HP 2007 Annual Report Download - page 43

We cannot predict the outcome of various regulatory inquiries and stockholder derivative action lawsuits arising out of the
processes employed in the investigation into leaks of HP confidential information to members of the media, and we may be
named in additional regulatory inquiries and stockholder litigation, all of which could result in significant legal and other
expenses.
The Attorney General of the State of California, the Committee on Energy and Commerce of the U.S. House of
Representatives, the U.S. Attorney for the Northern District of California, the Division of Enforcement of the SEC and the
U.S. Federal Communications Commission all have conducted inquiries or investigations relating to the processes employed
in an investigation into leaks of HP confidential information to members of the media that concluded in May 2006. We have
entered into an agreement with the California Attorney General to resolve civil claims relating to the leak investigation.
Under the terms of the agreement, which includes an injunction, we have paid a total of $14.5 million and agreed to
implement and maintain for five years a series of measures designed to ensure that HP’ s corporate investigations are
conducted in accordance with California law and the company’ s high ethical standards. We also have consented to the entry
of an order by the SEC ordering HP to cease and desist from committing or causing violations of the public reporting
requirements of the Securities Exchange Act of 1934, as amended. If we fail to implement and maintain the measures
required under the agreement with the California Attorney General or if we fail to comply with the SEC cease and desist
order, we could be subject to civil or criminal penalties.
Four stockholder derivative lawsuits also have been filed in California (all of which have been consolidated into a single
lawsuit) and two in Delaware (both of which have been consolidated into a single lawsuit) purportedly on behalf of HP
stockholders seeking to recover damages and to obtain specified injunctive relief stemming from the activities of the leak
investigations. We may in the future also be subject to additional litigation or other proceedings arising in relation to these
matters. The period of time necessary to resolve the stockholder lawsuits is uncertain, and the expense of defending and
concluding such litigation may be significant. In addition, we may be obligated to indemnify (and advance legal expenses to)
former or current directors, officers or employees in accordance with the terms of our certificate of incorporation, bylaws,
other applicable agreements, and Delaware law.
Unforeseen environmental costs could impact our future net earnings.
We are subject to various federal, state, local and foreign laws and regulations concerning environmental protection,
such as laws governing the conduct of our facilities and operations with respect to the discharge of pollutants into the air and
water, the management and disposal of hazardous substances and wastes and the cleanup of contaminated sites. It is our
policy to apply strict standards for environmental clean-up to sites outside the United States, even where we are not required
to do so under applicable local laws and regulations. Many of our products are subject to various federal, state and
international laws governing chemical substances, including laws regulating the manufacture and distribution of chemical
substances and laws restricting the presence of certain substances in electronics products. We could incur substantial costs,
including cleanup costs, fines and civil or criminal sanctions, third-party property damage or personal injury claims, or our
products could be enjoined from entering certain jurisdictions, if we were to violate or become liable under environmental
laws or if our products become non-compliant with environmental laws. The ultimate costs under environmental laws and the
timing of these costs are difficult to predict, and liability under some environmental laws relating to contaminated sites can be
imposed retroactively and on a joint and several basis. We record a liability for environmental remediation and other
environmental costs when we consider the costs to be probable and the amount of the costs can be reasonably estimated. We
face increasing complexity in our product design and procurement operations as we adjust to new and future requirements
relating to the materials composition of our products, including the restrictions on lead, cadmium and certain other substances
that apply to specified electronics products put on the market in the European Union as of July 1, 2006 (Restriction of
Hazardous Substances Directive) and
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