<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K/A
AMENDMENT NO. 1
---------------
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 26, 1997 OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) 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 (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
1 Infinite Loop
Cupertino, California 95014
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (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)
------------------------
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 definitive 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 nonaffiliates of the
Registrant was approximately $2,271,883,063 as of November 28, 1997, 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.
127,993,412 shares of Common Stock Issued and Outstanding as of November 28,
1997
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<PAGE>
PART III
Part III is replaced in its entirety as follows:
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
The name of, principal occupation of, and certain additional information
about each of the three nominees and the three current directors with unexpired
terms are set forth below. On August 5, 1997, all of the members of the Board
other than Messrs. Woolard and Chang resigned and were replaced by Steven P.
Jobs, Lawrence J. Ellison, William V. Campbell and Jerome B. York. One Class II
director seat remained unfilled on Apple's Board after August 5, 1997 and,
pursuant to an amendment to the Company's by-laws, has been eliminated, thereby
reducing the number of directors on the Board from seven to six.
Listed below are the Class II directors to be nominated for re-election at
the Company's Annual Meeting of Shareholders (the "Annual Meeting"). In
connection with the Annual Meeting, it is expected that shareholders will be
asked to approve an amendment to the Company's Restated Articles of
Incorporation which would, if approved, eliminate the classification of the
Board and ensure that each director will stand for election annually. If
shareholders approve the proposal to declassify the Board, all of the directors
elected at the Annual Meeting will serve a one-year term expiring at the next
annual meeting of shareholders.
<TABLE>
<CAPTION>
DIRECTOR
NAME POSITION WITH THE COMPANY AGE SINCE
- ---------------------------------------------- -------------------------------------------------- --- -----------
<S> <C> <C> <C>
Steven P. Jobs................................ Director and Interim Chief Executive Officer 42 1997
Lawrence J. Ellison........................... Director 53 1997
Edgar S. Woolard, Jr.......................... Director 63 1996
</TABLE>
Listed below are the Class I directors whose two-year terms do not expire
until the next annual meeting of shareholders.
<TABLE>
<CAPTION>
DIRECTOR
NAME POSITION WITH THE COMPANY AGE SINCE
- ---------------------------------------------- -------------------------------------------------- --- -----------
<S> <C> <C> <C>
Gareth C.C. Chang............................. Director 54 1996
William V. Campbell........................... Director 57 1997
Jerome B. York................................ Director 59 1997
</TABLE>
WILLIAM V. CAMPBELL has been President and Chief Executive Officer and a
director of Intuit Inc. since April 1994. From January 1991 to December 1993,
Mr. Campbell was President and Chief Executive Officer of GO Corporation. From
1987 to January 1991, he served as President and Chief Executive Officer of
Claris Corporation, a subsidiary of the Company. Mr. Campbell also serves on the
board of directors of SanDisk Corporation and Great Plains Software.
GARETH C.C. CHANG has been Corporate Senior Vice President of Hughes
Electronics since 1993. Previously, he was Corporate Vice President of McDonnell
Douglas Corporation. He is currently a director of Mallinckrodt, Inc.
LAWRENCE J. ELLISON has been Chief Executive Officer and a director of
Oracle Corporation ("ORACLE") since he co-founded Oracle in May 1977, and was
President of Oracle until June 1996. Mr. Ellison has been Chairman of the Board
of Oracle since June 1995. Mr. Ellison is a director of SuperGen, Inc. and Co-
Chairman of California's Council on Information Technology.
STEVEN P. JOBS is one of the Company's co-founders and currently serves as
its Interim Chief Executive Officer. Mr. Jobs is the also the Chairman and Chief
Executive Officer of Pixar Animation Studios. In addition, Mr. Jobs co-founded
NeXT Software, Inc. ("NEXT") and served as the Chairman and Chief Executive
Officer of NeXT from 1985 until 1997, when NeXT was acquired by the Company.
2
<PAGE>
EDGAR S. WOOLARD, JR. served as the Chairman of the Board of Directors of E.
I. DuPont de Nemours & Co. ("DUPONT") until October 1997. Previously, he held
the positions of President and Chief Executive Officer of DuPont. He is
currently a director of Citicorp and Zurich Holding Company of America, Inc.
