ResMed highlights ‘positive’ tax changes

Tuesday, February 27, 2018

SAN DIEGO – Tax reform recently passed by Congress has “liberated our global cash assets to be able to be invested without artificial constraints,” ResMed CEO Mick Farrell said during a Jan. 22 conference call.

Farrell said the company will now be free to invest in three new ways in the United States: 1.) grow its manufacturing footprint; 2.) grow its research and development capabilities; and 3.) build its intellectual property assets.

“The changes will be positive for ResMed from a financial and treasury management perspective,” said Brett Sandercock, CFO of ResMed. “We will now have far more flexibility to repatriate cash back to the U.S. at little or no tax cost. We will be able to more effectively utilize our strong global cash flows to invest in growth opportunities and undertake capital management activities.”

The tax reform revises the corporate income tax by, among other things, imposing a one-time transition tax on unremitted foreign earnings, lowering the corporate income tax rate from 35% to 21% and implementing a territorial tax system in regard to foreign earnings.

ResMed noted in its financial earnings for the second quarter that the one-time transition tax on unremitted foreign earnings results in additional income tax expense of $119.9 million, $10.5 million recorded as income taxes payable and $109.4 million recorded as long-term income taxes payable. The company also noted the lower corporate tax rate results in a reduction of net deferred tax assets and an increase in income tax expense of $6.7 million.