| [November 17, 2004] |
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Vivendi Universal Reports Quarterly Operating Results in Strong Progress And Raises its Full Year Adjusted Net Income Guidance to above EUR 1.2 billion
PARIS --(Business Wire)-- Nov. 17, 2004 -- Vivendi Universal (NYSE: V):
Third quarter 2004
-- Revenues of EUR 4,703 million. On a comparable(1) basis, revenues were up 6%.
-- Operating income of EUR 866 million. On a comparable(1) basis, operating income was up 19%.
-- Adjusted net income(2) of EUR 586 million, versus EUR 206 million in 2003.
-- Net income(3) of EUR 776 million, versus EUR 131 million in 2003.
-- Consolidated cash-flow from operations(4) of EUR 1,369 million. On a comparable(1) basis, consolidated cash flow from operations was up 42%.
-- Proportionate cash-flow from operations(5) of EUR 829 million. On a comparable(1) basis, proportionate cash flow from operations was up 56%.
First nine months of 2004
-- Revenues of EUR 16,094 million. On a comparable(1) basis, revenues were up 5%.
-- Operating income of EUR 2,684 million. On a comparable(1) basis, operating income was up 26%.
-- Adjusted net income(2) of EUR 1,053 million, versus EUR 192 million in 2003.
-- Net loss(3) of EUR 1,082 million, versus a loss of EUR 501 million. This result was negatively impacted by the non-cash foreign currency translation adjustment on the NBC-Universal transaction (EUR 2,105 million).
-- Consolidated cash-flow from operations(4) of EUR 3,856 million. On a comparable(1) basis, consolidated cash flow from operations was up 32%.
-- Proportionate cash-flow from operations(5) of EUR 2,516 million. On a comparable(1) basis, proportionate cash flow from operations was up 60%.
-- Financial net debt(6) of EUR 5.5 billion on September 30, 2004, versus EUR 12.8 billion on September 30, 2003.
Vivendi Universal raises its adjusted net income guidance and maintains its operating and financial net debt guidance for full year 2004:
-- Adjusted net income(2): above EUR 1.2 billion.
-- Operating income: strong growth on a pro forma basis(7), close to 2003 on an actual basis, in spite of VUE's deconsolidation.
-- Cash-flow from operations: growth on a pro forma basis(7), slight decline on an actual basis, in spite of a significantly reduced scope.
-- Financial net debt(6) below EUR 5 billion (when including the proceeds from the sale of Veolia Environnement shares).
Following a presentation of the 2004 full year positive outlook, the Board of Vivendi Universal indicated on September 29, 2004, that it may, at the appropriate time, propose a dividend which should not be lower than EUR 0.50 per share to be paid in 2005 based on 2004 earnings.
Comments on the Group's earnings:
Revenues
Vivendi Universal's consolidated revenues for the third quarter of 2004 amounted to EUR 4,703 million. On a comparable basis(1), third quarter 2004 revenues for Vivendi Universal increased 6%, and 7% at constant currency.
Vivendi Universal Entertainment (VUE) was deconsolidated as of May 11, 2004 as the result of the closing of the NBC-Universal transaction.
For the first nine months of 2004, Vivendi Universal reported revenues of EUR 16,094 million. On a comparable basis(1), revenues were up 5% and 7% at constant currency.
This good performance was achieved through the return to revenue growth at Universal Music Group and Canal+ Group and the continued revenue growth at SFR Cegetel Group and Maroc Telecom.
Operating income
For the third quarter 2004, Vivendi Universal operating income amounted EUR 866 million. On a comparable(1) basis, operating income was up 19%.
Vivendi Universal's consolidated operating income for the first nine months of 2004 amounted to EUR 2,684 million compared with EUR 2,573 million for the first nine months of 2003. On a comparable basis(1), operating income increased by 26%.
This performance was mainly achieved through the significant improvement of Canal+ Group operating income, the positive operating income at Universal Music Group and the continued operating income growth at SFR Cegetel Group and Maroc Telecom, despite higher operating loss recorded by VUG.
Financing expense
For the third quarter 2004, financing expense was almost divided by two from EUR 154 million in 2003 to EUR 82 million this quarter.
From the third quarter of 2003 to the same period this year, average gross debt decreased from EUR 15.2 billion to EUR 6.9 billion, mainly resulting from the NBC-Universal transaction (approximately EUR 5.3 billion impact on net debt). Over the same period, average interest rate also decreased from 5.26% to 4.34%.
For the first nine months of 2004, financing expense amounted to EUR 389 million compared with EUR 531 million for the same period in 2003. Over the same periods, average gross debt decreased to EUR 9.9 billion from EUR 17.2 billion.
Income tax expense
On December 23, 2003, Vivendi Universal applied to the French Ministry of Finance for permission to use the Consolidated Global Profit Tax System. This request has been granted and notified on August 23, 2004, for a five year period beginning with the taxable year 2004. As a consequence, as of September 30, 2004, the impact of this agreement corresponded to a tax saving of EUR 750 million (of which EUR 362 million related to the current fiscal year included in the adjusted net income).
For the third quarter 2004, income tax expense showed a profit of EUR 427 million compared with an expense of -EUR 212 million for the same period last year.
For the first nine months of 2004, income tax expense totalled -EUR 244 million compared with -EUR 845 million for the same period in 2003.
Net income
For the third quarter of 2004, net income amounted to EUR 776 million or EUR 0.72 per share (basic) compared to a net income of EUR 131 million or EUR 0.12 per share (basic) for the same period last year.
For the first nine months of 2004, net loss amounted to EUR 1,082 million or -EUR 1.01 per share (basic and diluted) compared to a net loss of EUR 501 million or -EUR 0.47 per share (basic and diluted) in the first nine months of 2003. This result was negatively impacted by the non-cash foreign currency translation adjustment on the NBC-Universal transaction (EUR 2,105 million).
