Apple plans another massive debt sale to fuel new share repurchases, dividends

“A year after it pulled off a then-corporate record $17 billion bond sale, Apple Inc.’s plans to raise a ‘similar’ sum this year highlight strong investor demand for debt issued by highly rated companies,” Mike Cherney reports for The Wall Street Journal. “Details haven’t been set, but a sale would match the investor thirst for income-generating investments with the corporate appetite for low-cost cash as companies seek to reward shareholders.”

“Apple expects to sell debt in the U.S. and abroad and use any proceeds to fund the company’s share repurchases and dividends, Luca Maestri, vice president and corporate controller, said on Apple’s earnings call on Wednesday,” Cherney reports. “Apple on Wednesday added $30 billion to its stock-buyback plan, and now aims to return more than $130 billion to shareholders by the end of 2015. It also raised its dividend about 8%. Chief Executive Tim Cook said the company expanded the buyback program because management doesn’t believe the full value of the company is reflected in the stock price.”

“Apple issued 10-year debt, maturing in 2023, to yield 0.75 percentage point more than comparable Treasurys, at a time when the 10-year Treasury note was around 1.6%. The 10-year note on Thursday yielded 2.69%,” Cherney reports. “Apple’s 2023 bonds traded recently at 0.66 percentage point more than Treasurys.”

Read more in the full article here.

MacDailyNews Take: Debt is cheaper than repatriation.

U.S. corporate taxes are obviously too high.

Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital… Apple has always believed in the simple, not the complex. You can see it in our products and the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S. We make this recommendation with our eyes wide open, realizing this would likely increase Apple’s U.S. taxes. But we strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth.Apple CEO Tim Cook, May 21, 2013

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Apple announces 7-for-1 stock split; boosts dividend, ups buybacks to $90 billion – April 23, 2014
Apple goes big on debt – and gets it right – May 3, 2013
Apple avoids potential $9 billion U.S. tax bill – May 2, 2013
Debt-free Apple to take on debt to avoid huge U.S. repatriation tax hit – April 26, 2013
Apple’s massive $100 billion capital return program is a perfect tax arbitrage – April 26, 2013
Apple to tap a hungry debt market; strong demand likely from investors eager to get cash off sidelines – April 25, 2013
Debt-free Apple plans to borrow to finance massive capital-return program – April 23, 2013
Apple beats Street on EPS and revenue; ups quarterly dividend by 15%; ups buybacks to $60 billion – April 23, 2013
Apple paid $6 billion in U.S. federal income taxes, 1/40th of all corporate income taxes collected by U.S. government in 2012 – January 5, 2013
Google, Apple, eBay shouldn’t pay taxes – people should pay taxes – November 25, 2012
So how much did Apple really pay in taxes? – November 1, 2012
Apple’s showdown with the U.S. government over taxes on offshore cash – July 13, 2012
Apple‘s $74 billion tops list of U.S. tech companies’ overseas cash – July 9, 2012
Apple’s dividend move puts spotlight on foreign cash holdings, repatriation tax reform – March 20, 2012
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Apple lobbies Obama for tax holiday, wants to bring overseas bounty home – August 24, 2011
U.S Senate Democrat Schumer allies with Apple, other multinationals on repatriation tax talks – June 21, 2011
U.S. companies push for tax break on foreign cash – June 20, 2011
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42 Comments

  1. I was certain that Apple was being victimized by Wall Street because of their excessive cash and no need for Wall Street bankers. But even as Apple take on debt to fulfill it’s obligation to shareholders, they are still not very well liked by Wall Street. It’s amazing that in a country that leads the world in innovation, would take Samsung over Apple.

    1. This country settled for a proven neophyte four-year failure, Mr. Perpetual Recession/What’s My Tee Time?, over a guy who has repeatedly proven that he can create jobs and turn around floundering enterprises, so I don’t know why you’re amazed.

      1. Yes, the country settled for a failure thanks to decades of beign dumbed down viapublic “education.” All it takes is the calorically gifted Candy Crowley to save an empty suit from himself when challenged live without a teleprompter, a complicit media made up of dullards in lockstep promoting failure, and tens of thousands of dead voters and voters registered in multiple states.

