Tuesday, April 27, 2010

Job Creation Proposal #6: Three-Year and Enhanced Research Tax Credits

Presently, as one of many recurring annual US tax extenders, and the only one of these tax extenders that is a real job creator, businesses receive a tax credit for incremental research expenses incurred through the end of the current year. Generally, this tax credit is computed at 20% of the excess of qualified research expenses for the current year over a base period amount.

My proposal here is to step up this 20% to 40% for small US businesses in 2010, and from 20% to 30% for larger US businesses in 2010. Also, to give US businesses more certainty, the Research Tax Credit would be extended for two additional years, at 35% in 2011 and at 30% in 2012 for small US businesses, and at 25% in 2011 and at 20% in 2012 for larger businesses. Thus, my proposal will be a much more substantial US job creator than the previous annual tax extension approach. And with the way my proposal deals with US multinational corps creatively, and fairly, the total CBO scored cost of this three-year proposal should approximate the cost of the normal research tax credit one-year extension. How is that possible? Just read on.

Clearly, companies, and the US as a whole, receive major benefits from these US research expenditures. However, there is also a major drawback to the country. The majority of these US research tax credits are given to multinational corps who subsequently generate income overseas from the fruits of this US research. Thus the end result is that these multinational corps receive both US tax deductions and also US Research Tax Credits, even though much of the subsequent related taxable income is generated overseas and thus not taxed in the US. Also, the majority of the job creation of multinational corps from this US research is overseas. Let me explain in much more depth.

From income tax footnotes in their annual reports, of the present 30 Dow Industrial Stocks, there are 12 of them which either have minor research expenditures, such as Financial companies and Retailers, or which are predominately domestic companies.

Thus, here are the remaining present 18 Dow Industrial Stocks with significant overseas operations and also significant research expenditures. Also shown here are the total Pretax Operating Income earned outside the US (or Intl Operating Income) as well as the percentage these Intl Earnings, which were generated outside of the US (or Intl % Mix), comprised of the Worldwide Earnings of each of these 18 companies in total for the last 11 years….the last two Clinton/Gore years (1999 and 2000), all eight Bush/Cheney years (2001-2008), and the first year of Obama/Biden (2009).

……………………....Intl Income....Intl Mix
Exxon Mobil……….$363.8 bil……78%
Chevron…………….$160.1 bil……74%
GE………………….....$115.5 bil…….53%
Pfizer………………...$ 89.0 bil…….85%
IBM……………….....$ 68.1 bil…….49%
Microsoft…………..$ 62.4 bil…….37%
JNJ…………………...$ 60.2 bil…….48%
Merck………………..$ 55.2 bil…….57%
Hewlett-Packard… $ 50.0 bil…….90%
Coca Cola…….........$ 45.5 bil…….67%
Procter & Gamble…$ 41.4 bil…….39%
Cisco Systems………$ 36.4 bil…….56%
Intel…………………...$ 28.7 bil…….31%
United Technologies$ 25.4 bil…….54%
3M…………………......$ 21.4 bil…….47%
Kraft Foods…………..$ 15.1 bil…….35%
Caterpillar…………....$ 14.9 bil…….53%
DuPont……………......$ 14.0 bil…….45%

Total………………...$1,267 bil……60%

Yeah, that’s correct, a monstrous $1.3 trillion of overseas earnings for just these 18 Dow companies, which represents a massive 60% of their worldwide pretax operating earnings.

But even more important, check out the annual trend in the Total Intl Pretax Income Mix as a Percentage of Worldwide Pretax Income for these 18 huge Dow companies:

2009…..74%
2008…..71%
2007…..66%
2006…..62%
2005…..56%
2004…..58%
2003…..52%
2002…..55%
2001…..48%
2000…..46%
1999…..43%

Yeah, that’s a 31% Intl income mix growth in just the last decade (43% in Clinton’s 1999 to 74% in Obama’s 2009). And get ready for these just incredible numbers….Intl income for these 18 companies more than tripled from $50 bil in 1999 to $155 bil in 2009, whereas US income for these 18 companies declined from $66 bil in 1999 to $53 bil in 2009. And this trend was most pronounced in the last four years of the Bush/Cheney Administration, with Intl income of these 18 companies growing from $130 bil in 2005 to $211 bil in 2008 (yeah, that’s up 62% in only three years), but with US income of these same 18 companies declining from $100 bil in 2005 to $85 bil in 2008 (yeah, that’s down 15% in the same three years). Whew, we clearly need some policies that will get us back much closer economically to the Clinton years.

The Bush/Cheney income tax rate reductions on the wealthy and the unfunded wars both contributed heavily to the build up of the US deficit in the 2000s decade. However, I think this US multinational corps massive shift from US income to Intl income is the single main reason for the present US double economic disaster…sky-high US federal deficit and sky-high US unemployment/underemployment rates. The earnings, along with the US jobs, were transferred overseas in the decade of the 2000s. And these companies still received massive R&D US federal income tax deductions and also R&D tax credits for doing just that. Thus the now massive US deficit ballooned from both the dramatic drop in US corporate income taxes paid by the multinational corps and also from the dramatic drop in US federal individual income taxes and payroll taxes from the US jobs transferred overseas, with the latter also causing substantial financial pressure on State government coffers, along with the additional US deficit increases from the necessary funding of State government shortfalls.

