The problem with Apple’s “cash pile” is that most of it is not actually “cash” nor “on hand,” and it doesn’t take into account Apple’s debt. Apple has about $16.7 billion in cash and equivalents on its balance sheet. The majority of the assets included in its reserve is stashed in long-term marketable securities, meaning Apple plans to let those funds — roughly $177.7 billion — accrue interest for more than a year.
More importantly, almost all of Apple’s cash and securities are stashed overseas, proceeds from sales outside the United States that Apple will not bring back because it would then have to pay U.S. taxes. Maestri said Tuesday that $200 billion of Apple’s reserves — a whopping 93% — are overseas, and Cook has expressly said Apple does not plan to sacrifice roughly 40% of that stash in order to bring the proceeds home to Cupertino, Calif.
While cash and securities pile up overseas, Apple is piling up debt in the United States.
The company currently sits on about $53.2 billion in long-term debt obligations as well as $32.2 billion in “non-current liabilities,” after executing a series of bond sales including the largest in history for a nonfinancial U.S. business.
And those debts don’t include the cash Apple has promised its shareholders, which are mostly financed by its bond sales. After spending more than $8.8 billion on stock repurchases and dividends in the fourth quarter of 2015, Apple is a little more than three-quarters of the way through a $200 billion capital-return program that it believes will set a corporate record for stock buybacks. There is another $47 billion promised to shareholders.
The promise to investors is why Maestri said more debt is likely.
“We also plan to be very active in the U.S. and international debt markets in 2016 in order to fund our capital return activities,” the financial chief said in Tuesday’s conference call.
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