Page 311 - 2012 Annual Report

311
VIVENDI l 2012 l Annual Report
FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS –
STATUTORY FINANCIAL STATEMENTS 4
4
III - CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 27 Litigation
In a decision dated February 17, 2011 and issued on February 22, 2011, the
Court, in applying the “Morrison” decision, confirmed Vivendi’s position by
dismissing the claims of all purchasers of Vivendi’s ordinary shares on the
Paris stock exchange and limited the case to claims of French, American,
British and Dutch purchasers of Vivendi’s ADRs on the New York Stock
Exchange. The Court denied Vivendi’s post-trial motions challenging the
jury’s verdict. The Court also declined to enter a final judgment, as had
been requested by the plaintiffs, saying that to do so would be premature
and that the process of examining individual shareholder claims must
take place before a final judgment could be issued. On March 8, 2011,
the plaintiffs filed a petition before the Second Circuit Court of Appeals
seeking to appeal the decision rendered on February 17, 2011. On July 20,
2011, the Court of Appeals denied the petition and dismissed the claim of
purchasers who acquired their shares on the Paris stock exchange.
In a decision dated January 27, 2012 and issued on February 1, 2012, the
Court, in applying the Morrison decision, also dismissed the claims of the
individual plaintiffs who purchased ordinary shares of the company on the
Paris stock exchange.
On July 5, 2012, the Court denied a request by the plaintiffs to expand the
class to nationalities other than those covered by the certification decision
dated March 22, 2007.
The claims process commenced on December 10, 2012, with the sending
of a notice to shareholders who may be part of the class. Recipients
of the notice have 150 days from that date to provide information and
documentation evidencing the validity of their claim. Vivendi will then
have the right to challenge the merits of these claims. At the end of this
process, which should be completed during the second quarter of 2013,
the judge will be able to determine the total amount of damages and enter
a final judgment, thereby enabling Vivendi to commence its appeal.
Vivendi believes that it has solid grounds for an appeal at the appropriate
times. Vivendi intends to challenge, among other issues, the plaintiffs’
theories of causation and damages and, more generally, certain decisions
made by the judge during the conduct of the trial. Several aspects of the
verdict will also be challenged.
On the basis of the verdict rendered on January 29, 2010, and following
an assessment of the matters set forth above, together with support
from studies conducted by companies specializing in the calculation of
class action damages and in accordance with the accounting principles
described in Notes 1.3.1 (Use of Estimates) and 1.3.8 (Provisions). Vivendi
made a provision on December 31, 2009, in an amount of €550 million
in respect of the damages that Vivendi might have to pay to plaintiffs.
Vivendi re-examined the amount of the reserve related to the Securities
class action litigation in the United States, given the decision of the
District Court for the Southern District of New York on February 17, 2011,
which followed the US Supreme Court’s decision on June 24, 2010 in
the Morrison case. Using the same methodology and the same valuation
experts as in 2009, Vivendi re-examined the amount of the reserve and
set it at €100 million as of December 31, 2010, in respect of the damages,
if any, that Vivendi might have to pay solely to shareholders who have
purchased ADRs in the United States. Consequently, as of December 31,
2010, Vivendi recognized a €450 million reversal of reserve, compared to
an accrual of €550 million as of December 31, 2009.
Vivendi considers that this provision and the assumptions on which it is
based may require further amendment as the proceedings progress and,
consequently, the amount of damages that Vivendi might have to pay to
the plaintiffs could differ from the current estimate. As is permitted by
current accounting standards, no details are given of the assumptions on
which this estimate is based, because their disclosure at this stage of the
proceedings could be prejudicial to Vivendi.
COMPLAINT OF LIBERTY MEDIA CORPORATION
On March 28, 2003, Liberty Media Corporation and certain of its affiliates
filed suit against Vivendi and Jean-Marie Messier and Guillaume Hannezo
in the District Court for the Southern District of New York for claims arising
out of the agreement entered into by Vivendi and Liberty Media relating
to the formation of Vivendi Universal Entertainment in May 2002. The
plaintiffs allege that the defendants violated certain provisions of the US
Exchange Act of 1934 and breached certain contractual representations
and warranties. The case had been consolidated with the securities class
action for pre-trial purposes but was subsequently deconsolidated on
March 2, 2009 for purposes of trial. The judge granted Liberty Media’s
request that they be permitted to avail themselves of the verdict rendered
by the securities class action jury with respect to Vivendi’s liability (theory
of “collateral estoppel”).
The Liberty Media jury returned its verdict on June 25, 2012. It found
Vivendi liable to Liberty Media for making certain false or misleading
statements and for breaching several representations and warranties
contained in the parties’ agreement and awarded damages to Liberty
Media in the amount of €765 million. Vivendi has filed certain post-trial
motions challenging the jury’s verdict, including motions requesting that
the Court set aside the jury’s verdict for lack of evidence and order a new
trial.
On January 9, 2013, the Court confirmed the jury’s verdict. It also awarded
Liberty Media pre-judgment interest accruing from December 16, 2001
until the date of the entry of judgment, using the average rate of return
on one-year U.S. Treasury bills. On January 17, 2013, the Court entered a
final judgment in the total amount of €945 million, including pre-judgment
interest, but stayed its execution while it considered two pending post-
trial motions, which were denied on February 12, 2013. On February 15,
2013, Vivendi filed with the Court a Notice of Appeal against the judgment
awarded, for which it believes it has strong arguments.
On the basis of the verdict rendered on June 25, 2012, and following the
entry of the final judgment by the Court, at December 31, 2012, Vivendi
recognized a provision in the amount of €945 million.
LBBW ET AL AGAINST VIVENDI
On March 4, 2011, twenty-six institutional investors from Germany,
Canada, Luxemburg, Ireland, Italy, Sweden, Belgium and Austria filed
a complaint against Vivendi with the Paris Commercial Court seeking
to obtain damages for losses they allegedly incurred as a result
of four financial communications issued by Vivendi in October and
December 2000, September 2001 and April 2002. Then on April 10 and