JEROME B. YORK has served as Vice Chairman of Tracinda Corporation since
September 1995 and has served in a number of executive positions at Chrysler
Corporation, including Executive Vice President-Finance and Chief Financial
Officer from May 1990 to May 1993. He also served as a director of Chrysler
Corporation from 1992 to 1993. In May 1993, he joined International Business
Machines Corporation ("IBM") as Senior Vice President and Chief Financial
Officer, and he served as a director of IBM from January 1995 to August 1995.
Mr. York also is a director of USA Waste Services, Inc., MGM Grand, Inc. and
Metro-Goldwyn-Mayer, Inc.
EXECUTIVE OFFICERS
The following sets forth certain information regarding the executive
officers of the Company as of December 1, 1997. Information pertaining to Mr.
Jobs, who is both a director and an executive officer of the Company, may be
found above under the caption "Directors."
FRED D. ANDERSON, Executive Vice President and Chief Financial Officer (age
53), joined the Company in April 1996. Prior to joining the Company, Mr.
Anderson was Corporate Vice President and Chief Financial Officer of Automatic
Data Processing, Inc. ("ADP"), a position he held from August 1992 to March
1996. Prior to joining ADP, Mr. Anderson held several domestic and international
executive positions at MAI Basic Four, Inc., including President and Chief
Operating Officer.
NANCY R. HEINEN, Senior Vice President, General Counsel and Secretary (age
41), joined the Company in September 1997. Prior to joining the Company, Ms.
Heinen held the position of Vice President, General Counsel and Secretary of the
Board of Directors at NeXT from February 1994 until the acquisition of NeXT by
the Company in February 1997. Prior to joining NeXT, Ms. Heinen was Group
Counsel and Assistant Secretary at Tandem Computers Incorporated from 1989 to
1994, and previously had been employed in private legal practice.
MITCHELL MANDICH, Senior Vice President, Americas Sales and Service (age
49), joined the Company in Feburary 1997 upon the Company's acquisition of NeXT.
Mr. Mandich has also served with the Company in the position of Vice President,
North American Business Division. Prior to joining the Company, Mr. Mandich held
the position of Vice President, Worldwide Sales and Service with NeXT from
December 1995 through February 1997. Before joining NeXT, Mr. Mandich served in
the position of Senior Vice President, Americas Sales and Marketing with Pyramid
Technology Corporation from January 1993 to November 1995.
JONATHAN RUBINSTEIN, Senior Vice President, Hardware Engineering (age 41),
joined the Company in February 1997. Before joining the Company, Mr. Rubinstein
was Executive Vice President and Chief Operating Officer of FirePower Systems
Incorporated ("FIREPOWER"), from May 1993 to August 1996. Before joining
FirePower, Mr. Rubinstein was Vice President and General Manager, Hardware and
Vice President, Hardware Engineering at NeXT.
AVADIS TEVANIAN, JR., PH.D., Senior Vice President, Software Engineering
(age 36), joined the Company in February 1997 upon the Company's acquisition of
NeXT. With NeXT, Dr. Tevanian held several positions, including Vice President,
Engineering, from April 1995 to February 1997. Prior to April 1995, Dr. Tevanian
worked as an engineer with NeXT and held several management positions.
SINA TAMADDON, Vice President and General Manager, Newton Group (age 40),
joined the Company in September 1997. Before joining the Company, Mr. Tamaddon
held the position of Vice President, Europe with NeXT from September 1996
through March 1997. From August 1994 to August 1996, Mr. Tamaddon held the
position of Vice President, Professional Services with NeXT. Prior to joining
NeXT, Mr. Tamaddon served as Vice President, Advanced Technology for Software
Alliance Incorporated.
3
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of
securities ownership and changes in such ownership with the Securities and
Exchange Commission (the "SEC"). Officers, directors and greater than ten
percent shareholders also are required by rules promulgated by the SEC to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the
Company, the absence of a Form 3 or Form 5 or written representations that no
Forms 5 were required, the Company believes that, during fiscal year 1997, its
officers, directors and greater than ten percent beneficial owners complied with
all applicable Section 16(a) filing requirements.
