-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, X836k3KrviG2RWKCMH4ydoTHbx9ZFtF6IFCNoV1suB/TX8ynT0GaMOSwPj68ZRcO rE0nLbYVYg7IHUTtnvh5ZQ== 0000950124-95-001635.txt : 19950602 0000950124-95-001635.hdr.sgml : 19950602 ACCESSION NUMBER: 0000950124-95-001635 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19950601 SROS: MSE SROS: NASD SROS: NYSE SROS: PHLX SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL MOTORS CORP CENTRAL INDEX KEY: 0000040730 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711] IRS NUMBER: 380572515 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-59169 FILM NUMBER: 95544132 BUSINESS ADDRESS: STREET 1: 3044 W GRAND BLVD CITY: DETROIT STATE: MI ZIP: 48202 BUSINESS PHONE: 3135565000 S-3/A 1 AMD. #1 TO S-3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 1, 1995 REGISTRATION NO. 33-59169 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549-1004 ------------------------- AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------- GENERAL MOTORS CORPORATION (Exact name of registrant as specified in its charter) ------------------------- State of Delaware 38-0572515 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
767 Fifth Avenue, New York, New York 10153-0075; (212) 418-6100 3044 West Grand Boulevard, Detroit, Michigan 48202-3091; (313) 556-5000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ------------------------- J. Michael Losh Executive Vice President General Motors Corporation 3044 West Grand Boulevard Detroit, Michigan 48202-3091 (313) 556-3549 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Warren G. Andersen Robert S. Osborne, P.C. Gerry D. Osterland General Motors Corporation Kirkland & Ellis Jones, Day, Reavis & Pogue 3031 West Grand Boulevard 200 East Randolph Drive 2300 Trammell Crow Center Detroit, Michigan 48202-3091 Chicago, Illinois 60601-6636 2001 Ross Avenue Dallas, Texas 75201 Robert L. Messineo Francis J. Morison Weil, Gotshal & Manges Davis Polk & Wardwell 767 Fifth Avenue 450 Lexington Avenue New York, New York 10153-0075 New York, New York 10017
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of the Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act of 1933, please check the following box. /X/ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 EXPLANATORY NOTE This Registration Statement relates to the offering of 37,000,000 shares of Class E Common Stock (without giving effect to the Underwriters' over-allotment option), of which 27,000,000 shares will be offered in the United States and Canada, 7,000,000 shares will be offered internationally outside the United States and Canada excluding Asia, and 3,000,000 shares will be offered in Asia. The Registration Statement includes the U.S. Prospectus followed by alternate front cover pages, underwriting sections and back cover pages for the International Prospectus and the Asian Prospectus as indicated on each page. 3 Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED JUNE 1, 1995 PROSPECTUS 37,000,000 SHARES GENERAL MOTORS CORPORATION CLASS E COMMON STOCK ------------------------ This Prospectus covers the resale of 37,000,000 shares of Class E Common Stock, par value $0.10 per share ("Class E Common Stock"), of General Motors Corporation, a Delaware corporation (together with its subsidiaries, "General Motors," "GM" or the "Corporation"), by the General Motors Special Hourly Employees Pension Trust (together with any sub-trusts thereunder, the "Hourly Plan Special Trust") under the General Motors Hourly-Rate Employees Pension Plan (the "Hourly Plan") and a trust (the "Salaried Plan Trust") under the General Motors Retirement Plan for Salaried Employees (the "Salaried Plan"). Each such trust is sometimes referred to herein as a "Selling Stockholder" and, collectively, as the "Selling Stockholders". See "Selling Stockholders." Of the 37,000,000 shares of Class E Common Stock offered hereby, 27,000,000 are being offered in the United States and Canada by the U.S. Underwriters, 7,000,000 are being offered internationally outside the United States and Canada excluding Asia by the International Underwriters, and 3,000,000 are being offered in Asia by the Asian Underwriters. See "Underwriting." Class E Common Stock is one of three classes of General Motors common stock. Under the General Motors Restated Certificate of Incorporation, as amended, dividends on Class E Common Stock may be declared and paid out of the assets of General Motors only to the extent of the sum of (i) the paid in surplus attributable to the Class E Common Stock plus (ii) an allocated portion of the earnings, determined as described herein, of General Motors' indirectly wholly owned subsidiary, Electronic Data Systems Corporation (together with its subsidiaries, "EDS"). General Motors, not EDS, is the issuer of Class E Common Stock. For a description of dividend, voting and liquidation rights and recapitalization provisions with respect to the Class E Common Stock, see "Class E Common Stock" and "Description of Capital Stock -- Common Stock." General Motors will not receive any of the proceeds from the sale of the shares offered hereby. See "Selling Stockholders" and "Underwriting." The Class E Common Stock is listed in the United States on the New York Stock Exchange under the symbol GME. The last reported sale price of the Class E Common Stock on the New York Stock Exchange on May 11, 1995 was $41 5/8 per share. United States Trust Company of New York is the trustee for the Hourly Plan Special Trust and U.S. Trust Company of California, N.A., an affiliate of United States Trust Company of New York, is the trustee for a sub-trust under the Hourly Plan Special Trust (together, the "Hourly Plan Trustee") and Bankers Trust Company is the trustee for the Salaried Plan Trust (the "Salaried Plan Trustee"). ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- PROCEEDS TO PRICE TO UNDERWRITING SELLING PUBLIC DISCOUNTS(1) STOCKHOLDERS(2) - ----------------------------------------------------------------------------------------------------- Per Share................................... $ $ $ - ----------------------------------------------------------------------------------------------------- Total(3).................................... $ $ $ - ----------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------
(1) General Motors and, to the extent permitted by applicable law, the Selling Stockholders, have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (2) Before deducting expenses of the offerings, estimated to be $1,230,000, payable by General Motors. (3) The Hourly Plan Special Trust has granted the U.S. Underwriters, International Underwriters and Asian Underwriters an option, exercisable within 30 days after the date hereof, to purchase up to an aggregate of 5,550,000 additional shares of Class E Common Stock at the Price to Public less Underwriting Discount for the purpose of covering overallotments, if any. If the Underwriters exercise such option in full, the total Price to Public, Underwriting Discount and Proceeds to Selling Stockholders will be $ , $ and $ , respectively. ------------------------ Advisor to United States Trust Company of New York WASSERSTEIN PERELLA & CO. ------------------------ The shares of Class E Common Stock are offered by the several Underwriters, subject to prior sale, when, as and if issued to and accepted by them, and subject to approval of certain legal matters by counsel for the Underwriters. The Underwriters reserve the right to withdraw, cancel or modify such offer and to reject orders in whole or in part. It is expected that delivery of the certificates for the shares of Class E Common Stock will be made on or about , 1995, in New York, New York. ------------------------ MERRILL LYNCH & CO. GOLDMAN, SACHS & CO. LEHMAN BROTHERS CS FIRST BOSTON MORGAN STANLEY & CO. SALOMON BROTHERS INC INCORPORATED ------------------------ JOINT GLOBAL COORDINATORS MERRILL LYNCH & CO. GOLDMAN, SACHS & CO. ------------------------ The date of this Prospectus is , 1995. 4 AVAILABLE INFORMATION General Motors is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information filed by General Motors with the Commission can be inspected, and copies may be obtained, at the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates, as well as at the following Regional Offices of the Commission: Seven World Trade Center, New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Reports, proxy statements and other information concerning General Motors can also be inspected at the offices of the New York Stock Exchange, Inc., 11 Wall Street, New York, New York 10005, where the $1 2/3 Par Value Common Stock, Class E Common Stock and Class H Common Stock of General Motors are listed and at the offices of the following other stock exchanges where the $1 2/3 Par Value Common Stock is listed: the Chicago Stock Exchange, Inc., One Financial Place, 440 South LaSalle Street, Chicago, Illinois 60605; the Pacific Stock Exchange, Inc., 233 South Beaudry Avenue, Los Angeles, California 90012 and 301 Pine Street, San Francisco, California 94104; and the Philadelphia Stock Exchange, Inc., 1900 Market Street, Philadelphia, Pennsylvania 19103. General Motors has filed with the Commission a Registration Statement on Form S-3 (as amended, including exhibits, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), covering the resale of the shares of Class E Common Stock offered hereby. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. For further information, reference is hereby made to the Registration Statement. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents, which have been filed by General Motors with the Commission, are incorporated herein by reference. 1. Annual Report on Form 10-K for the year ended December 31, 1994, as amended on Forms 10-K/A dated March 17 and 24, 1995 (as amended, the "GM 1994 Form 10-K"); 2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 (the "GM First Quarter 1995 Form 10-Q"); 3. Current Reports on Form 8-K dated March 3, 13 and 24 and May 30, 1995; and 4. The description of the Class E Common Stock set forth in Article Fourth of General Motors' Restated Certificate of Incorporation, as amended to May 26, 1994 (the "General Motors Certificate of Incorporation"), filed as Exhibit 3(i) to the Current Report on Form 8-K dated May 26, 1994. All documents filed by General Motors with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering made hereunder shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. General Motors will provide without charge to each person, including any beneficial owner, to whom this Prospectus is delivered, upon the written or oral request of such person, a copy of any or all of the documents which have been or may be incorporated by reference in this Prospectus, other than exhibits to such documents not specifically described above. Requests for such documents should be directed to General Motors Corporation, Room 11-243, General Motors Building, 3044 West Grand Boulevard, Detroit, Michigan 48202-3091 (Telephone Number (313) 556-2044). IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS E COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. 2 5 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information contained elsewhere or incorporated by reference in this Prospectus. This Prospectus relates to the resale by the Selling Stockholders of 37,000,000 shares of Class E Common Stock (plus up to 5,550,000 additional shares of Class E Common Stock if the Underwriters' over-allotment option is exercised in full). Class E Common Stock is one of three classes of General Motors Common Stock. Dividends on Class E Common Stock may be declared and paid out of the assets of General Motors only to the extent of the sum of (i) the paid in surplus of General Motors attributable to the Class E Common Stock plus (ii) an allocated portion of the earnings, determined as described below, of General Motors' indirectly wholly owned subsidiary, EDS. Holders of Class E Common Stock have no direct rights in the equity or assets of EDS, but rather have rights in the equity and assets of General Motors (which includes 100% of the stock of EDS). General Motors, not EDS, is the issuer of Class E Common Stock. See "Class E Common Stock." General Motors will not receive any of the proceeds from the sale of the shares of Class E Common Stock described herein. See "Selling Stockholders." GENERAL MOTORS The major portion of General Motors' operations is derived from the automotive products industry, consisting of the design, manufacture, assembly and sale of automobiles, trucks and related parts and accessories. Primarily through its wholly owned subsidiaries, EDS, General Motors Acceptance Corporation ("GMAC") and Hughes Electronics Corporation (formerly known as GM Hughes Electronics Corporation) ("Hughes"), General Motors also manufactures products and provides services in other industry segments. See "General Motors and EDS -- General Motors." EDS EDS is a world leader in applying information technology ("IT"), with over 30 years of experience in using advanced computer and communications technologies to meet its clients' business needs. EDS' total revenues in 1994 were $10.05 billion. EDS currently employs approximately 84,000 persons and serves clients in the United States and approximately 40 other countries. See "Business of EDS." THE OFFERINGS Class E Common Stock Offered Hereby(a) U.S. Offering......................................... 27,000,000 shares International Offering................................ 7,000,000 shares Asian Offering........................................ 3,000,000 shares ------------ Total......................................... 37,000,000 shares ========== Class E Common Stock Outstanding after the Offerings(b).......................................... 438,515,650 shares(c) Class E Dividend Base(d)................................ 482,392,167 NYSE Symbol............................................. GME
- --------------- (a) Without giving effect to the over-allotment option granted by the Hourly Plan Special Trust to the Underwriters. (b) Used in calculating the weighted average number of shares of Class E Common Stock outstanding, which is the numerator of the fraction used to allocate a portion of EDS' earnings to amounts available for the payment of dividends on Class E Common Stock. See "Class E Common Stock." (c) Based on the number of shares of Class E Common Stock outstanding on March 31, 1995. The consummation of the Offerings will not change the number of shares of Class E Common Stock outstanding. In addition, 44,881,366 shares of Class E Common Stock have been reserved for issuance upon conversion of currently outstanding General Motors Series C Convertible Preference Stock. See "Description of Capital Stock -- Preference Stock -- Series C Convertible Preference Stock." (d) The denominator of the fraction used to allocate a portion of EDS' earnings to amounts available for the payment of dividends on Class E Common Stock. Neither the Class E Dividend Base nor the numerator of such fraction will be affected by the sale by the Selling Stockholders of the shares being offered hereby. 3 6 GENERAL MOTORS AND EDS GENERAL MOTORS While the major portion of General Motors' operations is derived from the automotive products industry segment, General Motors also has financing and insurance operations and produces products and provides services in other industry segments. The automotive products segment consists of the design, manufacture, assembly, and sale of automobiles, trucks, and related parts and accessories. The financing and insurance operations assist in the merchandising of General Motors' products as well as other products. GMAC and its subsidiaries offer financial services and certain types of insurance to dealers and customers. In addition, GMAC and its subsidiaries are engaged in mortgage banking and investment services. The other products segment consists of military vehicles, radar and weapon control systems, guided missile systems, and defense and commercial satellites; the design, installation and operation of business information and telecommunication systems; as well as the design, development, and manufacture of locomotives. For additional information on General Motors, see the GM 1994 Form 10-K and the GM First Quarter 1995 Form 10-Q that are incorporated herein by reference, as well as the other documents incorporated herein by reference. General Motors' principal executive offices are located at 3044 West Grand Boulevard, Detroit, Michigan 48202-3091 (Telephone Number (313) 556-5000), and 767 Fifth Avenue, New York, New York 10153-0075 (Telephone Number (212) 418-6100). EDS EDS is a world leader in IT, with over 30 years of experience in using advanced computer and communications technologies to meet its clients' business needs. EDS' total revenues in 1994 were $10.05 billion. EDS currently employs approximately 84,000 persons and serves clients in the United States and approximately 40 other countries. See "Business of EDS." EDS was incorporated under the laws of the State of Texas in 1962 and became a wholly owned subsidiary of General Motors in October 1984. EDS' principal executive offices are located at 5400 Legacy Drive, Plano, Texas 75024-3105 (Telephone Number (214) 604-6000). RELATIONSHIP BETWEEN GENERAL MOTORS AND EDS EDS is responsible for substantially all of the worldwide data processing and telecommunications activities of General Motors and its subsidiaries. See "Business of EDS -- Services for General Motors." Approximately 35% of EDS' total revenues in 1994 were attributable to General Motors and its subsidiaries. The percentage of EDS' total revenues attributable to General Motors and its subsidiaries has decreased significantly since 1985. While it is anticipated that GM will continue to contribute a significant portion of EDS' total systems and other contracts revenues, the percentage is expected to continue to decline as non-GM revenues continue to increase. See "Management's Discussion and Analysis of Financial Condition and Results of Operations of EDS." It is GM's policy that a standard of fair dealing govern the prices, terms and conditions of commercial transactions between EDS and General Motors. The Capital Stock Committee of the General Motors Board of Directors (the "General Motors Board of Directors" or the "Board of Directors") is responsible for reviewing, under general principles of Delaware corporation law, among other things, (i) the principal business and financial relationships and transactions among General Motors, EDS and Hughes, (ii) the dividend policies or practices of General Motors and (iii) such other matters as have the potential to have differing effects on holders of the three classes of General Motors common stock, all to the extent such Committee may deem appropriate. The Capital Stock Committee is comprised entirely of independent directors of General Motors. In addition, a majority of the General Motors Board of Directors are independent directors. See "Class E Common Stock -- Considerations Relating to Multi-Class Common Stock Capital Structure." The Board of Directors of EDS is comprised of executive officers of General Motors and of EDS. Those directors of EDS who are also executive officers of General Motors devote a substantial amount of their time to the business and affairs of General Motors and its other subsidiaries or to the oversight thereof. As the sole 4 7 stockholder of EDS, General Motors controls the EDS Board of Directors and, subject to Delaware law, is able to cause EDS to pay dividends and make advances to or otherwise enter into such transactions with GM as GM deems desirable and appropriate. General Motors reserves the right to cause EDS to pay dividends to GM in such amounts as GM determines are desirable under the then prevailing facts and circumstances. Such amounts may be the same as, greater than, or less than the cash dividends paid by General Motors on the Class E Common Stock. There is no fixed relationship, on a per share or aggregate basis, between the cash dividends that may be paid by General Motors to holders of the Class E Common Stock and the dividends or other amounts that may be paid by EDS to General Motors. However, it has been the practice of the Board of Directors of EDS to pay quarterly cash dividends on the outstanding shares of EDS common stock in a per share amount equal to the quarterly dividends per share paid by General Motors with respect to Class E Common Stock. The number of shares of common stock of EDS issued and outstanding, all of which shares are owned by General Motors through a wholly owned subsidiary, is adjusted from time to time so as to remain equal to the denominator of the fraction used in allocating a portion of EDS' earnings to the Class E Common Stock for dividend purposes as described herein. EDS makes no payments on EDS common stock with respect to dividend payments by General Motors on shares of General Motors Series C Convertible Preference Stock (which are convertible pursuant to their terms into shares of Class E Common Stock). See "Class E Common Stock -- Considerations Relating to Multi-Class Common Stock Capital Structure" and "Description of Capital Stock." The managements of EDS and General Motors are engaged in discussions concerning the most appropriate means of addressing EDS' strategic objectives, including the possibility of a spin-off of EDS. These discussions have not produced a definitive proposal as to the structure or terms of any transaction or as to whether any transaction will be proposed to the board of directors of GM or EDS or the stockholders of GM. Any spin-off of EDS would be proposed only in a transaction determined by GM's Board of Directors to be fair to holders of all classes of GM's capital stock and that would be tax free and would not result in the recapitalization of Class E Common Stock into GM $1 2/3 Par Value Common Stock at a 120% exchange ratio as currently provided for under certain circumstances in the General Motors Certificate of Incorporation. See "Class E Common Stock -- Recapitalization." The development of any such proposal would be subject to the resolution of numerous matters and any subsequent implementation of any such proposal would be subject to numerous conditions, including appropriate board and stockholder approvals. In the event that any such spin-off were proposed, General Motors and EDS would plan to enter into a long-term agreement upon consummation of such transaction, with options for renewal by General Motors, under which EDS would continue to provide to General Motors substantially the same information technology services as it has provided in the past. See "Business of EDS -- Services for General Motors." The development of any such proposal and fulfillment of such conditions are uncertain and the consummation of any such transaction would in any event involve substantial periods of time. Due to the numerous uncertainties involved in these matters, there can be no assurance that any spin-off of EDS will be proposed or consummated. 5 8 BACKGROUND OF THE OFFERINGS On March 13, 1995, General Motors contributed to the Hourly Plan 173,163,187 shares of Class E Common Stock, having an aggregate fair market value on such date of approximately $6.3 billion (determined by an independent valuation expert retained by the Hourly Plan Trustee). In connection with making such contribution, General Motors and the Pension Benefit Guaranty Corporation (the "PBGC") entered into an agreement under which GM made $4.0 billion of incremental cash contributions to the Hourly Plan and agreed to certain limitations on the use of funding credits created by such contribution, and the PBGC agreed to provide flexibility to GM by granting a release of EDS from liability, if any, under Title IV of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), for GM's U.S. pension plans in the event EDS were to leave the GM control group under certain circumstances. In connection with such contribution, the Department of Labor also granted an exemption with respect to, among other things, limits otherwise applicable under ERISA on the amount of Class E Common Stock that could legally be held by the Hourly Plan. All of the contributed shares, together with an additional approximately 16.9 million shares of Class E Common Stock held by the Hourly Plan Special Trust, are subject to the restrictions on transfer in and other terms of a Registration Rights Agreement dated March 12, 1995 between General Motors and the Hourly Plan Trustee (including the exhibits thereto, the "Registration Rights Agreement"). Under the Registration Rights Agreement, the Hourly Plan Special Trust may only transfer shares of Class E Common Stock in certain types of transactions and under certain circumstances, including "demand transfers" (which are defined under the Registration Rights Agreement to include public offerings and negotiated transactions, whether registered or not) and certain transfers to employee benefit plans maintained by GM and its subsidiaries. The Hourly Plan Special Trust is currently permitted two registered demand transfers in any twelve-month period and an unlimited number of unregistered, negotiated transfers. Upon consummation, the sale of the shares offered hereby will constitute one of the two registered demand transfers by the Hourly Plan Special Trust currently allowed in any twelve-month period under the Registration Rights Agreement. The Salaried Plan Trust owns approximately 9.1 million shares of Class E Common Stock which are subject to the terms of an Exchange and Registration Agreement, dated November 4, 1992 (the "Exchange Agreement") among General Motors, the Hourly Plan and the Salaried Plan. The Exchange Agreement was terminated with respect to the Hourly Plan pursuant to the Registration Rights Agreement. Under the Exchange Agreement, the Salaried Plan Trust continues to have certain rights to register the shares of Class E Common Stock held by it. In order to coordinate the respective registration rights of the Hourly Plan Special Trust and the Salaried Plan Trust, an Agreement dated March 12, 1995 (the "Salaried Plan Agreement") was entered into among General Motors, the Hourly Plan Trustee and the Salaried Plan Trustee. Pursuant to the Salaried Plan Agreement, the Salaried Plan Trust has a right to include up to 3.0 million of the shares of Class E Common Stock owned by it as of the date of such Agreement in any public offering initiated by the Hourly Plan Special Trust under the Registration Rights Agreement. The Salaried Plan Trust has elected to exercise such right with respect to 2.0 million shares of Class E Common Stock in connection with the Offerings. The Selling Stockholders have agreed not to offer, sell or otherwise dispose of any shares of Class E Common Stock or any securities convertible into or exchangeable or exercisable for Class E Common Stock (other than transfers to or for the benefit of employee benefit plans of GM or any of its affiliates, including EDS) from the date of this Prospectus, in the case of the Hourly Plan Special Trust, until December 31, 1995 and, in the case of the Salaried Plan Trust, until 90 days after the date of this Prospectus, in each case, without the prior written consent of Merrill Lynch & Co. and Goldman, Sachs & Co. on behalf of the Representatives (as defined below). See "Underwriting." SELLING STOCKHOLDERS The Hourly Plan Special Trust is the owner of 35.0 million of the shares of Class E Common Stock offered hereby and all of the shares subject to the Underwriters' over-allotment option. The Salaried Plan Trust is the owner of 2.0 million of the shares of Class E Common Stock offered hereby. The Finance Committee of the General Motors Board of Directors is the named fiduciary of the Hourly Plan and the 6 9 Salaried Plan pursuant to the provisions of ERISA, and a portion of the assets of the Hourly Plan and the Salaried Plan (not including the shares of Class E Common Stock owned by the Hourly Plan Special Trust and the Salaried Plan Trust) is subject to management by or under the supervision of General Motors Investment Management Corporation, a wholly owned subsidiary of General Motors. Prior to the contribution of the 173,163,187 shares of Class E Common Stock to the Hourly Plan Special Trust as described above, the Hourly Plan Trustee was appointed to have ongoing responsibility, as a fiduciary within the meaning of ERISA, to manage the shares of Class E Common Stock owned by the Hourly Plan Special Trust. The Hourly Plan Trustee has retained Wasserstein Perella & Co., Inc. (the "Financial Advisor") to serve as its investment advisor regarding the management and disposition of such shares of Class E Common Stock. The Hourly Plan Trustee and the Salaried Plan Trustee have responsibility to manage prudently the shares of Class E Common Stock held by the Hourly Plan Special Trust and the Salaried Plan Trust, respectively, in a manner consistent with maximizing the value of the applicable Trust's respective investment in Class E Common Stock and in accordance with each Trustee's determination of the extent to which the applicable Trust may prudently continue to hold such shares consistent with the diversification and related fiduciary requirements of ERISA. In accordance with the foregoing and, in the case of the Hourly Plan Special Trust, in a manner consistent with the limitations and terms of the Registration Rights Agreement, each Trustee has the authority and discretion to cause the Trust of which it is trustee to hold such shares or sell all or any portion thereof from time to time as it may deem appropriate, and to direct the voting of and the exercise of all other rights relating to such shares. The Hourly Plan Trustee and the Salaried Plan Trustee intend to manage the disposition of such shares in a manner consistent with maintaining an orderly market for the Class E Common Stock. The Department of Labor exemption obtained at the time of the contribution of the shares of Class E Common Stock to the Hourly Plan Special Trust as described above does not impose any time constraints on the Hourly Plan Special Trust for any dispositions of such shares. The compensation of the Hourly Plan Trustee and the Financial Advisor is not contingent in any way on the sale or continued holding of shares of Class E Common Stock by the Hourly Plan Special Trust. As of March 31, 1995, the Hourly Plan Special Trust had beneficial ownership of approximately 190.1 million shares of Class E Common Stock (which does not include approximately 309,000 shares of Class E Common Stock and approximately 278,000 shares of Class E Common Stock issuable upon conversion of shares of General Motors Series C Convertible Preference Stock held for the benefit of the Hourly Plan by investment managers other than the Hourly Plan Trustee), representing approximately 43% of the Class E Common Stock outstanding, and the Salaried Plan Trust had beneficial ownership of approximately 9.1 million shares of Class E Common Stock (which does not include approximately 240,000 shares of Class E Common Stock and approximately 200,000 shares of Class E Common Stock issuable upon conversion of shares of General Motors Series C Convertible Preference Stock held for the benefit of the Salaried Plan by investment managers other than the Salaried Plan Trustee), representing approximately 2% of the Class E Common Stock outstanding (in each case, based on the number of shares of Class E Common Stock outstanding as of March 31, 1995). Following the consummation of the Offerings, the Hourly Plan Special Trust will have beneficial ownership of approximately 155.1 million shares (or, if the Underwriters' over-allotment option is exercised in full, approximately 149.5 million shares) of Class E Common Stock and the Salaried Plan Trust will have beneficial ownership of approximately 7.1 million shares of Class E Common Stock. Such shares will represent approximately 35% (or, if the Underwriters' over-allotment option is exercised in full, 34%) and 2%, respectively, of the Class E Common Stock outstanding (in each case, based on the number of shares of Class E Common Stock outstanding as of March 31, 1995). In addition, the Hourly Plan and the Salaried Plan have beneficial ownership of other securities of General Motors from time to time. General Motors will not receive any of the proceeds of the sale of any of the shares of Class E Common Stock offered hereby. All of such proceeds will be for the account of the Selling Stockholders and for the benefit of employees and retirees and their beneficiaries participating in the Hourly Plan and the Salaried Plan, as appropriate. 7 10 SELECTED FINANCIAL DATA OF GENERAL MOTORS AND EDS The following data have been derived from General Motors' and EDS' consolidated financial statements. Such data should be read in conjunction with the consolidated financial statements, the notes thereto and Management's Discussion and Analysis in the GM 1994 Form 10-K and the GM First Quarter 1995 Form 10-Q (which are incorporated herein by reference), including in each case the information with respect to EDS in Exhibit 99(a) thereto. With respect to EDS, see also "Management's Discussion and Analysis of Financial Condition and Results of Operations of EDS" and the consolidated financial statements of EDS included as Appendix A attached hereto. In the opinion of management, the unaudited consolidated financial statements of General Motors and EDS for the three months ended March 31, 1995 and 1994 include all adjustments (consisting only of normal recurring adjustments, except as described in the notes hereto) necessary to present fairly the financial information for such periods. Interim results are not necessarily indicative of the results which may be expected for any other interim period or for the full year. The GM financial data presenting GMAC on an equity basis are unaudited. GENERAL MOTORS (IN MILLIONS)
AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, AS OF AND FOR THE YEARS ENDED DECEMBER 31, ----------------------- -------------------------------------------------------------- 1995 1994 1994(A) 1993 1992(B) 1991(C) 1990 ---------- ---------- ---------- ---------- ---------- ---------- ---------- CONSOLIDATED GM OPERATIONS OPERATING RESULTS Total net sales and revenues........ $ 43,285.0 $ 37,495.4 $154,951.2 $138,219.5 $132,242.2 $123,108.8 $124,705.1 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Costs and expenses.................. 39,805.3 35,043.3 146,597.9 134,694.2 134,338.3 126,180.3 123,608.2 Special provision for scheduled plant closings and other restructurings.................... -- -- -- 950.0 1,237.0 2,820.8 3,314.0 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total costs and expenses...... 39,805.3 35,043.3 146,597.9 135,644.2 135,575.3 129,001.1 126,922.2 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Income (Loss) before cumulative effect of accounting changes...... 2,154.0 1,611.8 5,658.7 2,465.8 (2,620.6) (4,992.0) (1,985.7) ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net income (loss)................... $ 2,154.0 $ 853.7 $ 4,900.6 $ 2,465.8 $(23,498.3) $ (4,452.8) $ (1,985.7) ========= ========= ========= ========= ========= ========= ========= BALANCE SHEET DATA Cash and marketable securities...... $ 16,021.2 $ 15,466.0 $ 16,075.6 $ 17,962.7 $ 15,107.7 $ 10,192.4 $ 7,821.4 Total assets........................ 205,559.6 191,727.6 198,598.7 188,200.9 190,196.0 184,074.6 180,236.5 Notes and loans payable............. 76,300.9 70,268.9 73,730.2 70,441.2 82,592.3 94,022.1 95,633.5 Stockholders' equity................ 21,366.5 6,936.5 12,823.8 5,597.5 6,225.6 27,327.6 30,047.4 GM OPERATIONS WITH GMAC ON AN EQUITY BASIS OPERATING RESULTS Total net sales and revenues........ $ 39,450.1 $ 34,280.7 $141,576.0 $125,252.7 $118,571.6 $109,156.9 $110,797.3 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Costs and expenses.................. 36,523.6 32,147.4 134,815.3 122,812.1 121,420.0 112,719.3 110,893.3 Special provision for scheduled plant closings and other restructurings.................... -- -- -- 950.0 1,237.0 2,820.8 3,314.0 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total costs and expenses...... 36,523.6 32,147.4 134,815.3 123,762.1 122,657.0 115,540.1 114,207.3 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Income (Loss) before cumulative effect of accounting changes...... 2,154.0 1,604.4 5,651.3 2,465.8 (2,903.2) (4,660.5) (1,985.7) ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net income (loss)................... $ 2,154.0 $ 853.7 $ 4,900.6 $ 2,465.8 $(23,498.3) $ (4,452.8) $ (1,985.7) ========= ========= ========= ========= ========= ========= ========= BALANCE SHEET DATA Cash and marketable securities...... $ 10,270.5 $ 9,546.6 $ 10,976.4 $ 10,485.0 $ 7,960.8 $ 4,419.4 $ 4,606.5 Total assets........................ 130,730.3 123,976.9 126,334.9 120,980.5 121,356.2 104,797.5 102,878.8 Long-term debt and capitalized leases............................ 6,318.9 6,711.6 6,218.7 6,383.6 7,055.4 6,699.1 4,923.8 Stockholders' equity................ 21,366.5 6,936.5 12,823.8 5,597.5 6,225.6 27,327.6 30,047.4 Cumulative Amount Available for Payment of Dividends(d) Class E Common Stock............ $ 10,152.3 $ 3,398.6 $ 3,752.1 $ 3,243.8 $ 2,546.4 $ 1,753.0 $ 1,449.0 Class H Common Stock............ 2,259.1 1,971.7 2,169.3 1,886.7 1,582.9 1,218.5 1,106.6 $1-2/3 Par Value Common Stock... 10,494.5 5,757.7 9,013.8 4,870.0 3,487.7 23,264.1 26,801.2 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total......................... $ 22,905.9 $ 11,128.0 $ 14,935.2 $ 10,000.5 $ 7,617.0 $ 26,235.6 $ 29,356.8 ========= ========= ========= ========= ========= ========= =========
