<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-2275
THE SEAGRAM COMPANY LTD.
(Exact name of registrant as specified in its charter)
Canada None
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1430 Peel Street, Montreal, Quebec, Canada H3A 1S9
(Address of principal executive offices) (Zip Code)
514-849-5271
(Registrant's telephone number, including area code)
No Change
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No ___
As of May 31, 1996, there were 373,561,035 common shares without nominal or
par value issued and outstanding.
<PAGE>
<PAGE>
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
INDEX
Page No.
---------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income and
Retained Earnings -
Quarter Ended
April 30, 1996 and 1995 1
Consolidated Balance Sheet -
April 30 and January 31, 1996 2
Consolidated Statement of Cash Flows -
Quarter Ended April 30, 1996 and 1995 3
Notes to Consolidated Financial Statements 4-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security
Holders 11-12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
Exhibit Index 16
<PAGE>
<PAGE>
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
(United States dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
QUARTER
ENDED APRIL 30,
------------------
1996 1995
---- ----
<S> <C> <C>
Revenues $2,520 $1,282
Cost of revenues 1,619 739
Selling, general and administrative expenses 761 393
------- ------
OPERATING INCOME 140 150
Interest, net and other 66 69
------- ------
74 81
Provision for income taxes 50 22
Minority interest 1 -
------- ------
INCOME BEFORE DISCONTINUED DUPONT ACTIVITIES 23 59
------- ------
Discontinued DuPont Activities:
Dividends, after tax - 68
Gain on redemption of 156 million shares, after tax - 3,164
------- ------
- 3,232
------- ------
NET INCOME 23 3,291
Retained earnings at beginning of period 8,480 5,315
Dividends paid (56) (56)
Shares purchased and retired (44) -
------- ------
Retained earnings at end of period $ 8,403 $8,550
======= ======
<PAGE>
Earnings per share:
Income before discontinued DuPont
activities $ .06 $ .16
Discontinued DuPont activities - 8.67
------ ------
Net income $ .06 $ 8.83
====== ======
Dividends paid $ .15 $ .15
====== ======
Average shares outstanding (thousands) 374,125 372,709
======= =======
Excise taxes included in revenues and
cost of revenues $ 142 $ 136
======= ======
The accompanying notes are an integral part of these financial statements.
</TABLE>
1
<PAGE>
<PAGE>
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(United States dollars in millions)
<TABLE>
<CAPTION>
APRIL 30, JANUARY 31,
1996 1996
---------- -------------
<S> <C> <C>
ASSETS
Current Assets
Cash and short-term investments at cost,
which approximates market $ 256 $ 254
Receivables, net 1,672 2,276
Inventories 3,052 2,914
Film costs, net of amortization 474 510
Deferred income taxes 355 361
Prepaid expenses and other current assets 344 325
-------- -------
TOTAL CURRENT ASSETS 6,153 6,640
-------- -------
Common stock and warrants of DuPont 1,100 1,071
Common stock of Time Warner 2,320 2,356
Film costs, net of amortization 819 790
Artists' contracts, advances and other entertainment assets 706 712
Deferred charges and other assets 759 746
Property, plant and equipment, net 2,831 2,806
Investment in unconsolidated companies 2,029 1,936
Excess of cost over fair value of assets acquired 4,522 4,298
-------- -------
$21,239 $21,355
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings and indebtedness
payable within one year $ 1,405 $ 936
Accrued royalties and participations 604 642
Payables and accrued liabilities 1,704 2,164
Income and other taxes 138 112
-------- -------
TOTAL CURRENT LIABILITIES 3,851 3,854
-------- -------
<PAGE>
Long-term indebtedness 2,898 2,889
Accrued royalties and participations 429 404
Deferred income taxes 675 696
Deferred income taxes - DuPont share redemption 1,489 1,489
Other credits 790 851
Minority interest 1,845 1,844
Shareholders' Equity
Shares without par value (373,318,758 and
374,461,601 shares, respectively) 716 709
Cumulative currency translation adjustments (260) (268)
Cumulative gain on equity securities, net of tax 403 407
Retained earnings 8,403 8,480
-------- -------
TOTAL SHAREHOLDERS' EQUITY 9,262 9,328
-------- -------
$21,239 $21,355
======== =======
The accompanying notes are an integral part of these financial statements.
</TABLE>
2
<PAGE>
<PAGE>
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(United States dollars in millions)
<TABLE>
<CAPTION>
QUARTER
ENDED APRIL 30,
-----------------
1996 1995
------ ------
<S> <C> <C>
OPERATING ACTIVITIES
Income before discontinued DuPont activities $23 $ 59
--- ----
Adjustments to reconcile income before discontinued
DuPont activities to net cash provided
Amortization of film costs 274 -
Depreciation and amortization of assets 79 36
Amortization of excess of cost over fair value of
assets acquired 41 12
Sundry (2) (2)
Changes in assets and liabilities
Receivables 597 330
Inventories (170) (146)
Prepaid expenses and other current assets (20) 5
Artists' contracts, advances and other entertainment assets 7 -
Payables and accrued liabilities (535) (476)
Accrued royalties and participations (12) -
Income and other taxes 26 (65)
Deferred income taxes (10) (6)
Other credits 7 2
---- ------
282 (310)
---- ------
Net cash provided by (used for) continuing operations 305 (251)
---- ------
INVESTING ACTIVITIES
Film production (272) -
Acquisition of 50% of Interscope Records (200) -
Investments in/advances to unconsolidated companies (91) -
Capital expenditures (101) (48)
Discontinued DuPont activities:
Dividends - 68
Proceeds from redemption of 156 million shares - 8,336
Sundry (44) 2
---- ------
Net cash (used for) provided by investing activities (708) 8,358
---- ------
<PAGE>
FINANCING ACTIVITIES
Dividends paid (56) (56)
Issuance of shares upon exercise of stock options
and conversion of LYONs 9 9
Shares purchased and retired (47) -
Increase in long-term indebtedness 59 5
Decrease in long-term indebtedness (47) (250)
Increase (decrease)in short-term borrowings and
indebtedness payable within one year 487 (697)
---- ------
Net cash provided by (used for) financing activities 405 (989)
---- ------
NET INCREASE IN CASH AND SHORT-TERM INVESTMENTS $ 2 $7,118
==== ======
The accompanying notes are an integral part of these financial statements.
</TABLE>
3<PAGE>
<PAGE>
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with the requirements of Form 10-Q and, therefore, do not include
all information and notes necessary for a presentation of results of
operations, financial position and cash flows in conformity with generally
accepted accounting principles. These statements should be read in
conjunction with the consolidated financial statements and related notes in
the Company's Annual Report to Shareholders for the fiscal year ended January
31, 1996. In the opinion of the Company, the unaudited interim financial
statements include all adjustments, comprising only normal recurring
adjustments, necessary for a fair presentation of operating results. Results
of operations for the three months are not necessarily indicative of those
expected for the fiscal year.
Certain prior year amounts have been reclassified to conform with the current
year's presentation.
2. Change in Fiscal Year-end
The Company will change to a fiscal year ending June 30, effective June 30,
1996 and begin its first full fiscal year on the new basis on July 1, 1996.
3. Acquisition of 80% Interest in MCA Holding I Corp. ("MCA Holding")
On June 5, 1995, the Company purchased an 80 percent interest in MCA Holding,
the indirect parent of MCA INC. ("MCA"), from Matsushita Electric Industrial
Co., Ltd. ("Matsushita") for $5.7 billion. Matsushita retains a 20 percent
interest in MCA Holding.
The acquisition has been accounted for under the purchase method of
accounting. The cost of the acquisition has been allocated on the basis of
the estimated fair market value of the assets acquired and liabilities
assumed. This valuation resulted in goodwill of approximately $2.7 billion
which is being amortized over 40 years.
4. DuPont Share Redemption and Remaining DuPont Investment
On April 6, 1995, E.I. du Pont de Nemours and Company ("DuPont") redeemed 156
million shares of its common stock owned by the Company for $8.336 billion
plus the warrants described below which the Company valued as of the date of
the transaction at approximately $440 million based on a valuation
methodology applicable to the warrants which incorporates the principles of
the Black-Scholes model and which was utilized by the respective financial
advisors to DuPont and the Company. The Company received proceeds from the
transaction of $8.3 billion before taxes of $0.5 billion and recorded an
<PAGE>
after-tax gain on the transaction of $3.2 billion. The $3.2 billion gain on
the transaction is net of a $2 billion tax provision of which $1.5 billion is
deferred. The Company has retained 8.2 million shares of DuPont common
stock, which had a market value of $660 million as of April 30, 1996.
The warrants issued in the transaction allow the Company to purchase 48
million shares of DuPont common stock for a sixty day period ending on
October 6, 1997 at a price of $89.33 per share; 54 million shares of DuPont
common stock for a sixty day period ending on October 6, 1998 at a price of
$101.14 per share; and 54 million shares of DuPont common stock for a sixty
day period ending on October 6, 1999 at a price of $113.63 per share, subject
to acceleration under certain circumstances. The warrants are subject to
various other conditions.