ITEM 11. EXECUTIVE COMPENSATION
The following table summarizes compensation information for the last three
fiscal years for (i) Mr. Jobs, Interim Chief Executive Officer, and Dr. Amelio,
former Chairman of the Board and Chief Executive Officer, (ii) the four most
highly compensated executive officers other than the Chief Executive Officer who
were serving as executive officers of the Company at the end of fiscal year 1997
and (iii) Ms. Hancock, former Executive Vice President and Chief Technology
Officer, who would have been one of the Company's four most highly compensated
executive officers for which disclosure is required had she been an executive
officer of the Company at the end of fiscal year 1997 (collectively, the "NAMED
EXECUTIVE OFFICERS").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ------------------------------
SECURITIES
------------------------ RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS STOCK AWARDS OPTIONS COMPENSATION
POSITION (1)(2) YEAR ($) ($) ($) (#) ($)
- ----------------------------------- ------ -------- ----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Steven P. Jobs..................... 1997 -- -- -- 30,000(3) --
Interim Chief Executive Officer 1996
1995
Gilbert F. Amelio.................. 1997 997,617 1,000,000(4) 509,350(5) -- 6,749,094(6)
Former Chairman of the Board 1996 655,061 2,334,000 3,830,580(7) 1,000,000(8) 3,060(9)
and Chief Executive Officer 1995
Fred D. Anderson................... 1997 520,311 -- 40,748(5) 850,000(10) 250,489(11)
Executive Vice President 1996 252,156 1,275,000 -- 400,000 141,361(12)
and Chief Financial Officer 1995
Guerrino De Luca................... 1997 430,496 322,732 30,561(5) 700,000(10) 169,513(13)
Executive Vice President, 1996 269,034 104,489 -- 78,000 62,327(14)
Marketing 1995
Robert Calderoni................... 1997 288,058 75,000(15) 9,547(5) 125,000 1,586(9)
Senior Vice President, 1996 63,794 125,000 -- 75,000 4,750(9)
Corporate Controller 1995
Jonathan Rubinstein................ 1997 250,262 100,000 19,108(5) 700,000(10) 1,864(9)
Senior Vice President, 1996
Hardware Engineering 1995
Ellen Hancock...................... 1997 424,120 360,000(16) -- -- 480,000(17)
Former Executive Vice President 1996 111,646 200,000 -- 300,000(18) --
and Chief Technology Officer 1995
</TABLE>
- --------------------------
(1) Dr. Amelio and Ms. Hancock resigned as executive officers of the Company
effective as of July 8, 1997 and July 25, 1997, respectively. Messrs. De
Luca and Calderoni resigned as executive officers effective as of October
10, 1997 and November 7, 1997, respectively.
4
<PAGE>
(2) Messrs. Jobs and Rubinstein became executive officers of the Company during
fiscal year 1997. Dr. Amelio, Messrs. Anderson, De Luca and Calderoni and
Ms. Hancock became executive officers of the Company during fiscal year
1996.
(3) Mr. Jobs was granted 30,000 stock options in his capacity as a director of
the Company pursuant to the Director Plan, subject to the approval of the
Director Plan by shareholders at the Annual Meeting.
(4) Represents Dr. Amelio's annual Component B Bonus paid pursuant to the terms
of his employment agreement and his separation agreement. For a description
of the terms of Dr. Amelio's separation agreement, see "Item 13. Certain
Relationships and Related Transactions--Arrangements with Named Executive
Officers--Separation Agreement with Gilbert F. Amelio."
(5) For fiscal year 1997, these amounts represent the values on February 5,
1997 of the Common Stock underlying the Performance Shares earned by the
Named Executive Officers under the terms of the Performance Share Plan. The
amounts of Common Stock earned by participating Named Executive Officers are
as follows: Dr. Amelio - 33,400; Mr. Anderson - 2,672; Mr. De Luca - 2,004;
Mr. Calderoni - 626; and Mr. Rubinstein - 1,253. No dividends were paid on
the Performance Shares. As of the last day of fiscal year 1997, the Named
Executive Officers held no other Performance Shares or restricted stock.
