Berkshire Hathaway 2000 Annual Report Download - page 6

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We quickly purchased CORT for Wesco, our 80%-owned subsidiary, paying about $386 million
in cash. You will find more details about CORT’s operations in Wesco’s 1999 and 2000 annual
reports. Both Charlie and I enjoy working with Paul, and CORT looks like a good bet to beat our
original expectations.
•Early last year, Ron Ferguson of General Re put me in contact with Bob Berry, whose family had
owned U.S. Liability for 49 years. This insurer, along with two sister companies, is a medium-
sized, highly-respected writer of unusual risks — “excess and surplus lines” in insurance jargon.
After Bob and I got in touch, we agreed by phone on a half-stock, half-cash deal.
In recent years, Tom Nerney has managed the operation for the Berry family and has achieved a
rare combination of excellent growth and unusual profitability. Tom is a powerhouse in other
ways as well. In addition to having four adopted children (two from Russia), he has an extended
family: the Philadelphia Belles, a young-teen girls basketball team that Tom coaches. The team
had a 62-4 record last year and finished second in the AAU national tournament.
Few property-casualty companies are outstanding businesses. We have far more than our share,
and U.S. Liability adds luster to the collection.
•Ben Bridge Jeweler was another purchase we made by phone, prior to any face-to-face meeting
between me and the management. Ed Bridge, who with his cousin, Jon, manages this 65-store
West Coast retailer, is a friend of Barnett Helzberg, from whom we bought Helzberg Diamonds
in 1995. Upon learning that the Bridge family proposed to sell its company, Barnett gave
Berkshire a strong recommendation. Ed then called and explained his business to me, also
sending some figures, and we made a deal, again half for cash and half for stock.
Ed and Jon are fourth generation owner-managers of a business started 89 years ago in Seattle.
Both the business and the family— including Herb and Bob, the fathers of Jon and Ed — enjoy
extraordinary reputations. Same-store sales have increased by 9%, 11%, 13%, 10%, 12%, 21%
and 7% over the past seven years, a truly remarkable record.
It was vital to the family that the company operate in the future as in the past. No one wanted
another jewelry chain to come in and decimate the organization with ideas about synergy and
cost saving (which, though they would never work, were certain to be tried). I told Ed and Jon
that they would be in charge, and they knew I could be believed: After all, it’s obvious that your
Chairman would be a disaster at actually running a store or selling jewelry (though there are
members of his family who have earned black belts as purchasers).
In their typically classy way, the Bridges allocated a substantial portion of the proceeds from their
sale to the hundreds of co-workers who had helped the company achieve its success. We’re
proud to be associated with both the family and the company.
•In July we acquired Justin Industries, the leading maker of Western boots — including the
Justin, Tony Lama, Nocona, and Chippewa brands  and the premier producer of brick in Texas
and five neighboring states.
Here again, our acquisition involved serendipity. On May 4th, I received a fax from Mark Jones,
a stranger to me, proposing that Berkshire join a group to acquire an unnamed company. I faxed
him back, explaining that with rare exceptions we don’t invest with others, but would happily
pay him a commission if he sent details and we later made a purchase. He replied that the
“mystery company” was Justin. I then went to Fort Worth to meet John Roach, chairman of the
company and John Justin, who had built the business and was its major shareholder. Soon after,
we bought Justin for $570 million in cash.
John Justin loved Justin Industries but had been forced to retire because of severe health problems
(which sadly led to his death in late February). John was a class act  as a citizen, businessman
and human being. Fortunately, he had groomed two outstanding managers, Harrold Melton at
Acme and Randy Watson at Justin Boot, each of whom runs his company autonomously.