<PAGE> 1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-2275
THE SEAGRAM COMPANY LTD.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Canada None
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1430 Peel Street, Montreal, Quebec, Canada H3A 1S9
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
514-849-5271
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
No Change
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-- --
As of October 31, 1999, there were 433,506,209 common shares without nominal or
par value issued and outstanding
<PAGE> 2
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income and
Retained Earnings - Quarter Ended
September 30, 1999 and 1998 1
Consolidated Balance Sheet -
September 30, 1999 and June 30, 1999 2
Consolidated Statement of Cash Flows -
Quarter Ended September 30, 1999 and 1998 3
Notes to Consolidated Financial Statements 4-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 4. Submission of Matters to a Vote of Security Holders 20-21
Item 6. Exhibits and Reports on Form 8-K 21
Signatures 22
Exhibit Index 23-24
</TABLE>
<PAGE> 3
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
(United States dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Quarter
Ended September 30,
1999 1998
-------- --------
<S> <C> <C>
Revenues $ 3,643 $ 2,247
Cost of revenues 2,150 1,282
Selling, general and administrative expenses 1,421 786
-------- --------
Operating income 72 179
Interest, net and other 161 41
Gain on sale of businesses 98 --
-------- --------
9 138
Provision for income taxes 110 87
Minority interest 4 6
Equity earnings from unconsolidated companies 65 50
-------- --------
Income (loss) from continuing operations (40) 95
Loss from discontinued Tropicana operations, after tax -- (3)
Gain on sale of discontinued Tropicana operations, after tax -- 1,072
Cumulative effect of change in accounting principle, after tax (84) --
-------- --------
Net income (loss) (124) 1,164
Retained earnings at the beginning of the period 8,707 8,268
Dividends paid (72) (57)
-------- --------
Retained earnings at end of period $ 8,511 $ 9,375
======== ========
Basic earnings per share $ (0.29) $ 3.35
======== ========
Diluted earnings per share $ (0.29) $ 3.33
======== ========
Dividends paid per share $ 0.165 $ 0.165
======== ========
Weighted average shares outstanding (thousands) 432,842 347,360
Dilutive potential common shares (thousands) -- 2,593
-------- --------
Adjusted weighted average shares outstanding (thousands) 432,842 349,953
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
1
<PAGE> 4
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(United States dollars in millions)
<TABLE>
<CAPTION>
September 30, June 30,
1999 1999
------------- --------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,420 $ 1,533
Receivables, net of allowances 3,243 2,985
Inventories 2,624 2,627
Other current assets 1,678 1,736
------- -------
TOTAL CURRENT ASSETS 8,965 8,881
Investments 5,700 5,663
Film costs, net of amortization 1,015 1,251
Music catalogs, artists' contracts and advances 3,384 3,348
Property, plant and equipment, net 3,124 3,158
Goodwill and other intangible assets 11,909 11,871
Other assets 786 839
------- -------
$34,883 $35,011
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings and current portion of long-term debt $ 801 $ 1,053
Payables and accrued liabilities 4,639 4,808
Accrued royalties and participations 2,437 2,285
------- -------
TOTAL CURRENT LIABILITIES 7,877 8,146
Long-term debt 7,561 7,468
Accrued royalties and participations 576 434
Deferred income taxes 2,626 2,698
Other liabilities 1,526 1,499
Minority interest 1,873 1,878
------- -------
TOTAL LIABILITIES 22,039 22,123
------- -------
Shareholders' Equity
Shares without par value 4,606 4,575
Retained earnings 8,511 8,707
Accumulated other comprehensive income (273) (394)
------- -------
TOTAL SHAREHOLDERS' EQUITY 12,844 12,888
------- -------
$34,883 $35,011
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 5
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(United States dollars in millions)
<TABLE>
<CAPTION>
Quarter
Ended September 30,
1999 1998
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Income (loss) from continuing operations.................................................... $ (40) $ 95
Adjustments to reconcile income (loss) from continuing operations to net cash provided:
Depreciation and amortization of assets................................................... 182 75
Amortization of goodwill.................................................................. 86 26
Gain on sale of businesses................................................................ (98) --
Minority interest in income of subsidiaries............................................... 4 6
Equity earnings from unconsolidated companies in excess of dividends received............. (52) (48)
Deferred income taxes..................................................................... 45 52
Other..................................................................................... 13 (6)
Changes in assets and liabilities, net of effect of acquisitions and dispositions:
Receivables, net of allowances.......................................................... (224) (45)
Inventories............................................................................. (82) (83)
Other current assets.................................................................... 176 (197)
Music catalogs, artists' contracts and advances......................................... (87) (75)
Payables and accrued liabilities........................................................ 112 (213)
Other liabilities....................................................................... 3 (36)
------ ------
78 (544)
------ ------
Net cash provided by (used for) operating activities........................................ 38 (449)
------ ------
INVESTING ACTIVITIES
Sale of Tropicana........................................................................... -- 3,288
Sale of Mumm................................................................................ 310 --
Sale of Universal Concerts.................................................................. 190 --
Investment in USANi LLC..................................................................... (242) (231)
Capital Expenditures........................................................................ (120) (98)
Other....................................................................................... (45) (57)
------ ------
Net cash provided by investing activities................................................... 93 2,902
------ ------
FINANCING ACTIVITIES
Dividends paid.............................................................................. (72) (57)
Issuance of shares upon exercise of stock options and conversion of LYONS................... 30 11
Issuance of Adjustable Conversion-rate Equity Security Units................................ 75 --
Issuance of long-term debt.................................................................. -- 20
Repayment of long-term debt................................................................. (4) --
(Decrease) increase in short-term borrowings and current portion of long-term debt.......... (273) 155
------ ------
Net cash (used for) provided by financing activities........................................ (244) 129
------ ------
Net cash (used for) provided by continuing operations....................................... (113) 2,582
------ ------
Net cash used for discontinued operations................................................... -- (3)
------ ------
Net (decrease) increase in cash and cash equivalents........................................ (113) 2,579
Cash and cash equivalents at beginning of period............................................ 1,533 1,174
------ ------
Cash and cash equivalents at end of period.................................................. $1,420 $3,753
====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited interim financial statements have been prepared in
accordance with the requirements of Form 10-Q and, therefore, do not include all
information and notes necessary for a presentation of results of operations,
financial position and cash flows in conformity with U.S.generally accepted
accounting principles (GAAP). These statements should be read in conjunction
with the consolidated financial statements and related notes in the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 1999,
(the Form 10-K). In the opinion of the Company, the unaudited interim
financial statements include all adjustments, comprising only normal
recurring adjustments, necessary for a fair presentation of operating
results. Results of operations for the three months are not necessarily
indicative of those expected for the fiscal year.
Certain prior year amounts have been reclassified to conform with the current
year's presentation.
2. Pro Forma Financial Information
The unaudited condensed pro forma income statement data presented below assume
the PolyGram acquisition and the sale of Tropicana occurred at the beginning of
the 1998 fiscal year. The pro forma information is not necessarily indicative of
the combined results of operations of the Company that would have occurred if
the transactions had occurred on the dates previously indicated, nor is it
necessarily indicative of future operating results of the Company.
<TABLE>
<CAPTION>
QUARTER
ENDED SEPTEMBER 30,
1999 1998
-------- ---------
ACTUAL PRO FORMA
<S> <C> <C>
Millions, except per share amounts
- ----------------------------------
Revenues....................................... $3,643 $3,578
Net loss....................................... $ (124) $ (4)
Loss per share:
Basic........................................ $(0.29) $(0.01)
Diluted...................................... $(0.29) $(0.01)
</TABLE>
3. Sale of Businesses
Disposition of Champagne Operations
On July 2, 1999, the Company completed the sale of its Mumm and Perrier-Jouet
Champagne operations for approximately $310 million in cash. The sale price
approximated book value and therefore no gain or loss was recognized. Through
agreement with the purchaser, Seagram has retained global distribution rights
for Mumm and Perrier-Jouet Champagnes for a ten-year period following the sale.
Disposition of Concert Operations
On September 10, 1999, the Company completed the sale of Universal Concerts,
Inc. for proceeds of approximately $190 million. This transaction resulted in a
pretax gain of $98 million ($55 million after tax).
4
<PAGE> 7
4. Restructuring Charge and Exit Activities
Restructuring Charge
Management developed and committed to a formal plan that was communicated to
employees to restructure its music and filmed entertainment operations after the
acquisition of PolyGram. This plan resulted in a fiscal 1999 pre-tax
restructuring charge of $405 million. The charge related entirely to the
Company's existing global music and film production, financial, marketing and
distribution operations and includes severance, elimination of duplicate
facilities and labels, termination of artists' and distribution contracts and
costs related to exiting film production arrangements and properties in
development. The major components of the charge were:
<TABLE>
<CAPTION>
Filmed
Millions Music Entertainment Total
- -------- ----- ------------- -----
<S> <C> <C> <C>
Severance and other
employee-related costs $111 $15 $126
Facilities and labels 124 4 128
Contract termination and
other costs 78 73 151
---- --- ----
$313 $92 $405
---- --- ----
</TABLE>
The severance and other employee related costs provided for a reduction of
approximately 1,200 employees worldwide related to facility closures, duplicate
position eliminations and streamlining of operations related to cost reduction
initiatives. The facilities and labels elimination costs provided for domestic
and international lease and label terminations and the write-off of the net book
value of furniture, fixtures and equipment and leasehold improvements for
vacated properties. The costs of contract terminations were comprised primarily
of artists' contracts, distribution contracts, story property commitments and
filmed entertainment term deals. The cash and non-cash elements of the
restructuring charge approximated $318 million and $87 million, respectively.
The utilization of the restructuring charge through September 30, 1999 is as
follows:
<TABLE>
<CAPTION>
Original Utilized Balance at
Millions Accrual Cash Non-cash September 30, 1999
- -------- -------- ---- -------- ------------------
<S> <C> <C> <C>
Severance and other
employee-related costs $126 $ 57 $ 3 $ 66
Facilities and labels 128 5 14 109
Contract termination and
other costs 151 45 9 97
---- ---- --- ----
$405 $107 $26 $272
---- ---- --- ----
</TABLE>
As part of the restructuring initiative, approximately 985 employees have
separated from the Company as of September 30, 1999. The Company anticipates
that all restructuring activities will be substantially completed by June 30,
2000.
Accrual for Acquisition-Related Exit Activities
In connection with the integration of PolyGram and Seagram, management developed
a formal exit activity plan that was committed to by management and communicated
to employees shortly after the acquisition was consummated. In fiscal 1999, a
$490 million accrual for exit activities was established related to the acquired
PolyGram business. The accrual consisted principally of facility elimination
costs, contract terminations and the severance or relocation of approximately
1,700 employees. As at September 30, 1999, approximately $215 million of the
accrual had been utilized and approximately 1,235 employees had been terminated.
5
<PAGE> 8
5. Investment in DuPont and USAi
At September 30, 1999, the Company owned 16.4 million shares of the outstanding
common stock of E.I. du Pont de Nemours and Company (DuPont). The Company
accounts for the investment at market value, which was $995 million at September
30, 1999. The underlying historical book value of the DuPont shares is $187
million.
At September 30, 1999, the Company owned 9.1 million shares of the outstanding
common stock of USA Networks, Inc. (USAi). The investment, which is accounted
for at market value ($352 million at September 30, 1999), has an underlying
cost of $211 million. At September 30, 1999, the Company also owned 6.7 million
shares of USAi Class B common stock which is carried at its historical cost of
$136 million.
6. Supplementary Financial Statement Information
<TABLE>
<CAPTION>
September 30, June 30,
Millions 1999 1999
- -------- ------------- --------
<S> <C> <C>
INVENTORIES
Beverages $ 2,128 $ 2,233
Materials, supplies and other 496 394
------- -------
$ 2,624 $ 2,627
======= =======
PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, at cost $ 4,562 $ 4,485
Accumulated depreciation (1,438) (1,327)
------- -------
$ 3,124 $ 3,158
======= =======
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
September 30,
Millions 1999 1998
- -------- -------- --------
<S> <C> <C>
EXCISE TAXES (included in revenues
and cost of revenues) $203 $183
==== ====
</TABLE>
7. Comprehensive Income (Loss)
The components of the Company's total comprehensive income (loss) were as
follows:
<TABLE>
<CAPTION>
Quarter
Ended September 30,
MILLIONS 1999 1998
- -------- -------- --------
<S> <C> <C>
Net income (loss) $(124) $1,164
Currency translation adjustments 209 117
Unrealized holding loss in equity
security, net of tax (88) (222)
----- ------
Total comprehensive income (loss) $ (3) $1,059
===== ======
</TABLE>
6
<PAGE> 9
8. Long-Term Debt and Debt Guarantees
Joseph E. Seagram & Sons, Inc. (JES), the Company's principal U.S. spirits and
wine subsidiary, has outstanding debt securities guaranteed by the Company. JES
issued Liquid Yield Option Notes (LYONs), which are zero coupon notes with no
interest payments due until maturity on March 5, 2006. Each $1,000 face amount
LYON may be converted, at the option of the holder, into 18.44 of the Company's
common shares (214,073 shares at September 30, 1999). The Company has guaranteed
the LYONs on a subordinated basis.
