HP 2014 Annual Report Download - page 29

completion of the proposed separation, or cause the proposed separation to occur on terms or
conditions that are different or less favorable than expected.
We have established a Separation Management Office tasked with driving the separation process.
We expect that the process of completing the proposed separation will be time-consuming and involve
significant costs and expenses, which may be significantly higher than what we currently anticipate and
may not yield a discernible benefit if the separation is not completed. Executing the proposed
separation will require significant time and attention from our senior management and employees,
which could adversely affect our business, financial results and results of operations. We may also
experience increased difficulties in attracting, retaining and motivating employees during the pendency
of the separation and following its completion, which could harm our businesses.
The separation may not achieve some or all of the anticipated benefits.
We may not realize some or all of the anticipated strategic, financial, operational, marketing or
other benefits from the separation. As independent publicly-traded companies, Hewlett-Packard
Enterprise and HP Inc. will be smaller, less diversified companies with a narrower business focus and
may be more vulnerable to changing market conditions, which could materially and adversely affect
their respective business, financial condition and results of operations. Further, there can be no
assurance that the combined value of the common stock of the two publicly-traded companies will be
equal to or greater than what the value of our common stock would have been had the proposed
separation not occurred.
The proposed separation may result in disruptions to, and negatively impact our relationships with, our
customers and other business partners.
Uncertainty related to the proposed separation may lead customers and other parties with which
we currently do business or may do business in the future to terminate or attempt to negotiate changes
in existing business relationships, or consider entering into business relationships with parties other than
us. These disruptions could have a material and adverse effect on our businesses, financial condition,
results of operations and prospects. The effect of such disruptions could be exacerbated by any delays
in the completion of the separation.
The separation could result in substantial tax liability.
We intend to obtain an opinion of outside counsel to the effect that, for U.S. federal income tax
purposes, the separation will qualify, for both HP and its stockholders, as a reorganization within the
meaning of Sections 368(a)(1)(D) and 355 of the U.S. Internal Revenue Code of 1986, as amended. In
addition, we intend to obtain a private letter ruling from the Internal Revenue Service (the ‘‘IRS’’)
and/or one or more opinions of outside counsel regarding certain matters impacting the U.S. federal
income tax treatment of the separation for HP and certain related transactions as transactions that are
generally tax-free for U.S. federal income tax purposes. The opinions of outside counsel and any IRS
private letter ruling will be based, among other things, on various factual assumptions we have
authorized and representations we have made to outside counsel or the IRS. If any of these
assumptions or representations are, or become, inaccurate or incomplete, reliance on the opinions
and/or IRS private letter ruling may be affected. An opinion of outside counsel represents their legal
judgment but is not binding on the IRS or any court. Accordingly, there can be no assurance that the
IRS will not challenge the conclusions reflected in the opinions or that a court would not sustain such
a challenge. In addition, we may incur certain tax costs in connection with the separation, including
non-U.S. tax expense resulting from separations in multiple non-U.S. jurisdictions that do not legally
provide for tax-free separations, which may be material.
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