4
<PAGE>
5. Acquisition of the Juice Beverage Business of the Dole Food Company,
Inc. ("Dole")
On May 19, 1995, the Company acquired the worldwide juice and juice beverage
business of Dole for $276 million. The transaction excluded Dole's canned
pineapple juice business. The acquisition has been accounted for under the
purchase method of accounting. The cost of the acquisition has been
allocated on the basis of the estimated fair market value of the assets
acquired and liabilities assumed. This valuation resulted in $128 million of
unallocated excess cost over fair value of assets acquired which is being
amortized over 40 years.
6. Investment in Time Warner Inc. ("Time Warner")
At April 30, 1996, the Company owned 56.8 million shares or approximately
14.5 percent of the outstanding common stock of Time Warner. The Company
accounts for the investment at market value. The total cost of the
investment was $2.17 billion.
<PAGE>
7. Balance Sheet Data
<TABLE>
<CAPTION>
1996
-------------------------
APRIL 30, JANUARY 31,
--------- -----------
(millions)
<S> <C> <C>
Inventories
Beverages $2,683 $2,600
Materials, supplies and other 369 314
------ ------
$3,052 $2,914
====== ======
Property, Plant and Equipment, net
Property, plant and equipment, at cost $3,932 $3,862
Accumulated depreciation (1,101) (1,056)
------ ------
$2,831 $2,806
====== ======
</TABLE>
8. Long-Term Debt and Debt Guarantees
Joseph E. Seagram & Sons, Inc. ("JES"), the Company's U.S. spirits and wine
subsidiary, has outstanding Liquid Yield Option Notes (LYONs), which are zero
coupon notes with no interest payments due until maturity on March 5, 2006.
Each $1,000 face amount LYON may be converted, at the option of the holder,
into 18.44 of the Company's common shares (683,793 shares at April 30, 1996).
The Company has guaranteed the LYONs on a subordinated basis.
In addition, the Company has unconditionally guaranteed JES's 9 3/4% Notes
due June 15, 2000, 8 3/8% Debentures due February 15, 2007, 7% Debentures due
April 15,2008, 8 7/8% Debentures due September 15, 2011, 9.65% Debentures due
August 15, 2018, and 9% Debentures due August 15, 2021. JES has notified
holders of its intention to redeem the 9 3/4% Notes due June 15, 2000. The
Notes will be redeemed on June 14, 1996.
5
<PAGE>
<PAGE>
Summarized financial information for JES and its subsidiaries follows:
<TABLE>
<CAPTION>
QUARTER
ENDED APRIL 30,
---------------
1996 1995
---- ----
(millions)
<S> <C> <C>
Revenues $758 $ 933
Cost of revenues 601 649
Income before discontinued DuPont
activities 12 61
Net income 12 3,293
<CAPTION>
1996
----------------------
APRIL 30, JAN. 31,
--------- --------
(millions)
<S> <C> <C>
Current assets $ 1,013 $ 1,412
Noncurrent assets 11,748 11,442
------- -------
$12,761 $12,854
======= =======
Current liabilities $ 591 $ 720
Noncurrent liabilities 3,362 3,357
Shareholder's equity 8,808 8,777
------- -------
$12,761 $12,854
======= =======
</TABLE>
9. Earnings Per Share and Common Shares
At April 30, 1996, 27,025,618 common shares were potentially issuable upon
the conversion of the LYONs described in Note 8 and the exercise of employee
stock options. The dilutive effect on the Company's earnings per share from
these shares is less than 3 percent.
In the three months ended April 30, 1996, the Company retired 1,448,700
common shares which were purchased on the open market and issued 305,857
<PAGE>
shares upon the exercise of employee stock options and the conversion of
LYONs.
10. Subsequent Event
A subsidiary of the Company has reached a settlement with the U.S. government
regarding the recognition of a capital loss on its 1981 exchange of shares of
Conoco Inc. for common stock of DuPont. The settlement is expected to reduce
the Company's tax provision for the fiscal period ending June 30, 1996 by
approximately $60 million which will be reflected in its income for such
period.
6
<PAGE>
<PAGE>
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
The Company operates two core, global businesses: beverages and
entertainment. The Company's beverage businesses are engaged principally in
the production and marketing of distilled spirits, wines, fruit juices,
coolers and mixers. The Company's entertainment unit, MCA, produces and
distributes motion picture, television and home video products; produces and
distributes recorded music; operates theme parks and retail stores; and
publishes books.
The discussion of business unit performance includes attributed earnings
before interest, taxes, depreciation and amortization ("EBITDA") for the
Company's operations which reflects the proportionate share of the EBITDA of
the Company's equity companies. The adjustment for equity companies
eliminates the Company's proportionate share of the EBITDA in order to
reflect equity income as calculated for generally accepted accounting
principles. Financial analysts generally consider EBITDA to be an important
measure of comparative operating performance. However, EBITDA should be
considered in addition to, not as a substitute for operating income, net
income, cash flows and other measures of financial performance in accordance
with generally accepted accounting principles.
<TABLE>
<CAPTION>
QUARTER ENDED APRIL 30,
-----------------------
1996 1995
---- ----
(millions)
<S> <C> <C>
Reported Revenues $2,520 $1,282
------ ------
Beverages - EBITDA
Spirits and Wine $148 $162
Fruit Juices, Coolers and Mixers 48 41
---- ----
Total Beverages EBITDA 196 203
Adjustment for Equity Companies (1) (1)
Depreciation and Amortization (53) (48)
---- ----
<PAGE>
Beverages - Operating Income 142 154
Entertainment - EBITDA
Filmed Entertainment 109 -
Music Entertainment (13) -
Recreation 13 -
Publishing and Other (1) -
---- ----
Total Entertainment EBITDA 108 -
Adjustment for Equity Companies (22) -
Depreciation and Amortization (67) -
---- ----
Entertainment - Operating Income 19 -
Corporate Expenses (21) ( 4)
---- ----
TOTAL OPERATING INCOME $140 $150
==== ====
</TABLE>
7
<PAGE>
Reported revenues and operating income were $2.5 billion and $140 million,
respectively, for the quarter ended April 30, 1996 compared to $1.3 billion
and $150 million in the prior year period. Revenues are up significantly
from the prior year due to the timing of the MCA and Dole juice beverage
acquisitions, both of which were concluded after the end of the first quarter
last year. Operating income declined to $140 million reflecting lower
results from the Spirits and Wine operations, higher corporate expenses
related to reengineering initiatives and an increase in depreciation and
amortization expense associated with the MCA and Dole juice beverage
acquisitions. These factors, when combined, more than offset the increase in
operating earnings associated with the MCA and Dole juice beverage
acquisitions.
Attributed revenues and EBITDA for the first quarter were $2.8 billion and
$304 million, respectively, both up significantly from the prior year period
which had attributed revenues of $1.3 billion and EBITDA of $203 million.
The increases are primarily due to the contributions of MCA and the Dole
juice beverage business.
Beverage Operations
Spirits and Wine
Reported and attributed revenues rose two percent in the quarter as the
Spirits and Wine operations reported increases in both unit and dollar
volume. Spirits and Wine volumes rose four percent in the quarter, driven
primarily by Absolut (15 percent), Martell (eight percent) and an improvement
in Mumm Sekt in Germany (41 percent). These increases were partially offset
<PAGE>
by lower sales volumes for Chivas Regal (9 percent)and Crown Royal (6
percent) both of which were negatively impacted by reductions in distributor
inventories in the Americas.
EBITDA and operating income were $148 million and $117 million, respectively,
versus $162 million and $131 million, in the prior year. EBITDA for the
Spirits and Wine operations declined nine percent as decreases in both the
Americas and Asia Pacific more than offset improvements in Europe. The
decline in North America was mainly due to a reduction of distributor
inventory levels as well as the timing of brand spending. The performance of
the Asia Pacific region was hampered by political unrest between the People's
Republic of China and Taiwan. These declines were partially mitigated by
improvements in Germany and Portugal which had reported weak results in the
prior year period.
Fruit Juices, Coolers and Mixers
Reported and attributed revenues for fruit juices, coolers and mixers
increased 20 percent in the quarter. Excluding the beverage
operations acquired from Dole, revenues for fruit juices, coolers and mixers
increased four percent in the quarter driven by the continued strength of
Tropicana Pure Premium in the United States and increases in most major
international markets, particularly the United Kingdom and Japan.
EBITDA for fruit juices, coolers and mixers grew 17 percent to $48 million in
the quarter reflecting a solid performance from Tropicana's base business and
the contribution of the Dole juice beverage business. Operating income
increased nine percent in the quarter to $25 million, reflecting strong
operating performance, partially offset by higher depreciation and
amortization expense associated with the acquisition of the Dole juice
beverage business.
