Apple 1997 Annual Report Download - page 28

CHANGE IN SENIOR MANAGEMENT
On July 9, 1997, the Company announced that Dr. Gilbert F. Amelio had resigned his positions as Chairman of the Board and Chief Executive
Officer and that the Company was initiating a search for a new Chief Executive Officer. While the Company intends to name a new Chief
Executive Officer as soon as practicable, there can be no assurance that the change in senior management and related uncertainties will not
adversely affect the Company's consolidated operating results and financial condition during the period until a new Chief Executive Officer is
hired and afterward. In addition, certain members of the Company's senior management have been with the Company for less than six months.
There can be no assurance that new members of the management team can be successfully assimilated, that the Company will be able to
satisfactorily allocate responsibilities or that such new members of its management will succeed in their roles in a timely and efficient manner.
The Company's failure to recruit, retain and assimilate new executives, or the failure of any such executive to perform effectively, or the loss of
any such executive, could have a material adverse impact on the Company's business, financial condition and results of operations.
CHANGES TO BOARD OF DIRECTORS
The Company announced on August 6, 1997 significant changes to its Board of Directors, replacing all but two former directors. The
continuing directors are Gareth C.C. Chang, Corporate Senior Vice President, Marketing, Hughes Electronics and President, Hughes
International, and Edgar S. Woolard, Jr., retired Chairman of E.I. DuPont de Nemours & Company. The new directors are William V.
Campbell, President and CEO of Intuit Corp.; Lawrence J. Ellison, Chairman and Chief Executive Officer of Oracle Corp.; Steven P. Jobs,
Chairman and Chief Executive Officer of Pixar Animation Studios; and Jerome B. York, Vice Chairman of Tracinda Corporation and former
Chief Financial Officer of IBM and Chrysler Corporation.
DEPENDENCE ON KEY EMPLOYEES
During the past several years, the Company has experienced significant voluntary employee turnover as a result of employees' concerns over
the Company's prospects, as well as the abundance of career opportunities available elsewhere. The Company is dependent on its key
employees in order to achieve its business plan. There can be no assurance the Company will be able to attract, motivate and retain key
employees. Failure to do so may have a significant effect on the Company's consolidated operating results and financial condition.
OTHER FACTORS
The Company is in the process of identifying operating and application software challenges related to the year 2000. While the Company
expects to resolve year 2000 compliance issues substantially through normal replacement and upgrades of software, there can be no assurance
that there will not be interruption of operations or other limitations of system functionality or that the Company will not incur substantial costs
to avoid such limitations. Any failure to effectively monitor, implement or improve the Company's operational, financial, management and
technical support systems could have a material adverse effect on the Company's business and consolidated results of operations.
The majority of the Company's research and development activities, its corporate headquarters, and other critical business operations, including
certain major vendors, are located near major seismic faults. The Company's operating results and financial condition could be materially
adversely affected in the event of a major earthquake.
Production and marketing of products in certain states and countries may subject the Company to environmental and other regulations which
include, in some instances, the requirement that the Company provide consumers with the ability to return to the Company product at the end
of its useful life, and leave
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