(6) Consists of (i) a lump sum severance payment of $6,731,871 paid pursuant to
the terms of Dr. Amelio's separation agreement, $1,500,000 of which was
immediately applied in partial repayment of his outstanding indebtedness to
the Company, (ii) $8,272, the value of certain computer equipment that Dr.
Amelio was permitted to keep or which the Company agreed to deliver after
his termination of employment pursuant to the terms of his separation
agreement, (iii) a $4,194 matching contribution made by the Company in
accordance with the terms of its 401(k) plan and (iv) the payment by the
Company of $4,757 of premiums on a life insurance policy for the benefit of
Dr. Amelio.
(7) Represents the value on February 2, 1996 of 130,960 shares of Common Stock
earned by Dr. Amelio for fiscal year 1996 under the Performance Share Plan.
No dividends were paid on the Performance Shares.
(8) Pursuant to Dr. Amelio's separation agreement, 800,000 of the options
granted to him during fiscal year 1996 were forfeited upon his resignation
of employment, which became effective on September 27, 1997.
(9) Consists of matching contributions made by the Company in accordance with
the terms of its 401(k) plan.
(10) Includes the replacement of 500,000, 309,750 and 200,000 options that were
previously granted to Messrs. Anderson, De Luca and Rubinstein,
respectively, and canceled pursuant to the Stock Option Exchange Program
(the "EXCHANGE PROGRAM"), which is described below under the caption "Stock
Option Exchange Program."
(11) Consists of $245,497 in relocation assistance and $4,992 in matching
contributions made by the Company in accordance with the terms of its 401(k)
plan.
(12) Consists of $140,155 in relocation assistance and $1,206 in matching
contributions made by the Company in accordance with the terms of its 401(k)
plan.
(13) Consists of $158,373 in relocation assistance and $11,140 in matching
contributions made by the Company in accordance with the terms of its 401(k)
plan.
(14) Consists of $49,451 in relocation assistance and $12,876 in matching
contributions made by the Company in accordance with the terms of its 401(k)
plan.
(15) Paid pursuant to the terms of Mr. Calderoni's employment agreement with the
Company, which agreement terminated upon his resignation as an employee of
the Company effective November 7, 1997. For a description of employment
agreements with Named Executive Officers, see "Item 13. Certain
Relationships and Related Transactions--Arrangements with Named Executive
Officers--Employment Agreements with Named Executive Officers."
(16) Paid pursuant to the terms of Ms. Hancock's employment agreement with the
Company, which agreement terminated upon her resignation as an employee of
the Company effective July 25, 1997.
(17) Consists of a severance payment made by the Company to Ms. Hancock pursuant
to the terms of her employment agreement with the Company.
(18) Ms. Hancock forfeited 200,000 of these stock options upon her termination
of employment.
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information about option grants to the Named
Executive Officers during fiscal year 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES IN EXERCISE OR OPTION TERM(3)
OPTIONS GRANTED FISCAL YEAR BASE PRICE EXPIRATION ----------------------
NAME (#) (1) ($/SH)(2) DATE 5% ($) 10% ($)
- ------------------------------------ --------------- --------------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Steven P. Jobs...................... 30,000(4) 0.15% 23.625 8/14/07 446,512 1,134,000
Gilbert F. Amelio................... -- -- -- -- -- --
Fred D. Anderson.................... 100,000 0.51% 18.375 4/21/07 1,157,625 2,940,000
500,000(5) 2.55% 13.25 7/11/07 4,173,750 10,600,000
250,000 1.27% 19.75 8/5/07 3,110,625 7,900,000
Guerrino De Luca(6)................. 200,000 1.02% 17.00 2/21/07 2,142,000 5,440,000
309,750(5) 1.58% 13.25 7/11/07 2,585,638 6,566,700
190,250 0.97% 19.75 8/5/07 2,367,186 6,011,900
Robert Calderoni(6)................. 25,000 0.13% 17.00 2/21/07 267,750 680,000
20,000 0.10% 18.375 4/21/07 231,525 588,000
80,000 0.41% 19.75 8/5/07 995,400 2,528,000
Jonathan Rubinstein................. 200,000 1.02% 17.00 2/21/07 2,142,000 5,440,000
200,000(5) 1.02% 13.25 7/11/07 1,669,500 4,240,000
300,000 1.53% 19.75 8/5/07 3,732,750 9,480,000
Ellen Hancock....................... -- -- -- -- -- --
</TABLE>
- --------------------------
(1) Based on an aggregate of 19,629,231 options granted to all employees during
fiscal year 1997, including 7,866,155 options granted in exchange for the
cancellation of the same number of outstanding options as of July 11, 1997
on a one-for-one basis pursuant to the Exchange Program. This amount does
not include (i) NeXT options which were converted into Apple options during
fiscal year 1997 in connection with Apple's acquisition of NeXT or (ii)
Apple options granted to Dr. Amelio during fiscal year 1996 which were
subject to shareholder approval obtained during fiscal year 1997. Options
vest in three equal annual installments commencing on the first anniversary
of the date of grant.