Yeah, it’s the “Leave Multinational Corp Businesses Alone” decade of the 2000s, predominately in the Bush/Cheney years, causing the present US double economic disaster. You can’t blame the US multinational corps for these massive offshoring steps to maximize their worldwide income. After all, the CEOs of these US multinational corps are rightfully working for their stockholders. However, I think you can rightfully blame the US government for either not being financially savvy enough to understand it or looking the other way while all of this long-term financial devastation to the US jobs picture and to the US federal deficit was happening in the 2000s decade. And then for the US government to pile on by allowing the foreign earnings repatriation in 2004 with a 85% dividend received deduction…..Whoa, and there were even some Democrats who voted for this US multinational corp boondoggle, that effectively forgave US multinational corps of billions and billions of dollars of what they owed the US government in income taxes.

Further, I think it is helpful to look at the changing global income mix of each of these 18 companies in the past decade.

………………………International Pretax Income Mix Percentage
…………………………………………………………............2008-2009
……………………………………………………………..............vs
…………………………………………………………............1999-2000
..........................................................................Average
………………………..2009…..2008…..2000…1999….Change
Caterpillar…………214%.....52%.......29%.....26%.....105%
GE…………………….105%.....87%.......30%.....28%.......67%
Pfizer…………………134%...118%.......82%.....55%.......57%
Microsoft……………72%.....47%.......17%.....10%.......46%
Cisco Systems…….79%......79%......41%......35%......36%
Coca Cola…………..70%......93%......56%......61%......23%
Exxon Mobil……...93%......88%......66%......71%......22%
Chevron…………….93%......75%.......59%......70%.....20%
3M……………………...50%......56%.......40%......30%.....18%
Merck………………….65%......48%.......46%......35%.....16%
JNJ……………………..55%......61%.......43%.......43%.....15%
Kraft Foods…………46%......48%.......36%.......35%.....12%
DuPont……………….92%......59%.......55%.......73%.....11%
Hewlett-Packard….73%......79%........67%......67%......9%
Intel…………………….43%......20%........26%......36%......1%
Procter & Gamble…41%......44%........46%......40%......0%
IBM…………………….47%......50%........49%......50%.....-1%
United Technologies55%......58%........45%......72%.....-2%

Total……………………74%......71%........46%......43%.......28%

To further extend the research here, below are 27 US Non-Dow Industrial Stocks that I found from a quick review which had significant International Operations, significant Research Expenditures and also pretty healthy annual worldwide consolidated income for the most recent five years. You can clearly see the growing Intl income mix trend, particularly so for the 5 Oil-Related Stocks shown here.

…………………… …..........Intl
…………………… …........Income... Intl Operating Income % Mix
…………………… ….........2009 …. 2009. 2008.. 2007. 2006. 2005
Conoco Phillips……... $7.6 bil... 76%... 54%... 40%... 53%... 47%
Abbott Labs…………... $5.7 bil... 79%.. 101%... 85%.. 138%... 55%
Google………………..... $4.8 bil... 57%... 65%... 43%... 33%... 28%
Apple………………….... $4.4 bil... 55%... 51%... 44%... 53%... 51%
Oracle………………...... $4.1 bil... 52%... 50%... 45%... 43%... 52%
PepsiCo……………...... $3.9 bil... 48%... 54%... 47%... 45%... 50%
Schlumberger………... $3.8 bil... 98%... 79%... 74%... 68%... 70%
Amgen………………..... $3.1 bil... 60%... 52%... 63%... 58%... 38%
Bristol-Myers Squibb $2.9 bil... 52%... 53%... 74%.. 126%... 82%
Occidental Petroleum $2.8 bil... 57%... 48%... 46%... 43%... 35%
Ebay…………………...... $2.7 bil... 95%... 85%.... 4%... 50%... 39%
Colgate Palmolive…... $2.4 bil... 67%... 66%... 69%... 71%... 57%
Baxter………………...... $2.3 bil... 84%... 89%... 95%... 89%... 76%
Dell……………………..... $1.8 bil... 89%... 81%... 86%... 78%... 65%
Corning………………..... $1.7 bil... 90%... 72%... 74%... 13%... 32%
Medtronic…………….... $1.5 bil... 56%... 75%... 55%... 50%... 63%
Emerson Electric…...... $1.3 bil... 53%... 53%... 50%... 43%... 46%
Honeywell…………....... $1.2 bil... 41%... 48%... 38%... 33%... 33%
Nike…………………....... $1.1 bil... 57%... 72%... 63%... 61%... 59%
Halliburton…………….. $1.1 bil... 65%... 31%... 36%... 31%... 30%
Qualcomm…………...... $1.0 bil... 50%... 59%... 54%... 54%... 44%
Kimberly-Clark……..... $.9 bil... 36%... 45%... 37%... 26%... 21%
Apache………………..... $.9 bil.. 274%.. 138%... 63%... 68%... 64%
Dow Chemical……...... $.8 bil.. 162%.. 201%... 95%... 55%... 58%
Illinois Tool Works….. $.7 bil... 59%... 49%... 36%... 39%... 36%
Texas Instruments….. $.6 bil... 32%... 30%... 26%... 29%... 36%
Deere…………………..... $.6 bil... 44%... 45%... 40%... 34%... 42%

