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`UNITED STATES
`
`SECURITIES AND EXCHANGE COMMISSION
`Washington, D.C. 20549
`
`(Mark One)
`
`Form 10-K
`
`/X/
`
`ANNUAL REPORT PURSUANT TO SECTION 13 OR 15() OF THE SECURITIES
`EXCHANGE ACT OF 1934
`
`For the fiscal year ended September 29, 2001
`
`OR
`
`/ /
`
`TRANSITION REPORT PURSUANT TO SECTION 13 OR 15() OF THE
`SECURITIES EXCHANGE ACT OF 1934
`
`For the transition period from
`
`to
`
`Commission file number 0-10030
`
`APPLE COMPUTER, INC.
`(Exact name of Registrant as specified in its charter)
`
`CALIFORNIA
`
`942404110
`
`(State or other jurisdiction
`of incorporation or organization)
`
`(IRS. Employer Identification No.)
`
`1 Infinite Loop
`Cupertino, California
`(Address of principal executive offices)
`
`95014
`(Zip Code)
`
`Registrant's telephone number, including area code: (408) 996-1010
`
`Securities registered pursuant to Section 12(b) of the Act: None
`
`Securities registered pursuant to Section 12(g) of the Act:
`Common Stock, no par value
`Common Share Purchase Rights
`(Titles of classes)
`
`12/29/2013
`http://www.sec.gov/Archives/edgar/data/320193/000091205701544436/a2066l7lz10-k4...
`SIGHTSOUND TECHNOLOGIES
`EXHIBIT 2132
`
`CBM2013-00020 (APPLE v. SIGHTSOUND)
`PAGE 000001
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`
`
`Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
`Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required
`to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / /
`
`Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
`will not be contained, to the best of the Registrant's knowledge, in defrmtive proxy or information statements incorporated by
`reference to Part III of this Form 10-K or any amendment to this Form 10-K.
`/x/
`
`The aggregate market value of voting stock held by nonaffrliates of the Registrant was approximately $7,924,159,876 as of
`December 7, 2001, based upon the closing price on the NASDAQ National Market reported for such date. Shares of
`Common Stock held by each executive officer and director and by each person who beneficially owns more than 5% of the
`outstanding Common Stock have been excluded in that such persons may under certain circumstances be deemed to be
`affiliates. This determination of executive officer or affiliate status is not necessarily a conclusive determination for other
`purposes.
`
`351,722,532 shares of Common Stock Issued and Outstanding as of December 7, 2001
`
`
`
`PART I
`
`The Business section and other parts ofthis Annual Report on Form 1 0-K (”Form 10K”) contain forward-looking statements
`that involve risks and uncertainties. The Company’s actual results may difler significantlyfrom the results discussed in the
`forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the
`subsection entitled ”Factors That May Aflect Future Results and Financial Condition ” under Part II, Item 7 ofthis Form 1 0-
`K.
`
`The Company's fiscal year ends on the last Saturday of September. Unless otherwise stated, all information presented in this
`Form 10-K is based on the Company's fiscal calendar.
`
`Item 1. Business
`
`Company Background
`Apple Computer, Inc. ("Apple" or the "Company") was incorporated under the laws of the state of California on January 3,
`1977. The Company designs, manufactures and markets personal computers and related personal computing and
`communicating solutions for sale primarily to education, creative, consumer, and business customers. Substantially all of the
`Company's net sales over the last five years have been derived from the sale of its Apple® Macintosh® line of personal
`computers and related software and peripherals.
`
`Business Strategy
`Apple is committed to bringing the best possible personal computing experience to students, educators, creative
`professionals, businesses and consumers around the world through its innovative hardware, software, and Internet offerings.
`The Company believes that personal computing is entering a new era in which the personal computer will function for both
`professionals and consumers as the digital hub for advanced new digital devices such as digital music players, personal
`digital assistants, digital still and movie cameras, CD and DVD players, and other electronic devices. The attributes of the
`personal computer, including its ability to run complex applications, possess a high quality user interface, contain large and
`relatively inexpensive storage, and easily connect to the Internet in multiple ways and at varying speeds, can individually add
`value to these devices and interconnect them as well. Apple is the only company in the PC industry that designs and
`manufactures the entire personal computer — from the hardware and operating system to sophisticated applications, and ties it
`all together with Apple's innovative industrial design, intuitive ease-of—use, and built-in networking, graphics, and multimedia
`capabilities — uniquely positioning the Company to offer digital hub products and solutions.
