Apple 1995 Annual Report Download - page 7

Company's business and financial position include, at this time, Canon, Inc., General Electric Co., Hitachi, Ltd., IBM, Motorola, Inc., Sharp
Corporation, Sony Corporation, Texas Instruments, Inc., and/or their United States affiliates, and VLSI Technology, Inc. However, the
Company helps mitigate these potential risks by working closely with these and other key suppliers on product introduction plans, strategic
inventories, and coordinated product introductions. The Company believes that most of its single-source suppliers, including most of the
foregoing companies, are reliable multinational corporations. Most of these suppliers manufacture the relevant materials, processes, or
components in multiple plants. The Company further believes that its long-standing business relationships with these and other key suppliers
are strong and mutually beneficial in nature.
The Company has also from time to time experienced significant price increases and limited availability of certain components that are
available from multiple sources. Any similar occurrences in the future could have an adverse affect on the Company's operating results.
The Company has a supply agreement with Motorola, Inc. (see Exhibit 10.B.12 hereto). The agreement with Motorola continues for five years
from January 31, 1992 unless otherwise mutually agreed in writing by the parties. The Company single-sources certain microprocessors from
Motorola. The supply agreement does not obligate the Company to make minimum purchase commitments; however, the agreement does
commit the vendor to supply the Company's requirements of the particular items for the duration of the agreement.
Further discussion relating to availability and supply of components may be found under Part II, Item 7 of this Form 10-K under the
subheading "Inventory and Supply" included under the heading "Factors That May Affect Future Results and Financial Condition," which
information is hereby incorporated by reference.
Patents, trademarks, copyrights and licenses
The Company currently holds rights to patents and copyrights relating to certain aspects of its computer and peripheral systems. In addition, the
Company has registered, and/or has applied to register, trademarks in the United States and a number of foreign countries for "Apple", the
Apple silhouette logo, the Apple color logo, "Macintosh", Newton, the Newton Lightbulb logo, and numerous other product trademarks. In
1986, the Company acquired ownership of the trademark "Macintosh" for use in connection with computer products. Although the Company
believes that the ownership of such patents, copyrights, and trademarks is an important factor in its business and that its success does depend in
part on the ownership thereof, the Company relies primarily on the innovative skills, technical competence, and marketing abilities of its
personnel.
Because of technological changes in the computer industry, current extensive patent coverage, and the rapid rate of issuance of new patents, it
is possible that certain components of the Company's products may unknowingly infringe existing patents of others. The Company believes the
resolution of any claim of infringements would not have a material adverse effect on its financial condition and results of operations as reported
in the accompanying financial statements. However, depending on the amount and timing of an unfavorable resolution of any such claims of
infringement, it is possible that the Company's future results of operations or cash flow could be materially affected in a particular period. The
Company has from time to time entered into cross-licensing agreements with other companies.
Seasonal business
Although the Company does not consider its business to be highly seasonal, it has historically experienced increased sales in its first and fourth
fiscal quarters, compared to other quarters in its fiscal year, due to holiday demand for and calendar year-end buying of some of its products.
However, past performance should not be considered a reliable indicator of the Company's future revenue or financial performance.
Warranty
The Company offers a parts and labor limited warranty on its products. The warranty period is one year from the date of purchase by the end
user. The Company also offers a 90-day warranty for Apple service parts used to repair Apple hardware products. In addition, consumers may
purchase extended service coverage on all Apple hardware products.
Customers
No customer of the Company accounted for 10% or more of net sales in each of the fiscal years 1995, 1994, and 1993.
Backlog
In general, the Company's resellers typically purchase products on an as- needed basis. Resellers frequently change delivery
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