Press Release

Boeing Concludes Acquisition of Hughes’ Space and Communications Businesses

By SpaceRef Editor
October 6, 2000
Filed under

The Boeing Company today
completed its acquisition of Hughes Electronics Corporation’s space and
communications business and related operations.

The acquisition makes Boeing the world’s largest space company, boosts its
space-related revenues and provides for significant future growth in
information and communications products and services, which has been
identified as a major growth area for Boeing in the coming decade.

The resulting entity, called Boeing Satellite Systems, Inc. creates a
pre-eminent satellite-based information and communications company with nearly
9,000 employees, mostly based in Southern California.

“Today marks the beginning of a new era for Boeing,” said Phil Condit,
Boeing chairman and chief executive officer.
“Prior to the acquisition,
Boeing had an impressive space and communications presence and a tremendous
potential for growth.
Today, we are stronger and more prepared than ever to
capitalize on the opportunities available in the marketplace and to open new
frontiers.”

The smallest of the three Boeing business units today, S&C is also the one
with the highest growth potential in the new information-based economy.

Industry projections indicate that the space and communications market
will grow significantly over the next 10 years, primarily driven by expansion
in commercial and government information and communications systems and
services.
Boeing is focusing its growth in space and communications in areas
that include broadband information delivery to travelers, new space-based air
traffic management systems, classified government program opportunities, and
integrated military battlefield and defense systems.

The Hughes acquisition is a key part of Boeing’s growth strategy.
Traditionally recognized as the technological world leader in space-based
communications, reconnaissance, surveillance and imaging systems, Hughes Space
and Communications is also the world’s leading manufacturer of commercial
communications satellites.
Its current backlog of more than 36 satellites
valued at more than $5 billion transfers to Boeing.

In addition to Hughes Space and Communications, included in the
acquisition are:
Hughes Electron Dynamics, a leading supplier of electronic
components for satellites; Spectrolab, a premier provider of solar cells and
panels for satellites; and a 50-percent share of HRL Laboratories, a
world-renowned research center owned jointly with Raytheon.

“When Hughes Electronics Corp. first approached us about the possibility
of acquiring its space and communications operations, we recognized the
tremendous value of the talent in that organization, and we realized that this
acquisition was an excellent opportunity for The Boeing Company, on many
levels,” said Jim Albaugh, president of Boeing Space & Communications Group.

“The intellectual capital this team brings to the table will help us
achieve our growth goals and will give us unmatched capability to integrate
space, air and terrestrial information and communications systems to provide
seamless services,” he added.

As examples of the company’s strategic move into such services, Albaugh
cited: Connexion by Boeing, an airplane-based Internet initiative that
promises to change the way people travel by keeping them in touch in the new
mobile economy; satellite-based navigation and air traffic management, which
can make flying safer and more efficient; and decision aids like battle
management and logistics tracking that will enable customers to protect and
maximize use of assets.

Boeing Satellite Systems is part of the Boeing Space and Communications
Group, led by Albaugh.
Boeing Satellite Systems is headquartered in
El Segundo, Calif., under the leadership of Tig H. Krekel, formerly president
and chief executive officer of Hughes Space and Communications Company.

“The businesses that now comprise Boeing Satellite Systems have a long
history of creating new technologies that enable exciting market
breakthroughs.
The successful direct-to-home satellite television business is
just one example of what the expertise in Boeing Satellite Systems can
develop,” said Tig H. Krekel, president of Boeing Satellite Systems.
“This
expertise, combined with Boeing’s existing large systems prowess, can create
many next-generation businesses.”

Boeing’s existing Space and Communications group features an array of
advanced technology products in four major markets: launch services,
information and communications, human space flight and exploration, and
missile defense and space control.
Boeing is NASA’s leading contractor, the
lead integrator for the 16-nation International Space Station, the builder of
the Delta family of launch vehicles and the lead systems integrator for the
National Missile Defense program.
It also designs and builds advanced
Rocketdyne rocket propulsion systems and is developing the next generation of
global positioning system satellites, known as GPS IIF.
Boeing is a partner
in Sea Launch, the four-nation joint venture that launches satellites from a
floating platform in the Pacific near the equator.

Boeing Satellite Systems is the world’s leading manufacturer of commercial
communications satellites.
BSS also supplies spacecraft for communications
and space exploration to the U.S. government, and builds weather satellites
for the United States and Japan.

Boeing Satellite Systems will be operated as a wholly owned subsidiary.
Under agreements with the FTC and the EC, Boeing will establish certain
firewalls to ensure both the confidentiality of launch vehicle information
that is provided to Boeing Satellite Systems by various launch service
providers and satellite information provided by various manufacturers to
Boeing’s Expendable Launch Systems unit.

The Boeing Company, headquartered in Seattle, is the largest aerospace
company in the world and the United States’ leading exporter.
It is the
world’s largest manufacturer of commercial jetliners and military aircraft,
and the largest NASA contractor.
The company’s capabilities in aerospace also
include rotorcraft, electronic and defense systems, missiles, rocket engines,
launch vehicles, and advanced information and communication systems.
The
company has an extensive global reach with customers in 145 countries and
manufacturing operations throughout the United States, Canada and Australia.
At year-end 1999, Boeing and its subsidiaries employed 197,100 people.

Forward-Looking Information Is Subject to Risk and Uncertainty

Certain statements in this release contain “forward-looking” information
that involves risk and uncertainty, including projections for revenues,
earnings, earnings per share, market growth, completion of government and
regulatory reviews and receipt of necessary approvals, statements regarding
goals, and other trend projections.
This forward-looking information is based
upon a number of assumptions including assumptions regarding demand; internal
performance; customer, supplier and subcontractor performance; and government
policies and actions.
Actual future results and trends may differ materially
depending on a variety of factors, including the company’s successful
execution of internal performance plans including research and development,
production system initiatives, asset management plans, procurement plans, and
other cost-reduction efforts; the cyclical nature of the company’s business,
volatility of the market for certain products, future integration of Hughes’
space and communications business and related operations; product performance
risks; collective bargaining labor disputes; performance issues with key
suppliers, subcontractors and customers; governmental export and import
policies; global trade policies; worldwide political stability and economic
conditions; changing priorities or reductions in the U.S. Government or
foreign government defense and space budgets; termination of government
contracts due to unilateral government action or failure to perform; and legal
proceedings.
Additional information regarding these factors is contained in
the company’s Annual Report on Form 10-K for the year ended 1999 and Form 10-Q
for the quarterly period ended June 30, 2000.

SpaceRef staff editor.