Apple 1999 Annual Report Download - page 62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8--COMMITMENTS AND CONTINGENCIES (CONTINUED)
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
affected depending on the time required to obtain sufficient quantities from the original source, or to identify and obtain sufficient quantities
from an alternative 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, significant portions of the Company's CPUs,
logic boards, and assembled products 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.
LITIGATION
ABRAHAM AND EVELYN KOSTICK TRUST V. PETER CRISP ET AL.
In January 1996, a purported shareholder derivative action was filed in the California Superior Court for Santa Clara County naming the
Company and its then directors as defendants, seeking injunctive relief and damages for alleged acts of mismanagement. Between February
1996 and October 1997, the complaint was amended several times as a result of the Courts' rulings upon various demurrers filed by the
Company. The Third Amended Complaint was filed in October 1997, and eliminated the class action claims and restated claims against certain
directors and former directors. In November 1997, the Company's Board of Directors appointed a special investigation committee and engaged
independent counsel to assist in the investigation of the claims made in the Third Amended Complaint. This matter was settled during the
fourth quarter of 1999 for an amount not material to the Company's financial position or results of operations.
LS MEN'S CLOTHING DEFINED BENEFIT PENSION FUND V. MICHAEL SPINDLER ET AL.
In May 1996, an action was filed in the California Superior Court naming as defendants the Company and certain of its current and former
officers and directors and seeking compensatory and punitive damages for alleged misrepresentation and omission of material facts about the
Company's operations and financial results. Between May 1996 and November 1997, the complaint was has been amended several times as a
result of the Court's rulings upon various demurrers of the Company. In January 1998, the Company and three individual defendants brought a
motion to dismiss the third amended complaint, and, in March 1998, the Court granted the motion to dismiss the third amended complaint
without leave to amend. The plaintiffs filed an appeal in the Sixth Appellate District in June 1998. The Court of Appeal heard oral argument in
November 1999 and has not yet ruled.
"REPETITIVE STRESS INJURY" LITIGATION
The Company was named in approximately 60 lawsuits between 1991 to 1995, alleging plaintiffs incurred so-called "repetitive stress" injuries
to their upper extremities as a result of using keyboards and/or mouse input devices sold by the Company. These actions are similar to those
filed against other major suppliers of
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