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) August 3, 1998
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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.)
100 Renaissance Center, Detroit, Michigan 48243-7301
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 August 3, 1998, General Motors Corporation (GM) issued a news
release regarding the announcement of GM's plans to create a fully independent
Delphi Automotive Systems. The news release was as follows:
GENERAL MOTORS TO CREATE A FULLY INDEPENDENT
DELPHI AUTOMOTIVE SYSTEMS DURING 1999
TROY, Mich. -- General Motors Corporation and its Delphi Automotive Systems
jointly announced today that the General Motors Board of Directors has approved
in principle proceeding with transactions that would result in Delphi becoming a
fully independent, publicly traded company during 1999. Delphi, based in Troy,
Mich., is the world's largest and most diversified supplier of automotive
components, systems and modules. Delphi's annual revenues in calendar-year 1997
were $31.4 billion and its income totaled $1.2 billion, excluding special
charges and restated to reflect the inclusion of Delco Electronics' results.
The board's approval follows a series of actions to allow Delphi to pursue
more strategic growth and competitive initiatives on a stand-alone basis. Those
actions began in 1994 with the establishment of Delphi (then called Automotive
Components Group Worldwide) as a separate business sector within General Motors,
and was followed by periodic internal consideration of the potential benefits to
Delphi, GM, and their employees, that could flow from Delphi's full separation
from General Motors. GM began publicly disclosing separate financial data for
Delphi in March of 1997. Stockholder approval in December of 1997 of the Hughes
Transactions paved the way for the integration of Delco Electronics and Delphi,
and today's decision by the GM Board of Directors.
It is currently expected that Delphi would be incorporated and then offer
15-20 percent of its common stock in an initial public offering during the first
quarter of 1999. Later in the year, all of the Delphi shares held by GM would be
distributed to holders of General Motors $1-2/3 par value common stock through
one of the following transactions:
Asplit-off transaction in which Delphi shares would be offered in
exchange for GM $1-2/3 par value common stock to those GM
stockholders who elected to participate in an exchange offer.
Aspin-off transaction in which the shares of Delphi would be
distributed to GM $1-2/3 par value common stockholders on a pro-rata
basis.
Some combination of the above.
"Either transaction would create value for holders of GM $1-2/3 par value
common stock," said GM Chairman, Chief Executive Officer and President John F.
Smith, Jr. GM plans that any distribution of Delphi shares to GM stockholders
would be completed on a basis that would be tax-free to GM and its stockholders
for U.S. federal income tax purposes. General Motors also plans to structure the
separation to enable GM to preserve its current credit ratings, including
General Motors Acceptance Corporation's (GMAC) "Top Tier" commercial paper
rating, and to allow Delphi to have an investment-grade credit rating that would
be competitive with other major automotive components and systems suppliers.
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"An independent Delphi would become even more competitive than Delphi is
today," said J.T. Battenberg III, president, Delphi Automotive Systems, and
executive vice president, General Motors. "As an independent company, we would
have greater opportunities to leverage our expertise in the integration of
automotive systems, and to take advantage of technological innovation, our
global sales and manufacturing base, and our significant scale advantages. While
General Motors would continue to be an important customer, Delphi's independence
would substantially help it attract additional business from automotive
companies other than GM."
Smith said Battenberg would become chairman, chief executive officer and
president of Delphi and head an independent leadership team that would manage
the new Delphi Automotive Systems Corporation, and a corporate board with
independent directors would be established. Delphi would continue to maintain
its headquarters in Troy, a suburb of Detroit. The ability of the separate
management teams and boards of directors for GM and Delphi to focus on their
individual businesses, and the ability of Delphi to use its own stock as
currency for business acquisitions and incentive compensation, are among the
rationale for and significant benefits expected from a separation.
"In our October 1997 solicitation statement for the Hughes Transactions,
and again in our 1997 10-K annual report, we told stockholders that once the
integration of Delco and Delphi was completed and we had demonstrated the
competitiveness of the combined operations, we would be able to consider a
public offering of Delphi common stock," Smith said. "We're pleased that the
integration of Delco and Delphi has progressed more quickly than we had
anticipated. That fact, and the findings of a comprehensive study on the
benefits of separating Delphi from GM, led to the board decision.
"In making this historic change we intend to work closely with the
leadership of the United Auto Workers (UAW), the International Union of
Electrical Workers (IUE), and our other unions, to ensure that Delphi would be
the strongest possible competitor in the parts industry," Smith said. "By
establishing Delphi as an independent entity, both GM and Delphi will become
stronger at an even-faster rate. Over the long term this should benefit all of
the workers, as well as the stockholders, of both companies."
Commenting on Delphi's future labor relations, Battenberg said, "We intend
to use this opportunity to engage in high-level dialogue with the leadership of
the UAW and our other unions, and to enter a more constructive relationship with
the employees of what will be a new Fortune 25 company. The new Delphi will
recognize the unions and assume the terms of GM's pre-separation agreements with
them. We, of course, will honor the commitments made in last week's settlements
at Delphi plants, including the no-sale provisions."
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Major points GM and Delphi will discuss with employees and their union
representatives include:
Delphi's commitment to recognize the unions as representatives of its
hourly employees, and Delphi's assumption of the national labor
agreements for its hourly employees.
Pensions, health-care, and other benefits of Delphi's current
employees would be continued.
The retention by Delphi's hourly employees of seniority rights,
potential flow-back opportunities, joint programs, and job security.
Multi-year contractual supply agreements, which will be put in place
for Delphi to continue to be an important supplier to GM.
"I'm sure there will be other topics we will be discussing with the unions.
The new process we've jointly begun should help our communication and
understanding," Smith said.
In general, employees working for Delphi, currently numbering approximately
200,000, would become employees of the independent Delphi Automotive Systems,
with essentially the same level of compensation and benefits as before the
transaction. General Motors would have approximately 400,000 employees following
the separation.
With Delphi's December 1997 addition of Delco Electronics to its
operations, Delphi operates 208 wholly owned manufacturing facilities, 46 joint
ventures and 27 technical centers in 37 countries. Regional headquarters are
located in Paris, Tokyo and Sao Paulo.
General Motors Corporation, the world's largest manufacturer of automobiles
and automotive parts, employs approximately 600,000 people and sells products in
160 countries worldwide. In 1997, General Motors reported revenues of $178
billion, and net income of $6.7 billion. GM would have had 1997 revenues of
approximately $172 billion if Delphi had been a separate company throughout that
year.
An initial public offering and either split-off or spin-off of Delphi
common stock would be subject to the development of definitive separation terms,
further corporate approvals and government actions, including receipt of a
favorable Internal Revenue Service ruling that the separation would be tax-free
to GM and its stockholders for U.S. federal income tax purposes. No offer of
Delphi securities will be made except by means of a prospectus. While an initial
public offering of Delphi common stock is planned for the first quarter of 1999
and a full separation later in the year, it should be noted that due to the
numerous uncertainties involved in these matters, there can be no assurance that
an initial public offering or full separation will be completed as described or
within the time periods outlined above.
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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 August 3, 1998
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By
s/Peter R. Bible
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(Peter R. Bible,
Chief Accounting Officer)
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