Apple 1999 Annual Report Download - page 27

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price/performance features that compare favorably to those supplied to the Company's competitors by Intel Corporation, and other developers
and producers of microprocessors used by personal computers using the Windows operating systems.
Further discussion relating to availability and supply of components and product may be found in Part I, Item 1 of this Form 10-K under the
heading "Raw Materials," and in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements at Note 8 under the
subheading "Concentrations in the Available Sources of Supply of Materials and Product," which information is hereby incorporated by
reference.
MARKETING AND DISTRIBUTION
The Company distributes its products through wholesalers, resellers, national and regional retailers and cataloguers, and directly to education
institutions for resale (collectively referred to as "resellers"). In addition, the Company also sells many of its products in most of its major
markets directly to end users through its on-line store. Many of the Company's significant resellers operate on narrow product margins. Most
such resellers also distribute products from competing manufacturers. The Company's business and financial results could be adversely affected
if the financial condition of these resellers weakened, if resellers within consumer channels were to cease distribution of the Company's
products, or if uncertainty regarding demand for the Company's products causes resellers to reduce their ordering and marketing of the
Company's products.
Further information regarding risks associated with Marketing and Distribution may be found in Part I, Item 1 of this Form 10-K under the
heading "Markets and Distribution," which information is hereby incorporated by reference.
GLOBAL MARKET RISKS
A large portion of the Company's revenue is derived from its international operations. As a result, the Company's operating results and
financial condition could be significantly affected by risks associated with international activities, including economic and labor conditions,
political instability, tax laws (including U.S. taxes on foreign subsidiaries), and changes in the value of the U.S. dollar versus the local currency
in which the products are sold and goods and services are purchased.
Countries in the Asia Pacific region, including Japan, have recently experienced weaknesses in their currency, banking and equity markets.
These weaknesses have adversely affected and may continue to adversely affect consumer demand for the Company's products, the U.S. dollar
value of the Company's foreign currency denominated sales, the availability and cost of product components to the Company, and consequently
the Company's results of operations.
Further information related to the Company's global market risks may be found in Part II, Item 7A of this Form 10-K under the subheading
"Foreign Currency Risk" and may be found in Part II, Item 8 of this Form 10-K at Notes 1 and 2 of Notes to Consolidated Financial
Statements, which information is hereby incorporated by reference.
SUPPORT FROM THIRD-PARTY SOFTWARE DEVELOPERS
Decisions by customers to purchase the Company's personal computers, as opposed to Windows-based systems, are often based on the
availability of third-party software for particular applications. The Company believes the availability of third-party application software for the
Company's hardware products depends in part on third-party developers' perception and analysis of the relative benefits of developing,
maintaining, and upgrading such software for the Company's products versus software for the larger Windows market. This analysis is based
on factors such as the perceived strength of the Company and its products, the anticipated potential revenue that may be generated, and the
costs of developing such software products. To the extent the Company's financial losses in prior years and declining demand for the
Company's products, as well as the Company's decision to end its Mac OS licensing program, have caused
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