EX-99.A 2 ex99-a.txt FORM 11-K - 401K PLAN - SPENCER EMPLOYEES 1 EXHIBIT 99(a) SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 COMMISSION FILE NUMBER 1-2275 THE SEAGRAM 401(k) PLAN - SPENCER EMPLOYEES 375 Park Avenue New York, New York 10152 (Full title of the plan and the address of the plan) THE SEAGRAM COMPANY LTD. 1430 Peel Street Montreal, Quebec, Canada, H3A 1S9 (Name of issuer of the securities held pursuant to the plan and the address of its principal executive office) 2 2 REQUIRED INFORMATION 1. Not Applicable. 2. Not Applicable. 3. Not Applicable. 4 The Seagram 401(k) Plan - Spencer Employees (the "Plan") is subject to the requirements of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Attached hereto are the financial statements of the Plan for the fiscal year ended December 31, 1999 prepared in accordance with the financial reporting requirements of ERISA. EXHIBITS 1. Financial statements of the Plan for the fiscal year ended December 31, 1999 prepared in accordance with the financial reporting requirements of ERISA. 2. Consent of Gutierrez & Co., independent accountants. 3 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on their behalf by the undersigned hereunto duly authorized. THE SEAGRAM 401(k) PLAN - SPENCER EMPLOYEES By /s/ John Borgia ------------------------------------ John Borgia Member of Investment Committee Date: June 30, 2000 4 THE SEAGRAM 401(k) PLAN - SPENCER EMPLOYEES FINANCIAL STATEMENTS DECEMBER 31, 1999 AND 1998 5 THE SEAGRAM 401(k) PLAN - SPENCER EMPLOYEES INDEX TO FINANCIAL STATEMENTS
Page ---- Independent Auditors' Report 1 Statement of Net Assets Available for Benefits 2 Statement of Changes in Net Assets Available for Benefits 3 Notes to Financial Statements 4-11
6 INDEPENDENT AUDITORS' REPORT To the Administrative Committee of The Seagram 401(k) Plan - Spencer Employees We have audited the accompanying statements of net assets available for benefits of The Seagram 401(k) Plan - Spencer Employees (the "Plan") as of December 31, 1999 and 1998, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1999 and 1998, and the changes in net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. /s/ Gutierrez & Co. Flushing, New York June 20, 2000 7 THE SEAGRAM 401(k) PLAN - SPENCER EMPLOYEES STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, ------------------------------- 1999 1998 ------------- -------------- Net assets held in trust by Bank of New York ( Note 11 ) $ 13,652,682 $ 8,800,121 ------------- -------------- NET ASSETS AVAILABLE FOR BENEFITS $ 13,652,682 $ 8,800,121 ============= ==============
The accompanying notes are an integral part of the financial statements. 2 8 THE SEAGRAM 401(k) PLAN - SPENCER EMPLOYEES STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, ------------------------------------- 1999 1998 --------------- ---------------- CONTRIBUTIONS Participating Employees $ 888,974 $ 724,445 Participating Companies 386,708 211,040 --------------- ---------------- 1,275,682 935,485 --------------- ---------------- INVESTMENT INCOME ON ASSETS HELD BY BANK OF NEW YORK Net appreciation in fair value of investments 1,077,854 1,107,174 Dividends and interest 154,341 167,873 PARTICIPANT WITHDRAWALS ( 412,974) ( 394,078) --------------- ---------------- INCREASE IN PLAN EQUITY 2,094,903 1,816,454 TRANSFER OF SPENCER GIFTS PROFIT SHARING PLAN 2,757,658 PLAN EQUITY AT BEGINNING OF YEAR 8,800,121 6,983,667 --------------- ---------------- PLAN EQUITY AT END OF YEAR $ 13,652,682 $ 8,800,121 ============== ==============
The accompanying notes are an integral part of the financial statements. 3 9 THE SEAGRAM 401(k) PLAN - SPENCER EMPLOYEES NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies followed in the preparation of the financial statements of The Seagram 401 (k) Plan - Spencer Employees (the "Plan") conform with generally accepted accounting principles. The more significant accounting policies are: Basis of Accounting The accompanying financial statements of the Plan are maintained on the accrual basis of accounting. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires the plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates. Investment Valuation Effective January 1, 1997, the assets are held in trust by Bank of New York (Trustee) in the Joseph E. Seagram & Sons, Inc. Master Trust (Master Trust), which also includes assets of the 401(k) plans of the company's affiliates, Universal Studios, Inc. and UMG Manufacturing and Logistics, Inc. Effective, July 1, 1999,, the assets of the PolyGram Holding, Inc. Deferred Savings and Investment Plan for Employees were added to the Master Trust. The related investment income and appreciation in fair value represents allocations to the Plan based upon the ratio of the Plan's assets to total Master Trust Assets. Investment securities are recorded and valued as follows: United States government obligations at fair value based on the current market yields; temporary investments in short-term investment funds at cost which in the normal course approximates market value; securities representing units of other funds at net asset value; The Seagram Company Ltd. common shares at the closing price reported on the composite tape of the New York Stock Exchange on the valuation date. Security Transactions Security transactions are accounted for on a trade date basis with the average cost basis used for determining the cost of investments sold. Interest income is recorded on an accrual basis. Income on securities purchased under agreements to resell is accounted for at the repurchase rate. Changes in discount on coupons detached from United States Treasury Bonds are reflected as unrealized appreciation. 4 10 THE SEAGRAM 401(k) PLAN - SPENCER EMPLOYEES NOTES TO FINANCIAL STATEMENTS 2. DESCRIPTION OF THE PLAN The Plan is a defined contribution plan originally established as the Spencer Gifts, Inc. Employee Savings Plan ("Spencer Plan") and is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Effective January 1, 1997, the Spencer Plan was amended and continued in the form of The Seagram 401 (k) Plan (the "Seagram Plan"). The name of the Spencer Plan was changed to the Retirement Savings and Investment Plan for Employees of Joseph E. Seagram & Sons, Inc. and Affiliates - Spencer Employees (the "Plan"). Effective January 1, 1999, the name of the Retirement Savings and Investment Plan for Employees of Joseph E. Seagram & Sons, Inc. and Affiliates - Spencer Employees was changed to The Seagram 401(k) Plan - Spencer Employees. To simplify plan administration, the Plan was amended in the form of the Seagram Plan, including certain modifications to the terms, to accomodate the benefits provisions solely applicable to eligible employees of Spencer Gifts, Inc. ("Spencer"). Notwithstanding the adoption of the form of the Seagram Plan, the Plan has continued its existence as a separate plan. Plan assets are solely available for the benefit of and used to satisfy the liabilities incurred on behalf of employees of the Plan. The Plan covers certain employees of Spencer who have completed one year of service and who are either (i) salaried employees or (ii) hourly employees employed in a classification designated by Spencer, excluding employees classified as Highly Compensated employees. The Plan provides benefits to participants based upon amounts voluntarily contributed to a participant's account by the participant and, amounts contributed under certain circumstances, by the Participating Companies (see Note 4). Under the Plan, a participant is not provided with any fixed benefit. The ultimate benefit to be received by the participant depends on the amounts contributed, the investment results and other adjustments, and the participant's vested interest at termination of employment (see Note 5). With respect to each participant, contributions are allocated among four accounts specified in the Plan: pre-tax account, company match account, after-tax account and rollover account (the "Accounts"). Such contributions are invested as designated by the participants in one or more of the investment funds referred to in Note 3, and are accumulated and invested in the Master Trust. Plan assets are solely available for the benefit of and used to satisfy the liabilities incurred on behalf of employees covered by the Plan. The Plan is administered by the Joseph E. Seagram & Sons, Inc. (the "Company") through an Administrative Committee appointed by the Board of Directors of the Company. Effective, July 1, 1999, the Spencer Gifts Profit Sharing Plan was merged with the Plan. The account balances under the Spencer Gifts Profit Sharing Plan when transferred to the Plan will continue to be invested in the same funds in which they were invested prior to the merger unless the participant makes an investment election. 