimates of fair value.  Accordingly, the estimates
presented herein are not necessarily indicative of the amounts the Company
could realize in a current market exchange. The use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair value.

         The carrying values of cash and cash equivalents, receivables and
accounts payable, accruals and other liabilities are deemed to be reasonable
estimates of their fair values. The estimated fair values of the Company's
other financial instruments as of December 31, 1995 and 1994, are as follows
(in millions):

<TABLE>
<CAPTION>
                                                                         Carrying Value                  Estimated Fair Value
                                                                         --------------                  --------------------
                                                                     1995              1994             1995              1994     
                                                                  ----------         ---------       ----------        ---------- 
<S>                                                               <C>                <C>             <C>               <C>
Investments in securities with fixed
   maturities . . . . . . . . . . . . . . . . . . . . . . .       $    835.2         $ 1,820.7       $    835.2        $  1,820.7
Investments in marketable equity securities . . . . . . . .         22,000.3          15,236.5         22,000.3          15,236.5
Investment in Salomon Inc . . . . . . . . . . . . . . . . .            822.7           1,023.4            822.7             983.8
Assets of finance businesses  . . . . . . . . . . . . . . .            756.7             717.1            792.3             702.9
Borrowings under investment agreements and
   other debt . . . . . . . . . . . . . . . . . . . . . . .          1,061.7             810.7          1,095.0             768.6
Liabilities of finance businesses . . . . . . . . . . . . .            685.2             562.4            704.4             546.7
</TABLE>


(16)     SUPPLEMENTAL CASH FLOW INFORMATION

         A summary of supplemental cash flow information is presented in the
following table (in millions):

<TABLE>
<CAPTION>
                                                                           1995             1994            1993    
                                                                       ------------     ------------    ------------
<S>                                                                       <C>              <C>             <C>
Cash paid during the year for:
   Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . .       $ 294.6          $ 411.1         $ 235.0
   Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . .          83.9             90.6            70.6
Non-cash investing and financing activities:                                
   Liabilities assumed in connection with acquisition of                    
      businesses  . . . . . . . . . . . . . . . . . . . . . . . . .         248.0             --              26.1
   Common shares issued in connection with acquisitions of                  
      businesses  . . . . . . . . . . . . . . . . . . . . . . . . .         348.5             --             433.0
   Common shares issued upon conversions of Zero Coupon                     
      Convertible Subordinated Notes  . . . . . . . . . . . . . . .          --               --              45.5
</TABLE>





                                       35
<PAGE>   37

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(17)     QUARTERLY DATA

         A summary of revenues and earnings by quarter for each of the last two
years is presented in the following table. This information is unaudited.
Dollars are in millions, except per share amounts.

<TABLE>
<CAPTION>
                                                                                 1st           2nd          3rd          4th  
                       1995                                                    Quarter       Quarter      Quarter      Quarter
                                                                               -------       -------      -------      -------
                  <S>                                                           <C>          <C>          <C>         <C>
                  Revenues  . . . . . . . . . . . . . . . . . . . . . . .       $ 923.5      $1,004.9     $1,083.3    $1,476.0
                                                                                -------      --------     --------    --------
                  Earnings:                                                              
                    Excluding realized investment gain    . . . . . . . .       $ 124.9      $  127.8     $  129.3    $  218.2
                    Realized investment gain (loss)   . . . . . . . . . .          (4.7)         51.7         43.2        34.8
                                                                                -------      --------     --------    --------
                    Net earnings  . . . . . . . . . . . . . . . . . . . .       $ 120.2      $  179.5     $  172.5    $  253.0
                                                                                =======      ========     ========    ========
                  Earnings per share:
                    Before realized investment gain   . . . . . . . . . .       $106.12      $ 108.02     $ 108.32    $  182.82
                    Realized investment gain (loss)   . . . . . . . . . .         (4.03)        43.71        36.18        29.16
                                                                                -------      --------     --------    ---------
                    Net earnings  . . . . . . . . . . . . . . . . . . . .       $102.09      $ 151.73     $ 144.50    $  211.98
                                                                                =======      ========     ========    =========
</TABLE>

