Berkshire Hathaway 2005 Annual Report Download - page 43

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Notes to Consolidated Financial Statements (Continued)
(13) Notes payable and other borrowings (Continued)
Berkshire Hathaway Finance Corporation (“BHFC”), a wholly-owned subsidiary of Berkshire, issued senior notes at various
times during 2003, 2004 and 2005. Par amounts of such issuances aggregated $5.25 billion in 2005, $1.6 billion in 2004 and $2.0
billion in 2003. The proceeds were used in the financing of manufactured housing loan originations and portfolio acquisitions of
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).
2006 2007 2008 2009 2010
Insurance and other........................................................................ $1,502 $ 626 $ 14 $ 434 $ 7
Finance and financial products ...................................................... 426 870 3,495 96 2,214
$1,928 $1,496 $3,509 $ 530 $2,221
(14) Income taxes
The liability for income taxes as of December 31, 2005 and 2004 as reflected in the accompanying Consolidated Balance
Sheets is as follows (in millions).
2005 2004
Payable currently............................................................................................. $ 258 $ 1,073
Deferred........................................................................................................... 11,994 11,174
$12,252 $12,247
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at
December 31, 2005 and 2004 are shown below (in millions).
2005 2004
Deferred tax liabilities:
Investments – unrealized appreciation; basis differences ............................. $11,882 $11,517
Deferred charges reinsurance assumed......................................................... 828 955
Property, plant and equipment...................................................................... 1,202 1,201
Other ............................................................................................................ 1,165 677
15,077 14,350
Deferred tax assets:
Unpaid losses and loss adjustment expenses ................................................ (867) (1,129)
Unearned premiums ..................................................................................... (403) (388)
Accrued liabilities ........................................................................................ (815) (830)
Other ............................................................................................................ (998) (829)
(3,083) (3,176)
Net deferred tax liability.................................................................................. $11,994 $11,174
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 $512 million as of December 31, 2005. 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).
2005 2004 2003
Federal............................................................................................................. $ 3,736 $ 3,313 $ 3,490
State................................................................................................................. 129 108 81
Foreign ............................................................................................................ 294 148 234
$ 4,159 $ 3,569 $ 3,805
Current............................................................................................................. $ 2,057 $ 3,746 $ 3,346
Deferred........................................................................................................... 2,102 (177) 459
$ 4,159 $ 3,569 $ 3,805