Apple 2014 Annual Report Download - page 78

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Other Commitments
The Company utilizes several outsourcing partners to manufacture sub-assemblies for the Company’s products and to
perform final assembly and testing of finished products. These outsourcing partners acquire components and build product
based on demand information supplied by the Company, which typically covers periods up to 150 days. The Company also
obtains individual components for its products from a wide variety of individual suppliers. Consistent with industry practice, the
Company acquires components through a combination of purchase orders, supplier contracts and open orders based on
projected demand information. Where appropriate, the purchases are applied to inventory component prepayments that
are outstanding with the respective supplier. As of September 27, 2014, the Company had outstanding off-balance sheet third-
party manufacturing commitments and component purchase commitments of $24.5 billion.
In addition to the off-balance sheet commitments mentioned above, the Company had outstanding obligations of $3.4 billion
as of September 27, 2014, which consisted mainly of commitments to acquire capital assets, including product tooling and
manufacturing process equipment, and commitments related to advertising, R&D, Internet and telecommunications services
and other obligations.
Contingencies
The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that
have not been fully adjudicated. In the opinion of management, there was not at least a reasonable possibility the Company
may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies.
However, the outcome of litigation is inherently uncertain. Therefore, although management considers the likelihood of such an
outcome to be remote, if one or more of these legal matters were resolved against the Company in a reporting period for
amounts in excess of management’s expectations, the Company’s consolidated financial statements for that reporting period
could be materially adversely affected.
Apple Inc. v. Samsung Electronics Co., Ltd, et al.
On August 24, 2012, a jury returned a verdict awarding the Company $1.05 billion in its lawsuit against Samsung Electronics
Co., Ltd and affiliated parties in the United States District Court, Northern District of California, San Jose Division. On March 6,
2014, the District Court entered final judgment in favor of the Company in the amount of approximately $930
million. Because the award is now subject to appeal, the Company has not recognized the award in its results of operations.
VirnetX, Inc. v. Apple Inc. et al.
On August 11, 2010, VirnetX, Inc. filed an action against the Company alleging that certain of its products infringed on four
patents relating to network communications technology. On November 6, 2012, a jury returned a verdict against the Company,
and awarded damages of $368 million. On September 16, 2014, the Court of Appeals for the Federal Circuit affirmed the
District Court’s decision in part, reversed in part, and vacated the damages award. The case has been remanded for further
proceedings.
Apple Inc. | 2014 Form 10-K | 76