Boston, MA 05/06/2013 (wallstreetpr) – Apple Inc. (NASDAQ:AAPL) (Closed: $449.98, Up by 1.00%) , one of the largest corporate tax payers in the United States, has managed to avoid around $9.2 billion taxes by an efficient decision to finance its stock buyback with bond offerings rather than with offshore cash. Laid at the rate of $1 for every $40, Apple Inc. (NASDAQ:AAPL)had paid around $6 billion as corporate income taxes in the fiscal year 2012 which makes it find a place among the top corporate income tax paying firms in the state. Apple Inc. (NASDAQ:AAPL) offered $17 billion in bonds to finance part of the share purchases and increased dividends, promised to its shareholders who were disappointed with the slow growth of the stock. There had been a steady decline in the company’s share price for the past six months due to concerns of delay in the release of its new models of iPhones and iPads.
Debt To Finance Repurchase Of Share
To woo the investors, Apple Inc. (NASDAQ:AAPL) made the announcements of share repurchases and increased dividends of around $55 billion. This decision of Apple Inc. (NASDAQ:AAPL) to finance the buyback with bonds had enabled it to avoid the taxes effectively which would have otherwise been imposed at 35% on cash repatriation from offshore holdings. The bond offering of Apple Inc. (NASDAQ:AAPL) at $17 billion stood up as the biggest corporate offering of the week. The company will now pay an interest of $308 million a year on these bond offerings and will also enjoy another $100 million tax deduction on interest payments every year. Further this inclusion of debt into the capital structure would also enable better leverage, reduction in the cost of capital and access to better priced capital.