(2) All options were granted at an exercise price equal to fair market value
based on the closing market value of Common Stock on the Nasdaq National
Market on the trading day immediately preceding the date of grant. For
administrative purposes, the Board on November 5, 1997 amended the Company's
stock option plans to provide that the exercise price of options granted
under such plans will be the fair market value based on the closing market
value on the date of grant.
(3) Potential gains are net of exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation
only, based on SEC rules, and do not represent the Company's estimate or
projection of the price of the Company's stock in the future. Actual gains,
if any, on stock option exercises depend upon the actual future price of
Common Stock and the continued employment of the option holders throughout
the vesting period. Accordingly, the potential realizable values set forth
in this table may not be achieved.
(4) Mr. Jobs was granted 30,000 stock options in his capacity as a director of
the Company pursuant to the Director Plan, subject to the approval of the
Director Plan by shareholders at the Annual Meeting.
(5) Grants of stock options pursuant to the Exchange Program in exchange for the
cancellation of outstanding stock options. The first grant of stock options
listed in the table above for each of Messrs. Anderson, De Luca and
Rubinstein was canceled in connection with the Exchange Program and is no
longer outstanding.
(6) All stock options held by Messrs. De Luca and Calderoni were forfeited upon
their termination of employment.
6
<PAGE>
OPTIONS EXERCISED AND YEAR-END OPTION HOLDINGS
The following table provides information about stock option exercises by the
Named Executive Officers during fiscal year 1997 and stock options held by each
of them at fiscal year-end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL YEAR-END IN-THE-MONEY OPTIONS AT FISCAL
ACQUIRED ON VALUE (#) YEAR-END ($)(2)
EXERCISE REALIZED -------------------------- --------------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------- ----------- --------- ----------- ------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steven P. Jobs....................... -- -- 0 30,000 0 0
Gilbert F. Amelio.................... 50,000 134,375 150,000 800,000(3) 0 0
Fred D. Anderson..................... -- -- 0 750,000 0 4,421,875
Guerrino De Luca..................... -- -- 0 500,000(3) 0 2,794,625
Robert Calderoni..................... 25,000 133,125 0 175,000(3) 0 513,437
Jonathan Rubinstein.................. -- -- 0 500,000 0 2,081,250
Ellen Hancock........................ 100,000 949,375 0 0 0 0
</TABLE>
- ------------------------
(1) Market value of underlying securities (based on the fair market value of
Common Stock on the Nasdaq National Market) at the time of exercise, minus
the exercise price.
(2) Market value of securities underlying in-the-money options at the end of
fiscal year 1997 (based on $21.3125 per share, the closing price of Common
Stock on the Nasdaq National Market on September 26, 1997), minus the
exercise price.
(3) Forfeited upon termination of employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The composition of the Compensation Committee changed several times during
fiscal year 1997. No person who was an employee of the Company in fiscal year
1997 served on the Compensation Committee in fiscal year 1997. During fiscal
year 1997, no executive officer of the Company (i) served as a member of the
compensation committee (or other board committee performing similar functions
or, in the absence of any such committee, the board of directors) of another
entity, one of whose executive officers served on the Company's Compensation
Committee, (ii) served as a director of another entity, one of whose executive
officers served on the Company's Compensation Committee, or (iii) served as a
member of the compensation committee (or other board committee performing
similar functions or, in the absence of any such committee, the board of
directors) of another entity, one of whose executive officers served as a
director of the Company.
