According to the docket, at the proceedings held on July 11, 2005, Judge B. Lynn Winmill granted motions to approve the settlement, the plan of distribution, and the appliciation for attorneys' fees and reimbursement of expenses. The Court entered the Final Judgment and Order of Dismissal with prejudice on July 12.
In a press release dated April 15, 2005, Raytheon Company announced that it has reached an agreement in principle to settle a class action securities lawsuit pending in the United States District Court for the District of Idaho. The terms of the settlement, which are subject to approval by the court, include a cash payment of $39 million that the Company expects to make in the second quarter of 2005. Plaintiffs' attorney's fees are included within the settlement.
The complaint alleges that during the Class Period, Raytheon deliberately misrepresented the true financial condition of its Raytheon Engineers & Constructors ("RE&C") division in order to sell this division to Washington Group at an artificially inflated price. On April 17, 2000, the beginning of the Class Period, Raytheon and Washington Group each issued press releases disclosing Raytheon's sale of RE&C to Washington Group for a modest cash price and Washington Group's assumption of RE&C's liabilities of approximately $500 million. The sales agreement, which was filed with the Securities and Exchange Commission on the same day, detailed the transaction, including Raytheon's promise to reimburse Washington Group for cost overruns from certain projects. Throughout the Class Period, defendants issued misleading financial statements for RE&C that failed to disclose massive cost overruns of approximately $700 million that were known to exist at the time of the sale transaction, but were not disclosed to investors. On March 2, 2001, the Class Period closes with Washington Group's shocking announcement that Raytheon was refusing to honor its previously disclosed contractual commitments to reimburse Washington Group for these massive cost overruns. Further, Washington Group announced that Raytheon's refusal to reimburse Washington Group for these massive cost overruns placed the Company in a severe "near-term liquidity problems" -- including being in default of its senior credit facilities -- that could result in the bankruptcy of the Washington Group. Following this announcement, the price of Washington Group stock plummeted 80% from $8.00 per share to $1.65 per share, causing a market capitalization loss of more than $400 million to stockholders, and more than $200 million to bondholders. Ultimately, these cash shortages forced Washington Group to seek protection under the bankruptcy laws on March 14, 2001.