SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
COMMISSION FILE NUMBER
POLYGRAM HOLDING, INC.
DEFERRED SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES
375 Park Avenue
New York, New York 10152
(Full title of the plan and the address of the plan)
Vivendi Universal
42, avenue de Friedland
75380 Paris Cedex 08, France
(Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office)
REQUIRED INFORMATION
1. Not Applicable.
2. Not Applicable.
3. Not Applicable.
4. Polygram Holding, Inc. Deferred Savings and Investment Plan for Employees
(the "Polygram Plan") is subject to the requirements of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Attached
hereto are the financial statements of the Polygram Plan for the fiscal
year ended December 31, 2001 prepared in accordance with the financial
reporting requirements of ERISA.
EXHIBITS
1. Financial statements of the Polygram Plan for the fiscal year ended
December 31, 2001 prepared in accordance with the financial reporting
requirements of ERISA.
2. Consent of McGladrey & Pullen, LLP, independent accountants.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on their behalf by the undersigned
hereunto duly authorized.
POLYGRAM HOLDING INC. DEFERRED SAVINGS
AND INVESTMENT PLAN FOR EMPLOYEES
By /s/ Ann M. Giambusso
----------------------------------
Ann M. Giambusso
Vice President - Human Resources,
Vivendi Universal
Date: July 12, 2002
Exhibit 1
POLYGRAM HOLDING, INC.
DEFERRED SAVINGS AND INVESTMENT
PLAN FOR EMPLOYEES
FINANCIAL STATEMENTS
DECEMBER 31, 2001 and 2000
CONTENTS
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INDEPENDENT AUDITOR'S REPORT
ON THE FINANCIAL STATEMENTS 1
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FINANCIAL STATEMENTS
Statement of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4 - 9
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INDEPENDENT AUDITOR'S REPORT
To the Plan Administrator
PolyGram Holding, Inc.
Deferred Savings and Investment Plan for Employees
We have audited the accompanying statement of net assets available for
benefits of PolyGram Holdings, Inc. Deferred Savings and Investment Plan for
Employees as of December 31, 2001, and the related statement of changes in net
assets available for benefits for the year ended December 31, 2001. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The statement of net assets available for benefits of PolyGram
Holdings, Inc. Deferred Savings and Investment Plan for Employees as of
December 31, 2000 was audited by other auditors whose report, dated June
15,2001, expressed an unqualified opinion on that statement.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of PolyGram
Holdings, Inc. Deferred Savings and Investment Plan for Employees as of
December 31, 2001 and the changes in net assets available for benefits for the
year ended December 31, 2001 in conformity with accounting principles
generally accepted in the United States of America.
/s/ McGladrey & Pullen, LLP
-------------------------------
McGladrey & Pullen, LLP
New York, New York
July 9, 2002
1
POLYGRAM HOLDINGS, INC.
DEFERRED SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2001 AND DECEMBER 31, 2000
2001 2000
--------------------------------------------------------------------------------
Net assets held in trust by Bank of New York
(Note 6) $ 54,628,333 $ 62,490,191
----------------------------------
Liabilities - -
----------------------------------
Net Assets Available for Benefits $ 54,628,333 $ 62,490,191
==================================
SEE NOTES TO FINANCIAL STATEMENTS.
2
POLYGRAM HOLDINGS, INC.
DEFERRED SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2001
--------------------------------------------------------------------------------
Additions:
Additions to net assets attributed to:
Contributions
Employee contributions $ 3,180,910
Employer contributions 1,353,549
------------
4,534,459
------------
Investment income
Net appreciation (depreciation) in fair
value of investments (4,580,062)
Dividends and interest 2,697,753
------------
(1,882,309)
Total additions 2,652,150
Deductions:
Deductions to net assets attributed to:
Participant Withdrawals (10,514,008)
------------
Net (decrease) (7,861,858)
Net assets available for benefits:
Beginning of year 62,490,191
------------
End of year $ 54,628,333
============
SEE NOTES TO FINANCIAL STATEMENTS.
