Apple (AAPL)

Professional Application Software

In March 2006, the Company introduced Final Cut Studio® 5.1, the Company’s High Definition (“HD”) video production suite. Final Cut Studio features Final Cut Pro® 5, Soundtrack® Pro, Motion 2, and DVD Studio Pro® 4. All of these applications are Universal.

Final Cut Pro® 5.1, the latest version of the Company’s video editing software, includes editing tools that work natively with most formats, from Digital Video (“DV”) and High Definition Video (“HDV”) to fully uncompressed HD. With a real-time multi-stream effects architecture, multicam editing tools, and advanced color correction, Final Cut Pro 5.1 enables users to view and cut from multiple sources in real time, group up to 128 sources together into multi-clips, then add or subtract cameras at any time.

DVD Studio Pro® 4 is the latest version of the Company’s professional DVD authoring application. With DVD Studio Pro 4 users can author Standard Definition (“SD”) or HD DVDs in a graphic interactive environment. DVD Studio Pro 4 includes Compressor 2, a full-featured video and audio compression application. Compressor gives users control over encoding, including the ability to encode several clips in one batch operation to a wide variety of formats including H.264.

Motion 2 is a real-time motion graphics software application that enables Final Cut Pro editors to add motion graphics to their projects. Motion 2 features interactive animation of text and graphics for DVD motion menus, video or film in real time, and quick output rendering by built-in GPU acceleration at 8-bit, 16-bit, or 32-bit float film quality. With Motion 2’s design tool, Replicator, users can automatically generate and animate multiple copies of a graphic, shape, or movie.

Soundtrack® Pro is an audio editing and sound design application that gives audio and video professionals a way to edit, mix, and repair audio. Soundtrack Pro features a waveform editor with flexible Action Layers that allow users to re-order, bypass, or change any edit, effect, or process. Find-and-Fix features identify and repair common audio problems such as background noise, pops, clicks, and hum. An integrated multitrack mixer allows editors to apply common effects to multiple tracks and group common tracks. Soundtrack Pro also features over 50 professional plug-ins for enhancing sounds, and over 5,000 music and sound effect loops.

In February 2006, the Company introduced Logic® Pro 7.2, a Universal version of the Company’s music creation and audio production software. Logic Pro 7.2 is used by musicians around the world and by professionals in music production and film scoring. It combines digital music composition, notation, and audio production facilities in one comprehensive product and includes software instruments such as Sculpture®, a component-modeling based synthesizer; UltraBeat®, a drum synthesizer with built-in step sequencer; and digital signal processing (DSP) plug-ins including Guitar Amp Pro, a full-featured guitar amplifier simulator. Along with workflow enhancements, mastering plug-ins, and support for Apple Loops, Logic Pro 7 adds distributed audio processing, a technology that allows professionals to utilize multiple Macintosh systems to expand available DSP power via an Ethernet network.

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Professional
Application Software

In March 2006, the Company introduced Final Cut
Studio® 5.1, the Company’s High Definition (“HD”)
video production suite. Final Cut Studio features Final Cut Pro® 5, Soundtrack®
Pro, Motion 2, and DVD Studio Pro® 4. All of these applications are Universal.

Final Cut Pro® 5.1, the latest version of the Company’s
video editing software, includes editing tools that work natively with most
formats, from Digital Video (“DV”) and High Definition Video (“HDV”) to fully
uncompressed HD. With a real-time multi-stream effects architecture, multicam
editing tools, and advanced color correction, Final Cut Pro 5.1 enables users
to view and cut from multiple sources in real time, group up to 128 sources
together into multi-clips, then add or subtract cameras at any time.

DVD Studio Pro® 4 is the latest version of the Company’s
professional DVD authoring application. With DVD Studio Pro 4 users can author
Standard Definition (“SD”) or HD DVDs in a graphic interactive environment. DVD
Studio Pro 4 includes Compressor 2, a full-featured video and audio compression
application. Compressor gives users control over encoding, including the
ability to encode several clips in one batch operation to a wide variety of
formats including H.264.

Motion 2 is a real-time motion graphics software
application that enables Final Cut Pro editors to add motion graphics to their
projects. Motion 2 features interactive animation of text and graphics for DVD
motion menus, video or film in real time, and quick output rendering by
built-in GPU acceleration at 8-bit, 16-bit, or 32-bit float
film quality. With Motion 2’s design tool, Replicator, users can automatically
generate and animate multiple copies of a graphic, shape, or movie.

