“The strategy has always been to use bond offerings to bolster its domestic cash position, allowing it to keep the majority of its money mountain abroad and avoid repatriation taxes,” Niu reports. “In that short amount of time, the Mac maker has since accumulated approximately $80 billion in debt, which is greater than the market caps of many companies.”
“At the end of last quarter, Apple had $72.4 billion in total long-term debt (including current and non-current). It then sold $7 billion worth of paper at the end of July, bringing the total to nearly $80 billion. Note that this total does not include commercial paper, which Apple started selling in 2014. Apple currently has $12.5 billion of commercial paper outstanding in addition to long-term debt,” Niu reports. “The debt strategy has been quite successful thus far. Apple has been able to fund its highly accretive share repurchase program without needing to bring foreign cash home, of which there was $215 billion at the end of last quarter. Meanwhile, the interest and dividend income from Apple’s broader investment portfolio actually covers the interest payments and more than services the debt, so there is no net cost to Apple.”
Read more in the full article here.
MacDailyNews Take: As we’ve been saying for the past three years: Free money.
Hopefully, the next U.S. administration can work with Congress to fix the broken U.S. corporate tax “system,” so that Apple (and other multinationals) can repatriate a significant amount of their offshore mountain of cash.