HP 2015 Annual Report Download - page 180

Table of Contents
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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.
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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 they perform on behalf of HP or for losses arising from certain events as defined within the particular contract,
which may include, for example, litigation or claims relating to past performance. HP also provides indemnifications to certain vendors and customers against
claims of IP infringement made by third parties arising from the vendors' and customers' use of HP's software products and services and certain other matters.
Some indemnifications may not be subject to maximum loss clauses. Historically, payments made related to these indemnifications have been immaterial.
Under the separation and distribution agreement, HP agreed to indemnify Hewlett Packard Enterprise, each of its subsidiaries and each of their respective
directors, officers and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to
HP as part of the Separation. Hewlett Packard Enterprise similarly agreed to indemnify HP, each of its subsidiaries and each of their respective directors,
officers and employees from and against all liabilities relating to, arising out of or resulting from, among other matters, the liabilities allocated to Hewlett
Packard Enterprise as part of the Separation. HP expects Hewlett Packard Enterprise to fully perform under the terms of the separation and distribution
agreement.
For information on the cross-indemnifications related to the tax matter agreements and litigations effective upon the Separation on November 1, 2015,
see Note 6 "Taxes on Earnings" and Note 16 "Litigation and Contingencies", respectively.
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HP accrues the estimated cost of product warranties at the time it recognizes revenue. HP engages in extensive product quality programs and processes,
including actively monitoring and evaluating the quality of its component suppliers; however, contractual warranty terms, repair costs, product call rates,
average cost per call, current period product shipments and ongoing product failure rates, as well as specific product class failures outside of HP's baseline
experience, affect the estimated warranty obligation.
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Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠
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except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.