Entertainment
In the quarter ended April 30, 1996, MCA contributed $1.1 billion to reported
revenues and $108 million and $19 million to EBITDA and operating income,
respectively. Although MCA is not included in the Company's results for the
quarter ended April 30, 1995, in order to provide a basis for comparison, the
discussion that follows is based on MCA's current quarter results ended
March 31, 1996 compared to MCA's prior year quarter ended March 31, 1995.
8
<PAGE>
Filmed Entertainment
Attributed revenues increased 11 percent to $894 million and EBITDA more than
doubled in the quarter to $109 million. The motion picture group results
were driven by higher worldwide theatrical and domestic home video profits
from prior year releases, particularly Babe and Casper. The television group
results improved, largely due to the cancellation of several series which
were reporting deficits. EBITDA at our 50% owned joint venture, USA
Networks, was higher in the current period primarily because of the Sci-Fi
channel, which had positive results for the first time.
<PAGE>
Music Entertainment
Music Entertainment reported attributed revenues of $228 million and negative
EBITDA of $13 million for the quarter compared to $310 million and positive
$50 million for the prior year period. The decline in EBITDA is due to the
26 percent decline in revenues as well as significant investment spending
during the period, which was anticipated. Sales in the first quarter of last
year were very strong and reflected carryover sales from the fourth quarter
of 1994 with hits from Nirvana, The Eagles and Aerosmith. The investment
program includes spending for new artists and labels, particularly at
Universal Records and MCA Records, and incremental overhead related to
international expansion efforts.
Recreation
Attributed revenues increased to $100 million in the period from $92 million
in the prior year while EBITDA declined to $13 million as a result of higher
marketing spending and the timing of spending in advance of the opening of
two attractions, Terminator 2: 3-D in Florida and Jurassic Park - The Ride in
Hollywood. The Terminator 2: 3-D attraction opened in May, 1996 and is
exceeding expectations, with paid attendance in the Florida park up 10
percent since its opening. In addition, results were also affected by higher
development spending for Japan and China.
Publishing and Other
Attributed revenues and EBITDA were $120 million and negative $1 million for
the quarter compared to $127 million and positive $14 million in the prior
year period. The decline in results is primarily attributable to several
favorable non-recurring items which occurred last year including $7 million
from the sale of land to the Los Angeles MTA. In addition, publishing was
down due to the timing of the new Tom Clancy Op Center release which will be
released in the second quarter this year. In the prior year, an Op Center
book was released in the first quarter.
Corporate Expenses and Interest, Net and Other
Corporate expenses increased to $21 million from $4 million in the prior year
primarily reflecting expenses associated with reengineering initiatives.
Interest, net and other for the period was $66 million and included net
interest expense of $75 million, partially offset by $9 million in dividend
income from the DuPont and Time Warner investments. Gross interest expense
declined during the current year period due to lower outstanding debt. The
prior year amount is net of $32 million in interest income as the full
proceeds from the DuPont redemption were invested for approximately one month
prior to the funding of the MCA acquisition.
Discontinued DuPont Activities
Due to the redemption by DuPont of most of the Company's DuPont shares on
April 6, 1995, the Company discontinued accounting for its investment in
DuPont under the equity method of accounting and earnings related to the
DuPont investment are presented as discontinued activities. Dividend income
<PAGE>
from the Company's remaining shares was $4 million in both the current and
prior year quarters and is included in interest, net and other.
9
<PAGE>
Net Income
Net income was $23 million or $.06 per share for the current quarter compared
to income before discontinued DuPont activities of $59 million or $.16 per
share in the prior year quarter. The tax provision in the current quarter
reflects a 68 percent effective rate, which is significantly higher than the
prior year rate of 27 percent because of the non-deductibility of goodwill
associated with the MCA and Dole juice business transactions and lower
taxable earnings. In the prior year, net income was $3.3 billion for the
quarter which included discontinued DuPont activities of $3.2 billion.
Liquidity and Capital Resources
Current assets decreased to $6.2 billion at April 30, 1996 from $6.6 billion
at January 31, 1996, reflecting a decline in accounts receivable following
the seasonal peak in the spirits business in the fourth quarter partially
offset by a build in inventories in the juice beverage business. Current
liabilities at April 30, 1996 were $3.9 billion, unchanged from the year-end
as an increase in short term borrowings used to finance investments in the
entertainment segment was offset by a seasonal decline in accounts payable
and accrued liabilities. Shareholders' equity was $9.3 billion at April 30,
1996. Net debt was $4.0 billion compared to $3.6 billion at January 31, 1996
reflecting the funding of various initiatives at MCA.
Net cash flow from operating activities was $305 million in the quarter ended
April 30, 1996 compared to a negative $251 million in the prior year quarter.
The improvement is due to lower working capital requirements and higher
EBITDA in the current year period reflecting MCA's contribution to operating
results.
Net cash expenditures for investing activities was $708 million in the
quarter reflecting investments in film production, capital assets and other
entertainment initiatives (Interscope Records acquisition and additional
investments in unconsolidated subsidiaries). The prior year reflected an
$8.3 billion source of funds from investing activities associated with the
DuPont redemption. The Company's investment in 14.5% of Time Warner stock
had a market value of $2.3 billion on April 30, 1996. The Company does not
view its investment in Time Warner as a strategic asset and is evaluating its
options, including a possible sale of the investment.
Financing activities in the current quarter reflect an increase in short term
borrowings used to fund investments in the entertainment segment. In the
comparable prior year period financing activities reflected the use of a
portion of the proceeds from the DuPont redemption to reduce outstanding
debt. The balance of the DuPont proceeds were invested in short-term
instruments until the funding of the MCA acquisition in June, 1995.
<PAGE>
The Company's financial condition remains strong. Management believes that
its strong financial position provides it with sufficient financial
flexibility to meet future financial obligations.
10
<PAGE>
<PAGE>
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On April 29, 1996, MCA commenced an action entitled MCA INC. v. Viacom, Inc.,
Viacom International Inc. and Eighth Century Corporation, C.A. No. 14971, in
the Court of Chancery of the State of Delaware (the "Court of Chancery")
alleging breaches by Viacom, Inc. ("Viacom") and affiliated entities of the
USA Networks joint venture agreement between affiliates of Viacom and MCA, by
reason, among others, of Viacom operating certain cable television networks
in violation of the joint venture agreement and in competition with USA
Networks. The action seeks, among other things, to enforce the joint venture
agreement's exclusivity provision in the fields of advertiser-supported basic
cable television and pay-per-view programming services. Shortly thereafter
Viacom and Eighth Century Corporation, an indirect, wholly owned subsidiary
of Viacom, commenced an action in the Court of Chancery entitled Viacom, Inc.
and Eighth Century Corporation v. The Seagram Company Ltd., MCA INC. and
Universal City Studios, Inc., C.A. No. 14973, against the Company, MCA and
Universal City Studios, Inc. The action alleges, among other things, that
MCA sought to force Viacom to sell its 50 percent interest in USA Networks to
MCA at an unfairly low price. The action seeks compensatory damages in an
unspecified amount and a declaration that Viacom has not violated, or has
been released from a claim for violating, the exclusivity provision of the
USA Networks joint venture agreement. The Court of Chancery has scheduled
the trial of both actions to commence on October 1, 1996.
Item 4. Submission of Matters to a Vote of Security Holders
A total of 303,671,917 common shares were voted in person or by proxy at the
Annual Meeting of Shareholders on May 29, 1996, or 81.05 percent of the
shares entitled to be voted. Business was transacted as follows:
1. Election of Directors: The persons listed below were elected to serve
on the Board of Directors until the next annual meeting. The vote
tabulation with respect to each person follows:
VOTES CAST VOTES CAST AGAINST
DIRECTOR FOR OR WITHHELD
- -------- ----------- ------------------
Edgar M. Bronfman 302,870,020 801,897
The Hon. Charles R. Bronfman 302,877,526 794,391
Edgar Bronfman, Jr. 302,872,268 799,649
Samuel Bronfman II 302,880,656 791,261
Matthew W. Barrett 302,880,246 791,671
Frank J. Biondi, Jr. 278,994,558 24,677,359
David M. Culver 302,895,479 776,438
The Hon. William G. Davis 302,877,142 794,775
The Hon. Paul Desmarais 285,123,749 18,548,168
David L. Johnston 302,900,006 771,911
The Hon. E. Leo Kolber 302,889,422 782,495
<PAGE>
VOTES CAST VOTES CAST AGAINST
DIRECTOR FOR OR WITHHELD
- -------- ----------- ------------------
Marie-Josee Kravis 302,885,569 786,348
Robert W. Matschullat 302,880,646 791,271
C. Edward Medland 302,890,731 781,186
Lew R. Wasserman 298,009,727 5,662,190
John L. Weinberg 302,864,358 807,559
John S. Weinberg 302,846,013 825,904
2. Confirmation of By-Law Amendment: The proposal to confirm the amendment
of the Company's By-Laws was approved by a vote of 301,294,432 shares
for and 2,377,485 shares against, withheld, abstentions and broker
nonvotes.
