<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: AUGUST 25, 1998
THE SEAGRAM COMPANY LTD.
(Exact name of registrant as specified in its charter)
<TABLE>
<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
------------------
</TABLE>
The Seagram Company Ltd. (the "Corporation") filed a Current Report on
Form 8-K dated August 25, 1998 (the "Form 8-K") which included unaudited pro
forma financial statements which gave effect to the Corporation's sale of
Tropicana Products, Inc. and the Corporation's global juice business, the
acquisition of PolyGram N.V. and certain other transactions (the "Pro Forma
Financial Statements"). The Form 8-K is hereby amended to delete the Pro Forma
Financial Statements in their entirety and substitute therefor the unaudited pro
forma financial statements filed herewith. The Form 8-K, as amended by this Form
8-K/A, is referred to herein as the "Amended Form 8-K."
Item 7. Financial Statements and Exhibits.
(b) Pro Forma Financial Information
(1) Unaudited pro forma consolidated balance sheet as of June 30, 1998
and unaudited pro forma consolidated income statement for the
fiscal year ended June 30, 1998
(c) Exhibits
(23) Consent of KPMG Accountants N.V., independent accountants.
<PAGE> 2
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE SEAGRAM COMPANY LTD.
By /s/ Neal B. Cravens
--------------------
Neal B. Cravens
Senior Vice President, Finance
Date: October 30, 1998
<PAGE> 3
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 June 30, 1998.
Unaudited Pro Forma Consolidated Income Statement for the Fiscal Year
Ended June 30, 1998.
<PAGE> 4
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 will be used by the Corporation to provide
part of the financing for the Corporation's acquisition of PolyGram N.V.
("PolyGram") which is expected to close in the second quarter of the
Corporation's fiscal year ending June 30, 1999. In connection with the PolyGram
transaction, the Corporation has agreed to make an offer (the "Offer") to
acquire all issued shares, par value NLG 0.50 per share ("PolyGram Shares"), of
PolyGram for per share consideration, at the election of each holder of PolyGram
Shares, of either (i) 1.3772 common shares without nominal or par value
("Seagram Shares") of the Corporation (the "Share Consideration") or (ii) NLG
115, net to the seller in cash (the "Cash Consideration"); provided, that Share
Consideration shall be paid in respect of 34,783,758 PolyGram Shares and Cash
Consideration shall be paid in respect to all other tendered PolyGram Shares.
The following Unaudited Pro Forma Consolidated Balance Sheet as of June 30,
1998 and Unaudited Pro Forma Consolidated Statement of Income for the fiscal
year ended June 30, 1998 illustrate (i) the effect of the sale of Tropicana and
the Offer as if such transactions had been consummated on June 30, 1998 for the
Unaudited Pro Forma Consolidated Balance Sheet and (ii) the effect of the sale
of Tropicana, the Offer and the other transactions described below as if each
had been consummated on July 1, 1997 for the Unaudited Pro Forma Consolidated
Statement of Income. For purposes of the following Unaudited Pro Forma
Consolidated Financial Statements, the total purchase price of the Offer of NLG
20.7 billion is converted to US Dollars at a rate of 2.00 Dutch Guilders to 1.0
US Dollar, the payment of which is reflected as Cash Consideration of $8.35
billion and the issuance of 47,904,191 Seagram Shares valued at $2.0 billion
(assuming that all PolyGram Shares are acquired in the Offer). The Offer will be
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 the
7.1 million shares of USAi common stock held by Universal at June 30,
1998 is accounted for at market value ($178 million at June 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 October 22, 1998, Seagram announced that
it had entered into an agreement in principle with Metro-Goldwyn-Mayer Inc.
("MGM") to sell certain library assets of PolyGram's film division to a direct
or indirect wholly owned 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.
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
4
<PAGE> 5
December 31, 1997, which is incorporated by reference in the Amended Form 8-K;
(ii) the PolyGram unaudited consolidated interim financial data contained in
PolyGram's Report on Form 6-K dated July 22, 1998, which is incorporated by
reference in the Amended Form 8-K and (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, which is incorporated by reference in the
Amended Form 8-K.
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.
