Hughes, Boeing Settle Dispute Over Purchase of Satellite Manufacturing Operations
Hughes Electronics [NYSE: GMH] has reached a settlement agreement with Boeing [NYSE: BA] that resolves the outstanding purchase price adjustment disputes arising from Boeing’s October 2000 acquisition of Hughes’ satellite manufacturing operations for $3.75 billion. The operation was renamed Boeing Satellite Systems (BSS).
Under the terms of the agreement, Hughes said it would settle all outstanding purchase price adjustment disputes with Boeing by paying an aggregate $360 million in cash. Boeing also will be released from its commitment to pay Hughes $4.4 million over the next seven years in connection with Boeing’s participation in the settlement with the U.S. Department of State on China launch issues of the mid-1990s. As a result of the settlement, Hughes will take an after-tax charge of approximately $8 million that will be accounted for under discontinued operations for the quarter ended June 30, 2003.
In connection with the settlement, Hughes Network Systems (HNS) agreed to extend the scheduled launch date for the first BSS-built SpaceWay satellite from the fourth quarter of 2003 until February 2004.