`
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`Business Organization
`The Company manages its business primarily on a geographic basis. The Company's geographic operating segments include
`the Americas, Europe, Japan, and Asia Pacific. The Americas segment includes both North and South America, except for
`the Company's Retail segment which operates Apple-owned retail stores in the United States. The Europe segment includes
`European countries as well as the Middle East and Africa. The Japan segment includes only Japan, while the Asia Pacific
`segment includes Australia and Asia except for Japan. Each geographic operating segment provides similar hardware and
`software products and similar services. Non-geographic operating segments include the Company's subsidiary,
`FileMaker, Inc. and the Company's Retail segment. Further information regarding the Company's operating segments may be
`found in Part II, Item 7 of this Form 10-K under the heading "Segment Operating Performance," and in Part II, Item 8 on this
`Form 10-K in the Notes to Consolidated Financial Statements at Note 11, "Segment Information and Geographic Data,"
`which information is hereby incorporated by reference.
`
`
`
`Principal Hardware Products
`The Company offers a range of personal computing products including desktop and notebook personal computers, related
`devices and peripherals, networking and connectivity products, and various third-party hardware products. All of the
`Company's Macintosh products utilize PowerPC® RISC-based microprocessors. Further information regarding the
`Company's products may be found in Part II, Item 7 of this Form 10-K under the heading "Factors That May Affect Future
`Results and Financial Condition," which information is hereby incorporated by reference.
`
`Power MacTM
`
`The Power Mac line of desktop personal computers is targeted at business and professional users and is designed to meet the
`speed, expansion and networking needs of the most demanding Macintosh user. With the addition of Apple server and
`networking software, Power Mac systems can be used as workgroup servers. Apple's SuperDriveTM, a combination CD-
`RW/DVD-R drive that can burn DVDs which can be played in consumer DVD players, is standard equipment on high-end
`Power Mac models. In July 2001, the Company announced it had suspended indefinitely production and sale of the G4 Cube,
`a Power Mac system introduced in 2000 that was designed for users seeking more power coupled with a small size.
`
`P0werBook®
`
`The PowerBook family of portable computers is specifically designed to meet the mobile computing needs of professionals
`and advanced consumer users. The Company's current PowerBook line, the Titanium PowerBook G4, was introduced in
`January 2001. The Titanium PowerBook is a full-featured notebook computer that incorporates PowerPC G4 processors, TFT
`wide-screen active-matrix displays, and advanced networking and graphics capabilities. The Titanium PowerBook G4 is one
`inch thick, weighs 5.3 pounds and is encased in a pure-grade titamum body.
`
`iMac®
`
`The iMac line of desktop computers is targeted at education and consumer markets. Current iMac computers feature
`innovative industrial design, easy Internet access, built-in support for AirPort® wireless networking, fan-less operation, and
`PowerPC G3 processors, making them suitable for a wide range of education and consumer applications. Three of the four
`current iMac standard configurations come standard with slot-loading CD-RW drives.
`
`iBook®
`
`Designed specifically for the portable computing needs of education and consumer users, the current iBook design was
`introduced in May of 2001. Current iBook models weigh less than 5 pounds, feature 12.1 inch TFT active-matrix displays,
`offer a choice of optical drive configurations, have long battery life, and utilize PowerPC G3 processors.
`
`iPodTM
`
`Introduced in October 2001, the iPod portable digital music player holds up to 1,000 CD-quality songs in a 6.5 ounce design.
`The iPod features an intuitive user interface on a 2-inch liquid crystal display, automatic synchromzation with a music
`collection on a Macintosh via Apple's iTunesTM 2 digital music software, a high-speed FireWire® connection for power and
`data transfer and a 10 hour battery life. By enhancing the overall functionality and integration of the digital music player and
`by expanding the value of the digital music stored on a computer, the iPod represents an important and natural extension of
`Apple's digital hub strategy.
`
`Peripheral Products
`The Company sells certain associated Apple-branded computer hardware peripherals, including a range of high quality flat
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`panel TFT active-matrix digital color displays and AirPort wireless networking base stations and add-in cards. The Company
`also sells a variety of third-party Macintosh-compatible hardware
`
`3
`
`products directly to end users through both its retail and online stores, including computer printers and printing supplies,
`storage devices, computer memory, digital video and still cameras, personal digital assistants, digital music players and
`related accessories, and various other computing products and supplies.
