SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported) September 28, 2000
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HUGHES ELECTRONICS CORPORATION
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(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 0-26035 52-1106564
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or organization) File Number) Identification No.)
200 North Sepulveda Boulevard
El Segundo, California 90245
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(310) 662-9688
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(Address, including zip code, and telephone number,
including area code, of registrants' principal executive office)
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ITEM 5. OTHER EVENTS
On September 28, 2000, Hughes' 81% owned subsidiary, PanAmSat, released
the following press release regarding the operation of its Galaxy VIII-i
satellite:
PANAMSAT'S SATELLITE DEPLOYMENT PLAN ASSURES
CONTINUOUS SERVICE FOR GALAXY VIII-i CUSTOMER
Galaxy VIII-i Is Operating Normally After Propulsion System Difficulties; GLA
Will Use Galaxy IIIC, Which Is Already Under Construction For Launch Next Year;
Agreement in Principle Reached With GLA To Build Galaxy VIII-iR Replacement
Satellite
GREENWICH, Conn., September 28, 2000 - PanAmSat Corporation (NASDAQ: SPOT)
announced today that the Galaxy VIII-i satellite has recently experienced
difficulties with its primary propulsion system that are expected to shorten its
projected operational life. The company's ongoing satellite deployment plan,
however, is expected to assure continuous service for the Galaxy VIII-i customer
because Galaxy IIIC is already under construction and scheduled for launch next
year, a full year before the projected end of operational life for Galaxy
VIII-i.
In addition, PanAmSat has reached an agreement in principle with Galaxy Latin
America (GLA), the Galaxy VIII-i customer, to build the Galaxy VIII-iR
replacement satellite to assure against a Galaxy IIIC launch failure and provide
for a more robust in-orbit back-up configuration. This agreement is subject to
approval by the boards of directors of PanAmSat and GLA.
Galaxy VIII-i recently experienced difficulties with its xenon ion propulsion
system (XIPS), an electric propulsion system that is used to maintain the
spacecraft's proper orbit and attitude. The satellite is operating normally on
its backup chemical propulsion system. PanAmSat and the manufacturer are
continuing to investigate the causes of the difficulty and possible solutions.
Without the use of XIPS, the spacecraft is expected to reach its end-of-life in
late 2002.
Galaxy IIIC is under construction and expected to be launched into the same
orbital location as Galaxy VIII-i during the second quarter of 2001. At that
time, GLA will transition to Galaxy IIIC as its primary transmission platform,
which will not require re-pointing of any consumer dishes. Galaxy VIII-i will
continue to be used for some additional services.
"As the world's largest commercial satellite operator, we have the capability to
offer unparalleled backup and redundancy for our customers. As part of our
ongoing satellite expansion effort, we are already building Galaxy IIIC in order
to assure seamless, long-term service for GLA," said R. Douglas Kahn, PanAmSat's
president and chief executive officer.
PanAmSat operates five other HS 601 HP spacecraft that contain XIPS and one HS
702 spacecraft that uses the XIPS propulsion system. By mid-2001, PanAmSat plans
to launch one additional HS 601 HP spacecraft, and two HS 702 spacecraft, all of
which use a XIPS propulsion system. The HS 702s use a different XIPS system.
Based on the information furnished to PanAmSat by Hughes Space & Communications
Company, the manufacturer of the XIPS-equipped satellite, and PanAmSat's
experience with XIPS, PanAmSat believes that this difficulty on Galaxy VIII-i is
an incident that will not affect the performance of XIPS on those other
spacecraft.
PanAmSat expects that the reduced in-orbit life of Galaxy VIII-i will not have a
material impact on the company's projected revenues through 2002. PanAmSat
intends to accelerate depreciation of the spacecraft to reflect its revised
operational life, resulting in an increase in its projected depreciation expense
beginning in the fourth quarter of 2000 of approximately $15 million per
quarter, which may not be offset by insurance proceeds. It is anticipated that
the reduced life will result in a reduction of backlog in the ten-year period
after 2002 of approximately $350 million, which would be more than offset by the
potential addition to backlog from the Galaxy VIII-iR satellite.
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If the replacement satellite is launched to serve GLA's additional capacity
needs, the resulting backlog would more than offset the loss of backlog on
Galaxy VIII-i.
Until the successful launch and in service placement of Galaxy IIIC, GLA also
has backup rights to preemptible transponders on Galaxy IIIR. However, given the
capacity that continues to be available on Galaxy VIII-i, the new capacity on
the Galaxy IIIC satellite to be made available in 2001, and the agreement in
principle to provide capacity on the additional replacement satellite, PanAmSat
considers it highly unlikely that this situation will occur.
Galaxy VIII-i, an HS 601 HP satellite built by Hughes Space and Communications,
was launched in December 1997 and provides Ku-band coverage of Latin America.
Galaxy IIIC is a Hughes-built HS 702 spacecraft that will provide C-band and
Ku-band coverage of the Americas upon its launch during the second quarter of
2001.
PanAmSat is a leading provider of global video and data broadcasting services
via satellite. The company builds, owns and operates networks that deliver
entertainment and information to cable television systems, TV broadcast
affiliates, direct-to-home TV operators, Internet service providers,
telecommunications companies and corporations. With 21 spacecraft in orbit
today, PanAmSat has the world's largest commercial geostationary satellite
network. The company will expand its global fleet to 24 spacecraft by late 2001.
For more information about PanAmSat, visit the company's web site at
http://www.panamsat.com.
NOTE: The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward-looking statements so long as such information is
identified as forward-looking and is accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in the information. When used in this
press release, the words "estimate," "plan," "project," "anticipate," "expect,"
"intend," "outlook," "believe," and other similar expressions are intended to
identify forward-looking statements and information. Actual results may differ
materially from anticipated results as a result of certain risks and
uncertainties, which are more specifically set forth in the company's annual
report on Form 10-K for the year ended December 31, 1999 on file with the
Securities and Exchange Commission. These risks and uncertainties include but
are not limited to (i) risks associated with technology (including without
limitation, delayed launches, launch failures and in-orbit failures), (ii)
regulatory risks, including the ability to obtain export licenses, (iii) risks
of uninsured loss, (iv) risks associated with the Company's new Internet
initiatives, and (v) litigation. PanAmSat cautions that the foregoing list of
important factors is not exclusive. Further, PanAmSat operates in an industry
sector where securities values may be volatile and may be influenced by economic
and other factors beyond the Company's control.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HUGHES ELECTRONICS CORPORATION
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(Registrant)
By
Date October 2, 2000 /s/Roxanne S. Austin
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(Roxanne S. Austin,
Chief Financial Officer)
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