7
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of November 7, 1997 (the "TABLE DATE"),
certain information with respect to the beneficial ownership of Common Stock.
Based on information available to the Company, there are no shareholders known
to the Company to be the beneficial owner of more than 5% of the outstanding
Common Stock. The following table contains information concerning (i) each
director of the Company and each nominee; (ii) each Named Executive Officer
listed in the Summary Compensation Table below; and (iii) all directors and
executive officers of the Company as a group. On the Table Date, 127,989,659
shares of Common Stock were issued and outstanding. Unless otherwise indicated,
all persons named as beneficial owners of Common Stock have sole voting power
and sole investment power with respect to the shares indicated as beneficially
owned.
SECURITY OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1)
- --------------------------------------------------------------------- -----------------------
<S> <C>
Gilbert F. Amelio.................................................... 158,816(2)
Fred D. Anderson..................................................... 0
Robert Calderoni..................................................... 0
William V. Campbell.................................................. 251
Gareth C. C. Chang................................................... 2,000
Guerrino De Luca..................................................... 899
Lawrence J. Ellison.................................................. 0
Ellen Hancock........................................................ 23
Steven P. Jobs....................................................... 1
Jonathan Rubinstein.................................................. 0
Edgar S. Woolard, Jr................................................. 8,000
Jerome B. York....................................................... 10,000
All executive officers and directors as a group (13 persons)......... 20,252(3)
</TABLE>
- ------------------------
(1) All amounts listed in this table represent less than 1% of the issued and
outstanding shares of Common Stock on the Table Date.
(2) Includes 156,667 shares subject to outstanding options and warrants held by
Dr. Amelio that were exercisable at the Table Date.
(3) Represents shares of Common Stock held by 13 executive officers and
directors at the Table Date.
8
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ARRANGEMENTS WITH NAMED EXECUTIVE OFFICERS
The Company has from time to time entered into employment, retention and
severance arrangements with certain of its Named Executive Officers. A summary
of the terms of such arrangements is set forth in the following paragraphs.
SEPARATION AGREEMENT WITH GILBERT F. AMELIO
Pursuant to a separation agreement with the Company, Dr. Amelio resigned as
an officer of the Company as of July 8, 1997 and as an employee of the Company
as of September 27, 1997. Pursuant to his separation agreement, Dr. Amelio
received a lump sum payment of $6,731,871, less $1,500,000, which was
immediately applied to the partial repayment of Dr. Amelio's outstanding $5
million loan from the Company. In addition, Dr. Amelio received a payment of
$1,000,000 representing the fiscal year 1997 Component B Bonus provided for in
his employment agreement. Dr. Amelio was permitted to remain a participant in
the Performance Share Plan for fiscal year 1997. In addition, Dr. Amelio is
entitled to continued health benefits for himself and his family through
February 2, 2001, the end of the original term of his employment agreement.
Pursuant to the separation agreement, the maturity date of Dr. Amelio's $5
million loan from the Company made to him in accordance with the terms of his
employment agreement was extended to September 15, 1998, whereupon the entire
outstanding balance will become due and payable. Dr. Amelio forfeited 800,000
unvested stock options upon his termination of employment on September 27, 1997.
For more information regarding the loan from the Company to Dr. Amelio, see
"Certain Relationships and Related Transactions" below.
EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
The Company entered into an employment agreement with Mr. Anderson effective
April 1, 1996, pursuant to which he serves as Executive Vice President and Chief
Financial Officer of the Company. Pursuant to his agreement, Mr. Anderson is
entitled to an annual base salary of no less than $500,000 and a target bonus
under the Bonus Plan for fiscal year 1997 of 80% of his base salary, which
target bonus will thereafter be reviewed annually by the Company. In fiscal year
1997, however, no cash bonuses were paid under the Bonus Plan. During fiscal
year 1997, the Company paid Mr. Anderson the second half of an $800,000 hiring
bonus. If Mr. Anderson's employment is terminated by the Company without "Cause"
at any time during the five-year period following April 1, 1996, he will be
entitled to receive a lump sum severance payment equal to the sum of his annual
base salary and target bonus. Mr. Anderson's agreement generally defines "Cause"
to include a felony conviction, willful disclosure of confidential information
or willful and continued failure to perform his employment duties.
