Boeing 2008 Annual Report Download - page 119

Los Angeles County Superior Court seeking a declaration that ICO’s prior termination of two contracts
for convenience extinguished all claims between the parties. On September 16, 2004, ICO filed a
cross-complaint alleging breach of contract, economic duress, fraud, unfair competition, and other
claims. ICO added The Boeing Company as a defendant in October 2005 to some of these claims and
also sued it for interference with contract and misappropriation of trade secrets. On January 13, 2006,
BSSI filed a cross-complaint against ICO, ICO Global Communications (Holdings) Limited (ICO
Holdings), ICO’s parent, and Eagle River Investments, LLC, parent of both ICO and ICO Holdings,
alleging fraud and other claims. Trial commenced on June 19, 2008, with ICO seeking to recover
approximately $2,000 in damages, including all monies paid to BSSI and Boeing Launch Services, plus
punitive damages and other unspecified damages and relief.
On October 21, 2008, the jury returned a verdict awarding ICO compensatory damages of $371 plus
interest, based upon findings of contract breach, fraud and interference with contract. On October 31,
2008 the jury awarded ICO punitive damages of $236. On January 2, 2009, the Court entered
judgment for ICO in the amount of $631 which included $24 in prejudgment interest. Post-judgment
interest will accrue on the judgment at the rate of 10% per year (simple interest).
We have filed post-trial motions before the trial court seeking to set aside the verdict. If those motions
are denied, we expect to file an appeal on multiple grounds. We believe that we would have substantial
arguments on appeal, which we will pursue vigorously if necessary.
BSSI/Telesat Canada
On November 9, 2006, Telesat Canada (Telesat) and a group of its insurers served BSSI with an
arbitration demand alleging breach of contract, gross negligence and willful misconduct in connection
with the constructive total loss of Anik F1, a model 702 satellite manufactured by BSSI. Telesat and its
insurers seek over $385 in damages and $10 in lost profits. BSSI has asserted a counterclaim against
Telesat for $6 in unpaid performance incentive payments and also a $180 contingent counterclaim on
the theory that any ultimate award to reimburse the insurers for their payments to Telesat could only
result from Telesat’s breach of its contractual obligation to obtain a full waiver of subrogation rights
barring recourse against BSSI. We believe that the claims asserted by Telesat and its insurers lack
merit, but we have notified our insurance carriers of the demand. The arbitration hearing in this matter
has been scheduled for November 2010.
On April 26, 2007, a group of our insurers filed a declaratory judgment action in the Circuit Court of
Cook County asserting certain defenses to coverage and requesting a declaration of their obligation
under our insurance and reinsurance policies relating to the Telesat Anik F1 arbitration. On June 12,
2008, the court granted the insurers’ motion for summary judgment, concluding that our insurance
policy excluded the kinds of losses alleged by Telesat. On January 16, 2009, the court ruled in favor of
Boeing to require the insurers to provide insurance coverage to defend the claim.
BSSI/SES New Skies
On January 30, 2007, the SES New Skies (New Skies) NSS-8 satellite, a Boeing 702 model
spacecraft, was declared a loss when the Sea Launch Zenit-3SL vehicle carrying the satellite
experienced an anomaly during the launch that destroyed the rocket and the payload. In the event of
such a launch failure, New Skies had an option under the NSS-8 contract to order a replacement
satellite. New Skies did not exercise the option. Instead, New Skies purported to cancel the contract on
April 27, 2007, maintaining that discussions between the parties regarding the never-exercised option
amounted to a repudiation by BSSI. We vigorously disputed that characterization.
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