-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FVTssvxPFLZ+Tw8LWkGTPIh19b6D2cbm7krCkF51birn8qfA9IwEj+vXjC0YtW4v pcNGWDVuL1XNIw1f10j1rg== 0000950131-97-006085.txt : 19971010 0000950131-97-006085.hdr.sgml : 19971010 ACCESSION NUMBER: 0000950131-97-006085 CONFORMED SUBMISSION TYPE: SC 13E3/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19971009 SROS: NYSE SUBJECT COMPANY: 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: SC 13E3/A SEC ACT: SEC FILE NUMBER: 005-37025 FILM NUMBER: 97693074 BUSINESS ADDRESS: STREET 1: 100 RENAISSANCE CTR STREET 2: 3044 W GRAND BLVD CITY: DETROIT STATE: MI ZIP: 48202-3091 BUSINESS PHONE: 3135565000 FILED BY: 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: SC 13E3/A BUSINESS ADDRESS: STREET 1: 100 RENAISSANCE CTR STREET 2: 3044 W GRAND BLVD CITY: DETROIT STATE: MI ZIP: 48202-3091 BUSINESS PHONE: 3135565000 SC 13E3/A 1 AMENDMENT #2 TO SCHEDULE 13E-3 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13E-3 (AMENDMENT NO. 2) RULE 13E-3 TRANSACTION STATEMENT (PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934) GENERAL MOTORS CORPORATION (NAME OF ISSUER) GENERAL MOTORS CORPORATION (NAME OF PERSON(S) FILING STATEMENT) CLASS H COMMON STOCK (TITLE OF CLASS OF SECURITIES) 370442501 (CUSIP NUMBER OF CLASS OF SECURITIES) PETER R. BIBLE CHIEF ACCOUNTING OFFICER GENERAL MOTORS CORPORATION 100 RENAISSANCE CENTER DETROIT, MICHIGAN 48243-7301 (313) 556-5000 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT) COPIES TO: WARREN G. ANDERSEN ROBERT S. OSBORNE, P.C. GENERAL MOTORS CORPORATION KIRKLAND & ELLIS 3031 WEST GRAND BOULEVARD 200 EAST RANDOLPH DRIVE DETROIT, MICHIGAN 48202-3091 CHICAGO, ILLINOIS 60601-6636 (313) 974-5000 (312) 861-2000 This statement is filed in connection with (check the appropriate box): a.[X] The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange Act of 1934. b.[X] The filing of a registration statement under the Securities Act of 1933. c.[_] A tender offer. d.[_] None of the above. Check the following box if soliciting materials or an information statement referred to in checking box (a) are preliminary copies: [X] - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ITEMS 1 THROUGH 17. INTRODUCTION This Amendment to the Rule 13e-3 Transaction Statement (the "Transaction Statement") is being filed by General Motors Corporation, a Delaware corporation ("General Motors"), in connection with a series of related transactions (the "Hughes Transactions") pursuant to which, among other things, each issued and outstanding share of Class H Common Stock, $0.10 par value per share, of General Motors ("GM Class H Common Stock") will be recapitalized and converted into one share of a new class of common stock of General Motors ("New GM Class H Common Stock") and the right to receive a distribution of Class A Common Stock, $0.01 par value per share ("Class A Common Stock"), of HE Holdings, Inc. ("HE Holdings"). As a result of the Hughes Transactions, among other things, (a) holders of GM Class H Common Stock will remain stockholders of General Motors as holders of New GM Class H Common Stock and become stockholders of HE Holdings, which, immediately after the Hughes Transactions, will merge with Raytheon Company and be renamed "Raytheon Company," and (b) GM Class H Common Stock will cease to exist. This Amendment amends and supplements the Transaction Statement as filed previously hereto. General Motors has filed a Registration Statement on Form S-4 for the New GM Class H Common Stock (as amended and including exhibits, the "New GM Class H Registration Statement") and HE Holdings has filed a Registration Statement on Form S-4 for the Class A Common Stock (as amended and including exhibits, and together with the New GM Class H Registration Statement, the "Registration Statements") with the Securities and Exchange Commission previously hereto in connection with the Hughes Transactions. The cross reference sheet on the following pages, which is supplied pursuant to General Instruction F to Schedule 13E-3, shows the location in the solicitation statement/prospectus that forms a part of the Registration Statements (as amended, the "Solicitation Statement/Prospectus") of the information required to be included in response to the items of the Transaction Statement. The information set forth in the Registration Statements is incorporated herein by reference in its entirety, and responses to each item herein are qualified in their entirety by such reference. ITEM 16. ADDITIONAL INFORMATION The information contained in the Registration Statements is incorporated herein by reference in its entirety. 1 ITEM 17. MATERIAL TO BE FILED AS EXHIBITS Exhibit (a) Not applicable. Exhibit (b)(1) Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), dated October 6, 1997, which is included in Appendix B attached to the Solicitation Statement/Prospectus filed as Exhibit (d) hereto. Exhibit (b)(2) Opinion of Salomon Brothers Inc ("Salomon Brothers"), dated October 6, 1997, which is included in Appendix B attached to the Solicitation Statement/Prospectus filed as Exhibit (d) hereto. Exhibit (b)(3) Opinion of Goldman, Sachs & Co. Incorporated ("Goldman Sachs"), dated January 16, 1997, which is included in Appendix B attached to the Solicitation Statement/Prospectus filed as Exhibit (d) hereto. Exhibit (b)(4) Presentation to the General Motors Board of Directors Regarding the Hughes Transactions, dated January 16, 1997, given by Merrill Lynch and Salomon Brothers. Exhibit (b)(5) Presentation to the General Motors Board of Directors, dated January 16, 1997, given by Goldman Sachs. Exhibit (b)(6) Presentation to the General Motors Board of Directors Regarding the Hughes Transactions, dated October 6, 1997, given by Merrill Lynch and Salomon Brothers. Exhibit (b)(7) Presentation to the General Motors Board of Directors Regarding the Hughes Transactions, dated October 6, 1997, given by Merrill Lynch. Exhibit (b)(8) Presentation to the General Motors Board of Directors Regarding the Hughes Transactions, dated October 6, 1997, given by Salomon Brothers. Exhibit (c)(1) Form of Agreement and Plan of Merger by and between General Motors Corporation and GM Mergeco Corporation, which is attached as Appendix A to the Solicitation Statement/Prospectus filed as Exhibit (d) hereto. Executed Agreement and Plan of Merger to be included as Appendix A to the Solicitation Statement/Prospectus by amendment. Exhibit (c)(2) Implementation Agreement by and between General Motors Corporation and Raytheon Company, dated as of January 16, 1997 (filed as Exhibit 2(b) to the Current Report on Form 8- K of General Motors Corporation, dated January 16, 1997, and incorporated herein by reference). Exhibit (d) Solicitation Statement/Prospectus (and Consent Cards). Exhibit (e) Not applicable. Exhibit (f) Not applicable. 2 CROSS REFERENCE SHEET
