<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment No.1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: DECEMBER 10, 1998
THE SEAGRAM COMPANY LTD.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Canada 1-2275 None
- ------------------------------- ----------------------- ------------------
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
1430 Peel Street, Montreal, Quebec, Canada H3A 1S9
- ------------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (514) 849-5271
------------------
</TABLE>
<PAGE> 2
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K dated
December 10, 1998, as set forth in the pages attached hereto:
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
------------------------------------------------------------------
Item 7 is hereby amended and supplemented to include the financial statements,
pro forma financial information and the exhibits set forth below:
(a) Financial Statements of Business Acquired.
------------------------------------------
Unaudited consolidated financial statements of PolyGram N.V. for the nine
months ended September 30, 1998.
(b) Pro Forma Financial Information
-------------------------------
Unaudited pro forma consolidated income statements of The Seagram Company
Ltd. for the six months ended December 31, 1998 and for the fiscal year ended
June 30, 1998.
(c) Exhibits
(23) Consent of KPMG Accountants N.V., independent auditors.
(99) Unaudited Quarterly Supplementary Pro Forma Financial Information.
2
<PAGE> 3
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE SEAGRAM COMPANY LTD.
By /s/ Robert W. Matschullat
-------------------------
Robert W. Matschullat
Vice Chairman and
Chief Financial Officer
Date: February 23, 1999
3
<PAGE> 4
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF POLYGRAM N.V.
PAGE
----
Item 1. Financial Statements
Consolidated financial statements
Consolidated statements of income for the quarters and nine
months ended September 30, 1997 and September 30, 1998 6
Consolidated balance sheets at December 31, 1997 and
September 30, 1998 7
Consolidated statements of cash flows for the nine months
ended September 30, 1997 and September 30, 1998 8
Consolidated statements of changes in shareholders' equity
for the years ended December 31, 1996 and 1997 and the nine
months ended September 30, 1998 9
Notes to the consolidated financial statements 10 - 12
4
<PAGE> 5
This report sets forth certain information regarding the financial condition and
results of operations of PolyGram N.V. ("PolyGram") for the nine month
period ended September 30, 1998.
The unaudited financial statements included in this report, in the opinion of
management, reflect all adjustments necessary for a fair presentation of the
financial position, the results of operations and cash flows for the periods
presented.The unaudited financial information included in this report has been
prepared in accordance with generally accepted accounting principles in The
Netherlands.
These statements should be read in conjunction with the consolidated financial
statements and related notes in PolyGram's Annual Report to Shareholders on
Form 20-F for the fiscal year ended December 31, 1997.
5
<PAGE> 6
Item 1
THE POLYGRAM GROUP
CONSOLIDATED STATEMENTS OF INCOME
(ALL AMOUNTS EXPRESSED IN MILLIONS OF NETHERLANDS
GUILDERS, EXCEPT SHARE AMOUNTS AND PER SHARE
DATA, UNLESS OTHERWISE STATED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1997 1998 1997 1998
------ ------ ------ ------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales (note 4) 2,675 2,668 7,201 7,318
Direct cost of sales (1,534) (1,446) (3,813) (3,991)
------ ------ ------ ------
Gross income 1,141 1,222 3,388 3,327
Selling expenses, General and
administrative expenses (1,011) (1,051) (2,828) (3,047)
------ ------ ------ ------
Income from operations (note 4) 130 171 560 280
Financial income (expense) (3) (20) (7) (36)
------ ------ ------ ------
Income before tax 127 151 553 244
Income tax (36) 11 (160) (18)
------ ------ ------ ------
Income after tax 91 162 393 226
Equity in net loss of non-consolidated
companies (2) (1) (22) (14)
Minority interests (4) 5 (16) (8)
------ ------ ------ ------
Net income 85 166 355 204
====== ====== ====== ======
Average number of shares in millions
(par value NLG 0.50) outstanding during
the year 180.0 180.0 180.0 180.0
Net income per share 0.47 0.92 1.97 1.13
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
6
<PAGE> 7
THE POLYGRAM GROUP
CONSOLIDATED BALANCE SHEETS
(ALL AMOUNTS EXPRESSED IN MILLIONS OF NETHERLANDS
GUILDERS, EXCEPT SHARE AMOUNTS AND PER SHARE
DATA, UNLESS OTHERWISE STATED)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
------------ -------------
1997 1998
------- -------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash 694 185
Receivables and prepaid expenses 4,186 3,660
Inventories (note 3) 1,455 1,438
------- -------
Total current assets 6,335 5,283
Long-term receivables 718 700
Other non-current financial assets 106 120
Non-consolidated companies 298 338
Tangible fixed assets (note 3) 819 762
Intangible fixed assets 3,036 3,391
------- -------
Total assets 11,312 10,594
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Payables to banks 194 906
Subordinated notes to be redeemed 163 --
Accounts payable: Trade creditors 1,083 824
Dividend payable 180 --
Accrued liabilities
Income taxes payable 101 97
Accrued expenses 3,490 3,034
Short-term provisions 502 456
