Boeing 2009 Annual Report Download - page 119

Download and view the complete annual report

Please find page 119 of the 2009 Boeing annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 160

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160

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.
On February 26, 2009 the trial court granted in part and denied in part post-trial motions we filed
seeking to set aside the verdict. As a result, on March 3, 2009, the court entered an amended
judgment for ICO in the amount of $604, which included $371 in compensatory damages, $207 in
punitive damages and $26 in prejudgment interest. Post-judgment interest will accrue on the judgment
at the rate of 10% per year (simple interest) from January 2, 2009. We filed a notice of appeal and ICO
filed a notice of cross-appeal in March 2009. Our opening brief for the appeal was filed on October 27,
2009. No date has been set for argument. We believe that we have substantial arguments on appeal,
which we intend to pursue vigorously.
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 initially sought over $385 in damages and $10 in lost profits, but recently revised their demand
to $263. 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 has been stayed pending an application by Telesat to the Ontario
Superior Court on a preliminary issue. The arbitration hearing date has been vacated.
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 granted
Boeing’s motion for reconsideration, ruling in favor of Boeing to require the insurers to provide
insurance coverage to defend the claim.
Civil Securities Litigation
Plaintiff shareholders have filed a putative securities fraud class action against The Boeing Company
and two of our senior executives. This lawsuit arises from our June 2009 announcement that the first
flight of the 787 Dreamliner would be postponed due to a need to reinforce an area within the
side-of-body section of the aircraft. Plaintiffs contend that we were aware before June 2009 that the
first flight could not take place as scheduled due to issues with the side-of-body section of the aircraft,
and that our determination not to announce this delay earlier resulted in an artificial inflation of our
stock price for a multi-week period in May and June 2009. Plaintiffs’ complaint was filed in November
2009. No briefing or discovery has yet taken place. We believe the allegations are without merit and
intend to contest the case vigorously.
In addition, plaintiff shareholders have filed three similar shareholder derivative lawsuits concerning the
flight schedule for the 787 Dreamliner that closely tracks the allegations in the putative class action
lawsuit. No briefing or discovery has yet taken place. We believe the allegations are without merit and
intend to contest the case vigorously.
107