Apple 1999 Annual Report Download - page 9

in both hardware and software development, which have substantially increased the capabilities and applications of these products, and has
resulted in the frequent introduction of new products. The principal competitive factors in this market are relative price/performance, product
quality and reliability, design innovation, availability of software, product features, marketing and distribution capability, service and support,
availability of hardware peripherals, and corporate reputation. The Company is currently taking and will continue to take steps to respond to the
competitive pressures being placed on its personal computer sales as a result of the recent innovations in the Windows platform. The
Company's future operating results and financial condition are substantially dependent on its ability to continue to develop improvements to the
Macintosh platform in order to maintain perceived functional and design advantages over competing platforms.
Further discussion relating to the competitive conditions of the personal computing industry and the Company's competitive position in the
marketplace may be found in Part II, Item 7 of this Form 10-K under the subheading "Competition," included under the heading "Factors That
May Affect Future Results and Financial Condition," which information is hereby incorporated by reference.
RESEARCH AND DEVELOPMENT
Because the personal computer industry is characterized by rapid technological advances, the Company's ability to compete successfully is
heavily dependent upon its ability to ensure a continuing and timely flow of competitive products and technology to the marketplace. The
Company continues to develop new products and technologies and to enhance existing products in the areas of hardware and peripherals,
system software, networking and communications, and the Internet. The Company's research and development expenditures, before charges for
in-process research and development, totaled $314 million, $303 million, and $485 million in 1999, 1998, and 1997, respectively. The declines
in total expenditures for research and development in 1999 and 1998 as compared to 1997 were principally due to restructuring actions taken
by the Company intended to focus the Company's research and development efforts on those projects perceived as critical to the Company's
future success.
ENVIRONMENTAL LAWS
Compliance with federal, state, and local laws and foreign laws enacted for the protection of the environment has to date had no material effect
upon the Company's capital expenditures, earnings, or competitive position. Although the Company does not anticipate any material adverse
effects in the future based on the nature of its operations and the thrust of such laws, no assurance can be given such laws, or any future laws
enacted for the protection of the environment, will not have a material adverse effect on the Company.
EMPLOYEES
As of September 25, 1999, Apple and its subsidiaries worldwide had 6,960 regular employees, and an additional 2,776 temporary or part-time
employees and contractors.
FOREIGN AND DOMESTIC OPERATIONS AND GEOGRAPHIC DATA
Information regarding financial data by geographic segment and the risks associated with international operations is set forth in Part II, Item 8
of this Form 10-K in the Notes to Consolidated Financial Statements at Note 9, "Segment Information and Geographic Data," and in Part II,
Item 7 of this Form 10-K under the subheading "Global Market Risks," included under the heading "Factors That May Affect Future Results
and Financial Condition," which information is hereby incorporated by reference.
Margins on sales of Apple products in foreign countries, and on domestic sales of products that include components obtained from foreign
suppliers, can be adversely affected by foreign currency exchange rate fluctuations and by international trade regulations, including tariffs and
antidumping penalties.
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