HP 2015 Annual Report Download - page 174

Table of Contents
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alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO Act), fraudulent concealment, tortious interference, and violations of
the California Unfair Competition Law in connection with alleged improper payments provided to Pemex officials by third-parties retained by HP Mexico.
These allegations arise from the same subject-matter as a previously disclosed 2014 Non-Prosecution Agreement between HP Mexico and the DOJ and a
simultaneous cease-and-desist order against HP issued by the Securities and Exchange Commission ("SEC"). On February 9, 2015, HP and HP Mexico filed a
motion to dismiss the complaint in its entirety. On July 13, 2015, the court granted the motion to dismiss and gave the plaintiffs leave to amend their
complaint. The plaintiffs filed a first amended complaint on July 31, 2015. On August 21, 2015, HP and HP Mexico filed a motion to dismiss the first
amended complaint. On November 3, 2015, the parties settled the matter for no payment and the court dismissed this case with prejudice on November 4,
2015.
 In January 2011, the postal service of Brazil, Empresa Brasileira de Correios e Telégrafos ("ECT"), notified an HP subsidiary in
Brazil ("HP Brazil") that it had initiated administrative proceedings to consider whether to suspend HP Brazil's right to bid and contract with ECT related to
alleged improprieties in the bidding and contracting processes whereby employees of HP Brazil and employees of several other companies allegedly
coordinated their bids and fixed results for three ECT contracts in 2007 and 2008. In late July 2011, ECT notified HP Brazil it had decided to apply the
penalties against HP Brazil and suspend HP Brazil's right to bid and contract with ECT for five years, based upon the evidence before it. In August 2011, HP
Brazil appealed ECT's decision. In April 2013, ECT rejected HP Brazil's appeal, and the administrative proceedings were closed with the penalties against HP
Brazil remaining in place. In parallel, in September 2011, HP Brazil filed a civil action against ECT seeking to have ECT's decision revoked. HP Brazil also
requested an injunction suspending the application of the penalties until a final ruling on the merits of the case. The court of first instance has not issued a
decision on the merits of the case, but it has denied HP Brazil's request for injunctive relief. HP Brazil appealed the denial of its request for injunctive relief to
the intermediate appellate court, which issued a preliminary ruling denying the request for injunctive relief but reducing the length of the sanctions from five
to two years. HP Brazil appealed that decision and, in December 2011, obtained a ruling staying enforcement of ECT's sanctions until a final ruling on the
merits of the case. HP expects the decision to be issued in 2016 and any subsequent appeal on the merits to last several years. Pursuant to the separation and
distribution agreement, Hewlett Packard Enterprise has been assigned responsibility for this litigation.
 On August 21, 2015, Cisco Systems, Inc. ("Cisco Systems") and Cisco Systems Capital Corporation ("Cisco Capital") filed an action in
Santa Clara County Superior Court for declaratory judgment and breach of contract against HP in connection with a dispute arising out of a third-party's
termination of a services contract with HP. As part of that third-party services contract, HP separately contracted with Cisco on an agreement to utilize Cisco
products and services. HP prepaid the entire amount due Cisco through a financing arrangement with Cisco Capital. Following the termination of HP services
contract with the third-party, HP no longer required Cisco's products and services, and, accordingly, exercised its contractual termination rights under the
agreement with Cisco, and requested that Cisco apply the appropriate credit toward the remaining balance owed Cisco Capital. This lawsuit relates to the
calculation of that credit under the agreement between Cisco and HP. Cisco contends that after the credit is applied, HP still owes Cisco Capital
approximately $58 million. HP contends that under a proper reading of the agreement, HP owes nothing to Cisco
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Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠
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