Hughes Electronics Corporation
P.O. Box 956
El Segundo, CA 90245-0956


FOR IMMEDIATE RELEASE
Media contact: Richard Doré (310) 662-9670




LAUNCHES OF HUGHES HS 601 SATELLITES READY TO RESUME

El Segundo, Calif., Aug. 11, 1998 -- Hughes Electronics Corporation today announced that launches of its HS 601 communications satellites are ready to resume after an extensive investigation revealed that electrical shorts involving tin-plated relay switches are the most likely cause of three spacecraft control processor (SCP) failures on in-orbit satellites.

Hughes began incorporating improved relay switches and related processes on its satellites several years ago. The company has notified PanAmSat Corporation and Société Européenne des Satellites that they can proceed with their launches of Galaxy X and Astra 2A, respectively. The satellites are manufactured by Hughes Space and Communications Company (HSC).

"Our investigation team was very diligent in its pursuit of the probable cause and we are confident that this scenario will not be repeated in the satellites that are being built and launched today," said Michael T. Smith, chairman and chief executive officer of Hughes Electronics. "While our investigation cannot rule out the possibility that another currently operating SCP could fail, the probability of both SCPs failing on one in-orbit HS 601 satellite is very low."

"With this in mind, on Monday the Hughes Electronics board of directors endorsed plans to strengthen the robustness of the PanAmSat and DIRECTV satellite fleets," said Smith. "These plans will provide our satellite services customers a very high level of assurance of continuity of service, while preserving Hughes' long-term growth opportunities."

The Hughes board endorsed PanAmSat Corporation's announced strategy to modify two satellites already under construction for the U.S. market and procure four communications satellites, two of which will serve as spares on the ground. The Hughes board also approved the acquisition of a fourth direct broadcast satellite by DIRECTV, Inc. The satellites, pending approval by the Federal Communications Commission, are expected to be launched in the latter half of 1999. (PanAmSat and DIRECTV have issued separate press releases and the company contacts are listed at the end of this release.)

Of the satellites that experienced a failure of an SCP, two -- Galaxy VII and DBS-1 -- are operating normally with backup SCPs. The third, Galaxy IV, suffered the loss of both SCPs and has been removed from service. The second SCP failure on Galaxy IV is distinctly different from the other three and is viewed as a random event. Galaxy IV was the first operational HS 601 model satellite to suffer a complete failure. Since 1963, Hughes satellites have provided more than 1,000 years of cumulative on-orbit service to customers worldwide with a channel availability of more than 99 percent.

A team of Hughes engineers and outside experts confirmed that all three satellites experienced an electrical short within the SCP, resulting in blown fuses. The SCP is the on-board computer that controls the satellite. It executes a number of critical functions, such as propulsion for attitude control, solar wing positioning and antenna pointing. Hughes installs two SCPs, as well as other redundant systems, on each satellite to assure long life and reliability.

The investigators have narrowed down the most probable cause to a tin-plated latching relay that serves as an on/off switch within the SCP. Under certain combined conditions, a tiny, crystalline structure, less than the width of a human hair, can grow and bridge a relay terminal to its case, causing an electrical short.

For this to occur, however, a number of factors must be concurrently present. Those factors include the presence of pure tin, incomplete protective coating leaving part of the tin relay exposed, and a grounded relay case. Additionally, other factors with a finite probability of happening must also be present for a short to occur. There must be localized stress in the tin plating to precipitate the growth of the crystalline structure, and the structure must grow a sufficient length and in a certain direction.

"Manufacturing records and photos are being scrutinized to narrow the number of in-orbit satellites that are possibly susceptible to the phenomenon and we are investigating possible actions that might reduce the probability of recurrence in orbit," said HSC President Donald L. Cromer.

When Galaxy IV became inoperable May 19, it had been in orbit nearly five years. On June 14, Galaxy VII switched over to its redundant SCP and is operating normally. It has been in orbit since October 1992. Both Galaxy satellites are owned by PanAmSat Corporation. On July 4, DIRECTV's DBS-1 spacecraft also switched over to the redundant SCP without any loss of service and is operating normally. It was launched in December 1993.

The HS 601 is the world's most popular large satellite model. There are 35 HS 601 spacecraft in orbit and 30 under construction or awaiting launch. Hughes has inspected the SCPs on those satellites pending launch and has confirmed their flight worthiness.

The earnings of Hughes Electronics are used to calculate the earnings per share attributable to GMH (NYSE symbol) common stock.

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Editors: For additional information on the PanAmSat and DIRECTV plans, please contact:
Dan Marcus, PanAmSat, (203) 622-6664
Jeff Torkelson, DIRECTV, (310) 535-5062