HP 2009 Annual Report Download - page 35

Changes to our compensation and benefit programs could adversely affect our ability to attract and retain
employees.
Like other companies, HP has implemented changes to its compensation programs intended to
reduce fixed costs, create a high performance culture at all levels and provide an opportunity for
employees to earn significant rewards if HP delivers strong financial results. These changes included
reducing base pay for many employees; lowering the cap on matching contributions under the HP
401(k) Plan; making the funding of the HP 401(k) Plan matching contributions fully discretionary
depending on quarterly business results; and eliminating the purchase price discount for shares
purchased under the HP Share Ownership Plan, all of which were announced in February 2009. HP
also has reduced the total number of share-based payment awards granted to employees and the
number of employees who receive share-based payment awards. Due to these changes in our
compensation programs, we may find it difficult to attract, retain and motivate employees, and any such
difficulty could materially adversely affect our business. Moreover, any difficulty relating to obtaining
stockholder approval of equity compensation plans could limit our ability to grant share-based payment
awards to employees in the future.
Terrorist acts, conflicts and wars may seriously harm our business and revenue, costs and expenses and
financial condition and stock price.
Terrorist acts, conflicts or wars (wherever located around the world) may cause damage or
disruption to HP, our employees, facilities, partners, suppliers, distributors, resellers or customers. The
potential for future attacks, the national and international responses to attacks or perceived threats to
national security, and other actual or potential conflicts or wars, including the ongoing military
operations in Iraq and Afghanistan have created many economic and political uncertainties. In
addition, as a major multi national company with headquarters and significant operations located in the
United States, actions against or by the United States may impact our business or employees. Although
it is impossible to predict the occurrences or consequences of any such events, they could result in a
decrease in demand for our products, make it difficult or impossible to deliver products to our
customers or to receive components from our suppliers, create delays and inefficiencies in our supply
chain and result in the need to impose employee travel restrictions. We are predominantly uninsured
for losses and interruptions caused by terrorist acts, conflicts and wars.
Any failure by us to identify, manage, complete and integrate acquisitions, divestitures and other significant
transactions successfully could harm our financial results, business and prospects, and the costs, expenses
and other financial and operational effects associated with managing, completing and integrating
acquisitions may result in financial results that are different than expected.
As part of our business strategy, we frequently acquire complementary companies or businesses,
divest non-core businesses or assets, enter into strategic alliances and joint ventures and make
investments to further our business (collectively, ‘‘business combination and investment transactions’’).
In order to pursue this strategy successfully, we must identify suitable candidates for and successfully
complete business combination and investment transactions, some of which may be large and complex,
and manage post-closing issues such as the integration of acquired companies or employees. We may
not fully realize all of the anticipated benefits of any business combination and investment transaction,
and the timeframe for achieving benefits of a business combination and investment transaction may
depend partially upon the actions of employees, suppliers or other third parties. In addition, the pricing
and other terms of our contracts for business combination and investment transactions require us to
make estimates and assumptions at the time we enter into these contracts, and, during the course of
our due diligence, we may not identify all of the factors necessary to estimate our costs accurately. Any
increased or unexpected costs, unanticipated delays or failure to achieve contractual obligations could
make these transactions less profitable or unprofitable. Moreover, if we fail to identify and complete
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