Apple is engaged in the largest capital return program in enterprise history. The capital return program is comprised of the company’s regular quarterly dividend and the current $90 billion share repurchase program set to be completed by the end of this calendar year.
The graphs below illustrates the significant drop in the reported fully diluted share count since the $90 billion share repurchase program began.
During the December quarter conference call with analysts held in January, Apple CFO Luka Maestri stated the company had completed $73 billion of the planned share repurchases under the $90 billion share repurchase program. The Form 10-Q for the quarter puts the amount already invested in share repurchases at $72.90 billion comprised of both accelerated share repurchase programs and open market share repurchases
For the December quarter Apple reported the fully diluted share count at 5.882 billion shares. This contrasts with the split-adjusted 6.337 billion shares in the reported fully diluted share count in the September quarter (FQ4) of 2012. To further illustrate the dramatic drop in fully diluted share count, I have charted the percentage changes in the fully diluted share count on a sequential and year-over-year basis. From the peak in FQ4 2012 the fully diluted share count has fallen 12.84% through the December quarter. In the recent December quarter, there were 6.788% fewer shares in the fully diluted share count than in the prior-year period.
Because Apple averages the number of fully diluted shares in each quarterly reporting period, any and all repurchases in a quarter this calendar year will have a residual and beneficial impact on earnings per share in the corresponding quarter in 2016. Although there is much speculation Apple will announce an expansion of the current repurchase program in April, the repurchases are currently scheduled to be completed by the end of CY2015.
Since the September quarter of FY2012, on a split-adjusted basis, Apple has achieved a net reduction of approximately 755.50 million shares. While much has been written about Apple’s decision to borrow funds to complete the share repurchase program rather than repatriate foreign-sourced earnings, using the current $1.88 per share dividend as a guide, the company is currently saving in annual cash disbursements from the elimination of dividends on the repurchased shares about $1.420 billion.
Notwithstanding speculation Apple will announce an expansion of the current $90 billion share repurchase program along with the announcement of a dividend increase during the March quarter conference call in April, the existing share repurchase program with $17 billion remaining to be invested in share repurchases has already substantially reduced the company’s fully diluted share count.
Robert Paul Leitao
