Apple 1997 Annual Report Download - page 7

covering the Company's requirements for periods from 90 to 180 days. However, the Company continues to evaluate the need for a supply
contract in each situation.
If the supply of a key single-sourced component to the Company were to be delayed or curtailed, the Company's ability to ship the related
product utilizing that component in desired quantities and in a timely manner could be adversely affected. The Company's business and
financial performance could also be adversely affected, depending on the time required to obtain sufficient quantities from the original source,
or to identify and obtain sufficient quantities from an alternate source. The Company believes that the suppliers whose loss to the Company
could have a material adverse effect upon the Company's business and financial position include, at this time: Canon, Inc., General Electric
Co., IBM Corporation, Motorola, Inc., Sharp Corporation, Sony Corporation, Texas Instruments, Inc., VLSI Technology, Inc., Quanta
Computer, Inc., Quantum Corporation, NatSteel Electronics Pte. Ltd., and SCI. The Company attempts to mitigate these potential risks by
working closely with these and other key suppliers on product introduction plans, strategic inventories, coordinated product introductions, and
manufacturing schedules and levels. The Company believes that many of its single-source suppliers, including most of the foregoing
companies, are reliable multinational corporations. The Company also believes most of these suppliers manufacture the relevant 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 is obligated to purchase certain percentages of its total annual volumes of CPUs and logic boards from SCI over each of the next
two years.
Further discussion relating to availability and supply of components and product may be found in 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," and in Part
II, Item 8 on this Form 10-K in the Notes to Consolidated Financial Statements under the subheading "Concentrations in the Available Sources
of Supply of Materials and Product" included under the heading "Concentrations of Risk," and under the subheading "Purchase Commitments"
included under the heading "Commitments and Contingencies," 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 U.S. and a number of foreign countries for "Apple", the Apple
silhouette logo, the Apple color logo, "Macintosh", "Newton", the Newton Lightbulb logo, "Claris" 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.
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