------- -------
Total current liabilities 5,713 5,317
Non-current liabilities
Deferred income taxes 815 638
Provision for pensions 244 247
Other provisions 58 116
Long-term debt 260 227
------- -------
Total non-current liabilities 1,377 1,228
------- -------
Minority interests 79 67
------- -------
Shareholders' equity
Common Shares (NLG 0.50 par value):
Authorized 500,000,000 shares, issued
and outstanding 180,000,000 shares 90 90
Share premium 1,095 1,095
Foreign exchange translation differences (211) (427)
Retained earnings 3,169 3,224
------- -------
Total shareholders' equity 4,143 3,982
------- -------
Total liabilities and shareholders' equity 11,312 10,594
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
7
<PAGE> 8
THE POLYGRAM GROUP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(ALL AMOUNTS EXPRESSED IN MILLIONS OF NETHERLANDS GUILDERS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------- -----------------
1997 1998
------ ------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities
Net income 355 204
Adjustments to reconcile net income to gross
cash provided by operating activities:
Depreciation on film inventory 411 449
Depreciation and amortization on tangible
and intangible assets 149 161
Provision for losses on advances to artists,
repertoire owners and other current receivables 187 244
Equity in income of non-consolidated
companies (net of dividends) 22 14
Minority interests 16 8
------ ------
Gross cash flows from operations 1,140 1,080
Change in assets and liabilities, net of
effects from acquisitions:
Advances to artists and repertoire owners, other
current receivables and prepaid expenses (362) 41
Long-term receivables 12 (18)
Film inventories (683) (609)
Accrued liabilities 218 (370)
Deferred income tax and other
provisions 10 (134)
Other assets and liabilities (164) (64)
------ ------
Total adjustments (969) (1,154)
------ ------
Net cash provided by operating activities 171 (74)
Cash flows from investing activities:
Payments for acquisitions, net of cash
acquired (97) (462)
Investm. in tangible and intangible assets (90) (91)
Others (56) (67)
------ ------
Net cash used in investing activities (243) (620)
Cash flows from financing activities:
Payables to banks 273 703
Redemption of subordinated Notes (76) (163)
Transactions in PolyGram N.V. shares (18) (59)
Dividend paid (170) (270)
Others (12) (11)
------ ------
Net cash used for financing activities (3) 200
------ ------
Net decrease in cash (75) (494)
Translation differences 12 (15)
Cash as at January 1 414 694
------ ------
Cash as at end of period 351 185
====== ======
Non-cash financing activities 193 195
Interest paid 66 82
Income taxes paid 19 138
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
8
<PAGE> 9
THE POLYGRAM GROUP
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(ALL AMOUNTS IN MILLIONS OF NETHERLANDS GUILDERS,
EXCEPT SHARE AMOUNTS, UNLESS OTHERWISE STATED)
<TABLE>
<CAPTION>
FOREIGN
NUMBER OF SHARE EXCHANGE
COMMON CAPITAL SHARE TRANSLATION RETAINED
SHARES COMMON PREMIUM DIFFERENCES EARNINGS TOTAL
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 180,000,000 90 1,095 (707) 2,257 2,735
Net income -- -- -- -- 608 608
Foreign exchange translation
differences -- -- -- 226 -- 226
Goodwill on acquisitions prior
to January 1, 1993 -- -- -- -- 8 8
Dividend -- -- -- -- (171) (171)
Transactions in PolyGram N.V. shares -- -- -- (104) (104)
----------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 1996 180,000,000 90 1,095 (481) 2,598 3,302
Net income -- -- -- -- 787 787
Foreign exchange translation
differences -- -- -- 270 -- 270
Goodwill on acquisitions prior
to January 1, 1993 -- -- -- -- 2 2
Dividend -- -- -- -- (180) (180)
Transactions in PolyGram N.V. shares -- -- -- -- (38) (38)
----------- ----------- ----------- ----------- ----------- -----------
Balance at December 31, 1997 180,000,000 90 1,095 (211) 3,169 4,143
Net income (unaudited) -- -- -- -- 204 204
Foreign exchange translation
differences (unaudited) -- -- -- (216) -- (216)
Dividend (unaudited) -- -- -- -- (90) (90)
Transactions in PolyGram N.V. shares (unaudited) -- -- -- -- (59) (59)
----------- ----------- ----------- ----------- ----------- -----------
Balance at September 30, 1998 (unaudited) 180,000,000 90 1,095 (427) 3,224 3,982
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
9
<PAGE> 10
THE POLYGRAM GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(ALL AMOUNTS SHOWN IN TABULAR FORMATS ARE EXPRESSED IN MILLIONS
OF NETHERLANDS GUILDERS, EXCEPT SHARE AMOUNTS AND PER SHARE
DATA, UNLESS OTHERWISE STATED)
1. BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of PolyGram
N.V. and its subsidiaries (the "PolyGram Group")have been prepared in accordance
with generally accepted accounting principles in The Netherlands ("Dutch GAAP")
and do therefore not include certain information and notes necessary for a
presentation of results of operations, financial position and cash flows in
conformity with generally accepted accounting principles in the United States of
America. These statements should be read in conjunction with the consolidated
financial statements and related notes in the Company's Annual Report to
Shareholders on Form 20-F for the fiscal year ended December 31, 1997. In the
opinion of PolyGram, 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 nine months are
not necessarily indicative of those expected for the full year.
See Note 4 for further information on significant differences between
Dutch GAAP and US GAAP which affect PolyGram's consolidated net income
and shareholders' equity.
In recognition of the proposed acquisition of PolyGram by The Seagram
Company Ltd. (Seagram), announced on May 21, 1998, and Seagram's announced
intention to sell PolyGram Filmed Entertainment (PFE), PolyGram's divisional
revenues and operating results for the three and nine month periods ended
September 30, 1998 have been reclassified to reflect the film activities that
were offered for sale. The reclassification reflects the transfer of certain
video distribution activities which would not be sold as part of PFE if such
transaction would be effected. For comparison purposes, prior periods have also
been restated.
2. ACQUISITIONS
Effective January 1, 1997 PolyGram acquired an additional 31% in PT
PolyGram Indonesia, increasing its share to 80% and acquired 60% of What's Music
International Inc., in Taiwan. These and other acquisitions in 1997 were
accounted for using the purchase method and resulted in goodwill of NLG 100
million in total. In 1997 PolyGram sold its music and VHS cassette factory in
The Netherlands.
In January 1998, PolyGram acquired a library of film catalogs from
Consortium de Realisation SA for a consideration of US$225 million. From the
purchase price an amount of US$125 million is identified as a catalogue of film
rights, the remainder being allocated to various other assets and liabilities
acquired, including goodwill. This, and other acquisitions in the nine months
ended September 30, 1998 were accounted for using the purchase method and
resulted in goodwill of NLG 306 million.
During 1997 and the first nine months of 1998 PolyGram made other
acquisitions, none of which had a significant effect on the consolidated
financial statements.
3. SUPPLEMENTARY INFORMATION
INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
---- ----
(UNAUDITED)
<S> <C> <C>
Films, net of amortization 963 957
Finished goods 238 230
Recording costs 197 191
Raw materials 57 60
----- -----
1,455 1,438
===== =====
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
---- ----
(UNAUDITED)
<S> <C> <C>
TANGIBLE FIXED ASSETS
Property, plant and equipment, at cost 1,574 1,563
Accumulated depreciation 755 801
----- -----
819 762
===== =====
</TABLE>
4. APPLICATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED
STATES OF AMERICA
The accounting policies followed in the preparation of the consolidated
financial statements differ in certain significant respects from those generally
accepted in the United States of America (US GAAP).
The significant differences which affect net income and/or
shareholders' equity are as follows:
a. Goodwill arising from a difference between the purchase
price including contingent consideration and net asset value of newly
acquired companies and participations was accounted for directly in
shareholders' equity up to January 1, 1993. Thereafter goodwill is
capitalized and amortized over periods not exceeding 40 years. For US
GAAP purposes, all goodwill has been recorded as an asset and is being
amortized over periods not exceeding 40 years. Under US GAAP,
contingent consideration is not recognized at the date of acquisition,
but instead is recognized as additional goodwill at the date the
contingency is resolved and the additional consideration is payable.
b. Intangible fixed assets other than goodwill are amortized
if and to the extent that the present value of the expected income
generated by each category of asset is less than the book value. For US
GAAP purposes, catalogs of recorded music are amortized straight-line
over 25 years, the catalogue of film rights straight-line over 20 years
and the catalogs of music publishing rights and theatrical rights
straight-line over 15 years.
The calculation of net income and shareholders' equity, substantially in
accordance with US GAAP, is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ -----------------
1997 1998 1997 1998
---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net income as per Consolidated
Statements of Income of the
PolyGram Group 85 166 355 204
Adjustments to reported income:
a. amortization of goodwill (8) (8) (23) (25)
b. amortization of intangible fixed assets
other than goodwill (29) (29) (83) (87)
- -- other (5) (1) (20) (2)
- -- tax effects of US GAAP adjustments 12 12 38 35
---- ---- ---- ----
Approximate net income in accordance
with US GAAP 55 140 267 125
Approximate net income per share in
accordance with US GAAP 0.31 0.78 1.48 0.69
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Shareholders' equity as per consolidated
balance sheets of the PolyGram Group 4,143 3,982
Adjustments to reported equity:
a. goodwill 1,110 1,032
b. intangible fixed assets other than goodwill (739) (784)
-- other (28) (29)
-- tax effects of US GAAP adjustments 197 222
------ ------
Approximate shareholders' equity in accordance
with US GAAP 4,683 4,423
====== ======
</TABLE>
Changes in shareholders' equity, substantially in accordance with US GAAP are as
follows:
<TABLE>
<CAPTION>
TOTAL
-----
<S> <C>
Balance at December 31, 1996 3,876
Net income 677
Foreign exchange translation differences 345
Dividend (180)
Transactions in PolyGram N.V. shares (38)
Other, on balance 3
------
Balance at December 31, 1997 4,683
Net income 125
Foreign exchange translation differences (236)
Dividend (90)
Transactions in PolyGram N.V. shares (59)
------
Balance at September 30, 1998 4,423
======
</TABLE>
12
<PAGE> 13
UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE SEAGRAM COMPANY LTD.
Index to Financial Statements
<TABLE>
<CAPTION>
Page
----
<S> <C>
Unaudited Pro Forma Consolidated Income Statement for the Six
Months Ended December 31, 1998. 15
Unaudited Pro Forma Consolidated Income Statement for the Fiscal
Year Ended June 30, 1998. 16
</TABLE>
13
<PAGE> 14
THE SEAGRAM COMPANY LTD.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On August 25, 1998, The Seagram Company Ltd. (the "Corporation") completed
the sale of Tropicana Products, Inc. and the Corporation's global juice business
("Tropicana") to PepsiCo, Inc. for cash proceeds of approximately $3.3 billion.
The proceeds from the Tropicana sale have been used by the Corporation to
provide part of the financing for the Corporation's acquisition of PolyGram N.V.
("PolyGram"). On December 6, 1998, the Corporation announced that it had
accepted all of the shares of PolyGram tendered pursuant to a tender offer (the
"Offer") by the Corporation, representing approximately 99.5% of the then
outstanding PolyGram Shares. Pursuant to the Offer, on December 10, 1998 the
Corporation paid approximately $8.56 billion in cash and issued approximately
47.9 million common shares (approximately 12 percent of the Corporation's
outstanding common shares after the transaction). Substantially all of the
common shares were issued to Koninklijke Philips Electronics N.V., which had
owned 75% of the PolyGram shares.
The following Unaudited Pro Forma Consolidated Statements of Income for the
six months ended December 31, 1998 and for the fiscal year ended June 30, 1998
illustrate (i) the effect of the sale of Tropicana and the Offer as if each had
been consummated on July 1, 1997 for the Unaudited Pro Forma Consolidated
Statement of Income for the six months ended December 31, 1998 and (ii) the
effect of the sale of Tropicana, the Offer and the other transactions described
below as if such transactions had been consummated on July 1, 1997 for the
Unaudited Pro Forma Consolidated Statement of Income for the fiscal year ended
June 30, 1998. The Offer has been accounted for as a purchase.
The other transactions referred to in the immediately preceding paragraph
are:
- On October 21, 1997, the acquisition by Universal Studios, Inc.
("Universal") of an incremental 50% interest in the USA Networks
partnership, including the Sci-Fi Channel, for $1.7 billion in cash (the
"USA Networks Transaction"). The USA Networks Transaction was accounted
for under the purchase method of accounting. The cost of the acquisition
was allocated on the basis of the estimated fair market value of the
assets acquired and liabilities assumed. This valuation resulted in $1.6
billion of unallocated excess of cost over fair value of assets acquired
which was being amortized over 40 years, and
- On February 12, 1998, the sale of a 50% interest in USA Networks to USA
Networks, Inc. ("USAi") and the contribution of the remaining 50%
interest in USA Networks and the majority of the television assets
("UTV") of Universal, including all of Universal's domestic television
production and distribution operations and 50% of the international
operations of USA Networks, to USANi LLC (the "LLC") in a transaction
(the "USAi Transaction") in which Universal received cash, 13.5 million
shares of USAi (after giving effect to the 2 for 1 split of USAi stock on
March 26, 1998), consisting of approximately 7.1 million shares of common
stock and 6.4 million shares of Class B common stock which in the
aggregate represented a 10.7% equity interest in USAi at date of
acquisition, and a 45.8% interest in the LLC which is exchangeable for
USAi common stock and Class B common stock. The USAi Transaction resulted
in $82 million of unallocated excess cost over fair value of assets
acquired which is being amortized over 40 years.
No adjustment has been included in the pro forma amounts for any
anticipated cost savings or other synergies.
These Unaudited Pro Forma Consolidated Financial Statements should be read
in conjunction with (i) the historical financial statements of PolyGram
(including the notes thereto) contained in PolyGram's Annual Report on Form 20-F
for the year ended December 31, 1997, (ii) the PolyGram unaudited consolidated
interim financial data contained in PolyGram's Reports on Form 6-K dated July
22, 1998 and October 21, 1998, (iii) the PolyGram unaudited consolidated
financial statements for the nine months ended September 30, 1998 included
herein, (iv) the historical financial statements of Seagram contained in
Seagram's Annual Report on Form 10-K for the fiscal year ended June 30, 1998, as
amended and (v) the historical unaudited consolidated financial statements of
Seagram contained in Seagram's Quarterly Reports on Form 10-Q for the quarters
ended September 30, 1998 and December 31, 1998.
The Unaudited Pro Forma Consolidated Financial Statements are presented for
comparative purposes only and are not intended to be indicative of actual
consolidated results of operations or consolidated financial position that would
have been achieved had the sale of Tropicana, the Offer, the USA Networks
Transaction and the USAi Transaction been consummated as of the dates indicated
above nor do they purport to indicate results which may be attained in the
future.
14
<PAGE> 15
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
(UNITED STATES DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
-------------------------------------------
POLYGRAM SEAGRAM
SEAGRAM OTHER FINANCIAL POLYGRAM CONSOLIDATED
HISTORICAL ADJUSTMENTS STATEMENTS(a) ADJUSTMENTS PRO FORMA
---------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues...................... $ 5,574 $3,032 $ 8,606
Cost of revenues.............. 3,274 1,645 $ 136(i) 5,055
Selling, general and
administrative
expenses.................... 1,935 1,019 106(j) 3,060
Restructuring charge.......... 405 (405)(c) -- -- --
------- ------- ------- ------- ------
Operating income (loss)....... (40) 405 368 (242) 491
Interest, net and
other..................... 117 65 (d) 23 137(k) 342
------- ------- ------ ------- ------
(157) 340 345 (379) 149
Provision (benefit)
for income taxes.......... 75 117(e) 73 (96)(l) 169
Minority interest
charge (credit)........... (17) 21(f) 3 6(m) 13
Equity earnings (losses)
from unconsolidated
companies................... 84 (7) -- 77
------- ------- ------ ------- ------
Income (loss) from
continuing
operations................ (131) 202 262 (289) 44
Discontinued Tropicana
operations:
Loss from discontinued
operations (net of
taxes of $0) (3) 3(g) -- -- --
Gain on sale of discontinued
operations (net of taxes
of $373)................. 1,072 (1,072)(h) -- -- --
------- ------- ------- ------- ------
1,069 (1,069) -- -- --
------- ------- ------ ------- ------
Net income (loss)............. $ 938 $ (867) $ 262 $ (289) $ 44
======= ======= ====== ======= ======
Basic earnings per share
Income from continuing
operations................ $ (0.37) $ 0.11
Income from
discontinued
Tropicana
operations, after
tax....................... 3.02 --
------- ------
Net income.................. $ 2.65 $ 0.11
======= ======
Diluted earnings per
share
Income from continuing
operations................ $ (0.37) $ 0.11
Income from
discontinued
Tropicana
operations, after
tax....................... 3.01 --
------- ------
Net income.................. $ 2.64 $ 0.11
======= ======
Shares (in thousands)
Weighted average
shares
outstanding............... 353,526 47,904(b) 401,430
Dilutive potential
common shares............. 2,350 2,350
------- -------
Adjusted weighted
average shares
outstanding............... 355,876 403,780
======= =======
</TABLE>
15
<PAGE> 16
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE FISCAL YEAR ENDED JUNE 30, 1998
(UNITED STATES DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS PRO FORMA ADJUSTMENTS
----------------- --------------------------------------------
UTV AND SEAGRAM/ POLYGRAM SEAGRAM
SEAGRAM USA USAI & USAI TROPICANA FINANCIAL POLYGRAM CONSOLIDATED
HISTORICAL NETWORKS OTHER PRO FORMA ADJUSTMENTS(g) STATEMENTS(a) ADJUSTMENTS PRO FORMA
---------- -------- ------ --------- -------------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $ 9,474 $(376)(n) $ 11(p) $9,109 $5,478 $14,587
Cost of revenues........ 5,525 (232)(n) 5,293 3,045 $ 300(i) 8,638
Selling, general and
administrative
expenses.............. 3,396 (53)(n) 8(p) 3,351 2,084 240(j) 5,675
------- ----- ---- ------ ------ ------ ------- -------
Operating income........ 553 (91) 3 465 349 (540) 274
Interest, net and
other............... 228 (38)(n) 21(q) 211 14 373(k) 598
Gain on sale of Time
Warner shares......... 926 -- -- 926 926
Gain on USAi
transaction........... 360 -- -- 360 360
------- ----- ---- ------ ------ ------ ------- -------
1,611 (53) (18) 1,540 335 (913) 962
Provision (benefit)
for income taxes.... 638 (14) 3(l) 627 102 (236)(l) 493
Minority interest
charge (credit)..... 48 (10)(n) 6(m) 44 11 (39)(m) 16
Equity (loss) earnings
from unconsolidated
companies............. (45) 31 (n) 19(o) 5 (11) (6)
------- ----- ---- ------ ------ ------ ------- -------
Income (loss) from
continuing
operations.......... 880 2 (8) 874 211 (638) 447
Income from
discontinued
Tropicana
operations, after
tax................. 66 -- -- 66 (66) -- -- --
------- ----- ---- ------ ------ ------ ------- -------
Net income (loss)....... $ 946 $ 2 $ (8) $ 940 $ (66) $ 211 $ (638) $ 447
======= ===== ==== ====== ====== ====== ======= =======
Basic earnings per share
Income from continuing
operations.......... $ 2.51 $ 1.12
Income from
discontinued
Tropicana
operations, after
tax................. .19 --
------- -------
Net income............ $ 2.70 $ 1.12
======= =======
Diluted earnings per
share
Income from continuing
operations.......... $ 2.49 $ 1.11
Income from
discontinued
Tropicana
operations, after
tax................. .19 --
------- -------
Net income............ $ 2.68 $ 1.11
======= =======
Shares (in thousands)
Weighted average
shares
outstanding......... 349,874 47,904(b) 397,778
Dilutive potential
common shares....... 3,731 3,731
------- -------
Adjusted weighted
average shares
outstanding......... 353,605 401,509
======= =======
</TABLE>
16
<PAGE> 17
NOTES TO SEAGRAM PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
(a) The PolyGram financial statements for the six months ended December 31,
1998 and the twelve months ended June 30, 1998 have been converted to U.S.
GAAP and certain reclassifications have been made to conform to Seagram's
account classifications. The income statement has been converted to US
Dollars at an average rate of 1.9217 Dutch Guilders to one US Dollar for
the six months ended December 31, 1998, and at an average rate of
2.01812 Dutch Guilders to one US Dollar for the twelve months ended June
30, 1998.
(b) Reflects the issuance of 47,904,145 Seagram Shares at $41.75 per share to
PolyGram shareholders in the Offer.
(c) Reflects the elimination of the entertainment restructuring charge.
(d) Reflects the elimination of interest income earned on the proceeds
from the sale of Tropicana.
(e) Reflects the elimination of the income taxes on the restructuring charge
and interest earned on the proceeds from the sale of Tropicana at the
statutory income tax rate.
(f) Reflects the elimination of the minority interest on the restructuring
charge.
(g) Reflects the removal of Tropicana net income (loss).
(h) Reflects the removal of the gain on the sale of Tropicana.
(i) Reflects the amortization, on an accelerated basis over periods from 14 to
20 years, of the $2.8 billion fair value of artist contracts, catalogs
and music publishing assets. Amortization for the fiscal years ending June
30, 1999, June 30, 2000, June 30, 2001 and June 30, 2002 will be $330
million.
(j) Reflects the amortization, over a 40 year period, of the unallocated amount
of the excess of the purchase price over the fair value of PolyGram assets
acquired.
(k) Reflects the additional interest expense resulting from the increased
borrowings at an average borrowing rate of 7.02% to finance the acquisition
of PolyGram.
(l) Reflects the income taxes provided for at the statutory income tax rate.
(m) Reflects the adjustment of interest attributable to minority shareholders
of Universal.
(n) Reflects the elimination of USA Networks and the television business
contributed to the LLC. The initial 50% interest was accounted for under
the equity method of accounting, while the acquisition of the remaining 50%
interest was accounted for under the purchase method of accounting.
(o) Reflects the 45.8% equity in the net income of the LLC net of the
amortization of goodwill on the investment in the LLC over 40 years. The
interest in the LLC is accounted for under the equity method of accounting.
(p) Reflects distribution agreements which principally include: (1) USAi's
distribution of Universal's library and other television product and
theatrical films in domestic television markets and (2) Universal's
distribution of USAi's television product in foreign markets.
(q) Reflects the additional interest expense resulting from the increased
short-term borrowings for the payment of $1.7 billion for the incremental
50% interest in USA Networks offset by the reduction of short-term
borrowings using cash proceeds of $1.3 billion from the USAi transaction,
at an average borrowing rate of 5.4%.
17
<PAGE> 18
EXHIBIT INDEX
------- -----
<TABLE>
<S> <C>
(23) Consent of KPMG Accountants N.V., independent auditors.
(99) Unaudited Quarterly Supplementary Pro Forma Financial
Information
</TABLE>
18
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
We consent to incorporation by reference in the Prospectuses constituting part
of the Registration Statements on Form S-3 (Numbers 2-99681, 33-42959, 33-42877,
33-67772, 333-4134 and 333-4136 and 333-62921) and the Registration Statements
on Form S-8 (Numbers 33-27194, 33-2043, 33-49096, 33-60606, 33-99122 and
333-19059) of The Seagram Company Ltd. of our Report dated February 11, 1998,
relating to the Consolidated Balance Sheets of PolyGram N.V. as of December 31,
1996 and 1997, and the related Consolidated Statements of Income, Consolidated
Statements of Cash Flows and Consolidated Statements of Changes in Shareholders'
Equity for each of the years in the three-year period ended December 31, 1997 of
PolyGram N.V., appearing in the Annual Report on Form 20-F of PolyGram N.V. for
the year ended December 31, 1997.
/s/ KPMG Accountants N.V.
_________________________
KPMG Accountants N.V.
Amsterdam, The Netherlands
February 23, 1999
19
<PAGE> 1
EXHIBIT 99
THE SEAGRAM COMPANY LTD. UNAUDITED QUARTERLY SUPPLEMENTARY PRO FORMA FINANCIAL
INFORMATION
The following unaudited quarterly supplementary pro forma financial
information of The Seagram Company Ltd. (the "Corporation" or "Seagram") is
intended solely to provide investors with additional data and should be read
in conjunction with (i) the historical financial statements of Seagram
contained in Seagram's Annual Report on Form 10-K for the fiscal year ended
June 30, 1998, as amended, and Quarterly Reports on Form 10-Q for the quarters
ended September 30, 1998 and December 31, 1998 and (ii) unaudited pro forma
consolidated income statements for the fiscal year ended June 30, 1998 and the
six months ended December 31, 1998 included herein.
The unaudited quarterly supplementary pro forma financial information which
follows includes revenues, earnings before interest, taxes, depreciation and
amortization of the Corporation and its consolidated subsidiaries ("EBITDA") and
operating income through net income, including equity earnings from
unconsolidated companies. EBITDA is a non-GAAP financial metric utilized by
management and is intended solely to provide additional information to
investors. The Corporation believes EBITDA provides additional information for
understanding its underlying business results. The Corporation also believes
EBITDA is an appropriate measure of the Corporation's operating performance,
given the goodwill associated with the Corporation's acquisitions. However,
EBITDA should be considered in addition to, not as a substitute for, reported
revenues, operating income, net income, cash flows and other measures of
financial performance in accordance with generally accepted accounting
principles.
The unaudited quarterly supplementary pro forma financial information for
each of the quarters in the fiscal year ended June 30, 1998 illustrates (i) the
effect of the sale of Tropicana Products, Inc. and the Corporation's global
juice business, (ii) the acquisition of PolyGram N.V. (the "Acquisition") and
(iii) the other transactions referred to below as if such transactions had been
consummated on July 1, 1997. The unaudited supplementary pro forma financial
information for the quarters ended September 30, 1998 and December 31, 1998
illustrates the effect of the Acquisition as if it had been consummated on
July 1, 1997. The Acquisition has been accounted for as a purchase.
The other transactions referred to in the immediately preceding paragraph
are:
- on October 21, 1997, the acquisition by Universal Studios, Inc.
("Universal") of an incremental 50% interest in the USA Networks
partnership (the "USA Networks transaction"), including the Sci-Fi
Channel, for $1.7 billion in cash. The USA Networks transaction was
accounted for under the purchase method of accounting. The cost of the
acquisition was allocated on the basis of the estimated fair market value
of the assets acquired and liabilities assumed. This valuation resulted
in $1.6 billion of unallocated excess of cost over fair value of assets
acquired which was being amortized over 40 years, and
- on February 12, 1998, the sale of a 50% interest in USA Networks to USA
Networks, Inc. ("USAi") and the contribution of the remaining 50%
interest in USA Networks and the majority of the television assets
("UTV") of Universal, including all of Universal's domestic television
production and distribution operations and 50% of the international
operations of USA Networks, to USANi LLC in a transaction (the "USA
transaction") in which Universal received cash, 13.5 million shares of
USAi (after giving effect to the 2 for 1 split of USAi stock on March 26,
1998), consisting of approximately 7.1 million shares of common stock and
6.4 million shares of Class B common stock which, as of the date of
acquisition, in the aggregate represented a 10.7% equity interest in
USAi, and a 45.8% interest in the USANi LLC which is exchangeable for
USAi common stock and Class B common stock. The USAi transaction resulted
in $82 million of unallocated excess cost over fair value of assets
acquired which is being amortized over 40 years.
No adjustment has been included in the pro forma amounts for any
anticipated cost savings or other synergies.
The unaudited supplementary pro forma financial information of the
Corporation is presented for comparative purposes only and is not intended to be
indicative of actual consolidated results of operations or consolidated
financial position that would have been achieved had the Acquisition, the
USA Networks transaction and the USAi transaction been consummated as of the
dates indicated above nor does it purport to indicate results which may be
attained in the future.
20
<PAGE> 2
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
Unaudited Pro Forma Quarterly Supplementary Consolidated Financial Information
(United States dollars in millions)
<TABLE>
<CAPTION>
First Second Third Fourth Fiscal First Second
Quarter Quarter Quarter Quarter Year Quarter Quarter
Ended Ended Ended Ended Ended Ended Ended
9/30/97 12/31/97 3/31/98 6/30/98 6/30/98 9/30/98 12/31/98
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues
Spirits and Wine $ 1,027 $ 1,513 $ 859 $ 1,126 $ 4,525 $ 1,021 $ 1,621
Entertainment
Filmed Entertainment 991 971 777 520 3,259 857 945
Music 1,453 1,994 1,214 1,447 6,108 1,512 2,220
Recreation and Other 181 223 140 151 695 188 242
-------- -------- -------- -------- -------- -------- --------
Total Entertainment 2,625 3,188 2,131 2,118 10,062 2,557 3,407
Total Revenues $ 3,652 $ 4,701 $ 2,990 $ 3,244 $ 14,587 $ 3,578 $ 5,028
======== ======== ======== ======== ======== ======== ========
EBITDA
Spirits and Wine $ 192 $ 190 $ 83 $ 118 $ 583 $ 144 $ 288
Entertainment
Filmed Entertainment 105 25 3 (28) 105 61 (95)
Music 123 385 85 115 708 165 451
Recreation and Other 44 29 10 16 99 34 36
-------- -------- -------- -------- -------- -------- --------
Total Entertainment 272 439 98 103 912 260 392
Total EBITDA $ 464 $ 629 $ 181 $ 221 $ 1,495 $ 404 $ 680
======== ======== ======== ======== ======== ======== ========
Operating Income
Spirits and Wine $ 165 $ 157 $ 52 $ 90 $ 464 $ 114 $ 255
Entertainment
Filmed Entertainment 85 1 (15) (41) 30 35 (114)
Music (81) 167 (118) (92) (124) (38) 246
Recreation and Other 22 15 (8) (5) 24 14 15
-------- -------- -------- -------- -------- -------- --------