`
`Principal Software Products
`
`Operating System Software
`During 2001, the Company introduced the first customer release of its new client operating system, Mac OS® X, and its first
`significant upgrade, Mac OS X v10.1. This new operating system offers advanced functionality built on an open-source
`UNIX-based foundation. Mac OS X incorporates the most fundamental changes in both core technology and user interface
`design made by the Company to the Mac OS in a single upgrade since the original introduction of the Macintosh in 1984.
`Mac OS X features memory protection, pre-emptive multi-tasking, and symmetric multiprocessing. Mac OS X includes
`Apple's new QuartzTM 2D graphics engine (based on the Intemet-standard Portable Document Format) for enhanced graphics
`and broad font support, and OpenGL for enhanced 3D graphics and gaming. In addition, Mac OS X features Apple's new
`user interface named "Aqua®," which combines superior ease-of-use with new functionality such as the "Dock," a new
`interface for organizing applications, documents and miniaturized windows. Included with Mac OS X are native versions of
`several Internet applications including Mail, Sherlock®, the Company's advanced Internet search engine, QuickTime®
`Player for streaming audio and video and Microsoft Internet Explorer 5.1. Mac OS X also includes a copy of Mac OS 9.2 so
`users can run Mac OS 9 applications natively in Mac OS 9.2 or in the Classic compatibility environment in Mac OS X. The
`Company also develops and distributes extensions to the Macintosh system software including utilities, languages, and
`developer tools.
`
`Mac OS X Server delivers high-performance services for Internet and web serving, filing, printing, and networking services
`needed to manage a network of Mac and Windows clients. Based on the Mach 2.5 microkemel and the BSD 4.4 operating
`system, Mac OS X Server is a modern UNIX-based server built on open standards. It provides performance and stability
`through full pre-emptive multi-tasking, protected memory, advanced virtual memory, software RAID support, QuickTime
`Streaming Server software, and NetBoot; a Mac OS X Server feature allowing a network of Macintosh computers to be
`booted and configured from a single server.
`
`Further information regarding the introduction of Mac OS X may be found in Part II, Item 7 of this Form 10-K under the
`heading "Factors That May Affect Future Results and Financial Condition," which information is hereby incorporated by
`reference.
`
`Application Software
`The Company has two digital video authoring/editing software titles. Final Cut Pro® 3 is a video authoring application
`designed to meet the demanding needs of the professional video editing environment by combining professional-quality real-
`time video editing, compositing, and special effects in one package. iMovieTM 2, the Company's easy-to-use consumer digital
`video editing software for creation of home and classroom movies, features an enhanced user interface, improved audio
`editing capabilities, enhanced controls for titling and transitions, and added special effects. iMovie 2 is currently preinstalled
`on all of the Company's Macintosh systems.
`
`iDVD 2 is consumer oriented software that makes it easy to turn iMovie files, QuickTime files and digital pictures into
`DVDs that can be played on consumer DVD players. iDVD 2 simplifies DVD authoring by offering built-in professionally
`designed themes and drag-and—drop simplicity. The Company's other DVD application, DVD Studio ProTM, lets professional
`users encode video, conduct complex authoring tasks and preview finished product in real-time. Both iDVD 2 and DVD
`Studio Pro allow users to burn DVDs using the Power Mac G4's SuperDrive.
`
`4
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`iTunes 2 is a digital music application for the Macintosh that lets users create and manage their own digital music library.
`iTunes 2 organizes music using searching, browsing and playlist features. It supports both audio and MP3 CD burning,
`features a graphic equalizer and cross fading between songs, and supports automatic synchronization with the music stored
`on an iPod, Apple's new portable digital music player. iTunes 2 is currently preinstalled on all of the Company's Macintosh
`systems.
`
`AppleWorks® 6.2 is an integrated productivity application that incorporates word processing, page layout, image
`manipulation, spreadsheets, databases and presentations in a single application. Intended to be an easy-to-use product for the
`Company's consumer and education customers, AppleWorks makes it simple to create professional looking documents in the
`classroom and at home.
`
`FileMaker Corporation, a wholly owned subsidiary of the Company, develops, publishes, and distributes desktop based
`database management application software for Mac OS and Windows-based systems. FileMaker's FileMaker® Pro database
`software and related products offer strong relational databases and advanced desktop-to-web publishing capabilities.
