Hughes Finalizes Sale of Satellite Operations to Boeing; Focuses On Broadband Entertainment, Communications.

Business Editors

EL SEGUNDO, Calif.--(BUSINESS WIRE)--Oct. 6, 2000

Hughes Electronics Corporation today finalized the sale of its satellite manufacturing operations to The Boeing Company for $3.75 billion in cash.

"Hughes is now a more focused company, competing in fast-paced and rapidly growing markets," said Michael T. Smith, chairman and chief executive officer. "Currently and in the next several months, Hughes is launching several products, services and initiatives to support the company's goal of being the premier global provider of integrated digital entertainment and information services."

As a result of the transaction with Boeing, Hughes received approximately $3 billion after taxes that will be used primarily to fund the growth of its DIRECTV, DirecPC broadband and Spaceway businesses into the next year, as well as pay down debt.

The satellite operations acquired by Boeing were the last aerospace components of a breakthrough electronics business formed by Howard Hughes in 1953. Hughes had become the world's largest defense electronics manufacturer when it sold its defense businesses, which included the bulk of its aerospace manufacturing operations, to Raytheon Company for $9.5 billion in 1997.

While growing as a defense contractor, Hughes started the modern communications satellite industry in 1963 with the successful launch of Syncom 2, the world's first geosynchronous orbit satellite. From this orbit, a satellite can provide 24-hour communications to fixed ground antennas. Two years later, Hughes launched Early Bird, the world's first commercial communications satellite.

In January 2000, Boeing agreed to acquire the Hughes Space and Communications Company, the world leader in communications satellites; Hughes Electron Dynamics, a leading supplier of electronic components for satellites; and Spectrolab, a premier provider of solar cells and panels for satellites. The units have a combined workforce of about 9,000 employees, primarily in the Los Angeles area.

"With the divestiture effort behind us, Hughes has transformed itself into a focused broadband communications company. In this new Internet-driven economy, Hughes is uniquely positioned to bring about convergence in digital entertainment and information services both to homes and businesses, and to both TVs and PCs," said Smith. "By any measure, Hughes' future is bright and its potential is vast."

Today, Hughes has approximately 8,000 employees in three strategic and complementary business units, each one the leader in its market:

-- DIRECTV of El Segundo, Calif., is the world's number-one digital multichannel entertainment provider. With more than 9 million customers nationwide, DIRECTV is now the United States' third largest provider of multichannel entertainment. Meanwhile, Galaxy Latin America of Ft. Lauderdale, Fla., of which Hughes owns 78 percent, delivers DIRECTV to more than 1 million subscribers in 27 countries, virtually the entire Latin American, Mexican and Caribbean market.

-- Hughes Network Systems of Germantown, Md., is the world's leading provider of satellite-based private business networks, with an installed base of more than 300,000 VSATs (very small aperture terminals) in 85 countries. HNS is also a leading supplier of DIRECTV receiving equipment, provider of the DirecPC nationwide high-speed Internet access service, and a growing force in the global growth of broadband services for consumers and businesses.

-- And PanAmSat Corporation of Greenwich, Conn., of which Hughes owns 81 percent, is the world's leading provider of commercial satellite services, all delivered via a global spacecraft fleet. PanAmSat is the industry leader in the distribution of cable and broadcast TV programming, and it is leveraging its customer base of the world's leading entertainment companies as it pursues new broadband Internet-related business opportunities.

Hughes, which reported 1999 revenues of $5.6 billion not including the satellite manufacturing operations, is a subsidiary of General Motors Corporation. The earnings of Hughes are used to calculate the earnings per share attributable to the General Motors Class H common stock (NYSE:GMH).

Visit Hughes on the World Wide Web at www.hughes.com.