SCHEDULE 13E-3 ITEM CAPTION OR LOCATION IN SOLICITATION NUMBER STATEMENT/PROSPECTUS ------------------- ----------------------------------- 1. Issuer and Class of Security Subject to the Transaction (a)..................... Introduction--The Issuers (b)..................... GM Class H Common Stock--Introduction (c)..................... GM Class H Common Stock--Price Range and Dividends (d)..................... Considerations Relating to GM's Dual-Class Common Stock Capital Structure--Overview; GM Class H Common Stock-- Price Range and Dividends; --Dividend Policy (e)..................... See Annex 1 to the Transaction Statement. (f)..................... See Annex 1 to the Transaction Statement. 2. Identity and Background. See Annex 1 to the Transaction Statement. (a)..................... See Annex 1 to the Transaction Statement. (b)..................... See Annex 1 to the Transaction Statement. (c)..................... See Annex 1 to the Transaction Statement. (d)..................... See Annex 1 to the Transaction Statement. (e)..................... See Annex 1 to the Transaction Statement. (f)..................... See Annex 1 to the Transaction Statement. (g)..................... See Annex 1 to the Transaction Statement. 3. Past Contacts, Transactions or Negotiations (a)..................... Not applicable (b)..................... Special Factors--Background of the Hughes Transactions 4. Terms of Transaction (a)..................... Special Factors--The Distribution Ratio; Description of the Hughes Transactions; Description of the Raytheon Merger; Separation and Transition Arrangements; Considerations Relating to GM's Dual-Class Common Stock Capital Structure; New GM Class H Common Stock; New Raytheon Capital Stock (b)..................... Not applicable 5. Plans or Proposals of the Issuer or Affiliate (a)..................... Not applicable (b)..................... Not applicable (c)..................... Not applicable (d)..................... Considerations Relating to GM's Dual-Class Common Stock Capital Structure--New GM Board Policy Statement; New GM Class H Common Stock--GM Certificate of Incorporation Provisions Regarding Dividends; -- Dividend Policy
3
SCHEDULE 13E-3 ITEM CAPTION OR LOCATION IN SOLICITATION NUMBER STATEMENT/PROSPECTUS ------------------- ----------------------------------- (e)..................... Special Factors--Purposes of the Hughes Transactions-- Integration of Delco and Delphi; --Background of the Hughes Transactions--Development of the Hughes Transactions and The Raytheon Merger--September 23, 1997 Capital Stock Committee Meeting (f)..................... Not applicable (g)..................... Not applicable 6. Source and Amounts of Funds or Other Consideration (a)..................... Estimated Fees and Expenses (b)..................... Estimated Fees and Expenses (c)..................... Not applicable (d)..................... Not applicable 7. Purpose(s), Alternatives, Reasons and Effects (a)..................... Special Factors--Purposes of the Hughes Transactions (b)..................... Special Factors--Alternatives to the Hughes Transactions (c)..................... Special Factors--Purposes of the Hughes Transactions; --Alternatives to the Hughes Transactions; -- Background of the Hughes Transactions (d)..................... Special Factors--Certain U.S. Federal Income Tax Considerations Relating to Certain of the Hughes Transactions; --The Distribution Ratio; Description of the Hughes Transactions; Description of the Raytheon Merger 8. Fairness of the Transaction (a)..................... Special Factors--Recommendations of the Capital Stock Committee and the GM Board; Fairness of the Hughes Transactions (b)..................... Special Factors--Recommendations of the Capital Stock Committee and the GM Board; Fairness of the Hughes Transactions (c)..................... Special Factors--Requisite Stockholder Approval of the Hughes Transactions; Description of the Hughes Transactions--Stockholder Approval of the Hughes Transactions; Solicitation of Written Consent of GM's Common Stockholders (d)..................... See Annex 1 to the Transaction Statement. (e)..................... Special Factors--Recommendations of the Capital Stock Committee and the GM Board; Fairness of the Hughes Transactions (f)..................... Not applicable 9. Reports, Opinions, Appraisals and Certain Negotiations (a)..................... Special Factors--Background of the Hughes Transactions; --Hughes Transactions Fairness Opinions: Merrill Lynch and Salomon Brothers; Description of the Raytheon Merger--Raytheon Merger Fairness Opinion: Goldman Sachs
4
SCHEDULE 13E-3 ITEM CAPTION OR LOCATION IN SOLICITATION NUMBER STATEMENT/PROSPECTUS ------------------- ----------------------------------- (b)..................... Special Factors--Background of the Hughes Transactions; --Hughes Transactions Fairness Opinions: Merrill Lynch and Salomon Brothers; Description of the Raytheon Merger--Raytheon Merger Fairness Opinion: Goldman Sachs (c)..................... Special Factors--Hughes Transactions Fairness Opinions: Merrill Lynch and Salomon Brothers; Description of the Raytheon Merger--Raytheon Merger Fairness Opinion: Goldman Sachs; Appendix B--Fairness Opinions 10. Interest in Securities of the Issuer (a)..................... Security Ownership of Certain Beneficial Owners and Management of General Motors; See also Annex 1 to the Transaction Statement. (b)..................... See Annex 1 to the Transaction Statement. 11. Contracts, Arrangements Description of the Hughes Transactions--GM Spin-Off or Merger Agreement; Description of the Raytheon Merger-- Understandings with Implementation Agreement Respect to the Issuer's Securities 12. Present Intention and Recommendation of Certain Persons with Regard to the Transaction (a)..................... Solicitation of Written Consent of GM's Common Stockholders-- Matter to be Approved. Other than as set forth in such section, General Motors has not received any notice of intent with respect to the vote on the Hughes Transactions from any person enumerated in Item 12(a) of Schedule 13E-3. (b)..................... Special Factors--Background of the Hughes Transactions; --Recommendations of the Capital Stock Committee and the GM Board; Fairness of the Hughes Transactions; Solicitation of Written Consent of GM's Common Stockholders--Matter to be Approved. Other than as set forth in such sections, General Motors has not received any notice that any person enumerated in Item 12(a) of Schedule 13E-3 has made any recommendation with respect to the Hughes Transactions. 13. Other Provisions of the Transaction (a)..................... Description of the Hughes Transactions--No Appraisal Rights (b)..................... Not applicable (c)..................... Not applicable 14. Financial Statements (a)..................... Summary--Certain Historical and Pro Forma Per Share Data--GM Common Stock Historical Per Share Data; Where You Can Find More Information (b)..................... Not applicable
5
SCHEDULE 13E-3 ITEM CAPTION OR LOCATION IN SOLICITATION NUMBER STATEMENT/PROSPECTUS ------------------- ----------------------------------- 15. Persons and Assets Employed, Retained or Utilized (a)..................... Special Factors--Background of the Hughes Transactions; Solicitation of Written Consent of GM's Common Stockholders (b)..................... Solicitation of Written Consent of GM's Common Stockholders 16. Additional Information The information contained in the Registration Statements is incorporated by reference herein in its entirety. 17. Material to be Filed as Exhibits (a)..................... Not applicable (b)..................... Fairness opinions of each of Merrill Lynch, Salomon Brothers and Goldman Sachs, which are included in Appendix B attached to the Solicitation Statement/Prospectus filed as Exhibit (d) hereto; Presentations to the General Motors Board of Directors given by (i) Merrill Lynch and Salomon Brothers, (ii) Goldman Sachs, (iii) Merrill Lynch and Salomon Brothers, (iv) Merrill Lynch, and (v) Salomon Brothers, which are filed as Exhibits (b)(4), (b)(5), (b)(6), (b)(7) and (b)(8), respectively, hereto (c)..................... Form of Agreement and Plan of Merger by and between General Motors Corporation and GM Mergeco Corporation, which is attached as Appendix A to the Solicitation Statement/Prospectus filed as Exhibit (d) hereto; Implementation Agreement by and between General Motors Corporation and Raytheon Company, dated as of January 16, 1997 (d)..................... New GM Class H Registration Statement filed as Exhibit (d)(1) hereto; Class A Registration Statement filed as Exhibit (d)(2) hereto (e)..................... Not applicable (f)..................... Not applicable