`
`Internet Software, Integration, and Services
`Apple's Internet strategy is focused on delivering seamless integration with and access to the Internet throughout the
`Company's product lines. Apple develops products and technologies that adhere to many industry standards in order to
`provide an optimized user experience through interoperability. In addition to Sherlock 2, an easy Internet Setup Assistant is
`included with the Mac OS.
`
`QuickTime 5 Player, the Company's current version of its multimedia software for Macintosh and Windows platforms,
`features streaming of live and stored video and audio over the Internet and playback of high-quality audio and video on
`computers. More than 150 million copies of QuickTime Player have been distributed. Over 20,000 software applications and
`content CDs feature QuickTime, and more than 75 models of digital cameras from most major brands use QuickTime to
`capture and display their images. QuickTime Pro is a suite of software that allows creation and editing of Intemet-ready
`audio and video files and allows a user to add special effects and other features to QuickTime movies. QuickTime Streaming
`Server software is the underlying server technology that powers QuickTime's ability to stream live and stored video and
`audio over the Internet. QuickTime Streaming Server can be downloaded for free as open source software and is included in
`Mac OS X Server.
`
`WebObjects®, the Company's Java-based application server for web publishing and enterprise application development,
`offers a complete solution for rapid development and deployment of web applications. WebObjects features sophisticated
`graphical development tools, comprehensive prebuilt and reusable components, integration with numerous data sources, and
`robust deployment tools.
`
`Apple currently offers three free Internet services collectively called iTools. Mac.comTM is an email service run by Apple.
`iDisk offers users 20 megabytes of private or public storage on Apple's Internet servers. HomePage allows users to create
`their own personal website hosted by Apple with personalized content including data, pictures, and movies. In addition to the
`three iTools services, Apple also currently offers on its corporate website iCards, an electronic greeting card service.
`
`Third-Party Software Products
`Thousands of third-party software titles and solutions are available for the Macintosh platform. The Company sells a variety
`of these third-party software products directly to end users through both its retail and online stores. Additional information
`regarding the Company's relationship with and dependence upon third-party software developers, including Microsoft
`Corporation, may be found in Part II, Item 7 of this Form 10-K under the heading "Factors That May Affect Future Results
`and Financial Condition," which information is hereby incorporated by reference.
`
`5
`
`Product Support and Services
`AppleCare® offers a range of support options for Apple customers. These options include assistance that is built into
`software products, printed and electronic product manuals, online support including comprehensive product information as
`well as tecMcal assistance, and the AppleCare Protection Plan. The AppleCare Protection Plan is a fee-based service that
`typically includes three years of phone support and hardware repairs, dedicated web-based support resources, and user
`diagnostic tools.
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`Apple Training offers comprehensive system administration and development training on Apple technologies, together with
`certification programs that test customer's skills and verify their tecMcal proficiency. Apple Professional Services offers a
`range of custom, personalized tecMcal services, including Internet consulting and setup, installation and integration services.
`The Company also offers specialized loan programs including loans for consumers, students, and educators. Apple also
`provides leasing solutions for its education institution customers and its business and design customers. The Company uses
`several third-party lenders to originate and carry these loans and leases.
`
`Specialized Education Products and Services
`The Company offers a variety of umque services and products to its education customers, including a separate online store
`for education customers offering special education price lists and promotions; special financing programs for K-12 and
`higher education students, faculty, and staff; a special edition of its productivity software suite, AppleWorks, that is cross
`platform for both Macintosh and Windows computers; the iBook Wireless Mobile Lab that allows teachers and students to
`share iBook computers, a printer, and a wireless network/Intemet connection that are stored on a mobile cart that can be
`moved between classrooms; and three special Digital Media Studio solutions designed for education, including one that is
`integrated into a mobile cart. Additionally, Apple Professional Services offers a range of tecMcal services to education
`customers.
`
`In March of 2001, Apple acquired PowerSchool Inc., a privately held provider of web-based student information systems for
`K-12 schools and school districts. PowerSchool® software products give school adrnimstrators and teachers the ability to
`easily and cost-effectively manage student records and give parents real-time access to track their children's performance.
`PowerSchool offers the option of being hosted remotely with an application service provider model.