Total………………….. $65.7 bil... 63%... 61%... 53%... 54%... 49%

My Research Tax Credit Proposals

For 2010, I would
• Increase the US Research Tax Credit from 20% to 40% for 100% domestic small businesses with revenues under a certain amount.
• Increase the US Research Tax Credit from 20% to 30% for 100% domestic businesses with revenues higher than the above small business threshold
• For corps with both US and Intl revenues, set the maximum US Research Tax Credit at 30%, however multiply this 30% by a fraction, which cannot exceed 100%, the numerator being the US pretax operating income and the denominator being the Consolidated worldwide pretax operating income (both numbers coming from the income tax footnote in the most recent annual report)
• Give corps with both US and Intl revenues a second option of instead of the above fraction of the maximum 30% approach, they would be entitled to the entire maximum 30% US Research Tax Credit, if they choose to fund it completely with their foreign earnings repatriation tax (I would set the Research Tax Credit pecking order for foreign earnings repatriation tax tranches precisely in between the Jobs Tax Credit and the Manufacturing Tax Credit)

For 2011, I would reduce the above 40% to 35% for 100% domestic small businesses. Also, I would reduce the above 30% to 25% for larger 100% domestic businesses. On multinationals, the maximum 30% drops to 25%, and the fraction is computed the same way as in 2010, and also the Research Tax Credit would be the first tax tranch for foreign earnings repatriation tax purposes.

For 2012, I would reduce the above 40% to 30% for 100% domestic small businesses. Also, I would reduce the above 30% to 20% for larger 100% domestic businesses. On multinationals, the maximum 30% drops to 20%, and the fraction is computed the same way as in 2010 and the Research Tax Credit would be the first tax tranch for foreign earnings repatriation tax purposes.

I think this three-year approach on the US Research Tax Credit gives US businesses more certainty, which they claim they really need to add US jobs.

The overall CBO cost of this three-year program should approximate the cost of a normal one-year tax extender for the US Research Tax Credit. This very desirable result occurs even though the proposal includes Research Tax Credits for three years instead of for one year and also includes a higher maximum Research Tax Credit percentage. The reason the CBO cost doesn't vary substantially is due to the fact that the majority of the US Research expenditures are made by the large US multinational corps. If these multinational corps choose the maximum Research Tax Credit option, there will be no CBO-scored cost to the US government, since it is completely funded by the foreign earnings repatriation tax. And if they don’t choose the maximum option, their high international operating income mix will substantially and fairly eat into the US Research Tax Credit they will be entitled to.

Now, let me address how I would consider paying for this strong US job-creating proposal, in addition to the above mentioned substantial foreign earnings repatriation tax funding.

For the largest funding vehicle, I would focus on the incentives to move US job overseas and try to reverse this financially devastating trend. It’s all about lower wages and lower corporate income taxes offshore. I have no problem with a US multinational corp setting up a manufacturing plant in Ireland for its very favorable corporate income tax environment, and then those products manufactured in Ireland getting subsequently sold to somewhere in Europe. Likewise, ignoring the unfair air pollution problem which needs to get addressed in climate change legislation, I have no problem with a US multinational corp manufacturing products in places like the Puerto Rico tax haven or in Mexico, and then these manufactured goods are subsequently sold to somewhere in South America.

However, if these products manufactured by a US multinational corp in a low-taxed or low-wage environment offshore are subsequently sold in the US (the Manufacturing Bounce Back), then I do have a major problem with that. Therefore, to be fair, I think the US should impose a duty or tax on US multinational corps that set up manufacturing operations in low-taxed and/or low-waged offshore locations, and then subsequently sell these products back to US customers. This duty or tax, payable to the US government, with a portion of it subsequently shared with US States in some fair manner, should be based on a percentage of the sales price of the products sold to the US customer.

To substantially soften the blow to multinational corps subject to this duty or tax on Manufacturing Bounce Backs, I think I would give them an option of paying for this duty or tax by a like amount of repatriation foreign earnings tax from repatriating foreign earnings.

Second, the 2000s were a lost decade to the US middle class, to those below the middle class, to small and mid-sized purely domestic businesses, and to the country as a whole, with the resultant massive federal deficit increase. When I study who benefited the most from the demise of the US middle class, the US have-nots, and the domestic businesses, I see two main major industries. And these two benefiting industries unfairly placed severe cost pressures on these suffering groups during the decade of the 2000s.

First, there’s the health care industry….all three main parts of it….the health insurance industry, Big Pharma, but just as important and probably even more so, the non-profit hospital industry. The massive rise in health care costs in the 2000s decade put immense financial pressure on both US individuals and on US businesses. Further, in the recently-passed health care legislation, all three of these made out like bandits and hosed the outfoxed US government. The health care cost increases in the 2000s decade will be significantly curtailed with the new health care legislation, but not by nearly as much as they should be. The day will come for these health care industry outsized beneficiaries, but since I’m all health cared out, I’ll pass on them for now. However, Big Pharma would get hit heavily and fairly by my above import tax proposal on Manufacturing Bounce Backs.

