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Medtech's Take on Corporate Repatriation

Article-Medtech's Take on Corporate Repatriation


The potential for corporate tax reform and repatriation

Karen Parkhill, Medtronic CFO--"We would say that the Republican blueprint, as written right now, is a slight benefit for Medtronic if the details remain similar to what is written on the high level. There are puts and takes in the tax reform. The benefit of repatriation would be the largest benefit for us.

On the repatriation side, it is our assumption that there will be an impact on both accumulated foreign earnings and on cash currently overseas. We have about $25 billion in accumulated foreign earnings right now and about $6 billion of cash overseas . . . The biggest positive on repatriation, though, is the ability to have access to our cash ongoing. Just to put that in perspective, if we had 100% access to our cash in this fiscal year, in FY17, it would mean we would have an additional $2.5 billion of cash accessibility, which is meaningful. As you know, our cash grows over time. So that would be even more meaningful over time. 

From an overall perspective on our tax rate, we would assume that we would probably have a slight net benefit in the early years and assuming that interest deductability on new debt may not apply, we could have a slight negative benefit in the outer years. That said, repatriation is the biggest positive for us, so we're hopeful that that would occur."

Timothy Ring, C.R. Bard chairman and CEO--"We've never not done a deal because we couldn't afford it. It's a low interest rate environment and we're pretty underleveraged. We've had the flexibility to do pretty much anything we've wanted to do. It certainly wouldn't change our strategic filters that we use when we look at acquisitions. We would remain disciplined. We just would have more cash to spend. Clearly when you look at things like buybacks, that gives you more flexibility on things like that as well."


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