HP 2014 Annual Report Download - page 175

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 15: Litigation and Contingencies (Continued)
Environmental
HP’s operations and products are subject to various federal, state, local and foreign laws and
regulations concerning environmental protection, including laws addressing the discharge of pollutants
into the air and water, the management and disposal of hazardous substances and wastes, the cleanup
of contaminated sites, the content of HP’s products and the recycling, treatment and disposal of those
products. In particular, HP faces increasing complexity in its product design and procurement
operations as it adjusts to new and future requirements relating to the chemical and materials
composition of its products, their safe use, and the energy consumption associated with those products,
including requirements relating to climate change. HP is also subject to legislation in an increasing
number of jurisdictions that makes producers of electrical goods, including computers and printers,
financially responsible for specified collection, recycling, treatment and disposal of past and future
covered products (sometimes referred to as ‘‘product take-back legislation’’). HP could incur substantial
costs, its products could be restricted from entering certain jurisdictions, and it could face other
sanctions, if it were to violate or become liable under environmental laws or if its products become
non-compliant with environmental laws. HP’s potential exposure includes fines and civil or criminal
sanctions, third-party property damage or personal injury claims and clean-up costs. The amount and
timing of costs to comply with environmental laws are difficult to predict.
HP is party to, or otherwise involved in, proceedings brought by U.S. or state environmental
agencies under the Comprehensive Environmental Response, Compensation and Liability Act
(‘‘CERCLA’’), known as ‘‘Superfund,’’ or state laws similar to CERCLA, and may become a party to, or
otherwise involved in, proceedings brought by private parties for contribution towards clean-up costs.
HP is also conducting environmental investigations or remediations at several current or former
operating sites pursuant to administrative orders or consent agreements with state environmental
agencies.
Note 16: Guarantees
Guarantees
In the ordinary course of business, HP may issue performance guarantees to certain of its clients,
customers and other parties pursuant to which HP has guaranteed the performance obligations of third
parties. Some of those guarantees may be backed by standby letters of credit or surety bonds. In
general, HP would be obligated to perform over the term of the guarantee in the event a specified
triggering event occurs as defined by the guarantee. HP believes the likelihood of having to perform
under a material guarantee is remote.
HP has entered into service contracts with certain of its clients that are supported by financing
arrangements. If a service contract is terminated as a result of HP’s non-performance under the
contract or failure to comply with the terms of the financing arrangement, HP could, under certain
circumstances, be required to acquire certain assets related to the service contract. HP believes the
likelihood of having to acquire a material amount of assets under these arrangements is remote.
Indemnifications
In the ordinary course of business, HP enters into contractual arrangements under which HP may
agree to indemnify a third party to such arrangement from any losses incurred relating to the services
167