Berkshire Hathaway 1998 Annual Report Download - page 22

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BERKSHIRE HATHAWAY INC.
ACQUISITION CRITERIA
We are eager to hear from principals or their representatives about businesses that meet all of the following criteria:
(1) Large purchases (at least $50 million of before-tax earnings),
(2) Demonstrated consistent earning power (future projections are of no interest to us, nor are "turnaround"
situations),
(3) Businesses earning good returns on equity while employing little or no debt,
(4) Management in place (we can't supply it),
(5) Simple businesses (if there's lots of technology, we won't understand it),
(6) An offering price (we don't want to waste our time or that of the seller by talking, even preliminarily,
about a transaction when price is unknown).
The larger the company, the greater will be our interest: We would like to make an acquisition in the $5-20 billion
range. We are not interested, however, in receiving suggestions about purchases we might make in the general stock
market.
We will not engage in unfriendly takeovers. We can promise complete confidentiality and a very fast answer —
customarily within five minutes — as to whether we're interested. We prefer to buy for cash, but will consider issuing
stock when we receive as much in intrinsic business value as we give.
Charlie and I frequently get approached about acquisitions that don't come close to meeting our tests: We've found
that if you advertise an interest in buying collies, a lot of people will call hoping to sell you their cocker spaniels. A
line from a country song expresses our feeling about new ventures, turnarounds, or auction-like sales: "When the
phone don't ring, you'll know it's me."
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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, 1998 and 1997, and the related consolidated statements of earnings, changes in shareholders' equity,
and cash flows for each of the three years in the period ended December 31, 1998. 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, 1998 and 1997, and the results of their operations
and their cash flows for each of the three years in the period ended December 31, 1998 in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
March 8, 1999
Omaha, Nebraska