<TABLE>
<CAPTION>
                                                                                   1st           2nd         3rd          4th
                          1994                                                   Quarter       Quarter     Quarter      Quarter
                                                                                 -------       -------     -------      -------
                  <S>                                                            <C>           <C>         <C>          <C>
                  Revenues  . . . . . . . . . . . . . . . . . . . . . . .        $ 918.0       $ 868.4     $ 795.5      $1,265.6
                                                                                 -------       -------     -------      --------
                  Earnings:                                                                           
                    Excluding realized investment gain  . . . . . . . . .        $  82.3       $ 158.8     $ 110.5      $   82.1  *
                    Realized investment gain (loss)   . . . . . . . . . .           50.6           5.9        (4.7)          9.3
                                                                                 -------       -------     -------      --------
                    Net earnings  . . . . . . . . . . . . . . . . . . . .        $ 132.9       $ 164.7     $ 105.8      $   91.4
                                                                                 =======       =======     =======      ========
                  Earnings per share:
                    Before realized investment gain   . . . . . . . . . .        $ 69.89       $134.82     $ 93.79        $69.71  *
                    Realized investment gain (loss)   . . . . . . . . . .          42.94          4.98       (3.94)         7.93
                                                                                 -------       -------     -------        ------
                    Net earnings  . . . . . . . . . . . . . . . . . . . .        $112.83       $139.80     $ 89.85        $77.64
                                                                                 =======       =======     =======        ======
</TABLE>

   *     Includes a nonrecurring charge of $172.6 ($146.53/share) representing
         an other-than-temporary decline in value of investment in USAir Group,
         Inc. Preferred Stock. See note 5.






                                       36
<PAGE>   38

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(18)     BUSINESS SEGMENT DATA

         Berkshire identified eight business segments for purposes of 1995
reporting pursuant to Statement of Financial Accounting Standards No. 14. These
include the property and casualty insurance and reinsurance business (The
Insurance Segment) plus seven separately conducted non-insurance businesses as
follows:

<TABLE>
<CAPTION>
         Business
         identity and headquarters               Product                        Activity
         -------------------------               -------                        --------
         <S>                                     <C>                            <C>
         See's Candies                           Candy                          Manufacture and distribution at retail
           South San Francisco, CA                                               and by catalog solicitation

         World Book                              Encyclopedias and              Publication and marketing, principally by 
           Chicago, IL                            other reference materials      the direct sales method

         Kirby, Douglas and
           Cleveland Wood Divisions                                    
           of The Scott Fetzer Company           Home cleaning systems          Manufacture and sale principally to distributors
           Cleveland, OH                                               

         Nebraska Furniture Mart and             Home furnishings               Retailing
           R.C. Willey Home Furnishings         
           Omaha, NE and Salt Lake              
           City, UT                             

         Buffalo News                            Newspaper                      Publication of a daily and Sunday newspaper
           Buffalo, NY

         H.H. Brown Shoe Co.,     
           Lowell Shoe, Inc. and           
           Dexter Shoe Companies                 Shoes                          Manufacture, importing and distribution at wholesale
           Greenwich, CT, Hudson,                                                and retail
           NH and Dexter, ME               

         Fechheimer Bros. Co.                    Uniforms                       Manufacture and distribution at wholesale and retail
           Cincinnati, OH
</TABLE>

         The business segments identified above were responsible in 1995 for
79% of Berkshire's consolidated revenues. Other businesses activities that
contributed for 1995, in the aggregate, 20% of Berkshire's consolidated
revenues, were as follows:

<TABLE>
<CAPTION>
         Business identity                       Product/Service/Activity
         ------------------                      ------------------------
         <S>                                     <C>
         Adalet - PLM                            Explosion proof electrical enclosures, cable couplers and terminations
         BHR                                     Real estate management
         Berkshire Hathaway
           Credit Corporation                    Commercial financing
         Berkshire Hathaway Life
           Insurance Co.                         Annuities
         Blue Chip Stamps                        Marketing motivational services
         Borsheim's                              Retailing fine jewelry
         Campbell Hausfeld                       Air compressors, air tools, painting systems, pressure washers and generators
         Carefree                                Sun and shade control products for the home and campground
         France                                  Appliance and HVAC controls, ignition and sign transformers
         Halex                                   Zinc die cast conduit fittings and other electrical construction materials
         Helzberg's Diamond Shops                Retailing fine jewelry
         K&W Products                            Automotive compounds
         Meriam                                  Pressure and flow measurement devices
         Northland                               Fractional horsepower electric motors
         Powerwinch                              Marine winches and windlasses; general purpose winches and hoists
         Precision Steel Products                Steel service center
         Quikut                                  Cutlery for home and sporting goods markets
         ScottCare                               Cardiopulmonary rehabilitation and monitoring equipment
         Scott Fetzer Financial Group            Commercial and consumer finance companies
         Scot Labs                               Cleaning and maintenance chemicals
         Stahl                                   Custom service bodies, flatbed bodies, cranes and tool boxes for trucks
         Wayne                                   Furnace burners; sump, utility and sewage pumps
         Wesco Financial                         Real estate management
         Western Enterprises                     Medical and industrial compressed gas fittings and regulators
         Western Plastics                        Molded plastic components
</TABLE>