6 ANNEX 1 ITEM 1. ISSUER AND CLASS ITEM 1(E) On April 27, 1995, General Motors registered under the Securities Act an underwritten public offering of 15 million shares of GM Class H Common Stock owned by Howard Hughes Medical Institute ("HHMI"). All such shares were sold to the public at a price per share of $38.50. General Motors received none of the proceeds of this offering. Before deducting expenses, HHMI received aggregate proceeds from the offering of $557,500,000. ITEM 1(F) Since January 1, 1995, neither General Motors nor any of its affiliates has purchased GM Class H Common Stock in open-market or negotiated transactions. ITEM 2. IDENTITY AND BACKGROUND General Motors, the person filing the Transaction Statement, is the issuer of the class of equity securities which is the subject of the Rule 13e-3 transaction. ITEM 2(A) The persons enumerated in General Instruction C to Schedule 13E-3 (each, an "Instruction C Person") are Anne L. Armstrong, Percy N. Barnevik, John H. Bryan, Thomas E. Everhart, Charles T. Fisher, III, George M.C. Fisher, J. Willard Marriott, Jr., Ann D. McLaughlin, Harry J. Pearce, Eckhard Pfeiffer, John G. Smale, John F. Smith, Jr., Louis W. Sullivan, Dennis Weatherstone, Thomas H. Wyman, C. Michael Armstrong, J.T. Battenberg, III, Louis R. Hughes, J. Michael Losh and G. Richard Wagoner, Jr. ITEM 2(B) THROUGH (D) The following information with respect to principal occupation or employment and name of the corporation or other organization in which such occupation or employment is carried on and in regard to other affiliations has been furnished to General Motors by the Instruction C Persons. ANNE L. ARMSTRONG, P.O. Box 1358, Kingsville, Texas 78364; Chairman, Board of Trustees, Center for Strategic and International Studies. PERCY N. BARNEVIK, Affolternstrasse 44, Box 8131, CH-8050 Zurich, Switzerland; Chairman, ABB Asea Brown Boveri Ltd., Zurich, Switzerland, serving electric power generation, transmission and distribution customers as well as industrial, environmental control and mass transit markets. JOHN H. BRYAN, Sara Lee Corporation, Three First National Plaza, Chicago, Illinois 60602-4260; Chairman and Chief Executive Officer, Sara Lee Corporation, Chicago. THOMAS E. EVERHART, California Institute of Technology, Parsons-Oates Hall of Administration, 1201 East California Boulevard, Pasadena, California 91125; President and Professor of Electrical Engineering and Applied Physics, California Institute of Technology, Pasadena. CHARLES T. FISHER, III, 100 Renaissance Center, Detroit, Michigan 48243; Retired Chairman and President of NBD Bancorp, Inc. and its subsidiary NBD Bank, N.A. GEORGE M.C. FISHER, 343 State Street, Rochester, New York 14650; Chairman and Chief Executive Officer, Eastman Kodak Company, Rochester, NY, since December 1, 1993. Held additional office of President (December 1993-December 1996); Chairman and Chief Executive Officer, Motorola, Inc. (1990-1993); 1303 East Algonquin Road, Schaumburg, Illinois 60196. 7 J. WILLARD MARRIOTT, JR., Marriott International, Inc., One Marriott Drive, Washington, D.C. 20058; Chairman and Chief Executive Officer, Marriott International, Inc., Washington, D.C., since October 1993; President (October 1993-March 1997); Chairman, President and Chief Executive Officer, Marriott Corporation (1985-1993). ANN D. MCLAUGHLIN, 4320 Garfield, N.W., Washington, D.C.; Former U.S. Secretary of Labor (1987-1989); Chairman, The Aspen Institute; President, Federal City Council, Washington, D.C. (1990-1995); 1155 15th Street N.W., Washington, D.C. 20005. HARRY J. PEARCE, General Motors Corporation, 3044 West Grand Boulevard, Detroit, Michigan 48202-3091; Vice Chairman, Board of Directors since January 1, 1996 with responsibility for Hughes Electronics Corporation, GM Locomotive Group, Allison Transmission Division and Corporate Affairs; Executive Vice President (1994-1995) and General Counsel (1992-1994). ECKHARD PFEIFFER, 20555 State Highway 249, Houston, Texas 77070; President, Chief Executive Officer and Director (since October 1991), Compaq Computer Corporation, Houston, Texas. JOHN G. SMALE, The Procter & Gamble Company, P.O. Box 599, Cincinnati, Ohio 45201-0599; Chairman of the Executive Committee of General Motors Corporation since January 1, 1996, former Chairman, General Motors Corporation (November 1992-December 1995). JOHN F. SMITH, JR., General Motors Corporation, 3044 West Grand Boulevard, Detroit, Michigan 48202-3091; Chairman, General Motors Corporation since January 1, 1996, and Chief Executive Officer and President since 1992. LOUIS W. SULLIVAN, Morehouse School of Medicine, 720 Westview Drive, S.W., Atlanta, Georgia 30310-1495; President, Morehouse School of Medicine, Atlanta, Georgia, since January 21, 1993; U.S. Secretary of Health and Human Services (1989-1993); 200 Independence Avenue, S.W., Washington, D.C. 20201. DENNIS WEATHERSTONE, J.P. Morgan & Co. Incorporated, 60 Wall Street, 21st Floor, New York, New York 10260; Retired Chairman and currently director of J. P. Morgan & Co. Incorporated and its subsidiary Morgan Guaranty Trust Company of New York. THOMAS H. WYMAN, S.G. Warburg & Co., Inc., 277 Park Avenue, New York, New York 10172; Senior Adviser, SBC Warburg Inc., Chairman, S.G. Warburg & Co. Inc., New York (1992-1996). C. MICHAEL ARMSTRONG, Hughes Electronics Corporation, 7200 Hughes Terrace, Los Angeles, California 90045-0066; Chairman and Chief Executive Officer, Hughes Electronics Corporation since March 1992. J. T. BATTENBERG, III, General Motors Corporation, 3044 West Grand Boulevard, Detroit, Michigan, 48202-3091; Executive Vice President, General Motors since July 1995 and President, Delphi Automotive Systems since July 1994, Senior Vice President (July 1994-July 1995), Vice President and Group Executive in charge of the Automotive Components Group (May 1992-July 1994). LOUIS R. HUGHES, General Motors Corporation, 3044 West Grand Boulevard, Detroit, Michigan, 48202-3091; Executive Vice President, International Operations, General Motors since November 1992 and President, International Operations since September 1994. J. MICHAEL LOSH, General Motors Corporation, 3044 West Grand Boulevard, Detroit, Michigan, 48202-3091; Executive Vice President and Chief Financial Officer, General Motors since July 1994, Group Executive in charge of North American Vehicle Sales, Service, and Marketing (May 1992-July 1994). G. RICHARD WAGONER, JR., General Motors Corporation, 3044 West Grand Boulevard, Detroit, Michigan, 48202-3091; Executive Vice President, General Motors since November 1992 and President, North American Operations since July 1994, Chief Financial Officer (November 1992-July 1994). 8 ITEM 2(E) To the best of General Motors' knowledge, during the past five years, no Instruction C Person has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). ITEM 2(F) To the best of General Motors' knowledge, during the past five years, no Instruction C Person has been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining further violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. ITEM 2(G) All of the Instruction C Persons are U.S. citizens, except for Mr. Barnevik, who is a citizen of Sweden, and Mr. Pfeiffer, who is a citizen of Germany. ITEM 8. FAIRNESS OF THE TRANSACTION. ITEM 8(D) No unaffiliated representative has been retained to act solely on behalf of unaffiliated security holders for the purposes of negotiating the terms of the Hughes Transactions or preparing a report concerning the fairness of the Hughes Transactions. ITEM 10. INTEREST IN SECURITIES OF THE ISSUER. ITEM 10(A) The following table sets forth, based on information available to General Motors as of October 3, 1997, beneficial ownership of GM Class H Common Stock for certain Instruction C Persons and pension and profit-sharing or similar plans of General Motors (excluding its subsidiaries). Ownership of less than one percent of the outstanding shares of GM Class H Common Stock is indicated by an asterisk.