Adjusted net income(2)
For the third quarter 2004, the adjusted net income increased by EUR 380 million to EUR 586 million, versus EUR 206 million for the same period last year.
This increase, in spite of the decrease in operating income due to the Group's scope reduction (divestitures of 80% of VUE, Canal+ Group non-core assets and others), is mainly driven by the positive income tax impact and the decrease in financing expense.
For the first nine months of 2004, the adjusted net income increased by EUR 861 million to achieve EUR 1,053 million, versus EUR 192 million for the same period last year.
Comments on operating income for Vivendi Universal's Media and Telecom businesses:
Media activity (as fully consolidated at 100%)
For the third quarter 2004, Media businesses have generated EUR 96 million of operating income, up 33% on a comparable basis and up 39% on a comparable(1) basis at constant currency .
For the first nine months of 2004, Media businesses have generated EUR 162 million of operating income, up 47% on a comparable basis and up 38% on a comparable basis at constant currency .
Canal+ Group (100% Vivendi Universal economic interest):
Significant improvement in Canal+ Group's operating income, up 16%, for the first nine months of 2004, on a comparable basis(8).
Canal+ Group reported third quarter operating income of EUR 96 million compared to EUR 133 million in 2003. Neutralizing the effect of changes in scope of consolidation(8) the operating income decreased compared to the same period in 2003, mainly due to a different timing in programming costs (broadcasting cost of the Athens Olympic Games in August) and in movies releases, as well as the impact of the subscribers management and recruitment costs.
Canal+ Group reported nine months operating income of EUR 303 million compared to EUR 378 million for the same period in 2003. Neutralizing the effect of changes in scope of consolidation, period-on-period growth came to 16%(8). The operating income of the Group's core business, French pay-television, was slightly up compared to the same period last year. Canal+'s churn rate continued its decrease during the period (-1.7 point), highlighting the solid momentum of the premium channel. CanalSatellite, driven by its revenues growth, confirmed and reinforced its French leadership.
In parallel, the Group's movie business increased its operating income compared to last year, benefiting from the releases of successful movies (Les Rivieres Pourpres 2, Podium, Fahrenheit 9/11).
Universal Music Group (92% Vivendi Universal economic interest):
For the first nine months of 2004, UMG significantly improved its operating income to EUR 44 million
For the third quarter 2004, UMG's operating income of EUR 29 million was up compared to operating income of EUR 4 million last year reflecting the margin on higher sales, lower marketing expenses and the other results of the company's cost reduction program partly offset by the planned acceleration of catalog amortization, restructuring expenses and a further impairment charge of EUR 10 million at UMG's Music Clubs in the U.K. and France.
For the first nine months of 2004, UMG's operating income amounted to EUR 44 million compared to a reported loss in 2003 of EUR 38 million. This improvement was driven by lower Artist & Repertoire (A&R) and marketing costs, reductions in overheads and selling expenses and a lower depreciation charge. This more than offset higher amortization costs, reflecting a planned reduction in the period that music and music publishing catalogs were amortized from 20 to 15 years, restructuring costs and a cumulative impairment charge of EUR 28 million recorded at UMG's Music Clubs in the U.K. and France.
Major new releases for the remainder of the year include new albums from Ashanti, Andrea Bocelli, Daniel Bedingfield, Busted, Elton John, Eminem, Gwen Stefani and U2 in addition to Greatest Hits from the Bee Gees, George Strait, Ronan Keating, Shania Twain and Toby Keith.
Vivendi Universal Games (99% Vivendi Universal economic interest):
For the third quarter of 2004, Vivendi Universal Games started to cut operating losses.
For the third quarter 2004, VUG's operating loss was EUR 29 million, essentially cutting the operating loss in half (representing a 50% growth or a 48% growth at constant currency) despite lower net sales. This improvement was driven by lower operating expenses relating to the global turnaround plan.
For the first nine months of 2004, VUG's operating loss was EUR 185 million compared to a loss of EUR 110 million in 2003. The 2004 operating income includes the beginning of the favorable results of these cost reductions, but they are offset by heavy one-time costs associated with such turnaround plan (approximately EUR 85 million). The one-time costs include write-offs of certain projects and titles, along with a significant level of restructuring expenses associated with the cost of a material reduction in the staff count in North America, down by approximately 40% since the beginning of the year.
Furthermore, at the end of 2003, VUG strengthened capitalization criteria of internal development costs. As a result, most internal development costs are now expensed as incurred. Had this strengthening of capitalization criteria actually occurred at the beginning of 2003, it would have had an approximate negative impact of EUR 24 million on operating income on the first nine months of 2003.
Telecom activity (as fully consolidated at 100%)
For the third quarter 2004, Telecom businesses have generated EUR 809 million of operating income, up 13% on a comparable basis.
For the first nine months of 2004, Telecom businesses have generated EUR 2,313 million of operating income, up 16% on a comparable basis.
SFR Cegetel Group (approximately 56% Vivendi Universal economic interest):
For the first nine months of 2004, SFR Cegetel Group's operating income grew 17% on a comparable(9) basis to EUR 1,799 million.
SFR Cegetel Group operating income for the third quarter of the year grew 15% (14% on a comparable basis(9) to EUR 613 million.
Mobile telephony operating income grew 20%(10) (also 20% on a comparable basis(9)) to EUR 642 million, thanks to the 9% revenues growth (11% on a comparable basis(9)) and to continued strong control of customer costs.