But the second and just as significant industry beneficiary is Big Oil. In the 11 years from 1999 to 2009, Exxon Mobil earned worldwide consolidated pretax income of $468 bil and Chevron earned $217 bil, with this total of $685 bil comprising 32% of the total earnings for these 18 huge US multinational corps. But more to the point, Exxon Mobil generated 78% and Chevron 74% of their earnings overseas for that 11 year period. And in the most recent year 2009, it gets even worse, with both Exxon Mobil and Chevron generating 93% of their earnings overseas. Further, in 2009, Exxon Mobil generated 30% of its worldwide revenues in the US, but still only generated 7% of its pretax earnings in the US....there's clearly something out of synch in 2009, partly due to the LIFO Inventory tax loophole in the US, but there's also got to be something unusual going on with the cost allocations between the US and foreign.

Exxon Mobil has paid paltry amounts of US income tax over the years in comparison to its incredibly high profits. When I do the math from its annual report tax footnotes, and add in its very lucrative tax benefits from its executive stock based awards, Exxon Mobil's effective US federal income tax rate paid on its total US pretax profits in the past 11 years is less than 25%....and that's based on severely-deflated LIFO Inventory earnings. At December 31, 2009, the current cost of Exxon Mobil's inventory was an incredible $17.1 bil higher than, or triple, the recorded inventory in its financial statements, much of which was based on oil prices of decades ago. I think the FASB should get its act together and ban unrealistic LIFO Inventory. Pretty much the rest of the world has.

Both of these Big Oil companies are getting massive US tax breaks from tax loopholes like from LIFO Inventory, from Percentage Depletion, and from expensing Intangible Drilling Costs. And other Big Oil companies benefiting from these tax loopholes include foreign-owned companies BP and Royal Dutch Shell, both of which generate a significant portion of their revenues and earnings in the US.....BP generated $84 bil, or 35% of its worldwide revenues, in the US in 2009. I would eliminate these tax breaks for the entire oil industry, for all oil and oil-related companies over a certain size, and scale it in over say a ten-year period. Also, I don't think the oil industry has any business receiving the very lucrative Domestic Production Activity Deduction and I would eliminate its eligibility for all of the oil related industry.

With its severe cost pressure placed on US businesses and US individuals, Big Oil was a major contributor to the lost decade of the 2000s. Thus, I think it is only fair for Big Oil, and for the entire oil related industry for that matter, to now step up to the plate and do its part and pay for some of the tab of these US job-creating Research Tax Credits proposals that could help turn the Bush/Cheney driven 2000s lost decade into an Obama/Biden driven 2010s recovery-from-a-deep-economic-crater decade.

My hunch here is with all of the above substantial funding, there should also be a lot of money left over to reduce the massive US deficit.

And frankly, I think a fair CBO scoring here could well permit my Research Tax Credit proposal for the year 2012 to be made permanent for all subsequent years. Now that would be what I call Increased Business Certainty, the ideal business environment to jump-start job creation.

And further, I think there is enough funding here in the above proposals to also give an additional Research Tax Credit for any US Research that is clearly Green....i.e. whose purpose is to help make the US Energy Independent as quickly as possible. Perhaps call it the Steven Chu Premium Green R&D Tax Credit.

Wednesday, April 7, 2010

Job Creation Funding #3 Update: Large Corp Deposits on Open IRS Tax Audits

About two months ago, I performed a very quick review of some US large corporation footnotes and from just my very limited review, I found 106 companies that had amounts owed for all open tax audit years in excess of $300 mil each, that in the aggregate totaled $176.8 bil at the most recent year end, which for the majority of these companies was December 31, 2008. This total amount owed for these 106 companies was up 13.4% from the $155.9 bil owed one year earlier. And that 13.4% increase was registered in a year where taxable income of corps was severely hampered by a deep recession.

Projecting that $176.8 bil amount out eleven years using the same 13.4% annual increase of 2008 over 2007, the estimated total tax liability, including accrued interest, at Dec 31, 2019 would be $705 bil.

Now, I am updating and expanding this research. So far, I have found 381 companies that had amounts owed for all open tax audit years of at least $100 mil each, that in the aggregate totaled $269.2 bil, up a substantial 52% from my two month ago estimate. Included in these 381 companies are a handful of foreign companies, with significant US operations.

Most large foreign corps apply International GAAP rather than US FASB GAAP. Thus most foreign corps do not disclose their estimated tax audit exposure amount. I did find two large foreign corps (AstraZeneca and Sanofi-Aventis), which follow International GAAP, but which still disclosed their tax audit exposure amounts. These two foreign corps had $2.9 bil of tax reserves each. Sales to US customers in 2009 was 31% for AstraZeneca and 32% for Sanofi-Aventis.

Projecting that $269.2 bil amount out ten years using the same 13.4% annual increase, the estimated total tax liability, including accrued interest, at Dec 31, 2019, would be an incredibly high $947 bil.

Thus, by using the updated numbers, my best guess is that my 20% tax deposit scheme increases the positive ten-year CBO scoring from the previous range of $120 bil to $140 bil to now a much higher range of $160 bil to $180 bil. And over the second ten-year period, the positive CBO scoring balloons to a range of $403 bil to $453 bil.

My 50% tax deposit scheme increases the positive first ten-year CBO scoring from the previous range of $300 bil to $350 bil to now a much higher range of $400 bil to $450 bil. And over the second ten-year CBO scoring period, the positive CBO scoring goes off the charts to a range of $1.01 trillion to $1.13 trillion....the power of compounding a fairly high annual growth rate over many years.