SHARES PERCENT BENEFICIALLY OF BENEFICIAL OWNER OWNED CLASS ---------------- ------------ ------- J. T. Battenberg, III............................... 6,238 * J. M. Losh.......................................... 5,566 * General Motors Retirement Plan for Salaried Employees.......................................... 0 0 General Motors Savings Plans Master Trust........... 5,379,217 5.25% General Motors Canadian Savings-Stock Purchase Program............................................ 58,131 *
ITEM 10(B) To be provided by amendment. 9 After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement, as amended, is true, complete and correct. General Motors Corporation /s/ John F. Smith, Jr. By: _________________________________ John F. Smith, Jr. Chairman, Chief Executive Officer, and President Dated: October 9, 1997 10 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------- ---------------------- (a)(1) Not applicable. (b)(1) Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated, dated October 6, 1997, which is included in Appendix B attached to the So- licitation Statement/Prospectus filed as Exhibit (d) hereto. (b)(2) Opinion of Salomon Brothers Inc, dated October 6, 1997, which is in- cluded in Appendix B attached to the Solicitation Statement/Prospectus filed as Exhibit (d) hereto. (b)(3) Opinion of Goldman, Sachs & Co. Incorporated, dated January 16, 1997, which is included in Appendix B attached to the Solicitation Statement/Prospectus filed as Exhibit (d) hereto. (b)(4) Presentation to the General Motors Board of Directors Regarding the Hughes Transactions, dated January 16, 1997, given by Merrill Lynch and Salomon Brothers.* (b)(5) Presentation to the General Motors Board of Directors, dated January 16, 1997, given by Goldman Sachs.** (b)(6) Presentation to the General Motors Board of Directors Regarding the Hughes Transactions, dated October 6, 1997, given by Merrill Lynch and Salomon Brothers.*** (b)(7) Presentation to the General Motors Board of Directors Regarding the Hughes Transactions, dated October 6, 1997, given by Merrill Lynch.*** (b)(8) Presentation to the General Motors Board of Directors Regarding the Hughes Transactions, dated October 6, 1997, given by Salomon Broth- ers.*** (c)(1) Form of Agreement and Plan of Merger by and between General Motors Corporation and GM Mergeco Corporation, which is attached as Appen- dix A to the Solicitation Statement/Prospectus filed as Exhibit (d) hereto. Executed Agreement and Plan of Merger to be included as Ap- pendix A to the Solicitation Statement/Prospectus by amendment. (c)(2) Implementation Agreement by and between General Motors Corporation and Raytheon Company, dated as of January 16, 1997 (filed as Exhibit 2(b) to the Current Report on Form 8-K of General Motors Corpora- tion, dated January 16, 1997, and incorporated herein by reference). (d) Solicitation Statement/Prospectus (and Consent Cards).* (e)(1) Not applicable. (f)(1) Not applicable.
- -------- * Filed previously ** Filed herewith ***To be filed by amendment 11 EX-99.B.(5) 2 GOLDMAN SACHS PRESENTATION Exhibit (b)(5) CONFIDENTIAL MATERIAL PRESENTED TO THE BOARDS OF DIRECTORS OF GENERAL MOTORS CORPORATION, HUGHES ELECTRONICS CORPORATION AND HE HOLDINGS, INC. ---------------- AT A MEETING ON JANUARY 16, 1997 ---------------- The following pages contain material that was provided to the Boards of Directors of General Motors Corporation, Hughes Electronics Corporation and HE Holdings, Inc. (the "Companies") in the context of a meeting of the Boards of Directors held to evaluate the transactions described in the Solicitation Statement which is part of this Schedule 13E-3. The accompanying material was compiled or prepared on a confidential basis solely for use by the Boards of Directors and not with a view toward public disclosure under the Securities Act of 1933 or the Securities Exchange Act of 1934 (the "Federal Securities Law"). The information contained in this material was obtained from the Companies and other sources. Any estimates and projections contained herein have been prepared by the management of the Companies or Raytheon Company and involve numerous and significant subjective determinations, which may or may not be correct. No representation or warranty, expressed or implied, is made as to the accuracy or completeness of such information and nothing contained herein is, or shall be relied upon as, a promise or representation, whether as to the past or the future. Because this material was prepared for use in the context of an oral presentation to the Boards of Directors, it was not prepared to comply with the disclosure standards set forth under the Federal Securities Laws and may be used by readers not as familiar with the business and affairs of the Companies as the Boards of Directors, neither the Companies nor Goldman, Sachs & Co. nor any of their respective legal or financial advisors or accountants takes any responsibility for the accuracy or completeness of any of the material when used by persons other than the Boards of Directors of the Companies. Neither the Companies nor Goldman, Sachs & Co. expects to update or otherwise revise the accompanying materials. HIGHLY CONFIDENTIAL =================== Goldman Sachs Presentation to the Board of Directors Prepared By Goldman, Sachs & Co January 16, 1997 Table of Exhibits I. Summary of Proposals II. Valuation Parameters Public Market Statistics Analysis of Relevant Transactions Discounted Cash Flow Analysis Contribution Analysis III. Review of Raytheon Company Stock Trading History Summary Financial Data Review of Synergies IV. Analysis of Raytheon Proposal Analysis of Proposal Pro Forma Trading Analysis V. Review of Northrop Grumman Corporation Stock Trading History Summary Financial Data Review of Synergies VI. Analysis of Northrop Grumman Proposal Analysis of Proposal Pro Forma Trading Analysis A. Appendix Backup Exhibits I. SUMMARY OF PROPOSALS (In millions, except per share amounts)
--------------------------------- ------------------------------- Raytheon Northrop Grumman --------------------------------- ------------------------------- Total Value $9,500 $9,500 $9,500 $9,301 $9,301 $9,301 Low Midpoint High Low Midpoint High ---------- ---------- --------- -------- ---------- ------- Value of Equity $4,570 $5,078 $5,586 $4,208 $4,676 $5,144 Debt Assumed 4,930 4,422 3,914 5,093 4,625 4,157 Additional Debt 4,694 4,186 3,678 4,857 4,389 3,921 Existing Debt 236 236 236 236 236 236 Equity - Collar (a) $44.42 $49.35 $54.29 $72.90 $81.00 $89.10 January 6, 1997 $50.00 $81.88 January 10, 1997 47.25 77.75 Number of Class A Shares to be distributed to GM Holders (b) 102.9 57.7 Number of Class B Shares Exchanged for Merger Partner Common (b) 235.5 57.7 ----- ---- Total New Company Shares (b) 338.4 115.5 Class A Ownership in New Company (b) 30.4% 50.0%