3
POLYGRAM HOLDING, INC,
DEFERRED SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note 1. Note 1. Description of the Plan
The following brief description of PolyGram Holding, Inc. Deferred Savings and
Investment Plan for Employees (the "Plan") is provided for general information
purposes only. Participants should refer to the plan document for more
complete information.
General: The Plan became effective January 1, 1987, and the Plan was amended
from time to time including amendments subsequent to December 31, 1998. It is
a profit sharing, thrift-type defined contribution plan with a 401(k)
provision under which certain employees of PolyGram Holding, Inc. (the
"Company") may participate. Leased employees, "freelance" employees or
consultants are not eligible to participate. The plan subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended
(ERISA).
Eligibility: The Plan is a voluntary defined contribution plan. Under the
terms of the Plan, former employees of PolyGram Holding, Inc. who are employed
with UMG Recordings, Inc. or one of its affiliates, and who have one year of
service are eligible to participate in the Plan. Employees are eligible to
participate in the Plan beginning with the calendar month following the
completion of one year of service.
Contribution: Eligible employees may make a combination of pre-tax dollars and
after-tax dollars contributions, in whole percentage of annual earnings,
through payroll deductions. Participants may contribute up to 17% of their
annual earnings, subject to a 12% maximum in pre-tax contributions and 17%
maximum in after-tax contributions. Highly compensated employees, as defined
by the Plan, are allowed to make pre-tax contributions up to 17% with a limit
of 12% of their pre-tax account. Matching contributions were increased to 60%
of the first 6% of participants' pre-tax and after-tax contributions made
during each payroll period.
Participants may elect to have their contributions and matching contributions
invested in a variety of investment funds. Investment elections or
contribution rate changes can be changed on any business day and must be made
in increments of 1%.
Participants are 100% vested in their pre-tax, after-tax and rollover
contributions. A participant's interest in the Company's matching contribution
will become vested according to the following schedule:
Completed year of service Percentage vested
--------------------------------------------------------------------------------
1 year 20%
2 years 40%
3 years 60%
4 years 80%
5 years or more 100%
In addition, nonvested employer matching contributions become 100% vested upon
Disability (as defined by the Plan), retirement or death.
Participants as of December 10, 1998 are fully vested in their benefits
accrued through December 31, 1998. Employer matching contributions related to
services performed by employees from January 1, 1999 forward are subject to
the vesting schedule set forth in the Plan. Effective August 23, 1999,
participants who attain age 60 while in service with the Employer shall become
100% vested.
4
POLYGRAM HOLDING, INC,
DEFERRED SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 1. DESCRIPTION OF THE PLAN (CONTINUED)
Forfeited balances of terminated participants' nonvested accounts are used to
reduce future Company contributions. For 2001, the total forfeited amount was
$25,919.
Loans: Participants may borrow from their vested account balance. The minimum
loan amount is $1,000 and the maximum is the lesser of $50,000 or 50% of the
participant's vested amount balance. Only one loan may be outstanding at any
one time. The interest rate charged on loans shall be set monthly for loans
made during the month. Repayments are made through payroll deductions over a
period of no more than 5 year although the term may be extended to 15 years if
the loan is for the purpose of the participant's primary residence.
Participant Distributions: The distribution to which a plan participant is
entitled is provided by the vested contributions and income thereon allocated
to the participant's account. The distribution election may be made upon
retirement, death, disability or termination of employment. Distributions are
in the form of immediate or deferred cash lump sum or immediate or deferred
installments. Installments are available only for participants who retire or
who are disabled as defined by the Plan. Normal retirement age is 65; however,
a participant may work past his normal retirement date and continue to
participate in the Plan until termination of employment. If a former
participant is rehired and has not received a distribution of his account
balance, any forfeited amounts will be reinstated. If the former participant
has received a distribution, then the distribution must be repaid within five
years from the participant's rehire date in order to restore the forfeiture
amount. There are also certain inservice withdrawals from the Plan.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting: Accounting records of the Plan are maintained on an
accrual basis.