3. Approval of 1996 Stock Incentive Plan: The proposal to approve the
Company's 1996
11
<PAGE>
Stock Incentive Plan was approved by a vote of 231,955,805 shares
for and 71,716,112 shares against, withheld, abstentions and broker
nonvotes.
4. Shareholder Proposal: A shareholder proposal regarding, among other
things, the separation of the Company's entertainment and beverage
businesses was rejected by a vote of 279,972,978 shares against,
withheld, abstentions and broker nonvotes and 23,698,939 shares for.
5. Ratification of Independent Accountants: The proposal to ratify the
appointment of Price Waterhouse as independent accountants to serve
until the next annual meeting was approved by a vote of 303,269,169
shares for and 402,748 shares against, withheld, abstentions and broker
nonvotes.
12<PAGE>
<PAGE>
Item 5. Other Information
Set forth below is certain financial information which has been restated on
the new fiscal year basis. The fiscal quarters ended April 30, 1996,
January 31, 1996 and October 31, 1995 of the Company have been restated to
reflect the fiscal quarters ended March 31, 1996, December 31, 1995, and
September 30, 1995, respectively.
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------------------
March 31, 1996 December 31, 1995 September 30, 1995
--------------- ----------------- ------------------
<S> <C> <C> <C>
REVENUES
Beverages
Spirits and Wines $1,061 $1,724 $1,235
Fruit Juices, Coolers
and Mixers 496 486 505
------ ------ ------
Total Attributed Beverages 1,557 2,210 1,740
------ ------ ------
Entertainment
Filmed Entertainment 894 1,009 922
Music Entertainment 228 329 339
Recreation 100 97 142
Publishing and Other 120 202 139
------ ------ ------
Total Attributed Entertainment 1,342 1,637 1,542
------ ------ ------
Total Attributed Revenues 2,899 3,847 3,282
------ ------ ------
Adjustment for Equity Companies:
Beverages (64) (82) (89)
Entertainment (200) (205) (222)
------ ------ ------
Total Reported Revenues $2,635 $3,560 $2,971
====== ====== ======
<PAGE>
EBITDA
Beverages
Spirits and Wine 131 290 169
Fruit Juices, Coolers
and Mixers 43 57 55
Reengineering charge - (290) -
----- ------ -----
Total Beverages 174 57 224
----- ------ -----
Entertainment
Filmed Entertainment 109 64 139
Music Entertainment (13) 27 21
Recreation 13 19 50
Publishing and Other (1) 23 11
----- ------ -----
Total Entertainment 108 133 221
----- ------ -----
Total EBITDA $282 $190 $445
----- ------ -----
Adjustment for Equity
Companies - Beverages (1) (4) (2)
Adjustment for Equity
Companies - Entertainment (22) (23) (21)
Depreciation and Amortization (120) (127) (120)
Corporate expenses (31) (32) (12)
----- ------ -----
Operating income 108 4 290
----- ------ -----
Interest, Net and Other 66 70 90
Provision for Income Taxes 28 (44) 133
Minority Interest 1 4 14
----- ------ -----
Net Income $13 $(26) $53
===== ====== =====
Net Income Per Share $0.04 $(0.07) $0.14
===== ====== =====
</TABLE>
13
<PAGE>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The Exhibit Index filed with this Form 10-Q is on page 16.
(b) Current Reports on Form 8-K
None
14
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE SEAGRAM COMPANY LTD.
(Registrant)
By: /S/ Robert W. Matschullat
Robert W. Matschullat
Vice Chairman and Chief Financial
Officer (Principal Financial Officer)
Dated: June 14, 1996
15
<PAGE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- ----------------------
3(b) General By-Laws of the Company, as amended.
12(a) Computation of Ratio of Earnings to Fixed
Charges - The Seagram Company Ltd.
12(b) Computation of Ratio of Earnings to Fixed
Charges - Joseph E. Seagram & Sons, Inc.
27 Financial Data Schedule
16
Exhibit 3(b)
THE SEAGRAM COMPANY LTD.
LA COMPAGNIE SEAGRAM LTEE
__________________________________________________________________________
GENERAL BY-LAWS
Effective November 29, 1979
Amended as of May 29, 1996
<PAGE>
THE SEAGRAM COMPANY LTD.
BY-LAW No. 1
being a by-law relating generally to the transaction
of the business and affairs of the Corporation
ARTICLE ONE
Interpretation
SECTION 1.01 Definitions. In the by-laws of the Corporation, unless the
context otherwise requires:
"Act" means the Canada Business Corporations Act, and any statute that may
be substituted therefor, as from time to time amended;
"appoint" includes "elect" and vice versa;
"articles" means the articles of continuance of the Corporation attached to
the certificate of continuance of the Corporation as from time to time
amended or restated;
"board" means the board of directors of the Corporation;
"by-laws" means this by-law and all other by-laws of the Corporation from
time to time in force and effect;
"Corporation" means the corporation continued by certificate of continuance
under the Act and named THE SEAGRAM COMPANY LTD. -- LA COMPAGNIE SEAGRAM
LTEE;
"meeting of shareholders" means an annual meeting of shareholders or a
special meeting of shareholders;
"non-business day" means Saturday, Sunday and any other day that is a
holiday as defined in the Interpretation Act (Canada);
"recorded address" means in the case of a shareholder his latest address as
recorded in the securities register; and in the case of joint shareholders
the address appearing in the securities register in respect of such joint
holding or the first address so appearing if there are more than one; and in
the case of a director, officer, auditor or member of a committee of the
board, his latest address as shown in the records of the Corporation;
"signing officer" means, in relation to any instrument, any person
authorized to sign the same on behalf of the Corporation by Section 2.04, or
by a resolution passed pursuant thereto;
save as aforesaid, words and expressions defined in the Act have the same
meanings when used herein or in any other by-law; and
words importing the singular number include the plural and vice versa; words
importing gender include the masculine, feminine and neuter genders; and
words importing persons include individuals, bodies corporate, partnerships,
trusts and unincorporated organizations; and a reference to a Section means
that Section in this by-law.
<PAGE>
In the case of any conflict between the articles and the provisions of this
or any other by-law the provisions of the articles shall prevail.
ARTICLE TWO
Business of the Corporation
SECTION 2.01 Registered Office. Until changed in accordance with the Act,
the registered office of the Corporation shall be in the City of Waterloo,
in the Province of Ontario and at such location therein as the board may
from time to time determine.
SECTION 2.02 Corporate Seal. Until changed by the board, the corporate
seal of the Corporation shall be in the form impressed.
SECTION 2.03 Financial Year. Until changed by the board, the financial
year of the Corporation shall end on the 30th day of June in each
year.<F1>
SECTION 2.04 Execution of Instruments. Deeds, documents, bonds,
debentures, transfers, assignments, contracts, obligations, certificates and
other instruments may be signed on behalf of the Corporation by two persons,
one of whom holds the office of chairman of the board, chairman of the
executive committee, president, vice-president or director and the other of
whom holds one of the said offices or the office of secretary, treasurer,
controller, assistant secretary or assistant treasurer or assistant
controller or any other office created by by-law or by resolution of the
board. In addition, the board may from time to time direct the manner in
which and the person or persons by whom any particular instrument or class
of instruments may or shall be signed. Any signing officer may affix the
corporate seal to any instrument requiring the same.
SECTION 2.05 Banking and Financial Arrangements. The banking and financial
business of the Corporation including, without limitation, the borrowing of
money and the giving of security therefor, shall be transacted with such
banks, trust companies or other bodies corporate or organizations as may
from time to time be designated by or under the authority of the board. Such
banking and financial business or any part thereof shall be transacted under
such agreements, instructions and delegations of powers as the board may
from time to time prescribe or authorize.
SECTION 2.06 Voting Rights in Other Bodies Corporate. Any officer of the
Corporation may execute and deliver proxies and arrange for the issuance of
voting certificates or other evidence of the right to exercise the voting
rights attaching to any securities held by the Corporation. Such
instruments, certificates or other evidence shall be in favour of such
person or persons as may be determined by the officer executing such proxies
or arranging for the issuance of voting certificates or such other evidence
of the right to exercise such voting rights. In addition, the board may from
time to time direct the manner in which and the person or persons by whom
any particular voting rights or class of voting rights may or shall be
exercised.
SECTION 2.07 Declarations. Any officer of the Corporation or any other
person appointed for the purpose by resolution of the board is authorized
and empowered to appear and make answer for, on behalf and in the name of
the Corporation, to all writs, orders and interrogatories upon articulated
<PAGE>
facts issued by any court and to declare for, on behalf and in the name of
the Corporation, any answer to writs of attachment by way of garnishment or
otherwise and to make all affidavits and sworn declarations in connection
therewith or in connection with any and all judicial proceedings. Such
officers and persons may make demands of abandonment or petitions for
winding or bankruptcy orders upon any debtor of the Corporation, may attend
and vote at all meetings of creditors of the Corporation's debtors and grant
proxies in connection therewith, and may generally do all such things in
respect thereof as they deem to be in the best interests of the Corporation.
