<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: DECEMBER 14, 1998
THE SEAGRAM COMPANY LTD.
(Exact name of registrant as specified in its charter)
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<CAPTION>
<S> <C> <C>
Canada 1-2275 None
- ------------------------------- ----------------------- ------------------
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
1430 Peel Street, Montreal, Quebec, Canada H3A 1S9
- ------------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (514) 849-5271
------------------
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<PAGE> 2
Item 5. Other Events
On December 14, 1998, The Seagram Company Ltd. (the "Corporation")
announced that it updated the investment community on its strategic prograss
and near-term outlook at a Corporation-sponsored investor conference in New
York. The conference was the first opportunity for Seagram to speak to security
analysts and institutional investors about the new Universal Music Group,
created on December 10, when the Corporation completed its acquisition of
PolyGram N.V. ("PolyGram"). At the meeting, the Corporation also updated
approximately 200 attendees on its Spirits and Wine Group and Universal
Studios Inc.'s filmed entertainment and recreation businesses. A copy of the
press release which includes financial results and forecasts discussed at the
meeting is attached hereto as Exhibit 99.1 and incorporated herein by reference.
In addition, filed as part of this Current Report on Form 8-K and
incorporated by reference herein are unaudited pro forma financial statements
and unaudited quarterly supplementary financial information of the Corporation
which give effect to the sale of Tropicana Products, Inc. and the Corporation's
global juice business on August 25, 1998 and the acquisition of PolyGram. The
pro forma financial statements should be read in conjunction with the
historical financial statements of the Corporation and PolyGram. Incorporated
by reference herein are the unaudited consolidated interim financial reports of
PolyGram for the six months ended June 30, 1998 and June 30, 1997 and the nine
months ended September 30, 1998 and September 30, 1997 contained in PolyGram's
Reports on Form 6-K dated July 22, 1998 and October 21, 1998 (the "Unaudited
Interim Financial Reports").
Item 7. Financial Statements and Exhibits.
(b) Pro Forma Financial Information
(1) Unaudited pro forma consolidated balance sheet as of September 30,
1998 and unaudited pro forma consolidated income statements for
the three months ended September 30, 1998 and for the fiscal year
ended June 30, 1998.
(c) Exhibits
<TABLE>
<S> <C>
(99.1) Press Release
(99.2) Unaudited Quarterly Supplementary Historical and Pro Forma
Financial Information
(99.3) PolyGram's Unaudited Interim Financial Reports
(incorporated by reference to PolyGram's Reports on Form
6-K dated July 22, 1998 and October 21, 1998).
(99.4) Pricing Agreement dated December 11, 1998 among Joseph E.
Seagram & Sons, Inc. and Goldman, Sachs & Co., Bear,
Stearns & Co. Inc., Morgan Stanley & Co. Incorporated,
Chase Securities Inc., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, and Salomon Smith Barney Inc., as
representatives of the several underwriters named therein.
(99.5) Form of Senior Note and Debenture. (This exhibit relates
to Registration Statement No. 333-62921 on Form S-3 of the
registrant and Joseph E. Seagram & Sons, Inc. and is filed
herewith for incorporation by reference in such
Registration Statement).
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2
<PAGE> 3
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.
By /s/ Daniel R. Paladino
-------------------------
Daniel R. Paladino
Executive Vice President,
Legal and Environmental
Affairs
Date: December 14, 1998
3
<PAGE> 4
THE SEAGRAM COMPANY LTD.
CURRENT REPORT ON FORM 8-K
Index to Financial Statements
Unaudited Pro Forma Financial Information of The Seagram Company Ltd.:
Unaudited Pro Forma Consolidated Balance Sheet as of September 30,
1998.
Unaudited Pro Forma Consolidated Income Statement for the Three
Months Ended September 30, 1998.
Unaudited Pro Forma Consolidated Income Statement for the Fiscal Year
Ended June 30, 1998.
4
<PAGE> 5
THE SEAGRAM COMPANY LTD.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On August 25, 1998, The Seagram Company Ltd. (the "Corporation") completed
the sale of Tropicana Products, Inc. and the Corporation's global juice business
("Tropicana") to PepsiCo, Inc. for cash proceeds of approximately $3.3 billion.
The proceeds from the Tropicana sale have been used by the Corporation to
provide part of the financing for the Corporation's acquisition of PolyGram N.V.
("PolyGram"). On December 6, 1998, the Corporation announced that it had
accepted approximatelhy 99.5% of the shares of PolyGram tendered pursuant
to a tender offer (the "Offer") by the Corporation. Pursuant to the Offer, the
Corporation paid approximately $8.56 billion in cash and issued approximately
47.9 million common shares (approximately 12 percent of the Corporation's
outstanding common shares after the transaction). Substantially all of the
common shares were issued to Koninklijke Philips Electroncs N.V., which had
owned 75% of the PolyGram shares.
The following Unaudited Pro Forma Consolidated Balance Sheet as of
September 30, 1998 and Unaudited Pro Forma Consolidated Statements of Income for
the three months ended September 30, 1998 and for the fiscal year ended June 30,
1998 illustrate (i) the effect of the Offer as if it had been consummated on
September 30, 1998 for the Unaudited Pro Forma Consolidated Balance Sheet and
(ii) the effect of the sale of Tropicana and the Offer as if each had been
consummated on July 1, 1997 for the Unaudited Pro Forma Consolidated Statement
of Income for the three months ended September 30, 1998 and (iii) the effect of
the sale of Tropicana, the Offer and the other transactions described below as
if such transactions had been consummated on July 1, 1997 for the Unaudited Pro
Forma Consolidated Statement of Income for the fiscal year ended June 30, 1998.
For purposes of the following Unaudited Pro Forma Consolidated Financial
Statements, the total purchase price of the Offer includes Cash Consideration of
$8.56 billion and the issuance of 47,904,145 Seagram Shares valued at $2.0
billion. The Offer has been accounted for as a purchase.
The other transactions referred to in the immediately preceding paragraph
are:
- On October 21, 1997, the acquisition by Universal Studios, Inc.
("Universal") of an incremental 50% interest in the USA Networks
partnership, including the Sci-Fi Channel, for $1.7 billion in cash (the
"USA Networks Transaction"). The USA Networks Transaction was accounted
for under the purchase method of accounting. The cost of the acquisition
was allocated on the basis of the estimated fair market value of the
assets acquired and liabilities assumed. This valuation resulted in $1.6
billion of unallocated excess of cost over fair value of assets acquired
which was being amortized over 40 years, and
- On February 12, 1998, the sale of a 50% interest in USA Networks to USA
Networks, Inc. ("USAi") and the contribution of the remaining 50%
interest in USA Networks and the majority of the television assets
("UTV") of Universal, including all of Universal's domestic television
production and distribution operations and 50% of the international
operations of USA Networks, to USANi LLC (the "LLC") in a transaction
(the "USAi Transaction") in which Universal received cash, 13.5 million
shares of USAi (after giving effect to the 2 for 1 split of USAi stock on
March 26, 1998), consisting of approximately 7.1 million shares of common
stock and 6.4 million shares of Class B common stock which in the
aggregate represented a 10.7% equity interest in USAi at date of
acquisition, and a 45.8% interest in the LLC which is exchangeable for
USAi common stock and Class B common stock. The USAi Transaction resulted
in $82 million of unallocated excess cost over fair value of assets
acquired which is being amortized over 40 years. The investment in 7.1
million shares of USAi common stock held by Universal at September 30,
1998 is accounted for at market value ($138 million at September 30,
1998) and has an underlying historical cost of $142 million. The
investment in the 6.4 million shares of Class B common stock of USAi is
carried at its historical cost of $128 million. The investment in the
LLC is included in investments in unconsolidated companies on the
consolidated balance sheet and is accounted for under the equity method.
No adjustment has been included in the pro forma amounts for any
anticipated cost savings or other synergies.
Pursuant to the agreement relating to the acquisition of PolyGram, PolyGram
has retained a financial advisor for the purpose of selling PolyGram's film
division as promptly as practicable. On November 10, 1998, Seagram and PolyGram
entered into an agreement with a subsidiary of Metro-Goldwyn-Mayer Inc. ("MGM")
with respect to the previously announced agreement in principle to sell certain
library assets of PolyGram's film division to a subsidiary of MGM following
Seagram's acquisition of PolyGram. Discussions with other parties regarding the
sale of certain other library assets of PolyGram's film division have taken
place, and Seagram is continuing to examine strategic alternatives regarding the
film division's production and distribution operations. No adjustment has been
included in the pro forma amounts for any sale of PolyGram film division assets.
