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Bancroft v. Apple Computer, Inc.
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Plaintiff Bancroft filed this purported class action on January 30, 2002 in Los Angeles Superior Court on behalf of a potentially nationwide class of purchasers of certain Power Macintosh G3 computers.
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Plaintiff alleges violation of the Consumer Legal Remedies Act ("CLRA") arising from allegedly poor performance while running the Company's Mac OS X operating system, specifically relating to 2D hardware acceleration, QuickTime movie hardware acceleration, 3D graphics performance and DVD movie playback.
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Plaintiff seeks actual damages, injunctive relief, restitution, punitive damages, attorneys' fees and other relief.
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The Company has answered the complaint, denying all allegations and alleging numerous affirmative defenses.
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The parties participated in mediation in October 2002 without resolution.
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The parties are in discovery.
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BIAX Corporation v. Apple Computer, Inc.
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Plaintiff BIAX filed this action on September 5, 2001 in the United States District Court in Delaware claiming patent infringement relating to dual processor technology.
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IBM and Motorola were added as defendants in an amended complaint.
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Plaintiff seeks unspecified damages and other relief.
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The Company has answered the complaint, denying all allegations and asserting numerous affirmative defenses.
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The Company also asserted counterclaims requesting a declaratory judgment for non-infringement, unenforceability and invalidity.
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The parties are in discovery.
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Dynacore Holdings Corp. v. Apple Computer, Inc.
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Plaintiff Dynacore filed this action on June 6, 2001 in United States District Court for the Southern District of New York against the Company and thirteen other defendants claiming patent infringement relating to IEEE 1394 technology, also known as FireWire.
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Plaintiff claims that any computer system or other electronic product that uses or complies with the IEEE 1394 standard violates the patent.
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Plaintiff seeks unspecified damages and other relief.
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The Company has answered the complaint, denying all allegations and asserting numerous affirmative defenses.
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The Company also asserted counterclaims requesting declaratory judgment for non-infringement and invalidity.
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Defendants are seeking to amend the pleading to assert a counterclaim for inequitable conduct against Dynacore.
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The case was stayed pending the Federal Circuit's decision in Datapoint Corp. v. Standard Microsystems Corp., a related case in which plaintiff claimed that its patent was infringed by products complying with the fast Ethernet standard.
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In February 2002, the Federal Circuit affirmed the judgment of non-infringement in Datapoint, and the District Court lifted the stay in this action.
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The defendants filed a joint motion for summary judgment based upon the decision in Datapoint.
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The Court heard the motion on October 4, 2002 and has not yet issued its ruling.
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Elonex IP Holdings Ltd., EIP Licensing, B.V. v. Apple Computer, Inc.
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Plaintiffs filed this action on February 12, 2001 in the United States District Court in Delaware claiming patent infringement relating to a low power consumption monitor standby system.
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Plaintiffs filed numerous identical lawsuits against other computer monitor manufacturers and computer systems manufacturers.
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Plaintiffs seek unspecified damages and other relief.
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The Company answered the complaint, denying all allegations and asserting numerous affirmative defenses.
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The Company also asserted counterclaims requesting declaratory judgment for non-infringement, unenforceability and invalidity of the patents at issue.
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The parties reached a settlement in July 2002.
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Settlement of this matter did not have a material effect on the Company's financial position or results of operations.
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FTC Inquiry-Prado v. Apple Computer, Inc. (and related actions) In October 1997, Apple began charging all U.S. non-education customers for live telephone technical support beyond 90 days after purchase of Apple products.
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In late 1997, the Federal Trade Commission (FTC) commenced an investigation into customer complaints that Apple's change in technical support practices was either unfair or contrary to earlier representations to certain customers.
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Four purported class action lawsuits were filed against Apple related to this change.
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During the fourth quarter of 1999, the regional and national offices of the FTC approved a settlement with the Company, and a settlement was approved by the Court in three of the class action suits.
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In November 1999, two appeals were filed objecting to the settlement.
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The California Court of Appeal upheld the settlement, and the California Supreme Court denied review of the Court of Appeal's decision.
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No further appeals were taken and the Company is administering the settlement.
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Settlement of this matter did not have a material effect on the Company's financial position or results of operations.
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Hawaii Structural Iron Workers and Pension Trust Fund v. Apple Computer, Inc. and Steven P. Jobs; Young v. Apple Computer, Inc. et al; Hsu v. Apple Computer Inc. et al Beginning on September 27, 2001, three shareholder class action lawsuits were filed in the United States District Court for the Northern District of Cal...
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These lawsuits are substantially identical, and purport to bring suit on behalf of persons who purchased the Company's publicly traded common stock between July 19, 2000, and September 28, 2000.
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The complaints allege violations of the 1934 Securities Exchange Act and seek unspecified compensatory damages and other relief.
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The Company believes these claims are without merit and intends to defend them vigorously.
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The Company filed a motion to dismiss on June 4, 2002, which was heard by the Court on September 13, 2002.
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On December 11, 2002, the Court granted the Company's motion to dismiss for failure to state a cause of action, with leave to plaintiffs to amend their complaint within thirty days.
