repurchase activity in 2019 as compared to 2018 and intends to use existing cash and investments, cash flows from operations and, as needed, borrowings under its existing credit facilities to
fund its repurchases under its share repurchase program.
The Company received $28 million and $24 million of proceeds from the exercise of
stock options and the purchase of shares pursuant to the Companys employee stock purchase plan during the three months ended March 30, 2019 and March 31, 2018, respectively.
The Company had cash, cash equivalents and investments of $1,167 million as of March 30, 2019. The majority of the Companys cash, cash
equivalents and investments are generated from foreign operations, with $411 million held by foreign subsidiaries at March 30, 2019, of which $263 million was held in currencies other than U.S. dollars. The Company believes it has
sufficient levels of cash flow and access to its existing cash, cash equivalents and investments to fund operations and capital expenditures, service debt interest, finance potential acquisitions and continue the authorized stock repurchase program
in the U.S. These cash requirements are managed by the Companys cash flow from operations, its existing cash, cash equivalents and investments, and the use of the Companys revolving credit facility.
Management believes, as of the date of this report, that the Companys financial position, along with expected future cash flows from earnings based on
historical trends and the ability to raise funds from external sources and the borrowing capacity from existing, committed credit facilities, will be sufficient to service debt and fund working capital and capital spending requirements, authorized
share repurchase amounts and potential acquisitions for at least the next twelve months. The Company has conducted a
post-tax
reform evaluation of its capital allocation strategy and the Company is currently
planning to use its existing cash, cash equivalents and investments, cash flow from operations and available debt capacity to repurchase up to $4 billion of the Companys common stock over the next two years. The Company is currently
planning to increase its outstanding debt balances up to approximately 2.5 times the Companys net
debt-to-earnings
before interest, taxes, depreciation and
amortization ratio to fund a significant portion of these share repurchases. In addition, as of December 31, 2018, the Company determined that it will provide income taxes on all future foreign earnings and reverse its historical assertion that
its foreign earnings were permanently invested. However, the Company will continue to be permanently reinvested in relation to the cumulative historical outside basis difference that is not related to the unremitted earnings. There have been no
other significant changes to the Companys financial position.
Contractual Obligations, Commercial Commitments, Contingent Liabilities and
Dividends
A summary of the Companys contractual obligations and commercial commitments is included in the Companys Annual Report on Form
10-K/A
for the year ended December 31, 2018, as filed with the SEC on March 1, 2019. The Company reviewed its contractual obligations and commercial commitments as of March 30, 2019 and determined
that there were no material changes outside the ordinary course of business from the information set forth in the Annual Report on Form
10-K.
From time to time, the Company and its subsidiaries are involved in various litigation matters arising in the ordinary course of business. The Company
believes that it has meritorious arguments in its current litigation matters and that any outcome, either individually or in the aggregate, will not be material to the Companys financial position or results of operations.
During fiscal year 2019, the Company expects to contribute a total of approximately $3 million to $6 million to its defined benefit plans, excluding
the U.S. defined benefit pension plans.
The Company has not paid any dividends and has no plans, at this time, to pay any dividends in the future.
Off-Balance
Sheet Arrangements
The Company has not created, and is not party to, any special-purpose or
off-balance
sheet entities for the purpose of
raising capital, incurring debt or operating parts of its business that are not consolidated (to the extent of the Companys ownership interest therein) into the consolidated financial statements. The Company has not entered into any
transactions with unconsolidated entities whereby it has subordinated retained interests, derivative instruments or other contingent arrangements that expose the Company to material continuing risks, contingent liabilities or any other obligation
under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the Company.
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