During a conference call discussing its fiscal 2015 second-quarter results, Tim Cook & Co. also announced expanding their already massive capital return program to a whooping $200 billion through March of 2017 to “reflect strong confidence in what lies ahead for Apple.”
A filing with the United States Securities and Exchange Commission posted today on Apple’s Investor website casts more light on the initiative, confirming the company will fund this expansion through a new seven-part bond to raise the funds.
The 7-part bond will be managed by JP Morgan, Bank of America, Merrill Lynch and Goldman Sachs, with maturities ranging from two to thirty years. The rates for the bonds were not disclosed immediately, but will be made public later today.
It’s worth noting that Apple has a stellar credit rating due to its stock price and financial performance, allowing it to sell bonds at a cheap rate.
While it now has nearly $200 billion in bank, most of that cash is being held overseas. If Apple were to tap into its massive cash hoard to fund such a large-scale capital expenditure program, it would first have to repatriate foreign funds and then pay high corporate tax to Uncle Sam on its international cash.
That’s why they’re financing the capital return program expansion by selling domestic company debt rather than repatriating the cash held overseas, simply because it’s cheaper that way.
As part of the revised program, the Apple Board has increased its share repurchase authorization to $140 billion from the $90 billion level announced last year.
In addition, the Board has approved an increase of eleven percent to Apple’s quarterly dividend, and has declared a dividend of $.52 per share, payable on May 14, 2015 to shareholders of record as of the close of business on May 11, 2015.
From the inception of its capital return program in August 2012 through March 2015, the company has returned over $112 billion to shareholders, including $80 billion in share repurchases.