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0000320193
20031219
10-K
1,052
This sales pattern can produce pressure on the Company's internal infrastructure during the third month of a quarter and may adversely impact the Company's ability to predict its financial results accurately.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,053
Developments late in a quarter, such as lower-than-anticipated demand for the Company's products, an internal systems failure, or failure of one of the Company's key logistics, components suppliers, or manufacturing partners, can have significant adverse impacts on the Company and its results of operations and financia...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,054
The Company's success depends largely on its ability to attract and retain key personnel.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,055
Much of the future success of the Company depends on the continued service and availability of skilled personnel, including its Chief Executive Officer, members of its executive team, and those in technical, marketing and staff positions.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,056
Experienced personnel in the information technology industry are in high demand and competition for their talents is intense, especially in the Silicon Valley, where the majority of the Company's employees are located.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,057
The Company has relied on its ability to grant stock options as one mechanism for recruiting and retaining this highly skilled talent.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,058
Potential accounting regulations requiring the expensing of stock options may impair the Company's future ability to provide these incentives without incurring significant compensation costs.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,059
There can be no assurance that the Company will continue to successfully attract and retain key personnel.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,060
The Company is subject to risks associated with the availability and cost of insurance.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,061
The Company has observed rapidly changing conditions in the insurance markets relating to nearly all areas of traditional corporate insurance.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,062
Such conditions have resulted in higher premium costs, higher policy deductibles, and lower coverage limits.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,063
For some risks, because of cost and/or availability, the Company does not have insurance coverage.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,064
For these reasons, the Company is retaining a greater portion of its insurable risks than it has in the past at relatively greater cost.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,065
Business interruptions could adversely affect the Company's future operating results.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,066
The Company's major business operations are subject to interruption by earthquake, fire, power shortages, terrorist attacks and other hostile acts, labor disputes, medical conditions, and other events beyond its control.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,067
The majority of the Company's research and development activities, its corporate headquarters, information technology systems, and other critical business operations, including certain component suppliers and manufacturing vendors, are located near major seismic faults.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,068
The Company does not carry earthquake insurance for direct quake-related losses.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,069
The Company's operating results and financial condition could be materially adversely affected in the event of a major earthquake or other natural or manmade disaster.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,070
Failure of the Company's information technology systems and breaches in the security of data could adversely affect the Company's future operating results.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,071
Information technology system failures and breaches of data security could disrupt the Company's ability to function in the normal course of business by potentially causing delays or cancellation of customer orders, impeding the manufacture or shipment of products, or resulting in the unintentional disclosure of custom...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,072
Management has taken steps to address these concerns by its implementation of sophisticated network security and internal control measures.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,073
However, there can be no assurance that a system failure or data security breach will not have a material adverse effect on the Company's results of operations.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,074
The Company is exposed to credit risk on its accounts receivables.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,075
This risk is heightened as economic conditions worsen.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,076
The Company distributes its products through third-party computer resellers and retailers and directly to certain educational institutions and commercial customers.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,077
A substantial majority of the Company's outstanding trade receivables are not covered by collateral or credit insurance.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,078
The Company also has non-trade receivables from certain of its manufacturing vendors resulting from the sale by the Company of raw material components to these manufacturing vendors who manufacture sub-assemblies or assemble final products for the Company.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,079
While the Company has procedures in place to monitor and limit exposure to credit risk on its trade and non-trade receivables, there can be no assurance that such procedures will be effective in limiting its credit risk and avoiding losses.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,080
Additionally, if the global economy and regional economies fail to improve or continue to deteriorate, it becomes more likely that the Company will incur a material loss or losses as a result of the weakening financial condition of one or more of its customers or manufacturing vendors.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,081
The Company is subject to risks associated with environmental regulations.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,082
Production and marketing of products in certain states and countries may subject the Company to environmental and other regulations including, in some instances, the requirement to provide customers the ability to return product at the end of its useful life, and place responsibility for environmentally safe disposal o...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,083
Such laws and regulations have recently been passed in several jurisdictions in which the Company operates, including various European Union member countries, Japan and California.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,084
