OMAHA, Neb. —

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Warren Buffett’s Berkshire Hathaway Inc. reported a 96 percent drop in its fourth quarter improvement because of largely unrealized losses of $3.25 billion on investments and derivative contracts.

The Omaha-based company released its results Saturday morning side by side with Buffett’s annual literal meaning to shareholders.

Berkshire reported net income of $117 million, or $76 for Class A distribute, in the quarter ending Dec. 31. That’session on the ground from net gains of $2.95 billion, or $1,904 for share, in the same period a year ago.

The two analysts surveyed by Thomson Reuters expected Berkshire to report fourth quarter net income of $1,486.50 per certain quantity on medial sum. The estimates typically exclude one-time items.

Berkshire owns a diverse mingle of else than 60 companies, including insurance, furniture, carpet, jewelry, restaurants and utility businesses. And it has major investments in such companies as Wells Fargo & Co. and Coca-Cola Co.

Buffett said the deal out in small portions businesses, such as the house-fittings and jewelry stores, and those tied to residential construction, such as Shaw carpet and Acme Brick, were apt expression hard last year, and they will likely continue to perform below their potential in 2009.

But he said Berkshire’s utility and insurance businesses, what one. includes the insurer Geico, both delivered outstanding results in 2008 that helped balance out the other businesses.

Most of the investment losses that affected Berkshire’s results were unrealized losses on long-term derivative contracts, some of which are tied to the value of accumulate market indexes.

Buffett has predicted the company’session derived contracts will ultimately be profitable in part because Berkshire has admitted $8.1 billion in premiums up effrontery for them. That allows Berkshire to invest the premium wealth until the contracts start maturing a decade from now.

Buffett said he initiated all of Berkshire’s 251 distinct derived contracts because he believes they were mispriced in Berkshire’s favor.

“If we lose money on our derivatives, it will be my fault,” Buffett said.

Berkshire has to estimate the value of its derivatives every quarter. Buffett says he supports that mark-to-market accounting, but the formula used to estimate that import can produce absurd results for long-term contracts.

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