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0000320193
20060203
10-Q
823
The Company may enter into foreign currency forward and option contracts with financial institutions to protect against foreign exchange risks associated with existing assets and liabilities, certain firmly committed transactions, forecasted future cash flows, and net investments in foreign subsidiaries.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
824
Generally, the Company’s practice is to hedge a majority of its existing material foreign exchange transaction exposures.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
825
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.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
826
Item 4.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
827
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 ...
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
828
Changes in Internal Control Over Financial Reporting There were no significant changes in the Company’s internal control over financial reporting identified in management’s evaluation during the first quarter of 2006 that have materially affected, or are reasonably likely to materially affect, the Company’s internal co...
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
829
PART II.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
830
OTHER INFORMATION Item 1.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
831
Legal Proceedings The Company is subject to various legal proceedings and claims that are discussed below.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
832
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.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
833
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.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
834
However, the results of legal proceedings cannot be predicted with certainty.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
835
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.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
836
The Company settled certain matters during the first quarter of 2006 that did not individually or in the aggregate have a material impact on the Company’s results of operations.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
837
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.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
838
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.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
839
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.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
840
Plaintiffs assert claims under California Business & Professions Code §17200 (unfair competition); California Business & Professions Code §17500 (false advertising) and the Consumer Legal Remedies Act.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
841
The amended complaint seeks remedies including damages and equitable relief.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
842
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.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
843
At a status conference on November 1, 2005, the Court ordered Plaintiffs to amend their complaint.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
844
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.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
845
The case is in discovery.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
846
Apple Computer, Inc. v. Burst.com.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
847
Inc The Company filed an action for declaratory judgment against Defendant Burst.com, Inc. on January 4, 2006.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
848
The Company seeks declaratory judgment that U.S. Patent Nos.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
849
4,963,995, 5,164,839, and 5,995,705 are invalid and not infringed by the Company.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
850
The patents allegedly relate to methods and devices used for “burst” transmission of audio or video files.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
851
Burst.com has claimed that iTunes, iTunes Music Store, iPod, Airport Express, and Quicktime infringe the patents.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
852
Apple Corps Ltd. v. Apple Computer, Inc.; Apple Computer, Inc. v. Apple Corps Ltd.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
853
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.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
854
Plaintiff seeks an injunction, unspecified damages, and other relief.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
855
The Company filed a motion on October 13, 2003, challenging jurisdiction in the U.K.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
856
The Court denied this motion on April 7, 2004.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
857
The Company filed an appeal of the Court’s decision but subsequently withdrew the appeal.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
858
In November 2004, Plaintiff served the Company with an Amended Bill of Particulars and on December 23, 2004, the Company filed a Defence.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
859
On November 24, 2005, Plaintiff filed a Re-Amended Bill of Particulars and the Company filed its Defence on December 16, 2005.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
860
Trial is set for the week of March 27, 2006.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
861
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.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
862
Apple Corps challenged jurisdiction in the California case but the Court denied that challenge on March 25, 2004.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
863
Apple Corps subsequently prevailed on a motion to stay the California case during the pendency of the U.K. action.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
864
The Company has dismissed the California lawsuit without prejudice.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
865
Bader v. Anderson; Bader v. Apple Computer, Inc. et.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
866
al.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
867
Plaintiff filed this purported shareholder derivative action against the Company and each of its 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 of Ca...
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
868
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.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
869
Performance Bonus Plan, which was approved by shareholders at the annual meeting held on April 21, 2005.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
870
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.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
871
Plaintiff seeks injunctive and other relief for purported injury to the Company.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
872
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.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
873
Defendants filed a demurrer.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
874
On January 10, 2006, the court sustained defendants’ demurrer and gave the Plaintiff 30 days to amend her complaint.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
875
Baghdasarian, et al.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
876
v. Apple Computer, Inc.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
877
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.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
878
The complaint alleges that the Company misrepresented the transmission rates of these products.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
879
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).
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
880
The complaint seeks damages and equitable remedies.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
881
The Company filed an answer denying all allegations and asserting numerous affirmative defenses to the complaint on December 15, 2005.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
882
Birdsong v. Apple Computer, Inc. (filed January 30, 2006, United States District Court for the Western District of Louisiana); Patterson v. Apple Computer, Inc. (filed January 31, 2006, United States District Court for the Northern District of California) These federal court complaints allege that the Company's iPod mu...