8 11 - ------------------------- (a) Effective January 1, 1994, GM adopted Statement of Financial Accounting Standards ("SFAS") No. 112. The effect of this change on 1994 results was an unfavorable cumulative effect on GMAC earnings of $7.4 million, an unfavorable cumulative effect on GM operations with GMAC on an equity basis of $750.7 million, and an unfavorable cumulative effect on consolidated GM operations of $758.1 million. (b) Effective January 1, 1992, GM adopted SFAS No. 106. The effect of this change on 1992 earnings was an unfavorable cumulative effect on GMAC earnings of $282.6 million, an unfavorable cumulative effect on GM operations with GMAC on an equity basis of $20,555.1 million and an unfavorable cumulative effect on consolidated GM operations of $20,837.7 million. Additionally, effective January 1, 1992, Hughes changed its revenue recognition policy for certain commercial businesses. The effect of this change on 1992 results was an unfavorable adjustment of $40.0 million. (c) Effective January 1, 1991, accounting procedures were changed to include in inventory general purpose spare parts previously charged directly to expense. The effect of this change on 1991 earnings was a favorable adjustment of $306.5 million. GM adopted SFAS No. 109, effective January 1, 1991. The effect of this change on 1991 results was a favorable cumulative effect on GMAC earnings of $331.5 million, an unfavorable cumulative effect on GM operations with GMAC on an equity basis of $98.8 million and a favorable cumulative effect on consolidated GM operations of $232.7 million. (d) Amount of funds legally available as of such date for the payment of dividends on each class of GM common stock under the General Motors Certificate of Incorporation. See "Description of Capital Stock -- Common Stock -- Dividends." On May 23, 1995, General Motors concluded a tender offer, which began on April 25, 1995, to purchase for cash any and all of its (i) outstanding depositary shares, each representing one-fourth of a share of its Series B 9 1/8% Preference Stock, at a purchase price of $27.50 per depositary share, (ii) outstanding depositary shares, each representing one-fourth of a share of its Series D 7.92% Preference Stock, at a purchase price of $26.375 per depositary share, and (iii) outstanding depositary shares, each representing one-fourth of a share of its Series G 9.12% Preference Stock, at a purchase price of $28.25 per depositary share. Based on a preliminary count, the approximate number of depositary shares tendered pursuant to such offer were 24.4 million depositary shares of Series B Preference Stock, 9.6 million depositary shares of Series D Preference Stock, and 12.9 million depositary shares of Series G Preference Stock. In accordance with the terms of the offer, General Motors has purchased all of the depositary shares properly tendered for an aggregate purchase price of approximately $1.3 billion. Following payment for such depositary shares, the approximate number of shares remaining outstanding will be 19.9 million depositary shares of Series B Preference Stock, 6.1 million depositary shares of Series D Preference Stock, and 10.1 million depositary shares of Series G Preference Stock. No offer was made for General Motors' fourth series of Preference Stock, the Series C Convertible Preference Stock, shares of which are convertible into the Class E Common Stock. See "Description of Capital Stock." 9 12 EDS (IN MILLIONS EXCEPT PER SHARE AMOUNTS)
AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, AS OF AND FOR THE YEARS ENDED DECEMBER 31, -------------------- --------------------------------------------------------- 1995 1994 1994 1993 1992 1991 1990 -------- -------- --------- -------- -------- -------- -------- OPERATING RESULTS Revenues Systems and other contracts GM and affiliates..................... $ 898.0 $ 841.7 $ 3,547.2 $3,323.7 $3,348.5 $3,362.2 $3,234.2 Outside customers..................... 1,878.3 1,375.5 6,412.9 5,183.6 4,806.7 3,666.3 2,787.5 Interest and other income................. 8.7 22.1 92.3 54.5 63.7 70.5 87.1 -------- -------- --------- -------- -------- -------- -------- Total revenues........................ 2,785.0 2,239.3 10,052.4 8,561.8 8,218.9 7,099.0 6,108.8 Costs and expenses Cost of revenues.......................... 2,176.1 1,710.6 7,529.4 6,390.6 6,205.8 5,415.1 4,639.0 Selling, general, and administrative...... 281.0 250.8 1,187.1 1,005.4 969.3 761.9 663.0 Interest expense.......................... 20.4 9.6 51.7 34.5 43.0 28.3 18.1 -------- -------- --------- -------- -------- -------- -------- Total costs and expenses.............. 2,477.5 1,971.0 8,768.2 7,430.5 7,218.1 6,205.3 5,320.1 -------- -------- --------- -------- -------- -------- -------- Income before income taxes.................. 307.5 268.3 1,284.2 1,131.3 1,000.8 893.7 788.7 Provision for income taxes.................. 110.7 96.6 462.3 407.3 365.3 330.7 291.8 Cumulative effect of accounting change(a)... -- -- -- -- -- (15.5) -- -------- -------- --------- -------- -------- -------- -------- Separate Consolidated Net Income............ $ 196.8 $ 171.7 $ 821.9 $ 724.0 $ 635.5 $ 547.5 $ 496.9 ======== ======== ========= ======== ======== ======== ======== Average number of shares of Class E Common Stock outstanding (Numerator)............. 300.0 257.9 260.3 243.0 209.1 195.3 187.1 Class E Dividend Base (Denominator)......... 482.4 481.2 481.7 480.6 479.3 478.1 478.6 Available Separate Consolidated Net Income.................................... $ 122.4 $ 92.1 $ 444.4 $ 367.2 $ 278.4 $ 223.6 $ 194.4 Earnings attributable to Class E Common Stock on a per share basis................ 0.42 0.36 1.71 1.51 1.33 1.14 1.04 Dividends per share of Class E Common Stock..................................... 0.13 0.12 0.48 0.40 0.36 0.32 0.28 BALANCE SHEET DATA Cash and marketable securities.............. $ 641.0 $ 753.9 $ 757.8 $ 607.5 $ 587.9 $ 415.8 $ 715.4 Current assets.............................. 3,465.5 2,665.1 3,354.1 2,506.8 2,157.0 1,945.6 1,716.4 Property and equipment, net................. 2,881.2 2,153.5 2,756.6 2,114.7 1,720.7 1,551.6 1,197.1 Total assets(b)............................. 9,158.0 7,289.6 8,786.5 6,942.1 6,123.5 5,703.2 4,565.3 Current liabilities......................... 2,832.2 2,138.3 2,873.2 2,160.4 1,903.1 2,396.7 1,653.9 Long-term debt.............................. 1,198.4 710.4 1,021.0 522.8 561.1 281.9 285.1 Stockholder's equity(b)(c).................. 4,414.5 3,761.9 4,232.5 3,617.4 3,063.4 2,610.3 2,181.8 OTHER DATA Depreciation and amortization............... $ 231.0 $ 156.9 $ 741.3 $ 607.9 $ 603.2 $ 524.4 $ 495.7 Expenditures for property and equipment..... 263.8 156.3 1,120.9 799.4 639.0 673.2 514.8
- ------------------------- (a) Effective January 1, 1991, the Company adopted SFAS No. 109. The cumulative effect of this accounting change at January 1, 1991, was a charge of $15.5 million or $0.03 per share of Class E Common Stock. First quarter 1991 earnings were restated for the effect of the accounting change. (b) Holders of Class E Common Stock have no direct rights in the equity or assets of EDS, but rather have rights in the equity and assets of General Motors (which includes 100% of the stock of EDS). (c) General Motors' equity in its indirectly wholly owned subsidiary, EDS. The portion of EDS' earnings that is included in the amount available for the payment of dividends on Class E Common Stock (which amount is also used to calculate earnings per share of Class E Common Stock) is determined by a fraction, the numerator of which is a number equal to the weighted average number of shares of Class E Common Stock outstanding and the denominator of which was 482.4 million for the first quarter of 1995; provided, that such fraction shall never be greater than one. The amount so allocated is referred to in the General Motors Certificate of Incorporation as the "Available Separate Consolidated Net Income" of EDS. For purposes of determining the approximate earnings per share attributable to Class E Common Stock for financial reporting purposes, an investor may divide the quarterly EDS earnings allocated to Class E Common Stock (the "Available Separate Consolidated Net Income of EDS") by the weighted average number of shares of Class E Common Stock outstanding during such quarter, which is the numerator of the fraction described above. Approximately the same mathematical result may be obtained by dividing the quarterly EDS earnings used for computation of Available Separate Consolidated Net Income (i.e., net income) by the denominator of the fraction described above. The denominator is sometimes referred to herein as the "Class E Dividend Base." See "Class E Common Stock." The foregoing financial data for EDS should be read in conjunction with the consolidated financial statements (including the notes thereto) of EDS included as Appendix A attached hereto. 10 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF EDS RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1995 AND 1994 EDS signed new contracts with a total contract value of $2.6 billion during the quarter ended March 31, 1995, compared to $2.2 billion during the same period of 1994. Total revenues rose $545.7 million over the comparable quarter in the prior year to $2,785.0 million for the quarter ended March 31, 1995. Systems and other contracts revenues for the quarter ended March 31, 1995 included $898.0 million of revenues related to GM contracts. The growth of base business (non-GM) revenues during the first quarter of 1995, when compared to the corresponding period in 1994, was 36.6%. This growth results from several new contracts and improved performance of existing contracts. GM revenues increased 6.7% during the quarter ended March 31, 1995, when compared with the same period in 1994. The percentage of EDS' total revenues attributable to General Motors and its subsidiaries has decreased significantly since 1985. While it is anticipated that GM will continue to contribute a significant portion of total systems and other contracts revenues, the percentage of revenues from GM and its subsidiaries is expected to continue to decline as non-GM revenues continue to increase. In the first quarter of 1995, 32% of total revenues came from GM and its subsidiaries, compared with 38% for the first quarter of 1994. Cost of revenues as a percentage of systems and other contracts revenues was 78% for the first quarter of 1995, compared with 77% for the first quarter of 1994. Selling, general, and administrative expenses as a percentage of systems and other contracts revenues were 10% for the first quarter of 1995, compared with 11% for the first quarter of 1994. For the quarter ended March 31, 1995, EDS' separate consolidated net income increased 14.6% to $196.8 million, when compared to net income of $171.7 million for the same period in 1994. Earnings per share of Class E Common Stock increased from $0.36 to $0.42, or 16.7%, for the first quarter of 1995 when compared to the first quarter of 1994. EDS' effective tax rate remained at 36% for the quarter. THREE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992 General. EDS achieved record earnings in 1994, signing the largest base business global outsourcing contract in its history and achieving more than $10 billion in total revenues. The total value of contracts sold during the year also surpassed EDS' previous record year, 1993, continuing the trend of global business expansion. Total Revenues. 1994 was the first year in which more than a quarter of total systems and other contracts revenues were generated outside the United States. The total revenues of $10,052.4 million represented an increase of 17% over total revenues in 1993. The comparable amounts for 1993 and 1992 were 4% and 16%, respectively. The base (non-GM) portion of 1994 revenues grew 24% over 1993, to $6,505.2 million, while GM revenues grew 7% over the same period, to $3,547.2 million. The growth in base business compares with 8% in 1993 and 30% in 1992. GM revenues were relatively stable in 1993 and 1992. Total U.S. base systems and other contracts revenues for 1994 increased 15%, or $606.7 million over 1993, to $4,611.2 million. This compares with U.S. growth of 8% in 1993 and 23% in 1992. Base systems and other contracts revenues from outside the United States were $1,801.7 million, or 28% of base systems and other contracts revenues in 1994, compared with $1,179.1 million, or 23% in 1993. The increase in non-U.S. base revenues of $622.6 million was largely attributable to growth in European business. European base revenues increased $396.5 million, or 43%, in 1994 to $1,308.1 million, compared with $911.6 million in 1993 and $828.3 million in 1992. This increase was related to business in the United Kingdom and Germany. Other non-U.S. base revenues were up 85% over 1993, to $493.6 million, compared with $267.5 million in 1993 and $284.8 million in 1992. This growth was primarily due to business in Japan and New Zealand. 11 14 Systems and Other Contracts Revenues. Systems and other contracts revenues for the year ended December 31, 1994, included $3,547.2 million of revenues related to GM contracts, compared with $3,323.7 million and $3,348.5 million in 1993 and 1992, respectively. It is anticipated that GM will continue to contribute a significant portion of systems and other contracts revenues. However, as base revenues have continued to increase, the percentage of revenues coming from GM and its subsidiaries continues to decline. In 1994, 35% of revenues came from GM and its subsidiaries; in 1993, GM revenues were 39% of the total, and in 1992 it was 41%. EDS expects this trend to continue as base revenues grow. Interest and Other Income. Interest and other income increased to $92.3 million in 1994, compared with $54.5 million in 1993 and $63.7 million in 1992. The increase in 1994 occurred as EDS realized higher earnings and gains created by a strong market for certain investments. Cost of Revenues. Cost of revenues as a percentage of systems and other contracts revenues was 76% in 1994, compared with 75% and 76% in 1993 and 1992, respectively. Selling, General, and Administrative Expenses. Selling, general, and administrative expenses remained constant at 12% of systems and other contracts revenues in 1994, 1993 and 1992. Interest Expense. Interest expense of $51.7 million increased 50% from 1993 due to an overall increase in the average outstanding borrowings and an increase in the average cost of borrowing. Interest expense of $34.5 million in 1993 represented a decrease of $8.5 million from 1992 due to an overall decline in the average outstanding borrowings and a decline in the average cost of borrowing. Pretax Margin. EDS achieved strong revenues growth of 17% in 1994 and a pretax margin of 12.8%. The 1993 pretax margin was 13.2% coupled with 4% revenues growth in that year. The 1992 pretax margin was 12.2%. Income Taxes. The effective income tax rate was 36.0% in 1994 and 1993, down from 36.5% in 1992. Net Income. EDS' separate consolidated net income increased 14% to $821.9 million in 1994, compared with $724.0 million in 1993 and $635.5 million in 1992. Return on stockholder's equity (General Motors' equity in its indirectly wholly owned subsidiary, EDS) was 21% in 1994, compared with 22% in 1993 and 1992. Return on assets remained constant at 11% for 1994, 1993 and 1992. LIQUIDITY AND CAPITAL RESOURCES EDS' liquidity and capital structure changed during 1994 to reflect the steady growth in significant customer relationships established in recent years. Working capital increased from $346.4 million at December 31, 1993 to $480.9 million at December 31, 1994. Working capital was $633.3 million at March 31, 1995. The increase in 1995 was primarily related to increases in accounts receivable and prepaid and other assets, as well as decreases in accounts payable and accrued liabilities. The current ratio remained relatively constant at 1.2-to-1 at March 31, 1995, December 31, 1994, and December 31, 1993. The ratio of noncurrent debt-to-capital was 21% at March 31, 1995, 19% at December 31, 1994 and 13% at December 31, 1993, indicating EDS currently meets most of its capital needs internally. EDS' capital at March 31, 1995 consisted of $1,198.4 million in noncurrent notes payable and $4,414.5 million in stockholder's equity (General Motors' equity in its indirectly wholly owned subsidiary, EDS). Total debt was $1,456.6 million at March 31, 1995, which consisted entirely of notes payable. This compares with total debt of $1,224.4 million at December 31, 1994 and $695.5 million at December 31, 1993. The long-term debt in 1994 and 1993 also consisted entirely of notes payable. Debt, which consists largely of commercial paper, has increased primarily to manage working capital needs and due to the financing of non-U.S. acquisitions and the purchase of assets to support significant long-term contracts. At March 31, 1995, EDS had unused, uncommitted short-term lines of credit totaling $495.8 million and unused committed lines of credit of $1,800.0 million. The total debt-to-capital ratio (which includes current debt as a component of capital) was 24.8% at March 31, 1995, compared with 22.4% at December 31, 1994 and 16.1% at December 31, 1993. On April 4, 1995, Standard & Poor's Corporation ("S&P") raised its commercial paper rating of EDS to A-1 from A-2, second highest within the four investment grade ratings available from S&P for commercial 12 15 paper, indicating a strong degree of safety regarding timely payments, and removed the rating from CreditWatch, where it was placed on February 6, 1995. A security rating is not a recommendation to buy, sell, or hold securities and may be subject to revision or withdrawal at any time by the assigning rating organization. Each rating should be evaluated independently of any other rating. EDS continues to maintain a strong cash position, holding cash and cash equivalents of $521.7 million at March 31, 1995. Cash flows from operations for the three months ended March 31, 1995, were $93.1 million, down $275.2 million from the same period for 1994 due primarily to changes in working capital items. For the year ended December 31, 1994, cash flows from operations were $1,490.8 million, up $95.8 million from 1993. Net cash used in investing activities was $373.9 million for the first quarter of 1995 compared to $291.9 million for the first quarter of 1994. Additionally, net cash used in investing activities was $1,485.6 million for the year ended December 31, 1994, compared with $1,049.7 million for 1993. These increases were primarily due to purchases of property and equipment, as well as increased participation in business combinations and other investments to support business growth. EDS made cash payments in connection with 1994 acquisitions of $186.6 million, acquiring assets with a fair value of $427.8 million, issuing debt of $94.9 million and assuming liabilities of $146.3 million. During the first quarter of 1995, EDS made net additions to property and equipment of $263.8 million and net additions to goodwill and other intangibles of $5.0 million. EDS made net additions to software and certain other intangibles of $96.7 million in 1994 and net additions to land held for development of $3 million. Net cash provided by financing activities was $191.2 million for the first quarter of 1995 compared to $97.4 million for the first quarter of 1994, an increase of $93.8 million due to the issuance of notes payable. For the year ended December 31, 1994, net cash provided by financing activities was $194.1 million compared with cash used in financing activities of $370.2 million in 1993. EDS paid cash dividends to GM totaling $62.6 million in the first quarter of 1995 and $231.1 million during the year ended December 31, 1994. EDS' capital expenditures for the calendar year 1995 are currently projected at approximately $1.2 billion to $1.5 billion. EDS intends to finance these investments through a combination of internally generated funds and outside sources. The competitive environment and changing market forces are increasing the capital intensity of EDS' business. Increasing amounts of capital will be required by EDS in order to make investments in acquisitions, joint ventures and strategic alliances in other parts of the information industry and in new product development. See "Business of EDS -- Competition." In addition, information technology customer contracts frequently now require front-end investments in computers and telecommunications equipment, software, and other property, plant and equipment. For these reasons, EDS' ability to continue to access the capital markets on an efficient basis will become increasingly important to EDS' ability to compete effectively. PRIVATE PLACEMENT OF NOTES In the second quarter of 1995, EDS issued $350,000,000 principal amount of its 6.850% Notes Due May 15, 2000 and $300,000,000 principal amount of its 7.125% Notes Due May 15, 2005 in a private placement to investment banks for resale only to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The proceeds of such issuance will be used for general corporate purposes, including repayment of outstanding commercial paper borrowings and funding of acquisitions. Such notes have not been and will not be registered under the Securities Act or any other applicable securities laws and may not be offered, sold or otherwise transferred unless registered pursuant to, or exempt from registration under, the Securities Act and other applicable securities laws. 13 16 BUSINESS OF EDS SERVICES EDS is a world leader in applying information technology, with over 30 years of experience in using advanced computer and communications technologies to meet the business needs of its clients. EDS offers its clients a continuum of services worldwide, including the management of computers, networks, information systems, information processing facilities, business operations and related personnel, providing to its clients advantages in cost-effectiveness, speed of implementation and state-of-the-art technology. In delivering this continuum of services, EDS generally performs one or more of five basic functions: - Management Consulting Services. EDS Management Consulting Services ("MCS") delivers business, industry and technology advisory and information services, including business process reengineering, strategic planning, change management, resource management and technology strategy and planning. - Creation of IT Systems -- Systems Development. EDS designs, develops and implements information systems or adds features that may increase the capabilities of existing systems. - Assembly of IT Platforms -- Systems Integration. EDS selects technologies and assembles integrated systems that may include software, hardware, telecommunications and systems support and maintenance. - Management of IT Operations -- Systems Management. EDS assumes and manages the operation of part or all of a client's IT operations, which may include equipment, personnel, information processing systems and communications networks. - Management of Business Operations -- Process Management. EDS manages an entire business function within the client's enterprise, which may include IT operations as well as other activities such as remittance processing, marketing, sales, customer service and training. EDS is able to leverage its extensive technical infrastructure and other numerous resources to offer IT services at clients' sites or through one of its 14 information processing centers worldwide. EDS' digital telecommunications network, EDSNET(R), is capable of worldwide transmission of clients' voice, digital and video data using the integrated fiber optic, microwave and satellite facilities of what EDS believes is one of the world's largest digital telecommunications networks, excluding government networks and common carriers. EDS constantly examines and tests computer hardware and software offered by suppliers worldwide as part of its efforts to assess and use in its operations, and offer to EDS' clients, the technological changes that continuously occur within the computer industry, including developments in distributed computing and client/server architecture. EDS has developed computer-aided software engineering ("CASE") tools to assist in generating new software to keep pace with rapidly evolving strategies involving hardware technologies and information processing theories and facilitate the rapid deployment of its products and services to the market. BUSINESS AREAS EDS conducts its sales, marketing and service activities on a global basis through business units that focus either geographically or vertically along the lines of specified industries. By combining the skills of an industry-focused business unit with a geographic business unit, EDS is able to respond to a client's requirements with people who are knowledgeable about a specific industry and the client's business. Additionally, certain services provided by EDS to all clients are concentrated in specific service units. These service units, called Centers of Service, provide electronic transfer, microcomputer technology, computer assisted design, manufacturing and engineering ("CAD," "CAM" and "CAE") and other services to EDS' clients in coordination with the business units having primary responsibility for a particular client. The industry areas to which EDS provides IT services can be broadly categorized as follows: - Manufacturing -- EDS assists numerous manufacturing companies in their worldwide operations and in their implementations of global competitive strategies, providing them with advanced capabilities in 14 17 information processing, information management and telecommunications. EDS offers manufacturing clients expertise in electronic data interchange, engineering information systems, integrated document processing, inventory control, materials handling, process control, synchronous manufacturing, artificial intelligence techniques and capabilities in CAD, CAM and CAE on an integrated basis. - Government -- EDS performs IT services for national, state and local governments in the U.S. and around the world. At the national level, EDS targets its services at both civil and defense organizations with complex, large scale information needs. Within state and local governments, key markets of EDS include health care, human services, transportation, public safety and administration and finance. EDS' core competency for managing complexity and its proven ability to leverage process performance improvement techniques and technologies from the private sector into the public sector has allowed EDS to expand its government presence worldwide. - Financial Services -- EDS offers a full range of IT services to the global financial services industry. The industry's expansion of products and services has led to an unprecedented dependence on IT and its integration with a financial institution's business processes and strategy. Through strategic alliances and acquisitions, EDS has positioned itself to support a wide range of industry segments, including commercial banks, consumer finance companies, investment banks, regional and community banks, credit unions, brokerage and securities firms, thrifts and mortgage lenders. EDS' services are augmented by a full range of industry-specific products and services, including data processing, automated teller machines ("ATMs"), debit and credit card services, voice and teller automation, item and remittance processing, cross-border funds transfer and currency exchange, consumer asset management, customer service technology, remote/home banking, and business-process improvement. - Communications -- EDS offers a full spectrum of IT services to the global communications market in addition to industry-specific technology platforms tailored to the information needs of each industry segment. These services include clearinghouse, roaming and billing services and systems for the wireless industry, information management and billing systems for the cable television industry, and operational support systems and billing systems for the telecommunications industry. EDS also offers multimedia-based services designed to satisfy the predicted demand of emerging full service network operators within the interactive multimedia segment. - Insurance -- EDS offers IT services to companies in the insurance industry, providing the management of information required in this highly regulated industry in a rapidly-changing, record-intensive environment. EDS' services go beyond traditional outsourcing and include solution sets to improve specific business areas, including sales and marketing, customer service and claims management. - Travel and Transportation -- EDS' travel and transportation group offers IT services to customers worldwide in the air transportation, freight, computer reservation system, vehicle rental, travel agency, cruise line and hospitality industries. EDS' IT services to these industries are designed to meet customer requirements for reducing operating costs, improving quality and increasing responsiveness to rapidly changing market conditions. - Energy -- EDS provides IT services on a global basis to companies in the petroleum, natural gas, chemical, pharmaceutical, mining and utility industries. EDS' services in the energy industry are intended to improve inventory control, reduce time to market, lower product cost, improve rate case approval, improve capacity planning and increase efficiency in regulatory and environmental compliance. In certain of these markets, EDS provides services, such as ATM and travel related services, directly to individual consumers. From time to time EDS has made acquisitions and entered into strategic alliances in an effort to obtain a competitive advantage or a new or expanded presence in targeted geographic or service markets. EDS believes that a convergence of information industries, including computing, communications and media/entertainment, is occurring and will continue. As a result, acquisitions, joint ventures and strategic alliances are expected to be increasingly important to EDS' ability to compete effectively. See "Competition." 15 18 REVENUES EDS receives fees for all aspects of its continuum of services. The fees are generally paid pursuant to predetermined rates set forth in contracts. Contracts with respect to non-General Motors business generally have terms of one to 10 years. A substantial majority of the services EDS provides for General Motors are covered by fixed-price, multi-year agreements. See "Services for General Motors." EDS' total revenues grew from $3.4 billion in 1985 (the first full year following General Motors' acquisition of EDS) to $10.05 billion in 1994. Although revenues attributable to General Motors have increased from 1985 to 1994, they have decreased as a percentage of total revenues (including interest and other income) from approximately 70% in 1985 to approximately 35% in 1994 as a result of the rapid revenue growth of EDS' base (non-General Motors) business. As a percentage of total revenues (including interest and other income), revenues attributable to EDS' base (non-General Motors) business have increased from approximately 30% in 1985 to approximately 65% in 1994. The following table sets forth the percentage of operating revenues for the year ended December 31, 1994 derived by EDS from the identified principal industry areas. Operating revenues equal total revenues less interest and other income.
PERCENTAGE OF OPERATING REVENUES FOR THE FISCAL YEAR INDUSTRY AREA ENDED DECEMBER 31, 1994 ---------------------------------------------------- ----------------------- Manufacturing....................................... 47% Government.......................................... 15 Financial Services.................................. 13 Communications...................................... 7 Insurance........................................... 5 Travel and Transportation........................... 4 Energy.............................................. 4 Other............................................... 5 --- Total............................................. 100% =====
Other than General Motors, no one client accounted for more than 5% of EDS' total revenues for 1994. SERVICES FOR GENERAL MOTORS Approximately 35% of EDS' total revenues in 1994 was attributable to General Motors and its subsidiaries. EDS is responsible for substantially all of the worldwide data processing and telecommunications activities of General Motors and its subsidiaries, including integrated information systems for payroll, health and benefits, office automation, communications and plant automation functions. General Motors and EDS have entered into a master agreement providing a framework for the negotiation of service agreements, development agreements and other agreements between their respective organizations. Within this framework, General Motors, with certain exceptions, has committed to purchase substantially all of its data processing and telecommunications requirements through EDS. Contracts with respect to General Motors business may be terminated by either party in the event of a sale by General Motors of all or substantially all of the assets or stock of EDS, other than to an affiliate of General Motors. See "General Motors and EDS -- Relationship Between General Motors and EDS." The pricing policy between EDS and General Motors contemplates three alternative pricing methods. Under the first alternative, General Motors and EDS operating units negotiate and utilize fixed-price contracts where the scope of the work can be precisely defined. A substantial majority of the services that EDS provides for General Motors are covered by multi-year agreements of this type. The second alternative permits General Motors operating units to use a cost-plus method of pricing for EDS' services. Under the third alternative, commercially available products and services are provided to General Motors at uniform, competitive rates. 16 19 COMPETITION EDS experiences competition in the IT industry and in the broader information industry, which includes the computing, communications and media/entertainment industries. Today, EDS' principal competitors in the IT services industry include IBM, Andersen Consulting, Computer Sciences Corporation and AT&T. EDS has historically faced competition principally from other companies providing information technology systems and service, as well as from current or potential customers that choose to develop, utilize for themselves and offer to others their own business information systems or services. As the markets for IT services have grown and as the services demanded by customers have expanded and increased in complexity, EDS' competitors have expanded from niche-oriented, geographically-focused companies to include broader-based, global competitors. EDS believes that a long-term trend of convergence is occurring in the computing, communications and media/entertainment sectors of the information industry. As this trend continues, companies historically involved in the communications and media/entertainment sectors of the information industry, as well as companies principally involved in other portions of the IT industry, will increasingly seek to compete in the businesses in which EDS has traditionally operated. For example, AT&T now offers services that combine computing with communications. Similarly, EDS' strategy includes continuing to leverage its expertise into other parts of the information industry. The ability of EDS to remain competitive will depend in part upon its continued ability to finance and acquire the resources necessary to offer broad-based services and products on an efficient basis. 17 20 CLASS E COMMON STOCK PRICE RANGE AND DIVIDENDS The table below shows the range of reported per share sale prices on the New York Stock Exchange Composite Tape for the Class E Common Stock for the periods indicated, and the dividends paid per share on the Class E Common Stock in such periods. A recent per share last reported sale price, as reported on the New York Stock Exchange, is set forth on the cover page of this Prospectus.