These Unaudited Pro Forma Consolidated Financial Statements should be read
in conjunction with (i) the historical financial statements of PolyGram
(including the notes thereto) contained in PolyGram's Annual Report on Form 20-F
for the year ended December 31, 1997; (ii) the PolyGram unaudited consolidated
interim financial data contained in PolyGram's Reports on Form 6-K dated July
22, 1998 and October 21, 1998, which are incorporated by reference herein, (iii)
the historical financial statements of Seagram contained in Seagram's Annual
Report on Form 10-K for the fiscal year ended June 30, 1998, as amended and (iv)
the historical unaudited consolidated financial statements of Seagram contained
in Seagram's Quarterly Report on Form 10-Q for the quarter ended September 30,
1998.
The Unaudited Pro Forma Consolidated Financial Statements are presented for
comparative purposes only and are not intended to be indicative of actual
consolidated results of operations or consolidated financial position that would
have been achieved had the sale of Tropicana, the Offer, the USA Networks
Transaction and the USAi Transaction been consummated as of the dates indicated
above nor do they purport to indicate results which may be attained in the
future.
5
<PAGE> 6
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(UNITED STATES DOLLARS IN MILLIONS)
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<CAPTION>
POLYGRAM POLYGRAM SEAGRAM
SEAGRAM FINANCIAL PRO FORMA CONSOLIDATED
HISTORICAL STATEMENTS(a) ADJUSTMENTS PRO FORMA
---------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and short-term investments at
cost................................... $ 3,753 $ 98 $5,417(b) $ 708
(8,560)(c)
Receivables, net......................... 2,216 1,268 -- 3,484
Inventories.............................. 2,734 154 -- 2,888
Film costs, net of amortization.......... 304 194 -- 498
Deferred income taxes.................... 294 216 -- 510
Prepaid expenses and other current
assets................................. 683 528 (188)(d) 1,023
------- ------ ------- -------
TOTAL CURRENT ASSETS................... 9,984 2,458 (3,331) 9,111(k)
------- ------ ------- -------
Common stock of DuPont...................... 925 -- -- 925
Common stock of USAi........................ 266 -- -- 266
Film costs, net of amortization............. 1,292 315 -- 1,607
Artists' contracts, advances and other
entertainment assets..................... 860 1,265 2,800(e) 4,925
Property, plant and equipment, net.......... 2,759 405 -- 3,164
Investment in unconsolidated companies...... 3,836 69 -- 3,905
Excess of cost over fair value of assets
acquired................................. 3,109 1,060 6,754(e) 10,923
Deferred charges and other assets........... 651 68 -- 719
------- ------ ------- -------
$23,682 $5,640 $ 6,223 $35,545(k)
======= ====== ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings and indebtedness
payable within one year................ $ 1,820 $ 482 $ 917(f) $ 3,219
Accrued royalties and participations..... 738 911 -- 1,649
Payables and accrued liabilities......... 2,043 1,037 95(g) 3,175
Income and other taxes................... 525 47 -- 572
------- ------ ------- -------
TOTAL CURRENT LIABILITIES.............. 5,126 2,477 1,012 8,615(k)
------- ------ ------- -------
Long-term indebtedness...................... 2,266 76 4,500(h) 6,842
Accrued royalties and participations........ 453 187 -- 640
Deferred income taxes....................... 2,541 271 1,064(e) 3,876
Other credits............................... 1,044 242 -- 1,286
Minority interest........................... 1,923 34 -- 1,957
Shareholders' equity
Shares without par value................. 859 2,353 (2,353)(i) 2,859
2,000(j)
Cumulative currency translation
adjustments............................ (382) -- -- (382)
Cumulative gain on equity securities
after tax.............................. 477 -- -- 477
Retained earnings........................ 9,375 -- -- 9,375
------- ------ ------- -------
TOTAL SHAREHOLDERS' EQUITY............. 10,329 2,353 (353) 12,329
------- ------ ------- -------
$23,682 $5,640 $ 6,223 $35,545
======= ====== ======= =======
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6
<PAGE> 7
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
(UNITED STATES DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
-------------------------------------------
POLYGRAM SEAGRAM
SEAGRAM TROPICANA FINANCIAL POLYGRAM CONSOLIDATED
HISTORICAL ADJUSTMENTS STATEMENTS(l) ADJUSTMENTS PRO FORMA
---------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues...................... $ 2,247 $1,343 $ 3,590
Cost of revenues.............. 1,282 741 $ 83(m) 2,106
Selling, general and
administrative
expenses.................... 786 533 42(n) 1,361
------- ------ ------- ------
Operating income.............. 179 69 (125) 123(k)
Interest, net and
other..................... 41 11 93(o) 145
------- ------ ------- ------
138 58 (218) (22)
Provision (benefit)
for income taxes.......... 87 (11) (65)(p) 11
Minority interest
charge (credit)........... 6 (4) (6)(q) (4)
Equity earnings (loss)
from unconsolidated
companies................... 50 (2) -- 48
------- ------ ------- ------
Income (loss) from
continuing
operations................ $ 95 $ 71 $ (147) $ 19
Discontinued Tropicana
operations:
Loss from discontinued
operations (net of
taxes of $0) (3) 3 (r) -- -- --
Gain on sale of discontinued
operations (net of taxes
of $373)................. 1,072 (1,072)(s) -- -- --
------- ------- ------- ------- ------
1,069 (1,069) -- -- --
------- ------- ------ ------- ------
Net income (loss)............. $ 1,164 $(1,069) $ 71 $ (147) $ 19(k)
======= ======= ====== ======= ======
Basic earnings per share
Income from continuing
operations................ $ .27 $ .05
Income from
discontinued
Tropicana
operations, after
tax....................... 3.08 --
------- ------
Net income.................. $ 3.35 $ .05
======= ======
Diluted earnings per
share
Income from continuing
operations................ $ .27 $ .05
Income from
discontinued
Tropicana
operations, after
tax....................... 3.06 --
------- ------
Net income.................. $ 3.33 $ .05
======= ======
Shares (in thousands)
Weighted average
shares
outstanding............... 347,360 47,904(j) 395,264
Dilutive potential
common shares............. 2,593 2,593
------- -------
Adjusted weighted
average shares
outstanding............... 349,953 397,857
======= =======
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<PAGE> 8
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE FISCAL YEAR ENDED JUNE 30, 1998
(UNITED STATES DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS PRO FORMA ADJUSTMENTS
----------------- --------------------------------------------
UTV AND SEAGRAM/ POLYGRAM SEAGRAM
SEAGRAM USA USAI & USAI TROPICANA FINANCIAL POLYGRAM CONSOLIDATED
HISTORICAL NETWORKS OTHER PRO FORMA ADJUSTMENTS(r) STATEMENTS(l) ADJUSTMENTS PRO FORMA
---------- -------- ------ --------- -------------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $ 9,474 $(376)(t) $ 11(v) $9,109 $5,559 $14,668
Cost of revenues........ 5,525 (232)(t) 5,293 3,045 $ 347(m) 8,685
Selling, general and
administrative
expenses.............. 3,396 (53)(t) 8(v) 3,351 2,156 174(n) 5,681
------- ----- ---- ------ ------ ------ ------- -------
Operating income........ 553 (91) 3 465 358 (521) 302(k)
Interest, net and
other............... 228 (38)(t) 21(w) 211 14 373(o) 598
Gain on sale of Time
Warner shares......... 926 -- -- 926 926
Gain on USAi
transaction........... 360 -- -- 360 360
------- ----- ---- ------ ------ ------ ------- -------
1,611 (53) (18) 1,540 344 (894) 990
Provision (benefit)
for income taxes.... 638 (14) 3(p) 627 102 (263)(p) 466
Minority interest
charge (credit)..... 48 (10)(t) 6(q) 44 11 (35)(q) 20
Equity (loss) earnings
from unconsolidated
companies............. (45) 31(t) 19(u) 5 (11) (6)
------- ----- ---- ------ ------ ------ ------- -------
Income (loss) from
continuing
operations.......... $ 880 $ 2 $ (8) $ 874 $ 220 $ (596) $ 498
Income from
discontinued
Tropicana
operations, after
tax................. 66 -- -- 66 $ (66) -- -- --
------- ----- ---- ------ ------ ------ ------- -------
Net income (loss)....... $ 946 $ 2 $ (8) $ 940 $ (66) $ 220 $ (596) $ 498(k)
======= ===== ==== ====== ====== ====== ======= =======
Basic earnings per share
Income from continuing
operations.......... $ 2.51 $ 1.25
Income from
discontinued
Tropicana
operations, after
tax................. .19 --
------- -------
Net income............ $ 2.70 $ 1.25
======= =======
Diluted earnings per
share
Income from continuing
operations.......... $ 2.49 $ 1.24
Income from
discontinued
Tropicana
operations, after
tax................. .19 --
------- -------
Net income............ $ 2.68 $ 1.24
======= =======
Shares (in thousands)
Weighted average
shares
outstanding......... 349,874 47,904(j) 397,778
Dilutive potential
common shares....... 3,731 3,731
------- -------
Adjusted weighted
average shares
outstanding......... 353,605 401,509
======= =======
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4
<PAGE> 9
NOTES TO SEAGRAM PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
(a) The PolyGram financial statements have been converted to U.S. GAAP and
certain reclassifications have been made to conform to Seagram's account
classifications. The balance sheet has been converted at a rate of 1.8794
Dutch Guilders to 1.0 US Dollar.
