Hughes Electronics
Corporation today announced a settlement agreement with The Boeing Company
that resolves the outstanding purchase price adjustment disputes arising from
Boeing’s October 2000 acquisition of Hughes satellite manufacturing
operations.
A price adjustment procedure was provided under the purchase agreement
when Boeing acquired the HUGHES satellite systems manufacturing businesses in
October 2000 for $3.75 billion in cash. The operations were renamed Boeing
Satellite Systems, Inc. (BSS).
Under the terms of the agreement, HUGHES will 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. HNS, a subsidiary of
HUGHES, and BSS also agreed to amend other terms of the contract. The
modifications to the SPACEWAY satellite contract are not expected to have a
significant effect on HNS’ plans for initiating SPACEWAY services in 2004.
Hughes Electronics Corporation, a unit of General Motors Corporation, is a
world-leading provider of digital television entertainment, broadband
satellite networks and services, and global video and data broadcasting. The
earnings of HUGHES are used to calculate the earnings attributable to the
General Motors Class H common stock.
Hughes Electronics Corporation believes that some of the foregoing
statements may constitute forward-looking statements. When used in this
release, the words “expect,” “intend,” “believe” and other similar expressions
are intended to identify such forward-looking statements and information.
These statements are based on certain assumptions and analyses made in light
of Hughes’ experience and perception of historical trends, current conditions
and expected future developments as well as other factors Hughes believes are
appropriate in the circumstances. However, whether actual developments will
conform with Hughes’ expectations and predictions is subject to a number of
risks and uncertainties, including possible satellite construction delays,
launch failures, incorrect orbital placement, improper commercial operation or
the availability of insurance coverage and other factors set forth in Annual
Reports on Form 10-K filed with the SEC by General Motors and Hughes.