Soundtrack® Pro is an audio editing and sound design
application that gives audio and video professionals a way to edit, mix, and
repair audio. Soundtrack Pro features a waveform editor with flexible Action
Layers that allow users to re-order, bypass, or change any edit, effect, or
process. Find-and-Fix features identify and repair common audio problems such
as background noise, pops, clicks, and hum. An integrated multitrack mixer
allows editors to apply common effects to multiple tracks and group common
tracks. Soundtrack Pro also features over 50 professional plug-ins for
enhancing sounds, and over 5,000 music and sound effect loops.

In February 2006, the
Company introduced Logic® Pro 7.2, a Universal version of the Company’s music
creation and audio production software. Logic Pro 7.2 is used by musicians
around the world and by professionals in music production and film scoring. It
combines digital music composition, notation, and audio production facilities
in one comprehensive product and includes software instruments such as
Sculpture®, a component-modeling based synthesizer; UltraBeat®, a drum
synthesizer with built-in step sequencer; and digital signal processing (DSP)
plug-ins including Guitar Amp Pro, a full-featured guitar amplifier simulator.
Along with workflow enhancements, mastering plug-ins, and support for Apple
Loops, Logic Pro 7 adds distributed audio processing, a technology that allows
professionals to utilize multiple Macintosh systems to expand available DSP
power via an Ethernet network.

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Professional Application Software

In April 2005, the Company announced Final Cut Studio™, a High Definition (HD) video production suite that features Final Cut Pro® 5, the Company’s editing software for Digital Video (DV), Standard Definition (SD), HD, and film. Final Cut Studio also includes tools that complement Final Cut Pro 5 such as Soundtrack® Pro, a new application that gives audio and video professionals a way to create, control and repair audio; Motion 2, an application that allows real-time motion graphics design; and DVD Studio Pro® 4, DVD authoring software that burns DVDs, including high definition DVDs to the latest HD DVD specification. These components of Final Cut Studio are also sold separately.

Final Cut Pro® 5, the latest version of the Company’s video editing software, which began shipping in April 2005, includes editing tools that work with most formats, from DV and native High Definition Video (HDV) to fully uncompressed HD. Final Cut Pro 5 acquires HDV media via FireWire and keeps it in the original format, transferring it into the system without any generation loss. With a real-time multi-stream effects architecture, multicam editing tools, and advanced color correction, Final Cut Pro 5 enables users to view and cut from multiple sources in real time, group up to 128 sources together into multi-clips, then add or subtract cameras at any time. Final Cut Pro 5 allows users to use external audio control surfaces to mix and record multiple fader automations simultaneously.

Soundtrack® Pro is a new audio editing and sound design application that gives audio and video professionals a way to create, control, and repair audio. Soundtrack Pro features a waveform editor with flexible Action Layers that allow users to re-order, bypass, or change any edit, effect, or process. Find-and-Fix features identify and repair common audio problems such as background noise, pops, clicks, and hum. An integrated multitrack mixer allows editors to apply common effects to multiple tracks and group common tracks using busses. Soundtrack Pro also features over 50 professional plug-ins for creating sounds, over 5,000 loops, an integrated mixer, and integration with Final Cut Studio.

Motion 2 is a real-time motion graphics software that enables Final Cut Pro editors to add motion graphics to their projects. Motion 2 features interactive animation of text and graphics for DVD motion menus, video or film in real time, and quick output rendering by built-in GPU acceleration at 8-bit, 16-bit, or 32-bit float film quality. With Motion 2’s new design tool, Replicator, users can automatically generate and animate multiple copies of a graphic, shape, or movie.

DVD Studio Pro® 4 is the latest version of the Company’s professional DVD authoring application. With DVD Studio Pro 4 and its integrated, scalable H.264 encoding, users can author SD or HD DVDs. DVD Studio Pro 4 allows users to preview HD content in real time with a second Digital Cinema Desktop and audition surround sound using S/PDIF (digital audio) out to an external DTS or Dolby Digital (AC-3) decoder. Its interactive graphical view also enables users to edit/display menus, tracks, slideshows, scripts,

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and stories of a DVD project in a storyboard layout. DVD Studio Pro 4 includes Compressor 2, a full-featured video and audio compression application. Compressor gives users control over encoding, including the ability to encode several clips in one batch operation to a wide variety of formats and perform advanced format conversions at the same time.