CALENDAR YEAR HIGH LOW DIVIDENDS PAID ------------- ------ ------ -------------- 1993 First Quarter............................... $35.88 $27.63 $ 0.10 Second Quarter.............................. 33.38 28.25 0.10 Third Quarter............................... 32.50 26.00 0.10 Fourth Quarter.............................. 31.13 26.50 0.10 1994 First Quarter............................... $36.88 $27.50 $ 0.12 Second Quarter.............................. 38.00 32.88 0.12 Third Quarter............................... 38.50 33.00 0.12 Fourth Quarter.............................. 39.50 34.75 0.12 1995 First Quarter............................... $41.38 $36.88 $ 0.13 Second Quarter (through May 11, 1995)....... 43.88 38.38 --
18 21 CLASS E COMMON STOCK INTRODUCTION Class E Common Stock is one of three classes of General Motors common stock. See "Description of Capital Stock -- Common Stock." Holders of Class E Common Stock have no direct rights in the equity or assets of EDS, but rather have rights in the equity and assets of General Motors (which includes 100% of the stock of EDS). Class E Common Stock is designed to provide holders with financial returns based on the performance of EDS. The intent of this design objective is achieved through (i) allocations under the General Motors Certificate of Incorporation of the earnings of EDS between amounts available for the payment of dividends on Class E Common Stock and amounts available for the payment of dividends on General Motors' $1 2/3 Par Value Common Stock and (ii) the announced current dividend practices and policies of the General Motors Board of Directors, all as more fully described herein. General Motors, not EDS, is the issuer of Class E Common Stock. The General Motors Board of Directors is, of course, free to change dividend practices and policies with respect to Class E Common Stock, or any other class of General Motors common stock, at any time. See "Description of Capital Stock -- Common Stock -- Dividends." DIVIDEND POLICY Subject to the rights of the holders of General Motors Preferred Stock (if any) and General Motors Preference Stock, under the General Motors Certificate of Incorporation, dividends on Class E Common Stock may be declared and paid out of the assets of General Motors only to the extent of the sum of (i) the paid in surplus of General Motors attributable to the Class E Common Stock plus (ii) an allocated portion of the earnings, determined as described herein, of EDS earned after General Motors' acquisition of EDS. The portion of EDS' earnings that is included in the amount available for the payment of dividends on Class E Common Stock (which amount is also used to calculate earnings per share of Class E Common Stock) is determined by a fraction, the numerator of which is a number equal to the weighted average number of shares of Class E Common Stock outstanding and the denominator of which was 482.4 million for the first quarter of 1995; provided, that such fraction shall never be greater than one. The amount so allocated is referred to in the General Motors Certificate of Incorporation as the "Available Separate Consolidated Net Income" of EDS. For purposes of determining the approximate earnings per share attributable to Class E Common Stock for financial reporting purposes, an investor may divide the quarterly EDS earnings allocated to Class E Common Stock (the "Available Separate Consolidated Net Income of EDS") by the weighted average number of shares of Class E Common Stock outstanding during such quarter, which is the numerator of the fraction described above. Approximately the same mathematical result may be obtained by dividing the quarterly EDS earnings used for computation of Available Separate Consolidated Net Income (i.e., net income) by the denominator of the fraction described above. The denominator is sometimes referred to herein as the "Class E Dividend Base." Issuance of the shares of Class E Common Stock contributed to the Hourly Plan as described above increased the number of outstanding shares of Class E Common Stock by the number of shares so contributed, and thus increased the numerator of the fraction used in determining the Available Separate Consolidated Net Income of EDS. For the first quarter of 1995, the numerator of such fraction was 300.0 million, which is a weighted average giving effect to the contribution of 173,163,187 shares of Class E Common Stock to the Hourly Plan on March 13, 1995. On March 31, 1995, there were 438,515,650 shares of Class E Common Stock outstanding. While increasing the numerator of the fraction used in determining the Available Separate Consolidated Net Income of EDS, the contribution of shares of Class E Common Stock to the Hourly Plan had no effect on the denominator of such fraction. Thus, the issuance of the shares of Class E Common Stock contributed to the Hourly Plan was not dilutive of the earnings per share attributable to Class E Common Stock for financial reporting purposes, but rather reduced the portion of the earnings of EDS allocated to GM's $1 2/3 Par Value Common Stock. The sale of the shares hereunder by the Selling Stockholders will not increase the number of outstanding shares of Class E Common Stock and thus will have no effect on the numerator of such fraction. Such sale will also have no effect on the Class E Dividend Base and therefore there will be no effect on the fraction described above. 19 22 General Motors' Series C Convertible Preference Stock is convertible into shares of Class E Common Stock. The issuance of Series C Convertible Preference Stock was not, and any conversion thereof into shares of Class E Common Stock will not be, dilutive of earnings attributable to Class E Common Stock for financial reporting purposes, as such shares affect the numerator but not the denominator of the fraction used in determining Available Separate Consolidated Net Income of EDS. The denominator used in determining the Available Separate Consolidated Net Income of EDS is adjusted as deemed appropriate by the GM Board of Directors to reflect subdivisions or combinations of the Class E Common Stock and to reflect certain transfers of capital to or from EDS. The Board of Directors' discretion to make such adjustments is limited by criteria set forth in the General Motors Certificate of Incorporation. In this regard, the Board of Directors has generally caused the denominator to decrease as shares of Class E Common Stock are purchased by EDS and to increase as shares of Class E Common Stock are used, at EDS expense, for EDS employee benefit plans or acquisitions. See "Description of Capital Stock -- Common Stock -- Dividends." Dividend policy is one of the matters reviewed by the Capital Stock Committee of the General Motors Board of Directors. See "General Motors and EDS - -- Relationship Between General Motors and EDS" and "Considerations Relating to Multi-Class Common Stock Capital Structure." The current dividend policy of the General Motors Board of Directors is to pay quarterly dividends on Class E Common Stock, when, as and if declared by the Board of Directors, at an annual rate equal to approximately 30% of the Available Separate Consolidated Net Income of EDS for the prior year. Under the current dividend policy, the quarterly dividend on the Class E Common Stock for 1994 was $0.12 per share. In February 1995, the Board of Directors increased the quarterly dividend on Class E Common Stock from $0.12 per share to $0.13 per share. Under Delaware law and the General Motors Certificate of Incorporation, the General Motors Board of Directors is not required to declare dividends on any class of General Motors common stock, including Class E Common Stock. If and to the extent the General Motors Board of Directors chooses to declare dividends on any or all of the classes of its common stock, neither Delaware law nor the General Motors Certificate of Incorporation requires that there be any proportionate or other fixed relationship between the amount of dividends declared with respect to such different classes of common stock. The General Motors Board of Directors reserves the right to reconsider from time to time its practices and policies regarding dividends on all classes of GM common stock and to increase or decrease the dividends paid on GM common stocks on the basis of General Motors' consolidated financial position, including liquidity, and other factors, including, with regard to Class E Common Stock, the earnings and consolidated financial position of EDS. Under the current dividend practices and policies of the General Motors Board of Directors, dividends on Class E Common Stock are not materially affected by developments involving the performance (operations, liquidity or financial condition) of General Motors (excluding EDS). See "Description of Capital Stock -- Common Stock -- Dividends." Information concerning General Motors and its consolidated financial performance, including Management's Discussion and Analysis, may be found in the documents incorporated herein by reference, including the GM 1994 Form 10-K and the GM First Quarter 1995 Form 10-Q. There is no fixed relationship, on a per share or aggregate basis, between the cash dividends that may be paid by General Motors to holders of Class E Common Stock and cash dividends or other amounts that may be paid by EDS to General Motors. However, it has been the practice of the Board of Directors of EDS to pay quarterly cash dividends on the outstanding EDS common stock in a per share amount equal to the quarterly dividends per share paid by General Motors on Class E Common Stock. The number of shares of common stock of EDS issued and outstanding, all of which shares are owned by General Motors through a wholly owned subsidiary, is adjusted from time to time so as to remain equal to the denominator of the fraction described above. EDS makes no payments on EDS common stock with respect to dividend payments by General Motors on shares of General Motors Series C Convertible Preference Stock (which are convertible pursuant to their terms into shares of Class E Common Stock). See "General Motors and EDS -- Relationship Between General Motors and EDS." 20 23 VOTING RIGHTS Under the General Motors Certificate of Incorporation, holders of Class E Common Stock may cast one-eighth of a vote per share on all matters submitted to General Motors stockholders for a vote, while holders of $1 2/3 Par Value Common Stock may cast one vote per share and holders of General Motors Class H Common Stock may cast one-half of a vote per share. Holders of all three classes of common stock vote together on all matters, except that separate class votes are required for certain amendments to the General Motors Certificate of Incorporation. See "Description of Capital Stock -- Common Stock -- Voting." LIQUIDATION RIGHTS In the event of the liquidation, dissolution or winding up of the business of General Motors, whether voluntary or involuntary, the General Motors Certificate of Incorporation provides that, after the holders of General Motors Preferred Stock (if any) and Preference Stock receive the full preferential amounts to which they are entitled, holders of Class E Common Stock and the other two classes of General Motors common stock will receive the assets remaining for distribution to the General Motors stockholders on a per share basis in proportion to the respective per share liquidation units of such classes and will have no direct claim against any particular assets of General Motors or any of its subsidiaries. Subject to adjustment as described below, each share of Class E Common Stock, $1 2/3 Par Value Common Stock and Class H Common Stock would currently be entitled to liquidation units of approximately one-eighth (0.125), one (1.0) and one-half (0.50), respectively. Holders of Class E Common Stock have no direct rights in the equity or assets of EDS, but rather have rights in the equity and assets of General Motors (which include 100% of the stock of EDS). See "Description of Capital Stock -- Common Stock -- Liquidation Rights." RECAPITALIZATION Under the General Motors Certificate of Incorporation, all outstanding shares of Class E Common Stock may be recapitalized as shares of $1 2/3 Par Value Common Stock (i) at any time, in the sole discretion of the General Motors Board of Directors, subject to certain conditions based on the amount of dividends paid on Class E Common Stock during the five full fiscal years prior to the proposed recapitalization, or (ii) automatically, if at any time General Motors disposes of substantially all of the business of EDS. In the event of such a recapitalization, each holder of Class E Common Stock would receive shares of $1 2/3 Par Value Common Stock having a market value, as of the valuation date provided for in the General Motors Certificate of Incorporation, equal to 120% of the market value of such holder's Class E Common Stock on such valuation date. Based on the dividends paid on Class E Common Stock in 1990 through 1994, the conditions described in clause (i) above would be satisfied during 1995. See "General Motors and EDS -- Relationship Between General Motors and EDS" and "Description of Capital Stock -- Common Stock -- Recapitalization by Exchange of Stock." SUBDIVISION OR COMBINATION If General Motors subdivides (by stock split or otherwise) or combines (by reverse stock split or otherwise) the outstanding shares of the $1 2/3 Par Value Common Stock or the Class E Common Stock, the voting and liquidation rights of shares of Class E Common Stock relative to $1 2/3 Par Value Common Stock will be appropriately adjusted. In the event of the issuance of shares of Class E Common Stock as a dividend on shares of $1 2/3 Par Value Common Stock, the liquidation rights of Class E Common Stock would be adjusted so that the relative aggregate liquidation rights to each stockholder would not be changed as a result of such dividend. CONSIDERATIONS RELATING TO MULTI-CLASS COMMON STOCK CAPITAL STRUCTURE Class E Common Stock is one of three classes of General Motors common stock. The General Motors Certificate of Incorporation restricts the power of the General Motors Board of Directors to declare and pay dividends on any one of the three classes of common stock to certain defined amounts which are attributable to each separate class of common stock and based on the legally available retained earnings of General 21 24 Motors. For dividend purposes, this restriction serves to preserve the interest in retained earnings of holders of each class of GM common stock in relation to the interests therein of holders of the other two classes. However, this restriction does not result in a physical segregation of the assets of General Motors, Hughes or EDS, nor does it result in the establishment of separate accounts or dividend or liquidation preferences with respect to such assets for the benefit of the holders of any of the three separate classes of General Motors common stock. Holders of Class E Common Stock and Class H Common Stock have no direct rights in the equity or assets of EDS or Hughes, but rather, together with holders of $1 2/3 Par Value Common Stock, have certain liquidation rights in the equity and assets of General Motors (which includes 100% of the stock of both EDS and Hughes). The existence of multiple classes of common stock with separate dividend rights as provided for in the General Motors Certificate of Incorporation can give rise to potential divergences among the interests of the holders of each of the separate classes of General Motors common stock with respect to various intercompany transactions and other matters. Because General Motors is incorporated under the Delaware General Corporation Law, the laws of Delaware govern the duties of the General Motors Board of Directors with respect to such divergences. Under Delaware law, the General Motors Board of Directors owes an equal fiduciary duty to all holders of General Motors common stock and must act with due care and on an informed basis in the best interest of General Motors and all such stockholders, regardless of class. In this regard, the General Motors Board of Directors, in the discharge of its fiduciary duties, takes care, principally through its Capital Stock Committee (comprised entirely of independent directors of General Motors), to oversee the policies, programs and practices of General Motors which may impact the potentially divergent interests of the three classes of General Motors common stock. The By-Laws of General Motors, in defining the role of the Capital Stock Committee, provide that such Committee shall oversee those matters in which the three classes of stockholders may have divergent interests, particularly as they relate to: (a) the business and financial relationships between General Motors or any of its units with EDS, General Motors or any of its units with Hughes, and between EDS and Hughes; (b) dividends in respect of, disclosures to stockholders and the public concerning, and transactions by GM or any of its subsidiaries in, shares of Class E Common Stock or Class H Common Stock; and (c) any matters arising in connection therewith, all to the extent the Committee may deem appropriate, and to recommend such changes in such policies, programs and practices as the Committee may deem appropriate. In performing this function, the Capital Stock Committee's role is not to make decisions concerning matters referred to its attention, but rather to oversee the process by which decisions concerning such matters are made. The Committee does this with a view towards, among other things, assuring a process of fair dealing among GM, EDS and Hughes as well as fair consideration of the interests of all GM stockholders in the resolution of such matters. 22 25 DESCRIPTION OF CAPITAL STOCK The authorized capital stock of General Motors, which may be issued upon resolution of the Board of Directors, consists of 6,000,000 shares of Preferred Stock, without par value, issuable in series; 100,000,000 shares of Preference Stock, $0.10 par value, issuable in series; 2,000,000,000 shares of $1 2/3 Par Value Common Stock; 1,000,000,000 shares of Class E Common Stock, $0.10 par value; and 600,000,000 shares of Class H Common Stock, $0.10 par value. The $1 2/3 Par Value Common Stock, the Class E Common Stock and the Class H Common Stock are referred to collectively as the "Common Stock." On March 31, 1995, the following shares of capital stock of General Motors were outstanding: 11,075,000 shares of Series B 9 1/8% Preference Stock ("Series B Preference Shares"), represented by 44,300,000 Depositary Shares; 3,188,050 shares of Series C Convertible Preference Stock ("Series C Preference Shares"), represented by 31,880,498 Depositary Shares; 3,925,000 shares of Series D 7.92% Preference Stock ("Series D Preference Shares"), represented by 15,700,000 Depositary Shares; 5,750,000 shares of Series G 9.12% Preference Stock ("Series G Preference Shares"), represented by 23,000,000 Depositary Shares; 747,449,538 shares of $1 2/3 Par Value Common Stock; 438,515,650 shares of Class E Common Stock; and 95,093,416 shares of Class H Common Stock. In addition, 44,881,366 shares of Class E Common Stock have been reserved for issuance upon conversion of currently outstanding Series C Preference Shares. On May 23, 1995, General Motors concluded a tender offer for any and all of the outstanding Series B Preference Shares, Series D Preference Shares and Series G Preference Shares. See "Selected Financial Data of General Motors and EDS -- General Motors." PREFERRED STOCK On May 1, 1993, General Motors exercised its option to redeem all outstanding shares of Preferred Stock -- $5.00 Series for $120.00 per share plus accrued dividends and to redeem all outstanding shares of Preferred Stock -- $3.75 Series for $100.00 per share plus accrued dividends. Consequently, there are currently no outstanding shares of Preferred Stock and the General Motors Board of Directors has no current intent to issue any Preferred Stock. The General Motors Certificate of Incorporation authorizes the Board of Directors to issue shares of Preferred Stock from time to time in distinctly designated series, and each series of Preferred Stock would rank equally and be identical in all respects to all other series except as to the dividend rate and redemption price. Preferred Stock would rank senior to Preference Stock and Common Stock with respect to payment of dividends and distributions in liquidation. If any shares of Preferred Stock were issued, no cash dividends could be paid on any class of Common Stock or any series of Preference Stock if current assets of General Motors in excess of its current liabilities were less than $75 per share of outstanding Preferred Stock. As noted above, the Board of Directors has no current intent to issue Preferred Stock, but if any shares were issued, they would not be entitled to vote except that (i) they would vote together with the holders of Common Stock on the disposition of General Motors' assets as an entirety; (ii) if General Motors has defaulted in paying dividends on Preferred Stock for six months, the holders of Preferred Stock, voting as a class, would be entitled to elect one-quarter of the directors; and (iii) certain mortgaging or pledging of, or the placing of certain liens upon, General Motors' property would require the approval of the holders of three-fourths of any outstanding Preferred Stock. PREFERENCE STOCK Preference Stock would rank junior to Preferred Stock, if any were outstanding, and ranks senior to Common Stock with respect to payment of dividends and distributions in liquidation. Subject to these limitations, the Board of Directors may from time to time authorize the issuance of shares of Preference Stock in such series, and having such dividend and liquidation preferences, voting rights, redemption prices, conversion rights, and other terms and provisions as may be contained in the resolutions of the Board of Directors providing for their issuance. 23 26 General Motors currently has outstanding four series of Preference Stock. Interests in each of such series of Preference Stock are held by the public in the form of depositary shares, each of which represents a fractional interest in one share of such Preference Stock. The fractional interest which a single depositary share represents in relation to outstanding shares of the corresponding series of Preference Stock is as follows: each Series B Depositary Share, $25.00 per share stated value, represents a one-fourth (1/4) interest in one Series B Preference Share, $100.00 per share stated value; each Series C Depositary Share, $50.00 per share stated value, represents a one-tenth (1/10) interest in one Series C Preference Share, $500.00 per share stated value; each Series D Depositary Share, $25.00 per share stated value, represents a one-fourth (1/4) interest in one Series D Preference Share, $100.00 per share stated value; and each Series G Depositary Share, $25.00 per share stated value, represents a one-fourth (1/4) interest in one Series G Preference Share, $100.00 per share stated value. The following discussion of each outstanding series of Preference Stock is based on shares of Preference Stock rather than the corresponding depositary shares. SERIES B 9 1/8% PREFERENCE STOCK Dividends. Subject to the rights of the holders of Preferred Stock, if any were outstanding, dividends will be paid on the outstanding Series B Preference Shares when, as and if declared by the Board of Directors out of General Motors' assets legally available therefor. Dividends may be subject to restrictions contained in any future debt agreements of General Motors and to limitations contained in future series or classes of Preferred Stock or Preference Stock. Holders of Series B Preference Shares will be entitled to receive cumulative cash dividends, at the annual rate of 9 1/8% of the per share stated value (equivalent to $9.125 per annum per Series B Preference Share), payable quarterly for each of the quarters ending March, June, September and December of each year, payable in arrears on the first day that is not a legal holiday of each succeeding May, August, November and February, respectively. Each such dividend will be paid to holders of record on each record date, which shall be not less than 10 nor more than 50 days preceding the payment date, as fixed by the Board of Directors. Dividends on the Series B Preference Shares, whether or not declared, will be cumulative from the date of original issue of the Series B Preference Shares. The amount of dividends payable for any period shorter than a full quarterly dividend period will be determined on the basis of a 360-day year consisting of twelve 30-day months. Accrued but unpaid dividends will not bear interest. Preferential dividends will accrue whether or not General Motors has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Dividends accumulate to the extent they are not paid on the dividend payment date following the calendar quarter for which they accrue. Accumulated preferential dividends will not bear interest. Dividends will not be paid on any class of Common Stock or other stock ranking junior to the Series B Preference Shares (other than a dividend payable in shares of any class of Common Stock) and General Motors will not redeem, repurchase or otherwise acquire any shares of Common Stock or other stock ranking junior to the Series B Preference Shares (other than a redemption or purchase of shares of Common Stock made in connection with employee incentive or benefit plans of General Motors or its subsidiaries), unless the full preferential dividends accumulated on all outstanding Series B Preference Shares have been paid. Dividends will not be declared on any series of Preference Stock for any prior dividend payment period unless there shall have been declared on all outstanding shares of Preference Stock ranking on a parity with such series, in respect of all dividend payment periods of such parity stock terminating with or before such prior dividend payment period, like proportionate dividends determined ratably in proportion to the respective preferential dividends accumulated to date on such series and the dividends accumulated on all such outstanding parity Preference Stock. Conversion. The Series B Preference Shares are not convertible into shares of any other class of capital stock of General Motors. Redemption. The Series B Preference Shares may not be redeemed prior to January 1, 1999. On or after January 1, 1999, General Motors may, at its option, on not less than 35 nor more than 60 days' notice, redeem the Series B Preference Shares, as a whole or in part, at any time or from time to time, for cash in an amount 24 27 equal to $100 per Series B Preference Share, plus an amount equal to all dividends accrued and unpaid thereon to the date fixed for redemption. If less than all outstanding Series B Preference Shares are to be redeemed, shares to be redeemed will be selected by General Motors by lot or pro rata or by any other method determined by General Motors in its sole discretion to be equitable. Holders of Series B Preference Shares have no right to require redemption of such shares. Liquidation Preference. In the event of the liquidation, dissolution or winding up of the business of General Motors, whether voluntary or involuntary, the holders of Series B Preference Shares will be entitled to the liquidation preference described below, after the holders of Preferred Stock, if any were outstanding, receive the full preferential amounts to which they are entitled and before any distribution to holders of Common Stock. The holders of the Series B Preference Shares will be entitled to receive for each share $100 plus an amount equal to all dividends accrued and unpaid thereon to the date of final distribution to such holders (subject to the right of the holders of record of any Series B Preference Share on a record date for payment of dividends thereon to receive a dividend payable on the date of final distribution), but such holders shall not be entitled to any further payment. If there are insufficient assets to permit full payment to holders of the Series B Preference Shares and the holders of any other series of Preference Stock which is on parity with the Series B Preference Shares as to liquidation rights, then the holders of the Series B Preference Shares and such other shares shall be paid ratably in proportion to the full distributable amounts to which holders of all such parity shares are respectively entitled upon such dissolution, liquidation or winding up. Voting. The Series B Preference Shares do not entitle holders thereof to voting rights, except (i) with respect to any amendment or alteration of any provision of the General Motors Certificate of Incorporation which would adversely affect the powers, preferences or special rights of the Series B Preference Shares, which requires the prior approval of the holders of at least two-thirds of the outstanding Series B Preference Shares, and (ii) in the event General Motors fails to pay accumulated preferential dividends on the Series B Preference Shares in full for any six quarterly dividend payment periods, whether or not consecutive, and all such dividends remain unpaid (a "Preferential Dividend Default"), or as required by law. In the event of a Preferential Dividend Default, the number of directors of General Motors will be increased by two and the holders of the outstanding Series B Preference Shares, voting together as a class with all other series of Preference Stock ranking junior to or on a parity with the Series B Preference Shares and then entitled to vote on the election of such directors, will be entitled to elect such two additional directors until the full dividends accumulated on all outstanding Series B Preference Shares have been paid. SERIES C CONVERTIBLE PREFERENCE STOCK Dividends. Subject to the rights of the holders of Preferred Stock, if any were outstanding, dividends will be paid on the outstanding Series C Preference Shares when, as and if declared by the Board of Directors out of General Motors' assets legally available therefor. Dividends may be subject to restrictions contained in any future debt agreements of General Motors and to limitations contained in future series or classes of Preferred Stock or Preference Stock. Holders of Series C Preference Shares will be entitled to receive cumulative cash dividends from the date of original issue, accruing at the annual rate of $32.50 per share, and no more, payable quarterly for each of the quarters ending March, June, September and December of each year, payable in arrears on the first day that is not a legal holiday of each succeeding May, August, November and February, respectively. Each such dividend will be paid to holders of record on each record date, which shall be not less than 10 nor more than 50 days preceding the payment date, as fixed by the Board of Directors. Dividends on the Series C Preference Shares, whether or not declared, will be cumulative from the date of original issuance thereof. The amount of dividends payable for any period shorter than a full quarterly dividend period will be determined on the basis of a 360-day year consisting of twelve 30-day months. Accrued but unpaid dividends will not bear interest. Preferential dividends will accrue whether or not General Motors has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Dividends accumulate to the extent they are not paid on the dividend payment date following the calendar quarter for which they accrue. Accumulated preferential dividends will not bear interest. Dividends will not be 25 28 paid on any class of Common Stock or other stock ranking junior to the Series C Preference Shares (other than a dividend payable in shares of any class of Common Stock) and General Motors will not redeem, repurchase or otherwise acquire any shares of Common Stock or other stock ranking junior to the Series C Preference Shares (other than a redemption or purchase of shares of Common Stock made in connection with employee incentive or benefit plans of General Motors or its subsidiaries), unless the full preferential dividends accumulated on all outstanding Series C Preference Shares have been paid. Dividends will not be declared on any series of Preference Stock for any prior dividend payment period unless there shall have been declared on all outstanding shares of Preference Stock ranking on a parity with such series, in respect of all dividend payment periods of such parity stock terminating with or before such prior dividend payment period, like proportionate dividends determined ratably in proportion to the respective preferential dividends accumulated to date on such series and the dividends accumulated on all such outstanding parity Preference Stock. Conversion. The Series C Preference Shares are convertible at any time at the option of the holders thereof into shares of Class E Common Stock at a conversion price of $35.52 per share of Class E Common Stock (equivalent to a conversion rate of 14.078 shares of Class E Common Stock for each Series C Preference Share), subject to adjustment as described below. For purposes of such conversion, each Series C Preference Share will be valued at $500.00. Notwithstanding the foregoing, if Series C Preference Shares are called for redemption by General Motors as provided below, holders of those shares will not have the right to convert such shares into Class E Common Stock after the close of business on the effective date of such call for redemption. In order to prevent dilution of conversion rights, the conversion price will be adjusted in the event of (i) a dividend in shares of Class E Common Stock paid with respect to the Class E Common Stock, (ii) the subdivision or combination of the outstanding shares of Class E Common Stock, (iii) the issuance to holders of Class E Common Stock of certain rights or warrants to purchase Class E Common Stock at below market prices, or (iv) the conversion or exchange of all outstanding shares of Class E Common Stock for any securities of General Motors by a recapitalization or otherwise. Redemption. At any time on or after February 19, 1996, General Motors may at its option call for redemption, on not less than 15 nor more than 60 days' notice, any or all of the outstanding Series C Preference Shares at the call price set forth in the following paragraph, plus any accumulated and unpaid preferential dividends. The call price per Series C Preference Share shall be as follows, if the effective date of the redemption occurs during the 12-month period beginning February 19 of the years indicated, plus in each case accrued and unpaid dividends on such shares to and including the effective date: 1996 -- $519.50; 1997 -- $516.25; 1998 -- $513.00; 1999 -- $509.75; 2000 -- $506.50; 2001 -- $503.25; 2002 and thereafter -- $500.00. General Motors may pay the call price in cash, in shares of $1 2/3 Par Value Common Stock, or in a specified combination thereof. If fewer than all outstanding Series C Preference Shares are called by General Motors, the shares to be so called shall be selected by lot or pro rata or by any other method determined by General Motors in its sole discretion to be equitable. Holders of Series C Preference Shares have no right to require redemption of such shares. Liquidation Preference. In the event of the liquidation, dissolution or winding up of the business of General Motors, whether voluntary or involuntary, after the holders of Preferred Stock, if any were outstanding, receive the full preferential amounts to which they are entitled and before any distribution to holders of Common Stock, the holders of Series C Preference Shares, together with holders of all other currently outstanding shares of Preference Stock, will be entitled to the respective liquidation preferences described below. The holders of Series C Preference Shares shall be entitled to receive for each share $500.00 plus an amount equal to all dividends accrued and unpaid thereon to the date of final distribution to such holders, and no more. If there are insufficient assets to permit full payment to holders of the Series C Preference Shares and the holders of any other series of Preference Stock which is on parity with the Series C Preference Shares as to liquidation rights, then the holders of the Series C Preference Shares and such other shares shall be paid 26 29 ratably in proportion to the full distributable amounts to which holders of all such parity shares are respectively entitled upon such dissolution, liquidation or winding up. Voting. The Series C Preference Shares do not entitle holders thereof to voting rights, except (i) with respect to any amendment or alteration of any provision of the General Motors Certificate of Incorporation which would adversely affect the powers, preferences or special rights of the Series C Preference Shares, which requires the prior approval of the holders of at least two-thirds of the outstanding shares of such series, and (ii) in the event General Motors fails to pay preferential dividends on the Series C Preference Shares in full for any six quarterly dividend payment periods, whether or not consecutive, and all such dividends remain unpaid (a "Preferential Dividend Default"), or as required by law. In the event of a Preferential Dividend Default, the number of directors of General Motors will be increased by two and the holders of the outstanding Series C Preference Shares, voting together as a class with all other series of Preference Stock then entitled to vote on the election of directors, will be entitled to elect such two additional directors until the full dividends accumulated on all outstanding Series C Preference Shares are paid. SERIES D 7.92% PREFERENCE STOCK Dividends. Subject to the rights of the holders of Preferred Stock, if any were outstanding, dividends will be paid on the outstanding Series D Preference Shares when, as and if declared by the Board of Directors out of General Motors' assets legally available therefor. Dividends may be subject to restrictions contained in any future debt agreements of General Motors and to limitations contained in future series or classes of Preferred Stock or Preference Stock. Holders of Series D Preference Shares will be entitled to receive cumulative cash dividends, at the annual rate of 7.92% of the per share stated value (equivalent to $7.92 per annum per Series D Preference Share), payable quarterly for each of the quarters ending March, June, September and December of each year, payable in arrears on the first day that is not a legal holiday of each succeeding May, August, November and February, respectively. Each such dividend will be paid to holders of record on each record date, which shall be not less than 10 nor more than 50 days preceding the payment date, as fixed by the Board of Directors. Dividends on the Series D Preference Shares, whether or not declared, will be cumulative from the date of original issue of the Series D Preference Shares. The amount of dividends payable for any period shorter than a full quarterly dividend period will be determined on the basis of a 360-day year consisting of twelve 30-day months. Accrued but unpaid dividends will not bear interest. Preferential dividends will accrue whether or not General Motors has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Dividends accumulate to the extent they are not paid on the dividend payment date following the calendar quarter for which they accrue. Accumulated preferential dividends will not bear interest. Dividends will not be paid on any class of Common Stock or other stock ranking junior to the Series D Preference Shares (other than a dividend payable in shares of any class of Common Stock) and General Motors will not redeem, repurchase or otherwise acquire any shares of Common Stock or other stock ranking junior to the Series D Preference Shares (other than a redemption or purchase of shares of Common Stock made in connection with employee incentive or benefit plans of General Motors or its subsidiaries), unless the full preferential dividends accumulated on all outstanding Series D Preference Shares have been paid. Dividends will not be declared on any series of Preference Stock for any prior dividend payment period unless there shall have been declared on all outstanding shares of Preference Stock ranking on a parity with such series, in respect of all dividend payment periods of such parity stock terminating with or before such prior dividend payment period, like proportionate dividends determined ratably in proportion to the respective preferential dividends accumulated to date on such series and the dividends accumulated on all such outstanding parity Preference Stock. Conversion. The Series D Preference Shares are not convertible into shares of any other class of capital stock of General Motors. Redemption. The Series D Preference Shares may not be redeemed prior to August 1, 1999. On or after August 1, 1999, General Motors may, at its option, on not less than 35 nor more than 60 days' notice, redeem 27 30 the Series D Preference Shares, as a whole or in part, at any time or from time to time, for cash in an amount equal to $100 per Series D Preference Share, plus an amount equal to all dividends accrued and unpaid thereon to the date fixed for redemption. If less than all outstanding Series D Preference Shares are to be redeemed, shares to be redeemed will be selected by General Motors by lot or pro rata or by any other method determined by General Motors in its sole discretion to be equitable. Holders of Series D Preference Shares have no right to require redemption of such shares. Liquidation Preference. In the event of the liquidation, dissolution or winding up of the business of General Motors, whether voluntary or involuntary, the holders of Series D Preference Shares will be entitled to the liquidation preference described below, after the holders of Preferred Stock, if any were outstanding, receive the full preferential amounts to which they are entitled and before any distribution to holders of Common Stock. The holders of the Series D Preference Shares will be entitled to receive for each share $100 plus an amount equal to all dividends accrued and unpaid thereon to the date of final distribution to such holders (subject to the right of the holders of record of any Series D Preference Shares on a record date for payment of dividends thereon to receive a dividend payable on the date of final distribution), but such holders shall not be entitled to any further payment. If there are insufficient assets to permit full payment to holders of the Series D Preference Shares and the holders of any other series of Preference Stock which is on parity with the Series D Preference Shares as to liquidation rights, then the holders of the Series D Preference Shares and such other shares shall be paid ratably in proportion to the full distributable amounts to which holders of all such parity shares are respectively entitled upon such dissolution, liquidation or winding up. Voting. The Series D Preference Shares do not entitle holders thereof to voting rights, except (i) with respect to any amendment or alteration of any provision of the General Motors Certificate of Incorporation which would adversely affect the powers, preferences or special rights of the Series D Preference Shares, which requires the prior approval of the holders of at least two-thirds of the outstanding Series D Preference Shares, and (ii) in the event General Motors fails to pay accumulated preferential dividends on the Series D Preference Shares in full for any six quarterly dividend payment periods, whether or not consecutive, and all such dividends remain unpaid (a "Preferential Dividend Default"), or as required by law. In the event of a Preferential Dividend Default, the number of directors of General Motors will be increased by two and the holders of the outstanding Series D Preference Shares, voting together as a class with all other series of Preference Stock ranking junior to or on a parity with the Series D Preference Shares and then entitled to vote on the election of such directors, will be entitled to elect such two additional directors until the full dividends accumulated on all outstanding Series D Preference Shares have been paid. SERIES G 9.12% PREFERENCE STOCK Dividends. Subject to the rights of the holders of Preferred Stock, if any were outstanding, dividends will be paid on the outstanding Series G Preference Shares when, as and if declared by the Board of Directors out of General Motors' assets legally available therefor. Dividends may be subject to restrictions contained in any future debt agreements of General Motors and to limitations contained in future series or classes of Preferred Stock or Preference Stock. Holders of Series G Preference Shares will be entitled to receive cumulative cash dividends, at the annual rate of 9.12% of the per share stated value (equivalent to $9.12 per annum per Series G Preference Share), payable quarterly for each of the quarters ending March, June, September and December of each year, payable in arrears on the first day that is not a legal holiday of each succeeding May, August, November and February, respectively. Each such dividend will be paid to holders of record on each record date, which shall be not less than 10 nor more than 50 days preceding the payment date, as fixed by the Board of Directors. Dividends on the Series G Preference Shares, whether or not declared, will be cumulative from the date of original issue of the Series G Preference Shares. The amount of dividends payable for any period shorter than a full quarterly dividend period will be determined on the basis of a 360-day year consisting of twelve 30-day months. Accrued but unpaid dividends will not bear interest. Preferential dividends will accrue whether or not General Motors has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. 28 31 Dividends accumulate to the extent they are not paid on the dividend payment date following the calendar quarter for which they accrue. Accumulated preferential dividends will not bear interest. Dividends will not be paid on any class of Common Stock or other stock ranking junior to the Series G Preference Shares (other than a dividend payable in shares of any class of Common Stock) and General Motors will not redeem, repurchase or otherwise acquire any shares of Common Stock or other stock ranking junior to the Series G Preference Shares (other than a redemption or purchase of shares of Common Stock made in connection with employee incentive or benefit plans of General Motors or its subsidiaries), unless the full preferential dividends accumulated on all outstanding Series G Preference Shares have been paid. Dividends will not be declared on any series of Preference Stock for any prior dividend payment period unless there shall have been declared on all outstanding shares of Preference Stock ranking on a parity with such series, in respect of all dividend payment periods of such parity stock terminating with or before such prior dividend payment period, like proportionate dividends determined ratably in proportion to the respective preferential dividends accumulated to date on such series and the dividends accumulated on all such outstanding parity Preference Stock. Conversion. The Series G Preference Shares are not convertible into shares of any other class of capital stock of General Motors. Redemption. The Series G Preference Shares may not be redeemed prior to January 1, 2001. On or after January 1, 2001, General Motors may, at its option, on not less than 35 nor more than 60 days' notice, redeem the Series G Preference Shares, as a whole or in part, at any time or from time to time, for cash in an amount equal to $100 per Series G Preference Share, plus an amount equal to all dividends accrued and unpaid thereon to the date fixed for redemption. If less than all outstanding Series G Preference Shares are to be redeemed, shares to be redeemed will be selected by General Motors by lot or pro rata or by any other method determined by General Motors in its sole discretion to be equitable. Holders of Series G Preference Shares have no right to require redemption of such shares. Liquidation Preference. In the event of the liquidation, dissolution or winding up of the business of General Motors, whether voluntary or involuntary, the holders of Series G Preference Shares will be entitled to the liquidation preference described below, after the holders of Preferred Stock, if any were outstanding, receive the full preferential amounts to which they are entitled and before any distribution to holders of Common Stock. The holders of the Series G Preference Shares will be entitled to receive for each share $100 plus an amount equal to all dividends accrued and unpaid thereon to the date of final distribution to such holders (subject to the right of the holders of record of any Series G Preference Share on a record date for payment of dividends thereon to receive a dividend payable on the date of final distribution), but such holders shall not be entitled to any further payment. If there are insufficient assets to permit full payment to holders of the Series G Preference Shares and the holders of any other series of Preference Stock which is on parity with the Series G Preference Shares as to liquidation rights, then the holders of the Series G Preference Shares and such other shares shall be paid ratably in proportion to the full distributable amounts to which holders of all such parity shares are respectively entitled upon such dissolution, liquidation or winding up. Voting. The Series G Preference Shares do not entitle holders thereof to voting rights, except (i) with respect to any amendment or alteration of any provision of the General Motors Certificate of Incorporation which would adversely affect the powers, preferences or special rights of the Series G Preference Shares, which requires the prior approval of the holders of at least two-thirds of the outstanding Series G Preference Shares, and (ii) in the event General Motors fails to pay accumulated preferential dividends on the Series G Preference Shares in full for any six quarterly dividend payment periods, whether or not consecutive, and all such dividends remain unpaid (a "Preferential Dividend Default"), or as required by law. In the event of a Preferential Dividend Default, the number of directors of General Motors will be increased by two and the holders of the outstanding Series G Preference Shares, voting together as a class with all other series of Preference Stock ranking junior to or on a parity with the Series G Preference Shares and then entitled to vote on the election of such directors, will be entitled to elect such two additional directors until the full dividends accumulated on all outstanding Series G Preference Shares have been paid. 29 32 COMMON STOCK General Motors has three classes of common stock: $1 2/3 Par Value Common Stock, Class E Common Stock and Class H Common Stock. Dividends. Subject to the rights of the holders of Preferred Stock, if any were outstanding, and Preference Stock, dividends may be paid in cash or otherwise, when, as and if declared by the Board of Directors, on the $1 2/3 Par Value Common Stock, the Class E Common Stock and the Class H Common Stock out of the assets of General Motors legally available therefor as provided below. Dividends on the $1 2/3 Par Value Common Stock may be declared and paid only to the extent of the assets of General Motors legally available therefor, reduced by the amount available for dividends on the Class E Common Stock and the Class H Common Stock. Dividends paid on the $1 2/3 Par Value Common Stock and adjustments to surplus arising from the repurchase of shares of $1 2/3 Par Value Common Stock or other appropriate circumstances will be charged to the amount available for payment of dividends on $1 2/3 Par Value Common Stock. General Motors' policy is to distribute dividends on the $1 2/3 Par Value Common Stock based on the outlook and indicated capital needs of General Motors' business. At the May 1, 1995 meeting of the General Motors Board of Directors, the quarterly dividend on the $1 2/3 Par Value Common Stock was raised from $0.20 per share to $0.30 per share. On November 2, 1992, the General Motors Board of Directors had reduced the quarterly dividend from $0.40 per share to $0.20 per share of $1 2/3 Par Value Common Stock, and on February 4, 1991, the Board of Directors had reduced the quarterly dividend to $0.40 per share from $0.75 per share. Dividends on Class E Common Stock may be declared and paid out of assets of General Motors legally available therefor only to the extent of the sum of (i) the paid in surplus of General Motors attributable to Class E Common Stock plus (ii) the Available Separate Consolidated Net Income of EDS earned after GM's acquisition of EDS. The Available Separate Consolidated Net Income of EDS for each quarterly accounting period is equal to (x) the separate consolidated net income of EDS for that period, determined in accordance with generally accepted accounting principles (without giving effect to any adjustment which would result from accounting for the acquisition of EDS using the purchase method) multiplied by (y) a fraction, the numerator of which is a number equal to the weighted average number of shares of the Class E Common Stock outstanding during that period and the denominator of which was 482.4 million for the first quarter of 1995; provided that such fraction shall never be greater than one. The denominator shall be adjusted from time to time as deemed appropriate by the Board of Directors (i) to reflect subdivisions and combinations of the Class E Common Stock and stock dividends payable in shares of Class E Common Stock to holders of Class E Common Stock, (ii) to reflect the fair market value of contributions of cash or property by General Motors or its subsidiaries to EDS or its subsidiaries and to reflect such contributions or contributions of General Motors capital stock by General Motors to, or for the benefit of, employees of EDS or its subsidiaries in connection with employee benefit plans or arrangements and (iii) to reflect payments by EDS to General Motors of amounts applied to the repurchase by General Motors of shares of Class E Common Stock and purchases by EDS of shares of Class E Common Stock. The Board of Directors has determined the denominator will be automatically adjusted at the end of each quarter to reflect on a weighted-average basis the number of shares of Class E Common Stock acquired or sold by EDS during such quarter. For all purposes, determination of the Available Separate Consolidated Net Income of EDS will be in the sole discretion of the Board of Directors, subject to criteria set forth in the General Motors Certificate of Incorporation. Under the current dividend policy as adopted by the General Motors Board of Directors, the annual per share dividends on the Class E Common Stock, when, as and if declared by the Board of Directors in its sole discretion, will equal approximately 30% of the Available Separate Consolidated Net Income of EDS for the preceding year. Under the current dividend policy, the quarterly dividend on the Class E Common Stock for 1994 was $0.12 per share. In February 1995, the Board of Directors increased the quarterly dividend on Class E Common Stock from $0.12 per share to $0.13 per share. Although such dividend policy is subject to change in the sole discretion of the General Motors Board of Directors, it has no present intention of doing so. However, it reserves the right to reconsider this policy from time to time and to increase or decrease the 30 33 dividends paid on the Class E Common Stock in light of the earnings and financial position of EDS, General Motors' consolidated financial position, including liquidity, and other factors. The Capital Stock Committee of the Board of Directors is responsible for reviewing any dividend policy which may have differing effects on holders of the three classes of General Motors common stock. The number of shares of common stock of EDS issued and outstanding, all of which shares are owned by General Motors through a wholly owned subsidiary, is adjusted from time to time so as to remain equal to the denominator of the fraction described above. It is the policy of the Board of Directors of EDS to pay quarterly dividends on such shares in a