Use of Estimates: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported amounts
of additions and deductions during the reporting period. Actual results could
differ from those estimates.
Risks and Uncertainties: The Plan provides for various investment options.
Investment securities are exposed to various risks such as interest rate,
market and credit. Due to the risk associated with investment securities and
the uncertainty related to changes in the value of such securities, it is at
least reasonably possible that changes in risks, in the near term could
materially affect participants' account balances and the amounts reported in
the statement of net assets available for plan benefits and the statements of
changes in net assets available for plan benefits.
The assets are held in trust by Bank of New York (Trustee) in the Joseph E.
Seagram & Sons, Inc. Master Trust Agreement (Master Trust), which also
includes assets of the 401(k) plans of the Company's affiliates, Universal
Studios, Inc., UMG Manufacturing and Logistics, Inc. and Spencer Gifts, Inc.
and Joseph E. Seagram & Sons, Inc. The related investment income and
appreciation in fair value represents allocations to the Plan based upon the
ratio of the Plan's assets to total Master Trust Assets.
5
POLYGRAM HOLDING, INC,
DEFERRED SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
On December 8, 2000, The Seagram Company Ltd. (parent of Joseph E. Seagram &
Sons, Inc.), Vivendi and Canal Plus S.A. completed a series of transactions
pursuant to which the three companies combined into Vivendi Universal S.A.
Upon the completion of the merger transactions, shareholders of The Seagram
Company Ltd. (other than those exercising dissenter's rights), including the
Trustee on behalf of the Plan, received, for each common share of The Seagram
Company Ltd. held, 0.80 Vivendi Universal ADSs or a combination of 0.80
non-voting exchangeable shares of Vivendi Universal's Canadian subsidiary,
Vivendi Universal Exchangeco, and an equal number of voting rights in Vivendi
Universal.
Investment securities are recorded and valued as follows: United States
government obligations are recorded at fair value based on the current market
yields; temporary investments in short-term investment funds are recorded at
cost which in the normal course approximates market value; securities
representing units of other funds are recorded at net asset value. Common
shares are recorded at the closing price reported on the composite tape of the
New York Stock Exchange on the valuation date. Purchases and sales of
securities are accounted for on a trade date basis with average cost basis
used for determining the cost of the investments sold. Interest income is
recorded on an accrual basis.
NOTE 3. PLAN TERMINATION
Although it has not expressed any in that to do so, the Board of Directors of
the VU has the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions of ERISA. In case of
termination, the rights of participants to their accounts shall become fully
vested as of the date of termination.
NOTE 4. ADMINISTRATIVE EXPENSES
All costs associated with the maintenance of accounting records and certain
investment fees of the Plan are borne by the Company. Administrative expenses
paid to investment brokers are deducted from plan earnings.
NOTE 5. TAX STATUS
The Plan is approved as qualified under Section 401(a) of the Internal Revenue
Code (the "Code") of 1986, as amended, and, therefore, is exempt from Federal
income taxes under Section 501(a) of such Code pursuant to a determination
letter dated December 10, 1997 from the Internal Revenue Service (the "IRS").
Although the Plan has been amended since receiving the determination letter
the opinion of the plan administrator, and the Plan's tax counsel, the Plan
and its underlying trust have operated within the terms of the Plan and the
compliance requirements to remain qualified under the applicable provisions of
the Code.