In addition, the Company has unconditionally guaranteed JES's 5.79% Senior Notes
due 2001, 6.25% Senior Notes due 2001, 6.4% Senior Notes due 2003, 6.625% Senior
Notes due 2005, 8.375% Debentures due 2007, 7% Debentures due 2008, 6.8% Senior
Notes due 2008, 8.875% Debentures due 2011, 9.65% Debentures due 2018, 7.5%
Senior Debentures due 2018, 9% Debentures due 2021, 7.6% Senior Debentures due
2028, 8% Quarterly Income Debt Securities due 2038 (QUIDS) and 7.5% Adjustable
Conversion-rate Equity Security Units.
Summarized financial information for JES and its subsidiaries is presented
below. Separate financial statements and other disclosures related to JES are
not provided because management has determined that such information does not
provide additional meaningful information to holders of JES debt securities.
<TABLE>
<CAPTION>
Quarter
Ended September 30,
MILLIONS 1999 1998
- -------- ------ ------
<S> <C> <C>
Revenues $558 $506
Cost of revenues $348 $320
Net income $ 64 $ 40
</TABLE>
<TABLE>
<CAPTION>
September 30, June 30,
1999 1999
------- -------
<S> <C> <C>
Current assets $ 1,791 $ 1,674
Noncurrent assets 18,471 18,602
------- -------
$20,262 $20,276
======= =======
Current liabilities $ 858 $ 1,099
Noncurrent liabilities 10,257 10,014
Shareholders' equity 9,147 9,163
------- -------
$20,262 $20,276
======= =======
</TABLE>
9. Earnings Per Share and Common Shares
At September 30, 1999, 53,455,506 common shares were potentially issuable upon
the conversion of the LYONs, the exercise of employee stock options, conversion
of deferred share units and the early settlement of the contracts to purchase
common shares under the Adjustable Conversion-rate Equity Security Units. Basic
net income per share was based on the following weighted average number of
shares outstanding during the quarters ended September 30, 1999 -- 432,842,035
and September 30, 1998 -- 347,359,705. Diluted net income per share was based on
the following weighted average number of shares outstanding during the quarter
ended September 30, 1998 -- 349,953,080. Average shares of 7,146,720 were not
included in the computation of diluted net income per share in the quarter ended
September 30, 1999 because to do so would have been anti-dilutive.
7
<PAGE> 10
In the quarter ended September 30, 1999, the Company issued 809,058 shares upon
the exercise of employee stock options, deferred compensation and the conversion
of LYONs.
10. Business Segment Information
The Company's four reportable segments are music, filmed entertainment,
recreation and other, and spirits and wine. Each of these reportable segments is
a strategic business unit that offers different products and services that are
marketed through different channels. They are managed separately because of
their unique customers, technology, marketing and distribution requirements. The
Company evaluates its segments and allocates resources to them based on several
performance measures, including operating earnings before interest, taxes,
depreciation and amortization from consolidated companies (EBITDA). While not a
standard measurement under GAAP, the Company believes EBITDA is an appropriate
measure of operating performance, given the goodwill associated with the
Company's acquisitions. However, EBITDA could be defined differently by other
companies and should be considered in addition to, not as a substitute for,
other measures of financial performance including revenues and operating income.
There are no intersegment revenues; however, corporate headquarters allocates a
portion of its costs to each of its operating segments. The Company does not
allocate interest income, interest expense, income taxes or unusual items to
segments.
Business Segment Data
<TABLE>
<CAPTION>
Filmed Recreation Spirits
Millions Music Entertainment and Other and Wine Corporate Total
- -------- ------ ------------- ---------- -------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
SEPTEMBER 30, 1999
Revenues $1,412 $873 $209 $1,149 $ -- $3,643
EBITDA $ 185 $(38) $ 49 $ 156 $ -- $ 352
Depreciation and
amortization (189) (21) (25) (31) (2) (268)
Corporate expenses -- -- -- -- (12) (12)
------ ---- ---- ------ ---- ------
Operating income (loss) $ (4) $(59) $ 24 $ 125 $(14) $ 72
====== ==== ==== ====== ==== ======
Capital expenditures $ 52 $ 19 $ 14 $ 35 $ -- $ 120
SEPTEMBER 30, 1998
Revenues $ 420 $618 $188 $1,021 $ -- $2,247
EBITDA $ 21 $ 93 $ 34 $ 144 $ -- $ 292
Depreciation and
amortization (31) (18) (20) (30) (2) (101)
Corporate expenses -- -- -- -- (12) (12)
------ ---- ---- ------ ---- ------
Operating income (loss) $ (10) $ 75 $ 14 $ 114 $(14) $ 179
====== ==== ==== ====== ==== ======
Capital expenditures $ 12 $ 19 $ 34 $ 33 $ -- $ 98
</TABLE>
Geographic Data
The following table presents revenues by geographic area for the quarters ended
September 30, 1999 and 1998. Revenues are classified based upon the location of
the customer. In addition to Canada, the Company's country of domicile,
individual countries are specified if revenues exceed 10 percent of the total.
8
<PAGE> 11
<TABLE>
<CAPTION>
MILLIONS Revenues
- -------- --------
<S> <C>
SEPTEMBER 30, 1999
United States $ 1,780
United Kingdom 379
Canada 113
Other countries 1,371
---------
$ 3,643
=========
SEPTEMBER 30, 1998
United States $ 1,296
United Kingdom 164
Canada 74
Other countries 713
---------
$ 2,247
=========
</TABLE>
11. New Accounting Guidance
On July 1, 1999 the Company adopted the Accounting Standards Executive Committee
of the American Institute of Certified Public Accountants (AcSEC) Statement of
Position (SOP) 98-5, Reporting on the Costs of Start-Up Activities, which
required that costs of start-up activities be expensed as incurred. The adoption
of SOP 98-5 resulted in an $84 million after-tax charge in the quarter ended
September 30, 1999, which was recorded as a cumulative effect of a change in
accounting principle. The cumulative effect is principally related to costs
associated with the expansion of our recreation operations.
9
<PAGE> 12
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
COMPARABILITY
The discussion presented below includes an analysis of total Seagram and
business segment results prepared in accordance with GAAP. Supplemental
financial data includes operating earnings before interest, taxes,
depreciation and amortization, referred to as EBITDA. Because of the
significant goodwill associated with our acquisitions, we believe EBITDA is an
appropriate measure of operating performance. However, you should note that
EBITDA is not a substitute for operating income, net income, cash flows and
other measures of financial performance as defined by GAAP and may be defined
differently by other companies. Investments in companies that are not
consolidated with the results of Seagram are reported as "equity earnings
from unconsolidated companies". This discussion includes, as supplemental
financial data, information about our share of the results of revenues and
EBITDA related to these investments.
To enhance comparability, financial information for the quarter ended September
30, 1998 is also presented on a pro forma basis, which illustrates the effect of
the acquisition of PolyGram and the disposition of Tropicana as if the
transactions had occurred at the beginning of the 1998 fiscal year. We believe
that pro forma results represent meaningful comparative information for
assessing earnings trends because the pro forma results include comparable
operations in each period presented. The discussion of the recreation and other
and spirits and wine business segments does not include pro forma comparisons,
since the pro forma adjustments did not impact those segments. The pro forma
results are not necessarily indicative of the combined results that would have
occurred had the events actually occurred at the beginning of our 1998 fiscal
year. We believe this information will help you to better understand our
business results.
Management's discussion and analysis of our results of operations and liquidity
should be read in conjunction with the accompanying financial statements, as
well as the consolidated financial statements and related notes in the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 1999.
10
<PAGE> 13
RESULTS OF OPERATIONS
CONSOLIDATED RESULTS
<TABLE>
<CAPTION>
Three Months Ended September 30,
1999 1998 1998
U S dollars in millions, except per share amounts (Actual) (Actual) (Pro forma)
<S> <C> <C> <C>
REVENUES $ 3,643 $ 2,247 $ 3,578
---------- --------- ------------
OPERATING INCOME 72 179 111
Interest, net and other 161 41 156
Gain on sale of businesses 98 -- --
Provision for income taxes 110 87 13
Minority interest 4 6 (6)
Equity earnings from unconsolidated companies 65 50 48
---------- --------- ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS (40) 95 (4)
Loss from discontinued Tropicana operations, after tax -- (3) --
Gain on sale of discontinued Tropicana operations, after tax -- 1,072 --
Cumulative effect of change in accounting principle, after tax (84) -- --
---------- --------- ------------
NET INCOME (LOSS) $ (124) $ 1,164 $ (4)
========== ========= ============
EARNINGS PER SHARE - BASIC
Income (loss) from continuing operations $ (0.09) $ 0.27 $ (0.01)
Loss from discontinued operations -- (0.01) --
Gain on sale of discontinued operations -- 3.09 --
Cumulative effect of accounting change (0.20) -- --
---------- --------- ------------
NET INCOME (LOSS) $ (0.29) $ 3.35 $ (0.01)
========== ========= ============
EARNINGS PER SHARE - DILUTED
Income (loss) from continuing operations $ (0.09) $ 0.27 $ (0.01)
Loss from discontinued operations -- (0.01) --
Gain on sale of discontinued operations -- 3.07 --
Cumulative effect of accounting change (0.20) -- --
---------- --------- ------------
NET INCOME (LOSS) $ (0.29) $ 3.33 $ (0.01)
========== ========= ============
Net cash provided by (used for) operating activities $ 38 $ (449)
Net cash (used for) provided by investing activities $ 93 $ 2,902
Net cash (used for) provided by financing activities $ (244) $ 129
SUPPLEMENTAL FINANCIAL DATA:
REVENUES
Consolidated companies $ 3,643 $ 2,247 $ 3,578
Unconsolidated companies 639 545 545
---------- --------- ------------
$ 4,282 $ 2,792 $ 4,123
========== ========= ============
EBITDA
Consolidated companies $ 352 $ 292 $ 404
Unconsolidated companies 142 123 123
---------- --------- ------------
494 415 527
Adjustment for unconsolidated companies (142) (123) (123)
Depreciation and amortization (268) (101) (281)
Corporate (12) (12) (12)
---------- --------- ------------
OPERATING INCOME $ 72 $ 179 $ 111
========== ========= ============
</TABLE>
11
<PAGE> 14
ACTUAL
Revenues increased 62 percent in the quarter ended September 30, 1999 compared
to the prior-year period, primarily reflecting the acquisition of PolyGram.
Operating income declined from $179 million to $72 million largely as a result
of higher amortization and depreciation expense associated with the acquisition.
EBITDA from consolidated companies increased 21 percent to $352 million,
reflecting strong performances by our music, recreation and spirits and wine
businesses, partially offset by results in our film business. The first quarter
results include a $98 million gain related to the sale of our concert
operations. The net gain, after tax, was $55 million. Proceeds from the concert
business sale approximated $190 million. During the quarter we also sold our
Champagne operations for $310 million, an amount which approximated the book
value of those operations. A net loss of $124 million or $0.29 per share (basic
and diluted) was incurred in the quarter, which included the $55 million
after-tax gain on the sale of our concert operations and a $84 million
cumulative effect of an accounting change related to start-up activities.
Excluding these items, the net loss was $95 million or $0.22 per share (basic
and diluted). In the prior-year quarter, net income of $1,164 million or $3.35
per basic share and $3.33 per diluted share included a $1.1 billion after-tax
gain on the sale of Tropicana. Excluding the discontinued Tropicana operations,
net income was $95 million or $0.27 per share (basic and diluted).
PRO FORMA
On a pro forma basis, revenues increased two percent in the quarter as compared
to the prior-year period. Operating income declined from $111 million to $72
million and EBITDA from consolidated companies declined 13 percent as the filmed
entertainment performance more than offset strong growth in all other business
segments.
