-----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, MnW+AGbDDoV6ufFL2RqVtY11kOxg+J9ay6aiWe8Gx4YsB9ixTnYugpxD7+m9Y6WC PrYt+ARGnxtK4BH5aIlk/Q== 0000950123-99-010052.txt : 19991115 0000950123-99-010052.hdr.sgml : 19991115 ACCESSION NUMBER: 0000950123-99-010052 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991112 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: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-02275 FILM NUMBER: 99746873 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 10-Q 1 THE SEAGRAM COMPANY LTD. 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-2275 THE SEAGRAM COMPANY LTD. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Canada None - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1430 Peel Street, Montreal, Quebec, Canada H3A 1S9 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) 514-849-5271 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) No Change - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No -- -- As of October 31, 1999, there were 433,506,209 common shares without nominal or par value issued and outstanding 2 THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES INDEX
Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statement of Income and Retained Earnings - Quarter Ended September 30, 1999 and 1998 1 Consolidated Balance Sheet - September 30, 1999 and June 30, 1999 2 Consolidated Statement of Cash Flows - Quarter Ended September 30, 1999 and 1998 3 Notes to Consolidated Financial Statements 4-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-19 PART II. OTHER INFORMATION Item 1. Legal Proceedings 20 Item 4. Submission of Matters to a Vote of Security Holders 20-21 Item 6. Exhibits and Reports on Form 8-K 21 Signatures 22 Exhibit Index 23-24
3 THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS (United States dollars in millions, except per share amounts)
Quarter Ended September 30, 1999 1998 -------- -------- Revenues $ 3,643 $ 2,247 Cost of revenues 2,150 1,282 Selling, general and administrative expenses 1,421 786 -------- -------- Operating income 72 179 Interest, net and other 161 41 Gain on sale of businesses 98 -- -------- -------- 9 138 Provision for income taxes 110 87 Minority interest 4 6 Equity earnings from unconsolidated companies 65 50 -------- -------- Income (loss) from continuing operations (40) 95 Loss from discontinued Tropicana operations, after tax -- (3) Gain on sale of discontinued Tropicana operations, after tax -- 1,072 Cumulative effect of change in accounting principle, after tax (84) -- -------- -------- Net income (loss) (124) 1,164 Retained earnings at the beginning of the period 8,707 8,268 Dividends paid (72) (57) -------- -------- Retained earnings at end of period $ 8,511 $ 9,375 ======== ======== Basic earnings per share $ (0.29) $ 3.35 ======== ======== Diluted earnings per share $ (0.29) $ 3.33 ======== ======== Dividends paid per share $ 0.165 $ 0.165 ======== ======== Weighted average shares outstanding (thousands) 432,842 347,360 Dilutive potential common shares (thousands) -- 2,593 -------- -------- Adjusted weighted average shares outstanding (thousands) 432,842 349,953 ======== ========
The accompanying notes are an integral part of these statements. 1 4 THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET (United States dollars in millions)
September 30, June 30, 1999 1999 ------------- -------- ASSETS Cash and cash equivalents $ 1,420 $ 1,533 Receivables, net of allowances 3,243 2,985 Inventories 2,624 2,627 Other current assets 1,678 1,736 ------- ------- TOTAL CURRENT ASSETS 8,965 8,881 Investments 5,700 5,663 Film costs, net of amortization 1,015 1,251 Music catalogs, artists' contracts and advances 3,384 3,348 Property, plant and equipment, net 3,124 3,158 Goodwill and other intangible assets 11,909 11,871 Other assets 786 839 ------- ------- $34,883 $35,011 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Short-term borrowings and current portion of long-term debt $ 801 $ 1,053 Payables and accrued liabilities 4,639 4,808 Accrued royalties and participations 2,437 2,285 ------- ------- TOTAL CURRENT LIABILITIES 7,877 8,146 Long-term debt 7,561 7,468 Accrued royalties and participations 576 434 Deferred income taxes 2,626 2,698 Other liabilities 1,526 1,499 Minority interest 1,873 1,878 ------- ------- TOTAL LIABILITIES 22,039 22,123 ------- ------- Shareholders' Equity Shares without par value 4,606 4,575 Retained earnings 8,511 8,707 Accumulated other comprehensive income (273) (394) ------- ------- TOTAL SHAREHOLDERS' EQUITY 12,844 12,888 ------- ------- $34,883 $35,011 ======= =======
The accompanying notes are an integral part of these statements. 2 5 THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF CASH FLOWS (United States dollars in millions)
Quarter Ended September 30, 1999 1998 ------- ------- OPERATING ACTIVITIES Income (loss) from continuing operations.................................................... $ (40) $ 95 Adjustments to reconcile income (loss) from continuing operations to net cash provided: Depreciation and amortization of assets................................................... 182 75 Amortization of goodwill.................................................................. 86 26 Gain on sale of businesses................................................................ (98) -- Minority interest in income of subsidiaries............................................... 4 6 Equity earnings from unconsolidated companies in excess of dividends received............. (52) (48) Deferred income taxes..................................................................... 45 52 Other..................................................................................... 13 (6) Changes in assets and liabilities, net of effect of acquisitions and dispositions: Receivables, net of allowances.......................................................... (224) (45) Inventories............................................................................. (82) (83) Other current assets.................................................................... 176 (197) Music catalogs, artists' contracts and advances......................................... (87) (75) Payables and accrued liabilities........................................................ 112 (213) Other liabilities....................................................................... 3 (36) ------ ------ 78 (544) ------ ------ Net cash provided by (used for) operating activities........................................ 38 (449) ------ ------ INVESTING ACTIVITIES Sale of Tropicana........................................................................... -- 3,288 Sale of Mumm................................................................................ 310 -- Sale of Universal Concerts.................................................................. 190 -- Investment in USANi LLC..................................................................... (242) (231) Capital Expenditures........................................................................ (120) (98) Other....................................................................................... (45) (57) ------ ------ Net cash provided by investing activities................................................... 93 2,902 ------ ------ FINANCING ACTIVITIES Dividends paid.............................................................................. (72) (57) Issuance of shares upon exercise of stock options and conversion of LYONS................... 30 11 Issuance of Adjustable Conversion-rate Equity Security Units................................ 75 -- Issuance of long-term debt.................................................................. -- 20 Repayment of long-term debt................................................................. (4) -- (Decrease) increase in short-term borrowings and current portion of long-term debt.......... (273) 155 ------ ------ Net cash (used for) provided by financing activities........................................ (244) 129 ------ ------ Net cash (used for) provided by continuing operations....................................... (113) 2,582 ------ ------ Net cash used for discontinued operations................................................... -- (3) ------ ------ Net (decrease) increase in cash and cash equivalents........................................ (113) 2,579 Cash and cash equivalents at beginning of period............................................ 1,533 1,174 ------ ------ Cash and cash equivalents at end of period.................................................. $1,420 $3,753 ====== ======
The accompanying notes are an integral part of these statements. 3 6 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 Annual Report on Form 10-K for the fiscal year ended June 30, 1999, (the Form 10-K). 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 three months are not necessarily indicative of those expected for the fiscal year. Certain prior year amounts have been reclassified to conform with the current year's presentation. 2. Pro Forma Financial Information The unaudited condensed pro forma income statement data presented below assume the PolyGram acquisition and the sale of Tropicana occurred at the beginning of the 1998 fiscal year. The pro forma information is not necessarily indicative of the combined results of operations of the Company that would have occurred if the transactions had occurred on the dates previously indicated, nor is it necessarily indicative of future operating results of the Company.
QUARTER ENDED SEPTEMBER 30, 1999 1998 -------- --------- ACTUAL PRO FORMA Millions, except per share amounts - ---------------------------------- Revenues....................................... $3,643 $3,578 Net loss....................................... $ (124) $ (4) Loss per share: Basic........................................ $(0.29) $(0.01) Diluted...................................... $(0.29) $(0.01)
3. Sale of Businesses Disposition of Champagne Operations On July 2, 1999, the Company completed the sale of its Mumm and Perrier-Jouet Champagne operations for approximately $310 million in cash. The sale price approximated book value and therefore no gain or loss was recognized. Through agreement with the purchaser, Seagram has retained global distribution rights for Mumm and Perrier-Jouet Champagnes for a ten-year period following the sale. Disposition of Concert Operations On September 10, 1999, the Company completed the sale of Universal Concerts, Inc. for proceeds of approximately $190 million. This transaction resulted in a pretax gain of $98 million ($55 million after tax). 4 7 4. Restructuring Charge and 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 includes 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 major components of the charge were:
Filmed Millions Music Entertainment Total - -------- ----- ------------- ----- Severance and other employee-related costs $111 $15 $126 Facilities and labels 124 4 128 Contract termination and other costs 78 73 151 ---- --- ---- $313 $92 $405 ---- --- ----
The severance and other employee related costs provided for a reduction of approximately 1,200 employees worldwide related to facility closures, duplicate position eliminations and streamlining of operations related to cost reduction initiatives. The facilities and labels elimination costs provided for domestic and international lease and label terminations and the write-off of the net book value of furniture, fixtures and equipment and leasehold improvements for vacated properties. The costs of contract terminations were comprised primarily of artists' contracts, distribution contracts, story property commitments and filmed entertainment term deals. The cash and non-cash elements of the restructuring charge approximated $318 million and $87 million, respectively. The utilization of the restructuring charge through September 30, 1999 is as follows:
Original Utilized Balance at Millions Accrual Cash Non-cash September 30, 1999 - -------- -------- ---- -------- ------------------ Severance and other employee-related costs $126 $ 57 $ 3 $ 66 Facilities and labels 128 5 14 109 Contract termination and other costs 151 45 9 97 ---- ---- --- ---- $405 $107 $26 $272 ---- ---- --- ----
As part of the restructuring initiative, approximately 985 employees have separated from the Company as of September 30, 1999. The Company anticipates that all restructuring activities will be substantially completed by June 30, 2000. 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. In fiscal 1999, a $490 million accrual for exit activities was established related to the acquired PolyGram business. The accrual consisted principally of facility elimination costs, contract terminations and the severance or relocation of approximately 1,700 employees. As at September 30, 1999, approximately $215 million of the accrual had been utilized and approximately 1,235 employees had been terminated. 5 8 5. Investment in DuPont and USAi At September 30, 1999, 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 $995 million at September 30, 1999. The underlying historical book value of the DuPont shares is $187 million. At September 30, 1999, the Company owned 9.1 million shares of the outstanding common stock of USA Networks, Inc. (USAi). The investment, which is accounted for at market value ($352 million at September 30, 1999), has an underlying cost of $211 million. At September 30, 1999, the Company also owned 6.7 million shares of USAi Class B common stock which is carried at its historical cost of $136 million. 6. Supplementary Financial Statement Information
September 30, June 30, Millions 1999 1999 - -------- ------------- -------- INVENTORIES Beverages $ 2,128 $ 2,233 Materials, supplies and other 496 394 ------- ------- $ 2,624 $ 2,627 ======= ======= PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, at cost $ 4,562 $ 4,485 Accumulated depreciation (1,438) (1,327) ------- ------- $ 3,124 $ 3,158 ======= =======
Quarter Ended September 30, Millions 1999 1998 - -------- -------- -------- EXCISE TAXES (included in revenues and cost of revenues) $203 $183 ==== ====
7. Comprehensive Income (Loss) The components of the Company's total comprehensive income (loss) were as follows:
Quarter Ended September 30, MILLIONS 1999 1998 - -------- -------- -------- Net income (loss) $(124) $1,164 Currency translation adjustments 209 117 Unrealized holding loss in equity security, net of tax (88) (222) ----- ------ Total comprehensive income (loss) $ (3) $1,059 ===== ======
6 9 8. Long-Term Debt and Debt Guarantees Joseph E. Seagram & Sons, Inc. (JES), the Company's principal U.S. spirits and wine subsidiary, has outstanding debt securities guaranteed by the Company. JES issued Liquid Yield Option Notes (LYONs), which are zero coupon notes with no interest payments due until maturity on March 5, 2006. Each $1,000 face amount LYON may be converted, at the option of the holder, into 18.44 of the Company's common shares (214,073 shares at September 30, 1999). The Company has guaranteed the LYONs on a subordinated basis. In addition, the Company has unconditionally guaranteed JES's 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.
