FT: U.S. Corps. Park Billions Overseas
On Friday, The Financial Times reported on a trend of large U.S. companies parking billions of dollars in cash overseas. The article, "U.S. Tech and Pharma Park Cash Offshore," says, "Nearly $500bn of offshore cash is held by just 14 US technology and pharma groups, according to an FT survey that found they paid an average overseas tax rate of just 10 percent last year. That's "just over half of the $947bn that Moody's estimated was held by US non-financial companies." The FT article continues, "This year, there has been an acceleration of foreign acquisitions by US companies wanting to move their tax base abroad as they try to break free of the US tax system and lock in lower foreign tax rates. Some companies are borrowing heavily in the US to avoid the tax costs of repatriating offshore funds. Moody's, the credit rating agency, has described the growth in offshore cash as "an emerging credit challenge" for some technology companies.... The FT reviewed the accounts of 14 cash-rich tech and pharma companies that provided data on their offshore cash. Apple, Microsoft, Google, Pfizer, Cisco Systems, Oracle, Qualcomm, Johnson & Johnson, Merck, Amgen EMC, eBay, Eli Lilly and Medtronic together held $479bn of offshore cash and equivalents at the end of their last financial year -- just over half of the $947bn that Moody's estimated was held by US non-financial companies." Note: EMC's Jamie Cortas will speak on Corporate Cash at our upcoming Money Fund Symposium next week (June 23-25) in Boston. See also, Bloomberg's "Support eroding for money funds rule as SEC's White pushes vote".