(a) Collar range for each proposal reflects 10% change in stock price in either direction from midpoint. (b) Share figures reflect primary shares outstanding. Midpoint of $81.00 for Northrop Grumman represents 20 day average closing price for the period prior to January 9, 1997. Midpoint of $49.35 for Raytheon represents average trading price during the 30 day period prior to January 6, 1997. 1 Summary of Proposals Key Terms
Term Raytheon Northrop Grumman - ----------------------------------------------------------------------------------------------------------------------------------- Surviving Corporation C.M. Armstrong to be director and chairman of Board C.M. Armstrong to be director Management and Transition Committee Board M.T. Smith to be President, COO and director C.H. Noski to be director and member of Audit Committee Third new member to be mutually determined Current GM outside director to be a director and member of Nominating Committee and Board Transition Committee Other governance bodies established with HAC representation: Management Transition Committee Defense Business Executive Council Voting Rights Class A to have 80% of votes for election of directors; Class A to have 80% of votes for election of Class A and Class B to have class votes on all other directors; Class A and Class B each have one matters vote per share on all other matters Closing Balance Sheet Adjusted net worth of HAC Net working capital of HAC Adjustment HAC earnings until closing accrue to GM/Telecom HAC earnings until closing accrue to GM/Telecom - ------------------------------------------------------------------------------------------------------------------------------------
2 II. Public Market Statistics ($ in millions, except per share amounts)
Levered Multiple of P/E Multiple (c) Market Debt/ 1997 --------------------------- Company Cap. (a) Cap. EBITDA (b) 1997E 1998E - ------------------------------------------------------------------------------------------------------------------ Boeing (d) $36,637 31.4% 8.6x 19.6x 15.6x General Dynamics 3,693 8.8% 9.3 15.4 15.1 Hughes Electronics 24,442 3.0% 9.5 23.6 20.4 Lockheed Martin 28,626 62.6% 6.6 14.0 12.5 Northrop Grumman 7,929 62.6% 6.9 13.3 11.8 Raytheon (e) 15,426 49.9% 8.3 13.1 11.9 Median 40.7% 8.4x 14.7x 13.8x Mean 36.4% 8.2 16.5 14.5 - ------------------------------------------------------------------------------------------------------------------
(a) Based on closing stock prices as of 01/11/97 and balance sheet data as of September 30, 1996. (b) EBITDA estimates as per Goldman Sachs research (November 1996). Figures exclude pension and non-cash income. (c) IBES estimates for EPS as of 01/08/97. Estimates for companies with non-calendar fiscal year ends have been calendarized. (d) Figures have been adjusted pro forma for acquisition of Rockwell A&D but do not include impact of pending acquisition of McDonnell Douglas. (e) Figures have not been adjusted for pending acquisition of Texas Instruments' DS&E business. 3 Analysis of Relevant Transactions ($ in millions)
- ---- ----------------- ---------------- ------------- ------------- ------------------------ ------------ ----------- Multiple Multiple of Current Year of Next Year Multiple of Form of Total ------------------------ ------------ Book Date Acquiring Company Acquired Company Consideration Consideration Sales EBIT EBITDA Sales EBIT Value - ---- ----------------- ---------------- ------------- ------------- ----- ---- ------ ----- ---- ----------- Pending Raytheon Texas Instruments DS&E Cash $2,950 1.68x 12.0x 10.6x 1.66x 12.9x 3.4x Pending Boeing McDonnell Douglas Stock 13,345 1.01 10.5 10.0 0.95 8.8 4.4 12/96 Boeing Rockwell A&D Cash/Stock 3,025 0.94 11.1 9.4 0.93 9.4 3.9 04/96 Lockheed Martin Loral Cash 9,066 1.44 12.9 9.2 1.33 11.9 3.8 03/96 Northrop Grumman Westinghouse ESG Cash 3,000 1.17 12.7 9.3 1.25 10.9 9.6 05/95 Raytheon E-Systems Cash 2,340 1.06 11.6 8.3 0.96 10.6 2.8 03/95 Martin Marietta Lockheed Stock 5,227 0.56 8.6 5.4 0.57 8.2 1.9 05/94 Northrop Grumman Cash 2,190 0.64 10.9 7.5 0.66 9.9 2.5 ------------------------------------------------------------------------------------------------------------------------- High 1.68x 12.9x 10.6x 1.66 12.9x 9.6x Median 1.03 11.4 9.3 0.96 10.3 3.6 ------------------------------------------------------------------------------------------------------------------------- Proposed Raytheon Company Hughes Aircraft Company Cash/Stock $9,500 1.53x 13.7x 11.7x 1.43x 13.0x 1.9x Proposed Northrop Grumman Hughes Aircraft Company Cash/Stock 9,301 1.50 13.4 11.4 1.40 12.7 1.8
4 Summary Financial Data Hughes Aircraft Company ($ in millions)
Years Ended December 31, -------------------------------------------------------------------------------------- CAGR 1996 1997 1998 1999 2000 2001 1996-2001 ---- ---- ---- ---- ---- ---- --------- Income Statement - ---------------- Revenues $6,220 $6,640 $7,148 $7,657 $8,826 $9,600 9.1% EBITDA 814 863 893 955 1,080 1,163 7.4% EBIT (a) 695 732 750 800 916 998 7.5% Margin 11.2% 11.0% 10.5% 10.5% 10.4% 10.4% Balance Sheet 9/30/96 - ------------- ------- Debt (b) $236 Equity 5,044 Debt/Cap Ratio 4.5%
Source: Financial information provided by HAC management, December 1996. (a) EBIT figures excludes impact of amortization of goodwill. (b) Pro forma for $141 debt relating to the pending acquisition of the Marine Systems business of Alliant Techsystems. 5 Discounted Cash Flow Analysis ($ in millions)
Multiple of Terminal EBITDA ------------------------------------------ Discount Rate 7.0x 7.5x 8.0x - --------------------------------------------------------------------- 10.0% $7,022 $7,389 $7,757 11.0% $6,745 $7,096 $7,448 12.0% $6,482 $6,818 $7,154
- -------------------------------- Cash flow projections provided by HAC management. Terminal value calculation based on a multiple of trailing EBITDA in 2001. All cash flows discounted to January 1, 1997. 6 Discounted Cash Flow Analysis Comparison of Synergy Values ($ in millions)
- ----------------------------------------------- ----------------------------------------------- Raytheon-HAC Northrop Grumman-HAC - ----------------------------------------------- ----------------------------------------------- Multiple of Terminal EBIT Multiple of Terminal EBIT Discount -------------------------------- Discount -------------------------------- Rate 8.0x 9.0x 10.0x Rate 8.0x 9.0x 10.0x - ----------- -------------------------------- ----------- -------------------------------- 10.0% $3,677 $3,999 $4,321 10.0% $1,762 $1,905 $2,049 11.0% 3,533 3,841 4,149 11.0% 1,695 1,833 1,970 12.0% 3,396 3,690 3,985 12.0% 1,632 1,763 1,894
