Google explains in a letter to the U.S. Securities and Exchange Commission dated Dec. 20, 2013 that it expects foreign operations outside the U.S. will become a significant portion of the company's future expansion plans that will require capital -- between $20 and $30 billion -- for M&A activity and $2 to $4 billion for capital expenditures.
The letter was in response to questions from regulators during a regular review of its filings about the stockpile of cash outside the U.S. The company is not saying there's a pending deal, but they want to keep the money overseas in the event that one -- or many -- materializes.
Google spent about $1.4 billion on more than 20 strategic deals in 2013 through the beginning of December, including the $1 billion acquisition of Waze, which was funded by non-U.S. earnings. The company said about half of its revenue is generated in non-U.S. markets.
Google also wrote about a potential $4 billion to $5 billion mystery deal for an unnamed overseas company that did not go through. The near deal was disclosed in a letter to the Securities and Exchange Commission that the company made public Tuesday.
While Google's letter explains it has no interest in sending home overseas cash holdings, other letters filed with the SEC from investors ask that Google follow different accounting practices for offshore funds. "Although 63% of Google's long-lived assets are in the U.S. and the U.S. accounted for 45% of Google's consolidated revenues in 2013, only 40% of the company's income from domestic operations was reported as U.S. source. It has been widely reported that Google holds a significant portion of profits in offshore tax havens, reducing its exposure to corporate tax in the U.S. and other developed countries," per a filing dated May 14, 2014.