Filed by General Motors Corporation
Subject Company - General Motors Corporation
and Hughes Electronics Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and Deemed Filed Pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Commission File No.: 001-00143
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This is the second update to employee questions and answers about the EchoStar
Transition. HUGHES Corporate Communications will publish updates on the
HUGHESNet Transition News website,
http://hughesnet.hughes.com/transition/index.html. If you have a question,
please send it to employee.communications@hughes.com or call (888) 832-5306 or
(310) 662-5208 or FAX to (310) 647-6213. Thanks for all the questions sent in so
far, we will continue to work on getting answers for you in the weeks ahead.
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Process -- Closing the Transaction
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1. There have been many recent media accounts about our merger approval
process; please explain the regulatory approval process and its
timeframe. Is it possible that the merger could be concluded before
the 9 - 12 months estimated timeframe?
There are four major regulatory milestones that must be reached as
part of the transaction. Each may require a number of months to
complete. Our lawyers have provided an estimate of nine to twelve
months from the time of our announcement last October to obtain all
of the necessary regulatory clearances and approvals. Please note
that this is only an estimate and that there are a number of factors
that can influence the time required. The actual time it takes may be
either longer or shorter.
HART-SCOTT-RODINO (HSR) ANTITRUST CLEARANCE
The parties to the transaction must make filings with the government
for antitrust clearance. The Department of Justice (DOJ) will make
the determination about whether the merger complies with the
antitrust laws.
INTERNAL REVENUE SERVICE (IRS)
GM has applied for a private letter ruling from the IRS to the effect
that, among other things, the separation of HUGHES from GM will be
tax-free to GM and its shareholders for U.S. Federal Income Tax
purposes. This is the same process as that used in connection with
the separation of Hughes Defense from GM in 1997.
SECURITIES AND EXCHANGE COMMISSION (SEC)
GM must prepare a Proxy/Consent Solicitation Statement relating to
the GM stockholder vote on the proposed transactions, which will be
filed with the SEC. The document will include a prospectus relating
to the issuance of stock of the surviving company in the merger in
exchange for GM Class H common stock. The document must be declared
effective by the SEC prior to seeking stockholder approval for these
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ECHOSTAR TRANSITION EMPLOYEE QUESTION & ANSWER
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transactions, including for an amendment of the GM Charter that
enables the transactions.
FEDERAL COMMUNICATIONS COMMISSION (FCC)
On December 3, 2001 GM, HUGHES and EchoStar filed with the FCC for
approval to transfer control of the FCC licenses held by HUGHES,
EchoStar and their respective subsidiaries to the combined company in
connection with the merger. That process will involve public notice
and a public proceeding. The public comment period has been underway
for several weeks.
2. Do we have a go-forward plan if this transaction isn't completed?
The regulatory process is proceeding as we have anticipated and we
expect that it will result in the approval of our merger with
EchoStar. In the meantime, HUGHES is operating as an aggressive,
competitive business. Our business goals continue as before the
announcement of the merger and we strive to improve on our leadership
position in the markets we serve. We aim to build momentum and value
in our company by meeting and exceeding the promises we have made.
And above all, we continue to compete as vigorously and aggressively
as we know how to compete.
In addition, protections have been negotiated as part of the
transaction that require the payment of a substantial break-up fee
and the purchase of HUGHES' interest in PanAmSat by EchoStar under
certain circumstances where the transaction is not completed. We
believe that these protections will help to assure that HUGHES
continues as a healthy business should the transaction not be
completed as planned.
DIRECTV Latin America
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3. Will EchoStar sell DIRECTV Latin America?
Every part of HUGHES will become part of the new combined company at
the Close of the transaction, including DIRECTV Latin America. Senior
leadership in the new combined company will review and assess each
part of the business and make decisions regarding business strategy
and planning as part of the transition process.
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ECHOSTAR TRANSITION EMPLOYEE QUESTION & ANSWER
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Layoffs & Severance
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Please note: We have received many questions regarding possible employee
relocations to Denver. The Transition Team is just beginning its work and has
not yet discussed issues relating to work locations and staffing for the new
company, including any possible relocations. In the next few months the
Transition Team will address these and other major business integration issues
and we will then respond to these questions with specificity. We know this is an
important subject to you and appreciate your patience.
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4. Will the severance package be open to volunteers who would like to
leave the company before the Close?
No. Layoff decisions will be made by management based on business
needs.
