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0000320193
20070202
10-Q
465
Controls and Procedures Evaluation of Disclosure Controls and Procedures Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as ...
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
466
Changes in Internal Control Over Financial Reporting There were no changes in the Company’s internal control over financial reporting during the first quarter of 2007, which were identified in connection with management’s evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, that have ...
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
467
PART II.
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0000320193
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10-Q
468
OTHER INFORMATION Item 1.
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0000320193
20070202
10-Q
469
Legal Proceedings The Company is subject to various legal proceedings and claims that are discussed below.
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0000320193
20070202
10-Q
470
The Company is also subject to certain other legal proceedings and claims that have arisen in the ordinary course of business and which have not been fully adjudicated.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
471
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 have a material adverse effect on its financial condition, liquidity or results of operations.
0001104659-07-006648/full-submission.txt
0000320193
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10-Q
472
However, the results of legal proceedings cannot be predicted with certainty.
0001104659-07-006648/full-submission.txt
0000320193
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10-Q
473
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.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
474
The Company settled certain matters during the first quarter of 2007 that did not individually or in the aggregate have a material impact on the Company’s results of operations.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
475
Allen v. Apple Computer, Inc. On January 28, 2005, a plaintiff filed a purported nationwide class action in Los Angeles Superior Court alleging that a defect in the Company’s 17-inch Studio Display monitors results in dimming of half of the screen and constant blinking of the power light.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
476
Plaintiff filed an amended complaint on October 24, 2005, adding additional named plaintiffs and expanding the alleged class to include purchasers of the 20-inch Apple Cinema Display and the 23-inch Apple Cinema HD Display.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
477
The amended complaint alleges that the displays have a purported defect that causes dimming of one-half of the screen, and that the Company misrepresented the quality of the displays and/or concealed the purported defect.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
478
Plaintiffs assert claims under California Business & Professions Code §17200 (unfair competition), California Business & Professions Code §17500 (false advertising), and the Consumer Legal Remedies Act.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
479
The amended complaint seeks remedies including damages and equitable relief.
0001104659-07-006648/full-submission.txt
0000320193
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10-Q
480
On November 14, 2005, the Company filed an answer to the amended complaint as to the allegations regarding the 17-inch display and a demurrer/motion to strike as to the allegations regarding the 20-inch and 23-inch displays on the ground that plaintiffs failed to allege that they purchased those displays.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
481
At a status conference on November 1, 2005, the Court ordered plaintiffs to amend their complaint.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
482
Plaintiff filed an amended complaint on December 12, 2005, and the Company answered on January 5, 2006 denying all allegations and asserting numerous affirmative defenses.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
483
The Company has reached a settlement in this matter, which was given preliminary approval by the Court on September 18, 2006.
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0000320193
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10-Q
484
The final approval hearing is scheduled for February 15, 2007.
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0000320193
20070202
10-Q
485
Settlement of this matter will not have a material effect on the Company’s financial position or results of operations.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
486
Apple Computer, Inc. v. Burst.com, Inc.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
487
The Company filed an action for declaratory judgment against defendant Burst.com, Inc. on January 4, 2006 in the United States District Court for the Northern District of California.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
488
The Company seeks declaratory judgment that U.S. Patent Nos.
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0000320193
20070202
10-Q
489
4,963,995, 5,164,839, 5,057,932 and 5,995,705 (“Burst patents”) are invalid and not infringed by the Company.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
490
Burst filed an answer and counterclaim on April 17, 2006.
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0000320193
20070202
10-Q
491
Burst alleges that the following Apple products and services infringe U.S. Patent Nos.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
492
4,963,995, 5,057,932, 5,164,839, and 5,995,705; iTunes Store, iPod devices, QuickTime products (including QuickTime player and QuickTime Streaming Server), iTunes software, other Apple software products (Final Cut Studio, GarageBand, iMovie, iDVD, iWeb), the use of the .Mac services and Apple computers and servers runn...