per share amount equal to the dividends per share paid by General Motors with respect to the Class E Common Stock. EDS makes no payments to General Motors or the holder of EDS common stock with respect to dividend payments by General Motors on the Series C Preference Shares. Dividends on Class H Common Stock may be declared and paid out of assets of General Motors legally available therefor only to the extent of the sum of (i) the paid in surplus of General Motors attributable to Class H Common Stock plus (ii) the Available Separate Consolidated Net Income of Hughes earned after December 31, 1985, the date that General Motors acquired Hughes Aircraft Company ("HAC"). The Available Separate Consolidated Net Income of Hughes for each quarterly accounting period is equal to (x) the separate consolidated net income of Hughes for that period, determined in accordance with generally accepted accounting principles (without giving effect to any adjustment which would result from accounting for GM's acquisition of HAC using the purchase method) multiplied by (y) a fraction, the numerator of which is a number equal to the weighted average number of shares of Class H Common Stock outstanding during that period and the denominator of which was 399.9 million for the first quarter of 1995; provided that such fraction shall never be greater than one. The denominator shall be adjusted from time to time as deemed appropriate by the General Motors Board of Directors under circumstances that are generally similar to those which would give rise to an adjustment of the denominator for the Class E Common Stock, as described above. For all purposes, determination of the Available Separate Consolidated Net Income of Hughes will be in the sole discretion of the General Motors Board of Directors, subject to criteria set forth in GM's Certificate of Incorporation. Under the current dividend policy as adopted by the General Motors Board of Directors, the annual per share dividends on the Class H Common Stock, when, as and if declared by the Board of Directors in its sole discretion, will equal approximately 35% of the Available Separate Consolidated Net Income of Hughes for the preceding year. The dividends paid on the Class H Common Stock during 1994, 1993 and 1992 exceeded an annual rate based on 35% of the Available Separate Consolidated Net Income of Hughes for the preceding year (excluding the impact of a $749.4 million after-tax special Hughes restructuring charge recorded in 1992). The quarterly dividend on the Class H Common Stock for 1994 was $0.20 per share and for 1993 and 1992 was $0.18 per share. In February 1995, the Board of Directors increased the quarterly dividend on Class H Common Stock from $0.20 per share to $0.23 per share (which is based on an annual rate of approximately 35% of the Available Separate Consolidated Net Income of Hughes for 1994). Although such dividend policy is subject to change in the sole discretion of the Board of Directors, it has no present intention of doing so. However, it reserves the right to reconsider this policy from time to time and to increase or decrease the dividends paid on the Class H Common Stock in light of the earnings and consolidated financial position of Hughes, General Motors' consolidated financial position, including liquidity, and other factors. The Capital Stock Committee of the Board of Directors is responsible for reviewing any dividend policy which may have differing effects on holders of the three classes of General Motors common stock. The number of shares of common stock of Hughes issued and outstanding as of December 31, 1994 was 1,000, all of which are owned by General Motors. It is the policy of the Board of Directors of Hughes to pay quarterly dividends to General Motors on such shares in an aggregate amount equal to the dividend per share paid by General Motors with respect to the Class H Common Stock multiplied by the denominator used to determine the Available Separate Consolidated Net Income of Hughes. Subject to the foregoing, the Board of Directors may declare dividends payable exclusively to the holders of $1 2/3 Par Value Common Stock, payable exclusively to the holders of Class E Common Stock, payable exclusively to the holders of Class H Common Stock, or payable to the holders of any two or more of such 31 34 classes in equal or unequal amounts, notwithstanding the respective amounts of surplus available for payment of dividends on each class, the respective voting and liquidation rights of each class, the amount of any prior dividends declared on each class, or any other factor. Voting. Under the General Motors Certificate of Incorporation and subject to adjustment as described below, holders of $1 2/3 Par Value Common Stock may cast one vote per share on all matters submitted to General Motors' stockholders for a vote, holders of Class E Common Stock may cast one-eighth of a vote per share on all such matters, and holders of Class H Common Stock may cast one-half of a vote per share on all such matters. Holders of $1 2/3 Par Value Common Stock, Class E Common Stock and Class H Common Stock will vote together as a single class on all matters, except that (i) any amendment to the Certificate of Incorporation which adversely affects the rights, powers or privileges of any class must also be approved by the holders of that class voting separately as a class; (ii) any increase in the number of authorized shares of Class E Common Stock must be approved by both (A) the holders of a majority of $1 2/3 Par Value Common Stock, Class E Common Stock and Class H Common Stock voting together as a single class and (B) the holders of a majority of Class E Common Stock voting separately as a class; and (iii) any increase in the number of authorized shares of Class H Common Stock must be approved by both (A) the holders of a majority of $1 2/3 Par Value Common Stock, Class E Common Stock and Class H Common Stock voting together as a single class and (B) the holders of a majority of Class H Common Stock voting separately as a class. Recapitalization by Exchange of Stock. The Board of Directors, in its sole discretion, may recapitalize General Motors by exchanging all of the outstanding shares of Class E Common Stock for shares of $1 2/3 Par Value Common Stock at the Exchange Rate (as defined below). However, the Board of Directors may effect such an exchange only if, during each of the five full fiscal years preceding the exchange, the aggregate cash dividends on the Class E Common Stock have been no less than the product of the Payout Ratio (as defined below) for such year multiplied by the Available Separate Consolidated Net Income of EDS for the prior fiscal year. If General Motors sells, transfers, assigns or otherwise disposes of the business of EDS substantially as an entirety to a person, entity or group of which General Motors is not a majority owner, all of the outstanding shares of Class E Common Stock will automatically be exchanged for shares of $1 2/3 Par Value Common Stock at the Exchange Rate. See "General Motors and EDS -- Relationship Between General Motors and EDS." At any time after December 31, 1995, the Board of Directors, in its sole discretion, may recapitalize General Motors by exchanging all of the outstanding shares of Class H Common Stock for shares of $1 2/3 Par Value Common Stock at the Exchange Rate. However, the Board of Directors may effect such an exchange only if, during each of the five full fiscal years preceding the exchange, the aggregate cash dividends on the Class H Common Stock have been no less than the product of the Payout Ratio for such year multiplied by the Available Separate Consolidated Net Income of Hughes for the prior fiscal year. If General Motors sells, transfers, assigns or otherwise disposes of substantially all of the business of HAC, its subsidiaries and successors or of substantially all of the other business of Hughes to a person, entity or group of which General Motors is not a majority owner, all of the outstanding shares of Class H Common Stock will automatically be exchanged for shares of $1 2/3 Par Value Common Stock at the Exchange Rate. The "Payout Ratio" equals the lesser of (A) 0.25 or (B) the quotient of (x) the total cash dividends paid on $1 2/3 Par Value Common Stock for such fiscal year, divided by (y) the net income of General Motors for such fiscal year, minus the Available Separate Consolidated Net Income of EDS for such fiscal year and the Available Separate Consolidated Net Income of Hughes for such fiscal year. The "Exchange Rate" per share of Class E Common Stock and Class H Common Stock will equal 120% of the ratio of (i) the average market price per share of Class E Common Stock or of Class H Common Stock, respectively, on a specified valuation date to (ii) the average market price per share of $1 2/3 Par Value Common Stock on such date. No fractional shares of $1 2/3 Par Value Common Stock will be issued in any such exchange. In lieu thereof, a holder of shares of Class E Common Stock or Class H Common Stock, as the case may be, will receive cash equal to the product of (A) the fraction of a share of $1 2/3 Par Value Common Stock to which the 32 35 holder would otherwise have been entitled, multiplied by (B) the average market price per share of $1 2/3 Par Value Common Stock on such valuation date. Liquidation Rights. In the event of the liquidation, dissolution or winding up of the business of General Motors, whether voluntary or involuntary, after the holders of Preferred Stock, if any were outstanding, and Preference Stock receive the full preferential amounts to which they are entitled, holders of the $1 2/3 Par Value Common Stock, Class E Common Stock and Class H Common Stock will receive the assets remaining for distribution to the General Motors stockholders on a per share basis in proportion to the respective per share liquidation units of such classes. Subject to adjustment as described below, each share of $1 2/3 Par Value Common Stock, Class E Common Stock and Class H Common Stock would currently be entitled to liquidation units of approximately one (1.0), one-eighth (0.125) and one-half (0.50), respectively. Holders of Class E Common Stock and Class H Common Stock have no direct rights in the equity or assets of EDS or Hughes, respectively, but rather, together with holders of $1 2/3 Par Value Common Stock, have certain liquidation rights in the equity and assets of General Motors (which includes 100% of the stock of both EDS and Hughes). Subdivision or Combination. If General Motors subdivides (by stock split or otherwise) or combines (by reverse stock split or otherwise) the outstanding shares of the $1 2/3 Par Value Common Stock, the Class E Common Stock or the Class H Common Stock, the voting and liquidation rights of shares of Class E Common Stock and Class H Common Stock relative to $1 2/3 Par Value Common Stock will be appropriately adjusted. In the event of the issuance of shares of Class E Common Stock or Class H Common Stock as a dividend on shares of $1 2/3 Par Value Common Stock, the liquidation rights of the applicable class of Common Stock would be adjusted so that the relative aggregate liquidation rights of each stockholder would not be changed as a result of such dividend. CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS This is a general discussion of certain U.S. federal income and estate tax consequences of the purchase, ownership and disposition of Class E Common Stock by a "Non-U.S. Holder." A "Non-U.S. Holder" is a person or entity that, for U.S. federal income tax purposes, is a nonresident alien individual, a foreign corporation, a foreign partnership, or a nonresident fiduciary of a foreign estate or trust. This discussion is based on the Internal Revenue Code of 1986, as amended (the "Code"), and administrative interpretations as of the date hereof, all of which may be changed either retroactively or prospectively. This discussion does not address all aspects of U.S. federal income and estate taxation that may be relevant to Non-U.S. Holders in light of their particular circumstances (including the direct or indirect ownership of more than 5% of the outstanding Class E Common Stock) and does not address any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction. The following summary does not constitute, and should not be considered as, legal or tax advice to prospective investors. Prospective holders should consult their tax advisers about the particular tax consequences to them of holding and disposing of Class E Common Stock. DIVIDENDS Subject to the discussion below, dividends paid to a Non-U.S. Holder of Class E Common Stock generally will be subject to withholding tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. For purposes of determining whether tax is to be withheld at a 30% rate or at a reduced rate as specified by an income tax treaty, General Motors ordinarily will presume that dividends paid to an address in a foreign country are paid to a resident of such country absent actual knowledge that such presumption is not warranted. However, under proposed U.S. Treasury regulations which have not yet been put into effect, to claim the benefits of a tax treaty, a Non-U.S. Holder of Class E Common Stock would be required to file certain forms accompanied by a statement from a competent authority of the treaty country. 33 36 Dividends paid to a holder with an address within the United States generally will not be subject to withholding tax, unless General Motors has actual knowledge that the holder is a Non-U.S. Holder. Absent such actual knowledge, dividends paid to a holder with a U.S. address may be subject to backup withholding if the holder is not an exempt recipient as defined in Section 6049(b)(4) of the Code (which includes corporations) and fails to provide a correct tax identification number and other information to General Motors. Upon the filing of an Internal Revenue Service Form 4224 with General Motors, there is no withholding tax on dividends that are effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States. Instead, the effectively connected dividends are subject to regular U.S. income tax in the same manner as if the Non-U.S. Holder were a U.S. resident. Effectively connected dividends received by a non-U.S. corporation may be subject to an additional "branch profits tax" at a rate of 30% (or such lower rate as may be specified by an applicable treaty) of its effectively connected earnings and profits, subject to certain adjustments. Generally, General Motors must report to the U.S. Internal Revenue Service the amount of dividends paid, the name and address of the recipient, and the amount, if any, of tax withheld. A similar report is sent to the holder. Pursuant to tax treaties or other agreements, the U.S. Internal Revenue Service may make its reports available to tax authorities in the recipient's country of residence. GAIN ON DISPOSITION A Non-U.S. Holder generally will not be subject to U.S. federal income tax with respect to gain realized on a sale or other disposition of Class E Common Stock unless (i) the gain is effectively connected with a trade or business of such holder in the United States or (ii) in the case of certain Non-U.S. Holders who are nonresident alien individuals and hold Class E Common Stock as a capital asset, such individuals are present in the United States for 183 or more days in the taxable year of the disposition. INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING If the proceeds of a disposition of Class E Common Stock are paid over by or through a U.S. office of a broker, the payment is subject to information reporting and to backup withholding unless the disposing holder certifies as to his name, address, and non-U.S. status or otherwise establishes an exemption. Generally, U.S. information reporting and backup withholding will not apply to a payment of disposition proceeds if the payment is made outside the United States through a non-U.S. office of a non-U.S. broker. However, U.S. information reporting requirements (but not backup withholding) will apply to a payment of disposition proceeds outside the United States if (A) the payment is made through an office outside the United States of a broker that is either (i) a U.S. person, (ii) a foreign person which derives 50% or more of its gross income for certain periods from the conduct of a trade or business in the United States or (iii) a "controlled foreign corporation" for U.S. federal income tax purposes and (B) the broker fails to maintain documentary evidence that the holder is a Non-U.S. Holder and that certain conditions are met, or that the holder otherwise is entitled to an exemption. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained, provided that the required information is furnished to the U.S. Internal Revenue Service. FEDERAL ESTATE TAX An individual Non-U.S. Holder who is treated as the owner of or has made certain lifetime transfers of an interest in Class E Common Stock will be required to include the value thereof in his gross estate for U.S. federal estate tax purposes, and may be subject to U.S. federal estate tax unless an applicable estate tax treaty provides otherwise. 34 37 UNDERWRITING The U.S. Underwriters named below, acting through their U.S. Representatives, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., Lehman Brothers Inc., CS First Boston Corporation, Morgan Stanley & Co. Incorporated and Salomon Brothers Inc (the "U.S. Representatives"), have severally agreed, subject to the terms and conditions of the U.S. Purchase Agreement with General Motors and the Selling Stockholders (the "U.S. Purchase Agreement"), to purchase from the Selling Stockholders, the aggregate number of shares of Class E Common Stock set forth below opposite their respective names.
NUMBER OF U.S. SHARES OF U.S. UNDERWRITER CLASS E COMMON STOCK ---------------- ------------------------ Merrill Lynch, Pierce, Fenner & Smith Incorporated.............................................. Goldman, Sachs & Co. .................................................. Lehman Brothers Inc.................................................... CS First Boston Corporation............................................ Morgan Stanley & Co. Incorporated...................................... Salomon Brothers Inc................................................... ---------- Total........................................................... 27,000,000 ==========
This offering is part of a worldwide offering that consists of the U.S. Offering, the International Offering and the Asian Offering (collectively, the "Offerings"). Merrill Lynch & Co. and Goldman, Sachs & Co. are acting as Joint Global Coordinators for the Offerings. In the U.S. Purchase Agreement, the U.S. Underwriters have agreed, subject to the terms and conditions set forth therein, to purchase all of the shares of Class E Common Stock being sold pursuant to such Agreement if any of the shares of Class E Common Stock being sold pursuant to such Agreement are purchased. Under certain circumstances under such Agreement, the commitments of non-defaulting U.S. Underwriters may be increased. The U.S. Representatives of the U.S. Underwriters have advised General Motors and the Selling Stockholders that they propose initially to offer the shares to the public at the Price to Public set forth on the cover page of this Prospectus, and to certain dealers at such price less a concession not in excess of $ per share. The U.S. Underwriters may allow, and such dealers may reallow, a discount not in excess of $ per share on sales to certain other dealers. After the initial public offering, the public offering price, concession and discount may be changed. General Motors and the Selling Stockholders have also entered into an International Purchase Agreement (the "International Purchase Agreement") with certain underwriters (the "International Underwriters") for whom Merrill Lynch International Limited, Goldman Sachs International, Lehman Brothers International (Europe), CS First Boston Limited, Morgan Stanley & Co. International Limited and Salomon Brothers International Limited are acting as representatives (the "International Representatives") providing for a concurrent International Offering. General Motors and the Selling Stockholders have also entered into an Asian Purchase Agreement (the "Asian Purchase Agreement") with certain underwriters (the "Asian Underwriters") for whom Merrill Lynch International Limited, Goldman Sachs (Asia) L.L.C., Lehman Brothers Securities Asia Limited, HSBC Corporate Finance Limited, The Nikko Securities Co. (Asia) Limited and Nomura International (Hong Kong) Limited are acting as representatives (the "Asian Representatives") providing for the concurrent Asian Offering. The U.S. Underwriters, the International Underwriters and the Asian Underwriters are collectively referred to as the "Underwriters" and the 35 38 U.S. Representatives, the International Representatives and the Asian Representatives are collectively referred to as the "Representatives". The International Underwriters have agreed, subject to the terms and conditions set forth in the International Purchase Agreement, to purchase all of the shares of Class E Common Stock being offered in the International Offering (other than shares subject to the Underwriters' over-allotment option) if any are purchased and the Asian Underwriters have agreed, subject to the terms and conditions set forth in the Asian Purchase Agreement, to purchase all of the shares of Class E Common Stock being offered in the Asian Offering (other than shares subject to the Underwriters' over-allotment option) if any are purchased. The closing of each of the Offerings is a condition to the closing of each of the U.S. Offering, the International Offering and the Asian Offering. The Underwriters have entered into an intersyndicate agreement (the "Intersyndicate Agreement") that provides for the coordination of their activities. Under the terms of the Intersyndicate Agreement, the Underwriters in each geographic area have agreed not to offer to sell any shares of Class E Common Stock in any other geographic area until the completion of the distribution of the shares of Class E Common Stock in all of the Offerings. Pursuant to the Intersyndicate Agreement, each of the U.S. Underwriters has agreed or will agree that, as part of the distribution of the U.S. shares of Class E Common Stock, subject to certain exceptions, (i) it is not purchasing any shares of Class E Common Stock for the account of anyone other than a U.S. Person (as defined below) or Canadian Person (as defined below) and (ii) it has not offered or sold, and will not offer or sell, directly or indirectly, any shares of Class E Common Stock or distribute any prospectus relating to the shares of Class E Common Stock to any person outside the United States or Canada or to anyone other than a U.S. Person or Canadian Person, or to any dealer who does not so agree. Each of the International Underwriters and the Asian Underwriters has agreed or will agree that, as part of the distribution of the International shares of Class E Common Stock and Asian shares of Class E Common Stock, respectively, subject to certain exceptions, (i) it is not purchasing any shares of Class E Common Stock for the account of any U.S. Person or Canadian Person and (ii) it has not offered or sold, and will not offer or sell, directly or indirectly, any shares of Class E Common Stock or distribute any prospectus relating to the shares of Class E Common Stock in the United States or Canada or to any U.S. Person or Canadian Person or to any dealer who does not so agree. The foregoing limitations do not apply to stabilization transactions or to transactions between the U.S. Underwriters, the International Underwriters and the Asian Underwriters pursuant to the Intersyndicate Agreement. As used in this section, "United States" means the United States of America, its territories, possessions and other areas subject to its jurisdiction; "Canada" means Canada, its provinces, territories, possessions and other areas subject to its jurisdiction; "Asia" means all countries in the Middle East (excluding Turkey), India and its subcontinent, Asia, Australia and New Zealand; and "U.S. Person" and "Canadian Person" mean (i) a citizen or resident of the United States or Canada, respectively, (ii) a corporation, partnership, trust or other entity created or organized in or under the laws of the United States or Canada, respectively (other than a foreign branch of such an entity), or (iii) an estate or trust, the income of which is subject to United States federal income taxation or Canadian federal income taxation, respectively, regardless of its source of income, and includes any United States or Canadian branch of a person not included in any of clauses (i), (ii) and (iii) of this sentence. The Hourly Plan Special Trust has granted the Underwriters an option, exercisable for 30 days after the date hereof, to purchase up to an additional 5,550,000 shares of Class E Common Stock at the Price to Public less the Underwriting Discount for the purpose of covering over-allotments, if any. If the Underwriters exercise such option in full, each of the Underwriters will have a firm commitment, subject to certain conditions, to purchase approximately the same percentage thereof which the number of shares of Class E Common Stock to be purchased by it shown opposite their respective names in the table under "Underwriting" in the relevant Prospectus is of the 37,000,000 shares of Class E Common Stock initially offered by the Underwriters hereunder. General Motors and (to the extent permitted under applicable law) the Selling Stockholders have agreed to indemnify the Underwriters against certain liabilities including liabilities under the Securities Act. General Motors has agreed not to offer, sell or otherwise dispose of any shares of Class E Common Stock or any securities convertible into or exchangeable or exercisable for Class E Common Stock from the date of this Prospectus until December 31, 1995, without the prior written consent of Merrill Lynch & Co. and 36 39 Goldman, Sachs & Co. on behalf of the Representatives, provided that General Motors may issue and deliver such securities under specified exceptions in connection with (i) the conversion, exercise or exchange of outstanding options or other securities pursuant to their terms, (ii) any previously disclosed acquisition or other business combination and (iii) employee benefit plans. The Selling Stockholders have agreed not to offer, sell or otherwise dispose of any shares of Class E Common Stock or any securities convertible into or exchangeable or exercisable for Class E Common Stock (other than transfers to or for the benefit of employee benefit plans of GM or any of its affiliates, including EDS) from the date of this Prospectus, in the case of the Hourly Plan Special Trust, until December 31, 1995 and, in the case of the Salaried Plan Trust, until 90 days after the date of this Prospectus, in each case, without the prior written consent of Merrill Lynch & Co. and Goldman, Sachs & Co. on behalf of the Representatives. Any prospective purchaser of shares of Class E Common Stock offered hereby that is an employee benefit plan subject to Title I of ERISA or Section 4975 of the Code should purchase such shares pursuant to the U.S. Offering unless, upon the advice of counsel, it concludes that such plan is permitted to purchase such shares in the International Offering or Asian Offering, as the case may be. Accordingly, all such plans are advised to consult with counsel before purchasing shares of Class E Common Stock outside the United States and Canada. Certain of the Underwriters or their affiliates have rendered, and are expected to continue to render, various investment banking and other advisory services to General Motors, EDS, the Selling Stockholders, the Hourly Plan and the Salaried Plan. They have received, and will continue to receive, customary compensation for such services. LEGAL MATTERS The legality of the shares of Class E Common Stock offered hereby will be passed upon for General Motors by Warren G. Andersen, Attorney, Legal Staff of General Motors. Certain matters relating to federal income tax considerations will be passed on by Anton H. Zidansek, Assistant General Tax Counsel, Tax Staff of General Motors. Mr. Andersen is the beneficial owner of shares, including shares subject to options, of $1 2/3 Par Value Common Stock, Class E Common Stock and Class H Common Stock. Mr. Zidansek is the beneficial owner of shares, including shares subject to options, of $1 2/3 Par Value Common Stock and Class E Common Stock. Certain legal matters related to this offering will be passed upon for the Underwriters by Davis Polk & Wardwell, New York, New York. Davis Polk & Wardwell acts as counsel to the Executive Compensation Committee of the General Motors Board of Directors and has acted as counsel for General Motors and its subsidiaries in various matters. EXPERTS The consolidated financial statements and the financial statement schedule included in the General Motors 1994 Form 10-K, incorporated by reference herein, have been audited by Deloitte & Touche LLP (as to financial statements and the financial statement schedule of General Motors and as to financial statements of Hughes) and KPMG Peat Marwick LLP (as to financial statements of EDS), independent auditors, as stated in their respective reports appearing therein, and have been so incorporated in reliance upon such reports given upon the authority of such firms as experts in accounting and auditing. The consolidated financial statements of EDS as of December 31, 1994 and 1993, and for each of the years in the three-year period ended December 31, 1994, included herein in Appendix A, have been audited by KPMG Peat Marwick LLP, independent auditors, as stated in their report appearing therein, and have been so included in reliance upon such report given upon the authority of that firm as experts in accounting and auditing. 37 40 APPENDIX A INDEPENDENT AUDITORS' REPORT The Board of Directors Electronic Data Systems Corporation: We have audited the accompanying consolidated balance sheets of Electronic Data Systems Corporation and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income and cash flows for each of the years in the three-year period ended December 31, 1994. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Electronic Data Systems Corporation and subsidiaries at December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1994, in conformity with generally accepted accounting principles. /s/ KPMG PEAT MARWICK LLP Dallas, Texas January 25, 1995 A-1 41 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN MILLIONS EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED MARCH 31, YEARS ENDED DECEMBER 31, -------------------- --------------------------------- 1995 1994 1994 1993 1992 -------- -------- --------- -------- -------- (UNAUDITED) Revenues Systems and other contracts GM and affiliates...................... $ 898.0 $ 841.7 $ 3,547.2 $3,323.7 $3,348.5 Outside customers...................... 1,878.3 1,375.5 6,412.9 5,183.6 4,806.7 Interest and other income................. 8.7 22.1 92.3 54.5 63.7 -------- -------- --------- -------- -------- Total revenues....................... 2,785.0 2,239.3 10,052.4 8,561.8 8,218.9 -------- -------- --------- -------- -------- Costs and expenses Cost of revenues.......................... 2,176.1 1,710.6 7,529.4 6,390.6 6,205.8 Selling, general, and administrative...... 281.0 250.8 1,187.1 1,005.4 969.3 Interest (Note 9)......................... 20.4 9.6 51.7 34.5 43.0 -------- -------- --------- -------- -------- Total costs and expenses............. 2,477.5 1,971.0 8,768.2 7,430.5 7,218.1 -------- -------- --------- -------- -------- Income before income taxes.................. 307.5 268.3 1,284.2 1,131.3 1,000.8 Provision for income taxes (Note 11)........ 110.7 96.6 462.3 407.3 365.3 -------- -------- --------- -------- -------- Separate Consolidated Net Income............ $ 196.8 $ 171.7 $ 821.9 $ 724.0 $ 635.5 ======= ======= ======== ======= ======= Available Separate Consolidated Net Income Average number of shares of GM Class E common stock outstanding (Note 1) (Numerator)............................... 300.0 257.9 260.3 243.0 209.1 Class E dividend base (Denominator)......... 482.4 481.2 481.7 480.6 479.3 Available Separate Consolidated Net Income.................................... $ 122.4 $ 92.1 $ 444.4 $ 367.2 $ 278.4 ======= ======= ======== ======= ======= Earnings Attributable to GM Class E Common Stock on a Per Share Basis (Note 1)....... $ 0.42 $ 0.36 $ 1.71 $ 1.51 $ 1.33 ======= ======= ======== ======= =======
See accompanying notes to consolidated financial statements. A-2 42 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN MILLIONS)
DECEMBER 31, MARCH 31, ------------------- 1995 1994 1993 ----------- -------- -------- (UNAUDITED) ASSETS Current assets Cash and cash equivalents.................................... $ 521.7 $ 608.2 $ 383.4 Marketable securities (Note 3)............................... 119.3 149.6 224.1 Accounts receivable.......................................... 2,114.1 2,082.1 1,412.5 Accounts receivable from GM and affiliates................... 192.4 65.4 112.6 Inventories.................................................. 140.3 137.8 130.7 Prepaids and other........................................... 377.7 311.0 243.5 --------- -------- -------- Total current assets...................................... 3,465.5 3,354.1 2,506.8 --------- -------- -------- Property and equipment, at cost less accumulated depreciation (Note 4) Land......................................................... 126.8 125.3 121.6 Buildings and facilities..................................... 536.7 559.2 532.0 Computer equipment........................................... 1,993.9 1,871.0 1,275.5 Other equipment and furniture................................ 223.8 201.1 185.6 --------- -------- -------- Total property and equipment, net......................... 2,881.2 2,756.6 2,114.7 --------- -------- -------- Operating and other assets Land held for development, at cost (Note 5).................. 98.3 97.4 94.4 Investment in leases and other (Note 6)...................... 1,435.9 1,308.8 1,159.9 Software, goodwill, and other intangibles, net (Notes 7 and 19)....................................................... 1,277.1 1,269.6 1,066.3 --------- -------- -------- Total operating and other assets.......................... 2,811.3 2,675.8 2,320.6 --------- -------- -------- Total Assets................................................... $ 9,158.0 $8,786.5 $6,942.1 ========= ======= ======= LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities Accounts payable............................................. $ 501.3 $ 571.1 $ 359.8 Accrued liabilities (Note 8)................................. 1,351.3 1,451.0 996.0 Deferred revenue............................................. 619.8 536.7 429.7 Income taxes (Note 11)....................................... 101.6 111.0 202.2 Notes payable (Note 9)....................................... 258.2 203.4 172.7 --------- -------- -------- Total current liabilities................................. 2,832.2 2,873.2 2,160.4 --------- -------- -------- Deferred income taxes (Note 11)................................ 712.9 659.8 641.5 --------- -------- -------- Notes payable (Note 9)......................................... 1,198.4 1,021.0 522.8 --------- -------- -------- Commitments and contingent liabilities (Notes 17 and 18) Stockholder's equity (Notes 10 and 12) Common stock, without par value; authorized 1,000.0 shares. Issued and outstanding 482.4 shares at March 31, 1995, and 481.7 and 480.9 shares at December 31, 1994 and 1993, respectively. ............................................ 506.4 455.1 421.2 Retained earnings............................................ 3,908.1 3,777.4 3,196.2 --------- -------- -------- Total stockholder's equity................................ 4,414.5 4,232.5 3,617.4 --------- -------- -------- Total Liabilities and Stockholder's Equity..................... $ 9,158.0 $8,786.5 $6,942.1 ========= ======= =======
See accompanying notes to consolidated financial statements. A-3 43 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN MILLIONS)
THREE MONTHS ENDED MARCH 31, YEARS ENDED DECEMBER 31, ------------------ ---------------------------------- 1995 1994 1994 1993 1992 ------- ------- --------- --------- -------- (UNAUDITED) Cash Flows from Operating Activities Net income....................................... $ 196.8 $ 171.7 $ 821.9 $ 724.0 $ 635.5 ------- ------- --------- --------- -------- Adjustments to reconcile net income to net cash provided by operating activities (net of effects of acquired companies) Depreciation and amortization.................. 231.0 156.9 741.3 607.9 603.2 Accretion of discount related to commercial paper....................................... 14.6 3.8 30.9 13.4 8.3 (Increase) decrease in accounts receivable..... (45.1) 21.9 (585.0) (199.8) 18.6 (Increase) decrease in accounts receivable from GM and affiliates........................... (123.1) 25.5 51.1 (56.0) 2.3 (Increase) decrease in inventories............. 0.2 (18.5) (1.9) (15.5) (22.3) Increase in prepaids and other................. (65.3) (33.2) (57.0) (26.8) (29.8) Increase (decrease) in accounts payable and accrued liabilities......................... (230.6) 5.6 482.9 22.0 (181.4) Increase (decrease) in deferred revenue........ 68.0 (11.5) 79.1 137.1 1.6 Increase (decrease) in income taxes............ (9.5) 10.5 (94.4) 138.9 (98.2) Increase in deferred income taxes.............. 56.1 35.6 21.9 49.8 198.0 ------- ------- --------- --------- -------- Total adjustments........................... (103.7) 196.6 668.9 671.0 500.3 ------- ------- --------- --------- -------- Net cash provided by operating activities........ 93.1 368.3 1,490.8 1,395.0 1,135.8 ------- ------- --------- --------- -------- Cash Flows from Investing Activities Payments for purchase of available-for-sale securities..................................... (10.8) (38.6) (248.9) (305.7) (291.2) Proceeds from sale of available-for-sale securities..................................... 64.0 70.3 370.0 247.4 277.9 Payments related to land held for development.... (0.9) (1.4) (3.0) (6.2) (16.6) Payments for investment in leases and certain other assets................................... (144.1) (257.2) (518.0) (293.5) (456.7) Proceeds from investment in leases and certain other assets................................... 27.6 96.8 318.5 348.8 406.7 Payments for purchase of software and certain other intangibles.............................. (5.0) (4.8) (96.7) (119.0) (64.5) Payments for purchase of property and equipment...................................... (263.8) (156.3) (1,120.9) (799.4) (639.0) Payments related to acquisitions, net of cash acquired....................................... (40.9) (0.7) (186.6) (122.1) (30.2) ------- ------- --------- --------- -------- Net cash used in investing activities............ (373.9) (291.9) (1,485.6) (1,049.7) (813.6) ------- ------- --------- --------- -------- Cash Flows from Financing Activities Net increase (decrease) in current notes payable with maturities less than 90 days.............. 48.8 (43.6) (102.9) (99.0) (239.4) Payments on notes payable........................ (62.6) (31.8) (197.2) (220.5) (800.2) Proceeds from notes payable...................... 216.3 205.7 690.3 91.5 1,032.5 Proceeds from (payments on) advances from GM..... -- (0.3) 1.1 (5.4) (16.0) Proceeds from issuance of common stock........... 51.3 25.1 33.9 55.3 42.5 Cash dividends paid to GM........................ (62.6) (57.7) (231.1) (192.1) (172.4) ------- ------- --------- --------- -------- Net cash provided by (used in) financing activities..................................... 191.2 97.4 194.1 (370.2) (153.0) ------- ------- --------- --------- -------- Effect of Exchange Rate Changes on Cash and Cash Equivalents...................................... 3.1 2.5 25.5 (13.6) (7.9) ------- ------- --------- --------- -------- Net Increase (Decrease) in Cash and Cash Equivalents...................................... (86.5) 176.3 224.8 (38.5) 161.3 Cash and Cash Equivalents at Beginning of Period... 608.2 383.4 383.4 421.9 260.6 ------- ------- --------- --------- -------- Cash and Cash Equivalents at End of Period......... $ 521.7 $ 559.7 $ 608.2 $ 383.4 $ 421.9 ======== ======== ========== ========== =========
See accompanying notes to consolidated financial statements. A-4 44 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992 AND THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (UNAUDITED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INTERIM FINANCIAL INFORMATION In the opinion of management, the unaudited interim consolidated financial statements as of March 31, 1995 and for the three months ended March 31, 1995 and 1994, reflect all adjustments, consisting of only normal recurring items (with the exception of the accounting change in 1994 to adopt Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities), which are necessary for a fair presentation of the results for the interim periods presented. The results for interim periods are not necessarily indicative of results which may be expected for any other interim period or for the full year. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Electronic Data Systems Corporation and all majority-owned subsidiaries. As used herein, the terms "EDS" and "the Company" refer to Electronic Data Systems Corporation and its consolidated subsidiaries. EDS is a wholly owned subsidiary of General Motors Corporation (GM). The Company's investments in companies in which it has the ability to exercise significant influence over operating and financial policies are accounted for under the equity method, with the remaining investments carried at cost. Earnings Attributable to GM Class E Common Stock on a Per Share Basis have been determined based on the relative amounts available for the payment of dividends to holders of GM Class E common stock. Holders of GM Class E common stock have no direct rights in the equity or assets of EDS, but rather have rights in the equity and assets of GM (which includes 100% of the stock of EDS). Dividends on the GM Class E common stock are declared out of the Available Separate Consolidated Net Income of EDS earned since the acquisition of EDS by GM. The Available Separate Consolidated Net Income of EDS is determined quarterly and is equal to the separate consolidated net income of EDS, excluding the effects of purchase accounting adjustments arising from the acquisition of EDS, multiplied by a fraction, the numerator of which is a number equal to the weighted average number of shares of GM Class E common stock outstanding during the period and the denominator of which was 482.4 million and 481.2 million for the first quarter of 1995 and 1994, respectively. For the fourth quarter of 1994, the denominator was 481.7 million. Comparable denominators for the fourth quarters of 1993 and 1992 were 480.6 million and 479.3 million, respectively. On March 13, 1995, GM contributed approximately 173 million shares of GM Class E common stock to its hourly pension plan. This contribution increased the weighted average shares outstanding during the three months ended March 31, 1995. GM Series C depositary shares represent ownership of one-tenth of a share of GM Series C convertible preference stock. GM Series C depositary shares and GM Series C preference stocks are convertible into GM Class E common stock and are common stock equivalents for purposes of computing Earnings Attributable to GM Class E Common Stock on a Per Share Basis. On November 2, 1992, GM Series E-II and E-III preference stocks, previously held by the GM pension plans, were converted to GM Class E common stock. In 1993 and 1992, GM Series E-1 preference stock was converted to GM Class E common stock, or redeemed by GM. The issuances and conversions of such preference stocks have no dilutive effect on the GM Class E common stock, because to the extent that shares of GM Class E common stock deemed to be outstanding would increase, such increased shares would increase the numerator of the fraction used to determine Available Separate Consolidated Net Income, but would have no effect on the denominator. The denominator used in determining the Available Separate Consolidated Net Income of EDS is adjusted as deemed appropriate by the GM Board of Directors to reflect subdivisions or combinations of the GM Class E common stock and to reflect certain transfers of capital to or from EDS. The Board's discretion A-5 45 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED to make such adjustments is limited by criteria set forth in GM's Certificate of Incorporation. In 1994 and 1988, EDS initiated programs to repurchase 9.5 million and 11.0 million shares, respectively, of GM Class E common stock in order to meet certain future requirements of the Company's employee benefit plans. The GM Board has generally caused the denominator used in calculating the Available Separate Consolidated Net Income of EDS to decrease as shares are purchased and to increase as shares are used for the employee benefit plans. The current GM Board policy is that the cash dividends on the GM Class E common stock, when, as, and if declared by the GM Board in its sole discretion, will equal approximately 30% of the Available Separate Consolidated Net Income of EDS for the prior year. CASH AND CASH EQUIVALENTS The carrying amount approximates fair value because of the short maturity of these instruments. DEBT AND MARKETABLE EQUITY SECURITIES Marketable securities at December 31, 1994 consist of securities issued by the U.S. Treasury, states, and political subdivisions, as well as mortgage-backed debt, corporate debt and corporate equity securities. The Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities, effective January 1, 1994. Pursuant to SFAS No. 115, the provisions of the Statement were not applied retroactively. The change had no material cumulative effect on the Company's financial position or results of operations. Prior to the adoption of SFAS No. 115, equity and debt securities were carried at the lower of aggregate cost or market and on an amortized cost basis, respectively. Under SFAS No. 115, the Company classifies all of its debt and marketable equity securities as available-for-sale. Management determines the appropriate classification of all securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Noncurrent available-for-sale securities are reported within the balance sheet classification Investment in Leases and Other. The Company's available-for-sale securities are recorded at fair value. Unrealized holding gains and losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of stockholder's equity until realized. A decline in the market value of any available-for-sale security below cost that is deemed other than temporary is charged to earnings, resulting in the establishment of a new cost basis for the security. INVENTORY VALUATION Inventories are stated principally at the lower of cost or market using the first-in, first-out method. PROPERTY AND EQUIPMENT Property and equipment are carried at cost. Depreciation of property and equipment is calculated using the straight-line method over the lesser of the asset's estimated useful life, the life of the related customer contract, or the term of the lease in the case of leasehold improvements. The ranges of estimated useful lives are as follows:
YEARS ----- Buildings..................................... 20-40 Facilities.................................... 5-20 Computer equipment............................ 3-7 Other equipment and furniture................. 3-15
A-6 46 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED SOFTWARE, GOODWILL, AND OTHER INTANGIBLES Software purchased by the Company and utilized in designing, installing, and operating business information and communications systems is capitalized and amortized on a straight-line basis over a five- to eight-year period. Costs of developing and maintaining software systems are incurred primarily in connection with customer contracts and are generally expensed as incurred. Software development costs that meet the capitalization and recoverability requirements of SFAS No. 86, Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed, are capitalized and generally amortized on a straight-line basis over three years. Such amounts were not significant. Goodwill, which represents the excess of the purchase price over the fair value of identifiable net assets acquired, is amortized on a straight-line basis over the expected period of benefit, five to 40 years. The Company assesses the recoverability of this intangible asset by determining whether its balance can be recovered over its remaining life. The amount of goodwill impairment, if any, is measured based on the expected undiscounted cash flows of the acquired operation. Other intangibles are amortized on a straight-line basis over the anticipated period of benefit, which is generally five to 10 years. REVENUE RECOGNITION The Company provides services under level-of-effort and fixed-price contracts, with the length of the Company's contracts ranging up to ten years. For level-of-effort types of contracts, revenue is earned based on the agreed-upon billing amounts as services are provided to the customer. For certain fixed-price contracts, revenue is recognized on the percentage-of-completion method. Revenue earned is based on the percentage that incurred costs to date bear to total estimated costs after giving effect to the most recent estimates of total cost. Deferred revenue of $536.7 million and $429.7 million at December 31, 1994 and 1993, respectively, represents billings in excess of costs and related profits on certain contracts. Included in accounts receivable are unbilled receivables of $448.5 million and $314.9 million at December 31, 1994 and 1993, respectively. Such unbilled receivables for certain contracts in progress represent costs and related profits in excess of billings, and such amounts were not billable at the balance sheet date. These billings on fixed-price contracts will be made in the future in accordance with contractual agreements. Of the unbilled receivables at December 31, 1994, billings to such customers amounting to $194.6 million are expected to be collected in 1996 and thereafter. CURRENCY TRANSLATION Assets and liabilities of non-U.S. subsidiaries whose functional currency is not the U.S. dollar are translated at current exchange rates. Revenue and expense accounts are translated using an average rate for the period. Translation gains and losses are not included in determining net income but are reflected as a separate component of stockholder's equity. Nonfunctional currency transaction gains (losses) are included in determining net income and were $4.5 million, ($3.7) million, and ($1.5) million, net of income taxes, for the years ended December 31, 1994, 1993, and 1992, respectively. INCOME TAXES The Company provides for deferred taxes under the asset and liability method of SFAS No. 109, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered. The Company is included in the consolidated Federal tax returns filed by GM. Current Federal A-7 47 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED income taxes are calculated on a separate return basis and remitted to GM. The deferral method is used to account for investment tax credits. STATEMENT OF CASH FLOWS The Company uses the indirect method to present cash flows from operating activities and considers certificates of deposit, as well as the following items with original maturities of three months or less, to be cash equivalents: commercial paper, repurchase agreements, and money market funds. (See Note 20.) FAIR VALUE OF FINANCIAL INSTRUMENTS SFAS No. 107, Disclosures about the Fair Value of Financial Instruments, defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. All of the Company's financial instruments, including foreign exchange-forward contracts disclosed at Note 15, are presented in the Consolidated Balance Sheets at their fair values at December 31, 1994, with the exception of the following (in millions):
DECEMBER 31, 1994 -------------------- CARRYING FAIR AMOUNT VALUE -------- -------- Financial Assets (Note 6) Investments in joint ventures and partnerships......................... $ 149.6 $ 172.0 Long-term securities................................................... 201.2 192.6 Noncurrent notes receivable............................................ 158.1 154.4 Financial liabilities Notes payable (Note 9)................................................. 1,224.4 1,230.3
Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers comprising the Company's customer base and their dispersion across different industry and geographic areas. DERIVATIVES Derivative financial instruments are used by the Company in the management of its interest rate and foreign currency exposures. Net payments or receipts under the Company's interest rate swap agreements are recorded as adjustments to interest expense. Foreign exchange-forward contracts are recorded in the Company's Consolidated Balance Sheets at fair value as of the reporting date. Realized and unrealized changes in fair value are recognized in income, as other income, in the period in which the changes occur. NEW ACCOUNTING STANDARDS The Financial Accounting Standards Board (FASB) has issued SFAS No. 118, Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosures, which will become effective for fiscal years beginning in 1995. The effect of this Statement, if implemented currently, would not be material. NOTE 2. NATIONAL HERITAGE INSURANCE COMPANY National Heritage Insurance Company (NHIC), a wholly owned subsidiary of EDS, acts as underwriter for claims benefit payments for the Medicaid welfare program contract for the state of Texas. The state of Indiana awarded EDS a fiscal agent contract for the Medicaid welfare program effective July 1, 1994, which was previously underwritten by NHIC. A-8 48 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED The contracts provide that payments from the states be deposited in trust accounts that are not included in the consolidated financial statements. Of such payments received for the years ended December 31, 1994, 1993, and 1992, $4,188.7 million, $4,453.4 million, and $3,664.1 million, respectively, were designated for the payment of benefit claims or to be returned to the states. At December 31, 1994 and 1993, $983.5 million and $1,316.3 million, respectively, of such designated funds at amortized cost remained in the trust accounts. Approximate market values of these invested funds at December 31, 1994 and 1993 were $975.2 million and $1,315.3 million, respectively. These investments primarily consist of corporate and government bonds. NHIC intends to hold these investments until their full face value can be realized. Gains and losses from the sale of these investments held in trust accounts are combined with gains and losses from the Company's other investments. NOTE 3. DEBT AND MARKETABLE EQUITY SECURITIES Following is a summary of available-for-sale securities as of December 31, 1994 (in millions):
GROSS GROSS AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE --------- ---------- ---------- ------ Current: U.S. government and agency obligations............... $ 31.9 $ -- $0.6 $ 31.3 Other debt securities................................ 94.9 0.2 4.7 90.4 --------- ----- ----- ------ Total debt securities............................. 126.8 0.2 5.3 121.7 Equity securities.................................... 29.2 -- 1.3 27.9 --------- ----- ----- ------ Total current available-for-sale securities............ $ 156.0 $0.2 $6.6 $149.6 ======= ===== ====== ====== Non-Current (Note 6) Other debt securities................................ $ 0.6 $ -- $ -- $ 0.6 Equity securities.................................... 60.5 -- 2.4 58.1 --------- ----- ----- ------ Total noncurrent available-for-sale securities.... $ 61.1 $ -- $2.4 $ 58.7 ======= ===== ===== ======
The amortized cost and estimated fair value of debt and marketable equity securities at December 31, 1994, by contractual maturity, are shown below (in millions). Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to repay obligations without prepayment penalties.