In April 2005, the Company announced Shake® 4, an upgrade to the Company’s compositing software, which began shipping in June 2005. Used to create visual effects for film and television, Shake 4 features 3D multi-plane compositing, optical flow image processing and integration with Final Cut Pro 5. Users can composite live action and 3D CGI layers with added realism using OpenGL accelerated 3D multi-plane compositing node. Other features include advanced optical flow technology that uses pixel-by-pixel image analysis to create smooth retiming and automatic stabilization. Shake 4 also integrates Truelight monitor calibration to maintain color consistency between the computer screen and the final look on film.

Logic® Pro 7 is used by musicians around the world and by professionals in music production and film scoring. It combines digital music composition, notation, and audio production facilities in one comprehensive product and includes software instruments such as Sculpture, a component-modeling based synthesizer; UltraBeat™, a drum synthesizer with built-in step sequencer; and digital signal processing (DSP) plug-ins including Guitar Amp Pro, a full-featured guitar amplifier simulator. Along with workflow enhancements, mastering plug-ins, and support for Apple Loops, Logic Pro 7 adds distributed audio processing, a technology that allows professionals to utilize multiple Macintosh systems to expand available DSP power via an Ethernet network.

In October 2005, the Company announced Aperture™, began shipping in November 2005. Aperture is an application designed to provide professional photographers with post-production tools to manage, edit, and publish digital pictures. Features include compare and select tools, nondestructive image processing, color managed printing, and custom web and book publishing. Compare and select tools in Aperture allow photographers to sift through photo projects and identify their final selections. RAW images are maintained natively throughout Aperture without any intermediate conversion process, and can be retouched using a suite of adjustment tools designed especially for photographers. Print options include customizable contact sheets, high-quality local printing, and color-managed online prints. Aperture also provides a layout environment where photographers can create and order custom books and publish web galleries.

Professional Application
Software

In April 2005, the Company announced Final Cut
Studio™, a High Definition (HD) video production suite that features Final Cut
Pro® 5, the Company’s editing software for Digital Video (DV), Standard
Definition (SD), HD, and film. Final Cut Studio also includes tools that
complement Final Cut Pro 5 such as Soundtrack® Pro, a new application that
gives audio and video professionals a way to create, control and repair audio;
Motion 2, an application that allows real-time motion graphics design; and DVD
Studio Pro® 4, DVD authoring software that burns DVDs, including high
definition DVDs to the latest HD DVD specification. These components of Final
Cut Studio are also sold separately.

Final Cut Pro® 5, the latest version of the Company’s
video editing software, which began shipping in April 2005, includes
editing tools that work with most formats, from DV and native High Definition
Video (HDV) to fully uncompressed HD. Final Cut Pro 5 acquires HDV media via
FireWire and keeps it in the original format, transferring it into the system
without any generation loss. With a real-time multi-stream effects
architecture, multicam editing tools, and advanced color correction, Final Cut
Pro 5 enables users to view and cut from multiple sources in real time, group
up to 128 sources together into multi-clips, then add or subtract cameras at
any time. Final Cut Pro 5 allows users to use external audio control surfaces
to mix and record multiple fader automations simultaneously.

Soundtrack® Pro is a new audio editing and sound
design application that gives audio and video professionals a way to create,
control, and repair audio. Soundtrack Pro features a waveform editor with
flexible Action Layers that allow users to re-order, bypass, or change any
edit, effect, or process. Find-and-Fix features identify and repair common
audio problems such as background noise, pops, clicks, and hum. An integrated
multitrack mixer allows editors to apply common effects to multiple tracks and
group common tracks using busses. Soundtrack Pro also features over 50
professional plug-ins for creating sounds, over 5,000 loops, an integrated
mixer, and integration with Final Cut Studio.

Motion 2 is a real-time motion graphics software that
enables Final Cut Pro editors to add motion graphics to their projects. Motion
2 features interactive animation of text and graphics for DVD motion menus,
video or film in real time, and quick output rendering by built-in GPU
acceleration at 8-bit, 16-bit, or 32-bit float film quality. With Motion 2’s
new design tool, Replicator, users can automatically generate and animate
multiple copies of a graphic, shape, or movie.