                                       37
<PAGE>   39

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(18)     BUSINESS SEGMENT DATA (Continued)

         A disaggregation of Berkshire's consolidated data for each of the
three most recent years is presented in the tables which follow on this and the
following page. Amounts are in millions.

<TABLE>
<CAPTION>
                                                                         REVENUES                OPERATING PROFIT BEFORE TAXES  
                                                                                                                                
                                                                 1995      1994       1993         1995      1994       1993    
                                                               --------  --------   --------     --------   --------   -------- 
         <S>                                                   <C>       <C>        <C>          <C>        <C>       <C>       
         Identified Segments:
            Insurance . . . . . . . . . . . . . . . . . . .    $1,640.1  $1,437.0   $1,591.2     $  700.9   $  639.2   $  961.4
            Non-insurance businesses  . . . . . . . . . . .     1,918.9   1,771.9    1,440.2        249.3      275.4      224.8
                                                               --------  --------   --------     --------   --------   --------
                                                                3,559.0   3,208.9    3,031.4        950.2      914.6    1,186.2
         Other than identified segments . . . . . . . . . .       928.7     638.6      567.9        114.6     (192.3)**    60.1
         Interest expense * . . . . . . . . . . . . . . . .                                         (56.0)     (60.1)     (56.6)
                                                               --------  --------   --------     --------   --------   -------- 
                    Aggregate consolidated total               $4,487.7  $3,847.5   $3,599.3     $1,008.8   $  662.2   $1,189.7
                                                               ========  ========   ========     ========   ========   ========
</TABLE>

   *     Amounts of interest expense represent those for borrowings under
         investment agreements and other debt exclusive of that of finance
         businesses and interest allocated to certain identified segments.

  **     Includes pre-tax charge of $268.5 representing an other than temporary
         decline in value of investment in USAir Group, Inc.  Preferred Stock.

<TABLE>
<CAPTION>
         INSURANCE SEGMENT                                               REVENUES                OPERATING PROFIT BEFORE TAXES    
         -----------------                                                                                                        
                                                                 1995      1994       1993         1995      1994       1993      
                                                               --------  --------   --------     --------   --------   --------   
         <S>                                                   <C>       <C>        <C>           <C>        <C>        <C>       
         Premiums earned: *
            Primary or direct . . . . . . . . . . . . . .      $  287.3  $  281.1   $  249.6                                      
            Reinsurance assumed . . . . . . . . . . . . .         718.4     688.5      442.4                                      
            Reinsurance ceded . . . . . . . . . . . . . .         (48.2)    (46.4)     (41.3)                                     
                                                               --------  --------   --------                                      
                                                                  957.5     923.2      650.7                                      
         Underwriting   . . . . . . . . . . . . . . . . .                                         $ 19.6     $129.0     $ 30.1
         Investment income  . . . . . . . . . . . . . . .         501.5     421.8      384.6       500.2      418.2      375.4
         Realized investment gain . . . . . . . . . . . .         181.1      92.0      555.9       181.1       92.0      555.9
                                                               --------  --------   --------      ------     ------     ------
                                                               $1,640.1  $1,437.0   $1,591.2      $700.9     $639.2     $961.4
                                                               ========  ========   ========      ======     ======     ======
</TABLE>

   *       Premiums written were as follows:

<TABLE>
<CAPTION>
                                                    1995        1994       1993   
                                                  --------     ------     ------
                    <S>                           <C>          <C>        <C>
                    Primary or direct . . . .     $  294.8     $271.2     $247.2
                    Reinsurance assumed . . .        777.9      689.9      528.8
                    Reinsurance ceded . . . .        (48.5)     (45.6)     (38.9)
                                                  --------     ------     ------ 
                                                  $1,024.2     $915.5     $737.1
                                                  ========     ======     ======
</TABLE>