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
883
The Birdsong action was brought on behalf of a purported Louisiana class of iPod purchasers and alleges violations of the Louisiana Products Liability Act, breaches of implied warranties, unjust enrichment and negligent misrepresentation.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
884
The Patterson action was brought on behalf of a purported class of all iPod purchasers within the four year period before January 31, 2006.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
885
That action alleges breaches of implied and express warranties, violations of California Business & Professions Code §17200 (unfair competition), California Business & Professions Code §17500 (false advertising), California Civil Code §1750 (Consumer Legal Remedies Act), breaches of express and implied warranties, negl...
0001104659-06-005910/full-submission.txt
0000320193
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10-Q
886
The Company has not yet been served with these actions and the Company’s responses to these complaints are not yet due.
0001104659-06-005910/full-submission.txt
0000320193
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10-Q
887
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.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
888
Branning et al.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
889
v. Apple Computer, Inc.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
890
Plaintiffs originally filed this purported class action in San Francisco County Superior Court on February 17, 2005.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
891
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 hono...
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
892
Plaintiffs also brought causes of action for misappropriation of trade secrets, breach of contract, and violation of the Song Beverly Act.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
893
Plaintiffs requested unspecified damages and other relief.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
894
On May 9, 2005, the Court granted the Company’s motion to transfer the case to Santa Clara County Superior Court.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
895
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 and Professions Code §16700 et seq.)
0001104659-06-005910/full-submission.txt
0000320193
20060203
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896
and a claim for false advertising.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
897
The Company filed a demurrer to the amended complaint, which the Court sustained in its entirety on November 10, 2005.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
898
The Court granted Plaintiffs leave to amend and they filed an amended complaint on December 29, 2005.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
899
Plaintiffs’ amended complaint adds three additional plaintiffs and alleges 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 A...
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
900
Plaintiffs continue 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 allege new causes of action for fraud, conversion and breach of the implied covenant of good faith and fair dealing.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
901
The Company filed a demurrer to the amended complaint on January 31, 2006.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
902
Butzer, et al., v. Apple Computer, Inc./Wirges v. Apple Computer, Inc.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
903
Plaintiffs filed the Butzer action on August 23, 2005, in the United States District Court for the Northern District of California, San Jose Division, on behalf of a purported nationwide class of all purchasers of the Company’s PowerBook G4 portable computers.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
904
The complaint alleges defects in the memory of the computers.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
905
The complaint alleges that this purported defect extends to other series of the Company’s portables and states that plaintiffs reserve the right to amend the complaint to include these other series.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
906
Plaintiffs assert claims for alleged violations of California Business & Professions Code §17200 (unfair competition), California Business & Professions Code §17500 (false advertising), the Consumer Legal Remedies Act and the Song-Beverly Consumer Warranty Act.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
907
The complaint seeks remedies including restitution and/or damages and injunctive relief.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
908
The Wirges action was filed on January 20, 2006 in the United State District Court for the Eastern District of Arkansas, also on behalf of a purported nationwide class, and makes similar allegations.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
909
Plaintiffs assert claims for breach of warranties, violation of Magnuson-Moss Act, strict products liability and unjust enrichment.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
910
The complaint seeks restitution, damages and other remedies.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
911
The Company filed an answer to the Butzer complaint on October 19, 2005 denying the material allegations and asserting numerous affirmative defenses.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
912
A class certification hearing is set for June 23, 2006.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
913
The case is in discovery.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
914
The Company’s response to the Wirges action is not yet due.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
915
Cagney v. Apple Computer, Inc.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
916
Plaintiff filed this purported class action on January 9, 2004 in Los Angeles County Superior Court, alleging improper collection of sales tax in transactions involving mail-in rebates.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
917
The complaint alleged violations of California Business and Professions Code §17200 (unfair competition) and sought restitution and other relief.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
918
The Company filed an answer on February 20, 2004, denying all allegations and asserting numerous affirmative defenses.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
919
The Company filed a motion to disqualify Plaintiff’s counsel, which the Court denied.
0001104659-06-005910/full-submission.txt
0000320193
20060203
10-Q
920
The Company filed a petition for a writ of mandate with respect to this ruling and the Court of Appeal issued an order to show cause as to why the writ should not issue.
0001104659-06-005910/full-submission.txt
0000320193
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921
Plaintiff’s lead counsel subsequently withdrew.
0001104659-06-005910/full-submission.txt
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922
On February 17, 2005 the Court of Appeal ruled that the trial court abused its discretion in failing to grant the Company’s motion to disqualify and ordered the trial court to disqualify both of Plaintiff’s law firms upon remand.
0001104659-06-005910/full-submission.txt