Total Entertainment 26 183 (141) (138) (70) 11 147
Corporate (21) (18) (20) (61) (120) (14) (22)
-------- -------- -------- -------- -------- -------- --------
Total Operating Income 170 322 (109) (109) 274 111 380
Interest, net and other 135 167 155 141 598 156 186
Gain on sale of Time Warner
shares -- -- 433 493 926 -- --
Gain on USAi transaction -- -- 360 -- 360 -- --
-------- -------- -------- -------- -------- -------- --------
35 155 529 243 962 (45) 194
Provision for income taxes 49 136 214 94 493 13 156
Minority interest (1) (1) 24 (6) 16 (6) 19
Equity earnings/(loss) from
unconsolidated companies
Spirits and Wine (3) 2 (2) 4 1 -- 1
Entertainment
Filmed Entertainment 17 (2) 9 (2) 22 28 41
Music 1 4 (7) (5) (7) 2 (2)
Recreation and Other 4 (4) (15) (7) (22) 18 (11)
-------- -------- -------- -------- -------- -------- --------
Total Entertainment 22 (2) (13) (14) (7) 48 28
Total equity earnings/(loss)
from unconsolidated companies 19 -- (15) (10) (6) 48 29
======== ======== ======== ======== ======== ======== ========
Net Income $ 6 $ 20 $ 276 $ 145 $ 447 $ (4) $ 48
======== ======== ======== ======== ======== ======== ========
</TABLE>
21
<PAGE> 3
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
Unaudited Pro Forma Quarterly Supplementary Financial Information
Consolidated and Unconsolidated Companies
(United States dollars in millions)
<TABLE>
<CAPTION>
First Second Third Fourth Fiscal First Second
Quarter Quarter Quarter Quarter Year Quarter Quarter
Ended Ended Ended Ended Ended Ended Ended
9/30/97 12/31/97 3/31/98 6/30/98 6/30/98 9/30/98 12/31/98
------- -------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues
Spirits and Wine
Consolidated companies $1,027 $1,513 $ 859 $1,126 $ 4,525 $1,021 $1,621
Unconsolidated companies 61 83 31 57 232 18 62
------ ------ ------ ------ ------- ------ ------
1,088 1,596 890 1,183 4,757 1,039 1,683
Entertainment
Filmed Entertainment
Consolidated companies 991 971 777 520 3,259 857 945
Unconsolidated companies 329 409 396 358 1,492 407 464
------ ------ ------ ------ ------- ------ ------
1,320 1,380 1,173 878 4,751 1,264 1,409
Music
Condolidated companies 1,453 1,994 1,214 1,447 6,108 1,512 2,220
Unconsolidated companies(g) 32 17 7 12 68 33 9
------ ------ ------ ------ ------- ------ ------
1,485 2,011 1,221 1,459 6,176 1,545 2,229
Recreation and Other
Consolidated companies 181 223 140 151 695 188 242
Unconsolidated companies 73 72 72 72 289 87 49
------ ------ ------ ------ ------- ------ ------
254 295 212 223 984 275 291
Total Entertainment
Consolidated companies 2,625 3,188 2,131 2,118 10,062 2,557 3,407
Unconsolidated companies 434 498 475 442 1,849 527 522
------ ------ ------ ------ ------- ------ ------
3,059 3,686 2,606 2,560 11,911 3,084 3,929
Total Revenues
Consolidated companies 3,652 4,701 2,990 3,244 14,587 3,578 5,028
Unconsolidated companies 495 581 506 499 2,081 545 584
------ ------ ------ ------ ------- ------ ------
$4,147 $5,282 $3,496 $3,743 $16,668 $4,123 $5,612
====== ====== ====== ====== ======= ====== ======
EBITDA
Spirits and Wine
Consolidated companies $ 192 $ 190 $ 83 $ 118 $ 583 $ 144 $ 288
Unconsolidated companies -- 2 -- 5 7 1 4
------ ------ ------ ------ ------- ------ ------
192 192 83 123 590 145 292
Entertainment
Filmed Entertainment
Consolidated companies 105 25 3 (28) 105 61 (95)
Unconsolidated companies 84 38 77 54 253 78 107
------ ------ ------ ------ ------- ------ ------
189 63 80 26 358 139 12
Music
Consolidated companies 123 385 85 115 708 165 451
Unconsolidated companies(g) 4 1 -- 1 6 5 --
------ ------ ------ ------ ------- ------ ------
127 386 85 116 714 170 451
Recreation and Other
Consolidated companies 44 29 10 16 99 34 36
Unconsolidated companies 19 10 12 19 60 39 10
------ ------ ------ ------ ------- ------ ------
63 39 22 35 159 73 46
Total Entertainment
Consolidated companies 272 439 98 103 912 260 392
Unconsolidated companies 107 49 89 74 319 122 117
------ ------ ------ ------ ------- ------ ------
379 488 187 177 1,231 382 509
Total EBITDA
Consolidated companies 464 629 181 221 1,495 404 680
Unconsolidated companies 107 51 89 79 326 123 121
------ ------ ------ ------ ------- ------ ------
571 680 270 300 1,821 527 801
Adjustment for unconsolidated
companies (107) (51) (89) (79) (326) (123) (121)
Depreciation (76) (76) (76) (76) (304) (78) (78)
Amortization (199) (215) (195) (195) (804) (203) (203)
Corporate ( 19) ( 16) ( 19) ( 59) (113) ( 12) ( 19)
------ ------ ------ ------ ------- ------ ------
Operating Income $ 170 $ 322 $ (109) $ (109) $ 274 $ 111 $ 380
====== ====== ====== ====== ======= ====== ======
</TABLE>
22