5. What situations would cause a layoff following the Closing Date not
to be considered due to a change in control under the special
severance appendix of the Employee Transition Assistance Plan (ETA)?
Layoffs that are identified within one year after the Closing Date
will likely be due to the Change in Control. However, layoffs that
occur for reasons such as competitive pressures, reductions in
business volume, technological changes, shifts in business strategy
and/or poor business performance may not be due to a Change in
Control.
6. In the event of layoffs, will employees receive 8 weeks notice?
The Employee Transition Assistance Plan (ETA) says management will
try to give 4 to 8 weeks notice, barring unusual circumstances. We
expect to continue this practice to the extent feasible.
Retirement
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7. Will early retirement packages be offered?
No. There is no plan in place to offer early retirement packages.
However, if a Contributory Plan participant is identified for layoff
within 1 year following the Closing Date and is laid off within 2
years following the Closing Date, and the layoff is considered due to
a Change in Control (CIC), he/she may be eligible for a lump sum
payment. A special publication available through your Human Resources
department provides more information about this benefit.
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ECHOSTAR TRANSITION EMPLOYEE QUESTION & ANSWER
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8. Please provide more information about how the Non-Contributory
Retirement Plan will work after the Closing Date.
A new benefit has been added for all employees in the
Non-Contributory Benefit of the Non-Bargaining Retirement Plan as of
12/1/01. The new benefit (Retirement Growth Benefit), effective on
12/1/01, provides employees who were employed as of 12/1/01 with the
better of either their original Non-Contributory Benefit or the new
Retirement Growth Benefit at termination or retirement. Both the
Non-Contributory Benefit and the Retirement Growth Benefit allow for
lump-sum cashouts for employees vested in the plan, who are given
layoff notice and are subsequently laid off or voluntarily terminate
on or after 12/1/01. Information on the new Retirement Growth Benefit
has been distributed to eligible employees. Employees hired after
12/1/01 are only eligible for the Retirement Growth Benefit.
The terms of the agreement with EchoStar provide for continuation of
the Non-Contributory Benefit, including the new Retirement Growth
Benefit, for at least 12 months following the Closing Date.
Company Locations
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9. Will any of our broadcast centers be closed as part of the merger?
At this time, no decisions have been made regarding changes to any
company locations, including the broadcast centers. As the transition
process progresses, these and other issues will be reviewed and
analyzed. We will share new information as soon as it is practicable.
However, decisions regarding specific company functions or locations
are not likely in the near future.
Benefits
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10. What will happen to the HUGHES savings plans (including the GMH Stock
Fund in the HUGHES savings plans) after the Close of the merger of
HUGHES?
The HUGHES savings plans will continue for a minimum of 12 months
following the Closing Date, during which time participants may
continue to request loans and withdrawals, and to transfer monies
among investment funds, just as they do today. In addition, if you
have a loan outstanding, you will be expected to continue making
repayments on your loan during this time period.
At the Close, GMH stock will be exchanged on a one-for-one basis for
stock of the surviving company in the merger, which company will be
renamed EchoStar Communications. You will see no change in the
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ECHOSTAR TRANSITION EMPLOYEE QUESTION & ANSWER
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quantity of units held in your former GMH Stock Fund account when it
is converted to the new stock. As always, the value of your holdings
will depend upon market price fluctuations.
11. Will there be any changes to the investment options in the HUGHES
Savings Plans?
There are currently no plans to make any significant changes to
investment options for at least 12 months following the Closing Date.
You may recall, however, that under the current provisions of the
HUGHES plans, the Raytheon Stock Fund will be dissolved no later than
December 31, 2002.
12. If I am laid off, will I be compensated for my EPTO (Extended Paid
Time Off) balance?
Under our current benefits plans, at the time of layoff, employees
are paid out any vacation or PTO balances that they have accrued on
the books, but unused EPTO balances are not paid out. EPTO is not a
vested benefit and is intended to be used only for an employee's
extended disability or personal emergency, with the approval of
management and/or the Back-to-Work program. For DIRECTV employees,
under our current benefits plans, unused Floaters are also paid out
upon layoff.
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ECHOSTAR TRANSITION EMPLOYEE QUESTION & ANSWER
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DIRECTV Broadband
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13. Does the HUGHES Employee Transition Assistance (ETA) Plan and the
special severance benefit formula apply to DIRECTV Broadband? If so,
please describe the plan and how it is affected by the agreement with
EchoStar.
Yes. DIRECTV Broadband is covered by the same ETA Plan as DIRECTV,
which is covered by the HUGHES plan.