DECEMBER 31, 1994 ------------------- AMORTIZED FAIR COST VALUE --------- ------ (IN MILLIONS) Debt securities Due in one year or less................................... $ 41.6 $ 41.1 Due after one year through five years..................... 51.8 50.8 Due after five years through 10 years..................... 7.1 7.0 Due after 10 years........................................ 13.5 13.3 Mortgage-backed securities................................ 13.4 10.1 --------- ------ Total debt securities.................................. 127.4 122.3 Equity securities........................................... 89.7 86.0 --------- ------ Total available-for-sale securities.................... $ 217.1 $208.3 ======= ======
A-9 49 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED Proceeds from sales of available-for-sale securities (excluding gains, losses, amortization of related discount or premium, effects of foreign currency translation, and acquisitions) were $370.0 million. Without these adjustments, proceeds from sales of available-for-sale securities during 1994 were $387.6 million. Gross gains of $17.4 million and gross losses of ($4.1) million were realized during 1994 on sales of available-for-sale securities. Realized gains and losses in 1993 and 1992 were not significant. Specific identification was used to determine cost in computing realized gain or loss. NOTE 4. PROPERTY AND EQUIPMENT
ACCUMULATED COST DEPRECIATION NET -------- ------------ -------- (IN MILLIONS) DECEMBER 31, 1994 Land.......................................................... $ 125.3 $ -- $ 125.3 Buildings and facilities...................................... 878.7 319.5 559.2 Computer equipment............................................ 3,967.6 2,096.6 1,871.0 Other equipment and furniture................................. 465.9 264.8 201.1 -------- -------- -------- Total.................................................... $5,437.5 $2,680.9 $2,756.6 ======== ======== ======== DECEMBER 31, 1993 Land.......................................................... $ 121.6 $ -- $ 121.6 Buildings and facilities...................................... 815.1 283.1 532.0 Computer equipment............................................ 3,158.6 1,883.1 1,275.5 Other equipment and furniture................................. 425.1 239.5 185.6 -------- -------- -------- Total.................................................... $4,520.4 $2,405.7 $2,114.7 ======== ======== ========
NOTE 5. LAND HELD FOR DEVELOPMENT Land held for development at December 31, 1994 consists of approximately 2,222 acres located throughout the Dallas metropolitan area. Approximately 1,590 acres of land, site of a commercial real estate development, are located in Plano, Texas. A-10 50 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED NOTE 6. INVESTMENT IN LEASES AND OTHER
DECEMBER 31, -------------------- 1994 1993 -------- -------- (IN MILLIONS) Lease contracts receivable (net of principal and interest on nonrecourse debt).................................................................. $ 384.5 $ 396.8 Estimated residual values of leased assets (not guaranteed).............. 339.0 337.7 Unearned income, including deferred investment tax credits............... (260.6) (271.3) -------- -------- Investment in leveraged leases (excluding deferred taxes of $284.7 and $307.4 at December 31, 1994 and 1993, respectively)................. 462.9 463.2 Investment in securities, joint ventures, and partnerships............... 357.2 249.9 Investment in direct financing leases, net of unearned income............ 153.8 158.6 Noncurrent notes receivable.............................................. 158.1 118.1 GM Class E common stock held for benefit plans........................... 54.7 62.4 Investment in tax benefit transfers...................................... 38.6 40.9 Other.................................................................... 83.5 66.8 -------- -------- Total............................................................... $1,308.8 $1,159.9 ======== ========
The fair values of certain long-term investments are estimated based on quoted market prices for these or similar investments. For other investments, a variety of methods are used to estimate fair value, including external valuations and discounted cash flows. At December 31, 1994, the fair values of investments in joint ventures and partnerships (accounted for using the cost method), long-term securities, and noncurrent notes receivable were estimated to be $172.0 million, $192.6 million, and $154.4 million, respectively, with carrying amounts of $149.6 million, $201.2 million, and $158.1 million, respectively. At December 31, 1993, the fair values of investments in joint ventures and partnerships (accounted for using the cost method), long-term securities, and noncurrent notes receivable were estimated to be $275.0 million, $152.8 million, and $114.9 million, respectively, with carrying amounts of $241.1 million, $128.5 million, and $118.1 million, respectively. Long-term securities include GM Class E common stock and other securities. The carrying value of the GM Class E common stock, which was less than the market value, was utilized to estimate the investment's fair value shown above because the stock will be used to satisfy future benefit plan obligations. Financing leases that are financed with nonrecourse borrowings at lease inception are accounted for as leveraged leases. Such borrowings are secured by substantially all of the lessor's rights under the lease plus the residual value of the asset. For Federal income tax purposes, the Company receives the investment tax credit (if available) at lease inception and has the benefit of tax deductions for depreciation on the leased asset and for interest on the nonrecourse debt. A portion of the Company's leveraged lease portfolio is concentrated within the airline industry. The Company historically has not experienced credit losses from these transactions, and the portfolio is diversified among unrelated lessees. A-11 51 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED NOTE 7. SOFTWARE, GOODWILL, AND OTHER INTANGIBLES
ACCUMULATED COST AMORTIZATION NET -------- ------------ -------- (IN MILLIONS) DECEMBER 31, 1994 Software...................................................... $ 876.0 $462.1 $ 413.9 Goodwill...................................................... 833.9 80.4 753.5 Other intangibles............................................. 312.8 210.6 102.2 -------- ------ -------- Total.................................................... $2,022.7 $753.1 $1,269.6 ======== ====== ======== DECEMBER 31, 1993 Software...................................................... $ 791.5 $374.2 $ 417.3 Goodwill...................................................... 595.8 58.4 537.4 Other intangibles............................................. 235.2 123.6 111.6 -------- ------ -------- Total.................................................... $1,622.5 $556.2 $1,066.3 ======== ====== ========
NOTE 8. ACCRUED LIABILITIES
DECEMBER 31, -------------------- 1994 1993 -------- ------ (IN MILLIONS) Contract related........................................................ $ 880.9 $368.6 Payroll related......................................................... 196.4 286.8 Operating expenses...................................................... 196.1 205.2 Property, sales, and franchise taxes.................................... 100.1 82.5 Claims settlement (Note 2).............................................. 21.3 30.1 Other................................................................... 56.2 22.8 -------- ------ Total.............................................................. $1,451.0 $996.0 ======== ======
NOTE 9. NOTES PAYABLE
DECEMBER 31, -------------------- 1994 1993 -------- ------ (IN MILLIONS) Commercial paper, 5.5% to 6.3%.......................................... $ 933.0 $398.6 Lines of credit, variable rate 6.5% to 10.3%, due 1995.................. 48.7 135.7 Notes, variable rate 5.7% to 12.5%, due 1995 to 2006.................... 91.2 85.1 Notes, fixed rate 2.8% to 12.95%, due 1995 to 2003...................... 151.5 76.1 -------- ------ Total.............................................................. 1,224.4 695.5 Less current maturities classified as notes payable................ 203.4 172.7 -------- ------ Noncurrent notes payable........................................... $1,021.0 $522.8 ======== ======
Commercial paper is classified as noncurrent debt as it is intended to be maintained on a long-term basis with ongoing credit availability provided by the Company's revolving, committed lines of credit. During 1994, the Company revised its agreement with a syndicate of banks, which increased to $1,800.0 million its committed lines of credit, of which $900.0 million expires in 1995 with the option to convert any outstanding amounts under these lines into term loans that mature in 1997. The remaining $900.0 million expires in 1999. A-12 52 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED Upon expiration of the commitment periods, the lenders and EDS have the option to extend the commitment. In addition, as of December 31, 1994, the Company had available another $15.5 million in committed lines of credit, of which $2.2 million remained unused. The Company also had available $529.9 million in uncommitted short-term lines of credit, of which $494.5 million remained unused at December 31, 1994. These lines of credit do not require material commitment fees, compensating balances, or collateral. Under the terms of the $1,800.0 million agreement, the Company is required to maintain a consolidated net worth of $2,631.8 million, increasing quarterly by 50 percent of the Company's consolidated net income after June 30, 1994. Notes payable relate to land held for development, property and equipment, acquisitions, and other items. These notes are generally unsecured, with certain notes secured by assets of a majority-owned subsidiary. At December 31, 1994, the Company had no interest rate swap agreements outstanding. At December 31, 1993, the Company had interest rate swap agreements outstanding that effectively converted the variable interest rates on an aggregate notional amount of $54.4 million to fixed interest rates ranging from 5.3% to 8.1%. At December 31, 1993, the estimated fair value of such contracts was ($0.8) million. Maturities of notes payable for years subsequent to December 31, 1994 are as follows (in millions): 1995......................................... $203.4 1996......................................... 43.3 1997......................................... 940.4 1998......................................... 5.4 1999......................................... 13.3 Thereafter................................... 18.6
For the years ended December 31, 1994, 1993, and 1992, interest costs of $1.2 million, $5.4 million, and $18.1 million, respectively, were capitalized, which, if charged to expense, would have resulted in reductions in net income of $0.7 million, $3.5 million, and $11.9 million, respectively. The fair value of notes payable is estimated based on the current rates offered to the Company for the same remaining maturities. At December 31, 1994 and 1993, the estimated fair value was $1,230.3 million and $703.5 million, respectively. A-13 53 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED NOTE 10. STOCKHOLDER'S EQUITY
COMMON STOCK CURRENCY MARKET ---------------- TRANS. VALUE RETAINED STOCKHOLDER'S (IN MILLIONS EXCEPT PER SHARE AMOUNTS) SHARES AMOUNT ADJUST. ADJUST. EARNINGS EQUITY -------------------------------------- ------ ------ -------- ------ -------- ------------- Balance at December 31, 1991..................... 478.0 $323.4 $ (0.2) $ -- $2,287.1 $ 2,610.3 Separate consolidated net income............... -- -- -- -- 635.5 635.5 Cash dividends declared -- $0.36 per share -- -- -- -- (172.4) (172.4) Stock option and award transactions............ 1.3 42.5 -- -- -- 42.5 Currency translation adjustment................ -- -- (52.5) -- -- (52.5) ----- ------ ------ ------ -------- --------- Balance at December 31, 1992..................... 479.3 365.9 (52.7) -- 2,750.2 3,063.4 Separate consolidated net income............... -- -- -- -- 724.0 724.0 Cash dividends declared -- $0.40 per share..... -- -- -- -- (192.1) (192.1) Stock option and award transactions............ 1.6 55.3 -- -- -- 55.3 Currency translation adjustment................ -- -- (33.2) -- -- (33.2) ----- ------ ------ ------ -------- --------- Balance at December 31, 1993..................... 480.9 421.2 (85.9) -- 3,282.1 3,617.4 Separate consolidated net income............... -- -- -- -- 821.9 821.9 Cash dividends declared -- $0.48 per share..... -- -- -- -- (231.1) (231.1) Stock option and award transactions............ 0.8 33.9 -- -- -- 33.9 Currency translation adjustment................ -- -- (3.0) -- -- (3.0) Unrealized loss on securities, net (Note 3).... -- -- -- (6.6) -- (6.6) ----- ------ ------ ------ -------- --------- Balance at December 31, 1994..................... 481.7 $455.1 $(88.9) $(6.6) $3,872.9 $ 4,232.5 ===== ====== ====== ====== ======== =========
As the sole stockholder of EDS, GM is able to cause EDS to pay cash dividends and make advances to or otherwise enter into transactions with GM as GM deems desirable and appropriate. GM reserves the right to cause EDS to pay cash dividends to GM in such amounts as GM determines are desirable under the then prevailing facts and circumstances. Such amounts may be the same as, greater than, or less than the cash dividends paid by GM on its Class E common stock. There is no fixed relationship, on a per share or aggregate basis, between the cash dividends that may be paid by GM to holders of its Class E common stock and the cash dividends or other amounts that may be paid by EDS to GM. NOTE 11. INCOME TAXES The current and deferred income tax liabilities (assets) are summarized as follows:
DECEMBER 31, ---------------- 1994 1993 ------ ------ (IN MILLIONS) Current payable.............................................. $ 49.3 $ 66.3 Current deferred............................................. 61.7 135.9 ------ ------ Total income taxes -- current........................... 111.0 202.2 Noncurrent deferred.......................................... 659.8 641.5 ------ ------ Total current and noncurrent income taxes............... $770.8 $843.7 ====== ======
A-14 54 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED The provision for income tax expense is summarized as follows:
U.S. U.S. YEAR ENDED FEDERAL NON-U.S. STATE TOTAL ---------- ------- -------- ----- ------ (IN MILLIONS) DECEMBER 31, 1994 Current..................................................... $ 279.0 $167.9 $32.6 $479.5 Deferred.................................................... 15.8 (33.0) -- (17.2) ------- ------ ----- ------ Total.................................................. $ 294.8 $134.9 $32.6 $462.3 ======= ====== ===== ====== DECEMBER 31, 1993 Current..................................................... $ 130.1 $ 77.8 $17.0 $224.9 Deferred.................................................... 161.0 21.4 -- 182.4 ------- ------ ----- ------ Total.................................................. $ 291.1 $ 99.2 $17.0 $407.3 ======= ====== ===== ====== DECEMBER 31, 1992 Current..................................................... $ 113.9 $ 97.3 $21.0 $232.2 Deferred.................................................... 145.0 (11.9) -- 133.1 ------- ------ ----- ------ Total.................................................. $ 258.9 $ 85.4 $21.0 $365.3 ======= ====== ===== ======
Income before income taxes included the following components:
YEARS ENDED DECEMBER 31, -------------------------------- 1994 1993 1992 -------- -------- -------- (IN MILLIONS) U.S. income...................................... $ 963.5 $ 886.1 $ 781.9 Non-U.S. income.................................. 320.7 245.2 218.9 -------- -------- -------- Total....................................... $1,284.2 $1,131.3 $1,000.8 ======== ======== ========
A reconciliation of income tax expense using the statutory Federal income tax rate of 35.0% for 1994 and 1993 and 34.0% for 1992 to the actual income tax expense follows:
YEARS ENDED DECEMBER 31, -------------------------------- 1994 1993 1992 -------- -------- -------- (IN MILLIONS) Income before income taxes..................................... $1,284.2 $1,131.3 $1,000.8 ======== ======== ======== Statutory Federal income tax................................... $ 449.5 $ 395.9 $ 340.3 Non-U.S. taxes, net of credit.................................. 18.9 13.4 10.3 U.S. State income tax, net..................................... 21.2 11.1 13.8 Investment tax credit -- leveraged leases...................... (3.1) (4.4) (2.8) Research and experimentation credits........................... (11.3) (8.8) (5.2) Other.......................................................... (12.9) 0.1 8.9 -------- -------- -------- Total..................................................... $ 462.3 $ 407.3 $ 365.3 ======== ======== ======== Effective income tax rate...................................... 36.0% 36.0% 36.5% ==== ==== ====
A-15 55 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED The tax effects of temporary differences and carryforwards, which result in a significant portion of the deferred tax assets and liabilities, are as follows:
DECEMBER 31, 1994 DECEMBER 31, 1993 ---------------------- --------------------- ASSETS LIABILITIES ASSETS LIABILITIES ------- ----------- ------ ----------- (IN MILLIONS) Basis differences attributable to leasing activities.... $ 2.5 $ 504.8 $ 6.4 $ 515.3 Adjustments necessary to convert accruals to a tax basis................................................. 111.9 215.1 76.8 200.1 Employee benefit plans.................................. 32.0 25.9 17.5 27.0 Accumulated tax depreciation/amortization versus accumulated financial statement depreciation/amortization............................. 18.7 211.2 26.1 186.0 Effect on deferred taxes of carryforwards............... 102.9 -- 110.0 -- Other................................................... 232.1 153.5 126.0 119.5 ------- ---------- ------ ---------- Subtotal........................................... 500.1 1,110.5 362.8 1,047.9 Less valuation allowance........................... (111.1) -- (92.3) -- ------- ---------- ------ ---------- Total deferred taxes............................... $ 389.0 $ 1,110.5 $270.5 $ 1,047.9 ======= ========== ====== ==========
The net changes in the total valuation allowance for the years ended December 31, 1994 and 1993 were increases of $18.8 million and $43.7 million, respectively. Certain of the Company's foreign subsidiaries have net operating loss carryforwards which expire over an indefinite period. A majority of such carryforwards are included in the valuation allowance. NOTE 12. STOCK PURCHASE AND INCENTIVE PLANS The 1984 Electronic Data Systems Corporation Employee Stock Purchase Plan (Purchase Plan) enables EDS employees to purchase up to 80.0 million shares of GM Class E common stock at 85% of the quoted market price through payroll deductions of up to 10% of their compensation. Shares of GM Class E common stock purchased under the Purchase Plan may not be sold or transferred within two years of the date of purchase unless they are first offered to GM or EDS at the lesser of the original purchase price or the fair market value on the date of sale. The number of shares available for future sale under the Purchase Plan was 59.5 million shares at December 31, 1994. The 1984 Electronic Data Systems Corporation Stock Incentive Plan (1984 Plan) covers up to 160.0 million shares of GM Class E common stock. The 1984 Plan, which was scheduled to expire on October 17, 1994, was amended to change the expiration date to October 17, 2004, thus extending the term for an additional 10 years. During the 20-year life of the 1984 Plan, shares and rights or options to acquire shares, which may be subject to restrictions, may be granted or sold. The maximum number of shares for which additional shares, rights, or options may be granted or sold under the provisions of the 1984 Plan was 99.6 million shares at December 31, 1994. The EDS Incentive and Compensation Committee (the Committee) has granted the right to purchase a total of 27.6 million shares of GM Class E common stock, at prices of $0.0125 and $0.025 per share, to key employees under the provisions of the 1984 Plan. These shares will vest over various periods up to 10 years from the date of grant. The difference between the quoted market price as of the date of grant and the purchase price of shares granted is charged to operations over the vesting period. Expense for these awards amounted to $13.3 million, $16.3 million, and $14.9 million for the years ended December 31, 1994, 1993, and 1992, respectively. As of December 31, 1989, the Company had purchased 11.0 million shares of GM Class E common stock to be distributed to key employees under the provisions of the 1984 Plan. In 1994, 1991, and 1988, the A-16 56 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED Committee approved restricted stock unit grants. The 1994 grant, totaling 9.5 million shares of GM Class E common stock, will be distributed to key employees under the provisions of the 1984 Plan. The right to receive shares is a restricted stock unit. All units granted are generally scheduled to vest over a period of 10 years. The 1994 units are scheduled to vest beginning March 1995. The 1991 grant began vesting in March 1992, while the 1988 grant began vesting in March 1989. The quoted market price as of the date of grant is charged to operations over the vesting period. The Company has a bonus plan under which awards are granted to key executives and employees. Bonus expense amounted to $86.6 million, $49.8 million, and $44.6 million for the years ended December 31, 1994, 1993, and 1992, respectively. Included in bonus expense is $48.7 million, $17.5 million, and $15.5 million relating to the restricted stock unit grants for the years ended December 31, 1994, 1993, and 1992, respectively. NOTE 13. DEFERRED COMPENSATION PLAN The EDS Deferred Compensation Plan (Plan) provides a long-term savings program for participants. The Plan allows eligible employees to contribute a percentage of their compensation to a savings program and to defer income taxes until the time of distribution. NOTE 14. SEGMENT INFORMATION INDUSTRY SEGMENTS The Company's business involves operations in principally one industry segment: designing, installing, and operating business information and communications systems. Revenues from GM contributed approximately 36%, 39%, and 41% of gross revenues for the years ended December 31, 1994, 1993, and 1992, respectively. GEOGRAPHIC SEGMENTS The following presents information about the Company's operations in different geographic areas: As of and for the Year Ended December 31, 1994
U.S. EUROPE OTHER TOTAL -------- -------- ------ -------- (IN MILLIONS) Systems and other contracts revenue GM and affiliates..................................... $2,764.4 $ 523.4 $259.4 $3,547.2 Outside customers..................................... 4,611.2 1,308.1 493.6 6,412.9 -------- -------- ------ -------- Total systems and other contracts revenue............... $7,375.6 $1,831.5 $753.0 $9,960.1 ======== ======== ====== ======== Operating income........................................ $1,008.6 $ 168.3 $ 66.7 $1,243.6 ======== ======== ====== ======== Identifiable assets..................................... $6,618.0 $1,573.8 $594.7 $8,786.5 ======== ======== ====== ========
A-17 57 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED As of and for the Year Ended December 31, 1993
U.S. EUROPE OTHER TOTAL -------- -------- ------ -------- (IN MILLIONS) Systems and other contracts revenue GM and affiliates..................................... $2,574.5 $ 511.2 $238.0 $3,323.7 Outside customers..................................... 4,004.5 911.6 267.5 5,183.6 -------- -------- ------ -------- Total systems and other contracts revenue............... $6,579.0 $1,422.8 $505.5 $8,507.3 ======== ======== ====== ======== Operating income........................................ $ 906.5 $ 148.7 $ 56.1 $1,111.3 ======== ======== ====== ======== Identifiable assets..................................... $5,350.6 $1,185.9 $405.6 $6,942.1 ======== ======== ====== ========
As of and for the Year Ended December 31, 1992
U.S. EUROPE OTHER TOTAL -------- -------- ------ -------- (IN MILLIONS) Systems and other contracts revenue GM and affiliates..................................... $2,562.9 $ 546.5 $239.1 $3,348.5 Outside customers..................................... 3,693.6 828.3 284.8 4,806.7 -------- -------- ------ -------- Total systems and other contracts revenue............... $6,256.5 $1,374.8 $523.9 $8,155.2 ======== ======== ====== ======== Operating income........................................ $ 773.3 $ 131.3 $ 75.5 $ 980.1 ======== ======== ====== ======== Identifiable assets..................................... $4,750.3 $1,008.7 $364.5 $6,123.5 ======== ======== ====== ========
NOTE 15. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT The Company operates on a global basis, receiving revenues and incurring expenses in many different countries. As a result of these activities, the Company has exposure to market risks arising from changes in interest rates and foreign exchange rates. Derivative financial instruments are used by the Company for the purpose of hedging against these risks, to which the Company is exposed in the normal course of business, by creating offsetting market exposures. The Company's use of such instruments in relation to such risks is explained below. The Company does not hold or issue financial instruments for trading purposes. The notional amounts of derivatives contracts are summarized below as part of the description of the instruments utilized. The notional amounts do not represent the amounts exchanged by the parties, and thus are not a measure of the exposure of the Company through its use of derivatives. The amounts exchanged by the parties are normally based upon the notional amounts and the other terms of the derivatives. The Company is not a party to leveraged derivatives. INTEREST RISK MANAGEMENT The Company has historically entered into interest rate swap agreements in order to reduce the impact of changes in interest rates upon its floating-rate debt. As of December 31, 1994, all such contracts had matured and the Company had no outstanding interest rate swap agreements. FOREIGN EXCHANGE RISK MANAGEMENT The Company uses derivative financial instruments, particularly foreign exchange-forward contracts, to hedge transactions denominated in different currencies on a continuing basis. The purpose of the Company's hedging activities is to reduce the levels of risk to which it is exposed resulting from exchange-rate movements. At December 31, 1994 and 1993, the Company had forward exchange contracts maturing in the following year to purchase various foreign currencies in the amount of $289.0 million and $276.9 million, A-18 58 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED respectively, and to sell $766.5 million and $286.0 million, respectively. The estimated fair value of forward exchange contracts is based on quoted market prices. At December 31, 1994, the estimated fair value of outstanding contracts in a gain position was $3.3 million and the estimated fair value of outstanding contracts in a loss position was ($4.2) million. At December 31, 1993, the estimated fair value of outstanding contracts in a gain position was $2.7 million and the estimated fair value of outstanding contracts in a loss position was ($3.3) million. The Company recognizes realized and unrealized gains and losses on foreign exchange contracts by marking to market all outstanding forward exchange contracts. The Company is exposed to credit risk in the event of nonperformance by counterparties to foreign exchange contracts, but because the Company deals only with major commercial banks with high quality credit, the Company does not anticipate nonperformance by any of these counterparties. NOTE 16. RETIREMENT PLANS The Company has pension plans (the Plans) covering substantially all of its employees, the majority of which are noncontributory. In general, employees become fully vested upon attaining five years of service, and benefits are based on years of service and earnings. The actuarial cost method currently used is the projected unit credit cost method. The Company's U.S. funding policy is to contribute amounts that fall within the range of deductible contributions for Federal income tax purposes. The weighted average assumptions used for the Plans are as follows:
YEARS ENDED DECEMBER 31, ------------------------ 1994 1993 1992 ---- ---- ---- Discount rate........................................................ 8.9% 7.7 % 9.1 % Rate of increase in compensation levels.............................. 5.7% 5.9 % 5.3 % Long-term rate of return on assets................................... 10.0% 9.8 % 9.7 %
Net pension cost consisted of the following components:
YEARS ENDED DECEMBER 31, --------------------------- 1994 1993 1992 ------ ------- ------ (IN MILLIONS) Service cost of the current period................................. $ 96.1 $ 72.6 $ 67.8 Interest cost on projected benefit obligation...................... 82.3 69.8 62.0 Actual return on assets............................................ (22.3) (121.3) (19.3) Net amortization and deferral...................................... (37.9) 75.2 (24.1) ------ ------- ------ Net pension cost................................................... $118.2 $ 96.3 $ 86.4 ====== ======= ======
At December 31, 1994 and 1993, the Plans' assets consisted principally of marketable securities. Accrued and/or prepaid pension cost is included in Accrued Liabilities and Prepaids and Other in the Company's Consolidated Balance Sheets. A-19 59 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED The following is a reconciliation of the funded status of the Plans (in millions):
DECEMBER 31, 1994 DECEMBER 31, 1993 -------------------- -------------------- ASSETS ACCUM. ASSETS ACCUM. EXCEED BENEFITS EXCEED BENEFITS ACCUM. EXCEED ACCUM. EXCEED BENEFITS ASSETS BENEFITS ASSETS -------- -------- -------- -------- Plans' assets at fair value.............................. $ 918.3 $ -- $ 671.0 $ 6.1 ======= ======== ======== ======== Actuarial present value of benefit obligation Vested benefits........................................ $ 485.9 $ 56.1 $ 472.6 $ 50.8 Nonvested benefits..................................... 57.6 11.2 69.1 17.9 ------- -------- -------- -------- Accumulated benefit obligation........................... 543.5 67.3 541.7 68.7 Effect of projected future salary increases.............. 326.4 25.5 368.6 44.1 ------- -------- -------- -------- Projected benefit obligation (PBO)....................... $ 869.9 $ 92.8 $ 910.3 $ 112.8 ======= ======== ======== ======== Excess (deficiency) of Plans' assets over PBO............ $ 48.4 $ (92.8) $ (239.3) $ (106.7) Unrecognized net (gain) loss............................. (28.3) (35.3) 150.9 (5.8) Unrecognized net (asset) obligation at date of adoption............................................... (9.6) 23.4 (6.8) 26.5 Unrecognized prior service cost.......................... 12.8 (1.0) 32.8 0.9 Additional minimum liability............................. -- -- -- (3.7) ------- -------- -------- -------- Net prepaid (accrued) pension cost....................... $ 23.3 $ (105.7) $ (62.4) $ (88.8) ======= ======== ======== ========
NOTE 17. COMMITMENTS AND RENTAL EXPENSE Commitments for rental payments under noncancellable operating leases for each of the next five years ending December 31 and thereafter for computer equipment, software, and facilities are as follows (in millions): 1995................................................... $339.1 1996................................................... 233.5 1997................................................... 175.7 1998................................................... 131.1 1999................................................... 114.7 Thereafter............................................. 720.1
Total rentals under cancellable and noncancellable leases, principally computer equipment and software, included in costs and charged to expenses were $524.3 million, $564.9 million, and $614.6 million for the years ended December 31, 1994, 1993, and 1992, respectively. NOTE 18. CONTINGENT LIABILITIES There are various claims and pending actions against the Company arising in the ordinary course of the conduct of its business. Certain of these actions seek damages in significant amounts. The amount of liability on these claims and actions at December 31, 1994 was not determinable, but in the opinion of management, the ultimate liability, if any, will not have a material adverse effect on the Company's consolidated operations or financial position. A-20 60 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED NOTE 19. ACQUISITIONS The Company made various acquisitions during the years ended December 31, 1994 and 1993, none of which had a material effect on the Company's financial position or results of operations. In conjunction with those acquisitions, assets were acquired and liabilities were assumed as follows:
