Apple 2006 Annual Report Download - page 34

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Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The Company’s headquarters are located in Cupertino, California. The Company has a manufacturing facility in Cork, Ireland. As of
September 30, 2006, the Company leased approximately 3.6 million square feet of space, primarily in the U.S., and to a lesser extent, in
Europe, Japan, Canada, and the Asia Pacific region. The major facility leases are for terms of 5 to 15 years and generally provide renewal
options for terms of 3 to 5 additional years. Leased space includes approximately 1.2 million square feet of retail space, a majority of which is
in the U.S. Lease terms for retail space range from 5 to 20 years, the majority of which are for 10 years, and often contain multi-year renewal
options.
The Company owns a 352,000 square-foot manufacturing facility in Cork, Ireland that also houses a customer support call center. The
Company also owns 805,000 square feet of facilities in Sacramento, California that include warehousing and distribution operations as well as
a customer support call center. In addition, the Company owns approximately 1.9 million square feet of facilities for research and development
and corporate functions in Cupertino, California, including approximately 948,000 square feet purchased during 2006 for the future
development of the Company’s second corporate campus, and approximately 107,000 square feet for a data center in Newark, California.
Outside the U.S., 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 matters during 2006 that did not individually or in the aggregate have a material impact on the
Company’s results of operations.
Allen v. Apple Computer, Inc.
On January 28, 2005, a plaintiff filed a purported nationwide class action in Los Angeles Superior Court alleging that a defect in the
Company’s 17-inch Studio Display monitors results in dimming of half of the screen and constant blinking of the power light. Plaintiff filed an
amended complaint on October 24, 2005, adding additional named plaintiffs and expanding the alleged class to include purchasers of the 20-
inch Apple Cinema Display and the 23-inch Apple Cinema HD Display. The amended complaint alleges that the displays have a purported
defect that causes dimming of one-half of the screen, and that the Company misrepresented the quality of the displays and/or concealed the
purported defect. Plaintiffs assert claims under California Business & Professions Code §17200 (unfair competition); California Business &
Professions Code §17500 (false advertising) and the Consumer Legal Remedies Act. The amended complaint seeks remedies including
damages and equitable relief. On November 14, 2005, the Company
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