For 24 months following the Closing Date, EchoStar will continue to
provide severance benefits as described in the HUGHES ETA Plan and
Special Severance Appendix.
The standard ETA severance benefits include 1 week of base pay for
each full year of company service, with a minimum of 4 weeks and a
maximum of 52 weeks of base pay, 3 months of medical COBRA payments,
and may include educational assistance up to $1000.
In the event a layoff is determined to be due to a Change in Control
(CIC), affected employees may receive the better of the standard ETA
benefit or a special severance benefit formula, equal to 1 week of
base pay for each $3K of annual salary, provided that:
o a minimum of 26 weeks of base pay or 1 week of base pay
for each full year of company service, whichever is
greater, will be paid; and
o the severance benefit cannot exceed 52 weeks of base pay
All other severance provisions apply, including the requirement that
the employee sign a release before severance benefits will be paid.
NOTE: Change in Control means a change in company ownership as
defined in the HE Incentive Plan.
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Note: This is a summary highlighting specific employee compensation and benefits
issues. It is not intended as a Summary Plan Description or a Plan Document.
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ECHOSTAR TRANSITION EMPLOYEE QUESTION & ANSWER
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In connection with the proposed transactions, General Motors Corporation ("GM"),
Hughes Electronics Corporation ("Hughes") and EchoStar Communications
Corporation ("EchoStar") intend to file relevant materials with the Securities
and Exchange Commission, including one or more Registration Statement(s) on Form
S-4 that contain a prospectus and proxy/consent solicitation statement. Because
those documents will contain important information, holders of GM $1-2/3 and GM
Class H common stock are urged to read them, if and when they become available.
When filed with the SEC, they will be available for free at the SEC's website,
www.sec.gov, and GM stockholders will receive information at an appropriate time
on how to obtain transaction-related documents for free from GM. Such documents
are not currently available.
GM and its directors and executive officers, Hughes and certain of its officers,
and EchoStar and certain of its executive officers may be deemed to be
participants in GM's solicitation of proxies or consents from the holders of GM
$1-2/3 common stock and GM Class H common stock in connection with the proposed
transactions. Information regarding the participants and their interests in the
solicitation was filed pursuant to Rule 425 with the SEC by EchoStar on November
1, 2001 and by each of GM and Hughes on November 16, 2001. Investors may obtain
additional information regarding the interests of the participants by reading
the prospectus and proxy/consent solicitation statement if and when it becomes
available.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy, nor shall there be any sale of securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended.
Materials included in this document contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that could cause our actual results to be materially different
from historical results or from any future results expressed or implied by such
forward-looking statements. The factors that could cause actual results of GM,
EchoStar, Hughes, or a combined EchoStar and Hughes to differ materially, many
of which are beyond the control of EchoStar, Hughes or GM include, but are not
limited to, the following: (1) the businesses of EchoStar and Hughes may not be
integrated successfully or such integration may be more difficult,
time-consuming or costly than expected; (2) expected benefits and synergies from
the combination may not be realized within the expected time frame or at all;
(3) revenues following the transaction may be lower than expected; (4) operating
costs, customer loss and business disruption including, without limitation,
difficulties in maintaining relationships with employees, customers, clients or
suppliers, may be greater than expected following the transaction; (5)
generating the incremental growth in the subscriber base of the combined company
may be more costly or difficult than expected; (6) the regulatory approvals
required for the transaction may not be obtained on the terms expected or on the
anticipated schedule; (7) the effects of legislative and regulatory changes; (8)
an inability to obtain certain retransmission consents; (9) an inability to
retain necessary authorizations from the FCC; (10) an increase in competition
from cable as a result of digital cable or otherwise, direct broadcast
satellite, other satellite system operators, and other providers of subscription
television services; (11) the introduction of new technologies and competitors
into the subscription television business; (12) changes in labor, programming,
equipment and capital costs; (13) future acquisitions, strategic partnership and
divestitures; (14) general business and economic conditions; and (15) other
risks described from time to time in periodic reports filed by EchoStar, Hughes
or GM with the Securities and Exchange Commission. You are urged to consider
statements that include the words "may," "will," "would," "could," "should,"
"believes," "estimates," "projects," "potential," "expects," "plans,"
"anticipates," "intends," "continues," "forecast," "designed," "goal," or the
negative of those words or other comparable words to be uncertain and
forward-looking. This cautionary statement applies to all forward-looking
statements included in this document.
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