YEARS ENDED DECEMBER 31, ------------------ 1994 1993 ------ ------ (IN MILLIONS) Fair value of assets acquired.............................. $427.8 $319.8 Less: Cash paid for stock and assets, net of cash acquired............................................. 186.6 122.1 Debt issued for stocks and assets.................... 94.9 91.2 ------ ------ Liabilities assumed...................................... $146.3 $106.5 ====== ======
NOTE 20. SUPPLEMENTARY FINANCIAL INFORMATION The following summarizes certain costs charged to expense for the years indicated:
YEARS ENDED DECEMBER 31, -------------------------- 1994 1993 1992 ------ ------ ------ (IN MILLIONS) Depreciation of property and equipment................ $577.5 $465.6 $457.9 ====== ====== ====== Amortization.......................................... $163.8 $142.3 $145.3 ====== ====== ======
Supplemental cash flow information is presented below:
YEARS ENDED DECEMBER 31, -------------------------- 1994 1993 1992 ------ ------ ------ (IN MILLIONS) Cash paid for Income taxes, net of refunds........................ $465.6 $183.8 $252.6 ====== ====== ====== Interest, net of amount capitalized................. $ 49.7 $ 40.2 $ 46.8 ====== ====== ======
A-21 61 ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONCLUDED NOTE 21. QUARTERLY FINANCIAL DATA (UNAUDITED)
FIRST SECOND THIRD FOURTH QUARTER QUARTER QUARTER QUARTER -------- -------- -------- -------- (IN MILLIONS EXCEPT PER SHARE AMOUNTS) YEAR ENDED DECEMBER 31, 1994 Revenues.............................................. $2,239.3 $2,334.0 $2,564.9 $2,914.2 Gross profit from operations.......................... 506.6 584.1 602.1 737.9 Income before income taxes............................ 268.3 308.2 338.1 369.6 Separate Consolidated Net Income...................... 171.7 197.3 216.4 236.5 Available Separate Consolidated Net Income............ $ 92.1 $ 106.5 $ 117.3 $ 128.5 Earnings Attributable to GM Class E Common Stock on a Per Share Basis..................................... $ 0.36 $ 0.41 $ 0.45 $ 0.49 Stock price range of GM Class E Common Stock High................................................ $ 36.88 $ 38.00 $ 38.50 $ 39.50 Low................................................. $ 27.50 $ 32.88 $ 33.00 $ 34.75 YEAR ENDED DECEMBER 31, 1993 Revenues.............................................. $2,073.2 $2,090.5 $2,084.3 $2,313.8 Gross profit from operations.......................... 490.1 501.3 525.0 600.3 Income before income taxes............................ 236.6 278.2 299.4 317.1 Separate Consolidated Net Income...................... 151.4 178.1 191.6 202.9 Available Separate Consolidated Net Income............ $ 74.1 $ 87.7 $ 98.4 $ 107.0 Earnings Attributable to GM Class E Common Stock on a Per Share Basis..................................... $ 0.32 $ 0.37 $ 0.40 $ 0.42 Stock price range of GM Class E Common Stock High................................................ $ 35.88 $ 33.38 $ 32.50 $ 31.13 Low................................................. $ 27.63 $ 28.25 $ 26.00 $ 26.50
A-22 62 - ------------------------------------------------------------------- - ------------------------------------------------------------------- NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME OR ANY SALE MADE HEREUNDER DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. ------------------------ TABLE OF CONTENTS
PAGE ----- PROSPECTUS Available Information................. 2 Incorporation of Certain Documents by Reference........................... 2 Prospectus Summary.................... 3 The Offerings......................... 3 General Motors and EDS................ 4 Background of the Offerings........... 6 Selling Stockholders.................. 6 Selected Financial Data of General Motors and EDS...................... 8 Management's Discussion and Analysis of Financial Condition and Results of Operations of EDS................ 11 Business of EDS....................... 14 Class E Common Stock Price Range and Dividends........................... 18 Class E Common Stock.................. 19 Description of Capital Stock.......... 23 Certain United States Federal Tax Considerations for Non-U.S. Holders............................. 33 Underwriting.......................... 35 Legal Matters......................... 37 Experts............................... 37 Appendix A: EDS Consolidated Financial Statements.......................... A-1
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ 37,000,000 SHARES GENERAL MOTORS CORPORATION CLASS E COMMON STOCK --------------------------- PROSPECTUS --------------------------- MERRILL LYNCH & CO. GOLDMAN, SACHS & CO. LEHMAN BROTHERS CS FIRST BOSTON MORGAN STANLEY & CO. I N C O R P O R A T E D SALOMON BROTHERS INC , 1995 ------------------------------------------------------ ------------------------------------------------------ 63 Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. ALTERNATE FRONT COVER FOR INTERNATIONAL PROSPECTUS SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED JUNE 1, 1995 PROSPECTUS 37,000,000 SHARES GENERAL MOTORS CORPORATION CLASS E COMMON STOCK ------------------------ This Prospectus covers the resale of 37,000,000 shares of Class E Common Stock, par value $0.10 per share ("Class E Common Stock"), of General Motors Corporation, a Delaware corporation (together with its subsidiaries, "General Motors," "GM" or the "Corporation"), by the General Motors Special Hourly Employees Pension Trust (together with any sub-trusts thereunder, the "Hourly Plan Trust") under the General Motors Hourly-Rate Employees Pension Plan (the "Hourly Plan") and a trust (the "Salaried Plan Trust") under the General Motors Retirement Plan for Salaried Employees (the "Salaried Plan"). Each such trust is sometimes referred to herein as a "Selling Stockholder" and, collectively, as the "Selling Stockholders". See "Selling Stockholders." Of the 37,000,000 shares of Class E Common Stock offered hereby, 27,000,000 are being offered in the United States and Canada by the U.S. Underwriters, 7,000,000 are being offered internationally outside the United States and Canada excluding Asia by the International Underwriters, and 3,000,000 are being offered in Asia by the Asian Underwriters. See "Underwriting." Class E Common Stock is one of three classes of General Motors common stock. Under the General Motors Restated Certificate of Incorporation, as amended, dividends on Class E Common Stock may be declared and paid out of the assets of General Motors only to the extent of the sum of (i) the paid in surplus attributable to the Class E Common Stock plus (ii) an allocated portion of the earnings, determined as described herein, of General Motors' indirectly wholly owned subsidiary, Electronic Data Systems Corporation (together with its subsidiaries, "EDS"). General Motors, not EDS, is the issuer of Class E Common Stock. For a description of dividend, voting and liquidation rights and recapitalization provisions with respect to the Class E Common Stock, see "Class E Common Stock" and "Description of Capital Stock -- Common Stock." General Motors will not receive any of the proceeds from the sale of the shares offered hereby. See "Selling Stockholders" and "Underwriting." The Class E Common Stock is listed in the United States on the New York Stock Exchange under the symbol GME. The last reported sale price of the Class E Common Stock on the New York Stock Exchange on May 11, 1995 was $41 5/8 per share. United States Trust Company of New York is the trustee for the Hourly Plan Special Trust and U.S. Trust Company of California, N.A., an affiliate of United States Trust Company of New York, is the trustee for a sub-trust under the Hourly Plan Special Trust ( together, the "Hourly Plan Trustee") and Bankers Trust Company is the trustee for the Salaried Plan Trust (the "Salaried Plan Trustee"). ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- PROCEEDS TO PRICE TO UNDERWRITING SELLING PUBLIC DISCOUNTS(1) STOCKHOLDERS(2) - ---------------------------------------------------------------------------------------------------- Per Share.................................... $ $ $ - ---------------------------------------------------------------------------------------------------- Total(3)..................................... $ $ $ - ---------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------
(1) General Motors and, to the extent permitted by applicable law, the Selling Stockholders, have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (2) Before deducting expenses of the offerings, estimated to be $1,230,000, payable by General Motors. (3) The Hourly Plan Special Trust has granted the U.S. Underwriters, International Underwriters and Asian Underwriters an option, exercisable within 30 days after the date hereof, to purchase up to an aggregate of 5,550,000 additional shares of Class E Common Stock at the Price to Public less Underwriting Discount for the purpose of covering overallotments, if any. If the Underwriters exercise such option in full, the total Price to Public, Underwriting Discount and Proceeds to Selling Stockholders will be $ , $ and $ , respectively. ------------------------ Advisor to United States Trust Company of New York WASSERSTEIN PERELLA & CO. ------------------------ The shares of Class E Common Stock are offered by the several Underwriters, subject to prior sale, when, as and if issued to and accepted by them, and subject to approval of certain legal matters by counsel for the Underwriters. The Underwriters reserve the right to withdraw, cancel or modify such offer and to reject orders in whole or in part. It is expected that delivery of the certificates for the shares of Class E Common Stock will be made on or about , 1995, in New York, New York. ------------------------ MERRILL LYNCH INTERNATIONAL LIMITED GOLDMAN SACHS INTERNATIONAL LEHMAN BROTHERS CS FIRST BOSTON MORGAN STANLEY & CO. SALOMON BROTHERS INTERNATIONAL LIMITED INTERNATIONAL ------------------------ JOINT GLOBAL COORDINATORS MERRILL LYNCH & CO. GOLDMAN, SACHS & CO. ------------------------ The date of this Prospectus is , 1995. 64 ALTERNATE PAGES FOR INTERNATIONAL PROSPECTUS UNDERWRITING The International Underwriters named below, acting through their International Representatives, Merrill Lynch International Limited, Goldman Sachs International, Lehman Brothers International (Europe), CS First Boston Limited, Morgan Stanley & Co. International Limited and Salomon Brothers International Limited (the "International Representatives"), have severally agreed, subject to the terms and conditions of the International Purchase Agreement with General Motors and the Selling Stockholders (the "International Purchase Agreement"), to purchase from the Selling Stockholders, the aggregate number of shares of Class E Common Stock set forth below opposite their respective names.
NUMBER OF INTERNATIONAL SHARES OF INTERNATIONAL UNDERWRITER CLASS E COMMON STOCK ------------------------- --------------------------------- Merrill Lynch International Limited.............................. Goldman Sachs International ..................................... Lehman Brothers International (Europe)........................... CS First Boston Limited.......................................... Morgan Stanley & Co. International Limited....................... Salomon Brothers International Limited........................... ---------- Total..................................................... 7,000,000 ==========
This offering is part of a worldwide offering that consists of the U.S. Offering, the International Offering and the Asian Offering (collectively, the "Offerings"). Merrill Lynch & Co. and Goldman, Sachs & Co. are acting as Joint Global Coordinators for the offerings. In the International Purchase Agreement, the International Underwriters have agreed, subject to the terms and conditions set forth therein, to purchase all of the shares of Class E Common Stock being sold pursuant to such Agreement if any of the shares of Class E Common Stock being sold pursuant to such Agreement are purchased. Under certain circumstances under such Agreement, the commitments of non-defaulting International Underwriters may be increased. The International Representatives of the International Underwriters have advised General Motors and the Selling Stockholders that they propose initially to offer the shares to the public at the Price to Public set forth on the cover page of this Prospectus, and to certain dealers at such price less a concession not in excess of $ per share. The International Underwriters may allow, and such dealers may reallow, a discount not in excess of $ per share on sales to certain other dealers. After the initial public offering, the public offering price, concession and discount may be changed. General Motors and the Selling Stockholders have also entered into a U.S. Purchase Agreement (the "U.S. Purchase Agreement") with certain underwriters (the "U.S. Underwriters") for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., Lehman Brothers Inc., CS First Boston Corporation, Morgan Stanley & Co. Incorporated and Salomon Brothers Inc are acting as representatives (the "U.S. Representatives") providing for a concurrent U.S. Offering. General Motors and the Selling Stockholders have also entered into an Asian Purchase Agreement (the "Asian Purchase Agreement") with certain underwriters (the "Asian Underwriters") for whom Merrill Lynch International Limited, Goldman Sachs (Asia) L.L.C., Lehman Brothers Securities Asia Limited, HSBC Corporate Finance Limited, The Nikko Securities Co. (Asia) Limited and Nomura International (Hong Kong) Limited are acting as representatives (the "Asian Representatives") providing for the concurrent Asian Offering. The U.S. Underwriters, the 65 International Underwriters and the Asian Underwriters are collectively referred to as the "Underwriters," and the U.S. Representatives, the International Representatives and the Asian Representatives are collectively referred to as the "Representatives." The U.S. Underwriters have agreed, subject to the terms and conditions set forth in the U.S. Purchase Agreement, to purchase all of the shares of Class E Common Stock being offered in the U.S. Offering if any are purchased and the Asian Underwriters have agreed, subject to the terms and conditions set forth in the Asian Purchase Agreement, to purchase all of the shares of Class E Common Stock being offered in the Asian Offering (other than shares subject to the Underwriters' over-allotment option) if any are purchased. The closing of each of the Offerings is a condition to the closing of each of the U.S. Offering, the International Offering and the Asian Offering. The Underwriters have entered into an intersyndicate agreement (the "Intersyndicate Agreement") that provides for the coordination of their activities. Under the terms of the Intersyndicate Agreement, the Underwriters in each geographic area have agreed not to offer to sell any shares of Class E Common Stock in any other geographic area until the completion of the distribution of the shares of Class E Common Stock in all of the Offerings. Pursuant to the Intersyndicate Agreement, each of the U.S. Underwriters has agreed or will agree that, as part of the distribution of the U.S. shares of Class E Common Stock, subject to certain exceptions, (i) it is not purchasing any shares of Class E Common Stock for the account of anyone other than a U.S. Person (as defined below) or Canadian Person (as defined below) and (ii) it has not offered or sold, and will not offer or sell, directly or indirectly, any shares of Class E Common Stock or distribute any prospectus relating to the shares of Class E Common Stock to any person outside the United States or Canada or to anyone other than a U.S. Person or Canadian Person, or to any dealer who does not so agree. Each of the International Underwriters and the Asian Underwriters has agreed or will agree that, as part of the distribution of the International shares of Class E Common Stock and Asian shares of Class E Common Stock, respectively, subject to certain exceptions, (i) it is not purchasing any shares of Class E Common Stock for the account of any U.S. Person or Canadian Person and (ii) it has not offered or sold, and will not offer or sell, directly or indirectly, any shares of Class E Common Stock or distribute any prospectus relating to the shares of Class E Common Stock in the United States or Canada or to any U.S. Person or Canadian Person or to any dealer who does not so agree. The foregoing limitations do not apply to stabilization transactions or to transactions between the U.S. Underwriters, the International Underwriters and the Asian Underwriters pursuant to the Intersyndicate Agreement. As used in this section, "United States" means the United States of America, its territories, possessions and other areas subject to its jurisdiction; "Canada" means Canada, its provinces, territories, possessions and other areas subject to its jurisdiction; "Asia" means all countries in the Middle East (excluding Turkey), India and its subcontinent, Asia, Australia and New Zealand; and "U.S. Person" and "Canadian Person" mean (i) a citizen or resident of the United States or Canada, respectively, (ii) a corporation, partnership, trust or other entity created or organized in or under the laws of the United States or Canada, respectively (other than a foreign branch of such an entity), or (iii) an estate or trust, the income of which is subject to United States federal income taxation or Canadian federal income taxation, respectively, regardless of its source of income, and includes any United States or Canadian branch of a person not included in any of clauses (i), (ii) and (iii) of this sentence. The Hourly Plan Special Trust has granted the Underwriters an option, exercisable for 30 days after the date hereof, to purchase up to an additional 5,550,000 shares of Class E Common Stock at the Price to Public less the Underwriting Discount for the purpose of covering over-allotments, if any. If the Underwriters exercise such option in full, each of the Underwriters will have a firm commitment, subject to certain conditions, to purchase approximately the same percentage thereof which the number of shares of Class E Common Stock to be purchased by it shown opposite their respective names in the table under "Underwriting" in the relevant Prospectus is of the 37,000,000 shares of Class E Common Stock initially offered by the Underwriters hereunder. General Motors and (to the extent permitted under applicable law) the Selling Stockholders have agreed to indemnify the Underwriters against certain liabilities including liabilities under the Securities Act. General Motors has agreed not to offer, sell or otherwise dispose of any shares of Class E Common Stock or any securities convertible into or exchangeable or exercisable for Class E Common Stock from the date of this Prospectus until December 31, 1995, without the prior written consent of Merrill Lynch & Co. and 66 Goldman, Sachs & Co. on behalf of the Representatives, provided that General Motors may issue and deliver such securities under specified exceptions in connection with (i) the conversion, exercise or exchange of outstanding options or other securities pursuant to their terms, (ii) any previously disclosed acquisition or other business combination and (iii) employee benefit plans. The Selling Stockholders have agreed not to offer, sell or otherwise dispose of any shares of Class E Common Stock or any securities convertible into or exchangeable or exercisable for Class E Common Stock (other than transfers to or for the benefit of employee benefit plans of GM or any of its affiliates, including EDS) from the date of this Prospectus, in the case of the Hourly Plan Special Trust, until December 31, 1995 and, in the case of the Salaried Plan Trust, until 90 days after the date of this Prospectus, in each case, without the prior written consent of Merrill Lynch & Co. and Goldman, Sachs & Co. on behalf of the Representatives. Any prospective purchaser of shares of Class E Common Stock offered hereby that is an employee benefit plan subject to Title I of ERISA or Section 4975 of the Code should purchase such shares pursuant to the U.S. Offering unless, upon the advice of counsel, it concludes that such plan is permitted to purchase such shares in the International Offering or Asian Offering, as the case may be. Accordingly, all such plans are advised to consult with counsel before purchasing shares of Class E Common Stock outside the United States and Canada. Certain of the Underwriters or their affiliates have rendered, and are expected to continue to render, various investment banking and other advisory services to General Motors, EDS, the Selling Stockholders, the Hourly Plan and the Salaried Plan. They have received, and will continue to receive, customary compensation for such services. SELLING RESTRICTIONS General No action has been or will be taken in any jurisdiction (except in the United States) that would permit a public offering of any shares of Class E Common Stock or the possession, circulation or distribution of this Prospectus or any other material relating to General Motors or the Class E Common Stock in any jurisdiction where action for such purpose is required. Accordingly, no shares of Class E Common Stock may be offered or sold, directly or indirectly, and neither this Prospectus nor any other offering material or advertisements in connection with the shares of Class E Common Stock may be distributed or published, in or from any country or jurisdiction, except in compliance with any applicable rules and regulations of any such country or jurisdiction. United Kingdom Each International Underwriter and Asian Underwriter has agreed that (i) it has not offered or sold and will not offer or sell in the United Kingdom by means of any document any shares of Class E Common Stock other than to persons whose ordinary business it is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Act 1985; (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the shares of Class E Common Stock in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issuance of the shares of Class E Common Stock to a person of a kind described in Article 9(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1988, or to a person to whom the document may otherwise lawfully be issued or passed on. Japan Each International Underwriter and Asian Underwriter has agreed that it has not offered or sold, and it will not offer or sell, directly or indirectly, any of the shares of Class E Common Stock in Japan or to residents of Japan or to any persons for reoffering or resale, directly or indirectly, in Japan or to any resident of Japan 67 except pursuant to an exemption from the registration requirements of the Securities and Exchange Law available thereunder and in compliance with the other relevant laws of Japan. Hong Kong Each International Underwriter and Asian Underwriter has agreed that (i) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any shares of Class E Common Stock other than to persons whose ordinary business it is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong and (ii) it has not issued and will not issue any invitation or advertisement relating to the shares of Class E Common Stock in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares of Class E Common Stock intended to be disposed of to persons outside Hong Kong or to be disposed of in Hong Kong only to persons whose business involves the acquisition, disposal, or holding of securities, whether as principal or agent. Singapore Each International Underwriter and Asian Underwriter has agreed that the shares of Class E Common Stock may not be offered or sold, nor may any document or other material in connection with the shares of Class E Common Stock be distributed, either directly or indirectly, (i) to persons in Singapore other than in circumstances in which such offer or sale does not constitute an offer or sale of the shares of Class E Common Stock to the public in Singapore or (ii) to the public or any member of the public in Singapore other than pursuant to, and in accordance with the conditions of, an exemption invoked under Division 5A of Part IV of the Companies Act, Chapter 50 of Singapore and to persons to whom the shares of Class E Common Stock may be offered or sold under such exemption. 68 ALTERNATE BACK COVER FOR INTERNATIONAL PROSPECTUS ------------------------------------------------------ ------------------------------------------------------ NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME OR ANY SALE MADE HEREUNDER DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. ------------------------ TABLE OF CONTENTS
PAGE ----- PROSPECTUS Available Information................. 2 Incorporation of Certain Documents by Reference........................... 2 Prospectus Summary.................... 3 The Offerings......................... 3 General Motors and EDS................ 4 Background of the Offerings........... 6 Selling Stockholders.................. 6 Selected Financial Data of General Motors and EDS...................... 8 Management's Discussion and Analysis of Financial Condition and Results of Operations of EDS................ 11 Business of EDS....................... 14 Class E Common Stock Price Range and Dividends........................... 18 Class E Common Stock.................. 19 Description of Capital Stock.......... 23 Certain United States Federal Tax Considerations for Non-U.S. Holders............................. 33 Underwriting.......................... 35 Legal Matters......................... 37 Experts............................... 37 Appendix A: EDS Consolidated Financial Statements.......................... A-1
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ 37,000,000 SHARES GENERAL MOTORS CORPORATION CLASS E COMMON STOCK --------------------------- PROSPECTUS --------------------------- MERRILL LYNCH INTERNATIONAL LIMITED GOLDMAN SACHS INTERNATIONAL LEHMAN BROTHERS CS FIRST BOSTON MORGAN STANLEY & CO. INTERNATIONAL SALOMON BROTHERS INTERNATIONAL LIMITED , 1995 ------------------------------------------------------ ------------------------------------------------------ 69 Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. ALTERNATE FRONT COVER FOR ASIAN PROSPECTUS SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED JUNE 1, 1995 PROSPECTUS A COPY OF THIS PROSPECTUS HAS BEEN LODGED WITH THE REGISTRAR OF COMPANIES IN SINGAPORE AS AN INFORMATION MEMORANDUM FOR THE PURPOSES OF SECTION 106D OF THE COMPANIES ACT, CHAPTER 50 OF SINGAPORE. THE REGISTRAR OF COMPANIES IN SINGAPORE TAKES NO RESPONSIBILITY AS TO THE CONTENTS OF THIS PROSPECTUS. 37,000,000 SHARES GENERAL MOTORS CORPORATION CLASS E COMMON STOCK ------------------------ This Prospectus covers the resale of 37,000,000 shares of Class E Common Stock, par value $0.10 per share ("Class E Common Stock"), of General Motors Corporation, a Delaware corporation (together with its subsidiaries, "General Motors," "GM" or the "Corporation"), by the General Motors Special Hourly Employees Pension Trust (together with any sub-trusts thereunder, the "Hourly Plan Trust") under the General Motors Hourly-Rate Employees Pension Plan (the "Hourly Plan") and a trust (the "Salaried Plan Trust") under the General Motors Retirement Plan for Salaried Employees (the "Salaried Plan"). Each such trust is sometimes referred to herein as a "Selling Stockholder" and, collectively, as the "Selling Stockholders". See "Selling Stockholders." Of the 37,000,000 shares of Class E Common Stock offered hereby, 27,000,000 are being offered in the United States and Canada by the U.S. Underwriters, 7,000,000 are being offered internationally outside the United States and Canada excluding Asia by the International Underwriters, and 3,000,000 are being offered in Asia by the Asian Underwriters. See "Underwriting." Class E Common Stock is one of three classes of General Motors common stock. Under the General Motors Restated Certificate of Incorporation, as amended, dividends on Class E Common Stock may be declared and paid out of the assets of General Motors only to the extent of the sum of (i) the paid in surplus attributable to the Class E Common Stock plus (ii) an allocated portion of the earnings, determined as described herein, of General Motors' indirectly wholly owned subsidiary, Electronic Data Systems Corporation (together with its subsidiaries, "EDS"). General Motors, not EDS, is the issuer of Class E Common Stock. For a description of dividend, voting and liquidation rights and recapitalization provisions with respect to the Class E Common Stock, see "Class E Common Stock" and "Description of Capital Stock -- Common Stock." General Motors will not receive any of the proceeds from the sale of the shares offered hereby. See "Selling Stockholders" and "Underwriting." The Class E Common Stock is listed in the United States on the New York Stock Exchange under the symbol GME. The last reported sale price of the Class E Common Stock on the New York Stock Exchange on May 11, 1995 was $41 5/8 per share. United States Trust Company of New York is the trustee for the Hourly Plan Special Trust and U.S. Trust Company of California, N.A., an affiliate of United States Trust Company of New York, is the trustee for a sub-trust under the Hourly Plan Special Trust (together, the "Hourly Plan Trustee") and Bankers Trust Company is the trustee for the Salaried Plan Trust (the "Salaried Plan Trustee"). ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- PROCEEDS TO PRICE TO UNDERWRITING SELLING PUBLIC DISCOUNTS(1) STOCKHOLDERS(2) - --------------------------------------------------------------------------------------------------- Per Share................................. $ $ $ - --------------------------------------------------------------------------------------------------- Total(3).................................. $ $ $ - --------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------
(1) General Motors and, to the extent permitted by applicable law, the Selling Stockholders, have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (2) Before deducting expenses of the offerings, estimated to be $1,230,000, payable by General Motors. (3) The Hourly Plan Special Trust has granted the U.S. Underwriters, International Underwriters and Asian Underwriters an option, exercisable within 30 days after the date hereof, to purchase up to an aggregate of 5,550,000 additional shares of Class E Common Stock at the Price to Public less Underwriting Discount for the purpose of covering overallotments, if any. If the Underwriters exercise such option in full, the total Price to Public, Underwriting Discount and Proceeds to Selling Stockholders will be $ , $ and $ , respectively. ------------------------ Advisor to United States Trust Company of New York WASSERSTEIN PERELLA & CO. ------------------------ The shares of Class E Common Stock are offered by the several Underwriters, subject to prior sale, when, as and if issued to and accepted by them, and subject to approval of certain legal matters by counsel for the Underwriters. The Underwriters reserve the right to withdraw, cancel or modify such offer and to reject orders in whole or in part. It is expected that delivery of the certificates for the shares of Class E Common Stock will be made on or about , 1995, in New York, New York. ------------------------ MERRILL LYNCH INTERNATIONAL LIMITED GOLDMAN SACHS (ASIA) L.L.C. LEHMAN BROTHERS HSBC CORPORATE FINANCE LIMITED THE NIKKO SECURITIES CO.(ASIA) LIMITED NOMURA INTERNATIONAL (HONG KONG) LIMITED ------------------------ JOINT GLOBAL COORDINATORS MERRILL LYNCH & CO. GOLDMAN, SACHS & CO. ------------------------ The date of this Prospectus is , 1995. 70 ALTERNATE PAGES FOR ASIAN PROSPECTUS UNDERWRITING The Asian Underwriters named below, acting through their Asian Representatives, Merrill Lynch International Limited, Goldman Sachs (Asia) L.L.C., Lehman Brothers Securities Asia Limited, HSBC Corporate Finance Limited, The Nikko Securities Co. (Asia) Limited and Nomura International (Hong Kong) Limited (the "Asian Representatives"), have severally agreed, subject to the terms and conditions of the Asian Purchase Agreement with General Motors and the Selling Stockholders (the "Asian Purchase Agreement"), to purchase from the Selling Stockholders, the aggregate number of shares of Class E Common Stock set forth below opposite their respective names.