<PAGE> 6
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1998
(UNITED STATES DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
TROPICANA POLYGRAM POLYGRAM SEAGRAM
SEAGRAM PRO FORMA FINANCIAL PRO FORMA CONSOLIDATED
HISTORICAL ADJUSTMENTS STATEMENTS(F) ADJUSTMENTS PRO FORMA
---------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash and short-term investments at
cost................................... $ 1,174 $3,288(a) $ 119 $(5,207)(g) $ 1,438
(8,350)(h)
Receivables, net......................... 2,155 -- 1,010 -- 3,165
Inventories.............................. 2,555 -- 135 -- 2,690
Film costs, net of amortization.......... 175 -- 204 -- 379
Deferred income taxes.................... 282 -- 181 -- 463
Prepaid expenses and other current
assets................................. 630 -- 572 (188)(i) 1,014
------- ------ ------ ------- -------
TOTAL CURRENT ASSETS................... 6,971 3,288 2,221 (3,331) 9,149(p)
------- ------ ------ ------- -------
Common stock of DuPont...................... 1,228 -- -- 1,228
Common stock of USAi........................ 306 -- 306
Film costs, net of amortization............. 1,272 333 -- 1,605
Artists' contracts, advances and other
entertainment assets..................... 761 1,116 2,800(j) 4,677
Property, plant and equipment, net.......... 2,733 394 -- 3,127
Investment in unconsolidated companies...... 3,437 105 -- 3,542
Excess of cost over fair value of assets
acquired................................. 3,076 1,056 6,695(j) 10,827
Deferred charges and other assets........... 661 58 -- 719
Net assets of discontinued Tropicana
operations............................... 1,734 (1,734)(b) -- -- --
------- ------ ------ ------- -------
$22,179 $1,554 $5,283 $ 6,164 $35,180(p)
======= ====== ====== ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings and indebtedness
payable within one year................ $ 1,653 $ 325 $ 1,707(k) $ 3,685
Accrued royalties and participations..... 702 610 -- 1,312
Payables and accrued liabilities......... 2,068 108(c) 1,310 95(l) 3,581
Income and other taxes................... 286 373(d) 84 -- 743
------- ------ ------ ------- -------
TOTAL CURRENT LIABILITIES.............. 4,709 481 2,329 1,802 9,321(p)
------- ------ ------ ------- -------
Long-term indebtedness...................... 2,225 73 3,500(m) 5,798
Accrued royalties and participations........ 421 153 -- 574
Deferred income taxes....................... 2,598 261 1,064(j) 3,923
Other credits............................... 995 229 -- 1,224
Minority interest........................... 1,915 36 -- 1,951
Shareholders' equity
Shares without par value................. 848 2,202 (2,202)(n) 2,848
2,000(o)
Cumulative currency translation
adjustments............................ (499) -- (499)
Cumulative gain on equity securities
after tax.............................. 699 -- 699
Retained earnings........................ 8,268 1,073(e) -- 9,341
------- ------ ------ ------- -------
TOTAL SHAREHOLDERS' EQUITY............. 9,316 1,073 2,202 (202) 12,389
------- ------ ------ ------- -------
$22,179 $1,554 $5,283 $ 6,164 $35,180
======= ====== ====== ======= =======
</TABLE>
<PAGE> 7
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(W) STATEMENTS(X) ADJUSTMENTS PRO FORMA
---------- -------- ------ --------- -------------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $ 9,474 $(376)(q) $ 11(s) $9,109 $5,559 $14,668
Cost of revenues........ 5,525 (232)(q) 5,293 3,045 $ 332(y) 8,670
Selling, general and
administrative
expenses.............. 3,396 (53)(q) 8(s) 3,351 2,156 169(z) 5,676
------- ----- ---- ------ ------ ------ ------- -------
Operating income........ 553 (91) 3 465 358 (501) 322(p)
Interest, net and
other............... 228 (38)(q) 21(t) 211 14 352(aa) 577
Gain on sale of Time
Warner shares......... 926 -- -- 926 926
Gain on USAi
transaction........... 360 -- -- 360 360
------- ----- ---- ------ ------ ------ ------- -------
1,611 (53) (18) 1,540 344 (853) 1,031
Provision (benefit)
for income taxes.... 638 (14) 3(u) 627 102 (249)(u) 480
Minority interest
charge (credit)..... 48 (10)(q) 6(v) 44 11 (36)(v) 19
Equity (loss) earnings
from unconsolidated
companies............. (45) 31(q) 19(r) 5 (11) (6)
------- ----- ---- ------ ------ ------ ------- -------
Income (loss) from
continuing
operations.......... $ 880 $ 2 $ (8) $ 874 $ 220 $ (568) $ 526
Income from
discontinued
Tropicana
operations, after
tax................. 66 -- -- 66 $ (66) -- -- --
------- ----- ---- ------ ------ ------ ------- -------
Net income (loss)....... $ 946 $ 2 $ (8) $ 940 $ (66) $ 220 $ (568) $ 526(p)
======= ===== ==== ====== ====== ====== ======= =======
Basic earnings per share
Income from continuing
operations.......... $ 2.51 $ 1.32
Income from
discontinued
Tropicana
operations, after
tax................. .19 --
------- -------
Net income............ $ 2.70 $ 1.32
======= =======
Diluted earnings per
share
Income from continuing
operations.......... $ 2.49 $ 1.31
Income from
discontinued
Tropicana
operations, after
tax................. .19 --
------- -------
Net income............ $ 2.68 $ 1.31
======= =======
Shares (in thousands)
Weighted average
shares
outstanding......... 349,874 47,904(o) 397,778
Dilutive potential
common shares....... 3,731 3,731
------- -------
Adjusted weighted
average shares
outstanding......... 353,605 401,509
======= =======
</TABLE>
<PAGE> 8
NOTES TO SEAGRAM PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
(a) Reflects the proceeds from the sale of Tropicana, after an adjustment based
upon a final determination of net indebtedness as of the closing date of
such disposition.
