Apple 2006 Annual Report Download - page 42

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announcement on June 29, 2006 that an internal investigation had discovered irregularities related to the issuance of certain stock option grants
made between 1997 and 2001, that a special committee of the Company’s outside directors had retained independent counsel to perform an
investigation, and that the Company had informed the Securities and Exchange Commission. The Company’s response to the Consolidated
Complaint is not yet due.
In re Apple Computer, Inc. Derivative Litigation (formerly Plumbers and Pipefitters v. Jobs, et al. and Related Actions) (State Action); Boston
Retirement Board v. Apple Computer, Inc.
On July 5, 2006, a putative derivative action captioned Plumbers and Pipefitters v. Jobs, et. al. , was filed in California Superior Court for the
County of Santa Clara. A number of related actions were filed in the subsequent weeks, and have been consolidated into a single action
captioned In re Apple Computer, Inc. Derivative Litigation , No. 1:06CV066692, assigned to the Hon. Joseph Huber. These actions purport to
assert claims on behalf of the Company against several current and former executive officers and members of the Board of Directors alleging
improper backdating of stock option grants to maximize certain defendants’ profits, failing to properly account for and take tax deductions for
those grants and issuing false financial statements. The Company is named as a nominal defendant. A consolidated complaint was filed on
October 5, 2006, alleging a variety of causes of action under California law, including claims for unjust enrichment, breach of fiduciary duty,
violation of the California Corporations Code, abuse of control, accounting, constructive trust, rescission, deceit, gross mismanagement and
waste of corporate assets. On December 7, 2006, the Court granted the Company’s motion to stay these actions.
On November 3, 2006, the Boston Retirement Board, a purported shareholder, filed a petition for writ of mandate against the Company in
California Superior Court for the County of Santa Clara County ( Boston Retirement Board v. Apple Computer Inc. ). The petition seeks to
compel the Company to allow inspection of certain corporate records relating to the Company’s option practices and the Special Committee’s
investigation. The Company’s response to the petition is not yet due.
Lenzi v. Apple Canada, Inc.; Wolfe v. Apple Computer, Inc. and Apple Canada, Inc.; Hirst v. Apple Canada, Inc.; Hamilton v. Apple
Computer, Inc. and Apple Canada, Inc.
Plaintiff filed a purported class action on June 7, 2005, in Superior Court, in Montreal, Quebec, Canada allegedly on behalf of Quebec
customers claiming false advertising and breach of warranty relating to iPod battery life. Plaintiff sought
authorization to institute a class action
on behalf of Generations 1, 2 and 3 iPod owners in Quebec. On February 2, 2006, the Court dismissed Plaintiff’s motion for authorization to
institute a class action. Plaintiff has appealed this ruling, and the appeal will be heard on February 22, 2007.
Two similar complaints relative to iPod battery life, Wolfe v. Apple and Hirst v. Apple , were filed in Toronto, Ontario, Canada on August 15,
2005 and September 12, 2005, respectively. Both actions define the purported class as a national class consisting of all persons in Canada who
have purchased or who own an iPod. Counsel has proposed an amended complaint to which the Company has not consented. In addition, a
similar complaint regarding iPod battery life, Hamilton v. Apple Computer, Inc. and Apple Canada, Inc. was filed in Alberta, Calgary, Canada
on October 5, 2005, purportedly on behalf of all purchasers of iPods in Alberta, Canada. That complaint has not been served.
MacTech Systems v. Apple Computer, Inc.; Macadam v. Apple Computer, Inc.; Computer International, Inc. v. Apple Computer, Inc.; Elite
Computers and Software, Inc. v. Apple Computer, Inc.; The Neighborhood Computer Store v. Apple Computer, Inc.; MacAccessory
Center, Inc. v. Apple Computer, Inc.; Creative Online Computer Services, Inc., DBA MacOnline v. Apple Computer, Inc.; MacGuys, Inc. v.
Apple Computer, Inc.
(all in Santa Clara County Superior Court)
Eight resellers filed similar lawsuits against the Company between late 2002 and early 2006 asserting various causes of action including breach
of contract, fraud, negligent and intentional interference with
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