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Pierce et al.
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v. Apple Computer, Inc.
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Plaintiff Pierce filed this action on June 15, 2000 in Santa Clara County Superior Court.
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This case was a purported nationwide consumer class action brought on behalf of purchasers of the Company's AirPort Card and AirPort Base Station ("AirPort System").
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Plaintiffs alleged that the Company engaged in false advertising and unfair business practices (among other causes of action) by advertising that the AirPort System is Internet-ready and failing to disclose that the AirPort System is incompatible with certain Internet service providers, primarily America Online.
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The Company answered the complaint, denying all allegations and alleging numerous affirmative defenses.
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The parties reached a settlement that received final approval by the Court on October 8, 2002.
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The Company is administering the settlement.
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Settlement of this matter did not have a material effect on the Company's financial position or results of operations.
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Pitney Bowes Inc. v. Apple Computer, Inc.
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Plaintiff Pitney Bowes filed this patent infringement action on June 18, 2001 in the United States District Court in Connecticut alleging patent infringement relating to laser printer technology.
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Plaintiff has filed similar lawsuits against other companies.
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Plaintiff seeks unspecified damages and other relief.
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The Company has answered the complaint, denying all allegations and asserting numerous affirmative defenses.
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The Company also asserted counterclaims requesting a declaratory judgment for non-infringement, unenforceability and invalidity of the patents at issue.
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The Connecticut Court transferred this case to the Eastern District of Kentucky on February 1, 2002 and consolidated the case with two other lawsuits, a declaratory judgment action filed by Xerox and Pitney Bowes' patent infringement case against Epson.
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The case is set for trial on June 8, 2004.
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Sternberg v. Apple Computer, Inc. and Gordon et al.
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v. Apple Computer, Inc.
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Plaintiff Sternberg filed this action against the Company on March 17, 2000 in the Santa Clara County Superior Court.
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The case was a purported nationwide consumer class action brought on behalf of purchasers of iMac DV and iMac DV SE computers.
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Plaintiff alleged that Apple engaged in false advertising, unfair competition and breach of warranty, among other causes of action, by marketing and selling a DVD player with iMac DV and iMac DV SE computers where the playback was unacceptable.
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A companion case, Gordon et al.
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v. Apple Computer, Inc. was filed by largely the same plaintiffs on June 14, 2000.
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This case was essentially the same as Sternberg but with respect to a different computer model-the Power Macintosh G4.
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The Company answered both complaints, denying all allegations and alleging numerous affirmative defenses.
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The parties reached a settlement in August 2001 that received final approval by the Court on February 25, 2002.
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The Company is administering the settlement.
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Settlement of this matter did not have a material effect on the Company's financial position or results of operations.
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UNOVA, Inc. v. Apple Computer, Inc., et al.
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Plaintiff UNOVA filed this patent infringement action against the Company and six other defendants on May 8, 2002 in the Central District of California for infringement of eight UNOVA patents related to "Smart Battery Management".
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Plaintiff alleges that the Company's portable computers manufactured since 1996 infringe these eight patents.
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Plaintiff has filed similar lawsuits against other companies in addition to the co-defendants in this case.
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Plaintiff seeks unspecified damages and other relief.
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The Company has answered the complaint, denying all allegations and asserting numerous affirmative defenses.
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The Company also asserted counterclaims requesting a declaratory judgment for non-infringement, invalidity and unenforceability.
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Item 4.
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Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders during the fourth quarter of the Company's fiscal year ended September 28, 2002.
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PART II Item 5.
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Market for the Registrant's Common Equity and Related Shareholder Matters The Company's common stock is traded on the over-the-counter market and is quoted on the Nasdaq National Market under the symbol AAPL, on the Tokyo Stock Exchange under the symbol APPLE, and on the Frankfurt Stock Exchange under the symbol APCD.
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As of December 6, 2002, there were 28,310 shareholders of record.
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On June 21, 2000, the Company effected a two-for-one stock split in the form of a Common Stock dividend to shareholders of record as of May 19, 2000.
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All share price and per share data and numbers of Common shares have been retroactively adjusted to reflect the stock split.
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The Company did not pay cash dividends in either fiscal 2002 or 2001.
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The Company anticipates that, for the foreseeable future, it will retain any earnings for use in the operation of its business.
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The price range per share of common stock presented below represents the highest and lowest closing prices for the Company's common stock on the Nasdaq National Market during each quarter.
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Item 6.
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Selected Financial Data The following selected financial information has been derived from the audited consolidated financial statements.
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The information set forth below is not necessarily indicative of results of future operations, and should be read in conjunction with Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes thereto included in Item 8 of ...
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A net loss before taxes related to the Company's non-current debt and equity investments of $42 million was recognized in 2002.
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Net gains before taxes related to the Company's non-current debt and equity investments of $75 million, $367 million, $230 million, and $40 million were recognized in 2001, 2000, 1999, and 1998, respectively.
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In 2002, the Company acquired Emagic resulting in a charge of approximately $1 million for acquired in-process technologies with no alternative future use.
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The Company recognized a similar charge of $11 million in 2001 related to its acquisition of PowerSchool.
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