Quarter Ended September 30, MILLIONS 1999 1998 - -------- ------ ------ Revenues $558 $506 Cost of revenues $348 $320 Net income $ 64 $ 40
September 30, June 30, 1999 1999 ------- ------- Current assets $ 1,791 $ 1,674 Noncurrent assets 18,471 18,602 ------- ------- $20,262 $20,276 ======= ======= Current liabilities $ 858 $ 1,099 Noncurrent liabilities 10,257 10,014 Shareholders' equity 9,147 9,163 ------- ------- $20,262 $20,276 ======= =======
9. Earnings Per Share and Common Shares At September 30, 1999, 53,455,506 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, 1999 -- 432,842,035 and September 30, 1998 -- 347,359,705. Diluted net income per share was based on the following weighted average number of shares outstanding during the quarter ended September 30, 1998 -- 349,953,080. 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. 7 10 In the quarter ended September 30, 1999, the Company issued 809,058 shares upon the exercise of employee stock options, deferred compensation and the conversion of LYONs. 10. Business Segment Information The Company's four reportable segments are music, filmed entertainment, recreation and other, and spirits and wine. Each of these reportable segments is a strategic business unit that offers different products and services that are marketed through different channels. They are managed separately because of their unique customers, technology, marketing and distribution requirements. The Company evaluates its segments and allocates resources to them based on several performance measures, including operating earnings before interest, taxes, depreciation and amortization from consolidated companies (EBITDA). While not a standard measurement under GAAP, the Company believes EBITDA is an appropriate measure of operating performance, given the 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
Filmed Recreation Spirits Millions Music Entertainment and Other and Wine Corporate Total - -------- ------ ------------- ---------- -------- --------- ----- 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 SEPTEMBER 30, 1998 Revenues $ 420 $618 $188 $1,021 $ -- $2,247 EBITDA $ 21 $ 93 $ 34 $ 144 $ -- $ 292 Depreciation and amortization (31) (18) (20) (30) (2) (101) Corporate expenses -- -- -- -- (12) (12) ------ ---- ---- ------ ---- ------ Operating income (loss) $ (10) $ 75 $ 14 $ 114 $(14) $ 179 ====== ==== ==== ====== ==== ====== Capital expenditures $ 12 $ 19 $ 34 $ 33 $ -- $ 98
Geographic Data The following table presents revenues by geographic area for the quarters ended September 30, 1999 and 1998. 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. 8 11
MILLIONS Revenues - -------- -------- SEPTEMBER 30, 1999 United States $ 1,780 United Kingdom 379 Canada 113 Other countries 1,371 --------- $ 3,643 ========= SEPTEMBER 30, 1998 United States $ 1,296 United Kingdom 164 Canada 74 Other countries 713 --------- $ 2,247 =========
11. New Accounting Guidance On July 1, 1999 the Company adopted the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants (AcSEC) Statement of Position (SOP) 98-5, Reporting on the Costs of Start-Up Activities, which required that costs of start-up activities be expensed as incurred. The adoption of SOP 98-5 resulted in an $84 million after-tax charge in the quarter ended September 30, 1999, which was recorded as a cumulative effect of a change in accounting principle. The cumulative effect is principally related to costs associated with the expansion of our recreation operations. 9 12 THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations COMPARABILITY The discussion presented below includes an analysis of total Seagram and business segment results prepared in accordance with GAAP. Supplemental financial data includes operating earnings before interest, taxes, depreciation and amortization, referred to as EBITDA. Because of the significant goodwill associated with our acquisitions, we believe EBITDA is an appropriate measure of operating performance. However, you should note that EBITDA is not a substitute for operating income, net income, cash flows and other measures of financial performance as defined by GAAP and may be defined differently by other companies. Investments in companies that are not consolidated with the results of Seagram are reported as "equity earnings from unconsolidated companies". This discussion includes, as supplemental financial data, information about our share of the results of revenues and EBITDA related to these investments. To enhance comparability, financial information for the quarter ended September 30, 1998 is also presented on a pro forma basis, which illustrates the effect of the acquisition of PolyGram and the disposition of Tropicana as if the transactions had occurred at the beginning of the 1998 fiscal year. We believe that pro forma results represent meaningful comparative information for assessing earnings trends because the pro forma results include comparable operations in each period presented. The discussion of the recreation and other and spirits and wine business segments does not include pro forma comparisons, since the pro forma adjustments did not impact those segments. The pro forma results are not necessarily indicative of the combined results that would have occurred had the events actually occurred at the beginning of our 1998 fiscal year. We believe this information will help you to better understand our business results. Management's discussion and analysis of our results of operations and liquidity should be read in conjunction with the accompanying financial statements, as well as the consolidated financial statements and related notes in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1999. 10 13 RESULTS OF OPERATIONS CONSOLIDATED RESULTS
Three Months Ended September 30, 1999 1998 1998 U S dollars in millions, except per share amounts (Actual) (Actual) (Pro forma) REVENUES $ 3,643 $ 2,247 $ 3,578 ---------- --------- ------------ OPERATING INCOME 72 179 111 Interest, net and other 161 41 156 Gain on sale of businesses 98 -- -- Provision for income taxes 110 87 13 Minority interest 4 6 (6) Equity earnings from unconsolidated companies 65 50 48 ---------- --------- ------------ INCOME (LOSS) FROM CONTINUING OPERATIONS (40) 95 (4) Loss from discontinued Tropicana operations, after tax -- (3) -- Gain on sale of discontinued Tropicana operations, after tax -- 1,072 -- Cumulative effect of change in accounting principle, after tax (84) -- -- ---------- --------- ------------ NET INCOME (LOSS) $ (124) $ 1,164 $ (4) ========== ========= ============ EARNINGS PER SHARE - BASIC Income (loss) from continuing operations $ (0.09) $ 0.27 $ (0.01) Loss from discontinued operations -- (0.01) -- Gain on sale of discontinued operations -- 3.09 -- Cumulative effect of accounting change (0.20) -- -- ---------- --------- ------------ NET INCOME (LOSS) $ (0.29) $ 3.35 $ (0.01) ========== ========= ============ EARNINGS PER SHARE - DILUTED Income (loss) from continuing operations $ (0.09) $ 0.27 $ (0.01) Loss from discontinued operations -- (0.01) -- Gain on sale of discontinued operations -- 3.07 -- Cumulative effect of accounting change (0.20) -- -- ---------- --------- ------------ NET INCOME (LOSS) $ (0.29) $ 3.33 $ (0.01) ========== ========= ============ Net cash provided by (used for) operating activities $ 38 $ (449) Net cash (used for) provided by investing activities $ 93 $ 2,902 Net cash (used for) provided by financing activities $ (244) $ 129 SUPPLEMENTAL FINANCIAL DATA: REVENUES Consolidated companies $ 3,643 $ 2,247 $ 3,578 Unconsolidated companies 639 545 545 ---------- --------- ------------ $ 4,282 $ 2,792 $ 4,123 ========== ========= ============ EBITDA Consolidated companies $ 352 $ 292 $ 404 Unconsolidated companies 142 123 123 ---------- --------- ------------ 494 415 527 Adjustment for unconsolidated companies (142) (123) (123) Depreciation and amortization (268) (101) (281) Corporate (12) (12) (12) ---------- --------- ------------ OPERATING INCOME $ 72 $ 179 $ 111 ========== ========= ============
11 14 ACTUAL Revenues increased 62 percent in the quarter ended September 30, 1999 compared to the prior-year period, primarily reflecting the acquisition of PolyGram. Operating income declined from $179 million to $72 million largely as a result of higher amortization and depreciation expense associated with the acquisition. EBITDA from consolidated companies increased 21 percent to $352 million, reflecting strong performances by our music, recreation and spirits and wine businesses, partially offset by results in our film business. The first quarter results include a $98 million gain related to the sale of our concert operations. The net gain, after tax, was $55 million. Proceeds from the concert business sale approximated $190 million. During the quarter we also sold our Champagne operations for $310 million, an amount which approximated the book value of those operations. A net loss of $124 million or $0.29 per share (basic and diluted) was incurred in the quarter, which included the $55 million after-tax gain on the sale of our concert operations and a $84 million cumulative effect of an accounting change related to start-up activities. Excluding these items, the net loss was $95 million or $0.22 per share (basic and diluted). In the prior-year quarter, net income of $1,164 million or $3.35 per basic share and $3.33 per diluted share included a $1.1 billion after-tax gain on the sale of Tropicana. Excluding the discontinued Tropicana operations, net income was $95 million or $0.27 per share (basic and diluted). PRO FORMA On a pro forma basis, revenues increased two percent in the quarter as compared to the prior-year period. Operating income declined from $111 million to $72 million and EBITDA from consolidated companies declined 13 percent as the filmed entertainment performance more than offset strong growth in all other business segments. BUSINESS SEGMENT RESULTS MUSIC
Three Months Ended September 30, 1999 1998 1998 U.S. dollars in millions (Actual) (Actual) (Pro forma) REVENUES $ 1,412 $ 420 $ 1,512 OPERATING LOSS $ (4) $ (10) $ (38) Equity earnings from unconsolidated companies $ 3 $ 4 $ 2 SUPPLEMENTAL FINANCIAL DATA: REVENUES Consolidated companies $ 1,412 $ 420 $ 1,512 Unconsolidated companies 27 33 33 --------- --------- --------- $ 1,439 $ 453 $ 1,545 ========= ========= ========= EBITDA Consolidated companies $ 185 $ 21 $ 165 Unconsolidated companies 3 5 5 --------- --------- --------- 188 26 170 Adjustment for unconsolidated companies (3) (5) (5) Depreciation and amortization (189) (31) (203) --------- --------- --------- OPERATING LOSS $ (4) $ (10) $ (38) ========= ========= =========
CONSOLIDATED OPERATIONS Actual -- Revenues and EBITDA show significant increases reflecting the acquisition of PolyGram. An operating loss of $4 million was incurred in the quarter, compared to a loss of $10 million last year. Of the $1,412 million total music 12 15 revenues, 44 percent were generated in North America, the European and African markets accounted for 41 percent, Asia Pacific contributed 10 percent and Latin America generated the remaining 5 percent. Our market share continues to be strong internationally in key markets, including France, the U.K., Germany and Brazil and remains strong in the U.S., where we maintain a leading market position. Major album sales in the quarter included those by Shania Twain, Limp Bizkit, Boyzone, Nine Inch Nails and the soundtrack from the Universal feature film Notting Hill. In the second quarter, we expect significant sales from such artists as Shania Twain, Enrique Iglesias and Bryan Adams, among others. Pro forma -- Revenues declined seven percent in the quarter primarily due to the impact of unfavorable foreign exchange, divested operations and our effort to reduce unprofitable acts from our artist roster. Operating income improved from a pro forma loss of $38 million in the prior-year first quarter to a loss of $4 million in the current quarter. EBITDA increased 12 percent compared with a very strong quarter last year. Excluding the impact of foreign exchange, EBITDA would have increased 18 percent. These improvements are due to strong chart positions, particularly in North America and Europe. Our cost savings program is progressing as anticipated as we proceed with the integration of PolyGram. Investments in electronic commerce (e-CAT) continue, as we believe that emerging technologies will be important to the music business. UNCONSOLIDATED OPERATIONS The equity in earnings from unconsolidated companies, consisting primarily of the results of certain concert operations, was $3 million for the quarter, a decrease of $1 million compared to the same period in 1998. Concert operations were sold during September 1999. FILMED ENTERTAINMENT
Three Months Ended September 30, 1999 1998 1998 U.S. dollars in millions (Actual) (Actual) (Pro forma) REVENUES $ 873 $ 618 $ 857 OPERATING INCOME (LOSS) $ (59) $ 75 $ 35 Equity earnings from unconsolidated companies $ 63 $ 28 $ 28 SUPPLEMENTAL FINANCIAL DATA: REVENUES Consolidated companies $ 873 $ 618 $ 857 Unconsolidated companies 441 407 407 --------- --------- --------- $ 1,314 $ 1,025 $ 1,264 ========= ========= ========= EBITDA Consolidated companies $ (38) $ 93 $ 61 Unconsolidated companies 97 78 78 --------- --------- --------- 59 171 139 Adjustment for unconsolidated companies (97) (78) (78) Depreciation and amortization (21) (18) (26) --------- --------- --------- OPERATING INCOME (LOSS) $ (59) $ 75 $ 35 ========= ========= =========
