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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: May 13, 1999
THE SEAGRAM COMPANY LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Canada 1-2275 None
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
1430 Peel Street, Montreal, Quebec, Canada H3A 1S9
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code:
(514) 849-5271
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Item 5. Other Events.
Filed as part of this Current Report on Form 8-K and incorporated by
reference herein are the unaudited pro forma consolidated financial
statements of The Seagram Company Ltd. (the "Corporation") for the
nine months ended March 31, 1999 and for the fiscal year ended June
30, 1998 which give effect to the sale of Tropicana Products, Inc.,
the acquisition of PolyGram N.V. ("PolyGram") and certain other
transactions. The unaudited pro forma consolidated financial
statements should be read in conjunction with the historical financial
statements of the Corporation and Polygram.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
(99) Unaudited pro forma consolidated statements of income for the
nine months ended March 31, 1999 and for the fiscal year ended June
30, 1998.
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SIGNATURE
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)
Date: May 13, 1999
By: /s/ Daniel R. Paladino
_______________________________
Daniel R. Paladino
Executive Vice President,
Legal and Environmental Affairs
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Exhibit 99
UNAUDITED PRO FORMA CONSOLIDATED 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") 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 acquisition of Polygram N.V. (the "Acquisition").
The following Unaudited Pro Forma Consolidated Statements of Income for the
nine months ended March 31, 1999 and for the fiscal year ended June 30, 1998
illustrate (i) the effect of the sale of Tropicana and the Acquisition as if
each had been consummated on July 1, 1997 for the Unaudited Pro Forma
Consolidated Statement of Income for the nine months ended March 31, 1999 and
(ii) the effect of the sale of Tropicana, the Acquisition 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 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, 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 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 N.V.
(including the notes thereto) contained in PolyGram N.V.'s Annual Report on Form
20-F for the year ended December 31, 1997, (ii) the PolyGram N.V. unaudited
consolidated interim financial data contained in PolyGram N.V.'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
contained in the Corporation's Form 8-K/A dated February 23, 1999, (iv) the
historical financial statements of the Corporation contained in the
Corporation'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 the Corporation contained in the Corporation's Quarterly Reports
on Form 10-Q for the quarters ended September 30, 1998, December 31, 1998 and
March 31, 1999.
The Unaudited Pro Forma Consolidated Financial Statements are presented for
comparative purposes only and are not intended to be
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indicative of actual consolidated results of operations or consolidated
financial position that would have been achieved had the sale of Tropicana, the
Acquisition, 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.
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UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED MARCH 31, 1999
(U.S. DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
-----------------------------------------
POLYGRAM SCL
SCL OTHER FINANCIAL POLYGRAM CONSOLIDATED
HISTORICAL ADJUSTMENTS STATEMENTS(a) ADJUSTMENTS PRO FORMA
---------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues................................... $ 8,789 $3,032 $ 11,821
Cost of revenues........................... 5,265 1,645 $ 136(h) 7,046
Selling, general and administrative
expenses................................. 3,322 1,019 106(i) 4,447
Restructuring charge....................... 405 $ (405)(b) -- -- --
-------- ------- ------ -------- --------
Operating income (loss).................... (203) 405 368 (242) 328
Interest, net and other.................. 301 65(c) 23 137(j) 526
-------- ------- ------ -------- --------
(504) 340 345 (379) (198)
Provision (benefit) for income taxes..... (18) 117(d) 73 (96)(k) 76
Minority interest charge (credit)........ (27) 21(e) 3 6(l) 3
Equity earnings (losses) from
unconsolidated companies................. 129 -- (7) -- 122
-------- ------- ------ -------- --------
