HP 2007 Annual Report Download - page 155

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 17: Litigation and Contingencies (Continued)
consolidated the two cases under the caption In re Hewlett-Packard Company Derivative Litigation and subsequently stayed
the proceedings, as the parties have reached a tentative settlement. The HP Board of Directors has appointed a Special
Litigation Committee consisting of independent Board members authorized to investigate, review and evaluate the facts and
circumstances asserted in these derivative matters and to determine how HP should proceed in these matters. On
December 14, 2007, HP and the plaintiffs in the California and Delaware derivative actions entered into an agreement to
settle those lawsuits, which agreement is subject to the approval of the California and Delaware courts before it becomes
final. Under the terms of the proposed settlement, HP has agreed to continue certain corporate governance changes until
December 31, 2012 and to pay the plaintiffs’ attorneys’ fees.
Mercury Interactive Corporation Proceedings. In November 2006, HP completed its acquisition of Mercury Interactive
Corporation (“Mercury”). Upon completion of the acquisition, HP assumed oversight for all litigation and regulatory matters
pending or subsequently commenced against Mercury. The following Mercury-related litigation and regulatory inquiries
currently are pending:
• Prior to the announcement of the acquisition, and beginning on or about August 19, 2005, four securities class action
lawsuits were filed against Mercury and certain of its officers and directors on behalf of purchasers of Mercury’ s
stock from October 2003 to November 2005: Archdiocese of Milwaukee Supporting Fund, Inc. v. Mercury
Interactive, et al, Johnson v. Mercury Interactive, et al., Munao v. Mercury Interactive, et al., and Public
Employees’ Retirement System of Mississippi v. Mercury Interactive, et al. These class action lawsuits were
consolidated in the United States District Court for the Northern District of California as In re Mercury Interactive
Corporation Securities Litigation. The consolidated complaint filed on September 8, 2006 alleges that, during the
putative class period of October 17, 2000 through November 1, 2005, the defendants made false or misleading
public statements regarding Mercury’ s business and operations in violation of Section 10(b) and Section 20(a) of the
Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder and seeks unspecified
monetary damages and other relief. On July 30, 2007, the court granted the defendants’ motion to dismiss the
consolidated complaint with leave to amend. On October 15, 2007, HP and counsel for the plaintiffs reached an
agreement in principle to settle the consolidated class action lawsuit. The agreement, if finalized and approved by
the court, provides for HP to pay an aggregate of $117.5 million to administer the settlement, to compensate the
class, and to pay attorneys’ fees.
• On February 26, 2007, HP received a request from the Permanent Subcommittee on Investigations of the U.S.
Senate Committee on Homeland Security and Governmental Affairs for information relating to Mercury’ s past
executive compensation and stock option granting policies and procedures, including information about the practice
of backdating the grant date of options that allegedly occurred before HP acquired Mercury. HP has responded to the
Subcommittee’ s request and intends to cooperate with the inquiry.
European Commission OEM Investigation. In May 2002, the European Commission of the EU publicly stated that it
was considering conducting an investigation into original equipment manufacturer (“OEM”) activities concerning the sales of
printers and supplies to consumers within the EU. The European Commission contacted HP requesting information on the
printing systems businesses. HP has cooperated fully in response to the initial inquiry and intends to cooperate fully with
respect to subsequent requests for information.
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