<TABLE>
<CAPTION>
         NON-INSURANCE BUSINESS SEGMENTS                                 REVENUES                OPERATING PROFIT BEFORE TAXES    
         -------------------------------                                                                                          
                                                                 1995      1994       1993         1995      1994       1993      
                                                               --------  --------   --------     --------   --------   --------   
         <S>                                                   <C>       <C>        <C>           <C>        <C>        <C>       
         Candy   . . . . . . . . . . . . . . . . . . . . .     $  233.6  $  216.1   $  201.0      $ 49.3     $ 46.6     $ 40.3
         Encyclopedias, other reference material . . . . .        157.9     191.3      198.8         7.4       24.4       19.4
         Home cleaning systems . . . . . . . . . . . . . .        235.6     207.6      193.9        52.6       43.9       40.9
         Home furnishings. . . . . . . . . . . . . . . . .        428.1     245.4      208.6        28.1       16.9       21.1
         Newspaper . . . . . . . . . . . . . . . . . . . .        154.8     150.9      145.5        46.3       53.7       50.4
         Shoes . . . . . . . . . . . . . . . . . . . . . .        565.1     609.4      370.2        49.5       76.4       40.0
         Uniforms  . . . . . . . . . . . . . . . . . . . .        143.8     151.2      122.2        16.1       13.5       12.7
                                                               --------  --------   --------      ------     ------     ------
                                                               $1,918.9  $1,771.9   $1,440.2      $249.3     $275.4     $224.8
                                                               ========  ========   ========      ======     ======     ======
</TABLE>





                                       38
<PAGE>   40

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (Continued)

                            BERKSHIRE HATHAWAY INC.
                                AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(18)     BUSINESS SEGMENT DATA (Continued)

<TABLE>
<CAPTION>
         OTHER THAN IDENTIFIED SEGMENTS                                  REVENUES               OPERATING PROFIT BEFORE TAXES
         ------------------------------                                                                                      
                                                                 1995      1994      1993          1995      1994       1993  
                                                                ------    ------    ------        ------    -------    -------
         <S>                                                    <C>       <C>       <C>           <C>       <C>        <C>
         Other businesses . . . . . . . . . . . . . . . . .     $877.9    $607.3    $550.7        $ 77.7    $  59.2     $ 55.2
         Not identified with specific businesses:                                            
           Interest and dividend income   . . . . . . . . .       37.8      32.0      26.6          37.8       32.0       26.6
           Realized investment gain (loss)  . . . . . . . .       13.0      (0.7)     (9.4)         13.0       (0.7)      (9.4)
           All other except interest expense  . . . . . . .                                        (13.9)    (282.8)*    (12.3)
                                                                ------    ------    ------        ------    -------     ------ 
                                                                $928.7    $638.6    $567.9        $114.6    $(192.3)    $ 60.1
                                                                ======    ======    ======        ======    =======     ======
</TABLE>

*       Includes pre-tax charge of $268.5 representing an other than 
        temporary decline in value of investment in USAir Group, Inc.
        Preferred Stock.                                             

<TABLE>
<CAPTION>
                                                                                                          DEPREC. & AMORT.
                                                                     CAPITAL EXPENDITURES*               OF TANGIBLE ASSETS
                                                                   1995      1994       1993          1995      1994      1993  
                                                                 --------  --------   --------      --------  --------   --------
                    <S>                                           <C>      <C>         <C>            <C>       <C>        <C>
                    Insurance . . . . . . . . . . . . . .         $ 1.2     $ 0.9      $ 1.2          $ 0.9     $ 0.9      $ 0.8
                    Candy . . . . . . . . . . . . . . . .           5.1       4.1        4.3            4.1       4.1        4.1
                    Encyclopedias, other reference
                      material  . . . . . . . . . . . . .           --        0.1        0.7            1.0       1.4        1.4
                    Home cleaning systems . . . . . . . .           0.3       1.0        1.5            3.0       4.2        5.3
                    Home furnishings  . . . . . . . . . .           9.2      22.6        5.3            9.7       6.2        2.7
                    Newspaper . . . . . . . . . . . . . .           1.8       5.2        3.6            4.9       2.2        1.9
                    Shoes . . . . . . . . . . . . . . . .          13.7      17.9        4.4           12.0      10.2        5.2
                    Uniforms  . . . . . . . . . . . . . .           0.6       4.6        1.0            2.2       2.5        1.8
                    Other . . . . . . . . . . . . . . . .          22.3      10.7       13.0           22.5      17.9       17.3
                                                                  -----     -----      -----          -----     -----      -----
                                                                  $54.2     $67.1      $35.0          $60.3     $49.6      $40.5
                                                                  =====     =====      =====          =====     =====      =====
</TABLE>

