Apple to Pay $38 Billion in Repatriation Tax; Plans New U.S. Campus -- 2nd Update
January 17 2018 - 6:02PM
Dow Jones News
By Tripp Mickle
Apple Inc. said it would make a one-time tax payment of $38
billion on profits accumulated overseas and ramp up its spending in
the U.S., as it seeks to emphasize its contributions to the
American economy after years of taking criticism for outsourcing
manufacturing to China.
The tech giant said Wednesday it plans $30 billion in capital
spending in the U.S. over five years that will create more than
20,000 new jobs. It didn't specify how much of that spending was
already planned, but said the total will include building a new
facility that initially will house customer-service operations, and
$10 billion toward data centers across the country. Apple also is
expanding from $1 billion to $5 billion a fund it established last
year for investing in advanced manufacturing in the U.S.
Chief Executive Tim Cook touted the plans as building on Apple's
support for the U.S. economy. "We have a deep sense of
responsibility to give back to our country and the people who help
make our success possible," he said in a statement.
Apple said its one-time tax payment was the result of recent
changes to U.S. tax law, under which companies must pay a one-time
tax of 15.5% on overseas profits held in cash and other liquid
assets. Profits held in other forms will be taxed at 8%. The
company said in November that it had earmarked $36 billion to cover
deferred taxes on its $252.3 billion in overseas cash holdings,
assuming that it would eventually pay some tax for bringing that
home.
Apple has faced criticism over the past decade for the overseas
manufacturing of its iPhone, of which it has sold more than 1
billion units, rather than manufacturing devices domestically.
President Donald Trump during the presidential campaign blasted the
company for outsourcing. He later called on Apple to build a
factory in the U.S. and last year said Mr. Cook promised to build
three manufacturing plants in the U.S.
Apple's announcement left many details of its plans unclear, and
a spokesman declined to elaborate. The company didn't say how much
it planned to return of its $252.3 billion in cash and marketable
securities held overseas. It also didn't specify whether it plans
to increase dividends or share repurchases, which is something its
top executives had said would be a priority following the change in
U.S. tax law.
The company previously said it planned $16 billion of capital
expenditures world-wide in the current fiscal year ending in
September, up from $14.9 billion the previous year. However, Apple
doesn't break out its spending in the U.S., making it difficult to
gauge how much of the $30 billion over five years is new.
Apple's announcement said it currently employs 84,000 people in
the U.S. A year ago, it said it employed 80,000, suggesting its
plans for job creation are consistent with what it has been doing.
Its annual report, which doesn't break out the number of U.S.
employees, said it had a total of 123,000 full-time equivalent
employees as of Sept. 30.
The company said it would offer more information later this year
on its planned new campus, which will initially house technical
support for customers. It already operates multiple campuses across
the U.S., such as a facility in Austin, Texas; and its new $5
billion headquarters, Apple Park, in Cupertino, Calif.
Combining the new investments and current spending with U.S.
suppliers, Apple estimated it would contribute $350 billion to the
U.S. economy over the next five years. The bulk of that spending,
estimated at about $55 billion this year, goes to U.S. suppliers,
such as glass-maker Corning Inc. The remainder is for capital
expenditures, estimated at about $30 billion over five years, and
the one-time tax hit of $38 billion. It's unclear if the $4 billion
increase in its advanced manufacturing fund is included in its
anticipated payments to suppliers or in addition to that
spending.
Apple announced its $1 billion advanced manufacturing fund last
year. It subsequently committed $200 million to Corning for
improvements to a glass manufacturing plant in Harrodsburg, Ky.,
and committed to $390 million in future purchases from laser
manufacturer Finisar Corp., which plans to open a
700,000-square-foot plant in Sherman, Texas.
Apple said it works with more than 9,000 suppliers in the U.S.
across 50 states.
Write to Tripp Mickle at Tripp.Mickle@wsj.com
(END) Dow Jones Newswires
January 17, 2018 17:47 ET (22:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Apple (NASDAQ:AAPL)
Historical Stock Chart
From Aug 2024 to Sep 2024
Apple (NASDAQ:AAPL)
Historical Stock Chart
From Sep 2023 to Sep 2024