Apple ramping up for another bond sale, blowing it far past all other funds

That's what Apple does with their "overseas cash".... they buy corporate debt. So no it's not simply parked in some Irish bank as many of us would presume based on the stories we read. Instead it's safely invested right here in the US via Braeburn, an Apple subsidiary, and using accounts in New York banks.

So in a way their foreign cash has already been repatriated, but with strict IRS limits on what Apple (and other big companies who do much the same) can invest in and still avoid paying corporate taxes on the money. Technically it's still considered "overseas" even tho it's really right here and earning money thru investment activity. 

Getting tax credits for the expense of bonds they're selling to enable stock repurchases is gravy. 

Apple is issuing corporate debt that they have to pay back to buyers.

Ozarkcanoer said:

Apple is issuing corporate debt that they have to pay back to buyers.

They're also BUYING debt. The AI article is a bit confusing on that point. 

gatorguy said:

That's what Apple does with their "overseas cash".... they buy corporate debt. So no it's not simply parked in some Irish bank as many of us would presume based on the stories we read. Instead it's safely invested right here in the US via Braeburn, an Apple subsidiary, and using accounts in New York banks.

So in a way their foreign cash has already been repatriated, but with strict IRS limits on what Apple (and other big companies who do much the same) can invest in and still avoid paying corporate taxes on the money. Technically it's still considered "overseas" even tho it's really right here and earning money thru investment activity. 

Getting tax credits for the expense of bonds they're selling to enable stock repurchases is gravy. 

Yes. The various terminology - undistributed or unremitted or held oversees or not repatriated - doesn't mean the capital is necessarily held in a foreign account or in the form of a foreign savings or investment instrument. It means that the foreign subsidiary which, as an accounting matter, made that money has not given it to the parent (domestic) company. Those profits haven't been distributed to the parent company.

The money can still be held in a number of forms, including in securities sold in (or even by) the United States. There are limitations on what can be done with that money. But it can be held as corporate debt (i.e. loaned to other companies) as you suggest. A majority of Apple's cash is in that form. It can also be held as U.S. Treasury securities. As of the end of FY 2016 Apple held more than $40 billion worth of those Treasuries. It also held around $20 billion worth of M/ABS, some U.S. agency debt and some foreign government debt.

I meant to add: The interest income that Apple earns from those various ways of holding cash is taxed in the United States. The interest it pays on its own debt is, in effect, subtracted from that income.

carnegie said:

gatorguy said:

That's what Apple does with their "overseas cash".... they buy corporate debt. So no it's not simply parked in some Irish bank as many of us would presume based on the stories we read. Instead it's safely invested right here in the US via Braeburn, an Apple subsidiary, and using accounts in New York banks.

So in a way their foreign cash has already been repatriated, but with strict IRS limits on what Apple (and other big companies who do much the same) can invest in and still avoid paying corporate taxes on the money. Technically it's still considered "overseas" even tho it's really right here and earning money thru investment activity. 

Getting tax credits for the expense of bonds they're selling to enable stock repurchases is gravy. 

Yes. The various terminology - undistributed or unremitted or held oversees or not repatriated - doesn't mean the capital is necessarily held in a foreign account or in the form of a foreign savings or investment instrument. It means that the foreign subsidiary which, as an accounting matter, made that money has not given it to the parent (domestic) company. Those profits haven't been distributed to the parent company.

The money can still be held in a number of forms, including in securities sold in (or even by) the United States. There are limitations on what can be done with that money. But it can be held as corporate debt (i.e. loaned to other companies) as you suggest. A majority of Apple's cash is in that form. It can also be held as U.S. Treasury securities. As of the end of FY 2016 Apple held more than $40 billion worth of those Treasuries. It also held around $20 billion worth of M/ABS, some U.S. agency debt and some foreign government debt.

I meant to add: The interest income that Apple earns from those various ways of holding cash is taxed in the United States. The interest it pays on its own debt is, in effect, subtracted from that income.

And we are in 100% agreement sir. :)