CONSOLIDATED OPERATIONS Actual -- Filmed Entertainment revenues increased 41 percent in the quarter reflecting the strong performance of The Mummy, Notting Hill and American Pie. Despite this performance, operating income decreased from income of $75 million to a loss of $59 million in the current quarter. EBITDA also declined from $93 million to a loss of $38 million in the current quarter. Disappointing box office performance of Mystery Men, Dudley Do Right and For Love of The 13 16 Game, as well as several films released earlier in the calendar year, more than offset the strong performance of the above. Television results also declined reflecting lower sales of library product. We believe the movie slate for the remainder of the calendar year is strong, with releases including: The Bone Collector, End of Days and Man on the Moon. While our film business demonstrates continued improvement and we anticipate improved box office performance in fiscal year 2000, we expect that it will be several more quarters before our film business returns to profitability. Pro forma - Pro forma Filmed Entertainment includes the results of PolyGram Filmed Entertainment. Revenues increased two percent in the quarter, largely driven by higher motion picture revenues from The Mummy and American Pie. Operating income and EBITDA losses in the quarter are discussed above. UNCONSOLIDATED OPERATIONS Unconsolidated companies principally include USANi LLC, Loews Cineplex Entertainment Corporation, United Cinemas International Multiplex B.V. and Cinema International Corporation. Led by significant improvement in operating results in the businesses of USANi LLC and Loews Cineplex, the equity in earnings from unconsolidated companies increased from $28 million in the first quarter of the prior year to $63 million in the current quarter. Revenues from unconsolidated companies increased eight percent in the quarter while EBITDA increased 24 percent. RECREATION
Three Months Ended September 30, U.S. dollars in millions 1999 1998 REVENUES $ 209 $ 188 OPERATING INCOME $ 24 $ 14 Equity earnings (losses) from unconsolidated companies $ (1) $ 18 SUPPLEMENTAL FINANCIAL DATA: REVENUES Consolidated companies $ 209 $ 188 Unconsolidated companies 139 87 ----- ----- $ 348 $ 275 ===== ===== EBITDA Consolidated companies $ 49 $ 34 Unconsolidated companies 40 39 ----- ----- 89 73 Adjustment for unconsolidated companies (40) (39) Depreciation and amortization (25) (20) ----- ----- OPERATING INCOME $ 24 $ 14 ===== =====
CONSOLIDATED OPERATIONS Revenues related to our recreation and other business segment increased 11 percent in the quarter, operating income increased 71 percent and EBITDA increased 44 percent. These improvements reflect increased management fees from the expansion of Universal Studios Escape, improved performance at Universal Studios Hollywood and a full quarter of Wet'n Wild results, which was purchased in September 1998. Universal Studios Hollywood contributed to EBITDA 14 17 growth through improved attendance and aggressive cost management. Paid attendance increased two percent, driven, in part, by the opening of Terminator 2:3D in May, with total per capita spending increasing three percent. UNCONSOLIDATED OPERATIONS Equity in earnings from unconsolidated companies declined from income of $18 million in the first quarter of last year to a loss of $1 million this year, partly due to the pre-opening development costs at Universal Studios Japan. In addition, the prior year comparatives included a gain recognized by Sega GameWorks on the sale of its game sales operation to Sega. Revenues from unconsolidated companies increased 60 percent and EBITDA increased three percent. At Universal Studios Escape, the opening of Universal Studios Islands of Adventure, Hard Rock Live and CityWalk contributed to a 31 percent EBITDA increase, a 67 percent increase in paid attendance and a three percent increase in total per capita spending. The Portofino Bay Hotel which is owned by a joint venture in which we have a 25 percent interest, opened in September to strong reviews and strong advance bookings. SPIRITS AND WINE
Three Months Ended September 30, U.S. dollars in millions 1999 1998 REVENUES $1,149 $1,021 OPERATING INCOME $ 125 $ 114 Equity earnings from unconsolidated companies $ -- $ -- SUPPLEMENTAL FINANCIAL DATA: REVENUES Consolidated companies $1,149 $1,021 Unconsolidated companies 32 18 ------ ------ $1,181 $1,039 ====== ====== EBITDA Consolidated companies $ 156 $ 144 Unconsolidated companies 2 1 ------ ------ 158 145 Adjustment for unconsolidated companies (2) (1) Depreciation and amortization (31) (30) ------ ------ OPERATING INCOME $ 125 $ 114 ====== ======
CONSOLIDATED OPERATIONS Revenues increased 13 percent, operating income increased 10 percent and EBITDA increased eight percent in the first quarter. Excluding the results of the Champagne operations, operating income increased 19 percent and EBITDA increased 16 percent. Operating income (excluding the Champagne operations) as a percentage of revenues for total spirits and wine improved from 10.3 percent last year to 10.9 percent in the current quarter. The improved results were driven by continued momentum in the global spirits and wine business and volume growth across all four geographic regions. Total spirits and wine case volumes, including unconsolidated companies, increased 11 percent in the quarter. Volumes in North America were very strong partially reflecting millennium sales and the timing of price increases. Latin American volumes increased six percent primarily due to growth in Mexico, driven by Don Julio Tequila, and in Venezuela. Volumes in Asia Pacific increased 17 percent as the region continues to demonstrate substantial recovery, notably in Korea and Greater China. Europe and Africa reported 13 percent volume growth, led by Germany, Spain, France, Italy and the U.K. Globally, volumes for Crown Royal, Captain Morgan and Chivas Regal increased 39, 21 and nine percent, respectively. ABSOLUT VODKA, which is owned by V&S Vin & 15 18 Sprit AB and distributed by us in major international markets, had a 12 percent increase in volume driven by the successful introduction of ABSOLUT MANDRIN in the United States. Volumes of Royal Salute increased 16,000 cases or 153 percent, reflecting improvement in Asia. Sales of Don Julio, the super premium Tequila that joined the spirits and wine portfolio in May 1999, got off to a strong start in both the United States and Mexico. Case volumes of Martell declined 11 percent primarily due to the timing of shipments in Europe. In the quarter, cost of goods sold as a percentage of revenues increased to 54.7 percent from 51.3 percent in the prior year quarter. Selling, general and administrative expenses as a percentage of revenues decreased to 33.3 percent from 37.5 percent partially due to the timing and reduction of overhead spending. At constant foreign exchange rates, global marketing expense increased 30 percent in the quarter, with a focus on our core brands in anticipation of heightened trade activity related to the millennium. Brand equity build increased approximately 50 percent at constant exchange rates as we continued to invest for future growth by supporting our brands in key markets. UNCONSOLIDATED OPERATIONS The equity in earnings of unconsolidated companies remained unchanged year-on-year at breakeven. Revenues from unconsolidated companies increased over 75 percent in the quarter and EBITDA doubled to $2 million. In the current fiscal year there is only one spirits and wine unconsolidated company, Kirin-Seagram Limited in Japan. In fiscal 1999, the unconsolidated companies also included Seagram (Thailand) Limited for nine months to March 1999 at which time we increased our investment in Thailand and began to consolidate that affiliate. OTHER INCOME AND EXPENSES Corporate expenses were $12 million for the quarter, unchanged from the prior year. Interest, net and other in the quarter included net interest expense of $167 million, offset by $6 million of dividend income from DuPont. The increase of $120 million from the prior year reflects the interest costs associated with funding the PolyGram acquisition. On a pro forma basis, interest, net and other was comparable with the $156 million reported for the first quarter of fiscal 1999. TAXES The first quarter tax provision was calculated using an estimated annual effective rate, excluding the tax on the sale of concert operations, of negative 80 percent. This effective rate is adversely affected by the non-deductible amortization associated with our acquisitions. Excluding this non-deductible amortization, the effective annual rate would be approximately 30 percent. CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE During the quarter we recorded an $84 million after-tax charge related to the cumulative effect of a change in accounting principle. The change relates to the treatment of costs related to start-up activities, which now must be expensed as incurred. The cumulative effect is principally related to costs associated with the expansion of our recreation operations. Beginning July 1, 1999, start-up costs are expensed as incurred and are not anticipated to have a significant impact on our financial results. LIQUIDITY, CAPITAL RESOURCES AND MARKET RISK Financial Position -- Current assets of $9.0 billion at September 30, 1999 were $84 million higher than at June 30, 1999, a variance of less than one percent. Current liabilities decreased $200 million to $7.9 billion at September 30, 1999, primarily due to a decrease in short-term borrowings. Shareholders' equity was $12.8 billion at September 30, 1999, $44 million below June 30, 1999. Our total long- and short-term debt, net of cash and short-term investments, decreased to $6.9 billion at September 30, 1999 from $7.0 billion at June 30, 1999. Our ratio of net debt to total capitalization (including minority interest) remained unchanged at 32 percent. 16 19 Cash Flows from Operating Activities -- Net cash provided by operating activities totaled $38 million in the quarter, an increase of $487 million from the first quarter of fiscal 1999. Contributing to this favorable variance were lower working capital requirements partially offset by a reduction in income from continuing operations. Cash Flows from Investing Activities -- Net cash provided by investing activities was $93 million in the quarter. The $310 million proceeds from the sale of Champagne operations together with $190 million proceeds from the sale of Universal Concerts Inc., were partially offset by an additional $242 million investment in USANi LLC, capital expenditures of $120 million and other investments of $45 million. The capital expenditures by business segment were Music $52 million, Filmed Entertainment $19 million, Recreation $14 million, and Spirits and Wine $35 million. In the first quarter of fiscal 1999, the net cash provided by investing activities was $2.9 billion comprised of $3.3 billion pre-tax proceeds from the Tropicana disposition partially offset by an additional investment in USANi LLC of $231 million, capital expenditures of $98 million and other investments of $57 million. The capital expenditures by business segment were Music $12 million, Filmed Entertainment $19 million, Recreation $34 million, and Spirits and Wine $33 million. Cash Flows from Financing Activities -- Financing activities in the quarter used $244 million. A $273 million decrease in short-term borrowings, a $4 million repayment of long-term debt and dividend payments of $72 million were partially offset by a $75 million supplemental issuance of Adjustable Conversion-rate Equity Security Units and a $30 million issuance of shares upon exercise of stock options and conversion of LYONs. In the first quarter of fiscal 1999, financing activities provided $129 million primarily due to a $155 million increase in short-term borrowings, a $20 million issuance of long-term debt and a $11 million issuance of shares upon exercise of stock options and conversion of LYONs, partially offset by dividend payments of $57 million. Working Capital -- Our working capital position is reinforced by available credit facilities of approximately $7.6 billion. These facilities are used to support our commercial paper borrowings and are available for general corporate purposes. We believe our access to external capital resources together with internally generated liquidity will be sufficient to satisfy existing commitments and plans, and to provide adequate financial flexibility. Evolving technology allows consumers to experience music in new electronic mediums and formats. Through a variety of strategic alliances and independent initiatives, we continue to invest resources in the technology and electronic commerce areas. International Exchange - We employ a variance/covariance approach in our calculation of Value at Risk (VaR), which measures the potential losses in fair value or earnings that could arise from changes in market conditions, using a 95 percent confidence level and assuming a one-day holding period. The VaR, which is the potential loss in fair value, attributable to those interest rate sensitive exposures