BAX » Topics » The American Jobs Creation Act of 2004

This excerpt taken from the BAX 10-K filed Mar 7, 2006.
The American Jobs Creation Act of 2004
In October 2004, the American Jobs Creation Act of 2004 (the Act) was enacted. The Act created a one-time incentive for U.S. corporations to repatriate undistributed foreign earnings by providing an 85% dividends received deduction. This allowed U.S. companies to repatriate non-U.S. earnings through 2005 at a substantially reduced rate, provided that certain criteria were met.

Under a plan approved by the company’s board of directors in September 2005, during the fourth quarter of 2005 the company repatriated approximately $2.1 billion in earnings previously considered indefinitely reinvested outside the United States. The company recorded income tax expense of $191 million associated with this repatriation. In addition, the company recognized income tax expense of $38 million during 2005 relating to certain earnings outside the United

 
76


 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

States, which were not deemed indefinitely reinvested. The company also recognized $12 million of income tax expense in 2005 relating to certain foreign earnings taxed currently by the United States under Subpart F of the U.S. Internal Revenue Code. Management will continue to evaluate whether to indefinitely reinvest earnings in certain foreign jurisdictions as it continues to analyze the company’s global financial structure. Currently, aside from the items mentioned above, management intends to continue to reinvest earnings outside of the United States for the foreseeable future, and therefore has not recognized U.S. income tax expense on these earnings. U.S. federal income taxes, net of applicable credits, on these foreign unremitted earnings of $3.79 billion as of December 31, 2005, would be approximately $323 million. As of December 31, 2004 (prior to the 2005 repatriation), the foreign unremitted earnings and U.S. federal income tax amounts were $5.01 billion and $1.17 billion, respectively.

The repatriation principally consisted of existing off-shore cash, proceeds from the issuance of notes and an existing European credit facility. Repatriation cash proceeds are being reinvested in the company’s domestic operations in accordance with the Act. The majority of the proceeds were used in 2005 to reduce the company’s debt and contribute to its pension plans.

This excerpt taken from the BAX 10-Q filed Aug 9, 2005.

The American Jobs Creation Act of 2004

 

No provision has been made for U.S. income taxes on the undistributed earnings of non-U.S. subsidiaries, as these earnings are currently deemed to be permanently invested.

 

In October 2004, the American Jobs Creation Act of 2004 (the Act) was enacted. The Act allows U.S. companies a one-time opportunity to repatriate non-U.S. earnings through 2005 at a 5.25% tax rate rather than the normal U.S. tax rate of 35%, provided that certain criteria, including qualified reinvestment, are met. Management is analyzing the provisions of the Act. Detailed final guidance necessary to implement the Act has not yet been issued by the Internal Revenue Service. Management has not yet determined the effects on the company’s plans or its consolidated financial statements. Management expects to complete its evaluation by the end of the third quarter of 2005.

 

This excerpt taken from the BAX 10-Q filed May 6, 2005.

The American Jobs Creation Act of 2004

 

In October 2004, the American Jobs Creation Act of 2004 (the Jobs Creation Act) was enacted. The Act includes numerous provisions, including the creation of a temporary incentive for United States multinationals to repatriate accumulated income earned abroad. The temporary tax deduction of 85% of certain repatriated foreign earnings is subject to a number of limitations. Detailed final guidance necessary to implement the Jobs Creation Act has not yet been issued by the Internal Revenue Service. Management is analyzing the provisions of the Jobs Creation Act and has not yet determined the effects, if any, on the company’s plans or its consolidated financial statements. Management expects to complete its evaluation by the end of the third quarter of 2005. Refer to the 2004 Annual Report for further information.

 

This excerpt taken from the BAX 10-K filed Mar 16, 2005.

The American Jobs Creation Act of 2004

In October 2004, the American Jobs Creation Act of 2004 (the Act) was enacted. The Act includes numerous provisions, including the creation of a temporary incentive for United States multinationals to repatriate accumulated income earned abroad. The temporary tax deduction of 85% of certain repatriated foreign earnings is subject to a number of limitations. Detailed final guidance necessary to implement the Act has not yet been issued by the Internal Revenue Service. Management is analyzing the provisions of the Act and has not yet determined the effects, if any, on the company’s plans or its consolidated financial statements. Management has not determined when it will complete its evaluation. Refer to Note 11 for further information regarding the company’s foreign unremitted earnings.

 

Income From Continuing Operations Before the Cumulative Effect of Accounting Changes and Related per Diluted Share Amounts

Income from continuing operations, before the cumulative effect of accounting changes, was $383 million in 2004, $907 million in 2003 and $1.03 billion in 2002. Net earnings per diluted share from continuing operations, before the cumulative effect of accounting changes, was $0.62 in 2004, $1.50 in 2003 and $1.66 in 2002. The significant factors and events causing the net declines from 2003 to 2004 and from 2002 to 2003 are discussed above.

 

Income (Loss) From Discontinued Operations

In 2002, management decided to divest certain businesses, principally the majority of the services businesses included in the Renal segment, and recorded a $294 million pre-tax charge ($229 million on an after-tax basis). Management’s decision was based on an evaluation of the company’s business strategy and the economic conditions in certain geographic markets. Refer to Note 2 for further information.

 

During 2003, the company sold RMS Lifeline, Inc., RMS Disease Management, Inc., and the Medication Delivery segment’s offsite pharmacy admixture products and services business. During 2004 and 2003, the company divested the RTS centers. At December 31, 2004, the divestiture plan is substantially complete.

 

During 2004, discontinued operations generated income of $5 million. The income was principally related to tax and other adjustments, as the company completed divestitures. Discontinued operations generated net-of-tax losses of $24 million in 2003 and $26 million in 2002.

 

Changes in Accounting Principles

During 2003, the company adopted Statement of Financial Accounting Standards (FASB) No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,” and Financial Accounting Standards Board Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN No. 46). Upon adoption, Baxter recorded charges to earnings for the cumulative effect of these changes in accounting principles totaling $17 million (net of income tax benefit of $5 million). Refer to Note 1 for further information.

 

"The American Jobs Creation Act of 2004" elsewhere:

Medtronic (MDT)
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki