<PAGE> 1
Exhibit 8
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,
2000 1999
---- ----
<S> <C> <C>
Revenues $ 3,539 $ 3,643
Cost of revenues 2,014 2,150
Selling, general and administrative expenses 1,353 1,421
--------- ---------
Operating income 172 72
Interest, net and other expense 160 161
Gain on sale of businesses -- 98
--------- ---------
12 9
Provision for income taxes 5 110
Minority interest 6 4
Equity earnings from unconsolidated companies 20 65
--------- ---------
Income (loss) from continuing operations 21 (40)
Cumulative effect of change in accounting principle, after tax (390) (84)
--------- ---------
Net loss (369) (124)
Retained earnings at beginning of period 8,460 8,707
Dividends paid (73) (72)
--------- ---------
Retained earnings at end of period $ 8,018 $ 8,511
========= =========
Basic loss per share $ (0.84) $ (0.29)
========= =========
Diluted loss per share $ (0.83) $ (0.29)
========= =========
Dividends paid per share $ 0.165 $ 0.165
========= =========
Weighted average shares outstanding (thousands) 439,541 432,842
Dilutive potential common shares (thousands) 7,413 --
--------- ---------
Adjusted weighted average shares outstanding (thousands) 446,954 432,842
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
U.S. GAAP BASIS
1
<PAGE> 2
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(United States dollars in millions)
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
---- ----
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 651 $ 1,230
Receivables, net of allowances 2,770 2,697
Inventories 2,402 2,422
Other current assets 1,300 1,308
-------- --------
TOTAL CURRENT ASSETS 7,123 7,657
Investments 5,684 5,603
Film costs, net of amortization 1,293 1,133
Music catalogs, artists' contracts and advances 2,950 2,803
Property, plant and equipment,net 3,070 3,099
Goodwill and other intangible assets 11,644 11,814
Other assets 700 699
-------- --------
$ 32,464 $ 32,808
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term borrowings and current portion of long-term debt $ 703 $ 499
Payables and accrued liabilities 3,796 3,960
Accrued royalties and participations 1,920 2,263
-------- --------
TOTAL CURRENT LIABILITIES 6,419 6,722
Long-term debt 7,339 7,378
Accrued royalties and participations 518 575
Deferred income taxes 2,707 2,696
Other liabilities 1,241 1,326
Minority interest 2,603 1,882
-------- --------
TOTAL LIABILITIES 20,827 20,579
-------- --------
Shareholders' Equity
Shares without par value 5,140 4,762
Retained earnings 8,018 8,460
Accumulated other comprehensive income (1,521) (993)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 11,637 12,229
-------- --------
$ 32,464 $ 32,808
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
U.S. GAAP BASIS
2
<PAGE> 3
THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(United States dollars in millions)
<TABLE>
<CAPTION>
Quarter
Ended September 30,
2000 1999
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Income (loss) from continuing operations $ 21 $ (40)
Adjustments to reconcile income (loss) from continuing operations to
net cash provided:
Depreciation and amortization of assets 184 182
Amortization of goodwill 85 86
Gain on sale of businesses -- (98)
Minority interest in income of subsidiaries 6 4
Equity earnings from unconsolidated companies in excess
of dividends received (14) (52)
Deferred income taxes (31) 45
Other (2) 13
Changes in assets and liabilities, net of effect of acquisitions
and dispositions:
Receivables, net of allowances (107) (224)
Inventories (75) (82)
Other current assets 78 176
Music catalogs, artists' contracts and advances (105) (87)
Payables and accrued liabilities (44) 112
Other liabilities (131) 3
------- -------
(156) 78
------- -------
Net cash (used for) provided by operating activities (135) 38
------- -------
INVESTING ACTIVITIES
Sale of Champagne operations -- 310
Sale of Universal Concerts -- 190
USA transactions -- (242)
Capital expenditures (66) (120)
Other (172) (45)
------- -------
Net cash (used for) provided by investing activities (238) 93
------- -------
FINANCING ACTIVITIES
Dividends paid (73) (72)
Issuance of shares upon exercise of stock options and conversion of LYONs 28 30
Issuance of Adjustable Conversion-rate Equity Security Units -- 75
Issuance of long-term debt 4 --
Repayment of long-term debt (51) (4)
Decrease in short-term borrowings and other financing activities (114) (273)
------- -------
Net cash used for financing activities (206) (244)
------- -------
Net decrease in cash and cash equivalents (579) (113)
------- -------
Cash and cash equivalents at beginning of period 1,230 1,533
------- -------
Cash and cash equivalents at end of period $ 651 $ 1,420
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
U.S. GAAP BASIS
3
<PAGE> 4
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
Form 10-K for the fiscal year ended June 30, 2000, as amended. 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 first quarter are not
necessarily indicative of those expected for the fiscal year.
