Apple 2002 Annual Report Download - page 13

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The parliament of the European Union is working to finalize the Waste Electrical and Electronic Equipment Directive (the Directive). The
Directive makes manufacturers of electrical goods, including personal computers, financially responsible for the collection, recycling, and safe
disposal of past and future products. The Directive must now be approved and implemented by individual European Union governments by
2005. The Company's potential liability resulting from the Directive related to past sales of its products and expenses associated with future
sales of its product may be substantial. However, because it is likely that specific laws, regulations, and enforcement policies will vary
significantly between individual European member states, it is not currently possible to estimate the Company's existing liability or future
expenses resulting from the Directive. As the European Union and its individual member states clarify specific requirements and policies with
respect to the Directive, the Company will continue to assess its potential financial impact. Similar legislation may be enacted in other
geographies, including federal and state legislation in the United States, the cumulative impact of which could be significant.
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Employees
As of September 28, 2002, Apple and its subsidiaries worldwide had 10,211 employees and an additional 2,030 temporary employees and
contractors.
Item 2. Properties
The Company's headquarters are located in Cupertino, California. The Company has manufacturing facilities in Sacramento, California, Cork,
Ireland, and Singapore. As of September 28, 2002, the Company leased approximately 2.7 million square feet of space, primarily in the United
States, and to a lesser extent, in Europe, Japan, and the Asia Pacific region. Leased space in the United States includes 395,000 square feet of
retail space. Leases are generally for terms of 5 to 10 years, and usually provide renewal options for terms of 3 to 5 additional years.
The Company owns its manufacturing facilities in Cork, Ireland, and Singapore, which total approximately 617,000 square feet. The Company
also owns a 752,000 square-foot facility in Sacramento, California, which is used as a manufacturing, warehousing and distribution center. The
Sacramento and Cork facilities also house customer support call centers. In addition, the Company owns 930,000 square feet of facilities
located in Cupertino, California, used for research and development and corporate functions. Outside the United States, the Company owns
additional facilities totaling approximately 106,000 square feet.
The Company believes its existing facilities and equipment are well maintained and in good operating condition. The Company has invested in
internal capacity and strategic relationships with outside manufacturing vendors, and therefore believes it has adequate manufacturing capacity
for the foreseeable future. The Company continues to make investments in capital equipment as needed to meet anticipated demand for its
products.
Information regarding critical business operations that are located near major earthquake faults 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."
Item 3. Legal Proceedings
The Company is subject to certain legal proceedings and claims, including those described below, which have arisen in the ordinary course of
business and have not been fully adjudicated. Information regarding the risks and potential financial impact of these legal matters 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," and in Part II, Item 8 of
this Form 10-K in the Notes to Consolidated Financial Statements at Note 10 under the subheading "Commitments and Contingencies."
Articulate Systems, Inc. v. Apple Computer, Inc.
Plaintiff Articulate filed this action in March 1996 in the United States District Court in Massachusetts claiming patent infringement relating to
voice recognition technology. Plaintiff seeks unspecified damages and other relief. The Company has answered the complaint, denying all
allegations and asserting numerous affirmative defenses. The Company also asserted counterclaims requesting declaratory judgment for non-
infringement, unenforceability and invalidity. The case was stayed for several months pending resolution of four summary judgment motions
filed by the Company, all of which were denied by the Court. Through a series of corporate transactions the assets belonging to Plaintiff were
acquired by a subsidiary, Lernout & Hauspie Speech Products N.V. ("L&H"). L&H filed for bankruptcy in November 2000 and is being
liquidated as part of the bankruptcy. The case is currently stayed pending the resolution of the liquidation.
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