- ------------------------------- Synergy projections provided by Raytheon and Northrop Grumman managements (January 1997). Raytheon-HAC synergy values do not include synergies associated with Raytheon's acquisition of TI DS&E. Terminal value calculation based on a multiple of trailing EBIT in 2001. All cash flows discounted to January 1, 1997. 7 Contribution Analysis Raytheon ($ in millions)
% Contribution 1997E(a) HAC Raytheon(b) HAC ---------------- ---------------- ---------------- Revenues $6,640 $16,711 28.4% EBITDA 863 2,257 27.7% Operating Income(c) 732 1,788 29.1% Levered Value(d) $9,500 $18,376 34.1%
(a) Projected financial information for 1997 as per HAC management and Northrop Grumman management. (b) Raytheon data includes pro forma base forecast for TI, before impact of synergies. (c) Operating Income is before impact of goodwill amortization and pension income. (d) Levered value for HAC represents Raytheon proposal; levered value for Raytheon is as of January 10, 1997 and includes $2,950 of debt for TI. 8 Contribution Analysis Northrop Grumman ($ in millions)
Northrop % Contribution 1997E(a) HAC Grumman HAC ---------------- ------------ ---------------- Revenues $6,640 *** *** EBITDA 863 *** *** Operating Income(b) 732 *** *** Levered Value(c) $9,301 *** ***
(a) Projected financial information for 1997 as per HAC management and Northrop Grumman management. (b) Operating Income is before impact of goodwill amortization and pension income. (c) Levered value for HAC represents Northrop Grumman proposal; levered value for Northrop Grumman is as of January 10, 1997. *** [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.] 9 III. Stock Trading History Raytheon [LINE GRAPH APPEARS HERE] Latest Close (1/10/97) $47.25 Equity Market Cap (millions) $11,210.0 Shares Outstanding (millions) 10 Day Average $48.50 Primary 236.0 20 Day Average 48.18 Fully-Diluted 240.1 30 Day Average 48.79 Average Daily Volume 557,516 10 Stock Trading History Raytheon - Indexed [LINE GRAPH APPEARS HERE] 11 Summary Financial Data Raytheon ($ in millions, except per share amounts)
Years Ended December 31, ----------------------------------------------------------------------------- CAGR 1996 1997 1998 1999 2000 2001 1996-2001 ---- ---- ---- ---- ---- ---- --------- Income Statement - ---------------- Revenues $12,260 $14,936 $16,826 $19,219 $21,604 $23,795 14.2% EBITDA 1,655 1,986 2,227 2,507 2,798 3,098 13.4% EBIT 1,250 1,549 1,755 2,015 2,297 2,594 15.7% Margin 10.2% 10.4% 10.4% 10.5% 10.6% 10.9% Earnings Per Share $3.30 $3.60 $4.11 $4.83 $5.68 $6.57 14.8% Annual Growth 9.2% 14.2% 17.5% 17.6% 15.7% Impact of TI Base Plan - ---------------------- Revenues $1,775 $1,791 $1,952 $2,056 $2,216 5.7% EBIT 239 243 264 277 298 5.7% Margin 13.5% 13.6% 13.5% 13.5% 13.4% 12/31/96 Pro Forma TI -------- ------------ Balance Sheet - ------------- Debt $3,730 $6,680 Equity 4,600 4,600 Debt/Cap Ratio 44.8% 59.2% Credit Ratings S&P A+ BBB+ Watch List Moody's A1 On Review
Source: Raytheon management, January 1997. 12 Review of Synergies Raytheon ($ in millions)
Years Ended December 31, 1997-2001 ----------------------------------------------------------------- - ------------------------------- 1997* 1998 1999 2000 2001 Total Raytheon/HAC ---- ---- ---- ---- ---- ----- - ------------------------------- Revenue Synergy $ 15 $220 $385 $555 $750 $1,925 Associated Margin 2 24 42 61 84 213 Pretax Cost Savings 152 343 421 393 345 1,654 Cost Recovery 0 19 64 90 90 264 - -- -- -- -- --- Subtotal 154 387 528 544 519 2,131 Purchase Accounting Adjustments 35 72 50 50 50 257 -- -- -- -- -- --- Subtotal $189 $459 $578 $594 $569 $2,388 - ------------------------------- Raytheon/TI - ------------------------------- Revenue Synergy $ 0 $130 $140 $170 $190 $630 Associated Margin 0 17 18 22 25 82 Pretax Cost Savings 16 38 55 54 54 217 Cost Recovery 0 10 26 26 26 88 - -- -- -- -- -- Subtotal $ 16 $ 65 $ 99 $102 $105 $387 - ------------------------------- HAC/TI - ------------------------------- Revenue Synergy $ 47 $190 $369 $515 $580 $1,701 Associated Margin 5 21 42 61 70 199 Pretax Cost Savings 31 97 84 72 73 357 -- -- -- -- -- --- Subtotal $ 36 $118 $126 $133 $143 $556 ---- ---- ---- ---- ---- ---- Total EBT Increase $241 $641 $803 $829 $816 $3,330 ---- ---- ---- ---- ---- ------
Source: Synergy information provided by Raytheon management, January 1997. * 1997 figures represent 1/2 year. 13 IV Analysis of Proposal Raytheon ($ in millions, except per share amounts)
------------------------------------------------------------ Summary of Terms ------------------------------------------------------------ Class A Shares Issued to HAC Holders 102.9 Raytheon Stock Price (1/10/97) $47.25 Implied Equity Value $4,862 Debt Assumed 4,638 ------ Total Transaction Value $9,500 ====== ------------------------------------------------------------ - -------------------------------------------------------------------------------- Raytheon Total Transaction Value Stock ----------------------- Pro Forma Price % Change Equity Value Debt Total Value Debt/Cap* ----- -------- ------------ ---- ----------- --------- $37.01 (25.0%) $3,808 $4,930 $8,738 58.0% 39.48 (20.0%) 4,062 4,930 8,992 57.3% 41.95 (15.0%) 4,316 4,930 9,246 56.6% - ------------------------------------------------------------- 44.42 (10.0%) 4,570 4,930 9,500 55.9% 46.88 (5.0%) 4,824 4,676 9,500 54.6% 49.35 0.0% 5,078 4,422 9,500 53.4% 51.82 5.0% 5,332 4,168 9,500 52.2% 54.29 10.0% 5,586 3,914 9,500 51.0% - ------------------------------------------------------------- 56.75 15.0% 5,840 3,914 9,754 50.4% 59.22 20.0% 6,093 3,914 10,008 49.8% 61.69 25.0% 6,347 3,914 10,262 49.2% - --------------------------------------------------------------------------------
* Reflects impact of additional $2,950 debt relating to the pending acquisition of Texas Instruments' DS&E business. 14 Pro Forma Trading Analysis Raytheon ($ in millions, except per share amounts)
1997 1998 ---- ---- Earnings Per Share Stand-Alone $3.60 $4.11 Pro Forma (a) 3.43 4.15 Accretion / (Dilution) (4.7%) 1.0% Valuation Implications - ---------------------- 1997E P/E Multiple 13.0x - 15.0x 12.0x - 14.0x ----- ----- ----- ----- Implied Stock Price $44.59 - $51.45 $49.80 - $58.10 P/E Multiple Needed to Maintain Stock Price of Collar Midpoint 14.4x 11.9x