NUMBER OF ASIAN SHARES OF ASIAN UNDERWRITER CLASS E COMMON STOCK ----------------- ------------------------ Merrill Lynch International Limited.................................... Goldman Sachs (Asia) L.L.C. ........................................... Lehman Brothers Securities Asia Limited................................ HSBC Corporate Finance Limited......................................... The Nikko Securities Co. (Asia) Limited................................ Nomura International (Hong Kong) Limited............................... --------- Total........................................................... 3,000,000 =========
This offering is part of a worldwide offering that consists of the U.S. Offering, the International Offering and the Asian Offering (collectively, the "Offerings"). Merrill Lynch & Co. and Goldman, Sachs & Co. are acting as Joint Global Coordinators for the offerings. In the Asian Purchase Agreement, the Asian Underwriters have agreed, subject to the terms and conditions set forth therein, to purchase all of the shares of Class E Common Stock being sold pursuant to such Agreement if any of the shares of Class E Common Stock being sold pursuant to such Agreement are purchased. Under certain circumstances under such Agreement, the commitments of non-defaulting Asian Underwriters may be increased. The Asian Representatives of the Asian Underwriters have advised General Motors and the Selling Stockholders that they propose initially to offer the shares to the public at the Price to Public set forth on the cover page of this Prospectus, and to certain dealers at such price less a concession not in excess of $ per share. The Asian Underwriters may allow, and such dealers may reallow, a discount not in excess of $ per share on sales to certain other dealers. After the initial public offering, the public offering price, concession and discount may be changed. General Motors and the Selling Stockholders have also entered into a U.S. Purchase Agreement (the "U.S. Purchase Agreement") with certain underwriters (the "U.S. Underwriters") for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., Lehman Brothers Inc., CS First Boston Corporation, Morgan Stanley & Co. Incorporated and Salomon Brothers Inc are acting as representatives (the "U.S. Representatives"). General Motors and the Selling Stockholders have also entered into an International Purchase Agreement (the "International Purchase Agreement") with certain underwriters (the "International Underwriters") for whom Merrill Lynch International Limited, Goldman Sachs International, Lehman Brothers International (Europe), CS First Boston Limited, Morgan Stanley & Co. International Limited and Salomon Brothers International Limited are acting as representatives (the "International Representatives") providing for a concurrent International Offering. The U.S. Underwriters, the International Underwriters and the Asian Underwriters are collectively referred to as the "Underwriters," and the U.S. Representatives, the 71 International Representatives and the Asian Representatives are collectively referred to as the "Representatives." The U.S. Underwriters have agreed, subject to the terms and conditions set forth in the U.S. Purchase Agreement, to purchase all of the shares of Class E Common Stock being offered in the U.S. Offering if any are purchased and the International Underwriters have agreed, subject to the terms and conditions set forth in the International Purchase Agreement, to purchase all of the shares of Class E Common Stock being offered in the International Offering (other than shares subject to the Underwriters' over-allotment option) if any are purchased. The closing of each of the Offerings is a condition to the closing of each of the U.S. Offering, the International Offering and the Asian Offering. The Underwriters have entered into an intersyndicate agreement (the "Intersyndicate Agreement") that provides for the coordination of their activities. Under the terms of the Intersyndicate Agreement, the Underwriters in each geographic area have agreed not to offer to sell any shares of Class E Common Stock in any other geographic area until the completion of the distribution of the shares of Class E Common Stock in all of the Offerings. Pursuant to the Intersyndicate Agreement, each of the U.S. Underwriters has agreed or will agree that, as part of the distribution of the U.S. shares of Class E Common Stock, subject to certain exceptions, (i) it is not purchasing any shares of Class E Common Stock for the account of anyone other than a U.S. Person (as defined below) or Canadian Person (as defined below) and (ii) it has not offered or sold, and will not offer or sell, directly or indirectly, any shares of Class E Common Stock or distribute any prospectus relating to the shares of Class E Common Stock to any person outside the United States or Canada or to anyone other than a U.S. Person or Canadian Person, or to any dealer who does not so agree. Each of the International Underwriters and the Asian Underwriters has agreed or will agree that, as part of the distribution of the International shares of Class E Common Stock and Asian shares of Class E Common Stock, respectively, subject to certain exceptions, (i) it is not purchasing any shares of Class E Common Stock for the account of any U.S. Person or Canadian Person and (ii) it has not offered or sold, and will not offer or sell, directly or indirectly, any shares of Class E Common Stock or distribute any prospectus relating to the shares of Class E Common Stock in the United States or Canada or to any U.S. Person or Canadian Person or to any dealer who does not so agree. The foregoing limitations do not apply to stabilization transactions or to transactions between the U.S. Underwriters, the International Underwriters and the Asian Underwriters pursuant to the Intersyndicate Agreement. As used in this section, "United States" means the United States of America, its territories, possessions and other areas subject to its jurisdiction; "Canada" means Canada, its provinces, territories, possessions and other areas subject to its jurisdiction; "Asia" means all countries in the Middle East (excluding Turkey), India and its subcontinent, Asia, Australia and New Zealand; and "U.S. Person" and "Canadian Person" mean (i) a citizen or resident of the United States or Canada, respectively, (ii) a corporation, partnership, trust or other entity created or organized in or under the laws of the United States or Canada, respectively (other than a foreign branch of such an entity), or (iii) an estate or trust, the income of which is subject to United States federal income taxation or Canadian federal income taxation, respectively, regardless of its source of income, and includes any United States or Canadian branch of a person not included in any of clauses (i), (ii) and (iii) of this sentence. The Hourly Plan Special Trust has granted the Underwriters an option, exercisable for 30 days after the date hereof, to purchase up to an additional 5,550,000 shares of Class E Common Stock at the Price to Public less the Underwriting Discount for the purpose of covering over-allotments, if any. If the Underwriters exercise such option in full, each of the Underwriters will have a firm commitment, subject to certain conditions, to purchase approximately the same percentage thereof which the number of shares of Class E Common Stock to be purchased by it shown opposite their respective names in the table under "Underwriting" in the relevant Prospectus is of the 37,000,000 shares of Class E Common Stock initially offered by the Underwriters hereunder. General Motors and (to the extent permitted under applicable law) the Selling Stockholders have agreed to indemnify the Underwriters against certain liabilities including liabilities under the Securities Act. General Motors has agreed not to offer, sell or otherwise dispose of any shares of Class E Common Stock or any securities convertible into or exchangeable or exercisable for Class E Common Stock from the date of this Prospectus until December 31, 1995, without the prior written consent of Merrill Lynch & Co. and Goldman, Sachs & Co. on behalf of the Representatives, provided that General Motors may issue and deliver 72 such securities under specified exceptions in connection with (i) the conversion, exercise or exchange of outstanding options or other securities pursuant to their terms, (ii) any previously disclosed acquisition or other business combination and (iii) employee benefit plans. The Selling Stockholders have agreed not to offer, sell or otherwise dispose of any shares of Class E Common Stock or any securities convertible into or exchangeable or exercisable for Class E Common Stock (other than transfers to or for the benefit of employee benefit plans of GM or any of its affiliates, including EDS) from the date of this Prospectus, in the case of the Hourly Plan Special Trust, until December 31, 1995 and, in the case of the Salaried Plan Trust, until 90 days after the date of this Prospectus, in each case, without the prior written consent of Merrill Lynch & Co. and Goldman, Sachs & Co. on behalf of the Representatives. Any prospective purchaser of shares of Class E Common Stock offered hereby that is an employee benefit plan subject to Title I of ERISA or Section 4975 of the Code should purchase such shares pursuant to the U.S. Offering unless, upon the advice of counsel, it concludes that such plan is permitted to purchase such shares in the International Offering or Asian Offering, as the case may be. Accordingly, all such plans are advised to consult with counsel before purchasing shares of Class E Common Stock outside the United States and Canada. Certain of the Underwriters or their affiliates have rendered, and are expected to continue to render, various investment banking and other advisory services to General Motors, EDS, the Selling Stockholders, the Hourly Plan and the Salaried Plan. They have received, and will continue to receive, customary compensation for such services. SELLING RESTRICTIONS General No action has been or will be taken in any jurisdiction (except in the United States) that would permit a public offering of any shares of Class E Common Stock or the possession, circulation or distribution of this Prospectus or any other material relating to General Motors or the Class E Common Stock in any jurisdiction where action for such purpose is required. Accordingly, no shares of Class E Common Stock may be offered or sold, directly or indirectly, and neither this Prospectus nor any other offering material or advertisements in connection with the shares of Class E Common Stock may be distributed or published, in or from any country or jurisdiction, except in compliance with any applicable rules and regulations of any such country or jurisdiction. United Kingdom Each International Underwriter and Asian Underwriter has agreed that (i) it has not offered or sold and will not offer or sell in the United Kingdom by means of any document any shares of Class E Common Stock other than to persons whose ordinary business it is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Act 1985; (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the shares of Class E Common Stock in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issuance of the shares of Class E Common Stock to a person of a kind described in Article 9(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1988, or to a person to whom the document may otherwise lawfully be issued or passed on. Japan Each International Underwriter and Asian Underwriter has agreed that it has not offered or sold, and it will not offer or sell, directly or indirectly, any of the shares of Class E Common Stock in Japan or to residents of Japan or to any persons for reoffering or resale, directly or indirectly, in Japan or to any resident of Japan except pursuant to an exemption from the registration requirements of the Securities and Exchange Law available thereunder and in compliance with the other relevant laws of Japan. 73 Hong Kong Each International Underwriter and Asian Underwriter has agreed that (i) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any shares of Class E Common Stock other than to persons whose ordinary business it is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong and (ii) it has not issued and will not issue any invitation or advertisement relating to the shares of Class E Common Stock in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares of Class E Common Stock intended to be disposed of to persons outside Hong Kong or to be disposed of in Hong Kong only to persons whose business involves the acquisition, disposal, or holding of securities, whether as principal or agent. Singapore Each International Underwriter and Asian Underwriter has agreed that the shares of Class E Common Stock may not be offered or sold, nor may any document or other material in connection with the shares of Class E Common Stock be distributed, either directly or indirectly, (i) to persons in Singapore other than in circumstances in which such offer or sale does not constitute an offer or sale of the shares of Class E Common Stock to the public in Singapore or (ii) to the public or any member of the public in Singapore other than pursuant to, and in accordance with the conditions of, an exemption invoked under Division 5A of Part IV of the Companies Act, Chapter 50 of Singapore and to persons to whom the shares of Class E Common Stock may be offered or sold under such exemption. 74 ALTERNATE BACK COVER FOR ASIAN PROSPECTUS ------------------------------------------------------ ------------------------------------------------------ NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME OR ANY SALE MADE HEREUNDER DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. ------------------------ TABLE OF CONTENTS
PAGE ----- PROSPECTUS Available Information................. 2 Incorporation of Certain Documents by Reference........................... 2 Prospectus Summary.................... 3 The Offerings......................... 3 General Motors and EDS................ 4 Background of the Offerings........... 6 Selling Stockholders.................. 6 Selected Financial Data of General Motors and EDS...................... 8 Management's Discussion and Analysis of Financial Condition and Results of Operations of EDS................ 11 Business of EDS....................... 14 Class E Common Stock Price Range and Dividends........................... 18 Class E Common Stock.................. 19 Description of Capital Stock.......... 23 Certain United States Federal Tax Considerations for Non-U.S. Holders............................. 33 Underwriting.......................... 35 Legal Matters......................... 37 Experts............................... 37 Appendix A: EDS Consolidated Financial Statements.......................... A-1
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ 37,000,000 SHARES GENERAL MOTORS CORPORATION CLASS E COMMON STOCK --------------------------- PROSPECTUS --------------------------- MERRILL LYNCH INTERNATIONAL LIMITED GOLDMAN SACHS (ASIA) L.L.C. LEHMAN BROTHERS HSBC CORPORATE FINANCE LIMITED THE NIKKO SECURITIES CO. (ASIA) LIMITED NOMURA INTERNATIONAL (HONG KONG) LIMITED , 1995 ------------------------------------------------------ ------------------------------------------------------ 75 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. General Motors is paying the expenses of the Offerings. The amounts set forth below, except for the Securities and Exchange Commission registration fee, are estimated:
Securities and Exchange Commission registration fee.................... $ 635,503 Legal fees............................................................. 160,000 Printing and engraving expenses........................................ 350,000 Auditors' fees......................................................... 65,000 Blue sky fees.......................................................... 10,000 Miscellaneous.......................................................... 9,497 ---------- Total................................................................ $1,230,000 =========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Under Section 145 of the Delaware Corporation Law, General Motors is empowered to indemnify its directors and officers in the circumstances therein provided. General Motors Certificate of Incorporation, as amended, provides that no directors shall be personally liable to General Motors or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to General Motors, or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174, or any successor provision thereto, of the Delaware Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. Under Article V of its By-Laws, General Motors shall indemnify and advance expenses to every director and officer (and to such person's heirs, executors, administrators or other legal representatives) in the manner and to the full extent permitted by applicable law as it presently exists, or may hereafter be amended, against any and all amounts (including judgments, fines, payments in settlement, attorneys' fees and other expenses) reasonably incurred by or on behalf of such person in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding"), in which such director or officer was or is made or is threatened to be made a party or is otherwise involved by reason of the fact that such person is or was a director, officer, employee, fiduciary or member of any other corporation, partnership, joint venture, trust, organization or other enterprise. General Motors shall not be required to indemnify a person in connection with a proceeding initiated by such person if the proceeding was not authorized by the Board of Directors of General Motors. General Motors shall pay the expenses of directors and officers incurred in defending any proceeding in advance of its final disposition ("advancement of expenses"); provided, however, that the payment of expenses incurred by a director or officer in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the director or officer to repay all amounts advanced if it should be ultimately determined that the director or officer is not entitled to be indemnified under Article V of the By-Laws or otherwise. If a claim for indemnification or advancement of expenses by an officer or director under Article V of the By-Laws is not paid in full within ninety days after a written claim therefor has been received by General Motors, the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action General Motors shall have the burden of proving that the claimant was not entitled to the requested indemnification or advancement of expenses under applicable law. The rights conferred on any person by Article V of the By-Laws shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of General Motors Certificate of Incorporation or By-Laws, agreement, vote of stockholders or disinterested directors or otherwise. II-1 76 General Motors is insured against liabilities which it may incur by reason of Article V of its By-Laws. In addition, directors and officers are insured, at GM's expense, against some liabilities which might arise out of their employment and not be subject to indemnification under Article V of the By-Laws. Pursuant to a resolution adopted by the Board of Directors on December 1, 1975, General Motors to the fullest extent permissible under law will indemnify, and has purchased insurance on behalf of, directors or officers of General Motors, or any of them, who incur or are threatened with personal liability, including expense, under the Employee Retirement Income Security Act of 1974, as amended, or any amendatory or comparable legislation or regulation thereunder. ITEM 16. EXHIBITS. Except as otherwise indicated, the following documents have been filed as exhibits to the Registration Statement.
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT - ------- ----------------------- 1 Form of U.S. Purchase Agreement. 4(a) Restated Certificate of Incorporation of General Motors Corporation as amended to May 26, 1994, incorporated by reference to Exhibit 3(i) to the Current Report on Form 8-K of General Motors dated May 26, 1994, and Amendment to Article Fourth of the Certificate of Incorporation -- Division III -- Preference Stock, by reason of the Certificates of Designations filed with the Secretary of State of the State of Delaware on September 14, 1987 and the Certificate of Decrease filed with the Secretary of State of the State of Delaware on September 29, 1987, incorporated by reference to Exhibit 19 to the Quarterly Report on Form 10-Q of General Motors for the quarter ended June 30, 1990 in the Form SE of General Motors dated August 6, 1990; as further amended by the Certificate of Designations filed with the Secretary of State of the State of Delaware on June 28, 1991, incorporated by reference to Exhibit 4(a) to Form S-8 Registration Statement of General Motors dated November 6, 1991 (Registration No. 33-43744) in the Form SE of General Motors dated November 1, 1991; as further amended by the Certificate of Designations filed with the Secretary of State of the State of Delaware on December 9, 1991, incorporated by reference to Exhibit 4(a) to Form S-3 Registration Statement of General Motors dated January 27, 1992 (Registration No. 33-45216) in the Form SE of General Motors dated January 27, 1992; as further amended by the Certificate of Designations filed with the Secretary of State of the State of Delaware on February 14, 1992, incorporated by reference to Exhibit 3(a) to the Annual Report on Form 10-K of General Motors for the year ended December 31, 1991 in the Form SE of General Motors dated March 20, 1992; as further amended by the Certificate of Designations filed with the Secretary of State of the State of Delaware on July 15, 1992, incorporated by reference to Exhibit 3(a)(2) to the Quarterly Report on Form 10-Q of General Motors for the quarter ended June 30, 1992 in the Form SE of General Motors dated August 10, 1992; and as further amended by the Certificate of Designations filed with the Secretary of State of the State of Delaware on December 15, 1992, incorporated by reference to Exhibit 4(a) to Form S-3 Registration Statement of General Motors dated January 25, 1993 (Registration No. 33-49309) in the Form SE of General Motors dated January 25, 1993. 4(b) By-Laws of General Motors Corporation as amended to December 5, 1994, incorporated by reference to Exhibit 3(ii) to the Current Report on Form 8-K of General Motors dated December 5, 1994.
II-2 77
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT - ------- ----------------------- 5 Opinion of Warren G. Andersen, Esq. 8 Opinion of Anton H. Zidansek, Esq. 23(a) Consent of Deloitte & Touche LLP, independent auditors. 23(b) Consent of KPMG Peat Marwick LLP, independent auditors. 23(c) Consents of counsel (included in Exhibits 5 and 8 above). 99(a) Registration Rights Agreement, dated as of March 12, 1995, by and between General Motors and the Trustee, for the account and on behalf of the Hourly Plan, including all exhibits thereto, incorporated by reference to Exhibit 10(h) to the Current Report on Form 8-K of General Motors dated March 3, 1995. 99(b) Agreement, dated March 12, 1995, by and among the Hourly Plan Trustee, as trustee of the Hourly Plan, the Salaried Plan Trustee, as trustee of the Salaried Plan, and General Motors.* 99(c) Exchange and Registration Agreement, dated November 4, 1992, among General Motors, the Hourly Plan and the Salaried Plan (without schedules).*
- ------------------------- * Filed previously. ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: 1. For purposes of determining any liability under the Securities Act of 1933 (the "Securities Act"), each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 2. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. 3. For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of the Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of the Registration Statement as of the time it was declared effective. 4. For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 78 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this amendment to registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on June 1, 1995. GENERAL MOTORS CORPORATION By: /s/ JOHN F. SMITH, JR. ---------------------------------------- (John F. Smith, Jr. Chief Executive Officer, President and Director) Pursuant to the requirements of the Securities Act of 1933, this amendment to registration statement has been signed on June 1, 1995 by the following persons in the capacities indicated.
SIGNATURE TITLE - ---------------------------------------- --------------------------------- /s/ JOHN G. SMALE Chairman of the Board of Directors - ---------------------------------------- (John G. Smale) /s/ JOHN F. SMITH, JR. Chief Executive Officer, President - ---------------------------------------- and Director (John F. Smith, Jr.) /s/ J. MICHAEL LOSH Executive Vice President and Chief - ---------------------------------------- Financial Officer (J. Michael Losh) (Principal /s/ LEON J. KRAIN Vice President and Group Executive Financial - ---------------------------------------- Officers) (Leon J. Krain) /s/ HEIDI KUNZ Vice President and Treasurer - ---------------------------------------- (Heidi Kunz) /s/ WALLACE W. CREEK Comptroller - ---------------------------------------- (Wallace W. Creek) (Principal Officers) /s/ JAMES H. HUMPHREY Chief Accounting Officer Accounting - ---------------------------------------- (James H. Humphrey)
II-4 79 SIGNATURES (CONCLUDED)
SIGNATURE TITLE - ---------------------------------------- ---------- /s/ ANNE L. ARMSTRONG Director - ---------------------------------------- (Anne L. Armstrong) /s/ JOHN H. BRYAN Director - ---------------------------------------- (John H. Bryan) /s/ THOMAS E. EVERHART Director - ---------------------------------------- (Thomas E. Everhart) /s/ CHARLES T. FISHER, III Director - ---------------------------------------- (Charles T. Fisher, III) /s/ J. WILLARD MARRIOTT, JR. Director - ---------------------------------------- (J. Willard Marriott, Jr.) /s/ ANN D. McLAUGHLIN Director - ---------------------------------------- (Ann D. McLaughlin) /s/ PAUL H. O'NEILL Director - ---------------------------------------- (Paul H. O'Neill) /s/ EDMUND T. PRATT, JR. Director - ---------------------------------------- (Edmund T. Pratt, Jr.) /s/ LOUIS W. SULLIVAN Director - ---------------------------------------- (Louis W. Sullivan) /s/ DENNIS WEATHERSTONE Director - ---------------------------------------- (Dennis Weatherstone) /s/ THOMAS H. WYMAN Director - ---------------------------------------- (Thomas H. Wyman)
II-5 80 EXHIBIT INDEX
SEQUENTIAL EXHIBIT PAGE NUMBER DESCRIPTION OF DOCUMENT NUMBER - ------- ------------------------------------------------------------------------- ---------- 1 Form of U.S. Purchase Agreement. 4(a) Restated Certificate of Incorporation of General Motors Corporation as amended to May 26, 1994, incorporated by reference to Exhibit 3(i) to the Current Report on Form 8-K of General Motors dated May 26, 1994, and Amendment to Article Fourth of the Certificate of Incorporation -- Division III -- Preference Stock, by reason of the Certificates of Designations filed with the Secretary of State of the State of Delaware on September 14, 1987 and the Certificate of Decrease filed with the Secretary of State of the State of Delaware on September 29, 1987, incorporated by reference to Exhibit 19 to the Quarterly Report on Form 10-Q of General Motors for the quarter ended June 30, 1990 in the Form SE of General Motors dated August 6, 1990; as further amended by the Certificate of Designations filed with the Secretary of State of the State of Delaware on June 28, 1991, incorporated by reference to Exhibit 4(a) to Form S-8 Registration Statement of General Motors dated November 6, 1991 (Registration No. 33-43744) in the Form SE of General Motors dated November 1, 1991; as further amended by the Certificate of Designations filed with the Secretary of State of the State of Delaware on December 9, 1991, incorporated by reference to Exhibit 4(a) to Form S-3 Registration Statement of General Motors dated January 27, 1992 (Registration No. 33-45216) in the Form SE of General Motors dated January 27, 1992; as further amended by the Certificate of Designations filed with the Secretary of State of the State of Delaware on February 14, 1992, incorporated by reference to Exhibit 3(a) to the Annual Report on Form 10-K of General Motors for the year ended December 31, 1991 in the Form SE of General Motors dated March 20, 1992; as further amended by the Certificate of Designations filed with the Secretary of State of the State of Delaware on July 15, 1992, incorporated by reference to Exhibit 3(a)(2) to the Quarterly Report on Form 10-Q of General Motors for the quarter ended June 30, 1992 in the Form SE of General Motors dated August 10, 1992; and as further amended by the Certificate of Designations filed with the Secretary of State of the State of Delaware on December 15, 1992, incorporated by reference to Exhibit 4(a) to Form S-3 Registration Statement of General Motors dated January 25, 1993 (Registration No. 33-49309) in the Form SE of General Motors dated January 25, 1993. 4(b) By-Laws of General Motors Corporation as amended to December 5, 1994, incorporated by reference to Exhibit 3(ii) to the Current Report on Form 8-K of General Motors dated December 5, 1994. 5 Opinion of Warren G. Andersen, Esq. 8 Opinion of Anton H. Zidansek, Esq. 23(a) Consent of Deloitte & Touche LLP, independent auditors. 23(b) Consent of KPMG Peat Marwick LLP, independent auditors. 23(c) Consents of counsel (included in Exhibits 5 and 8 above). 99(a) Registration Rights Agreement, dated as of March 12, 1995, by and between General Motors and the Trustee, for the account and on behalf of the Hourly Plan, including all exhibits thereto, incorporated by reference to Exhibit 10(h) to the Current Report on Form 8-K of General Motors dated March 3, 1995. 99(b) Agreement, dated March 12, 1995, by and among the Hourly Plan Trustee, as trustee of the Hourly Plan, the Salaried Plan Trustee, as trustee of the Salaried Plan, and General Motors.* 99(c) Exchange and Registration Agreement, dated November 4, 1992, among General Motors, the Hourly Plan and the Salaried Plan (without schedules).*
- ------------------------- * Filed previously. EX-1 2 PURCHASE AGREEMENT 1 EXHIBIT 1 27,000,000 SHARES GENERAL MOTORS CORPORATION (A DELAWARE CORPORATION) CLASS E COMMON STOCK ($0.10 PAR VALUE PER SHARE) U.S. PURCHASE AGREEMENT June , 1995 MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED GOLDMAN, SACHS & CO. LEHMAN BROTHERS INC. CS FIRST BOSTON MORGAN STANLEY & CO. INCORPORATED SALOMON BROTHERS INC as U.S. Representatives of the several U.S. Underwriters c/o Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated Merrill Lynch World Headquarters North Tower World Financial Center New York, New York 10281-1209 Dear Sirs: General Motors Corporation, a Delaware corporation (the "Company"), and each of the trustees of the trusts named in Schedule B hereto (each a "Trustee" and, collectively, the Trustees") established under the respective pension plans named in Schedule B hereto (each a "Pension Plan" and, collectively, the "Pension Plans," sometimes referred to herein individually as the "Hourly Plan" and the "Salaried Plan," respectively, as denoted in Schedule B hereto) for the account and on behalf of each such respective Pension Plan (each of which shall thereby be deemed a party to this Agreement) (each a "Selling Stockholder" and, collectively, the "Selling Stockholders"), confirm their respective agreements with you and each of the other underwriters named in Schedule A hereto (collectively, the "U.S. Underwriters," which term shall also include any underwriter substituted as hereinafter provided in Article VIII), for whom you are acting as representatives (in such capacity, the "U.S. Representatives"), with respect to the sale by the Selling Stockholders, acting severally and not jointly, of the respective number of shares set forth opposite their names in Schedule B hereto of Class E Common Stock, $0.10 par value of shares of the Company ("Class E Common Stock"), and the purchase by the U.S. Underwriters, acting severally and not jointly, of the respective number of shares of Class E Common Stock set forth in Schedule A hereto (the "Initial U.S. Securities"), and with respect to the grant by the Hourly Plan to the U.S. Underwriters, acting severally and not jointly, of the option described in Article I hereto to purchase all or any part of the respective number of additional shares set forth opposite their names in Schedule B hereto of Class E Common Stock (the "Option U.S. Securities") to cover over-allotments, in each case except as may otherwise be provided in the U.S. Pricing Agreement, as hereinafter defined. The aggregate number of Initial U.S. Securities and all or any part of the Option U.S. Securities are collectively hereinafter called the "U.S. Securities." It is understood that the Company and the Selling Stockholders are concurrently entering into an agreement dated the date hereof (the "International Purchase Agreement") providing for the offering by the Selling Stockholders of 7,000,000 shares of Class E Common Stock (the "Initial International Securities" and, together with any additional shares of Class E Common Stock offered subject to over-allotments, the 2 "International Securities") through arrangements with certain underwriters internationally outside the United States and Canada excluding Asia (the "International Managers") for which Merrill Lynch International Limited, Goldman Sachs International, Lehman Brothers International (Europe), CS First Boston Limited, Morgan Stanley & Co. International Limited and Salomon Brothers International Limited are acting as lead managers (the "International Lead Managers"). It is also understood that the Company and the Selling Stockholders are concurrently entering into an agreement dated the date hereof (the "Asian Purchase Agreement" and, together with the U.S. Purchase Agreement and the International Purchase Agreement, the "Purchase Agreements") providing for the offering by the Selling Stockholders of 3,000,000 shares of Class E Common Stock (the "Initial Asian Securities" and, together with any additional shares of Class E Common Stock offered subject to over-allotments, the "Asian Securities") through arrangements with certain underwriters in Asia (the "Asian Managers") for which Merrill Lynch International Limited, Goldman Sachs (Asia) L.L.C., Lehman Brothers Securities Asia Limited, HSBC Corporate Finance Limited, The Nikko Securities Co. (Asia) Limited and Nomura International (Hong Kong) Limited are acting as the lead managers (the "Asian Lead Managers"). It is understood that the Selling Stockholders are not obligated to sell, and the U.S. Underwriters are not obligated to purchase, any Initial U.S. Securities unless all of the Initial International Securities and Initial Asian Securities are contemporaneously purchased by each of the International Managers and the Asian Managers, respectively. The U.S. Underwriters, the International Managers and the Asian Managers are hereinafter collectively called the "Underwriters," and the U.S. Securities, the International Securities and the Asian Securities are hereinafter collectively called the "Securities." Prior to the purchase and public offering of the U.S. Securities by the several U.S. Underwriters, the Selling Stockholders and the U.S. Representatives, acting on behalf of the several U.S. Underwriters, shall enter into an agreement substantially in the form of Exhibit A hereto (the "U.S. Pricing Agreement"). The U.S. Pricing Agreement may take the form of an exchange of any standard form of written telecommunication among the Selling Stockholders and the U.S. Representatives and shall specify such applicable information as is indicated in Exhibit A hereto. The offering of the U.S. Securities will be governed by this Agreement, as supplemented by the U.S. Pricing Agreement. From and after the date of the execution and delivery of the U.S. Pricing Agreement, this Agreement shall be deemed to incorporate the U.S. Pricing Agreement. The date of the U.S. Pricing Agreement is referred to as the "Representation Date." The initial public offering price and the purchase price with respect to the International Securities and the Asian Securities shall be set forth in separate instruments (the "International Pricing Agreement" and the "Asian Pricing Agreement", respectively), the form of which is attached to the International Purchase Agreement and the Asian Purchase Agreement, respectively. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (No. 33-59169) and related preliminary prospectuses for the registration of the Securities under the Securities Act of 1933 (the "1933 Act"), has filed such amendments thereto, if any, and such amended preliminary prospectuses as may have been required to the date hereof, and will file such additional amendments thereto and such amended prospectuses as may hereinafter be required. Such registration statement (as amended, if applicable), the prospectus constituting part of the Registration Statement which relates to the U.S. Securities and the prospectus also constituting part of the Registration Statement which relates to the International Securities and the Asian Securities (including in each case the information, if any, deemed to be part thereof pursuant to Rule 430A(b) of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations") and all documents, if any, incorporated by reference thereafter), as from time to time amended or supplemented pursuant to the 1933 Act, are hereinafter referred to as the "Registration Statement," the "U.S. Prospectus," the "International Prospectus," and the "Asian Prospectus," respectively, and the U.S. Prospectus, the International Prospectus and the Asian Prospectus are hereinafter together called "Prospectuses" and, each individually, a "Prospectus," except that if any revised prospectuses shall be provided to the Underwriters by the Company for use in connection with the offering of the Securities which differs from the Prospectuses on file at the Commission at the time the Registration Statement becomes effective (whether or not such revised prospectus is required to be or is filed by the Company pursuant to Rule 424(b) of the 1933 Act Regulations), the term "U.S. Prospectus", 2 3 "International Prospectus" and "Asian Prospectus" shall refer to each such revised prospectus from and after the time it is first provided to the U.S. Underwriters, the International Managers or the Asian Managers, as the case may be, for such use. I. On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Selling Stockholders, severally and not jointly, agree to sell to each U.S. Underwriter, severally and not jointly, and each U.S. Underwriter, severally and not jointly, agrees to purchase from the Selling Stockholders, at the price per share set forth in the U.S. Pricing Agreement, the number of Initial U.S. Securities set forth in Schedule A opposite the name of such U.S. Underwriter, plus any additional number of Initial U.S. Securities which such U.S. Underwriter may become obligated to purchase pursuant to the provisions of Article VIII hereof. In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Hourly Plan hereby grants an option to the U.S. Underwriters, severally and not jointly, to purchase up to the aggregate number of Option U.S. Securities set forth opposite their respective names in Schedule B hereto at the price per share set forth in the U.S. Pricing Agreement. If the option is exercised as to all or any portion of the Option U.S. Securities, the Hourly Plan will sell and each of the U.S. Underwriters, acting severally and not jointly, will purchase from the Hourly Plan the number of Option U.S. Securities which bears the same proportion to the total number of Option U.S. Securities to be purchased from the Hourly Plan as the number of Initial U.S. Securities set forth in Schedule A opposite the name of such U.S. Underwriter bears to the total number of Initial U.S. Securities. The option hereby granted will expire 30 days after the Representation Date, and may be exercised in whole or in part from time to time only for the purpose of covering over-allotments which may be made in connection with the offering and distribution of the Initial U.S. Securities upon notice by the U.S. Representatives to the Hourly Plan and the Company setting forth the number of Option U.S. Securities as to which the several U.S. Underwriters are then exercising the option and the time, date and place of payment and delivery for such Option U.S. Securities. Any such time and date of delivery (a "Date of Delivery") shall be determined by the U.S. Representatives but shall not be later than seven full business days after the exercise of said option, nor in any event prior to Closing Time, as hereinafter defined, unless otherwise agreed upon by you, the Hourly Plan and the Company. The purchase price per share to be paid by the several U.S. Underwriters for the U.S. Securities shall be an amount equal to the initial public offering price, less an amount per share to be determined by agreement between the U.S. Representatives and the Selling Stockholders. The initial public offering price per share of the U.S. Securities shall be a fixed price to be determined by agreement between the U.S. Representatives and the Selling Stockholders. The initial public offering price and the purchase price, when so determined, shall be set forth in the U.S. Pricing Agreement. The price per share for the International Securities and the Asian Securities to be purchased by the International Managers and Asian Managers, respectively, pursuant to the International Purchase Agreement and the Asian Purchase Agreement, respectively, shall be identical to the price per share for the U.S. Securities to be purchased by the U.S. Underwriters hereunder. II. The Company and the Selling Stockholders understand that the U.S. Underwriters propose to make a public offering of the U.S. Securities as soon as the U.S. Representatives deem advisable after the Registration Statement becomes effective and the U.S. Pricing Agreement has been executed and delivered. In accordance with the Hourly Plan's obligations to the Company under Section 3(g) of that certain Registration Rights Agreement dated March 12, 1995 and Section 1(d) of that certain Transfer Agreement dated March 12, 1995, each between the Company and the Hourly Plan, each Underwriter severally covenants that it will, collectively with the other Underwriters, use its reasonable best efforts (i) to effect a broad public distribution of the Securities and (ii) not to sell to any one Person (or group of related Persons acting pursuant 3 4 to a plan or arrangement) (whether such Person (or group of related Persons acting pursuant to a plan or arrangement) is buying for its own account or as a fiduciary on behalf of one or more accounts) if (A) such sale is of Securities constituting more than 2% of the Class E Common Stock outstanding as of the date hereof or (B) such Person (or group of related Persons acting pursuant to a plan or arrangement) is a 5% Person, or, at any time prior to the time of such sale, has been designated in a written list provided by the Company to the U.S. Representatives as, to the reasonable belief of the Company, beneficially owning (as defined in Rule 13d-3 ("Rule 13d-3") of the Securities Exchange Act of 1934, as amended (the "1934 Act")) 2% or more of the total voting power or total value of the Class E Common Stock then outstanding. As used herein, the term "5% Person" shall mean any Person (or group of related Persons acting pursuant to a plan or arrangement) that, directly or indirectly, beneficially owns (as defined in Rule 13d-3) shares of Class E Common Stock that constitute 5% or more of the total voting power or total value of the Class E Common Stock then outstanding. As used herein, the term "Person" shall mean an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof. Each U.S. Underwriter acknowledges that pursuant to the International Purchase Agreement and the Asian Purchase Agreement, each of the International Managers and the Asian Managers has agreed to the undertakings set forth in this Article II. The U.S. Underwriters agree to cooperate with the International Managers and the Asian Managers, as necessary or appropriate, such that the distribution of the Securities is made in a manner consistent with the purposes and intent of this Article II. III. Payment of the purchase price for, and delivery of certificates for, or evidence of book-entry transfer of, the Initial U.S. Securities shall be made at the offices of Davis Polk & Wardwell, New York, New York, or at such other place as shall be agreed upon by the U.S. Representatives, the Company and the Selling Stockholders, at 10:00 a.m. on a date no later than the fourth business day (unless postponed in accordance with Article VIII herein) following the Representation Date, or such other time not later than ten business days after such date as shall be agreed upon by the U.S. Representatives, the Company and the Selling Stockholders (such time and date of payment and delivery being herein called "Closing Time"). In addition, in the event that any or all of the Option U.S. Securities are purchased by the U.S. Underwriters, payment of the purchase price for, and delivery of certificates for, or evidence of book-entry transfer of, such Option U.S. Securities shall be made at the above mentioned office of Davis Polk & Wardwell, or at such other place as shall be agreed upon by the U.S. Representatives, the Company and the Hourly Plan, on each Date of Delivery as specified in the notice from you to the Company and the Hourly Plan. The Selling Stockholders shall not be obligated to deliver any of the U.S. Securities to be delivered at Closing Time or on a Date of Delivery except upon payment for all the Securities to be purchased at such time or on such date as provided herein. Payment shall be made to each Selling Stockholder by certified or official bank checks drawn in New York Clearing House funds or similar next day funds payable to the order of such Selling Stockholder against delivery to the U.S. Representatives for the respective accounts of the U.S. Underwriters of certificates for the U.S. Securities to be purchased by them. Certificates for the Initial U.S. Securities and the Option U.S. Securities shall be in such denominations and registered in such names as the U.S. Representatives may request in writing at least two business days before Closing Time or the Date of Delivery, as the case may be. It is understood that each U.S. Underwriter has authorized the U.S. Representatives, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the U.S. Securities which it has agreed to purchase. The U.S. Representatives, individually and not as representatives of the U.S. Underwriters, may (but shall not be obligated to) make payment of the purchase