6
POLYGRAM HOLDING, INC,
DEFERRED SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 6. ASSETS HELD IN TRUST
The assets of the Plan are invested in the Master Trust held by the Trustee
where the assets of other related employee benefit plans of affiliates are
invested on a commingled basis. The Master Trust net assets consist of the
following classification of assets and liabilities as of December 2001 and
2000:
2001 2000
-------------------------------------
ASSETS
Investments held in trust at fair
valued determined by quoted market
prices:
Money market fund
State street yield enhanced STIF fund $ - $ 50,734,702
Stable income fund
Vanguard Retirement Saving Trust 121,870,473 -
The LaSalle income plus fund - 55,772,944
Bond fund
PIMCO total return fund, class A shares 116,050,435 98,703,855
S&P 500 index fund
Vanguard employee benefit fund 168,991,669 205,414,392
Managed equity fund
Vanguard value index fund 45,758,762 51,700,709
Growth equity fund
Vanguard institutional index fund 20,321,155 24,538,463
Vivendi stock fund
Vivendi Universal ADSs 34,029,544 48,004,886
Collective short term investment fund 553,319 1,325,251
The Coca-Cola Company stock fund
The Coca-Cola Company common stock 1,561,089 2,453,770
Collective short term investment fund 108,353 67,777
Dreyfus small company value fund
Berger Small Cap Value Fund 46,493,358 -
Dreyfus small company value fund - 24,883,209
MSDW international equity fund
MSDW international equity fund 19,032,529 22,109,100
Dresdner global technology fund
Dresdner RCM global technology fund 10,590,173 20,418,043
Loans to Participants 8,457,476 9,280,310
--------------------------------
Total Investments $593,818,335 $615,407,411
--------------------------------
7
POLYGRAM HOLDING, INC,
DEFERRED SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 6. ASSETS HELD IN TRUST (CONTINUED)
2001 2000
---------------------------------
Receivables
Accrued interest and dividends $ 1,586,871 $6,347,086
Capital gain distribution receivable 12,247,990 -
Contributions receivable 5,554 88,182
Proceeds from securities sold 157,749,273 371,263
---------------------------------
Total receivables $171,589,688 $6,806,531
---------------------------------
Total assets 765,408,023 622,213,942
---------------------------------
Liabilities
Accounts payable for securities purchased 170,257,735 6,337,958
Administrative expenses 15,438 26,171
Other payables 300,241 -
Benefit payments 50,749 -
---------------------------------
Total liabilities 170,624,163 6,364,129
---------------------------------
Net Assets $594,783,860 $615,849,813
=================================
As of December 31, 2001 and 2000, the equitable share of PolyGram Holding,
Inc. Deferred Savings and Investment Plan for Employees in the Master Trust is
9.18% and 10.14%, respectively.
As of December 31, 2001 and 2000, the net assets of the Master Trust available
to the Plan for benefits in the individual investment funds were as follows:
8
POLYGRAM HOLDING, INC,
DEFERRED SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 6. ASSETS HELD IN TRUST (CONTINUED)
2001 2000
-------------------------------------------
Money market fund $ - $ 4,373,990
Stable income fund 5,392,653 958,494
Bond fund 12,509,732 11,877,181
S&P 500 index fund 8,465,751 11,421,361
Managed equity fund 14,566,224 18,915,229
Growth equity fund 2,982,784 4,217,969
Vivendi Universal ADSs 1,766,135 2,146,016
Berger small company value fund 5,049,363 -
Dreyfus small company value fund - 2,827,508
MSDW international equity fund 1,968,450 2,572,984
Dresdner global technology fund 824,338 1,893,281
Loans to participants 1,102,903 1,286,178
---------------------------------
Total $54,628,333 $62,490,191
=================================
NOTE 7. INVESTMENT INCOME FROM MASTER TRUST
The appreciation in fair value and other income is as follows:
Investments held in trust at fair value determined by quoted market prices:
2001
--------------------
Bond fund $ 129,275
S&P 500 index fund (1,305,335)
Managed equity fund (2,619,531)
Growth equity fund (551,684)
Seagram stock fund -
Vivendi Universal ADSs (371,303)
Berger small company value fund 1,238,142
Dreyfus small company value fund -
Dresdner global technology fund (777,777)
MSDW international equity fund (321,849)
-----------
Investment losses (net of investment gains) (4,580,062)
Interest and dividends 2,697,753
-----------
Investment (loss) $(1,882,309)
===========
9