This is part one of the transcript and video of Warren Buffett's 'Ask Warren' appearance on CNBC's Squawk Box on Monday, March 1, 2010.

Announcer: This is a special presentation of SQUAWK BOX. The world's most famous investor live from Omaha, Nebraska; you ask, Warren Buffett will answer. A unique, interactive three-hour-long conversation not to be missed as SQUAWK BOX begins right now.

BECKY QUICK, co-host: Good morning, everybody and welcome to SQUAWK BOX right here on CNBC. I'm Becky Quick, and we are this morning at Piccolo Pete's restaurant in Omaha, Nebraska. This is a favorite hangout of Warren Buffett. He's going to be talking to us for the next three hours. Of course, Joe Kernen and Carl Quintanilla are back at CNBC's world headquarters live this morning. And, guys, we have plenty to be talking about this morning. We are joined by the "Oracle of Omaha" himself this morning, Warren Buffett. And he made it here early, guys, he is sitting down and he is ready to go. He is ready to take questions.  So good morning, everybody.

JOE KERNEN, co-host: It's 4 AM?

QUICK: It's--yeah. It's 5 AM here.

KERNEN: It's 5 AM.

CARL QUINTANILLA, co-host: Yeah.

QUICK: It was 4:45 when he showed up, yeah.

KERNEN: Five AM, wow.

QUICK: Five AM here.

KERNEN: Wow.

QUICK: So he's ready to go.

KERNEN: What is...

QUICK: He is ready for your questions this morning, too, guys.

KERNEN: What is...

WARREN BUFFETT: Omaha's in--Omaha's in the middle of the country, Joe.  That's why it's 5, yeah.

KERNEN: Middle, because Colorado's right around there, right?

QUINTANILLA: Right. We're a little farther west.

KERNEN: A little further and that's two hours, right?

QUINTANILLA: Mm-hmm.

BUFFETT: It's 4:00 in Colorado, right, 4:00 in Colorado.

KERNEN: It's so complicated, isn't it?

QUINTANILLA: Yeah.

KERNEN: What is Piccolo Pete's--what is the real specialty there? Is it appetizers? Is it big portions?

QUICK: I...

KERNEN: Is it drinks?

QUICK: No, I'm glad you--I'm glad you asked. This is a steak house, and they've got great steaks, they've got great Italian food that they bring alongside it. And Piccolo Pete's is a place that Warren's been coming for many years and also bringing some of his big out of town guests into as well.  In fact, Joe, if you stick around for a minute, I want to show you a few pictures of people who have been to Piccolo Pete's. You wonder, you know, they come to Omaha, they want to see Warren, so they want to come down and get a good meal, and this is where he brings a lot of his people.

KERNEN: But he never--he never bought it.

QUICK: People like A-Rod, who's shown up.

KERNEN: He never bought it. He never just decided, `I like this business, I...'

QUICK: Do you buy? Oh, the business, itself. I thought you meant buy dinner for everybody when they come in.

KERNEN: I know--I know he...

QUINTANILLA: I think--I think he generally picks up the tab.

CNBC Piccolo's in Omaha, Nebraska, is Warren Buffett's favorite restaurant.

BUFFETT: (Unintelligible)

KERNEN: I don't think he does pick up the tab.

QUINTANILLA: Really?

KERNEN: Unless you pay $700,000. I think he'll sit down with you, but, otherwise, he won't even get the tip, really.  Do you? I mean, you're frugal. You're known to be fairly...

QUINTANILLA: That's how you become a billionaire.

KERNEN: You're known to be fairly frugal, which is--which is--but why not buy it?

BUFFETT: Jeff and I sat--Jeff and I sat here for two hours, each waiting for the other to pick up the check.

QUICK: Jeff, you know he's talking about, Joe, who's in town just a few weeks ago and also who, I think, had dinner with him then, too. So we're talking A-Rod, Jeff Immelt, who have come in, you're talking Bill Gates, you're talking Charlie Rose.

BUFFETT: Yeah, yeah.

QUICK: Ben Stein was here.

BUFFETT: Ben Stein.  Yeah.  Everybody comes here.  And last Friday I had 189 students from seven schools here.  I bring--I bring the schools that come in for the day, we come down here for lunch and I get more letters, frankly, about how good the food was than how good the teaching was.

QUICK: All right, so gentlemen, we are here this morning, and we've got three hours to do it, plenty of things to talk about, so why don't we start right off the top. We've got a lot of questions from viewers and we're going to get to as many as we can through it.  But, Warren, we're here because you came out with your annual shareholders letter...

BUFFETT: Right.

QUICK: ...and--over the weekend, and this is a little different. You were addressing about 65,000 new shareholders this time around, added to the 500,000 you already had on the books because of the acquisition of Burlington Northern. So this shareholders letter was really written as a how-to guide, an owner's manual, if you want to call it, for owning Berkshire-Hathaway.  Why'd you set it up that way?