Apple 1998 Annual Report Download - page 20

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APPLE PRODUCTS
The Company designs and manufacturers microprocessor-based personal computers, related peripherals, operating system software and
application software, including Macintosh personal computers and the Mac OS which are marketed under the "Apple" brand (collectively
"Apple Branded Products"). The Company tested certain Apple Branded Products to determine Y2K compliance, although such testing did not
include third party products bundled with Apple Branded Products and certain Apple Branded Products no longer supported by the Company.
Information regarding the Y2K readiness of all Apple Branded Products is available on the Apple corporate web site at www.apple.com. Such
information is not to be considered part of this annual report. The Company believes that the unsupported Apple Branded Products are Y2K
compliant because, unlike other companies' personal computers and related products, the Company did not rely upon the two digit date format
but used a long word approach which allows the correct representation of dates up to the year 2040. The current date and time utilities utilized
by Apple Branded Products are 64 bit signed value which covers dates from 30081 BC to 29940 AD. Since the Company does not control the
design of non-Apple Branded Products or third party products bundled with Apple Branded Products, it cannot assure they are Y2K compliant.
Certain products acquired from NeXT Software, Inc., including OpenStep and NextStep, are not currently Y2K compliant. The Company
intends to develop and make available during the third quarter of fiscal 1999 a software patch intended to allow such products to become Y2K
compliant. For purposes of this discussion, Y2K compliant means a product will not produce errors processing date data in connection with the
year change from December 31, 1999, to January 1, 2000, when used with accurate date data in accordance with its documentation, provided
all other products (including other software, firmware and hardware) used with it properly exchange date data with it. A Y2K compliant
product will recognize the Year 2000 as a leap year.
THIRD PARTY RELATIONSHIPS
The Company's business operations are heavily dependent on third party corporate service vendors, materials suppliers, outsourced operations
partners, distributors and others. The Company is working with key external parties to identify and attempt to mitigate the potential risks to it
of Y2K. The failure of external parties to resolve their own Y2K issues in a timely manner could result in a material financial risk to the
Company. As part of its overall Y2K program, the Company is actively communicating with third parties through face to face meetings and
correspondence, on an ongoing basis, to ascertain their state of readiness. Although numerous third parties have indicated to the Company in
writing that they are addressing their Y2K issues on a timely basis, the readiness of third parties overall varies widely. Because the Company's
Y2K compliance is dependent on the timely Y2K compliance of third parties, there can be no assurances that the Company's efforts alone will
resolve all Y2K issues.
IT SYSTEMS AND NON-IT BUSINESS SYSTEMS
Phase I--Inventory and Risk Assessment:
This Phase requires an inventory and assessment of the Non-IT Business systems used by the Company including systems with embedded
technology, building access systems, and health and safety systems. This Phase also includes inventory and assessment of IT Systems used by
the Company which include large IS&T systems, desktop hardware and software, and network hardware and software. Each such system is
evaluated and the business risk is quantified as being High, Medium or Low Risk to the Company's Business. Systems which are High Risk are
those which if uncorrected would cause an interruption or complete failure to conduct the Company's business. Medium Risks are those which
would negatively impact the business but complete cessation could be avoided with some inconvenience. Low Risks are those where the risk to
business interruption or cessation are remote. High and Medium Risk items will be remediated or replaced, and Low risk items will likely not
be addressed prior to the Year 2000. Currently, the Company has completed this Phase for the IT Systems and is approximately 80%
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