As a consequence of the heavy commercial and technical costs of the broadband Internet retail offer launched in March 2004 and despite the growth in revenues and the recording of positive non recurring items amounting to EUR 4 million, Cegetel recorded operating losses of EUR 29 million for the third quarter of 2004, compared to a loss of EUR 5 million for the same period in 2003, (and to a profit of EUR 2 million on a comparable basis).
For the first nine months of 2004, SFR Cegetel Group operating income grew 19% (17% on a comparable basis(9)) to EUR 1,799 million.
Mobile telephony operating income grew 20%(10) (also 20% on a comparable basis(9)) to EUR 1,831 million, thanks to the 10% revenues growth (12% on a comparable basis(9)), continued strong control of customer costs and the recording of EUR 42 million of positive non recurring items. As a consequence, the growth in operating income observed at the end of September cannot be extrapolated to the rest of the year.
As a consequence of the heavy commercial and technical costs of the broadband Internet retail offer launched in March 2004 and despite the 41% growth in revenues (7% on a comparable basis(9)) and the recording of positive non-recurring items amounting to EUR 30 million, Cegetel recorded operating losses of EUR 32 million for the first nine months of 2004, compared to a loss of EUR 7 million for the same period in 2003 (and to a profit of EUR 19 million on a comparable basis(9)).
Maroc Telecom (35% Vivendi Universal economic interest):
For the first nine months of 2004, Maroc Telecom operating income grew 12% to EUR 514 million.
Maroc Telecom Group consolidated operating income grew 13% (+11% at constant currency on a comparable basis(11)) to EUR 196 million on the third quarter mainly with a strong growth of revenues (+14%).
For the first nine months of 2004, Maroc Telecom Group consolidated operating income grew 12% (+14% at constant currency on a comparable basis) to EUR 514 million. The good performance of revenues (+10%) emphasized by the accounting of EUR 20 million positive non-recurring items was partially reduced by an increase in the acquisition cost of new customers. -0- *T Analyst Conference Details --------------------------- Analyst Conference (Media invited on a listen only basis). Speaker: Jacques Espinasse, Senior Executive Vice President and Chief Financial Officer Wednesday November 17, 2004 at 3.00 pm (Paris Time), 2.00 pm (London Time) and 9.00 am (EST). Conference Call details (access code: 153012): Dial-in (France): + 33 (0)1.70.70.81.98 Dial-in (UK): + 44 (0)207.984.7582 Dial-in (US toll-free): (1)866.239.0750 or Dial-in (US): +00 (1)718.354.1158 For your convenience, please dial-in 10 minutes prior to the call time. A replay service will be available for seven days (access code: 153012): France: +33 (0)1. 70.70.82.10 UK: +44 (0)207.984.7578 US: (1)866.239.0765 or +00 (1)718.354.1112 Web cast details: The meeting / call will also be available via an audio web cast at: http://finance.vivendiuniversal.com *T
Important disclaimer:
This press release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside our control, including but not limited to, the risks that: the reduction of Vivendi Universal's indebtedness expected to be reached as a result of the debt-reduction and maturity-extension plans, proposed disposals and/or restructurings will not materialize in the timing or manner described above; Vivendi Universal will not be able to obtain the regulatory, competition or other approvals necessary to complete certain proposed transactions; actual cash flow and net debt figures differ from the estimated targets described above; Vivendi Universal will be unable to further identify, develop and achieve success for new products, services and technologies; Vivendi Universal will face increased competition and that the effect on pricing, spending, third-party relationships and revenues of such competition will limit or reduce Vivendi Universal's revenue and/or income; Vivendi Universal will be unable to establish and maintain relationships with commerce, advertising, marketing, technology and content providers; as well as the risks described in the documents Vivendi Universal has filed previously with the U.S. Securities and Exchange Commission and/or the French Autorite des Marches Financiers. Investors and security holders may obtain a free copy of documents filed by Vivendi Universal with the U.S. Securities and Exchange Commission at www.sec.gov or directly from Vivendi Universal. Vivendi Universal does not undertake, nor has any obligation, to provide updates or revise any forward-looking statements. -0- *T APPENDIX I VIVENDI UNIVERSAL REVENUES AND OPERATING INCOME ON A COMPARABLE BASIS BY BUSINESS SEGMENT (French GAAP, unaudited) Comparable basis essentially illustrates the effect of the divestiture of Vivendi Universal Entertainment (VUE), of the divestitures at Canal+ Group (Telepiu, Canal+ Nordic, Canal+ Benelux, etc...), VUP (Comareg and Atica & Scipione) and of Vivendi Telecom Hungary, Kencell and Monaco Telecom, the abandonment of Internet operations and includes the full consolidation of Telecom Developpement at SFR Cegetel Group and of Mauritel at Maroc Telecom as if these transactions had occurred at the beginning of 2003. These results are not necessarily indicative of the combined results that would have occurred had the events actually occurred at the beginning of 2003. -------------------------------------------- 3rd Quarter Ended September 30, -------------------------------------------- % Change at constant (in millions of euros) 2004 2003 % Change currency ------------ ----------- --------- -------- Revenues -------- Canal+ Group EUR 831 EUR 831 0% 1% Universal Music Group 1,164 1,115 4% 8% Vivendi Universal Games 63 77 -18% -14% ------------ ----------- --------- -------- Media EUR 2,058 EUR 2,023 2% 4% SFR Cegetel Group 2,188 1,982 10% 10% Maroc Telecom 440 399 10% 12% ------------ ----------- --------- -------- Telecom EUR 2,628 EUR 2,381 10% 11% Other (a) (6) 12 na* na* ------------ ----------- --------- -------- Total Vivendi Universal EUR 4,680 EUR 4,416 6% 7% ============ =========== ========= ======== Operating Income (Loss) ---------------------- Canal+ Group EUR 92 EUR 123 -25% -24% Universal Music Group 29 4 x7 x8 Vivendi Universal Games (29) (58) 50% 48% ------------ ----------- --------- -------- Media EUR 92 EUR 69 33% 39% SFR Cegetel Group 613 538 14% 14% Maroc Telecom 196 178 10% 11% ------------ ----------- --------- -------- Telecom EUR 809 EUR 716 13% 13% Holding & corporate (61) (59) -3% -5% Other (a) 19 (7) na* na* ------------ ----------- --------- -------- Total Vivendi Universal EUR 859 EUR 719 19% 20% ============ =========== ========= ======== -------------------------------------------- Nine months ended September 30, -------------------------------------------- % Change at constant (in millions of euros) 2004 2003 % Change currency ------------ ----------- --------- -------- Revenues -------- Canal+ Group EUR 2,584 EUR 2,489 4% 4% Universal Music Group 3,233 3,283 -2% 3% Vivendi Universal Games 211 317 -33% -28% ------------ ----------- --------- -------- Media EUR 6,028 EUR 6,089 -1% 2% SFR Cegetel Group 6,301 5,647 12% 12% Maroc Telecom 1,241 1,135 9% 12% ------------ ----------- --------- -------- Telecom EUR 7,542 EUR 6,782 11% 12% Other (a) (7) 20 na* na* ------------ ----------- --------- -------- Total Vivendi Universal EUR 13,563 EUR 12,891 5% 7% ============ =========== ========= ======== Operating Income (Loss) ----------------------- Canal+ Group EUR 292 EUR 251 16% 17% Universal Music Group 44 (38) na* na* Vivendi Universal Games (185) (110) -68% -80% ------------ ----------- --------- -------- Media EUR 151 EUR 103 47% 38% SFR Cegetel Group 1,799 1,541 17% 17% Maroc Telecom 523 467 12% 14% ------------ ----------- --------- -------- Telecom EUR 2,322 EUR 2,008 16% 16% Holding & corporate (173) (213) 19% 16% Other (a) 30 (42) na* na* ------------ ----------- --------- -------- Total Vivendi Universal EUR 2,330 EUR 1,856 26% 25% ============ =========== ========= ======== * na: non applicable. (a) "Other" corresponds to Vivendi Telecom International (excluding Vivendi Telecom Hungary, Kencell and Monaco Telecom), Vivendi Valorisation, other non core businesses and the elimination of intercompany transactions. *T -0- *T APPENDIX II VIVENDI UNIVERSAL REVENUES AND OPERATING INCOME BY BUSINESS SEGMENT AS PUBLISHED (French GAAP, unaudited) (in millions of euros) 3rd quarter ended Nine months ended September 30, September 30, Revenues ---------------------- --------------------- 2004 2003 2004 2003 ----------- ---------- ----------- ---------- Canal+ Group EUR 850 EUR 969 EUR 2,689 EUR 3,184 Universal Music Group 1,164 1,115 3,233 3,283 Vivendi Universal Games 63 77 211 317 ----------- ---------- ----------- ---------- Media EUR 2,077 EUR 2,161 EUR 6,133 EUR 6,784 SFR Cegetel Group 2,188 1,941 6,301 5,553 Maroc Telecom 440 387 1,210 1,101 ----------- ---------- ----------- ---------- Telecom EUR 2,628 EUR 2,328 EUR 7,511 EUR 6,654 Other (a) (2) 109 123 434 ----------- ---------- ----------- ---------- Total Vivendi Universal EUR 4,703 EUR 4,598 EUR 13,767 EUR 13,872 (Excluding VUE and =========== ========== =========== ========== VUP assets sold in 2003) Vivendi Universal Entertainment (b) - 1,305 2,327 4,267 VUP assets sold in 2003 (c) - - - 128 ----------- ---------- ----------- ---------- Total Vivendi Universal EUR 4,703 EUR 5,903 EUR 16,094 EUR 18,267 =========== ========== =========== ========== Operating Income (Loss) ----------------------- Canal+ Group EUR 96 EUR 133 EUR 303 EUR 378 Universal Music Group 29 4 44 (38) Vivendi Universal Games (29) (58) (185) (110) ----------- ---------- ----------- ---------- Media EUR 96 EUR 79 EUR 162 EUR 230 SFR Cegetel Group 613 531 1,799 1,515 Maroc Telecom 196 174 514 457 ----------- ---------- ----------- ---------- Telecom EUR 809 EUR 705 EUR 2,313 EUR 1,972 Holding & corporate (61) (59) (173) (213) Other (a) 22 (26) 45 (114) ----------- ---------- ----------- ---------- Total Vivendi Universal EUR 866 EUR 699 EUR 2,347 EUR 1,875 (Excluding VUE and =========== ========== =========== ========== VUP assets sold in 2003) Vivendi Universal Entertainment (b) - 197 337 692 VUP assets sold in 2003 (c) - - - 6 ----------- ---------- ----------- ---------- Total Vivendi Universal EUR 866 EUR 896 EUR 2,684 EUR 2,573 =========== ========== =========== ========== *na: not applicable (a) "Other" corresponds to Vivendi Universal Publishing (VUP) activities in Brazil (Atica & Scipione) deconsolidated since January 1, 2004, Internet operations abandoned since January 1, 2004, Vivendi Telecom International, Vivendi Valorisation, other non core businesses and the elimination of intercompany transactions. (b) Vivendi Universal Entertainment was deconsolidated as of May 11, 2004 as the result of the divestiture of 80% of Vivendi Universal's interest in this company. (c) Corresponds to Comareg sold in May 2003. *T -0- *T APPENDIX III VIVENDI UNIVERSAL PRO FORMA REVENUES AND OPERATING INCOME BY BUSINESS SEGMENT (French GAAP, unaudited) The pro forma information illustrates the effect of the divestitures of VUE in May 2004, of Telepiu in April 2003 and of Comareg in May 2003 as if these transactions had occurred at the beginning of 2003. These results are not