*       Excludes expenditures which were part of business acquisitions.

<TABLE>
<CAPTION>
                                                                                        IDENTIFIABLE ASSETS
                                                                                            AT YEAR END    
                                                                                 1995            1994            1993    
                                                                               ---------       ---------       ---------
         <S>                                                                   <C>             <C>             <C>
         Insurance  . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $26,497.4       $18,494.2       $16,126.9
         Candy  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         74.5            69.4            70.2
         Encyclopedias, other reference material  . . . . . . . . . . . . .         71.8            75.9            74.7
         Home cleaning systems  . . . . . . . . . . . . . . . . . . . . . .         42.9            42.1            48.7
         Home furnishings . . . . . . . . . . . . . . . . . . . . . . . . .        427.7           128.4           101.1
         Newspaper  . . . . . . . . . . . . . . . . . . . . . . . . . . . .         45.0            48.4            45.4
         Shoes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        656.7           672.7           641.6
         Uniforms   . . . . . . . . . . . . . . . . . . . . . . . . . . . .         83.5            94.9            87.6
         Other  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      2,029.3         1,712.2         2,324.3
                                                                               ---------       ---------       ---------
                                                                               $29,928.8       $21,338.2       $19,520.5
                                                                               =========       =========       =========
</TABLE>

(19)     ACCOUNTING RULE TO BE ADOPTED IN 1996

         In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS 121).  The
Company's required adoption date is January 1, 1996.  SFAS 121 standardizes the
accounting practices for the recognition and measurement of impairment losses
on certain long-lived assets, including goodwill.  The Company believes the
adoption of SFAS 121 will not have a material impact on its results of
operations or financial position.





                                       39
<PAGE>   41
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None

                                    Part III

         Except for the information set forth under the caption "Executive
Officers of the Registrant" in Part I hereof, information required by this Part
(Items 10, 11, 12, and 13) is incorporated by reference from the Registrant's
definitive proxy statement, filed pursuant to Regulation 14A, for the Annual
Meeting of Shareholders of the Registrant to be held on May 6, 1996, which
meeting will involve the election of directors.

                                    Part IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)      1.      Financial Statements

                 The following consolidated financial statements, as well as
                 the Independent Auditors' Report, are included in Part II Item
                 8 of this report:
<TABLE>
<CAPTION>
                                                                                                                 PAGE
                                                                                                                 ----
                 <S>                                                                                             <C>
                 Independent Auditors' Report                                                                    19

                 Consolidated Balance Sheets at December 31, 1995 and 1994                                       20

                 Consolidated Statements of Earnings for the years ended
                       1995, 1994 and 1993                                                                       21

                 Consolidated Statements of Cash Flows for the years ended
                       1995, 1994 and 1993                                                                       22

                 Notes to Consolidated Financial Statements                                                      23-39
</TABLE>

<TABLE>
<CAPTION>
(a)              2.    Financial Statement Schedule                                                              PAGE
                                                                                                                 ----
                 <S>                                                                                             <C>
                 Independent Auditors' Report on Schedule                                                        42

                 Schedule I -- Parent Company                                                                    43-44
                       Condensed Balance Sheets as of December 31, 1995
                       and 1994 and Condensed Statements of Earnings and
                       Cash Flows for the years ended 1995, 1994, and 1993.
</TABLE>

                 Other schedules are omitted because they are not required,
                 information therein is not applicable, or is reflected in
                 the Consolidated Financial Statements or notes thereto.

(a)              3.    Exhibits

                 See the "Exhibit Index" at page 45.

(b)              Reports on Form 8-K

                 None





                                       40
<PAGE>   42


                                   SIGNATURES




         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                       BERKSHIRE HATHAWAY INC.