The Company entered into an employment agreement with Ms. Hancock, effective
July 8, 1996, pursuant to which she served as Executive Vice President and Chief
Technology Officer until her termination of employment on July 25, 1997.
Pursuant to her agreement, Ms. Hancock was entitled to receive a base salary of
$480,000 and a bonus of $360,000 during fiscal year 1997. Upon Ms. Hancock's
termination of employment with the Company, she received $480,000 in a lump sum
severance payment.
The Company entered into an employment agreement with Mr. Calderoni,
effective July 8, 1996, pursuant to which he served as Senior Vice President,
Corporate Controller until his termination of employment on November 7, 1997.
Pursuant to his agreement, Mr. Calderoni was entitled to receive a base salary
of $275,000 and was guaranteed a minimum bonus of $75,000 for fiscal year 1997.
CHANGE IN CONTROL ARRANGEMENTS--STOCK OPTIONS
In the event of a "change in control" of the Company, all outstanding
options under the Company's stock option plans will, unless otherwise determined
by the plan administrator, become exercisable in full,
9
<PAGE>
and will be cashed out at an amount equal to the difference between the
applicable "change in control price" and the exercise price. A "change in
control" under these plans is generally defined as (i) the acquisition by any
person of 50% or more of the combined voting power of the Company's outstanding
securities or (ii) the occurrence of a transaction requiring shareholder
approval and involving the sale of all or substantially all of the assets of the
Company or the merger of the Company with or into another corporation.
CHANGE IN CONTROL ARRANGEMENTS--RETENTION AGREEMENTS
The Company is currently party to retention agreements (the "RETENTION
AGREEMENTS") with two Named Executive Officers (Messrs. Anderson and Rubinstein)
providing for certain cash payments in the event of a termination of an
executive's employment following a change in control of the Company. For
purposes of the Retention Agreements, a "change in control" is defined as (i) a
reorganization, merger, consolidation or other corporate transaction in which
the holders of voting stock of the Company immediately before the corporate
transaction will not own more than 50% of the voting shares of the continuing or
surviving corporation immediately after such corporate transaction, (ii) the
acquisition of 30% or more of the combined voting power of the Company's
then-outstanding securities, (iii) a change of 50% in the membership of the
Board within a two-year period, unless the election or nomination for election
by shareholders of an adequate number of directors within such period was
approved by the vote of at least three-fourths of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, (iv) all or
substantially all of the assets of the Company are sold, liquidated or
distributed, or (v) a "change in control" or a "change in the effective control"
of the Company within the meaning of Section 280G of the Code.
In the event of an Involuntary Termination (as defined in the Retention
Agreements) of any executive officer who is a party to a Retention Agreement
within two years following a change in control, such executive officer will
receive a cash payment equal to the sum of (i) three times his annual base
salary immediately prior to the date of his termination or, if greater, the
highest annualized base salary in effect during the three-year period ending on
the change in control, and (ii) three times his target bonus for the year in
which the termination occurs or, if greater, the highest target annual bonus
applicable to the executive officer in any of the three years ending prior to
the change in control. In addition, the executive officer would be eligible to
participate in the medical, dental, health, life and other fringe benefit plans
and arrangements applicable to him until the second anniversary of his date of
termination.
The Retention Agreements further provide that, in the event of an
Involuntary Termination of an executive officer on or following a change in
control, such executive officer's equity awards granted to him under the
Company's equity-based incentive plans (the "EQUITY PLANS") will vest and become
exercisable. All equity awards also will vest and become exercisable as of the
date of a change in control as defined in the Equity Plans, regardless of
whether the executive officer's employment has then terminated. Subject to
certain limits on payments, the Retention Agreements also require tax gross-up
payments to the executive officers to mitigate any excise tax imposed on the
executive officers under Section 4999 of the Code in connection with a change in
control.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Company's use of an aircraft owned by Aero Ventures,
an entity wholly owned by Dr. Amelio, the Company made monthly payments of
approximately $14,000 to Aero Ventures during fiscal year 1997 through the date
of Dr. Amelio's termination of employment. The Company also paid for certain
other expenses, including pilot and copilot fees, parking and landing fees and
simulator training and fuel expenses. During fiscal year 1997, the Company paid
approximately $471,461 to Aero Ventures in the aggregate. Pursuant to the terms
of Dr. Amelio's separation agreement, the Company's obligation to make payments
in connection with the use of his aircraft ended upon his termination of
employment.
