Apple 2007 Annual Report Download - page 15

Patents, Trademarks, Copyrights and Licenses
The Company currently holds rights to patents and copyrights relating to certain aspects of its computer systems, iPods, iPhone, peripherals,
software, and services. In addition, the Company has registered, and/or has applied to register, trademarks and service marks in the U.S. and a
number of foreign countries for "Apple," the Apple logo, "Macintosh," "Mac," "iPod," "iTunes," "iTunes Store," "iPhone," and numerous other
trademarks and service marks. Although the Company believes the ownership of such patents, copyrights, trademarks and service marks is an
important factor in its business and that its success does depend in part on the ownership thereof, the Company relies primarily on the innovative
skills, technical competence, and marketing abilities of its personnel.
Many of the Company's products are designed to include intellectual property obtained from third-parties. While it may be necessary in the
future to seek or renew licenses relating to various aspects of its products and business methods, the Company believes, based upon past
experience and industry practice, such licenses generally could be obtained on commercially reasonable terms; however, there is no guarantee
that such licenses could be obtained at all. Because of technological changes in the computer industry, current extensive patent coverage, and the
rapid rate of issuance of new patents, it is possible certain components of the Company's products and business methods may unknowingly
infringe existing patents or intellectual property rights of others. From time to time, the Company has been notified that it may be infringing
certain patents or other intellectual property rights of third-parties.
Foreign and Domestic Operations and Geographic Data
The U.S. represents the Company's largest geographic marketplace. Approximately 60% of the Company's net sales in 2007 came from sales to
customers inside the U.S. Final assembly of products sold by the Company is currently performed in the Company's manufacturing facility in
Cork, Ireland, and by external vendors in Fremont, California; Fullerton, California; Taiwan; the Republic of Korea ("Korea"); the People's
Republic of China ("China"); and the Czech Republic. Currently, the supply and manufacture of many critical components used in the
Company's products is performed by sole-sourced third-party vendors in the U.S., China, Japan, Korea, and Singapore. Final assembly of
substantially all of the Company's portable products, including MacBook Pro, MacBook, iPod, and iPhone, is performed by sole-sourced third-
party vendors in China. Margins on sales of the Company's products in foreign countries, and on sales of products that include components
obtained from foreign suppliers, can be adversely affected by foreign currency exchange rate fluctuations and by international trade regulations,
including tariffs and antidumping penalties.
Information regarding financial data by geographic segment is set forth in Part II, Item 8 of this Form 10-K and in Notes to Consolidated
Financial Statements at Note 9, "Segment Information and Geographic Data."
Seasonal Business
The Company has historically experienced increased net sales in its first and fourth fiscal quarters compared to other quarters in its fiscal year
due to seasonal demand related to the holiday season and the beginning of the school year. This historical pattern should not be considered a
reliable indicator of the Company's future net sales or financial performance.
Warranty
The Company offers a basic limited parts and labor warranty on most of its hardware products, including Mac computers, iPods and iPhones.
The basic warranty period is typically one year from the date of purchase by the end-user. The Company also offers a 90-day basic warranty for
its service parts used to repair the Company's hardware products. In addition, consumers may purchase extended service coverage on most of the
Company's hardware products in all of its major markets.
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