Amaya Toman Just a few days after Valentine's Day in 2004, Apple's then-CEO Steve Jobs sends an internal message to the company's employees announcing that the Cupertino company is completely debt-free for the first time in years.
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"Today is, in a way, a historic day for our company," Jobs wrote in the aforementioned circular. It marked a really significant and big turnaround from the difficult period of the 90s, when Apple had debts exceeding $1 billion and was on the verge of bankruptcy. Achieving debt-free status was somewhat of a formality for Apple. At that time, the company already had enough money in the bank to easily pay off the remaining debt. By 2004, Apple had released the first iMac computer, the similarly colored iBook laptop and the groundbreaking iPod music player. Cupertino also saw the launch of the iTunes Store, which was well on its way to changing the music industry.
Apple has clearly changed course and headed in the right direction. However, using $300 million in cash to pay off the latest debt proved a symbolic triumph. Apple's then-CFO Fred Anderson, who was close to retirement, confirmed the news.
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Apple revealed its plans to repay the debt it took on in 1994 in an SEC filing on February 10, 2004. “The Company currently has outstanding debt in the form of unsecured notes with an aggregate face value of US$300 million bearing interest at 6,5%, which were originally issued in 1994. The notes, which bear interest semi-annually, were sold at 99,925% of par, which represents an effective yield to maturity of 6,51%. The notes, together with approximately US$1,5 million of unamortized deferred gains on the interest rate swaps entered into, mature in February 2004 and were therefore classified as short-term debt as of December 27, 2003. The company currently anticipates that it will use existing cash balances to pay off these bonds when they become due." Jobs' email to Apple employees also mentions that the company had $2004 billion in the bank as of February 4,8. Today, Apple maintains a much larger pile of cash reserves, although its finances are also structured in such a way that the company also carries a large amount of debt.
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In 2004, Apple had been profitable for approximately six years. The change came in early 1998, when Jobs shocked attendees at the Macworld Expo in San Francisco by announcing that Apple was making money again. Before the great recovery began, the company's fortunes fell several times and rose several times. However, Cupertino was once again heading for the top of the technology world. Paying off Apple's remaining debt in February 2004 only confirmed this.