10
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Pursuant to the terms of Dr. Amelio's employment agreement with the Company,
the Company extended a $5 million loan to Dr. Amelio in February 1996, which was
to be repaid over a period of 5 years. The largest aggregate amount of
indebtedness outstanding on this loan during fiscal year 1997 was $5 million.
Upon the termination of Dr. Amelio's employment with the Company, $1.5 million
of his severance was immediately applied in partial repayment of the outstanding
loan balance. Pursuant to Dr. Amelio's employment agreement, the loan was to
become due and payable on the 90th day after his termination of employment.
However, in consideration for Dr. Amelio's executing a release of the Company
from certain legal claims, the Company agreed to extend the maturity date of the
loan to September 15, 1998. The loan bears interest at the rate of 7% and is
secured by real estate owned by Dr. Amelio.
In connection with a relocation assistance package, the Company loaned James
McCluney (Senior Vice President, Operations) $100,000 bearing interest at the
rate of 7.31%. The largest amount of the indebtedness outstanding on this loan
during fiscal year 1997 was $100,000.
11
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(c) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------------ ---------------------------------------------------------------------------------------------
<S> <C>
23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors.
23.2 Consent of Ernst & Young LLP, Independent Auditors.
24 Power of Attorney (previously filed).
</TABLE>
12
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, this 21st day of
January 1998.
<TABLE>
<S> <C> <C>
APPLE COMPUTER, INC.
By: /s/ FRED D. ANDERSON
-----------------------------------------
Fred D. Anderson
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
NAME TITLE DATE
- -------------------------- ------------------------------ -------------------
Interim Chief Executive
* Officer and Director
- -------------------------- (Principal Executive January 21, 1998
STEVEN P. JOBS Officer)
Executive Vice President and
/s/ FRED D. ANDERSON Chief Financial Officer
- -------------------------- (Principal Financial January 21, 1998
FRED D. ANDERSON Officer)
*
- -------------------------- Director January 21, 1998
WILLIAM V. CAMPBELL
*
- -------------------------- Director January 21, 1998
GARETH C.C. CHANG
*
- -------------------------- Director January 21, 1998
LAWRENCE J. ELLISON
*
- -------------------------- Director January 21, 1998
EDGAR S. WOOLARD, JR.
*
- -------------------------- Director January 21, 1998
JEROME B. YORK
*/s/ FRED D. ANDERSON
- --------------------------
FRED D. ANDERSON
Attorney-in-Fact
13
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Apple Computer, Inc.
We consent to incorporation by reference in the registration statements
(Nos. 2-70449, 2-77563, 2-85095, 33-00866, 33-24650, 33-31075, 33-40877,
33-47596, 33-57092, 33-57080, 33-53873, 33-53879, 33-53895, 33-60279, 33-60281,
333-07437, and 333-23725) on Forms S-8 and registration statements (No.
33-62310) on Form S-3 and (Nos. 333-10961 and 333-28191) on Forms S-3/A and
registration statement (No. 333-42025) on Forms S-4 and S-4/A of Apple Computer,
Inc. of our report dated October 15, 1997, relating to the consolidated balance
sheet of Apple Computer, Inc. and subsidiaries as of September 26, 1997, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for the year then ended, and the related schedule, which report appears in
the September 26, 1997 annual report on Form 10-K of Apple Computer, Inc.
/s/ KPMG Peat Marwick LLP
San Jose, California
January 21, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG, LLP, INDEPENDENT AUDITORS
We consent to the use of our report dated October 14, 1996, included in the
Annual Report on Form 10-K of Apple Computer, Inc. for the year ended September
26, 1997, with respect to the consolidated financial statements, as amended,
included in this Form 10-K/A.
/s/ Ernst & Young LLP
San Jose, California
January 21, 1998