Analysis based on transaction completed at the midpoint of the collar ($49.35). (a) Earnings per share calculation for 1997 is pro forma assuming a full year impact of HAC and TI transactions. EPS figures are calculated using primary shares. 15 Stock Trading History Northrop Grumman [GRAPH APPEARS HERE] Latest Close (1/10/97) $ 77.75 10 Day Average $ 80.71 20 Day Average 80.74 30 Day Average 81.06 Equity Market Cap (millions) $ 4,677.2 Shares Outstanding (millions) Primary 57.7 Fully-Diluted 59.0 Average Daily Volume 147,078 16 V Stock Trading History Northrop Grumman - Indexed [LINE GRAPH APPEARS HERE] 17 Summary Financial Data Northrop Grumman ($ in millions, except per share amounts)
Years Ended December 31, --------------------------------------------------------------------- CAGR 1996 1997 1998 1999 2000 2001 1996-2001 ---- ---- ---- ---- ---- ---- --------- Income Statement - ---------------- Revenues $8,000 *** *** *** *** *** *** EBITDA (a) 953 *** *** *** *** *** *** EBIT (b) 594 *** *** *** *** *** *** Margin 7.4% *** *** *** *** *** Earnings Per Share $5.28 *** *** *** *** *** *** Annual Growth *** *** *** *** *** Balance Sheet 12/31/96 - ------------- -------- Debt $3,490 Equity 2,175 Debt/Cap Ratio 61.6% Credit Ratings S&P BBB- Moody's Baa3
Source: Financial information provided by Northrop Grumman management, January 1997. (a) EBITDA figures are before impact of pension income. (b) EBIT figures include impact of pension income and amortization of acquisition goodwill. *** [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.] 18 Review of Synergies Northrop Grumman ($ in millions)
Years Ended December 31, --------------------------------- 1997-2001 1997 1998 1999 2000 2001 Total ---- ---- ---- ---- ---- ----- Revenue Synergy $5 $150 $420 $650 $1,000 $2,225 Associated Margin (11%) 1 17 46 72 110 245 Pretax Cost Savings 199 234 294 169 121 1,017 ---- ---- ---- ---- ---- ------ Subtotal $200 $251 $340 $241 $231 $1,262 Other Items Purchase Accounting Adjustments 78 83 84 86 86 417 ---- ---- ---- ---- ---- ------ Total EBT Increase $278 $334 $424 $327 $317 $1,679 ---- ---- ---- ---- ---- ------
Source: Synergy information provided by Northrop Grumman management, January 1997. 19 VI Analysis of Proposal Northrop Grumman ($ in millions, except per share amounts)
------------------------------------------------------------------- Summary of Terms ------------------------------------------------------------------- Class A Shares Issued to HAC Holders 57.729 Northrop Grumman Stock Price (1/10/97) $77.75 Implied Equity Value $4,488 Debt Assumed 4,813 ----- Total Transaction Value $9,301 ------ -------------------------------------------------------------------
- -------------------------------------------------------------------------------- Northrop Grumman Stock Pro Forma Price % Change Debt Equity Total Value Debt/Cap - ----------------------- ------------------------------------- -------- $60.75 (25.0%) $5,093 $3,507 $8,600 60.2% 64.80 (20.0%) 5,093 3,741 8,833 59.2% 68.85 (15.0%) 5,093 3,975 9,067 58.3% 72.90 (10.0%) 5,093 4,208 9,301 57.3% 76.95 (5.0%) 4,859 4,442 9,301 55.8% 81.00 0.0% 4,625 4,676 9,301 54.2% 85.05 5.0% 4,391 4,910 9,301 52.7% 89.10 10.0% 4,157 5,144 9,301 51.1% 93.15 15.0% 4,157 5,377 9,535 50.3% 97.20 20.0% 4,157 5,611 9,769 49.6% 101.25 25.0% 4,157 5,845 10,002 48.8% - --------------------------------------------------------------------------------
20 Pro Forma Trading Analysis Northrop Grumman ($ in millions, except per share amounts)
1997 1998 ---- ---- Earnings Per Share Stand-Alone *** *** Pro Forma (a) *** *** Accretion/(Dilution) *** *** Valuation Implications - ---------------------- 1997E P/E Multiple *** *** *** *** Implied Stock Price *** *** *** *** P/E Multiple Needed to Maintain Stock Price of Collar Midpoint 16.3x 13.8x
Analysis based on transaction completed at the midpoint of the collar ($81.00). (a) Earnings per share calculation for 1997 is pro forma assuming a full year impact. Assumes full benefit of synergies. *** [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.] 21 A. Impact of Transaction Raytheon ($ in millions, except per share amounts)
Year Ended December 31, --------------------------------------------------------------------- CAGR CAGR 1996 1997 1998 1999 2000 2001 1996-2001 1997-2001 ---- ---- ---- ---- ---- ---- --------- --------- Raytheon Earnings Per Share* $3.30 $3.60 $4.11 $4.83 $5.68 $6.57 14.8% 16.2% P/E Ratio** 13.1x 11.5x 9.8x 8.3x 7.2x Debt/Cap 44.8% Raytheon/TI/HAC Earnings Per Share $3.30 $3.43 $4.15 $5.13 $6.17 $7.07 16.5% 19.8% P/E Ratio to Breakeven 13.8x 11.4x 9.2x 7.7x 6.7x Accretion/(Dilution) (4.7%) 1.0% 6.3% 8.6% 7.6% Debt/Cap 53.4%
* Earnings per share calculated using primary shares outstanding. ** Based on latest closing stock price of $47.25 as of January 10, 1997. 22 Impact of Transaction Northrop Grumman ($ in millions, except per share amounts)
Years Ended December 31, ---------------------------------------------- CAGR CAGR 1996 1997 1998 1999 2000 2001 1996-2001 1997-2001 ------ ------ ------ ------ ------ ------ --------- --------- Stand-Alone Earnings Per Share $5.31 *** *** *** *** *** *** *** P/E Ratio (a) *** *** *** *** *** Debt/Cap 62% 57% 50% 41% 51% 35% Pro Forma Earnings Per Share $5.31 $4.97 $5.89 $7.55 $8.37 $9.68 12.8% 18.1% P/E Ratio to Breakeven (a) 15.7x 13.2x 10.3x 9.3x 8.0x Accretion/(Dilution) *** *** *** *** *** Debt/Cap 55% 51% 47% 41% 39% 33% Pro Forma w/ Repurchase Earnings Per Share $5.31 $5.02 $6.14 $8.28 $9.51 $11.36 16.4% 22.7% P/E Ratio to Breakeven (a) 15.5x 12.7x 9.4x 8.2x 6.9x Accretion/(Dilution) *** *** *** *** *** Debt/Cap 55% 55% 55% 55% 55% 55%
Source: Pro forma "Merger Consequences Analysis" as per Northrop Grumman proposal, January 1997. (a) Based on latest closing stock price of $77.75 as of January 10, 1997. *** [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.] 23 Summary Financial Information HAC Segment Data
For the Years Ended December 31, ----------------------------------------------------------------------------- 1996-2001 Projected ($ in millions) 1996 1997 1998 1999 2000 2001 CAGR - --------------------------------------------------------------------------------------------------------------------------------- Revenues - -------- Sensor & Communications Systems $2,548 $2,607 $2,713 $2,860 $3,377 $3,708 7.8% Weapons Systems 1,997 2,120 2,048 2,057 2,076 2,150 1.5% Information Systems & Services 2,065 2,549 2,832 3,198 3,589 3,910 13.6% Defense Systems 51 75 98 152 329 346 46.7% Eliminations/Other (441) (711) (543) (610) (545) (514) ----- ---- ----- ----- ----- ----- Total $6,220 $6,640 $7,148 $7,657 $8,826 $9,600 9.1% Operating Income - ---------------- Sensor & Communications Systems $285 $333 $312 $324 $389 $420 8.1% Weapons Systems 200 197 212 221 233 251 4.6% Information Systems & Services 188 236 266 292 321 347 13.0% Defense Systems 0 2 7 13 34 36 160.5% Eliminations/Other 22 (36) (47) (50) (61) (56) -- ---- ---- ---- ---- ---- Total $695 $732 $750 $800 $916 $998 7.5% Revenue Growth - -------------- Sensor & Communications Systems 15.1% 2.3% 4.1% 5.4% 18.1% 9.8% Weapons Systems (14.0%) 6.2% (3.4%) 0.4% 0.9% 3.6% Information Systems & Services 7.4% 23.4% 11.1% 12.9% 12.2% 8.9% Defense Systems 45.7% 47.1% 30.7% 55.1% 116.4% 5.2% Total 2.0% 6.8% 7.7% 7.1% 15.3% 8.8% Operating Margin - ---------------- Sensor & Communications Systems 11.2% 12.8% 11.5% 11.3% 11.5% 11.3% Weapons Systems 10.0% 9.3% 10.3% 10.8% 11.2% 11.7% Information Systems & Services 9.1% 9.3% 9.4% 9.1% 8.9% 8.9% Defense Systems 0.6% 2.7% 7.1% 8.6% 10.3% 10.4% Total 11.2% 11.0% 10.5% 10.5% 10.4% 10.4%