5 11 THE SEAGRAM 401(k) PLAN - SPENCER EMPLOYEES NOTES TO FINANCIAL STATEMENTS 3. INVESTMENT PROGRAM During the year ended December 31, 1999, the Plan was comprised of nine investment funds: (i) the Money Market Fund investing primarily in the State Street Yield Enhanced STIF Fund managed by State Street Bank and Trust Company; (ii) the Stable Income Fund investing in the La Salle Income Plus Fund managed by LaSalle National Trust, N.A.; (iii) the Bond Fund investing in PIMCO Total Return Fund, Class A Shares (which replaced the Putnam Income Fund, Class A Shares on June 1, 1998) managed by PIMCO; (iv) the S&P 500 Index Fund investing in the S&P 500 Flagship Fund, Series C, managed by State Street Bank and Trust Company; (v) the Managed Equity Fund investing in Lazard Equity Portfolio managed by Lazard Freres Asset Management; (vi) the Growth Equity Fund investing in Brandywine Fund, Inc. managed by Freiss Associates (up to February 1, 1999); on December 1, 1999, the Growth Equity Fund was reestablished investing in Vanguard Institutional Index Fund managed by Vanguard; (vii) the Seagram Stock Fund investing primarily in The Seagram Company Ltd. common shares; :(viii) the Dreyfus Small Company Value Fund investing in the Dreyfus Small Company Value Fund managed by Dreyfus and (ix) the MSDW International Equity Fund investing in MSDW International Equity Fund managed by Morgan Stanley. The investments are administered by the Investment Committee appointed by the Board of Directors of the Company. 4. CONTRIBUTIONS Non-highly compensated employees, as defined by the Plan, may elect to contribute to their pre-tax accounts on a pre-tax basis ("Pre-Tax Contributions) and/or to their after-tax accounts on an after-tax basis ("After-Tax Contributions") through payroll deductions of 1% to 14% (in the aggregate) (up to 17% effective January 1, 1999) of their annual salary (as defined in the Plan), in multiples of 1%, in any combination. Pre-tax Contributions and After-Tax Contributions are subject to limitations imposed by federal laws for qualified retirement plans. The Plan provides for mandatory matching contributions by the Participating Companies payable to the participants' company match accounts. The Participating Companies, except as herein noted, contribute on behalf of the participants 40% of the participants'contributions not exceeding 5% of their salary. Effective January 1, 1999, the Participating Companies matching contribution was increased to 60% fo the first 6% of the Participants' Pre-Tax and After-Tax Contributions. The Participating Companies matching contributions are subject to limitations imposed by federal laws for qualified retirement plans. The Plan will accept into participants' rollover Accounts cash received by participants from a qualified plan within the time prescribed by applicable law ("Rollover Contributions"). The Participating Companies may make discretionary contributions in an amount to be determined by the Participating Companies. The Participating Companies have not made discretionary contributions since the inception of the Plan. 6 12 THE SEAGRAM 401(k) PLAN - SPENCER EMPLOYEES NOTES TO FINANCIAL STATEMENTS 5. VESTING A participant in the Plan always has a fully vested interest in the value of his or her contributions and rollover accounts. He or she has a non-forfeitable right to the value of his or her company match account upon the attainment of age 60, disability (as defined in the Plan ) or death. Upon termination of employment for any other reason, a participant vests in the funds held in his or her company match account in accordance with the following vesting schedule: Years of Service Vested Percentage ---------------- ----------------- Less than 1 0% At least 1, but less than 2 20% At least 2, but less than 3 40% At least 3, but less than 4 60% At least 4, but less than 5 80% 5 or more 100% Upon termination of employment for reasons other than the attainment of age 60, disability or death of a participant who was not fully vested in his or her company match account, the