necessarily indicative of the combined results that would have occurred had the events actually occurred at the beginning of 2003. ---------------------------------------- 3rd quarter ended September 30, ---------------------------------------- % Change at % constant 2004 2003 Change currency ------- -------- --------- ---------- (in millions of euros) Revenues --------- Canal+ Group EUR 850 EUR 969 -12% -11% Universal Music Group 1,164 1,115 4% 8% Vivendi Universal Games 63 77 -18% -14% ----------- ---------- ----------- ---------- Media EUR 2,077 EUR 2,161 -4% -1% SFR Cegetel Group 2,188 1,941 13% 13% Maroc Telecom 440 387 14% 15% ----------- ---------- ----------- ---------- Telecom EUR 2,628 EUR 2,328 13% 13% Other (a) (2) 109 na* na* ----------- ---------- ----------- ---------- Total Vivendi Universal EUR 4,703 EUR 4,598 2% 4% =========== ========== =========== ========== Operating income (Loss) ----------------------- Canal+ Group EUR 96 EUR 133 -28% -28% Universal Music Group 29 4 x7 x8 Vivendi Universal Games (29) (58) 50% 48% ----------- ---------- ----------- ---------- Media EUR 96 EUR 79 22% 25% SFR Cegetel Group 613 531 15% 15% Maroc Telecom 196 174 13% 14% ----------- ---------- ----------- ---------- Telecom EUR 809 EUR 705 15% 15% Holding & corporate (61) (59) -3% -5% Other (a) 22 (26) na* na* ----------- ---------- ----------- ---------- Total Vivendi Universal EUR 866 EUR 699 24% 24% =========== ========== =========== ========== ---------------------------------------- Nine months ended September 30, ---------------------------------------- % Change at % constant 2004 2003 Change currency ------- -------- --------- ---------- (in millions of euros) Revenues --------- Canal+ Group EUR 2,689 EUR 2,873 -6% -6% Universal Music Group 3,233 3,283 -2% 3% Vivendi Universal Games 211 317 -33% -28% ----------- ---------- ----------- ---------- Media EUR 6,133 EUR 6,473 -5% -3% SFR Cegetel Group 6,301 5,553 13% 13% Maroc Telecom 1,210 1,101 10% 12% ----------- ---------- ----------- ---------- Telecom EUR 7,511 EUR 6,654 13% 13% Other (a) 123 434 -72% -70% ----------- ---------- ----------- ---------- Total Vivendi Universal EUR 13,767 EUR13,561 2% 3% =========== ========== =========== ========== Operating income (Loss) ----------------------- Canal+ Group EUR 303 EUR 265 14% 14% Universal Music Group 44 (38) na* na* Vivendi Universal Games (185) (110) -68% -80% ----------- ---------- ----------- ---------- Media EUR 162 EUR 117 38% 30% SFR Cegetel Group 1,799 1,515 19% 19% Maroc Telecom 514 457 12% 15% ----------- ---------- ----------- ---------- Telecom EUR 2,313 EUR 1,972 17% 18% Holding & corporate (173) (213) 19% 16% Other (a) 45 (114) na* na* ----------- ---------- ----------- ---------- Total Vivendi Universal EUR 2,347 EUR 1,762 33% 33% =========== ========== =========== ========== *na: non applicable (a) "Other" corresponds to Vivendi Universal Publishing (VUP) activities in Brazil (Atica & Scipione) deconsolidated since January 1, 2004, Internet operations abandoned since January 1, 2004, Vivendi Telecom International, Vivendi Valorisation, other non core businesses and the elimination of intercompany transactions. *T -0- *T APPENDIX IV VIVENDI UNIVERSAL CONSOLIDATED STATEMENT OF INCOME (French GAAP, unaudited) ------------------ ----------------------- 3rd quarter ended Nine months ended September 30, September 30, ------------------ ----------------------- 2004 2003 (in millions of euros, 2004 2003 --------- --------- except per share amounts) ----------- ----------- EUR 4,703 EUR 5,903 Revenues EUR 16,094 EUR 18,267 EUR 866 EUR 896 Operating income EUR 2,684 EUR 2,573 (82) (154) Financing expense (389) (531) Other financial expenses, - (50) net of provisions (a) (426) (339) ---------- ---------- ----------- ----------- Financing and other EUR (82) EUR (204) expenses, net EUR (815) EUR (870) ---------- ---------- ----------- ----------- Income before gain (loss) on businesses sold, net of provisions and other, income taxes, equity interest, goodwill amortization EUR 784 EUR 692 and minority interests EUR 1,869 EUR 1,703 Gain (loss) on businesses sold, net of (61) 144 provisions, and other (b) (1,657) 481 427 (212) Income tax expense (c) (244) (845) ---------- ---------- ----------- ----------- Income before equity interest, goodwill amortization and EUR 1,150 EUR 624 minority interests EUR (32) EUR 1,339 Equity in (losses) earnings of 31 (20) unconsolidated companies (d) 187 (87) Equity loss in Veolia - - Environnement Impairment (e) - (190) (129) (159) Goodwill amortization (412) (625) (8) (39) Impairment losses (19) (161) ---------- ---------- ----------- ----------- Income (loss) before EUR 1,044 EUR 406 minority interests EUR (276) EUR 276 (268) (275) Minority interests (806) (777) ---------- ---------- ----------- ----------- EUR 776 EUR 131 Net income (loss) EUR (1,082) EUR (501) ========= ========== =========== =========== Income (loss) per EUR 0.72 EUR 0.12 basic share EUR (1.01) EUR (0.47) ========= ========== =========== =========== Weighted average common shares outstanding 1,072.2 1,071.7 (in millions) (f) 1,071.9 1,070.8 (a) In 2004, includes the cost related to the redemption of High Yield Notes (-EUR 303 million). (b) In 2004, mainly includes the after tax loss on the divestiture of 80% of Vivendi Universal's interests in Vivendi Universal Entertainment for EUR 1,739 million net of a -EUR 2,105 million foreign currency translation adjustment (with no impact on cash position and on shareholders' equity) as well as gain on the divestiture of other entities, net of provisions (+EUR 181 million). For the third quarter, includes a non-cash additional expense of EUR 88 million resulting from