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
493
The Burst patents allegedly relate to methods and devices used for “burst” transmission of audio or video files.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
494
The case is in discovery.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
495
A claim construction hearing is set for February 8, 2007.
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0000320193
20070202
10-Q
496
Trial is set for February 26, 2008.
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0000320193
20070202
10-Q
497
Apple Corps Ltd. v. Apple Computer, Inc.; Apple Computer, Inc. v. Apple Corps Ltd.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
498
Plaintiff Apple Corps filed this action on July 4, 2003 in the High Court of Justice, Chancery Division, in London alleging that the Company has breached a 1991 agreement that resolved earlier trademark litigation between the parties regarding use of certain Apple marks.
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0000320193
20070202
10-Q
499
Plaintiff seeks an injunction, unspecified damages, and other relief.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
500
The Company filed a motion on October 13, 2003, challenging jurisdiction in the U.K.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
501
The Court denied this motion on April 7, 2004.
0001104659-07-006648/full-submission.txt
0000320193
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10-Q
502
The Company filed an appeal of the Court’s decision but subsequently withdrew the appeal.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
503
In November 2004, plaintiff served the Company with an Amended Bill of Particulars and on December 23, 2004, the Company filed a Defence.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
504
On November 24, 2005, plaintiff filed a Re-Amended Bill of Particulars and the Company filed its Defence on December 16, 2005.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
505
Trial took place from March 29, 2006 through April 5, 2006.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
506
Judgment was given in favor of the Company on May 8, 2006 and Apple Corps was ordered to pay a portion of the Company’s fees, the amount to be agreed or determined in a subsequent proceeding.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
507
Apple Corps has filed an appeal, which is scheduled to be heard in late February 2007.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
508
On October 8, 2003, the Company filed a lawsuit against Apple Corps in the United States District Court for the Northern District of California requesting a declaratory judgment that the Company has not breached the 1991 agreement.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
509
Apple Corps challenged jurisdiction in the California case but the Court denied that challenge on March 25, 2004.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
510
Apple Corps subsequently prevailed on a motion to stay the California case during the pendency of the U.K. action.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
511
The Company has dismissed the California lawsuit without prejudice.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
512
Bader v. Anderson, et al.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
513
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 ...
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
514
Plaintiff alleges 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.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
515
Performance Bonus Plan, which was approved by shareholders at the annual meeting held on April 21, 2005.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
516
Plaintiff, who ostensibly brings suit on the Company’s behalf, has made no demand on the Board of Directors and alleges that such demand is excused.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
517
Plaintiff seeks injunctive and other relief for purported injury to the Company.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
518
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.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
519
On January 10, 2006, the Court sustained defendants’ demurrer to the amended complaint, with leave to amend.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
520
Plaintiff filed a second amended complaint on February 7, 2006, and the Company filed a demurrer.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
521
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.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
522
On July 24, 2006, plaintiff filed a third amended complaint, which purports 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.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
523
In addition to reasserting prior causes of action, the third amended complaint includes 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.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
524
The Company filed a demurrer to the third amended complaint.
0001104659-07-006648/full-submission.txt
0000320193
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10-Q
525
On January 30, 2007, the Court sustained the Company’s demurrer with leave to amend.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
526
Baghdasarian, et al.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
527
v. Apple Computer, Inc.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
528
Plaintiffs filed this action in Los Angeles County Superior Court on October 31, 2005, on behalf of a purported nationwide class of all purchasers of all Apple wireless products (router, modem, or adaptor) sold at any time.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
529
The complaint alleges that the Company misrepresented the transmission rates of these products.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
530
The complaint alleges causes of action for breach of express warranty and for violations of the Consumer Legal Remedies Act, California Business & Professions Code §17200 (unfair competition), and California Business & Professions Code §17500 (false advertising).
