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vendors in China per-formed final assembly of substantially all of the company’s Macs, iPhones, iPads, and iPods. Margins on sales of the company’s products in foreign countries, and on sales of products that include components obtained from foreign suppliers, can be adversely affected by foreign cur-rency exchange rate fluctuations and by international trade regulations, including tariffs and antidumping penalties. Seasonal Business 34 The company historically experienced increased net sales in its first and fourth fiscal quarters compared to other quarters in its fiscal year due to the seasonal demand of consumer markets related to the holiday season and the beginning of the school year; however, this pattern was less pronounced following the introductions of the iPhone and iPad. This historical pattern should not be considered a reliable indicator of the company’s future net sales or financial performance. Warranty 35 The company offered a basic limited parts and labor warranty on most of its hardware products, including Macs, iPhones, iPads, and iPods. The basic warranty period was typically one year from the date of purchase by the original end- user. The company also offered a 90- day basic warranty for its service parts used to repair the company’s hardware products. In addition, con-sumers may purchase the APP, which extended service coverage on many of the company’s hardware products in most of its major markets. Backlog 36 In the company’s experience, the actual amount of product backlog at any particular time was not a meaningful indication of its future business prospects. In particular, backlog often increased in anticipation of or immediately following new product introductions as dealers anticipated shortages. Backlog was often reduced once dealers and customers be-lieved they were able to obtain sufficient supply. Because of the foregoing, backlog should not be considered a reliable indicator of the company’s ability to achieve any particular level of revenue or financial performance. Environmental Laws Compliance with federal, state, local, and foreign laws enacted for the protection of the environment has to date had no significant effect on the company’s capital expenditures, earn-ings, or competitive position. In the future, however, compliance with environmental laws could materially adversely affect the company. Production and marketing of products in certain states and countries may subject the com-pany to environmental and other regulations including, in some instances, the requirement to provide customers with the ability to return a product at the end of its useful life, as well as place responsibility for environmentally safe disposal or recycling with the company. Such laws and regulations had been passed in
several jurisdictions in which the company operates including various countries within Europe and Asia and certain states and provinces within North America. Although the company did not anticipate any