Certain prior year amounts have been reclassified to conform to the current
year's presentation.
2. Restructuring Charge and Accrual for 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 included 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 utilization of the restructuring charge to date follows:
<TABLE>
<CAPTION>
Utilized
Original Restructuring -------------------- Balance at
U.S. dollars in millions Charge Credit Cash Non-cash September 30, 2000
------------------------ ------ ------ ---- -------- ------------------
<S> <C> <C> <C> <C> <C>
Severance and other employee-related costs $ 126 $ (12) $ (78) $ (3) $ 33
Facilities and labels 128 (35) (20) (56) 17
Contract termination and other costs 151 (12) (76) (28) 35
--------- -------- ------- -------- --------
$ 405 $ (59) $ (174) $ (87) $ 85
========= ======== ======= ======== ========
</TABLE>
As of September 30, 2000, all of the employees provided for under the
restructuring initiative have separated from the Company. Remaining
restructuring activities relate principally to contractual obligations and
severance payments to be made in future periods.
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. The accrual for exit
activities consists principally of facility elimination costs, including
leasehold termination payments and incremental facility closure costs, contract
terminations, relocation costs and the severance of employees. The utilization
of the accrual for exit activities to date follows:
U.S. GAAP BASIS
4
<PAGE> 5
<TABLE>
<CAPTION>
Utilized
------------------ Balance at
U.S. dollars in millions Exit Activities Cash Non-cash September 30, 2000
------------------------ --------------- ---- -------- ------------------
<S> <C> <C> <C> <C>
Facility elimination costs $ 45 $ (23) $ (2) $ 20
Contract terminations 68 (45) (13) 10
Severance or relocation 397 (219) (16) 162
------ ----- ----- -----
$ 510 $(287) $ (31) $ 192
====== ===== ===== =====
</TABLE>
As of September 30, 2000, remaining exit activities relate principally to
contractual obligations and severance payments to be made in future periods.
3. Investment in DuPont and USAi
At September 30, 2000, 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 $672 million at September
30, 2000. The underlying historical book value of the DuPont shares is $187
million.
At September 30, 2000, the Company owned 18.2 million shares of the outstanding
common stock of USA Networks, Inc. (USAi). The investment, which is accounted
for at market value ($399 million at September 30, 2000), has an underlying cost
of $211 million. At September 30, 2000, the Company also owned 13.4 million
shares of USAi Class B common stock which is carried at its historical cost of
$136 million.
4. Supplementary Financial Statement Information
<TABLE>
<CAPTION>
September 30, June 30,
U.S. dollars in millions 2000 2000
------------------------ ---- ----
<S> <C> <C>
INVENTORIES
Beverages $ 1,956 $ 2,009
Materials, supplies and other 446 413
------- -------
$ 2,402 $ 2,422
======= =======
PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, at cost $ 4,681 $ 4,686
Accumulated depreciation (1,611) (1,587)
------- -------
$ 3,070 $ 3,099
======= =======
</TABLE>
<TABLE>
<CAPTION>
Quarter
Ended September 30,
U.S. dollars in millions 2000 1999
------------------------ ---- ----
<S> <C> <C>
EXCISE TAXES (included in revenues and cost of revenues) $ 185 $ 203
======= =======
</TABLE>
U.S. GAAP BASIS
5
<PAGE> 6
5. Comprehensive Income (Loss)
The components of the Company's total comprehensive income (loss) were as
follows:
<TABLE>
<CAPTION>
Quarter
Ended September 30,
U.S. dollars in millions 2000 1999
------------------------ ---- ----
<S> <C> <C>
Net loss $ (369) $(124)
Currency translation adjustments (497) 209
Unrealized holding loss in equity security, net of tax (31) (88)
------ -----
Total comprehensive loss $ (897) $ (3)
====== =====
</TABLE>
6. Long-Term Debt and Debt Guarantees
The Company has unconditionally guaranteed the following outstanding debt
securities of its principal U.S. spirits and wine subsidiary, Joseph E. Seagram
& Sons, Inc., (JES); 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.
6
U.S. GAAP BASIS
<PAGE> 7
<TABLE>
<CAPTION>
Quarter
Ended September 30,
U.S. dollars in millions 2000 1999
------------------------ ---- ----
<S> <C> <C>
Revenues $ 590 $ 558
Cost of revenues $ 366 $ 348
Net income (loss) $ (23) $ 64
</TABLE>
<TABLE>
<CAPTION>
September 30, June 30,
U.S. dollars in millions 2000 2000
------------------------ ---- ----
<S> <C> <C>
Current assets $ 2,472 $ 2,232
Noncurrent assets 18,306 18,377
-------- --------
$ 20,778 $ 20,609
======== ========
Current liabilities $ 1,160 $ 879
Noncurrent liabilities 10,816 10,889
Shareholders' equity 8,802 8,841
-------- --------
$ 20,778 $ 20,609
======== ========
</TABLE>
7. Earnings Per Share and Common Shares
At September 30, 2000, 58,058,399 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, 2000 -- 439,540,513
and September 30, 1999 -- 432,842,035. Diluted net income per share was based on
446,953,534 weighted average shares outstanding in the quarter ended September
30, 2000. 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.