(b) Reflects the cash proceeds from short term borrowings and long term
borrowings.
(c) Reflects the cash paid to PolyGram shareholders in the Offer.
(d) Reflects option premiums for the purchase of various currency options to
hedge Seagram's currency exposure given that the cash consideration payable
in the Offer is payable in Dutch Guilders. Seagram has purchased options to
sell $6.8 billion in exchange for Deutsch Marks, which are being used as a
proxy for Dutch Guilders due to the greater liquidity available in the
German currency, at strike prices equivalent to the forward rates at the
times of purchase. These options mature on various dates near the expected
close of the Offer.
(e) Reflects preliminary estimates of the revaluation of artist contracts,
catalogs and music publishing to fair value and the associated deferred tax
liability and the unallocated amount of the excess of the purchase price
over the fair value of PolyGram assets acquired. Seagram is currently
evaluating the fair value of certain assets to be acquired and liabilities
to be assumed. Upon completion of this valuation, Seagram will make a final
allocation of the excess purchase price over fair value, which may include
adjustments to the preliminary estimates referenced above. Accordingly, the
purchase accounting allocation is preliminary and has been made solely for
the purpose of developing the unaudited pro forma consolidated financial
information.
(f) Reflects the short-term borrowings to finance the Offer.
(g) Reflects financing and transaction costs incurred as a result of the
Offer.
(h) Reflects the long-term borrowings to finance the Offer.
(i) Reflects the elimination of historical PolyGram equity.
(j) Reflects the issuance of 47,904,145 Seagram Shares at $41.75 per share to
PolyGram shareholders in the Offer.
(k) Includes PolyGram's film division balances which represent approximately
five percent of Seagram pro forma current assets, approximately two percent
of Seagram pro forma total assets, approximately five percent of Seagram
pro forma current liabilities and approximately two percent of Seagram pro
forma total liabilities. The operating loss and net loss for PolyGram's
film division for the three months ended September 30, 1998 were $38
million and $48 million, respectively. The operating loss and net loss for
PolyGram's film division for the twelve months ended June 30, 1998 were
$102 million and $150 million, respectively.
(l) The PolyGram financial statements for the three months ended September 30,
1998 and the twelve months ended June 30, 1998 have been converted to U.S.
GAAP and certain reclassifications have been made to conform to Seagram's
account classifications. The income statement has been converted to US
Dollars at an average rate of 1.9868 Dutch Guilders to one US Dollar for
the three months ended September 30, 1998, and at an average rate of
2.01812 Dutch Guilders to one US Dollar for the twelve months ended June
30, 1998.
(m) Reflects the amortization, on an accelerated basis over periods from 14 to
20 years, of the $2.8 billion revaluation to fair value of artist
contracts, catalogs and music publishing assets as described in note (e).
Amortization for the fiscal years ending June 30, 1999, June 30, 2000, June
30, 2001 and June 30, 2002 will be $332 million, $228 million, $198 million
and $183 million, respectively.
(n) Reflects the amortization, over a 40 year period, of the unallocated amount
of the excess of the purchase price over the fair value of PolyGram assets
acquired as described in note (e).
(o) Reflects the additional interest expense resulting from the increased
short-term borrowings of approximately $917 million at an average borrowing
rate of 6.28% and increased long-term borrowings of $4.5 billion at an
average borrowing rate of 7.02% for the payment of $8.35 billion of the
$10.35 billion purchase price to acquire 100% of PolyGram in the Offer. The
balance of the $8.35 billion payment will be funded from the net sale
proceeds from the sale of Tropicana.
(p) Reflects the income taxes provided for at the statutory income tax rate.
(q) Reflects the adjustment of interest attributable to minority shareholders
of Universal.
(r) Reflects the removal of Tropicana net income.
(s) Reflects the removal of the gain on the sale of Tropicana.
(t) Reflects the elimination of USA Networks and the television business
contributed to the LLC. The initial 50% interest was accounted for under
the equity method of accounting, while the acquisition of the remaining 50%
interest was accounted for under the purchase method of accounting.
(u) Reflects the 45.8% equity in the net income of the LLC net of the
amortization of goodwill on the investment in the LLC over 40 years. The
interest in the LLC is accounted for under the equity method of accounting.
(v) Reflects distribution agreements which principally include: (1) USAi's
distribution of Universal's library and other television product and
theatrical films in domestic television markets and (2) Universal's
distribution of USAi's television product in foreign markets.
(w) Reflects the additional interest expense resulting from the increased
short-term borrowings for the payment of $1.7 billion for the incremental
50% interest in USA Networks offset by the reduction of short-term
borrowings using cash proceeds of $1.3 billion from the USAi transaction,
at an average borrowing rate of 5.4%.
8
<PAGE> 10
EXHIBIT INDEX
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<S> <C>
(99.1) Unaudited Quarterly Supplementary Pro Forma Financial
Information
(99.3) Pricing Agreement dated December 11, 1998 among Joseph E.
Seagram & Sons, Inc. and Goldman, Sachs & Co., Bear, Stearns & Co. Inc.,
Morgan Stanley & Co. Incorporated, Chase Securities Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, and Salomon Smith Barney Inc.,
as representatives of the several underwriters named therein.
</TABLE>
<PAGE> 1
Exhibit 99.1
Media Relations:
Ray Boyce
212/572-7172
Investor Relations:
Joseph M. Fitzgerald
212/572-7782
SEAGRAM ADDRESSES NEAR TERM EARNINGS OUTLOOK AT INVESTOR
CONFERENCE IN NEW YORK
_______________________________________________
MONTREAL, December 14, 1998 -- The Seagram Company Ltd. today updated the
investment community on its strategic progress and near-term outlook at a
Company-sponsored investor conference in New York. The conference was the first
opportunity for Seagram to speak to security analysts and institutional
investors about the new Universal Music Group, created on December 10, when
Seagram completed its acquisition of PolyGram. At the meeting, Seagram also
updated approximately 200 attendees on its Spirits and Wine Group and
Universal's filmed entertainment and recreation businesses.
In commenting on Seagram's transformation over the past three years and the
Company's growth prospects, Edgar Bronfman, Jr., Seagram's president and chief
executive officer, said: "The transformation of Seagram has been accomplished.
We are now an operating company with leading businesses in entertainment and
spirits and wine. Our franchises are strong. Our growth prospects are real and
immediate, led by our music business and recreation business. And, we will
deliver on the promise of this transformation in each of the next few years."
