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May 23, 2014
SEC Exam of Google Leads to More Disclosure of Foreign Earnings
by Thomas Jaworski

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A recently completed review of Google Inc.'s regulatory filing for 2012 by the U.S. Securities Exchange Commission included a request for expanded disclosure on the company's plan for its undistributed foreign earnings, according to documents released May 20.

The SEC, in a letter dated April 15, confirmed the completion of its review of Google's annual filing for the fiscal year ending December 31, 2012, but added that its comments or the changes made to the company's disclosure in response to those comments "do not foreclose the Commission from taking any action with respect to the company."

Starting January 1, 2012, the SEC began publicly releasing comment and response letters regarding disclosure filings no earlier than 20 days following the completion of a filing review.

As part of its review, the SEC requested in a letter dated November 13, 2013, that Google expand the income tax footnote included in the annual filing to describe the company's plans for indefinitely reinvesting its undistributed foreign earnings. The commission asked Google to quantify the amount of reinvestment of undistributed earnings for each period presented.

Google said in a December 20, 2013, response letter that it had significant financial needs outside the United States to fund continued market growth and expansion through mergers and acquisitions, ongoing research and development, and investments in data center and other infrastructure and real property. The company quantified the funding requirements outside the United States as being $20 billion to $30 billion for M&A activities, $2 billion to $4 billion for capital expenditures, and $12 billion to $14 billion for intercompany charges.

Regarding its U.S. operations, Google said that it has significant financial resources within the United States and that its anticipated U.S. financial requirements are not expected to involve repatriation of the undistributed foreign earnings in the foreseeable future.

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