Foreign subsidiaries of U.S. multinationals generally retain their excesscash because paying a dividend to the U.S. parent would result in significant U.S. tax costs.
Companies seeking to tap excess foreign cash for U.S. needs without incurring additional tax costs should consider having foreign subsidiaries prepay taxable royalties.
"You don't want to have excesscash tied up in the company that's not generating any value, " said Nick Fanandakis, chief financial officer of the manufacturing and science company.