“Though still certainly a force in the investing world, today’s Apple relies on a more diverse playbook, including share buybacks and dividends to generate returns for its shareholders, rather than relying solely on torrent earnings and profit growth, as it once did,” Andrew Tonner writes for The Motley Fool. “Case in point, Apple has emerged as something of a share buyback and dividend powerhouse since initiating its capital return program in 2012.”
“Thanks to its truly monumental financial resources — $159 billion in net cash and investments as of its most recent quarter — Apple has developed an impressive track record of returning cash to shareholders via buybacks and dividends,” Tonner writes. “As of its most recent quarterly report, Apple has utilized roughly $127 billion of the $175 billion the company has earmarked for stock buybacks. That’s an absolutely incredible about of capital committed to repurchasing Apple’s shares, especially considering the company’s entire market capitalization of $573 billion.”
MacDailyNews Note: As of last month, Apple had $232 billion in cash, with about $214 billion of that being held overseas.
“At a high level, stock buybacks should be thought of as a more tax-efficient way for a company to reward investors than dividends in cases when its shares are undervalued,” Tonner writes. “Companies with low P/E ratios, like Apple, can benefit tremendously from stock buybacks.”
Read more in the full article here.
MacDailyNews Note: Also of note, Apple’s statement on Restricted Stock Units (RSUs) form the company’s Annual Form 10-K:
The fair value as of the respective vesting dates of RSUs was $4.8 billion, $3.4 billion and $3.1 billion for 2015, 2014 and 2013, respectively. The majority of RSUs that vested in 2015, 2014 and 2013 were net-share settled such that the Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld were approximately 14.1 million, 15.6 million and 15.5 million for 2015, 2014 and 2013, respectively, and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price. Total payments for the employees’ tax obligations to taxing authorities were $1.6 billion, $1.2 billion and $1.1 billion in 2015, 2014 and 2013, respectively, and are reflected as a financing activity within the Consolidated Statements of Cash Flows. These net-share settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have otherwise been issued as a result of the vesting and did not represent an expense to the Company.
The Company had 1.2 million stock options outstanding as of September 26, 2015, with a weighted-average exercise price per share of $15.08 and weighted-average remaining contractual term of 4.1 years, substantially all of which are exercisable. The aggregate intrinsic value of the stock options outstanding as of September 26, 2015 was $120 million, which represents the value of the Company’s closing stock price on the last trading day of the period in excess of the weighted-average exercise price multiplied by the number of options outstanding. Total intrinsic value of options at time of exercise was $479 million, $1.5 billion and $1.0 billion for 2015, 2014 and 2013, respectively.