Apple 2009 Annual Report Download - page 28

Download and view the complete annual report

Please find page 28 of the 2009 Apple annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 106

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106

Table of Contents
As of September 26, 2009, the end of the annual period covered by this report, the Company was subject to the various legal proceedings and
claims discussed below, as well as certain other legal proceedings and claims that have not been fully resolved and that have arisen in the
ordinary course of business. 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 materially adversely affect its financial condition or operating results.
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 the fourth quarter of 2009 that did not individually or
in the aggregate have a material impact on the Company’s financial condition and results of operations.
Bader v. Anderson, et al.
Plaintiff filed this purported shareholder derivative action against the Company and each of its then current executive officers and members of its
Board of Directors on May 19, 2005 in Santa Clara County Superior Court asserting claims for breach of fiduciary duty, material misstatements
and omissions and violations of California Business & Professions Code §17200 (unfair competition). The complaint alleged that the Company’
s
March 14, 2005, proxy statement was false and misleading for failure to disclose certain information relating to the Apple Computer, Inc.
Performance Bonus Plan, which was approved by shareholders at the annual meeting held on April 21, 2005. Plaintiff, who ostensibly brought
suit on the Company’
s behalf, made no demand on the Board of Directors and alleged that such demand was excused. The complaint sought
injunctive and other relief for purported injury to the Company. On July 27, 2005, plaintiff filed an amended complaint alleging that, in addition
to the purported derivative claims, adoption of the bonus plan and distribution of the proxy statement describing that plan also inflicted injury on
her directly as an individual shareholder. On January 10, 2006, the Court sustained defendants’
demurrer to the amended complaint, with leave
to amend. Plaintiff filed a second amended complaint on February 7, 2006, and the Company filed a demurrer. After a hearing on June 13, 2006,
the Court sustained the demurrer without leave to amend as to the non-
director officers and with leave to amend as to the directors. On July 24,
2006, plaintiff filed a third amended complaint, which purported to bring claims derivatively as well as directly on behalf of a class of common
stockholders who have been or will be harmed by virtue of the allegedly misleading proxy statement. In addition to reasserting prior causes of
action, the third amended complaint included a claim that the Company violated the terms of the plan, and a claim for waste related to restricted
stock unit grants to certain officers in 2003 and 2004 and an option grant to the Company’
s CEO in January 2000. The Company filed a
demurrer to the third amended complaint. On January 30, 2007, the Court sustained the Company’
s demurrer with leave to amend. On May 8,
2007, plaintiff filed a fourth amended complaint. The Company filed a demurrer to the fourth amended complaint, which the Court sustained,
without leave to amend, on October 12, 2007. On October 25, 2007, the Court entered a final judgment in favor of defendant and ordered the
case dismissed with prejudice. On November 26, 2007, plaintiff filed a notice of appeal. A hearing on plaintiff’
s appeal is scheduled for
October 29, 2009.
Birdsong v. Apple Computer, Inc.
This action alleges that the Company’
s iPod music players, and the ear bud headphones sold with them, are inherently defective in design and
are sold without adequate warnings concerning the risk of noise-
induced hearing loss by iPod users. The Birdsong action was initially filed on
January 30, 2006 in the United States District Court for the Western District of Louisiana asserting Louisiana causes of action on behalf of a
purported Louisiana class of iPod purchasers. A similar action (Patterson v. Apple Computer, Inc.)
was filed on January 31, 2006 in the United
States District Court for the Northern District of California asserting California causes of action on behalf of a purported class of all iPod
purchasers within the four-
year period before January 31, 2006. The Birdsong action was transferred to the Northern District of California, and
the Patterson action was dismissed. An amended complaint was subsequently filed in Birdsong, dropping the Louisiana law-
based claims and
adding California law-based claims equivalent to those in Patterson. After the Company filed a motion to
25
Item 3.
Legal Proceedings