nonvested portion of the participant's company match account shall be forfeited. Any amount forfeited shall be applied to reduce the Participating Companies' contributions. Any amount forfeited shall be restored if the participant is re-employed by a Participating Company before incurring a five year break in service and if the participant repays to the Plan (within five years after his or her reemployment commencement date) an amount in cash equal to the full amount distributed to him or her from the Plan on account of termination of employment, excluding amounts from the after-tax and rollover accounts at the participant's election. The nonvested interest of terminated participants serves to reduce Participating Company contributions in accordance with the terms of the Plan. The Participating Companies used $7,263 in forfeitures to offset their contributions during the year ended December 31, 1999. 6. DISTRIBUTIONS Upon termination of employment, after the attainment of age 60 or for reason of disability or death, the participant or his or her beneficiary shall receive the value of his or her Accounts. However, if the termination of employment is for reasons other than the attainment of age 60, Disability or death, the participant shall receive only the value of the vested funds in his or her Accounts (See Note 5). Benefits are recorded when paid. In accordance with the procedures established by the Administrative Committee and the terms of the Plan, a terminated employee may elect to defer final distribution from the Plan. Upon such election, the amount in the participant's vested interest in the Plan is entitled to continue to receive investment income and is held by the Trustee until the date of distribution as elected by the 7 13 THE SEAGRAM 401(k) PLAN - SPENCER EMPLOYEES NOTES TO FINANCIAL STATEMENTS 6. DISTRIBUTIONS (Continued) participant. Prior to termination of employment, the participant may withdraw amounts from the participant's Accounts in accordance with the provisions of the Plan. 7. LOANS TO PARTICIPANTS A participant may apply for loans up to the lesser of $50,000 or 50% of the value of the vested portion of the participant's Accounts. The minimum loan amount is $1,000. The maximum repayment terms are 5 years for general purpose loans and 25 years for principal residence loans. Applications for loans must be approved by the Administrative Committee. The amounts borrowed are transferred from the investment funds in which the participant's Accounts are currently invested. Repayments and interest thereon are credited to the participant's current investment funds through payroll deductions made each pay period. The interest rate for loans is based on the prime rate on the first business day of the month in which the loan is made plus one percentage point. 8. TAX STATUS OF PLAN The Internal Revenue Service has ruled by a letter dated April 20, 2000 that the Plan is qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended. So long as the Plan continues to be so qualified, it is not subject to Federal income taxes. Participants are not currently subject to income tax on the Participating Companies' contributions to the Plan or on income earned by the Plan. Benefits distributed to participants or to their beneficiaries may be taxable to them. The tax treatment of the value of such benefits depends on the event giving rise to the distribution and the method of distribution selected. 9. RELATED PARTY TRANSACTIONS Some of the Plan expenses including trustee, custodial, and certain recordkeeping fees, are paid by the Company, and personnel and facilities of the Company are used by the Plan at no charge. 10. TERMINATION OF THE PLAN The Board of Directors of the Company may terminate the Plan at any time. In the case of termination, the rights of participants to their accounts shall be vested as of the date of termination. 8 14 THE SEAGRAM 401(k) PLAN - SPENCER EMPLOYEES NOTES TO FINANCIAL STATEMENTS 11. ASSETS HELD IN TRUST The assets of the Plan are invested in the Master Trust held by the Trustee where the assets of other related employee benefit plans of affiliates are invested on a commingled basis. The Master Trust net assets consist of the following classification of assets and liabilities as of December 31, 1999 and 1998.
