Berkshire Hathaway 2004 Annual Report Download - page 47

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Notes to Consolidated Financial Statements (Continued)
(13) Notes payable and other borrowings (Continued)
$3.75 billion par amount of senior notes consisting of $1.5 billion par of 4.125% notes due 2010, $1.0 billion par of
4.85% notes due 2015, and $1.25 billion par of floating rate notes due 2008. Aggregate proceeds of $3,733 million were
used to finance a loan portfolio acquisition on December 30, 2004 by Clayton Homes.
Generally, Berkshire’ s guarantee of a subsidiary’ s debt obligation is an absolute, unconditional and irrevocable
guarantee for the full and prompt payment when due of all present and future payment obligations of the issuer.
Payments of principal amounts expected during the next five years are as follows (in millions).
2005 2006 2007 2008 2009
Insurance and other.............................................................. $1,388 $ 121 $ 554 $ 15 $ 293
Finance and financial products ............................................ 257 133 810 1,388 279
$1,645 $ 254 $1,364 $1,403 $ 572
(14) Income taxes
The liability for income taxes as of December 31, 2004 and 2003 as reflected in the accompanying Consolidated
Balance Sheets is as follows (in millions).
2004 2003
Payable currently ................................................................................. $ 1,073 $ 44
Deferred ............................................................................................... 11,174 10,950
$12,247 $10,994
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax
liabilities at December 31, 2004 and 2003 are shown below (in millions).
2004 2003
Deferred tax liabilities:
Unrealized appreciation of investments ............................................ $11,020 $10,663
Deferred charges reinsurance assumed ............................................. 955 1,080
Property, plant and equipment .......................................................... 1,201 1,124
Investments ....................................................................................... 509 573
Other ................................................................................................. 665 629
14,350 14,069
Deferred tax assets:
Unpaid losses and loss adjustment expenses..................................... (1,129) (1,299)
Unearned premiums .......................................................................... (388) (372)
Other ................................................................................................. (1,659) (1,448)
(3,176) (3,119)
Net deferred tax liability ...................................................................... $11,174 $10,950
Deferred income taxes have not been established with respect to undistributed earnings of certain foreign
subsidiaries. Such earnings are expected to remain reinvested indefinitely and totaled approximately $490 million as of
December 31, 2004. Upon distribution as dividends or otherwise, such amounts would be subject to taxation in the
United States as well as foreign countries. However, U.S. tax liabilities could be offset, in whole or in part, by tax
credits allowable from taxes paid to foreign jurisdictions. Determination of the potential net tax due is impracticable
due to the complexities of hypothetical calculations involving uncertain timing and amounts of taxable income and the
effects of multiple taxing jurisdictions.
The Consolidated Statements of Earnings reflect charges for income taxes as shown below (in millions).
2004 2003 2002
Federal ................................................................................................. $ 3,313 $ 3,490 $1,916
State ..................................................................................................... 108 81 87
Foreign ................................................................................................. 148 234 56
$ 3,569 $ 3,805 $2,059
Current ................................................................................................. $ 3,746 $ 3,346 $2,218
Deferred ............................................................................................... (177) 459 (159)
$ 3,569 $ 3,805 $2,059