`
`Markets and Distribution
`
`The Company's customers are primarily in the education, creative, consumer, and business markets. Certain customers are
`attracted to Macintosh computers for a variety of reasons, including the reduced amount of training resulting from the
`Macintosh computer's intuitive ease of use, advanced graphics capabilities, industrial design features of the Company's
`hardware products, ability of Macintosh computers to network and commumcate with other computer systems and
`environments, and availability of application software. Apple personal computers were first introduced to education
`customers in the late 1970s. Sales in the United States to both elementary and secondary schools, as well as for college and
`university customers, remains a core market for Apple, accounting for over 26% of net sales in 2001.
`
`The Company distributes its products through wholesalers, resellers, national and regional retailers and cataloguers. During
`2000 a single distributor, Ingram Micro Inc., accounted for approximately 11.5% of net sales. No other customer accounted
`for more than 10% of net sales during 2000, and no individual customer accounted for more than 10% of net sales in 2001 or
`1999. The Company also sells many of its products and resells certain third-party products in most of its major markets
`directly to consumers, education customers, and certain resellers either directly, through its retail stores in the United States,
`or through one of its online stores around the world. During 2001, net sales attributable to the Company's online stores totaled
`approximately $2 billion.
`
`Since May of 2001, the Company opened 27 retail stores in the United States. The Company anticipates opemng additional
`stores in calendar 2002. The Company has located its retail stores in high traffic
`
`6
`
`locations in shopping malls and urban shopping districts. In addition to its own hardware and software products, the
`Company's retail stores carry a variety of third-party hardware and software in inventory and provide certain hardware
`support services.
`
`Competition
`The Company is confronted by aggressive competition in all areas of its business. The market for the design, manufacture,
`and sale of personal computers and related software and peripheral products is highly competitive. It continues to be
`characterized by rapid technological advances in both hardware and software development, which have substantially
`increased the capabilities and applications of these products, and has resulted in the frequent introduction of new products
`and significant price, feature, and performance competition. Recently, price competition in the market for personal computers
`has been particularly intense. The Company's competitors who sell Windows-based personal computers have aggressively cut
`prices and lowered their product margins to gain or maintain market share in response to weakness in demand for personal
`computing products. The Company's results of operations and financial condition have been, and in the future may continue
`
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`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. As of December 7, 2001, there were 26,992 shareholders of record.
`
`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. All share price and per share data and numbers of Common shares, have been retroactively
`adjusted to reflect the stock split.
`
`The Company did not pay cash dividends in either fiscal 2001 or 2000. The Company anticipates that, for the foreseeable
`future, it will retain any earnings for use in the operation of its business.
`
`The price range per share of common stock represents the highest and lowest prices for the Company's common stock on the
`Nasdaq National Market during each quarter.
`
`Fiscal 2001 price range per common
`share
`
`Fiscal 2000 price range per common
`share
`
`Item 6. Selected Financial Data
`
`Fourth Quarter
`Third Quarter
`Second Quarter
`First Quarter
`
`
`$
`
`$
`
`25.22-$14.68
`
`64.13-$25.38
`
`$
`
`$
`
`27.12-$18.75
`
`69.75-$40.19
`
`$
`
`$
`
`23.75-$14.44
`
`75.19-$43.25
`
`$
`
`$
`
`26.75-$13.63
`
`59.00-$28.72
`
`The following selected financial information has been derived from the audited consolidated financial statements. The
`information set forth below is not necessarily indicative of results of future operations, and should be read in conjunction
`with Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated
`financial statements and related notes thereto included in Item 8 of this Form 10-K in order to fully understand factors that
`may affect the comparability of the information presented below.
`
`Five fiscal years ended September 29, 2001
`(In millions, except share and per share amounts)
`
`Net sales
`Net income (loss)
`Earnings (loss) per common share:
`Basic
`Diluted
`Cash dividends declared per common share
`Shares used in computing earnings (loss) per
`share (in thousands):
`Basic
`Diluted
`Cash, cash equivalents, and short-term
`investments
`Total assets
`Long-term debt
`Shareholders' equity
`
`1997
`1998
`1999
`2000
`2001
`
`
`$
`$
`
`8
`$
`$
`
`$
`$
`$
`$
`
`5,363
`(25)
`
`$
`$
`
`7,983
`786
`
`$
`$
`
`6,134
`601
`
`$
`$
`
`5,941
`309
`
`$
`$
`
`7,081
`(1,045)
`
`$
`(0.07)
`$
`(0.07)
`— $
`
`$
`2.42
`$
`2.18
`— $
`
`$
`2.10
`$
`1.81
`— $
`
`$
`1.17
`$
`1.05
`— $
`
`(4.15)
`(4.15)
`—
`
`345,613
`345,613
`
`324,568
`360,324
`
`286,314
`348,328
`
`263,948
`335,834
`
`252,124
`252,124
`
`4,336
`6,021
`3 17
`3,920
`
`$
`$
`$
`$
`
`4,027
`6,803
`300
`4,107
`
`$
`$
`$
`$
`
`3,226
`5,161
`300
`3,104
`
`$
`$
`$
`$
`
`2,300
`4,289
`954
`1,642
`
`$
`$
`$
`$
`
`1,459
`4,233
`951
`1,200
`
`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. In 2001, the Company acquired
`PowerSchool, Inc., resulting in the allocation to in-process research and development of a charge of $11 million for acquired
`in-process technologies with no altemative future use.
