This analysis may be based on factors such as the market position of the Company and its products, the anticipated revenue that may be generated, expected future growth of Mac sales and the costs of developing such applications and services. Under the terms of the Companys Restated Articles of Incorporation, the Board of Directors is authorized to determine or alter the rights, preferences, privileges and restrictions of the Companys authorized but unissued shares of preferred stock. While these arrangements help ensure the supply of components and finished goods, if these outsourcing partners or suppliers experience severe financial problems or other disruptions in their business, such continued supply could be reduced or terminated and the net realizable value of these assets could be negatively impacted. For example, third parties may attempt to fraudulently induce employees or customers into disclosing user names, passwords or other sensitive information, which may in turn be used to access the Companys information technology systems. The cost of securities sold is based upon the specific identification method. On July 10, 2013, the District Court found, following a bench trial, that the Company conspired to restrain trade in violation of §1 of the Sherman Act and relevant state statutes to the extent those laws are congruent with §1 of the Sherman Act. Cost of sales related to delivered hardware and related essential software, including estimated warranty costs, are recognized at the time of sale.
The Company devotes significant resources to network security, data encryption, and other security measures to protect its systems and data, but these security measures cannot provide absolute security. As with all companies, these security measures are subject to third-party security breaches, employee error, malfeasance, faulty password management, or other irregularities. The Company believes its existing facilities and equipment, which are used by all operating segments, are in good operating condition and are suitable for the conduct of its business. The Companys direct sales generally have higher associated gross margins than its indirect sales through its channel partners. AppleCare service and support contracts typically include extended phone support, repair services, web-based support resources and diagnostic tools offered under the Companys standard limited warranty.
The Companys portable computers include MacBook Pro ® and MacBook Air ®. Capitalized costs related to internal-use software are amortized using the straight-line method over the estimated useful lives of the assets, which range from three to five years. The Notes are senior unsecured obligations, and interest is payable in arrears, quarterly for the U. Directors, Executive Officers and Corporate Governance The information required by this Item is set forth under the headings Directors, Executive Officers and Corporate Governance and Section 16 a Beneficial Ownership Reporting Compliance in the Companys 2014 Proxy Statement to be filed with the U. The Company also reviews its manufacturing-related capital assets and inventory prepayments for impairment whenever events or circumstances indicate the carrying amount of such assets may not be recoverable.
The Company also could be significantly affected by other risks associated with international activities including, but not limited to, economic and labor conditions, increased duties, taxes and other costs, and political instability. The Companys business may be impacted by political events, war, terrorism, public health issues, natural disasters and other circumstances. If the cost of the inventories exceeds their market value, provisions are made currently for the difference between the cost and the market value. Foreign and Domestic Operations and Geographic Data During 2013, the Companys domestic and international net sales accounted for 39% and 61%, respectively, of total net sales. The foregoing statement regarding the Companys expected gross margin percentage in the first quarter of 2014 is forward-looking and could differ from actual results. While the Company has procedures to monitor and limit exposure to credit risk on its trade and vendor non-trade receivables, as well as long-term prepayments, there can be no assurance such procedures will effectively limit its credit risk and avoid losses. Substantially all of the Companys manufacturing is performed in whole or in part by a few outsourcing partners located primarily in Asia.
Although arrangements with these partners may contain provisions for warranty expense reimbursement, the Company may remain responsible to the consumer for warranty service in the event of product defects and could experience an unanticipated product defect or warranty liability. The Company is vigorously defending infringement actions in courts in a number of U. A damages trial is set for May 2014. The Company is also subject to payment card association rules and obligations under its contracts with payment card processors. Many components, including those that are available from multiple sources, are at times subject to industry-wide shortages and significant commodity pricing fluctuations. The Company believes the duration of its patents is adequate relative to the expected lives of its products.
The Company typically invests in highly-rated securities, and its investment policy generally limits the amount of credit exposure to any one issuer. The Retail segment operates Apple retail stores in 13 countries, including the U. Margins on sales of the Companys products in foreign countries, and on sales of products that include components obtained from foreign suppliers, could be materially adversely affected by international trade regulations, including duties, tariffs and antidumping penalties. The Company distributes its products through third-party cellular network carriers, wholesalers, retailers and value-added resellers. The Companys internal portfolio is benchmarked against external manager performance. The Company translates the assets and liabilities of its non-U.
For the sale of most third-party products, the Company recognizes revenue based on the gross amount billed to customers because the Company establishes its own pricing for such products, retains related inventory risk for physical products, is the primary obligor to the customer and assumes the credit risk for amounts billed to its customers. As of September 28, 2013 the remaining weighted-average amortization period for acquired intangible assets is 4. Further information regarding share-based compensation can be found in Note 9, Benefit Plans of this Form 10-K. Revenue allocated to the delivered hardware and the related essential software is recognized at the time of sale provided the other conditions for revenue recognition have been met. In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value.
As of September 28, 2013, a significant portion of the Companys trade receivables was 19 concentrated within cellular network carriers, and its non-trade receivables and prepayments related to long-term supply agreements were concentrated among a few individual vendors located primarily in Asia. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Solely for purposes of this disclosure, shares of common stock held by executive officers and directors of the Registrant as of such date have been excluded because such persons may be deemed to be affiliates. An additional week is included in the first fiscal quarter approximately every five or six years to realign fiscal quarters with calendar quarters, which will next occur in the first quarter of the Company's fiscal year ending September 30, 2017. Because of the foregoing, backlog should not be considered a reliable indicator of the Companys ability to achieve any particular level of revenue or financial performance. Reports offered in this portal are produced by a small group of academic writers headed by John Dudovski. Fair Value Measurements The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis.