-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OhmuZUKmpeNoMvd848s14i+OVmv3cLO7+b/k6095VgZ2cpbTqONoD1OTHK5Pd3Om LTqfaxH7g5H3IybVAvFbpg== 0000950123-98-008135.txt : 19980909 0000950123-98-008135.hdr.sgml : 19980909 ACCESSION NUMBER: 0000950123-98-008135 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980825 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980908 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEAGRAM CO LTD CENTRAL INDEX KEY: 0000088188 STANDARD INDUSTRIAL CLASSIFICATION: BEVERAGES [2080] IRS NUMBER: 000000000 STATE OF INCORPORATION: CA FISCAL YEAR END: 0701 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-02275 FILM NUMBER: 98705208 BUSINESS ADDRESS: STREET 1: 1430 PEEL ST STREET 2: H3A 1S9 CITY: MONTREAL QUEBEC CANA STATE: A8 BUSINESS PHONE: 5148495271 MAIL ADDRESS: STREET 1: C/O JOSEPH E SEAGRAM & SONS INC STREET 2: 375 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10152 8-K 1 THE SEAGRAM COMPANY LTD. 1 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: August 25, 1998 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 2 Item 2. Acquisition or Disposition of Assets. 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. ("Pepsi") for cash proceeds of approximately $3.3 billion. Certain of the assets relating to the business of Tropicana which, in the aggregate, are not material to Tropicana's business continue to be held by affiliates of the Corporation, pending receipt of consents or approvals or satisfaction of other applicable requirements necessary for the transfer of such assets. The terms of the transaction were the result of arms-length negotiations between the Corporation and Pepsi. The proceeds from the transaction will be used by the Corporation to pay a part of the cash portion of the purchase price for the previously announced acquisition of PolyGram N.V. ("PolyGram") described below. The foregoing description of the Tropicana transaction is not intended to be complete and is qualified in its entirety by reference to the Stock Purchase Agreement among the Corporation, Seagram Enterprises, Inc. and Pepsi, which is incorporated by reference herein. Item 5. Other Events. On June 22, 1998, the Corporation announced that it had signed definitive agreements with Koninklijke Philips Electronics N.V. ("Philips") and PolyGram to acquire PolyGram. The transaction, which is subject to the receipt of certain regulatory approvals, is scheduled to close in the second quarter of the Corporation's fiscal year ending June 30, 1999. The pro forma financial statements filed herewith give effect to the sale of Tropicana, the acquisition of PolyGram and certain other transactions. The pro forma financial statements should be read in conjunction with the historical financial statements of the Corporation and Polygram. Incorporated by reference herein are the following historical financial statements of Polygram: (i) the audited consolidated balance sheets of PolyGram as of December 31, 1997 and 1996, and the related consolidated statements of income, consolidated statements of cash flows and consolidated statements of changes to shareholders' equity for each of the three years ended December 31, 1997 (the "Audited Financial Statements") and the report of KPMG Accountants N.V. thereon (the "Report") and (ii) the unaudited consolidated interim financial reports of PolyGram for the six months ended June 30, 1998 and June 30, 1997 (the "Unaudited Interim Financial Reports"). 2 3 Item 7. Financial Statements and Exhibits. (b) Pro Forma Financial Information. (1) Unaudited pro forma consolidated balance sheet as of June 30, 1998 and unaudited pro forma consolidated income statement for the fiscal year ended June 30, 1998. (c) Exhibits (2) Stock Purchase Agreement dated as of July 20, 1998 among the Corporation, Seagram Enterprises, Inc. and PepsiCo, Inc. (incorporated by reference to Exhibit 2 to the Corporation's Form 8-K dated July 20, 1998). (23) Consent of KPMG Accountants N.V., independent auditors. (99.1) PolyGram Audited Financial Statements and Report (incorporated by reference to PolyGram's Annual Report on Form 20-F for the year ended December 31, 1997). (99.2) Polygram Unaudited Interim Financial Reports (incorporated by reference to PolyGram's Report on Form 6-K dated July 22, 1998). (99.3) Press Release. 3 4 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: September 8, 1998 By: /s/ Neal B. Cravens ---------------------------------- Neal B. Cravens Senior Vice President, Finance 4 5 THE SEAGRAM COMPANY LTD CURRENT REPORT ON FORM 8-K Index to Financial Statements Unaudited Pro Forma Financial Information of The Seagram Company Ltd.: Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 1998 Unaudited Pro Forma Consolidated Income Statement for the Fiscal Year Ended June 30, 1998. 5 6 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 will be used by the Corporation to provide part of the financing for the Corporation's acquisition of PolyGram N.V. ("PolyGram") which is subject to the receipt of certain regulatory approvals and is expected to close in the second quarter of the Corporation's fiscal year ending June 30, 1999. In connection with the PolyGram transaction, the Corporation has agreed to make an offer (the "Offer") to acquire all issued shares, par value NLG 0.50 per share ("PolyGram Shares"), of PolyGram for per share consideration, at the election of each holder of PolyGram Shares, of either (i) 1.3772 common shares without nominal or par value ("Seagram Shares") of the Corporation (the "Share Consideration") or (ii) NLG 115, net to the seller in cash (the "Cash Consideration"); provided, that Share Consideration shall be paid in respect of 34,783,758 PolyGram Shares and Cash Consideration shall be paid in respect to all other tendered PolyGram Shares. The following Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 1998 and Unaudited Pro Forma Consolidated Statement of Income for the fiscal year ended June 30, 1998 illustrate (i) the effect of the sale of Tropicana and the Offer as if such transactions had been consummated on June 30, 1998 for the Unaudited Pro Forma Consolidated Balance Sheet and (ii) the effect of the sale of Tropicana, the Offer and the other transactions described below as if each had been consummated on July 1, 1997 for the Unaudited Pro Forma Consolidated Statement of Income. For purposes of the following unaudited pro forma financial statements, the total purchase price of the Offer of NLG 20.7 billion is converted to US Dollars at a rate of 2.00 Dutch Guilders to 1.0 US Dollar, the payment of which is reflected as Cash Consideration of $8.35 billion and the issuance of 47,904,191 Seagram Shares valued at $2.0 billion (assuming that all PolyGram Shares are acquired in the Offer). The Offer will be accounted for as a purchase. The other transactions referred to in the immediately preceding paragraph are: - 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"); and - 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. 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 contained in PolyGram's Annual Report on Form 20-F for the year ended December 31, 1997 which is incorporated by reference herein, (ii) the PolyGram unaudited consolidated interim financial data contained in PolyGram's Report on Form 6-K dated July 22, 1998, which is incorporated by reference herein and (iii) the historical financial statements of the Corporation included in its Current Report on Form 8-K dated September 1, 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. 6 7 THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1998 (UNITED STATES DOLLARS IN MILLIONS)
TROPICANA POLYGRAM POLYGRAM SEAGRAM SEAGRAM PRO FORMA FINANCIAL PRO FORMA CONSOLIDATED HISTORICAL ADJUSTMENTS STATEMENTS(F) ADJUSTMENTS PRO FORMA ---------- ----------- ------------- ----------- ------------ ASSETS Current assets Cash and short-term investments at cost................................... $ 1,174 $3,269(a) $ 119 $ 5,207(g) $ 1,419 (8,350)(h) Receivables, net......................... 2,155 -- 1,010 -- 3,165 Inventories.............................. 2,555 -- 135 -- 2,690 Film costs, net of amortization.......... 175 -- 204 -- 379 Deferred income taxes.................... 282 -- 181 -- 463 Prepaid expenses and other current assets................................. 630 -- 572 (188)(i) 1,014 ------- ------ ------ ------- ------- TOTAL CURRENT ASSETS................... 6,971 3,269 2,221 (3,331) 9,130 ------- ------ ------ ------- ------- Common stock of DuPont...................... 1,228 -- -- 1,228 Common stock of USAi........................ 306 -- 306 Film costs, net of amortization............. 1,272 333 -- 1,605 Artists' contracts, advances and other entertainment assets..................... 761 1,116 2,800(j) 4,677 Property, plant and equipment, net.......... 2,733 394 -- 3,127 Investment in unconsolidated companies...... 3,437 105 -- 3,542 Excess of cost over fair value of assets acquired................................. 3,076 1,056 6,695(j) 10,827 Deferred charges and other assets........... 661 58 -- 719 Net assets of discontinued Tropicana operations............................... 1,734 (1,734)(b) -- -- ------- ------ ------ ------- ------- $22,179 $1,535 $5,283 $ 6,164 $35,161 ======= ====== ====== ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term borrowings and indebtedness payable within one year................ $ 1,653 $ 325 $ 1,707(k) $ 3,685 Accrued royalties and participations..... 702 610 -- 1,312 Payables and accrued liabilities......... 2,068 172(c) 1,310 95(i) 3,645 Income and other taxes................... 286 80(d) 84 -- 450 ------- ------ ------ ------- ------- TOTAL CURRENT LIABILITIES.............. 4,709 252 2,329 1,802 9,092 ------- ------ ------ ------- ------- Long-term indebtedness...................... 2,225 73 3,500(l) 5,798 Accrued royalties and participations........ 421 153 -- 574 Deferred income taxes....................... 2,598 261 1,064(j) 3,923 Other credits............................... 995 229 -- 1,224 Minority interest........................... 1,915 36 -- 1,951 Shareholders' equity Shares without par value................. 848 2,202 (2,202)(m) 2,848 2,000(n) Cumulative currency translation adjustments............................ (499) -- (499) Cumulative gain on equity securities after tax.............................. 699 -- 699 Retained earnings........................ 8,268 1,283(e) -- 9,551 ------- ------ ------ ------- ------- TOTAL SHAREHOLDERS' EQUITY............. 9,316 1,283 2,202 (202) 12,599 ------- ------ ------ ------- ------- $22,179 $1,535 $5,283 $ 6,164 $35,161 ======= ====== ====== ======= =======
7 8 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)
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(V) STATEMENTS(W) ADJUSTMENTS PRO FORMA ---------- -------- ------ --------- -------------- ------------- ----------- ------------ Revenues................ $ 9,714 $(394)(o) $26(p) $9,351 $5,559 $14,910 5(q) Cost of revenues........ 5,630 (247)(o) 5,383 3,045 $ 332(x) 8,760 Selling, general and administrative expenses.............. 3,576 (87)(o) 8(q) 3,498 2,167 169(y) 5,834 1(r) ------- ----- --- ------ ------ ------ ------- ------- Operating income........ 508 (60) 22 470 347 (501) 316 Interest, net and other............... (1,058) (38)(o) 21(s) (1,075) 14 332(z) (729) ------- ----- --- ------ ------ ------ ------- ------- 1,566 (22) 1 1,545 333 (833) 1,045 Provision (benefit) for income taxes.... 638 (14) 3(t) 627 102 (242)(t) 487 Minority interest charge (credit)..... 48 (10)(o) 6(u) 44 11 (36)(u) 19 ------- ----- --- ------ ------ ------ ------- ------- Income (loss) from continuing operations.......... $ 880 $ 2 $(8) $ 874 $ 220 $ (555) $ 539 Income from discontinued Tropicana operations, after tax................. 66 -- -- 66 $ (66) -- -- -- ------- ----- --- ------ ------ ------ ------- ------- Net income (loss)....... $ 946 $ 2 $(8) $ 940 $ (66) $ 220 $ (555) $ 539 ======= ===== === ====== ====== ====== ======= ======= Basic earnings per share Income from continuing operations.......... $ 2.51 $ 1.36 Income from discontinued Tropicana operations, after tax................. .19 -- ------- ------- Net income............ $ 2.70 $ 1.36 ======= ======= Diluted earnings per share Income from continuing operations.......... $ 2.49 $ 1.34 Income from discontinued Tropicana operations, after tax................. .19 -- ------- ------- Net income............ $ 2.68 $ 1.34 ======= ======= Shares (in thousands) Weighted average shares outstanding......... 349,874 47,904(n) 397,778 Dilutive potential common shares....... 3,731 3,731 ------- ------- Adjusted weighted average shares outstanding......... 353,605 401,509 ======= =======
8 9 NOTES TO SEAGRAM PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (a) Reflects the proceeds from the sale of Tropicana, which are subject to adjustment based upon a final determination of net indebtedness as of the closing date. (b) Reflects the disposal of Tropicana net assets. (c) Reflects transaction fees and other incremental costs related to the sale of Tropicana. (d) Reflects the income tax expected to be paid on the sale of Tropicana. (e) Reflects the net gain after tax on the sale of Tropicana. (f) The PolyGram financial statements have been converted to U.S. GAAP and certain reclassifications have been made to conform to Seagram's account classifications. The balance sheet has been converted at a rate of 2.0341 Dutch Guilders to 1.0 US Dollar. (g) Reflects the cash proceeds from short term borrowings and long term borrowings. (h) Reflects the cash paid to PolyGram shareholders in the Offer. (i) Reflects hedging, financing and transaction costs incurred as a result of the Offer. (j) Reflects preliminary estimates of the revaluation of artist contracts, catalogs and music publishing to fair value and the associated deferred tax liability and the unallocated amount of the excess of the purchase price over the fair value of PolyGram assets acquired. Seagram is currently evaluating the fair value of certain assets to be acquired and liabilities to be assumed. Upon completion of this valuation, Seagram will make a final allocation of the excess purchase price over fair value, which may include adjustments to the preliminary estimates referenced above. Accordingly, the purchase accounting allocation is preliminary and has been made solely for the purpose of developing the unaudited pro forma consolidated financial information. (k) Reflects the short-term borrowings to finance the Offer. (l) Reflects the long-term borrowings to finance the Offer. (m) Reflects the elimination of historical PolyGram equity. (n) Reflects the issuance of 47,904,191 Seagram Shares at $41.75 per share to PolyGram shareholders in the Offer. (o) Reflects the elimination of USA Networks and the television business contributed to the LLC. (p) Reflects the 45.8% equity in the net income of the LLC. (q) 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. (r) Reflects the amortization of goodwill on the investment in the LLC over 40 years. (s) 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%. (t) Reflects the income taxes provided for at the statutory income tax rate. (u) Reflects the adjustment of interest attributable to minority shareholders of Universal. (v) Reflects the removal of Tropicana net income. (w) The PolyGram financial statements for 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 2.01812 Dutch Guilders to one US Dollar for the twelve months ended June 30, 1998. (x) Reflects the amortization, over periods from 14 to 20 years, of the $2.8 billion revaluation to fair value of artist contracts, catalogs and music publishing assets as described in note (j). (y) 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 as described in note (j). (z) Reflects the additional interest expense resulting from the increased short-term borrowings of approximately $1,707 million at an average borrowing rate of 5.6% and increased long-term borrowings of $3.5 billion at an average borrowing rate of 6.75% for the payment of $8.35 billion of the $10.35 billion purchase price to acquire 100% of PolyGram in the Offer. The balance of the $8.35 billion payment will be funded from the net sale proceeds of $3.15 billion from the sale of Tropicana as described in notes (a) and (b). 9 10 EXHIBIT INDEX
Exhibit Number Description of Exhibit ------ ---------------------- (2) Stock Purchase Agreement dated as of July 20, 1998 among the Corporation, Seagram Enterprises, Inc. and Pepsi (incorporated by reference to Exhibit 2 to the Corporation's Form 8-K dated July 20, 1998). (23) Consent of KPMG Accountants N.V., independent auditors. (99.1) PolyGram Audited Financial Statements and Report (incorporated by reference to PolyGram's Annual Report on Form 20-F for the year ended December 31, 1997). (99.2) PolyGram Unaudited Interim Financial Reports (incorporated by reference to PolyGram's Report on Form 6-K dated July 22, 1998). (99.3) Press Release.
10 EX-23 2 CONSENT OF KPMG ACCOUNTANTS 1 Exhibit 23 CONSENT OF INDEPENDENT AUDITORS We consent to incorporation by reference in the Prospectuses constituting part of the Registration Statement on Form S-4 (333-61535), Registration Statements on Form S-3 (Numbers 2-99681, 33-42959, 33-42877, 33-67772, 333-4134 and 333-4136) 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, September 4, 1998 11 EX-99 3 PRESS RELEASE 1 Exhibit 99 SEAGRAM COMPLETES SALE OF TROPICANA TO PEPSICO FOR US$3.3 BILLION IN CASH August 25, 1998 Seagram announced today that it has completed the sale of Tropicana Products, Inc. to PepsiCo, for $3.3 billion in cash. As stated on July 20, the proceeds from the transaction will be used by Seagram to pay a part of the cash portion of the purchase price for the acquisition of PolyGram, currently scheduled to close in the fourth quarter of this calendar year. 12 -----END PRIVACY-ENHANCED MESSAGE-----