Income (loss) from continuing
operations............................ $ (330) $ 202 $ 262 $ (289) $ (155)
======== ======= ====== ======== ========
Basic and diluted earnings per share(q)
Income (loss) from continuing operations... $ (0.90) $ (0.39)
======== ========
Shares (in thousands)...................... 47,904(r)
Weighted average shares outstanding........ 368,827 (19,811)(s) 396,920
======== ======= ====== ======== ========
</TABLE>
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UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE FISCAL YEAR ENDED JUNE 30, 1998
(U.S. DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS PRO FORMA ADJUSTMENTS
------------------- --------------------------------------
SCL/ POLYGRAM
UTV AND USAI TROPICANA FINANCIAL SCL
SCL USA USAI & PRO ADJUSTMENTS STATEMENTS POLYGRAM CONSOLIDATED
HISTORICAL NETWORKS OTHER FORMA (f) (a) ADJUSTMENTS PRO FORMA
---------- -------- ------ ----------- ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................. $ 9,474 $(376)(m) $ 11(o) $9,109 $5,478 $ 14,587
Cost of revenues......... 5,525 (232)(m) 5,293 3,045 $ 300(h) 8,638
Selling, general and
administrative
expenses............... 3,396 (53)(m) 8(o) 3,351 2,084 240(i) 5,675
-------- ----- ---- ------ ---- ------ ----- --------
Operating income......... 553 (91) 3 465 349 (540) 274
Interest, net
and other............ 228 (38)(m) 21(p) 211 14 373(j) 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(k) 627 102 (236)(k) 493
Minority interest
charge (credit)...... 48 (10)(m) 6(l) 44 11 (39)(l) 16
Equity earnings (losses)
from unconsolidated
companies.............. (45) 31(m) 19(n) 5 (11) (6)
-------- ----- ---- ------ ---- ------ ----- --------
Income (loss) from
continuing
operations........... $ 880 $ 2 $ (8) $ 874 $ 211 $ (638) $ 447
======== ===== ==== ====== ==== ====== ===== ========
Basic earnings per share
Income from continuing
operations........... $ 2.51 $ 1.12
======== ========
</TABLE>
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<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS PRO FORMA ADJUSTMENTS
------------------- --------------------------------------
SCL/ POLYGRAM
UTV AND USAI TROPICANA FINANCIAL SCL
SCL USA USAI & PRO ADJUSTMENTS STATEMENTS POLYGRAM CONSOLIDATED
HISTORICAL NETWORKS OTHER FORMA (f) (a) ADJUSTMENTS PRO FORMA
---------- -------- ------ ----------- ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Diluted earnings per
share
Income from continuing
operations........... $ 2.49 $ 1.11
======== ========
Shares (in thousands)
Weighted average
shares outstanding... 349,874 47,904(r) 397,778
Dilutive potential
common shares........ 3,731 3,731
-------- --------
Adjusted Weighted average
shares outstanding..... 353,605 401,509
-------- --------
</TABLE>
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NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION
(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 SCL's
account classifications. The income statment 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 elimination of the entertainment restructuring charge.
(c) Reflects the elimination of interest income earned on the proceeds from the
sale of Tropicana.
(d) 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.
(e) Reflects the elimination of the minority interest on the restructuring
charge.
(f) Reflects the removal of Tropicana net income (loss).
(g) Reflects the removal of the gain on the sale of Tropicana.
(h) 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.
(i) 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.
(j) Reflects the additional interest expense resulting from the increased
borrowings at an average borrowing rate of 7.02% to finance the
acquisition of PolyGram.
(k) Reflects the income taxes provided for at the statutory income tax rate.
(l) Reflects the adjustment of interest attributable to minority shareholders.
(m) 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.
(n) 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.
(o) 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.
(p) 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%.
(q) The diluted earnings per share calculated excludes any potential common
shares issuable upon conversion of the LYONS, exercise of employee stock
options or otherwise because such items would result in an anti-dilutive
per-share amount.
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(r) Reflects the issuance of Seagram shares in connection with the PolyGram
acquisition.
(s) Reflects the removal of weighted average shares issued in connection with
the PolyGram acquisition.
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