Apple 1998 Annual Report Download - page 63

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NOTE 10--CONCENTRATIONS OF RISK (CONTINUED)
associated with these ten-year swap transactions which mature in 2004, the Company entered into margining agreements with its third-party
bank counterparties. These agreements require the Company or the counterparty to post margin only if certain credit risk thresholds are
exceeded. The amounts held in margin accounts were not material as of September 25, 1998.
CONCENTRATIONS IN THE AVAILABLE SOURCES OF SUPPLY OF MATERIALS AND PRODUCT
Although certain components essential to the Company's business are generally available from multiple sources, other key components
(including microprocessors and application-specific integrated circuits, or "ASICs") are currently obtained by the Company from single or
limited sources. If the supply of a key single-sourced component to the Company were to be delayed or curtailed or in the event a key
manufacturing vendor delays shipments of completed products to the Company, the Company's ability to ship related products in desired
quantities and in a timely manner could be adversely affected. The Company's business and financial performance could also be adversely
affect, depending on the time required to obtain sufficient quantities from the original source, or to identify and obtain sufficient quantities
from an alternate source. In addition, the Company uses some components that are not common to the rest of the personal computer industry.
Continued availability of these components may be affected if producers were to decide to concentrate on the production of common
components instead of components customized to meet the Company's requirements. Finally, a significant portion of the Company's CPUs and
logic boards are now manufactured by outsourcing partners. Although the Company works closely with its outsourcing partners on
manufacturing schedules and levels, the Company's operating results could be adversely affected if its outsourcing partners were unable to
meet their production obligations.
NOTE 11--INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION
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, consumer, and government markets.
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