At the meeting, the Company discussed the following financial results and
forecasts:
o The Universal Music Group expects pro forma fiscal year ending June 30, 1999
earnings before interest, taxes, depreciation and amortization (EBITDA) of
approximately $850 million. This compares to fiscal year ended June 30, 1998
pro forma music EBITDA of $708 million. Results during both years assume that
Universal had owned PolyGram for the entire year.
o In fiscal year ending June 30, 2001, Universal Music expects to achieve an
integration cost savings target of approximately $300 million, with
approximately $200 million of this target achieved in fiscal year ending
June 30, 2000.
o Seagram reiterated its statement made at the time of the acquisition that it
expects to take a charge related to the integration of PolyGram of up to
$700 million in the second quarter ending December 31, 1998.
o The Universal Studios Recreation Group currently expects to triple its
fiscal year 1998 EBITDA of approximately $150 million by the end of fiscal
year 2003. The opening of Islands of Adventure in Orlando, Florida in
May 1999 and Universal Studios Japan in Osaka in the spring of 2001 will be
the principal growth drivers.
o The Seagram Spirits and Wine Group's EBITDA is expected to increase modestly
for the full fiscal year 1999, with strong year over year comparisons for
the last three quarters of the year. For example, in the second quarter of
1999, the Group's EBITDA is expected to increase in percentage terms in the
low to mid-teens.
o Additionally, The Seagram Company Ltd. has identified up to $1.0 billion in
non-strategic assets that it expects to sell within the next two years.
o Overall, The Seagram Company Ltd. EBITDA in the second quarter ending
December 31, 1998 is expected to be $670 million on a pro forma basis,
adjusted to include PolyGram's music EBITDA for the full quarter. Actual
reported EBITDA is expected to be approximately $325 million. Of these
totals, the combined music EBITDA is expected to be $425 million on a pro
forma basis and $80 million on an actual reported basis.
o The Seagram Company Ltd. reported earnings per share for the Quarter ending
December 31, 1998 are expected to be approximately equal to the $0.02 per
share reported in last year's quarter, excluding any charge related to the
integration of PolyGram.
The statements in this release relating to matters that are not historical fact
are forward looking statements that are not guarantees of future performance
and involve risk and uncertainties, including but not limited to future global
economic conditions, foreign exchange rates, the actions of competitors and
other factors beyond the control of the Company.
The Seagram Company Ltd., headquartered in Montreal, operates in two global
business segments; entertainment; and spirits and wine. The entertainment
business segment produces and distributes motion picture, television and home
video products, and recorded music; and operates theme parks and retail stores.
The spirits and wine business segment is engaged principally in the production
and marketing of distilled spirits, wines, coolers, beers and mixers throughout
more than 190 countries and territories. The Company's corporate website is
located at www.seagram.com.
<PAGE> 1
EXHIBIT 99.2
THE SEAGRAM COMPANY LTD. UNAUDITED QUARTERLY SUPPLEMENTARY
HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
The following unaudited quarterly supplementary historical and pro forma
financial information of The Seagram Company Ltd. (the "Corporation" or
"Seagram") is intended solely to provide investors with additional data and
should be read in conjunction with (i) the historical financial statements of
Seagram contained in Seagram's Annual Report on Form 10-K for the fiscal year
ended June 30, 1998, as amended, and Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998 and (ii) the unaudited pro forma consolidated
balance sheet as of September 30, 1998 and unaudited pro forma consolidated
income statements for the fiscal year ended June 30, 1998 and the three months
ended September 30, 1998 included in this Form 8-K.
The unaudited quarterly supplementary historical and pro forma financial
information which follows includes revenues, earnings before interest, taxes,
depreciation and amortization of the Corporation and its consolidated
subsidiaries ("EBITDA") and operating income through net income, including
equity earnings from unconsolidated companies. EBITDA is a non-GAAP financial
metric utilized by management and is intended solely to provide additional
information to investors. The Corporation believes EBITDA provides additional
information for understanding its underlying business results. The Corporation
also believes EBITDA is an appropriate measure of the Corporation's operating
performance, given the goodwill associated with the Corporation's acquisitions.
However, EBITDA should be considered in addition to, not as a substitute for,
reported revenues, operating income, net income, cash flows and other measures
of financial performance in accordance with generally accepted accounting
principles.
The unaudited quarterly supplementary pro forma financial information for
the fiscal year ended June 30, 1998 illustrates the effect of the sale of
Tropicana Products Inc. and the Corporation's global juice business
the acquisition of PolyGram N.V. (the "Acquisition") and the other transactions
referred to below as if such transactions had been consummated on July 1, 1997.
The unaudited supplementary pro forma financial information for the three
months ended September 30, 1998 illustrates the effect of the Acquisition as
if it had been consummated on July 1, 1997. For purposes of the following
unaudited supplementary pro forma financial information, the total purchase
price of the Acquisition includes cash consideration of $8.56 billion and the
issuance of 47,904,145 common shares of the Corporation valued at $2.0 billion.
The Acquisition has been accounted for as a purchase.
The other transactions referred to in the immediately preceding paragraph
are:
- on October 21, 1997, the acquisition by Universal Studios, Inc.
("Universal") of an incremental 50% interest in the USA Networks
partnership (the "USA Networks transaction"), including the Sci-Fi
Channel, for $1.7 billion in cash. The USA Networks transaction was
accounted for under the purchase method of accounting. The cost of the
acquisition was allocated on the basis of the estimated fair market value
of the assets acquired and liabilities assumed. This valuation resulted
in $1.6 billion of unallocated excess of cost over fair value of assets
acquired which was being amortized over 40 years, and
- on February 12, 1998, the sale of a 50% interest in USA Networks to USA
Networks, Inc. ("USAi") and the contribution of the remaining 50%
interest in USA Networks and the majority of the television assets
("UTV") of Universal, including all of Universal's domestic television
production and distribution operations and 50% of the international
operations of USA Networks, to USANi LLC in a transaction (the "USA
transaction") in which Universal received cash, 13.5 million shares of
USAi (after giving effect to the 2 for 1 split of USAi stock on March 26,
1998), consisting of approximately 7.1 million shares of common stock and
6.4 million shares of Class B common stock which, as of the date of
acquisition, in the aggregate represented a 10.7% equity interest in
USAi, and a 45.8% interest in the USANi LLC which is exchangeable for
USAi common stock and Class B common stock. The USAi transaction resulted
in $82 million of unallocated excess cost over fair value of assets
acquired which is being amortized over 40 years. The investment in the
7.1 million shares of USAi common stock held by Universal at
September 30, 1998 is accounted for at market value ($138 million at
September 30,1998) and has an underlying historical cost of $142
million. The investment in the 6.4 million shares of Class B common
stock of USAi is carried at its historical cost of $128 million. The
investment in the USANi LLC is included in investments in unconsolidated
companies on the consolidated balance sheet and is accounted for under
the equity method.
No adjustment has been included in the pro forma amounts for any
anticipated cost savings or other synergies.
Pursuant to the agreement relating to the acquisition of PolyGram,
Polygram has retained a financial advisor for the purpose of selling PolyGram's
film division as promptly as practicable. On November 10, 1998, Seagram and
PolyGram entered into an agreement with a subsidiary of Metro-Goldwyn-Mayer
Inc. ("MGM") with respect to the previously announced agreement in principle to
sell certain library assets of PolyGram's film division to a subsidiary of MGM
following Seagram's acquisition of PolyGram. Discussions with other parties
regarding the sale of certain other library assets of PolyGram's film division
have taken place, and Seagram is continuing to examine strategic alternatives
regarding the film division's production and distribution operations. No
adjustment has been included in the pro forma amounts for any sale of PolyGram
film division assets.
The unaudited supplementary pro forma financial information of the
Corporation is presented for comparative purposes only and is not intended to be
indicative of actual consolidated results of operations or consolidated
financial position that would have been achieved had the Acquisition, the
USA Networks transaction and the USAi transaction been consummated as of the
dates indicated above nor does it purport to indicate results which may be
attained in the future.