BUSINESS SEGMENT RESULTS
MUSIC
<TABLE>
<CAPTION>
Three Months Ended September 30,
1999 1998 1998
U.S. dollars in millions (Actual) (Actual) (Pro forma)
<S> <C> <C> <C>
REVENUES $ 1,412 $ 420 $ 1,512
OPERATING LOSS $ (4) $ (10) $ (38)
Equity earnings from unconsolidated companies $ 3 $ 4 $ 2
SUPPLEMENTAL FINANCIAL DATA:
REVENUES
Consolidated companies $ 1,412 $ 420 $ 1,512
Unconsolidated companies 27 33 33
--------- --------- ---------
$ 1,439 $ 453 $ 1,545
========= ========= =========
EBITDA
Consolidated companies $ 185 $ 21 $ 165
Unconsolidated companies 3 5 5
--------- --------- ---------
188 26 170
Adjustment for unconsolidated companies (3) (5) (5)
Depreciation and amortization (189) (31) (203)
--------- --------- ---------
OPERATING LOSS $ (4) $ (10) $ (38)
========= ========= =========
</TABLE>
CONSOLIDATED OPERATIONS
Actual -- Revenues and EBITDA show significant increases
reflecting the acquisition of PolyGram. An operating loss of $4 million was
incurred in the quarter, compared to a loss of $10 million last year. Of the
$1,412 million total music
12
<PAGE> 15
revenues, 44 percent were generated in North America, the European and African
markets accounted for 41 percent, Asia Pacific contributed 10 percent and Latin
America generated the remaining 5 percent. Our market share continues to be
strong internationally in key markets, including France, the U.K., Germany and
Brazil and remains strong in the U.S., where we maintain a leading market
position. Major album sales in the quarter included those by Shania Twain, Limp
Bizkit, Boyzone, Nine Inch Nails and the soundtrack from the Universal feature
film Notting Hill. In the second quarter, we expect significant sales from such
artists as Shania Twain, Enrique Iglesias and Bryan Adams, among others.
Pro forma -- Revenues declined seven percent in the quarter primarily due to the
impact of unfavorable foreign exchange, divested operations and our effort to
reduce unprofitable acts from our artist roster. Operating income improved from
a pro forma loss of $38 million in the prior-year first quarter to a loss of $4
million in the current quarter. EBITDA increased 12 percent compared with a very
strong quarter last year. Excluding the impact of foreign exchange, EBITDA would
have increased 18 percent. These improvements are due to strong chart positions,
particularly in North America and Europe. Our cost savings program is
progressing as anticipated as we proceed with the integration of PolyGram.
Investments in electronic commerce (e-CAT) continue, as we believe that emerging
technologies will be important to the music business.
UNCONSOLIDATED OPERATIONS
The equity in earnings from unconsolidated companies, consisting primarily of
the results of certain concert operations, was $3 million for the quarter, a
decrease of $1 million compared to the same period in 1998. Concert operations
were sold during September 1999.
FILMED ENTERTAINMENT
<TABLE>
<CAPTION>
Three Months Ended September 30,
1999 1998 1998
U.S. dollars in millions (Actual) (Actual) (Pro forma)
<S> <C> <C> <C>
REVENUES $ 873 $ 618 $ 857
OPERATING INCOME (LOSS) $ (59) $ 75 $ 35
Equity earnings from unconsolidated companies $ 63 $ 28 $ 28
SUPPLEMENTAL FINANCIAL DATA:
REVENUES
Consolidated companies $ 873 $ 618 $ 857
Unconsolidated companies 441 407 407
--------- --------- ---------
$ 1,314 $ 1,025 $ 1,264
========= ========= =========
EBITDA
Consolidated companies $ (38) $ 93 $ 61
Unconsolidated companies 97 78 78
--------- --------- ---------
59 171 139
Adjustment for unconsolidated companies (97) (78) (78)
Depreciation and amortization (21) (18) (26)
--------- --------- ---------
OPERATING INCOME (LOSS) $ (59) $ 75 $ 35
========= ========= =========
</TABLE>
CONSOLIDATED OPERATIONS
Actual -- Filmed Entertainment revenues increased 41 percent in the quarter
reflecting the strong performance of The Mummy, Notting Hill and American Pie.
Despite this performance, operating income decreased from income of $75 million
to a loss of $59 million in the current quarter. EBITDA also declined from $93
million to a loss of $38 million in the current quarter. Disappointing box
office performance of Mystery Men, Dudley Do Right and For Love of The
13
<PAGE> 16
Game, as well as several films released earlier in the calendar year, more than
offset the strong performance of the above. Television results also declined
reflecting lower sales of library product.
We believe the movie slate for the remainder of the calendar year is strong,
with releases including: The Bone Collector, End of Days and Man on the Moon.
While our film business demonstrates continued improvement and we anticipate
improved box office performance in fiscal year 2000, we expect that it will be
several more quarters before our film business returns to profitability.
Pro forma - Pro forma Filmed Entertainment includes the results of PolyGram
Filmed Entertainment. Revenues increased two percent in the quarter, largely
driven by higher motion picture revenues from The Mummy and American Pie.
Operating income and EBITDA losses in the quarter are discussed above.
UNCONSOLIDATED OPERATIONS
Unconsolidated companies principally include USANi LLC, Loews Cineplex
Entertainment Corporation, United Cinemas International Multiplex B.V. and
Cinema International Corporation. Led by significant improvement in operating
results in the businesses of USANi LLC and Loews Cineplex, the equity in
earnings from unconsolidated companies increased from $28 million in the first
quarter of the prior year to $63 million in the current quarter. Revenues from
unconsolidated companies increased eight percent in the quarter while EBITDA
increased 24 percent.
RECREATION
<TABLE>
<CAPTION>
Three Months Ended
September 30,
U.S. dollars in millions 1999 1998
<S> <C> <C>
REVENUES $ 209 $ 188
OPERATING INCOME $ 24 $ 14
Equity earnings (losses) from unconsolidated
companies $ (1) $ 18
SUPPLEMENTAL FINANCIAL DATA:
REVENUES
Consolidated companies $ 209 $ 188
Unconsolidated companies 139 87
----- -----
$ 348 $ 275
===== =====
EBITDA
Consolidated companies $ 49 $ 34
Unconsolidated companies 40 39
----- -----
89 73
Adjustment for unconsolidated companies (40) (39)
Depreciation and amortization (25) (20)
----- -----
OPERATING INCOME $ 24 $ 14
===== =====
</TABLE>
CONSOLIDATED OPERATIONS
Revenues related to our recreation and other business segment increased 11
percent in the quarter, operating income increased 71 percent and EBITDA
increased 44 percent. These improvements reflect increased management fees from
the expansion of Universal Studios Escape, improved performance at Universal
Studios Hollywood and a full quarter of Wet'n Wild results, which was purchased
in September 1998. Universal Studios Hollywood contributed to EBITDA
14
<PAGE> 17
growth through improved attendance and aggressive cost management. Paid
attendance increased two percent, driven, in part, by the opening of Terminator
2:3D in May, with total per capita spending increasing three percent.
UNCONSOLIDATED OPERATIONS
Equity in earnings from unconsolidated companies declined from income of $18
million in the first quarter of last year to a loss of $1 million this year,
partly due to the pre-opening development costs at Universal Studios Japan. In
addition, the prior year comparatives included a gain recognized by Sega
GameWorks on the sale of its game sales operation to Sega. Revenues from
unconsolidated companies increased 60 percent and EBITDA increased three
percent. At Universal Studios Escape, the opening of Universal Studios Islands
of Adventure, Hard Rock Live and CityWalk contributed to a 31 percent EBITDA
increase, a 67 percent increase in paid attendance and a three percent increase
in total per capita spending. The Portofino Bay Hotel which is owned by a joint
venture in which we have a 25 percent interest, opened in September to strong
reviews and strong advance bookings.
SPIRITS AND WINE
<TABLE>
<CAPTION>
Three Months Ended
September 30,
U.S. dollars in millions 1999 1998
<S> <C> <C>
REVENUES $1,149 $1,021
OPERATING INCOME $ 125 $ 114
Equity earnings from unconsolidated
companies $ -- $ --
SUPPLEMENTAL FINANCIAL DATA:
REVENUES
Consolidated companies $1,149 $1,021
Unconsolidated companies 32 18
------ ------
$1,181 $1,039
====== ======
EBITDA
Consolidated companies $ 156 $ 144
Unconsolidated companies 2 1
------ ------
158 145
Adjustment for unconsolidated companies (2) (1)
Depreciation and amortization (31) (30)
------ ------
OPERATING INCOME $ 125 $ 114
====== ======
</TABLE>
CONSOLIDATED OPERATIONS
Revenues increased 13 percent, operating income increased 10 percent and EBITDA
increased eight percent in the first quarter. Excluding the results of the
Champagne operations, operating income increased 19 percent and EBITDA increased
16 percent. Operating income (excluding the Champagne operations) as a
percentage of revenues for total spirits and wine improved from 10.3 percent
last year to 10.9 percent in the current quarter. The improved results were
driven by continued momentum in the global spirits and wine business and volume
growth across all four geographic regions. Total spirits and wine case volumes,
including unconsolidated companies, increased 11 percent in the quarter. Volumes
in North America were very strong partially reflecting millennium sales and the
timing of price increases. Latin American volumes increased six percent
primarily due to growth in Mexico, driven by Don Julio Tequila, and in
Venezuela. Volumes in Asia Pacific increased 17 percent as the region continues
to demonstrate substantial recovery, notably in Korea and Greater China. Europe
and Africa reported 13 percent volume growth, led by Germany, Spain, France,
Italy and the U.K. Globally, volumes for Crown Royal, Captain Morgan and Chivas
Regal increased 39, 21 and nine percent, respectively. ABSOLUT VODKA, which is
owned by V&S Vin &
15
<PAGE> 18
Sprit AB and distributed by us in major international markets, had a 12 percent
increase in volume driven by the successful introduction of ABSOLUT MANDRIN in
the United States. Volumes of Royal Salute increased 16,000 cases or 153
percent, reflecting improvement in Asia. Sales of Don Julio, the super premium
Tequila that joined the spirits and wine portfolio in May 1999, got off to a
strong start in both the United States and Mexico. Case volumes of Martell
declined 11 percent primarily due to the timing of shipments in Europe.
In the quarter, cost of goods sold as a percentage of revenues increased to 54.7
percent from 51.3 percent in the prior year quarter. Selling, general and
administrative expenses as a percentage of revenues decreased to 33.3 percent
from 37.5 percent partially due to the timing and reduction of overhead
spending. At constant foreign exchange rates, global marketing expense increased
30 percent in the quarter, with a focus on our core brands in anticipation of
heightened trade activity related to the millennium. Brand equity build
increased approximately 50 percent at constant exchange rates as we continued to
invest for future growth by supporting our brands in key markets.
UNCONSOLIDATED OPERATIONS
The equity in earnings of unconsolidated companies remained unchanged
year-on-year at breakeven. Revenues from unconsolidated companies increased over
75 percent in the quarter and EBITDA doubled to $2 million. In the current
fiscal year there is only one spirits and wine unconsolidated company,
Kirin-Seagram Limited in Japan. In fiscal 1999, the unconsolidated companies
also included Seagram (Thailand) Limited for nine months to March 1999 at which
time we increased our investment in Thailand and began to consolidate that
affiliate.
OTHER INCOME AND EXPENSES
Corporate expenses were $12 million for the quarter, unchanged from the prior
year. Interest, net and other in the quarter included net interest expense of
$167 million, offset by $6 million of dividend income from DuPont. The increase
of $120 million from the prior year reflects the interest costs associated with
funding the PolyGram acquisition. On a pro forma basis, interest, net and other
was comparable with the $156 million reported for the first quarter of fiscal
1999.
TAXES
The first quarter tax provision was calculated using an estimated annual
effective rate, excluding the tax on the sale of concert operations, of negative
80 percent. This effective rate is adversely affected by the non-deductible
amortization associated with our acquisitions. Excluding this non-deductible
amortization, the effective annual rate would be approximately 30 percent.
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
During the quarter we recorded an $84 million after-tax charge related to the
cumulative effect of a change in accounting principle. The change relates to the
treatment of costs related to start-up activities, which now must be expensed as
incurred. The cumulative effect is principally related to costs associated with
the expansion of our recreation operations. Beginning July 1, 1999, start-up
costs are expensed as incurred and are not anticipated to have a significant
impact on our financial results.
LIQUIDITY, CAPITAL RESOURCES AND MARKET RISK
Financial Position -- Current assets of $9.0 billion at September 30, 1999 were
$84 million higher than at June 30, 1999, a variance of less than one percent.
Current liabilities decreased $200 million to $7.9 billion at September 30,
1999, primarily due to a decrease in short-term borrowings. Shareholders' equity
was $12.8 billion at September 30, 1999, $44 million below June 30, 1999. Our
total long- and short-term debt, net of cash and short-term investments,
decreased to $6.9 billion at September 30, 1999 from $7.0 billion at June 30,
1999. Our ratio of net debt to total capitalization (including minority
interest) remained unchanged at 32 percent.
16
<PAGE> 19
Cash Flows from Operating Activities -- Net cash provided by operating
activities totaled $38 million in the quarter, an increase of $487 million from
the first quarter of fiscal 1999. Contributing to this favorable variance were
lower working capital requirements partially offset by a reduction in income
from continuing operations.