In the quarter ended September 30, 2000, the Company issued 635,328 shares upon
the exercise of employee stock options and the conversion of LYONs.
Additionally, the Company issued approximately six million shares (approximate
value of $350 million) to acquire Rondor Music International, Inc., an
independent music publishing company.
8. Business Segment Information
The Company's four reportable segments are music, filmed entertainment,
recreation and other and spirits and wine. Each reportable segment defined by
the Company is a strategic business unit that offers different products and
services that are marketed through different channels. Segments are managed
separately because of their unique customers, technology, marketing and
distribution requirements. The Company evaluates the performance of its segments
and allocates resources to them based on several performance measures, including
modified EBITDA (EBITDA). As defined by the Company, EBITDA consists of
operating earnings (losses) before depreciation, amortization and corporate
expenses from consolidated companies. While not a standard measurement under
GAAP, the Company believes
7
U.S. GAAP BASIS
<PAGE> 8
EBITDA is an appropriate measure of operating performance, given the significant
assets and 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
U.S. dollars in millions Music Entertainment and Other and Wine Corporate Total
------------------------ ----- ------------- --------- -------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
SEPTEMBER 30, 2000
Revenues $ 1,378 $ 787 $ 230 $ 1,144 $ -- $ 3,539
EBITDA $ 210 $ 23 $ 56 $ 177 $ -- $ 466
Depreciation and amortization (187) (24) (26) (30) (2) (269)
Corporate expenses -- -- -- -- (25) (25)
------- ------- ------- ------- ------- -------
Operating income (loss) $ 23 $ (1) $ 30 $ 147 $ (27) $ 172
======= ======= ======= ======= ======= =======
Capital expenditures $ 31 $ 13 $ 8 $ 14 $ -- $ 66
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
</TABLE>
Geographic Data
The following table presents revenues by geographic area for the quarters ended
September 30, 2000 and 1999. 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.
<TABLE>
<CAPTION>
Quarter
Ended September 30,
U.S. dollars in millions 2000 1999
------------------------ ---- ----
<S> <C> <C>
United States $ 1,852 $ 1,780
United Kingdom 319 379
Canada 92 113
Other countries 1,276 1,371
-------- --------
$ 3,539 $ 3,643
======== ========
</TABLE>
8
U.S. GAAP BASIS
<PAGE> 9
9. New Accounting Guidance
On July 1, 2000, the Company adopted the Accounting Standards Executive
Committee of the American Institute of Certified Public Accountants (AcSEC)
Statement of Position (SOP) 00-2, Accounting by Producers or Distributors of
Films. The SOP requires that advertising costs for theatrical and television
product be expensed as incurred and that certain abandoned project costs, which
were previously capitalized as film costs, be expensed on an accelerated basis.
The adoption of SOP 00-2 resulted in a $390 million non-cash after-tax charge in
the quarter ended September 30, 2000. The charge reduced the carrying value of
film inventory and was recorded as a cumulative effect of a change in accounting
principle.
10. Recent Events
On June 20, 2000, the Company, Vivendi S.A. (Vivendi) and Canal Plus S.A.
(Canal+) announced that they had entered into a merger agreement and related
agreements providing for a strategic business combination among the three
companies. The combined entity will be named Vivendi Universal. The merger is
expected to close by the end of the calendar year and is subject to customary
closing conditions, including shareholder approval. There is no assurance that
such conditions will be satisfied.
As part of Vivendi Universal's overall strategy after completion of the proposed
merger transactions, Seagram has commenced a process intended to lead to the
sale of the spirits and wine business.
In connection with the proposed strategic business combination, Seagram and JES
have commenced cash tender offers and consent solicitations for certain of their
outstanding debt securities and intend to commence cash tender offers for
certain of their other outstanding debt securities. These debt securities would
otherwise mature between April 2001 and December 2028. The tender offers that
have already commenced have an aggregate principal amount of approximately $5.6
billion. They are conditioned upon, among other things, the completion of the
combination.
We understand that Vivendi is arranging certain bridge financing facilities
with various financial institutions to provide funding to Seagram and JES
for the tender offers and consent solicitations. We understand that Vivendi
intends to repay amounts drawn under these bridge financing facilities from
the proceeds of the sale of the spirits and wine business.
9
U.S. GAAP BASIS