With these huge potential “pay for” amounts, the US government has a great opportunity to implement some really broad, critically-needed, long-term, private sector Jobs Creation Legislation. And given how large the potential "pay-fors" are here, perhaps even this funding could also be used to solve the Doc Fix on Medicare Fees. And perhaps it might be a lot easier to pass substantial job creation legislation if it is paired with the very popular Medicare Doc Fix.

Let me now focus on why I think the above gigantic $947 bil tax reserve projection in ten years is even substantially understated.

First, the interest growth will be much more pronounced over the next ten years than it has been in the past. The present extremely low interest rates will not continue.

Second, there will be hundreds of companies, which presently have tax reserves below $100 mil, but with these tax reserves growing to above that threshold in the next ten years.

Third, these are just the 381 companies that I found in my quick review. There are many more that I didn’t find.

And fourth, there are thousands of large foreign companies excluded from my tax reserve list, even though they have significant operating activities in the US. Let me explain this in depth.

When I review just the top 50 worldwide profit generators in 2008, the most recent annual rankings by Fortune, only 15 are US corps. Thus, only 15 of these giant corps are included on my US tax reserve list, even though many of the other 35 will be paying much to the US government upon future tax audits.

The highest global earner is Exxon Mobil, with after tax earnings of $45.2 bil. The top six on the top 50 list are all oil companies, and there are many other global oil companies in the top 50. Chevron, another US oil corp, is fourth on the list.

Third on the top 50 list is Royal Dutch Shell, with after tax earnings of $26.3 bil. It makes 22% of its sales to US customers.

Fifth on the top 50 list is BP, with earnings of $21.2 bil. It makes 35% of its sales to US customers.

Neither Shell nor BP are on my tax reserve list of 381 companies.

Other foreign corps on this top 50 earnings list, but not on my list of 381 companies with tax reserves of at least $100 mil are:

• Nestle, with 2008 earnings of $16.7 bil, and with 2009 sales to US customers of 29%
• ArcelorMittal, with earnings of $9.4 bil, and with 2009 sales to US customers of 15%
• Siemens, with earnings of $8.6 bil, and with 2009 sales to US customers of 20%
• GlaxoSmithKline, with earnings of $8.3 bil, and with 2009 sales to US customers of 39% (Also, in 2006, Glaxo paid the US government upon tax audit $3.4 bil to settle a transfer pricing dispute)
• Roche Group, with earnings of $8.3 bil, and with 2009 sales to US customers of 35%
• Novartis, with earnings of $8.2 bil, and with 2009 sales to US customers of 32%
• Barclay’s, with earnings of $8.0 bil, and with US revenues comprising 19% of worldwide revenues
• Unilever, with earnings of $7.4 bil, and with 2009 sales to US customers of 16%
• Volkswagen, with earnings of $7.0 bil, and with 2009 sales to US customers of 11%

Further, there are thousands of huge foreign companies that aren’t in the top 50 global profit list, with very significant US operations, but not on my tax reserve list of 381 companies. Let me just point out two of the numerous such foreign financial institutions.

UBS generated $9 bil of pretax operating profit in the US in 2009, which represented 41% of its worldwide pretax operating profit. And ING generated 15.2 bil of Euros pretax operating income in North America in 2009, which comprised 32% of its worldwide profit. In 2008, ING generated a much higher similar profit in Euros in North America of 25.0 bil, which was 40% of its worldwide 2008 profit.

And here’s just a few of the non-financial global giants not on the top 50 profit list:

• Nintendo, with sales to the Americas of 43%
• Takeda Pharmaceuticals, with sales to US customers of 37%
• Cadbury, with sales to the Americas of 30%, and operating profit to the Americas of 54%
• Alcatel-Lucent, with sales to the Americas of 29%
• British American Tobacco, with sales to the Americas of 22%, and operating profit to the Americas of 27%
• Daimler, with sales to US customers of 21%
• Samsung Electronics, with sales to the Americas of 19%
• Hyundai, with sales to the US of 12%

Thus, my best hunch on what that above $947 bil projected number should be….I’ll stick my neck out and say…..more than $1.5 trillion.

Anyway, here is a listing of the 381 companies, whose income tax footnotes I reviewed, that had estimated tax liabilities, including accrued interest, of at least $100 mil each, for a total of $269.2 bil, owing to all taxing authorities for all open tax audit years at their most recent balance sheet date.

