l:\secfiles\8-k\EDSMAY.DOC 4
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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) May 16, 1994
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GENERAL MOTORS CORPORATION
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(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 1-143 38-0572515
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
767 Fifth Avenue, New York, New York 10153-0075
3044 West Grand Boulevard, Detroit, Michigan 48202-3091
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (313)-556-5000
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ITEM 5. OTHER EVENTS
On May 16, 1994, two news releases were issued on the subject of an EDS
spin-off:
(a) General Motors Corporation Release
General Motors Corporation today confirmed that it is considering a
proposal to spin off its wholly owned subsidiary, Electronic Data Systems
Corp., to holders of Class E common stock. Such a spin-off would be proposed
to GM shareholders if ongoing negotiations between EDS and Sprint result in an
agreement for those companies to merge or form a strategic alliance.
A spin-off of EDS to Class E shareholders would be proposed only in a
transaction that is tax free, and does not result in the recapitalization of
Class E common stock into GM $1-2/3 par value common stock at a 120 percent
exchange ratio, as currently provided for under certain circumstances by GM's
certificate of incorporation. Further, the spin-off would be proposed only if
GM's previously announced proposal for a Class E common stock contribution to
its pension fund is finalized.
A spin-off could be achieved by exchanging EDS common stock for Class E
stock. However, there can be no assurance that a spin off will be proposed or
consummated, or that a merger will be consummated.
In a related announcement today, EDS and Sprint confirmed that they are
engaged in preliminary discussions concerning the possible formation of a
strategic relationship between both companies. GM believes that EDS would be
best able to pursue such a strategic alliance if it were an independent
company.
GM previously announced a proposal to aggressively address its
underfunded pension liability by contributing approximately 177 million shares
of its Class E common stock, plus an additional $4 billion in cash, to its
U. S. Hourly-Rate Employees Pension Plan. The Class E stock is a common stock
of GM that pays dividends based on the earnings of EDS.
The pension plan stock contribution is subject to approval by the GM
Board of Directors. It is also contingent upon receiving various exemptions
from the U.S. Department of Labor. GM expects to proceed with the proposed
contribution regardless of the outcome of discussions between Sprint and EDS.
However, no assurance can be given that the government action being sought by
GM will be attained or that the Class E stock contribution will be made.
EDS has been a wholly owned subsidiary of GM since 1984. In the event
that EDS becomes an independent company, GM and EDS plan to enter into a new,
10-year master agreement, with options for renewal, under which EDS would
continue to provide the same information technology services for GM that it
does today.
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(b) Sprint and EDS Confirm Discussions on Possible Merger
EDS and Sprint confirmed today they are engaged in discussions
concerning the possible formation of a strategic relationship between the two
companies. Such a relationship could involve a merger of equals as well as
other types of business ventures or alliances. The parties emphasized that
significant issues, including relative values, remain to be resolved and there
can be no assurances that any transaction will be agreed upon or consummated.
Both Sprint and EDS said that a strategic relationship would position
the companies to take advantage of significant business and consumer
opportunities created by the convergence of computing, communications and
services.
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An alliance between the two companies would combine the global leader of
information technology with the owner of one of the world's most advanced
communications infrastructures. If combined, Sprint and EDS would have over
$20 billion in annual revenues, significant presence and experience in major
vertical market segments and would serve a full spectrum of customers,
spanning individual consumers, businesses and governments.
"We have an opportunity to create a single source for products and
services to meet the converging information and communications needs of
customers," said Messrs. Les Alberthal, chairman and chief executive officer
of EDS, and William T. Esrey, chairman and chief executive officer of Sprint.
"Our complementary strengths would enable us to capitalize on current market
opportunities, and create new opportunities, as our industries continue to
converge. A strong alliance would create tangible benefits for our customers,
shareholders and employees in our rapidly changing environment," said Messrs.
Alberthal and Esrey.
Said Mr. Alberthal: "We view Sprint's strong brand identity,
sophisticated network and presence across a full spectrum of communications
markets as providing us with powerful increased capabilities to offer our
customers. In addition, Sprint's connection with the consumer marketplace
would offer EDS an attractive path for the future development of products and
services tailored to the individual."
Mr. Esrey stated: "A strategic alliance with EDS would allow Sprint to
further enhance its already strong position in the business marketplace and
enable it to offer even greater and more sophisticated information technology
features."
Both companies have proven track records in managing rapid growth.
Sprint's overall revenues have grown from $2.9 billion to $11.4 billion in 10
years, with its long distance business growing from less than $225 million to
$6 billion over the same time. EDS has grown from $900 million in business to
over $8 billion in 10 years.
EDS is currently a wholly owned subsidiary of General Motors and any
merger between EDS and Sprint could not occur unless General Motors had
previously divested its ownership of EDS. In an announcement today, General
Motors indicated its willingness, under certain conditions (including
completion of its previously announced contribution of Class E stock to its
pension fund) and subject to shareholder approval, to consider a tax-free spin-
off of EDS to the holders of GM's Class E stock, which would create an
independent EDS owned by former Class E shareholders. In addition to the spin-
off of EDS, a merger of equals involving EDS and Sprint would be subject to
numerous other conditions, including approval by both companies' boards of
directors, approval by EDS' post-spin-off shareholders and the shareholders of
Sprint, and various governmental and other approvals.
Should EDS become an independent company, General Motors and EDS plan to
enter into a new, 10-year master agreement, with options for renewal, under
which EDS would continue to provide the same services for General Motors that
it does today.
Sprint is a diversified international telecommunications company with
more than $11 billion in annual revenues and the United States' only
nationwide all-digital, fiber-optic network. Its divisions provide global
long distance voice, data and video products and services, local telephone
services to more than 6.2 million subscriber lines in 19 states, and cellular
operations that serve 42 metropolitan markets and more than 50 rural service
areas.
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EDS has operations in more than 30 countries, employs 70,000 and is the
leader in applying information technology to meet the needs of businesses and
governments around the world. Class E stock is a common stock of General
Motors, traded under the symbol GME. EDS reported revenues of $8.6 billion in
1993.
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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.
GENERAL MOTORS CORPORATION
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(Registrant)
Date May 17, 1994
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s/Wallace W. Creek
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(Wallace W. Creek, Comptroller)
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