<PAGE> 2
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
Unaudited Historical Quarterly Supplementary Consolidated Financial Information
(United States dollars in millions)
<TABLE>
<CAPTION>
First Second Third Fourth Fiscal
Quarter Quarter Quarter Quarter Year
Ended Ended Ended Ended Ended
9/30/97 12/31/97 3/31/98 6/30/98 6/30/98
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Revenues
Spirits and Wine $ 1,027 $ 1,513 $ 859 $ 1,126 $ 4,525
Entertainment
Filmed Entertainment 829 839 665 460 2,793
Music 335 434 327 365 1,461
Recreation and Other 181 223 140 151 695
------- ------- ------- ------- -------
Total Entertainment 1,345 1,496 1,132 976 4,949
Total Revenues $ 2,372 $ 3,009 $ 1,991 $ 2,102 $ 9,474
======= ======= ======= ======= =======
EBITDA
Spirits and Wine 192 190 83 118 $ 583
Entertainment
Filmed Entertainment 131 98 64 23 316
Music 14 46 12 12 84
Recreation and Other 44 29 10 16 99
------- ------- ------- ------- -------
Total Entertainment 189 173 86 51 499
Total EBITDA $ 381 $ 363 $ 169 $ 169 $ 1,082
======= ======= ======= ======= =======
Operating Income
Spirits and Wine 165 157 52 90 $ 464
Entertainment
Filmed Entertainment 111 64 42 12 229
Music (17) 13 (19) (21) (44)
Recreation and Other 22 15 (8) (5) 24
------- ------- ------- ------- -------
Total Entertainment 116 92 15 (14) 209
Corporate (21) (18) (20) (61) (120)
------- ------- ------- ------- -------
Total Operating Income 260 231 47 15 553
Interest, net and other 44 76 63 45 228
Gain on sale of Time Warner
shares -- -- 433 493 926
Gain on USAi transaction -- -- 360 -- 360
------- ------- ------- ------- -------
216 155 777 463 1,611
Provision for income taxes 93 114 282 149 638
Minority interest 9 6 33 -- 48
Equity earnings/(loss) from
unconsolidated companies
Spirits and Wine (3) 2 (2) 4 1
Entertainment
Filmed Entertainment (3) (26) 3 (2) (28)
Music 4 1 (1) -- 4
Recreation and Other 4 (4) (15) (7) (22)
------- ------- ------- ------- -------
Total Entertainment 5 (29) (13) (9) (46)
Total equity earnings/(loss)
from unconsolidated companies 2 (27) (15) (5) (45)
------- ------- ------- ------- -------
Income from continuing operations 116 8 447 309 880
Income from discontinued
Tropicana operations, after tax 17 20 14 15 66
------- ------- ------- ------- -------
Net Income $ 133 $ 28 $ 461 $ 324 $ 946
======= ======= ======= ======= =======
</TABLE>
<PAGE> 3
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
Unaudited Historical Quarterly Supplementary Financial Information
Consolidated and Unconsolidated Companies
(United States dollars in millions)
<TABLE>
<CAPTION>
First Second Third Fourth Fiscal
Quarter Quarter Quarter Quarter Year
Ended Ended Ended Ended Ended
9/30/97 12/31/97 3/31/98 6/30/98 6/30/98
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Revenues
Spirits and Wine
Consolidated companies $ 1,027 $ 1,513 $ 859 $ 1,126 $ 4,525
Unconsolidated companies 61 83 31 57 232
------- ------- ------- ------- -------
1,088 1,596 890 1,183 4,757
Entertainment
Filmed Entertainment
Consolidated companies 829 839 665 460 2,793
Unconsolidated companies 207 231 337 358 1,133
------- ------- ------- ------- -------
1,036 1,070 1,002 818 3,926
Music
Consolidated companies 335 434 327 365 1,461
Unconsolidated companies 32 17 7 12 68
------- ------- ------- ------- -------
367 451 334 377 1,529
Recreation and Other
Consolidated companies 181 223 140 151 695
Unconsolidated companies 73 72 72 72 289
------- ------- ------- ------- -------
254 295 212 223 984
Total Entertainment
Consolidated companies 1,345 1,496 1,132 976 4,949
Unconsolidated companies 312 320 416 442 1,490
------- ------- ------- ------- -------
1,657 1,816 1,548 1,418 6,439
Total Revenues
Consolidated companies 2,372 3,009 1,991 2,102 9,474
Unconsolidated companies 373 403 447 499 1,722
------- ------- ------- ------- -------
$ 2,745 $ 3,412 $ 2,438 $ 2,601 $11,196
======= ======= ======= ======= =======
EBITDA
Spirits and Wine
Consolidated companies $ 192 $ 190 $ 83 $ 118 $ 583
Unconsolidated companies -- 2 -- 5 7
------- ------- ------- ------- -------
192 192 83 123 590
Entertainment
Filmed Entertainment
Consolidated companies 131 98 64 23 316
Unconsolidated companies 27 15 51 54 147
------- ------- ------- ------- -------
158 113 115 77 463
Music
Consolidated companies 14 46 12 12 84
Unconsolidated companies 4 1 -- 1 6
------- ------- ------- ------- -------
18 47 12 13 90
Recreation and Other
Consolidated companies 44 29 10 16 99
Unconsolidated companies 19 10 12 19 60
------- ------- ------- ------- -------
63 39 22 35 159
Total Entertainment
Consolidated companies 189 173 86 51 499
Unconsolidated companies 50 26 63 74 213
------- ------- ------- ------- -------
239 199 149 125 712
Total EBITDA
Consolidated companies 381 363 169 169 1,082
Unconsolidated companies 50 28 63 79 220
------- ------- ------- ------- -------
431 391 232 248 1,302
Adjustment for Unconsolidated companies (50) (28) (63) (79) (220)
Depreciation (58) (57) (59) (59) (233)
Amortization (44) (59) (44) (36) (183)
Corporate (19) (16) (19) (59) (113)
------- ------- ------- ------- -------
Operating Income as Reported $ 260 $ 231 $ 47 $ 15 $ 553
======= ======= ======= ======= =======
</TABLE>
<PAGE> 4
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
Unaudited Pro Forma Quarterly Supplementary Consolidated Financial Information
(United States dollars in millions)
<TABLE>
<CAPTION>
First Second Third Fourth First
Quarter Quarter Quarter Quarter Fiscal Year Quarter
Ended Ended Ended Ended Ended Ended
9/30/97 12/31/97 3/31/98 6/30/98 6/30/98 9/30/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Spirits and Wine $ 1,027 $ 1,513 $ 859 $ 1,126 $ 4,525 $ 1,021
Entertainment
Filmed Entertainment 768 646 554 460 2,428 618
Music 1,691(a) 2,355(b) 1,449(c) 1,525(d) 7,020(e) 1,763(f)
Recreation and Other 181 223 140 151 695 188
-------- -------- -------- -------- -------- --------
Total Entertainment 2,640 3,224 2,143 2,136 10,143 2,569
Total Revenues $ 3,667 $ 4,737 $ 3,002 $ 3,262 $ 14,668 $ 3,590
======== ======== ======== ======== ======== ========
EBITDA
Spirits and Wine $ 192 $ 190 $ 83 $ 118 $ 583 $ 144
Entertainment
Filmed Entertainment 119 30 32 23 204 93
Music 105(a) 391(b) 59(c) 69(d) 624(e) 135(f)
Recreation and Other 44 29 10 16 99 34
-------- -------- -------- -------- -------- --------
Total Entertainment 268 450 101 108 927 262
Total EBITDA $ 460 $ 640 $ 184 $ 226 $ 1,510 $ 406
======== ======== ======== ======== ======== ========
Operating Income
Spirits and Wine 165 157 52 90 $ 464 114
Entertainment
Filmed Entertainment 101 9 19 12 141 75
Music (98)(a) 174(b) (146)(c) (137)(d) (207)(e) (66)(f)
Recreation and Other 22 15 (8) (5) 24 14
-------- -------- -------- -------- -------- --------
Total Entertainment 25 198 (135) (130) (42) 23
Corporate (21) (18) (20) (61) (120) (14)
-------- -------- -------- -------- -------- --------
Total Operating Income 169 337 (103) (101) 302 123
Interest, net and other 135 167 155 141 598 145
Gain on sale of Time Warner
shares -- -- 433 493 926 --
Gain on USAi transaction -- -- 360 -- 360 --
-------- -------- -------- -------- -------- --------
34 170 535 251 990 (22)
Provision for income taxes 42 129 207 88 466 11
Minority interest 1 -- 25 (6) 20 (4)
Equity earnings/(loss) from
unconsolidated companies
Spirits and Wine (3) 2 (2) 4 1 --
Entertainment
Filmed Entertainment 17 (2) 9 (2) 22 28
Music 1 4 (7) (5) (7) 2
Recreation and Other 4 (4) (15) (7) (22) 18
-------- -------- -------- -------- -------- --------
Total Entertainment 22 (2) (13) (14) (7) 48
Total equity earnings/(loss)
from unconsolidated companies 19 -- (15) (10) (6) 48
======== ======== ======== ======== ======== ========
Net Income $ 10(a) $ 41(b) $ 288(c) $ 159(d) $ 498(e) $ 19(f)
======== ======== ======== ======== ======== ========
</TABLE>
<PAGE> 5
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
Unaudited Pro Forma Quarterly Supplementary Financial Information
Consolidated and Unconsolidated Companies
(United States dollars in millions)
<TABLE>
<CAPTION>
First Second Third Fourth Fiscal First
Quarter Quarter Quarter Quarter Year Quarter
Ended Ended Ended Ended Ended Ended
9/30/97 12/31/97 3/31/98 6/30/98 6/30/98 9/30/98
