5.1. Full Disclosure—Both the Good and the Bad

It's called an annual report. It's not called the annual sales document. It's not called the annual, you know, tribute to management's aspirations or anything. It's called the annual report.

I really have a mental picture of my sisters in mind and it's Dear Doris and Birdie. And I envision them as people who have a very significant part of their net worth in the company, who are bright but who have been away for a year and who are not business specialists.

And once a year I tell them what's going on. And then, at the end, I take the Dear Birdie and Doris out and put in the shareholders of Berkshire Hathaway. I think that should be the mental approach.[]

At Berkshire, full reporting means giving you the information that we would wish you to give to us if our positions were reversed. What Charlie and I would want under that circumstance would be all the important facts about current operations as well as the CEO's frank view of the long-term economic characteristics of the business. We would expect both a lot of financial details and a discussion of any significant data we would need to interpret what was presented.

When Charlie and I read reports, we have no interest in pictures of personnel, plants or products.

References to EBITDA make us shudder—does management think the tooth fairy pays for capital expenditures? We're very suspicious of accounting methodology that is vague or unclear, since too often that means management wishes ...

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