Apple expects to access debt markets to help fund $100 billion capital return program

By Lisa Kerner

Charlotte, N.C., April 23 - Apple Inc. will access the debt markets to help fund the company's expanded program to return capital to shareholders, said chief financial officer Peter Oppenheimer during the company's second quarter fiscal 2013 earnings call.

Apple now expects to use a total of $100 billion of cash under the expanded program by the end of calendar 2015.

Apple plans to announce more details in the near future regarding its plans to borrow in conjunction with the expanded return of capital, according to its earnings news release.

On Tuesday, Apple announced its board of directors authorized a $55 billion increase to the company's share repurchase program as part of its effort to return capital to shareholders. That was up from the $10 billion level announced last year.

Shares will be purchased on the open market and under the accelerated share repurchase program beginning as early as this month, said Oppenheimer

According to Apple, this is the largest single share repurchase authorization in history.

In addition, Apple's board approve a 15% increase in the quarterly dividend, declaring a dividend of $3.05 per common share, payable on May 16 to shareholders of record as of the close of business on May 13. Apple pays annual dividend payments of about $11 billion annually.

Oppenheimer noted that the company continues to generate "significant" cash offshore and expects foreign cash and domestic borrowing to both grow in the next three years.

The Cupertino, Calif.-based computer and mobile communication device company also plans to use about $1 billion annually to net-share-settle vesting restricted stock units.

Strong quarterly results

"Our cash generation remains very strong, with $12.5 billion in cash flow from operations during the quarter and an ending cash balance of $145 billion," said Oppenheimer.

Apple reported fiscal 2013 second quarter revenue of $43.6 billion and quarterly net profit of $9.5 billion, or $10.09 per diluted share, compared to revenue of $39.2 billion and net profit of $11.6 billion, or $12.30 per diluted share, in the year-ago quarter.

Gross margin was 37.5% compared to 47.4% for the same quarter last year.

Looking ahead, Apple is guiding for its fiscal 2013 third quarter to be between $33.5 billion and $35.5 billion, and gross margin to be between 36% and 37%.

Apple sold 37.4 million iPhones in the quarter, versus 35.1 million in the year-ago period. iPad sales were up, with 19.5 million sold in the quarter, compared to 11.8 million iPads sold in the second quarter of 2012.

Mac sales were down slightly for the comparable period at about 4 million units sold.

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