Apple 1998 Annual Report Download - page 19

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investment grade debt ratings will maintain pressure on the Company's cost of funds in future periods and may require the Company to pledge
additional collateral or agree to more stringent debt covenants.
The Company believes that its balances of cash, cash equivalents, and short-term investments will be sufficient to meet its cash requirements
over the next twelve months. However, given the Company's current debt ratings, if the Company should need to obtain short-
term borrowings,
there can be no assurance that such borrowings could be obtained at favorable rates. The inability to obtain such borrowings at favorable rates
could materially adversely affect the Company's results of operations, financial condition, and liquidity.
YEAR 2000 COMPLIANCE
The information presented below related to Year 2000 compliance contains forward looking statements that are subject to risks and
uncertainties. The Company's actual results may differ significantly from the results discussed below and elsewhere in this Form 10-K
regarding Year 2000 compliance.
YEAR 2000
The Year 2000 (Y2K) issue is the result of certain computer hardware, operating system software and software application programs having
been developed using two digits rather than four to define a year. For example the clock circuit in the hardware may be incapable of holding a
date beyond the year 1999; some operating systems may recognize a date using "00" as the year 1900 rather than 2000 and certain applications
may have limited date processing capabilities. These problems could result in the failure of major systems or miscalculations, which could have
a material impact on companies through business interruption or shutdown, financial loss, damage to reputation, and legal liability to third
parties.
STATE OF READINESS
The Company's Information Systems and Technology department ("IS&T") began addressing the Y2K issue in 1996 as part of its Next
Generation strategy, which addressed the need for ongoing enhancement and replacement of the Company's various disparate legacy
information technology (IT) Systems. In 1998, the Company established a Year 2000 Executive Steering Committee (Steering Committee)
comprised of senior executives of the Company and the Company's Year 2000 Project Management Office ("PMO"). The PMO reports to the
Executive Vice President and Chief Financial Officer, the Steering Committee, and the Audit and Finance Committee of the Board of
Directors.
The PMO developed and manages the Company's worldwide strategic plan ("Y2K Plan") to address the potential impact of Y2K on the
Company's operations and business processes. In particular, the Y2K Plan addresses four principal areas that may be impacted by the Y2K
issue: Apple Branded Products; Third Party Relationships; Non-IT Business Systems; and IT Systems. With respect to the IT Systems and
Non
-IT Business Systems, the Y2K Plan consists of four separate but overlapping phases: Phase I-- Inventory and Risk Assessments; Phase II--
Remediation Cost Estimation; Phase III--Remediation; and Phase IV--Remediation Testing. In addition, the Company has an ongoing Y2K
Awareness Program designed to keep employees informed about Y2K issues. The Company's goal is to substantially complete Phase III--
Remediation during the third quarter of fiscal 1999; complete Phase IV-- Remediation Testing during the fourth quarter of fiscal 1999, and to
continue compliance efforts throughout the remainder of 1999. The Company is currently on schedule to meet these goals.
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