Apple 2008 Annual Report Download - page 27

Table of Contents
The Company is exposed to credit risk on its accounts receivable and prepayments related to long-term supply agreements. This risk is
heightened during periods when economic conditions worsen.
A substantial majority of the Company’s outstanding trade receivables are not covered by collateral or credit insurance. The Company also has
unsecured non-trade receivables resulting from the sale by the Company of components to vendors who manufacture sub-
assemblies or assemble
final products for the Company. In addition, the Company has made prepayments associated with long-term supply agreements to secure supply
of NAND flash memory. While the Company has procedures to monitor and limit exposure to credit risk on its trade and non-trade receivables
as well as long-term prepayments, there can be no assurance such procedures will effectively limit its credit risk and avoid losses, which could
have a material adverse effect on the Company’s financial condition and operating results.
The Company is subject to risks associated with laws and regulations related to health, safety and environmental protection.
The Company’s products and services, and the production and distribution of those goods and services, are subject to a variety of laws and
regulations. These may require the Company to offer customers the ability to return a product at the end of its useful life and place responsibility
for environmentally safe disposal or recycling with the Company. Such laws and regulations have been passed in several jurisdictions in which
the Company operates, including various countries within Europe and Asia, certain Canadian provinces and certain states within the U.S.
Although the Company does not anticipate any material adverse effects based on the nature of its operations and the thrust of such laws, there is
no assurance such existing laws or future laws will not have a material adverse effect on the Company’s financial condition and operating
results.
Changes in the Company’s tax rates could affect its future results.
The Company’s future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates,
changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation. The Company is subject to the
continuous examination of its income tax returns by the Internal Revenue Service and other tax authorities. The Company regularly assesses the
likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for taxes. There can be no
assurance that the outcomes from these examinations will not have a material adverse effect on the Company’s financial condition and operating
results.
The Company is subject to risks associated with the availability and coverage of insurance.
For certain risks, the Company does not maintain insurance coverage because of cost and/or availability. Because the Company retains some
portion of its insurable risks, and in some cases self-
insures completely, unforeseen or catastrophic losses in excess of insured limits could have a
material adverse effect on the Company’s financial condition and operating results.
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 27, 2008, the Company leased approximately 4.2 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 generally for terms of 3 to 20 years and generally provide renewal
options for terms of 1 to 5 additional years. Leased space includes approximately 1.8 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.
As of September 27, 2008, the Company owned a 367,000 square-foot manufacturing facility in Cork, Ireland that also housed a customer
support call center. The Company also owned 805,000 square feet of facilities in
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