associated with our exposure to interest rates at September 30, 1999 was $38 million. This exposure is primarily related to long-term debt with fixed interest rates. The VaR, which is the potential loss in earnings associated with our exposure to foreign exchange rates, primarily to hedge cash flow exposures denominated in foreign currencies, was $12 million at September 30, 1999. These exposures include intercompany trade accounts, service fees, intercompany loans and third party debt. We are subject to other foreign exchange market risk exposure as a result of non-financial instrument anticipated foreign currency cash flows which are difficult to reasonably predict, and have therefore not been included in the Company's VaR calculation. YEAR 2000 ISSUE During the quarter, we have made continued progress in our efforts to minimize potential business disruption associated with the Year 2000 (Y2K) issue. Modification or replacement of time or date sensitive information technology (IT) is necessary so that the affected systems will properly recognize dates beyond December 31, 1999. If not corrected, certain systems may fail or miscalculate data. Failures or miscalculations may not only result from IT systems, but from non-IT systems, such as equipment that relies on embedded technology. Risks associated with the Y2K issue also include the potential impact of third parties on our business, including vendors and government services. The Y2K issue could impact all areas of our business, including the production and distribution of music, film and beverage products, operation of theme parks and retail stores. Our overall plan to address the Y2K issue is described more fully in our 1999 Annual Report on Form 10-K. The following is an update of the information included therein. Assessment - Our assessment phase is now complete. Remediation, Testing and Validation - Of the approximate 4,100 critical systems identified during the assessment phase of our program, remediation, testing and validation of 97 percent of the systems is now considered complete. The 17 20 remaining three percent of critical systems are currently in the remediation stage, with completion of all critical systems, including testing and validation, expected by November 30, 1999. Third-Party Vendors and Customers - Our assessment of the Y2K readiness of critical third-party vendors, customers, governments and financial institutions is now complete. We are continuing to evaluate the Y2K readiness of non-critical third parties. Contingency Planning - In addition to assessment, remediation and testing of systems, we are in an ongoing process of developing contingency plans for all business processes which have been identified as critical. All such elements, including dependencies on third parties, have been identified, and we expect detailed contingency plans will be in place by December 31, 1999. Of our anticipated $75 million in costs related to assessment and remediation of IT and non-IT systems, 60 percent of the estimated costs have been incurred as of September 30, 1999. Our estimated costs do not include the costs of redeployed internal resources or the costs of internally developed software or hardware which is being replaced or developed in the normal course of business. We continue to expect that certain remediation efforts related to non-critical systems and contingency planning efforts will extend well into 2000. All costs associated with our plan will be funded through operations. The costs of the Company's Y2K remediation efforts are based upon management's best estimates, which require assumptions about future events, availability of resources and personnel, third-party remediation actions, and other factors. There are no assurances that these estimates will be accurate, and actual amounts may differ materially based on a number of factors, including the availability and cost of resources to undertake remediation activities and the scope and nature of the work required to complete remediation. We expect that the Y2K issue will not pose significant operational problems for us. While we have completed substantially all phases of our Y2K program relating to critical systems, we are dependent on third parties whose progress is not within our control. As with many multinational companies, we continue to believe that our most likely "worst case" scenario involves potential disruptions in services from critical third- parties, such as governments, vendors, customers and financial institutions. Such failures could have a material adverse effect on our operations and at the present time we cannot estimate the likelihood or potential costs of such failures. In addition, while we believe our Y2K program will minimize the likelihood of significant business disruptions, delays in the implementation of new systems, a failure to fully identify all embedded technology potentially affected by the Y2K issues and unexpected failures of critical internal systems also could have a material adverse effect on our operations. Statements concerning Y2K issues which contain more than historical information may be considered forward-looking statements, which are subject to risks and uncertainties. Actual results may differ materially from those expressed in the forward-looking statements, and our Y2K discussion should be read in conjunction with our statement on forward-looking statements which appears below. CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS This report contains statements that are "forward-looking statements," in that they include statements regarding the intent, belief or current expectations of our management with respect to our future operating performance. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements that express forecasts, expectations and projections with respect to future matters, including the launching or prospective development of new business initiatives and products, anticipated music or motion picture releases, internet or theme park projects, and Y2K remediation efforts and anticipated cost savings or synergies are forward-looking statements within the meaning of the Act. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from our forward-looking statements as a result of certain risks and uncertainties, many of which are outside of our control, including but not limited to: - - Changes in global and localized economic and political conditions which may affect attendance and spending at our theme parks, purchases of our consumer products and the performance of our filmed entertainment operations. 18 21 - - Changes in financial and equity markets, including significant interest rate and foreign currency rate fluctuations, which may affect our access to, or increase the cost of financing for our operations and investments. - - Increased competitive product and pricing pressures and unanticipated actions by competitors that could impact our market share, increase expenses and hinder our growth potential. - - Changes in consumer preferences and tastes, which may affect all our business segments. - - Adverse weather conditions or natural disasters, such as hurricanes and earthquakes, which may, among other things, impair performance at our theme parks in California, Florida and Spain. - - Legal and regulatory developments, including changes in accounting standards, taxation requirements, such as the impact of excise tax increases with respect to the spirits and wine business, and environmental laws. - - Technological developments that may affect the distribution of our products or create new risks to our ability to protect our intellectual property rights. - - The uncertainties of litigation and other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission. 19 22 THE SEAGRAM COMPANY LTD. AND SUBSIDIARY COMPANIES PART II. OTHER INFORMATION Item 1. Legal Proceedings Reference is made to the proceedings commenced by the Australian Competition and Consumer Commission (ACCC) on August 30,1999, described on page 12 of the Form 10-K. Universal has received Answers to its Request for Particulars from the ACCC, along with an amended Statement of Claim. Universal and the three individuals continue to vigorously defend these proceedings. Item 4. Submission of Matters to a Vote of Security Holders A total of 357,374,570 common shares were voted at the Annual Meeting of Shareholders on November 3, 1999 representing 82.5 percent of the shares entitled to be voted. Business was transacted as follows. 1. Election of Directors: The persons listed below were elected to serve on the Board of Directors until the next annual meeting. The vote tabulation with respect to each person follows: VOTES CAST VOTES CAST AGAINST OR DIRECTOR FOR WITHHELD Edgar M. Bronfman 355,272,542 2,102,028 -------------- -------------- Charles R. Bronfman 355,280,046 2,094,524 -------------- -------------- Edgar Bronfman, Jr. 355,252,563 2,122,007 -------------- -------------- Samuel Bronfman II 355,300,674 2,073,896 -------------- -------------- Stephen R. Bronfman 355,299,859 2,074,711 -------------- -------------- Matthew W. Barrett 355,332,023 2,042,547 -------------- -------------- Laurent Beaudoin 355,324,251 2,050,319 -------------- -------------- Cornelis Boonstra 350,521,031 6,853,539 -------------- -------------- Richard H. Brown 355,334,283 2,040,287 -------------- -------------- Andre Desmarais 346,187,863 11,186,707 -------------- -------------- Barry Diller 350,486,839 6,887,731 -------------- -------------- Michele J. Hooper 355,339,443 2,035,127 -------------- -------------- David L. Johnston 355,323,574 2,050,996 -------------- -------------- Marie-Josee Kravis 355,215,188 2,159,382 -------------- -------------- Robert W. Matschullat 355,309,224 2,065,346 -------------- -------------- Samuel Minzberg 355,329,345 2,045,225 -------------- -------------- John S. Weinberg 355,309,099 2,065,471 -------------- -------------- 20 23 2. Ratification of Independent Accountants: The proposal to ratify the appointment of PricewaterhouseCoopers LLP as independent accountants to serve until the next annual meeting was approved by a vote of 356,459,057 shares for and 862,095 shares against, withheld, abstentions and broker nonvotes. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits The Exhibit Index filed with this Form 10-Q is on pages 23 and 24. (b) Current Reports on Form 8-K 1. A Current Report on Form 8-K dated September 20, 1999, was filed to report under Item 5 and file under Item 7 the Company's consolidated financial statements for the fiscal year ended June 30, 1999. 21 24 SIGNATURES 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) By: /s/ Robert W. Matschullat ------------------------------ Robert W. Matschullat Vice Chairman and Chief Financial Officer (Principal Accounting Officer) Dated: November 12, 1999 22 25 EXHIBIT INDEX
Exhibit Number Description of Exhibit - -------------------------------------------------------------------------------- 2.1 Investment Agreement, dated as of October 19, 1997, as amended and restated as of December 18, 1997, among Universal Studios, Inc., for itself and on behalf of certain of its subsidiaries, HSN, Inc., Home Shopping Network, Inc. and Liberty Media Corporation, for itself and on behalf of certain of its subsidiaries (incorporated by reference to Exhibit 10 to the Quarterly Report on Form 10-Q for the quarter ended December 31, 1997). 10.1 Governance Agreement, dated as of October 19, 1997, among Universal Studios, Inc., HSN, Inc., Liberty Media Corporation and Barry Diller (incorporated by reference to Exhibit 33 to Schedule 13D/A dated February 23, 1998 of TeleCommunications, Inc., The Seagram Company Ltd., Universal Studios, Inc., Barry Diller, BDTV Inc., BDTV II INC., BDTV III INC. and BDTV IV INC. (the "Schedule 13D"). 10.2 Stockholders Agreement, dated as of October 19, 1997, among Universal Studios, Inc., HSN, Inc., Liberty Media Corporation, Barry Diller and The Seagram Company Ltd. (incorporated by reference to Exhibit 34 to the Schedule 13D). 10.3 Agreement, dated as of October 19, 1997, among Universal Studios, Inc., HSN, Inc. and Liberty Media Corporation (incorporated by reference to Exhibit 35 to the Schedule 13D). 10.4 Exchange Agreement, dated as of October 19, 1997, among Universal Studios, Inc., HSN, Inc. and Liberty Media Corporation (incorporated by reference to Exhibit 36 to the Schedule 13D). 10.5 Amended and Restated LLC Operating Agreement, dated as of February 12, 1998, among USA Networks, Inc., Universal Studios, Inc., Liberty Media Corporation and Barry Diller (incorporated by Reference to Exhibit 37 to the Schedule 13D). 10.6 Amendment and Restatement Agreement dated as of October 20, 1999, in respect of the US $6,500,000,000 Credit Agreement dated as of October 21, 1998, among Joseph E. Seagram & Sons, Inc., The Seagram Company Ltd., J.E. Seagram Corp., the Lenders party thereto, The Chase Manhattan Bank, as Administrative Agent, Citibank, N.A., as Syndication Agent, and Bank of America NT&SA and Bank of Montreal, as Co-Documentation Agents. 10.7 Amendment and Restatement Agreement dated as of October 20, 1999, in respect of the US $1,100,000,000 Credit Agreement dated as of December 21, 1994, as amended and restated as of October 23, 1998, among The Seagram Company Ltd., the Lenders party thereto, and Bank of Montreal, as Administrative Agent.