DVD Studio Pro® 4 is the latest version of the Company’s
professional DVD authoring application. With DVD Studio Pro 4 and its
integrated, scalable H.264 encoding, users can author SD or HD DVDs. DVD Studio
Pro 4 allows users to preview HD content in real time with a second Digital
Cinema Desktop and audition surround sound using S/PDIF (digital audio) out to
an external DTS or Dolby Digital (AC-3) decoder. Its interactive graphical view
also enables users to edit/display menus, tracks, slideshows, scripts,

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and stories of a DVD project in a storyboard layout.
DVD Studio Pro 4 includes Compressor 2, a full-featured video and audio
compression application. Compressor gives users control over encoding,
including the ability to encode several clips in one batch operation to a wide
variety of formats and perform advanced format conversions at the same time.

In April 2005, the Company announced Shake® 4, an
upgrade to the Company’s compositing software, which began shipping in June 2005.
Used to create visual effects for film and television, Shake 4 features 3D
multi-plane compositing, optical flow image processing and integration with
Final Cut Pro 5. Users can composite live action and 3D CGI layers with added
realism using OpenGL accelerated 3D multi-plane compositing node. Other
features include advanced optical flow technology that uses pixel-by-pixel
image analysis to create smooth retiming and automatic stabilization. Shake 4
also integrates Truelight monitor calibration to maintain color consistency
between the computer screen and the final look on film.

Logic® Pro 7 is used by musicians around the world and
by professionals in music production and film scoring. It combines digital
music composition, notation, and audio production facilities in one
comprehensive product and includes software instruments such as Sculpture, a
component-modeling based synthesizer; UltraBeat™, a drum synthesizer with
built-in step sequencer; and digital signal processing (DSP) plug-ins including
Guitar Amp Pro, a full-featured guitar amplifier simulator. Along with workflow
enhancements, mastering plug-ins, and support for Apple Loops, Logic Pro 7 adds
distributed audio processing, a technology that allows professionals to utilize
multiple Macintosh systems to expand available DSP power via an Ethernet
network.

In October 2005, the
Company announced Aperture™, began shipping in November 2005. Aperture is
an application designed to provide professional photographers with
post-production tools to manage, edit, and publish digital pictures. Features include
compare and select tools, nondestructive image processing, color managed
printing, and custom web and book publishing. Compare and select tools in
Aperture allow photographers to sift through photo projects and identify their
final selections. RAW images are maintained natively throughout Aperture
without any intermediate conversion process, and can be retouched using a suite
of adjustment tools designed especially for photographers. Print options
include customizable contact sheets, high-quality local printing, and
color-managed online prints. Aperture also provides a layout environment where
photographers can create and order custom books and publish web galleries.

Professional Application Software

Final Cut Pro® HD, the latest version of the Company's video editing software, was introduced in April 2004 and features real-time performance of high-quality native DVCPRO HD, a high-definition video format, in addition to real-time support for digital video (DV) and standard definition (SD) formats. Final Cut Pro HD supports native DVCPRO HD editing with no recompression or image degradation and enables HD preview monitoring through the computer's DVI display output via the Digital Cinema Desktop feature. Final Cut Pro HD's support of native DVCPRO HD makes media conversion unnecessary, preserving the full quality of the camera original. Final Cut Pro HD includes precision, non-modal editing and trimming tools; powerful interface customization features; advanced real-time color correction and image control; and enhanced audio editing capabilities with multi-track audio mixing and multi-channel audio output.

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In April 2004, the Company announced DVD Studio Pro® 3, the latest version of the Company's professional DVD authoring application. DVD Studio Pro 3 features Alpha Transitions, which are QuickTime® based movie transitions that may be used as segues between DVD menus and as DVD slide show transitions, and a new Graphical View for easy visualization of a project's entire flow in a storyboard environment. Graphical View makes it easy to see the relationships between menus, tracks, slideshows, stories and scripts. DVD Studio Pro 3 also includes Compressor 1.2, the latest version of the Company's digital media encoding and compression software that provides high-quality constant and variable bit rate MPEG-2 encoding. In addition to DV and SD, DVD Studio Pro 3 now provides the ability to scale HD and encode directly to MPEG-2 all in one step.

In August 2004, the Company began shipping Motion, a motion graphic design and production application. Motion features interactive animation of text, graphics and video, with real-time previewing of multiple filters and particle effects. Motion introduces "Behaviors," a procedural animation technology that allows for the adding of natural looking movement to type and graphics, such as gravity and wind, without the use of complex keyframes. Motion's "Interactive Dashboard" gives users access to a contextual, semi-transparent floating palette that provides the tools and slider parameters for objects being manipulated on screen. Motion's "Project Pane" allows users to view and manage all filters, Behaviors, masks and other properties applied to all objects and layers of objects within a project.