ARTICLE THREE
Borrowing and Securities
SECTION 3.01 Borrowing Power. Without limiting the borrowing powers of the
Corporation as set forth in the Act, the board may from time to time:
(a) borrow money upon the credit of the Corporation and limit or
increase the amount to be borrowed;
(b) issue, reissue, sell or pledge bonds, debentures, notes or
other evidences of indebtedness, guarantees or securities of the
Corporation, whether secured or unsecured;
(c) to the extent permitted by the Act, give guarantees on
behalf of the Corporation to secure performance of an obligation of any
person or give, directly or indirectly, financial assistance to any
person on behalf of the Corporation by means of a loan, guarantee or
otherwise;
(d) mortgage, hypothecate, pledge or otherwise create a security
interest in all or any of the real or personal, moveable or immoveable
property of the Corporation, currently owned or subsequently acquired,
including book debts, rights, powers, franchises and undertakings, to
secure any present or future debt obligations or any money borrowed or
other debt or liability of the Corporation, including any bonds,
debentures, notes, debenture stock, other evidences of indebtedness,
guarantees or securities of the Corporation which it is by law entitled
to issue.
Nothing in this section limits or restricts the borrowings of money by the
Corporation on bills of exchange or promissory notes and accepted or
endorsed by or on behalf of the Corporation.
SECTION 3.02 Delegation. The board may from time to time delegate to such
one or more of the directors and officers of the Corporation as may be
designated by the board all or any of the powers conferred on the board by
Section 3.01 or by the Act to such extent and in such manner as the board
shall determine at the time of each such delegation.
<PAGE>
ARTICLE FOUR
Directors
SECTION 4.01 Number of Directors and Quorum. Until changed in accordance
with the Act, the board shall consist of not fewer than ten (10) directors
and not more than twenty-five (25) directors.
The directors may, from time to time, fix by resolution the quorum for
meetings of directors, but until otherwise fixed five (5) directors shall
constitute a quorum. Any meeting of directors at which a quorum is present
shall be competent to exercise all or any of the authorities, powers and
discretions by or under the by-laws of the Corporation for the time being
vested in or exercisable by the directors generally.
SECTION 4.02 Qualification. No person shall be qualified for election as a
director if he is less than 18 years of age or more than 70 years of age; if
he is of unsound mind and has been so found by a court in Canada or
elsewhere; if he is not an individual; or if he has the status of a
bankrupt. Notwithstanding the foregoing age qualification, a maximum of
three persons of more than 70 years of age may be elected to serve as
directors at any time. A director need not be a shareholder. A majority of
the directors shall be resident Canadians unless the Act permits otherwise.
SECTION 4.03 Election and Term. The election of directors shall take place
at each annual meeting of shareholders at which time all the directors then
in office shall cease to hold office but, if qualified, shall be eligible
for re-election. The number of directors to be elected at any such meeting
shall be the number of directors then in office unless the directors or the
shareholders otherwise determine. The election shall be by resolution.
Whenever the number of nominees exceeds the number of directors to be
elected, a ballot may be taken in two or more parts so as to have a ballot
for other than resident Canadians in order that a majority of the board
shall be resident Canadians. If an election of directors is not held at any
such meeting of shareholders, the incumbent directors shall continue in
office until their successors are elected.
SECTION 4.04 Calling of Meetings. Meetings of the board shall be held from
time to time and at such place as the board, the chairman of the board, the
chairman of the executive committee, the president, a vice-president or any
two directors may determine.
SECTION 4.05 Notice of Meeting. Notice of the time and place of each
meeting of the board shall be given in the manner provided in Section 11.01
to each director not less than 48 hours before the time when the meeting is
to be held.
A director may in any manner waive notice of or otherwise consent to a
meeting of the board. No action taken at any meeting of the board shall be
invalidated by the accidental failure to give notice or sufficient notice
thereof to any director.
SECTION 4.06 Adjourned Meeting. Notice of an adjourned meeting of the
board is not required if the time and place of the adjourned meeting is
announced at the original meeting.
<PAGE>
SECTION 4.07 Regular Meetings. The board may appoint a day or days in any
month or months for regular meetings of the board at a place and hour to be
named. A copy of any resolution of the board fixing the place and time of
such regular meetings shall be sent to each director forthwith after being
passed, but no other notice shall be required for any such regular meeting
except where the Act requires the purpose thereof or the business to be
transacted thereat to be specified.
SECTION 4.08 Meetings by Telephone. If all the directors consent, a
director may participate in a meeting of the board or of a committee of the
board by means of such telephone or other communications facilities as
permit all persons participating in the meeting to hear each other, and a
director participating in such a meeting by such means is deemed to be
present at that meeting. Any such consent shall be effective whether given
before or after the meeting to which it relates and may be given with
respect to all meetings of the board and of committees of the board held
while a director holds office.
SECTION 4.09 Chairman. The chairman of any meeting of the board shall be
the first mentioned of such of the following officers who is present
thereat: chairman of the board, chairman of the executive committee,
president or a vice-president who is a director. If no such officer is
present, the directors present shall choose one of their number to be
chairman.
SECTION 4.10 Votes to Govern. At all meetings of the board every question
shall be decided by a majority of the votes cast on the question. In case of
an equality of votes the chairman of the meeting shall be entitled to a
second or casting vote.
SECTION 4.11 Remuneration and Expenses. The directors shall be paid such
remuneration for their services as the board may from time to time
determine. The directors shall also be entitled to be reimbursed for
travelling and other expenses properly incurred by them in attending
meetings of the board or any committee thereof. Nothing herein contained
shall preclude any director from serving the Corporation in any other
capacity and receiving remuneration therefor.
ARTICLE FIVE
Committees
SECTION 5.01 Committee of Directors. The board may appoint a committee or
committees of directors, however designated, and delegate to such committee
or committees any of the powers of the board except those which, under the
Act, a committee of directors has no authority to exercise.
SECTION 5.02 Executive Committee. The board may designate one of the
committees appointed by it as the executive committee. It shall comprise at
least three (3) members who shall remain in office at the pleasure of the
board and while still directors. It shall, subject to Section 5.01, be
vested with all the powers and authority of the board between meetings
thereof. All acts and proceedings of the executive committee shall be
reported to the board at the next meeting thereof, but any right granted or
obligation incurred pursuant to the authority of the executive committee
shall be valid and binding upon the Corporation.
<PAGE>
SECTION 5.03 Audit Committee. The board shall elect from among its number
an audit committee to be composed of at least three (3) directors of whom
the majority shall not be officers or employees of the Corporation or its
affiliates. Members of the audit committee shall remain in office at the
pleasure of the board and while still directors.
SECTION 5.04 Procedure. Each committee shall meet at the call of the
chairman thereof or, in his absence, at the call of a member. Unless
otherwise determined by the board, each committee shall have the power to
fix its quorum at not less than a majority of its members, to elect its
chairman and to regulate its procedures. The powers of a committee may be
exercised by a meeting at which a quorum is present or by resolution in
writing signed by all members entitled to vote thereon.
ARTICLE SIX
Officers
SECTION 6.01 Appointment. The board may from time to time appoint a
chairman of the board, a chairman of the executive committee, a president,
one or more vice-presidents (to which title may be added words indicating
seniority or function), a secretary, a treasurer and such other officers as
the board may determine, including one or more assistants to any of the
officers so appointed. The board may specify the duties of and, in
accordance with this by-law and subject to the provisions of the Act,
delegate to such officers powers to manage the business and affairs of the
Corporation. Subject to Section 6.02, an officer may but need not be a
director and one person may hold more than one office.
SECTION 6.02 Chairman of the Board, Chairman of the Executive Committee and
President. The chairman of the board, chairman of the executive committee
and the president shall each be chosen from among the directors and, if
appointed, shall have such powers and duties as the board may specify.
SECTION 6.03 Vice-President or Vice-Presidents. The vice-president or
vice-presidents shall have such powers and duties as the board may specify.
SECTION 6.04 Secretary. Except as may be otherwise determined from time to
time by the directors, the secretary shall attend and be the secretary of
all meetings of the board, shareholders and committees of the board and
shall enter or cause to be entered in records kept for that purpose minutes
of all proceedings thereat; he shall give or cause to be given, as and when
instructed, all notices to shareholders, directors, officers, auditors and
members of committees of the board; he shall be the custodian of the stamp
or mechanical device generally used for affixing the corporate seal of the
Corporation and of all books, papers, records, documents and instruments
belonging to the Corporation, except when some other officer or agent has
been appointed for that purpose; and he shall have such other powers and
duties as the board or the chairman of the board, chairman of the executive
committee or the president may specify. The assistant-secretary or, if more
than one, the assistant-secretaries, shall assist the secretary in the
performance of his duties and shall exercise all his powers and carry out
all his duties in the absence of the secretary.
