Following are excerpts from the notes that accompanied the of Hewlett-Packard for the year ended October 31, 2015.
HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIES
Note 17: Litigation and Contingencies
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 Inc.’s acquisition of Autonomy and the financial performance of HP Inc.’s enterprise services business. On June 9, 2015, HP Inc. entered into a settlement agreement with the lead plaintiff in the consolidated securities class action. Under the terms of the settlement, HP Inc., through its insurers, will contribute $100 million to a settlement fund that will be used to compensate persons who purchased HP Inc.’s shares during the period from August 19, 2011 through November 20, 2012. On July 17, 2015, the court granted preliminary approval to the settlement. On November 13, 2015, the court granted final approval to the settlement.
Environmental The Company’s operations and products are or may in the future become 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 hazardous substances and wastes, the clean-up of contaminated sites, the substances and materials used in the Company’s products, the energy consumption of products, services and operations and the operational or financial responsibility for recycling, treatment and disposal of those products. The amount and timing of costs to comply with environmental laws are difficult to predict. In particular, the Company may become a 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 other federal, state or foreign laws and regulations addressing the clean-up of contaminated sites, and may become a party to, or otherwise involved in, proceedings brought by private parties for contribution towards clean-up costs.
Required
1. Based on the excerpt, how did the company treat the contingency on its for the year ended October 31, 2015? What criteria were likely used to lead to that treatment?
2. What was the effect on the of the company’s treatment of the contingency?
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