23 26 10.8 Amendment and Restatement Agreement dated as of October 20, 1999, in respect of the US $2,000,000,000 Credit Agreement dated as of November 23, 1994, as amended and restated as of October 21, 1998, among Joseph E. Seagram & Sons, Inc., The Seagram Company Ltd., J.E. Seagram Corp., the Lenders party thereto, The Chase Manhattan Bank, as Administrative Agent, Citibank, N.A., as Syndication Agent, and Bank of Montreal, as Documentation Agent. 12(a) Computation of Ratio of Earnings to Fixed Charges - The Seagram Company Ltd. 12(b) Computation of Ratio of Earnings to Fixed Charges - Joseph E. Seagram & Sons, Inc. 27 Financial Data Schedule
24 EX-10.6 2 AMENDMENT AND RESTATEMENT AGREEMENT 1 Exhibit 10.6 AMENDMENT AND RESTATEMENT AGREEMENT dated as of October 20, 1999 (this "Amendment and Restatement"), in respect of the US$6,500,000,000 Credit Agreement dated as of October 21, 1998 (the "Credit Agreement" and, as amended by this Amendment and Restatement, the "Amended and Restated Credit Agreement"), among Joseph E. Seagram & Sons, Inc. (the "Borrower"), The Seagram Company Ltd., J.E. Seagram Corp., the Lenders party thereto, The Chase Manhattan Bank, as Administrative Agent (in such capacity, the "Administrative Agent"), Citibank, N.A., as Syndication Agent, and Bank of America NT&SA and Bank of Montreal, as Co-Documentation Agents. Section 2.19 of the Credit Agreement provides that the Termination Date of the Credit Agreement may be extended for a period of 364 days with the consent of the Consenting Lenders. The Borrower has requested that the Credit Agreement be amended and restated to effect such an extension and the other amendments set forth below, and the parties hereto are willing so to amend and restate the Credit Agreement. Each capitalized term used but not defined herein has the meaning assigned thereto in the Credit Agreement. Concurrently herewith, the Borrower and The Seagram Company Ltd. are entering into amendments (the "Other Amendments"), similar to those described in Section 1(b) below, with respect to (i) the US$2,000,000,000 Credit Agreement dated as of November 23, 1994, as amended and restated as of October 21, 1998, among the Borrower, the Seagram Company Ltd., J.E. Seagram Corp., the lenders party thereto, The Chase Manhattan Bank, as administrative agent, Citibank, N.A., as syndication agent, and Bank of Montreal, as documentation agent, and (ii) the US$1,100,000,000 Credit Agreement dated as of December 21, 1994, as amended and restated as of October 23, 1998, among The Seagram Company, Ltd., the lenders party thereto and Bank of Montreal, as administrative agent. In consideration of the premises and the agreements, provisions and covenants herein contained, the 2 2 parties hereto hereby agree, on the terms and subject to the conditions set forth herein, as follows: SECTION 1. Amendments. Upon the effectiveness of this Amendment and Restatement as provided in Section 4 below, the Credit Agreement shall be amended and restated in its current form, but with the following changes: (a) Rollover of Facilities: (i) The definition of "Applicable Rate" is hereby amended by (i) replacing "50%" with "33.3%" in clauses (i) and (ii) of the proviso to the first sentence thereof, (ii) replacing "0.075%" with "0.250%" in such proviso and (iii) replacing the chart with the following:
- ---------------------------------------------------------------- Index Debt Eurodollar Facility Fee ---------- ---------- ------------ Ratings: Spread Rate -------- ------ ---- - ---------------------------------------------------------------- > = A-/A3 0.50% 0.10% - ---------------------------------------------------------------- BBB+/Baa1 0.54% 0.11% - ---------------------------------------------------------------- BBB/baa2 0.57% 0.13% - ---------------------------------------------------------------- BBB-/Baa3 0.60% 0.15% - ---------------------------------------------------------------- BB+/Ba1 0.70% 0.25% - ---------------------------------------------------------------- (ii) The last sentence of the definition of "Commitment" in the Credit Agreement is hereby deleted and replaced with: The aggregate amount of the Lenders' Commitments is $2,000,000,000. (iii) The definition of "Termination Date" in the Credit Agreement is hereby deleted and replaced with: "Termination Date" means October 18, 2000 (subject to extension as provided in Section 2.19). 3 3 (iv) Schedule 2.01 of the Credit Agreement is hereby replaced with the schedule attached hereto as Exhibit A. (b) General Amendments. (i) the definition of "Leverage Ratio" in the Credit Agreement is hereby amended by adding at the end thereof the following new sentence: For purposes of calculating the Leverage Ratio, Total Debt shall not include 90% of the Indebtedness under the 7.50% Adjustable Conversion-rate Equity Security Units in the form issued on June 15, 1999 (including under the subordinated deferrable notes that are a part thereof). (ii) Section 6.01(e) of the Credit Agreement is hereby amended by adding the words "and the aggregate amount of other payment obligations" after the word "Indebtedness" in clause (A) thereof and by deleting the word "and" at the end thereof. (iii) Section 6.01(f) of the Credit Agreement is hereby amended (i) by adding the words "and other payment obligations" after the words "other Liens to secure Indebtedness" therein, (ii) by adding the words "and the aggregate amount of other payment obligations" after the words "principal amount of Indebtedness" therein and (iii) by changing the period to a semi-colon and adding the word "and" at the end thereof. (iv) the following new Section 6.01(g) is hereby added to the Credit Agreement after Section 6.01(f) thereof: (g) Liens on equity interests in special purpose entities securing only Indebtedness and other obligations of such entities that was incurred for the purpose of financing (including through securitizations) films, television programming, music and other intellectual 4 4 property. (v) Clause (v) of Section 6.04 of the Credit Agreement is hereby deleted and replaced with: (v) clause (a) of the foregoing shall not apply to prohibitions, restrictions and conditions arising pursuant to contractual arrangements (other than arrangements with respect to Indebtedness) entered into in the ordinary course of business relating to (I) specific items of property (other than equity interests) or (II) the equity interests of special purpose vehicles that own no material assets other than the specific items of property referred to in clause (I) subject to such contractual arrangements; provided that (x) such prohibitions, restrictions and conditions apply only to such specific items of property and such equity interests of special purpose vehicles which are subject to such contractual arrangements and (y) if the aggregate amount (without duplication) of property and equity interests of special purpose vehicles subject to such prohibitions, restrictions or conditions exceeds 5% of the Consolidated Total Assets of Seagram at any time, the amount of such excess (the "Restricted Property Amount"), when added to (A) the aggregate principal amount of Indebtedness and the aggregate amount of other payment obligations secured by Liens permitted only by paragraph (f) of Section 6.01 and (B) the aggregate amount of Attributable Debt of Sale and Lease-Back Transactions permitted only by paragraph (e) of Section 6.01 shall not exceed 15% of the Consolidated Total Assets of Seagram at such time, SECTION 2. New Lenders and Departing Lenders. As of the date hereof, each of the new lenders (the "New Lenders") indicated on Exhibit A hereto shall become a party to and shall be bound by the provisions of the Amended and Restated Credit Agreement and shall have the rights and obligations of a Lender thereunder. Each of the New Lenders hereby confirms that (i) it has received a copy of the Credit Agreement, together with the most recent financial 5 5 statements delivered pursuant to Section 5.01 of the Credit Agreement and such other documents as it has deemed appropriate to make its own credit analysis and decision to become a party to the Amended and Restated Credit Agreement, and (ii) it will independently and without reliance on the Administrative Agent or any other Lender and based on such information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Amended and Restated Credit Agreement. This Amendment and Restatement shall not be effective with respect to any lender (a "Departing Lender") under the Credit Agreement that has not executed this Amendment and Restatement Agreement as a Consenting Lender, and the rights and obligations of the Departing Lenders shall terminate on October 20, 1999, in accordance with the Credit Agreement. SECTION 3. Representations and Warranties. Each of the Borrower and the Guarantors represents and warrants as of the date hereof to each of the Lenders that: (a) Before and after giving effect to this Amendment and Restatement, the representations and warranties set forth in the Credit Agreement are true and correct in all material respects with the same effect as if made on the date hereof, except to the extent such representations and warranties expressly relate to an earlier date. (b) Immediately before and after giving effect to this Amendment and Restatement, no Event of Default or Default has occurred and is continuing. SECTION 4. Conditions to Effectiveness. The amendments set forth in Section 1 of this Amendment and Restatement shall become effective, as of the date hereof, on the date (the "Amendment Closing Date") on which (i) the Administrative Agent shall have received (A) counterparts of this Amendment and Restatement that, when taken together, bear the signatures of the Borrower, the Guarantors, the Administrative Agent, the Required Lenders and the Consenting Lenders listed in Schedule 2.01 to the Amended and Restated Credit Agreement, (B) legal opinions of Simpson Thacher and Bartlett, Goodman Phillips & Vineberg and Barnes & Thornburg, in each case relating to this Amendment and 6 6 Restatement, the Amended and Restated Credit Agreement and such other matters as the Administrative Agent may reasonably request, each in form and substance reasonably satisfactory to the Administrative Agent, (C) such documents and certificates as the Administrative Agent may reasonably request relating to the existence of the Borrower and the Guarantors, the corporate authority of the Borrower and the Guarantors to enter into, and validity of, this Amendment and Restatement, and any other matters relevant hereto, all in form and substance reasonably satisfactory to the Administrative Agent and (D) payment of the fees described in the Fee Letter dated as of October 1, 1999, between the Borrower, The Chase Manhattan Bank and Chase Securities Inc. and all expenses of the Administrative Agent as described in Section 8, to the extent such expenses have been invoiced prior to the Amendment Closing Date, (ii) the Other Amendments shall have become, or shall simultaneously become, effective in accordance with their terms and (iii) there shall be no Loans outstanding on the Amendment Closing Date. SECTION 5. Agreement. Except as specifically stated herein, the provisions of the Credit Agreement are and shall remain in full force and effect. As used therein, the terms "Credit Agreement", "herein", "hereunder", "hereinafter", "hereto", "hereof" and words of similar import shall, unless the context otherwise requires, refer to the Credit Agreement as amended hereby. SECTION 6. APPLICABLE LAW. THIS AMENDMENT AND RESTATEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 7. Counterparts. This Amendment and Restatement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract. SECTION 8. Expenses. The Borrower agrees to reimburse the Administrative Agent for all out-of-pocket expenses incurred by it in connection with this Amendment and Restatement, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent. 7 7 IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Restatement to be duly executed by their respective authorized officers as of the day and year first written above. JOSEPH E. SEAGRAM & SONS, INC., by /s/ John R. Preston --------------------------------- Name: John R. Preston Title: Vice President & Treasurer THE SEAGRAM COMPANY LTD., by /s/ John R. Preston --------------------------------- Name: John R. Preston Title: Vice President & Treasurer J.E. SEAGRAM CORP., by /s/ John R. Preston --------------------------------- Name: John R. Preston Title: Vice President & Treasurer THE CHASE MANHATTAN BANK, individually and as Administrative Agent, by /s/ Robert T. Sacks --------------------------------- Name: Robert T. Sacks Title: Managing Director CITIBANK, N.A., individually and as Syndication Agent, 8 8 by /s/ Elizabeth H. Minnella --------------------------------- Name: Elizabeth H. Minnella Title: Vice President BANK OF AMERICA, N.A., individually and as Co-Documentation Agent, by /s/ Thomas J. Kane ----------------------------- Name: Thomas J. Kane Title: Vice President BANK OF MONTREAL, individually and as Co-Documentation Agent, by /s/ Jeffrey N. Wieser ----------------------------- Name: Jeffrey N. Wieser Title: Managing Director CITICORP USA, INC. by /s/ Elizabeth H. Minella ----------------------------- Name: Elizabeth H. Minella Title: Vice President ABN AMRO BANK, N.V. by /s/ Frances O'R. Logan ----------------------------- Name: Frances O'R. Logan Title: Senior Vice President by /s/ David Carrington ----------------------------- Name: David Carrington Title: Vice President 9 9 THE BANK OF NEW YORK by /s/ John C. Lambert --------------------------------- Name: John C. Lambert Title: Vice President 10 10 BANQUE NATIONALE DE PARIS by /s/ Sophie Revillard Kaufman --------------------------------- Name: Sophie Revillard Kaufman Title: Vice President by /s/ Gwen Abbott --------------------------------- Name: Gwen Abbott Title: Assistant Vice President BARCLAYS BANK PLC by /s/ Craig J. Lewis --------------------------------- Name: Craig J. Lewis Title: Director COMMERZBANK AG, NEW YORK BRANCH AND/OR GRAND CAYMAN BRANCH by /s/ Markus Tappe --------------------------------- Name: Markus Tappe Title: Vice President by /s/ Andreas Schwung --------------------------------- Name: Andreas Schwung Title: Vice President CREDIT AGRICOLE INDOSUEZ by /s/ Craig Welch --------------------------------- Name: Craig Welch Title: First Vice President by /s/ John McCloskey --------------------------------- Name: John McCloskey 11 11 Title: Vice President, Senior Relationship Manager 12 12 DEUTSCHE BANK AG NEW YORK BRANCH AND/OR CAYMAN ISLANDS BRANCH by /s/ Alexander Karow --------------------------------- Name: Alexander Karow Title: Assistant Vice President by /s/ William W. McGinty --------------------------------- Name: William W. McGinty Title: Director DRESDNER BANK AG, NEW YORK BRANCH AND GRAND CAYMAN BRANCH by /s/ Laura G. Fazio --------------------------------- Name: Laura G. Fazio Title: First Vice President by /s/ Constance Loosemore --------------------------------- Name: Constance Loosemore Title: Assistant Vice President HSBC BANK USA by /s/ Jeffrey Hughes --------------------------------- Name: Jeffrey Hughes Title: Assistant Vice President THE INDUSTRIAL BANK OF JAPAN, LIMITED, NEW YORK BRANCH by /s/ J. Kenneth Biegen --------------------------------- Name: J. Kenneth Biegen Title: Senior Vice President 13 13 LLOYDS TSB BANK PLC by /s/ David Rodway --------------------------------- Name: David Rodway Title: Assistant Director R156 by /s/ Louise Miller --------------------------------- Name: Louise Miller Title: Assistant Vice President Structured Finance M256 NATIONAL WESTMINSTER BANK PLC NEW YORK BRANCH, as lender by /s/ Richard Freedman --------------------------------- Name: Richard Freedman Title: Director, North America NATIONAL WESTMINSTER BANK PLC NASSAU BRANCH, as lender by /s/ Richard Freedman --------------------------------- Name: Richard Freedman Title: Director, North America SOCIETE GENERALE FINANCE (IRELAND) LIMITED by /s/ Richard Wanless --------------------------------- Name: Richard Wanless Title: Managing Director by /s/ Aidan Storey --------------------------------- Name: Aidan Storey Title: Account Manager 14 14 TORONTO DOMINION (TEXAS), INC. by /s/ Mark A. Baird --------------------------------- Name: Mark A. Baird Title: Vice President WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH by /s/ Lucie L. Guernsey --------------------------------- Name: Lucie L. Guernsey Title: Director by /s/ Pascal Kabemba --------------------------------- Name: Pascal Kabemba Title: Associate THE BANK OF NOVA SCOTIA by /s/ James R. Trimble --------------------------------- Name: James R. Trimble Title: Senior Relationship Manager CREDIT SUISSE FIRST BOSTON by /s/ David W. Kratovil --------------------------------- Name: David W. Kratovil Title: Director by /s/ Joel Glodowski --------------------------------- Name: Joel Glodowski Title: Managing Director 15 15 BAYERISCHE LANDESBANK GIROZENTRALE, CAYMAN ISLANDS BRANCH by /s/ Hereward Drummond --------------------------------- Name: Hereward Drummond Title: Senior Vice President by /s/ James H. Boyle --------------------------------- Name: James H. Boyle Title: Vice President MELLON BANK, N.A. by /s/ Maria N. Sisto --------------------------------- Name: Maria N. Sisto Title: Assistant Vice President ING BANK N.V. by /s/ Peter Nabney --------------------------------- Name: Peter Nabney Title: Country Manager by /s/ Alan Duffy --------------------------------- Name: Alan Duffy Title: Vice President 16 16 BANCA NAZIONALE DEL LAVORO S.p.A. NEW YORK BRANCH by /s/ Giulio Giovine --------------------------------- Name: Giulio Giovine Title: Vice President by /s/ Leonardo Valentini --------------------------------- Name: Leonardo Valentini Title: First Vice President BANCO BILBAO VIZCAYA by /s/ Alejandro Lorca --------------------------------- Name: Alejandro Lorca Title: Vice President by /s/ John Martini --------------------------------- Name: John Martini Title: Vice President THE BANK OF TOKYO-MITSUBISHI TRUST, LTD., NEW YORK BRANCH by /s/ Jim Brown --------------------------------- Name: Jim Brown Title: Attorney-In-Fact BANK ONE, NA [MAIN OFFICE CHICAGO] by /s/ Stephen E. McDonald --------------------------------- Name: Stephen E. McDonald Title: Senior Vice President BANKBOSTON, N.A. 17 17 by /s/ William F. Hamilton --------------------------------- Name: William F. Hamilton Title: Director THE DAI-ICHI KANGYO BANK, LIMITED, by /s/ Marvin M. Lazar --------------------------------- Name: Marvin M. Lazar Title: Assistant Vice President FIRST UNION NATIONAL BANK by /s/ Douglas E. Blackman --------------------------------- Name: Douglas E. Blackman Title: Vice President ROYAL BANK OF CANADA by /s/ Barbara Meijer --------------------------------- Name: Barbara Meijer Title: Senior Manager THE ROYAL BANK OF SCOTLAND PLC by /s/ Derek Bonnar --------------------------------- Name: Derek Bonnar Title: Vice President THE NORINCHUKIN BANK, NEW YORK BRANCH by /s/ Yoshiro Niiro --------------------------------- Name: Yoshiro Niiro Title: General Manager 18 18 BANCA MONTE DEI PASCHI DI SIENA S.p.A. by /s/ S. M. Sondak --------------------------------- Name: S. M. Sondak Title: First Vice President & Deputy General Manager by /s/ Brian R. Landy --------------------------------- Name: Brian R. Landy Title: Vice President 19 EXHIBIT A SCHEDULE 2.01 INSTITUTION REVOLVING COMMITMENT The Chase Manhattan Bank $ 85,000,000 Bank of America, N.A. 80,000,000 Bank of Montreal 80,000,000 Citicorp USA, Inc. 80,000,000 ABN AMRO Bank, N.V. 65,000,000 The Bank of New York 65,000,000 Banque Nationale de Paris 65,000,000 Barclays Bank PLC 65,000,000 Commerzbank AG, New York Branch and/or Grand Cayman Branch 65,000,000 Credit Agricole Indosuez 65,000,000 Deutsche Bank AG New York Branch and/or Cayman Islands Branch 65,000,000 Dresdner Bank AG New York Branch and Grand Cayman Branch 65,000,000 HSBC Bank USA 65,000,000 The Industrial Bank of Japan, Limited, New York Branch 65,000,000 Lloyds TSB Bank PLC 65,000,000 National Westminster Bank PLC 65,000,000 Societe Generale Finance (Ireland) Ltd. 65,000,000 Toronto Dominion (Texas), Inc. 65,000,000 Westdeutsche Landesbank Girozentrale, New York Branch 65,000,000 The Bank of Nova Scotia 65,000,000 Credit Suisse First Boston 65,000,000 Bayerische Landesbank Girozentrale, Cayman Islands Branch 40,000,000 Mellon Bank, N.A. 40,000,000 ING Bank 20,000,000 Banca Nazionale Del Lavoro S.p.A. New York Branch 20,000,000 Banco Bilbao Vizcaya 20,000,000 The Bank of Tokyo Mitsubishi, Ltd., New York Branch 20,000,000 Bank One, NA [main office Chicago] 20,000,000 BankBoston, N.A. 20,000,000 Dai-Ichi Kangyo Bank, Limited 20,000,000 First Union National Bank 20,000,000 Royal Bank of Canada 20,000,000 Royal Bank of Scotland PLC 20,000,000 The Norinchukin Bank, New York Branch 20,000,000 Banca Monte Dei Paschi Di Siena S.p.A. 20,000,000 Total Commitments $1,750,000,000 EX-10.7 3 AMENDMENT AND RESTATEMENT AGREEMENT 1 Exhibit 10.7 AMENDMENT AND RESTATEMENT AGREEMENT dated as of October 20, 1999 (this "Amendment and Restatement"), in respect of the US$1,100,000,000 Credit Agreement dated as of December 21, 1994, as amended and restated as of October 23, 1998 (the "Credit Agreement" and, as amended by this Amendment and Restatement, the "Amended and Restated Credit Agreement"), among The Seagram Company Ltd. (the "Borrower"), the Lenders party thereto, and Bank of Montreal, as Administrative Agent (in such capacity, the "Administrative Agent"). The Borrower has requested that the Credit Agreement be amended and restated as set forth below, and the parties hereto are willing so to amend and restate the Credit Agreement. Each capitalized term used but not defined herein has the meaning assigned thereto in the Credit Agreement. Concurrently herewith, the Borrower and Joseph E. Seagram & Sons, Inc. are entering into amendments (the "Other Amendments"), similar to those described in Section 1(b) below, with respect to (i) the US$6,500,000,000 Credit Agreement dated as of October 21, 1998, among Joseph E. Seagram & Sons, Inc., the Borrower, J.E. Seagram Corp., the lenders party thereto, The Chase Manhattan Bank, as administrative agent, Citibank, N.A., as syndication agent, and Bank of America NT&SA and Bank of Montreal, as co-documentation agents, and (ii) the US$2,000,000,000 Credit Agreement dated as of November 23, 1994, as amended and restated as of October 21, 1998, among Joseph E. Seagram & Sons, Inc., the Borrower, J.E. Seagram Corp., the lenders party thereto, The Chase Manhattan Bank, as administrative agent, Citibank, N.A., as syndication agent, and Bank of Montreal, as documentation agent. In consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto hereby agree, on the terms and subject to the conditions set forth herein, as follows: SECTION 1. Amendments. Upon the effectiveness of this Amendment and Restatement as provided in Section 3 below, the Credit Agreement shall be amended and restated in its current form, but with the following changes: (a) Pricing Grid. The definition of "Applicable Rate" is hereby amended by (i) replacing "50%" with "33.3%" 2 in clauses (i) and (ii) of the proviso to the first sentence thereof, (ii) replacing "0.075%" with "0.250%" in such proviso and (iii) replacing the chart with the following:
- ---------------------------------------------------------------------------- Index Debt Eurodollar Facility Fee ---------- ---------- ------------ Ratings: Spread Rate -------- ------ ---- - ---------------------------------------------------------------------------- > = A-/A3 0.51% 0.09% - ---------------------------------------------------------------------------- BBB+/Baa1 0.55% 0.10% - ---------------------------------------------------------------------------- BBB/Baa2 0.575% 0.125% - ---------------------------------------------------------------------------- BBB-/Baa3 0.60% 0.15% - ---------------------------------------------------------------------------- BB+/Ba1 0.725% 0.225% - ---------------------------------------------------------------------------- (b) General Amendments. (i) the definition of "Leverage Ratio" in the Credit Agreement is hereby amended by adding at the end thereof the following new sentence: For purposes of calculating the Leverage Ratio, Total Debt shall not include 90% of the Indebtedness under the 7.50% Adjustable Conversion-rate Equity Security Units in the form issued on June 15, 1999 (including under the subordinated deferrable notes that are a part thereof). (ii) Section 6.01(e) of the Credit Agreement is hereby amended by adding the words "and the aggregate amount of other payment obligations" after the word "Indebtedness" in clause (A) thereof and by deleting the word "and" at the end thereof. (iii) Section 6.01(f) of the Credit Agreement is hereby amended (A) by adding the words "and other payment obligations" after the words "other Liens to secure Indebtedness" therein, (B) by adding the words "and the aggregate amount of other payment obligations" after the words "principal amount of Indebtedness" therein and (C) by changing the period to a semi-colon and adding the word "and" at the end thereof. (iv) The following new Section 6.01(g) is hereby added to the Credit Agreement after Section 6.01(f) thereof: 3 3 (g) Liens on equity interests in special purpose entities securing only Indebtedness and other obligations of such entities that was incurred for the purpose of financing (including through securitizations) films, television programming, music and other intellectual property. (v) Clause (v) of Section 6.04 of the Credit Agreement is hereby deleted and replaced with: (v) clause (a) of the foregoing shall not apply to prohibitions, restrictions and conditions arising pursuant to contractual arrangements (other than arrangements with respect to Indebtedness) entered into in the ordinary course of business relating to (I) specific items of property (other than equity interests) or (II) the equity interests of special purpose vehicles that own no material assets other than the specific items of property referred to in clause (I) subject to such contractual arrangements; provided that (x) such prohibitions, restrictions and conditions apply only to such specific items of property and such equity interests of special purpose vehicles which are subject to such contractual arrangements and (y) if the aggregate amount (without duplication) of property and equity interests of special purpose vehicles subject to such prohibitions, restrictions or conditions exceeds 5% of the Consolidated Total Assets of the Borrower at any time, the amount of such excess (the "Restricted Property Amount"), when added to (A) the aggregate principal amount of Indebtedness and the aggregate amount of other payment obligations secured by Liens permitted only by paragraph (f) of Section 6.01 and (B) the aggregate amount of Attributable Debt of Sale and Lease-Back Transactions permitted only by paragraph (e) of Section 6.01 shall not exceed 15% of the Consolidated Total Assets of the Borrower at such time, SECTION 2. Representations and Warranties. The Borrower represents and warrants as of the date hereof to each of the Lenders that: 4 4 (a) Before and after giving effect to this Amendment and Restatement, the representations and warranties set forth in the Credit Agreement are true and correct in all material respects with the same effect as if made on the date hereof, except to the extent such representations and warranties expressly relate to an earlier date. (b) Immediately before and after giving effect to this Amendment and Restatement, no Event of Default or Default has occurred and is continuing. SECTION 3. Conditions to Effectiveness. The amendments set forth in Section 1 of this Amendment and Restatement shall become effective, as of the date hereof, on the date (the "Amendment Closing Date") on which (i) the Administrative Agent shall have received counterparts of this Amendment and Restatement that, when taken together, bear the signatures of the Borrower, the Administrative Agent, and the Required Lenders and (ii) the Other Amendments shall have become, or shall simultaneously become, effective in accordance with their terms. SECTION 4. Agreement. Except as specifically stated herein, the provisions of the Credit Agreement are and shall remain in full force and effect. As used therein, the terms "Credit Agreement", "herein", "hereunder", "hereinafter", "hereto", "hereof" and words of similar import shall, unless the context otherwise requires, refer to the Credit Agreement as amended hereby. SECTION 5. APPLICABLE LAW. THIS AMENDMENT AND RESTATEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE PROVINCE OF QUEBEC AND THE FEDERAL LAWS OF CANADA APPLICABLE THEREIN. SECTION 6. Counterparts. This Amendment and Restatement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract. SECTION 7. Expenses. The Borrower agrees to reimburse the Administrative Agent for all out-of-pocket expenses incurred by it in connection with this Amendment and Restatement, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent. IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Restatement to be duly executed by their respective authorized officers as of the day and year first written above. 5 6 THE SEAGRAM COMPANY LTD., by /s/ John R. Preston --------------------------------------- Name: John R. Preston Title: Vice President & Treasurer BANK OF MONTREAL, individually and as Administrative Agent, by /s/ Jeffrey N. Wieser --------------------------------------- Name: Jeffrey N. Wieser Title: Managing Director BANQUE NATIONALE DE PARIS (CANADA) by /s/ Frank L. Shaw --------------------------------------- Name: Frank L. Shaw Title: Vice President and Deputy Manager by /s/ Blaise Cloutier --------------------------------------- Name: Blaise Cloutier Title: Vice President 6 7 ABN-AMRO BANK CANADA by /s/ Michel Hylands --------------------------------------- Name: Michel Hylands Title: Group Vice President by /s/ Francois Bienvenue --------------------------------------- Name: Francois Bienvenue Title: Assistant Vice President BANK OF AMERICA CANADA by /s/ Richard J. Hall --------------------------------------- Name: Richard J. Hall Title: Vice President THE BANK OF NOVA SCOTIA by /s/ D. M. Torrey --------------------------------------- Name: D. M. Torrey Title: Relationship Manager BANK OF TOKYO-MITSUBISHI (CANADA) by /s/ Amos W. Simpson --------------------------------------- Name: Amos W. Simpson Title: Vice President and General Manager THE CHASE MANHATTAN BANK by /s/ Robert T. Sacks --------------------------------------- Name: Robert T. Sacks 7 8 Title: Managing Director 8 9 CITIBANK CANADA by /s/ Adam Shepherd --------------------------------------- Name: Adam Shepherd Title: Vice President GRB/Toronto CREDIT SUISSE FIRST BOSTON CANADA by /s/ W. M. McFarland --------------------------------------- Name: W. M. McFarland Title: Vice President by /s/ Peter Chauvin --------------------------------------- Name: Peter Chauvin Title: Vice President DEUTSCHE BANK CANADA by /s/ T. G. Leonard --------------------------------------- Name: T. G. Leonard Title: Vice President by /s/ R. A. Johnston --------------------------------------- Name: Title: HSBC BANK CANADA by /s/ Anastasios Georgiou --------------------------------------- Name: Anastasios Georgiou Title: Asst. Vice President by /s/ Peter Leenaars --------------------------------------- Name: Peter Leenaars 9 10 Title: Senior Manager THE INDUSTRIAL BANK OF JAPAN (CANADA) by /s/ Campbell McLeish --------------------------------------- Name: Campbell McLeish Title: Senior Vice President J.P. MORGAN (CANADA) by /s/ John Maynard ---------- Name: John Maynard Title: Vice President MELLON BANK CANADA by /s/ Wendy B. H. Bocti --------------------------------------- Name: Wendy B. H. Bocti Title: Vice President ROYAL BANK OF CANADA by /s/ Barbara Meijer --------------------------------------- Name: Barbara Meijer Title: Senior Manager SOCIETE GENERALE (CANADA) by /s/ Robert Page --------------------------------------- Name: Robert Page Title: Director by /s/ Jean A. Elie --------------------------------------- Name: Jean A. Elie Title: Managing Director EX-10.8 4 AMENDMENT AND RESTATEMENT AGREEMENT 1 Exhibit 10.8 AMENDMENT AND RESTATEMENT AGREEMENT dated as of October 20, 1999 (this "Amendment and Restatement"), in respect of the US$2,000,000,000 Credit Agreement dated as of November 23, 1994, as amended and restated as of October 21, 1998 (the "Credit Agreement" and, as amended by this Amendment and Restatement, the "Amended and Restated Credit Agreement"), among Joseph E. Seagram & Sons, Inc. (the "Borrower"), The Seagram Company Ltd., J.E. Seagram Corp., the Lenders party thereto, The Chase Manhattan Bank, as Administrative Agent (in such capacity, the "Administrative Agent"), Citibank, N.A., as Syndication Agent, and Bank of Montreal, as Documentation Agent. The Borrower has requested that the Credit Agreement be amended and restated as set forth below, and the parties hereto are willing so to amend and restate the Credit Agreement. Each capitalized term used but not defined herein has the meaning assigned thereto in the Credit Agreement. Concurrently herewith, the Borrower and The Seagram Company Ltd. are entering into amendments (the "Other Amendments"), similar to those described in Section 1(b) below, with respect to (i) the US$6,500,000,000 Credit Agreement dated as of October 21, 1998, among the Borrower, The Seagram Company Ltd., J.E. Seagram Corp., the lenders party thereto, The Chase Manhattan Bank, as administrative agent, Citibank, N.A., as syndication agent, and Bank of America NT&SA and Bank of Montreal, as co-documentation agents, and (ii) the US$1,100,000,000 Credit Agreement dated as of December 21, 1994, as amended and restated as of October 23, 1998, among the Seagram Company, Ltd., the lenders party thereto and Bank of Montreal, as administrative agent. In consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto hereby agree, on the terms and subject to the conditions set forth herein, as follows: SECTION 1. Amendments. Upon the effectiveness of this Amendment and Restatement as provided in Section 3 below, the Credit Agreement shall be amended and restated in its current form, but with the following changes: (a) Pricing Grid. The definition of "Applicable Rate" is hereby amended by (i) replacing "50%" with "33.3%" 2 2 in clauses (i) and (ii) of the proviso to the first sentence thereof, (ii) replacing "0.075%" with "0.250%" in such proviso and (iii) replacing the chart with the following:
- ----------------------------------------------------------------- Index Debt Eurodollar Facility Fee ---------- ---------- ------------ Ratings: Spread Rate -------- ------ ---- - ----------------------------------------------------------------- > = A-/A3 0.51% 0.09% - ----------------------------------------------------------------- BBB+/Baa1 0.55% 0.10% - ----------------------------------------------------------------- BBB/Baa2 0.575% 0.125% - ----------------------------------------------------------------- BBB-/Baa3 0.60% 0.15% - ----------------------------------------------------------------- BB+/Ba1 0.725% 0.225% - ----------------------------------------------------------------- (b) General Amendments. (i) The definition of "Leverage Ratio" in the Credit Agreement is hereby amended by adding at the end thereof the following new sentence: For purposes of calculating the Leverage Ratio, Total Debt shall not include 90% of the Indebtedness under the 7.50% Adjustable Conversion-rate Equity Security Units in the form issued on June 15, 1999 (including under the subordinated deferrable notes that are a part thereof). (ii) Section 6.01(e) of the Credit Agreement is hereby amended by adding the words "and the aggregate amount of other payment obligations" after the word "Indebtedness" in clause (A) thereof and by deleting the word "and" at the end thereof. (iii) Section 6.01(f) of the Credit Agreement is hereby amended (A) by adding the words "and other payment obligations" after the words "other Liens to secure Indebtedness" therein, (B) by adding the words "and the aggregate amount of other payment obligations" after the words "principal amount of Indebtedness" therein and (C) changing the period to a semi-colon and by adding the word "and" at the end thereof. (iv) the following new Section 6.01(g) is hereby 3 3 added to the Credit Agreement after Section 6.01(f) thereof: (g) Liens on equity interests in special purpose entities