Notes: Financial projections as per HAC management, November 1996. Adjusted to reflect impact of sale of DSO, acquisition of ATK Marine, and wins of AIM-9X and GM University contracts. Operating income is before impact of goodwill amortization. 24 Summary Financial Information Raytheon Segment Data ($ in millions)
For the Years Ended December 31, ----------------------------------------------------------------------- Projected 1996-2001 ($ in millions) 1996 1997 1998 1999 2000 2001 CAGR - -------------------------------------------------------------------------------------------------------------------- Revenues - -------- *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** --------- ------- ------- --------- ------- ------- Total $12,355 $14,936 $16,826 $19,219 $21,604 $21,604 14.0% Operating Income - ---------------- *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** --------- ------- ------- --------- ------- ------- Total $1,250 $1,575 $1,785 $2,026 $2,335 $2,623 16.0% Revenue Growth - -------------- *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** ------- ------- --------- ------- ------- Total 20.9% 12.7% 14.2% 12.4% 10.1% Operating Margin - ---------------- *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** --------- ------- ------- --------- ------- ------- Total 0.1% 10.5% 10.6% 10.5% 10.8% 11.0%
Notes: Source: Raytheon management, January 1997. ***[CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST]. 25 *** *** [CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.] 26 HAC Management Assessment Base Financial Plans
1997 Cumulative 1997-2001 ------------------------ ------------------------ CAGR ($ in millions) $ % Change $ % Change 1997-2001 - ---------------------------------------------------- ------------------------ --------- Raytheon Baseline Operating Profit $1,606 $10,417 16.9% HAC Consensus 1,557 (3.1%) 9,854 (5.4%) 14.4% Constant Rates 1,311 (18.4%) 8,004 (23.2%) 9.9% Baseline Synergies 190 11.8% 2,257 21.7% HAC Consensus Synergies 287 17.9% 1,880 18.0% Northrop Grumman Baseline Operating Profit *** *** *** HAC Consensus 800 *** 4,747 *** 9.3% Constant Rates 739 *** 3,925 *** *** Baseline Synergies 200 24.8% 1,263 26.1% HAC Consensus Synergies 166 20.6% 986 20.3%
Notes: Analysis as per HAC management, January 1997. Assessment of impact on operating earnings. *** [CONFIDENTIAL MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST.] 27 HAC Management Assessment Revenue Synergy
Years Ended December 31, ---------------------------------------------------------- Total ($ in millions) 1997 1998 1999 2000 2001 1997-2001 ======================================================================================================================= - -------------------------------------------- Raytheon - -------------------------------------------- Additional Revenues over Baseline Plan $15 $220 $385 $555 $750 $1,925 Additional Revenues from HAC/TI 47 190 369 515 580 1,701 -- --- --- --- --- ----- Total $62 $410 $754 $1,070 $1,330 $3,626 Additional Operating Profit $7 $45 $84 $122 $153 $411 "HAC Consensus" Adjustment -------------None----------- Combined Defense Base (w/TI) $15,045 $16,350 $17,826 $20,000 $21,940 Synergy as a % of Base 0.4% 2.5% 4.2% 5.4% 6.1% - -------------------------------------------- Northrop Grumman - -------------------------------------------- Additional Revenues over Baseline Plan $5 $150 $420 $650 $1,000 $2,225 Additional Operating Profit $1 $17 $46 $72 $110 $246 "HAC Consensus" Adjustment -------------None----------- Combined Electronics Base $10,716 $11,663 $12,811 $14,637 $16,340 Synergy as a % of Base 0.0% 1.3% 3.3% 4.4% 6.1%
Notes: Analysis as per HAC management, January 1997. 28 HAC Management Assessment Cost Synergy
Years Ended December 31, ---------------------------------------------------------------- Total ($ in millions) 1997 1998 1999 2000 2001 1997-2001 - ------------------------------------------------------------------------------------------------------------- --------------- Raytheon Gross Cost Reduction (Raytheon/HAC) $ 575 $ 1,150 $ 1,150 $ 1,150 $ 1,150 $ 5,175 Change in EBT (Raytheon/HAC) 152 343 421 393 345 1,654 Implied Retention Rate 26.4% 29.8% 36.6% 34.2% 30.0% Change in EBT (HAC/TI) 31 97 84 72 73 357 Combined Change in EBT $ 183 $ 440 $ 505 $ 465 $ 418 $ 2,011 Combined Target Cost Pool (Approx.)* $11,600 $12,400 $13,400 $15,000 $16,300 Gross Savings as a % of Target Cost Pool 5.0% 9.3% 8.6% 7.7% 7.1% HAC Cost Pool (Approx.) $ 6,000 $ 6,200 $ 6,600 $ 7,500 $ 8,100 Gross Savings as a % of HAC Cost Pool 9.6% 18.5% 17.4% 15.3% 14.2% HAC Consensus Adjustment Adjust Retention Rate (Raytheon/HAC) 50.0% 40.0% 30.0% 25.0% 25.0% Revised Change in EBT (Raytheon/HAC) $ 288 $ 460 $ 345 $ 288 $ 288 $ 1,668 Adjustment to EBT 136 117 (76) (106) (58) 14
Notes: Analysis as per HAC management, January 1997. 1997 represents 1/2 year. 29 HAC Management Assessment Cost Synergy
Years Ended December 31, -------------------------------------------------- Total ($ in millions) 1997 1998 1999 2000 2001 1997-2001 - -------------------------------------------------------------------------------------------------------------- Northrop Grumman Analysis (a) Cost Reduction - Gross $393 $653 $770 $770 $770 $3,356 Change in EBT $199 $234 $294 $169 $121 $1,017 Implied Retention Rate 50.6% 35.8% 38.2% 21.9% 15.7% Combined Target Cost Pool (Approx.)* $9,700 $10,400 $11,300 $12,800 $14,300 Gross Savings as a % of Target Cost Pool 4.1% 6.3% 6.8% 6.0% 5.4% ESID/ESSD Cost Pool (Approx.) $3,700 $4,100 $4,600 $5,200 $6,100 Gross Savings as a % of Cost Pool 10.6% 15.9% 16.7% 14.8% 12.6% HAC Consensus Adjustment Adjust Cost Reduction $685 $685 $685 $685 $685 $3,425 Adjust Retention Rate 20.0% 20.0% Revised Change in EBT $173 $245 $262 $137 $137 954 Adjustment to EBT ($26) $11 ($32) ($32) $16 ($63)
Notes: Analysis as per HAC management, January 1997. *Estimated target cost pool consists of ESID, ESSD and Ruby. 30 -----END PRIVACY-ENHANCED MESSAGE-----