April 06, 2015
Joseph Perry, Firmwide Partner-in-Charge, Tax & Business Services, Featured in Long Island Business News Article, "Dividend With That."
By Claude Solnik
Nathan's Famous stockholders recently had a big payday when the firm shelled out $116 million to pay a $25-pershare special dividend as of March 20.
While most shareholders must hope and wait for their stocks to rise, Nathan's shareholders cashed in without selling a single share. It was Christmas and New Year's all at once – but at a price.
The Jericho-based firm borrowed $130 million to make the distribution, creating possibly the biggest payout in the hotdog firm's history. While Nathan's action was remarkable in scale, other companies are pumping money out to shareholders even if they aren't always paying out of profits.
"We do see more and bigger dividends," said Joseph Perry, partner in charge of tax and business services at Manhattan-based Marcum with large Melville operations. "As they reduce cash and expenses, they have more cash. They have to do something with the cash."
Some of the world's best known companies have borrowed to pay big bucks to shareholders. Apple in February announced it was borrowing $6.5 billion to pay dividends and buy stock, even though it was earning billions.
If Apple used profits from global sales to pay the dividend, it would have had to pay U.S. income taxes on that money. Borrowing lets Apple avoid those taxes.
"To get the cash for dividends, they could have repatriated offshore money," Perry said. "Instead, they floated bonds to bring the cash to the United States."
Click here to read the full article on www.libn.com >>