More on Medtech's Take on Corporate Repatriation

Alex Gorsky, Johnson & Johnson chairman and CEO--"Based upon the conversations that we've had, the opportunity to go to more of a territorial-based system will result in us being much more competitive, hopefully taking out some of the anomalies that cause us to do inversions, other factors that result in us being less competitive. That could be a very good thing. Secondly, just lowering the rates so that we can be more competitive. Third, a very important issue is, how do we repatriate some of the cash that's abroad? There's a lot of discussion taking place about that--is it just the cash that's abroad or is it in fact all of the earnings? For a company like us, there's a significant difference between those two numbers. What exactly is that rate? Is it 8%? Is it 3%? Is it 5%? What's the timeline that might be associated with that? Is there a phase-in period so that you could manage it appropriately? At the end of the day, it could mean for a company like Johnson & Johnson, and I would dare say others, that your tax rate could go up marginally. However, I think if it provides us more flexibility in the long run, to be able to deploy capital in ways that are not necessarily so heavily influenced by the tax regulations versus the strategic and actual financial outcomes, I think that's a real positive. But there's a lot of work that will need to be done in the coming months to make that happen."

Daniel Florin, Zimmer Biomet CFO--"There's still a lot to be unveiled. Based on what we have heard and what we're expecting, I think Zimmer Biomet is likely to be a net beneficiary of corporate tax reform. We say that because of our current tax rate being at roughly 24% on an adjusted basis, above our peer group. As we've talked about over the past year and a half, we have been working through a diligent plan to lower that tax rate through operational restructuring efforts. Looking forward, we'll continue to monitor the situation out of Washington and decide if we continue to proceed with those movements or not. Certainly lower tax rates, we would be a beneficiary of. We look forward to learning more about that . . . We have significant access to OUS cash through some of the intercompany loan structures that we put in place at the time of the Biomet acquisition. So, that's not a big upside for us. We have plenty of access as it is. Certainly the permanent repeal of the medical device tax would be a very meaningful advancement as well, if that were to come to fruition."