price for the U.S. Securities to be purchased by any U.S. Underwriter whose check has not been received by Closing Time or the Date of Delivery, as the case may be, but such payment shall not relieve such U.S. Underwriter from its obligations hereunder. The certificates for the U.S. Securities will be made available for examination and packaging by the U.S. Representatives not later than 10:00 a.m. on the last business day prior to Closing Time or the Date of Delivery, as the case may be. 4 5 IV. The several obligations of the Company and the Selling Stockholders and the several obligations of the U.S. Underwriters hereunder are subject to the condition that the Registration Statement shall have become effective not later than the date hereof. The several obligations of the U.S. Underwriters hereunder are subject to the following further conditions: (a) No stop order suspending the effectiveness of the Registration Statement shall be in effect, and no proceedings for such purpose shall be pending before or threatened by the Commission, and there shall have been no material adverse change or development involving, in the current reasonable view of the respective Company and EDS (as hereinafter defined) management, a prospective material adverse change in the condition of the Company and its subsidiaries, taken as a whole, or Electronic Data Systems Corporation (hereinafter called "EDS") and its subsidiaries, taken as a whole, from that set forth in the Registration Statement; and you shall have received, at Closing Time, certificates of an officer of the Company (acting on behalf of the Company and without personal liability) and an officer of EDS (acting on behalf of EDS, without personal liability), each dated the Closing Time, to the foregoing effect with respect to the Company and EDS, respectively. Such certificates will also provide that the representations and warranties of the Company or EDS, as appropriate, contained herein are true and correct as of the Closing Time. Each such officer may rely upon the best of his knowledge in making such certification. You shall also have received, at Closing Time, a certificate of an authorized agent of each Selling Stockholder (acting on behalf of such Selling Stockholder and without personal liability), dated the Closing Time, providing that the representations and warranties of such Selling Stockholder contained herein are true and correct as of the Closing Time; such authorized agent may rely upon the best of his knowledge in making such certification. (b) You shall have received the favorable opinion, dated as of the Closing Time, of Warren G. Andersen, Attorney, Legal Staff of the Company, to the effect that: (i) The Company is a corporation validly existing and in good standing under the laws of the State of Delaware, is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be so qualified or in good standing would not have a materially adverse effect on the financial position of the Company and its subsidiaries taken as a whole, (ii) EDS is a corporation validly existing and in good standing under the laws of its state of incorporation, is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to be so qualified or in good standing would not have a materially adverse effect on the financial position of EDS and its subsidiaries taken as a whole, (iii) the authorized, issued and outstanding capital stock of the Company conforms as to legal matters to the description thereof contained in the U.S. Prospectus, (iv) the U.S. Securities sold by the Selling Stockholders hereunder have been duly authorized and validly issued and are fully paid and non-assessable, (v) this Agreement has been duly authorized, executed and delivered by the Company, (vi) the execution, delivery and performance of this Agreement will not contravene any provision of applicable law or the Certificate of Incorporation or By-laws of the Company or any agreement or other instrument known to such counsel and binding upon the Company, and no consent, approval or authorization of any governmental body or agency is required for the 5 6 performance of this Agreement other than the registration of the U.S. Securities under the 1933 Act and compliance with the securities or Blue Sky Laws of various foreign and state jurisdictions (as to which no opinion is expressed), (vii) the statements in the U.S. Prospectus under "Description of Capital Stock" and "Underwriting" (other than as to the description of intersyndicate agreements and arrangements, including the appointment of the Joint Global Coordinators), if applicable, insofar as such statements constitute a summary of the legal matters or documents referred to therein, fairly summarize the information called for with respect to such legal matters and documents, and (viii) after due inquiry, such counsel does not know of any legal or governmental proceeding or investigation pending or threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or of EDS is subject which is required to be described in the Registration Statement or the U.S. Prospectus and is not so described or of any contract or other document which is required to be described in the Registration Statement or the U.S. Prospectus or to be filed as an exhibit to the Registration Statement which is not described or filed as required. (c) You shall have received the favorable opinion, dated as of the Closing Time, of Kirkland & Ellis, counsel for the Company, covering the matters referred to in (iii) (as to authorized capital stock only), (iv), (v) and (vii) above. (d) You shall have received the favorable opinion, dated as of the Closing Time, of Davis Polk & Wardwell, counsel for the Underwriters, covering the matters referred to in (iii) (as to authorized capital stock only), (v) and (vii) above. (e) You shall have received the favorable opinions, dated as of the Closing Time, of each of Jones, Day, Reavis & Pogue, counsel for United States Trust Company of New York, as Trustee for the Hourly Plan (the "Hourly Trustee") and David Abramson, counsel for Bankers Trust Company, as Trustee for the Salaried Plan (the "Salaried Trustee"), to the effect that: (i) the applicable Trustee has been appointed by the named fiduciary of the relevant Selling Stockholder (the "Named Fiduciary") (as determined in accordance with Section 402(a) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), to manage the Securities held by the relevant Selling Stockholder and to exercise all rights, powers and privileges appurtenant to such Securities (subject to the authority of the Named Fiduciary to terminate such appointment and appoint one or more other investment managers for any such Securities); (ii) the applicable Trustee has full power and authority to execute and deliver this Agreement for the account and on behalf of the relevant Selling Stockholder and to so bind such Selling Stockholder; and (iii) upon the delivery of and payment for the U.S. Securities as herein contemplated, each of the U.S. Underwriters who has acquired U.S. Securities from the Selling Stockholders in good faith and without notice of any adverse claim within the meaning of the New York Uniform Commercial Code will acquire such U.S. Securities free of any adverse claim. (f) Each counsel referred to in (b), (c) and (d) above shall additionally state that, based upon the participation of such counsel in the preparation of the Registration Statement and U.S. Prospectus and any amendments or supplements thereto (but not including, with respect to counsel referred to in (c) and (d) above, documents incorporated therein by reference) and review and discussion of the contents thereof (including documents incorporated therein by reference), nothing has come to the attention of such counsel that would lead such counsel to believe that the Registration Statement, at the time it became effective or at the Representation Date, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the U.S. Prospectus, at the Representation Date (unless the term "U.S. Prospectus" refers to a prospectus which has been provided to the U.S. Underwriters by the Company for 6 7 use in connection with the offering of the U.S. Securities which differs from the U.S. Prospectus on file at the Commission at the Representation Date, in which case at the time it is first provided to the U.S. Underwriters for such use) or at Closing Time, included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that such counsel need not make such statement with respect to the financial statements and supporting schedules and other financial information contained or incorporated by reference into or omitted from the Registration Statement and the U.S. Prospectus. (g) You shall have received the favorable opinion, dated as of the Closing Time, of Anton H. Zidansek, Assistant General Tax Counsel, Tax Staff of the Company to the effect that the discussion set forth under the caption "Certain Federal Tax Considerations for Non-U.S. Holders" in the U.S. Prospectus accurately reflects such counsel's views on the matters discussed therein and is based on reasonable interpretations of existing law. (h) You shall have received on the date of this Agreement a letter dated such date and also at the Closing Time a letter dated as of the Closing Time, in each case in form and substance satisfactory to you, from each of Deloitte & Touche LLP and KPMG Peat Marwick LLP, independent auditors, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in or incorporated by reference into the Registration Statement and the U.S. Prospectus. (i) At Closing Time counsel for the Underwriters shall have been furnished with such documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the sale of the U.S. Securities as contemplated herein and related proceedings, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company and the Selling Stockholders in connection with the sale of the U.S. Securities as herein contemplated shall be reasonably satisfactory in form and substance to you and your counsel. (j) In the event the U.S. Underwriters exercise their option provided in Article I hereof to purchase all or any portion of the Option U.S. Securities, the representations and warranties of the Company contained herein and the statements in any certificates furnished by the Company hereunder shall be true and correct as of each Date of Delivery, and you shall have received: (1) A certificate, dated such Date of Delivery, of an officer of the Company (acting on behalf of the Company and without personal liability) confirming that the certificate of an officer of the Company delivered at Closing Time pursuant to Article IV(a) hereof remains true and correct as of such Date of Delivery, and a certificate, dated such Date of Delivery, of an authorized agent of the Hourly Plan (acting on behalf of the Hourly Plan and without personal liability) confirming that the certificate of an authorized agent of the Hourly Plan delivered at Closing Time pursuant to Article IV(a) hereof remains true and correct as of such Date of Delivery, (2) The favorable opinion of Warren G. Andersen, Attorney, Legal Staff of the Company, in form and substance satisfactory to counsel for the Underwriters, dated such Date of Delivery, relating to the Option U.S. Securities and otherwise to the same effect as the opinion required by Article IV(b) and (f) hereof, (3) The favorable opinion of Kirkland & Ellis, counsel for the Company, dated such Date of Delivery, relating to the Option U.S. Securities and otherwise to the same effect as the opinion required by Article IV(c) and (f) hereof, (4) The favorable opinion of Davis Polk & Wardwell, counsel for the Underwriters, dated such Date of Delivery, relating to the Option U.S. Securities and otherwise to the same effect as the opinion required by Article IV(d) and (f) hereof, and 7 8 (5) The favorable opinion of Jones, Day, Reavis & Pogue, counsel for the Hourly Trustee, dated such Date of Delivery, relating to the Option U.S. Securities and otherwise to the same effect as the opinion required by Article IV(e) hereof, and (6) Letters from Deloitte & Touche LLP and KPMG Peat Marwick LLP, in form and substance satisfactory to you and dated such Date of Delivery, substantially the same in scope and substance as the letter furnished to you pursuant to Article IV(h) hereof, except that the "specified date" in the letter furnished pursuant to this paragraph shall be a date not more than five days prior to such Date of Delivery. If any condition specified in this Article shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by you by notice to the Company and the Selling Stockholders at any time at or prior to Closing Time or the Delivery Date of the Option U.S. Securities, as the case may be, and such termination shall be without liability of any party to any other party except as provided in Article VIII. V. In further consideration of the agreements of the U.S. Underwriters herein contained, the Company covenants as follows: (a) To furnish you, without charge, three copies of the Registration Statement as filed with the Commission (including exhibits thereto and documents incorporated therein by reference) and to each other U.S. Underwriter and each Selling Stockholder a copy of the Registration Statement (without exhibits thereto but including documents incorporated therein by reference) and, during the period mentioned in paragraph (c), any supplements and amendments thereto as you may reasonably request. The terms "supplement" and "amendment" or "amend" as used in this Agreement shall include all documents subsequently filed by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), which are deemed to be incorporated by reference in the U.S. Prospectus. (b) Before amending or supplementing the Registration Statement or the U.S. Prospectus, to furnish you and each Selling Stockholder (or their respective counsel) a copy of each such proposed amendment or supplement, unless otherwise directed by you or such Selling Stockholder, unless otherwise directed. (c) If, during such period after the first date of the public offering of the U.S. Securities as in the opinion of your counsel the U.S. Prospectus is required by law to be delivered in connection with sales by a U.S. Underwriter or dealer, any event shall occur as a result of which it is necessary to amend or supplement the U.S. Prospectus in order to make the statements therein, in the light of the circumstances when the U.S. Prospectus is delivered to a purchaser, not misleading, or if it is necessary to amend or supplement the U.S. Prospectus to comply with law, forthwith to prepare and furnish, at its own expense, to the U.S. Underwriters and to the dealers (whose names and addresses you will furnish to the Company) to which U.S. Securities may have been sold by you on behalf of the U.S. Underwriters and to any other dealers upon request, either amendments or supplements to the U.S. Prospectus so that the statements in the U.S. Prospectus as so amended or supplemented will not, in the light of the circumstances when the U.S. Prospectus is delivered to a purchaser, be misleading or so that the U.S. Prospectus will comply with law. (d) To endeavor to qualify the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as you shall reasonably request and to pay all expenses (including reasonable fees and disbursements of counsel) in connection therewith. (e) To make generally available to the Company's security holders as soon as practicable an earnings statement covering the twelve month period ending December 31, 1995, which shall satisfy the provisions of Section 11(a) of the 1933 Act and the 1933 Act Regulations. 8 9 (f) Not to sell, transfer or otherwise dispose of or transfer (including any pledge and any disposition upon the foreclosure of any pledge or any agreement to do any of the foregoing), without the prior written consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated and Goldman, Sachs & Co. acting on your behalf, any shares of Class E Common Stock (or securities convertible into or exchangeable or exercisable for such shares) for the period from the Representation Date until December 31, 1995 provided that the Company shall not be precluded from (i) the issuance of shares of Class E Common Stock upon the conversion, exercise or exchange, by the holder thereof, of options, warrants or other securities convertible into or exercisable for the Class E Common Stock pursuant to the terms of such options, warrants or other securities, (ii) transfers pursuant to the terms of any other agreement to issue shares of Class E Common Stock (or any securities convertible into or exchangeable or exercisable for the Class E Common Stock) in effect on the date of the original filing of the Registration Statement with the Commission, including any such agreement in connection with any previously disclosed acquisition, merger, consolidation or other business combination and (iii) transfers (including grants or issuances) under or in connection with dividend reinvestment plans or employee benefit plans of the Company (or a subsidiary of the Company) or programs of the Company to reduce the number of odd-lot holders of Class E Common Stock. In further consideration of the agreements of the Underwriters herein contained, the Selling Stockholders, severally and not jointly, covenant not to offer or sell, or solicit offers to purchase, or transfer or otherwise dispose of (including any pledge and any disposition upon the foreclosure of any pledge or any agreement to do any of the foregoing), any shares of Class E Common Stock (or securities convertible into or exchangeable for such shares) (other than transfers to or for the benefit of employee benefit plans of the Company or any of its affiliates, including EDS) during the period from the Representation Date, in the case of the Hourly Plan, until December 31, 1995 and, in the case of the Salaried Plan, until 90 days after such Representation Date, in each case, without the prior written consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated and Goldman, Sachs & Co.; provided, that nothing contained in this Article V shall prevent the sale of the Securities hereunder. VI. The Company represents and warrants to each U.S. Underwriter and each Selling Stockholder that (i) each document filed or to be filed pursuant to the 1934 Act and incorporated by reference in the U.S. Prospectus complied or will comply when so filed in all material respects with the 1934 Act and the rules and regulations of the Commission thereunder, (ii) each Preliminary U.S. Prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all material respects with the 1933 Act and the 1933 Act Regulations, (iii) the Registration Statement and U.S. Prospectus complied on the date the Registration Statement became effective, and will comply on the Representation Date, in all material respects with the 1933 Act and the 1933 Act Regulations and, as of such dates did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and (iv) none of the Company or any material subsidiary does business with the government of Cuba or with any person or affiliate located in Cuba and the Company and each material subsidiary has complied to the extent necessary with all provisions of Florida H.B. 1771; except that these representations and warranties do not apply to statements or omissions in the Registration Statement or the U.S. Prospectus or any preliminary U.S. Prospectus based upon information furnished to the Company in writing by the Selling Stockholders or by any Underwriter through you expressly for use therein. Each Selling Stockholder, severally and not jointly, represents and warrants to the Company and each U.S. Underwriter that (i) this Agreement and the U.S. Pricing Agreement have been duly authorized, executed and delivered by such Selling Stockholder, (ii) such Selling Stockholder has good and marketable title to the U.S. Securities to be sold by such Selling Stockholder hereunder and full power, right and authority to sell such U.S. Securities, and upon the delivery of and payment for the U.S. Securities as herein contemplated, each of the U.S. Underwriters will receive good and marketable title to the U.S. Securities purchased by it from such Selling Stockholder, free and clear of any mortgage, pledge, lien, security interest, 9 10 encumbrance, claim or equity, (iii) any written information furnished to the Company by such Selling Stockholder for use in the Registration Statement, the U.S. Prospectus, any amendments or supplements thereto, or any preliminary U.S. Prospectus does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading and (iv) such Selling Stockholder has not taken and will not take, directly or indirectly, any action designed to or that might reasonably be expected to cause or result in stabilization or manipulation of the price of the Class E Common Stock. Each Trustee, severally and not jointly, represents and warrants to the Company and each U.S. Underwriter that (i) such Trustee has been appointed by the named fiduciary of the relevant Selling Stockholder (the "Named Fiduciary") (as determined in accordance with Section 402(a) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), to manage the Securities held by such Selling Stockholder as described herein and to exercise all rights, powers and privileges appurtenant to such Securities (subject to the authority of the Named Fiduciary to terminate such appointment and appoint one or more other investment managers for any such Securities); and (ii) such Trustee has full power and authority to execute and deliver this Agreement for the account and on behalf of the relevant Selling Stockholder and to so bind such Selling Stockholder. The Company agrees to indemnify and hold harmless each U.S. Underwriter, the directors, partners and each person, if any, who controls any U.S. Underwriter within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act from and against any and all losses, claims, damages and liabilities caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the U.S. Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary U.S. Prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information furnished to the Company in writing by any Underwriter through you expressly for use therein and agrees to reimburse each such indemnified party, as incurred, for any legal or other out-of-pocket expense reasonably incurred by them in connection with investigating or defending any such losses, claims, damages or liabilities, promptly after receipt of adequate documentation relating thereto; provided that the foregoing indemnity agreement with respect to any preliminary prospectuses shall not inure to the benefit of any U.S. Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased U.S. Securities, or any person controlling such U.S. Underwriter, if a copy of the U.S. Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such U.S. Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the U.S. Securities to such person, and if the U.S. Prospectus (as so amended or supplemented) would have cured the defect giving rise to such loss, claim, damage or liability. This indemnity agreement will be in addition to any liability which the Company may otherwise have. Each Selling Stockholder agrees, to the extent permitted under applicable law, severally and not jointly, to indemnify and hold harmless the U.S. Underwriters, their directors, partners and each person, if any, who controls the U.S. Underwriters within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as the foregoing indemnity from the Company to each U.S. Underwriter, but only with reference to information furnished to the Company in writing by such Selling Stockholder expressly for use in the Registration Statement, the U.S. Prospectus, any amendment or supplement thereto, or any preliminary prospectuses. This indemnity agreement will be in addition to any liability which each Selling Stockholder may otherwise have. No claim against the assets of either Selling Stockholder shall be created by this paragraph, except as and to the extent permitted by applicable law. Each U.S. Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, each of its officers who sign the Registration Statement, the Selling Stockholders, its trustees (including the Trustees) and directors and each person, if any, who controls the Company or the Selling Stockholders within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as the foregoing indemnity from the Company to each U.S. Underwriter, but only with reference 10 11 to information furnished to the Company in writing by such U.S. Underwriter through you expressly for use in the Registration Statement, the U.S. Prospectus, any amendment or supplement thereto, or any preliminary prospectuses. This indemnity agreement will be in addition to any liability which any Underwriter may otherwise have. In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to any of the three preceding paragraphs, such person (hereinafter called the indemnified party) shall promptly notify the person against whom such indemnity may be sought (hereinafter called the indemnifying party) in writing; provided, however, that the omission so to notify the indemnifying party shall not relieve the indemnifying party of any liability which it may have to such indemnified party except to the extent that the indemnifying party was materially prejudiced by such failure to notify. The indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party shall have agreed in writing to pay such fees and expenses, (ii) the indemnifying party shall have failed to take reasonable steps necessary to defend diligently any claim within ten calendar days after receiving written notice from the indemnified party that the indemnified party believes the indemnifying party has failed to take such steps or (iii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties, and that all such fees and expenses shall be reimbursed as they are incurred after receipt of adequate documentation thereof. In the case of any such separate firm for the U.S. Underwriters and such control persons of U.S. Underwriters, such firm shall be designated in writing by Merrill Lynch, Pierce, Fenner & Smith Incorporated and Goldman, Sachs & Co. In the case of any such separate firm for the Selling Stockholders and such control persons of the Selling Stockholders, such firm shall be designated in writing by the named fiduciary of each of the Selling Stockholders. In the case of any such separate firm for the Company, and such directors, officers and control persons of the Company, such firm shall be designated in writing by the Company. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement. If the indemnification provided for in the third, fourth or fifth paragraph of this Article VI is unavailable to an indemnified party in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Stockholders on the one hand and the U.S. Underwriters on the other from the offering of the U.S. Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and of the Selling Stockholders on the one hand and of the U.S. Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Stockholders on the one hand and the U.S. Underwriters on the other shall be deemed to be in the same proportions as the net proceeds from the offering (before deducting expenses) received by the Company and the Selling Stockholders bear to the total underwriting discounts and commissions received by the U.S. Underwriters, in each case as set forth in the table on the cover of the U.S. Prospectus. The relative fault of the Company, the Selling Stockholders and the U.S. Underwriters shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied in writing by the 11 12 Company, by the Selling Stockholders or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Selling Stockholders and the U.S. Underwriters agree that it would not be just and equitable if contribution pursuant to this Article VI were determined by pro rata allocation (even if the U.S. Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Article VI, the aggregate contribution of either Selling Stockholder under this Article VI, will not exceed the proceeds received by such Selling Stockholder from the U.S. Securities sold by it and neither Selling Stockholder shall be required to contribute under this Article VI in respect of any costs, expenses, losses, damages or other liabilities unless the same arise with reference to any information furnished to the Company in writing by the applicable Trustee acting on behalf of the relevant Selling Stockholder expressly for use in the Registration Statement. Notwithstanding the provisions of this Article VI, no U.S. Underwriter shall be required to contribute any amount in excess of the underwriting discount or commission applicable to the Securities purchased by such Underwriter hereunder. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The U.S. Underwriters' obligations to contribute pursuant to this Article VI are several in proportion to the respective number of U.S. Securities purchased by each Underwriter, and not joint. No party contributing pursuant to this Article VI shall be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent such contributing party agrees to contribute to that amount paid or payable by the indemnified party as a result of any loss or liability by reason of such settlement. The indemnity and contribution agreements contained in this Article VI and the representations and warranties of the Company and the Selling Stockholders contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any U.S. Underwriter or any person controlling any U.S. Underwriter or by on behalf of the Company, its officers and directors or any other person controlling the Company and (iii) acceptance of any payment for any of the Securities. VII. This Agreement shall be subject to termination in your absolute discretion, by notice given to the Company and the Selling Stockholders, if prior to the Closing Time (i) trading in securities generally or trading in the Class E Common Stock on the New York Stock Exchange, the American Stock Exchange, the London Stock Exchange or the Hong Kong Stock Exchange shall have been suspended or materially limited, (ii) a general moratorium on commercial banking activities in New York, London or Hong Kong shall have been declared by either Federal, New York State, British or Hong Kong authorities, as applicable, or (iii) there shall have occurred any material outbreak or escalation of hostilities or other calamity the effect of which on the financial markets of the United States, London or Hong Kong is such as to make it, in your reasonable judgment, impracticable to market the Securities. VIII. This Agreement shall become effective when notification of the effectiveness of the Registration Statement has been released by the Commission and you and the Selling Stockholders shall have agreed upon the public offering price. If the public offering price and the purchase price of the U.S. Securities shall not have been agreed upon, the U.S. Pricing Agreement shall not have been executed and delivered by all parties thereto, or the International Pricing Agreement or Asian Pricing Agreement shall not have been executed and delivered by all parties thereto, prior to 5:00 p.m., New York Time, on the seventh full business day after the 12 13 Registration Statement shall have become effective, this Agreement shall thereupon terminate without liability on the part of the U.S. Underwriters, the Company or the Selling Stockholders, except as set forth herein. If as of the Closing Time, any one or more of the U.S. Underwriters shall fail or refuse to purchase the Initial U.S. Securities which it or they have agreed to purchase hereunder on such date, and the aggregate number of the Initial U.S. Securities which such defaulting U.S. Underwriter or U.S. Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of the Initial U.S. Securities to be purchased on such date, the other U.S. Underwriters shall be obligated severally in the proportions which the number of Initial U.S. Securities set forth opposite their names in Schedule A bear to the aggregate number of Initial U.S. Securities set forth opposite the names of all such non-defaulting U.S. Underwriters, or in such other proportions as you may specify, to purchase the Initial U.S. Securities which such defaulting U.S. Underwriter or U.S. Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the number of Initial U.S. Securities which any U.S. Underwriter has agreed to purchase pursuant to Schedule A be increased pursuant to this Article VIII by an amount in excess of one-ninth of such number without the written consent of such U.S. Underwriter. If, at the Closing Time, any U.S. Underwriter or U.S. Underwriters shall fail or refuse to purchase the Initial U.S. Securities and the aggregate number of the Initial U.S. Securities with respect to which such default occurs is more than one-tenth of the aggregate number of the Initial U.S. Securities to be purchased on such date, and arrangements satisfactory to you and the Company and the Selling Stockholders for the purchase of such U.S. Securities are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting U.S. Underwriter, the Company or the Selling Stockholders. In any such case you or the Company and the Selling Stockholders shall have the right to postpone the Closing Time, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and in the U.S. Prospectus or in any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting U.S. Underwriter from liability in respect of any default of such U.S. Underwriter under this Agreement. If this Agreement shall be terminated by the U.S. Underwriters, or any of them, because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement to be complied with or fulfilled by the Company, or if for any reason the Company or either Selling Stockholder shall be unable to perform its obligations under this Agreement, the party who failed or refused to comply or fulfill any such condition will reimburse the U.S. Underwriters or such U.S. Underwriters as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the fees and disbursements of their counsel) reasonably incurred by such U.S. Underwriters in connection with this Agreement or the offering contemplated hereunder. This Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. * * * * * * 13 14 Very truly yours, GENERAL MOTORS CORPORATION By: ----------------------------------- Title: -------------------------------- GENERAL MOTORS HOURLY-RATE EMPLOYEES PENSION PLAN By: United States Trust Company of New York, as Trustee By: ----------------------------------- Name: Title: Authorized Agent GENERAL MOTORS RETIREMENT PLAN FOR SALARIED EMPLOYEES By: Bankers Trust Company, as Trustee By: ----------------------------------- Name: Title: Authorized Agent CONFIRMED AND ACCEPTED, as of the date first above written MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED GOLDMAN, SACHS & CO. LEHMAN BROTHERS INC. CS FIRST BOSTON MORGAN STANLEY & CO. INCORPORATED SALOMON BROTHERS INC By: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By --------------------------------------------- Authorized Signatory By: GOLDMAN, SACHS & CO. By --------------------------------------------- Authorized Signatory For themselves and as U.S. Representatives of the other U.S. Underwriters named in Schedule A to the U.S. Purchase Agreement. 14 15 EXHIBIT A SHARES GENERAL MOTORS CORPORATION (A DELAWARE CORPORATION) CLASS E COMMON STOCK ($0.10 PAR VALUE PER SHARE) PRICING AGREEMENT June , 1995 MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED GOLDMAN, SACHS & CO. LEHMAN BROTHERS INC. CS FIRST BOSTON MORGAN STANLEY & CO. INCORPORATED SALOMON BROTHERS INC as U.S. Representatives of the several U.S. Underwriters c/o Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated Merrill Lynch World Headquarters North Tower World Financial Center New York, New York 10281-1209 Dear Sirs: Reference is made to the U.S. Purchase Agreement, dated June , 1995 (the "U.S. Purchase Agreement"), relating to the purchase by the several U.S. Underwriters named in Schedule A thereto (the "U.S. Underwriters"), of the above shares of Class E Common Stock (the "Securities") of General Motors Corporation (the "Company"). Pursuant to Article I of the U.S. Purchase Agreement, each Selling Stockholder, severally and not jointly, agrees with each U.S. Underwriter as follows: (1) The initial public offering price per share for the Securities, determined as provided in said Article I, shall be $ . (2) The purchase price per share for the U.S. Securities to be paid by the several U.S. Underwriters shall be $ , being an amount equal to the initial public offering price set forth above less $ per share. 16 If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Selling Stockholders a counterpart hereof (with a copy to the Company), whereupon this instrument, along with all counterparts, will become a binding agreement among the U.S. Underwriters and the Selling Stockholders in accordance with its terms. * * * * * * GENERAL MOTORS HOURLY-RATE EMPLOYEES PENSION PLAN By: United States Trust Company of New York, as Trustee By ------------------------------------ Name: Title: Authorized Agent GENERAL MOTORS RETIREMENT PLAN FOR SALARIED EMPLOYEES By: Bankers Trust Company, as Trustee By ------------------------------------ Name: Title: Authorized Agent CONFIRMED AND ACCEPTED, as of the date first above written MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED GOLDMAN, SACHS & CO. LEHMAN BROTHERS INC. CS FIRST BOSTON MORGAN STANLEY & CO. INCORPORATED SALOMON BROTHERS INC By: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By --------------------------------------------- Authorized Signatory By: GOLDMAN, SACHS & CO. By --------------------------------------------- Authorized Signatory For themselves and as U.S. Representatives of the other U.S. Underwriters named in Schedule A to the U.S. Purchase Agreement. 2 17 SCHEDULE A
NAME OF NUMBER OF INITIAL NUMBER OF OPTION U.S. UNDERWRITER U.S. SECURITIES U.S. SECURITIES - -------------------------------------- ----------------- ----------------
3 18 SCHEDULE B
NAME OF SELLING STOCKHOLDER NUMBER OF INITIAL NUMBER OF OPTION (AND TRUSTEE) U.S. SECURITIES U.S. SECURITIES - -------------------------------------------------------------- ----------------- ---------------- General Motors Hourly-Rate Employees Pension Plan (the "Hourly Plan") (as represented by United States Trust Company of New York, as Trustee) General Motors Retirement Plan for Salaried Employees (the "Salaried Plan") (as represented by Bankers Trust Company, as Trustee)..........................
4 EX-5 3 WARREN ANDERSON OPINION 1 EXHIBIT 5 GENERAL MOTORS CORPORATION LEGAL STAFF FACSIMILE TELEPHONE 313/974-0685 313/974-1528 June 1, 1995 General Motors Corporation 3044 West Grand Boulevard Detroit, Michigan 48202 Ladies and Gentlemen: I refer to the proposed sales by the General Motors Special Hourly Employees Pension Trust under the General Motors Hourly-Rate Employees Pension Plan and a trust under the General Motors Retirement Program for Salaried Employees (collectively, the "Selling Stockholders"), of shares of Class E Common Stock, $0.10 par value per share (the "Class E Common Stock"), of General Motors Corporation, a Delaware corporation ("General Motors"), as described in the Registration Statement on Form S-3 (No. 33-59169) (as amended, the "Initial Registration Statement") filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), and in any subsequent, related registration statement filed with the Securities and Exchange Commission pursuant to Rule 462 under the Securities Act (a "Subsequent Registration Statement"). The Initial Registration Statement and any Subsequent Registration Statement are referred to collectively, as amended, as the "Registration Statements." I, in my capacity as an attorney on the Legal Staff of General Motors, am familiar with the proceedings to date with respect to the proposed sale of the Class E Common Stock to be sold by the Selling Stockholders pursuant to the Registration Statements and have examined such records, documents and matters of law and satisfied myself as to such matters of fact as I have considered relevant for the purposes of this opinion. I am of the opinion that: 1. General Motors is a corporation validly existing under the laws of the State of Delaware. 2. The issuance of the shares of Class E Common Stock to be sold by the Selling Stockholders pursuant to the Registration Statements were duly authorized by all necessary corporate action of General Motors and such shares were legally issued and are fully paid and nonassessable. I do not find it necessary for the purposes of this opinion, and accordingly I do not purport to cover herein, the application of the securities or "Blue Sky" laws of the various states to the sale of the Class E Common Stock. I am admitted to practice in the State of Michigan, and express no opinion with the respect to the laws of any jurisdiction other than the laws of the State of Michigan, the General Corporation Law of the State of Delaware, and the federal laws of the United States. I hereby consent to the filing of this opinion as an exhibit to the Initial Registration Statement, to the use of my name under the caption "Legal Matters" in the Prospectus forming a part of the Registration Statements and to the incorporation by reference of this opinion in any Subsequent Registration Statement. Very truly yours, /s/ WARREN G. ANDERSEN Attorney EX-8 4 TAX OPINION 1 EXHIBIT 8 June 1, 1995 General Motors Corporation 3044 West Grand Boulevard Detroit, Michigan 48202 Dear Sirs/Mesdames: In connection with the proposed sale by the General Motors Special Hourly Employees Pension Trust under the General Motors Hourly-Rate Employees Pension Plan and a trust under the General Motors Retirement Plan for Salaried Employees of General Motors Corporation's Class E Common Stock (the "Shares"), pursuant to the Registration Statement (No. 33-59169) (as amended, the "Initial Registration Statement") filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), and any subsequent related registration statement filed with the Securities and Exchange Commission pursuant to Rule 462 under the Securities Act (a "Subsequent Registration Statement" and, as amended, together with the Initial Registration Statement, the "Registration Statements") you have requested my legal opinion concerning certain United States Federal income tax consequences of ownership of the Shares to holders of the Shares who are nonresident alien individuals, foreign corporations, foreign partnerships, or nonresident fiduciaries of a foreign estate or trust ("Non-U.S. Holders"). I have examined the Registration Statements and such other documents and such legal authorities as I have deemed relevant for purposes of expressing the opinions contained herein. My opinion is based upon the applicable provisions of the Internal Revenue Code of 1986, as amended through the date hereof, Treasury regulations promulgated and proposed thereunder, current positions of the Internal Revenue Service (the "IRS") contained in published Revenue Rulings and Revenue Procedures and existing judicial decisions. No tax rulings have been or will be sought from the IRS with respect to any of the matters discussed herein. Based on the foregoing, and subject to the discussion set forth under the caption "Certain United States Federal Income Tax Considerations for Non-U.S. Holders" in the Prospectus forming part of the Initial Registration Statement, my opinion as to the material Federal income tax consequences of the purchase, ownership and disposition of the Shares to Non-U.S. Holders is as follows: 1. Dividends paid on the Shares will be subject to withholding tax at a 30% rate (or such lower rate as may be specified by an applicable income tax treaty), unless such dividends are effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States. 2. Dividends which are effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States will be subject to regular United States income tax in the same manner as if the Non-U.S. Holder were a United States resident. Such dividends received by a non-U.S. corporation also may be subject to an additional "branch profits tax" at a 30% rate (or such lower rate as may be specified by an applicable income tax treaty) of its effectively connected earnings and profits, subject to certain adjustments. 3. A Non-U.S. Holder generally will not be subject to United States Federal income tax with respect to gain realized on a sale or other disposition of the Shares, unless (i) the gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States, or (ii) in the case of certain Non-U.S. Holders who are nonresident alien individuals and hold such Shares as a capital asset, the holder is present in the United States for 183 or more days in the taxable year of the disposition. 4. An individual Non-U.S. Holder who is treated as the owner of Shares or has made certain lifetime transfers of Shares will be required to include the value thereof in his gross estate for United States Federal estate tax purposes, and may be subject to United States Federal estate tax unless an applicable estate tax treaty provides otherwise. 2 5. The discussion set forth under the caption "Certain United States Federal Income Tax Considerations for Non-U.S. Holders" in the Prospectus forming part of the Initial Registration Statement is based upon reasonable interpretations of existing law. There can be no assurance that these views will not be successfully challenged by the IRS or significantly altered by new legislation, changes in IRS positions or judicial decisions, any of which challenges or alterations may be applied retroactively with respect to completed transactions. I hereby consent to the filing of this opinion as an exhibit to the Initial Registration Statement, to the use of my name under the caption "Legal Matters" in the Prospectus forming a part of the Registration Statements and to the incorporation by reference of this opinion in any Subsequent Registration Statement. Very truly yours, /s/ Anton H. Zidansek -------------------------------------- Anton H. Zidansek Assistant Tax Counsel 2 EX-23.A 5 DELOITTE CONSENT 1 EXHIBIT 23(A) CONSENT OF INDEPENDENT AUDITORS GENERAL MOTORS CORPORATION: We consent to the incorporation by reference in this Amendment No. 1 to Registration Statement No. 33-59169 of General Motors Corporation on Form S-3 of our reports dated January 30, 1995 appearing in the Annual Report on Form 10-K of General Motors Corporation for the year ended December 31, 1994 and to the reference to us under the heading "Experts" in the Prospectus, which is part of such Registration Statement. /s/ DELOITTE & TOUCHE LLP Detroit, Michigan May 31, 1995 EX-23.B 6 KPMG CONSENT 1 EXHIBIT 23(B) CONSENT OF INDEPENDENT AUDITORS THE BOARDS OF DIRECTORS ELECTRONIC DATA SYSTEMS CORPORATION GENERAL MOTORS CORPORATION: We hereby consent to the use of our reports included and incorporated herein by reference and to the reference to our firm under the heading "Experts" in the Prospectus. /s/ KPMG PEAT MARWICK LLP Dallas, Texas May 31, 1995 -----END PRIVACY-ENHANCED MESSAGE-----