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Spirits and Wine
Consolidated companies $1,027 $1,513 $ 859 $1,126 $4,525 $1,021
Unconsolidated companies 61 83 31 57 232 18
------ ------ ------ ------ ------ ------
$1,088 $1,596 $ 890 $1,183 $4,757 $1,039
Entertainment
Filmed Entertainment
Consolidated companies 768 646 554 460 2,428 618
Unconsolidated companies 329 409 396 358 1,492 407
------ ------ ------ ------ ------ ------
$1,097 $1,055 $ 950 $ 818 $3,920 $1,025
Music
Condolidated companies 1,691(a) 2,355(b) 1,449(c) 1,525(d) 7,020(e) 1,763(f)
Unconsolidated companies(g) 32 17 7 12 68 33
------ ------ ------ ------ ------ ------
1,723 2,372 1,456 1,537 7,088 1,796
Recreation and Other
Consolidated companies 181 223 140 151 695 188
Unconsolidated companies 73 72 72 72 289 87
------ ------ ------ ------ ------ ------
$ 254 $ 295 $ 212 $ 223 $ 984 $ 275
Total Entertainment
Consolidated companies 2,640 3,224 2,143 2,136 10,143 2,569
Unconsolidated companies 434 498 475 442 1,849 527
------ ------ ------ ------ ------ ------
3,074 3,722 2,618 2,578 11,992 3,096
Total Revenues
Consolidated companies 3,667 4,737 3,002 3,262 14,668 3,590
Unconsolidated companies 495 581 506 499 2,081 545
------ ------ ------ ------ ------ ------
4,162 5,318 3,508 3,761 16,749 4,135
====== ====== ====== ====== ====== ======
EBITDA
Spirits and Wine
Consolidated companies $ 192 $ 190 $ 83 $ 118 $ 583 $ 144
Unconsolidated companies -- 2 -- 5 7 1
------ ------ ------ ------ ------ ------
$ 192 $ 192 $ 83 $ 123 $ 590 $ 145
Entertainment
Filmed Entertainment
Consolidated companies 119 30 32 23 204 93
Unconsolidated companies 84 38 77 54 253 78
------ ------ ------ ------ ------ ------
$ 203 $ 68 $ 109 $ 77 $ 457 $ 171
Music
Consolidated companies 105(a) 391(b) 59(c) 69(d) 624(e) 135(f)
Unconsolidated companies(g) 4 1 -- 1 6 5
------ ------ ------ ------ ------ ------
$ 109 $ 392 $ 59 $ 70 $ 630 $ 140
Recreation and Other
Consolidated companies 44 29 10 16 99 34
Unconsolidated companies 19 10 12 19 60 39
------ ------ ------ ------ ------ ------
$ 63 $ 39 $ 22 $ 35 $ 159 $ 73
Total Entertainment
Consolidated companies 268 450 101 108 927 262
Unconsolidated companies 107 49 89 74 319 122
------ ------ ------ ------ ------ ------
$ 375 $ 499 $ 190 $ 182 $1,246 $ 384
Total EBITDA
Consolidated companies 460 640 184 226 1,510 406
Unconsolidated companies 107 51 89 79 326 123
------ ------ ------ ------ ------ ------
$ 567 $ 691 $ 273 $ 305 $1,836 $ 529
Adjustment for unconsolidated
companies (107) (51) (89) (79) (326) (123)
Depreciation (76) (76) (76) (76) (304) (78)
Amortization (196) (211) (192) (192) (791) (193)
Corporate ( 19) ( 16) ( 19) ( 59) (113) ( 12)
------ ------ ------ ------ ------ ------
Operating Income $ 169 $ 337 $ (103) $ (101) $ 302 $ 123
====== ====== ====== ====== ====== ======
</TABLE>
<PAGE> 6
NOTES TO SEAGRAM UNAUDITED QUARTERLY SUPPLEMENTARY
HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
(a) Includes PolyGram film division revenues of $238 million, EBITDA of ($18)
million, operating loss of $22 million and net loss of $35 million for the
quarter ended September 30, 1997.
(b) Includes PolyGram film division revenues of $361 million, EBITDA of $6
million, operating income of $2 million and net loss of $5 million for
the quarter ended December 31, 1997.
(c) Includes PolyGram film division revenues of $235 million, EBITDA of ($26)
million, operating loss of $32 million and net loss of $41 million for the
quarter ended March 31, 1998.
(d) Includes PolyGram film division revenues of $78 million, EBITDA of ($46)
million, operating loss of $50 million and net loss of $69 million for the
quarter ended June 30, 1998.
(e) Includes PolyGram film division revenues of $912 million, EBITDA of ($84)
million, operating loss of $102 million and net loss of $150 million for
the twelve months ended June 30, 1998.
(f) Includes PolyGram film division revenues of $251 million, EBITDA of ($30)
million operating loss of $38 million and net loss of $48 million for the
quarter ended September 30, 1998.
(g) Excludes PolyGram unconsolidated companies revenues and EBITDA.
<PAGE> 1
EXHIBIT 99.4
Pricing Agreement
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
MORGAN STANLEY & CO. INCORPORATED
CHASE SECURITIES INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
SALOMON SMITH BARNEY INC.
as representatives of the several
Underwriters named in Schedule I hereto,
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
December 11, 1998
Ladies and Gentlemen:
JOSEPH E. SEAGRAM & SONS, INC., an Indiana corporation (the "Company"),
proposes, subject to the terms and conditions stated herein and in the
Underwriting Agreement General Terms and Conditions attached hereto, to issue
and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the
securities specified in Schedule II hereto (the "Designated Securities"). The
Designated Securities will be guaranteed (the "Guarantees") as to payment of
principal and interest, if any, by THE SEAGRAM COMPANY LTD., a Canadian
corporation (the "Guarantor"). Each of the provisions of the Underwriting
Agreement General Terms and Conditions is incorporated herein by reference in
its entirety, and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein; and each of the
representations and warranties set forth therein shall be deemed to have been
made at and as of the date of this Pricing Agreement. Each reference to the
Representatives herein and in the provisions of the Underwriting Agreement
General Terms and Conditions so incorporated by reference shall be deemed to
refer to you. Terms defined in the Underwriting Agreement General Terms and
Conditions are used herein as therein defined. The Representatives designated to
act on behalf of each of the Underwriters of the Designated Securities pursuant
to Section 12 of the Underwriting Agreement General Terms and Conditions and the
address of the Representatives referred to in such Section 12 are set forth in
Schedule II hereto.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement General Terms and Conditions incorporated herein by
reference, the Company agrees to issue and sell to each of the Underwriters, and
each of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at the time and place and at the purchase price to the Underwriters set
forth in Schedule II hereto, the principal amount of Designated Securities set
forth opposite the name of such Underwriter in Schedule I hereto, less the
principal amount of Designated Securities covered by Delayed Delivery Contracts,
if any, as may be specified in such Schedule II.
This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us ten counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement General Terms and
Conditions incorporated herein by reference, shall constitute a binding
agreement between each of the Underwriters and the Company. It is understood
that your acceptance of this letter on behalf of each of the Underwriters is or
will be pursuant to the authority set forth in a form of Agreement among
-1-
<PAGE> 2
Underwriters, the form of which shall be submitted to the Company for
examination, upon request, but without warranty on the part of the
Representatives as to the authority of the signers thereof.
Very truly yours,
JOSEPH E. SEAGRAM & SONS, INC.
By: /s/ John Preston
--------------------------------
Name: John Preston
Title: Vice President and Treasurer
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
MORGAN STANLEY & CO. INCORPORATED
CHASE SECURITIES INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
SALOMON SMITH BARNEY INC.
/s/ Goldman, Sachs & Co.
- -------------------------------------
(Goldman, Sachs & Co.)
On behalf of themselves and of each of the Underwriters
-2-
<PAGE> 3
SCHEDULE I
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Principal Principal
Principal Principal Principal Principal Amount of Amount of
Amount of Amount of Amount of Amount of 2018 2028
2001 Notes 2003 Notes 2005 Notes 2008 Notes Debentures Debentures
Underwriter
Goldman, Sachs & Co............ 270,050,000 179,850,000 224,295,000 202,400,000 393,800,000 315,150,000
Bear, Stearns & Co. Inc........ 72,000,000 48,000,000 56,640,000 54,000,000 105,000,000 84,000,000
Morgan Stanley & Co.