In August 2004, the Company introduced Production Suite, which combines the latest versions of Final Cut Pro HD, DVD Studio Pro 3 and Apple Motion into a software suite for film and video production that delivers real-time production tools in one comprehensive and integrated package. Production Suite provides an integrated workflow environment where content that is updated in one of the applications in the suite is automatically updated in the other applications.

Shake® 3.5, an upgrade of the Company's compositing and visual effects software designed for large format film and video productions was introduced in April 2004. Shake 3.5 features shape-based morphing and warping tools for advanced compositing and "shape shifting" special effects. Morphing and warping further enhance Shake's visual effects tools, including layering, tracking, rotoscoping, painting and color correction. Shake 3.5 also improves upon the Shake Qmaster network render manager that can now handle distributed rendering tasks for both Shake and Alias Systems Corp.'s Maya product, allowing for distribution of rendering tasks across a cluster of servers or computers.

Logic® Pro 7, introduced by the Company in September 2004 is actively used by musicians around the world and by professionals in music production, film scoring, and audio post-production facilities. It combines digital music composition, notation and audio production facilities in one comprehensive product and includes software instruments such as Sculpture, a component-modeling based synthesizer; UltraBeat, a drum synthesizer with built-in step sequencer; and digital signal processing (DSP) plug-ins including Guitar Amp Pro, a full-featured guitar amplifier simulator. Along with over 100 workflow enhancements, mastering plug-ins and support for Apple Loops, Logic Pro 7 debuts distributed audio processing, a technology which allows audio pros to tap into a number of Macintosh systems to expand available DSP power via an Ethernet network.

Professional Application Software

Final Cut Pro® HD, the latest version of the Company's video editing software, was introduced in April 2004 and features real-time performance of
high-quality native DVCPRO HD, a high-definition video format, in addition to real-time support for digital video (DV) and standard definition (SD) formats. Final
Cut Pro HD supports native DVCPRO HD editing with no recompression or image degradation and enables HD preview monitoring through the computer's DVI display output via the Digital Cinema Desktop
feature. Final Cut Pro HD's support of native DVCPRO HD makes media conversion unnecessary, preserving the full quality of the camera original. Final Cut Pro HD includes precision,
non-modal editing and trimming tools; powerful interface customization features; advanced real-time color correction and image control; and enhanced audio editing capabilities
with multi-track audio mixing and multi-channel audio output.

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In
April 2004, the Company announced DVD Studio Pro® 3, the latest version of the Company's professional DVD authoring application. DVD Studio Pro 3 features Alpha
Transitions, which are QuickTime® based movie transitions that may be used as segues between DVD menus and as DVD slide show transitions, and a new Graphical View for easy visualization of
a project's entire flow in a storyboard environment. Graphical View makes it easy to see the relationships between menus, tracks, slideshows, stories and scripts. DVD Studio Pro 3 also includes
Compressor 1.2, the latest version of the Company's digital media encoding and compression software that provides high-quality constant and variable bit rate MPEG-2 encoding.
In addition to DV and SD, DVD Studio Pro 3 now provides the ability to scale HD and encode directly to MPEG-2 all in one step.

In
August 2004, the Company began shipping Motion, a motion graphic design and production application. Motion features interactive animation of text, graphics and video, with
real-time previewing of multiple filters and particle effects. Motion introduces "Behaviors," a procedural animation technology that allows for the adding of natural looking movement to
type and graphics, such as gravity and wind, without the use of complex keyframes. Motion's "Interactive Dashboard" gives users access to a contextual, semi-transparent floating palette
that provides the tools and slider parameters for objects being manipulated on screen. Motion's "Project Pane" allows users to view and manage all filters, Behaviors, masks and other properties
applied to all objects and layers of objects within a project.

In
August 2004, the Company introduced Production Suite, which combines the latest versions of Final Cut Pro HD, DVD Studio Pro 3 and Apple Motion into a software suite for film and
video production that delivers real-time production tools in one comprehensive and integrated package. Production Suite provides an integrated workflow environment where content that is
updated in one of the applications in the suite is automatically updated in the other applications.

