Apple 2015 Annual Report Download - page 17

The Company devotes significant resources to network security, data encryption and other security measures to protect its systems and
data, but these security measures cannot provide absolute security. To the extent the Company was to experience a breach of its
systems and was unable to protect sensitive data, such a breach could materially damage business partner and customer relationships,
and curtail or otherwise adversely impact access to online stores and services. Moreover, if a computer security breach affects the
Company’s systems or results in the unauthorized release of PII, the Company’s reputation and brand could be materially damaged, use
of the Company’s products and services could decrease, and the Company could be exposed to a risk of loss or litigation and possible
liability. While the Company maintains insurance coverage that, subject to policy terms and conditions and subject to a significant self-
insured retention, is designed to address certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses or
all types of claims that may arise in the continually evolving area of cyber risk.
The Company’s business is subject to a variety of U.S. and international laws, rules, policies and other obligations regarding data
protection.
The Company is subject to federal, state and international laws relating to the collection, use, retention, security and transfer of PII. In
many cases, these laws apply not only to third-party transactions, but also to transfers of information between the Company and its
subsidiaries, and among the Company, its subsidiaries and other parties with which the Company has commercial relations. Several
jurisdictions have passed laws in this area, and other jurisdictions are considering imposing additional restrictions. These laws continue to
develop and may be inconsistent from jurisdiction to jurisdiction. Complying with emerging and changing international requirements may
cause the Company to incur substantial costs or require the Company to change its business practices. Noncompliance could result in
penalties or significant legal liability.
The Company’s privacy policy, which includes related practices concerning the use and disclosure of data, is posted on its website. Any
failure by the Company, its suppliers or other parties with whom the Company does business to comply with its posted privacy policy or
with other federal, state or international privacy-related or data protection laws and regulations could result in proceedings against the
Company by governmental entities or others.
The Company is also subject to payment card association rules and obligations under its contracts with payment card processors. Under
these rules and obligations, if information is compromised, the Company could be liable to payment card issuers for associated expenses
and penalties. In addition, if the Company fails to follow payment card industry security standards, even if no customer information is
compromised, the Company could incur significant fines or experience a significant increase in payment card transaction costs.
The Company’s success depends largely on the continued service and availability of key personnel.
Much of the Company’s future success depends on the continued availability and service of key personnel, including its Chief Executive
Officer, executive team and other highly skilled employees. Experienced personnel in the technology industry are in high demand and
competition for their talents is intense, especially in Silicon Valley, where most of the Company’s key personnel are located.
The Company’s business may be impacted by political events, war, terrorism, public health issues, natural disasters and other
business interruptions.
War, terrorism, geopolitical uncertainties, public health issues and other business interruptions have caused and could cause damage or
disruption to international commerce and the global economy, and thus could have a material adverse effect on the Company, its
suppliers, logistics providers, manufacturing vendors and customers, including channel partners. The Company’s business operations are
subject to interruption by, among others, natural disasters, whether as a result of climate change or otherwise, fire, power shortages,
nuclear power plant accidents, terrorist attacks and other hostile acts, labor disputes, public health issues and other events beyond its
control. Such events could decrease demand for the Company’s products, make it difficult or impossible for the Company to make and
deliver products to its customers, including channel partners, or to receive components from its suppliers, and create delays and
inefficiencies in the Company’s supply chain. Should major public health issues, including pandemics, arise, the Company could be
adversely affected by more stringent employee travel restrictions, additional limitations in freight services, governmental actions limiting the
movement of products between regions, delays in production ramps of new products and disruptions in the operations of the Company’s
manufacturing vendors and component suppliers. The majority of the Company’s R&D activities, its corporate headquarters, information
technology systems and other critical business operations, including certain component suppliers and manufacturing vendors, are in
locations that could be affected by natural disasters. In the event of a natural disaster, the Company could incur significant losses, require
substantial recovery time and experience significant expenditures in order to resume operations.
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