Date:  March 26, 1996                  /s/  Marc D. Hamburg  
      ----------------                 ----------------------------
                                            Marc D. Hamburg
                                       Vice President and Treasurer



         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



<TABLE>
<S>                                                            <C>                                    <C>
/s/   Warren E. Buffett                                        Chairman of the Board                  March 26, 1996
---------------------------------                              of Directors - Chief                   --------------
   Warren E. Buffett                                           Executive Officer                           Date
                                                                                    



/s/  Charles T. Munger                                         Vice Chairman of the                   March 26, 1996
---------------------------------                              Board of Directors                     --------------
  Charles T. Munger                                                                                        Date




/s/ Howard G. Buffett                                          Director                               March 26, 1996
---------------------------------                                                                     --------------
  Howard G. Buffett                                                                                        Date




/s/  Susan T. Buffett                                          Director                               March 26, 1996
---------------------------------                                                                     --------------
  Susan T. Buffett                                                                                         Date



/s/  Malcolm G. Chace, III                                     Director                               March 26, 1996
---------------------------------                                                                     --------------
  Malcolm G. Chace, III                                                                                    Date



/s/  Walter Scott, Jr.                                         Director                               March 26, 1996
---------------------------------                                                                     --------------
  Walter Scott, Jr.                                                                                        Date



/s/  Marc D. Hamburg                                           Vice President -                       March 26, 1996
---------------------------------                              Principal Financial                    --------------
   Marc D. Hamburg                                             Officer                                     Date
                                                                                    



/s/  Daniel J. Jaksich                                         Controller                             March 26, 1996
---------------------------------                                                                     --------------
   Daniel J. Jaksich                                                                                       Date
</TABLE>





                                       41
<PAGE>   43




                   INDEPENDENT AUDITORS' REPORT ON SCHEDULES




To the Board of Directors and Shareholders
Berkshire Hathaway Inc.




         We have audited the consolidated financial statements of Berkshire
Hathaway Inc. and subsidiaries as of December 31, 1995 and 1994, and for each
of the three years in the period ended December 31, 1995, and have issued our
report thereon dated March 8, 1996; such consolidated financial statements and
report are included elsewhere in this Form 10-K.  Our audits also included the
financial statement schedule of Berkshire Hathaway Inc., listed in Item 14.
The financial statement schedule is the responsibility of the Company's
management.  Our responsibility is to express an opinion based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.  Our report
referred to above includes an explanatory paragraph regarding changes in
accounting methods as described in Note 1 to the consolidated financial
statements.





DELOITTE & TOUCHE LLP
Omaha, Nebraska
March 8, 1996





                                       42
<PAGE>   44

                            BERKSHIRE HATHAWAY INC.
                                (Parent Company)
                        Condensed Financial Information
                             (Dollars in millions)

                                   Schedule I

         This Schedule includes the accounts of the Buffalo News Division, an
autonomous division of Registrant.  Its business is the publishing of a daily
and Sunday newspaper in Buffalo, New York.


                                BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                                          December 31,
                                                                                                       1995            1994    
                                                                                                   ------------    ------------
<S>                                                                                                 <C>             <C>
Assets:
   Cash and cash equivalents  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $   250.0       $   108.1
   Investments in consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . .       17,864.9        12,242.1
   Investments - other than consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . .           23.2           285.0
   Other assets (includes identifiable assets of the
      Buffalo News Division of $45.0 and $48.4 at
      December 31, 1995 and 1994 respectively)  . . . . . . . . . . . . . . . . . . . . . . . .           51.4            59.5
                                                                                                     ---------       ---------
                                                                                                     $18,189.5       $12,694.7
                                                                                                     =========       =========
Liabilities and Shareholders' Equity:
   Accounts payable and accrued expenses  . . . . . . . . . . . . . . . . . . . . . . . . . . .      $    32.1       $    25.9
   Borrowings under investment agreements and other debt  . . . . . . . . . . . . . . . . . . .          883.9           764.1
   Income taxes     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           56.4            29.7
                                                                                                     ---------       ---------
                                                                                                         972.4           819.7
   Shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       17,217.1        11,875.0
                                                                                                     ---------       ---------
                                                                                                     $18,189.5       $12,694.7
                                                                                                     =========       =========
</TABLE>
                                       