      2. George W Bush stole $15.6 Trillion from American taxpayers and gave it to Halliburton causing the worst World Wide financial Depression since 1939, meanwhile deliberately allowing 9/11, murdering 3000 innocent people, authorizing torture and starting two illegal wars, murdering 100.000 innocent people.

  2. Just imagine what would happen if there were no taxes at all on foreign earned income by US Corporations including if they distributed that income to shareholders on a tax free bases, used that income for capital expenses, or even paid US employees tax free.

    Let me say that a different way: What if Apple could give their foreign profits to shareholders and neither Apple or the shareholders needed to pay taxes on that money. What if Apple could use its foreign profits to build factories inside the United States tax free? What if a portion of Apple employee’s pay, possibly even lower paid retail employees, was free from personal income tax?

    1. And what if unicorns just shat out the funds needed to run this country?

      The U.S. Government needs to balance the budget and pay for the services rendered. In my opinion, the problem is that both political parties have doled out largesse for decades and borrowed rather than making U.S. citizens face the pain of actually paying for ongoing operations. If we want to cut excessive spending, then people need to feel the pain of that spending by actually paying for it.

      And I said *both* parties – spending on entitlements, defense, uncovered tax cuts, a wide variety of Congressional pork, etc. No one can point the finger of blame without another being pointed back. So stop supporting the political extremists on either end of the spectrum and start working together on real, reasonable, viable solutions.

      1. Let’s first cut spending by eliminating government waste by holding government employees responsible in their paychecks for such waste.

        Let’s eliminate an entire level of unneeded government – you live under a city OR county government but not both.

        For “needed” government services let’s go to a “user fee” system. You want old age insurance, pay social security tax. You want health care from the government, pay a health tax.

        Apple and EVERY OTHER company DON’T pay taxes, PEOPLE pay taxes: Apple’s customers, employees and shareholders pay taxes. Those who want companies to pay THEIR taxes are liars and cheaters and want something for free. I want the bill for the cost of government to go as directly to the citizens as possible.

        Last thing, the government is a poor vehicle for “income redistribution”.

          1. I want to buy my own insurance. I sure as hell don’t want the government to coerce me to buy a government designed plan that sucks and costs an arm and a leg. I want to buy products I choose from private companies who are not tyrannical like the Federal government.

            1. and you would by Shameslung insurance, letting us get flac because we pay for your sorry ass when the failure occurs?

              you know who you are, cheapskate…….

            2. You are the moron who thinks ObamaCare is good. The program that can only be sold by “force” by an entity that is $17 trillion in debt, which was sold to the public based on lies which if used in the private sector would result in the CEO being jailed. That would be fitting for Obama, Reid and Pelosi who committed blatant fraud in selling this turd as a good thing. You should join them in the cell for voting for these shitheads.

            3. Romney is just as much for socialized medicine.. The fact that Obama was at least honest about it is why I voted for him.

              Romney strongly supported practically THE SAME system as “ObamaCare” in his home state.

            4. Obviously facts don’t penetrate your being. Obama sold ObamaCare based totally on lies so he was not “honest”. He said you could keep your doctor (you can’t), you will save $2500 per year (it costs far more), you can keep your plan (millions have had their plans cancelled). Now he only enforces the elements of the “law” he wants to and makes up whatever statistics he needs to. The system is pure corruption. Obama may be less honest than Bill Clinton if that is possible.

            5. I love my roads,
              i love my schools
              i love my firefigters,
              i love my police
              i love my way of life with all the GOVE’MENT stuff,

              don’t you?

              go away and let us do our jobs

              ignorant tea bagger, nothing else

            6. “not sure i should be doing this…” All I’m saying is you should pay for it directly.

              And quite frankly, I doubt very seriously that you would “love my schools” if you really understood what is going on in you local public school. You might be lucky, and your school might be the extreme exception, but I doubt it.

            7. Based on your reference I will assume you spend your spare time sucking on the balls of some hairy guy with tattoos and nose rings. You should learn to be a bit more refined. Less anal sex would be a good start.