Cash Flows from Investing Activities -- Net cash provided by investing
activities was $93 million in the quarter. The $310 million proceeds from the
sale of Champagne operations together with $190 million proceeds from the sale
of Universal Concerts Inc., were partially offset by an additional $242 million
investment in USANi LLC, capital expenditures of $120 million and other
investments of $45 million. The capital expenditures by business segment were
Music $52 million, Filmed Entertainment $19 million, Recreation $14 million, and
Spirits and Wine $35 million. In the first quarter of fiscal 1999, the net cash
provided by investing activities was $2.9 billion comprised of $3.3 billion
pre-tax proceeds from the Tropicana disposition partially offset by an
additional investment in USANi LLC of $231 million, capital expenditures of $98
million and other investments of $57 million. The capital expenditures by
business segment were Music $12 million, Filmed Entertainment $19 million,
Recreation $34 million, and Spirits and Wine $33 million.
Cash Flows from Financing Activities -- Financing activities in the quarter used
$244 million. A $273 million decrease in short-term borrowings, a $4 million
repayment of long-term debt and dividend payments of $72 million were partially
offset by a $75 million supplemental issuance of Adjustable Conversion-rate
Equity Security Units and a $30 million issuance of shares upon exercise of
stock options and conversion of LYONs. In the first quarter of fiscal 1999,
financing activities provided $129 million primarily due to a $155 million
increase in short-term borrowings, a $20 million issuance of long-term debt and
a $11 million issuance of shares upon exercise of stock options and conversion
of LYONs, partially offset by dividend payments of $57 million.
Working Capital -- Our working capital position is reinforced by available
credit facilities of approximately $7.6 billion. These facilities are used to
support our commercial paper borrowings and are available for general corporate
purposes. We believe our access to external capital resources together with
internally generated liquidity will be sufficient to satisfy existing
commitments and plans, and to provide adequate financial flexibility.
Evolving technology allows consumers to experience music in new electronic
mediums and formats. Through a variety of strategic alliances and independent
initiatives, we continue to invest resources in the technology and electronic
commerce areas.
International Exchange - We employ a variance/covariance approach in our
calculation of Value at Risk (VaR), which measures the potential losses in fair
value or earnings that could arise from changes in market conditions, using a 95
percent confidence level and assuming a one-day holding period. The VaR, which
is the potential loss in fair value, attributable to those interest rate
sensitive exposures associated with our exposure to interest rates at September
30, 1999 was $38 million. This exposure is primarily related to long-term debt
with fixed interest rates. The VaR, which is the potential loss in earnings
associated with our exposure to foreign exchange rates, primarily to hedge cash
flow exposures denominated in foreign currencies, was $12 million at September
30, 1999. These exposures include intercompany trade accounts, service fees,
intercompany loans and third party debt. We are subject to other foreign
exchange market risk exposure as a result of non-financial instrument
anticipated foreign currency cash flows which are difficult to reasonably
predict, and have therefore not been included in the Company's VaR calculation.
YEAR 2000 ISSUE
During the quarter, we have made continued progress in our efforts to minimize
potential business disruption associated with the Year 2000 (Y2K) issue.
Modification or replacement of time or date sensitive information technology
(IT) is necessary so that the affected systems will properly recognize dates
beyond December 31, 1999. If not corrected, certain systems may fail or
miscalculate data. Failures or miscalculations may not only result from IT
systems, but from non-IT systems, such as equipment that relies on embedded
technology. Risks associated with the Y2K issue also include the potential
impact of third parties on our business, including vendors and government
services. The Y2K issue could impact all areas of our business, including the
production and distribution of music, film and beverage products, operation of
theme parks and retail stores. Our overall plan to address the Y2K issue is
described more fully in our 1999 Annual Report on Form 10-K. The following is
an update of the information included therein.
Assessment - Our assessment phase is now complete.
Remediation, Testing and Validation - Of the approximate 4,100 critical systems
identified during the assessment phase of our program, remediation, testing and
validation of 97 percent of the systems is now considered complete. The
17
<PAGE> 20
remaining three percent of critical systems are currently in the remediation
stage, with completion of all critical systems, including testing and
validation, expected by November 30, 1999.
Third-Party Vendors and Customers - Our assessment of the Y2K readiness of
critical third-party vendors, customers, governments and financial institutions
is now complete. We are continuing to evaluate the Y2K readiness of
non-critical third parties.
Contingency Planning - In addition to assessment, remediation and testing of
systems, we are in an ongoing process of developing contingency plans for all
business processes which have been identified as critical. All such elements,
including dependencies on third parties, have been identified, and we expect
detailed contingency plans will be in place by December 31, 1999.
Of our anticipated $75 million in costs related to assessment and remediation of
IT and non-IT systems, 60 percent of the estimated costs have been incurred as
of September 30, 1999. Our estimated costs do not include the costs of
redeployed internal resources or the costs of internally developed software or
hardware which is being replaced or developed in the normal course of business.
We continue to expect that certain remediation efforts related to non-critical
systems and contingency planning efforts will extend well into 2000. All costs
associated with our plan will be funded through operations.
The costs of the Company's Y2K remediation efforts are based upon management's
best estimates, which require assumptions about future events, availability of
resources and personnel, third-party remediation actions, and other factors.
There are no assurances that these estimates will be accurate, and actual
amounts may differ materially based on a number of factors, including the
availability and cost of resources to undertake remediation activities and the
scope and nature of the work required to complete remediation.
We expect that the Y2K issue will not pose significant operational problems for
us. While we have completed substantially all phases of our Y2K program relating
to critical systems, we are dependent on third parties whose progress is not
within our control. As with many multinational companies, we continue to believe
that our most likely "worst case" scenario involves potential disruptions in
services from critical third- parties, such as governments, vendors, customers
and financial institutions. Such failures could have a material adverse effect
on our operations and at the present time we cannot estimate the likelihood or
potential costs of such failures. In addition, while we believe our Y2K program
will minimize the likelihood of significant business disruptions, delays in the
implementation of new systems, a failure to fully identify all embedded
technology potentially affected by the Y2K issues and unexpected failures of
critical internal systems also could have a material adverse effect on our
operations.
Statements concerning Y2K issues which contain more than historical
information may be considered forward-looking statements, which are subject to
risks and uncertainties. Actual results may differ materially from those
expressed in the forward-looking statements, and our Y2K discussion should be
read in conjunction with our statement on forward-looking statements which
appears below.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This report contains statements that are "forward-looking statements," in that
they include statements regarding the intent, belief or current expectations of
our management with respect to our future operating performance. These
forward-looking statements are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. All statements that
express forecasts, expectations and projections with respect to future matters,
including the launching or prospective development of new business initiatives
and products, anticipated music or motion picture releases, internet or theme
park projects, and Y2K remediation efforts and anticipated cost savings or
synergies are forward-looking statements within the meaning of the Act. Such
forward-looking statements are not guarantees of future performance. Actual
results may differ materially from our forward-looking statements as a result of
certain risks and uncertainties, many of which are outside of our control,
including but not limited to:
- - Changes in global and localized economic and political conditions which
may affect attendance and spending at our theme parks, purchases of our
consumer products and the performance of our filmed entertainment
operations.
18
<PAGE> 21
- - Changes in financial and equity markets, including significant interest
rate and foreign currency rate fluctuations, which may affect our access
to, or increase the cost of financing for our operations and investments.
- - Increased competitive product and pricing pressures and unanticipated
actions by competitors that could impact our market share, increase
expenses and hinder our growth potential.
- - Changes in consumer preferences and tastes, which may affect all our
business segments.
- - Adverse weather conditions or natural disasters, such as hurricanes and
earthquakes, which may, among other things, impair performance at our
theme parks in California, Florida and Spain.
- - Legal and regulatory developments, including changes in accounting
standards, taxation requirements, such as the impact of excise tax
increases with respect to the spirits and wine business, and environmental
laws.
- - Technological developments that may affect the distribution of our
products or create new risks to our ability to protect our intellectual
property rights.
- - The uncertainties of litigation and other risks and uncertainties detailed
from time to time in our filings with the Securities and Exchange
Commission.
19
<PAGE> 22
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to the proceedings commenced by the Australian Competition
and Consumer Commission (ACCC) on August 30,1999, described on page 12 of the
Form 10-K. Universal has received Answers to its Request for Particulars from
the ACCC, along with an amended Statement of Claim. Universal and the three
individuals continue to vigorously defend these proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
A total of 357,374,570 common shares were voted at the Annual Meeting of
Shareholders on November 3, 1999 representing 82.5 percent of the shares
entitled to be voted. Business was transacted as follows.
1. Election of Directors: The persons listed below were elected to serve on the
Board of Directors until the next annual meeting. The vote tabulation with
respect to each person follows:
VOTES CAST
VOTES CAST AGAINST OR
DIRECTOR FOR WITHHELD
Edgar M. Bronfman 355,272,542 2,102,028
-------------- --------------
Charles R. Bronfman 355,280,046 2,094,524
-------------- --------------
Edgar Bronfman, Jr. 355,252,563 2,122,007
-------------- --------------
Samuel Bronfman II 355,300,674 2,073,896
-------------- --------------
Stephen R. Bronfman 355,299,859 2,074,711
-------------- --------------
Matthew W. Barrett 355,332,023 2,042,547
-------------- --------------
Laurent Beaudoin 355,324,251 2,050,319
-------------- --------------
Cornelis Boonstra 350,521,031 6,853,539
-------------- --------------
Richard H. Brown 355,334,283 2,040,287
-------------- --------------
Andre Desmarais 346,187,863 11,186,707
-------------- --------------
Barry Diller 350,486,839 6,887,731
-------------- --------------
Michele J. Hooper 355,339,443 2,035,127
-------------- --------------
David L. Johnston 355,323,574 2,050,996
-------------- --------------
Marie-Josee Kravis 355,215,188 2,159,382
-------------- --------------
Robert W. Matschullat 355,309,224 2,065,346
-------------- --------------
Samuel Minzberg 355,329,345 2,045,225
-------------- --------------
John S. Weinberg 355,309,099 2,065,471
-------------- --------------
20
<PAGE> 23
2. Ratification of Independent Accountants: The proposal to ratify the
appointment of PricewaterhouseCoopers LLP as independent accountants to serve
until the next annual meeting was approved by a vote of 356,459,057 shares for
and 862,095 shares against, withheld, abstentions and broker nonvotes.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The Exhibit Index filed with this Form 10-Q is on pages 23 and 24.
(b) Current Reports on Form 8-K
1. A Current Report on Form 8-K dated September 20, 1999, was filed to
report under Item 5 and file under Item 7 the Company's consolidated
financial statements for the fiscal year ended June 30, 1999.
21
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE SEAGRAM COMPANY LTD.
------------------------
(Registrant)
By: /s/ Robert W. Matschullat
------------------------------
Robert W. Matschullat
Vice Chairman and Chief Financial Officer
(Principal Accounting Officer)
Dated: November 12, 1999
22
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- --------------------------------------------------------------------------------
<S> <C>
2.1 Investment Agreement, dated as of October 19, 1997, as amended and
restated as of December 18, 1997, among Universal Studios, Inc.,
for itself and on behalf of certain of its subsidiaries, HSN,
Inc., Home Shopping Network, Inc. and Liberty Media Corporation,
for itself and on behalf of certain of its subsidiaries
(incorporated by reference to Exhibit 10 to the Quarterly Report
on Form 10-Q for the quarter ended December 31, 1997).
10.1 Governance Agreement, dated as of October 19, 1997,
among Universal Studios, Inc., HSN, Inc., Liberty Media
Corporation and Barry Diller (incorporated by reference
to Exhibit 33 to Schedule 13D/A dated February 23, 1998
of TeleCommunications, Inc., The Seagram Company Ltd.,
Universal Studios, Inc., Barry Diller, BDTV Inc., BDTV II INC.,
BDTV III INC. and BDTV IV INC. (the "Schedule 13D").
10.2 Stockholders Agreement, dated as of October 19, 1997,
among Universal Studios, Inc., HSN, Inc., Liberty Media
Corporation, Barry Diller and The Seagram Company Ltd.
(incorporated by reference to Exhibit 34 to the Schedule 13D).
10.3 Agreement, dated as of October 19, 1997, among Universal
Studios, Inc., HSN, Inc. and Liberty Media Corporation
(incorporated by reference to Exhibit 35 to the Schedule 13D).
10.4 Exchange Agreement, dated as of October 19, 1997, among Universal
Studios, Inc., HSN, Inc. and Liberty Media Corporation
(incorporated by reference to Exhibit 36 to the Schedule 13D).
