HP 2013 Annual Report Download - page 163

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 17: Litigation and Contingencies (Continued)
had also opened an investigation relating to Autonomy. HP is cooperating with the three investigating
agencies.
Litigation. As described below, HP is involved in various stockholder litigation relating to, among
other things, its November 20, 2012 announcement that it recorded a non-cash charge for the
impairment of goodwill and intangible assets within its Software segment of approximately $8.8 billion
in the fourth quarter of its 2012 fiscal year and HP’s statements that, based on HP’s findings from an
ongoing investigation, the majority of this impairment charge related to accounting improprieties,
misrepresentations to the market and disclosure failures at Autonomy that occurred prior to and in
connection with HP’s acquisition of Autonomy and the impact of those improprieties, failures and
misrepresentations on the expected future financial performance of the Autonomy business over the
long term. This stockholder litigation was commenced against, among others, certain current and
former HP executive officers, certain current and former members of the HP Board of Directors, and
certain advisors to HP. The plaintiffs in these litigation matters are seeking to recover certain
compensation paid by HP to the defendants and/or other damages. These matters include the
following:
•In re HP Securities Litigation consists of two consolidated putative class actions filed on
November 26 and 30, 2012 in the United States District Court for the Northern District of
California alleging, among other things, that from August 19, 2011 to November 20, 2012, the
defendants violated Sections 10(b) and 20(a) of the Exchange Act by concealing material
information and making false statements related to HP’s acquisition of Autonomy and the
financial performance of HP’s enterprise services business. On May 3, 2013, the lead plaintiff
filed a consolidated complaint alleging that, during that same period, all of the defendants
violated Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5(b) by concealing
material information and making false statements related to HP’s acquisition of Autonomy and
that certain defendants violated SEC Rule 10b-5(a) and (c) by engaging in a ‘‘scheme’’ to
defraud investors. On July 2, 2013, HP filed a motion to dismiss the lawsuit. On November 26,
2013, the court granted in part and denied in part HP’s motion to dismiss, allowing claims to
proceed against HP and Margaret C. Whitman based on alleged statements and/or omissions
made on or after May 23, 2012. The court dismissed all of the plaintiff’s claims that were based
on alleged statements and/or omissions made between August 19, 2011 and May 22, 2012.
•In re Hewlett-Packard Shareholder Derivative Litigation consists of seven consolidated lawsuits
filed beginning on November 26, 2012 in the United States District Court for the Northern
District of California alleging, among other things, that the defendants violated Sections 10(b)
and 20(a) of the Exchange Act by concealing material information and making false statements
related to HP’s acquisition of Autonomy and the financial performance of HP’s enterprise
services business. The lawsuits also allege that the defendants breached their fiduciary duties,
wasted corporate assets and were unjustly enriched in connection with HP’s acquisition of
Autonomy and by causing HP to repurchase its own stock at allegedly inflated prices between
August 2011 and October 2012. One lawsuit further alleges that certain individual defendants
engaged in or assisted insider trading and thereby breached their fiduciary duties, were unjustly
enriched and violated Sections 25402 and 25403 of the California Corporations Code. On May 3,
2013, the lead plaintiff filed a consolidated complaint alleging, among other things, that the
defendants concealed material information and made false statements related to HP’s acquisition
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