Incorporated................... 72,000,000 48,000,000 56,640,000 54,000,000 105,000,000 84,000,000
Chase Securities Inc........... 42,000,000 28,000,000 33,250,000 31,500,000 61,250,000 49,000,000
Merrill Lynch, Pierce,
Fenner & Smith
Incorporated................... 42,000,000 28,000,000 33,250,000 31,500,000 61,250,000 49,000,000
Salomon Smith Barney Inc....... 42,000,000 28,000,000 33,250,000 31,500,000 61,250,000 49,000,000
ABN AMRO Incorporated.......... 5,450,000 3,650,000 3,425,000 4,100,000 7,950,000 6,350,000
Nesbitt Burns Securities
Inc........................... 5,450,000 3,650,000 3,425,000 4,100,000 7,950,000 6,350,000
BNY Capital Markets, Inc....... 5,450,000 3,650,000 3,425,000 4,100,000 7,950,000 6,350,000
Commerzbank Capital
Markets Corporation............ 5,450,000 3,650,000 3,425,000 4,100,000 7,950,000 6,350,000
Credit Suisse First Boston
Corporation.................... 5,450,000 3,650,000 3,425,000 4,100,000 7,950,000 6,350,000
Deutsche Bank Securities
Inc............................ 5,450,000 3,650,000 3,425,000 4,100,000 7,950,000 6,350,000
Dresdner Kleinwort Benson
North America LLC.............. 5,450,000 3,650,000 3,425,000 4,100,000 7,950,000 6,350,000
HSBC Securities Inc............ 5,450,000 3,650,000 3,425,000 4,100,000 7,950,000 6,350,000
Scotia Capital Markets
(USA) Inc...................... 5,450,000 3,650,000 3,425,000 4,100,000 7,950,000 6,350,000
SG Cowen Securities
Corporation.................... 5,450,000 3,650,000 3,425,000 4,100,000 7,950,000 6,350,000
------------ ---------- ---------- ---------- ---------- ----------
TD Securities (USA)
Inc........................... 5,450,000 3,650,000 3,425,000 4,100,000 7,950,000 6,350,000
------------ ---------- ---------- ---------- ---------- ----------
Total $600,000,000 $400,000,000 $475,000,000 $450,000,000 $875,000,000 $700,000,000
</TABLE>
-1-
<PAGE> 4
SCHEDULE II
Title of Designated Securities:
6.250 % Senior Notes due 2001 (the "2001 Notes")
6.400% Senior Notes due 2003 (the "2003 Notes")
6.625 % Senior Notes due 2005 (the "2005 Notes")
6.800 % Senior Notes due 2008 (the "2008 Notes")
7.500 % Senior Debentures due 2018 (the "2018 Debentures")
7.600 % Senior Debentures due 2028 (the "2028 Debentures")
Aggregate Principal Amount of Designated Securities:
$600,000,000 2001 Notes
$400,000,000 2003 Notes
$475,000,000 2005 Notes
$450,000,000 2008 Notes
$875,000,000 2018 Debentures
$700,000,000 2028 Debentures
Form and Denominations:
Global Securities registered in the name of The Depository Trust
Company or its nominee.
Price to Public:
<TABLE>
<S> <C>
99.798% of the principal amount of the 2001 Notes, plus accrued interest from December 16, 1998, if any.
99.621% of the principal amount of the 2003 Notes, plus accrued interest from December 16, 1998, if any.
99.609% of the principal amount of the 2005 Notes, plus accrued interest from December 16, 1998, if any.
99.543% of the principal amount of the 2008 Notes, plus accrued interest from December 16, 1998, if any.
99.826% of the principal amount of the 2018 Debentures, plus accrued interest from December 16, 1998, if any.
99.801% of the principal amount of the 2028 Debentures, plus accrued interest from December 16, 1998, if any.
</TABLE>
Purchase Price by Underwriters:
<TABLE>
<S> <C>
99.398% of the principal amount of the 2001 Notes, plus accrued interest from December 16, 1998, if any.
99.021% of the principal amount of the 2003 Notes, plus accrued interest from December 16, 1998, if any.
98.984% of the principal amount of the 2005 Notes, plus accrued interest from December 16, 1998, if any.
98.893% of the principal amount of the 2008 Notes, plus accrued interest from December 16, 1998, if any.
98.951% of the principal amount of the 2018 Debentures, plus accrued interest from December 16, 1998, if any.
98.926% of the principal amount of the 2028 Debentures, plus accrued interest from December 16, 1998, if any.
</TABLE>
Specified Method and Funds for Payment of Purchase Price:
By wire transfer in immediately available funds.
Indenture:
Indenture, dated as of September 15, 1991, among the Company, the
Guarantor and The Bank of New York, as Trustee.
Time of Delivery:
9:30 a.m., New York City time, on December 16, 1998.
-1-
<PAGE> 5
Closing Location:
Sullivan & Cromwell, 375 Park Avenue, New York, New York 10152-0800.
Name and Address of Representatives:
Goldman, Sachs & Co.
Address for Notices, etc.:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Registration Department
Depositary:
The Depository Trust Company
Securities Exchange:
None.
Delayed Delivery:
None
Maturity:
December 15, 2001 for the 2001 Notes
December 15, 2003 for the 2003 Notes
December 15, 2005 for the 2005 Notes
December 15, 2008 for the 2008 Notes
December 15, 2018 for the 2018 Debentures
December 15, 2028 for the 2028 Debentures
Interest Rate:
<TABLE>
<S> <C>
6.250% with respect to the 2001 Notes
6.400% with respect to the 2003 Notes
6.625% with respect to the 2005 Notes
6.800% with respect to the 2008 Notes
7.500% with respect to the 2018 Debentures
7.600% with respect to the 2028 Debentures
</TABLE>
Interest Payment Dates:
June 15 and December 15
Redemption Provisions:
The 2001 Notes, 2003 Notes, 2005 Notes, 2008 Notes, 2018 Debentures and
2028 Debentures will not be redeemable prior to maturity.
Sinking Fund Provisions:
No sinking fund provisions
-2-
<PAGE> 6
Guarantees:
The Designated Securities shall be guaranteed as to payment of
principal and interest by The Seagram Company Ltd.
Defeasance:
The provisions of Section 1008 of the Indenture relating to defeasance
shall apply to the Designated Securities.
Other Terms:
The provisions of Section 1006 of the Indenture relating to the
negative pledge shall apply to the Designated Securities.
-3-
<PAGE> 1
EXHIBIT 99.5
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Company (as defined herein) or its agent for registration of transfer,
exchange, or payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
REGISTERED REGISTERED
NUMBER
R- $ ,000,000
JOSEPH E. SEAGRAM & SONS, INC.
% SENIOR [NOTE] [DEBENTURE] DUE
GUARANTEED AS TO PAYMENT OF PRINCIPAL AND INTEREST BY
THE SEAGRAM COMPANY LTD.
JOSEPH E. SEAGRAM & SONS, INC., a CUSIP
corporation duly organized and existing SEE REVERSE FOR CERTAIN DEFINITIONS
under the laws of Indiana (herein called
the "Company", which term includes any
successor corporation under the
Indenture hereinafter referred to), for
value received, hereby promises to pay
to
CEDE & CO.
% %
DUE DUE
or registered assigns,
the principal sum of
on December 15, , and to pay interest thereon from December 16,
1998 or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, semi-annually on June 15 and December 15 of each
year, commencing June 15, 1999, at the rate of % per annum until the
principal hereof is paid or duly provided for. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this [Note]
[Debenture] (or one or more Predecessor Securities) is registered at the close
of business on the Regular Record Date for such interest, which shall be the
June 1 or December 1 preceding such Interest Payment Date or, in the event that
such date is not a Business Day, the next succeeding day which is a Business
Day. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the registered Holder on such Regular Record
Date and may either be paid to the Person in whose name this [Note] [Debenture]
(or one or more Predecessor Securities) is registered at the close of business
on a Special Record Date to be fixed by the Trustee for the payment of such
Defaulted Interest, notice whereof shall be given to Holders of [Notes]
[Debentures] not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the [Notes] [Debentures] may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture. Payment of the principal of and interest on this [Note]
[Debenture] will be made at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan, The City of New York, New York, in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts; provided, however, that
at the option of the Company interest may be paid by check drawn on a bank in
the Borough of Manhattan, The City of New York, New York, mailed to the address
of the person entitled thereto as such address shall appear in the Security
Register.
