Apple 2003 Annual Report Download - page 14

file electronically with the SEC at http://www.sec.gov. The contents of these websites are not incorporated into this filing. Further, the
Company's references to the URLs for these websites are intended to be inactive textual references only.
Item 2. Properties
The Company's headquarters are located in Cupertino, California. The Company has manufacturing facilities in Sacramento, California and
Cork, Ireland. As of September 27, 2003, the Company leased approximately 3.2 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 538,000 square feet of retail
space. The major facility leases are for terms of 5 to 10 years and generally provide renewal options for terms of 3 to 5 additional years. Leases
for retail space are for terms of 5 to 15 years and often contain multi-year renewal options.
The Company owns its manufacturing facility in Cork, Ireland, which has approximately 352,000 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
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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
169,000 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.
Item 3. Legal Proceedings
The Company is subject to various legal proceedings and claims that are discussed below. The Company is also subject to certain other legal
proceedings and claims that have arisen in the ordinary course of business and which 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 individually or in
the aggregate 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 Company settled certain legal matters in 2003, which did not individually or in the aggregate have a material impact on
the Company's results of operations.
Antor Media Corporation v. Apple Computer, Inc. et al.
Plaintiff, Antor Media filed this action on September 5, 2003 in the United States District Court in the Eastern District of Texas alleging
infringement by the Company and other defendants of patent 5,754,961 relating to a "Method and Apparatus for Transmitting Information
Recorded on Information Storage Means from a Central Server to Subscribers via a High Data Rate Digital Telecommunications Network."
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 and invalidity.
Apple Corps Ltd. v. Apple Computer, Inc.; Apple Computer, Inc. v. Apple Corps Ltd.
Plaintiff, Apple Corps filed this action on July 4, 2003 in the High Court of Justice, Chancery Division, in London alleging that the Company
has breached a 1991 agreement which resolved earlier trademark litigation regarding use of the Apple marks. Plaintiff seeks unspecified
damages and other relief. The Company filed a motion on October 13, 2003, challenging jurisdiction in the U.K. On October 8, 2003, the
Company filed a case in the United States District Court for the Northern District of California requesting a declaratory judgment that the
Company has not breached the 1991 agreement.
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