1999 1998 --------------- -------------- Assets ------ Investments held in trust at fair valued determined by quoted market prices: Money Market Fund State Street Yield Enhanced STIF Fund $ 57,250,843 $ 27,162,114 Stable Income Fund The LaSalle Income Plus Fund 54,177,363 14,338,837 Bond Fund PIMCO Total Return Fund, Class A Shares 108,694,075 31,114,802 S&P 500 Index Fund State Street S&P 500 Flagship Fund Series C 257,741,161 129,652,061 Managed Equity Fund Lazard Equity Portfolio Fund 69,428,179 29,014,228 Growth Equity Fund Vanguard Institutional Index Fund 10,005,713 Cash 195,458 Brandywine Fund Inc. Common Shares 25,271,841 Seagram Stock Fund The Seagram Company Ltd. Common Shares 31,925,545 15,666,526 Collective Short Term Investment Fund 847,036 468,709 The Coca-Cola Company Stock Fund The Coca-Cola Company Common Stock 3,214,351 3,941,074 Collective Short Term Investment Fund 77,420 97,496 Dreyfus Small Company Value Fund Dreyfus Small Company Value Fund 15,733,411 2,314,513 MSDW International Equity Fund MSDW International Equity Fund 13,493,724 1,912,494 Dreyfus GIC Fund GICs and GACS 13,110,054 Collective Short Term Investment Fund 198,267 Loans to Participants 9,614,355 7,253,248 --------------- -------------- Total Investments 645,706,955 288,207,943 --------------- --------------
9 15 THE SEAGRAM 401(k) PLAN - SPENCER EMPLOYEES NOTES TO FINANCIAL STATEMENTS 11. ASSETS HELD IN TRUST ( Continued )
1999 1998 --------------- -------------- Receivables Accrued interest and dividends $ 5,226,406 $ 187,437 Contributions receivable 2,068 640,375 Proceeds from securities sold 1,925,793 2,907,827 --------------- -------------- Total Receivables 7,154,267 3,735,639 --------------- -------------- Total assets 652,861,222 291,943,582 --------------- -------------- Liabilities Accounts payable for securities purchased 6,551,837 3,537,298 Administrative expenses 13,989 3,460 Other payables 49,311 - Benefit payments 1,944 - --------------- -------------- Total liabilities 6,617,081 3,540,758 --------------- -------------- Net Assets $646,244,141 $288,402,824 =============== ==============
As of December 31, 1999 and 1998, the equitable share of the Plan in the Master Trust is 2.11% and 3.05% respectively. As of December 31, 1999 and 1998, the net assets of the Master Trust available to the Plan for benefits in the individual investment funds were as follows:
1999 1998 --------------- -------------- Money Market Fund $ 1,993,922 $ 1,308,582 Stable Income Fund 888,166 573,001 Bond Fund 1,149,547 1,045,632 S & P 500 Index Fund 6,945,663 4,665,987 Managed Equity Fund 631,635 414,651 Growth Equity Fund 191,002 380,900 Seagram Stock Fund 826,609 58,313 Dreyfus Small Company Value Fund 403,173 46,002 MSDW International Equity Fund 235,785 20,452 GIC Fund 39,496 Loan accounts 347,684 286,601 --------------- -------------- Total $ 13,652,682 $ 8,800,121 =============== ==============
10 16 THE SEAGRAM 401(k) PLAN - SPENCER EMPLOYEES NOTES TO FINANCIAL STATEMENTS 12. INVESTMENT INCOME FROM MASTER TRUST The appreciation in fair value and other income is as follows: Investments held in trust at fair value determined by quoted market prices:
December 31, ----------------------------------- 1999 1998 --------------- -------------- Bond Fund $ 660 $ 3,763 S & P Index Fund 1,072,624 1,017,874 Managed Equity Fund 14,201 49,213 Growth Equity Fund 27,307 10,404 Seagram Stock Fund ( 65,460) 12,229 Dreyfus Small Company Value Fund 18,291 ( 2,166) MSDW International Equity Fund 10,231 15,857 --------------- -------------- Investment gains (net of investment losses) 1,077,854 1,107,174 Interest and dividends 154,341 167,873 --------------- -------------- Investment Income $ 1,232,195 $ 1,275,047 =============== ==============
13. Spencer Profit Sharing Plan Effective July 1, 1999, the Spencer Gifts Profit Sharing Plan was merged into the Plan. As a result of the merger, the Participants' entire account balances under the Spencer Gifts Profit Sharing Plan were transferred and credited to the Participants' Spencer Profit Sharing Account. 11 17 CONSENT OF INDEPENDENT ACCOUNTANTS The Seagram Company Ltd. The Seagram 401(k) Plan - Spencer Employees We hereby consent to the incorporation by reference in Registration Statement No. 333-19059 on Form S-8 of our Report dated June 20, 2000 which appears in your Annual Report on Form 11-K of The Seagram 401(k) Plan - Spencer Employees for the fiscal year ended December 31, 1999. /S/ Gutierrez & Co. Flushing, New York June 30, 2000