Reference is hereby made to the further provisions of this [Note]
[Debenture] set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, neither this
[Note] [Debenture] nor the Guarantee endorsed hereon shall be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this [Note] [Debenture] to be
duly executed under its corporate seal.
Dated: December 16, 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated in, and
issued under, the Indenture described herein.
THE BANK OF NEW YORK, AS TRUSTEE
JOSEPH E. SEAGRAM & SONS, INC.
Attest: By
By Secretary Vice President and Treasurer
Authorized Signatory
<PAGE> 2
JOSEPH E. SEAGRAM & SONS, INC.
% SENIOR [NOTE] [DEBENTURE] DUE
GUARANTEED AS TO PAYMENT OF PRINCIPAL AND INTEREST BY
THE SEAGRAM COMPANY LTD.
This [NOTE] [DEBENTURE]is one of a duly authorized issue of [Notes]
[Debentures] of the Company designated as its % Senior [Notes] [Debentures]
due (herein called the "Notes") limited (except as provided in the Indenture)
in aggregate principal amount to $ ,000,000, issued and to be issued under an
Indenture, dated as of September 15, 1991 (herein called the "Indenture"),
among the Company, as issuer, The Seagram Company Ltd., as guarantor (herein
called the "Guarantor"), and The Bank of New York, as trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Guarantor, the Trustee and the
Holders of the Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered.
This Note is a global Security within the meaning of the Indenture and is
registered in the name of a Depositary or a nominee of a Depositary. This global
Security is exchangeable for Notes registered in the name of a Person other than
the Depositary or its nominee only in the limited circumstances described in the
Indenture and as may be set forth on the face hereof, and no transfer of this
Note (other than a transfer of this Note as a whole by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary) may be registered except in such limited
circumstances.
The Notes are not redeemable prior to maturity.
If an Event of Default shall occur and be continuing, the principal of all
the Notes may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Guarantor is subject to the provisions of the Indenture relating to a
negative pledge.
The Notes are subject to the provisions of the Indenture relating to
defeasance of certain obligations.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the Guarantor and the rights of the Holders of the Notes under the
Indenture at any time by the Company, the Guarantor and the Trustee with the
consent of the Holders of more than 50% in aggregate principal amount of the
Outstanding Securities of each series of Securities then Outstanding affected
thereby. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Notes at the time
Outstanding, on behalf of the Holders of all the Notes, to waive compliance by
the Company or the Guarantor or both with certain provisions of the Indenture
and certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Note.
No reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the right of the Holder of this Note, which is
absolute and unconditional, to receive payment of the principal of and interest
on this Note at the times, place and rate, and in the coin or currency, herein
prescribed.
Prior to due presentment for registration of transfer, the Company, the
Guarantor, the Trustee and any agent of the Company, the Guarantor or the
Trustee may treat the person in whose name this Note is registered as the owner
hereof for all purposes, except as otherwise set forth in the Indenture, whether
or not this Note be overdue and neither the Company, the Guarantor, the Trustee
nor any such agent shall be affected by notice to the contrary.
This Note has not been and will not be qualified for sale under the
securities laws of Canada or any province or territory thereof. Accordingly,
neither this Note nor any interest herein may be offered or sold, directly or
indirectly, in Canada or to residents of Canada in contravention of the
securities laws of Canada or any province or territory thereof.
The Indenture, the Notes and the Guarantees endorsed thereon shall be
governed by and construed in accordance with the laws of the State of New York.
All terms used in this Note which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
GUARANTEE
For value received, THE SEAGRAM COMPANY LTD., a company organized under the
laws of Canada (herein called the "Guarantor", which term includes any successor
corporation under the Indenture referred to in the Note upon which this
Guarantee is endorsed), hereby unconditionally guarantees to the Holder of the
Note upon which this Guarantee is endorsed, and to the Trustee on behalf of such
Holder, the due and punctual payment of the principal of and interest (including
any additional amounts payable in accordance with the terms of such Note and the
Indenture) on such Note, whether at the Stated Maturity or by declaration of
acceleration or otherwise, according to the terms of such Note and of the
Indenture. In case of the failure of the Company punctually to make any such
payment of principal or interest, the Guarantor hereby agrees to cause any such
payment to be made punctually when and as the same shall become due and payable,
whether at the Stated Maturity or by declaration of acceleration or otherwise,
and as if such payment were made by the Company.
The Guarantor shall make all payments in respect of principal of and interest
(including interest on amounts in default) on the Notes pursuant to this
Guarantee without deduction or withholding for or on account of any present or
future taxes, duties, assessments or governmental charges of whatever nature
imposed or levied upon or as a result of such payments by or on behalf of any
Canadian Taxing Authority, unless deduction or withholding of such taxes,
duties, assessments or governmental charges is required.
If the Guarantor is required to withhold or deduct any amounts from the
principal of or interest (including interest on amounts in default) on the Notes
on account of any taxes, duties, assessments or governmental charges mentioned
in the preceding paragraph, the Guarantor shall pay such additional amounts as
may be necessary in order that every net payment of the principal of and
interest (including interest on amounts in default) on the Notes, after such
withholding or deduction, shall not be less than the amount provided for in the
Notes to be then due and payable; except that no such additional amounts shall
be payable in respect of any Note to any Holder:
(a) who is subject to such taxes, duties, assessments or governmental
charges in respect of such Note by reason of his being connected with
Canada otherwise than merely by the holding or ownership of such Note, or
(b) who is not dealing at arm's length with the Guarantor (within the
meaning of the Income Tax Act (Canada) as reenacted or amended from time
to time), or
(c) with respect to any estate inheritance, gift, sales, transfer,
personal property or any other similar tax, duty, assessment or
governmental charge, or
(d) with respect to any tax, duty, assessment or governmental charge
payable otherwise than by withholding payments in respect of such Notes,
or
(e) with respect to any combination of the above.
Wherever in this Guarantee or the Indenture there is mention, in any context,
of payment of principal and/or interest (including interest on amounts in
default) of, on or in respect of the Notes or any Note by virtue of the
Guarantee or Guarantees thereof, such mention shall be deemed to include mention
of the payment of any additional amounts to the extent that, in such context,
such additional amounts are, were or would be payable pursuant to the provisions
of the preceding paragraph.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
such Note or the Indenture, the absence of any action to enforce the same, any
waiver or consent by the Holder of such Note or by the Trustee with respect to
any provisions thereof or of the Indenture, the obtaining of any judgment
against the Company or any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. The Guarantor hereby waives the benefits of division and discussion,
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest or notice with respect to such
Note or the indebtedness evidenced thereby and all demands whatsoever, and
covenants that this Guarantee will not be discharged except by complete
performance of the obligations contained in such Note and in this Guarantee.
The Holder of the Note upon which this Guarantee is endorsed is entitled to
the further benefits relating hereto set forth in the Indenture. No reference
herein to the Indenture and no provision of this Guarantee or of the Indenture
shall alter or impair the guarantee of the Guarantor, which is absolute and
unconditional, of the due and punctual payment of the principal of and interest
(including any additional amounts referred to above) on the Note upon which this
Guarantee is endorsed.
This Guarantee shall be governed by and construed in accordance with the laws
of the State of New York.
All terms used in this Guarantee which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
This Guarantee shall not be valid or obligatory for any purpose until the
certificate of authentication on the Note upon which this Guarantee is endorsed
shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized signatories.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly
executed.
Attest, THE SEAGRAM COMPANY LTD.
By
Vice President and Treasurer
Secretary
______________________________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right
of survivorship and not as
tenants in common
UNIF GIFT MIN ACT --_______________ Custodian______________
(Cust) (Minor)
Under Uniform Gifts to Minors Act
_______________________________________
(State)
Additional abbreviations may also be used though not in the above list
______________________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
_____________________________________________
________________________________________________________________________________
Please print or typewrite name and address including postal zip code of assignee
________________________________________________________________________________
the within Note of JOSEPH E. SEAGRAM & SONS, INC. and does hereby irrevocably
constitute and appoint
________________________________________________________________________attorney
to transfer the said Note on the books of the within-named Company, with full
power of substitution in the premises.
Dated___________________________
Signature(s) Guaranteed:
____________________________________________
____________________________________________
The signature(s) to this assignment must correspond with the name(s) as written
upon the face of the Note in every particular without alteration or enlargement
or any change whatever. The signature(s) should be guaranteed by a commercial
bank or trust company or by a New York Stock Exchange member or firm whose
signature is known to the registrar.