Shake® 3.5,
an upgrade of the Company's compositing and visual effects software designed for large format film and video productions was introduced in April 2004.
Shake 3.5 features shape-based morphing and warping tools for advanced compositing and "shape shifting" special effects. Morphing and warping further enhance Shake's visual effects tools,
including layering, tracking, rotoscoping, painting and color correction. Shake 3.5 also improves upon the Shake Qmaster network render manager that can now handle distributed rendering tasks
for both Shake and Alias Systems Corp.'s Maya product, allowing for distribution of rendering tasks across a cluster of servers or computers.

Logic®
Pro 7, introduced by the Company in September 2004 is actively used by musicians around the world and by professionals in music production, film scoring, and audio
post-production facilities. It combines digital music composition, notation and audio production facilities in one comprehensive product and includes software instruments such as
Sculpture, a component-modeling based synthesizer; UltraBeat, a drum synthesizer with built-in step sequencer; and digital signal processing (DSP) plug-ins including Guitar Amp
Pro, a full-featured guitar amplifier simulator. Along with over 100 workflow enhancements, mastering plug-ins and support for Apple Loops, Logic Pro 7 debuts
distributed audio processing, a technology which allows audio pros to tap into a number of Macintosh systems to expand available DSP power via an Ethernet network.

Professional Application Software

Final Cut Pro® is a video editing application designed to meet the demanding needs of professional video editors by providing them with a high-performance, scalable, and cost-effective solution for editing in virtually any format: DV, SD, HD and film. Final Cut Pro includes tools for editing, compositing and effects, color-correction and audio. Final Cut Pro 4, released in June 2003, introduced RT Extreme, a multi-stream real-time effects engine, new interface customization tools, high performance codecs for uncompressed SD and HD video, and 32-bit floating point (per channel) image processing. Final Cut Pro 4 also includes three completely new integrated tools—LiveType for creating animated, broadcast-quality titles, Soundtrack for music composition, and Compressor for batch encoding and output of high-quality MPEG-2, MPEG-4, and QuickTime files directly from Final Cut Pro 4's timeline. Version 4.1 of Final Cut Pro was released in November 2003 and included optimizations for the Power Mac G5 and Mac OS X Panther.

Shake® 3, an upgrade of the Company's compositing and visual effects software designed for large format film and video productions, was announced in April 2003 and released in June 2003. Shake 3 includes new Mac OS X only features such as the Shake Qmaster network render management software and unlimited network rendering licenses which allow visual effects artists to easily distribute rendering tasks across a cluster of Apple's Xserve rack servers or desktop Power Macintosh computers for enhanced performance

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and efficiency. Shake 3 also includes new visual effects features available to Mac OS X, Linux and IRIX customers including motion-tracking and real-time broadcast preview.

The Company acquired Emagic, a leading provider of professional software and hardware solutions for computer based music production, during the fourth quarter of 2002. Emagic's most popular product, Logic®, is actively used by musicians around the world and by professionals in music production, film scoring, and post-production facilities. It combines composition, notation and audio production facilities in one comprehensive product. Logic Platinum offers a comprehensive set of music creation tools featuring rock-solid MIDI timing and synchronization, mixing and automation with total recall, and non-destructive real-time editing of both audio and MIDI. It also offers MIDI timing with 960 PPQN and sends and receives synchronized MIDI clock, MTC, MMC and word clock signals, making it ideal for film, TV and video post-production facilities.

DVD Studio Pro® 2 was announced in April 2003 and released in August 2003. It is a completely new DVD authoring product, rebuilt from the ground up with a new user interface, professionally designed and fully customizable templates, an innovative new menu editor, timeline-based track editing and a new software-based MPEG-2 encoder.

Professional Application Software

Final Cut Pro® is a video editing application designed to meet the demanding needs of professional video editors by providing them with a
high-performance, scalable, and cost-effective solution for editing in virtually any format: DV, SD, HD and film. Final Cut Pro includes tools for editing, compositing and
effects, color-correction and audio. Final Cut Pro 4, released in June 2003, introduced RT Extreme, a multi-stream real-time effects engine, new interface customization tools, high
performance codecs for uncompressed SD and HD video, and
32-bit floating point (per channel) image processing. Final Cut Pro 4 also includes three completely new integrated tools—LiveType for creating animated, broadcast-quality
titles, Soundtrack for music composition, and Compressor for batch encoding and output of high-quality MPEG-2, MPEG-4, and QuickTime files directly from Final Cut
Pro 4's timeline. Version 4.1 of Final Cut Pro was released in November 2003 and included optimizations for the Power Mac G5 and Mac OS X Panther.

