DIRECTV 2002 Annual Report Download - page 13

Download and view the complete annual report

Please find page 13 of the 2002 DIRECTV 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 140

  • 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

HUGHES ELECTRONICS CORPORATION
PART I
ITEM 1. BUSINESS
Hughes Electronics Corporation (“Hughes”) is a wholly-owned subsidiary of General Motors
Corporation (“GM”). Hughes is a Delaware corporation incorporated in 1977 and was acquired by GM
in 1985.
The GM Class H common stock is a “tracking stock” of GM designed to provide holders with
financial returns based on the financial performance of Hughes. Holders of GM Class H common stock
have no direct rights in the equity or assets of Hughes, but rather have rights in the equity and assets
of GM (which includes 100% of the stock of Hughes).
On October 28, 2001, Hughes and GM, together with EchoStar Communications Corporation
(“EchoStar”), announced the signing of definitive agreements that provided for the split-off of Hughes
from GM and the subsequent merger of the Hughes business with EchoStar (the “Merger”). Hughes,
GM and EchoStar entered into a termination agreement on December 9, 2002, pursuant to which GM,
Hughes and EchoStar agreed to terminate the merger agreement and certain related agreements.
Under the terms of the termination agreement, EchoStar paid Hughes $600 million in cash and Hughes
retained its 81% ownership position in PanAmSat Corporation (“PanAmSat”).
GM has announced that it is currently evaluating a variety of strategic options for Hughes,
including a reduction or elimination of its retained economic interest in Hughes, transactions that would
involve strategic investors and public offerings of GM Class H common stock or related securities for
cash or in exchange for outstanding GM debt obligations. Any such transaction might involve the
separation of Hughes from GM. GM and Hughes have engaged in preliminary discussions with some
parties. No other decisions have been made regarding which options or combinations of options, if any,
GM will pursue. Due to the numerous uncertainties involved in these matters, there can be no
assurance that any transaction or offering will be announced or completed or as to the time at which
such a transaction or offering might be completed.
On February 28, 2003, GM announced plans to contribute approximately 150 million shares of GM
Class H common stock to certain of its United States (“U.S.”) employee benefit plans. GM expects to
make the contribution during the month of March 2003. The contribution would increase the amount of
GM Class H common stock held by GM’s employee benefit plans to approximately 330 million shares
and reduce GM’s retained economic interest in Hughes to approximately 20.0% from 30.7%.
Hughes is a world-leading provider of digital television entertainment, broadband satellite networks
and services, and global video and data broadcasting. Hughes has been a pioneer in many aspects of
the satellite communications industry, and its technologies have driven the creation of new services
and markets and have established Hughes as a leader in each of the markets it serves.
Hughes provides advanced communications services on a global basis and has developed a wide
range of entertainment, information and communications services for home and business use,
including video, data, voice, multimedia and Internet services. Hughes believes that these service
businesses have the potential to generate significant growth, profitability and value.
Hughes’ businesses include:
•DIRECTV, the world’s leading digital multi-channel entertainment service, based on the
number of subscribers. DIRECTV includes businesses in the United States and Latin
America, which constitute Hughes’ Direct-To-Home Broadcast segment. As of December 31,
3