(b) Reflects the disposal of Tropicana net assets.
(c) Reflects transaction fees and other incremental costs related to the sale
of Tropicana.
(d) Reflects the income tax expected to be paid on the sale of Tropicana.
(e) Reflects the net gain after tax on the sale of Tropicana.
(f) 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 2.0341
Dutch Guilders to 1.0 US Dollar.
(g) Reflects the cash proceeds from short term borrowings and long term
borrowings.
(h) Reflects the cash paid to PolyGram shareholders in the Offer.
(i) 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.
(j) 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.
(k) Reflects the short-term borrowings to finance the Offer.
(l) Reflects financing and transaction costs incurred as a result of the
Offer.
(m) Reflects the long-term borrowings to finance the Offer.
(n) Reflects the elimination of historical PolyGram equity.
(o) Reflects the issuance of 47,904,191 Seagram Shares at $41.75 per share to
PolyGram shareholders in the Offer.
(p) Includes PolyGram's film division balances which represent 4.8% of Seagram
pro forma current assets, 1.5% of Seagram pro forma total assets, 4.9% of
Seagram pro forma current liabilities and 2.3% of Seagram pro forma total
liabilities. 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.
(q) 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.
(r) 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.
<PAGE> 9
(s) 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.
(t) 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%.
(u) Reflects the income taxes provided for at the statutory income tax rate.
(v) Reflects the adjustment of interest attributable to minority shareholders
of Universal.
(w) Reflects the removal of Tropicana net income.
(x) The PolyGram financial statements for 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 2.01812 Dutch
Guilders to one US Dollar for the twelve months ended June 30, 1998.
(y) Reflects the amortization, 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 (j).
(z) 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 (j).
(aa) Reflects the additional interest expense resulting from the increased
short-term borrowings of approximately $1,707 million at an average
borrowing rate of 6.25% and increased long-term borrowings of $3.5 billion
at an average borrowing rate of 7.0% 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 as described in notes
(a) and (b).
<PAGE> 10
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
23 Consent of KPMG Accountants N.V., independent accountants.
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to incorporation by reference in the Prospectus constituting part of
the Registration Statement on Form S-4 (333-61535), Registration Statements on
Form S-3 (Numbers 2-99681, 33-42959, 33-42877, 33-67772, 333-4134, 333-4136 and
333-62921) and the Registration Statements on Form S-8 (Numbers 33-27194,
33-2043, 33-49096, 33-60606, 33-99122 and 333-19059) of The Seagram Company Ltd.
of our Report dated February 11, 1998, relating to the Consolidated Balance
Sheets of PolyGram N.V. as of December 31, 1996 and 1997, and the related
Consolidated Statements of Income, Consolidated Statements of Cash Flows and
Consolidated Statements of Changes in Shareholders' Equity for each of the years
in the three-year period ended December 31, 1997 of PolyGram N.V., appearing in
the Annual Report on Form 20-F of PolyGram N.V. for the year ended December 31,
1997.
/s/ KPMG Accountants N.V.
-------------------------
KPMG Accountants N.V.
October 30, 1998
Amsterdam, The Netherlands,
