Wednesday, December 5, 2012

US Firms Holding Cash Assets Offshore; Offshoring Assets Produced in US

From "Top US Firms Are Cash-Rich Abroad, But Poor At Home" by Kate Linebaugh Dec 4, 2012, p. B1, B6.

[paraphrasing] This article explores the growing tendency for US corporations to hold their cash overseas, while often failing to specify to investors where the cash resides.

The SEC is concerned that customers may be deceived as a result of lack of transparency in the location of cash holdings.

Examples from the article:

Illinios Tools Works inc a diversified manufacture: $2.1 billion in cash, with none of that in the US

Johnson & Johnson kept all of its $245 billion of cash outside US

Wabco had 3% of its holdings in the US

General Electric had 1/3 of its $85.5 billion in the US (although US counted for about 45% of revenue)

Whirlpool had 15% of cash at home, 85% overseas

Microsoft had 13% home, 87% overseas 

JP Morgan and Chase issued a report by Dane Mott concluding that approximately 600 of 1000 multinationals specified overseas retained earnings. 

The 600 reporting companies held, on average, 60% of their cash overseas, despite generating only about 1/3 of their revenue outside the US.

Majia here: That means that US companies are OFF-SHORING REVENUE produced IN the US.

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