1 Pfizer************************** $9,557 mil
2 JP Morgan Chase**************** $9,008 mil
3 GE***************************** $8,719 mil
4 ATT**************************** $7,523 mil
5 Bank of America***************** $6,353 mil
6 Microsoft*********************** $5,957 mil
7 General Motors****************** $5,822 mil
8 Merck************************** $5,741 mil
9 Wells Fargo********************* $5,692 mil
10 AIG*************************** $5,678 mil
11 Exxon Mobil******************** $5,496 mil
12 IBM*************************** $5,269 mil
13 Morgan Stanley***************** $4,419 mil
14 Entergy************************ $4,098 mil
15 Verizon************************ $3,952 mil
16 Citigroup*********************** $3,449 mil
17 Chevron*********************** $3,427 mil
18 Cisco Systems****************** $3,145 mil
19 Tyco Electronics**************** $2,909 mil
20 AstraZeneca******************** $2,892 mil
21 Sony*************************** $2,884 mil
22 Sanofi-Aventis****************** $2,880 mil
23 Proctor and Gamble************* $2,739 mil
24 JNJ*************************** $2,712 mil
25 Oracle************************* $2,692 mil
26 Dell**************************** $2,300 mil
27 Time Warner******************** $2,226 mil
28 PepsiCo************************ $2,192 mil
29 Abbott Labs******************** $2,172 mil
30 News Corp********************* $2,125 mil
31 Goldman Sachs***************** $2,119 mil
32 Boeing************************ $2,072 mil
33 Hewlett Packard**************** $2,003 mil
34 Energy Future Holdings********* $1,999 mil
35 Covidien********************** $1,844 mil
36 Comcast*********************** $1,704 mil
37 Exelon************************ $1,498 mil
38 ConocoPhillips***************** $1,374 mil
39 Swiss Reinsurance Group******** $1,373 mil
40 Honda Motor****************** $1,365 mil
41 American Express************** $1,363 mil
42 Boston Scientific*************** $1,337 mil
43 Google************************ $1,288 mil
44 Amgen************************ $1,265 mil
45 Apple************************* $1,262 mil
46 Walmart*********************** $1,250 mil
47 Accenture********************* $1,243 mil
48 Starwood Hotel & Resort********* $1,232 mil
49 Ford Motor********************* $1,211 mil
50 Eli Lilly************************ $1,205 mil
51 Credit Suisse******************* $1,194 mil
52 Schlumberger****************** $1,194 mil
53 Public Service Enterprise******** $1,190 mil
54 Johnson Controls*************** $1,117 mil
55 Edison Intl********************* $1,044 mil
56 Kraft************************** $1,039 mil
57 Bristol Myers Squibb*********** $1,022 mil
58 Agilent Technologies************ $971 mil
59 Metlife************************ $971 mil
60 Cardinal Health**************** $958 mil
61 Fannie Mae******************** $952 mil
62 United Technologies************ $935 mil
63 Caterpillar********************* $931 mil
64 Ebay************************** $930 mil
65 Altria Group******************* $928 mil
66 Berkshire Hathaway************ $926 mil
67 Yahoo************************ $908 mil
68 ABB************************** $888 mil
69 Honeywell******************** $870 mil
70 Dupont*********************** $864 mil
71 Disney************************ $828 mil
72 Freddie Mac******************* $805 mil
73 Home Depot******************* $797 mil
74 Mitsubishi UFJ Fincl Group****** $793 mil
75 Illinois Tool Works************* $770 mil
76 Symantec********************* $770 mil
77 Teva Pharmaceuticals********** $726 mil
78 Dow Chemical***************** $718 mil
79 Sara Lee********************** $713 mil
80 Pitney Bowes****************** $702 mil
81 AXA Fincl Group*************** $700 mil
82 Kroger************************ $694 mil
83 PG&E Corp******************** $684 mil
84 3M*************************** $671 mil
85 Duke Energy******************* $664 mil
86 NRG Energy******************* $660 mil
87 Transocean******************** $660 mil
88 Rovi************************** $658 mil
89 Vale************************** $657 mil
90 General Mills****************** $642 mil
91 HCA************************** $641 mil
92 McKesson********************* $627 mil
93 Avis Budget******************** $622 mil
94 Ingersoll-Rand***************** $605 mil
95 DIRECTV Group**************** $599 mil
96 Raytheon********************** $592 mil
97 Kimberly Clark***************** $588 mil
98 Valero Energy****************** $584 mil
99 Target************************* $579 mil
100 Southern Calif Edison********** $561 mil
101 Computer Sciences************ $552 mil
102 Medtronic******************** $545 mil
103 Fortune Brands**************** $543 mil
104 Dr Pepper Snapple Group******* $534 mil
105 Western Union**************** $523 mil
106 Monsanto********************* $513 mil
107 AES************************** $511 mil
108 McDonalds******************** $511 mil
109 Motorola********************** $506 mil
110 Baxter Intl********************* $499 mil
111 CNH Global******************** $493 mil
112 US Bancorp******************** $493 mil
113 First Data********************** $485 mil
114 Toyota Motor****************** $476 mil
115 Celgene************************ $463 mil
116 IAC/Interactive**************** $463 mil
117 Visa*************************** $461 mil
118 Capital One Financial************ $460 mil
119 Praxair************************ $449 mil
120 Coca Cola********************** $448 mil
121 Danaher*********************** $439 mil
122 Liberty Global****************** $436 mil
123 Federal-Mogul***************** $432 mil
124 Northrop Grumman************ $429 mil
125 State Street Corp*************** $424 mil
126 Lincoln National*************** $422 mil
127 PNC Fincl Svcs***************** $421 mil
