Apple 2002 Annual Report Download - page 63

leases, was $92 million, $80 million, and $72 million in 2002, 2001, and 2000, respectively. Future minimum lease payments under
noncancelable operating leases having remaining terms in excess of one year as of September 28, 2002, 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
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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, the majority of which occurs in various parts of Asia.
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.
Contingencies
Beginning on September 27, 2001, three shareholder class action lawsuits were filed in the United States District Court for the Northern
District of California against the Company and its Chief Executive Officer. These lawsuits are substantially identical, and purport to bring suit
on behalf of persons who purchased the Company's publicly traded common stock between July 19, 2000, and September 28, 2000. The
complaints allege violations of the 1934 Securities Exchange Act and seek unspecified compensatory damages and other relief. The Company
believes these claims are without merit and intends to defend them vigorously. The Company filed a motion to dismiss on June 4, 2002, which
was heard by the Court on September 13, 2002. On December 11, 2002, the Court granted the Company's motion to dismiss for failure to state
a cause of action, with leave to plaintiffs to amend their complaint within thirty days.
The Company is subject to certain other legal proceedings and claims that have arisen in the ordinary course of business and have not been
fully adjudicated. In the opinion of management, the Company does not have a potential liability related to any current legal proceedings and
claims that would have a material adverse effect on its financial condition, liquidity or results of operations. However, the results of legal
proceedings cannot be predicted with certainty. Should the Company fail to prevail in any of these legal matters or should several of these legal
matters be resolved against the Company in the same reporting period, the operating results of a particular reporting period could be materially
adversely affected.
The parliament of the European Union is working on finalizing the Waste Electrical and Electronic Equipment Directive (the Directive). The
Directive makes producers 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
June 2004, while the producers' financial obligations are scheduled to start June 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.
Fiscal Years
2003
$
83
2004
78
2005
66
2006
55
2007
42
Later years
140
Total minimum lease payments
$
464