restructuring included the winding down of the Company's Mac OS licensing program. There can be no assurance that the winding down of this program will result in any greater sales, market share, or increased gross margins to the Company. Although the Company believes that the actions it has taken in connection with the restructuring, including the winding down of its Mac OS licensing program, have contributed to reductions in the company's cost structure and increased gross margins experienced in fiscal 1998, there can be no assurance that such actions have restored the Company to sustainable profitability. The Company's future consolidated operating results and financial condition could be adversely affected should it encounter difficulty in effectively maintaining its new cost structure. 

Additional information relating to the restructuring of operations may be found in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements at Note 4 under the subheading "Restructuring of Operations," which information is hereby incorporated by reference. 

PRODUCT INTRODUCTIONS AND TRANSITIONS 

Due to the highly volatile nature of the personal computer industry, which is characterized by dynamic customer demand patterns and rapid technological advances, the Company must continually introduce new products and technologies and enhance existing products in order to remain competitive. Recent introductions include iMac, an innovatively designed lower priced desktop computer aimed at the education and consumer markets, certain PowerBook and G3 Power Macintosh products, and the introduction of Mac OS 8.5 in October 1998. The success of new product introductions is dependent on a number of factors, including market acceptance, the Company's ability to manage the risks associated with product transitions, the availability of application software for new products, the effective management of inventory levels in line with anticipated product demand, the availability of products in appropriate quantities to meet anticipated demand, and the risk that new products may have quality or other defects in the early stages of introduction. Accordingly, the Company cannot determine the ultimate effect that new products will have on its sales or results of operations. In addition, although the number of new product introductions may decrease as a result of the Company's restructuring actions, the risks and uncertainties associated with new product introductions may increase as the Company refocuses its product offerings on key growth segments and to the extent new product introductions are in markets that are new to the Company. 

The Company plans to continue to introduce major upgrades to the current Mac OS and later introduce a new operating system, Mac OS X, which is expected to offer advanced functionality based on Apple and NeXT software technologies. It is uncertain whether Mac OS X will gain developer support and market acceptance. Inability to successfully develop and make timely delivery of a substantially backward-compatible Mac OS X or of planned enhancements to the current Mac OS, or to gain developer support and market acceptance