Apple 2000 Annual Report Download - page 59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9--COMMITMENTS, CONTINGENCIES, AND RELATED PARTY TRANSACTIONS
LEASE COMMITMENTS
The Company leases various facilities, equipment, and data transmission capacity under noncancelable operating lease arrangements. The
major facilities leases are for terms of 5 to 10 years and generally provide renewal options for terms of 3 to 5 additional years. Rent expense
under all operating leases was approximately $93 million, $61 million, and $63 million in 2000, 1999, and 1998, respectively. Future minimum
lease payments under noncancelable operating leases having remaining terms in excess of one year as of September 30, 2000, are as follows (in
millions):
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. Some other key components, while currently available to the Company from multiple sources, are at times subject to industry
wide availability and pricing pressures. In addition, the Company uses some components that are not common to the rest of the personal
computer industry, and new products introduced by the Company often initially utilize custom components obtained from only one source until
the Company has evaluated whether there is a need for and subsequently qualifies additional suppliers.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. 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
The Company is subject to certain legal proceedings and claims that have arisen in the ordinary course of business and have not been fully
adjudicated. The results of legal proceedings cannot be predicted with certainty; however, in the opinion of management, the Company does
not have a potential liability related to any legal proceedings and claims that would have a material adverse effect on its financial condition or
results of operations.
56
FISCAL YEARS
------------
2001........................................................ $ 61
2002........................................................ 55
2003........................................................ 40
2004........................................................ 30
2005........................................................ 18
Later years................................................. 51
----
Total minimum lease payments................................ $255
====