`
`13
`
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`Net charges related to Company restructuring actions of $8 million, $27 million and $217 million were recognized in 2000,
`1999, and 1997, respectively. During 2000, the Company recognized the cost of a special executive bonus for the Company's
`Chief Executive Officer for past services in the form of an aircraft with a total cost to the Company of approximately
`$90 million. In 1997, the Company acquired NeXT Software, Inc., resulting in the allocation to in-process research and
`development of a charge of $375 million for acquired in-process technologies with no alternative future use. Also in 1997,
`the Company agreed to acquire certain assets from Power Computing Corporation (PCC). The total purchase price was
`approximately $110 million, of which $75 million was expensed in 1997 as "termination of license agreement."
`
`The following table sets forth quarterly results of operations for fiscal 2001 and 2000 (in millions, except unit shipment and
`per share amounts):
`
`Year Ended September 29, 2001
`Year Ended September 30, 2000
`
`Fourth
`Third
`Second
`First
`Fourth
`Third
`Second
`First
`
`Quarter
`Quarter
`Quarter
`Quarter
`Quarter
`Quarter
`Quarter
`Quarter
`
`
` *2
`
`$
`
`$
`
`$
`
`$
`
`$
`
`1,450
`
`850
`437
`30%
`3 84
`7
`53
`
`4%
`
`1
`
`7
`40
`
`$
`
`$
`
`$
`
`$
`
`$
`
`1,475
`
`827
`434
`29%
`392
`11
`31
`
`2%
`
`11
`
`7
`45
`
`26
`
`$
`
`$
`
`$
`
`$
`
`$
`
`$
`
`$
`
`$
`
`$
`
`1,431
`
`751
`385
`27%
`393
`7
`(8)
`
`(1)%
`
`5
`
`$
`
`7 $
`65
`$
`
`19
`
`$
`
`1,007
`
`659
`(21)
`(2)%
`399
`7
`(420)
`
`(42)%
`
`71
`
`(13)
`67
`
`(88)
`
`$
`
`$
`
`$
`
`$
`
`$
`
`$
`
`1,870
`
`1,122
`467
`25%
`383
`7
`84
`
`4%
`
`83
`
`7
`62
`
`59
`
`$
`
`$
`
`$
`
`$
`
`$
`
`$
`
`1,825
`
`1,016
`543
`30%
`375
`7
`168
`
`9%
`
`50
`
`7
`52
`
`70
`
`$
`
`$
`
`$
`
`$
`
`$
`
`$
`
`1,945
`
`1,043
`549
`28%
`379
`7
`170
`
`9%
`
`100
`
`7
`49
`
`86
`
`S
`
`S
`
`S
`
`S
`
`S
`
`S
`
`2,343
`
`1,377
`607
`26%
`409
`98
`100
`
`4%
`
`134
`
`7
`40
`
`91
`
`Net sales
`Macintosh CPU unit sales
`(in thousands)
`Gross margin
`Gross margin percentage
`Operating expenses
`Special charges
`Operating income
`Operating margin
`percentage
`Gains on non-current
`investments, net
`Unrealized loss on convertible
`securities
`Interest and other income, net
`Provision (benefit) for income
`taxes
`Income (loss) before
`accounting change
`Cumulative effect of
`accounting change, net of taxes
`Net income (loss)
`Earnings (loss) per common
`share before accounting
`change:
`Basic
`
`Diluted
`Earnings (loss) per common
`share:
`
`Basic
`Diluted
`Shares used in calculating
`earnings (loss) per share (in
`thousands):
`Basic
`Diluted
`
`$
`
`$
`
`$
`
`$
`
`$
`
`$
`$
`
`28
`
`66
`
`7
`66
`
`0.19
`
`0.19
`