10.5 Amended and Restated LLC Operating Agreement, dated as of February
12, 1998, among USA Networks, Inc., Universal Studios, Inc.,
Liberty Media Corporation and Barry Diller (incorporated by
Reference to Exhibit 37 to the Schedule 13D).
10.6 Amendment and Restatement Agreement dated as of October 20, 1999,
in respect of the US $6,500,000,000 Credit Agreement dated as of
October 21, 1998, among Joseph E. Seagram & Sons, Inc., The
Seagram Company Ltd., J.E. Seagram Corp., the Lenders party
thereto, The Chase Manhattan Bank, as Administrative Agent,
Citibank, N.A., as Syndication Agent, and Bank of America NT&SA
and Bank of Montreal, as Co-Documentation Agents.
10.7 Amendment and Restatement Agreement dated as of October 20, 1999,
in respect of the US $1,100,000,000 Credit Agreement dated as of
December 21, 1994, as amended and restated as of October 23, 1998,
among The Seagram Company Ltd., the Lenders party thereto, and
Bank of Montreal, as Administrative Agent.
</TABLE>
23
<PAGE> 26
<TABLE>
<S> <C>
10.8 Amendment and Restatement Agreement dated as of October 20, 1999,
in respect of the US $2,000,000,000 Credit Agreement dated as of
November 23, 1994, as amended and restated as of October 21, 1998,
among Joseph E. Seagram & Sons, Inc., The Seagram Company Ltd.,
J.E. Seagram Corp., the Lenders party thereto, The Chase Manhattan
Bank, as Administrative Agent, Citibank, N.A., as Syndication
Agent, and Bank of Montreal, as Documentation Agent.
12(a) Computation of Ratio of Earnings to Fixed Charges
- The Seagram Company Ltd.
12(b) Computation of Ratio of Earnings to Fixed Charges
- Joseph E. Seagram & Sons, Inc.
27 Financial Data Schedule
</TABLE>
24
<PAGE> 1
Exhibit 10.6
AMENDMENT AND RESTATEMENT AGREEMENT dated as of October 20, 1999 (this
"Amendment and Restatement"), in respect of the US$6,500,000,000
Credit Agreement dated as of October 21, 1998 (the "Credit
Agreement" and, as amended by this Amendment and Restatement, the
"Amended and Restated Credit Agreement"), among Joseph E. Seagram
& Sons, Inc. (the "Borrower"), The Seagram Company Ltd., J.E.
Seagram Corp., the Lenders party thereto, The Chase Manhattan
Bank, as Administrative Agent (in such capacity, the
"Administrative Agent"), Citibank, N.A., as Syndication Agent,
and Bank of America NT&SA and Bank of Montreal, as
Co-Documentation Agents.
Section 2.19 of the Credit Agreement provides that the Termination
Date of the Credit Agreement may be extended for a period of 364 days with the
consent of the Consenting Lenders. The Borrower has requested that the Credit
Agreement be amended and restated to effect such an extension and the other
amendments set forth below, and the parties hereto are willing so to amend and
restate the Credit Agreement. Each capitalized term used but not defined herein
has the meaning assigned thereto in the Credit Agreement. Concurrently herewith,
the Borrower and The Seagram Company Ltd. are entering into amendments (the
"Other Amendments"), similar to those described in Section 1(b) below, with
respect to (i) the US$2,000,000,000 Credit Agreement dated as of November 23,
1994, as amended and restated as of October 21, 1998, among the Borrower, the
Seagram Company Ltd., J.E. Seagram Corp., the lenders party thereto, The Chase
Manhattan Bank, as administrative agent, Citibank, N.A., as syndication agent,
and Bank of Montreal, as documentation agent, and (ii) the US$1,100,000,000
Credit Agreement dated as of December 21, 1994, as amended and restated as of
October 23, 1998, among The Seagram Company, Ltd., the lenders party thereto and
Bank of Montreal, as administrative agent.
In consideration of the premises and the agreements, provisions and
covenants herein contained, the
<PAGE> 2
2
parties hereto hereby agree, on the terms and subject to the conditions set
forth herein, as follows:
SECTION 1. Amendments. Upon the effectiveness of this Amendment and
Restatement as provided in Section 4 below, the Credit Agreement shall be
amended and restated in its current form, but with the following changes:
(a) Rollover of Facilities:
(i) The definition of "Applicable Rate" is hereby amended by (i)
replacing "50%" with "33.3%" in clauses (i) and (ii) of the proviso to the
first sentence thereof, (ii) replacing "0.075%" with "0.250%" in such
proviso and (iii) replacing the chart with the following:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
Index Debt Eurodollar Facility Fee
---------- ---------- ------------
Ratings: Spread Rate
-------- ------ ----
- ----------------------------------------------------------------
<S> <C> <C>
> = A-/A3 0.50% 0.10%
- ----------------------------------------------------------------
BBB+/Baa1 0.54% 0.11%
- ----------------------------------------------------------------
BBB/baa2 0.57% 0.13%
- ----------------------------------------------------------------
BBB-/Baa3 0.60% 0.15%
- ----------------------------------------------------------------
BB+/Ba1 0.70% 0.25%
- ----------------------------------------------------------------
<BB+/Ba1 0.95% 0.30%
- ----------------------------------------------------------------
</TABLE>
(ii) The last sentence of the definition of "Commitment" in the Credit
Agreement is hereby deleted and replaced with:
The aggregate amount of the Lenders' Commitments is $2,000,000,000.
(iii) The definition of "Termination Date" in the Credit Agreement is
hereby deleted and replaced with:
"Termination Date" means October 18, 2000 (subject to
extension as provided in Section 2.19).
<PAGE> 3
3
(iv) Schedule 2.01 of the Credit Agreement is hereby replaced with the
schedule attached hereto as Exhibit A.
(b) General Amendments.
(i) the definition of "Leverage Ratio" in the Credit Agreement is
hereby amended by adding at the end thereof the following new sentence:
For purposes of calculating the Leverage Ratio, Total Debt shall
not include 90% of the Indebtedness under the 7.50% Adjustable
Conversion-rate Equity Security Units in the form issued on June 15,
1999 (including under the subordinated deferrable notes that are a
part thereof).
(ii) Section 6.01(e) of the Credit Agreement is hereby amended by
adding the words "and the aggregate amount of other payment obligations"
after the word "Indebtedness" in clause (A) thereof and by deleting the
word "and" at the end thereof.
(iii) Section 6.01(f) of the Credit Agreement is hereby amended (i) by
adding the words "and other payment obligations" after the words "other
Liens to secure Indebtedness" therein, (ii) by adding the words "and the
aggregate amount of other payment obligations" after the words "principal
amount of Indebtedness" therein and (iii) by changing the period to a
semi-colon and adding the word "and" at the end thereof.
(iv) the following new Section 6.01(g) is hereby added to the Credit
Agreement after Section 6.01(f) thereof:
(g) Liens on equity interests in special purpose entities
securing only Indebtedness and other obligations of such entities that
was incurred for the purpose of financing (including through
securitizations) films, television programming, music and other
intellectual
<PAGE> 4
4
property.
(v) Clause (v) of Section 6.04 of the Credit Agreement is hereby
deleted and replaced with:
(v) clause (a) of the foregoing shall not apply to prohibitions,
restrictions and conditions arising pursuant to contractual
arrangements (other than arrangements with respect to Indebtedness)
entered into in the ordinary course of business relating to (I)
specific items of property (other than equity interests) or (II) the
equity interests of special purpose vehicles that own no material
assets other than the specific items of property referred to in clause
(I) subject to such contractual arrangements; provided that (x) such
prohibitions, restrictions and conditions apply only to such specific
items of property and such equity interests of special purpose
vehicles which are subject to such contractual arrangements and (y) if
the aggregate amount (without duplication) of property and equity
interests of special purpose vehicles subject to such prohibitions,
restrictions or conditions exceeds 5% of the Consolidated Total Assets
of Seagram at any time, the amount of such excess (the "Restricted
Property Amount"), when added to (A) the aggregate principal amount of
Indebtedness and the aggregate amount of other payment obligations
secured by Liens permitted only by paragraph (f) of Section 6.01 and
(B) the aggregate amount of Attributable Debt of Sale and Lease-Back
Transactions permitted only by paragraph (e) of Section 6.01 shall not
exceed 15% of the Consolidated Total Assets of Seagram at such time,
SECTION 2. New Lenders and Departing Lenders. As of the date hereof,
each of the new lenders (the "New Lenders") indicated on Exhibit A hereto shall
become a party to and shall be bound by the provisions of the Amended and
Restated Credit Agreement and shall have the rights and obligations of a Lender
thereunder. Each of the New Lenders hereby confirms that (i) it has received a
copy of the Credit Agreement, together with the most recent financial
<PAGE> 5
5
statements delivered pursuant to Section 5.01 of the Credit Agreement and such
other documents as it has deemed appropriate to make its own credit analysis and
decision to become a party to the Amended and Restated Credit Agreement, and
(ii) it will independently and without reliance on the Administrative Agent or
any other Lender and based on such information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under the Amended and Restated Credit Agreement. This Amendment and
Restatement shall not be effective with respect to any lender (a "Departing
Lender") under the Credit Agreement that has not executed this Amendment and
Restatement Agreement as a Consenting Lender, and the rights and obligations of
the Departing Lenders shall terminate on October 20, 1999, in accordance with
the Credit Agreement.
SECTION 3. Representations and Warranties. Each of the Borrower and
the Guarantors represents and warrants as of the date hereof to each of the
Lenders that:
(a) Before and after giving effect to this Amendment and Restatement,
the representations and warranties set forth in the Credit Agreement are true
and correct in all material respects with the same effect as if made on the date
hereof, except to the extent such representations and warranties expressly
relate to an earlier date.
(b) Immediately before and after giving effect to this Amendment and
Restatement, no Event of Default or Default has occurred and is continuing.
SECTION 4. Conditions to Effectiveness. The amendments set forth in
Section 1 of this Amendment and Restatement shall become effective, as of the
date hereof, on the date (the "Amendment Closing Date") on which (i) the
Administrative Agent shall have received (A) counterparts of this Amendment and
Restatement that, when taken together, bear the signatures of the Borrower, the
Guarantors, the Administrative Agent, the Required Lenders and the Consenting
Lenders listed in Schedule 2.01 to the Amended and Restated Credit Agreement,
(B) legal opinions of Simpson Thacher and Bartlett, Goodman Phillips & Vineberg
and Barnes & Thornburg, in each case relating to this Amendment and
<PAGE> 6
6
Restatement, the Amended and Restated Credit Agreement and such other matters as
the Administrative Agent may reasonably request, each in form and substance
reasonably satisfactory to the Administrative Agent, (C) such documents and
certificates as the Administrative Agent may reasonably request relating to the
existence of the Borrower and the Guarantors, the corporate authority of the
Borrower and the Guarantors to enter into, and validity of, this Amendment and
Restatement, and any other matters relevant hereto, all in form and substance
reasonably satisfactory to the Administrative Agent and (D) payment of the fees
described in the Fee Letter dated as of October 1, 1999, between the Borrower,
The Chase Manhattan Bank and Chase Securities Inc. and all expenses of the
Administrative Agent as described in Section 8, to the extent such expenses have
been invoiced prior to the Amendment Closing Date, (ii) the Other Amendments
shall have become, or shall simultaneously become, effective in accordance with
their terms and (iii) there shall be no Loans outstanding on the Amendment
Closing Date.
SECTION 5. Agreement. Except as specifically stated herein, the
provisions of the Credit Agreement are and shall remain in full force and
effect. As used therein, the terms "Credit Agreement", "herein", "hereunder",
"hereinafter", "hereto", "hereof" and words of similar import shall, unless the
context otherwise requires, refer to the Credit Agreement as amended hereby.
SECTION 6. APPLICABLE LAW. THIS AMENDMENT AND RESTATEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 7. Counterparts. This Amendment and Restatement may be
executed in two or more counterparts, each of which shall constitute an original
but all of which when taken together shall constitute but one contract.
SECTION 8. Expenses. The Borrower agrees to reimburse the
Administrative Agent for all out-of-pocket expenses incurred by it in connection
with this Amendment and Restatement, including the reasonable fees, charges and
disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent.
<PAGE> 7
7
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Restatement to be duly executed by their respective authorized officers as of
the day and year first written above.