128 Best Buy********************** $419 mil
129 Harrah's Entertainment********* $416 mil
130 Bank of NY Mellon************* $415 mil
131 Broadcom********************* $413 mil
132 Textron*********************** $408 mil
133 Pulte Homes******************* $407 mil
134 Cadence Design Systems********* $405 mil
135 Intl Paper********************** $403 mil
136 SAP*************************** $394 mil
137 Sears************************** $381 mil
138 MeadWestvaco***************** $380 mil
139 Viacom************************ $378 mil
140 Applied Materials************** $371 mil
141 BearingPoint******************* $364 mil
142 United Parcel Service*********** $360 mil
143 NCR*************************** $356 mil
144 Stryker************************ $352 mil
145 TD Ameritrade***************** $350 mil
146 Adecco************************ $348 mil
147 Discover Fincl Svcs************* $345 mil
148 GMAC************************* $342 mil
149 Yum Brands******************** $342 mil
150 Flextronics********************* $340 mil
151 Baker Hughes******************* $339 mil
152 Century Tel******************** $337 mil
153 Constellation Energy*********** $336 mil
154 Republic Services************** $336 mil
155 Electronic Arts**************** $334 mil
156 Tyco International************* $334 mil
157 Black Rock******************** $333 mil
158 Sprint Nextel****************** $333 mil
159 Carefusion********************* $330 mil
160 Estee Lauder****************** $327 mil
161 Prudential Financial************ $326 mil
162 Rite Aid*********************** $326 mil
163 Eastman Kodak**************** $325 mil
164 Dover************************* $324 mil
165 Nike************************** $324 mil
166 Pall Corp********************** $316 mil
167 El Paso************************ $312 mil
168 Computer Associates*********** $311 mil
169 CC Media Holdings************* $308 mil
170 Deere & Co******************** $307 mil
171 Tyson Foods******************* $304 mil
172 CBS*************************** $298 mil
173 Genworth Financial************* $296 mil
174 Black & Decker***************** $292 mil
175 Halliburton******************** $292 mil
176 Qwest Communications********* $292 mil
177 Altera************************ $291 mil
178 Dominion Resources************ $291 mil
179 Marriott*********************** $291 mil
180 Amerada Hess****************** $288 mil
181 Freeport-McMoRan Copper****** $287 mil
182 Goodrich*********************** $287 mil
183 Macy's************************* $285 mil
184 Staples************************* $283 mil
185 FPL Group********************* $279 mil
186 Garmin************************ $276 mil
187 Graham Packaging************** $276 mil
188 Intel*************************** $275 mil
189 HSBC Finance******************* $274 mil
190 Devon Energy****************** $272 mil
191 Mylan Labs******************** $269 mil
192 Gannett*********************** $266 mil
193 Forest Labs******************** $265 mil
194 United Health Group*********** $264 mil
195 Pepco Holdings**************** $259 mil
196 Dish Network Corp************* $256 mil
197 American Electric Power******** $255 mil
198 Reinsurance Group America***** $255 mil
199 Celanese*********************** $253 mil
200 Fluor************************** $249 mil
201 PPL**************************** $248 mil
202 Mattel************************* $245 mil
203 TJX**************************** $243 mil
204 L-3 Communications************* $242 mil
205 Chesapeake Energy************** $241 mil
206 Eaton************************** $240 mil
207 Mosaic************************* $240 mil
208 Liberty Capital Group*********** $238 mil
209 Liberty Media****************** $238 mil
210 Marsh & McLennan************** $238 mil
211 Adobe************************** $235 mil
212 Atmel************************** $230 mil
213 Sysco************************** $230 mil
214 R R Donnelly & Sons************* $228 mil
215 Cigna*************************** $227 mil
216 EMC**************************** $227 mil
217 Domtar************************* $226 mil
218 PMI**************************** $222 mil
219 Atlas Air WW Holdings*********** $220 mil
220 Southern Co******************* $220 mil
221 Omnicom********************** $219 mil
222 Lockheed Martin*************** $217 mil
223 BB&T************************** $215 mil
224 Expedia************************ $215 mil
225 Visteon************************ $215 mil
226 First Energy******************* $212 mil
227 Colgate Palmolive************* $211 mil
228 Toll Bros********************** $211 mil
229 Pinnacle West Capital********** $209 mil
230 Juniper Networks************** $208 mil
231 LSI*************************** $206 mil
232 Avery Dennison**************** $205 mil
233 Advanced Micro Devices******* $201 mil
234 TRW Automotive Holdings***** $201 mil
235 Sun Trust Banks*************** $200 mil
236 Amazon.com****************** $198 mil
237 Lam Research***************** $197 mil
238 Progress Energy************** $196 mil
239 Air Products & Chemicals****** $195 mil
240 ITT************************** $194 mil
241 Office Depot******************* $194 mil
242 ST Microelectronic************ $193 mil
243 Emerson Electric************* $192 mil
244 Moodys********************** $192 mil
245 Newell Rubbermaid*********** $192 mil
246 Weyerhaeuser***************** $192 mil
247 Travelers********************* $191 mil
248 Center Point Energy************ $190 mil
249 Burlington Northern Sante Fe**** $189 mil
250 Whirlpool********************* $189 mil
251 Owens Corning***************** $186 mil
252 MGM Mirage******************* $185 mil
253 Supervalu********************** $181 mil
254 Autodesk********************** $180 mil