ShakeSIZE=2>® 3, an upgrade of the Company's compositing and visual effects software designed for large format film and video productions, was
announced in April 2003 and released in June 2003. Shake 3 includes new Mac OS X only features such as the Shake Qmaster network render management software and unlimited network
rendering licenses which allow visual effects artists to easily distribute rendering tasks across a cluster of Apple's Xserve rack servers or desktop Power Macintosh computers for enhanced performance

6

and
efficiency. Shake 3 also includes new visual effects features available to Mac OS X, Linux and IRIX customers including motion-tracking and real-time broadcast preview.

The
Company acquired Emagic, a leading provider of professional software and hardware solutions for computer based music production, during the fourth quarter of 2002. Emagic's most popular product,
Logic®, is actively used by musicians around the world and by professionals in music production, film scoring, and post-production facilities. It combines composition, notation
and audio production facilities in one comprehensive product. Logic Platinum offers a comprehensive set of music creation tools featuring rock-solid MIDI timing and synchronization, mixing
and automation with total recall, and non-destructive real-time editing of both audio and MIDI. It also offers MIDI timing with 960 PPQN and sends and receives synchronized
MIDI clock, MTC, MMC and word clock signals, making it ideal for film, TV and video post-production facilities.

DVD
Studio Pro® 2 was announced in April 2003 and released in August 2003. It is a completely new DVD authoring product,
rebuilt from the ground up with a new user interface, professionally designed and fully customizable templates, an innovative new menu editor, timeline-based track editing and a new software-based
MPEG-2 encoder.

Professional Application Software

Final Cut Pro® 3 is a video authoring application designed to meet the demanding needs of the professional video editing environment by combining in a single software package professional-quality video editing and compositing, real-time effects, professional color correction tools and an innovative interface that seamlessly integrates editing, compositing and effects tools for an efficient and powerful media creation workflow. Final Cut Pro is especially popular among broadcast professionals because it allows them to increase their programming output at a fraction of the cost of traditional editing systems. Post production facilities use Final Cut Pro for the production of a wide range of projects including feature-length films, primetime television shows, news broadcasts, documentaries, trailers and commercials. Final Cut Pro was honored by the Academy of Television Arts and Sciences with a 2002 Primetime Emmy Engineering Award for its impact on the television industry.

Shake® is the Company's industry-leading compositing and visual effects software designed for large format film and video productions. Shake features a fast rendering engine, an extensive and mature compositing toolset, two industry-standard keyers, a complete suite of color correction tools, tracking/stabilization capabilities, integrated procedural paint, rotoscoping tools, and support for leading plug-in vendors. Shake has been used in the production of over a hundred motion pictures including the past five winners of the Academy Award for Best Visual Effects. Introduced during the fourth quarter of 2002, Shake 2.5 was the first Mac OS X native version of the software and added an improved image input, a disk-based proxy system, and the ability to limit the rendering process to a portion of an image for quicker processing.

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Introduced in 2002, Cinema Tools for Final Cut Pro™ is a new software package that enhances Final Cut Pro 3's 24 frames-per-second (fps) editing capabilities with support for film cut lists and 24-frame edit decision lists (EDLs) for high-definition (HD) video. The 24-frame EDL support allows off-line HD projects to be finished using significantly more affordable Final Cut Pro®-based HD finishing systems. Cinema Tools for Final Cut Pro is a robust solution for filmmakers who shoot and finish with 35mm or 16mm film, but want to take advantage of the cost and time benefits of digital editing on a Final Cut Pro system. Cinema Tools converts "telecined" content to its native 24-frame rate for editing, then generates a 24-fps cut list for negative conform. With its support for 24-fps EDL import/export, Cinema Tools for Final Cut Pro provides video professionals with not only an affordable path to online HD finishing, but also the EDL conversion capabilities required to create high-definition 24P universal masters used to efficiently meet the needs of varying international distribution formats.

DVD Studio Pro® 1.5 lets professional users encode video, conduct complex authoring tasks and preview finished product in real-time and allows users to burn DVDs using SuperDrive-equipped Macintosh systems. It handles the MPEG encoding, menu creation, asset organization, linking, and output formatting that are required to produce DVD-Video disks. DVD Studio Pro 1.5 has been optimized for Mac OS X and features enhanced integration with Final Cut Pro.