JOSEPH E. SEAGRAM & SONS, INC.,
by
/s/ John R. Preston
---------------------------------
Name: John R. Preston
Title: Vice President &
Treasurer
THE SEAGRAM COMPANY LTD.,
by
/s/ John R. Preston
---------------------------------
Name: John R. Preston
Title: Vice President &
Treasurer
J.E. SEAGRAM CORP.,
by
/s/ John R. Preston
---------------------------------
Name: John R. Preston
Title: Vice President &
Treasurer
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent,
by
/s/ Robert T. Sacks
---------------------------------
Name: Robert T. Sacks
Title: Managing Director
CITIBANK, N.A., individually and
as Syndication Agent,
<PAGE> 8
8
by
/s/ Elizabeth H. Minnella
---------------------------------
Name: Elizabeth H. Minnella
Title: Vice President
BANK OF AMERICA, N.A., individually and as Co-Documentation
Agent,
by
/s/ Thomas J. Kane
-----------------------------
Name: Thomas J. Kane
Title: Vice President
BANK OF MONTREAL, individually and as Co-Documentation
Agent,
by
/s/ Jeffrey N. Wieser
-----------------------------
Name: Jeffrey N. Wieser
Title: Managing Director
CITICORP USA, INC.
by
/s/ Elizabeth H. Minella
-----------------------------
Name: Elizabeth H. Minella
Title: Vice President
ABN AMRO BANK, N.V.
by
/s/ Frances O'R. Logan
-----------------------------
Name: Frances O'R. Logan
Title: Senior Vice President
by
/s/ David Carrington
-----------------------------
Name: David Carrington
Title: Vice President
<PAGE> 9
9
THE BANK OF NEW YORK
by
/s/ John C. Lambert
---------------------------------
Name: John C. Lambert
Title: Vice President
<PAGE> 10
10
BANQUE NATIONALE DE PARIS
by
/s/ Sophie Revillard Kaufman
---------------------------------
Name: Sophie Revillard Kaufman
Title: Vice President
by
/s/ Gwen Abbott
---------------------------------
Name: Gwen Abbott
Title: Assistant Vice President
BARCLAYS BANK PLC
by
/s/ Craig J. Lewis
---------------------------------
Name: Craig J. Lewis
Title: Director
COMMERZBANK AG, NEW YORK BRANCH AND/OR
GRAND CAYMAN BRANCH
by
/s/ Markus Tappe
---------------------------------
Name: Markus Tappe
Title: Vice President
by
/s/ Andreas Schwung
---------------------------------
Name: Andreas Schwung
Title: Vice President
CREDIT AGRICOLE INDOSUEZ
by
/s/ Craig Welch
---------------------------------
Name: Craig Welch
Title: First Vice President
by
/s/ John McCloskey
---------------------------------
Name: John McCloskey
<PAGE> 11
11
Title: Vice President, Senior
Relationship Manager
<PAGE> 12
12
DEUTSCHE BANK AG NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH
by
/s/ Alexander Karow
---------------------------------
Name: Alexander Karow
Title: Assistant Vice President
by
/s/ William W. McGinty
---------------------------------
Name: William W. McGinty
Title: Director
DRESDNER BANK AG, NEW YORK BRANCH AND
GRAND CAYMAN BRANCH
by
/s/ Laura G. Fazio
---------------------------------
Name: Laura G. Fazio
Title: First Vice President
by
/s/ Constance Loosemore
---------------------------------
Name: Constance Loosemore
Title: Assistant Vice President
HSBC BANK USA
by
/s/ Jeffrey Hughes
---------------------------------
Name: Jeffrey Hughes
Title: Assistant Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
NEW YORK BRANCH
by
/s/ J. Kenneth Biegen
---------------------------------
Name: J. Kenneth Biegen
Title: Senior Vice President
<PAGE> 13
13
LLOYDS TSB BANK PLC
by
/s/ David Rodway
---------------------------------
Name: David Rodway
Title: Assistant Director R156
by
/s/ Louise Miller
---------------------------------
Name: Louise Miller
Title: Assistant Vice President
Structured Finance M256
NATIONAL WESTMINSTER BANK PLC
NEW YORK BRANCH, as lender
by
/s/ Richard Freedman
---------------------------------
Name: Richard Freedman
Title: Director, North America
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH, as lender
by
/s/ Richard Freedman
---------------------------------
Name: Richard Freedman
Title: Director, North America
SOCIETE GENERALE FINANCE (IRELAND) LIMITED
by
/s/ Richard Wanless
---------------------------------
Name: Richard Wanless
Title: Managing Director
by
/s/ Aidan Storey
---------------------------------
Name: Aidan Storey
Title: Account Manager
<PAGE> 14
14
TORONTO DOMINION (TEXAS), INC.
by
/s/ Mark A. Baird
---------------------------------
Name: Mark A. Baird
Title: Vice President
WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW
YORK BRANCH
by
/s/ Lucie L. Guernsey
---------------------------------
Name: Lucie L. Guernsey
Title: Director
by
/s/ Pascal Kabemba
---------------------------------
Name: Pascal Kabemba
Title: Associate
THE BANK OF NOVA SCOTIA
by
/s/ James R. Trimble
---------------------------------
Name: James R. Trimble
Title: Senior Relationship Manager
CREDIT SUISSE FIRST BOSTON
by
/s/ David W. Kratovil
---------------------------------
Name: David W. Kratovil
Title: Director
by
/s/ Joel Glodowski
---------------------------------
Name: Joel Glodowski
Title: Managing Director
<PAGE> 15
15
BAYERISCHE LANDESBANK GIROZENTRALE, CAYMAN
ISLANDS BRANCH
by
/s/ Hereward Drummond
---------------------------------
Name: Hereward Drummond
Title: Senior Vice President
by
/s/ James H. Boyle
---------------------------------
Name: James H. Boyle
Title: Vice President
MELLON BANK, N.A.
by
/s/ Maria N. Sisto
---------------------------------
Name: Maria N. Sisto
Title: Assistant Vice President
ING BANK N.V.
by
/s/ Peter Nabney
---------------------------------
Name: Peter Nabney
Title: Country Manager
by
/s/ Alan Duffy
---------------------------------
Name: Alan Duffy
Title: Vice President
<PAGE> 16
16
BANCA NAZIONALE DEL LAVORO S.p.A. NEW YORK
BRANCH
by
/s/ Giulio Giovine
---------------------------------
Name: Giulio Giovine
Title: Vice President
by
/s/ Leonardo Valentini
---------------------------------
Name: Leonardo Valentini
Title: First Vice President
BANCO BILBAO VIZCAYA
by
/s/ Alejandro Lorca
---------------------------------
Name: Alejandro Lorca
Title: Vice President
by
/s/ John Martini
---------------------------------
Name: John Martini
Title: Vice President
THE BANK OF TOKYO-MITSUBISHI TRUST, LTD.,
NEW YORK BRANCH
by
/s/ Jim Brown
---------------------------------
Name: Jim Brown
Title: Attorney-In-Fact
BANK ONE, NA [MAIN OFFICE CHICAGO]
by
/s/ Stephen E. McDonald
---------------------------------
Name: Stephen E. McDonald
Title: Senior Vice President
BANKBOSTON, N.A.
<PAGE> 17
17
by
/s/ William F. Hamilton
---------------------------------
Name: William F. Hamilton
Title: Director
THE DAI-ICHI KANGYO BANK, LIMITED,
by
/s/ Marvin M. Lazar
---------------------------------
Name: Marvin M. Lazar
Title: Assistant Vice President
FIRST UNION NATIONAL BANK
by
/s/ Douglas E. Blackman
---------------------------------
Name: Douglas E. Blackman
Title: Vice President
ROYAL BANK OF CANADA
by
/s/ Barbara Meijer
---------------------------------
Name: Barbara Meijer
Title: Senior Manager
THE ROYAL BANK OF SCOTLAND PLC
by
/s/ Derek Bonnar
---------------------------------
Name: Derek Bonnar
Title: Vice President
THE NORINCHUKIN BANK, NEW YORK BRANCH
by
/s/ Yoshiro Niiro
---------------------------------
Name: Yoshiro Niiro
Title: General Manager
<PAGE> 18
18
BANCA MONTE DEI PASCHI DI SIENA S.p.A.
by
/s/ S. M. Sondak
---------------------------------
Name: S. M. Sondak
Title: First Vice President & Deputy
General Manager
by
/s/ Brian R. Landy
---------------------------------
Name: Brian R. Landy
Title: Vice President
<PAGE> 19
EXHIBIT A
SCHEDULE 2.01
INSTITUTION REVOLVING COMMITMENT
The Chase Manhattan Bank $ 85,000,000
Bank of America, N.A. 80,000,000
Bank of Montreal 80,000,000
Citicorp USA, Inc. 80,000,000
ABN AMRO Bank, N.V. 65,000,000
The Bank of New York 65,000,000
Banque Nationale de Paris 65,000,000
Barclays Bank PLC 65,000,000
Commerzbank AG, New York Branch
and/or Grand Cayman Branch 65,000,000
Credit Agricole Indosuez 65,000,000
Deutsche Bank AG New York Branch
and/or Cayman Islands Branch 65,000,000
Dresdner Bank AG New York Branch
and Grand Cayman Branch 65,000,000
HSBC Bank USA 65,000,000
The Industrial Bank of Japan,
Limited, New York Branch 65,000,000
Lloyds TSB Bank PLC 65,000,000
National Westminster Bank PLC 65,000,000
Societe Generale Finance (Ireland) Ltd. 65,000,000
Toronto Dominion (Texas), Inc. 65,000,000
Westdeutsche Landesbank
Girozentrale, New York Branch 65,000,000
The Bank of Nova Scotia 65,000,000
Credit Suisse First Boston 65,000,000
Bayerische Landesbank Girozentrale,
Cayman Islands Branch 40,000,000
Mellon Bank, N.A. 40,000,000
ING Bank 20,000,000
Banca Nazionale Del Lavoro S.p.A.
New York Branch 20,000,000
Banco Bilbao Vizcaya 20,000,000
The Bank of Tokyo Mitsubishi, Ltd.,
New York Branch 20,000,000
Bank One, NA [main office Chicago] 20,000,000
BankBoston, N.A. 20,000,000
Dai-Ichi Kangyo Bank, Limited 20,000,000
First Union National Bank 20,000,000
Royal Bank of Canada 20,000,000
Royal Bank of Scotland PLC 20,000,000
The Norinchukin Bank, New York Branch 20,000,000
Banca Monte Dei Paschi Di Siena S.p.A. 20,000,000
Total Commitments $1,750,000,000
<PAGE> 1
Exhibit 10.7
AMENDMENT AND RESTATEMENT AGREEMENT dated as of October 20, 1999 (this
"Amendment and Restatement"), in respect of the US$1,100,000,000
Credit Agreement dated as of December 21, 1994, as amended and
restated as of October 23, 1998 (the "Credit Agreement" and, as
amended by this Amendment and Restatement, the "Amended and
Restated Credit Agreement"), among The Seagram Company Ltd. (the
"Borrower"), the Lenders party thereto, and Bank of Montreal, as
Administrative Agent (in such capacity, the "Administrative
Agent").
The Borrower has requested that the Credit Agreement be amended and
restated as set forth below, and the parties hereto are willing so to amend and
restate the Credit Agreement. Each capitalized term used but not defined herein
has the meaning assigned thereto in the Credit Agreement. Concurrently herewith,
the Borrower and Joseph E. Seagram & Sons, Inc. are entering into amendments
(the "Other Amendments"), similar to those described in Section 1(b) below, with
respect to (i) the US$6,500,000,000 Credit Agreement dated as of October 21,
1998, among Joseph E. Seagram & Sons, Inc., the Borrower, J.E. Seagram Corp.,
the lenders party thereto, The Chase Manhattan Bank, as administrative agent,
Citibank, N.A., as syndication agent, and Bank of America NT&SA and Bank of
Montreal, as co-documentation agents, and (ii) the US$2,000,000,000 Credit
Agreement dated as of November 23, 1994, as amended and restated as of October
21, 1998, among Joseph E. Seagram & Sons, Inc., the Borrower, J.E. Seagram
Corp., the lenders party thereto, The Chase Manhattan Bank, as administrative
agent, Citibank, N.A., as syndication agent, and Bank of Montreal, as
documentation agent.
In consideration of the premises and the agreements, provisions and
covenants herein contained, the parties hereto hereby agree, on the terms and
subject to the conditions set forth herein, as follows:
SECTION 1. Amendments. Upon the effectiveness of this Amendment and
Restatement as provided in Section 3 below, the Credit Agreement shall be
amended and restated in its current form, but with the following changes:
(a) Pricing Grid. The definition of "Applicable Rate" is hereby
amended by (i) replacing "50%" with "33.3%"
<PAGE> 2
in clauses (i) and (ii) of the proviso to the first sentence thereof, (ii)
replacing "0.075%" with "0.250%" in such proviso and (iii) replacing the chart
with the following:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Index Debt Eurodollar Facility Fee
---------- ---------- ------------
Ratings: Spread Rate
-------- ------ ----
- ----------------------------------------------------------------------------
<S> <C> <C>
> = A-/A3 0.51% 0.09%
- ----------------------------------------------------------------------------
BBB+/Baa1 0.55% 0.10%
- ----------------------------------------------------------------------------
BBB/Baa2 0.575% 0.125%
- ----------------------------------------------------------------------------
BBB-/Baa3 0.60% 0.15%
- ----------------------------------------------------------------------------
BB+/Ba1 0.725% 0.225%
- ----------------------------------------------------------------------------
<BB+/Ba1 1.00% 0.25%
- ----------------------------------------------------------------------------
</TABLE>
(b) General Amendments. (i) the definition of "Leverage Ratio" in the
Credit Agreement is hereby amended by adding at the end thereof the following
new sentence:
For purposes of calculating the Leverage Ratio, Total Debt shall
not include 90% of the Indebtedness under the 7.50% Adjustable
Conversion-rate Equity Security Units in the form issued on June 15, 1999
(including under the subordinated deferrable notes that are a part
thereof).