            8. My neice (in the USA) got a debilitating illness from a tick bite while under her parent’s insurance policy. Now that she is of an age that she must get her own insurance, she has a “pre-existing condition” that makes insurance unaffordable. Obamacare has helped her.

              When we were younger, my wife and I had to plan pregnancies around my 2-year employment contracts as pregnancy was also considered a pre-existing condition.

              For the last 20 years we have lived in Australia. The public health care system here has been nothing but wonderful to us. Our income level requires us to pay a premium, which helps out those people on lower incomes who don’t pay the premium. We can now afford it, so it is a burden we are happy to bear.

              I can understand your position, but if your children are bitten by ticks, you may want to reconsider.

            9. I don’t really give a crap about your situation. Government mandated insurance – Obamacare – is immoral and destroys the health insurance and health care industry. If you want insurance you get it before you have a problem . That is what insurance is. No true insurance covers “pre-existing conditions” – that would not be insurance. If it was, everyone can wait till they get a disease and then buy government mandated insurance. The premiums are ending up way higher along with the deductibles and Obama promised everyone would save $2500 per year. Also he promised you could keep your plan. All lies.

          2. “Me” how in the world did you get from this statement:

            ” You want health care from the government, pay a health tax.”

            to this:

            “so you don’t give a shit to pay health insurance and you get sick?”

            Have you lost your mind?

            and for the record: I’ve been paying or my employer has been paying health insurance for me each and every month for more then 40 years and a health insurance claim has NEVER been filed on my behalf. AND, I’ve never ingested a prescription drug in my adult life. How about that?

    2. Just to clarify – I am a strong supporter of tax reform. Some methods of taxation are better than others for stimulating business development, job creation, etc. But any new tax strategy will have to be realistic in terms of collecting sufficient revenue to cover spending.

  3. It makes me a bit nervous that Apple are taking on more debt especially when its US cash level will be down to $18B. I guess if they really need cash they can repatriate some from outside the US and take the tax hit.
    I understand that borrowing at low rates and reducing the outstanding shares will save money since they will be paying less money out in dividends. What makes me nervous is that the debt will persist for several years and Apple will be liable for that.

    1. Ah hess but all of the debt is a write off on Apples taxes – Remember that the cash on hand is after expenses including taxes. This debt is added to expenses and translates into lower taxes for Apple.

      And since Apple pays taxes annually in the billion range – believe it or not the cash impact of the debt service on Apple is actually quite low.

      1. and they are actually the higest tax payer in the US
        GO AAPL!!!
        fund our wars and whatever you call the violence we spew across the planet, given the warmonger sentiment of the right

        no wonder they keep their funds offshore, they know they will need an island to protect themselves from the US, given our propensity to shoot ourselves in the (albeit less than one percent) foot

        1. Obama seem quote a warmonger. He has started wars in Libya, Egypt, Syria, Israel and Nevada. Being a radical Muslim guy he has a lot of work to stamp out Christianity and freedom.

  4. Democrats always like high taxes. Democrat tax policy is why Apple cannot access its huge overseas assets. Democrats want Apple to give the government $35 billion of $100 billion that would be brought into the US. Of course this money was already taxed in the countries where it was made by their tax laws. But Democrats love to take money from smart innovative companies that would use it wisely so the Federal Government can have the money and use it for things like Wind Turbine bald eagle killing subsidies, or ethanol subsidies to corporate agribusiness cronies, or bonuses for IRS workers who don’t pay their taxes but do harass conservatives. That is a favorite of Democrats.

    There is a lot of salivating in Washington among the Harry Reid/Nancy Pelosi/Dianne Feinstein/Barack Obama types about how much damage they could do to the American Free Enterprise system if they could get a hold of Apple’s foreign bank accounts. Lisa Jackson is probably working behind the scenes to steal it. Maybe she will put Jon Corzine on as a consultant. He knows how to steal money and get away with it.

