S&P 500 Foreign Sales Report: Sales to Asia Rise, U.K. Moves Lower, Taxes Paid to U.S. Climbs Dramatically

News provided by

Jul 14, 2015, 09:30 ET

NEW YORK, July 14, 2015 /PRNewswire/ -- S&P Dow Jones Indices ("S&P DJI"), one of the world's leading index providers, announced today that, for S&P 500® companies with full reporting information for 2014, the percentage of sales from foreign countries increased after five years of stagnation.

According to S&P DJI's annual S&P 500 Foreign Sales Report, the percentage of S&P 500 sales coming from outside of the U.S. equated to 47.82% in 2014, up from 46.29% in 2013 and 46% for each of the previous four years (2009-2012).

Additional findings from the Report include:

On Geographical Basis

European sales rebounded in 2014, accounting for 7.46% of all S&P 500 sales, up from the prior year's 6.80%, which had declined from 2012's 9.69% rate.
Sales in the U.K. declined for the fourth year in a row to 0.89% from 1.12% in 2013, 1.73% in 2012, and 2.39% in 2011.
European ex-U.K. sales represented 6.58% of all S&P 500 sales in 2014, increasing from 5.69% in 2013, but still down from the 7.97% level posted in 2012.
Asian sales continued to increase, but at a slower pace.
7.80% of S&P 500 sales came from Asia, up from 7.71% in 2013 and 7.46% in 2012.
Canadian sales increased to 3.51%, from the prior year's 2.23% rate, but they were still short of the 4.10% rate in 2012.
African declared sales increased to 4.09% from the 3.55% calculated for 2013 and 2012.

Sector Sales

Information technology continued to be the most successful (and exposed) sector in terms of foreign sales. In 2014, 59.4% of its declared sales were foreign, up from 56.6% in 2013. The sector's representation rebounded to 18.3% of all foreign sales, up from 2013's 14.8% but still shy of the 2011 19.0% rate.
Sales for utilities and telecommunications remained mostly domestic, with little reporting.

Taxes

In 2014, S&P 500 companies continued to send more payments to Washington for income taxes than they did to foreign governments.
The percentage of income tax payments going to the U.S. jumped to 61.8% of declared amounts, up from 54.9% in 2013 and 51.2% in 2012, with 38.2% of taxes being sent to foreign governments in 2014, down from 45.1% in 2013 and 48.8% in 2012.
Actual payments to Washington increased 17.4% in 2014 to USD 185.2 billion from 2013's USD 157.7 billion, as payments abroad declined 11.8% to USD 114.2 billion from USD 129.5 billion.

Quality of Reporting

The quantifiable data released with respect to foreign sales by issues for 2014 slightly improved, after a noticeable deterioration in 2013. Still, over half of the S&P 500 issues did not report sufficient information to facilitate producing a complete report on global sales.
Of the issues that did declare foreign sales, 46.4% of them used a term similar to "foreign country", giving little breakdown of the area or country of the sales.

"Sales to Asia continue to increase, albeit at a slower rate than years past, but still remains larger than Europe," says Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices and author of the report. "Sales to Africa substantially increased; however, growth of the middle-class has been slower than hoped for, and as a result, expected sales could be less than planned for and have a negative impact on future profitability."

Given the ongoing debate and discussion of corporate domestic and foreign tax rates and policy, as well as inversions, one key question is this: If sales are almost evenly split between the U.S. and foreign markets, why are the taxes currently so lopsided? S&P DJI's Silverblatt has the following take:

"The initial answer could be that U.S. tax rates are much higher than foreign tax rates. As a result, the taxes due on nearly comparable incomes are greater in the U.S. However, since companies do not report full net attributed incomes, this belief, in a time when the information is sorely needed by policy makers, is unsubstantiated."

For more information about S&P Dow Jones Indices, please visit www.spdji.com.

About S&P Dow Jones Indices
S&P Dow Jones Indices LLC, a part of McGraw Hill Financial, is the world's largest, global resource for index-based concepts, data and research. Home to iconic financial market indicators, such as the S&P 500® and the Dow Jones Industrial Average^®, S&P Dow Jones Indices LLC has over 115 years of experience constructing innovative and transparent solutions that fulfill the needs of investors. More assets are invested in products based upon our indices than any other provider in the world. With over 1,000,000 indices covering a wide range of asset classes across the globe, S&P Dow Jones Indices LLC defines the way investors measure and trade the markets. To learn more about our company, please visit www.spdji.com.

Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC, a part of McGraw Hill Financial. Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"). These trademarks have been licensed to S&P Dow Jones Indices LLC. It is not possible to invest directly in an index. S&P Dow Jones Indices LLC, Dow Jones, S&P and their respective affiliates (collectively "S&P Dow Jones Indices") do not sponsor, endorse, sell, or promote any investment fund or other investment vehicle that is offered by third parties and that seeks to provide an investment return based on the performance of any index. This document does not constitute an offer of services in jurisdictions where S&P Dow Jones Indices does not have the necessary licenses. S&P Dow Jones Indices receives compensation in connection with licensing its indices to third parties.

SOURCE S&P Dow Jones Indices