Greenlight Company Presentation
How Much Cash is There?
o We made some basic assumptions in
order to run through potential scenarios
of what Apple could do:
- Apple could repatriate and pay taxes
on current offshore cash of $94 billion
- We assume a $20 billion war chest
reserve to preserve flexibility
Greenlight Capital, Inc.
$ (billions)
Foreign Cash
Tax payment for repatriation
Net foreign cash
Total domestic cash
Reserves
Free domestic cash
Total Cash Available
94
(33)
61
43
(20)
23
84
19
To do a one-time dividend or a large one-time share repurchase, it's good to know how much cash is
available. Apple currently has $137 billion in cash, $94 billion of which is offshore.
In these scenarios, we assume Apple brings all its foreign cash back to the U.S. and pays the taxes
for repatriating the funds. With $94 billion in foreign cash taxed at 35%, there is $61 billion of cash
brought home. Add the existing $43 billion of domestic cash for a total of $104 billion available.
Please note we are not advocating that Apple repatriate its foreign cash; in fact our proposal later on
will show Apple does not need to do this.
Obviously, Apple isn't going to deplete its cash reserves to zero, so we made some assumptions
about a large cash reserve. We sought to pick a number that we felt would be more than sufficient
for a rainy day fund. We took one year's worth of operating expense and capex less depreciation,
and came up with $20 billion. This along with its ongoing franchise should leave Apple well
positioned to execute its business plan, including acquisitions.
While some have suggested that Apple could raise additional cash by selling debt, we believe that
Apple is highly debt averse. Even asking it to reduce the cash balance to $20 billion is probably not
realistic, but for the sake of this example we believe it is a reasonable number. That leaves $84
billion in free cash to use for a one-time dividend, or a one-time self-tender offer for its shares.
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