SECTION 6.05 Treasurer. The treasurer shall keep proper accounting
records in compliance with the Act and shall be responsible for the deposit
of monies, the safekeeping of securities and the disbursement of the funds
<PAGE>
of the Corporation; he shall render to the board whenever required an
account of all his transactions as treasurer and of the financial position
of the Corporation; and he shall have such other powers and duties as the
board or the chairman of the board, chairman of the executive committee or
the president may specify. The assistant-treasurer, or, if more than one,
the assistant-treasurers, shall assist the treasurer in the performance of
his duties and shall exercise all his powers and carry out all his duties in
the absence of the treasurer.
SECTION 6.06 Powers and Duties of Other Officers. The powers and duties of
all other officers shall be such as the terms of their engagement call for
or as the board or the chairman of the board, chairman of the executive
committee or the president may specify. Any of the powers and duties of an
officer to whom an assistant has been appointed may be exercised and
performed by such assistant, unless the board or the chairman of the board,
chairman of the executive committee or the president otherwise directs.
SECTION 6.07 Variation of Powers and Duties. The board may from time to
time and subject to the provisions of the Act, vary, add to or limit the
powers and duties of any officer.
SECTION 6.08 Term of Office. The board, in its discretion, may remove and
discharge any officer of the Corporation either with or without cause at any
meeting called for that purpose and may elect or appoint another in his
place. Any officer or employee of the Corporation, not being a member of the
board, may also be removed and discharged, either with or without cause, by
the chairman of the board, chairman of the executive committee or the
president. Otherwise each officer appointed by the board shall hold office
until his successor is appointed.
SECTION 6.09 Terms of Employment and Remuneration. The terms of employment
and the remuneration of officers appointed by the board shall be settled by
it from time to time.
SECTION 6.10 Agents and Attorneys. The board, the chairman of the board,
the chairman of the executive committee or the president or any person
delegated by any of them shall have power from time to time to appoint
agents or attorneys for the Corporation in or outside Canada with such
powers of management or otherwise (including the power to sub-delegate) as
may be thought fit.
SECTION 6.11 Fidelity Bonds. The board, the chairman of the board, the
chairman of the executive committee or the president or any person delegated
by any of them may require such officers, employees and agents of the
Corporation as the board deems advisable to furnish bonds for the faithful
discharge of their powers and duties, in such form and with such surety as
the board may from time to time determine.
ARTICLE SEVEN
Protection of Directors, Officers and Others
SECTION 7.01 Limitation of Liability. No director or officer shall be
liable for the acts, receipts, neglects or defaults of any other person
including any director or officer or employee or agent, or for joining in
any receipt or act for conformity, or for any loss, damage or expense
occurring to the Corporation through the insufficiency or deficiency of
<PAGE>
title to any property acquired by or on behalf of the Corporation, or for
the insufficiency or deficiency of any security in or upon which any of the
moneys of the Corporation shall be invested, or for any loss or damage
arising from the bankruptcy, insolvency, delictual, quasi-delictual or
tortious acts of any person with whom any of the moneys, securities or other
property of the Corporation shall be deposited, or for any loss occasioned
by an error of judgment or oversight on his part, or for any other loss,
damage or misfortune whatever which may arise out of the execution of the
duties of his office or in relation thereto, unless the same are occasioned
by his own wilful neglect or default; provided that nothing herein shall
relieve any director or officer from the duty to act in accordance with the
mandatory provisions of the Act and the regulations thereunder or from
liability for any breach thereof.
SECTION 7.02 Indemnity. Without in any manner derogating from or limiting
the mandatory provisions of the Act but subject to the conditions contained
therein, the Corporation shall indemnify a director or officer of the
Corporation, a former director or officer of the Corporation, or a person
who acts or acted at the Corporation's request as a director or officer of a
body corporate of which the Corporation is or was a shareholder or creditor,
and his heirs and legal representatives, against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a
judgment, reasonably incurred by him in respect of any civil, criminal or
administrative action or proceeding to which he is made a party by reason of
being or having been a director or officer of the Corporation or such body
corporate, if
(a) he acted honestly and in good faith with a view to the best
interests of the Corporation; and
(b) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, he has reasonable
grounds for believing that his conduct was lawful.
SECTION 7.03 Insurance. Subject to the limitations contained in the Act,
the Corporation may purchase and maintain such insurance for the benefit of
the persons mentioned in Section 7.02, as the board may from time to time
determine.
ARTICLE EIGHT
Shares
SECTION 8.01 Allotment. Subject to the articles, shares of the Corporation
may be issued at such times and to such persons and for such consideration
as the board may determine and the board may from time to time allot or
grant options or other rights to purchase any of the shares of the
Corporation at such times and to such persons and for such consideration as
the board shall determine.
SECTION 8.02 Commissions. Subject to the provisions of the Act, the board
may from time to time authorize the Corporation to pay a commission to any
person in consideration of his purchasing or agreeing to purchase shares or
other securities of the Corporation, whether from the Corporation or from
any other person, or procuring or agreeing to procure purchasers for any
such shares or other securities.
<PAGE>
SECTION 8.03 Registration of Transfer. Subject to the provisions of the
Act, no transfer of shares shall be registered in a securities register
except upon presentation of the certificate representing such shares with a
transfer endorsed thereon or delivered therewith duly executed by the
registered holder or by his attorney or successor duly appointed, together
with such reasonable assurance or evidence of signature, identification and
authority to transfer as the board may from time to time prescribe, upon
payment of all applicable taxes and any fees prescribed by the board and
upon compliance with such restrictions on transfer if any as are authorized
by the articles.
SECTION 8.04 Transfer Agents and Dividend Disbursing Agents. The board may
from time to time appoint a registrar to maintain the securities register
and a transfer agent to maintain the register of transfers and may also
appoint one or more branch registrars to maintain branch securities
registers and one or more branch transfer agents to maintain branch
registers of transfers. The board may also from time to time appoint one or
more dividend disbursing agents to disburse dividends. One person may be
appointed to any number of the aforesaid positions. The board may at any
time terminate any such appointment.
SECTION 8.05 Conclusiveness of Securities Register. Subject to the
provisions of the Act, the Corporation shall treat the person in whose name
the share is registered in the securities register as absolute owner of any
share with full legal capacity and authority to exercise all rights of
ownership, irrespective of any indication to the contrary through knowledge
or notice or description in the Corporation's records or on the share
certificate.
SECTION 8.06 Share Certificates. Every holder of one or more shares of the
Corporation shall be entitled, at his option, to a share certificate, or to
a non-transferable written acknowledgement of his right to obtain a share
certificate, stating the number and class or series of shares held by him as
shown on the securities register. Share certificates and acknowledgements of
a shareholder's right to a share certificate, respectively, shall be in such
form as the board shall from time to time approve. Any share certificate
shall be signed in accordance with Section 2.04 and need not be under the
corporate seal; provided that, unless the board otherwise determines,
certificates representing shares in respect of which a transfer agent and/or
registrar has been appointed shall not be valid unless countersigned by or
on behalf of such transfer agent and/or registrar. The signature of one of
the signing officers or, in the case of share certificates which are not
valid unless countersigned by or on behalf of a transfer agent and/or
registrar, the signatures of both signing officers, may be printed or
mechanically reproduced in facsimile upon share certificates and every such
facsimile signature shall for all purposes be deemed to be the signature of
the officer whose signature it reproduces and shall be binding upon the
Corporation. A share certificate executed as aforesaid shall be valid
notwithstanding that one or both the officers or directors whose facsimile
signature appears thereon no longer holds office at the date of issue of the
certificate.
SECTION 8.07 Replacement of Share Certificates. The board or any officer
or agent designated by the board may in its or his discretion direct the
issue of a new share certificate in lieu of and upon cancellation of a share
certificate that has been mutilated or in substitution for a share
certificate claimed to have been lost, destroyed or wrongfully taken upon
<PAGE>
payment of such fee, if any, and on such terms as to indemnity,
reimbursement of expenses and evidence of loss and of title as the board may
from time to time prescribe, whether generally or in any particular case.
SECTION 8.08 Joint Shareholders. If two or more persons are registered as
joint holders of any share, the Corporation shall not be bound to issue more
than one certificate in respect thereof, and delivery of such certificate to
one of such persons shall be sufficient delivery to all of them. Any one of
such persons may give valid receipts for the certificate issued in respect
thereof or for any dividend, bonus, return of capital or other money payable
or warrant issuable in respect of such share.
SECTION 8.09 Deceased Shareholders. In the event of the death of a holder,
or of one of the joint holders, of any share, the Corporation shall not be
required to make any entry in the securities register in respect thereof or
to make payment of any dividends thereon or other distributions in respect
thereof except upon production of all such documents as may be required by
law and upon compliance with the reasonable requirements of the Corporation
and its transfer agent.
ARTICLE NINE
Dividends
SECTION 9.01 Dividends. Subject to the provisions of the Act, the board
may from time to time declare dividends payable to the shareholders
according to their respective rights and interests in the Corporation.
