Apple 2001 Annual Report Download - page 8

Patents, Trademarks, Copyrights and Licenses
The Company currently holds rights to patents and copyrights relating to certain aspects of its computer systems, peripheral systems, and
software. In addition, the Company has registered, and/or has applied to register, trademarks and service marks in the United States and a
number of foreign countries for "Apple", the Apple silhouette logo, the Apple color logo, "Macintosh," and numerous other product trademarks
and service marks. In 1986, the Company acquired ownership of the trademark "Macintosh" for use in connection with computer products.
Although the Company believes the ownership of such patents, copyrights, trademarks and service marks is an important factor in its business
and that its success does depend in part on the ownership thereof, the Company relies primarily on the innovative skills, technical competence,
and marketing abilities of its personnel.
Many of the Company's products are designed to include intellectual property obtained from third parties. While it may be necessary in the
future to seek or renew licenses relating to various aspects of its products and business methods, the Company believes that based upon past
experience and industry practice, such licenses generally could be obtained on commercially reasonable terms. Because of technological
changes in the computer industry, current extensive patent coverage, and the rapid rate of issuance of new patents, it is possible certain
components of the Company's products and business methods may unknowingly infringe existing patents of others. The Company has from
time to time been notified that it may be infringing certain patents or other intellectual property rights of others. The Company believes that any
necessary patent or other rights could be obtained on commercially reasonable terms. However, there can be no assurance that the necessary
licenses would be available on acceptable terms, if at all, or that the Company would prevail in any such challenge. The failure to obtain
necessary licenses or other rights, or
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litigation arising out of such claims, could adversely affect the Company's results of operations and financial condition.
Information regarding litigation involving the Company related to alleged patent infringement is set forth in Part I, Item 3 of this Form 10-K,
which information is hereby incorporated by reference.
Foreign and Domestic Operations and Geographic Data
The United States represents the Company's largest geographic marketplace. Approximately 55% of the Company's net sales in fiscal 2001
came from sales to customers inside the United States. Final assembly of products sold by the Company is conducted in the Company's
manufacturing facilities in Sacramento, California, Cork, Ireland, and Singapore and by external vendors in Taiwan, Korea, Mexico, the
People's Republic of China, and the Czech Republic. Margins on sales of Apple products in foreign countries, and on 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.
Information regarding financial data by geographic segment is set forth in Part II, Item 8 of this Form 10-K in the Notes to Consolidated
Financial Statements at Note 11, "Segment Information and Geographic Data," which information is hereby incorporated by reference.
Additional information regarding the risks associated with international operations is set forth in Part II, Item 7 of this Form 10-K under the
heading "Factors That May Affect Future Results and Financial Condition," which information is hereby incorporated by reference.
Seasonal Business
Although the Company does not consider its business to be highly seasonal, it has historically experienced increased sales in its first and fourth
fiscal quarters, compared to other quarters in its fiscal year, due to seasonal demand related to the holiday season and the school year. However,
past performance should not be considered a reliable indicator of the Company's future net sales or financial performance.
Warranty
The Company offers a limited parts and labor warranty on its hardware products. The warranty period is typically one year from the date of
purchase by the end user. The Company also offers a 90-day warranty for Apple software and for Apple service parts used to repair Apple
hardware products. In addition, consumers may purchase extended service coverage on most Apple hardware products in all of the Company's
major markets.
Backlog
In the Company's experience, the actual amount of product backlog at any particular time is not a meaningful indication of its future business
prospects. In particular, backlog often increases in anticipation of or immediately following new product introductions because of over ordering
by dealers anticipating shortages. Backlog often is reduced once dealers and customers believe they can obtain sufficient supply. Because of the
foregoing, backlog should not be considered a reliable indicator of the Company's ability to achieve any particular level of revenue or financial
performance.
Environmental Laws
Compliance with federal, state, local, 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.