(ii) Section 6.01(e) of the Credit Agreement is hereby amended by
adding the words "and the aggregate amount of other payment obligations" after
the word "Indebtedness" in clause (A) thereof and by deleting the word "and" at
the end thereof.
(iii) Section 6.01(f) of the Credit Agreement is hereby amended (A) by
adding the words "and other payment obligations" after the words "other Liens to
secure Indebtedness" therein, (B) by adding the words "and the aggregate amount
of other payment obligations" after the words "principal amount of Indebtedness"
therein and (C) by changing the period to a semi-colon and adding the word "and"
at the end thereof.
(iv) The following new Section 6.01(g) is hereby added to the Credit
Agreement after Section 6.01(f) thereof:
<PAGE> 3
3
(g) Liens on equity interests in special purpose entities securing
only Indebtedness and other obligations of such entities that was incurred for
the purpose of financing (including through securitizations) films, television
programming, music and other intellectual property.
(v) Clause (v) of Section 6.04 of the Credit Agreement is hereby
deleted and replaced with:
(v) clause (a) of the foregoing shall not apply to prohibitions,
restrictions and conditions arising pursuant to contractual arrangements
(other than arrangements with respect to Indebtedness) entered into in the
ordinary course of business relating to (I) specific items of property
(other than equity interests) or (II) the equity interests of special
purpose vehicles that own no material assets other than the specific items
of property referred to in clause (I) subject to such contractual
arrangements; provided that (x) such prohibitions, restrictions and
conditions apply only to such specific items of property and such equity
interests of special purpose vehicles which are subject to such contractual
arrangements and (y) if the aggregate amount (without duplication) of
property and equity interests of special purpose vehicles subject to such
prohibitions, restrictions or conditions exceeds 5% of the Consolidated
Total Assets of the Borrower at any time, the amount of such excess (the
"Restricted Property Amount"), when added to (A) the aggregate principal
amount of Indebtedness and the aggregate amount of other payment
obligations secured by Liens permitted only by paragraph (f) of Section
6.01 and (B) the aggregate amount of Attributable Debt of Sale and
Lease-Back Transactions permitted only by paragraph (e) of Section 6.01
shall not exceed 15% of the Consolidated Total Assets of the Borrower at
such time,
SECTION 2. Representations and Warranties. The Borrower represents and
warrants as of the date hereof to each of the Lenders that:
<PAGE> 4
4
(a) Before and after giving effect to this Amendment and Restatement,
the representations and warranties set forth in the Credit Agreement are true
and correct in all material respects with the same effect as if made on the date
hereof, except to the extent such representations and warranties expressly
relate to an earlier date.
(b) Immediately before and after giving effect to this Amendment and
Restatement, no Event of Default or Default has occurred and is continuing.
SECTION 3. Conditions to Effectiveness. The amendments set forth in
Section 1 of this Amendment and Restatement shall become effective, as of the
date hereof, on the date (the "Amendment Closing Date") on which (i) the
Administrative Agent shall have received counterparts of this Amendment and
Restatement that, when taken together, bear the signatures of the Borrower, the
Administrative Agent, and the Required Lenders and (ii) the Other Amendments
shall have become, or shall simultaneously become, effective in accordance with
their terms.
SECTION 4. Agreement. Except as specifically stated herein, the
provisions of the Credit Agreement are and shall remain in full force and
effect. As used therein, the terms "Credit Agreement", "herein", "hereunder",
"hereinafter", "hereto", "hereof" and words of similar import shall, unless the
context otherwise requires, refer to the Credit Agreement as amended hereby.
SECTION 5. APPLICABLE LAW. THIS AMENDMENT AND RESTATEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE PROVINCE OF
QUEBEC AND THE FEDERAL LAWS OF CANADA APPLICABLE THEREIN.
SECTION 6. Counterparts. This Amendment and Restatement may be
executed in two or more counterparts, each of which shall constitute an original
but all of which when taken together shall constitute but one contract.
SECTION 7. Expenses. The Borrower agrees to reimburse the
Administrative Agent for all out-of-pocket expenses incurred by it in connection
with this Amendment and Restatement, including the reasonable fees, charges and
disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Restatement to be duly executed by their respective authorized officers as of
the day and year first written above.
<PAGE> 5
6
THE SEAGRAM COMPANY LTD.,
by
/s/ John R. Preston
---------------------------------------
Name: John R. Preston
Title: Vice President &
Treasurer
BANK OF MONTREAL, individually
and as Administrative Agent,
by
/s/ Jeffrey N. Wieser
---------------------------------------
Name: Jeffrey N. Wieser
Title: Managing Director
BANQUE NATIONALE DE PARIS
(CANADA)
by
/s/ Frank L. Shaw
---------------------------------------
Name: Frank L. Shaw
Title: Vice President and
Deputy Manager
by
/s/ Blaise Cloutier
---------------------------------------
Name: Blaise Cloutier
Title: Vice President
<PAGE> 6
7
ABN-AMRO BANK CANADA
by
/s/ Michel Hylands
---------------------------------------
Name: Michel Hylands
Title: Group Vice President
by
/s/ Francois Bienvenue
---------------------------------------
Name: Francois Bienvenue
Title: Assistant Vice
President
BANK OF AMERICA CANADA
by
/s/ Richard J. Hall
---------------------------------------
Name: Richard J. Hall
Title: Vice President
THE BANK OF NOVA SCOTIA
by
/s/ D. M. Torrey
---------------------------------------
Name: D. M. Torrey
Title: Relationship Manager
BANK OF TOKYO-MITSUBISHI (CANADA)
by
/s/ Amos W. Simpson
---------------------------------------
Name: Amos W. Simpson
Title: Vice President and
General Manager
THE CHASE MANHATTAN BANK
by
/s/ Robert T. Sacks
---------------------------------------
Name: Robert T. Sacks
<PAGE> 7
8
Title: Managing Director
<PAGE> 8
9
CITIBANK CANADA
by
/s/ Adam Shepherd
---------------------------------------
Name: Adam Shepherd
Title: Vice President
GRB/Toronto
CREDIT SUISSE FIRST BOSTON CANADA
by
/s/ W. M. McFarland
---------------------------------------
Name: W. M. McFarland
Title: Vice President
by
/s/ Peter Chauvin
---------------------------------------
Name: Peter Chauvin
Title: Vice President
DEUTSCHE BANK CANADA
by
/s/ T. G. Leonard
---------------------------------------
Name: T. G. Leonard
Title: Vice President
by
/s/ R. A. Johnston
---------------------------------------
Name:
Title:
HSBC BANK CANADA
by
/s/ Anastasios Georgiou
---------------------------------------
Name: Anastasios Georgiou
Title: Asst. Vice President
by
/s/ Peter Leenaars
---------------------------------------
Name: Peter Leenaars
<PAGE> 9
10
Title: Senior Manager
THE INDUSTRIAL BANK OF JAPAN
(CANADA)
by
/s/ Campbell McLeish
---------------------------------------
Name: Campbell McLeish
Title: Senior Vice President
J.P. MORGAN (CANADA)
by
/s/ John Maynard
----------
Name: John Maynard
Title: Vice President
MELLON BANK CANADA
by
/s/ Wendy B. H. Bocti
---------------------------------------
Name: Wendy B. H. Bocti
Title: Vice President
ROYAL BANK OF CANADA
by
/s/ Barbara Meijer
---------------------------------------
Name: Barbara Meijer
Title: Senior Manager
SOCIETE GENERALE (CANADA)
by
/s/ Robert Page
---------------------------------------
Name: Robert Page
Title: Director
by
/s/ Jean A. Elie
---------------------------------------
Name: Jean A. Elie
Title: Managing Director
<PAGE> 1
Exhibit 10.8
AMENDMENT AND RESTATEMENT AGREEMENT dated as of October 20, 1999
(this "Amendment and Restatement"), in respect of the
US$2,000,000,000 Credit Agreement dated as of November 23, 1994,
as amended and restated as of October 21, 1998 (the "Credit
Agreement" and, as amended by this Amendment and Restatement, the
"Amended and Restated Credit Agreement"), among Joseph E. Seagram
& Sons, Inc. (the "Borrower"), The Seagram Company Ltd., J.E.
Seagram Corp., the Lenders party thereto, The Chase Manhattan
Bank, as Administrative Agent (in such capacity, the
"Administrative Agent"), Citibank, N.A., as Syndication Agent,
and Bank of Montreal, as Documentation Agent.
The Borrower has requested that the Credit Agreement be amended and
restated as set forth below, and the parties hereto are willing so to amend and
restate the Credit Agreement. Each capitalized term used but not defined herein
has the meaning assigned thereto in the Credit Agreement. Concurrently herewith,
the Borrower and The Seagram Company Ltd. are entering into amendments (the
"Other Amendments"), similar to those described in Section 1(b) below, with
respect to (i) the US$6,500,000,000 Credit Agreement dated as of October 21,
1998, among the Borrower, The Seagram Company Ltd., J.E. Seagram Corp., the
lenders party thereto, The Chase Manhattan Bank, as administrative agent,
Citibank, N.A., as syndication agent, and Bank of America NT&SA and Bank of
Montreal, as co-documentation agents, and (ii) the US$1,100,000,000 Credit
Agreement dated as of December 21, 1994, as amended and restated as of October
23, 1998, among the Seagram Company, Ltd., the lenders party thereto and Bank of
Montreal, as administrative agent.
In consideration of the premises and the agreements, provisions and
covenants herein contained, the parties hereto hereby agree, on the terms and
subject to the conditions set forth herein, as follows:
SECTION 1. Amendments. Upon the effectiveness of this Amendment and
Restatement as provided in Section 3 below, the Credit Agreement shall be
amended and restated in its current form, but with the following changes:
(a) Pricing Grid. The definition of "Applicable Rate" is hereby
amended by (i) replacing "50%" with "33.3%"
<PAGE> 2
2
in clauses (i) and (ii) of the proviso to the first sentence thereof, (ii)
replacing "0.075%" with "0.250%" in such proviso and (iii) replacing the chart
with the following:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
Index Debt Eurodollar Facility Fee
---------- ---------- ------------
Ratings: Spread Rate
-------- ------ ----
- -----------------------------------------------------------------
<S> <C> <C>
> = A-/A3 0.51% 0.09%
- -----------------------------------------------------------------
BBB+/Baa1 0.55% 0.10%
- -----------------------------------------------------------------
BBB/Baa2 0.575% 0.125%
- -----------------------------------------------------------------
BBB-/Baa3 0.60% 0.15%
- -----------------------------------------------------------------
BB+/Ba1 0.725% 0.225%
- -----------------------------------------------------------------
<BB+/Ba1 1.00% 0.25%
- -----------------------------------------------------------------
</TABLE>
(b) General Amendments. (i) The definition of "Leverage Ratio" in the
Credit Agreement is hereby amended by adding at the end thereof the following
new sentence:
For purposes of calculating the Leverage Ratio, Total Debt shall not
include 90% of the Indebtedness under the 7.50% Adjustable Conversion-rate
Equity Security Units in the form issued on June 15, 1999 (including under
the subordinated deferrable notes that are a part thereof).
(ii) Section 6.01(e) of the Credit Agreement is hereby amended by
adding the words "and the aggregate amount of other payment obligations" after
the word "Indebtedness" in clause (A) thereof and by deleting the word "and" at
the end thereof.
(iii) Section 6.01(f) of the Credit Agreement is hereby amended (A) by
adding the words "and other payment obligations" after the words "other Liens to
secure Indebtedness" therein, (B) by adding the words "and the aggregate amount
of other payment obligations" after the words "principal amount of Indebtedness"
therein and (C) changing the period to a semi-colon and by adding the word "and"
at the end thereof.
(iv) the following new Section 6.01(g) is hereby
<PAGE> 3
3
added to the Credit Agreement after Section 6.01(f) thereof:
(g) Liens on equity interests in special purpose entities securing
only Indebtedness and other obligations of such entities that was incurred
for the purpose of financing (including through securitizations) films,
television programming, music and other intellectual property.