                            STATEMENTS OF EARNINGS

<TABLE>
<CAPTION>
                                                                                                 Year ending December 31,
                                                                                            1995        1994          1993   
                                                                                         ---------   ----------    ----------
<S>                                                                                        <C>          <C>          <C>
Income items:                                                                              
   From consolidated subsidiaries:
      Interest    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $  6.8      $  4.5        $  0.7
      Dividends   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          341.1       219.8         169.7
      Undistributed earnings  . . . . . . . . . . . . . . . . . . . . . . . . . . .          372.0       270.4         529.0
                                                                                            ------      ------        ------
                                                                                             719.9       494.7         699.4
   Interest and dividends - other investments . . . . . . . . . . . . . . . . . . .           21.1        16.8          14.8
   Realized investment gain (loss)  . . . . . . . . . . . . . . . . . . . . . . . .            5.8        (0.8)         (9.4)
   Revenues of Buffalo News Division  . . . . . . . . . . . . . . . . . . . . . . .          154.8       150.9         145.5
                                                                                            ------      ------        ------
                                                                                             901.6       661.6         850.3
                                                                                            ------      ------        ------
Cost and expense items:
   Costs and expenses of Buffalo News Division  . . . . . . . . . . . . . . . . . .          108.5        97.2          95.1
   General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . .            7.5         6.6           6.1
   Interest and finance charges . . . . . . . . . . . . . . . . . . . . . . . . . .           48.9        54.9          50.6
   Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           11.5         8.1          10.4
                                                                                            ------      ------        ------
                                                                                             176.4       166.8         162.2
                                                                                            ------      ------        ------
      Net earnings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $725.2      $494.8        $688.1
                                                                                            ======      ======        ======
</TABLE>


         See Note to Condensed Financial Information on following page.





                                       43
<PAGE>   45

                            BERKSHIRE HATHAWAY INC.
                                (Parent Company)
                        Condensed Financial Information
                             (Dollars in millions)

                             Schedule I (continued)

See headnote on preceding page.

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                              Year ending December 31,
                                                                                        1995            1994            1993   
                                                                                     ----------      ----------      ----------
<S>                                                                                   <C>             <C>             <C>
Cash flows from operating activities:
      Net income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $  725.2          $494.8          $688.1
      Adjustments to reconcile net income to
       cash flows from operating activities:
           Undistributed current earnings of subsidiaries   . . . . . . . . . .         (372.0)         (270.4)         (529.0)
           Realized investment (gain) loss  . . . . . . . . . . . . . . . . . .           (5.8)            0.8             9.4
           Increase (decrease) in income taxes payable  . . . . . . . . . . . .           21.5          (217.0)          187.6
           Other  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            2.0           (60.3)           (0.7)
                                                                                      --------         -------         ------- 
      Net cash flows from operating activities  . . . . . . . . . . . . . . . .          370.9           (52.1)          355.4
                                                                                       -------         -------          ------

Cash flows from investing activities:
      Investments in and advances to consolidated
         subsidiaries   . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (546.8)          207.4          (298.6)
      Purchases of investments  . . . . . . . . . . . . . . . . . . . . . . . .          (81.8)         (302.9)         (162.8)
      Proceeds on sales of investments  . . . . . . . . . . . . . . . . . . . .          279.8            56.8             2.8
                                                                                      --------         -------          ------
      Net cash flows from investing activities  . . . . . . . . . . . . . . . .         (348.8)          (38.7)         (458.6)
                                                                                      --------         -------          ------ 

Cash flows from financing activities:
      Proceeds from borrowings  . . . . . . . . . . . . . . . . . . . . . . . .        1,196.5         1,221.1         1,259.8
      Repayment of borrowings . . . . . . . . . . . . . . . . . . . . . . . . .       (1,076.7)       (1,382.1)       (1,391.9)
                                                                                      --------        --------        -------- 
      Net cash flows from financing activities  . . . . . . . . . . . . . . . .          119.8          (161.0)         (132.1)
                                                                                     ---------        --------        -------- 

