Apple Computer, Inc. ("Apple" or the Company) is a maker of personal computer and peripheral products.

The original Complaint charges that Apple and certain of its officers and directors violated Sections 10(b), 14(a) and 20(a) of the Securities Exchange Act of 1934 and Rules 10-b(5) and 14a-9 promulgated thereunder. The action alleges that Defendants made false and misleading statements and omissions concerning Apple's improper and undisclosed practice of backdating options conferred on certain executives which made it appear that such options were issued on dates when the market price of Apple stock was higher than actual market price on the actual grant dates. This improper backdating masked the virtually instant profits the option recipients obtained. Under generally accepted accounting principles, these profits were required to be recognized as an expense in the Company's financial statements for the appropriate period, but were not. Thus, the Company's financial statements in its Form 10-K filing for the fiscal year 2005 and interim financial statements for 2005 and 2006 were materially false and misleading. In addition, the Company's Proxy Statement for its annual shareholder meeting held in 2006 was materially false and misleading because it contained statements concealing Apple's practice of backdating stock options. The Complaint further alleges that as a result of Defendants' actions, Plaintiffs and the Class were damaged.

According to the Company’s Form 10-Q for the quarterly period ended June 28, 2008, Plaintiffs filed this purported class action on August 24, 2006, in the United States District Court for the Northern District of California against the Company and certain of the Company’s current and former officers and directors alleging improper backdating of stock option grants to maximize certain Defendants’ profits, failing to properly account for those grants and issuing false financial statements. On January 19, 2007, the Court appointed the New York City Employees’ Retirement System as lead Plaintiff. On March 23, 2007, Plaintiffs filed a Consolidated Class Action Complaint. The Consolidated Complaint purports to be brought on behalf of several classes of holders of the Company’s stock and asserts claims under Section 14(a) and 20(a) of the Securities Exchange Act as well as state law. The Consolidated Complaint seeks rescission of amendments to various stock option and other incentive compensation plans, an accounting and damages in an unspecified amount. Defendants filed a motion to dismiss on June 8, 2007, which was heard on September 7, 2007. On November 14, 2007, the Court issued an order dismissing all securities claims with prejudice, and held that any amended Complaint could only be styled as a derivative case. On December 14, 2007, Plaintiff filed a motion for leave to file a first amended consolidated class action Complaint. On January 23, 2008, Defendants filed an opposition to Plaintiff’s motion. Plaintiff’s motion was heard on March 21, 2008. On May 14, 2008, the Court issued an order denying Plaintiffs’ motion for leave to amend. The court entered judgment dismissing the case on June 12, 2008. On June 17, 2008, Plaintiffs filed a notice of appeal.

According to a press release dated January 28, 2010, Apple shareholders can refile a securities fraud claim in a group lawsuit against Chief Executive Officer Steve Jobs and the Company alleging stock options manipulation, a federal appeals court ruled. A lower court erred when it decided that the New York City Employees’ Retirement System, the lead Plaintiff in the investor lawsuit, couldn’t amend its Complaint, the U.S. Court of Appeals in San Francisco said in today’s ruling. The appeals court upheld dismissal of a claim that investors were harmed by dilution of their shares.

In 2008, a separate lawsuit was filed against Apple in the Northern District of California (08-CV-03123) claiming only Section 10(b) and 20 allegations. As the cases progressed, they became consolidated under the 2006 case docket. According to a news story, Plaintiffs filed a class action against Apple, its CEO, CFO, former general counsel and certain board members for participating in a scheme to file false financial statements, thereby concealing millions of dollars in executive compensation though the backdating of stock option grants. The report recounts that in June 2006, Apple acknowledged that an internal investigation had revealed irregularities in its stock option grants between 1997 and 2001. It also said that one of the grants in question was to Mr. Jobs but that "it was subsequently canceled and resulted in no financial gain to the CEO." According to the Complaint, Apple's share price dropped 14% in the two weeks after Apple's admission, erasing more than $7 billion in share value. It is this loss that the Plaintiffs hope to recover. InformationWeek further recalls that in December 2006, Apple said that as a result of its internal investigation, it would restate its financial results to include "an additional non-cash stock-based compensation expense of $84 million after tax [$105 million pretax], including $4 million and $7 million in fiscal years 2006 and 2005, respectively." The Company said it had found no irregular grants after Dec. 31, 2002.

The report relates that the 105-page Complaint asserts that Mr. Jobs and the other Apple executives named in the suit knew what was going on. "The defendants knew that options were not granted on the dates that were disclosed to shareholders and falsified the company's records to create the appearance of illegality, and thus bear direct responsibility for their actions," the Complaint states. "Here, Jobs and the Individual Defendants clearly appreciated the fraudulent nature of their conduct."

Mr. Jobs, the Complaint further states, made an "instant paper profit" of $20,325,000 when, on Dec. 18, 2001, he received 7.5 million Apple shares in a stock option grant dated back to Oct. 19, 2001. And Apple's books did not show a $20,325,000 expense. The Complaint also cites a 10-million share option grant in January 2000 that, through backdating, resulted in "instant paper profit" of $83,762,000 for Mr. Jobs, an amount that at the time was not disclosed to shareholders. On July 22, 2008, the Court stayed this case pending the appeal in the Vogel v. Jobs et al., also filed in the United States District Court for the Northern District of California. On April 30, 2010, an Order Administratively Closing the Consolidated Action in lieu of an earlier action (06-cv-05208) ongoing in the same district.

On March 22, 2010, the lead Plaintiff filed a First Amended Consolidate Class Action Complaint. On May 14, 2010, a Corrected First Amended Consolidated Class Action Complaint as filed.

On September 28, 2010, the lead Plaintiff's filed a motion for preliminary approval of a settlement. The proposed settlement is in the amount of $14 million. The judge signed an amended order preliminarily approving the settlement on October 12, 2010. The settlement fairness hearing is set for February 18, 2011, before Judge Jeremy Fogel.

On November 12, 2010, the settlement amount was amended to $16.5 million. In addition, Apple has agreed to implement certain corporate governance measures. The settlement was preliminarily approved on November 22, 2010. On May 16, 2011, the settlement was approved. The motion for attorneys' fees and expenses was also granted in the amount of $1,966,250 and $395,515.90 respectively. The action is now dismissed with prejudice.