Although the Company does not anticipate any material adverse effects in the future based on the nature of its operations and the thrust of such laws, there is no assurance that such existing laws or future laws will not have a material adverse effect on the Company's results of operation and financial position.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,085
Changes in accounting rules could adversely affect the Company's future operating results.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,086
Financial statements are prepared in accordance with U.S. generally accepted accounting principles.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,087
These principles are subject to interpretation by various governing bodies, including the FASB and the SEC, who interpret and create appropriate accounting regulations.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,088
A change from current accounting regulations can have a significant effect on the Company's results of operations and could impact the manner in which the Company conducts business.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,089
Unanticipated changes in the Company's tax rates could affect its future results.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,090
The Company's future effective tax rates could be favorably or unfavorably affected by unanticipated changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of the Company's deferred tax assets and liabilities, or by changes in tax laws or their interpretation.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,091
In addition, the Company is subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,092
The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,093
There can be no assurance that the outcomes from these continuous examinations will not have an adverse effect on its operating results and financial condition.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,094
The Company's stock price may be volatile.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,095
The Company's stock has at times experienced substantial price volatility as a result of variations between its actual and anticipated financial results and as a result of announcements by the Company and its competitors.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,096
In addition, the stock market has experienced extreme price and volume fluctuations that have affected the market price of many technology companies in ways that have been unrelated to the operating performance of these companies.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,097
These factors, including lack of positive performance in the Company's stock price, as well as general economic and political conditions and investors' concerns regarding the credibility of corporate financial reporting and integrity of financial markets, may materially adversely affect the market price of the Company'...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,098
The Company's acquisition activity could disrupt its ongoing business and may present risks not contemplated at the time of the transaction.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,099
The Company has acquired and may continue to acquire companies that have products, services, personnel and technologies that complement the Company's strategic direction and product roadmap.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,100
These acquisitions may involve significant risks and uncertainties, including difficulties in incorporating the acquired companies' operations and technologies; distraction of management's attention away from normal business operations; insufficient revenue generation to offset liabilities assumed and expenses associat...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,101
Acquisitions are inherently risky, and no assurance can be given that the Company's previous or future acquisitions will be successful and will not materially adversely affect business, operating results or financial condition.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,102
The Company has generally paid cash for its acquisitions.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,103
Should the Company issue its common stock or other equity related purchase rights as consideration in an acquisition, current shareholders' percentage ownership and earnings per share may become diluted.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,104
Item 7A.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,105
Quantitative and Qualitative Disclosures About Market Risk Interest Rate and Foreign Currency Risk Management To ensure the adequacy and effectiveness of the Company's foreign exchange and interest rate hedge positions, as well as to monitor the risks and opportunities of the non-hedge portfolios, the Company regularly...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,106
However, given the effective horizons of the Company's risk management activities and the anticipatory nature of the exposures intended to hedge, there can be no assurance the aforementioned programs will offset more than a portion of the adverse financial impact resulting from unfavorable movements in either foreign e...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,107
In addition, the timing of the accounting for recognition of gains and losses related to mark-to-market instruments for any given period may not coincide with the timing of gains and losses related to the underlying economic exposures and, therefore, may adversely affect the Company's operating results and financial po...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,108
The Company adopted SFAS No.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,109
133 as of October 1, 2000.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,110
SFAS No.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,111
133 established accounting and reporting standards for derivative instruments, hedging activities, and exposure definition.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,112
Management does not believe that ongoing application of SFAS No.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,113
133 will significantly alter the Company's hedging strategies.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,114
However, its application may increase the volatility of other income and expense and other comprehensive income.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,115
Interest Rate Risk While the Company is exposed to interest rate fluctuations in many of the world's leading industrialized countries, the Company's interest income and expense is most sensitive to fluctuations in the general level of U.S. interest rates.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,116
In this regard, changes in U.S. interest rates affect the interest earned on the Company's cash, cash equivalents, and short-term investments as well as costs associated with foreign currency hedges.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,117
The Company's fixed income investment policy and strategy is to ensure the preservation of capital, meet liquidity requirements, and optimize return in light of the current credit and interest rate environment.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,118
The Company benchmarks its performance by utilizing external money managers to manage a small portion of the aggregate investment portfolio.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,119