The Company was honored in 2002 by the National Academy of Recording Arts and Sciences with a Technical GRAMMY Award for its outstanding technical contributions to the music industry and recording field. This was the first Technical GRAMMY ever awarded to a personal computer company. From the original Macintosh, the first personal computer to include built-in audio capabilities, Apple has helped change the way music is written, recorded, mixed and enjoyed. The Company acquired Emagic, a leading provider of professional software and hardware solutions for computer based music production, during the fourth quarter of 2002. Emagic's most popular product, Logic®, is actively used by musicians around the world and by professionals in music production, film scoring, and post production facilities. At the time of the acquisition, Macintosh-based products accounted for over 65% of Emagic's revenues. Emagic's Windows-based product offerings were discontinued by the Company during its first fiscal quarter of 2003.

Professional Application Software

Final Cut Pro® 3 is a video authoring application designed to meet the demanding needs of the professional video editing environment by combining in a single
software package professional-quality video editing and compositing, real-time effects, professional color correction tools and an innovative interface that seamlessly integrates editing,
compositing and effects tools for an efficient and powerful media creation workflow. Final Cut Pro is especially popular among broadcast professionals because it allows them to increase their
programming output at a fraction of the cost of traditional editing systems. Post production facilities use Final Cut Pro for the production of a wide range of projects including feature-length films,
primetime television shows, news broadcasts, documentaries, trailers and commercials. Final Cut Pro was honored by the Academy of Television Arts and Sciences with a 2002 Primetime Emmy Engineering
Award for its impact on the television industry.

Shake®
is the Company's industry-leading compositing and visual effects software designed for large format film and video productions. Shake features a fast rendering engine, an extensive
and mature compositing toolset, two industry-standard keyers, a complete suite of color correction tools, tracking/stabilization capabilities, integrated procedural paint, rotoscoping tools, and
support for leading plug-in vendors. Shake has been used in the production of over a hundred motion pictures including the past five winners of the Academy Award for Best Visual Effects.
Introduced during the fourth quarter of 2002, Shake 2.5 was the
first Mac OS X native version of the software and added an improved image input, a disk-based proxy system, and the ability to limit the rendering process to a portion of an image for
quicker processing.

5

Introduced
in 2002, Cinema Tools for Final Cut Pro™ is a new software package that enhances Final Cut Pro 3's 24 frames-per-second (fps) editing capabilities with
support for film cut lists and 24-frame edit decision lists (EDLs) for high-definition (HD) video. The 24-frame EDL support allows off-line HD projects
to be finished using significantly more affordable Final Cut Pro®-based HD finishing systems. Cinema Tools for Final Cut Pro is a robust solution for filmmakers who shoot and finish with
35mm or 16mm film, but want to take advantage of the cost and time benefits of digital editing on a Final Cut Pro system. Cinema Tools converts "telecined" content to its native 24-frame
rate for editing, then generates a 24-fps cut list for negative conform. With its support for 24-fps EDL import/export, Cinema Tools for Final Cut Pro provides video
professionals with not only an affordable path to online HD finishing, but also the EDL conversion capabilities required to create high-definition 24P universal masters used to efficiently
meet the needs of varying international distribution formats.

DVD
Studio Pro® 1.5 lets professional users encode video, conduct complex authoring tasks and preview finished product in real-time and allows users to burn DVDs using
SuperDrive-equipped Macintosh systems. It handles the MPEG encoding, menu creation, asset organization, linking, and output formatting that are required to produce DVD-Video disks. DVD
Studio Pro 1.5 has been optimized for Mac OS X and features enhanced integration with Final Cut Pro.

The
Company was honored in 2002 by the National Academy of Recording Arts and Sciences with a Technical GRAMMY Award for its outstanding technical contributions to the music industry and recording
field. This was the first Technical GRAMMY ever awarded to a personal computer company. From the original Macintosh, the first personal computer to include built-in audio capabilities,
Apple has helped change the way music is written, recorded, mixed and enjoyed. The Company acquired Emagic, a leading provider of professional software and hardware solutions for computer based music
production, during the fourth quarter of 2002. Emagic's most popular product, Logic®, is actively used by musicians around the world and by professionals in music production, film scoring,
and post production facilities. At the time of the acquisition, Macintosh-based products accounted for over 65% of Emagic's revenues. Emagic's Windows-based product offerings were discontinued by the
Company during its first fiscal quarter of 2003.