Apple 1996 Annual Report Download - page 8

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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.
Significant Customers
No customer accounted for more than 10% of the Company's net sales in 1996, 1995, and 1994.
Backlog
In general, the Company's resellers purchase products on an as-needed basis. Resellers frequently change delivery schedules and order rates
depending on changing market conditions. Unfilled orders (backlog) can be, and often are, canceled at will. The Company attempts to fill
orders on the requested delivery schedules. However, products may be in relatively short supply from time to time until production volumes
have reached a level sufficient to meet demand or if other production or fulfillment constraints exist. The Company's backlog of unfilled orders
decreased to approximately $563 million at November 29, 1996 from $618 million at December 1, 1995. The Company's backlog at November
29, 1996 consisted primarily of the Company's PowerBook products, as well as higher-end Power Macintosh products. The Company expects
that substantially all of its orders in backlog at November 29, 1996 will be either shipped or canceled during fiscal 1997.
In the Company's experience, the actual amount of product backlog at any particular time is not a meaningful indication of its future business
prospects. In particular, backlog often increases in anticipation of or immediately following introduction of new products because of
overordering by dealers anticipating shortages. Backlog often is reduced once dealers and customers believe they can obtain sufficient supply.
Because of the foregoing, as well as other factors affecting the Company's backlog, backlog should not be considered a reliable indicator of the
Company's future revenue or financial performance. Further information regarding the Company's backlog may be found under Part II, Item 7
of this Annual Report on Form 10-K under the subheading "Net Sales" included under the heading "Results of Operations," and under the
subheading "Product Introductions and Transitions" included under the heading "Factors That May Affect Future Results and Financial
Condition," which information is hereby incorporated by reference.
Competition
The market for the design, manufacture and sale of personal computers, MessagePad and related products, and related software and peripheral
products is highly competitive. It continues to be characterized by rapid technological advances in both hardware and software development
that have substantially increased the capabilities and applications of these products, and has resulted in the frequent introduction of new
products. The principal competitive factors in this market are relative price/performance, product quality and reliability, availability of
software, product features, marketing and distribution capability, service and support, availability of hardware peripherals, and corporate
reputation.
Further discussion relating to the competitive conditions of the personal computing industry and the Company's competitive position in the
market place may be found under Part II, Item 7 of this Form 10-K under the subheading "Competition," included under the heading "Factors
That May Affect Future Results and Financial Condition," and in Part II, Item 8 on this Form 10-K in the Notes to Consolidated Financial
Statements under the subheading "Reserves Against Inventories" under the heading "Accounting Estimates," which information is hereby
incorporated by reference.
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