The external managers adhere to the Company's investment policies and also provide occasional research and market information that supplements internal research used to make credit decisions in the investment process.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,120
During 1994, the Company issued $300 million aggregate principal amount of 6.5% unsecured notes in a public offering registered with the SEC.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,121
The notes were sold at 99.925% of par, for an effective yield to maturity of 6.51%.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,122
The notes pay interest semiannually and mature on February 15, 2004.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,123
The Company's exposure to market risk for changes in interest rates relates primarily to the Company's investment portfolio and debt obligations and related derivative financial instruments.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,124
The Company places its short-term investments in highly liquid securities issued by high credit quality issuers and, by policy, limits the amount of credit exposure to any one issuer.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,125
The Company's general policy is to limit the risk of principal loss and ensure the safety of invested funds by limiting market and credit risk.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,126
All highly liquid investments with maturities of three months or less are classified as cash equivalents; highly liquid investments with maturities greater than three months are classified as short-term investments.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,127
As of September 27, 2003, approximately $629 million of the Company's short-term investments had underlying maturities ranging from 1 and 5 years.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,128
As of September 28, 2002, $1.087 billion of the Company's investment portfolio classified as short-term investments had maturities ranging from 1 to 5 years.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,129
The remainder all had underlying maturities between 3 and 12 months.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,130
Due to liquidity needs, or in anticipation of credit deterioration, or for the purpose of duration management of the Company's investment portfolio, the Company may sell investments prior to their stated maturities.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,131
As a result of such activity, the Company recognized net gains of $21 million in 2003 and $7 million in 2002.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,132
In order to provide a meaningful assessment of the interest rate risk associated with the Company's investment portfolio, the Company performed a sensitivity analysis to determine the impact that a change in interest rates would have on the value of the investment portfolio assuming a 100 basis point parallel shift in ...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,133
Based on investment positions as of September 27, 2003, a hypothetical 100 basis point increase in interest rates across all maturities would result in a $12.9 million decline in the fair market value of the portfolio.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,134
As of September 28, 2002, a similar 100 basis point shift in the yield curve would have resulted in a $37.7 million decline in fair value.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,135
Such losses would only be realized if the Company sold the investments prior to maturity.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,136
Except in instances noted above, the Company's policy is to hold investments to maturity.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,137
The Company sometimes enters into interest rate derivative transactions, including interest rate swaps, collars, and floors, with financial institutions in order to better match the Company's floating-rate interest income on its cash equivalents and short-term investments with its fixed-rate interest expense on its deb...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,138
The Company may also enter into interest rate contracts that are intended to reduce the cost of the interest rate risk management program.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,139
The Company entered into no interest rate asset swaps during 2003 or 2002 and had no open interest rate asset swaps at September 27, 2003.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,140
In prior years, the Company had entered into interest rate debt swaps with financial institutions.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,141
The interest rate debt swaps, which qualified as accounting hedges, generally required the Company to pay a floating interest rate based on the three- or six-month U.S. dollar LIBOR and receive a fixed rate of interest without exchanges of the underlying notional amounts.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,142
These swaps effectively converted the Company's fixed-rate 10-year debt to floating-rate debt and convert a portion of the floating rate investments to fixed rate.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,143
Due to prevailing market interest rates, during 2002 the Company entered into and then subsequently closed out debt swap positions realizing a gain of $6 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,144
During 2001 the Company closed out all of its then existing debt swap positions realizing a gain of $17 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,145
Both the gains in 2002 and 2001 were deferred, recognized in long-term debt and are being amortized to other income and expense over the remaining life of the debt.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,146
Foreign Currency Risk Overall, the Company is a net receiver of currencies other than the U.S. dollar and, as such, generally benefits from a weaker dollar and is adversely affected by a stronger dollar relative to major currencies worldwide.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,147
Accordingly, changes in exchange rates, and in particular a strengthening of the U.S. dollar, may negatively affect the Company's net sales and gross margins as expressed in U.S. dollars.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,148
There is also a risk that the Company will have to adjust local currency product pricing within the time frame of our hedged positions due to competitive pressures when there has been significant volatility in foreign currency exchange rates.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,149
The Company enters into foreign currency forward and option contracts with financial institutions primarily to protect against foreign exchange risks associated with existing assets and liabilities, certain firmly committed transactions, and probable but not firmly committed transactions.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,150
Generally, the Company's practice is to hedge a majority of its existing material foreign exchange transaction exposures.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,151
However, the Company may not hedge certain foreign exchange transaction exposures due to immateriality, prohibitive economic cost of hedging particular exposures, and limited availability of appropriate hedging instruments.
0001047469-03-041604/full-submission.txt