255 Biogen Idec******************** $180 mil
256 San Disk*********************** $180 mil
257 Zimmer Holdings************** $179 mil
258 Levi Strauss******************* $178 mil
259 Ace Limited******************** $175 mil
260 Brocade Communication Sys***** $175 mil
261 Sun Microsystems*************** $172 mil
262 Canon************************* $170 mil
263 Cleco************************** $170 mil
264 Lowe's************************* $169 mil
265 H&R Block********************* $167 mil
266 JC Penney********************* $167 mil
267 Terex************************* $167 mil
268 Unum Group******************* $167 mil
269 MasterCard******************** $165 mil
270 Williams Cos****************** $165 mil
271 Coach************************* $164 mil
272 Limited Brands**************** $164 mil
273 Ashland*********************** $163 mil
274 National Semiconductor******** $162 mil
275 Kellogg*********************** $161 mil
276 Xerox************************* $161 mil
277 Maxim Integrated Products***** $159 mil
278 Northeast Utilities************** $159 mil
279 Genentech********************* $158 mil
280 Imperial Oil******************** $158 mil
281 Tata Communications*********** $158 mil
282 Checkpoint Software************ $157 mil
283 Flowserve********************** $156 mil
284 Polo Ralph Lauren************** $155 mil
285 Solutia************************* $155 mil
286 Constellation Brands************ $154 mil
287 Mohawk Industries************** $154 mil
288 Navistar Intl******************** $153 mil
289 Safeway************************ $153 mil
290 Gap*************************** $152 mil
291 Bunge, Ltd********************* $151 mil
292 Interpublic Group************** $151 mil
293 Owens Illinois****************** $151 mil
294 St Jude Medical**************** $149 mil
295 Wynn Resorts****************** $148 mil
296 Activision Blizzard************* $147 mil
297 Apache*********************** $147 mil
298 Dun & Bradstreet*************** $147 mil
299 Reynolds American************ $147 mil
300 Toys R Us********************* $146 mil
301 W R Grace********************* $146 mil
302 Walgreen's********************* $146 mil
303 Nucor************************* $144 mil
304 Rockwell Automation*********** $144 mil
305 Wellpoint********************** $144 mil
306 Ameren************************ $143 mil
307 Newmont Mining**************** $143 mil
308 SPX**************************** $143 mil
309 Parker Hannifin***************** $142 mil
310 Research in Motion************* $142 mil
311 BMC Software****************** $141 mil
312 Avon Products***************** $139 mil
313 Dole Food********************** $138 mil
314 Avnet************************* $136 mil
315 Coventry Health Care*********** $136 mil
316 Western Digital***************** $136 mil
317 Teleflex*********************** $135 mil
318 Infosys Technologies*********** $134 mil
319 Seagate Technology************ $134 mil
320 Marvell Technology************ $133 mil
321 Quest Diagnostics************** $133 mil
322 Life Technologies************** $132 mil
323 WIPRO*********************** $132 mil
324 Allegheny Energy************** $131 mil
325 Ecolab*********************** $129 mil
326 Goodyear Tire & Rubber******* $129 mil
327 Armstrong World Industries*** $128 mil
328 Monster Worldwide*********** $126 mil
329 Magellan Health Services****** $125 mil
330 Automatic Data Processing**** $122 mil
331 ArvinMeritor***************** $121 mil
332 Nvidia*********************** $121 mil
333 PPG Industries*************** $121 mil
334 Loral Space & Commun******** $120 mil
335 Xilinx*********************** $120 mil
336 Anheuser-Busch************** $119 mil
337 Peabody Energy************** $119 mil
338 Ricoh************************ $119 mil
339 Mizuho Financial Group******* $118 mil
340 NISource******************** $118 mil
341 Northern Trust*************** $117 mil
342 Hasbro********************** $116 mil
343 Noble Corp******************* $116 mil
344 Bed Bath & Beyond************ $115 mil
345 Calpine*********************** $115 mil
346 Canadian Pacific Railway******* $115 mil
347 Clorox************************ $115 mil
348 Intl Game Technology********** $114 mil
349 Kohl's************************** $114 mil
350 Kyocera************************ $114 mil
351 Cintas************************** $111 mil
352 Lennar************************* $111 mil
353 Medco Health Solutions********** $111 mil
354 SLM**************************** $111 mil
355 Heinz*************************** $110 mil
356 NetApp************************* $110 mil
357 Temple-Inland****************** $110 mil
358 US Steel*********************** $110 mil
359 Logitech*********************** $109 mil
360 McAfee************************ $109 mil
361 New Page Holdings************* $109 mil
362 Rohm & Haas****************** $109 mil
363 Apollo Group****************** $108 mil
364 Alliant Energy***************** $107 mil
365 Gilead Sciences*************** $107 mil
366 Nabors Industries************* $107 mil
367 Rockwell Collins*************** $107 mil
368 Norfolk Southern************** $106 mil
369 YRC Worldwide*************** $106 mil
370 Harley Davidson*************** $105 mil
371 ABM Industries**************** $103 mil
372 Amdox Limited**************** $103 mil
373 American Tower*************** $103 mil
374 Delphi************************* $103 mil
375 Tenneco*********************** $103 mil
376 Iron Mountain***************** $101 mil
377 Aon*************************** $100 mil
378 Costco************************* $100 mil
379 NII Holdings******************** $100 mil
380 ProLogis*********************** $100 mil
381 Sempra Energy***************** $100 mil
Total************************** $269,192 mil