US non-financial companies rated by
Moody's held $1.64tn in cash at year-end 2013, up 12% from the prior
record of $1.46tn a year earlier, Moody's Investors Services says in a
new report, "Cash Pile Grows 12% to $1.64tn; Overseas Holdings Continue
to Expand." The top 50 holders of cash account for $1.04tn of the total,
and entry to the top 50 list now requires $5.7bn in cash.
Overseas cash is estimated at $947bn, or 58% of current total cash,
"Among sectors, technology continues to hold the most cash and has extended its
lead," says Richard Lane, senior vice president. "The technology sector held
$638bn, or 39%, of total corporate cash at the end of last year, followed
by healthcare/pharmaceuticals, consumer products and energy."
Apple, Microsoft, Google and Verizon are in the top five most cash rich
companies, the new report says. Together with pharmaceutical giant Pfizer, they
held $404bn, or 25%, of the total non-financial corporate cash balance at
year-end 2013, up 24% from $347bn at end-2012.
Apple accounted for $159bn, or 9.7%, of total corporate cash in 2013, up
from $137bn, or 9.5%, in 2012, Lane says. "Apple's surging balance has
contributed to the concentration of cash among the top cash holders, to 64% of
the current total. By itself, Apple now holds more cash than the total for every
industry sector except technology and healthcare/pharmaceuticals."
Capital spending and dividends reached seven-year highs in 2013, at $869bn
and $365bn, respectively. Share buybacks increased 11% and spending on
acquisitions went down 15%. Moody's expects businesses to remain cautious over
the next year, with spending on capital investments, dividends, acquisitions and
share buybacks going up only slightly, to around $1.7tn.
Cash coverage of five-year debt maturities continues to improve, and exceeded
100% for the third year in a row last year. At the beginning of 2010 the US
non-financial corporate sector had $1.05tn in cash and $1.35tn in
debt maturities, but higher cash balances and a similar amount of debt
maturities brought cash coverage of maturities to 107% last year.
Overseas cash is estimated at $947bn, or 58% of current total cash, up
from Moody's estimate of $840bn last year, Lane says. "The high amount
reflects the negative tax consequences of permanently repatriating money to the
US, and the domestic use of cash for dividends, share buybacks and the majority
The cash is kept overseas to avoid paying
corporate taxes but some of it is held in the United States while most of it is liklely in US
dollar accounts in American banks (whether it be in the US or overseas) and some may also be invested in US Treasuries.
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