(v) Clause (v) of Section 6.04 of the Credit Agreement is hereby
deleted and replaced with:
(v) clause (a) of the foregoing shall not apply to prohibitions,
restrictions and conditions arising pursuant to contractual arrangements
(other than arrangements with respect to Indebtedness) entered into in the
ordinary course of business relating to (I) specific items of property
(other than equity interests) or (II) the equity interests of special
purpose vehicles that own no material assets other than the specific items
of property referred to in clause (I) subject to such contractual
arrangements; provided that (x) such prohibitions, restrictions and
conditions apply only to such specific items of property and such equity
interests of special purpose vehicles which are subject to such contractual
arrangements and (y) if the aggregate amount (without duplication) of
property and equity interests of special purpose vehicles subject to such
prohibitions, restrictions or conditions exceeds 5% of the Consolidated
Total Assets of Seagram at any time, the amount of such excess (the
"Restricted Property Amount"), when added to (A) the aggregate principal
amount of Indebtedness and the aggregate amount of other payment
obligations secured by Liens permitted only by paragraph (f) of Section
6.01 and (B) the aggregate amount of Attributable Debt of Sale and
Lease-Back Transactions permitted only by paragraph (e) of Section 6.01
shall not exceed 15% of the Consolidated Total Assets of Seagram at such
time,
SECTION 2. Representations and Warranties. Each of the Borrower and
the Guarantors represents and warrants as of the date hereof to each of the
Lenders that:
<PAGE> 4
4
(a) Before and after giving effect to this Amendment and Restatement,
the representations and warranties set forth in the Credit Agreement are true
and correct in all material respects with the same effect as if made on the date
hereof, except to the extent such representations and warranties expressly
relate to an earlier date.
(b) Immediately before and after giving effect to this Amendment and
Restatement, no Event of Default or Default has occurred and is continuing.
SECTION 3. Conditions to Effectiveness. The amendments set forth in
Section 1 of this Amendment and Restatement shall become effective, as of the
date hereof, on the date (the "Amendment Closing Date") on which (i) the
Administrative Agent shall have received (A) counterparts of this Amendment and
Restatement that, when taken together, bear the signatures of the Borrower, the
Guarantors, the Administrative Agent, and the Required Lenders and (B) payment
of the fees described in the Fee Letter dated as of October 1, 1999, between the
Borrower, The Chase Manhattan Bank and Chase Securities Inc. and all expenses of
the Administrative Agent as described in Section 7, to the extent such expenses
have been invoiced prior to the Amendment Closing Date, and (ii) the Other
Amendments shall have become, or shall simultaneously become, effective in
accordance with their terms.
SECTION 4. Agreement. Except as specifically stated herein, the
provisions of the Credit Agreement are and shall remain in full force and
effect. As used therein, the terms "Credit Agreement", "herein", "hereunder",
"hereinafter", "hereto", "hereof" and words of similar import shall, unless the
context otherwise requires, refer to the Credit Agreement as amended hereby.
SECTION 5. APPLICABLE LAW. THIS AMENDMENT AND RESTATEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 6. Counterparts. This Amendment and Restatement may be
executed in two or more counterparts, each of which shall constitute an original
but all of which when taken together shall constitute but one contract.
<PAGE> 5
5
SECTION 7. Expenses. The Borrower agrees to reimburse the
Administrative Agent for all out-of-pocket expenses incurred by it in connection
with this Amendment and Restatement, including the reasonable fees, charges and
disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Restatement to be duly executed by their respective authorized officers as of
the day and year first written above.
JOSEPH E. SEAGRAM & SONS, INC.,
by
/s/ John R. Preston
---------------------------------------
Name: John R. Preston
Title: Vice President &
Treasurer
THE SEAGRAM COMPANY LTD.,
by
/s/ John R. Preston
---------------------------------------
Name: John R. Preston
Title: Vice President &
Treasurer
J.E. SEAGRAM CORP.,
by
/s/ John R. Preston
---------------------------------------
Name: John R. Preston
Title: Vice President &
Treasurer
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent,
<PAGE> 6
6
by
/s/ Robert T. Sacks
---------------------------------------
Name: Robert T. Sacks
Title: Managing Director
CITIBANK, N.A., individually and as Syndication Agent,
by
/s/ Elizabeth Minnella
---------------------------------------
Name: Elizabeth Minnella
Title: Vice President
BANK OF MONTREAL, individually and as
Documentation Agent,
by
/s/ Jeffrey N. Wieser
---------------------------------------
Name: Jeffrey N. Wieser
Title: Managing Director
BANK OF AMERICA, N.A., individually
and as Co-Documentation Agent
by
/s/ Thomas J. Kane
---------------------------------------
Name: Thomas J. Kane
Title: Vice President
BANQUE NATIONALE DE PARIS
by
/s/ Sophie Revillard Kaufman
---------------------------------------
Name: Sophie Revillard Kaufman
Title: Vice President
by
/s/ Gwen Abbott
---------------------------------------
Name: Gwen Abbott
Title: Assistant Vice President
<PAGE> 7
7
ABN AMRO BANK, N.V.
by
/s/ Frances O'R. Logan
---------------------------------------
Name: Frances O'R. Logan
Title: Senior Vice President
by
/s/ David Carrington
---------------------------------------
Name: David Carrington
Title: Vice President
BANKBOSTON, N.A.
by
/s/ William F. Hamilton
---------------------------------------
Name: William F. Hamilton
Title: Director
BANK ONE, NA [MAIN OFFICE CHICAGO]
by
/s/ Stephen E. McDonald
---------------------------------------
Name: Stephen E. McDonald
Title: Senior Vice President
THE BANK OF NEW YORK
by
/s/ John C. Lambert
---------------------------------------
Name: John C. Lambert
Title: Vice President
THE BANK OF NOVA SCOTIA
by
/s/ James R. Trimble
---------------------------------------
Name: James R. Trimble
Title: Senior Relationship
Manager
<PAGE> 8
8
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
by
/s/ J. Brown
---------------------------------------
Name: J. Brown
Title: Vice President
CITICORP USA, INC.
by
/s/ Elizabeth H. Minnella
---------------------------------------
Name: Elizabeth H. Minnella
Title: Vice President
CREDIT SUISSE FIRST BOSTON
by
/s/ David W. Kratovil
---------------------------------------
Name: David W. Kratovil
Title: Director
by
/s/ Joel Glodowski
---------------------------------------
Name: Joel Glodowski
Title: Managing Director
DEUTSCHE BANK AG NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH
by
/s/ Alexander Karow
---------------------------------------
Name: Alexander Karow
Title: Assistant Vice President
by
/s/ William W. McGinty
---------------------------------------
Name: William W. McGinty
Title: Director
DRESDNER BANK AG, NEW YORK AND GRAND
<PAGE> 9
9
CAYMAN BRANCHES
by
/s/ Laura G. Fazio
---------------------------------------
Name: Laura G. Fazio
Title: First Vice President
by
/s/ Constance Loosemore
---------------------------------------
Name: Constance Loosemore
Title: Assistant Vice President
THE FUJI BANK, LIMITED
by
/s/ Raymond Ventura
---------------------------------------
Name: Raymond Ventura
Title: Vice President & Manager
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
by
/s/ J. Kenneth Biegen
---------------------------------------
Name: J. Kenneth Biegen
Title: Senior Vice President
SANPAOLO IMI S.P.A.
by
/s/ Luca Sacchi
---------------------------------------
Name: Luca Sacchi
Title: Vice President
by
/s/ Robert Wurster
---------------------------------------
Name: Robert Wurster
Title: First Vice President
LLOYDS TSB BANK PLC
by
<PAGE> 10
10
/s/ David Rodway
---------------------------------------
Name: David Rodway
Title: Assistant Director R156
by
/s/ Louise Miller
---------------------------------------
Name: Louise Miller
Title: Assistant Vice President
Structured Finance M256
MELLON BANK, N.A.
by
/s/ Maria N. Sisto
---------------------------------------
Name: Maria N. Sisto
Title: Assistant Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
by
/s/ Robert Bottamedi
---------------------------------------
Name: Robert Bottamedi
Title: Vice President
NATIONAL WESTMINSTER BANK PLC
NEW YORK BRANCH, as lender
by
/s/ Richard Freedman
---------------------------------------
Name: Richard Freedman
Title: Director, North America
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH, as lender
by
/s/ Richard Freedman
---------------------------------------
Name: Richard Freedman
Title: Director, North America
<PAGE> 11
11
ROYAL BANK OF CANADA
by
/s/ Barbara Meijer
---------------------------------------
Name: Barbara Meijer
Title: Senior Manager
THE ROYAL BANK OF SCOTLAND PLC
by
/s/ Derek Bonnar
---------------------------------------
Name: Derek Bonnar
Title: Vice President
SOCIETE GENERALE FINANCE (IRELAND) LIMITED
by
/s/ Richard Wanless
---------------------------------------
Name: Richard Wanless
Title: Managing Director
by
/s/ Aidan Storey
---------------------------------------
Name: Aidan Storey
Title: Account Manager
THE TORONTO-DOMINION BANK
by
/s/ Mark A. Baird
---------------------------------------
Name: Mark A. Baird
Title: Manager Credit
Administration
WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH
by
/s/ Lucie L. Guernsey
---------------------------------------
Name: Lucie L. Guernsey
Title: Director
<PAGE> 1
Exhibit 12(a)
The Seagram Company Ltd. and Subsidiary Companies
Computation of Ratio of Earnings to Fixed Charges
(U.S. dollars in millions)
<TABLE>
<CAPTION>
Quarter Ended Fiscal Year Ended
September 30, June 30,
------------- -----------------
1999 1998 1999 1998
---- ---- ----- ------
<S> <C> <C> <C> <C>
Income (loss) from continuing operations,
before tax $ 9 $138 $(579) $1,611
Add (deduct):
Dividends from equity companies 13 2 92 56
Fixed charges 207 87 656 406
Interest capitalized, net of amortization -- -- -- (2)
----- ----- ----- ------
Earnings available for fixed charges $229 $227 $ 169 $2,071
===== ===== ===== ======
Fixed charges:
Interest expense $191 $ 74 $ 592 $ 357
Portion of rent expense deemed to
represent interest factor 16 13 64 49
----- ----- ----- ------
Fixed charges $207 $ 87 $ 656 $ 406
===== ===== ===== ======
Ratio of earnings to fixed charges 1.11 2.61 (a) 5.10
===== ===== ===== ======
</TABLE>
(a) Fixed charges exceeded earnings by $487 million for the year ended June 30,
1999.
25
<PAGE> 1
Exhibit 12(b)
Joseph E. Seagram & Sons, Inc. and Subsidiary Companies
Computation of Ratio of Earnings to Fixed Charges
(U.S. dollars in millions)
<TABLE>
<CAPTION>
Quarter Ended Fiscal Year Ended
September 30, June 30,
------------- -----------------
1999 1998 1999 1998
---- ----- ---- -----
<S> <C> <C> <C> <C>
Income (loss) from continuing operations,
before tax $ 94 $ 62 $(17) $ 17
Add (deduct):
Dividends from equity companies 1 1 1 2
Fixed charges 133 30 349 182
Interest capitalized, net of amortization -- -- -- --
----- ----- ----- -----
Earnings available for fixed charges $228 $ 93 $333 $201
===== ===== ===== =====
Fixed charges:
Interest expense $130 $ 27 $339 $170
Portion of rent expense deemed to
represent interest factor 3 3 10 12
----- ----- ----- -----
Fixed charges $133 $ 30 $349 $182
===== ===== ===== =====
Ratio of earnings to fixed charges 1.71 3.10 (a) 1.10
===== ===== ===== =====
</TABLE>
(a) Fixed charges exceeded earnings by $16 million for the year ended June 30,
1999.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE SEAGRAM COMPANY LTD. FOR THE QUARTER ENDED
SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 1,420
<SECURITIES> 0
<RECEIVABLES> 3,755
<ALLOWANCES> (512)
<INVENTORY> 2,624
<CURRENT-ASSETS> 8,965
<PP&E> 4,562
<DEPRECIATION> (1,438)
<TOTAL-ASSETS> 34,883
<CURRENT-LIABILITIES> 7,877
<BONDS> 7,561
0
0
<COMMON> 4,606
<OTHER-SE> 8,238
<TOTAL-LIABILITY-AND-EQUITY> 34,883
<SALES> 0
<TOTAL-REVENUES> 3,643
<CGS> 2,150
<TOTAL-COSTS> 2,150
<OTHER-EXPENSES> 1,421
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 161
<INCOME-PRETAX> 9
<INCOME-TAX> 110
<INCOME-CONTINUING> (40)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (84)
<NET-INCOME> (124)
<EPS-BASIC> (0.29)
<EPS-DILUTED> (0.29)
</TABLE>