Dividends may be paid in money or property or by issuing fully paid shares
of the Corporation. Dividends or other distributions that are payable in
cash may be paid to certain shareholders in Canadian currency and to other
shareholders in currencies other than Canadian currency, and, in this
regard, the board may declare dividends or other distributions in a
particular currency and make whatever provisions it deems advisable for the
payment of such dividends or other distributions in equivalent amounts in a
currency or currencies other than the currency in which such dividends or
distributions are declared.
SECTION 9.02 Dividend Cheques. A dividend payable in cash shall be paid by
cheque drawn on the Corporation's bankers or one of them or those of its
dividend disbursing agent to the order of each registered holder of shares
of the class or series in respect of which it has been declared and mailed
by pre-paid ordinary mail to such registered holder at his recorded address,
unless such holder otherwise directs. In the case of joint holders the
cheque shall, unless such joint holders otherwise direct, be made payable to
the order of all of such joint holders and mailed to them at their recorded
address or to the first address so appearing if there are more than one. The
mailing of such cheque as aforesaid, unless the same is not paid on due
presentation, shall satisfy and discharge the liability for the dividend to
the extent of the sum represented thereby plus the amount of any tax, levy,
duty or impost which the Corporation is required to and does withhold.
SECTION 9.03 Non-Receipt of Cheques. In the event of non-receipt of any
dividend cheque by the addressee, the Corporation shall issue to such person
a replacement cheque for a like amount on such terms as to indemnity,
reimbursement of expenses and evidence of non-receipt and of title as the
board or any officer may from time to time prescribe, whether generally or
in any particular case.
<PAGE>
SECTION 9.04 Unclaimed Dividends. Any dividend unclaimed after a period of
6 years from the date on which the same has been declared to be payable
shall be forfeited and shall revert to the Corporation.
ARTICLE TEN
Meetings of Shareholders
SECTION 10.01 Annual Meetings. The annual meeting of shareholders shall be
held at such time in each year and, subject to Section 10.03, at such place
as the board or failing it, the chairman of the board, the chairman of the
executive committee or the president may from time to time determine, for
the purpose of considering the financial statements and reports required by
the Act to be placed before the annual meeting, electing directors,
appointing an auditor and for the transaction of such other business as may
properly be brought before the meeting.
SECTION 10.02 Special Meetings. The board, the chairman of the board, the
chairman of the executive committee or the president shall have power to
call a special meeting of shareholders at any time.
SECTION 10.03 Place of Meetings. Meetings of shareholders shall be held at
the registered office of the Corporation or elsewhere at such other place in
Canada as may be determined by the directors.
SECTION 10.04 Notice of Meetings. Notice of the time and place of each
meeting of shareholders shall be given in the manner provided in Section
11.01 not less than 21 nor more than 50 days before the date of the meeting
to each director, to the auditor and to each shareholder who at the close of
business on the record date, if any, for notice is entered in the securities
register as the holder of one or more shares carrying the right to vote at
the meeting.
SECTION 10.05 Chairman, Secretary and Scrutineers. The chairman of any
meeting of shareholders shall be the first mentioned of such of the
following officers who is present thereat: chairman of the board, chairman
of the executive committee, president or a vice-president who is a director.
If no such officer is present within 15 minutes from the time fixed for
holding the meeting, the persons present and entitled to vote shall choose
one of their number to be chairman. If the secretary and each assistant-
secretary of the Corporation is absent, the chairman shall appoint some
person, who need not be a shareholder, to act as secretary of the meeting.
If desired, one or more scrutineers, who need not be shareholders, may be
appointed by the chairman or by resolution.
SECTION 10.06 Persons Entitled to be Present. The only persons entitled to
be present at a meeting of shareholders shall be those entitled to vote
thereat, the directors and the auditor of the Corporation and others who,
although not entitled to vote, are entitled or required under any provisions
of the Act or the articles or by-laws to be present at the meeting. Any
other person may be admitted only on the invitation of the chairman of the
meeting or with the consent of the meeting.
SECTION 10.07 Quorum. A quorum for the transaction of business at any
meeting of shareholders shall be two persons present in person, each being a
shareholder entitled to vote thereat or a duly appointed proxy for an absent
shareholder so entitled, and holding or representing not less than 40% of
<PAGE>
the total number of the issued shares of the Corporation enjoying voting
rights at such meeting. No business shall be transacted at any meeting
unless the requisite quorum be present at the time of the transaction of
such business.
Should a quorum not be present at any meeting of shareholders, those present
in person and entitled to be counted for the purpose of forming a quorum
shall have power to adjourn the meeting from time to time without notice
other than announcement at the meeting until a quorum shall be present,
subject to the provisions of the Act and Section 10.14 of this by-law. At
any such adjourned meeting, provided a quorum is present, any business may
be transacted which might have been transacted at the meeting adjourned.
SECTION 10.08 Right to Vote. (Repealed by by-law No. 14 enacted by the
board on March 17, 1983 and confirmed by the shareholders on May 19, 1983.).
SECTION 10.09 Proxies. Every shareholder entitled to vote at a meeting of
shareholders may appoint a proxyholder, or one or more alternate
proxyholders, who need not be shareholders, to attend and act at the meeting
in the manner and to the extent authorized and with the authority conferred
by the proxy. A proxy shall be in writing executed by the shareholder or his
attorney and shall conform with the requirements of the Act.
SECTION 10.10 Time for Deposit of Proxies. The board may specify in a
notice calling a meeting of shareholders a time, preceding the time of such
meeting by not more than 48 hours exclusive of non-business days, before
which time proxies to be used at such meeting must be deposited. A proxy
shall be acted upon only if, prior to the time so specified, it shall have
been deposited with the Corporation or an agent thereof specified in such
notice or, if no such time is specified in such notice, unless it has been
received by the secretary of the Corporation or by the chairman of the
meeting or any adjournment thereof prior to the time of voting.
SECTION 10.11 Votes to Govern. At any meeting of shareholders every
question shall, unless otherwise required by the articles or by-laws or by
law, be determined by the majority of the votes cast on the question. In
case of an equality of votes either upon a show of hands or upon a poll, the
chairman of the meeting shall be entitled to a second or casting vote.
SECTION 10.12 Show of Hands. Subject to the provisions of the Act, any
question at a meeting of shareholders shall be decided by a show of hands
unless a ballot thereon is required or demanded as hereinafter provided.
Upon a show of hands every person who is present and entitled to vote shall
have one vote. Whenever a vote by show of hands shall have been taken upon a
question, unless a ballot thereon is so required or demanded, a declaration
by the chairman of the meeting that the vote upon the question has been
carried by a particular majority or not carried and an entry to that effect
in the minutes of the meeting shall be prima facie evidence of the fact
without proof of the number or proportion of the votes recorded in favour of
or against any resolution or other proceeding in respect of the said
question, and the result of the vote so taken shall be the decision of the
shareholders upon the said question.
SECTION 10.13 Ballots. On any question proposed for consideration at a
meeting of shareholders, and whether or not a show of hands has been taken
thereon, any shareholder or proxyholder entitled to vote at the meeting may
require or demand a ballot. A ballot so required or demanded shall be taken
<PAGE>
in such manner as the chairman shall direct. A requirement or demand for a
ballot may be withdrawn at any time prior to the taking of the ballot. If a
ballot is taken each person present shall be entitled, in respect of the
shares which he is entitled to vote at the meeting upon the question, to
that number of votes provided by the Act or the articles, and the result of
the ballot so taken shall be the decision of the shareholders upon the said
question.
SECTION 10.14 Adjournment. If a meeting of shareholders is adjourned for
less than 30 days, it shall not be necessary to give notice of the adjourned
meeting, other than by announcement at such adjourned meeting. If a meeting
of shareholders is adjourned by one or more adjournments for an aggregate of
30 days or more, notice of the adjourned meeting shall be given as for an
original meeting.
ARTICLE ELEVEN
Notices
SECTION 11.01 Method of Giving Notices. Any notice (which term includes
any communication or document) to be given (which term includes sent,
delivered or served) pursuant to the Act, the regulations thereunder, the
articles, the by-laws or otherwise to a shareholder, director, officer,
auditor or member of a committee of the board shall be sufficiently given if
delivered personally to the person to whom it is to be given or if delivered
to his recorded address or if mailed to him at his recorded address by
prepaid ordinary or air mail or if sent to him at his recorded address by
any means of prepaid transmitted or recorded communication. A notice so
delivered shall be deemed to have been given when it is delivered personally
or to the recorded address as aforesaid; a notice so mailed shall be deemed
to have been given when deposited in a post office or public letter box; and
a notice so sent by any means of transmitted or recorded communication shall
be deemed to have been given when dispatched or delivered to the appropriate
communication company or agency or its representative for dispatch. The term
"recorded address" means in the case of a shareholder his address as
recorded in the register of shareholders and in the case of a director,
officer, auditor or member of a committee of the board his address as
recorded in the records of the Corporation. The secretary or assistant-
secretary may change or cause to be changed the recorded address of any
shareholder, director, officer, auditor or member of a committee of the
board in accordance with any information believed by him to be reliable.