    1. kent, kent, kent, do you even care? do you even KNOW???
      instead the billions of dollars are spent on iraq who did not have the capacity to threaten america, and the small afgan group of renagades called “al-queda’ THAT WE FINANCED DURING THE COLD WAR grew as a result

      go home and do some homework and then, maybe, you will gain some foothold in the slippery slope of talking about this delicate subject

      you seem deaf, dumb and blind as to the cause/effect of american diplomacy of this debacle, as are most of the sleepwalkers

      1. Obama has made Afghanistan a bigger battleground than Iraq. Obama became an imperialist spending millions giving Libya to Islamic Al Queda and letting his ambassador be raped and killed. Obama allowed our ally in Egypt to be overthrown so the Muslim Brotherhood could have Egypt. Now Obama is encouraging tyranny in Ukraine. All the while he is turning our military into an LGBTQTr recruiting enterprise.

        Iraq was an enemy. A coalition of about 30 countries and the UN agreed. National defense is the main purpose of the Federal government.

        Sent from my iPhone

        >

        1. failure in regards to my question about homework, you cite only the point at which obama took over, the fact that bush did his deed and then went on.. and on…

          please look at history beyond your myopic view,

          oh wait, you are myopic and cannot see there, oh well

          1. You seem OK with Obama lying that he would close the Guantano prison, end all the Mid East wars. You seem
            OK with Obama spending billions promoting Islamic tyrannies in that part of the world. You seem OK with his sacrificing four people in
            Libya so he could run an arms dealing operation in Libya to get weapons to Islamic terrorists.

            You are OK with America dictating the outcomes in foreign countries as long as Islamic radicals are served instead of American security interests.

            1. NO, NO, AND AN EMPHATIC NONONO!

              but then again unlike you, i am NOT speaking about one president, i am speaking about uninformed masses who follow the party line without education or challenge, and that is what led to the previous administrations actions, which i am more than willing to count out in more lines than you profess to our present commander in chief

              being of one cloth makes you ignorant of the whole debacle that is america today, please look outside yourself and get a view of the whole world and look back to the root of the pain you see, it will help you feel better. and may make america work together once again

            2. I was not a Bush advocate. I do not want any more Bush’s. The war in Iraq was fine for deposing Hussein who had violated about 15 UN resolutions. It was wrong when it became about turning Iraq into a democracy, which was not our job. We should have left after he was eliminated, as he deserved to be.

              Now, for you, please indicate your disgust with Obama for his treacherous behavior in Libya where he sat and did nothing while four Americans were waiting for his help. Also, his many instances of aiding radical Islamic regimes who hate us. This is the opposite of his job, which is to look after our national security. So, “once more, again,” be a man and tell the world that you are sorry for your votes for Obama and you surely will not vote for Hillary.

          1. You are an idiot. When Colin Powell told the world about WMD that was the best information based on the tactics of Saddam Hussein. All the world intelligence agencies had the same info and in fact the poison gases now being used in Syria are thought to be from
            Iraq. The Democrats all voted for the war, except Obama, who prefers wars where Islamic killers are put in charge.

            1. look at who looks an idiot now…
              one moment of research would have uncovered the truth but “we” belived them, (think, you idiods and most americans and the idiotic international community… and the powerful of the US)
              now look where we are..
              it was fabricated and now we lost the crown of being the good guys due to overreaction
              get used to being a sullen country, it was the bush team that led us here

            2. There was rock solid information – real time- that the Libyan attack was not by a mob angered by a video but was a planned military attack by Islamic extremists. Obama spent a few minutes with Hillary concocting the lie about the video to help his election campaign then he went and played cards with Reggie Love while Christopher Stephens our ambassador was raped and killed and three other good Americans were murdered without a finger lifted by Obama or Hillary to help. Now that was a lie.

              WMD was Saddam Hussein refusing to cooperate with the UN inspectors. So he was attacked. Good riddance.

            3. once again, you are looking forward from a point in time, not willing to include your “team” in the junk,,,,

              both parties are responsible for our loss of standing in the world, i am sure to say, and if you are unwilling to join the chorous of people around the world saying america is blowing it, then keep your eyes on your screen, keep your fingers on the keyboard, and waste your life trying to affect this blog, since you do not belong in true politics, only devisive politics.

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