Apple 1997 Annual Report Download - page 58

defendant. The complaints in all of these cases seek restitution in the form of refunds or product exchange, damages, punitive damages, and
attorneys fees. In December 1995, the California Judicial Council ordered all of the California actions, including Long, coordinated for
purposes of pretrial proceedings and trial before a single judge, the Honorable William Cahill, sitting in the County of San Francisco. All of the
California actions were subsequently coordinated under the name In re Computer Monitor Litigation and a master consolidated complaint filed
superseding all of the individual complaints in those actions. In July 1996, Judge Cahill ordered all of the California cases dismissed without
leave to amend as to plaintiffs residing in California on the ground that a stipulated judgment entered in September 1995 in a prior action
brought by the California Attorney General alleging the same cause of action was res judicata as to the plaintiffs in the consolidated California
class action suits. This order may be subject to appellate review at a later stage of the proceedings. Both the New Jersey cases and the
consolidated California cases are at a preliminary stage, with no discovery having taken place. In March 1997, the Court in the case styled In re
Computer Monitor Litigation preliminarily approved a proposed settlement to which the Company and all but three of the other defendants in
the action would be parties and provisionally certified a nationwide settlement class with respect thereto. A hearing regarding final approval of
the proposed settlement was held on June 30, 1997 and the Court's decision is pending. If approved, the Company does not anticipate its
obligations pursuant to the proposed settlement will have a material adverse effect on its consolidated results of operations or financial
condition as reported in the accompanying financial statements.
EXPONENTIAL TECHNOLOGY V. APPLE
Plaintiff alleges in a lawsuit styled Exponential Technology, Inc. v. Apple Computer, Inc. that the Company, which was an investor in
Exponential, breached its fiduciary duty to Exponential Technology by misusing confidential information about its financial situation to cause
Exponential to fail, and that the Company fraudulently misrepresented the facts about allowing Exponential to sell its processors to the
Company's Mac OS licensees. The lawsuit is filed in California State Court in Santa Clara County. In November 1997, the Company filed a
demurrer to portions of the complaint.
OTHER
On August 21, 1997, the Federal Trade Commission issued a consent decree against the Company, regarding the Company's past processor
upgrade practices, specifically certain advertisements which the Commission deemed to have misrepresented the Company's marketing of
certain microprocessor upgrade products. Pursuant to the order, the Company is ordered to cease and desist from any such allegedly misleading
advertising, to give notice to consumers, and to implement certain programs enabling consumers who are within the order's scope to obtain
upgrade kits or rebates, in connection with any purchases within the scope of the order. The Company has complied with all provisions of the
order currently effective, and has filed its 60-day compliance with the Commission on October 17, 1997.
The Company has various other claims, lawsuits, disputes with third parties, investigations and pending actions involving allegations of false or
misleading advertising, product defects, discrimination, infringement of intellectual property rights, and breach of contract and other matters
against the Company and its subsidiaries incident to the operation of its business. The liability, if any, associated with these matters is not
determinable.
The Company believes the resolution of the matters cited above will not have a material adverse effect on its financial condition as reported in
the accompanying financial statements. However, depending on the amount and timing of any unfavorable resolution of these lawsuits, it is
possible that the Company's future results of operations or cash flows could be materially affected in a particular period.
The Company operates in one principal industry segment: the design, manufacture, and sale of personal computing products. The Company's
products are sold primarily to the business, education, home, and government markets.
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