SECTION 11.02 Notice to Joint Shareholders. If two or more persons are
registered as joint holders of any share, any notice may be addressed to all
of such joint holders but notice to one of such persons shall be sufficient
notice to all of them. The address to be used for the purpose of giving
notices shall be the address appearing on the register of shareholders in
respect of such joint holding, or the first address so appearing if there
are more than one.
SECTION 11.03 Computation of Time. In computing the date when notice must
be given under any provision requiring a specified number of days' notice of
any meeting or other event, the date of giving the notice shall be excluded
and the date of the meeting or other event shall be included.
SECTION 11.04 Omissions and Errors. The accidental omission to give any
notice to any shareholder, director, officer, auditor or member of a
<PAGE>
committee of the board or the non-receipt of any notice by any such person
or any error in any notice not affecting the substance thereof shall not
invalidate any action taken at any meeting held pursuant to such notice or
otherwise founded thereon.
SECTION 11.05 Persons Entitled to Shares by Death or Operation of Law.
Every person who, by operation of law, transfer, death of a shareholder or
any other means whatsoever, shall become entitled to any share, shall be
bound by every notice in respect of such share which shall have been duly
given to the shareholder from whom he derives his title to such share prior
to his name and address being entered on the securities register (whether
such notice was given before or after the happening of the event upon which
he became so entitled) and prior to his furnishing to the Corporation the
proof of authority or evidence of his entitlement as provided in the Act.
SECTION 11.06 Waiver of Notice. Any director, officer, auditor or member
of a committee of the board may at any time waive any notice, or waive or
abridge the time for any notice, required to be given to him under any
provision of the Act, the regulations thereunder, the articles, the by-laws
or otherwise and such waiver or abridgement shall cure any default in the
giving or in the time of such notice, as the case may be. Any such waiver or
abridgement shall be in writing except a waiver of notice of a meeting of
the board or committee thereof which may be given in any manner.
ARTICLE TWELVE
Effective Date
SECTION 12.01 Effective Date. Subject to the Act, this by-law shall come
into force upon the issuance under the Act of a Certificate of Continuance
in respect of the Corporation.
SECTION 12.02 Repeal. Upon the date of this by-law becoming effective, by-
laws Nos. 1 to 11, inclusive, and by-laws Nos. 43 and 44 of the Corporation,
as amended, shall be repealed, provided that such repeal shall not affect
the previous operation of any by-law so repealed or affect the validity of
any act done or right, privilege, obligation or liability acquired or
incurred under or the validity of any contract or agreement made pursuant to
any such by-law prior to its repeal. All officers and persons acting under
any by-law so repealed shall continue to act as appointed under the
provisions of this by-law and all resolutions of the shareholders or board
with continuing effect passed under any repealed by-law shall continue to be
valid except to the extent inconsistent with this by-law and until amended
or repealed.
BY-LAW NO. 12
General Borrowing Powers
BE IT AND IT IS HEREBY ENACTED as a by-law of The Seagram Company Ltd., that
the Directors be and they are hereby authorized from time to time, to
1. (a) Borrow money upon the credit of the Company;
(b) Limit or increase the amount to be borrowed;
<PAGE>
(c) Issue bonds, debentures, debenture stock or other securities
of the Company, and pledge or sell the same for such sums and
at such price as may be deemed expedient;
(d) Hypothecate, mortgage or pledge the real or personal property
of the Company or both, to secure any such bonds, debentures,
debenture stock or other securities, and any money borrowed
for the purposes of the Company;
2. No further by-law or confirmation of the shareholders other than
the confirmation of this general borrowing by-law shall be necessary to
authorize any action taken by the Directors pursuant to this by-law.
BY-LAW No. 13
Bank Borrowing Powers
WHEREAS it is necessary for the purposes of the Company to borrow money on
the credit of the Company from time to time from one of the Chartered Banks
of Canada;
THEREFORE BE IT ENACTED by the Directors of The Seagram Company Ltd. as a
by-law thereof:
1. That the Directors of the Company be and they are hereby authorized
to borrow moneys from time to time from the BANK OF MONTREAL upon the credit
of the Company in such amounts as they deem proper and by way of overdraft
or otherwise:
2. That any promissory notes or other negotiable paper (including
renewals thereof in whole or in part) signed on behalf of the Company by the
Secretary or any other officer of the Company authorized from time to time
to sign negotiable instruments on its behalf and granted to said Bank for
the moneys so borrowed and interest thereon as may be agreed upon, shall be
binding upon the Company;
3. That the Directors may from time to time, if they see fit, so to
do, grant securities by way of mortgage, hypothecation or pledge covering
all or any of the property and assets of the Company as security for all or
any moneys borrowed by the Company from the Bank or any other indebtedness
of the Company to the Bank, and all such securities shall be valid and
binding upon the Company if signed by any of the officers authorized to sign
negotiable instruments on the Company's behalf;
4. The Directors may from time to time authorize any officer or
officers of the Company to make arrangements with said Bank with reference
to the moneys from time to time to be borrowed as aforesaid and as to the
terms and conditions of the loan thereof and as to the securities to be
given therefor, and every such officer shall have authority from time to
time to vary or modify such arrangements, terms and conditions, and to give
additional security for any moneys remaining due;
5. All contracts, deeds, grants, assurances and documents reasonably
required by said Bank or its Counsel for all or any of the purposes
aforesaid shall be executed and carried into effect by the proper officers
of the Company, and when necessary the Seal of the Company shall be affixed
thereto;
<PAGE>
6. This by-law when sanctioned by the shareholders shall be
irrevocable, until a by-law repealing the same shall have been confirmed or
sanctioned by the shareholders and a copy thereof duly certified under the
Seal of the Company delivered to the said Bank, and meanwhile all the powers
and authorities hereby conferred shall continue in force.
<PAGE>
____________________
[FN]
<F1> The fiscal year end was changed to June 30 by
resolution of the board of directors on November 28, 1995.
Exhibit 12(a)
THE SEAGRAM COMPANY LTD.
and Subsidiary Companies
Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Quarter Ended Fiscal Year Ended
April 30, January 31,
-------------- -----------------
1996 1995 1996
------ ------ ------
(millions)
<S> <C> <C> <C>
Earnings before income taxes and minority
interest $ 74 $ 81 $349
Add (deduct):
Equity in net earnings of less than 50%
owned companies (7) - (20)
Dividends from less than 50% owned companies 3 - 4
Fixed charges 96 119 426
Interest capitalized, net of amortization 1 1 (2)
---- ---- ----
Earnings available for fixed charges $167 $201 $757
---- ---- ----
Interest Expense $ 80 $111 $378
Proportionate share of 50% owned companies
fixed charges 3 1 6
Portion of rent expense deemed to
represent interest factor 13 7 42
---- ---- ----
Fixed Charges $ 96 $119 $426
---- ---- ----
Ratio of Earnings to Fixed Charges 1.7x 1.7x 1.8x
==== ==== ====
</TABLE>
Exhibit 12(b)
JOSEPH E. SEAGRAM & SONS, INC.
and Subsidiary Companies
Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Quarter Ended Fiscal Year Ended
April 30, January 31,
---------------- -------------------
1996 1995 1996
------ ------ ------
(millions)
<S> <C> <C> <C>
Earnings before income taxes $ 13 $ 91 $ 83
Add (deduct):
Fixed charges 12 80 169
Minority interest (1) (1) 1
---- ---- ----
Earnings available for fixed charges $ 24 $170 $253
---- ---- ----
Fixed charges:
Interest Expense $ 7 $ 74 $145
Portion of rent expense deemed to
represent interest factor 5 6 24
---- ---- ----
Fixed Charges $ 12 $ 80 $169
---- ---- ----
Ratio of Earnings to Fixed Charges 2.0x 2.1x 1.5x
==== ==== ====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the financial
statements of The Seagram Company Ltd. for the quarter ended April 30, 1996 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1996
<PERIOD-END> APR-30-1996
<EXCHANGE-RATE> 1
<CASH> 256
<SECURITIES> 0
<RECEIVABLES> 1,672
<ALLOWANCES> 0
<INVENTORY> 3,052
<CURRENT-ASSETS> 6,153
<PP&E> 3,932
<DEPRECIATION> 1,101
<TOTAL-ASSETS> 21,239
<CURRENT-LIABILITIES> 3,851
<BONDS> 2,898
0
0
<COMMON> 716
<OTHER-SE> 8,546
<TOTAL-LIABILITY-AND-EQUITY> 21,239
<SALES> 0
<TOTAL-REVENUES> 2,520
<CGS> 1,619
<TOTAL-COSTS> 1,619
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75
<INCOME-PRETAX> 74
<INCOME-TAX> 50
<INCOME-CONTINUING> 23
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