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
531
The complaint seeks damages and equitable remedies.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
532
On December 15, 2005, the Company filed an answer denying all allegations and asserting numerous affirmative defenses.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
533
The parties have reached a settlement and have filed a request for dismissal.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
534
The settlement will not have a material effect on the Company’s financial position or results of operations.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
535
Birdsong v. Apple Computer, Inc.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
536
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.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
537
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.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
538
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.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
539
The Birdsong action was transferred to the Northern District of California, and the Patterson action was dismissed.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
540
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.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
541
After the Company filed a motion to dismiss on November 3, 2006, plaintiffs agreed not to oppose the motion and filed a second amended complaint on January 16, 2007.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
542
That complaint alleges California law-based claims for breaches of implied and express warranties, violations of California Business & Professions Code §17200 (unfair competition), California Business & Professions Code §17500 (false advertising), the Consumer Legal Remedies Act and negligent misrepresentation on behal...
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
543
The Company has until March 1, 2007 to respond to the amended complaint.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
544
A similar complaint, Royer-Brennan v. Apple Computer, Inc. and Apple Canada, Inc., was filed in Montreal, Quebec, Canada, on February 1, 2006, seeking authorization to institute a class action on behalf of iPod purchasers in Quebec.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
545
Branning et al.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
546
v. Apple Computer, Inc.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
547
Plaintiffs originally filed this purported class action in San Francisco County Superior Court on February 17, 2005.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
548
The initial complaint alleged violations of California Business & Professions Code §17200 (unfair competition) and violation of the Consumer Legal Remedies Act (“CLRA”) regarding a variety of purportedly unfair and unlawful conduct including, but not limited to, allegedly selling used computers as new and failing to ho...
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
549
Plaintiffs also brought causes of action for misappropriation of trade secrets, breach of contract and violation of the Song-Beverly Consumer Warranty Act.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
550
Plaintiffs requested unspecified damages and other relief.
0001104659-07-006648/full-submission.txt
0000320193
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10-Q
551
On May 9, 2005, the Court granted the Company’s motion to transfer the case to Santa Clara County Superior Court.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
552
On May 2, 2005, plaintiffs filed an amended complaint adding two new named plaintiffs and three new causes of action including a claim for treble damages under the Cartwright Act (California Business & Professions Code §16700 et seq.)
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
553
and a claim for false advertising.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
554
The Company filed a demurrer to the amended complaint, which the Court sustained in its entirety on November 10, 2005.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
555
The Court granted plaintiffs leave to amend and they filed an amended complaint on December 29, 2005.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
556
Plaintiffs’ amended complaint added three plaintiffs and alleged many of the same factual claims as the previous complaints, such as alleged selling of used equipment as new, alleged failure to honor warranties and service contracts for the consumer plaintiffs, and alleged fraud related to the opening of the Apple reta...
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
557
Plaintiffs continued to assert causes of action for unfair competition (§17200), violations of the CLRA, breach of contract, misappropriation of trade secrets, violations of the Cartwright Act, and alleged new causes of action for fraud, conversion, and breach of the implied covenant of good faith and fair dealing.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
558
The Company filed a demurrer to the amended complaint on January 31, 2006, which the Court sustained on March 3, 2006 on sixteen of seventeen causes of action.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
559
Plaintiffs filed an amended complaint adding one new plaintiff.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
560
The Company filed a demurrer, which was granted in part on September 9, 2006.
0001104659-07-006648/full-submission.txt
0000320193
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10-Q
561
Plaintiffs filed a further amended complaint on September 21, 2006.
0001104659-07-006648/full-submission.txt
0000320193
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10-Q
562
On October 2, 2006, the Company filed an answer denying all allegations and asserting numerous affirmative defenses.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
563
The case is in discovery.
0001104659-07-006648/full-submission.txt
0000320193
20070202
10-Q
564
Charoensak v. Apple Computer, Inc. (formerly Slattery v. Apple Computer, Inc.) The original plaintiff (Slattery) filed this purported class action on January 3, 2005 in the United States District Court for the Northern District of California alleging various claims including alleged unlawful tying of music purchased on...
0001104659-07-006648/full-submission.txt