securing only Indebtedness and other obligations of such entities that was incurred for the purpose of financing (including through securitizations) films, television programming, music and other intellectual property. (v) Clause (v) of Section 6.04 of the Credit Agreement is hereby deleted and replaced with: (v) clause (a) of the foregoing shall not apply to prohibitions, restrictions and conditions arising pursuant to contractual arrangements (other than arrangements with respect to Indebtedness) entered into in the ordinary course of business relating to (I) specific items of property (other than equity interests) or (II) the equity interests of special purpose vehicles that own no material assets other than the specific items of property referred to in clause (I) subject to such contractual arrangements; provided that (x) such prohibitions, restrictions and conditions apply only to such specific items of property and such equity interests of special purpose vehicles which are subject to such contractual arrangements and (y) if the aggregate amount (without duplication) of property and equity interests of special purpose vehicles subject to such prohibitions, restrictions or conditions exceeds 5% of the Consolidated Total Assets of Seagram at any time, the amount of such excess (the "Restricted Property Amount"), when added to (A) the aggregate principal amount of Indebtedness and the aggregate amount of other payment obligations secured by Liens permitted only by paragraph (f) of Section 6.01 and (B) the aggregate amount of Attributable Debt of Sale and Lease-Back Transactions permitted only by paragraph (e) of Section 6.01 shall not exceed 15% of the Consolidated Total Assets of Seagram at such time, SECTION 2. Representations and Warranties. Each of the Borrower and the Guarantors represents and warrants as of the date hereof to each of the Lenders that: 4 4 (a) Before and after giving effect to this Amendment and Restatement, the representations and warranties set forth in the Credit Agreement are true and correct in all material respects with the same effect as if made on the date hereof, except to the extent such representations and warranties expressly relate to an earlier date. (b) Immediately before and after giving effect to this Amendment and Restatement, no Event of Default or Default has occurred and is continuing. SECTION 3. Conditions to Effectiveness. The amendments set forth in Section 1 of this Amendment and Restatement shall become effective, as of the date hereof, on the date (the "Amendment Closing Date") on which (i) the Administrative Agent shall have received (A) counterparts of this Amendment and Restatement that, when taken together, bear the signatures of the Borrower, the Guarantors, the Administrative Agent, and the Required Lenders and (B) payment of the fees described in the Fee Letter dated as of October 1, 1999, between the Borrower, The Chase Manhattan Bank and Chase Securities Inc. and all expenses of the Administrative Agent as described in Section 7, to the extent such expenses have been invoiced prior to the Amendment Closing Date, and (ii) the Other Amendments shall have become, or shall simultaneously become, effective in accordance with their terms. SECTION 4. Agreement. Except as specifically stated herein, the provisions of the Credit Agreement are and shall remain in full force and effect. As used therein, the terms "Credit Agreement", "herein", "hereunder", "hereinafter", "hereto", "hereof" and words of similar import shall, unless the context otherwise requires, refer to the Credit Agreement as amended hereby. SECTION 5. APPLICABLE LAW. THIS AMENDMENT AND RESTATEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 6. Counterparts. This Amendment and Restatement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract. 5 5 SECTION 7. Expenses. The Borrower agrees to reimburse the Administrative Agent for all out-of-pocket expenses incurred by it in connection with this Amendment and Restatement, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent. IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Restatement to be duly executed by their respective authorized officers as of the day and year first written above. JOSEPH E. SEAGRAM & SONS, INC., by /s/ John R. Preston --------------------------------------- Name: John R. Preston Title: Vice President & Treasurer THE SEAGRAM COMPANY LTD., by /s/ John R. Preston --------------------------------------- Name: John R. Preston Title: Vice President & Treasurer J.E. SEAGRAM CORP., by /s/ John R. Preston --------------------------------------- Name: John R. Preston Title: Vice President & Treasurer THE CHASE MANHATTAN BANK, individually and as Administrative Agent, 6 6 by /s/ Robert T. Sacks --------------------------------------- Name: Robert T. Sacks Title: Managing Director CITIBANK, N.A., individually and as Syndication Agent, by /s/ Elizabeth Minnella --------------------------------------- Name: Elizabeth Minnella Title: Vice President BANK OF MONTREAL, individually and as Documentation Agent, by /s/ Jeffrey N. Wieser --------------------------------------- Name: Jeffrey N. Wieser Title: Managing Director BANK OF AMERICA, N.A., individually and as Co-Documentation Agent by /s/ Thomas J. Kane --------------------------------------- Name: Thomas J. Kane Title: Vice President BANQUE NATIONALE DE PARIS by /s/ Sophie Revillard Kaufman --------------------------------------- Name: Sophie Revillard Kaufman Title: Vice President by /s/ Gwen Abbott --------------------------------------- Name: Gwen Abbott Title: Assistant Vice President 7 7 ABN AMRO BANK, N.V. by /s/ Frances O'R. Logan --------------------------------------- Name: Frances O'R. Logan Title: Senior Vice President by /s/ David Carrington --------------------------------------- Name: David Carrington Title: Vice President BANKBOSTON, N.A. by /s/ William F. Hamilton --------------------------------------- Name: William F. Hamilton Title: Director BANK ONE, NA [MAIN OFFICE CHICAGO] by /s/ Stephen E. McDonald --------------------------------------- Name: Stephen E. McDonald Title: Senior Vice President THE BANK OF NEW YORK by /s/ John C. Lambert --------------------------------------- Name: John C. Lambert Title: Vice President THE BANK OF NOVA SCOTIA by /s/ James R. Trimble --------------------------------------- Name: James R. Trimble Title: Senior Relationship Manager 8 8 BANK OF TOKYO-MITSUBISHI TRUST COMPANY by /s/ J. Brown --------------------------------------- Name: J. Brown Title: Vice President CITICORP USA, INC. by /s/ Elizabeth H. Minnella --------------------------------------- Name: Elizabeth H. Minnella Title: Vice President CREDIT SUISSE FIRST BOSTON by /s/ David W. Kratovil --------------------------------------- Name: David W. Kratovil Title: Director by /s/ Joel Glodowski --------------------------------------- Name: Joel Glodowski Title: Managing Director DEUTSCHE BANK AG NEW YORK BRANCH AND/OR CAYMAN ISLANDS BRANCH by /s/ Alexander Karow --------------------------------------- Name: Alexander Karow Title: Assistant Vice President by /s/ William W. McGinty --------------------------------------- Name: William W. McGinty Title: Director DRESDNER BANK AG, NEW YORK AND GRAND 9 9 CAYMAN BRANCHES by /s/ Laura G. Fazio --------------------------------------- Name: Laura G. Fazio Title: First Vice President by /s/ Constance Loosemore --------------------------------------- Name: Constance Loosemore Title: Assistant Vice President THE FUJI BANK, LIMITED by /s/ Raymond Ventura --------------------------------------- Name: Raymond Ventura Title: Vice President & Manager THE INDUSTRIAL BANK OF JAPAN, LIMITED, NEW YORK BRANCH by /s/ J. Kenneth Biegen --------------------------------------- Name: J. Kenneth Biegen Title: Senior Vice President SANPAOLO IMI S.P.A. by /s/ Luca Sacchi --------------------------------------- Name: Luca Sacchi Title: Vice President by /s/ Robert Wurster --------------------------------------- Name: Robert Wurster Title: First Vice President LLOYDS TSB BANK PLC by 10 10 /s/ David Rodway --------------------------------------- Name: David Rodway Title: Assistant Director R156 by /s/ Louise Miller --------------------------------------- Name: Louise Miller Title: Assistant Vice President Structured Finance M256 MELLON BANK, N.A. by /s/ Maria N. Sisto --------------------------------------- Name: Maria N. Sisto Title: Assistant Vice President MORGAN GUARANTY TRUST COMPANY OF NEW YORK by /s/ Robert Bottamedi --------------------------------------- Name: Robert Bottamedi Title: Vice President NATIONAL WESTMINSTER BANK PLC NEW YORK BRANCH, as lender by /s/ Richard Freedman --------------------------------------- Name: Richard Freedman Title: Director, North America NATIONAL WESTMINSTER BANK PLC NASSAU BRANCH, as lender by /s/ Richard Freedman --------------------------------------- Name: Richard Freedman Title: Director, North America 11 11 ROYAL BANK OF CANADA by /s/ Barbara Meijer --------------------------------------- Name: Barbara Meijer Title: Senior Manager THE ROYAL BANK OF SCOTLAND PLC by /s/ Derek Bonnar --------------------------------------- Name: Derek Bonnar Title: Vice President SOCIETE GENERALE FINANCE (IRELAND) LIMITED by /s/ Richard Wanless --------------------------------------- Name: Richard Wanless Title: Managing Director by /s/ Aidan Storey --------------------------------------- Name: Aidan Storey Title: Account Manager THE TORONTO-DOMINION BANK by /s/ Mark A. Baird --------------------------------------- Name: Mark A. Baird Title: Manager Credit Administration WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH by /s/ Lucie L. Guernsey --------------------------------------- Name: Lucie L. Guernsey Title: Director EX-12.A 5 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES 1 Exhibit 12(a) The Seagram Company Ltd. and Subsidiary Companies Computation of Ratio of Earnings to Fixed Charges (U.S. dollars in millions)
Quarter Ended Fiscal Year Ended September 30, June 30, ------------- ----------------- 1999 1998 1999 1998 ---- ---- ----- ------ Income (loss) from continuing operations, before tax $ 9 $138 $(579) $1,611 Add (deduct): Dividends from equity companies 13 2 92 56 Fixed charges 207 87 656 406 Interest capitalized, net of amortization -- -- -- (2) ----- ----- ----- ------ Earnings available for fixed charges $229 $227 $ 169 $2,071 ===== ===== ===== ====== Fixed charges: Interest expense $191 $ 74 $ 592 $ 357 Portion of rent expense deemed to represent interest factor 16 13 64 49 ----- ----- ----- ------ Fixed charges $207 $ 87 $ 656 $ 406 ===== ===== ===== ====== Ratio of earnings to fixed charges 1.11 2.61 (a) 5.10 ===== ===== ===== ======
(a) Fixed charges exceeded earnings by $487 million for the year ended June 30, 1999. 25 EX-12.B 6 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES 1 Exhibit 12(b) Joseph E. Seagram & Sons, Inc. and Subsidiary Companies Computation of Ratio of Earnings to Fixed Charges (U.S. dollars in millions)
Quarter Ended Fiscal Year Ended September 30, June 30, ------------- ----------------- 1999 1998 1999 1998 ---- ----- ---- ----- Income (loss) from continuing operations, before tax $ 94 $ 62 $(17) $ 17 Add (deduct): Dividends from equity companies 1 1 1 2 Fixed charges 133 30 349 182 Interest capitalized, net of amortization -- -- -- -- ----- ----- ----- ----- Earnings available for fixed charges $228 $ 93 $333 $201 ===== ===== ===== ===== Fixed charges: Interest expense $130 $ 27 $339 $170 Portion of rent expense deemed to represent interest factor 3 3 10 12 ----- ----- ----- ----- Fixed charges $133 $ 30 $349 $182 ===== ===== ===== ===== Ratio of earnings to fixed charges 1.71 3.10 (a) 1.10 ===== ===== ===== =====
(a) Fixed charges exceeded earnings by $16 million for the year ended June 30, 1999. EX-27 7 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF THE SEAGRAM COMPANY LTD. FOR THE QUARTER ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 U.S. DOLLARS 3-MOS JUN-30-2000 JUL-01-1999 SEP-30-1999 1 1,420 0 3,755 (512) 2,624 8,965 4,562 (1,438) 34,883 7,877 7,561 0 0 4,606 8,238 34,883 0 3,643 2,150 2,150 1,421 0 161 9 110 (40) 0 0 (84) (124) (0.29) (0.29)
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