Increase (decrease) in cash and cash equivalents  . . . . . . . . . . . . . . .          141.9          (251.8)         (235.3)
Cash and cash equivalents at beginning of year  . . . . . . . . . . . . . . . .          108.1           359.9           595.2
                                                                                      --------         -------        --------
Cash and cash equivalents at end of year  . . . . . . . . . . . . . . . . . . .       $  250.0         $ 108.1        $  359.9
                                                                                      ========         =======        ========
Other cash flow information:
      Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . .          273.3           386.8           212.3
      Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           47.6            55.0            47.0
</TABLE>

                    NOTE TO CONDENSED FINANCIAL INFORMATION

        Borrowings under investment agreements are made pursuant to contracts 
with terms generally ranging from three months to forty years and calling for
interest payable, normally semiannually, at fixed rates ranging from 3% to 9%
per annum. The borrowings are senior unsecured debt obligations of the Company.
No materially restrictive covenants are included in any of the various debt
agreements.

        Principal payments of the Registrant's borrowings under investment 
agreements and other debt outstanding at December 31, 1995, are expected to be
required no earlier than as follows (in millions):

<TABLE>
<CAPTION>
                     1996          1997           1998           1999           2000      After 2000
                    ------         -----          -----          -----          -----     ----------
                    <S>            <C>            <C>            <C>            <C>         <C>
                    $137.0         $46.5          $17.1          $13.9          $13.0       $656.4
</TABLE>





                                       44
<PAGE>   46


                                 EXHIBIT INDEX


<TABLE>
<CAPTION>
Exhibit No.
-----------
   <S>      <C>
   2        Agreement and Plan of Merger dated as of August 25, 1995, between the Registrant and GEICO Corporation.
                 Incorporated by reference to Exhibit 1 to the Registrant's Form 8-K dated August 25, 1995.

   3        Restated Certificate of Incorporation

   3.1      By-Laws
                 Incorporated by reference to Exhibit 3.1 to the Registrant's 1993 Annual Report on Form 10-K.

   4        Form of Indenture dated as of December 1, 1987 between Berkshire Hathaway Inc. and The First National Bank of Boston, as
            trustee, with respect to 9 3/4% Debentures due January 15, 2018
                 Incorporated by reference to Exhibit 4 to Registration Statement No. 33-19000 filed on Form S-3.

            OTHER INSTRUMENTS DEFINING THE RIGHTS OF HOLDERS OF LONG-TERM DEBT OF REGISTRANT AND ITS SUBSIDIARIES ARE NOT BEING
            FILED SINCE THE TOTAL AMOUNT OF SECURITIES AUTHORIZED BY ALL OTHER SUCH INSTRUMENTS DOES NOT EXCEED 10% OF THE TOTAL
            ASSETS OF THE REGISTRANT AND ITS SUBSIDIARIES ON A CONSOLIDATED BASIS AS OF DECEMBER 31, 1995.  THE REGISTRANT HEREBY
            AGREES TO FURNISH TO THE COMMISSION UPON REQUEST A COPY OF ANY SUCH DEBT INSTRUMENT TO WHICH IT IS A PARTY.

   10.1     Letter Agreements between Berkshire Hathaway Inc. and Salomon Inc dated September 27, 1987 and September 28, 1987
            relating to the purchase by Registrant of an Issue of Series A Cumulative Convertible Preferred Stock of Salomon Inc and
            Certificate of Designation of said Preferred Stock
                 Incorporated by reference to Exhibit 10.3 to Registrant's 1992 Annual Report on Form 10-K.

   10.2     Letter Agreement dated September 1, 1986 between Berkshire Hathaway Inc. and Trustee under indenture covering debt
            securities issued by Scott Fetzer Financial Group, Inc., formerly World Book Finance, Inc.
                 Incorporated by reference to Exhibit 10.4 to the Registrant's 1991 Annual Report on Form 10-K.

   10.3     Investment Agreement dated July 1, 1986, between Berkshire Hathaway Inc. and Scott Fetzer Financial Group, Inc.,
            formerly World Book Finance, Inc. and Amendment thereto dated August 31, 1986
                 Incorporated by reference to Exhibit 10.5 to the Registrant's 1991 Annual Report on Form 10-K.

   12       Statement of computation of ratio of earnings to fixed charges

   22       Subsidiaries of the Registrant

   23       Independent Auditors' Consent

   27       Financial Data Schedule (Submitted as an Exhibit pursuant to the requirements of Item 601(b)(27) of Reg. S-K and not 
            deemed filed for purposes Section 11 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act 
            of 1934.
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