`0.19
`0.19
`
`$
`
`$
`
`$
`
`$
`
`$
`
`$
`$
`
`61
`
`7
`61
`
`0.17
`
`0.17
`
`0.17
`0.17
`
`$
`
`$
`
`$
`
`$
`
`$
`$
`
`43
`
`$
`
`7 $
`43
`$
`
`0.12
`
`0.12
`
`0.12
`0.12
`
`$
`
`$
`
`$
`$
`
`(207)
`
`12
`(195)
`
`(0.61)
`
`(0.61)
`
`(0.58)
`(0.58)
`
`$
`
`$
`
`$
`
`$
`
`$
`$
`
`170
`
`7
`170
`
`0.52
`
`0.47
`
`0.52
`0.47
`
`$
`
`$
`
`$
`
`$
`
`$
`$
`
`200
`
`7
`200
`
`0.62
`
`0.55
`
`0.62
`0.55
`
`$
`
`$
`
`$
`
`$
`
`$
`$
`
`233
`
`7
`233
`
`0.72
`
`0.64
`
`0.72
`0.64
`
`S
`
`S
`
`S
`
`S
`
`S
`S
`
`183
`
`7
`183
`
`0.57
`
`0.51
`
`0.57
`0.51
`
`350,819
`356,525
`
`348,765
`358,912
`
`346,080
`352,812
`
`337,170
`337,170
`
`326,977
`361,784
`
`325,040
`361,817
`
`324,343
`363,986
`
`322,077
`356,834
`
`14
`
`
`
`Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
`
`This section and other parts of this Form 10-K contain forward-looking statements that involve risks and uncertainties. The
`Company's actual results may differ significantly from the results discussed in the forward-looking statements. Factors that
`might cause such differences include, but are not limited to, those discussed in the subsection entitled "Factors That May
`Affect Future Results and Financial Condition" below. The following discussion should be read in conjunction with the
`consolidated financial statements and notes thereto included in Item 8 of this Form 10-K. All information presented herein is
`based on the Company's flscal calendar.
`
`http://www.sec.gov/Archives/edgar/data/320193/000091205701544436/a2066171z10-k4...
`
`12/29/2013
`PAGE 000008
`
`

`

`Prepared by MERRILL CORPORATION
`
`Page 14 of 76
`
`Results of Operations
`The following table sets forth annual results of operations for fiscal years 2001, 2000, and 1999 (in millions, except unit
`shipment and per share amounts):
`
`2001
`ChangeWWW
`
`2000
`Change
`1999
`W W WWW
`
`30% $
`32%
`28% $
`
`21% $
`
`17% $
`
`61% $
`
`$
`
`$
`$
`45% $
`$
`$
`133% $
`308% $
`31% $
`$
`31% $
`
`15% $
`20% $
`
`15% $
`
`20% $
`
`6,134
`3,448
`1,696
`28%
`314
`5%
`996
`16%
`386
`
`_
`
`27
`_
`359
`230
`_
`87
`75
`601
`_
`601
`
`2.10
`1.81
`
`2.10
`
`1.81
`
`7,983
`4558
`2,166
`2796
`380
`
`596
`L166
`15%
`620
`
`90
`522
`367
`
`203
`306
`786
`
`786
`
`2.42
`2.18
`
`2.42
`
`2.18
`
`$ 9
`
`99999999999999999999999
`
`99
`
`5,363
`3,087
`1235
`2396
`430
`896
`
`1,138
`2196
`
`(33)96
`(32)96
`(43)96
`
`1396
`
`(2)96
`
`(333)
`
`(154)96
`
`11
`
`_
`_
`(344)
`88
`(13)
`217
`(15)
`(37)
`12
`(25)
`
`(011)
`(011)
`
`«107)
`«107)
`
`(166)96
`
`796
`
`(105)96
`(105)96
`
`(103)96
`
`(105)96
`(105)96
`
`(103)96
`(103)96
`
`$
`
`$
`
`$
`
`$
`
`$
`
`$
`
`$
`$
`$
`$
`$
`$
`$
`$
`$
`$
`
`$
`$
`
`$
`$
`
`15
`
`Net sales
`
`Macintosh CPU unit sales (in thousands)
`Gross margin
`
`Percentage of net sales
`Research an