balance sheet adjustments related to the divestiture of 80% of VUE and to the investment of 20% in NBC Universal. (c) In 2004, following its admission to the French Consolidated Income Tax Regime as from January 1, 2004, Vivendi Universal has recorded a tax saving of EUR 750 million. (d) In 2004, includes the equity in NBC Universal's earnings since May 12, 2004, i.e. EUR 57 million. In 2003, includes the equity in earnings of the Consumer Press Division, which was sold in February 2003. (e) Corresponds to Vivendi Universal's 20.4% interest in Veolia Environnement's impairment of goodwill and other intangible assets (i.e. EUR 440 million), after a notional impairment of goodwill initially recorded as a reduction of shareholders' equity of EUR 250 million, as prescribed by French GAAP. (f) Excluding treasury shares recorded as a reduction of shareholders' equity (that is 3,166 shares as at September 30, 2004). The weighted average common shares outstanding including the potential dilution effect of outstanding convertible bonds and stock options represented approximately 1,215.6 million common shares as at September 30, 2004. The financial instruments with potential dilution effect that were in the money at that date represented approximately 105.1 million common shares out of 143.7 million common shares to be potentially issued. *T -0- *T APPENDIX V VIVENDI UNIVERSAL RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME (French GAAP, unaudited) --------------------------- ---------------------------- 3rd quarter ended Nine months ended September 30, September 30, --------------------------- ---------------------------- (in millions 2004 2003 Change of euros) 2004 2003 Change --------- --------- ------- ------------ -------- ------- Net Income EUR 776 EUR 131 645 (loss) (a) EUR (1,082) EUR (501) (581) Adjustments Financial provisions and amortization of deferred financial 11 (33) 44 charges (b) 132 (407) 539 Realized losses, net of financial provisions taken 1 77 (76) previously (b) 5 469 (464) Other non-operating, non-recurring - 8 (8) items (b)(c) 303 145 158 --------- --------- ------- ------------ -------- ------- Subtotal impact on other financial expenses, net of EUR 12 EUR 52 (40) provisions (b) EUR 440 EUR 207 233 Loss (gain) on businesses sold, net of provisions, 61 (144) 205 and other (a) 1,657 (481) 2,138 Equity loss in Veolia Environnement - - - impairment (a) - 190 (190) Goodwill 129 159 (30) amortization (a) 412 625 (213) 8 39 (31) Impairment losses (a) 19 161 (142) Income tax (388) - (388) expense (d) (366) 47 (413) Minority interests (12) (31) 19 on adjustments (27) (56) 29 --------- --------- ------- ------------ -------- ------- Adjusted EUR 586 EUR 206 380 net income EUR 1,053 EUR 192 861 ========= ========= ======= ============ ======== ======= (a) As reported in the consolidated statement of income. (b) The table presents the detail of the impact of the adjustments on other financial expenses, net of provisions: *T -0- *T ------------------------------------------------------ 3rd quarter ended September 30, 2004 ------------------------------------------------------ Other non- Financial provisions operating, and amortization of Realized non- Net financial deferred losses recurring impact charges items -------------------- ----------- ----------- --------- (in millions of euros) Mark-to-market of interest rate swaps EUR - EUR - EUR - EUR - Mark-to-market of DuPont shares (22) - - (22) Provision on SNCF put option on Cegetel S.A.S. - - - - Amortization of deferred financial changes (5) - - (5) Cost related to the redemption of High Yield Notes - - - - Other 16 (1) - 15 ---------- ---------- --------- -------- Total EUR (11) EUR (1) EUR - EUR (12) ========== ========== ========= ======== ------------------------------------------------------ Nine months ended September 30, 2004 ------------------------------------------------------ Other non- Financial provisions operating, and amortization of Realized non- Net financial deferred losses recurring impact charges items -------------------- ----------- ----------- --------- (in millions of euros) Mark-to-market of interest rate swaps EUR - EUR - EUR - EUR - Mark-to-market of DuPont shares (42) - - (42) Provision on SNCF put option on Cegetel S.A.S. (35) - - (35) Amortization of deferred financial changes (66) - - (66) Cost related to the redemption of High Yield Notes - - (303) (303) Other 11 (5) - 6 ---------- ---------- --------- --------- Total EUR (132) EUR (5) EUR (303) EUR (440) ========== ========== ========= ========= (c) In 2004, includes the cost related to the redemption of High Yield Notes for -EUR 303 million. In 2003, includes the losses related to the settlement of put options on treasury shares (-EUR 104 million) and the fees related to the implementation of the group's refinancing plan (-EUR 41 million). (d) Includes the neutralization of the deferred tax asset induced by the expected tax saving for 2005 fiscal year (i.e. EUR 388 million) recognized as a result of Vivendi Universal's permission to use the Consolidated Global Profit System as of January 1, 2004. Indeed, only tax savings on 2004 fiscal year (i.e. EUR 362 million) are included in the adjusted net income. *T -0- *T APPENDIX VI VIVENDI UNIVERSAL CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION (French GAAP, unaudited) September 30, December 31, 2004 2003 -------- ----------- (In millions of euros) ASSETS Goodwill, net EUR 16,776 EUR 17,789 Other intangible assets, net 6,248 11,778 Fixed assets and investments 7,889 10,997 ------- -------- Total long-term assets 30,913 40,564 -------- -------- Other current assets 8,833 11,498 Cash and cash equivalents 1,231 2,858 -------- -------- Total current assets 10,064 14,356 -------- -------- TOTAL ASSETS EUR 40,977 EUR 54,920 ======= ======== SHAREHOLDERS' EQUITY AND LIABILITIES Total shareholders' equity 12,656 11,923 Minority interests 3,123 4,929 Other equity 1,000 1,000 Other non-current liabilities 3,721 5,261 Gross debt 6,750 14,423 Deferred taxes liabilities 3,656 5,123 Accounts payable 10,071 12,261 -------- -------- TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES EUR 40,977 EUR 54,920 ======== ======== FINANCIAL NET DEBT -------------------------------------- September 30 -------------------------------------- (In millions of euros) 2004 2003 Change ------------------------- ----------- ------------ ------------- Gross debt EUR 6,750 EUR 14,963 EUR (8,213) Cash and cash equivalents (1,231) (2,173) 942 ------------ ------------ ------------ Financial Net Debt EUR 5,519 EUR 12,790 EUR (7,271) ============ ============ ============ FINANCIAL NET DEBT MATURITY --------------------------------------------------------- Payments due in --------------------------------------------- Total as Between Between of September September September Before 2005 and 2006 and After 30, September September September September 2004 2005 2006 2009 2009 (In millions of euros) --------- -------- ---------- ------------ -------- Gross debt EUR 6,750 EUR 2,063 EUR 1,266 EUR 3,268 EUR 153 Cash and cash equivalents (1,231) (1,231) - - - ---------- ---------- ---------- ----------- -------- Financial Net Debt EUR 5,519 EUR 832 EUR 1,266 EUR 3,268 EUR 153 =========== ======== =========== =========== ======== *T -0- *T APPENDIX VII VIVENDI UNIVERSAL CONSOLIDATED STATEMENT OF CASH FLOWS (French GAAP, unaudited) Nine months ended Year ended September 30, December 31, (In millions of euros) 2004(a) 2003(a) 2003(a) ------------ ------------ ------------ Cash flow - operating activities: Net loss EUR (1,082) EUR (501) EUR (1,143) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,748 2,263 4,759 Equity loss in Veolia Environnement impairment - 190 203 Financial provisions and provisions related to businesses sold (b) 6 (407) (1,007) Gains on sale of property, plant and equipment and financial assets, net 1,692 (195) 47 Equity in (losses) earnings of unconsolidated companies (c) (187) 87 (72) Deferred taxes (797) 35 (842) Minority interests 806 777 1,212 Dividends received from unconsolidated companies (d) 355 55 59 Changes in assets and liabilities, net of effect of acquisitions and divestitures 987 (151) 670 ------------ ------------ ------------ Net cash provided by operating activities 3,528 2,153 3,886 Cash flow - investing activities: Capital expenditures (1,007) (979) (1,552) Proceeds from sales of property, plant, equipment and intangible assets 232 367 477 Purchases of investments (e) (401) (4,332) (4,422) Sales of investments (e) 3,011 1,394 1,408 Net decrease (increase) in financial receivables 13 160 140 Sales (purchases) of marketable securities (30) 48 49 ------------ ------------ ------------ Net cash provided by (used for) investing activities 1,818 (3,342) (3,900) Cash flow - financings activities: Net increase (decrease) in short-term borrowings (3,059) (4,805) (7,259) Proceeds from issuance of borrowings and other long-term debt 1,030 6,257 5,657 Principal payment on borrowings and other long-term liabilities (3,373) (4,646) (1,947) Net proceeds from issuance of common shares 15 70 71 Sales (purchases) of treasury shares - (100) (98) Cash dividends paid (1,649) (773) (737) ------------ ------------ ----------- Net cash provided by (used for) financing activities (7,036) (3,997) (4,313) Foreign currency translation adjustment 63 64 (110) ------------ ------------ ----------- Change in cash and cash equivalents EUR (1,627) EUR (5,122) EUR (4,437) ============ ============ ============ Cash and cash equivalents: ------------ ------------ ------------ Beginning EUR 2,858 EUR 7,295 EUR 7,295 ============ ============ ============ Ending EUR 1,231 EUR 2,173 EUR 2,858 ============ ============ ============ (a) Includes 100% of SFR, Maroc Telecom and Vivendi Universal Entertainment (until May 11, 2004) which are controlled by Vivendi Universal with a 56%, 51% and 92% voting interest respectively and a 56%, 35% and 86% ownership interest respectively. (b) For the nine months ended September 30, 2004, comprises financial provisions reported in "other financial expenses, net of provisions" (-EUR 66 million) and provisions reported in "gain (loss) on businesses sold, net of provisions, and other" (EUR 60 million). (c) Includes the reversal of equity in earnings of sold subsidiaries. (d) These dividends have no impact on Vivendi Universal net income. As at September 30, 2004, they include, among other, the dividends received from NBC Universal. In compliance with the terms of the combination agreement signed between Vivendi Universal, General Electric and NBC, Vivendi Universal reimbursed all the cash generated by VUE between October 1, 2003 and May 11, 2004 (i.e. EUR 629 million). In June, Vivendi Universal received a dividend of EUR 224 million from NBC Universal corresponding to 20%(12) of the cash generated by NBC and VUE from October 1, 2003 to May 11, 2004. This dividend has been recognized in net cash provided by operating activities while the consolidated cash flow statement includes 100% of VUE until its deconsolidation on May 11, 2004. On September 29, 2004, Vivendi Universal received a second dividend of EUR 78 million corresponding to 20 % of the cash generated by NBC Universal from May 12, 2003 to July 31, 2003. (e) Includes net cash from acquired and divested companies. *T -0- *T APPENDIX VIII VIVENDI UNIVERSAL CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (French GAAP, unaudited) Common shares ------------------------ Additional Paid-in Number Amount Captial (In millions of euros) ----------- ----------- ------------ (Thousands) Balance at December 31, 2003 1,071,519 EUR 5,893 EUR 6,030 Net loss for the period - - - Reversal of foreign currency translation adjustment related to 80% of the interests in VUE - - - Foreign currency translation adjustment - - - Impact of the implementation of CRC Rule 04-03 (b) - - - Conversion of ex-Seagram exchangeables 921 5 68 Conversion of bonds, warrants, stock options and issuances under the employee stock purchase plan 833 4 11 Treasury shares cancelled (incl. stripped shares) (714) (4) (11) Release of revaluation surplus and other - - - ---------- ----------- ---------- Balance at September 30, 2004 1,072,559 EUR 5,898 EUR 6,098 ========== =========== ========== Retained Earnings and Others ------------------------------------ Cumulative Foreign Currency Retained Translation Shareholders' Earnings Adjustment Total Equity ----------- ------------ --------- ------------- (In millions of euros) Balance at December 31, 2003 EUR 3,750 EUR (3,750) EUR - EUR 11,923 Net loss for the period (1,082) - (1,082)(a) (1,082) Reversal of foreign currency translation adjustment related to 80% of the interests in VUE - 2,105 2,105 (a) 2,105 Foreign currency translation adjustment - (164) (164) (164) Impact of the implementation of CRC Rule 04-03 (b) (95) - (95) (95) Conversion of ex-Seagram exchangeables (73) - (73) - Conversion of bonds, warrants, stock options and issuances under the employee stock purchase plan - - - 15 Treasury shares cancelled (incl. stripped shares) 15 - 15 - Release of revaluation surplus and other (46) - (46) (46) ---------- ----------- --------- ----------- Balance at September 30, 2004 EUR 2,469 EUR (1,809) EUR 660 EUR 12,656 ========== =========== ========= ========== (a) In accordance with accounting principles, upon the divestiture of 80% of its interests in VUE, Vivendi Universal reclassified to net income in proportion to the divested economic interests the foreign cumulative translation adjustment related to VUE recorded as a reduction of shareholders' equity. This reclassification resulted in a loss of EUR 2,105 million, but had no impact on shareholders' equity. (b) As a result of the application of the CRC Rule 04-03 issued on May 4, 2004, Vivendi Universal has fully consolidated Special Purpose Vehicles used for the defeasance of real estate since January 1, 2004. *T
Note: This press release contains unaudited consolidated results. The results are established under French Generally Accepted Accounting Principles (French GAAP).
(1) Comparable basis essentially illustrates the effect of the divestiture of Vivendi Universal Entertainment (VUE), of the divestitures at Canal+ Group (Telepiu, Canal+ Nordic, Canal+ Benelux, etc...), VUP (Comareg and Atica & Scipione) and of Vivendi Telecom Hungary, Kencell and Monaco Telecom, the abandonment of Internet operations and includes the full consolidation of Telecom Developpement at SFR Cegetel Group and of Mauritel at Maroc Telecom as if these transactions had occurred at the beginning of 2003. These results are not necessarily indicative of the combined results that would have occurred had the events actually occurred at the beginning of 2003. Cash-flow from operations (consolidated and proportionate) on a comparable basis does not include NBC Universal's dividends in 2004.
(2) Adjusted net income is detailed in Appendix V. Adjusted net income mainly does not include goodwill amortization, gain (loss) on businesses sold, net of provisions and other, and non-operating, non-recurring items, financial provisions, realized losses net of financial provisions taken previously, income tax and minority interests on adjustments. This result takes into account part of the benefit from the Consolidated Global Profit Tax System, as from January 1, 2004.
(3) This result takes into account the benefit of the Consolidated Global Profit Tax System, as from January 1, 2004.
(4) Net cash provided by operating activities after capital expenditures and before financing costs and taxes.
(5) Defined as cash-flow from operations excluding minority interests.
(6) French GAAP gross debt less cash and cash equivalents.
(7) The pro forma information illustrates the effect of the divestitures of VUE in May 2004, of Telepiu in April 2003 and of Comareg in May 2003 as if these transactions had occurred at the beginning of 2003. These results are not necessarily indicative of the combined results that would have occurred had the events actually occurred at the beginning of 2003.
(8) Comparable basis essentially illustrates the effect of the divestitures at Canal+ Group (Telepiu, Canal+ Nordic, Canal+ Benelux etc...) as if these transactions had occurred at the beginning of 2003.
(9) Comparable basis illustrates the full consolidation of Telecom Developpement as if the merger had occurred on January 1, 2003.
(10) Please note that because of the merger of SFR and Cegetel Groupe SA and also to better reflect the performances of each separate businesses, SFR Cegetel Group has reallocated holding and other revenues, which were previously reported in the "fixed and other" line renamed "fixed and internet", to the "mobile" line. As a consequence, SFR Cegetel Group's breakdown of results by business differs from figures published in 2003.
(11) Comparable basis illustrates the effect of the full consolidation of Mauritel as if it had occurred on January 1, 2003.
(12) Before Universal Studios Holding Corp's minority interests.
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