Wednesday, December 14, 2005
Interesting Associated Press story this afternoon: Companies Mum on How They Will Spend Funds:
Everything about this year's corporate "tax holiday" for foreign profits is big. So far, more than 400 companies have indicated they'll bring back about $222 billion to the United States. Supporters have made big claims; "repatriation," they say, will lift the economy, help companies and create U.S. jobs. What's not so big is the amount of information companies are giving investors about how they'll spend the money.
Few companies have disclosed anything about their spending plans; most that have talk only in general terms. Many say it's a competitive disadvantage to get too specific. While companies are required to tell the government about how they'll spend repatriated funds, it appears they don't have to tell shareholders a thing. For example, companies like Hewlett-Packard Co. and DuPont Co. are repatriating sums of cash that amount to a major portion of their capital structure, and have settled on how they'll spend the money -- yet they've said little about their plans.
"Shareholders own the company, and shareholders have a right to know what's happening to the cash," said Lee Sheppard, a contributing editor at Tax Notes, a widely respected weekly publication about tax issues. "The shareholders do have a right to ask, 'What are you going to do with it?'"