Apple 2000 Annual Report Download - page 26

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microprocessors running above 500 megahertz since such systems were first announced in August of 1999 due to its G4 microprocessor
Company's supply of faster PowerPC G3 microprocessors. The Company believes that this inability to obtain faster microprocessors had an
adverse impact on the Company's results of operations during 2000, particularly towards the end of the fiscal year. The Company has been
informed by its suppliers that faster microprocessors will be available in sufficient quantity beginning in the first half of calendar 2001.
However, no assurance can be given that such faster microprocessors will actually be available or be available in sufficient quantities, and the
inability of the Company to obtain faster microprocessors in sufficient quantities during 2001 may have an adverse impact on the Company's
results of operations and financial condition.
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 9 under the
subheading "Concentrations in the Available Sources of Supply of Materials and Product," which information is hereby incorporated by
reference.
EDUCATION MARKET
Several competitors of the Company have either targeted or announced their intention to target the education market for personal computers.
As a result, the Company's overall share of this market has declined. Additionally, net sales in the Company's education market fell short of
expectations by approximately $60 million during the fourth quarter of 2000, primarily as a result of the Company's transition to a more direct
the education market, there can be no assurance that the Company will be able to increase its share of the education market or maintain its
existing share of that market. Failure to increase or maintain market share in the education market may have an adverse impact on the
Company's operating results and financial condition.
MARKETING AND DISTRIBUTION
The Company distributes its products through wholesalers, resellers, national and regional retailers and cataloguers. In addition, the Company
also sells many of its products and resells certain third-party products in most of its major markets to consumers, certain education customers,
and certain resellers either directly or through its on-line stores around the world. Many of the Company's significant resellers operate on
narrow product margins, and may 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 caused 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,
in which the products are sold and goods and services are purchased. Historically, the Company's primary exposure to movements in foreign
currency exchange rates relate to non-dollar denominated sales in Europe, Japan, Australia, Canada, and certain parts of Asia and non-dollar
denominated operating expenses incurred throughout the world. Weaknesses in foreign currencies, particularly the Japanese Yen
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