Apple 1999 Annual Report Download - page 24

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and including in these estimates the Y2K costs incurred that are the result of utilization of the Company's existing internal resources.
CONTINGENCY PLANS
Under the guidance and management of the PMO, the Company is in the final stages of developing, implementing, and testing Y2K
contingency plans for critical business operations. The Company's contingency plans, which are based in part on the assessment of the
magnitude and probability of potential risks, primarily focus on proactive steps to prevent Y2K failures from occurring, or if they should occur,
to detect them quickly, minimize their impact and expedite their remediation. The Y2K contingency plans will supplement existing disaster
recovery and business continuity plans.
As part of its contingency plans, the Company has developed a global Incident Management Team (IMT) to identify, escalate, and mitigate the
potential impact of various Y2K failures. The IMT is comprised of personnel from the PMO as well as key areas of the Company's operations.
The IMT will begin to monitor the date rollover commencing with Sydney, Australia and will "follow the sun" through the time change in the
Pacific Standard Time zone. The Company's contingency planning efforts were approximately 85% complete at the end of the fourth quarter of
fiscal 1999 and are expected to be substantially completed during the first quarter of fiscal 2000.
The Company believes it is reasonably possible there will be interruptions in air traffic control, airfreight transportation, customs clearance,
telecommunications, and power utilities early in calendar year 2000 that could result in shipping delays of raw material and finished goods and
other business interruptions. The Company has developed and implemented contingency plans to mitigate the effects of a short-term
interruption in such services. However, if the interruption in these services last for an extended period of time, or if alternative Y2K compliant
services are not readily available at reasonable cost, there could be material adverse effects on the Company's results of operations and
financial position.
The Company also believes it is reasonably possible worldwide financial markets could exhibit unusual short-term volatility and liquidity
disturbances at the end of calendar 1999 and at the beginning of calendar 2000. The Company has developed and implemented contingency
plans to mitigate some of the potential short-term effects of such disturbances. However, if these disturbances in the financial markets last for
an extended period of time, or if alternative mitigating actions are not readily available at reasonable cost, there could be material adverse
effects on the Company's results of operations and financial position.
RISK FACTORS ASSOCIATED WITH Y2K ISSUES
The Company has substantially completed its initial assessment of reasonably likely worst case scenarios of Non-IT Business Systems and/or
IT Systems failures and related consequences. Based on current information, the Company believes the most likely worst case scenario is it will
experience minor malfunctions and failures of its IT Systems and Non-IT Business Systems at the beginning of the Year 2000 not previously
detected during the Company's inventory and risk assessment and remediation activities. The Company currently believes these malfunctions
and failures will not have a material impact on its results of operations or financial condition. However, there can be no assurance the Y2K
remediation by the Company or third parties will be properly and timely completed, and the failure to do so could have a material adverse
effect on the Company, its business, its results of operations, and its financial condition.
In particular, the Company believes a lack of Y2K readiness by its significant third party vendors could cause material interruptions in the
Company's operations. The identification of additional issues with respect to the Y2K compliance of key third parties could have a material
adverse effect on the Company's results of operations. In addition, important factors that could cause results to differ materially include, but are
not limited to, the ability of the Company to successfully identify systems and vendors that have a Y2K issue, the nature and amount of
remediation effort required to fix the affected systems, the adequacy of such remediation efforts, the production-related contingency plans of
competitors with the Company's
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